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Old 11-28-2014, 03:47 AM   #21
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as I refuse to borrow to buy something that depreciates.
Smart approach.

I was given a piece of advice by a family friend back when I was in my late teens. This fellow was a very successful self-made entrepreneur: one of his achievements was conceiving, starting, and guiding to success a company he named Telecheck.

His advice to me was never finance your toys. And I, and after marriage we, never have, regardless of the size or cost of the "toy."
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Old 11-28-2014, 09:39 PM   #22
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Smart approach.

I was given a piece of advice by a family friend back when I was in my late teens. This fellow was a very successful self-made entrepreneur: one of his achievements was conceiving, starting, and guiding to success a company he named Telecheck.

His advice to me was never finance your toys. And I, and after marriage we, never have, regardless of the size or cost of the "toy."
Full agreement with you. I never finance toys. I always finance cars as a rule. The philosophy is that they are a depreciating asset. As such I treat them as a monthly transportation expense just like power,water,gas,etc. You budget what you will and that determines what you drive. Only cars that change this are the toys. My Porsche as an example is a toy thus cash is the rule. Debt sucks.

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Old 11-28-2014, 10:29 PM   #23
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And I have a different take the on this. A depreciating asset will depreciate no matter how you pay for it. If I buy a boat for $250K, why would I lay out all that cash? At under 4% interest, over 20 years, and a tax deduction on the interest, I would rather work with the bank's money. Further, I have access to the cash I didn't layout for other purposes or investments. The odds are I will never pay off the boat "toy" so why pay for it in its entirety on day one?
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Old 11-28-2014, 11:37 PM   #24
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Our first boat, a 26' ranger sailboat, was paid for cash, by way of an investment we cashed in. In retrospect, seeing the growth in the investment we took money out of ( not all of it), we should have financed it, as year over year, that investment has way out produced the historically low interest rates of the past decade or so. When we sold the boat, we put the money down on our mortgage.
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Old 11-29-2014, 04:53 AM   #25
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well since my philosophy makes no sense I share it but do not preach it

I do not borrow money

Yet I am an active investor for a living and I make more money investing WAY MORE

then interest rates

so this may be one action I just can not justify
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Old 11-29-2014, 02:23 PM   #26
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Here is how I determine how to pay for expensive goods (depreciating or not):
If the interest rate to finance a purchase is higher than what my money is making, I will pay for the purchase in full.
On the other hand, if the interest rate to finance is less than what my money is making, I would elect to finance as it would make no sense to deprive yourself of that extra income even if the difference was just 1%.
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Old 11-29-2014, 02:30 PM   #27
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I don't see the point of laying out the full price of a boat when if in fact you financed it the odds of paying it off are slim. I'm talking about a price of 6 figures or more financed over 20 years or so. If you kept the boat 10 or 15 years and then sold it you would never have laid out the full value. You would have had the use of your money over all those years. To my way of thinking, unless the $$ are of no consequence to you, it is false economy to part with the full price on day one. The interest represents a small price to pay for the use of someone else's money.
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Old 11-29-2014, 02:42 PM   #28
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Also, whether a purchase is paid outright or financed, there is an interest cost. If financing, you pay a loan interest and when paying in full you pay interest in the form of lost income in whatever your money was in.
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