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Old 11-16-2015, 10:55 AM   #81
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"Please do not use the terms "tax free" as that really is misleading."
But I actually did say tax deferred exactly you quoted me - it will collect tax free but is in a tax deferred account.
Yes, I know you did. But you also used the words tax free. It doesn't collect tax free, it collects tax deferred. While you may clearly understand that, many people do not and they continue to make comparisons treating it as if it was tax free. It does not collect tax free. I doesn't do anything tax free. It does it all tax deferred.
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Old 11-16-2015, 11:10 AM   #82
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The account is tax deferred but it collects tax free which is the only accurate way I know of to describe it. If it did not collect tax free the balance each year would be subjected to a tax which it is not - the balance will be subjected to a tax when the deferral period is over - whenever that may be.
Maybe after many years of interest compounding , it is all relative to the exact person.
And there are other possibilities with these accounts which can confuse such as the borrowing, transferring, inheriting and distribution aspects.
But for those that want to do the math and have the desire to look at these facts the choices will be different for each case.
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Old 11-16-2015, 11:39 AM   #83
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This thread is a reminder why we all want to go cruising. To get away from the Bean Counters!
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Old 11-16-2015, 11:53 AM   #84
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The account is tax deferred but it collects tax free which is the only accurate way I know of to describe it. If it did not collect tax free the balance each year would be subjected to a tax which it is not - the balance will be subjected to a tax when the deferral period is over - whenever that may be.
Maybe after many years of interest compounding , it is all relative to the exact person.
And there are other possibilities with these accounts which can confuse such as the borrowing, transferring, inheriting and distribution aspects.
But for those that want to do the math and have the desire to look at these facts the choices will be different for each case.
Describe it simply as it is. Tax deferred. It collects tax deferred not tax free.
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Old 11-16-2015, 12:12 PM   #85
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"Describe it simply as it is. Tax deferred. It collects tax deferred not tax free."


I guess I should use the description found within investopedia and most other definitions....


"DEFINITION of 'Tax Deferred' Investment earnings such as interest, dividends or capital gains that accumulate tax free until the investor withdraws and takes possession of them. The most common types of tax-deferred investments include those in individual retirement accounts (IRAs) and deferred annuities."


But I think at this point most all of the readers will know what I meant originally and still consider important now - each loan consideration needs to be reviewed based upon each persons situation and then calculated with simple math to know what choices are present to you at that time.
It is not a matter of cash is good or loans are good but rather a choice that has both a math and in some cases a 'emotional' component.
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Old 11-16-2015, 12:52 PM   #86
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"You, or your heirs, will have to pay tax on that income (unless Cruz is elected). In the meantime, it is merely tax deferred. Moreover, you can borrow against the account."


Yes - agreed someday you or your heirs will need to pay some amount of taxes on some accumulated wealth in these accounts.
For clarity, under current law, the unavoidable tax is an income tax, not a wealth/inheritance tax (which may also apply).
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Old 11-16-2015, 12:52 PM   #87
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Originally Posted by smitty477 View Post
"Describe it simply as it is. Tax deferred. It collects tax deferred not tax free."


I guess I should use the description found within investopedia and most other definitions....


"DEFINITION of 'Tax Deferred' Investment earnings such as interest, dividends or capital gains that accumulate tax free until the investor withdraws and takes possession of them. The most common types of tax-deferred investments include those in individual retirement accounts (IRAs) and deferred annuities."


But I think at this point most all of the readers will know what I meant originally and still consider important now - each loan consideration needs to be reviewed based upon each persons situation and then calculated with simple math to know what choices are present to you at that time.
It is not a matter of cash is good or loans are good but rather a choice that has both a math and in some cases a 'emotional' component.
I knew what you meant. Most readers probably will. The sad thing is running across those who didn't and had no understanding of the consequences until time to withdraw. As to your point that it's got a math and emotional component I absolutely agree. As to simple math, I wouldn't say that as it requires a lot of present vs. future value calculations plus assumptions that are, at best, estimates and, at worst, guesses.

Now I do think the OP has been given a lot of potential loan sources. All the talk of financing or not was really not needed on his behalf. It might benefit others though.

Most also finance not based on the math and often not based on emotions, but simply based on their situation at that time. Cars are a simpler study in that the vast majority of cars are financed even though some percentage of those financing have the resources to pay cash and there is no tax benefit to financing. Often people just don't want to use their cash resources in that way. It's like the entire question of how much liquidity should we maintain? Different for everyone.

We are a constant contradiction in terms as are most people. We're far from conservative in many ways. Buying boats is not the sign of someone fiscally conservative. Owning businesses is not exactly a conservative investment. Yet, in many other ways we're fiscally conservative and not risk takers. No logic or explanation for human beings. I find it somewhat paradoxical that we even discuss wise financial choices in the context of purchasing boats.

How do we work fun or pleasure into a financial equation?

Where is the mathematical formula for quality of life?
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Old 11-16-2015, 01:04 PM   #88
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This thread is a reminder why we all want to go cruising. To get away from the Bean Counters!

When I was a bank examiner, a banker once told me a joke that went something like this: a banker had only two bullets in his gun (sorry if this is politically incorrect) and in front of him were a bank examiner, an accountant, and a lawyer. If he were to use those remaining bullets, what would he do? Answer: shoot the accountant twice.

This thread illustrates the frustration many of us face with accounting rules.
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Old 11-16-2015, 01:12 PM   #89
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"For clarity, under current law, the unavoidable tax is an income tax, not a wealth/inheritance tax (which may also apply)."


Yes - agreed , and also may be applied in a different state location which will have varying local taxes as well.
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Old 11-16-2015, 01:19 PM   #90
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"Most also finance not based on the math and often not based on emotions, but simply based on their situation at that time. Cars are a simpler study in that the vast majority of cars are financed even though some percentage of those financing have the resources to pay cash and there is no tax benefit to financing."


BanB - I agree with all that you have said and even more with what is cut and pasted above. Emotions often pose a problem to be dealt with individually as well as finances as you point out.
Interestingly with cars/trucks I usually buy outright as they can be written off within our business and in some past times exceeding 100% of their acquisition value. But when they offer special 'deals' for financing it is worth at least a look to do the math although in the past 8-10 years I have not seen that advantage make economical sense.
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Old 11-16-2015, 01:24 PM   #91
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FWIW - of all the posts on this thread Marin's post #47 about his family is eerily following me as I have seen the exact same thing in my experiences at home.
Somehow within all of this boat and financing talk that post will not leave me alone for a minute.
It was a good wakeup call very well written in with a very few words.
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Old 11-16-2015, 05:09 PM   #92
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FWIW - of all the posts on this thread Marin's post #47 about his family is eerily following me as I have seen the exact same thing in my experiences at home.
Somehow within all of this boat and financing talk that post will not leave me alone for a minute.
It was a good wakeup call very well written in with a very few words.
You and me both brother. Financing is a tool, and like any other tool, if you you use the right one for the right job......

Once again, when the beancounters (OK I did that on purpose) get done with my estate there will be plenty in the black. Meanwhile me and Momma need to get back out there, while we still can.
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Old 11-17-2015, 05:55 AM   #93
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How do we work fun or pleasure into a financial equation?

Where is the mathematical formula for quality of life?
If you can solve this, you'll be a very rich man/woman.

I spent hours crunching numbers last night, and have reached the conclusion that we just can't responsibly afford "the one". Not if we don't sell the house and live on it. The Admiral isn't ready to do that at this time.

It's hell to be poor and hired out
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Old 11-17-2015, 07:17 AM   #94
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I don't think you can get pre-approved on a boat...generally speaking. The make/model/year of the boat make a HUGE difference in their decision to lend money.
I have had "pre-approvals", sort-of.
Had me select a boat within the same range of boats I was looking at and was approved for that and supposedly a substitution of a boat, if it changes, is an easy matter.
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Old 11-17-2015, 07:49 AM   #95
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I have had "pre-approvals", sort-of.
Had me select a boat within the same range of boats I was looking at and was approved for that and supposedly a substitution of a boat, if it changes, is an easy matter.
That and the fact that you can be approved and locked into a rate for 30 days, creating a de facto pre-approval.
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Old 11-17-2015, 09:20 AM   #96
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If you can solve this, you'll be a very rich man/woman.

I spent hours crunching numbers last night, and have reached the conclusion that we just can't responsibly afford "the one". Not if we don't sell the house and live on it. The Admiral isn't ready to do that at this time.

It's hell to be poor and hired out
Don't underestimate how great the one that isn't "The One" can be. Always leaves you somewhere more to go later too, although you might decide later you really like what you have.
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Old 11-17-2015, 10:22 PM   #97
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Alaska federeal credit union gave me a competitive rate. They were easy to work with as well.
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Old 11-18-2015, 04:11 PM   #98
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When I was a bank examiner, a banker once told me a joke that went something like this: a banker had only two bullets in his gun (sorry if this is politically incorrect) and in front of him were a bank examiner, an accountant, and a lawyer. If he were to use those remaining bullets, what would he do? Answer: shoot the accountant twice.

This thread illustrates the frustration many of us face with accounting rules.
Well said!
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Old 11-18-2015, 04:14 PM   #99
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If you can solve this, you'll be a very rich man/woman.

I spent hours crunching numbers last night, and have reached the conclusion that we just can't responsibly afford "the one". Not if we don't sell the house and live on it. The Admiral isn't ready to do that at this time.

It's hell to be poor and hired out
Now you have a conundrum! Do you settle or do you get a new admiral?
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Old 11-18-2015, 04:18 PM   #100
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Also, what happens when one of us finds "The One" and after purchasing her we find out that nothing needs to be fixed, nothing ever breaks or wears out and nothing ever even needs to be upgraded?

That wouldn't even be boating, would it?
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