Financing.....

smitty477 · Nov 16, 2015

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.

oscar · Nov 16, 2015

smitty477 said:
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.

KMA · Nov 17, 2015

BandB said:
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

ktdtx · Nov 17, 2015

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.

oscar · Nov 17, 2015

ktdtx said:
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.

BandB · Nov 17, 2015

KMA said:
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.

bligh · Nov 17, 2015

Alaska federeal credit union gave me a competitive rate. They were easy to work with as well.

Cuttyhunk47 · Nov 18, 2015

drb1025 said:
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!

Cuttyhunk47 · Nov 18, 2015

KMA said:
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?

Cuttyhunk47 · Nov 18, 2015

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?

oscar · Nov 18, 2015

Cuttyhunk47 said:
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?

Ew.......

Marin · Nov 18, 2015

Cuttyhunk47 said:
...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?

Depends on what "the one" actually is.

A good friend bought the same kind of boat shown in the first picture new in 1973 and has had zero problems with it ever since.

The boat in the second picture was also brand new in 1973. We bought it in 1998 and have owned it since then. It has had and continues to have all sorts of problems, from easy little bitty ones to problems like the current one that has an entire shipyard baffled. I never discuss them here because that would be a waste of time, but it steadfastly continues to uphold the reality of powerboat ownership.

Most people select a boat that does what they want to do with a boat and then deal with whatever problems it throws at them along the way. But it is possible to first determine what level of problem solving and fixing you are willing to deal with and then select a boat to match that.

Gordon J · Mar 15, 2016

In my case, i am getting a 3.5% loan from sterling. I have more than enough money, but imagine the future losses of taking funds growling tax free in a retirement account. And once you take money from an IRA or 401k, you can't get it back in. I have average close to8 % a year On my investments And consider 3.5% pretty inexpensive money.

Gordon

sunchaser · Mar 16, 2016

Gordon J said:
I have average close to8 % a year On my investments Gordon

Wish my non stock funds were doing that well, so does my banker. But, why ruin a good thing and buy a quickly depreciating boat?

Baker · Mar 16, 2016

sunchaser said:
But, why ruin a good thing and buy a quickly depreciating boat?

Oh come on!!!!!......That applies to any of us!

MYTraveler · Mar 16, 2016

Marin said:
It's also a great way to prick up the IRS' ears. This from a family friend who is an auditor for the IRS.......

In the vast majority of cases, auditors don't flag returns for audit, computers do. For obvious reasons, the IRS closely guards its secret algorithms for the factors that trigger an audit. I wouldn't let fear of an audit stop me from taking a legitimate deduction. But the comment above is correct -- if you are subject to AMT, the deduction has little or no value.

BandB · Mar 16, 2016

MYTraveler said:
In the vast majority of cases, auditors don't flag returns for audit, computers do. For obvious reasons, the IRS closely guards its secret algorithms for the factors that trigger an audit. I wouldn't let fear of an audit stop me from taking a legitimate deduction. But the comment above is correct -- if you are subject to AMT, the deduction has little or no value.

I see so many people making both errors. First, they don't claim something very legitimate for fear of audit. Audits just don't scare me. If I did it right, then I'll be fine.

But then I see people making choices to get deductions that turn out worthless to them because of the increase in standard deductions or because of AMT, or thresholds like the ones on medical and on misc.

SaltyDawg86 · Jul 16, 2016

Sooooo did we ever figure out who was giving the best rates? Or home loans the way to go?

whirrr · Jul 27, 2016

Great topic. Retirement is approaching and I want to spend my retirement years cruising. I'm torn between selling a house or renting it out to pay for the boat loan payment. Real Estate in the PNW is currently doing well, and I love that house and the neighborhood it's in. But, I want a live-aboard/cruiser more.

klee wyck · Jul 27, 2016

whirr...
It is unlike me to wade into a post like this with a reply but this one got the better of me.
A few things here seem so highly likely that they are worth mentioning as you think about this:
No matter how much you love the cruising, live aboard life, you will not finish you lifetime on a boat I am thinking.
In either a short or a long amount of time, the boat you buy will be worth less than you paid for it and will have consumed a lot of money in the meantime.
Meanwhile, because Seattle/Tacoma is largely populated by companies of the future rather than industries of the past, the economy here will remain very vibrant and keep pressure on real assets so the house you sold to buy the boat will be worth far more than you sold it for.
Unless you are swimming in other assets (which is none of my business and the reason I usually resist posts like this), selling your house to buy the boat seems like a disaster idea that does not end well.

If you hang onto the house and rent it for 3% of its value and it appreciates at 3%, you have covered the cost of a boat loan and still have someplace to live when you are done boating.
I will say from experience, that being a landlord is not for the faint of heart, but seems like it may be better than being homeless in Seattle when you are ready for the dirt house again.

BandB · Jul 28, 2016

klee wyck said:
whirr...
It is unlike me to wade into a post like this with a reply but this one got the better of me.
A few things here seem so highly likely that they are worth mentioning as you think about this:
No matter how much you love the cruising, live aboard life, you will not finish you lifetime on a boat I am thinking.
In either a short or a long amount of time, the boat you buy will be worth less than you paid for it and will have consumed a lot of money in the meantime.
Meanwhile, because Seattle/Tacoma is largely populated by companies of the future rather than industries of the past, the economy here will remain very vibrant and keep pressure on real assets so the house you sold to buy the boat will be worth far more than you sold it for.
Unless you are swimming in other assets (which is none of my business and the reason I usually resist posts like this), selling your house to buy the boat seems like a disaster idea that does not end well.

If you hang onto the house and rent it for 3% of its value and it appreciates at 3%, you have covered the cost of a boat loan and still have someplace to live when you are done boating.
I will say from experience, that being a landlord is not for the faint of heart, but seems like it may be better than being homeless in Seattle when you are ready for the dirt house again.

A lot of good thought there. The point is that you need to be sure your plan will allow you to return to living on land if the time comes that you want to or need to.

I'd add a few thoughts. I would hold on to the house at least for a couple of years until I was certain living aboard was for me. Rent it using a management company. That's the only way to be an absentee landlord. See how it goes and then decide whether to hold on to it or not. Klee assumes you'd want to return to Tacoma. If you think you'd like to live elsewhere in retirement then that changes the equation. I would also limit the debt I took on the boat or kept on the home, the entire financial picture to something that could be reversed and you'd still be ok. You may have a long period of cruising, maybe even the rest of your life. However, an illness could arise in six months that would require you to return to land life.

So just consider all aspects and consider contingency plans, all the what-if's. This isn't saying to live in so much fear you're scared to do anything, but just to carefully think through all the scenarios.

whirrr · Jul 28, 2016

Thank you klee & bandb for the thoughtful replies. I've been grappling with this plan for some time. I wont be homeless when I'm done cruising, as my SO has a townhouse is Federal Way. I'm living there now and have been renting out my Tacoma house to my niece. She just bought a place and now I'm getting ready to enter the renter market for real. The fulcrum I keep teetering back and forth on is.. keep the house and finance an older boat or sell the house and buy a newer one. Keeping the house means property taxes, house maintenance, house insurance and dealing with renters, plus more question marks for expenses maintaining an older boat. I've got a few more years before I retire, so circumstances may change enough to make it a easier decision.

BandB · Jul 28, 2016

whirrr said:
Thank you klee & bandb for the thoughtful replies. I've been grappling with this plan for some time. I wont be homeless when I'm done cruising, as my SO has a townhouse is Federal Way. I'm living there now and have been renting out my Tacoma house to my niece. She just bought a place and now I'm getting ready to enter the renter market for real. The fulcrum I keep teetering back and forth on is.. keep the house and finance an older boat or sell the house and buy a newer one. Keeping the house means property taxes, house maintenance, house insurance and dealing with renters, plus more question marks for expenses maintaining an older boat. I've got a few more years before I retire, so circumstances may change enough to make it a easier decision.

Well, you're considering all the appropriate things. Now, keeping the house doesn't have to include dealing with renters and routine maintenance if you use a property management company. I'd definitely do some cash flow comparisons as it could be, not saying it will be, that keeping and renting the house and buying the newer boat work together. So much depends on the house and the rental market it is in. I know people getting solid 8-10% returns on rental houses which exceeds then the cost of borrowing money. One the other hand, I know those with houses from their prior location that have been large cash draws.

Financing.....

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