Boat Ownership - Ca$h Deal - or - Loaned $$$

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I am fortunate and unfortunate. My condo is paid for. Until I bought this boat, I had nothing to write off except for health insurance. My assets are tired up in stock. IF I were to sell stock to payoff the boat, 25% would go to taxes. So once a month the finance company withdraws their payment. Because my boat still qualifies as a second home under federal guide lines, I can still write off the approx $7K each year for home mortgage.
 
OldDan1943 said:
I am fortunate and unfortunate. My condo is paid for. Until I bought this boat, I had nothing to write off except for health insurance. My assets are tired up in stock. IF I were to sell stock to payoff the boat, 25% would go to taxes. So once a month the finance company withdraws their payment. Because my boat still qualifies as a second home under federal guide lines, I can still write off the approx $7K each year for home mortgage.
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I'm assuming since you live where you do then you're able to itemize because of property taxes and that allows you to get the full benefits of the $7k. As more people are led to standard deductions instead of itemizing, this mortgage benefit becomes less of a factor.

I was recently talking to a young employee being pushed to buy a home. She was being told that she'd have this great deduction. Just one problem. With her standard deduction of $12,200, she wouldn't benefit at all until her interest and property taxes exceeded that. So the benefit was only her tax rate times the excess. In her case the interest in year two was going to be $8,000 and her property taxes $4,000 so absolutely no tax benefit.
 
BandB said:
If you want a broader representation of circumstances, then I'd suggest a poll so people can answer anonymously.
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Thought I'd started this as a four question private poll. However, after I'd filled out the poll questions and hit submit - this the way the thread turned out. :confused:
 
Art said:
Thought I'd started this as a four question private poll. However, after I'd filled out the poll questions and hit submit - this the way the thread turned out. :confused:
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Clearly you didn't hit the attach poll question or something. I had that problem many times. My wife is much better at it than I am.
 
BandB said:
Clearly you didn't hit the attach poll question or something. I had that problem many times. My wife is much better at it than I am.
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Good, smart wives are great to have!!!
 
I think it really depends on where you are and what your doing with it. Say someone in their mid forties vs someone in their mid sixties might have a different point of view. Someone entering into retirement vs continuing to work. Someone looking at a 40k bucket vs someone looking at the latest 1.5m work of art on the water. What their portfolio looks like and their current returns.

I am going to be using it for business and my business is going to be paying the note. Wait another year and I'd have enough to pay cash but wouldn't want to do that because my returns are better than the note is costing.

It's a very personal decision based off many of other outlining issues.
 
BandB said:
I'm assuming since you live where you do then you're able to itemize because of property taxes and that allows you to get the full benefits of the $7k. As more people are led to standard deductions instead of itemizing, this mortgage benefit becomes less of a factor.

I was recently talking to a young employee being pushed to buy a home. She was being told that she'd have this great deduction. Just one problem. With her standard deduction of $12,200, she wouldn't benefit at all until her interest and property taxes exceeded that. So the benefit was only her tax rate times the excess. In her case the interest in year two was going to be $8,000 and her property taxes $4,000 so absolutely no tax benefit.
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Yes, this is the first year we did not itemize. With the standard Deduction now at $24K for a couple you need some serious personal deductions to exceed that number.
 
ksanders said:
Yes, this is the first year we did not itemize. With the standard Deduction now at $24K for a couple you need some serious personal deductions to exceed that number.
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I was actually answering Old Dan, but that's the catch is most people can't itemize now or if they do they're only getting a very small benefit. That changes the equation of cash vs. mortgage. Eliminates a lot of benefit of home ownership as well.
 
I financed about 80%. I found a good deal a lot earlier than I'd expected, and I just couldn't pass it up. I was 'ready' mentally, but slightly less so financially. I couldn't afford to pay cash. I had some cash on hand, some equity in my house, and was able to secure financing at a rate I was comfortable with, so I went for it.

My house will be going on the market within the next few weeks, and I'll put the proceeds toward the boat loan, and pay off the vast majority of it. I can have the remainder paid off at a comfortable pace within 2-3 years. Absolute worst case scenario, the market takes a dump tomorrow and nobody buys my house. I can still afford both. I'd rather not, but I can handle it.

I'm not a genius when it comes to managing money. Every time I try to learn more about investing, my eyes just glaze over, and I slowly start to lose consciousness. I'm sure there are many people who would say I'm being dumb. I'm okay with that. I'm going after the dream, and at 35, if I screw it all up, I should still be able to recover. In the end, I think I'll be glad I didn't wait until I could pay cash. I may not live that long!
 
BandB said:
I was actually answering Old Dan, but that's the catch is most people can't itemize now or if they do they're only getting a very small benefit. That changes the equation of cash vs. mortgage. Eliminates a lot of benefit of home ownership as well.
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That is correct, sorry for interjecting in your reply :)

Home mortgages are often partially financed through tax breaks that interest payment provides. Yes this changes the dynamic for borrowers.

Boat mortgages have traditionally also been a great tax reduction endevor, but no more, unless the numbers are pretty large.
 
ksanders said:
That is correct, sorry for interjecting in your reply :)

Home mortgages are often partially financed through tax breaks that interest payment provides. Yes this changes the dynamic for borrowers.

Boat mortgages have traditionally also been a great tax reduction endevor, but no more, unless the numbers are pretty large.
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No problem interjecting, just the benefits of mortgages can't now be used by most to offset interest expense.
 
Wayfarer said:
I financed about 80%. I found a good deal a lot earlier than I'd expected, and I just couldn't pass it up. I was 'ready' mentally, but slightly less so financially. I couldn't afford to pay cash. I had some cash on hand, some equity in my house, and was able to secure financing at a rate I was comfortable with, so I went for it.

My house will be going on the market within the next few weeks, and I'll put the proceeds toward the boat loan, and pay off the vast majority of it. I can have the remainder paid off at a comfortable pace within 2-3 years. Absolute worst case scenario, the market takes a dump tomorrow and nobody buys my house. I can still afford both. I'd rather not, but I can handle it.

I'm not a genius when it comes to managing money. Every time I try to learn more about investing, my eyes just glaze over, and I slowly start to lose consciousness. I'm sure there are many people who would say I'm being dumb. I'm okay with that. I'm going after the dream, and at 35, if I screw it all up, I should still be able to recover. In the end, I think I'll be glad I didn't wait until I could pay cash. I may not live that long!
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If you can seriously afford both, have you considered renting out the house for at least a year to give you future options.
 
I have always had a rule, cash for toys, boat, cars, racing toys. Could have had bigger and better but am retired now, so have no real income, no pension over here for many of us.
 
IMO
If you want to see boat values plummet, have the Feds declare, no mortgage interest write off on a boat.
 
OldDan1943 said:
IMO
If you want to see boat values plummet, have the Feds declare, no mortgage interest write off on a boat.
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They already did...not explicitly, they did it implicitly.

The new tax law raised the standard deduction to 24,000 for a couple.

What that means is that unless you have over $24,000 in deductions it’s better for you to jus take the standard deduction.
 
I am not ashamed to say that we financed both of our boats because we couldn't afford it otherwise. Our first boat we ended up paying off early thru various means. The second boat we paid off early and it only cost me one dead father (sad... but true). Still, even without his help, we would still be very willing to keep paying on a loan to stay in the lifestyle.

And for the record... for those of us that go after our dreams like this (meaning: financing fun stuff), it does feel a little degrading for some of you to loft the idea that we shouldn't be able have "toys" unless we can pay cash up front. Yea, we get it... y'all are far more well off they we are. There is no benefit to rubbing our noses in it.
 
Tom.B said:
I am not ashamed to say that we financed both of our boats because we couldn't afford it otherwise. Our first boat we ended up paying off early thru various means. The second boat we paid off early and it only cost me one dead father (sad... but true). Still, even without his help, we would still be very willing to keep paying on a loan to stay in the lifestyle.

And for the record... for those of us that go after our dreams like this (meaning: financing fun stuff), it does feel a little degrading for some of you to loft the idea that we shouldn't be able have "toys" unless we can pay cash up front. Yea, we get it... y'all are far more well off they we are. There is no benefit to rubbing our noses in it.
Click to expand...

Touchie, touchie. Embarrassment is a self produced energy. Different needs and different strokes for different folks; re purchases as well as myriad of other items. If your nose gets a red spot on its tip from too much "self-rubbing".. simply stop reading! Pretty simple.
 
Tom.B said:
I am not ashamed to say that we financed both of our boats because we couldn't afford it otherwise. Our first boat we ended up paying off early thru various means. The second boat we paid off early and it only cost me one dead father (sad... but true). Still, even without his help, we would still be very willing to keep paying on a loan to stay in the lifestyle.

And for the record... for those of us that go after our dreams like this (meaning: financing fun stuff), it does feel a little degrading for some of you to loft the idea that we shouldn't be able have "toys" unless we can pay cash up front. Yea, we get it... y'all are far more well off they we are. There is no benefit to rubbing our noses in it.
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Tom, look at the majority of “cash” boats, and look at your Navigator.

Huge difference in boats there.

You have done nothing wrong by enjoying your very nice boat now, as opposed to buying a 40 year old fixer upper with cash.

There are VERY FEW here that own a boat of the value that your Navigator represents, and paid cash for it, and they for the most part have decades of life on you, life you have yet to live, Yes happially enjoying your boat.
 
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Financed about 50%, money is cheap to get, plus the mortgage write off, didn't want to be underwater with depreciation. Can easily payoff when I decide to.
 
Tom.B said:
I am not ashamed to say that we financed both of our boats because we couldn't afford it otherwise. Our first boat we ended up paying off early thru various means. The second boat we paid off early and it only cost me one dead father (sad... but true). Still, even without his help, we would still be very willing to keep paying on a loan to stay in the lifestyle.

And for the record... for those of us that go after our dreams like this (meaning: financing fun stuff), it does feel a little degrading for some of you to loft the idea that we shouldn't be able have "toys" unless we can pay cash up front. Yea, we get it... y'all are far more well off they we are. There is no benefit to rubbing our noses in it.
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Hello Tom...
Look at the variables and how they stack up.
Arts boat for example is much less expensive and therefore much easier to pay cash for.
And that same boat would not be 'financeable' in our area through any banks due to age.
So different strokes for different folks as I say.
Cheers
 
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Soo-Valley said:
If you can seriously afford both, have you considered renting out the house for at least a year to give you future options.
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I did consider it, but I decided I didn’t want to deal with renters. I’d rather just have the loot and that much less responsibility. If/when I decide to move back ashore, I likely won’t go back to the same area anyway. I’m actually pretty excited to sell off the house.
 
ksanders said:
Tom, look at the majority of “cash” boats, and look at your Navigator.

Huge difference in boats there.

You have done nothing wrong by enjoying your very nice boat now, as opposed to buying a 40 year old fixer upper with cash.

There are VERY FEW here that own a boat of the value that your Navigator represents, and paid cash for it, and they for the most part have decades of life on you, life you have yet to live, Yes happially enjoying your boat.
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Well said! :dance:

And, yes... it is true... as you mention, I/we purchased a not too expensive boat so we could pay cash; such as we do for all our toys. It more than satisfies our needs and desires. We do not long after others possessions... nor their lives.

I do not feel that those with better boats than we "rub our nosees" in that factor. Whether or not they purchased for cash or with a loan. Would care less if they felt they could! I'm happy for them.

I surely do not mean to rub anyone's nose raw... due to the way they purchased a boat as compared to our way. Raw nose comes from self rubbing.

I really appreciate all persons who are in the boating community and post on TF. I'm also in the RV community. And, I execute two private businesses at the same time. Entrepreneurship, i.e. making money by providing good things, while carrying no debt [other than short term business and general life stuff] suits our nature. :D

BTW, Tom - We are 67 and 70 yrs. What's your age?
 
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Art me Irish bawling Mate.

I always pay cash on me vessels for these reasons.

Always get a better deal.

will always get the vessel cheaper then the asking price. (Much cheaper around 20 to 25% and in some case 30% cheaper.)

Less hassle. No bank, no paper work, no one saying you need this or that.

As the old saying goes. Money talks BS walks!

Cheers Mate.

H.
 
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hfoster said:
Art me Irish bawling Mate.

I always pay cash on me vessels for these reasons.

Always get a better deal.

will always get the vessel cheaper then the asking price. (Much cheaper around 20 to 25% and in some case 30% cheaper.)

Less hassle. No bank, no paper work, no one saying you need this or that.

As the old saying goes. Money talks BS walks!

Cheers Mate.

H.
Click to expand...

Thanks! H - You two fisted cut off the ol' Blarney Stone, Irish gent!!
 
We financed somewhere in the ballpark of 50% of the current boat. At the time we had already paid off our home mortgage so it wasn't bad.
Then about a year later at 55 I was one of those engineering "downsizing" victims.
However, with severance and being able to also collect state unemployment, and taking a temp engineering position, I was able to "double dip" for quite a while. Oddly enough that was the year that I made more $$ than ever.
All 14 of us in that first group actually fell UP the ladder with permanent positions.
Then after 6 months I was once again part of a "downsizing" movement. but once again I was able to make a seamless transition to another engineering position.
So thankfully I was not part of that 68%.
(boat has been paid off for many years now)
 
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jleonard said:
We financed somewhere in the ballpark of 50% of the current boat. At the time we had already paid off our home mortgage so it wasn't bad.
Then about a year later at 55 I was one of those engineering "downsizing" victims.
However, with severance and being able to also collect state unemployment, and taking a temp engineering position, I was able to "double dip" for quite a while. Oddly enough that was the year that I made more $$ than ever.
All 14 of us in that first group actually fell UP the ladder with permanent positions.
Then after 6 months I was once again part of a "downsizing" movement. but once again I was able to make a seamless transition to another engineering position.
So thankfully I was not part of that 68%.
(boat has been paid off for many years now)
Click to expand...

I can see that as an engineer. Helps to be in the right profession. In your case, one that is very much in demand and one where experience is valued.
 
Art said:
Touchie, touchie. Embarrassment is a self produced energy. Different needs and different strokes for different folks; re purchases as well as myriad of other items. If your nose gets a red spot on its tip from too much "self-rubbing".. simply stop reading! Pretty simple.
Click to expand...
That's condescending. People are entitled to pursue their dreams however way they wish and can. It's their judgment. However, the TFers did crow about how great they are in paying cash, and went so far as to say "If you can't pay cash for your 'toy,' then you can't afford it." Who says so? It's a matter of quality of life. If you can fulfill your quality of life by paying cash, great! Many others choose in their best judgment to finance. Great!


It's the self-righteousness portrayed for paying cash that is upsetting.
 
There are few if any pleasure boats I could not buy for cash. I just cant think of a good reason to buy a larger boat. I financed because, why use my own money.
Plus, when I die, I will no longer have any problems.
 
own our boats outright...


I would be downright pissed every month if I had to write a mortgage check for the boat considering how little time I get to use it.


I would sell mine tomorrow but the Admiral will not let me.. I figure she thinks I could afford a girlfriend if I didn't have to pay for the boat


HOLLYWOOD
 
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