Buy Now???

[Mako]

For me the real issue of boat ownership isn’t the cost of the boat, but the docking and insurance.

To my knowledge, marina rates don’t go down regardless of the economy. And, so far insurance has demonstrated as much.

When I had my 65 footer what really drained my wallet was mortgage and dockage. Now that I’m older and wiser I will never have debt again and if I did pickup a large vessel then it would be moored, not docked. That would help.

 

[Nick14]

There are many costs of boat ownership beyond the purchase. Either you accept that and feel the benefits are worth the cost, or don't buy a boat. I can't see how you'd make a sound financial case for boat ownership unless it replaces your house. Even then, it's probably a money drain, just less so.

Wiser words have never been spoken regarding money and boats. It's a decision of the heart, not of the head.

Die-hards (like most people here) might feel we 'need' a boat, but truth be told, no one really needs a boat. It doesn't fulfill any of the basic requirements of shelter, food, clothing, survival, etc. It's a want, albeit a very powerful one. Hard to justify it using any financial metrics. It all comes down to, what's it worth to you? The answer will be unique and different for everyone.

It an be a tough call sometimes. I've wrestled with it myself, pretty much every time I've bought a boat. On one had is the unpleasant reality of the brevity of life. The only guarantee is that it ends. For most people, aging also means that at some point we're just not limber and flexible enough to handle a boat. As the poet John Greenleaf Whittier wrote, "For of all sad words of tongue and pen, the saddest are these: what might have been." Regret can be bitter when it's too late to do anything about it.

On the other hand, unless someone has truly F*U money and is assured of being immune from ever having financial worries no matter what happens (I most definitely am not in that lucky group), the non-trivial costs of boating can't be ignored. For the kinds of boats most people here have, it's often a six-figure purchase with five-figure annual upkeep and running costs. The 'market' of the past couple of years made the impossible possible, the unthinkable of selling a used boat for more than one paid for it. But that was an anomaly, likely once in a lifetime and not to be repeated.

Our financial advisor's perspective is, a boat will always be worth something. It's unlikely to be sellable at a profit, but barring its total loss or world war, it should always have some value. If one's finances allow one to continue if having to sell a boat in a worst-case scenario, plus bearing the upkeep and running costs, then, why not?

As another wise sage Hillel the Elder said long ago: "If not now, when?"

 

[Captain DJ]

But do you want to wait? Are you young and have time to be patient, or is your boating going to age limit out in a few years? You can lose a lot of fun time waiting but maybe can get a better boat by waiting.
If you don't need the money for all you're other expenses, what good is it sitting in your pocket?

Fair points all. I am 54 and doing everything I can to jump out early...FIRE=Financial Independence Retire Early. I would add: FIREGB = Financial independence Retire Early and go boating.

So I can wait...but I don't want to. Health is never guaranteed.[/QUOTE]

I get you on the FIRE. Did it first at 36 and then again at 56 when Globalist corporations did not believe individuals have the sovereignty to choose the best medical practices for themselves? But I digress and tread on thin ice on a forum highly censored.

I believe tangible items will retain value as inflation or devaluation of the currencies of the West continues. Not to say I would put it all in gold and silver, perhaps brass and lead would be a safer store of wealth. Having been in the aluminum and steel industries it is a sure thing that those would have been excellent performers since the Great Crisis of global concerns has impacted us all.

A well-designed and built vessel, that has been maintained, and would assumably be maintained after purchase would likely be a safer haven for funds than the DOW or S&P over the coming years. The aging out of boomers as well as the failure of the powers in charge (Fed & IBS & WMF & WEF) to learn anything from the economic collapse of 2008/09 has brought us to the inevitable outcome of foolish behavior. A Great Reset or a Revolution may be in our not-too-distant future and a capable vessel may be both a metaphorical and literal "lifeboat" to escape an escalation of unintended consequences.

These are Apolitical evaluations, so please resist censoring civil discourse.

My promise to myself after retiring to do the Great Loop on my Grand Banks 42 Classic and maintaining and improving it for almost 17 years was this: "I will NOT buy a boat too big to trailer and store in a garage until I am ready to live aboard and cruise again" was originally intended to prevent me from buying a big financial alligator that I dreamed of using, but rarely fulfilled those dreams. It just seems to happen more often than we care to realize. Remembering one of the worst things you can do to a boat is to NOT use it.

Now, I have found myself with a happy medium. I, nor the admiral (wife) were quite ready to cruise full time, but were ready to commit to half the year, have once again bought a boat that is well suited for PNW and even Alaskan cruising, being away from docks and cities for many weeks at a time. It fits our desired lifestyle for now. But after 3-5 more years of this nomadic lifestyle, we will likely couple another region to our November through May regimen SOB, South of the Border. Maybe the Med, maybe another round of the Great Loop, or a Caribbean jaunt. I would be up for a partial circumnavigation including Down Under, New Zealand, and the South Pacific, but the admiral says no way.

In any case, my vote is go for it if it matches your desired lifestyle. It is NOT all sunsets and margaritas, and I hope you are aware that being a responsible boat owner makes for a busy and disciplined life where you either have a large and ever-expanding skillset or will become a major contributor to the commerce of the marine industry from a financial perspective. Most of us are a mixture of the two to varying degrees. The main point is to enjoy every day and night. Meet the challenges with the best of attitudes and be grateful for the chance to meet and get to know some rather amazing characters brave enough to also, throw off the reigns of a "more conventional life".

Sterling Hayden quote - "In the worship of security we fling ourselves beneath the wheels of routine-and before we know it our lives are gone."

and my favorite by him - "To be truly challenging, a voyage, like a life, must rest on a firm foundation of financial unrest. Otherwise, you are doomed to a routine traverse, the kind known to yachtsmen who play with their boats at sea 'cruising' it is called. Voyaging belongs to seamen, and to the wanderers of the world who cannot, or will not, fit in. If you are contemplating a voyage and you have the means, abandon the venture until your fortunes change. Only then will you know what the sea is all about."

Possibly my fav because it most assuredly applies to my 2nd act approach.

 

[backinblue]

Wow you are lucky to have a very clear crystal ball that can predict the stock market years in advance. In that case you have nothing to worry about as you must already be a billionaire and more to come from your future investments.

 

[Captain DJ]

Wow you are lucky to have a very clear crystal ball that can predict the stock market years in advance. In that case you have nothing to worry about as you must already be a billionaire and more to come from your future investments.

Not sure who you are talking to BlackinBlue, but yes, I have been luckier than anyone would ever expect or even hope to be. And for this, I am Grateful.

No crystal balls, just regular ones, but not afraid to use them.

 

[ksanders]

Honestly I know nothing about FIRE.

What I do know about is that you cannot carry debt into retirement. How do you not carry debt??? The answer is simple, quit buying things on credit several years before your planned retirement date.

Choose your date to leave the workforce and work backwards from there. For example I paid off my boat three months before I retired.

Planning for retirement is easy if you do not have credit bills to pay.

 

[mvweebles]

Honestly I know nothing about FIRE.

What I do know about is that you cannot carry debt into retirement. How do you not carry debt??? The answer is simple, quit buying things on credit several years before your planned retirement date.

Choose your date to leave the workforce and work backwards from there. For example I paid off my boat three months before I retired.

Planning for retirement is easy if you do not have credit bills to pay.

Yep, this about sums it up. Zero debt equates to financial freedom. Keep your eye on the prize and dream within your means.

Peter

 

[backinblue]

Debt in itself is not terrible, it depends on what interest you are paying vs. what that money could earn if invested. If you have a mortgage balance at 3% interest, you shouldn't pay that off with money that is earning more than 3%. Zero debt is a nice goal, but not at the expense of everything else.

 

[mvweebles]

Debt in itself is not terrible, it depends on what interest you are paying vs. what that money could earn if invested. If you have a mortgage balance at 3% interest, you shouldn't pay that off with money that is earning more than 3%. Zero debt is a nice goal, but not at the expense of everything else.

In corporate America, I was a finance guy - art-of-the-possible consultant type to Fortune 500 C-suite clients. I built business cases and totally understand the concept of leverage and debt and interest-arbitrage and other-peoples-money.

Debt has a magnifying effect - when times are good, allows you to outsize your gains. Unfortunately, works the other direction too.

I remember the first dot-com implosion in 2000. I had a dock neighbor who's father had started a sheet metal fabrication business in San Francisco. While his competitors dropped like flies during the localized recession, their family business survived solely because the shop and equipment were mortgage/lease free allowing them to hunker-down and weather the storm.

I've never met KSanders, but my sense is our respective life situations are similar. I'm 61, I think he's about the same. Decent nest egg from savings and a bit of luck, but could conceivably evaporate without some careful tending. If I really wanted a much more expensive boat, I could figure it out, and likely qualify for a loan if desired. But the opportunity costs of tying-up that much capital would mean I'd be at risk of financial instability. Not ruin, but would keep me up at night. And let's face it - at 61, I cannot deny there's more freeway in the rear-view mirror than the windshield. Time is more valuable than money or posessions.

Pick a large sum of money that's meaningful to your future - might be $50k, might be $500k, might be $5m. Then ask yourself "What would have the greater effect - if I gained that amount, or lost that amount?" When I realized my lifestyle was pretty well set and gaining that amount would not change a thing for me, I realized I needed to protect against loss. It was not an easy pivot for me as I'm generally an Alpha-Dog type with too much time working on Wall Street using $$$ as proxy for success. But being debt-free was important to me so I could sleep at night, especially in these times of rising inflation.

Peter

 

[cardude01]

I think traditional financial thinking says we should take on debt with low, locked-in interest rates in times of rising inflation. Pay the debt off with inflated dollars, blah blah blah.

But I’m like you, I’m retired and debt free, and don’t want to mess with taking on debt at this point in my life. I had to deal with banks constantly in my car dealership days (inventory floor plan), and when things were good they gave you all you needed and more, but when things went south they threatened to pull it all back. I swore I would never get into debt again, no matter how “smart” it might be financially.

 

[FIRE]

I think traditional financial thinking says we should take on debt with low, locked-in interest rates in times of rising inflation. Pay the debt off with inflated dollars, blah blah blah.

Inflated dollars?....assuming I am still working and receiving an inflated salary! HA.

I have also heard that the hedge against inflation is assets! A big boat is an asset - And I am not going to let anyone tell me otherwise...when you love boats!

 

[ksanders]

In corporate America, I was a finance guy - art-of-the-possible consultant type to Fortune 500 C-suite clients. I built business cases and totally understand the concept of leverage and debt and interest-arbitrage and other-peoples-money.

Debt has a magnifying effect - when times are good, allows you to outsize your gains. Unfortunately, works the other direction too.

I remember the first dot-com implosion in 2000. I had a dock neighbor who's father had started a sheet metal fabrication business in San Francisco. While his competitors dropped like flies during the localized recession, their family business survived solely because the shop and equipment were mortgage/lease free allowing them to hunker-down and weather the storm.

I've never met KSanders, but my sense is our respective life situations are similar. I'm 61, I think he's about the same. Decent nest egg from savings and a bit of luck, but could conceivably evaporate without some careful tending. If I really wanted a much more expensive boat, I could figure it out, and likely qualify for a loan if desired. But the opportunity costs of tying-up that much capital would mean I'd be at risk of financial instability. Not ruin, but would keep me up at night. And let's face it - at 61, I cannot deny there's more freeway in the rear-view mirror than the windshield. Time is more valuable than money or posessions.

Pick a large sum of money that's meaningful to your future - might be $50k, might be $500k, might be $5m. Then ask yourself "What would have the greater effect - if I gained that amount, or lost that amount?" When I realized my lifestyle was pretty well set and gaining that amount would not change a thing for me, I realized I needed to protect against loss. It was not an easy pivot for me as I'm generally an Alpha-Dog type with too much time working on Wall Street using $$$ as proxy for success. But being debt-free was important to me so I could sleep at night, especially in these times of rising inflation.

Peter

That is an excellent post Peter!

Yes, theory says if you can borrow at X% and your earnings are at x+1% then keep your money in the bank and take out a loan.

Except...

Your money is not in the bank. It is probably in stock equities. Those equities go up and down, and when they are down you still need cash flow to pay that loan, forcing withdrawals at a most inopportune time for us retired folks.

 

[backinblue]

That is an excellent post Peter!

Yes, theory says if you can borrow at X% and your earnings are at x+1% then keep your money in the bank and take out a loan.

Except...

Your money is not in the bank. It is probably in stock equities. Those equities go up and down, and when they are down you still need cash flow to pay that loan, forcing withdrawals at a most inopportune time for us retired folks.

Again, that's only true if you have that magic crystal ball. Let's say you have $500K in the stock market and $100K balance on your mortgage at 3%. If you pay off that loan with your investments and the market goes up 5% a year for the next 5 years, you've missed the opportunity for that $100K to grow. If the market goes down 5% a year for 5 years, you made a brilliant move. It's all about how much risk/reward you are personally comfortable with. There is no right or wrong answer that fits everyone. As Peter said, how much can you afford to lose that would be life-changing.

I would think that people here would know that and not give broad advice. You might want to retire debt free and take all your money and put it in a savings account. Others may be more comfortable letting that money continue to work for them and grow during retirement. One more point, traditional thinking is that retirement is short and you need to be very conservative. But if you retire in your early 60's you may well live another 30 years which is a pretty long investment timline.

 

[ksanders]

Again, that's only true if you have that magic crystal ball. Let's say you have $500K in the stock market and $100K balance on your mortgage at 3%. If you pay off that loan with your investments and the market goes up 5% a year for the next 5 years, you've missed the opportunity for that $100K to grow. If the market goes down 5% a year for 5 years, you made a brilliant move. It's all about how much risk/reward you are personally comfortable with. There is no right or wrong answer that fits everyone. As Peter said, how much can you afford to lose that would be life-changing.

I would think that people here would know that and not give broad advice. You might want to retire debt free and take all your money and put it in a savings account. Others may be more comfortable letting that money continue to work for them and grow during retirement. One more point, traditional thinking is that retirement is short and you need to be very conservative. But if you retire in your early 60's you may well live another 30 years which is a pretty long investment timline.

My opinion is to retire stress free. Let the young people scurry around searching for the perfect investment, and leverage debt.

I am happier knowing that all I need to do now is enjoy the adventure of retirement.

You have to leave America to gain an understanding that more money does not make for more happiness.

 

[backinblue]

My opinion is to retire stress free. Let the young people scurry around searching for the perfect investment, and leverage debt.

I am happier knowing that all I need to do now is enjoy the adventure of retirement.

You have to leave America to gain an understanding that more money does not make for more happiness.

Like I said, it's an idividual choice. You might sleep better with your life savings stuffed in your mattress. I don't criticize anyone's choice. At the same time I don't think that I have the right answer for everyone's situation, so I woon't tell someone to do what I do.

 

[Mambo42]

I don't know how it is in the US, but here in Europe the amount of gas guzzling boats on the market has increased a lot and those prices have come down as well. This season I saw a lot of boats, where the owners arrived, but they hardly took the boats out. Guess the incredible fuel prices are holding them back from burning fuel like crazy.
The prices of the gas guzzlers have dropped tremendously here in Europe. My guess is that, since Europe wants to get rid of fossil fuels by 2050, there will be a steady decline in prices of gas guzzlers.
For the trawlers it is probably going to be a bit better, there is a demand for less fuel burning boats, so I do expect those prices to remain steady, at least for now.

And when is the best time to buy ?
Good question.
I would say that if you cannot use the boat at least 4 to 5 months per year...........don't bother about buying one. The cost of owning and maintaining a boat are significant. If you start pouring in money into your boat, the chances are the wife is going to become annoyed. Is that worth it ?
When you can use the boat (eg like us, 7 months per year and she enjoys that) then there is no problem with those costs.

 

[bowball]

That is an excellent post Peter!

Yes, theory says if you can borrow at X% and your earnings are at x+1% then keep your money in the bank and take out a loan.

Except...

Your money is not in the bank. It is probably in stock equities. Those equities go up and down, and when they are down you still need cash flow to pay that loan, forcing withdrawals at a most inopportune time for us retired folks.

That’s probably a bad assumption re equities for most.

At your age let’s say you’ll need to plan to live to 90 plus? 30 years. It won’t be on a boat. If you don’t invest with growth above inflation in mind your savings will be deflated and inadequate unless they are sufficiently in excess now.

Debt is a tool to be properly used, nothing more.

There are always two risks in investing, losing capital or deflated purchasing power. One is almost for certain. The prudent investor needs to know how to balance those two risks.

 

[bowball]

My opinion is to retire stress free. Let the young people scurry around searching for the perfect investment, and leverage debt.

I am happier knowing that all I need to do now is enjoy the adventure of retirement.

You have to leave America to gain an understanding that more money does not make for more happiness.

I agree is it is imprudent to finance depreciating assets especially with long term debt. Without having sufficient income to pay that down. So exactly right to pay off your boat. (Unless they are giving you money and you can earn more in higher rated fixed income assets as an arbitrage, which is unlikely or a few other cases).

As for living abroad and happiness, I was an ex pat for a few years and I started to miss many of the social connections unless you can recreate them. For the first six months to a year I was still on vacation mode with the novelty and trying to convince everyone it was the way to go! Then I returned happily

 

[bowball]

Fair points all. I am 54 and doing everything I can to jump out early...FIRE=Financial Independence Retire Early. I would add: FIREGB = Financial independence Retire Early and go boating.

So I can wait...but I don't want to. Health is never guaranteed.

But I digress and tread on thin ice on a forum highly censored.

I believe tangible items will retain value as inflation or devaluation of the currencies of the West continues. Not to say I would put it all in gold and silver, perhaps brass and lead would be a safer store of wealth. Having been in the aluminum and steel industries it is a sure thing that those would have been excellent performers since the Great Crisis of global concerns has impacted us all.

A well-designed and built vessel, that has been maintained, and would assumably be maintained after purchase would likely be a safer haven for funds than the DOW or S&P over the coming years. The aging out of boomers as well as the failure of the powers in charge (Fed & IBS & WMF & WEF) to learn anything from the economic collapse of 2008/09 has brought us to the inevitable outcome of foolish behavior. A Great Reset or a Revolution may be in our not-too-distant future and a capable vessel may be both a metaphorical and literal "lifeboat" to escape an escalation of unintended consequences.

[/QUOTE]

I’ll take the opposite side of this bet!

 

[mvweebles]

That’s probably a bad assumption re equities for most.

At your age let’s say you’ll need to plan to live to 90 plus? 30 years. It won’t be on a boat. If you don’t invest with growth above inflation in mind your savings will be deflated and inadequate unless they are sufficiently in excess now.

Debt is a tool to be properly used, nothing more.

There are always two risks in investing, losing capital or deflated purchasing power. One is almost for certain. The prudent investor needs to know how to balance those two risks.

Personally, I re-swizzled my portfolio to greatly reduce risk. My financial manager tells me I have a >99% chance of being solvent even if I live to 100, partially because I live a modest lifestyle.

Sure debt is a tool, but it's an encumbrance too. I own several properties. The finance guy in me says to borrow against them. But then I'd forced to manage them more precisely which takes time and carries risk. I don't need the money, I need the time.

I guess what I'm saying is I'm pretty sure i could make your debt argument at least as well as you can. Managing debt is a growth strategy. I don't need it anymore and find it distracting. I accept less return with less risk and less management overhead.

I forget who said it, but I think it was on this forum "coffins don't have pockets."

But a good conversation. Definitely varies by person and where they are in their life. I would not make my recommendation to someone in their 30s or 40s approaching peak income years

Peter

 

[socalrider]

I think a lot of the conflicting viewpoints around debt come from the spread between rational and emotional behavior. Rationally, a low interest rate tax deductible mortgage against an appreciating asset like a home makes a ton of sense. But for a lot of people, it inflates their perceived wealth & encourages profligacy in other areas. Sure in theory that low monthly payment on a 30 year mortgage will allow you to save more... but in practice? Many (most) will end up hand-to-mouth, spending whatever's left at the end of each month. This is also why direct withdrawal retirement savings are so effective - you get used to living as if your income was lower than it is.

I think that's why many in the FIRE crowd advocate paying down all debt (mortgage usually last) even though it's not always strictly rational.

 

[ksanders]

I think a lot of the conflicting viewpoints around debt come from the spread between rational and emotional behavior. Rationally, a low interest rate tax deductible mortgage against an appreciating asset like a home makes a ton of sense. But for a lot of people, it inflates their perceived wealth & encourages profligacy in other areas. Sure in theory that low monthly payment on a 30 year mortgage will allow you to save more... but in practice? Many (most) will end up hand-to-mouth, spending whatever's left at the end of each month. This is also why direct withdrawal retirement savings are so effective - you get used to living as if your income was lower than it is.

I think that's why many in the FIRE crowd advocate paying down all debt (mortgage usually last) even though it's not always strictly rational.

Correct!

Theory is one thing, actual spending habits are another.

How many retire carrying debt that they actually could pay off and not affect their retirement goals? (remember that is the concept... have investments at a higher rate of return than debt, so you leverage the difference to your advantage)

My opinion, fewer than admit it.

The reality is that most that are carrying debt do so because they need to carry the debt, not because they really want to.

 

[catalinajack]

Debt in itself is not terrible, it depends on what interest you are paying vs. what that money could earn if invested. If you have a mortgage balance at 3% interest, you shouldn't pay that off with money that is earning more than 3%. Zero debt is a nice goal, but not at the expense of everything else.

Precisely. After living aboard full time for six years and not owning a dirt house, we decided to by a home. We closed on the house in January. We put 5% down and financed the the rest at 3% fixed. The alternative? Withdrawing cash from tax-deferred accounts and pay 25% to Uncle Sam. Why would anyone do something that foolish just to be able to not pay interest. And never mind that there are conservative investment vehicles to earn more than 3% on that invested money. So, we live in a brand new 2,700 square foot house that costs $1,250/month in interest. Big deal. That's less than the monthly cost to berth, insure, and maintain our boat.

 

[Art]

Precisely. After living aboard full time for six years and not owning a dirt house, we decided to by a home. We closed on the house in January. We put 5% down and financed the the rest at 3% fixed. The alternative? Withdrawing cash from tax-deferred accounts and pay 25% to Uncle Sam. Why would anyone do something that foolish just to be able to not pay interest. And never mind that there are conservative investment vehicles to earn more than 3% on that invested money. So, we live in a brand new 2,700 square foot house that costs $1,250/month in interest. Big deal. That's less than the monthly cost to berth, insure, and maintain our boat.

So you live in the house and dock the boat at the house? You pay the $1,250 per mo interest on the house loan and also $1,250 + on the boat berth/maintenance? Or, you sold the boat you'd lived on for six years? I'm not clear on what position you've chosen. Just interested.....

 

[FIRE]

Bought it

A quick update on our path...We bought it! The right boat came up with (almost) the right price, solid survey and more features than we were expecting to be able to afford with the purchase validated by so many of the stories received/read from this post. Thanks to all - great perspectives from everyone (both pro and con).
So my wife and I are the proud owners of a 2006 Fleming 55 Hull173. Finally not a lurker to this forum but a card (er boat) carrying member. Happy to finally arrive after a lifetime of spending well within our means and keeping a vision board of photos with nearly every boat we considered over the past 5 years.
Woohoo -

 

[socalrider]

Wow - congratulations! Fleming 55 is a true dream boat for me and many others here - you must be over the moon.

Please post pictures!!!

 

[Comodave]

Congrats on your new boat. That is my dream boat.

 

[Adopo]

This prob is not the boat, but what's not to like about this 2006 Fleming? Love the series too that Tony Flening produces...

https://www.yachtworld.com/yacht/2006-fleming-pilothouse-motor-yacht-8481061/

 

[Pete Meisinger]

Wow! Great choice on a great boat, Congratulations.

One important point regarding boat ownership/purchase.

Really, just about anyone can buy a boat these days. You might even say that just about anyone can afford to buy a boat these days.

BUT, (and its a big one). There is a big difference between being able to afford to buy a boat and being able to afford to own a boat.

I will use myself as a perfect example: I am retired, not wealthy but have excellent credit. I've even got a few bucks in the bank to use for a down payment. I'm sure I could get financing for a couple hundred thousand dollar boat. I could probably even make the payments on the loan. But I sure couldn't afford to own such a boat!

There is a big difference between buying and owning!

pete

 

[firehoser75]

Fire,
Congrats on the "new" boat!!
Flemings are great boats.
I also agree with Pete. Hopefully owning it will not be "problematic"??
Good luck, and fair seas.