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Started By
Message
re: Financing is OOC
Posted on 5/4/19 at 3:29 pm to iron banks
Posted on 5/4/19 at 3:29 pm to iron banks
quote:
20 years on a toy is just plain stupid.
Is 20 years at 4% stupid? How about 3%? 2%?
0
Posted on 5/4/19 at 3:37 pm to slackster
I get what you are driving at.
But spending money on a depreciating asset vs an appreciating does.make a difference to most people.
You will have a hard time convincing me or most anyone that if we could measure the happiness derived from boat while subtracting aggravation, associated costs, questioning decision, etc is > than cashing out amazon stock and spending it on X/living more comfortably/etc while subtracting for loss of enjoyment in near term (boat, some other item, hookers and blow).
I’m not going to make s value judgment on the person who finances a boat. I have friends who make a good living and have a lot of money for retirement. I have others who spend a ton.
Full disclosure: I grew up in a family with 2 sailboats, one of which was co-owned with family friends. I have had several sailboats, sell when I have moved. But, I tend to keep the price under 15k.
Ii know. Sailing is for the gays.
But spending money on a depreciating asset vs an appreciating does.make a difference to most people.
You will have a hard time convincing me or most anyone that if we could measure the happiness derived from boat while subtracting aggravation, associated costs, questioning decision, etc is > than cashing out amazon stock and spending it on X/living more comfortably/etc while subtracting for loss of enjoyment in near term (boat, some other item, hookers and blow).
I’m not going to make s value judgment on the person who finances a boat. I have friends who make a good living and have a lot of money for retirement. I have others who spend a ton.
Full disclosure: I grew up in a family with 2 sailboats, one of which was co-owned with family friends. I have had several sailboats, sell when I have moved. But, I tend to keep the price under 15k.
Ii know. Sailing is for the gays.
Posted on 5/4/19 at 3:57 pm to slackster
quote:
But once again, the underlying asset simply doesn't matter.
You’re 100% correct. The only thing that matters is the opportunity cost of tying up $230k by paying cash vs what you could get if you invested that $230K
Posted on 5/4/19 at 3:58 pm to GEAUXT
What business of it is yours how people piss away their money?
You do you and let everyone else do their thing
You do you and let everyone else do their thing
Posted on 5/4/19 at 4:07 pm to GEAUXT
If it fricks, flies, or floats rent it never buy it. The maintenance and PAI isn't worth it.
Posted on 5/4/19 at 4:12 pm to tigerinthebueche
quote:
What business of it is yours how people piss away their money? You do you and let everyone else do their thing
Exactly. The person that buys this may be absolutely miserable but if this boat puts a smile on his face and can afford to pay for it and other obligations, who cares?
Posted on 5/4/19 at 4:28 pm to sabanisarustedspoke
quote:
If it fricks, flies, or floats rent it never buy it. The maintenance and PAI isn't worth it.
Dumb arse philosophy
Posted on 5/4/19 at 4:34 pm to tgrbaitn08
Not owning a boat is dumb. I couldnt do it, I must have a boat
Posted on 5/4/19 at 4:37 pm to slackster
quote:
The decision is this - is $230k at 6.5% for 20 years a good deal or not. What you're spending the money on does. Not. Matter.
Yes, it absolutely does. You are treating this scenario as if it is a foregone conclusion that the boat will be purchased , rather than considering the more likely reality that the financing is enabling the purchase.
Again, it’s an oversimplification to say this is a pay cash vs finance decision. You are ignoring every other aspect of the purchase decision. You can’t just chalk it up to “opportunity cost”, that is the most important part of the purchase.
It is unwise for virtually anyone to purchase a recreational boat with a 20 year note, and yes the fact that it is a depreciating asset has a lot to do with that. I mean do we really need to get into the discussion of the impact of leverage on investment returns?
So sure, I will grant you that if you are buying the boat anyway, now it comes down to how will you pay for it. But don’t just gloss over the fact that this financing offer is a marketing tactic. It’s not a good idea to buy this boat just because you think you can get > 6.5% return on you brokerage account :lol
quote:
fwiw, I don't think it's a good deal, and I'd suggest paying cash if possible in this case. However, if the rate was 4%, I'd probably say finance it.
Nah, it’s still a horrendous deal
Posted on 5/4/19 at 4:38 pm to VolsOut4Harambe
Posted on 5/4/19 at 4:42 pm to OceanMan
quote:
Yes, it absolutely does. You are treating this scenario as if it is a foregone conclusion that the boat will be purchased , rather than considering the more likely reality that the financing is enabling the purchase.
Well of course that is how I'm framing it because that's the financing decision.
If you're saying the person can't afford it period, that's not the fault of the financing. My point it about the financial decision to finance and that's it. The behavioral finance aspect is a separate conversation.
Posted on 5/4/19 at 4:43 pm to tgrbaitn08
quote:
Much easier to just shite in a bucket and dump it overboard.
Or just hang your arse off the stern
Yeah I wouldn’t have customized that galley to be a bathroom but the dude I know that bought one is an old dude with a new Russian bride and I think she made the call on that one.
But those blackfins are still pretty cool. It’s a pretty serious fishing boat but it also has some good party boat add ons.
This post was edited on 5/4/19 at 4:45 pm
Posted on 5/4/19 at 4:44 pm to OceanMan
quote:
Nah, it’s still a horrendous deal
$230k at 4% over 20 years is a financing deal I'm taking every single day of the week.
Posted on 5/4/19 at 4:45 pm to GEAUXT
Boats are known for holding value for 20 years.
You should go ahead and do it!
Imagine how awesome that drive home would be...and the first trip to the ramp.
You should go ahead and do it!
Imagine how awesome that drive home would be...and the first trip to the ramp.
Posted on 5/4/19 at 4:51 pm to slackster
quote:
Put it this way - if you have the ability to pay cash or finance $230k over 20 years @ 6.5%, whether you're buying a boat or Amazon stock doesn't really matter.
Just because I have the ability now doesn't mean I will have the ability in 5 or 10 years. People get sick, accidents happen, layoffs occur. If I need to sell my item, having an appreciating asset vs a depreciating asset matters.
Posted on 5/4/19 at 5:19 pm to TigerintheNO
Excellent point.
It’s like the housing crash don’t happen and people leaned nothing.
I feel pretty confident that most everyone’s folks who were middle class and above would never have done this back when they were in their earning years.
In the 70 average loan was 11.5 and matured in 3 years w 100 per month payment.
They get that bought home and they own a boat when in fact the boat owns them.
Low interest rates help people make questionable decisions.
It’s like the housing crash don’t happen and people leaned nothing.
I feel pretty confident that most everyone’s folks who were middle class and above would never have done this back when they were in their earning years.
In the 70 average loan was 11.5 and matured in 3 years w 100 per month payment.
They get that bought home and they own a boat when in fact the boat owns them.
Low interest rates help people make questionable decisions.
This post was edited on 5/4/19 at 5:56 pm
Posted on 5/4/19 at 5:20 pm to TigerintheNO
quote:
Just because I have the ability now doesn't mean I will have the ability in 5 or 10 years. People get sick, accidents happen, layoffs occur. If I need to sell my item, having an appreciating asset vs a depreciating asset matters.
Is the boat worth less because you financed it? If you can't afford the boat, then you can't afford the boat. Don't blame that on financing.
I'm comparing paying cash vs financing. If you buy more than you can afford because of the financing, that's your fault.
Posted on 5/4/19 at 5:24 pm to cable
Posted on 5/4/19 at 5:25 pm to FightnBobLafollette
quote:
Excellent point.
It's not. Compare apples to apples. In the decision to pay cash vs finance, the underlying asset simply doesn't matter.
Posted on 5/4/19 at 5:33 pm to slackster
quote:
It's not. Compare apples to apples. In the decision to pay cash vs finance, the underlying asset simply doesn't matter.
Y'all are all correct.
Yes, slackster is correct that 4% over two decades is an absolute steal and if you have the money, take the financing anyway rather than paying all at once and then put that money to more productive use. It's why even rich people carry mortgages.
Everybody else is correct in that there is a whole behavioral economics issue to this and that offer is not only intending to lure the Jeff Bezos' of the world but also the dipshit that really can't afford the boat but may finance it anyway.
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