Retire debt free or get a boat loan

[oldsalt_1942]

I've always believed that a small boat and a suitcase full of money beats a 40-footer tied to a bank...

[Shenandoah]

A very wise friend of mine (a lawyer who also happened to have a Master's degree in Taxation) once told me that unless you figured out a way where spending a dollar would save you a dollar in taxes, that cash was the way to go. The boat will depreciate the same whether or not you finance it. Why would you pay the finance company $1 to save 35¢ on your taxes?

As far as "needing credit" to refinance a mortgage, there are still some mortgage companies (such as Churchill Mortgage) that will do traditional underwriting. Too many others simply look for a FICO score. If someone has no other debt, reasonable income, and adequate equity or down payment, you can get a home mortgage from a traditional underwriter. I used to think that predatory lenders were the payday lenders, loan sharks, etc. Now I know that they are much more prevalent.

Pay cash and don't look back.

[Stu Jackson]

Originally Posted by Shenandoah

Why would you pay the finance company $1 to save 35¢ on your taxes?

This is truly the crux of the matter.

All the discussions about boat loans and a boat as a depreciating asset is meaningless unless we know the details of the OP's financies, which we simply don't, and for good reason. It's none of our business. But he did ask, didn't he?

The key issue for the OP is what is the total overall cost of the money and the benefit to him.

If he pays $1 to save $.35, it's not a good deal.

If he pays $1 and saves even $1.01, then it is.

His call.

Your boat, your choice.

And he needs to know this basic Econ 101 stuff for himself.

Good luck.

[Kenomac]

Lot's of short sighted participants on this thread.

Borrow some 4% money against the house, and use it as rental income, then pay cash for the boat. Let other people pay for your boat and retirement.

Rich people didn't get that way by using their own money and punching a clock at work.

[SV Sailfish]

Originally Posted by belizesailor

Get a new financial advisor. Financing a non-income producing depreciating asset is a bad fianancial decision. Staying debt free is a good one.

The day I fired my Merrill Lynch financial advisor was the happiest day of my life. I told her to go rip somebody else off.

Hey... it's your money, learn to manage it yourself.
And debt free is the only way to go.
Happy cruising!

[Dave22q]

It is a no brainer. Borrowing money to generate income is frequently a good idea but never risk free. Borrowing to buy a house or any other asset can be a good idea if you do not have the cash. If you have the cash, you are back to borrowing to generate income. In some cases you can get tax free income and deduct your interest but the connection cannot be obvious. Asset secured loans in place of selling stocks is one way to get the necessary separation but if your income is high they have a few ways to get you anyway. In my limited experience taxes should be way down on the list of investment considerations.

[Cadence]

Originally Posted by SV Sailfish

The day I fired my Merrill Lynch financial advisor was the happiest day of my life. I told her to go rip somebody else off.

Hey... it's your money, learn to manage it yourself.
And debt free is the only way to go.
Happy cruising!

I guess it depends on what you call a financial advisor. I call it a local CPA not someone making a % for selling you something. They are just salesmen throwing as much **** on the wall as they can, some is bound to stick. If it doesn't no skin off their ass, they made their commission up front.

[gcaskew]

I would be taking a $250000 lump sum out of my pension. This would still leave me plenty to live well on but would reduce my monthly draw by $1200 for the rest of our lives. Or finance a boat for 15 years and have it paid off and then have the $1200 from the payments till we die, also saving some on taxes.
We will be 53 when we retire soon.
Either way my monthly pension will be hit for $1200 - $1500 a month, but by financing after the boat is paid for the old boat payment amount stays in my account.

[SoundWave]

Originally Posted by denverd0n

If the boat has sleeping accomodations, a head, and a galley, then it can qualify as a second home, and therefore you can deduct the interest paid from your taxes.

Beyond that, you have gotten professional advice from someone who knows your financial situation. No offense, but I would trust and accept that advice, rather than seek the opinions of a bunch of strangers on an internet forum.

1+ on that one.

Sailors like us, holding sundowners, are not yet part of my financial team.
Even at the lowest tax bracket, every dollar not taxed is an effective return in excess of 20%, and that will beat any investment fund going!

[SV THIRD DAY]

Originally Posted by Quote

The net result is that while its debt, its good debt.

There is no such thing as good debt, it's the lie bought hook line and stinker by the struggling middle class wanting to live like the fake 1$-ers. For example, a car payment is the montra of the middle class and it is robbing their retirement but everyone has one, so it's good right? Do the math of always having a $400 car payment vs investing $400/mo throughout your working years. You are trading your future for the latest car and it is killing you.

Originally Posted by Kreef

If you understand the nature of the system of financial enslavement that you have helped create in the USA led by a certain group of individuals in so called high places.Look no further than Freddie Mac and Fanny Mae and the legions of loan sharks working out of their backstreet holes feeding off the poor and poorly educated.Not to mention the criminal banking system such as Goldman Sachs and others that have brought sooo much suffering to so many.Suicide stands out as one of the sad effects of borrowing money and not being able to pay it back.
My father and grandfather were both bank managers here in South Africa and in the UK and they taught me to never borrow money but to save it and never to spend what wasn't mine.
So some people have been wise enough not to be enslaved by the system and that is really the best way to live .Remain the master of your finances and you can avoid being the footstool of others.There are many out there who want you to be their slaves as you may have noticed.They want to control you and dominate you in any way they can .So no it is not ODD but merely a plan .
As the Bible says .Neither a borrower nor a lender be!!Congratulations on having conducted your finances so well .You are however seen as an enemy of the SYSTEM!!!Because you are FREE and not a slave.

I love this guy...he nails it!!!

[ranger58sb]

IF...


(Note: I'm starting with an IF statement...)


IF the situation is such that it would be better to finance the boat (and I can imagine several scenarios where that's the case)...


THEN it might be useful to compare the idea mentioned several times about instead using a home equity loan to pay cash for the boat. If the verbiage of the home equity loan allows that kind of non-home use.


Mobile assets that offer tax-deductible interest... don't survive the Alternative Minimum Tax (AMT) computations... so that thought-to-be-deductible interest on a boat mortgage, sometimes isn't... whereas maybe the interest on the home equity loan would be.


-Chris

[SV THIRD DAY]

Originally Posted by ranger42c

Mobile assets that offer tax-deductible interest... don't survive the Alternative Minimum Tax (AMT) computations... so that thought-to-be-deductible interest, sometimes isn't.

Oh my good friend the F-ing AMT....stung me like a Africanized Killer bee on my naked ass this year. Thanks for reminding me of the pain...ha ha ha

[01kiwijohn]

As the borrower is slave to the lender, I decided to go debt free, with. Boat I could pay cash for; never regretted it . No debt means no insurance company deciding where, or when, I can/should go.

[Rhapsody-NS27]

I bought my boat free and clear. I didn't want any chance of my financial situation to change that could risk losing the boat.

FICO credit score is just a way to show how much you like being in debt and the banks want to know how much they can get out of you. Debt free really is the way to go.

To me, financing a boat doesn't make any sense at all. The value of the boat will go down, and the amount being paid towards it will be more than it's worth in the long run. You can get a loan, but have you calculated just how much MORE you'll be paying in interest? How does it balance out when it comes to what's being saved in taxes? You won't get anywhere near the amount back that you're going to put into it. Buying a boat is hardly a wise financial decision as it is, let alone getting a loan for it.

Getting a loan for anything is about keeping you tied to debt and making somebody else (the bank) rich. To me, just not worth it.

[belizesailor]

Originally Posted by SV Sailfish

The day I fired my Merrill Lynch financial advisor was the happiest day of my life. I told her to go rip somebody else off.

Hey... it's your money, learn to manage it yourself.
And debt free is the only way to go.
Happy cruising!

People forget that so called "financial advisors" who work for brokergage firms are just wolves in sheep's clothing. The are sales staff, their job is to sell you products and services that benefit the brokerage. Pretending to have your best interest in mind just helps to facilitate that.

The only real financial advisor is one you pay specifically for that service.