If you can pay cash, why did you finance?

[JordanH]

A loan is "a debt."
But taking out a loan doesn't mean you are "in debt".
If you have a positive net worth, you are not "in debt". To be "in debt", you have a negative net worth.
If you don't understand the above statements, then you definitely shouldn't borrow money.

I guess if you can't articulate your argument, provide facts or math to support your statements, you'll resort to insults.

[Simi 60]

Originally Posted by JordanH

A loan is "a debt."
But taking out a loan doesn't mean you are "in debt".

Sure it does.
You owe the bank money, that is a debt you must pay, with interest.

Here, read up.

https://www.investopedia.com/terms/d/debt.asp

Originally Posted by JordanH

I guess if you can't articulate your argument, provide facts or math to support your statements, you'll resort to insults.

The facts and maths to support my statement are that I am out here living the dream debt free.
What are you doing aside from trying to convince people debt is good?
You wouldn't be a debt peddler by any chance?

[JordanH]

Originally Posted by Simi 60

Sure it does.
You owe the bank money, that is a debt you must pay.

So you're agreeing with me, borrowing money / taking out a loan is "a debt". So there's at least that common ground. however, the literal definition for being "in debt" is to have a negative net worth. That's not really up for debate.

Originally Posted by Simi 60

The facts and maths to support my statement are that I am out here living the dream debt free.
What are you doing aside from trying to convince people debt is good?
You wouldn't be a debt peddler by any chance?

That's the funny thing with facts; It doesn't matter where you're sitting, or what you're doing. They remain facts. There is good debt and bad debt, and neither have any bearing on whether you are in debt or debt free. Using your wealth and available financial tools effectively helps you reach your goals much faster.

In the case of the OP who has, presumably, a positive net worth, is buying a boat regardless, and has the option of cash or credit... he should weigh the option of which is going to be most effective for him. It's simply a matter of math, it's quantifiable - it's not opinion, nor is it about your ego.


If you disagree, show me a mathematical example where it works out negatively, not in his favour, for what he's trying to do. It's clear that if he can't make the capital work for him, then it's a bad idea. If he can make the capital work for him, then it's a good idea. Simple as that.

[kev_rm]

Ya'll are forgetting the question again.

The first five words. Full stop. Don't pontificate if not.

[NPCampbell]

Originally Posted by a64pilot

No, you don’t take money out of your retirement funds to buy a boat, that would be foolish, you buy a boat with your discretionary income, if you can cover a million dollar boat with that, then fine, if you can’t well then maybe you can’t afford a million dollar boat.

LOL. Of course you take money out of a retirement to buy a boat. Would you rather have a million in cash just sitting around in a bank earning 1.25% while inflation is at 2%? Foolish indeed.

Originally Posted by a64pilot

See that gets to the heart of financing a depreciating asset, financing allows you to purchase a boat that put quite simply that you can’t afford.

I currently own 7 vehicles, 3 are Corvettes. I financed all of them. I am paying on 1 of them still. The rest are paid off. Why can't I afford them?

[fivecapes]

...everything else is superfluous.
Bottom line
-If you can beat your borrowing cost, then you borrow to buy the boat and invest your cash.
-If you can't, you spend the cash.


As an aside
-you can technically be in debt and be completely liquid and solvent. Apple has $100bio in debt outstanding but has double that in cash.

-if you didn't have the cash (violates OP's premise), and you borrow without fully understanding your repayment path or rate of return<borrowing cost, then you're living beyond your means.

[JordanH]

Originally Posted by fivecapes

...everything else is superfluous.
Bottom line
-If you can beat your borrowing cost, then you borrow to buy the boat and invest your cash.
-If you can't, you spend the cash.


As an aside
-you can technically be in debt and be completely liquid and solvent. Apple has $100bio in debt outstanding but has double that in cash.

-if you didn't have the cash (violates OP's premise), and you borrow without fully understanding your repayment path or rate of return<borrowing cost, then you're living beyond your means.

Exactly!


(One correction, You're correct Apple has a debt:equity ratio of 50%, which means they have debts but aren't "in debt". As you correctly state, they are completely solvent according to their balance sheet.)

[JordanH]

Originally Posted by kev_rm

Ya'll are forgetting the question again.

The first five words. Full stop. Don't pontificate if not.

Haven't forgotten; First world problem.
It's not about "letting the bank take risk"; they are experts at insulating themselves from risk - which is why they can offer you such a low interest rate.



The question to you is "Are you, kev_rm, able to put that capital to work and earn more than the cost of the 10yr loan they'll give you?" Make sure to take into account the cost of interest, additional costs (like any required insurance above what you would naturally be buying), additional taxes (if that applies) and so-on.


If you think you can still beat the bank, then go for it.