Cruisers Forum
 


Reply
 
Thread Tools Search this Thread Rate Thread Display Modes
Old 07-11-2019, 21:05   #136
Registered User

Join Date: May 2011
Posts: 67
Re: If you can pay cash, why did you finance?

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.
JordanH is offline   Reply With Quote
Old 07-11-2019, 21:10   #137
Registered User
 
Simi 60's Avatar

Join Date: Jun 2016
Location: Australia
Boat: Milkraft 60 ex trawler
Posts: 3,266
Re: If you can pay cash, why did you finance?

Quote:
Originally Posted by JordanH View Post
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
Quote:
Originally Posted by JordanH View Post


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?
Simi 60 is offline   Reply With Quote
Old 07-11-2019, 21:33   #138
Registered User

Join Date: May 2011
Posts: 67
Re: If you can pay cash, why did you finance?

Quote:
Originally Posted by Simi 60 View Post
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.


Quote:
Originally Posted by Simi 60 View Post
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.
JordanH is offline   Reply With Quote
Old 07-11-2019, 22:00   #139
Registered User

Join Date: Feb 2017
Location: Sea of Cortez
Boat: Passport 41
Posts: 214
Re: If you can pay cash, why did you finance?

Ya'll are forgetting the question again.

The first five words. Full stop. Don't pontificate if not.
kev_rm is offline   Reply With Quote
Old 07-11-2019, 23:02   #140
Registered User

Join Date: Oct 2018
Location: Dallas, TX
Posts: 348
Re: If you can pay cash, why did you finance?

Quote:
Originally Posted by a64pilot View Post
No, you donít 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 canít well then maybe you canít 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.

Quote:
Originally Posted by a64pilot View Post
See that gets to the heart of financing a depreciating asset, financing allows you to purchase a boat that put quite simply that you canít 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?
NPCampbell is offline   Reply With Quote
Old 08-11-2019, 05:21   #141
Registered User

Join Date: Oct 2009
Posts: 320
You already have the cash...

...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.
fivecapes is offline   Reply With Quote
Old 08-11-2019, 05:36   #142
Registered User

Join Date: May 2011
Posts: 67
Re: You already have the cash...

Quote:
Originally Posted by fivecapes View Post
...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 is offline   Reply With Quote
Old 08-11-2019, 05:44   #143
Registered User

Join Date: May 2011
Posts: 67
Re: If you can pay cash, why did you finance?

Quote:
Originally Posted by kev_rm View Post
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.
JordanH is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
V berth mattress - what did you pay? From where? PsychedChicken Construction, Maintenance & Refit 16 21-08-2017 03:51
Please help WHEN did you pay the seller ? arch007 General Sailing Forum 15 04-06-2017 14:52
How Much did you Pay? scarlet Multihull Sailboats 13 02-01-2014 13:21
To Pay or Not to Pay ... Crew brishear Our Community 56 04-03-2012 19:20
How Much Did You Pay, or Are Willing to Pay, for Your Cruising Vessel ? sailorboy1 Dollars & Cents 44 13-04-2010 06:48

Advertise Here


All times are GMT -7. The time now is 04:54.


Google+
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.
Social Knowledge Networks
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.

ShowCase vBulletin Plugins by Drive Thru Online, Inc.