Purchasing a new boat every year?

[Fman]

My plan is to pay the boat off fast. Like everything I own I pay extra every month to pay down the principle. I am doing a 12 year laon via BofA at 4.49% which seems very good on a boat loan. Hopefully I will have it paid off in 5-7 year range, but its nice to no that if something goes terribly wrong in my life I am commited to a $350 payment vs. a $1,300 payment.

I actuallly borrowed money against my deferred comp account at work and payed myself back interest free. You can ammortize the loan for up to 5 years, or pay it off as fast as you want to, which is what I ended up doing in 8 months. We have this available to us up to $50k, its a great way to borrow money and pay yourself back, rather than the bank.

Many people are not aware of this if you contribute to a 401k/deferrred compensation plan at your employer.

Edited December 21, 2011 by Fman

[Michigan boarder]

I actuallly borrowed money against my deferred comp account at work and payed myself back interest free. You can ammortize the loan for up to 5 years, or pay it off as fast as you want to, which is what I ended up doing in 8 months. We have this available to us up to $50k, its a great way to borrow money and pay yourself back, rather than the bank.

Many people are not aware of this if you contribute to a 401k/deferrred compensation plan at your employer.

We have that too, but when you borrow from it you do not earn interest on the investment. So if you borrow $30k from your account, that $30k is not earning interest. If you would normally earn 6% in your 401k, then it's the same as leaving your 401k untouched and borrowing $30k @ 6% from a bank. At least that's what I was told here at work, but I haven't actually tried it.

[tvano]

We have that too, but when you borrow from it you do not earn interest on the investment. So if you borrow $30k from your account, that $30k is not earning interest. If you would normally earn 6% in your 401k, then it's the same as leaving your 401k untouched and borrowing $30k @ 6% from a bank. At least that's what I was told here at work, but I haven't actually tried it.

our 401k was invested in various stocks (not interest bearing) so the only down side was the potential loss of stock earnings.

additionally we had to pay ourselves interest on the borrowed money; i figured that was a plus.

[noonewakeboards]

again, off topic,

"vote for the guy who beleives in as little governement as possible and you will see those American jobs come back to America!"

hahahaha those jobs aint ever coming back no matter who you "vote" for

can't wait to bail out the top 1% when they go belly up again! The middle class make the rich rich! Even if someone inherited all there money, the money can still be traced back to the general population, just give them enough crumbs to keep them happy and have them drink the coolaid to believe the lies like the jobs will come back!

almost back on topic,

12% was very easy to get in the last 3 years

almost very close to being back on topic,

ok, if you bought a new boat on a ten year loan, you might never break even, but if you buy a good used malibu on a ten year loan you will probably always stay ahead of the loan. The inboard boats are not cars and hold their value much better.

[Living the Dream]

I actuallly borrowed money against my deferred comp account at work and payed myself back interest free. You can ammortize the loan for up to 5 years, or pay it off as fast as you want to, which is what I ended up doing in 8 months. We have this available to us up to $50k, its a great way to borrow money and pay yourself back, rather than the bank.

Many people are not aware of this if you contribute to a 401k/deferrred compensation plan at your employer.

I would look a little bit deeper. You are paying back the money with after tax dollars. Then when you withdraw the money after reaching that magical age you get taxed all over again...ie Double taxation....nothing is free

http://retireplan.about.com/od/401kplans/a/401k_loan.htm

Edited December 22, 2011 by Living the Dream

[Murphy8166]

I would look a little bit deeper. You are paying back the money with after tax dollars. Then when you withdraw the money after reaching that magical age you get taxed all over again...ie Double taxation....nothing is free

http://retireplan.about.com/od/401kplans/a/401k_loan.htm

Oh wow - someone been watching too much Suzy Orman!!

Read up!! http://thefinancebuff.com/401k-loan-double-taxation-myth.html

[Dave SML VA]

1324346321' post='501944']

Gonna go out on a limb here and guess that the vast majority of the people who do this either have a promo deal with their dealer or they buy it through a business where they try to write off any depreciation.

No one would buy a boat for the depreciation. Why would you spend a $1.00 to get .30 back? Doubt a boat is deductible any way.

[Bobby Light]

No one would buy a boat for the depreciation. Why would you spend a $1.00 to get .30 back? Doubt a boat is deductible any way.

Who said they were buying it for the depreciation, I said they could find a way to write it off including depreciation. It can be deductible depending on situation.

Edited December 22, 2011 by Bobby Light

[Guest J-Ro]

SHARE!!

Give me your money....I made over 12% this year.

[snwdvl]

I think we got 2 straight answers on thred original post..... Awesome, guess Im not getting a new boat any time soon.....

[AxisA22]

Hello, I think it possible with a used boat and switch to another used boat. But new to new. Isshhh thst a hard one.

I bought my axis A22 2010 at I think 9k under real used price. So next year I do have a buffer.

[Backfooter100]

IMO, someone who needs to turn over to a new boat every year has nothing but an ego problem.....sorry but, thats how I see it.

[Fman]

I would look a little bit deeper. You are paying back the money with after tax dollars. Then when you withdraw the money after reaching that magical age you get taxed all over again...ie Double taxation....nothing is free

http://retireplan.about.com/od/401kplans/a/401k_loan.htm

Deferred comp is pre-taxed, so yes, you will get hit with taxes when the money is withdrawn from your account once you retire. I would rather pay on it on my retirement income, which will be less income and less taxes then I am paying right now. Regardless if you borrow from a bank or your own account you will be paying with after tax dollars.

[Fman]

I think we got 2 straight answers on thred original post..... Awesome, guess Im not getting a new boat any time soon.....

Funny, I was thinking the same thing... its amazing how many financial advisors we have on this site! and there boats are not even paid off! anyone who argues debt free is not the way to go IMO needs to hire a financial advisor! CASH IS KING!

Edited December 23, 2011 by Fman

[CumminsBu]

IMO, someone who needs to turn over to a new boat every year has nothing but an ego problem.....sorry but, thats how I see it.

Was thinking the samething.

[LJboater]

Whats the big deal its only my drug money.

[Nitrousbird]

Anyone with a 15 year boat loan can't afford the boat...period.

People always throw around the job loss thing as to why people foreclose or have stuff repoed. I am willing to bet that isn't even the cause 1/4 of the time...overspending is the cause. Paycheck to paycheck, no savings, but need that new 60" plasma. Credit card will tak care of that. Buying brand new cars, designer clothes, Starbucks daily and expecting me to feel sorry for you when it all comes tumbling down.

I have never purchased a new car (or ATV, boat, etc). Why...new items like these are for suckers, I'll let them eat the depreciation and I will pickup the same item in a couple of years for a fraction of the price. Could I afford to buy new...sure, but then I wouldn't have money for other things I want to do (or savings or retirement).

We bought our boat cash for a reason. I bought it at or near it's lowest market value, so in 5 years I can sell it if we want and break even. Did the same thing with my last boat...had it 11 years and sold it for $800 less than I paid for it (I did sink some money into it, but year to year cost was very low).

You don't get ahead in life by just blowing your money on every new item you see.

[rammer998]

Very well said Nitrousbird

[TallRedRider]

There are advantages to buying a new boat. I have owned 2 new and 2 used boats. My first 2 boats were new. Certainly there was some money saved on the used boats, but new boats have an appeal, and it is arrogant to criticize people who buy new. With the way boat prices have gone, I will probably not own a new boat again. I could buy new, but I would have to cut out some other discretionary spending to do so.

Most warranties are only 1 year, it is reassurring to some people to know if something fails, to just take it to the dealer. When I first got into boating and really didn't know how everything worked, I wanted the least chance of something failing and I wanted someone to fix it for me if it did.

Buying used carries some risk, you hope you can be thorough and discover if something has been mistreated or is about to fail, but there is always a chance you are going to get screwed, even for the most prepared shopper. We have all seen those threads, either here or elsewhere. It is a buyer beware market.

New boat smell is worth a lot of money all by itself.

New boats can be ordered optioned out exactly like you want, nothing less, nothing more.

The color you want, I am currently in a color I do not particularly like because some of the other options were more important. The exact boat I want did not exist when I was looking, because I was in the used market.

When you have a good relationship with your dealer, you might get a smoking deal, so it might not be as big of a loss as some people think. This was magnified by the way the market was from about 2004-2008. It wasn't unusual in those years to be able to sell a used boat for more than it was purchased for new. The days of not taking any loss are probably over now.

There are more reasons than that to buy new. The only time a new boat buyer deserves criticism is when they are maxing out what they can afford, and putting themselves in jeopardy of not being able to pay for it.

[Bawshogg]

I was able to have and turn a few boats in the past years as ^ stated. I was able to buy at a good enough price back in '04 that I could use the boat for a year or two ,make the payments because I am poor and stupid, then I could sell the boat for more than I originaly paid for it and roll that right into the new one. That did change in '08. This why I have my lovely 07 VTX. I love the boat and it is solid performer and it does everything I want it to do pretty damn well.

I am a pretty easy going guy when it comes to most stuff. So now that opertunity is no longer available I just roll with it. I feel lucky and content that I am still able to afford a boat because many others cannot. It is honestly one of my most cherrished parts of this life. I met my now wife on that boat. She recently gave birth to my first son and I cannot wait to be able to share that expirience with him and I cannot put an investment %# on the value of that, let alone all the good times I shared with friends on the wtaer. Call me simple if you will, but all these things are just material possessions that can be gone in instant, along with all your CASH. Hate to sound cliche', but those memories are priceless.

IMO it's a little bit haisty to plan for a game that could end at anytime. I choose to enjoy what I can within means, while I am here. If that means making payments on something that I am loosing money on, then so be it. Money ISN'T everthing. MO' MONEY, MO' PROBLEMS! HAHA!

[Fman]

Where are all the members who are posting up new pics of there boats every year??? Looking to see what there take is on this, but not having much response with anyone replying back with how they are trading in every year..... depreciation, taxes, losses, etc... dealer programs?

Maybe its top secret information that cant be discussed in public?

[Calexan]

I dont trade every year but see that it still could be profitable. I bought my 23 and drove it for 2 1/2 years. I only sold it cause the warranty was about done. When I sold it I could have easily walked into a new 23 from my dealer, but I wanted to upgrade to a 247. Looking at prices I think I can keep my 247 for another year and if new prices stay close to what they are now (i know they seem to go up a little each year) can step into a new 247.

I think its just a mix of getting a great deal on the boat and taking great care of it. Everyone around my lake knows that if you get my boat, its been babied so its gonna be in a good condition. So when it is for sale, there will be some interest. I put a big chunk down on it, then finance it for 3 years. As a young adult, I know im not in a position to pay everything off at once, and waiting until that point would put me at an age that it would not be as easy for me to wakeboard, snowboard, race, etc... So paying the majority off and breaking even when i sell it is my only goal. I think if you look around enough or are close with your dealer its not hard finding a new boat that you could buy and turn immediately around and make money off of it if you were the type of person that could do that to your dealer. The only way I see that you could cut into your ability to profit would be adding accessories that you dont plan to take off...

[Bawshogg]

I know a select few friends that are still doing it, but is becoming harder and harder and there is a risk involved each and every year. Most of the times the "new" boats my buddy buys are sold to Canada or Austrailia becuse the markets over there will command higher dollars on a slightly used boat. I will tell ya he does not make much, if anything on them and he does it just to be able to have a "new" boat every year. He has pricing breaks directly from one of the manufacturers and also has had a good relationship with the local dealer, but that is becoming more and more strained each and ever year. In fact I have heard him say for the last 3 years he wasn't confident he was going to be able to even work a deal. This year I know has been the toughest for him, and I belive he is still working on it. He is buy and sell kind of guy. Always has 2-3 vehicles wether they are cars, trucks ,boats, sometimes UTV's or ATV's that are currently FOR SALE. If he can bank a 100 bucks on a sale he is happy.

I have a nagging suspicion you are not going to get the magic answer you are looking for. People are just not that honest, and if I had an in like the one you speak of I surely wouldn't be telling everyone on the internet about it. Just one of those mysteries you'll never know.

Edited December 26, 2011 by Bobby Bright

[CRASH]

We used to have new Boats all the time but I worked in the Business. For some Reason we still have the 07 VTX in 08 and 09 we had 2 big Dummies

I was fortunate enough to be on a ProStaff deal with a Bass Boat Mfr. Their Program was -10 off cost and I had 365 days to pay for it. In most cases the Boat was spoken for before i ever took delivery. As the market tightened up it became harder and harder to Sell these boats. And by 09 Financing hard gotten so hard most couldnt qualify even if they wanted.In 09 I bought my Last new Bass Boat Paid cash for it. Which worked out great we bought a new house late last year I just offed the Boat and Had Cash Better than the Stock Market..lol

Malibu Did have similar programs for some Dealers depending on Volume ETC.

[Calexan]

I I have a nagging suspicion you are not going to get the magic answer you are looking for. People are just not that honest, and if I had an in like the one you speak of I surely wouldn't be telling everyone on the internet about it. Just one of those mysteries you'll never know.

I dont think there really is a magical answer, or maybe its just so simple that people want to think that there is more to it. Buy a boat cheap enough that when you sell it you dont lose money.... Take care of it well enough in the time you own it that it doesn't lose much value. Get your dealer down as close to cost as possible and if you get them low enough you could already turn a profit, so just consider that margin how long you can keep the boat till you break even. Thats what I've been doing and its worked out so far.