# this puts the price of boats into perspective



## mad_machine (Dec 16, 2012)

I have personally thought that new boats were vastly overpriced. Not going into Aesthetics of sailing ability, but the idea of spending half a million or more on something you can get on a comparably used boat for a 10th price always seemed a bit outrageous..

Cue Cape Cod Shipbuilding:

The Cape Cod Marlin Heritage, loosely based on the Herreshoff Fish class is a small 23 foot classically designed weekender that does not give you a lot of frills. There are no enclosed heads, refrigerators, or even a sink or icebox. It simply has a Nice V-berth up front, two quarter berths, and room to get out of the rain.

Outside is all old fashioned full keel with all it's "difficulties" in reversing, pointing, or even speed.

Used they go for 2 to 10 thousand. I was actually looking at one when I bought my Sea Sprite... As Cape Cod Ship Building just reintroduced the boat with a much nicer cabin top.. $98,000

Suddenly those half million dollar boats do not look so expensive

http://www.capecodshipbuilding.com/site/fleet.php?boat=marlinheritage


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## miatapaul (Dec 15, 2006)

Yea, the price of materials has gone up, but the price of good craftsmanship has gone way up. So what you are paying for is what amounts to artist finish carpenters and cabinet makers. You are paying for many hundreds if not thousands of hours of labor. 

When they were 2 to 10,000 they had bare bone finish. Mostly in the 70's it was Formica style laminate covering all surfaces with only a bit of wood as trim. Now it is full on high end expensive wood veneer on all surfaces. Even "common" brands like Hunter and Catalina have veneered/solid wood surfaces on everything. Boats like the Marlin Heritage is a piece of artwork, and no one makes a workmanlike boat anymore.


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## smurphny (Feb 20, 2009)

The difference between today and 50 years ago, when there was a growing middle class with some money to spend, is that there is really only one market for boats now: the 1%. This can be seen in many other areas as well like housing and luxury goods. Since there is almost no middle class anymore and those still in this endangered category are struggling to stay above water, smart vendors of boats, houses and handbags are targeting those with money to burn. It's the only market. Is a boat like that worth 100gs...absolutely not. Will some people pay any price to exhibit their wealth...YES. Overpriced has no effect on those who have more money than they could possibly spend in one lifetime. It is one of the obvious symptoms of the stratification of American society.


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## krisscross (Feb 22, 2013)

I'm happy that there are good folks out there who can afford to buy these nice boats, because 30 years later I will be able to buy that same boat for 1/20 of the initial price, and it will still sail like on day 1.


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## JimMcGee (Jun 23, 2005)

smurphny said:


> ... there is really only one market for boats now: the 1%.


I won't argue that money is tighter today than 25 years ago, but I think you're overstating things a bit. There're no 1%'rs in our marina but there are folks who bought new.

And if we're honest a new boat has always been a luxury.


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## ultraclyde (Jun 4, 2014)

First off - Hey Mad! Had no idea you were over here.

Second - It's the same as the performance car market - but even more so. Thinking I'll be moving up to a weekender style boat in a couple years, I went looking at new boats around 21-24 feet. Ouch. Locally a perfectly seaworthy 24 foot weekender with good sails and a decent outboard is only about $5k in good shape, much less if you're willing to do some repairs.

I wonder how many Catalina 25s were sold new last year? fewer boats means higher cost per boat to make a profit, which means a smaller customer base, which means fewer boats....it seems like an escalation with dire consequences, but I guess they manage to stay afloat. (ha!)


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## StormBay (Sep 30, 2010)

miatapaul said:


> Yea, the price of materials has gone up, but the price of good craftsmanship has gone way up. So what you are paying for is what amounts to artist finish carpenters and cabinet makers. You are paying for many hundreds if not thousands of hours of labor.
> 
> When they were 2 to 10,000 they had bare bone finish. Mostly in the 70's it was Formica style laminate covering all surfaces with only a bit of wood as trim. Now it is full on high end expensive wood veneer on all surfaces. Even "common" brands like Hunter and Catalina have veneered/solid wood surfaces on everything. Boats like the Marlin Heritage is a piece of artwork, and no one makes a workmanlike boat anymore.


On top of those improvements, you also have to take into consideration that 10k in 1970 had the same buying power as 62k does nowadays. Annual inflation between then and now was 4.15%.


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## Rapp (Nov 16, 2014)

Long term financing at lower rates and 2 income families have made boats easier for non 1%'s to buy.Many of the people who buy them are stretched very thin,During the last recession I talked to a boat repossesor ,he was very busy as were repossesers of all types.It would be interesting to see how boat purchases are accomplished by people,meaning cash, financing etc.And does the "the rich stay rich by spending like they're poor,and the poor stay poor by spending like they're rich" saying apply/


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## Minnewaska (Feb 21, 2010)

smurphny said:


> ....Since there is almost no middle class anymore.....


This is the contemporary rhetoric. However, in 2013, 40% of US households made between $40k an $106k. In 1967, when the middle class was reportedly booming, it was between $35k and $72k, in 2013 dollars.

The problem is not lacking a middle class, it's not being able to afford to be in the middle class. With cell phones, cable bills, a new car for every household occupant, etc. Our standards have risen dramatically. No money left for a boat.


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## Slayer (Jul 28, 2006)

Beautiful boat!


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## Don L (Aug 8, 2008)

My household income puts us in the top 10%. Yet when I drive around I'm amazed at the size and number of large fancy houses! It makes me wonder how so many are doing better than me.


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## Minnewaska (Feb 21, 2010)

Don0190 said:


> My household income puts us in the top 10%. Yet when I drive around I'm amazed at the size and number of large fancy houses! It makes me wonder how so many are doing better than me.


Most aren't. They just borrowed too much.


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## Rapp (Nov 16, 2014)

Minnewaska said:


> Most aren't. They just borrowed too much.


t
I agree ,I've talked to many people that go into house to work and a lot of these McMansions are sparcely furnished,and the people can barely pay the bill.One day I was cutting a guys hair that worked in a Factory,he was selling a rowhome,cashing out his 401K and then would need 12 hours of overtime a week to buy a house in a neighborhood he had no business in ,CRAZY


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## ianjoub (Aug 3, 2014)

Don0190 said:


> My household income puts us in the top 10%. Yet when I drive around I'm amazed at the size and number of large fancy houses! It makes me wonder how so many are doing better than me.


You ain't kidding. I was amazed. I just looked up the numbers. My wife and I fall somewhere between the top 1.5% to 5%. We consider ourselves to be _barely_ middle class...


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## ianjoub (Aug 3, 2014)

ianjoub said:


> You ain't kidding. I was amazed. I just looked up the numbers. My wife and I fall somewhere between the top 1.5% to 5%. We consider ourselves to be _barely_ middle class...


According to this site, top 2%...


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## smurphny (Feb 20, 2009)

JimMcGee said:


> I won't argue that money is tighter today than 25 years ago, but I think you're overstating things a bit. There're no 1%'rs in our marina but there are folks who bought new.
> 
> And if we're honest a new boat has always been a luxury.


Yes, it's more like the top 10% but there is a great wealth gap now that did not exist back a few decades ago. That's another off-topic subject. I think there is a large percentage of the population who have crossed things like boats off their wish list.


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## Pegu club (Jun 10, 2012)

Minnewaska said:


> This is the contemporary rhetoric. However, in 2013, 40% of US households made between $40k an $106k. In 1967, when the middle class was reportedly booming, it was between $35k and $72k, in 2013 dollars.
> 
> The problem is not lacking a middle class, it's not being able to afford to be in the middle class. With cell phones, cable bills, a new car for every household occupant, etc. Our standards have risen dramatically. No money left for a boat.


The middle class's biggest problem is the odd need to spend oneself out of the middle class, most of the consumer goods that the American middle class purchases in virtually no time at all becomes land fill, to many folk spend in an unwise fashion, granted this is jmo.


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## smurphny (Feb 20, 2009)

Minnewaska said:


> This is the contemporary rhetoric. However, in 2013, 40% of US households made between $40k an $106k. In 1967, when the middle class was reportedly booming, it was between $35k and $72k, in 2013 dollars.
> 
> The problem is not lacking a middle class, it's not being able to afford to be in the middle class. With cell phones, cable bills, a new car for every household occupant, etc. Our standards have risen dramatically. No money left for a boat.


Not just empty rhetoric. The problem is in unearned wealth, something that did not exist to any great extent back a few decades ago. The shuffling of paper, sophisticated financial instruments and basic stock portfolios that have skyrocketed as of late have given those (the "rich")who own such assets a gigantic financial advantage for doing essentially NOTHING. It's a system rigged by Wall St. and is not a healthy or sustainable idea. It's not so much income but wealth that is lopsided, although you've got to gag at the compensation of some of the banksters and their ilk.


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## Rapp (Nov 16, 2014)

I think a lot depends on where you live.Living in Nj 100K a year really goes nowhere.In Alabama or somewhere down South you'd be well off,plus its what you do with it,wether you're putting away for the future or spending as fast as you make it.


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## Minnewaska (Feb 21, 2010)

smurphny said:


> ....The shuffling of paper, sophisticated financial instruments and basic stock portfolios that have skyrocketed as of late have given those (the "rich")who own such assets a gigantic financial advantage for doing essentially NOTHING. It's a system rigged by Wall St.......


Wall St has serious corruption, but the system itself is not rigged. Many of the middle class have 401k investments that grow for doing essentially nothing, by your definition. I reiterate, the problem is more one of the middle class spending what they have on a substantially higher standard of living, than being extinct.

You need to save a piece, not just try to keep up with the Jones'.

When the middle class was buying boats, they had substantially smaller housing, only one car for the family, no cell phone bill, no DirectTV with NFL package, etc, etc. These things are sucking the life out of the middle class. You drove a few hours to the country for vacation, you didn't fly to the Bahamas with your whole family.

I have a 26 yr old stepson, who has already taken two vacations in the Caribbean with his girlfriend. By that age, out of college, I hadn't gone anywhere on vacation yet. We ate at a restaurant, maybe once per month and got a pizza once per week. The middle class today goes out to eat 3-4 times per week.

The problem is, the new middle class is spending all their money on something other than boats.


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## SHNOOL (Jun 7, 2007)

I think maybe people are just more conservative with their spending. I mean I probably could qualify for a 100k loan, or more, but I'd have a hard time justifying it as percentage of my income. I think there are many like me as well. It could be like myself, many are recently into the top 5% or so... and know how hard they had to work to get here. 

But I AM glad there are those who buy new, like others said, because it provides a steady used market for guys like me.

I'm still sailing my under $10k sailboat, from 1982. I've put more than $3000 into already since purchase in October. I'll never see that money I've sunk into it again, but I'm still gonna have fun with it!


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## Minnewaska (Feb 21, 2010)

SHNOOL said:


> .....I mean I probably could qualify for a 100k loan, or more.....


I forecast that you'll do very well over your lifetime.

Everyone knows the process of going to the bank to learn what you pre-qualify to borrow. That is the maximum amount you can borrow, measured by the payments as a percent of your income. The problem with this approach is that the ratio is essentially the same for an income of $100k per year as for $1million per year. In the later, there is substantially more disposable income remaining, even after the loan payment. For the $100k family, they still need to buy food, pay tuition, etc.

The FHA and HUD used to have a formula that began with your expenses and then backed into how much you had left for debt. This method was killed because it essentially kept the middle class and lower from buying houses. What it really did was keep them from buy expensive houses.

I grew up in a 1,600 sf house with three bedrooms and one bathroom. Family of five. My parents paid $16,000 for a house in the NY metro area. That would be about $118,000 in 2014 dollars. And we had a boat. Why then and not now? No one in the NY metro area will buy a house for that little. Driven by demand. The strength of demand is driven by debt.


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## smurphny (Feb 20, 2009)

Minnewaska said:


> Wall St has serious corruption, but the system itself is not rigged. Many of the middle class have 401k investments that grow for doing essentially nothing, by your definition. I reiterate, the problem is more one of the middle class spending what they have on a substantially higher standard of living, than being extinct.
> 
> You need to save a piece, not just try to keep up with the Jones'.
> 
> ...


 Young people have never had a very good handle, overall, on handling finances. Unfortunately, they don't teach personal financial responsibility 101 in public school for some inexplicable reason. But, in the past, there existed an economic system where many hard working folks had fixed retirement plans at work and could exist comfortably on ONE income. This has almost been forgotten. There was often money to buy boats or other luxury items. People did not need to enter the Wall St. Casino with personal savings and work two jobs just to keep above water. Then and now, the large majority of people do not belong in the shark tank with their hard earned money. This is a scam, perpetrated by Wall St. to get a hold of more money. It's a major reason for the evaporation of the middle class. No matter which way you slice it, the wealth of our economy has floated to the top, taking it away from the middle. I'm no liberal but it seems obvious that this is not sustainable nor healthy. It leads to all kinds of bad outcomes. Plutocracy does not work for long.


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## H and E (Sep 11, 2011)

I am not an expert on finances but I do know not to spend what I do not have. When we were working with a builder and real estate agent for our house were constantly prodded to borrow more money and build a bigger house. That was not a priority for us. We did nave a nice twin engine airplane in a hanger that took some $$ to keep. We enjoyed that a lot more than a big house.

I was offered an employee that was in a job that was about to terminate. He looked good so I took him. Shortly after joining our group he wondered why I did not offer any overtime. Seems he bought a big house based on his prior overtime earnings and was about to loose it. That was back in the late 80's. 

Seems to me that there a lot of folks that never learn to live within their income. As for boats I bought what I could easily afford that would do what we wanted to do. Yes, there are times, I would like to have a bigger one on the big water, however, at my age and admirals health, that is not going to happen. 

I don't know the Jones so I do not have to keep up with them.


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## Group9 (Oct 3, 2010)

Minnewaska said:


> This is the contemporary rhetoric. However, in 2013, 40% of US households made between $40k an $106k. In 1967, when the middle class was reportedly booming, it was between $35k and $72k, in 2013 dollars.
> 
> The problem is not lacking a middle class, it's not being able to afford to be in the middle class. With cell phones, cable bills, a new car for every household occupant, etc. Our standards have risen dramatically. No money left for a boat.


I agree with your sentiment completely (I just went a boat show this weekend, and I am still reeling from sticker shock), but I'm not sure about those numbers.

So, in 2013, was just $106,000 really enough to put you in the "rich bastard" upper class? And, the bottom rung of middle class-dom has only gone up from $35,000 to $40,000 in 45+ year? I don't buy into that.

I realize "middle class" is a term of art, not science, but I would put the middle class, somewhere between $75,000 and $250,000 these days. And, I do think the numbers of people in that class are shrinking. For every one that moves up out of it, two or three are probably moving down and out of it.

And, I do believe that no country can survive long without a thriving middle class, and the hope of those in the lower class, to one day move into it, although when I look at all of the people I know, most have roughly the same lifestyle their parents had (when most people probably hoped they would do better than them).


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## PorFin (Sep 10, 2007)

Minnewaska said:


> This is the contemporary rhetoric. However, in 2013, 40% of US households made between $40k an $106k. In 1967, when the middle class was reportedly booming, it was between $35k and $72k, in 2013 dollars.
> 
> The problem is not lacking a middle class, it's not being able to afford to be in the middle class. With cell phones, cable bills, a new car for every household occupant, etc. Our standards have risen dramatically. No money left for a boat.


And let's not forget that a middle income family (with kids) in the 70's was probably living in a ~1500 sq ft home. That'd be considered way too small by most folks today.


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## RobGallagher (Aug 22, 2001)

New C&C30 ft sailboat in 1972, about $20,000 - average income $8500
New C&C30 ft sailboat in 1989, about $65000 - average income $28000
Today a catalina 31 new cost about $131000 = average income $48000
(I know these boats are not exactly comparable, but its a worth a look.)

Taxes (combination of Federal,State, Local, Property) on the middle class have gone up disproportionately since 1972.

Discretionary spending is through the roof, but we live another lifestyle. For many people 1972 meant kids played outside, one car, one trip a week to the grocery store and school shopping once a year.

Iphones, soccer, martial arts, Walmart, cable, internet, grocery stores filled with expensive produce that used to be only seasonally available, I could go on for hours.

But my all time favorite is folks paying a membership fee to put a crate of 800 rolls of toilet paper on a credit card so that they can "save money"


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## RichH (Jul 10, 2000)

smurphny said:


> Young people have never had a very good handle, overall, on handling finances. Unfortunately, they don't teach personal financial responsibility 101 in public school for some inexplicable reason. But, in the past, there existed an economic system where many hard working folks had fixed retirement plans at work and could exist comfortably on ONE income. This has almost been forgotten. There was often money to buy boats or other luxury items. People did not need to enter the Wall St. Casino with personal savings and work two jobs just to keep above water. Then and now, the large majority of people do not belong in the shark tank with their hard earned money. This is a scam, perpetrated by Wall St. to get a hold of more money. It's a major reason for the evaporation of the middle class. No matter which way you slice it, the wealth of our economy has floated to the top, taking it away from the middle. I'm no liberal but it seems obvious that this is not sustainable nor healthy. It leads to all kinds of bad outcomes. Plutocracy does not work for long.


"The most powerful force in the universe is the power of compound interest" - Albert Einstein

In todays financial world ... taxation, the debasement of currency - the falling 'value' of money, inflation/deflation, artificially propped-up stock markets, govt-coorporate cronyism, etc. are all converging to make it very hard for one to even keep what one has saved/invested. Anything beyond the strategic advantages of compound interest is simply speculation and gambling.


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## JonEisberg (Dec 3, 2010)

PorFin said:


> And let's not forget that a middle income family (with kids) in the 70's was probably living in a ~1500 sq ft home. That'd be considered way too small by most folks today.


Just as a 35-footer with a base price approaching $400K is considered by CRUISING WORLD to be a "Pocket Cruiser", today...

Najad 355 Sailboat Review | Cruising World

However, few things put the price of new boats today in better perspective, than a $4,000+ Optimist dinghy...

McLaughlin Optimist PRO Racer


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## capecodda (Oct 6, 2009)

Yes, and as we drone on, FOX vs CNBC commentary, I'll try to distract you.


I'm thinking back to a few years ago sitting in Bequia on a charter. I'm on the scoop transom of a bene-whatever, feet in the water after a run down from St Lucia. I'm watching a small crew on a perfect example of a Shields short tacking up the bay. The trades are blowing perfectly, the shelter of the bay provides for only a short chop and the long overhangs of that boat look perfect. They come right up to me, and tack. I watch that tiny wine glass transom sail away.

At that moment, for such a perfect small day sailer, I'd have traded anything I own.


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## smurphny (Feb 20, 2009)

RichH said:


> "The most powerful force in the universe is the power of compound interest" - Albert Einstein
> 
> In todays financial world ... taxation, the debasement of currency - the falling 'value' of money, inflation/deflation, artificially propped-up stock markets, govt-coorporate cronyism, etc. are all converging to make it very hard for one to even keep what one has saved/invested. Anything beyond the strategic advantages of compound interest is simply speculation and gambling.


The old, stodgy, conservative strategy of compounding safe returns over long time horizons has been completely undermined by government policy. Seemingly permanent interest rates of near 0, have forced small investors, retirement funds, and state pension funds into much more risky investments, i.e the stock market. When this house of cards finally collapses, as it must, a boat may be a good thing to have... so maybe the prices aren't that bad


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## Minnewaska (Feb 21, 2010)

Group9 said:


> ...So, in 2013, was just $106,000 really enough to put you in the "rich bastard" upper class? And, the bottom rung of middle class-dom has only gone up from $35,000 to $40,000 in 45+ year? I don't buy into that.


Here's the US census stats. Click on H-1 All Races. $106k is the top income in the fourth quintile. Meaning, 20% of US residents earn more than that. You'll might find more surprising that to get into the top 5% you only have to make more than $196,000.

https://www.census.gov/hhes/www/income/data/historical/inequality/



> I realize "middle class" is a term of art, not science, but I would put the middle class, somewhere between $75,000 and $250,000 these days.


Unfortunately, most people believe that, which is how politicians manipulate them. The middle class is pretty measurable.

Culturally, its how the middle class spends their money that is a much an issue and whether it's growing. Read above on the middle class house I grew up in. No family of five would accept it today on a middle income salary. That house would be just over $118k in today's dollars, but a family making $100k (clearly in the middle class, statistically) would leverage their borrowing and buy at least a $300k house. The house I grew up in would sell for about $225k today, if the current owners hadn't built a second story on it!!

The point is, if a middle income family bought a $118,000 house, instead of a $300,000 house (or maybe even rent), they would have a ton of money left to buy boats. This is the heart of the issue, IMO.


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## JonEisberg (Dec 3, 2010)

capecodda said:


> Yes, and as we drone on, FOX vs CNBC commentary, I'll try to distract you.
> 
> I'm thinking back to a few years ago sitting in Bequia on a charter. I'm on the scoop transom of a bene-whatever, feet in the water after a run down from St Lucia. I'm watching a small crew on a perfect example of a Shields short tacking up the bay. The trades are blowing perfectly, the shelter of the bay provides for only a short chop and the long overhangs of that boat look perfect. They come right up to me, and tack. I watch that tiny wine glass transom sail away.
> 
> At that moment, for such a perfect small day sailer, I'd have traded anything I own.


That's one of the things I love about sitting out in the anchorage in Nantucket... You see that sort of thing played out every day, skilled small boat sailors enjoying the simple pleasures, in the midst of all that extraordinary wealth on display...

I was talking a few years ago with the wife of a well-known American billionaire businessman, who owns one of those sprawling estates that ring the periphery of Nantucket harbor... You've probably seen his 165' Feadship, it's a regular fixture in Newport. We were talking about the island, how much she loved it there, and that she was trying to get her husband to spend a bit more time there each summer. She guessed that the most time he had ever spent on the island in a single year was probably 8 days, perhaps as much as ten, in total...


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## ianjoub (Aug 3, 2014)

JonEisberg said:


> I was talking a few years ago with the wife of a well-known American billionaire businessman, who owns one of those sprawling estates that ring the periphery of Nantucket harbor... You've probably seen his 165' Feadship, it's a regular fixture in Newport. We were talking about the island, how much she loved it there, and that she was trying to get her husband to spend a bit more time there each summer. She guessed that the most time he had ever spent on the island in a single year was probably 8 days, perhaps as much as ten, in total...


And if he spent several months per year there, he couldn't afford it. She would then divorce him and look for another rich guy :lol:


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## smurphny (Feb 20, 2009)

Two places that I love to sit and watch the display of sailing are Newport and Annapolis.


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## Minnesail (Feb 19, 2013)

+1 to what Minnewaska said about house size. I think we have the smallest house of any of our friends at 1250 sq ft. It is nice, but a bit tight, so we're slowly finishing the basement to give us another 500 sq ft.

When we were buying it I called my dad and told him about this "little house" we put an offer on. He said "Little? The house you grew up in was 900 sq ft and there were five of us, now you think 1250 sq ft is little for just two?!" Of course they live in a bigger house now too, so he can't really throw stone.

In just one generation what people consider an adequately sized house has at least doubled.


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## Sal Paradise (Sep 14, 2012)

Minnewaska said:


> Culturally, its how the middle class spends their money that is a much an issue and whether it's growing. Read above on the middle class house I grew up in. No family of five would accept it today on a middle income salary. That house would be just over $118k in today's dollars, but a family making $100k (clearly in the middle class, statistically) would leverage their borrowing and buy at least a $300k house. The house I grew up in would sell for about $225k today, if the current owners hadn't built a second story on it!!
> 
> The point is, if a middle income family bought a $118,000 house, instead of a $300,000 house (or maybe even rent), they would have a ton of money left to buy boats. This is the heart of the issue, IMO.


I almost would have agreed with this before the financial crisis - and before my own kids started college. Now, I strongly disagree. I spent more on my kids education and on setting them up with some basics - than my own house. And I've lost more income in my private practice ( architecture ) from 2007 - 2014 than I spent on my house.

This is the heart of the issue. If public education were nearly free ( similar to 1950-1980) and economic growth nearly the same as before 2007- I'd be in a completely different financial picture.


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## Minnewaska (Feb 21, 2010)

Sal Paradise said:


> I almost would have agreed with this before the financial crisis - and before my own kids started college. Now, I strongly disagree. I spent more on my kids education and on setting them up with some basics - than my own house. And I've lost more income in my private practice ( architecture ) from 2007 - 2014 than I spent on my house.
> 
> This is the heart of the issue. If public education were nearly free ( similar to 1950-1980) and economic growth nearly the same as before 2007- I'd be in a completely different financial picture.


Well, near pre-2007 economic growth was, in many ways, unsustainable. Nevertheless, it should be better than it is today.

I completely agree that college tuition is also a major factor in middle-class spending. It is totally out of control, but I don't think paying on the public dime is the solution. That still the middle class paying the tab in taxes. These schools are competing like country clubs. New buildings, multi million dollar recruiting budgets to attract professors. It has to end.

In the middle class household I grew up in, I was the first in my family to ever attend college out of high school. My father actually finished his degree in his 30s and was the first, period. Neither of my sisters went to college.

Today, every kid has to go to college and it's outrageously expensive. It's just one more piece of the middle class spending on things other than boats.


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## ianjoub (Aug 3, 2014)

Minnewaska said:


> I don't think paying on the public dime is the solution.
> 
> Today, every kid has to go to college and it's outrageously expensive. It's just one more piece of the middle class spending on things other than boats.


I think the public funding is the problem, not the solution. When all the subsidies and loans became easily available, tuitions skyrocketed.

Today, every kid doesn't have to go to college. I would suggest that most kids shouldn't go to college. These kids are acquiring huge debt loads for worthless degrees. The jobs are not available for what they are training for.

I would like to see a resurgence of trade schools or apprenticeship programs. Unfortunately, with the grotesquely high minimum wage laws, no one can afford an apprentice.


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## miatapaul (Dec 15, 2006)

Minnewaska said:


> Wall St has serious corruption, but the system itself is not rigged. Many of the middle class have 401k investments that grow for doing essentially nothing, by your definition. I reiterate, the problem is more one of the middle class spending what they have on a substantially higher standard of living, than being extinct.
> 
> You need to save a piece, not just try to keep up with the Jones'.
> 
> ...


They also had jobs that paid 100% a pension fund, so they did not have to pay 15% of there income to 401K funds. There are essentially no companies that offer them to new employees.


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## smurphny (Feb 20, 2009)

I absolutely agree that not all kids need to go to college. It is a disservice to many students whose aptitudes are not academic. That's from a retired teacher. This idea has been fostered by academia FOR academia. Hopefully, folks are starting to look at academics with a good deal of skepticism. They've been witness to environmental Naziism and things like so many failed educational ideas that it's becoming quite obvious. The big danger is in accepting "just the way it is." It was not always like that. Buying a boat is less important now, even if affordable, because lower-middle class folks have been placed on an absolute hamster wheel. Once we old folks who remember what a one earner, Ozzie and Harriet household world looked like, the plutocrats will have won. They will have the worldwide supply of endless cheap labor, all working diligently for their benefit.

Be very careful of financial data and statistics produced by those who have a vested interest in having everyone think things are hunky-dory. Statistics are very often manipulated.


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## Minnesail (Feb 19, 2013)

Minnewaska said:


> I completely agree that college tuition is also a major factor in middle-class spending. It is totally out of control, but I don't think paying on the public dime is the solution. That still the middle class paying the tab in taxes. These schools are competing like country clubs. New buildings, multi million dollar recruiting budgets to attract professors. It has to end.





ianjoub said:


> I think the public funding is the problem, not the solution. When all the subsidies and loans became easily available, tuitions skyrocketed.


This is getting far off sailing, but&#8230;

It may be the case that private schools are competing like country clubs and that the easy access to loans is driving up tuition at private schools, but this is definitely not the case at public schools.

Over the last twenty years the University of Minnesota (which is a very good school) has slightly reduced the amount spent per student while keeping quality high, but tuition has more than doubled because the state subsidy dropped from 70% to 30%. (Calculating everything in inflation adjusted dollars.)

I haven't checked other states, but I think this is the general pattern. That hurts us all. A good, basic college education should be affordable. That's why we created land-grant universities, to serve the public good.

And it makes it harder for a middle-class family to afford a boat!  If you know tuition is going to be that high for your kids, or if you graduate with that debt&#8230;

Although it doesn't seem to be stopping Minnesotans from buying boats. We're a state of 5 million people with 2.5 million registered watercraft. Zoom zoom zoom!


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## Sal Paradise (Sep 14, 2012)

It's an interesting discussion and I agree with most of what you all have posted. My wife and I are the sandwich generation. I was comparing America in an earlier time to the situation now. 

In my company we have directors and upper management who ( many years ago ) squeeked through nearly free state university with no debt and plentiful jobs to graduate to. They manage entry level young people who had to go into debt tens or hundreds of thousands of dollars to get bottom rung dead end jobs and they make copies and file, or worse. 

It's like two different generations who grew up in totally different countries. The situation (it seems to me) is outside of their behavior or habit. It's macro economics.


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## TomMaine (Dec 21, 2010)

Sal Paradise said:


> It's an interesting discussion and I agree with most of what you all have posted. My wife and I are the sandwich generation. I was comparing America in an earlier time to the situation now.
> 
> In my company we have directors and upper management who ( many years ago ) squeeked through nearly free state university with no debt and plentiful jobs to graduate to. They manage entry level young people who had to go into debt tens or hundreds of thousands of dollars to get bottom rung dead end jobs and they make copies and file, or worse.
> 
> It's like two different generations who grew up in totally different countries. The situation (it seems to me) is outside of their behavior or habit. It's macro economics.


My experience, too. No degree means no interview today, right or wrong. In,our case, one graduated with degree and right into a good career. One more,to go...

New boats are easier to figure. Except for small ones, new boats have always been very expensive. The high cost of labor has them rising faster than inflation today. When I look at the high cost of labor in my field(housing), the boat posted in OP,looks,like a,pretty good deal.

But they still plummet in value! Our kids will enjoy used sailboats, that's still the same as always.


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## Omatako (Sep 14, 2003)

Whilst this is an interesting discussion . . . . . .

I have never at any stage in my life been able to afford a new boat irrespective of what my salary was or what financial environment/time it was in. That's not to say that I'm a low-level earner, we have always had two very respectable salaries coming into our home and still do.

After 45 years of earning reasonably well, we still cannot afford a new boat to replace what we're accustomed to.

So for me, all the discussion about how the money has devalued and spending habits have changed, accessibility to a new boat has IMHO never changed. It has always been for the upper level of financial society and their used boats have always been the domain of the middle class (me).

What is wrong with that? It has worked for me for four decades and our current/last boat was used when we bought it as were all our boats before that.

But I have to say - $4000+ for an Optimist??? You have got to be kidding


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## Sal Paradise (Sep 14, 2012)

And both sides of the coin are true - 

Middle class spending habits and lifestyles have an effect

and Macro economics have an effect. It's both.


Lump me in with the "grateful to have a used boat" group. You rich folk - please take good care of my future yacht.


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## mad_machine (Dec 16, 2012)

TomMaine said:


> New boats are easier to figure. Except for small ones, new boats have always been very expensive. The high cost of labor has them rising faster than inflation today. When I look at the high cost of labor in my field(housing), the boat posted in OP,looks,like a,pretty good deal.


That was my point.. when you look at the price a small "weekender" like this goes for.. the half million dollar boats do not seem so bad


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## smurphny (Feb 20, 2009)

Omatako said:


> Whilst this is an interesting discussion . . . . . .
> 
> I have never at any stage in my life been able to afford a new boat irrespective of what my salary was or what financial environment/time it was in. That's not to say that I'm a low-level earner, we have always had two very respectable salaries coming into our home and still do.
> 
> ...


Sounds to me like you have been smart enough to avoid going into debt for a new boat. Avoiding debt like the plague is the first key to financial wisdom To go into debt for a freakin' boat is madness.


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## Don L (Aug 8, 2008)

Must be nice to not need a loan to buy ones boat  I'm in the top 10% income wise and have a used production boat that was 10 years old when I got it. I still had to take a loan out for it.

Managing one's debt is important, but avoiding debt "like the plague" is just crazy. For those who insist that taking loan out to get a boat is all evil, did you also save for 30 years before you paid cash for your house?


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## Minnewaska (Feb 21, 2010)

All debt is clearly not evil. In fact, mathematically, the price of everything we buy would have to go up exponentially to be able to make money on multiple times the equity investment necessary for every business out there to be viable without leverage. No doubt it would be more stable, but it would also mean that no business would build boats at all. 

The problem is how much debt. The payments on all my debt combined is less than 15% of my average annual pay. The bank would willing lend me up to about 40%. If I borrowed that much money, I should be committed. But people do it all the time. The group that does it the most, is the middle-class. Not just to buy too big a house, but to pay college tuition too. They also have the least amount of absolute dollars remaining, after their debt payments. Low income individuals typically don't borrow, simply because they can't afford to.

I have no absolute issue with someone borrowing money to buy a boat. It all depends on the stability of their income, how much debt they have in total and how much of the value of the boat they borrow. The additional piece of advice I would give is to never borrow for a longer period of time than the useful life of the expenditure. For example, borrowing to go on vacation is insane!!!!! If you are going to borrow to buy a boat..... 1. be sure you have enough equity that you could sell it fairly quickly in an emergency and are willing to take the loss. 2. never borrow over a longer period that you believe the boat will be useful to you.


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## Sal Paradise (Sep 14, 2012)

I agree debt isn't necessarily evil, nor is lack of debt necessarily good.Because if you lack income or money then lack of debt is still no remedy. 

And paying cash isn't necessarily a virtue. For instance, the person who refuses to help pay for his children's education so he can pay all cash for a yacht ( new or used) isn't exactly a saint.


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## Don L (Aug 8, 2008)

Minnewaska said:


> I have no absolute issue with someone borrowing money to buy a boat. It all depends on the stability of their income, how much debt they have in total and how much of the value of the boat they borrow.


In lots of ways it is almost insane to NOT take a loan out to buy a boat instead of paying cash. Especially if you feel that your income isn't stable. It is sad in a way, but if disaster happens it is better to be able to walk away from a loan/boat and have cash still in hand, over having a boat "asset" and no cash.

The total interest I paid last year equaled 3.8% of my income. This is less than the the money invested made that would have had to used to not have any loans. I only have a loan balance on my house and boat, but I use my credit cards to pay for 95% of everything. But I pay those off each month and take the rewards and make $60/mo and save time.

I'm pretty convinced that 90% of people don't really understand money etc.


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## Minnewaska (Feb 21, 2010)

Don0190 said:


> ....if disaster happens it is better to be able to walk away from a loan/boat and have cash still in hand....


That's more an ethical issue than a financial one. It used to be that more people felt they needed to repay their debts. Bankruptcy laws were intended for the unable, not the unwilling. That line has grossly blurred. Before anyone "blames the banks", just remember they are lending out your deposits. The bank takes the first loss, but can't take all of them. I can name people that walked away from houses they could have paid for, but would not have lived the lifestyle that preferred. Sad.



> I'm pretty convinced that 90% of people don't really understand money etc.


Totally agreed.


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## smurphny (Feb 20, 2009)

I've got to strongly disagree with anyone using debt to buy a boat. Just my opinion but boats are luxury items and should be paid for in cash unless you can get more return on your money than you're paying for the debt. That has been possible in past times but certainly not now. People are using credit cards, for goodness sake, paying 19% interest while the banks get cash for essentially 0% interest from the fed. Most folks, instead of learning how to build their own house, employing the sweat equity theory, pay through the nose and enslave themselves for 30 years, paying 3X the value of their house. Many NEVER get out from under. Sorry, doing this is "the way things are done" but sometimes that way is not the best way. Doing this with a boat and getting into this kind of financial stress is not wise. Financial stress is at the top of the causes of mental issues in this country. It is part of American culture that is very destructive.


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## lapworth (Dec 19, 2008)

RichH said:


> "The most powerful force in the universe is the power of compound interest" - Albert Einstein
> 
> This is so true! I started full time work at 18 and started my IRA's by 20. Now my tax differed money makes more then my annual AGI. By the way my income is well below poverty line. I will just have to stay content waving at the rich boats while sailing on my old fixer upper. I love boats but I'm not giving up my hard working interest.


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## Minnewaska (Feb 21, 2010)

smurphny said:


> ....paying 19% interest while the banks get cash for essentially 0% interest from the fed.


First, banks don't get virtually any of their money from the Fed. That's a common misconception. The fed manipulates interest rates, by buying and selling securities (ie changing supply), but banks actually get their money from depositors and borrowing from each other. It's still pretty low cost, I'll agree. They also have to eat the cost of technology, and pay for all the unsecured losses, when people don't pay them back.



> Most folks, instead of learning how to build their own house, employing the sweat equity theory, pay through the nose and enslave themselves for 30 years, paying 3X the value of their house. Many NEVER get out from under.


"Most" is incorrect. Most, actually never pay to the last payment. They pay early, or sell and downsize in retirement. The point you lost in your example of paying 3X the value of your house, is that inflation generally raises wages over 30 years, while your payment stays the same. 20 years out, for most, their payment and remaining balance are a fraction of the burden they originally got in to.

The real problem comes when people continually refinance and remove the growing equity in their home. (nothwithstanding these recent few years of declining values) That's a hamster wheel and the middle class are on it, often to pay tuition.



> Doing this with a boat and getting into this kind of financial stress is not wise. Financial stress is at the top of the causes of mental issues in this country. It is part of American culture that is very destructive.


Whether one is stressed over debt is directly correlated to how much they have. I say zero debt in retirement! While one is healthy and working, a certain amount should not be stressful. To make my point in the extreme, how could you be stressed by borrowing $1,000 against a $100,000 boat? I'm just making the point that there is a line that should not be crossed, but there can be a line above zero debt for the right borrower.


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## smurphny (Feb 20, 2009)

Minnewaska said:


> First, banks don't get virtually any of their money from the Fed. That's a common misconception. The fed manipulates interest rates, by buying and selling securities (ie changing supply), but banks actually get their money from depositors and borrowing from each other. It's still pretty low cost, I'll agree. They also have to eat the cost of technology, and pay for all the unsecured losses, when people don't pay them back.
> 
> "Most" is incorrect. Most, actually never pay to the last payment. They pay early, or sell and downsize in retirement. The point you lost in your example of paying 3X the value of your house, is that inflation generally raises wages over 30 years, while your payment stays the same. 20 years out, for most, their payment and remaining balance are a fraction of the burden they originally got in to.
> 
> ...


Without getting into the many ways the fed controls interest rates, it is they who enable the 0 interest bank lending rates. They actually do lend directly through the discount window at times.

No matter how you slice it, mortgages are a tremendous burden for homeowners. Many people, especially since Barney Frank & Co., got in way over their heads. Banks knew better and totally ignored their fiduciary duties with ridiculous mortgage-based financial instruments to try to reap huge profits. They almost bankrupted the US and many should be in jail. Home values cannot be guaranteed like any other asset. Abusive mortgage products have cost us all money. As far as interest rates keeping up with home values, exactly the opposite is happening. We may actually be entering a period of devaluation and negative interest rates.

The great majority of people, especially young people, have no financial awareness. They are preyed upon by the credit industry to tempt them into that third mortgage. We really need more personal finance education in our public schools.

Anyway, back to boats before we get moved to the politics/shouting forum


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## Minnewaska (Feb 21, 2010)

smurphny said:


> Without getting into the many ways the fed controls interest rates, it is they who enable the 0 interest bank lending rates. They actually do lend directly through the discount window at times.


Right. That's what I said. The discount window, by definition, has to be the last resort, so it's used very infrequently. Never by health banks.



> Banks knew better and totally ignored their fiduciary duties with ridiculous mortgage-based financial instruments to try to reap huge profits. They almost bankrupted the US and many should be in jail. Home values cannot be guaranteed like any other asset. Abusive mortgage products have cost us all money.


Well, I can tell you're in "its the banks fault" crowd. You're entitled to your opinion, but it's misplaced, IMO. Banks have serious rules to follow or they don't get to be banks. Mortgage bankers and investment bankers had virtually none. I would argue that no one other than a deposit gathering, licensed bank should be allowed to use the word bank. There is a huge difference. The issue became blurred because the largest banks, owned both mortgage banks and investment banks too. Therein lies the problem, not the banks themselves.

In fact, the US taxpayer made a ton of money on the investments in "actual banks" that is commonly referred to as the bailout. All that money had to be repaid, with interest. It's the non-bank bailouts that killed the taxpayer.

The dumbest products have now been made illegal. (ie negative amortization loans). However, all these crazy, low payment, interest only, easy to get mortgage products had always been shunned by the banks. The problem started when the government said they had to make more loans to low-moderate income borrowers. Well, they didn't qualify, so the industry invented the product they could afford. Then it caught fire. It was like the adult in the room said to the teenagers, oh screw it, do whatever you want at the party.

Here's the big warning. The government is doing it again right now!! The "real banks" don't want to make these loans, but if the guy down the street does, then everyone ends up doing so or they can't compete. The whole debate was over having too little equity in the house and the FHA/HUD is trying to guarantee loans with 3% down. A slight decline in value and that middle class family is underwater. WTF are they thinking?

Banks may be the fuel, but government was (and is right now) the match. Fuel is docile, unless ignited.



> As far as interest rates keeping up with home values, exactly the opposite is happening. We may actually be entering a period of devaluation and negative interest rates.


That is possible. Not probably, but possible. But these are not ordinary times, either.



> The great majority of people, especially young people, have no financial awareness. They are preyed upon by the credit industry to tempt them into that third mortgage. We really need more personal finance education in our public schools.


Totally agreed!! Don't start a common core debate, however. Fin literacy isn't included. 



> Anyway, back to boats before we get moved to the politics/shouting forum


No doubt, we're on thin ice. However, I hope the connection to whether debt should be used to buy a boat and why the middle class don't own boats, like they once did, is reasonably related.

I also haven't seen anyone just get pissy yet either, which is a complete distinction from the sewer.


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## Minnesail (Feb 19, 2013)

A home mortgage is essentially a business loan. You're taking a loan to buy an asset (the house) that has a built-in customer (you). It may or may not be a wise business move, you're taking on a certain amount of risk hoping for a higher return. The smaller your down payment the more risk you take on and if you're below 20% the higher your expenses because you'll have to pay for mortgage insurance.

If you rent you transfer that risk to the landlord which is a better move in some circumstances. 

A boat loan could make sense using the same logic. If you found yourself spending X per year chartering boats (or renting other vacation properties) and you can get a loan for X - maintenance per year to buy the same boat then it would work out. You'd be spending the same amount and building some equity (assuming the loan is paid off faster than the boat depreciates). You could think of it as taking out a loan to start a charter business with one boat and one customer.

That being said, I wouldn't take a loan for a boat. I guess that's why I have a 22' boat.


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## smurphny (Feb 20, 2009)

Minnewaska said:


> Right. That's what I said. The discount window, by definition, has to be the last resort, so it's used very infrequently. Never by health banks.
> 
> Well, I can tell you're in "its the banks fault" crowd. You're entitled to your opinion, but it's misplaced, IMO. Banks have serious rules to follow or they don't get to be banks. Mortgage bankers and investment bankers had virtually none. I would argue that no one other than a deposit gathering, licensed bank should be allowed to use the word bank. There is a huge difference. The issue became blurred because the largest banks, owned both mortgage banks and investment banks too. Therein lies the problem, not the banks themselves.
> 
> ...


No doubt the banks are pressured to keep up with the least responsible. They do need to be the "adult in the room" though and know when to say no regardless of consequences. Makes one wonder what they teach them in Harvard Business School these days. Bill Clinton's repeal of Glass Steigel was the start of the mortgage mess, allowing the casino to invade real banks. Hey, maybe the Dems will come up with a program of no-interest loans for new boats along with the proposed free college education


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## caberg (Jul 26, 2012)

Don0190 said:


> Must be nice to not need a loan to buy ones boat  I'm in the top 10% income wise and have a used production boat that was 10 years old when I got it. I still had to take a loan out for it.


It's one thing to strategically use financing to buy a boat because it is better for your overall financial portfolio, which might be the case for any number of tax, accounting or investing reasons.

It is a whole other thing to _need_ financing to buy a boat.


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## Don L (Aug 8, 2008)

caberg said:


> It's one thing to strategically use financing to buy a boat because it is better for your overall financial portfolio, which might be the case for any number of tax, accounting or investing reasons.
> 
> It is a whole other thing to _need_ financing to buy a boat.


Never said I had a need to finance a boat, because no one needs a boat. I wanted a boat and wanted the one I got.

Stop trying to twist words.

Lets all say thanks to all the people who financed a new boat, without them most of the rest of us wouldn't even be talking about boats.


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## caberg (Jul 26, 2012)

Don0190 said:


> Never said I had a need to finance a boat, because no one needs a boat.


Well, duh. That's sorta the point. If you cannot buy the boat without financing, don't buy the boat.


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## Don L (Aug 8, 2008)

maybe because I didn't want a Seafarer 27


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## Minnewaska (Feb 21, 2010)

smurphny said:


> .... They do need to be the "adult in the room" though and know when to say no regardless of consequences. Makes one wonder what they teach them in Harvard Business School these days.....


There are 7 thousand banks in the country, give or take. The vast majority did nothing to cause the problem and never made a single "sub prime" loan. It was predominantly the non-banks that fueled this fire.


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## Minnewaska (Feb 21, 2010)

caberg said:


> It's one thing to strategically use financing to buy a boat because it is better for your overall financial portfolio, which might be the case for any number of tax, accounting or investing reasons.
> 
> It is a whole other thing to _need_ financing to buy a boat.


That's a pretty good point. Someone who borrows the money to buy a boat, so they don't have to liquidate an investment and prematurely pay capital gains tax, could be very smart to borrow the money. Technically, they don't need to.


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## Don L (Aug 8, 2008)

Minnewaska said:


> There are 7 thousand banks in the country, give or take. The vast majority did nothing to cause the problem and never made a single "sub prime" loan. It was predominantly the non-banks that fueled this fire.


NO! It was the STUPID people who took out stupid loans. Later they blamed the banks because how were they suppose to know that they couldn't afford a $300k house on $30k/yr earnings.


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## Sal Paradise (Sep 14, 2012)

Don0190 said:


> NO! It was the STUPID people who took out stupid loans. Later they blamed the banks because how were they suppose to know that they couldn't afford a $300k house on $30k/yr earnings.


Amazing, isn't it - that they were never that stupid, decade after decade.....until all of a sudden they were.....hmmmm.......


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## Rapp (Nov 16, 2014)

Minnewaska said:


> All debt is clearly not evil. In fact, mathematically, the price of everything we buy would have to go up exponentially to be able to make money on multiple times the equity investment necessary for every business out there to be viable without leverage. No doubt it would be more stable, but it would also mean that no business would build boats at all.
> 
> The problem is how much debt. The payments on all my debt combined is less than 15% of my average annual pay. The bank would willing lend me up to about 40%. If I borrowed that much money, I should be committed. But people do it all the time. The group that does it the most, is the middle-class. Not just to buy too big a house, but to pay college tuition too. They also have the least amount of absolute dollars remaining, after their debt payments. Low income individuals typically don't borrow, simply because they can't afford to.
> 
> I have no absolute issue with someone borrowing money to buy a boat. It all depends on the stability of their income, how much debt they have in total and how much of the value of the boat they borrow. The additional piece of advice I would give is to never borrow for a longer period of time than the useful life of the expenditure. For example, borrowing to go on vacation is insane!!!!! If you are going to borrow to buy a boat..... 1. be sure you have enough equity that you could sell it fairly quickly in an emergency and are willing to take the loss. 2. never borrow over a longer period that you believe the boat will be useful to you.


Well put,Govt guidelines are crazy for acceptable debt.I think the key is-Are you using longer term debt to reduce payments so you can buy something you really can't afford,and will there come a light at the end of the tunnell ? I'm 55 ,I had hoped to be out of debt by 50,now 60 is looking more realistic,but as I've gotten payments out of the way it has been invigorating .


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## caberg (Jul 26, 2012)

Don0190 said:


> maybe because I didn't want a Seafarer 27


Ha Ha -- good one!

Well, at age 36, wife age 34, our only debt is on our (modest) home and an investment property that generates income beyond it's debt and expense payments. And less than 60% of the value of those properties are mortgaged. Student loans paid off last year. Zero credit card debt. No car loans. Retirement accounts funded to the max each year.

And I get to spend all summer long with my beautiful wife, and our 5 year old son, on our $6,000 boat. Life is good.


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## Omatako (Sep 14, 2003)

Don0190 said:


> Managing one's debt is important, but avoiding debt "like the plague" is just crazy. For those who insist that taking loan out to get a boat is all evil, did you also save for 30 years before you paid cash for your house?


The real estate market in the US is obviously different but we have twice used equity in our real estate to fund our next boat.

It's a matter of borrowing against the mortgage at 7% instead of short term loans at 16 or 18% and when that property is sold, the boat is paid for. We have done that in two different countries and it has to be said that here in Auckland, the appreciation in value of property is nothing short of spectacular.

We immigrated here in 2003 with little capital, bought our 1st home with a meagre deposit. We sold it 8 years later having funded our present boat (not a Seafarer 27 ) through the mortgage. When we sold the property, it returned enough profit for the boat to be paid for and a healthy deposit for the next (our current) home. We have since bought our retirement spot and when we sell our current home we will go mortgage-free.

Saving 100k to buy a boat is counter-productive, the boat you want will go up in value as fast as you can save. But I believe funding a boat on short term credit with high interest is also not particularly clever. Just my opinion.


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## Don L (Aug 8, 2008)

Omatako said:


> Saving 100k to buy a boat is counter-productive, the boat you want will go up in value as fast as you can save. But I believe funding a boat on short term credit with high interest is also not particularly clever. Just my opinion.


Well boat financing is just like lots of things and the amount etc. makes a difference. My current boat had a $92k (80% of the boat price) loan at 6% for 15 years and the interest is deductible just like a house. I couldn't have really done better with a home equity once the fees get factored in. BTW, it's been 4 years and I pay more than just the payment so the loan is down to $38k balance.


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## caberg (Jul 26, 2012)

Omatako said:


> We immigrated here in 2003 with little capital, bought our 1st home with a meagre deposit. We sold it 8 years later having funded our present boat (not a Seafarer 27 ) through the mortgage. When we sold the property, it returned enough profit for the boat to be paid for and a healthy deposit for the next (our current) home. We have since bought our retirement spot and when we sell our current home we will go mortgage-free.


That's not a bad way to do it, but it wasn't without a little luck. Had you immigrated to the U.S. in 2006 and bought your first home, you would probably have filed for bankruptcy by now.

I'm definitely not saying cash is the only way to go. Financing is great. Why tie up your cash when you can use someone else's, right? But if you don't have cash or liquid assets in the first place, taking on debt with nothing but a hope that you'll have cash in the future to continue making payments, is not how we would choose to do it.


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## Sal Paradise (Sep 14, 2012)

caberg wins. 

Everyone else can go home.


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## Omatako (Sep 14, 2003)

Don0190 said:


> Well boat financing is just like lots of things and the amount etc. makes a difference. My current boat had a $92k (80% of the boat price) loan at 6% for 15 years and the interest is deductible just like a house. I couldn't have really done better with a home equity once the fees get factored in. BTW, it's been 4 years and I pay more than just the payment so the loan is down to $38k balance.


Not that I'm a banking guru (far from it) but in the two countries I have lived in there isn't a single financial institution that will give a 15 year loan on movable (and guaranteed-to-depreciate) assets - they would have a jaundiced view of a boat lasting 15 years and still having any meaningful value (bankers are not boaties). . . . . I believe the max period would be 5 years.

So you're quite lucky in the US to have such understanding bankers.

By my calculations your loan is costing about US$775 a month not counting the extra you're putting in. In New Zealand you would be paying US$1867 a month (92k, 6%, 5 years). On my mortgage I was paying $429 (114k, 4,8%, 25 years, remember the loan is against the real estate, not the boat). On your loan of 92K I would only have been paying US$344 (less than half). Sorry, I don't what "interest is deductible" means so that may make a difference to the calcs.

The essential difference here is that your boat would be paid off in a shorter time *IF* I was intending to keep my real estate until end-of-term. But since I sold the property after 4 years my boat was paid off in 4 years.

Still, not counting the extra you're putting in, your process means that you have to keep the boat for 15 years or make enough on the sale to settle the loan and have a deposit for your next boat. That's not going to be easy. And then the loan begins from the beginning.

All things considered my process works better in the right housing market

Wow, this thread has really gone off-topic - sorry for that.


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## barefootnavigator (Mar 12, 2012)

retracted


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