Lack of value for our boat in todays econonmy is hard to swallow...

A point here the other boat that you are looking at is selling for less too. In true reality the value of the boats is still there. Only since they have all taken the same hit they are just all selling for less.
The biggest problem is getting a buyer for a boat since the boat would be the first to go in a tight economy.
Sell low buy low
 
dpmulvey said:
...I say again, if it is not a business asset with a depreciation line of accounting associated with it, anticipating depreciation is a waste of time...
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Huh? Not sure I understand the statement... Unless you are simply reiterating your stance that if its not a business deduction then it doesn't count...???
 
A thought for anyone trading up in this market. Since you'll be buying your boat at a lower price, that's the price you pay tax on, whether 'sales and use tax' when you go to register the boat, or personal property tax in those localities that collect it.
 
I'm back... yes, I still need to school a junior engineer on aerodynamics, I'll get to that later this weekend.

On depreciation, in my humble opinion, I'm probably the most conservative here. Depreciation is something you do to assets. Assets are something you can usually use to leverage to gain more assets or even cash. In the world of personal finance, few are going to be able to use their boat in this economy as leverage. To me, that means the purchase price of the boat is a sunk cost... and in my world of personal finance, sunk costs are paid with free cash, not financed. What they cost to operate are expenses, paid for as incurred. Whatever you're able to recapture when you liquidate the boat, is an excess gain.

Why do I take this approach? Because I can sleep at night knowing that I can afford what I have, no matter what the market brings. I don't count on residual value of the boat because when times like this happen, you can't access it even if I wanted to. The money you used to buy your boat is gone. Deal with that. You have a huge chunk of fiberglass and nobody cares what you paid for it or what you think it is worth. It's just fiberglass with some rusting metal in it. If you can get someone to give you some cash for it, great... but don't count on it. And if you have a huge loan you're paying on because you didn't realize that you were putting your money into a sunk cost, that's your fault too. If it was a creative finance scheme to shift cash from one place to another so you might get a tax break, at least you have the cash to draw on... but if you were counting on some other asset to provide your loan payments, or worse yet, your job... you need to talk to some people that survived the great depression.

How's that for fiscal conservatism? In my world, the economy might be slow to expand, but it certainly wouldn't have the drops we see. We could debate forever as to which is best...
 
Jim240 said:
I'm back... yes, I still need to school a junior engineer on aerodynamics, I'll get to that later this weekend.

On depreciation, in my humble opinion, I'm probably the most conservative here. Depreciation is something you do to assets. Assets are something you can usually use to leverage to gain more assets or even cash. In the world of personal finance, few are going to be able to use their boat in this economy as leverage. To me, that means the purchase price of the boat is a sunk cost... and in my world of personal finance, sunk costs are paid with free cash, not financed. What they cost to operate are expenses, paid for as incurred. Whatever you're able to recapture when you liquidate the boat, is an excess gain.

Why do I take this approach? Because I can sleep at night knowing that I can afford what I have, no matter what the market brings. I don't count on residual value of the boat because when times like this happen, you can't access it even if I wanted to. The money you used to buy your boat is gone. Deal with that. You have a huge chunk of fiberglass and nobody cares what you paid for it or what you think it is worth. It's just fiberglass with some rusting metal in it. If you can get someone to give you some cash for it, great... but don't count on it. And if you have a huge loan you're paying on because you didn't realize that you were putting your money into a sunk cost, that's your fault too. If it was a creative finance scheme to shift cash from one place to another so you might get a tax break, at least you have the cash to draw on... but if you were counting on some other asset to provide your loan payments, or worse yet, your job... you need to talk to some people that survived the great depression.

How's that for fiscal conservatism? In my world, the economy might be slow to expand, but it certainly wouldn't have the drops we see. We could debate forever as to which is best...
Click to expand...


Exactly right in my opinion too. I bought my boat knowing it was not bought for appreciation or for a future sale. It is like a vacation for me. The appreciation of a vacation leaves great memories. So as far as I am concerned, I have a lot of vacations to look forward to.
 
Well... so we have some people that at one extreme say "don't worry about the depreciation" and some on the other that say "it's fully depreciated the day you buy it."

Wonder how that sound financial advice works on $2M boats? I guess that also throws out the whole argument about the increased cost of diesel engines can be recouped on the back end... Maybe we should apply this logic to houses? and cars? and dogs?... Your net worth is only the cash in your bank account. Period.

BTW... "Assets" are defined as things that have value...

http://wordnetweb.princeton.edu/perl/webwn?s=assets

I'm off to go convince the government that the value of my boat is zero so I shouldn't have to pay property taxes on it. I'll let you know how that goes.
 
Four Suns said:
......I'm off to go convince the government that the value of my boat is zero so I shouldn't have to pay property taxes on it. I'll let you know how that goes.
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Tell them you read it on the internet....so it must be true....
 
I have several categories that I can place something in when I'm considering a purchase. A dog is in the "costs me way more than I ever thought and will never see a dime" category. I've never purchased a $2mil boat so I haven't made a category for that yet. So how do you financially justify a big boat purchase? Do you leverage the value somehow? Do you look at it as a temporary holding tank of value that has a leak in it? Is it strictly standard of living value like a nice suit for the holidays? Is it a cost vs cost comparison like "this costs me much less than a 2 bedroom apt on the water in Miami"? Does it make a difference if the boat is $100k and under? $200k and over? i've been thinking about this for some time.
 
TurtleTone said:
I have several categories that I can place something in when I'm considering a purchase. A dog is in the "costs me way more than I ever thought and will never see a dime" category. I've never purchased a $2mil boat so I haven't made a category for that yet. So how do you financially justify a big boat purchase? Do you leverage the value somehow? Do you look at it as a temporary holding tank of value that has a leak in it? Is it strictly standard of living value like a nice suit for the holidays? Is it a cost vs cost comparison like "this costs me much less than a 2 bedroom apt on the water in Miami"? Does it make a difference if the boat is $100k and under? $200k and over? i've been thinking about this for some time.
Click to expand...

My justification is this. I could buy a condo on the water in Miami, but I would rather be able to take my condo with me anywhere I want to go.

Can I take that condo out on the lake or ocean with friends? No.

Can I take that condo on vacation in the summer months? No.

I always say, I would rather be washing/waxing/maintaining a boat than mowing a lawn or painting a house.

I enjoy being on the water and running the boat myself, I would never be content sitting in a condo landlocked in one place.
 
But what about the loss of value? does it enter your mind? Do you borrow the money and look at it as an expense? Or do you pay cash and look at it as an asset with a hole in it?
 
Justifying a purchase....any purchase....is way different than assest value realization. If you pay $x for an 'item' and then sell it for $x-y, then you lost $y BUT you now have $x-y to put back in to your portfolio....real $$$...BUT you lost $y from your original portfolio + all the $abcdef..... expenses along the way.

That said, I will continue to justify my boat purchases, a depriciating assest, in my own mind so long as I am physcially and financially capable....
 
Ok, so you look at it as a temporary holding tank of value that has a hole in it and it costs money. Say you buy a boat for $150k, It costs $20k/year for slips, storage, maint, gas, tax, insurance. It leaks about $10k a year in value. What are you left with after 5 years?
 
TurtleTone said:
Ok, so you look at it as a temporary holding tank of value that has a hole in it and it costs money. Say you buy a boat for $150k, It costs $20k/year for slips, storage, maint, gas, tax, insurance. It leaks about $10k a year in value. What are you left with after 5 years?
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150k - (5 x 10k) I am going to quess and save a boat that is worth 100k:grin:
 
You can do similar math with an appreciating asset like an apt. If you add up the expenses, taxes, insurance, interest etc... over a 30 year period, subtract the value after 30 years... you're pretty much left with nothing (unless you will it to your kids, then they get the value without the initial cost). So I have to agree with Gary's statement (whether or not it was meant to be sarcastic) That my net worth is the cash in the bank. All other things I purchase I base solely on trying to reduce the expense of owning it. Maybe I wrongly think this way, but I don't see most things I buy as an asset. I see it as an expense, something that costs me money, and my decision what to buy is based on how much it's going to cost me over a period of time. It's not quite that simple and sometimes I time things right, like my apt purchase which has gone up in value more than it cost me. But I could have easily bought it at the wrong time and lost a lot.

Work assets are another thing. I buy a piece of equipment based on how much money it's going to make me. I consider that an asset.
 
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vetteboy said:
Who cares, you enjoyed it and then you died. Life is too short to fly coach.
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Thank you.

We are making "hay" out of something quite simple: No one NEEDS a boat. I don't need a car with 400 horsepower that has depreciated to 50% of what I paid for it- but I love it and it's a hoot to drive. I don't need 3/4 of the stuff I have for chrissakes.

If anyone is trying to justify a boat as an investment, by ignoring ALL the costs and depreciation, you are, as you can tell from all the input here, making a mistake.

I'm "looking" for something to upgrade to. I want "new", not used. Yes, I can get more boat for less money and not take a depreciation hit. Dumb? Sure- so what. That's the attitude you have to have to be in boating. I'm just thankful that I even get to have a conversation about something like this.
 
Jim240 said:
On depreciation, in my humble opinion, I'm probably the most conservative here...

Why do I take this approach? Because I can sleep at night knowing that I can afford what I have, no matter what the market brings.
Click to expand...

Jim,

You remind me of my Grandfather, who grew up in the depression (take this as a compliment). I remember showing him around my first house when I was 25--it was a fixer upper. He took one look at some of the stuff I wanted to do and asked "did you pay for it yet." I replied, "It'll be mine in 30 years." He said, "I wouldn't do a thing to it until it's paid for." His advice was conservative, but works for times like these. We watched his 70 year-old brother loose his farm to the bank, but my grandfather died with money to spare (next farm over).

Unfortunately, there wouldn't be half the boating industry if everybody waited to pay for their boats with excess cash. I'm enjoying my boat while I'm young just incase I don't live to see retirement.
 
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