In article et,
Maxprop wrote:

"Jonathan Ganz" wrote in message
...
for example) on paper. I buy only what I can afford to pay cash for.

Well, that's not a terrible philosophy, but it isn't necessarily the
best one.

It is ALWAYS the best one, if you have the cash.

Nope. Not always... for some of the reasons cited previously.

I've heard these excuses for decades, and they didn't wash years ago, nor do
they now. If you add up the tax benefits you get from writing off the
interest on your boat loan, plus any interest you may earn from investments
made with the money instead of the boat purchase, you're still behind. The
only real excuse for not paying cash is, "I don't have it." Everything else
is just rationalization for allowing someone else the opportunity to make a
lot of money at your expense.

No, that's just not true. Have you suddenly switched professions to an
economoist or CPA?

Notice that I didn't even include depreciation in my statement above, Jon.
Add that in and you've got an even greater losing proposition. That said,
there is nothing wrong with financing a boat. It may be the only way one
can have a boat. It's a matter of priorities.

See my last comment, and it's certainly a matter of priorities.

--
"j" ganz @@
www.sailnow.com

"Jonathan Ganz" wrote in message
...
In article et,
Maxprop wrote:

"Jonathan Ganz" wrote in message
...
for example) on paper. I buy only what I can afford to pay cash for.

Well, that's not a terrible philosophy, but it isn't necessarily the
best one.

It is ALWAYS the best one, if you have the cash.

Nope. Not always... for some of the reasons cited previously.

I've heard these excuses for decades, and they didn't wash years ago, nor
do
they now. If you add up the tax benefits you get from writing off the
interest on your boat loan, plus any interest you may earn from
investments
made with the money instead of the boat purchase, you're still behind.
The
only real excuse for not paying cash is, "I don't have it." Everything
else
is just rationalization for allowing someone else the opportunity to make
a
lot of money at your expense.

No, that's just not true. Have you suddenly switched professions to an
economoist or CPA?

I've done the math, Jon. You'll realize I speak with non-forked tongue if
you do the math yourself. There is NEVER a good reason to finance a
depreciating asset, especially one not used for making money, if you have
the cash to buy it outright.


Max

In article . net,
Maxprop wrote:
I've done the math, Jon. You'll realize I speak with non-forked tongue if
you do the math yourself. There is NEVER a good reason to finance a
depreciating asset, especially one not used for making money, if you have
the cash to buy it outright.

It's just not true. Besides, as soon as someone uses the word "never"
in an argument like this, it usually means that there is no such
absolute.

I'm purdy good with dem numbers also.

--
"j" ganz @@
www.sailnow.com

"Jonathan Ganz" wrote in message
...
In article . net,
Maxprop wrote:
I've done the math, Jon. You'll realize I speak with non-forked tongue if
you do the math yourself. There is NEVER a good reason to finance a
depreciating asset, especially one not used for making money, if you have
the cash to buy it outright.

It's just not true. Besides, as soon as someone uses the word "never"
in an argument like this, it usually means that there is no such
absolute.

I'm purdy good with dem numbers also.

Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is going
for $64k and you have a down payment of 10%. Show me how you are going to
save money, or at least not lose any, by financing the boat. We'll assume
you have sufficient money in relatively liquid assets to purchase the boat
outright.

I'm waiting.

Max

In article et,
Maxprop wrote:
Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is going
for $64k and you have a down payment of 10%. Show me how you are going to
save money, or at least not lose any, by financing the boat. We'll assume
you have sufficient money in relatively liquid assets to purchase the boat
outright.

I'm waiting.

Changing numbers to something more realistic....

$20K buy + $5K fix-it money from an equity loan of ~5%.

Slip fee: $400/mo (probably a bit high)

Misc/Insurance: $200/mo (way high in my opinion)

Payment on loan about $200/mo.

Tax benefit ... well, that's proprietary, but basically, it's a
percentage of the slip fee, misc, loan paymnet, and the right-off from
the depreciating asset over time. Also, I don't have to rent or borrow
a boat to get my sea time and keep my license active, and I can make
money (although not a lot) per month, say $300 - average over 12 mos.)

Cost to rent a condo, so I can be near clients: $1200/mo (low estimate)
Cost to buy a condo, 10% down on $450K, since I don't have $450K
sitting around (and that's way low) plus monthly mortgage of $1500
(guestimate) plus boat rental so I can really lose money $300/outing.

Perhaps you see where this is going.

Sure, I could just pay cash, but then, since I don't have a bottomless
pit of cash, I might be a bit short if something interesting, like
another house, comes up for sale. For that, I would put down 20%,
finance the rest, and have break-even or (like now) slightly positive
cash flow.

Bottom line... the cash flow is much better. Thus, it's a better deal
to finance the boat.

Well, I've left out a lot. I'm sure you can pick it apart if you try.






--
"j" ganz @@
www.sailnow.com

"Jonathan Ganz" wrote in message
...
In article et,
Maxprop wrote:
Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is
going
for $64k and you have a down payment of 10%. Show me how you are going to
save money, or at least not lose any, by financing the boat. We'll assume
you have sufficient money in relatively liquid assets to purchase the boat
outright.

I'm waiting.

Changing numbers to something more realistic....

$20K buy + $5K fix-it money from an equity loan of ~5%.

Slip fee: $400/mo (probably a bit high)

Misc/Insurance: $200/mo (way high in my opinion)

Payment on loan about $200/mo.

Tax benefit ... well, that's proprietary, but basically, it's a
percentage of the slip fee, misc, loan paymnet, and the right-off from
the depreciating asset over time.

I hope you don't get audited, Jon. Federal law allows you to write-off the
interest on such a loan. But the slip fee? Total loan payment?
Depreciation? Unless you're using the boat as a business, you're in deep.

Also, I don't have to rent or borrow
a boat to get my sea time and keep my license active, and I can make
money (although not a lot) per month, say $300 - average over 12 mos.)

Doing what? Floating bordello? I suppose that might work.


Cost to rent a condo, so I can be near clients: $1200/mo (low estimate)
Cost to buy a condo, 10% down on $450K, since I don't have $450K
sitting around (and that's way low) plus monthly mortgage of $1500
(guestimate) plus boat rental so I can really lose money $300/outing.

Once again, the IRS might like to have a chat with you. You must show a
profit within five years or the write-offs become retroactively taxable.

Perhaps you see where this is going.

Sure, I could just pay cash, but then, since I don't have a bottomless
pit of cash, I might be a bit short if something interesting, like
another house, comes up for sale. For that, I would put down 20%,
finance the rest, and have break-even or (like now) slightly positive
cash flow.

Fergeddit. No one can afford Bay Area real estate any longer. g


Bottom line... the cash flow is much better. Thus, it's a better deal
to finance the boat.

Well, I've left out a lot. I'm sure you can pick it apart if you try.

If you'd simply bought the boat, your cash flow would have been positive.
With your calculations, it couldn't possibly be. Fact: the interest you
pay on a boat loan will always exceed the tax savings possible by writing
off the interest expense.

But to cut to the chase, we were talking about boats used for recreation,
not for business. If you can legitimately use yours for business, more
power to ya. Most of us either can't or wish to risk an audit every other
year. The IRS just loves it when folks write-off boats as a business
expense. The old rule was generally thus: the very rich can write-off very
expensive boats, at least in part, as business expenses, but the rest of us
cannot write off our small craft unless we are in the charter business. If
you do what you claim above, you'll doubtlessly be audited sometime down the
road. Hope your documentation is in order.

Max

"Maxprop" wrote in message
ink.net...

"Jonathan Ganz" wrote in message
...
In article et,
Maxprop wrote:
Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is
going
for $64k and you have a down payment of 10%. Show me how you are going
to
save money, or at least not lose any, by financing the boat. We'll
assume
you have sufficient money in relatively liquid assets to purchase the
boat
outright.

I'm waiting.

Changing numbers to something more realistic....

$20K buy + $5K fix-it money from an equity loan of ~5%.

Slip fee: $400/mo (probably a bit high)

Misc/Insurance: $200/mo (way high in my opinion)

Payment on loan about $200/mo.

Tax benefit ... well, that's proprietary, but basically, it's a
percentage of the slip fee, misc, loan paymnet, and the right-off from
the depreciating asset over time.

I hope you don't get audited, Jon. Federal law allows you to write-off
the interest on such a loan. But the slip fee? Total loan payment?
Depreciation? Unless you're using the boat as a business, you're in deep.

Well, duhh... if you read just a little bit further, you would see that I
will be...

Also, I don't have to rent or borrow
a boat to get my sea time and keep my license active, and I can make
money (although not a lot) per month, say $300 - average over 12 mos.)

Doing what? Floating bordello? I suppose that might work.


I would say that would be your experience, but you aren't up for it.

Cost to rent a condo, so I can be near clients: $1200/mo (low estimate)
Cost to buy a condo, 10% down on $450K, since I don't have $450K
sitting around (and that's way low) plus monthly mortgage of $1500
(guestimate) plus boat rental so I can really lose money $300/outing.

Once again, the IRS might like to have a chat with you. You must show a
profit within five years or the write-offs become retroactively taxable.

NO. Totally incorrect. There is no law nor IRS ruling that says I have to
make a profit. If I can show that I've made a good faith effort to make a
profit, that's all that's required. Suggestion: keep your day job.

Perhaps you see where this is going.

Sure, I could just pay cash, but then, since I don't have a bottomless
pit of cash, I might be a bit short if something interesting, like
another house, comes up for sale. For that, I would put down 20%,
finance the rest, and have break-even or (like now) slightly positive
cash flow.

Fergeddit. No one can afford Bay Area real estate any longer. g

I can, have, and will.


Bottom line... the cash flow is much better. Thus, it's a better deal
to finance the boat.

Well, I've left out a lot. I'm sure you can pick it apart if you try.

If you'd simply bought the boat, your cash flow would have been positive.
With your calculations, it couldn't possibly be. Fact: the interest you
pay on a boat loan will always exceed the tax savings possible by writing
off the interest expense.

Huh? That's a negative cash flow of $25K all at once!

But to cut to the chase, we were talking about boats used for recreation,
not for business. If you can legitimately use yours for business, more
power to ya. Most of us either can't or wish to risk an audit every other
year. The IRS just loves it when folks write-off boats as a business
expense. The old rule was generally thus: the very rich can write-off
very expensive boats, at least in part, as business expenses, but the rest
of us cannot write off our small craft unless we are in the charter
business. If you do what you claim above, you'll doubtlessly be audited
sometime down the road. Hope your documentation is in order.

You said NEVER buddy. The answer is not never. In addition, there is nothing
wrong with having a deduction as a second home on a boat. You're required to
have sleeping accomodations, a working head, and cooking facilities. And,
that has nothing to do with a commercial venture.

Sheesh. I'm sure glad you aren't my accountant!

How about if I put my company name on my saild, can I count that as a
deduction?
The cost of a new sail?

SV

Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is
going
for $64k and you have a down payment of 10%. Show me how you are going
to
save money, or at least not lose any, by financing the boat. We'll
assume
you have sufficient money in relatively liquid assets to purchase the
boat
outright.

Wow. Max, you don't know much about money do you? Many people can make
more money with a 64K cash investment spent elsewhere that would easily
outrun the losses for financing the boat. Unless you plan to keep her
forever, you're only "leasing" her in effect anway. Why hand over the
entire amount if you plan to trade up anyway in 5 years? In our case we
bought the boat outright, but there were serious financial profile
factors to consider as well for us.

RB
35s5...OUR boat!
NY

"Capt. Rob" wrote in message
oups.com...
Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is
going
for $64k and you have a down payment of 10%. Show me how you are going
to
save money, or at least not lose any, by financing the boat. We'll
assume
you have sufficient money in relatively liquid assets to purchase the
boat
outright.

Wow. Max, you don't know much about money do you? Many people can make
more money with a 64K cash investment spent elsewhere that would easily
outrun the losses for financing the boat.

Really? Show me--and I won't take your opinion for fact. I'd like to see
some hard evidence. Most boat loans are going to be in the 6-9% category
(probably at the high end for Jon), and I doubt if you can do better than
that investing the same amount of money in low-risk paper. My tax-deferred
municipal bonds are producing less than 5% currently, and they never exceed
the going consumer loan rates. I cite munis because they are the most
secure investments I have. CDs are generally doing about 4% or less, and
relatively low-risk mutuals aren't doing a whole lot better, but these are
probably going to come closer to the banks' consumer loan rates than any
other investment. And they are far from risk-free. 2001-2003.

Unless you plan to keep her
forever, you're only "leasing" her in effect anway. Why hand over the
entire amount if you plan to trade up anyway in 5 years? In our case we
bought the boat outright, but there were serious financial profile
factors to consider as well for us.

Whatever.

Max