Utah is a great place to go boating, ride ATVs, Wave Runners, Motor Cycles, etc. The most influential ally to the salesman that sells those toys is YOU. You’ve already gone into the showroom with daydreams of being out on the lake, the family is all smiles, the water skiing is not only fun, but it will keep you in shape, we can take friends, barbecuing on the beach. Sounds great! The problem is that Utah, as great a state as it is, has 7 months of bad weather. Yes, there is always driving to Southern Utah. Let me stop here to say that it’s none of my business what you do with your money. I am only suggesting that you invoke a little wisdom, and hopefully you have a spouse that you can talk to and jointly make wise decisions with. My point? Make darn sure you truly want the boat/toy before you go out and buy one. Here’s some information to contemplate.
I have taken a segment out of one of my articles to outline the math of a typical boat purchase. If you decide to read on, you will easily be able to adapt the math to any toy you may be planning to buy. Bentley Collins of Sabre Boat Finance says to budget 11 percent of the boat's value annually to cover additional expenses, Insurance, Tax & Licensing, maintenance, gas, fees, etc.
Let’s say the boat is $15K new plus the aforementioned extras $1600. If you pay cash, great, but then there is the math of what that money could be earning if it wasn’t tied up in a depreciating asset. Naturally most would finance the purchase adding a whole new layer of math to the equation.
Scenario: $150,000 left on mortgage, with an interest rate of 5%. 30 year fixed rate. If you pay that $15000 to principal on that mortgage, you would shave 6 years 5 months off the life of the loan, AND save yourself $48,769.
Let me state some statistical analysis. People that own boats typically go boating 5 weekends a year. Now you, being the salesman’s ally may say you will go up every weekend in the summer (12), but the reality is you may not have the extra money needed to go up every weekend. You may not have the time away from the responsibilities of home ownership. Towing a boat up a canyon takes a big toll on the mechanical condition of a truck that you either buy or borrow. Then the reality finally sets in after seeing the boat on the side of the house not being used for years, and it gets sold for a fraction of the price paid. Did you also buy ATVs? Waverunners? Snowmobiles?
Now not wanting to be a ‘kill joy’, what if you were able to go boating and also pay a big chunk on your house? Having “your cake and eating it too” is great. Renting is wise. What is it about renting the toys that causes people to buy rather than rent? Psychology…Ego…it’s that stupid trait of “keeping up with the Joneses”, until of course, the Joneses go bankrupt, lose their toys, lose their house, their kids are yanked out of their circles, their credit is killed for 7 years or more, stress on the family causes a divorce, thus causing more trauma to the kids/family.