How much of income to spend on a boat?

Hpower · Newbie Joined: 26 Jan 2006 Posts: 8

I am still in school and have been reading about all the different boats out there to try and figure out what I should get when I get a job. My parents have had boats as I have grown up but never a boat specifically for skiing. Now some of the name brand boat can run 50-100 for a new one, which is a decent amount of money to the average joe. So what percentage of your income do you think is resonable to spend on a boat? How reliable is it to get a used boat?

Neognosis · Ladies Man Joined: 13 Jan 2003 Posts: 17617 City: Webster

It depends on what else you are willing to give up and how you want to live.

A used boat can be very reliable or it can be a piece of junk. Have it checked out by a mechanic, and pay attention to the upkeep of the rest of the boat. If they didn't wax it, they probably didn't bother changing the oil.

Also, some inboards, like the chevy 350, are almost bulletproof. Some I/Os aren't so trustworthy. But that all depends on a lot of factors.

Hpower · Newbie Joined: 26 Jan 2006 Posts: 8

Styk33 · Posted: Jan 30, 2006 1:48 pm Post subject:

It is a hobby, and like other hobbies you need to decide how much you want to spend on it. Grantted, boating can be a very expensive one, but very rewarding too. There are quite a few folks that have spent $5-10k on a boat and it throws a great wake and is very reliable.

Someone will probably mention owning a house is more important. I kind of agree, but it is your money.

Neognosis · Ladies Man Joined: 13 Jan 2003 Posts: 17617 City: Webster

LEt me put it this way: I paid more than I could afford. BUT, we don't go out to dinner as much, we cut down to basic cable (just got rid of playboy and showtime and skin-a-max, but we'll get HBO back for the Sopranos), we don't see movies out as much anymore, we buy fewer name-brands, we don't take any vacations other than a week at the cottage which we spend ON the boat.

It's about deciding how badly you want the boat, and what you are willing to give up, unless you are as wealthy as some.

BUT, inboards, unless neglected, usually can be found in good shape even in the 20 year old range.

austin11 · Criminal Joined: 23 Jan 2006 Posts: 74

i agree with camera boy. For the time being spend what you are willing to maybe take out of regular living.. Just work your ass off and at one point(hopefully) you wont have to worry about how much your spending. But for the time being the question is how much do i love boating???

Hpower · Newbie Joined: 26 Jan 2006 Posts: 8

Yeah I have pretty much grown up being out on the water so it is pretty important to me. I have to make sure I live near a nice body of water also.

bmartin · Addict Joined: 05 Feb 2003 Posts: 794

I think the amount some spend on a boat is insane.....but it is their money or probably more likely their credit. It is all about priorities.

I tend to be on the conservative side and wouldn't put money in a boat before I put enough away for retirement, could pay all the essential bills like rent/mortgage, insurance, auto, and if you have kids have all their expenses. After that you could skimp on other things and throw the rest in the boat. I also pay cash for all my toys including boats...but like I said I'm fiscally conservative.

Wakebrad · Ladies Man Joined: 11 Dec 2003 Posts: 12257 City: Dallas

IMO 50% of your yearly is on the high side but doable. Just be prepared that if you are buying a newer boat on a 10-15 year loan, you will be upside down for a couple years in the middle.

It just depends on your priorities. If saving and making financial investments for the future is important to you then go on the low side. Something you can save for a year and pay in cash. If you're focused on having fun while you're young at the expense of comfort later in life then you can spend towards the upper end. I know people who's boat is probably more than half of their yearly. But they're just getting by paycheck to paycheck. That's not the way I want to live.

Hpower · Newbie Joined: 26 Jan 2006 Posts: 8

Maybe I will try and marry some girl who is a professional also, and get her to want a smaller house but a cool boat. Very Happy

acurtis_ttu · Soul Rider Joined: 16 Aug 2004 Posts: 499 City: Houston

My boat payment (15 year, 04 SSV) is about 5% of my gross monthly income if that helps at all.

austin11 · Criminal Joined: 23 Jan 2006 Posts: 74

lol u can marry more money in a minute than you can make in a lifetime! Laughing

austin11 · Criminal Joined: 23 Jan 2006 Posts: 74

My boat payment (10 yrs 06 24 ssv) its just under 1% of my monthly income. But believe wasnt always like that. When i was fresh out of grad school i was paying much much much more of my income towards my boat.

JV · Posted: Jan 30, 2006 4:39 pm Post subject:

austin11, what are the benefits of stretching out your payments over a ten year period? it sounds like you can afford to pay off the boat much earlier considering you're only paying 1% of your income towards the loan. i heard someone say once that if you spend a certain amout of money per month towards luxury items that you fall under a different tax bracket (so most people try to stay below that line), but i'm sure that has to be wrong. over a 10 year period, how much interest would you expect to pay on a $50k loan?

austin11 · Criminal Joined: 23 Jan 2006 Posts: 74

I am a realtor.That is my income source. But i have a bunch of investment properties that i set up for retirement so i have a lot of loans and payments to pay each month. So i cant exactly pay the boat in cash. I still spread my self out pretty thin.

JV · Posted: Jan 30, 2006 5:15 pm Post subject:

thanks austin. hypothetically, if i were a wealthy man (here's to dreaming), would there be any advantages to paying off a boat over 10 years compared to say 2 or 3? or is the only benefit having the pleasure of paying for your boat twice?

austin11 · Criminal Joined: 23 Jan 2006 Posts: 74

i will probably only have the boat for another 2-3 years and then ill sell it. So then i wont have to pay those larger payments. And interest isnt such a big deal when your not going to own something for that long.

Hpower · Newbie Joined: 26 Jan 2006 Posts: 8

austin11 · Criminal Joined: 23 Jan 2006 Posts: 74

correct if u are planning on having it for a while

jpk · Outlaw Joined: 07 Aug 2005 Posts: 215 City: Redmond

Unless you can claim the boat as a business expense AND can sell your boat at the end of each season for essentially what you paid for it, then it makes no financial sense to extend the payment period with interest any longer than you need to.

However, we love to buy now and pay later, so what the heck?! You might be dead in ten years, so why not put that money to use on more bling for your boat instead of into the principal! Twisted Evil

smokedog2 · Outlaw Joined: 02 Dec 2004 Posts: 210 City: Cincinnati

$50,000 at 6% for 10 years is $555. or 1% of $55,500/mo or $666,000/yr.

Austin, your kicking my a$$. Puppy Eyes

I’m on the infinity payment plan but who can turn down 6% consumer money.
I think I can do better - a lot better.

% of salary analysis:

My boat pmt is around $350 ($4,200/yr)

at 5% I should be making $7000/mo, or 84,000/yr

at 10% , 3,500/mo or $42,000/yr

at 15%, 2,333 or $28,000/yr

I’d say:

5% or less – golden

10% or less – ok, better if you love it

15% or more – you have lost your mind.

My $.02, worth what you paid for it,

SD2

Oh, You will have a really tough time becoming an Austin if this is where you are putting the first real disposable income you acquire.

bremsen · Outlaw Joined: 08 Jun 2005 Posts: 168 City: Charlotte

The payment is only a small part of owning a boat. We go through $30-80 in gas per day, then you have oil changes, winterization, storage, extra/replacement parts, insurance, covers, add-ons/upgrades, etc, etc ,etc. You also have to think about the trailer and the upkeep on that (bearings, tires, brakes, lights).

I would say we avg $500-700/mo just to own/use it during the season.....thats not including a payment (don't have one).

jpk · Outlaw Joined: 07 Aug 2005 Posts: 215 City: Redmond

Wakebrad · Ladies Man Joined: 11 Dec 2003 Posts: 12257 City: Dallas

I think calculating monthly percentage is worthless. You could finance a boat for 100 years at 10% interest and have a 1% monthly payment but that doesn't mean it's a good decision. In 5 years when you're ready to sell the boat you'll find that you owe tens of thousands of dollars more than it's worth.

Really the best way to calculate it is cost to you. That would include:
1. Depreciation
2. Maintenance
3. Interest
4. Insurance
5. Gas usage

When buying a new boat the interest won't kill you near as much as the depreciation. That's why so many people go upside down. Even the minimum payments on a used $30k boat over 10 years will put you upside down for a few.

smokedog2 · Outlaw Joined: 02 Dec 2004 Posts: 210 City: Cincinnati

100 years? I'm in. (I'm also dead and never paid it off - kinda like social security)

what is 50k at 6% for 100 yrs? at 30 years the interest alone was $60,000
and the pmts were 307

SD2

acurtis_ttu · Soul Rider Joined: 16 Aug 2004 Posts: 499 City: Houston

Best way to do it is find a year old boat……they (previous owner) will take the average 20% depreciation hit the first year. I bought a year old 51k boat for a little over 35k. Make your “money “ on the buy side not the sell side.

Iman · Outlaw Joined: 15 Jan 2003 Posts: 116

At my age, I pretty much buy luxury ideas such as a boat by just cutting down my spending in other areas. I guess you could sorta do that right outta school too. Let's say you plan to make $40 to $50K. Most people at that income level spend the biggest portion of their income on their housing and then their car. They probably overextend themselves somewhat and spend as much $1500 to $2000 per month on just these two areas. In your case try to figure roughly how much less you can spend on a car and housing than your contemporaries and then save around $100 in a few other small areas and figure the total is what you can spend on a boat. This figure will probably be $400 to $500 per month and will get you a used $10 to $20K boat. If you already own your car or have inexpensive housing or a big paying job, maybe you can spend more. In a year or two if you have more money trade in and upgrade.

KurtInCincy · Addict Joined: 06 Mar 2003 Posts: 645 City: Cincinnati OH

Save up some money. Buy an inexpensive used boat for cash. Keep it 3-4 yrs at the same time saving up more money. Sell it and use that money + your savings to get a better boat. Do that about 3 times and you will have a much better boat the 10th year than the guy who bought a new one and financed it for 10-15yrs. And you will have paid no interest. And if you choose good brand name boats and take care of them they may not depreciate at all while you own them.
If you make those interest free payments to your own savings account you'll win in the long run.
Thats just my opinion, there's 100 other ways to do it.

Hpower · Newbie Joined: 26 Jan 2006 Posts: 8

Thanks for all the comments. Hopefully I will know exactly what to do when I get out of school. I think I will try and get one that is a year or 2 old.

Hpower · Newbie Joined: 26 Jan 2006 Posts: 8

Another question. I had a marine mechanic tell me that V-drives were really hard to work on and cost more in labor and what not and to get a direct drive. Do you guys have any thoughts on this?

JV · Posted: Jan 31, 2006 7:31 pm Post subject:

yeah, v-drives are harder to work on plus there are more things that require oil/maintenance. my dealer doesn't charge much extra, but i can't speak for others. in all honestly, pretty much the ONLY benefits of v-drive over a direct drive are having that weight in the back and the seating configuration. i wish they could make a v-drive with a 1:1 gear ration