too expensive?

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

My wife and I, combined, make just under 70K a year. We are both at the start of our careers. I am seriously considering putting down 5K on a 36K boat, resulting in monthly payments of 299 for 15 years. We have no kids, one car payment of 320, one small 96$ a month student loan, and a mortgage of 845 a month. I can swing the payments, even doubling up during the summer when the heat is not on.

Am I crazy to even consider this?

mandi · Outlaw Joined: 24 Feb 2003 Posts: 223 City: Oklahoma

If you think your pay checks can handle I say go for it. But whatever you do try not to have to get a loan for it, I know this because my mom is a loan officer at a bank.

NAW · Posted: Mar 21, 2003 6:59 am Post subject:

Your not crazy....life is full of choices, looks like you need to make one Wink

....what kind of boat are you lookin' at Question

riverfreak · Posted: Mar 21, 2003 6:59 am Post subject:

ski boat $337
husbands new Xpress bass boat $189
truck $493
combined student loan $394
+ mortgage + bills ins...etc
and our gasoline bill is around $250 a month not including what we put in the boats
+ 7 year old

dude, you have no bills, I have bills
ski boat and truck are almost paid for Smile

yeah I would do it without a second thought, but I would not finance a boat for 15 years, it will be ragged out in 10, people finace 30k vehicles for 5 years all the time, do that then you won't be so upside down......

OttoNP · Addict Joined: 13 Jan 2003 Posts: 848 City: MI

It is definitely not unreasonable...70,000 is probably about 4083 a month after taxes, so with your expensives that leaves 2822.1, another 300 off that ain't no thing! Just don't forget to max out that roth ira...

Nick
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ohsix · Posted: Mar 21, 2003 7:38 am Post subject:

15 years is a long time to finanace something like a boat. You might try and see if you can afford to finance it for a shorter period and find the best loan you can. Here are some simple math equations to help you figure what you are actually paying with a loan. You probably already know them but if not they will help.

compound interest: A=P(1+r/n)^nt

A= amount after t years
P=principal
r=interest rate
n= number of times interest is compounded per year (i.e annually=1 semiannually=2 quarterly=4)
t= number of years

Continuously compounded interest: A=Pe^rt
A=amount after t years
e= natural exponential function (the italic e button on your calculator)
r=interest rate
P=principal
t=number of years

for example if you're putting 5k down on a 36k boat you are borrowing $31,000 and your interest rate is about 7.5% compounded annually and you're financing it for 15 years your cost would come out to this:

A= 31,000(1+.075/1)^1*15
= $91,725.19

but if you went down to a 5 year loan and everything else stayed the same it would look like this:

A=31,000(1+.075/1)^1*5
=$44,504.51

hope this helps.

OttoNP · Addict Joined: 13 Jan 2003 Posts: 848 City: MI

Wes,

Your formulas are wrong because they aren't taking into account the monthly payments. In your first case the total would be around 52,000, 20,700 in interest and the second case the total would be 37,000, 6270 in interest...

There is a nifty loan calculator on my web page...(link in my sig)...it will compare up to six loans, shows your monthly payment and the total interest you pay.
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quigglymaster · Posted: Mar 21, 2003 8:04 am Post subject:

i dont' think ur crazy. my sis and bro in law just started their careers and r making about 70k CAD, but that didn't slow them down. they just bought a new altima and a 135k house and they bought all new major appliances and they'll probably buy a boat too. so in all, i think that now's the time to do it b/c once u have kids, u'll be bogged down and u'll never get it. if u get it now u won't regret it.

ohsix · Posted: Mar 21, 2003 8:20 am Post subject:

nick- how does the calculator on your website subtract the monthly payments or what equation does it use?

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

I'm thinking about a Mobius V. I wan the 15 year loan term because I can always double up on the payments, but if something happens, and I need the cash, I have the option of having a low payment. I intend to pay it off in 5-7 yrs.

THat's the thing, we'll probably have a kid in a few years. I think we gotta do this now. Plus, how freakin' sweet is that huge V-drive, a case of beer, and 10 or our closest friends every weekend, know what I mean?

BIGMAC · Posted: Mar 21, 2003 8:49 am Post subject:

Pay it off as fast as possible or you will be so upside down!! Good luck!!

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

Thanks!

OttoNP · Addict Joined: 13 Jan 2003 Posts: 848 City: MI

The formula that banks use is this:

P=original principle
R=rate (.075 for this equation, on my page you put it in as 7.5%)
MP=monthy payment
N=number of payments

MP=(P*R*(1+R/12)^N)/(12*((1+R/12)^N-1))

There is a simpler equation that they teach you in finance class, but it doesn't apply to bank loans because of the way they compound the interest.

short example, if you borrow 30,000 at 12% for 10 years your monthy payment would be $430.41.

At first you owe 30,000, at the end of month one, they compound the interest for that month, which is 1% (12% a year /12 months in a year=1% a month), so now you'd owe $30300, but then you pay your monthly payment of $430.41, so now you owe $29869.59. Repeat this and you will see the balance is zero after 120 payments. If you pay it off early they will calculate a pay off amount for you, this is because you pay interest daily.
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derrick lenz · Posted: Mar 21, 2003 11:05 am Post subject:

i'm not a big fan of finacing stuff. if you can hold out longer and just save the money it'll be a lot better. pluse you'll have lots more money left over due to not paying intrest. another plus is if you invest your cash in cd's and whatnot you'll earn cash for doing nothing. if you're going to be financing the boat though think about what it'll be like in 15 years. most likely your not going to want it.

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

It will take me at least 2 or 3 years to save up 35K. I'll be 32 or 33 then, and maybe be thinking about having a baby. I think I want to enjoy what is left of my youth, not spend it saving for something I will probably not get later anyway. Know what I mean?

OttoNP · Addict Joined: 13 Jan 2003 Posts: 848 City: MI

Buy now pay later!! I don't know who you financing through, but your rate doesn't look that good. $299 a month is more than 8%. Do you own a house? Try to get a home equity line of credit (6-7%) or a fixed home equity loan. Best part of this is that you can deduct the interest of your taxes.

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

I got a rate of 6.49. I think you forgot to factor in the taxes. Brings it to around 40K.

J_DOGG · Posted: Mar 21, 2003 12:49 pm Post subject:

Careaboy, you can get a better rate.. call KeyBank they do all the big boat loans....

I did a refinance on my place (mainly for a new rate) and pulled out 40+ thousand dollars in equity. The best part is my note is still for under 100,000 thousand and I'm still 50 thousand under the appraised value. It pays to buy a house at the right time.

I had so much cash to use as a down payment for my boat the payments are dirt.....

LIVE LIFE NOW, IT WILL PASS YOU BY IF YOU DON"T.

PEACE

OttoNP · Addict Joined: 13 Jan 2003 Posts: 848 City: MI

you know, maybe you can buy it from a boat dealership off the internet from a nearby state and not pay sales tax...though they probably make you pay that when you register it.
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derrick lenz · Posted: Mar 21, 2003 2:27 pm Post subject:

maybe i'm just a little old fashioned when it comes to stuff like this but i don't like the thought of not owning all of my stuff all the way. my mom and dad have never financed any thing. they've paid cash for everything they've own and they are not in want of stuff. they also don't have the highest paying jobs. infact my mom didn't work when my brother and i were growing up. they just planned their money right and made sound investments. i understand what you mean of not being able to get it later but i guess we agree to disagree.

devo · Posted: Mar 21, 2003 5:28 pm Post subject:

I think if you are asking us for finanial advice you have more to worry about than "can I aford this boat" Confused

.

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

Not so much looking for financial advice, just needed to get a few opinions from people who love to ride as much as I do. Well, I bought the boat. I'm still shaking.