Boat finance

[Flex]

Thought Id ask for some advice on finance for a boat. Im in a good earning job paying zero rent so i have a fair bit of disposable income..but doing a few figures Its got me buggered how your average Joe paying a mortgage,2-3kids can afford to buy a $90k boat new like I see a few people doing+ being able to afford to go fishing every weekend.when you sit down and look hard at what catching a fish would cost you per week it starts to get scary. is $300 a week worth the effort? makes you realise how large of an money sink boating is....

But im not letting that stop me;D

So.. Im interested in what finance company some of you use to purchase your boats? lowest interest rate I've found so far is 9.85% anyone do any better?

[BM]

Personally I believe if you cant pay for something with cash then you cannot afford it. I would never borrow money to buy a boat or a car. Only exception to that rule is a house.

[ausandy]

flex, for every 10k you borrow. $50 a week to repay over 5 yrs. roughly.... andy

[Roughasguts]

Yup I agree with BM, a boat is a luxury and it will cost you heaps for very little in return. Shit I think the 3 fish I caught in mine woud of cost me nearly 6k each.

But the booze I have drunk and the fun we had was cheaper than taking the family to the pictures once a week.

So I would say buy a boat not a new one! and borrow only 1/3 of the money required over 5 years then if you have to sell it it's worth much more than you borrowed.

Cheers.

[Chimo]

Hi Flex

Rules are that you don't borrow to buy toys.

Borrow to buy a couple of houses, rent them, sell them, pay capital gains tax then buy your toy and another house.

Interest rates are too high to borrow for toys like boats while houses that you don't live in are totally different; if your accountant is any good talk to him / her* and if not; get a better one.

Cheers
Chimo

PS * See, just one more example of survival in the world we live and love in!

[Scott Ashe]

Hi

I look at it a little differently, I never thought I'd borrow to buy my boat, but I'm single 28 yr old pensioner, who lives at home doesn't drive a motor car, so my boat is my only expense.

So when I thought a new boat would be nice I borrowed about 2/3 of the price and it costs me about $50 a week over 4 years. I'm like you all though, don't catch enough to warrant the cost, but a man has to have a toy or too.

Cheers
Scott

[Roughasguts]

Sounds fair Scott, Mans got to have his toys, wife won't let me have another woman to play with! anyway there to exspensive. So of course exspensive toys it is. I just bought a new caravan (didn't borrow of course) cause I couldn't afford a weekender up the coast, and in case we got sick of the coast we could go inland. But I think we go down the coast to my other favourite spot Batemans bay.

But now I need a more powerfull 4WD to tow it, the Paj sucks so it never stops really, the aquisition of toys. (that's gonna have to wait a long time though)

Just don't get buried in debt, that will stop all your fun and ruin your life.

[Flex]

Millions of Australians borrow to buy motor cars every year, which give 0 return and Cars have 5 times depreciation than a boat. Only thing that significantly depreciates on a boat is the outboard+electronics
The hull if looked after and is of good quality loses very little over say a 5-10year period. unlike a car.

Even The house you live in depreciates its only the land that goes up in price.So I'd rather keep my rental property and borrow for a boat than sell it to buy one.. works out better in the long run I feel.

Anyhow I'd rather borrow a modest amount to buy a boat to do something I love while young enough to enjoy it, than invest for the next 20 years and be to old to enjoy a boat when i can afford to pay cash for one.

Buy I do agree on not going into too much debt to buy toys. My rule is 10% of income on toys per annum . which is reasonable amount i feel.

[Scott Ashe]

I forgot to mention in my earlier thread, that when I decided I would borrow for my new boat it didn't take too long to decide that it show be exactly that "Brand New", because my thinking was if I was paying it off, and I bought second hand and there was a problem, I would have to pay to fix it, in addition to my repayments.

With my rig i have factory warranty

My boat is an Allycraft Rhino 4.10m Dinghy + 25 Yamaha 4 stroke with Electric Start and Power Trim and Tilt.

Just my way of thinking.

Cheers
Scott

[SummerTrance]

Im a part of generation Y. We want things now and dont want to wait. Loans are the way to get things you want in this day and age. If you can afford the repayments, then go for it! I did, and never been happier!

I dont own a house, and other people I know that are my age that do, live very boring lives because they dont have any spare money to do anything, as everything they earn goes into their house repayments.

My missus and I made a decision a couple years ago. At the moment we'd prefer to have the nice car and boat, and live in a rented house. We'll look into property when the market calms down.

[Splash]

Flex - good post.

My thoughts -

Do u think you will be fit and able enough to climb in / out of boats, pull up heavy anchors, launch and retrieve boats, continually sink money into boat, swear and carry on when things go wrong on boats - WHEN YOU'RE 55-60 yo? If yes, then wait to that age. ........... :-)

If not, buy second hand NOW (borrow some and pay cash) and enjoy your life! :-)

Splash

[Flex]

Some interesting thoughts there guys:)

Never thought a simple question about finance would start a philosophical debate about life choices, but interesting none the less and is a reason I love these forums:)

I have no doubt I'd be fully capable at 60 as i am at 29. nothing like keeping healthy. But like Summertime said, we're on this planet to enjoy life and you only get 1 chance at it.

Housing is just insane atm, you'd be deadset crazy to buy a house to live in. Actually if you buy and live in your own house your deadset crazy to start with IMO. One of the silliest financial mistakes someone can make, your better off renting. invest some of the money you save from not having a mortgage in shares etc and live life a little easier with your slightly higher cash flow.but thats a whole other topic for discussion and a serious worm can opener..lol

Its funny, I mentioned buying a boat to a few friends of mine and I only need to borrow about $25k and use my own cash for the rest.. They all freaked out when I mentioned im buying a boat for $40,000...


But a week or 2 earlier I was looking at buying another 4x4 for trips up the cape etc..and they never battered an eyelid.

so instead of the second fourby I have decided to buy a bigger boat. Just a different means to an end for me really. But I find it amusing how peoples perceptions vary on what things are worth.

[robersl]

Sounds fair Scott, Mans got to have his toys, wife won't let me have another woman to play with! anyway there to exspensive. So of course exspensive toys it is. I just bought a new caravan (didn't borrow of course) cause I couldn't afford a weekender up the coast, and in case we got sick of the coast we could go inland. But I think we go down the coast to my other favourite spot Batemans bay.

But now I need a more powerfull 4WD to tow it, the Paj sucks so it never stops really, the aquisition of toys. (that's gonna have to wait a long time though)

Just don't get buried in debt, that will stop all your fun and ruin your life.

Mate wife's and girlfriends are dearer than boats

[Dodgy_Back]

If your only going to borrow 25 g ,go and do it.

And while you are borrowing the money rethink some of your investment strategies, re:buying a house

[Roughasguts]

Okay heres another plan then buy a house for 400k and add some extra for a new boat in the loan. You will probably find it cheaper than renting and you still get your boat. But pay the extra off on your mortgage, that way your boat won't acrue intrest over 30 years.

Mate think longer term, I got a mate that's mid 50's never got around to buying the house always the wrong time. Now he's basically screwed, no one going to lend him money, he can't save any, will never have a deposit and he spends more on rent than I pay on me mortgage for me 4 bedroom tripple garage home on the coast. (And I got plenty of toys, there just not brand new except the caravan.)

Anyway This guy plans to retire never ! as he still has to pay rent until he drops dead.
Actually I know a few guy's like that, never got around to it to scary to much commitment, and now regret not buying a house.

Trust me it's not that scary, and now might be a good time to buy, sure intrest rates are up but house prices going down.

[Chimo]

Hi RAG -

Your not just a pretty face are you:-*

IMVHO never have truer words been spoke:scholar:

Cheers
Chimo

[Splash]

My thoughts again..

The thought of borrowing at least $460k which includes stamp duty, fees, etc. for a house to rent out with the aim to live in upon retitrement or even live in it now - is not economically viable - it won't happen (be fully paid off) - approx total cost of house over 25-30 years including interest = $1.5m.

Those of us (including myself) who were lucky enough to buy property in the past bought at relatively low levels (to today) where our salary levels were able to have at least some realistic chance of paying the fcker off (with or without rental income).

Rent, pump your super to max for 30 years and you will have a much fuller life before and after retirement.. :-)

Anyway - my 2 cents worth....:-)

Good luck!

Splash

[Flex]

Okay heres another plan then buy a house for 400k and add some extra for a new boat in the loan. You will probably find it cheaper than renting and you still get your boat. But pay the extra off on your mortgage, that way your boat won't acrue intrest over 30 years.

Mate think longer term, I got a mate that's mid 50's never got around to buying the house always the wrong time. Now he's basically screwed, no one going to lend him money, he can't save any, will never have a deposit and he spends more on rent than I pay on me mortgage for me 4 bedroom tripple garage home on the coast. (And I got plenty of toys, there just not brand new except the caravan.)

Anyway This guy plans to retire never ! as he still has to pay rent until he drops dead.
Actually I know a few guy's like that, never got around to it to scary to much commitment, and now regret not buying a house.

Trust me it's not that scary, and now might be a good time to buy, sure intrest rates are up but house prices going down.

I personally think the "great Australian Dream" of home ownership is pushed way to hard in this country. Owning your own home is a terrible way to get ahead financially for young people starting out(owning property is different)

Your assuming people who dont buy their homes dont have a financial plan for the future. In alot of cases its financially better off to rent than to buy.at least untill you can save enough where you reach the cross over point where the equity in your home outweighs the weekly repayments in rent, which is usually around 50% of your home cost.but each case is different

heres a classic example.

$300,000 home loan over 15-20 years you end up giving the bank over $600,00 in this period. now in this time your land would have increased in value to generally this same figure. (generally speaking and depending where you live)
This = roughly $3000 a week in repayments. + add in rates,mortgage fees+upkeep of your house etc and you can safely assume you've paid an extra $100,000 in the houses lifetime in extra fees+extra $300,000 to the bank.

compare this to a renter. Rents a 4 bedroom home for $1600 a week. (rent isn;t dead money as you get a service from renting). Invest $1200 a month in a managed fun with a modest return of 10% over the same period you would have had a home.and leave yourself an extra $200 a week for extra cash(which the mortgage owner doesn't have)+ you have no rates,no maintance no fees etc

Guess who comes out ontop?

Home owner has a house worth $600,000

The renter has over $1million dollars.

Now this is a very very simple example, and generally workk out better for the renter until you've saved for more than 50% of your home. granted there are lots of other options out there to invest in and borrowing v your equity etc etc but owning your own home isn't always the best strategy for a young person starting out. theres lots more options i.e buying rentals,geared funds etc etc.

anyhow,Im not having a dig at anyone here. I just enjoy a good discussion.
:)

[Roughasguts]

Hi flex, nah discussion is good as long as it doesn't offend anyone, I once thought what you do.
Heres my story so far, my house was brand new when I bought it and has gone up in value 180K now that's in 6 years of mortgage payments and my mortgage payments were exactly the same as the rent I was paying 6 years ago.

So there is no chance I could of paid rent and saved 180k in 6 years with 2 kids and one our 3rd that came 7 weeks early, just this week.
And when I was paying rent there was no room for me 3 cars 2 boats 1 yak and caravan, and a sh!t load of tools and equiptment. So I save again on storage fees and don't have to house hunt when ever the land lord wan't to sell.
Hell I need a place with a flat driveway tripple garage and level block there hard to find.

I honestly could not tell you of anyone that has ever said I wish I never bought my first house, thats the hardest one to get your head around and be comfortable with. The second aparently comes easy, I can't do that yet single income.

Now you said in your last post the renter has a million dollars!!!
and the home owner has 600K yeah on paper maybe.... but it will not, and has not ever happened to many I bet.
I can say for sure not me mates I work with that have rented all there life, poor buggers have just there super there hanging on and sure it's worth around 400K but that's still not a house purchase and they still need money to live on. Where as the home owner will own his home in that time and still have the super to play with.

Now renting is okay you just need to rent your owned house out to your mate and you rent his. Now you get all sorts of benefits like tax deductions new furniture and travel costs subsidised. But I couldn't be bothered with that I would get burnt with my luck.

Hi Chimo, nah I'm not even a pretty face just a slow learner.

Cheers.

[Flex]

yeah all good advice mate. I know my rental theory sounds good on paper, but its very hard to stick by and not many do it. I've been trying it out for 2 yearsto afford another rental.Property is probably the best avenue to wealth, but its about how you do it. not just jumping into debt. as your well aware of

Im a lucky bastard and pay 0 rent as I live in a mining town, which is damn handy. So i have a few extra opportunities your average city dweller doesn't. Just means im 3 hours from the coast to go fishing:S:S

[MyEscape]

One thing buying a property does is "forced" saving. In the example given above by Flex shows that by investing the $1200 a month in a managed fund the renter comes out on top.

Good theory, but historically people are lazy with saving, hence the "forced" saving into superannuation by the fed government some years ago.

I will always believe that priorities must be buy the house to live in first, wait for your equity to increase naturally as the market increases then possibly buy a moderate toy (boat) using equity and the allowance of lower interest rates using your equity.

Lots of examples like the one given by Flex, but taking advantage of the Mackay housing market from buying October 2003 to selling in November 2006 we turned $150k into $450k.

Also one thing I believe is that when buying you also have to consider that you are not spending the $350k or $450k on the house. It's just the deposit you are spending and the other costs (bank fees etc). Whilst you have to live somewhere and if the cost of living somewhere (renting) is say $350.00 per week, then consider only what you have to pay on top of that to buy (repayments might be $500.00) then the net cost is only $150.00. so you can also use the example that to buy cost you say $50k in deposit etc, and paying it off on around $150 per week.

My example in the property market above actually turned my deposit of around $15k into $300k in 3 years. And that's tax free.

Now I have my boat.

Steve

[PinHead]

if the house you buy is your principal residence and then yo usell it at a large "profit" in a higher market then you also have to buy another in that same market. That negates a lot of the "profit".
If you want to use finance to buy a boat..do it. If not..then don't. Life is too short to sit back and worry about amassing wealth because there will come a day when no amount of wealth will save you from the inevitable. When the day does arrive, better to accept it without regrets and missed opportunites. In short...get out there and enjoy your life the way you want to.

[FNQCairns]

The last federal government turned housing with new tax rules away from an essential family need toward a commodity akin to stocks or gold. diamonds. A few (in overall number) typical and average familys were able to ride on the shirt tails of those this change was designed to profit, so a small group of workers did come out in front and housing was a worthy investment by the most base of capitalist terms.
Today and as the government was warned when they chose to enact the new rules, the market has slowed and even reversed, now is not the time to buy a house, some regional areas will still see further gain although property for the next 2 years will no longer represent the tail wagging the dog as it has in the past under speculator demand.

So if it were me, cannot with common sense buy a house in this market, can invest for more gain for the next few years by other methods than buying a dead loss house.

IMO wait out buying a house, not long now and we will see lots of x real estate agents doing work for the dole (yep already an upturn in this), So if gainfully employed and credit is available go for it -if you can handle the one sided treatment as a renter without dreaming of polishing your AK47:)

If buying a house offer not one red cent more than 70%-75 of todays value.

cheers fnq

[Roughasguts]

if the house you buy is your principal residence and then yo usell it at a large "profit" in a higher market then you also have to buy another in that same market. That negates a lot of the "profit".
If you want to use finance to buy a boat..do it. If not..then don't. Life is too short to sit back and worry about amassing wealth because there will come a day when no amount of wealth will save you from the inevitable. When the day does arrive, better to accept it without regrets and missed opportunites. In short...get out there and enjoy your life the way you want to.

Hi Pinhead, true sell high and buy high, or as some do buy a lower price house as they don't need the bigger one any longer. Or they buy two houses and rent one in a faster capital gain area, (you need a crystal ball for that)

But you still have to rent/live somwhere and those prices are still reflected by the house prices on the market. And that is usually 1% of the house price you would be paying per week. Eg 390K home paying $390.00 a week rent. No one is going to escape paying higher prices for housing, not renters that's for sure.

I don't think buying a house is about amassing wealth, it's also a roof over your childrens head that is always going to be there when you do drop dead either quickly or slowly.

I for one don't wan't to rent and find I'm on death door and then wonder how the wife and kids are going to get on and where there going to live. They still won't be able to rent or eat either as they will have no money with out my income.

Cheers.

[PinHead]

You mean you have the house but no life insurance? If you do die they will still have nothing to eat so will have to sell the house then become renters.

Finance is there for a reason..for people that want things now..if they can afford it good luck to them. Investment house? never..about 5% nett..not worth the effort.

[Splash]

Great points and good reflective thinking..

Basically, our wages (in major cities) have not raised by the same ratio as interest payments have raised - over last 6-7 years..and never will

Flex - I also live in a mining town with zero rent - Great mate!

Which town do u live in?

Splash

[Davey1]

I've never met a poor man who owns his house, investment properties, shares, boats, bikes, cars, etc.

[Roughasguts]

You mean you have the house but no life insurance? If you do die they will still have nothing to eat so will have to sell the house then become renters.

Finance is there for a reason..for people that want things now..if they can afford it good luck to them. Investment house? never..about 5% nett..not worth the effort.

Doesn't work like that they have equity in property, and of course I have life insurance it's bundled with my Super, more than enough to live on.

Life insurance is only good when your young and there isn't much risk of dying.
But when your old your waisting a lot of money for something that may or may not pay up. Thats provided you can get life insurance maybe to old or sick.


Yes Finance is there for a reason. It's there just like insurance so the banks can make even bigger profits from the clients that wan't things now, can't have one with out the other.

Sure it's a personal choice to make, but settle down a bit sounds like your having a go at me.

[Flex]

Great points and good reflective thinking..

Basically, our wages (in major cities) have not raised by the same ratio as interest payments have raised - over last 6-7 years..and never will

Flex - I also live in a mining town with zero rent - Great mate!

Which town do u live in?

Splash

Hey Splash.
I live in Blackwater atm, Moving to Emerald next year as I landed myself a new job with Rio-tinto.

How about you?


The whole rental thing is fine, IF you look at buying your own home in the future.

I agree Rough that you do not want to be renting at 60. But if you rent and invest for 5-10 years then purchase a home you can sometimes come out better off.. not always, but its a different avenue alot of people dont think of. as banks etc and government really push hard all this instant home ownership.

While im playing 0 rent atm, and interest rates going way up. Housing market isn't that good of an option to buy into atm. So all I do is invest all my money,get a reasonable return and hopefully pay cash for over half my house in 2-4 years time.

If you are one of the lucky bastards who owned a home 3-4 years ago before the boom then I'm extremely envious:)

[ifishcq1]

Hi Flex I don't know finance thats my misses job.... is it possible to borrow as a supplement to your other loan and pay it off inside the 5year mark to get the best interest rate?

Scott

[BM]

I like your idea there Flex although the only thing I see as a big hurdle is the longer you are out of the market the harder it is to get in (well, not harder just more costly). Of course if your investment made good returns then this will offset to some degree the natural increase in property values over that same period.

I feel for a lot of young couples buying first homes atm. I thought when we built our first house (7yrs ago) that we had a big mortgage but its not like those of today. But then again, 7yrs before us was a lot better than ours and would have made ours look extreme....

Our house in 7 yrs is worth a touch over twice what it cost for the land and the structure. Had it professionally valued recently (proper valuer, not a r/estate agent) when taking over a new business.

I think the longer you are out of the market the worse off you will be. Although there are obviosuly many vairables in there too.

Cheers

[Splash]

Flex - I'm at GOVE NT Rio Tinto Alcan.

We'll work for same company shortly.

Splash

[Flex]

Nice Splash, what do you do for Rio? yeah looks like the chinese or BHP is gunna take over the world shortly

[mik01]

how many people who thought 10 yrs ago 'nah, i'll just rent and enjoy my life, and buy into a house when I'm older' are kicking themselves today?

the road to wealth is different for every person, and you have to take into account many factors. if you live rent free in a mining town, great stuff. perhaps you can afford an expensive boat and save also for a rainy day.

I suspect you can't/won't work in the mine all your life, therefore you will have a backup plan for the future when you may not have the disposable cash and rent free lifestyle. Wife/kids quickly change all that too. Owning a home is a luxury - just like the nice car and boat, but it gives you so much more and theoretically should appreciate in value therefore offset the interest and borrowing costs to some extent.

can't see how buying a boat is any different to buying a nice car - sure you could get a cheap 4cyl being 'practical', just as you can get a cheap boat. if you can afford it, then do it.

personally I wouldn't get a boat on finance but my circumstances are vastly different to others (have a baby on the way, largish mortgage etc).

[Splash]

Nice Splash, what do you do for Rio? yeah looks like the chinese or BHP is gunna take over the world shortly


Capital Program Leader - Engineering Manager. You?

See the chinese are wanting to buy more of BHP now..Ominous signs:o

BHP will swallow RIo, the Chinese will gulp BHP.

On the housing situation - we are now purposely working/living in mine towns so that we can pay our house off quicker (25 year mortage turned into 10 year mortgage with 7 years to go :-) )- along with all the other benefits of life - Fishing/boating, OS holidays, no traffic lights, etc...

Splash

[Roughasguts]

Flex and Splash, you fella's are on big bucks and rightly so, you do it hard and dangerous in remote areas.

Trouble is you earn big!! but pay huge at tax time. (and I thank you for that, oh hang on i'm not on the dole) What you need to look in to is getting a big slice of your tax money back. Real estate can do that and also pay some travel exspenses like fuel costs to take your boat to the coast!! I mean fuel cost to inspect your home from time to time and mow the lawn, also with the ute you needed to cart the boat um lawn mower, also cover some accomodation costs.

Get my drift.

Have a chat to a accountant and see how many perks you can get away with.

cheers.

[BM]

On the flip side of this Mik01 we have my inlaws. Have enjoyed nice wines and cheeses and good food and foolish spending (him) and lavish furniture, plants and personal items and foolish spending (her) and now at 58 they are selling the house they recently built as they cannot afford it (both work) and they are terribly in debt (on top of their house) and when the house sells they will be lucky to have 20K left.

So if they buy or build again, who will give them a mortgage for 7 yrs (65y/old by then)?????

Sadly they have dug this hole for themselves and even worse is they have had a lifetime of irresponsible spending and whenever they got in trouble, someone has bailed them out (even their own kids money). Their inheritence on both sides has already been spent.

I'm pretty sure they now seriously regret their life decisions. And to some extent so do we now, because we are likely going to have to put a granny flat on our property at some stage as with next to no super and no money they will not be able to live in retirement.

Long term renters beware!!! But short term as Flex mentioned can certainly work.

How long till the bubs due? Your gonna love it. I have 2 boys. Greatest and hardest time of your life is when they are born. Very emotional times!! particularly if theres any complications and you watch your little one struggling to survive in his heated box..

Cheers

[Splash]

Good one BM.

I think many people will be in that position shortly - sad. We refuse to accomodate my parents (in similar sitation) in a granny flat on my property just out of sheer principle. I know people may think I'm cruel - that's life.

Guts, my property is in melbourne. Do u think the tax man will allow a return plane trip to Gove (even though I have a real estate looking afte rit?) - to inspect my proeprty?

SPlash

[BM]

Splash,

I'm pretty sure your accountant will advise that 1 maybe 2 trips a yr (under the label of property inspection) will be considered acceptable by the tax office.

But of course, defer to your accountant.

These aren't even my parents but I see I will have little choice as my wife will want it that way. I am so thankful that since I met her I have been able to over 10 yrs modify her thinking. I don't mean that to sound bad or domineering or anything like that but she thought just like her parents. Blow every cent you have and hang out till your next paycheck. I grew up the complete reverse of that.

I'm glad she sees that the way I was raised (in that regard) is better than her way and has no desire to follow her parents path. Likewise, she has some better attributes than I that I too am trying to adopt.

Presently we live on an acre but we are looking for something around 2-10 acres in time so if they do end up with us, they won't be on top of us. We get along very well, but I don't want them on my doorstep either.

So whats the plan for your folks then? Might be able to apply the same to my in laws....

cheers

[Roughasguts]

Hell yeah Splash that's a legitimate exspence.

[on-one]

Flex I think you're right about houses not being the best idea but when you're comparing buying a house to renting and investing the difference in shares to come out ahead you'd probably need to have a leveraged position in shares (borrow and claim the interest against your tax) not just pay cash for shares as you go along. You should also include equity in working out the cost of a house ie if you own 50% of your house that 50% is still costing you whatever it would earn being invested elsewhere.

Personally, I reckon you should buy the boat, my father always promised himself a big boat when he retired, finally sold his business and had a stroke instead

[Reel Nauti]

If there's one thing that can change the best laid plans and completely turn financial planning and structure on it's head it's..........................DIVORCE.

So many people, but particularly men, who have worked and planned and worked and planned and then some, have been literally sat right on their financial arse when the big "D" has occured.

That's not to say that planning shouldn't take place, but like life itself, nothing is guaranteed.

Live within your means, plan some for tomorrow, but enjoy today.

Just my thoughts.

Cheers

Dave

[Splash]

Guys - sorry for getting off main thread aim here but here goes..

BM - I am angry at my folks for not setting proper examples for me. They are now separated (sine 1977 actually) and trying to skimp a penny (at the age of 68) to live in shared accomodation with god knows who...?
You are luck you have acearge.

Thanks GUts - Will look into it with my Accountant.

On-One - Good one! Sorry to hear that. That about sums it all up...

Flex - If you really love your fishing/boating - GO FOR IT and buys shares instaed!

Splash

[Chimo]

Interesting little thread this is that reflects the great mix of society that we are.

RAG again is not just a pretty face and BMs story is really frightening and unfortunately all too common and makes me think of the Three Little Pigs fable.

I touched on this earlier in the thread; IME you don't make money buying and selling the house you live in. You lose also in selling and buying costs and stamp duty with none of these costs being deductable. Its your home and an appreciating asset and early in the game it allows extra property to be acquired before after a while you take it out of the pot. My neighbour who is in the building trades has bought and done up NINE properties since being married and has finally worked out that he might be getting better houses to live in but he is not making any serious money for the effort he is putting in and his marriage will not survive another property. (seems like there was a serious lack of quality financial planning and advice here too but just because your good at one trade / profession doesn't mean you understand them all)

You do gain from real estate that you don't live in that you hold with interest only payments supported by the rent the property earns and subsidised by you for a few years until the rents go up even more which they surely will. You purchase these with as little of your money as possible. The more of these you have the better and the benefits are both immediate and long term. Immediate benefits are as RAG indicated and also you can reduce your tax rate by many % down to close to single figures if you owe enough.

A bank manager friend of mine makes a good point when he talks of good debt and bad debt / asset and liability classes . Bad Eg Car, Boat, the debt AND the remaining credit limit on your credit cards, potential calls on shares etc Good eg the equity you have in real estate, cash on hand etc

What wasn't stressed in the earlier post that negative geared property that you acquire can be short term eg 5 yrs ( the term of the 1st interest only loan) or less or more and if you have a few properties and you turn one or two over after a while and buy another property that needs a heap of work on it you will reduce your capital gains tax liability on the sales and have $s to buy both the boat you want and do some repairs and have another bit of $ for the next deposit on another property etc.

All the while your growing your asset to top up your super when you quit work be that at 40 or 50 or 60 or when ever and thats probably the time to slowly unload property with the sales spread into as many tax years as possible to further reduce your tax liability. Theres nothing illegal or even shonky about any of this; all your doing is minimising tax and maximizing the value of your earnings and becoming a self funded retiree.

I think if I was working at the mines I'd be buying as much real estate in growth markets each year as I could so the rate of tax I was liable for could be very much more attractive. If you have an accountant /financial advisor and a buyers agent working for you sourcing and managing your rental properties as well as a good relationship with your bank manager and solicitor to do your conveyancing its not that hard.

Anyhoo some of us fiddle with real estate and tax minimization (not evasion) and others do the straw house thing or similar. The 80 / 20 rule is everywhere I guess and so to each his own I say.

Cheers
Chimo

PS You need a quantity surveyor to do a depreciation schedule on investment property you buy and you can inspect rental property several times a year as well travel to keep abreast of real estate with a view to future acquisition or disposal. You can also get a deduction of abt 3% of the cost of reconstruction of rental property over I think about 20 yrs.::)

[Flex]

Excellent posts all. Goes to show all us fishermen do have a some form of intellect(my mrs disagrees though).

I believe the biggest factor in financial security is PLANNING. as longas you have a plan you are way ahead of alot of others. Depending on your situation depends on your plan.

If you have a geared fund you can also offset your tax against interest paid in your loan. but I'd imagine rental property would have slightly more to offset.

Splash. Im starting on a new Career path. Im an apprentice electrician. I was a school teacher and got posted to Blackwater, but decided I'd try getting a trade. and the mine is kind enough to pay me alot more as an apprentice than a school teacher(poor teachers are well underpaid)

anyhow, I've decided im going to borrow a small amount at the end of the year and have myself a custom boat built. I dont smoke, hardly drink, love fishing like a madman. Plus I can easily afford it so im going ahead with it late in the year.

Now its a choice of boat builder, very very tough choice

[mik01]

gday BM - yeah little boy on the way!
due in about 6 weeks!!!

what a learning curve I am in for...

Flex - enjoy the boat mate. you obviously have earnt the right to splash out and you will definitely enjoy every minute of it when you get it!!

my general thoughts on investments are - Don't discount any investment option, including buying a house and renting it out as a good tax break. you can always move in later if you settle down, or sell and hopefully make some coin.

we sold our investment property in Dec, to get out of slowing housing market and get into the depressed share market (which we just did this month).

buy the toys, but invest in sound strategies to look after the mid term future is what we have tried to do and so far, life has worked out good. I splashed out on the boat, although did not spend a lot compared to most!, but it gets me out there and is a great girl to bring me home safely.

[TheRealAndy]

I am 30, paying a mortgage. When we first bought our house, I couldn't afford anything. At one stage we could not even afford a car. Now, my minimum repayments are about $260 week. It is a lot different now however. $450k for a house means a lot of rapayments. A quick type into a mortgage caculator puts that at about $1000 (roughly) week if you a borrowing 100%. You would want to be on a good wage to afford that. I am lucky, I got in early before the boom. Now I am a business owner and am reasonably well off financially. I nearly own my house and I also have some investments (not many, but they are growing).

The biggest point I will make here is that until recently I was quite depressed and drinking a lot. You would have never extracted it from me when it was happening, but it was not good. It nearly cost me my relationship with my wife. I went out an leased a 4wd as a company car and bought a boat. I have never been happier. Even someone at my wifes work made a comment about how much happier she looked as a result. I get out and enjoy life now. The point is, you can be well off financially, own your own house, have lots of investments but they are all a waste if you do nothing with your life. If you have to borrow money to buy a boat then do it. No point taking cash to the grave. As long as you dont go overboard (excuse the pun) so much that you will not be able to afford to retire then there is no problem with it at all.

[Outsider1]

Thanks for sharing that TRA, your honesty is appreciated.

Flex, no problem in borrowing for the boat if you are disciplined about your finances and it sound like you are. As some said, treat it like forced savings.

Can't argue with the life balance statements others have made either, money is not everything. But as someone else once said "Money can't buy you happiness, but it does buy a better class of misery"!

I have spent a fair bit of time and effort on this wealth thing over the years, got pretty good at it along the way, but also learnt lessons about balance etc the hard way. There a lots of "rules" you can find espoused, but I have found that there always good reasons why they can be broken.

What I found was that successful people had an attitude and discipline that set them apart and drove their success. To me finance and wealth creation are all about being disciplined about what you do. That does not mean being a tight arse, or paying for everything in cash. It means having a budget and planning your finances.

For those looking for some guidance I can recommend 2 books, both decades old, cheap as chips and still available;

1. The Richest Man in Babylon by George S Clason

short, simple, easy to read, easy to understand. It teaches you to "pay yourself", one of the keys

http://www.amazon.com/Richest-Man-Babylon-George-Clason/dp/0451205367

http://en.wikipedia.org/wiki/The_Richest_Man_in_Babylon_(book (http://en.wikipedia.org/wiki/The_Richest_Man_in_Babylon_%28book))

http://en.wikipedia.org/wiki/Babylon

and if you can't be bothered reading the book, here is the video!! How easy is that!

http://video.google.com/videoplay?docid=507553673251198265



2. Think and Grow Rich by Napoleon Hill

A lot deeper, but a very worthwhile read.

http://en.wikipedia.org/wiki/Napoleon_Hill

http://books.google.com.au/books?hl=en&id=wF74Hf7G0XAC&dq=napolean+hill&printsec=frontcover&source=web&ots=TDVi8EdQnX&sig=3rEv71DVVHzHIkQohzrLHtq1WaQ#PPP1,M1

and a couple of video clips to give you a feel for Hill and his book(s)

Gz4Wl3jsHMc

1GCaEZscfvA


Cheers

Dave

[thelump]

How about this theory. If you borrowed the money to buy your boat at the beginning of this thread you would probably have paid it off by now.;D

[TimiBoy]

In another life (before boat and owning my own business) I was a senior Manager in an American owned company. Try this in an American accent (take your pick which one, I heard it in all of them) -

"Plan your work, then work your plan"

It works for your finances, business, life. I just wish when I ran it through my head it wasn't in that damned accent!!!:o

[Seahorse]

Andy, i agree. got to enjoy life. dont they call it spend the kids inheratance.
Iam only mr. average, working for boss, mortgage, but i intend going into hock for new boat somehow. prob need about $25000.
u can always sell it. but enjoy it. truck could run me down tomorrow.