Losing my patience with Correct Craft

[TravisFling]

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Yeah, I love it when Ramsey et al say you can average 12 in the market.... .Maybe the market as a whole has averaged that over the last 100 years, but you've GOT to be WAY on top of things to get there by personally trading, especially spread on a 40 year average, PLUS never experience a catastrophic loss... Best of luck and I hope you've got some BRASS ones, oh and you can't go on vacation for the next 40, unless you've got a live line to the market on the beach!!! hahahaha. I've yet to see a single person who told me that this or that was stupid ACTUALLY get anywhere near the return they're preaching about. It's certainly not close to automatic!!

[SkiTundra]

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Quick clarification on what Travis said. All he said is, I believe, correct. What he is talking about though is leveraged debt vs credit debt. If you have the money (or maybe at least the bulk of it) to make a cash purchase but choose to finance instead because that money is cheaper than your cash (the opportunity cost of loosing out on investing your cash) then financing may well be a good choice. If you do not have the cash and need to borrow the money to make the purchase, then we've got something completely different.

My wife and I utilize the former but personally do not believe in the latter except for our primary house. I do strongly believe that our financial conservatism (though we're strongly libertarian politically) and lack of debt has been a major contributor to our having a really great marriage. Since we married we paid cash for 3 cars and financed 4, but only financed when we had the money and got a better borrow rate than we could earn (including any discounts for buying with cash). We use credit cards for convenience but pay them off every month. As mentioned earlier, this meant that we did without a boat for a number of years and missed out on some fun with our kids, but, we made up for the lack of a boat in other ways such as choosing extensive annual travel (paid for with cash on hand) with our kids instead of a boat which we would have had about 10 years sooner without all of the travel. I won't usually criticize people for what I personally consider over burdened debt financing, but when relatives have gotten in to financial trouble that has a huge bearing on any help we might give them.

[TravisFling]

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Good call, chap. and you are correct. I was assuming that Person X has 65,000 and 464 expendable per month. Of COURSE you shouldn't buy things you can't afford. That's just silly!!! I'm a libertarian as well and it's just plain crazy what some people do these days financially. I can't believe more people don't pay more attention to it. Blows my mind.

[zapada]

RE: Re: RE: Re: RE: Re: RE: Losing patience w. WRONG claims

Many of the comments are true mathematecally, however, there are too many variables both known and unknown that would have to be constant in order for the math to work out they way you've all planned. It is 'possible' for a person to invest in the market at a higher gain rate than the interest you would pay on a bank loan, however, there is no guarantee to any of that. Only ONE thing is certain in all of the scenarios listed in this thread...if you have the cash and you pay off your boat...then you will pay $0 interest and you will not have debt. All other outcomes from the various scenarios are only true in a vacuum with constants. One market influence that was left out is the ever-increasing possibilty of hyperinflation. Leverage is only the answer if you've deployed all your cash in items that will increase with the inflation. If you've borrowed $50k to finance a boat instead of purchaseing outright, you've only hedge against the inflation if you've done something else with the $50k cash that will hedge you against the inflation. That is a small variable that would change the answer to many of the scenarios above. When you borrow "a lot" to purchase a boat, there are really two things that a person should be concerned about...market events that prove to cost more than the interest paid on the boat, and personal events that would cause any amount of borrow to be an overextention which could force a distressed sale at a loss. Those two things can be avoided by paying cash!!!

[TravisFling]

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That's very true, but inflation actually helps you out only if you finance. If it's invested the investments should rise to cover, but you'll be paying back the loan with cheaper money.

[SkiTower]

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Jeff, looks like another candidate for splitting...Aaron, can't wait to see pics of the boat!

[TravisFling]

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Sorry... Aaron - I hope the boat is as beautiful as it looked when you built it on the site. I'm sure she's a beaut!!!

[SuperSquirt]

“I do know this I would rather live a full life and end up retired just getting by.” Remember that quote when you’re 65 and living in that "new" boat, that’s not conservatism, that’s greed. And that folks is one of the reasons this country is in a mess. People say if no one used debt our economy would collapse, no it would prosper folks.

If greed is a bad thing, I guess i'm screwed.....

Coming from a degree in Finance myself, I can only thank Travis for shutting up our finance preacher, not teacher.

[AuMDLST]

If I only didn't have to go to work to pay for the fun in the life of my family - Let it all ride and see if it pays out on red.

[SuperSquirt]

Travis' example is similar to what retailers across the country do everyday. Lets say they run a sale, discounting specific merchandise 15% off at the register to encourage people to buy. They eat the profit loss right then at the register. But when you buy something with a "Mail-in-Rebate", marking down anywhere from 20-50% off the regular price, the company gets to keep your money for 30-45 days during the rebate process. Guess where your money is going???? Yes, they invest your pre-rebate sales dollars in the investment markets (usually in the millions), putting your money to work for them. Hmmm.

As for AuMDLST's last comment.........no risk, no return

[aarond0083]

Enjoyed reading the finance posts. While I agree with most of what was said, zapada is dead on with the variables comment. Just way too much there for hypothetical situations to equal simple math. For what it's worth, I am fortunate enough that I could have bought my boat and paid cash but chose to finance a portion for some of the reasons mentioned. FWIW, I traded in my 2007 and had trade in allowance that was used as a DP on this boat.

As for an update on the thread.A huge thank you to Ron Nace for providing GREAT service on getting this resolved. He took time out of his vacation yet again to speak with me twice today. The second call was a confirmation that my boat was put on a truck and left FL this morning. Going to be delivered first thing tomorrow morning to the dealer and I took the day off Wednesday to go get her. I can't wait. I may even have the dealer email pics tomorrow as I don't think I can hold out at least seeing it any longer.

Kudos to Correct Craft on this one. Really impressed with how this ended up.

[aarond0083]

Boat has arrived. http://planetnautique.com/index.php?...wtopic&t=13729

[TravisFling]

Congratulations on the new boat!!! Looks great. Unfortunately finance is always a moving target. Always funny to meet someone you did a 30 year mortgage for 9 years later and they've changed jobs 7 times, and it's a whole different situation. Funny, that. I hope the example helps someone, I guess it's my two cents. Lord knows I vacuum enough information out of this site, just thought it was my time to contribute!!!

[TravisFling]

Oh, and I forgot... Main point with these babies is the memories you created. I'd rather have the memories than an extra 300k... Hopefully I can retire at 50 and learn to barefoot!!!
As far as working for toys, can you think of a better reason!!!

[swc5150]

I sold MC's while working through college, and they wouldn't deliver a boat to our dealership until they were paid. I can't imagine things have changed much, so I'd bet it's the dealers foul up. Hopefully they're not playing games and cash flowing your money on previous orders - like a ponzi scheme. Time to drive to Orlando!