I'd like some input here...

magster65 · Mar 21, 2006

What would you do? I know a guy in this position... he's 41 / single parent with a 3 year old. Scenario; $120,000 left to pay on his mortgage (9 years). 4.5% interest (variable). No other bills to speak of. $50,000 in the bank. Stable government job. Needs another boat on a trailer. Would you plan for the future and pay down the mortgage? Would you live for today and spend the cash on a boat? Split it half and half? Do some reno's 'cause the neighbors did? Sane ideas? Insane ideas? Talk to me

rwise · Mar 21, 2006

Re: I'd like some input here...

must be nice to have those kind of problems,,,, I'd buy the boat, sell the house and move to the lake!

SpinnerBait_Nut · Mar 21, 2006

Re: I'd like some input here...

I was always told and am a firm believer in this. "You can not take it with you when you leave this Earth." I would keep paying my bills and buy the boat if I wanted to.

Haut Medoc · Mar 21, 2006

Re: I'd like some input here...

I agree with SBN.... The day may come when you are to old to boat! (the horror!)

You will most likely always have to work... Buy the boat & have some fun... 4.5% doesn't sound bad..... 9 years will go by quickly.....& you will have all the memories of boating with your boy.... PRICELESS, IMHO

.....JK

jinx · Mar 21, 2006

Re: I'd like some input here...

A couple of thoughts for you. Watch that variable interest mortgage. The 50k you friend has in the bank does that include retirement funds? If not, its kind of skinny for a 40 year old. If there is a 401k or IRA backing up that 50k and things look on track for retirment savings, then he can buy a boat. Just don't be too extravagant. It is not so much what we buy any more than the scale of it. Young guys are thinking nothing of spending 35k on a pickup. People are living in 4500 sq ft houses around here. I saw a bathroom sink in a showroom that cost what a year at Virginia Tech costs. Too many people buy too much boat, then can't really enjoy it, and it becomes rather pointless. Random thoughts, I hope they help. Jinx Don't listen to me, I just bought a second--used Carolina Skiff-- for one of my boys. He's a good worker, and I figured what the devil. We have 30 to 50 years of hot and cold conflict ahead of us and we live just outside of ground zero. Let him enjoy his boyhood.

QC · Mar 21, 2006

Re: I'd like some input here...

Don't ask me . . . I'd spend all of it and figure out tomorrow well . . . er . . . tomorrow. Actually, I like rwise's and SBN's comments. Sell the house. Buy a 40 footer and live aboard. Or you could invest the cash, refinance the house, pull out a little cash from your equity, buy the boat and hope that your investment returns keep you ahead of the increased interest expense. Or you could invest the cash, leave your mortgage alone and finance a boat. What's the Canadian deal on mortgage interest? If I recall there are no tax benefits? If not then leave the mortgage alone? It is common thought here these days NOT to pay off a house. I have no idea if this is correct, but a lot of money manager types say that.

PW2 · Mar 21, 2006

Re: I'd like some input here...

Find and marry a rich, sickly widow. Have her experience an unfortunate accident. Buy a bigger house and a bigger boat, and still go off to Reno!

aspeck · Mar 21, 2006

Re: I'd like some input here...

What type of retirement does your friend have? What is the $50K invested in? What growth/interest rate? It doesn't pay to save at 2% when you are paying 4.5%, and it doesn't make sense to pay down a 4.5% loan with money that is making 8%! If there is a retirement account that is growing, then go ahead and buy a boat, just don't spend it all on the boat. Find a nice used one. With the left over funds, either invest in something more than 4.5% interest, or pay down the house mortgage. Oh, and remind your friend to put my name in the will for the boat!

aspeck · Mar 21, 2006

Re: I'd like some input here...

I dunno, but PW2's advice looks pretty good ... Just make sure it ain't Stan's sister-in-law.

treedancer · Mar 21, 2006

Re: I'd like some input here...

If it were me I believe some of it would be in a college fund for the three year old. The rest in a IRA preferably a Roth and think about getting a old fixer upper boat. That scenario might be different seeing youre in Canada.Dont know if you have college funds avaiable up there.

Tacklewasher · Mar 21, 2006

Re: I'd like some input here...

Couple of questions first. First, I'm in Kelowna and an accountant. Not a financial planner in any way though. Is that mortgage a big chunk of the house value? What's housing in Saanichton doing? I'd only be concerned about the mortgage if it's a big chunk of the house value, but I doubt it is. I'd think about locking in the interest as the Bank of Canada does seem to be raising rates. (Side note: No, our interest is not deductable but niether is the gain on our haouses taxable in any way. In general it is best to pay down debt that is not deductable) What's the $50K doing? And where did you find a stable government job in this province????? Oh. I'm almost done a bathroom reno so my advice there is don't bother unless you really need to. Forget what the neighbors did.

kenimpzoom · Mar 21, 2006

Re: I'd like some input here...

Ken's motto: Carpe Diem! End of story. Ken

stan_deezy · Mar 21, 2006

Re: I'd like some input here...

Personal view: if I was your friend I'd make sure that the son was well looked after if anything happened to your friend. Boat: yes I'd buy one but I think I'd only devote 25% of the savings to the capital outlay of the boat and budget 10% as the boat fund for the season then review. Just my thoughts, may be a crock of rocking horse poo right enough. Ps. I'd have bought the boat at the end of last season rather than pay Spring premium

Haut Medoc · Mar 21, 2006

Re: I'd like some input here...

He sold his boat at a spring premium, Stan...JK

Ron G · Mar 21, 2006

Re: I'd like some input here...

Wana swap finacial postions?

Not the rest,give it a little time to think about,Your freind may have been threw alot this year,alot of times we buy to make our selves feel better.sounds like your friend is going to be fine.

neumanns · Mar 21, 2006

Re: I'd like some input here...

Mag...Everybody looks at things differantly. ya only got precious little time with the lad. Heck in a couple years the fellow will be in school 8 hours a day! He aint gonna remeber how fancy the boat was or how bad it needed a paint job...What he will remember is boating with dad and the fish ya caught. Buy the dang boat and use it...that's what is important IMHO, not what ya spent on it! Besides there are many valuable lessons he will learn that you didn't even realize you were teaching him at the time. Guess what I'm saying is it don't matter if it's a boat new or used or camping with a $40 used tent, it's the time with them that count's If it's a boat that works for you....well, easy decision.

magster65 · Mar 21, 2006

Re: I'd like some input here...

ok ok I'll address some of the important questions... The $50,000 is a newly made deposit and isn't invested in anything, it's sitting in the bank waiting for this decision on what to do. Junior has a savings account that'll be switched into a GIC (or similar) soon. It's a little under $2000 at the moment. The $120,000 owing is about 25% of the house value. The government pension plan is decent plus there's been $100 a month put into RRSP's for about 10 years. They're doing fairly well now. The retirement is well looked after I think. I guess the question still is... live for the moment or make getting rid of the mortgage 'the' goal? Imagine not having to pay a mortgage or rent?

magster65 · Mar 21, 2006

Re: I'd like some input here...

Originally posted by Haut Medoc: He sold his boat at a spring premium, Stan...JK

Yes, I sold my boat but there was no spring premium this time... I needed it sold before the annual moorage came up for renewal at the end of this month. I priced it to sell...

SpinnerBait_Nut · Mar 21, 2006

Re: I'd like some input here...

Yea magster, no mortgage or rent, but what about a boat. Go for the boat and let everything else take care of itself. Life is to short to worry about this stuff, get what ya want while you still can cause you never know what's around the corner. That's what the wife and I do and let everything else fall where it may.

Reel Poor · Mar 21, 2006

Re: I'd like some input here...

I say refinance the home mortage, take out enough to get the boat you want. Get a 15 year fixed rate before the rates start to get to high again (which would probably leave your monthly note about the same as it is). Invest the 50g's, put it to work making money. Just keep it as liguid as possible in case something happen and you need it. Dont spend the 50 on a depreciating asset. Also the boat is free and clear if you need to liquidate it. Boat money (from liquidating) plus the 50 down the road placed on your mortgage, if needed, would put you in about the same financial position you would be in now if you paid the 50 on your mortgage. Hope I said that where you can understand it.

I'd like some input here...

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