When is it ok to splurge?

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Topic Author
Detroittl
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When is it ok to splurge?

Post by Detroittl »

I want to buy a boat - it wasn't part of the "plan".

35 single
One year's gross base salary saved in combination 401k and Roth.
Saving 23 percent of gross salary in 401k (this includes the employer match)

Most of annual bonus goes to early retirement fund. Part of it goes into "fun" fund (boat etc)
6 months expenses in early retirement fund in brokerage
Emergency fund fully funded
28 years left on mortgage at 3.875 percent, 70k equity in home
Paying a little more on mortgage each month. Was planning to keep building up early retirement fund and have about 12 years of expenses in 13 years. Then I would pay off whatever is left on mortgage and have the option to retire.

I really want this boat but it would set me back 100k (Leaning used and much cheaper now) and a few years of early retirement. Am I crazy or stupid or both ?
Last edited by Detroittl on Fri Apr 08, 2016 5:53 pm, edited 1 time in total.
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cheese_breath
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Re: When is it ok to splurge?

Post by cheese_breath »

Detroittl wrote:I want to buy a boat - it wasn't part of the "plan".

35 single
One year's gross base salary saved in combination 401k and Roth.
Saving 23 percent of gross salary in 401k
Most of annual bonus goes to early retirement fund. Part of it goes into "fun" fund (boat etc)
1/4 of gross salary in early retirement fund in brokerage
Emergency fund fully funded
28 years left on mortgage at 3.875 percent, 70k equity in home
Paying a little more on mortgage each month. Was planning to keep building up early retirement fund and have about 5x gross salary in 13 years. Then I would pay off whatever is left on mortgage and have the option to retire.

I really want this boat but it would set me back 100k and a few years of early retirement. Am I crazy or stupid or both ?
Stupid. By the time you include marina slip and winter storage, operating costs and maintenance for a 100K boat you're talking several more thousand every year. And don't forget insurance. If you want a boat get something smaller and less expensive. I had a 20 years of fun with an 18' I/O I bought used for 10K.
The surest way to know the future is when it becomes the past.
Topic Author
Detroittl
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Re: When is it ok to splurge?

Post by Detroittl »

I would be using the fun portion of my bonus for slip fees, insurance etc. looking at used too.
Angrypuppy
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Re: When is it ok to splurge?

Post by Angrypuppy »

As a prior boat owner, all I can say is charter or rent.

I know you won't listen, but I'd bet a good sum of money you will come to hate the boat.

Enjoy.
EFF_fan81
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Re: When is it ok to splurge?

Post by EFF_fan81 »

I occasionally chide people on this board for oversaving /overworrying, but not here. You only have one times your income saved for retirement. That's very far from your goal. You will be almost back at square one if you blow a ton a boat, and it will be harder to recover due to ongoing expenses for boat ownership.

"A Boat is a hole in the water in which you pour your money."
"People get married to the sea, but owning a boat is like being constantly divorced."
"Racing a sail boat is like standing in a cold shower and tearing up $100 dollar bills."

Why don't you set a budget for boat rental fees and see how that goes for a few years first?

Or, better yet, why don't you make friends with a rich guy with a boat?
EFF_fan81
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Re: When is it ok to splurge?

Post by EFF_fan81 »

I forgot. You will need far more than 5 times your annual income saved in order to retire early. Try 25-30 times.
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Watty
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Re: When is it ok to splurge?

Post by Watty »

Detroittl wrote:Am I crazy or stupid or both ?
It is pretty normal to have "wants" and maybe a bit of a mid-life crisis.

One thing that you didn't mention is how much you are making, if you make $500K a year then that might not be an unreasonable thing to consider.

You didn't mention already owning a boat or even being experienced enough to sale one safely but getting a much less expensive one to start out with would make sense so that you can learn more and to learn just what you want in more advanced boat.
Topic Author
Detroittl
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Re: When is it ok to splurge?

Post by Detroittl »

Thanks for the advice. I hadn't considered renting first.

The 5x would just be in the brokerage account to bridge the gap until I draw on 401k. Social and pension would be gravy but not factoring in.
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cheese_breath
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Re: When is it ok to splurge?

Post by cheese_breath »

With a name like Detroittl I assume you'll invite us all to watch the Gold Cup with you on your boat? :D
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Detroittl
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Re: When is it ok to splurge?

Post by Detroittl »

Cheese : +1
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LowER
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Re: When is it ok to splurge?

Post by LowER »

What type of boat do you want? Blow boat, power, sea, fresh?

Will it fit in your garage?

Are you handy enough to do required maintenance?

Is it a brand that sells for less but is high maintenance or the opposite?

Do you intend to buy new?

How much is your post-tax income compared to the price of the boat? (rhetorical)

Will it be the centerpiece of many vacations that you would otherwise spend many thousands on?

Are you prepared to spend X many more years working based on the purchase price and maintenance, storage/slip fees (if any) and the enormous loss of equity if purchased new?

If "Bring On Another Thousand" doesn't bother you, heck yes get the boat, but if you are like most people, you will use it less and less in the years that it starts costing more and more: best 2 days in a boat owner's life - day of purchase and day of sale.

I have owned a boat for a decade-ish. I do all maintenance, store it enclosed on my own land, bought a brand known for longevity and minimal upkeep, has been the centerpiece for countless super fun vacations in several states, can provide a day (and many nights) of smiles for 10 people, has taught my kids responsibility and boating responsibly, and teamwork in fun and stressful times in bad weather, and ultimately has been a bargain when compared to many other potential activities. Kids are off to college, but they still beg me not to sell, and why should I? Registration is dollars a month, a full day on the water is $25 to $100 (for 10 people) and it has never needed a repair that cost more than $100. Maintenance that has cost me includes tires a couple of years ago and brake maintenance on the trailer. Batteries are replaced every every 3-4 years. Oil changes occur 1-3 x annually. Insurance is quite inexpensive.

During my uber saver years for circumstances occurring after purchase, I kept it (paid cash long ago), and knew that it would continue to be a wonderful way to keep in touch with my teens and get to know who they were hanging out with, and how many tattoos they had been hiding. It's also been a great way to spend time with friends and colleagues in a very relaxing environment, listening to music, skiing/boarding/tubing, sightseeing, camping, etc.

Not every boat is a foolish purchase, but I will agree that most probably are eventually much more expensive than most purchasers ever anticipated and they become like the frog in the pot of eventually boiling water: best 2 days....
csm
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Re: When is it ok to splurge?

Post by csm »

LowER wrote: If "Bring On Another Thousand" doesn't bother you, heck yes get the boat, but if you are like most people, you will use it less and less in the years that it starts costing more and more: best 2 days in a boat owner's life - day of purchase and day of sale.
I was going to post these same two sentiments.

Have you considered a membership rental program like this (they offer both sailing boats and power boats depending on location): https://sailtime.com/

Friends of ours were members and had use of a sail boat in Tampa. The boat was brand new, kept in immaculate condition, and they had access to use it X number of days / weekends per month that could be reserved ahead of time, including overnight usage if desired, plus if it wasn't reserved, they could grab it on 24 hours notice. The membership fee was a few hundred dollars a month and was a bargain when looking at the cost of owning, mooring, maintenance, etc.

It's kind of like a timeshare for boating but I hesitate to use that analogy since timeshares are generally bad deals. They had a monthly fee that they could cancel anytime. We sailed with them one day and when we came back to the harbor, there was a simple checklist to go through but it didn't even include hosing down the boat - all of this was taken care of by the managers, as was the cost of diesel (not sure how the motorboat options handle the fuel).

My husband has sailed since he was 3 and his family, and we, owned boats until two years ago when he finally sold a 36' sailing boat that was costing more and more in ongoing costs, and used less and less. He has not been sorry to get rid of it. Should we someday live near a SailTime location (or similar membership program), I could imagine perhaps joining for a while to see if there was sufficient enjoyment vs. cost. But at least if it turned out to not be worthwhile, getting out of it is easy - which can't always be said for getting rid of a boat if you own it.
art_org
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Re: When is it ok to splurge?

Post by art_org »

Build one, then sell the house.

http://georgebuehler.com
Levett
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Re: When is it ok to splurge?

Post by Levett »

"Am I crazy or stupid or both ?"

I don't know. You are 35.

But since you asked at this site, I'm curious to know whether you will listen. :wink:

Lev
Longdog
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Re: When is it ok to splurge?

Post by Longdog »

Simple. It is okay to splurge when all of your other goals are met, even taking into account the splurge.
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Leemiller
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Re: When is it ok to splurge?

Post by Leemiller »

When you can pay cash. Does seem odd to have more in your boat than your house though.
MrNewEngland
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Re: When is it ok to splurge?

Post by MrNewEngland »

You should do whatever you want, you're an adult and there's no "right or wrong" on how to live your life.

With that said the boat is probably not the best financial move. I will echo what someone said above: you're probably better off renting one. I've had a couple boats and you really don't use them as often as you think you will. And there are so many expenses that you didn't realize.

Couple that with the fact that you seem concerned with retirement and early retirement... and that won't help. You're not doing poorly with your retirement but you're also not really on track for early retirement, and this boat won't help.

So I guess I'm saying that you can do what you want but it sounds like you need to put a lot more thought into it.
Last edited by MrNewEngland on Mon Apr 04, 2016 10:25 am, edited 1 time in total.
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cheese_breath
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Re: When is it ok to splurge?

Post by cheese_breath »

Leemiller wrote:...Does seem odd to have more in your boat than your house though.
Not for a dedicated boater.
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SimonJester
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Re: When is it ok to splurge?

Post by SimonJester »

The two happiest days of boat ownership: the day you buy the boat and the day you are waving goodby when some other sucker buys it from you and is driving off with it. :P
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SouthernCPA
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Re: When is it ok to splurge?

Post by SouthernCPA »

I'm a "boat person." I live on the Gulf of Mexico and use my boat nearly every weekend. If you think you'll use it this much, it's not a terrible idea. We've created countless memories on ours, great weekends with friends/family and I just plain love being out on the gulf. It's part of the fabric of who I am.

That said, the reputation of boats being expensive is correct. $100 here, $100 there, Fuel, surprise repairs (I got caught with a $2k+ repair last fall that I wasn't expecting). My advice would be get a cheaper boat to start with, see how much you actually use it and then consider upgrading when you're in a better financial position to do so.

Many bogleheads will never understand why you would want a boat, and rightfully so, but for some of us, it's just in our blood. FWIW, I have a pretty low maintenance center console fishing boat that I trailer. This keeps my holding costs down and upkeep is pretty easy. If you plan on having your boat stored in a wet slip (especially in saltwater), you've just upped your maintenance commitment each year. Bottom paint, zincs on engine (s), slip fees, constant washing/waxing, etc. My advice is to start small and see if it's really for you.
quantAndHold
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Re: When is it ok to splurge?

Post by quantAndHold »

I would start with a seasonal rental, and see how much you're using it after a couple of seasons.
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Christine_NM
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Re: When is it ok to splurge?

Post by Christine_NM »

My Dad was like SouthernCPA. He was not happy without a boat. His first was a 30ft racing sloop he bought for $700 after it had been damaged in a hurricane. He spent a year on repairs while taking sailing classes. Blue Water Sailing Club (MA) used to meet in our rec room (basement) in winter. Dad knew how to squeeze a penny and did nothing else for himself, just what Mom wanted to do. So it was never a serious splurge for them.

If you are a boatperson I do not know why you are asking us. If you are not a boatperson you will hate it. Definitely do the rental AND look at owning a boat with a skeptical eye. It can be dangerous as well as expensive, especially while you are learning.

Maybe you'd like a nice airplane instead? 8-)
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psystal
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Re: When is it ok to splurge?

Post by psystal »

$100k is A LOT of money - this is especially so at age 35 when you're planning an early retirement. As others have said, for boat ownership that's just the beginning of your costs. I'm sure you'll easily double that amount if you own the boat for a significant amount of time.

If you live on a body of water where you'll get daily/weekly use out of this boat, and you can manage the regular maintenance yourself, then it very well may be a worthwhile purchase. My great uncle had a boat when he lived in PA for use on a lake about 45 minutes away. After a couple years he barely used it and loathed the sight of it. Years later, he retired to Florida right along the Gulf, and bought a much larger boat primarily for fishing. He's on it almost everyday, and it's made his retirement wonderful. It's an attraction for his family/friends to visit, too, and he always is taking people out on it. The moral of the story is, it depends. As others have suggested, you might try renting for a few years, and definitely educate yourself about the investment in upkeep in terms of both time and money. People end up hating their boats when they either don't make use of them or resent the expenses.
Teague
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Re: When is it ok to splurge?

Post by Teague »

I just gave away, free, a decent 26' foot sailboat in order to be done with slip fees, insurance, maintenance, and so on. One of the happiest days of my life.
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Detroittl
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Re: When is it ok to splurge?

Post by Detroittl »

I am heavily leaning towards renting and used if I do buy.

Thanks again everybody!

Also someone mentioned I'm doing a poor job with retirement funds. If I want to start drawing at 59 I need about 30 times salary... I've got a year's worth now. What would be ideal?
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Re: When is it ok to splurge?

Post by Leeraar »

The second best day of your life is the day you buy a boat ...

Do not buy a new boat! I bought a used one for about 1/3 the cost of new.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
MrNewEngland
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Re: When is it ok to splurge?

Post by MrNewEngland »

Detroittl wrote:I am heavily leaning towards renting and used if I do buy.

Thanks again everybody!

Also someone mentioned I'm doing a poor job with retirement funds. If I want to start drawing at 59 I need about 30 times salary... I've got a year's worth now. What would be ideal?
Oops... I just edited my post to say that you're NOT doing poorly with your retirement. Not sure how I left that little (but important) word out. But I stand by the second half of that sentence where I said you're not on track for early retirement.

There a general rule about retirement that you should be able to withdraw 4% of your total funds and be safe for retirement. 4% is the same as 25X's your withdrawal rate. However if you have a pension or social security your withdrawal rate goes down.
Leeraar
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Re: When is it ok to splurge?

Post by Leeraar »

Nothing says it better than this:

Image

Notice, though, how happy the guy is!

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
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William4u
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Re: When is it ok to splurge?

Post by William4u »

Spurge when there are no higher priorities for the money, and you have plenty to spare. Life is pretty good if that becomes a boat. I'd worry that it would become a money pit at 100k for the boat.
KyleAAA
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Re: When is it ok to splurge?

Post by KyleAAA »

Which do you value more, fun on a boat or early retirement? I'd choose the boat but only you can answer this question for yourself.

Alternatively, $100k is a lot of boat. Could you buy a cheaper one?
KlangFool
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Re: When is it ok to splurge?

Post by KlangFool »

OP,

Let me give you a simple and straightforward answer: when your asset excluding your house is 25 times your annual expense. When you reach that point, you can spend all your income and save nothing every year.

KlangFool
Non7WoodUser
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Re: When is it ok to splurge?

Post by Non7WoodUser »

Boats and pools have a lot of hidden costs.
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Detroittl
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Re: When is it ok to splurge?

Post by Detroittl »

Thanks klang

In other words I have 2x annual expenses saved in retirement and 1x annual in brokerage for early retirement. Goal is 25x and 10x respectively. I feel on track right now but don't want to backtrack. I think my plan looks like this :

Use some money from my fun fund to rent a few times this summer and if I still want it look for a used boat
LeighN
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Re: When is it ok to splurge?

Post by LeighN »

Boats are great...as long as they belong to someone else.
hardrain
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Re: When is it ok to splurge?

Post by hardrain »

If it were me? I'd read Lila: http://amzn.to/1UQj0jd -- you could probably even find it at the library :).

Only other thing I'll add is that, as much as I love this site, the goals and practices that I gather here are a means to an end for me, not an end in themselves. Maybe it's a boat, maybe it's something else, but I always like to keep that in mind when I'm doing financial planning. Nothing special happens when you hit a debt reduction, retirement or FI goal, it's what it frees you to do with your mental energy and time that's the point imo.
feh
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Re: When is it ok to splurge?

Post by feh »

Detroittl wrote:
I really want this boat but it would set me back 100k and a few years of early retirement. Am I crazy or stupid or both ?
IMO, this would be a terrible purchase.
randomguy
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Re: When is it ok to splurge?

Post by randomguy »

blinx77 wrote:I forgot. You will need far more than 5 times your annual income saved in order to retire early. Try 25-30 times.
25-30x of annual income is way too much money. 25x of expenses is a reasonable number. Take out taxes, savings and so on and something in the 10-15x of annual income is a pretty reasonable number. 5x could work if you have some insane savings rate (70%)
cusetownusa
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Re: When is it ok to splurge?

Post by cusetownusa »

blinx77 wrote:I forgot. You will need far more than 5 times your annual income saved in order to retire early. Try 25-30 times.
Haven't heard this one before...Sounds very very conservative to me. I am shooting for 25-30 times my annual expenses which is a vastly different number than 25-30 times my annual income.
eggraid101
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Re: When is it ok to splurge?

Post by eggraid101 »

We bought a boat about 4 years ago, but it was a small, used boat, we spent about $15,000 on it. We used it and loved it, but last summer only got out on it about 4 times. We took that as a sign we should sell it, so we did, for about $13,000. It was a pain to maintain, stressful to drive it around on a trailer when we had to, but we made great memories on it as a family and I don't regret it. It is expensive to maintain and to store them, know that going in. There are people who have boats for decades and truly love owning them. But the majority of people don't.
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Fieldsy1024
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Re: When is it ok to splurge?

Post by Fieldsy1024 »

whenever it is something you really want! :)
SQRT
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Re: When is it ok to splurge?

Post by SQRT »

Seems like a pretty big splurge for someone so young. Also, doesn't sound like you have boated that much? If not you should start smaller/cheaper. This is from a guy that has a boat and thinking of getting a new one in the price range you mentioned. The difference is I am retired and FI. Would never have considered doing what you are considering at your age and wealth. Are you sure it isn't just the start of several such splurges? If so big mistake.
Last edited by SQRT on Tue Apr 05, 2016 11:29 am, edited 1 time in total.
NMJack
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Re: When is it ok to splurge?

Post by NMJack »

Save your hard earned money for more meaningful things such as rent, family, etc. I've NEVER met somebody who said, "Darn it, I wish I would have spend more of my money on things when I was younger so I didn't have so much deferred buying power now." Stick that $100K in an S&P 500 index fund and spend the next 10 years sitting on the beach watching the "lucky ones" doing whatever it is that they do with their boats. Then come back and tell us if you have any regrets.
Last edited by NMJack on Tue Apr 05, 2016 12:53 pm, edited 1 time in total.
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White Coat Investor
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Re: When is it ok to splurge?

Post by White Coat Investor »

I bought a wakeboat last Spring. It was brand new and quite expensive. Although technically it was a price point brand, it had all the performance of the fancy brands. It wasn't $100K but it was close enough that you can see it from there.

We put 126 hours on it in 4 months and I spent 5 weeks (okay, one "week" was only 4 days) at Lake Powell.

My only semi-regret? Not splurging another $5K for a (second) engine upgrade. Sometimes at high altitudes I wish I had a little more power so I could pump even more water into the boat to make the wake bigger.

You can't take it with you. If it will make you happier, and you can afford it, then buy it.

Now I was in a very different financial position than you are when I bought the boat. And there is no doubt the maintenance and operational costs are significant. You certainly haven't convinced me you can afford a $100K boat. But if you've convinced yourself, then sure, go for it.
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grettman
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Re: When is it ok to splurge?

Post by grettman »

feh wrote:
Detroittl wrote:
I really want this boat but it would set me back 100k and a few years of early retirement. Am I crazy or stupid or both ?
IMO, this would be a terrible purchase.
+1

Trading a couple years of freedom for a boat? I wouldn't do it. It isn't just the money; it is about trading time which is priceless.
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Toons
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Re: When is it ok to splurge?

Post by Toons »

Go ahead a get it,,,if it is what you want :happy
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SouthernCPA
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Re: When is it ok to splurge?

Post by SouthernCPA »

grettman wrote:
feh wrote:
Detroittl wrote:
I really want this boat but it would set me back 100k and a few years of early retirement. Am I crazy or stupid or both ?
IMO, this would be a terrible purchase.
+1

Trading a couple years of freedom for a boat? I wouldn't do it. It isn't just the money; it is about trading time which is priceless.
Unless you live on the water like I do and use it every weekend with family and friends. That time of freedom is not guaranteed, in fact I've seen more than a few clients die within a year or two of retirement. It could happen and if you can meet your savings goals while still enjoying life a little now it's worth it, IMO. Maybe not $100k boat in OP's situation, but some compromise in between. Our boat is a part of our lifestyle here on the Gulf of Mexico and I wouldn't trade the memories made for a chance at a year or two of early retirement. Got to smell the roses along the way in this life journey.

I'll probably have a boat of some sort my entire life. Can't imagine not having one. Bought my first boat when I was 15 years old and have been "on the water" my entire life.

I will say, part of my trade off is I drive an older paid for truck to justify having a boat. I have the same amount invested in my truck + boat that most have in one shiny new vehicle or SUV. I guess it's all just a matter of what brings you the most joy. I could not care less about how new my truck is because it doesn't bring me joy like getting out on the water does.
Leeraar
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Re: When is it ok to splurge?

Post by Leeraar »

Figure out the costs, and then if you want to do it, do it!

Do not ask the Bogleheads for permission!

My sense is that the docking and upkeep of the boat could be 10% of the cost or more per year. If you are contemplating one of the clubs on Lake St. Clair, be aware that they may require many hours of "volunteer" time as a condition of joining, in addition to the fees.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
stvbis
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Re: When is it ok to splurge?

Post by stvbis »

I've owned a boat most of my adult life and the experiences we've had with friends and family on the water are priceless. I now live on a lake and own two boats and I can't wait to take them out, it's part of who we are. If a boating lifestyle is what you are after, I say go for it. Our boating has taken the place of other "Splurges" and it's a priority in our lives. It is our main entertainment outlet during the warmer months.

However, before you pull the trigger there are the "normal" things to consider. How often will you really use it? How will it fit in with everything else you are doing for entertainment? Have you ever owned a toy like this before? Are you handy and can you do the routine maintenance yourself? Is trailering an option? How long is your boating season? Do you have hard freezes? Salt water or only fresh water. Do you fish, ski, ride, wake board or dive? All of those water activities require different equipment. Figuring out the right boat takes a while because there are so many options, styles, price points and manufactures. 2 or 3 year old boats are usually the best way to go.

Quite frankly, at least for me, there is not much I would rather be doing, so I am a poor Bogle advisor, but I've never had much fun with my 401K, Roth or Portfolio.. You only get one life, and we are pushing up daises a long time. Be smart, buy wisely, and have fun.
EFF_fan81
Posts: 406
Joined: Sat Jan 07, 2012 11:23 am

Re: When is it ok to splurge?

Post by EFF_fan81 »

cusetownusa wrote:
blinx77 wrote:I forgot. You will need far more than 5 times your annual income saved in order to retire early. Try 25-30 times.
Haven't heard this one before...Sounds very very conservative to me. I am shooting for 25-30 times my annual expenses which is a vastly different number than 25-30 times my annual income.
Yep, nevermind. My mistake.
anoop
Posts: 2084
Joined: Tue Mar 04, 2014 1:33 am

Re: When is it ok to splurge?

Post by anoop »

White Coat Investor wrote: Now I was in a very different financial position than you are when I bought the boat. And there is no doubt the maintenance and operational costs are significant. You certainly haven't convinced me you can afford a $100K boat. But if you've convinced yourself, then sure, go for it.
Is there a rule of thumb you would use for affordability?

I always struggle with affordability. I own only one car, but I tend to get a somewhat pricey one because I enjoy driving (I have a 2015 328i). I put a lot of miles on the car, so all told I think the car costs me about $10K per year (this includes depreciation, tires, maintenance, insurance, taxes, etc.).

Of course, a boat is a different beast since it's purely for recreation. My car does double duty.
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