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Should I pay off the boat or invest?

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  • #1

    Should I pay off the boat or invest?

    Hello,

    I recently purchased a boat, for 39500, the interest rate is 4.34% (simple) for 36 months. so the monthly payment is 1173$ for 36 months.

    I contribute max to retirement, 47000 (18K for both 401k for me and my husband, 11K for our backdoor roths) plus 5K in HSA... beyond that I have a taxable account that follows the bogleheads philosophy, low cost (etfs, not index funds) in broadly diversified markets and that's where all my extra money currently goes... so I was wondering, should I pay this boat off as quickly as possible, OR should i pay it off in said time frame, 36 months, and instead use my extra money in the taxable account?

    (all other loans, for cars (less than 2%, houses less than 4%) so this is my highest simple interest loan) that i just don't know what to do with.

    Thanks for any advice!

     

    Jessi
    Tags: None
  • #2
    Yes, you should pay off your boat loan today. You should not borrow at more than maybe 1-2% for consumables. Even then you should only borrow if you are contributing large amounts to taxable accounts after maxing tax-advantaged accounts and are trying to get some leverage to enhance returns. The issue with borrowing even at low, 1-2% rates is that you likely are not investing the money that could be used to pay down the boat, but are spending it elsewhere.

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    • #3
      First of all, you have to post a picture of the boat in a thread like this. It's a sad week for me. I winterized last week and mine will go into storage until May this week.

      Second of all, no buying boats on credit. Since you already did that, pay it off before anyone else finds out. Especially at 4%+. That makes both behavioral and mathematical sense, so it's a no-brainer.

       
      Helping those who wear the white coat get a fair shake on Wall Street since 2011

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      • #4
        LOL.

        Ok, I have no idea how to post pics on this site. But it's a lime-green Regal 1900 ESX with surf technology... and we mainly got it for the surfing capabilities since we're so ************************ old (36, 39) and falling from a wake board going at 30-40 mph is a lot different than falling while surfing at 10mph.

        Anyway, love the boat! I'm definitely putting it into the "worth it" category... and we get to use it year round since we live in Orlando, Florida... In fact, this is the first year that we'll get to participate in our annual Christmas boat parade. (we live on a chain of lakes, and basically everyone decorates their boat and put on a show for the entire community... we have enjoyed watching for 5 years, but I think it's time to get out there)

        Although, I'm worried that if we put lights on the boat... they won't ever come down (like what my husband did with the Christmas lights on the house, he says, we'll leave them up, but off, and next year all we have to do is turn them on). Dont ask.

         

        and Ok to the boat advice.. I will pay it off.. but it just seems like the markets are doing so well. Not that I'm timing it or anything...

         

         

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        • #5
          A lot of people, myself included, feel the markets are over valued at the moment.  I don't believe that stocks are going to climb too much higher between now and the next market correction.  But, no one knows of course.  Regardless, I personally feel like now is a good time to be paying off debt.

          In your case, a 4+% loan on a recreational item is a definite "must pay off now" item.  Especially on this site  And buying cars on credit is considered a no-no too

          Anyway, sounds like you guys get to have lots of fun on that boat!  Congrats!

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          • #6
            Pay off the boat.  Tell yourself that you will never finance a depreciating asset again.  I am still thinking about a response to your should I have children post.

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            • #7
              i just paid cash for a similarly priced trailer with a similar offered interest rate.

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              • #8

                FIREshrink wrote:



                i just paid cash for a similarly priced trailer with a similar offered interest rate.
                Click to expand...


                A 40k boat trailer?

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                • #9

                  jessikaur wrote:



                  LOL.

                  Ok, I have no idea how to post pics on this site. But it’s a lime-green Regal 1900 ESX with surf technology… and we mainly got it for the surfing capabilities since we’re so ************************ old (36, 39) and falling from a wake board going at 30-40 mph is a lot different than falling while surfing at 10mph.

                  Anyway, love the boat! I’m definitely putting it into the “worth it” category… and we get to use it year round since we live in Orlando, Florida… In fact, this is the first year that we’ll get to participate in our annual Christmas boat parade. (we live on a chain of lakes, and basically everyone decorates their boat and put on a show for the entire community… we have enjoyed watching for 5 years, but I think it’s time to get out there)

                  Although, I’m worried that if we put lights on the boat… they won’t ever come down (like what my husband did with the Christmas lights on the house, he says, we’ll leave them up, but off, and next year all we have to do is turn them on). Dont ask.

                   

                  and Ok to the boat advice.. I will pay it off.. but it just seems like the markets are doing so well. Not that I’m timing it or anything…

                   

                   
                  Click to expand...


                  Wakeboarding at 40 mph? Are you nuts? I ride at 22. It would be terrifying at 30.
                  Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                  • #10





                     

                     

                     
                    Click to expand…


                    Wakeboarding at 40 mph? Are you nuts? I ride at 22. It would be terrifying at 30.
                    Click to expand...


                    Ok clearly I have a lot to learn about the boat.. I have never owned a boat in my life.. I must be thinking of skiing with one ski, or skiing in general (neither of which I'm even going to attempt)

                    AND I've figured out how to post pics.. D'Oh. =)

                    See how happy it makes us???

                     

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                    • #11
                      travel trailer. with a truck a high five figure amount. but I figured it is far cheaper and far more portable than a second home.

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                      • #12

                        jessikaur wrote:







                         

                         

                         
                        Click to expand…


                        Wakeboarding at 40 mph? Are you nuts? I ride at 22. It would be terrifying at 30.
                        Click to expand…


                        Ok clearly I have a lot to learn about the boat.. I have never owned a boat in my life.. I must be thinking of skiing with one ski, or skiing in general (neither of which I’m even going to attempt)

                        AND I’ve figured out how to post pics.. D’Oh. =)

                        See how happy it makes us???

                         
                        Click to expand...


                        Pretty looking ride. Needs more ballast.
                        Helping those who wear the white coat get a fair shake on Wall Street since 2011

                        Comment

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