Boat vs. Residence + Car

[fe2o3ez]

I was visiting a neighbor the other night who was telling us all about his boat. Commented on how much pain it is to upkeep, but admitted that he was happy to have it to enjoy with his family. (We live within 15 miles of the Gulf beaches, so it is safe to assume he gets out on average 10-15 times per year) Of course, he has a picture of said vessel posted in his office and I will say it is a gorgeous boat - until he commented on what he paid for it. $400,000.

Now, he will be the first to tell you that he bought it when funds were better and that he made a mistake in purchasing it new, but wow. I couldn't imagine that situation.

It gets better. He pays over $290/mth to keep it stored/docked for the occasional use.

I have no idea how he paid for it, whether it was financed or paid in cash. Doesnt matter, but I started thinking about what I would do in that situation. Essentially, if I had the opportunity to spend the same money what would I do? The 400k is the price of a pretty nice second residence, depending on the location, and the $290/mth could be a car payment.

So, what would you do? Boat, with the upkeep fees and family enjoyment or second residence and car? The catch is you need to pick one. (None of the usual SA commentary on all the stuff the money SHOULD be spent on. I challenge you to justify one answer or the other.)

Also, let's assume that the other costs to enjoy these items essentially equal out (insurance, gas, utilities, registration, etc.)

[bjl584]

How much do you know about your neighbor's finances? The average person just doesn't go and buy a $400,000 boat.

[disneysteve]

So, what would you do? Boat, with the upkeep fees and family enjoyment or second residence and car? The catch is you need to pick one.

I'm not really sure of the point of your question. It will likely just identify who likes boats and who doesn't.

For me, the question is a no-brainer. I'll take the vacation home. I'm not into boating. My brother in law had a boat for years. We went out on it once and I was bored out of my mind. I can't think of a more boring way to spend my day. Never went with them again.

I could get a perfectly nice vacation home in a development that we like a lot for about $225,000 so I wouldn't even be greedy and use the whole 400K.

[phantom]

I'm not really sure of the point of your question. It will likely just identify who likes boats and who doesn't.

I have to agree. I think some people are just boat people, and I'm not one of them. So, I'd rather have a vacation home. There are actually lot of other things I'd do with 400k before buying a vacation home. For that much money, I'd rather have something I'd use more than a few times a year. But, that wasn't the question...

I've actually had similar conversations with my husband before. When we walk to and from our car before and after baseball games, we always go past where people have their boats docked on the the river. They're usually grilling or just hanging out listening to the radio. It looks like a lot of fun, and I could see myself enjoying it. But, I enjoy grilling and hanging out at home, and I can't imagine that being on a boat would make it that much better.

[JoeP]

Regardless of the boat cost, there is a truth that has to be recognized: they require a lot of time and money to maintain, especially in a salty and wet environment. Like any expensive thing (car, plane, bike), the parts and labor prices are high and never go away. Plus there is a huge emotional factor involved regarding insurance, slip fees, launching, trailing, problems that occur in the water, repair logistics, winterizing, etc.

It's been said that the happiest two days in a boat owner's life are when they buy the boat, and then when they sell it.

[rennigade]

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[greenskeeper]

It gets better. He pays over $290/mth to keep it stored/docked for the occasional use.

I'm going to guess that a 2nd home upkeep would be slightly higher than $290/month

[dunnrobert700]

If your question is simply...if you had $400K and $300,month would you use it to...

a) Buy a nice boat and keep it in a slip
b) Buy a vacation home with a car

I'd personally choose (b).

Some obvious observations on other implied questions/assertions in your post:

- Boat guy might be a fool or might be fine depending on his finances. You can't judge preferences. Maybe "new" is worth it to him. Maybe he is passionate about boats. You can only judge bad math (ie he ruins his finances with the boat) and even that's dicey.

- Boats have a lot more costs than purchase and slip fees

- There are LOT of other things I might consider doing with $400K and $300/month beyond boat or vacation home.

[johntomba]

A boat is not an investment. It's a sink hole. Have you looked at resale values of boats. Please do.

[Frugal Guru Jenny]

A boat is a hole in the water that you throw money into. But some people love their boats!

[JoeP]

A boat is not an investment. It's a sink hole. Have you looked at resale values of boats. Please do.

Similar to timeshares I'd say!

[LivingAlmostLarge]

I have a friend exactly like your neighbor. Today she and her husband are taking boating lessons to the tune of $2k for the weekend. Now they make $100k combined and she can't afford to stay at home with her two kids because she needs to save for the $150k boat they want and boating lessons they are taking. They are not saving for college because they want to buy their boat.

Furthermore they plan on getting a mortgage for their $150k boat purchase in a few years. Where we live boating is barely possible 6 months out of the year and you have to winterize and store the boat. To the tune of about $1k/month dockage fees not to mention taxes on a boat.

So to them it's more important to pay $2k for 3 days of boating lessons, they are spending at least $4k on boating lessons this year, two 3 day weekends of lessons and possibly a 3rd weekend. And live on a budget of $120/groceries and not be able to afford to buy all their wants, than using that $4k and having an extra $75/week for groceries. Hmmmm....I don't think they are saving enough for retirement, after all their retirement plan is literally to count on their parents leaving them enough to fund their retirement adeqauately.

So my vote is neither, but if I COULD afford it I'd buy the second home. But since I doubt I'd be able to afford a second home or boat, it's a moot point.