$53,000 too spend! am i crazy or dreaming? i just took $5O,OOO out of the $80,000 i have in equity on a home equity loan and plan on buying the 5 toys ive always wanted! (still single!) 1: 3/4 ton 4x4 2:9 foot camper 3: all open 16 or 18 ft tiller model sled 4: 19 to 21 foot salt rig 5: 16ft drift boat. this way if its wet i can fish it! i look at it like this, worst case, i sell the house , pay off loan, and still have at least $30,000 left to buy another house. all together, the house, loan, and all bills are just over 50% of my income so up keep and use (nock on wood) SHOULD BE ok. what do you think? am i crazy or not?

Pick a cliche'...


You can't take it with you...
You only go 'round once...
It's only money...
No pain, No gain...
No guts, No glory...
He who has the most toys wins...

And you're still single? I wish I would have lived it up a little more while I was still single. I don't think there is a right or wrong answer here. It sounds like you've been responsible enough to build all that equity and keep your debt:income ratio pretty low. Have fun. Live for today because you never know what tomorrow's going to bring. Besides, when/if you do decide to get married she won't be able to tell you that you can't buy your toys, You'll ALREADY have them!

$30,000 (and growing) left-over equity. I think I'd burn a few beer tickets and play with my new toys! An equity loan? I hope you got a good interest rate and at least you'll be paying yourself back.

Just my 2 pennies...

Shane

sure you are but that's ok

Why not! If you can handle your debt and still have money to play, you should play. In a wink of an eye you will be an old man. Enjoy while you can.

thats what I am doing sort of this fall. I managed to swing a pretty good deal on my home and the value has skyrocketed. as soon as its sold, I am paying off a few bills, buying a honda 90 four stroke and maybe a used harley. I should still have enough left over to buy a 20 acre parcel in eastern washington in case I survive 20 in the military. I say spend it, unless if course as noted above your interest rate is horrible. in that event, sell the house first and use the profit to buy your stuff. either way have fun. hows that tune go live like you were dying?

Thats alot of stash for that amount of cash, would like to know how you do! Please keep us informed...................Fishy.........

Hey Fishtman,

Congradulations on your equity riche$.



They're a few things to factor in before you make any big moves.

I don't know the estimated value of your home, but if you had to sell your home (unless it's a F.S.B.O.) you can expect to pay up to 6% of it's value in Real Estate broker fees--That would be $18,000 on a typical $300,000 home (something most people don't think of until they go to sell their first home).

Whatever you buy with the money you borrow against the value of your home you'll get the added benefit of a write off of interest paid come tax time (something you wouldn't get if you took out individual consumer loans on all those toys).

If you have any consumer debt (credit cards, higher interest rate car loans etc..) I would suggest you pay that off before you buy any big ticket toys. The monies used to pay them off becomes tax deductable--and the high intertest monthly payment (CC and Car) savings can be applied back directly towards the principal of your loan balance ( which will in return will save you un-godly amounts of interest money in the future).

What's the interest rate on your first mortgage? It might make more sense to roll all debt (toys included) into one loan with the lowest interest rate available. Regardless of what you ultimately do, it's a good idea to have a Home Equity Line Of Credit open (like a checking account to use at any time with a certain dolar amount available) on your home for those emergencies (other than toys) that alway seem to pop up when it's least expected.


As for justifing whether or not you should treat yourself to a few toys --I'm with Dave on this one--your only young and unincummbered once. You seem to have all your ducks lined up--Go for it.

BTW--I do mortgage consulting in real life as well as in fishing forum chat rooms. If you have any other questions- shoot me a PM--I'm always happy to help a fellow fisherman.



Happy Toying!!

thanks foe the replys fishing friends! my house is at 5.85%. theres no other bills other than smokes and cable that i can eliminate. looks like i will need some fishermen to fill all those seats soon

You're not speaking from experience, are you Dave?

Dan S.

Yeah, that might come from the fact I turn 60 in a few weeks. I have been so very lucky to have a job that takes me fishing all over the world. But I have seen so many friends and relatives save for the golden day they retire, then one of them gets sick and the dream never happens.

There is a saying about life is what happens while you are planning for it - or something like that.

You're only as old as you feel, man.

And I agree........if you're not living life, you're wasting it. You're a lucky man to do what you do.

Sorry but my opinion is you are crazy to do anything with the money but improve the property. The tax deductions mean one thing you are paying interest. Calculate the interst on 30 years for the Sled, truck whatever and add it to the selling price and you will see you are paying 3 to 4 times retail for that toy. Thats foolish in any scenario. The one big assumption is that RE prices will always be high and your income will be the same or better. It's ok to have fun and want toys but paying 3 to 4 times retail for something is stupid.

KING you're no fun, let him be crazy.

I have refied a coupled of times and picked up a newer used car each time,. Hell I'm still paying on a car that I sold two years ago and will be for the next 29 years stupid but it made "her" happy,

Papa,

I know I am a party pooper. We are a consumer society ridden with debt. Even so spending 300k for 50k worth of goods seems excessive to me. But hey it's not my 300k .

The King:

You are 100% correct speaking strictly from a financial perspective. Yet, we must al balance our wants with our needs. Does he need all those toys - hell no. Does he want them - sure.

While my advise was to go for it, yours is definately more logical. A good compromise and one I have used in my financial life would be to calculate how much his payments would be on that $53,000 loan and then pay that amount to himself via some sort of automatic payroll deduction. That way he would incur no interest expense and would actually earn a small amonut on what he saved. Then, when he has enough saved to buy whichever toy he desires most, he would be able to go buy it for cash. He could keep doing that until he had all the toys and would never be in debt. Of course, that means he would have to postpone the toys for awhile, but over the course of a lifetime he would be so very much better off that the wait would be well worth it.

Bottom line is, it's his life and his money.

Dave ,

Good points. I believe in toys and have had/have my share. I believe in living life in the moment and getting it out of your system while you can but at not too much expense of the future.

A couple more things to consider. It is HIGHLY unlikely that he will pay on the equity loan all the way to maturity. Odds are he'll sell that house and pay it off long before then.

Also, the interest is tax deductable and right now pretty darn low. (3.99% is available depending on FICO scores and debt/income ratio)

So in essence, he won't be paying $300,000 for $50,000 worth of toys.

Here's another old saying that I just made up: "If you can... then why the hell not!"

I recently ran into some money myself....

My theory, as usual (didn't let the size of my pile affect my decision making processes) when spending my money on stuff is to buy stuff used...let somebody else take care of the nasty depreciation. When I say 'stuff' I mean of course, cars, trucks and boats...the big stuff.

I looked at it like this......when every thing comes crashing down around me, can I sell what I bought for what I paid for it with relative ease? It helps that I am one stingy *******.....I just don't pull the trigger unless I am pretty sure what I am getting into.

So far, my auto/truck investments look good on paper....just need to start selling some of these rigs off! With any luck at all I'll be doing better than the stock market as soon as I can start liquidating some vehicles.

Great Dave, I took your advice, I went and bought two new motors for my boat. You tellin' me I should have waited??? J/K I have been saving for those for about two years. Paid about half of MSPR, cash sure does work wonders.
My father in-law has always said about the same thing as you did. Get it while you can. You never know what may happen of if the opportunity may be taken from you. Then again he sold his boat and is always in mine now...Hmmnn

I find myself in agreement with both Dave Vedder and Theking--Is that possible?


I agree with the Theking that as a society we have become spoiled by the drive-through mentality that wants everything yesterday, and from a striclty financial viewpoint buying toys with home equity doesn't look good on paper.

I also agree with Dave when he suggested that as we get older most of us will spend more time regretting what we did NOT do than regretting what we did.


I think there is a way Fishtman can have his cake and eat it too.


Fishtman mentioned in his post that his interest rate on his mortgage was 5.875%. Assuming that your getting the $50,000 in cash out equity on your 1st mortgage and not on a 2nd you'll be be paying an addtional $295.77 a month for the next 30 years. That amounts to $106,476.80 of which over $56,000 is interest on the 50K in toys that will only depreciate in value.

I don't know the specifics of his loan(s). But if we assume for example sake that $300,000 fixed @ 5.875% for 30 years would pay off his original 1st mortgage and give him $50,000 cash out for toys at time of closing his principal & interest payment would be $1,774.61 a month.

If he paid an addtional $60 above and beyond the required $1,774.61 (making a payment of $1,834.62) the $60 would apply directly towards principal of the loan and there by pay off his mortgage in 27.51 years as opposed to 30 (assuming he's not in a pre-payment penalty loan).

By shortening the life of his loan--the two and a half years of interest $avings would amount to $53,238.40 (P&I of $1,774.61 x12 months X 2.5 years). That would basically negate the cost of interest to borrow 50K for toys.

That way, for just an extra $60 a month Fishtman can enjoy his dream toys now guilt free and eat his cake too.





P.S.-As an ex-smoker who's never been accused of keeping my opinions to myself--I would urge you to quit smoking and apply the money you'ld spend on "smokes" towards your mortgage as well. That way you'll not only pay off your mortgage much quicker ($aving thousand$)-- more importantly, when it's paid off you'll be alive for several more years to focus on fishing full-time without having to worry about a mortgage or all the health problems associated with smoking. Just my 2 cents.