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Old 07-21-2014, 07:28 PM   #85
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I could not agree more!

The returns on all of my tax-deferred mutual funds far exceed the interest rate on the 20 year mortgage of my RV. Even though I could pay off the loan many times over, it ain't gonna happen. I have 9 years and 5 months left. If I die before it's paid off, it becomes my sons problem and they will pay it off from my trust.

For those that like to be debt free that's entirely your choice but for both Maladjusted and myself, we'd much rather have our money working for us versus in a depreciating RV.

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Old 07-21-2014, 07:46 PM   #86
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The only way to take it with you is to die in debt!! Enjoy your life because things can change in a blink of an eye!! The tragic story of the plane crash this past week should make us all look at things a little differently!!

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Old 07-21-2014, 08:26 PM   #87
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Originally Posted by Maladjusted View Post
Sometimes paying cash is not the most fiscally advantagous for large purchases... Ie House, Or RV.

Case in point... We have enough liquid savings to pay for our rig outright. That cash is currently in a mutual fund portfolio that turned 16% last year is is at 7% this year so far.

We borrowed 75% of the value at 3.24%. Keeping our cash in the mutual funds, even at a modest 7% return still nets us 3.76%.

A couple of comments about this.

#1) Usually you have to pay taxes on gains and no one ever figures in depreciation of money so the standard ratio is that you need to earn 2.5X's the interest rate to break even.

#2) If you are going to purchase a big ticket item with cash you have to use the power of cash to get a better deal than you would if you financed. For example I purchased my coach from the bank, got it for almost 1/2 of NADA low price but I had to pay cash. I know another person who just picked up a Newmar King Aire in a cash only estate sale. Paid less than 200K for 2011 coach that had only been taken out on the road twice. For homes I purchased a distressed home for 150K cash and had instant 100K in equity. Bought several bank repo's, including an apartment after the crash for pennies on the dollar but you need cash to do that.

So I agree with you that if you are making a good return and won't use the power of cash to get great deals it is probably better off to finance.
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Old 07-21-2014, 09:02 PM   #88
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Your talking apples against oranges.

The way I see it the Op didn't have boatload of cash. I thought they were under water on the coach they and wondered about rolling that into new coach some way. ??
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Old 07-22-2014, 07:09 AM   #89
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Financing more on a newer coach to get out of a bad situation on an existing coach sounds much like the what the boys in DC do. What happens after the next year and the OP is upside down on that one too. Just borrow more to buy a more expensive coach. Seems to me that paying down the current one would be a better plan. Sometimes when we make choices we are not happy with, it's better to live with it for awhile till a different choice is more practical. But, then again, I'm just one of those guys that doesn't like bad debt. Everyone is different and free to make their own choices/mistakes, so it doesn't really matter what we think. Heck, I'm about to buy another modified Jeep that I really don't need. Already have buyers remorse, but I will wire the funds tomorrow and hope to feel better after it's here. So, what do I know?????
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Old 07-22-2014, 07:15 AM   #90
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Old 07-22-2014, 07:21 AM   #91
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Originally Posted by Crasher View Post
Financing more on a newer coach to get out of a bad situation on an existing coach sounds much like the what the boys in DC do. What happens after the next year and the OP is upside down on that one too.
I think the big difference between this and what government does is that government debt is accumulated with no expectation that it will ever actually be paid down to zero. I'm not making a political statement here, but simply a statement of the fact that modern economic theory doesn't have a problem with governments operating with a modest amount of debt as long as it is relatively small compared with the GDP. Therefore, even though the government needs to control how much debt it adds each year, there is no real expectation that it will ever pay off the accumulated debt. It's a cycle that goes on forever.

The difference between that philosophy and that used by individual people is that people don't live forever and eventually debts do get paid off. One post already has noted that his children can pay off the MH debt from the estate. This is fine if you can afford to indefinitely pay for the loan on it until you die. However, there is a high likelihood that at some point before you die you will be unable to drive and/or enjoy the MH and then the issue of being upside down on the loan could become significant. if you want to get rid of it you may have to use a significant amount of savings to do so which for many people could cause serious issues.

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