Originally Posted by georgelesley
Another thought just came to me. Remember a mh is a depreciating asset. With 20 yr financing unless you put a lot down, you will be "upside down" as soon as you drive it off the lot and will never catch up. If you put a lot down, depreciation will catch up with you in a few years and your down payment will be gone. So, before you pull the trigger, make double sure it is the unit you want to get old with because trading or selling will not be fun.
Health issues forced us to recently trade or give up rv'ing. The unit we had was supposed to be our "lifetime" unit. We were forced to pay a substantial amount to even sell ours! Not fun. We now have a unit we think and hope we can get old (or older) with. You should ge able to get 5 or so. That got us off the lot and just completed a 4.5 refi with GS.
It's *kind of* all the same.....
Pay now, or pay later - depreciation is depreciation... being upside down doesn't matter - it's the same money either way.
Albeit, finding yourself upside down in a pickle jar can be unhealthy for your stress levels.... to mean if you have a financial or otherwise emergency that forces you to sell, but you don't exactly have the cash to get out from underneath it, or producing the cash hurts.
I never worry about depreciation. I prefer to look at the total spend to accomplish a goal. Hypothetically, If I buy at 100K, and sell at 70K two years later, it cost me 15k per year (1250 per month) to do whatever I did - whether that was staring out the window at my RV parked in my yard, or putting 30,000 miles to it. Of course you would also want to add in the interest you spend with the bank.... If in fact I did drive 30,000 miles, then I spent 1 dollar per mile to do it. (again simplified not including interest, repairs, fuel, gadgets - it'd really be more per mile, possibly close to $2)
From there I would decide if it was worth it to me... and to me, $2 a mile to spend quality time with my wife, my dogs, and see things on my list I've always wanted to see is way worth it.... not to say this arrangement of dollar signs would be the same for everyone...
The term "upside down" to me simply means you owe more than it's worth currently. In my mind, this is not a problem UNLESS you don't have the cash to cover the obligation... then it hurts, an avoidable self created predicament.
Me personally, especially as of late, try to never put myself in a position where I can't cover any gap with cash if I found my head stuck in a pickle jar. This in turn has lead me to cut back, even though I might not want to. For instance.. my tow vehicle.. I paid 22k in cash, it's a base model and smells like moth balls... but what I wanted was leather, and the cool electronics, and the power extending mirrors and all that jazz... but alas, I bought what I could pay for interest free. It's been an excellent truck
My bass boat... oh boy did I want a brand new bass boat!!! sparkly and gleaming, gel coat, wide deck, new carpet and slick seats..... but what did I buy? a 16 year old bass boat with a faded gel coat, and carpet I have to glue back down with spray glue and a rip in the seat.... but I tell you what, she sure does float! Cash, 11k (compared to 70k for new)
My RV, absolutely I wanted a Newmar Dutchstar, or a Ventana. No problem getting financed. BUT I decided to forgo that for the next best thing. A handsomely decent, sub 70k travel trailer that we both really like...that I could reasonably afford brand new with a warranty. I financed it through Essex Credit on a 15 year for the low monthly with no intention of carrying it past two years. (really pleased with the company and Jim Pena), placed a modest down payment, have enough cash on hand to pay it off completely if needed, on target to pay it off by the end of the year in new cash - leaving emergency cash in place. But on a new Ventana, I'd be in the banks pocket for a long time.... but that's my situation, which might not even be close to your situation. You could have millions invested compared to my paltry savings account.
It stinks though when unforeseen circumstances force us to face situations we'd rather not. I think this is what happened to George - I'm positive he didn't invite the change in lifestyle that forced his hand early. I think his advice to you would be "don't get in over your head, cause it hurts if your hand is forced".
Having a mental grip on the amount of depreciation, or we could say, the amount it will cost you if you have to sell, is
valuable. Are you in a position to cover it if something major changes in your life (you could ask yourself, no need to answer out loud). This is a question we should all ask ourselves.