Down Payments-How Much?

[TXiceman]

I like the 100% down payment plan. Then you owe nothing to anyone.

Ken

[Saltydog44]

Originally Posted by loisjop

I believe all you guys could make a lot more money as a financial advisor! Noel

Not me. I need a steady hand on the tiller, Besides - my approach is boring.

[Whatnobeer]

Originally Posted by Saltydog44

Not me. I need a steady hand on the tiller, Besides - my approach is boring.

I'm the same way. Dump as much as the law allows into the retirement, then see what I can do with the rest. We're in our mid-40's and we do OK. We're not well off by any stretch but we like what's going on. Some of the advice in here is solid. I know some of you are more "seasoned" than me but you've lived it and I appreciate the insight.

[HDrider]

We are a bit on the conservative side but our money so far this year has made 9.5% so it just made sense to go the loan way at 3.49% interest plus have the tax write off and let our money more than make the payment.
Even though it has been nice not having a MH payment for a number of years it just sounded right this time. And between the trade worth over $100K and the extra $25K we will put down we certainly will nit be upside down in the new unit,,,, I hope anyway LOL!!

[Whatnobeer]

Originally Posted by HDrider

We are a bit on the conservative side but our money so far this year has made 9.5% so it just made sense to go the loan way at 3.49% interest plus have the tax write off and let our money more than make the payment.
Even though it has been nice not having a MH payment for a number of years it just sounded right this time. And between the trade worth over $100K and the extra $25K we will put down we certainly will nit be upside down in the new unit,,,, I hope anyway LOL!!

Let me know if you are, I've got some swamp land with your name on it. My money is currently at 10.25% and riding along pretty good this year. I'll rearrange again in a few months just to make sure it stays that way. We hope to have most of the coach paid off before we retire.

[DianneS]

Anyone can do 10%, 13% or 9.5% return in any given year. The real question is what was your 10 year average? I still say that 3X your money over ten years... during the past 10 years is truly EXCEPTIONAL. We had some years where we had 35% returns but then gave it back the following year. It has been a bumpy road. I know we have gotten side-tracked here but it is an interesting subject.

[Whatnobeer]

Originally Posted by DianneS

Anyone can do 10%, 13% or 9.5% return in any given year. The real question is what was your 10 year average? I still say that 3X your money over ten years... during the past 10 years is truly EXCEPTIONAL. We had some years where we had 35% returns but then gave it back the following year. It has been a bumpy road. I know we have gotten side-tracked here but it is an interesting subject.

I know it's off subject but it's a good look at how to get to a down payment and then how to pay on your investment without touching a lot of principle. Since I was the OP for this, let's run with it.

[Jimooo]

Everybody's situation varies on the cost of the coach and makers as far as depreciation increments.

For my situation my financial adviser of course said a motorhome was a bad return investment for my portfolio , he also said that we should not pay off in full but negotiate price then put 33% down payment and if we decided to sell within 5 years of purchase we would probably break even and not be upside down on purchase.

But IMHO who can put a price on Joy.

Good luck,

James

[Saltydog44]

Originally Posted by DianneS

Anyone can do 10%, 13% or 9.5% return in any given year. The real question is what was your 10 year average? I still say that 3X your money over ten years... during the past 10 years is truly EXCEPTIONAL. We had some years where we had 35% returns but then gave it back the following year. It has been a bumpy road. I know we have gotten side-tracked here but it is an interesting subject.

I agree totally about the ups and downs. My numbers (13%) were based on a 5 year average since that is when I started seriously using the approach I discussed. I doubt that will continue at that level since it includes a couple of whizbang years.

My goal is to average 7% over the long haul and then use about 4% which allows for inflation although who knows what that will be. We've beaten the 7 but also have beaten the 4

You're also right that 3X over 10 years is pretty good. I seem to recall that a 7% return on average will get you a double in 10 years. Maybe Wntaxman can add his expertise to that issue. (Just ran an excel spreadsheet - yup on 7% = 10 Year double; It takes 12% to get to a triple.) 12% would be pretty strong for a 10 year run.

Our decision on financing was basically arithmetic. I hate debt, but if I earn 7+ % over time and the interest rate (and home interest deduction at that) is 2.4% it's pretty straightforward. Add to that if I take money out that has been increasing in value I have to pay LT Gains Tax on it. It still kills me each time I see the draft for the payment though.

Interesting thread.

[Jake62]

For what it's worth, most people, including those on this forum, will have their long-term assets invested in equities for the greatest gain. Over the last 10-year period, the "Dow Jones" has averaged 7.77%. It so far has a YTD average of 18.75%. The "S&P has a 10-year average of 7.12% and it's YTD is 16.15%.

So when you look at these numbers of what your long-term gain is realized vs. paying down a depreciating asset, you should pay-off the depreciating asset ASAP. Everyone has their advice, but seeing others on this forum who follow Dave Ramsey, Dave specifically states, pay "cash" for everything ... even an S&B which is usually considered an appreciating asset.

I understand that advice may not be practical for many, but he still suggests to be debt-free is to be worry-free. Especially if you have to use your long-term assets to pay off a MH, you may have to cash-out those funds during a down period and you certainly would realize a significant loss on your net-worth. Or, instead of using those monthly MH payments, you could be contributing to equities and realize a substantial gain in the long-term vs. that money going to paying off the MH.

Gotta Love Dave Ramsey!

[Dr4Film]

Originally Posted by Jimooo

For my situation my financial adviser of course said a motor-home was a bad return investment for my portfolio , he also said that we should not pay off in full but negotiate price then put 33% down payment and if we decided to sell within 5 years of purchase we would probably break even and not be upside down on purchase.

But IMHO who can put a price on Joy.

Good luck,

James

Paying cash or a huge down payment for a motor-home aka depreciating item is by far the very WORST investment anyone can make.

My money is earning far more than the 4.9% interest that I am paying on my loan. When I bought the coach I made sure that I would not need an upgrade. For people that do the swap every few years there is no way you can get ahead unless you are one of the very few lucky ones.

Originally Posted by Jake62

I understand that advice may not be practical for many, but he still suggests to be debt-free is to be worry-free. Especially if you have to use your long-term assets to pay off a MH, you may have to cash-out those funds during a down period and you certainly would realize a significant loss on your net-worth. Or, instead of using those monthly MH payments, you could be contributing to equities and realize a substantial gain in the long-term vs. that money going to paying off the MH.

Gotta Love Dave Ramsey!

Sorry, but I have to disagree about paying cash for everything including a house or in my case my coach which has been my house for the past 10 years.

As stated previously, my investments which are all in high risk but also high reward, have far exceeded my expectations and all of that money is Tax Deferred in a Self Directed IRA.

When I remove money it has to be taxed FIRST and then what's left over I can spend. Sorry, I would much rather have the Federal Governments money working for me versus my money working for them.

Once you retire the objective is to lower your income tax bracket thereby having to pay less tax. Your expenses are automatically lowered by not having to work everyday.

If I had to pay everything off, once the taxes were taken out and the debts paid off, what's left would take a very long time to recover to the same level it is currently.

Those number don't work for me! On a good day in the market I can make 10-15 thousand dollars and a bad day I can lose the same amount or more. If the total dollar amount was significantly lower, those numbers would be cut by 75%. It would be like starting over. Sorry that doesn't compute in my book not at my age. I'll keep my money working for me instead of giving my money away for others to use.

Dr4Film ----- Richard

[Jake62]

There are many with valid opinions. I leave this quote from Dave Ramsey who went from millionaire to poverty ... then back to millionaire.

"While paying off debt, should I stop investing? Dave recommends stopping your contribution to retirement plans and investments for as long as it takes to get rid of your debt (excluding mortgage payment). Do not withdraw from your retirement plans; just let them sit while you conquer your debt. Then, after everything is paid off, start contributing toward your retirement plans again."

Please also check out this article by Dave, entitled, "Full-Time RVers are Cool, RV Loans Aren't."

http://www.liveworkdream.com/2012/09...v-loans-arent/

Please read books and articles from as many financial experts as possible, who don't have a vested interest in their brokerage fee, on this subject. I certainly don't consider myself a financial expert ... just passing along information from known financial experts.

[ShadowBolt]

Originally Posted by Jake62

There are many with valid opinions. I leave this quote from Dave Ramsey who went from millionaire to poverty ... then back to millionaire.

"While paying off debt, should I stop investing? Dave recommends stopping your contribution to retirement plans and investments for as long as it takes to get rid of your debt (excluding mortgage payment). Do not withdraw from your retirement plans; just let them sit while you conquer your debt. Then, after everything is paid off, start contributing toward your retirement plans again."

Please also check out this article by Dave, entitled, "Full-Time RVers are Cool, RV Loans Aren't."

Dave Ramsey Says Avoid RV Loan Debt when Full-Time RVing | live. work. dream. | RVing Snowbird Lifestyle Design Blog

Please read books and articles from as many financial experts as possible, who don't have a vested interest in their brokerage fee, on this subject. I certainly don't consider myself a financial expert ... just passing along information from known financial experts.

Good stuff. I don't care if it's the right thing to do. Being debt free feels GREAT! As I (and Yamaha) say.....different strokes for different folks.


JJ

[TONYnBRANDY]

$300,000 at 3.7% for 15 years is $91,000 interest
If you put down $100,000 finance $200,000 for 15years its $60,000 interest
or you could take that same $100,000 invest it to get a 8% return and re-invest the dividends.
After 15 years the same $100,000 will be $318,000 yes you would pay $90,000 in interest and if you pay 25% on your gains of $218,000 you will be out another $54,500
90,000 interest
54,500 Tax on gains
=144,500 out of pocket
And now you are sitting on $173.500 cash in your pocket and the Motorhome is paid for.
$173,500 + $144,500 = $318,000