Boat finance

[BM]

I like your idea there Flex although the only thing I see as a big hurdle is the longer you are out of the market the harder it is to get in (well, not harder just more costly). Of course if your investment made good returns then this will offset to some degree the natural increase in property values over that same period.

I feel for a lot of young couples buying first homes atm. I thought when we built our first house (7yrs ago) that we had a big mortgage but its not like those of today. But then again, 7yrs before us was a lot better than ours and would have made ours look extreme....

Our house in 7 yrs is worth a touch over twice what it cost for the land and the structure. Had it professionally valued recently (proper valuer, not a r/estate agent) when taking over a new business.

I think the longer you are out of the market the worse off you will be. Although there are obviosuly many vairables in there too.

Cheers

[Splash]

Flex - I'm at GOVE NT Rio Tinto Alcan.

We'll work for same company shortly.

Splash

[Flex]

Nice Splash, what do you do for Rio? yeah looks like the chinese or BHP is gunna take over the world shortly

[mik01]

how many people who thought 10 yrs ago 'nah, i'll just rent and enjoy my life, and buy into a house when I'm older' are kicking themselves today?

the road to wealth is different for every person, and you have to take into account many factors. if you live rent free in a mining town, great stuff. perhaps you can afford an expensive boat and save also for a rainy day.

I suspect you can't/won't work in the mine all your life, therefore you will have a backup plan for the future when you may not have the disposable cash and rent free lifestyle. Wife/kids quickly change all that too. Owning a home is a luxury - just like the nice car and boat, but it gives you so much more and theoretically should appreciate in value therefore offset the interest and borrowing costs to some extent.

can't see how buying a boat is any different to buying a nice car - sure you could get a cheap 4cyl being 'practical', just as you can get a cheap boat. if you can afford it, then do it.

personally I wouldn't get a boat on finance but my circumstances are vastly different to others (have a baby on the way, largish mortgage etc).

[Splash]

Nice Splash, what do you do for Rio? yeah looks like the chinese or BHP is gunna take over the world shortly

Capital Program Leader - Engineering Manager. You?

See the chinese are wanting to buy more of BHP now..Ominous signs

BHP will swallow RIo, the Chinese will gulp BHP.

On the housing situation - we are now purposely working/living in mine towns so that we can pay our house off quicker (25 year mortage turned into 10 year mortgage with 7 years to go :-) )- along with all the other benefits of life - Fishing/boating, OS holidays, no traffic lights, etc...

Splash

[Roughasguts]

Flex and Splash, you fella's are on big bucks and rightly so, you do it hard and dangerous in remote areas.

Trouble is you earn big!! but pay huge at tax time. (and I thank you for that, oh hang on i'm not on the dole) What you need to look in to is getting a big slice of your tax money back. Real estate can do that and also pay some travel exspenses like fuel costs to take your boat to the coast!! I mean fuel cost to inspect your home from time to time and mow the lawn, also with the ute you needed to cart the boat um lawn mower, also cover some accomodation costs.

Get my drift.

Have a chat to a accountant and see how many perks you can get away with.

cheers.

[BM]

On the flip side of this Mik01 we have my inlaws. Have enjoyed nice wines and cheeses and good food and foolish spending (him) and lavish furniture, plants and personal items and foolish spending (her) and now at 58 they are selling the house they recently built as they cannot afford it (both work) and they are terribly in debt (on top of their house) and when the house sells they will be lucky to have 20K left.

So if they buy or build again, who will give them a mortgage for 7 yrs (65y/old by then)?????

Sadly they have dug this hole for themselves and even worse is they have had a lifetime of irresponsible spending and whenever they got in trouble, someone has bailed them out (even their own kids money). Their inheritence on both sides has already been spent.

I'm pretty sure they now seriously regret their life decisions. And to some extent so do we now, because we are likely going to have to put a granny flat on our property at some stage as with next to no super and no money they will not be able to live in retirement.

Long term renters beware!!! But short term as Flex mentioned can certainly work.

How long till the bubs due? Your gonna love it. I have 2 boys. Greatest and hardest time of your life is when they are born. Very emotional times!! particularly if theres any complications and you watch your little one struggling to survive in his heated box..

Cheers

[Splash]

Good one BM.

I think many people will be in that position shortly - sad. We refuse to accomodate my parents (in similar sitation) in a granny flat on my property just out of sheer principle. I know people may think I'm cruel - that's life.

Guts, my property is in melbourne. Do u think the tax man will allow a return plane trip to Gove (even though I have a real estate looking afte rit?) - to inspect my proeprty?

SPlash

[BM]

Splash,

I'm pretty sure your accountant will advise that 1 maybe 2 trips a yr (under the label of property inspection) will be considered acceptable by the tax office.

But of course, defer to your accountant.

These aren't even my parents but I see I will have little choice as my wife will want it that way. I am so thankful that since I met her I have been able to over 10 yrs modify her thinking. I don't mean that to sound bad or domineering or anything like that but she thought just like her parents. Blow every cent you have and hang out till your next paycheck. I grew up the complete reverse of that.

I'm glad she sees that the way I was raised (in that regard) is better than her way and has no desire to follow her parents path. Likewise, she has some better attributes than I that I too am trying to adopt.

Presently we live on an acre but we are looking for something around 2-10 acres in time so if they do end up with us, they won't be on top of us. We get along very well, but I don't want them on my doorstep either.

So whats the plan for your folks then? Might be able to apply the same to my in laws....

cheers

[Roughasguts]

Hell yeah Splash that's a legitimate exspence.

[on-one]

Flex I think you're right about houses not being the best idea but when you're comparing buying a house to renting and investing the difference in shares to come out ahead you'd probably need to have a leveraged position in shares (borrow and claim the interest against your tax) not just pay cash for shares as you go along. You should also include equity in working out the cost of a house ie if you own 50% of your house that 50% is still costing you whatever it would earn being invested elsewhere.

Personally, I reckon you should buy the boat, my father always promised himself a big boat when he retired, finally sold his business and had a stroke instead

[Reel Nauti]

If there's one thing that can change the best laid plans and completely turn financial planning and structure on it's head it's..........................DIVORCE.

So many people, but particularly men, who have worked and planned and worked and planned and then some, have been literally sat right on their financial arse when the big "D" has occured.

That's not to say that planning shouldn't take place, but like life itself, nothing is guaranteed.

Live within your means, plan some for tomorrow, but enjoy today.

Just my thoughts.

Cheers

Dave

[Splash]

Guys - sorry for getting off main thread aim here but here goes..

BM - I am angry at my folks for not setting proper examples for me. They are now separated (sine 1977 actually) and trying to skimp a penny (at the age of 68) to live in shared accomodation with god knows who...?
You are luck you have acearge.

Thanks GUts - Will look into it with my Accountant.

On-One - Good one! Sorry to hear that. That about sums it all up...

Flex - If you really love your fishing/boating - GO FOR IT and buys shares instaed!

Splash

[Chimo]

Interesting little thread this is that reflects the great mix of society that we are.

RAG again is not just a pretty face and BMs story is really frightening and unfortunately all too common and makes me think of the Three Little Pigs fable.

I touched on this earlier in the thread; IME you don't make money buying and selling the house you live in. You lose also in selling and buying costs and stamp duty with none of these costs being deductable. Its your home and an appreciating asset and early in the game it allows extra property to be acquired before after a while you take it out of the pot. My neighbour who is in the building trades has bought and done up NINE properties since being married and has finally worked out that he might be getting better houses to live in but he is not making any serious money for the effort he is putting in and his marriage will not survive another property. (seems like there was a serious lack of quality financial planning and advice here too but just because your good at one trade / profession doesn't mean you understand them all)

You do gain from real estate that you don't live in that you hold with interest only payments supported by the rent the property earns and subsidised by you for a few years until the rents go up even more which they surely will. You purchase these with as little of your money as possible. The more of these you have the better and the benefits are both immediate and long term. Immediate benefits are as RAG indicated and also you can reduce your tax rate by many % down to close to single figures if you owe enough.

A bank manager friend of mine makes a good point when he talks of good debt and bad debt / asset and liability classes . Bad Eg Car, Boat, the debt AND the remaining credit limit on your credit cards, potential calls on shares etc Good eg the equity you have in real estate, cash on hand etc

What wasn't stressed in the earlier post that negative geared property that you acquire can be short term eg 5 yrs ( the term of the 1st interest only loan) or less or more and if you have a few properties and you turn one or two over after a while and buy another property that needs a heap of work on it you will reduce your capital gains tax liability on the sales and have $s to buy both the boat you want and do some repairs and have another bit of $ for the next deposit on another property etc.

All the while your growing your asset to top up your super when you quit work be that at 40 or 50 or 60 or when ever and thats probably the time to slowly unload property with the sales spread into as many tax years as possible to further reduce your tax liability. Theres nothing illegal or even shonky about any of this; all your doing is minimising tax and maximizing the value of your earnings and becoming a self funded retiree.

I think if I was working at the mines I'd be buying as much real estate in growth markets each year as I could so the rate of tax I was liable for could be very much more attractive. If you have an accountant /financial advisor and a buyers agent working for you sourcing and managing your rental properties as well as a good relationship with your bank manager and solicitor to do your conveyancing its not that hard.

Anyhoo some of us fiddle with real estate and tax minimization (not evasion) and others do the straw house thing or similar. The 80 / 20 rule is everywhere I guess and so to each his own I say.

Cheers
Chimo

PS You need a quantity surveyor to do a depreciation schedule on investment property you buy and you can inspect rental property several times a year as well travel to keep abreast of real estate with a view to future acquisition or disposal. You can also get a deduction of abt 3% of the cost of reconstruction of rental property over I think about 20 yrs.

[Flex]

Excellent posts all. Goes to show all us fishermen do have a some form of intellect(my mrs disagrees though).

I believe the biggest factor in financial security is PLANNING. as longas you have a plan you are way ahead of alot of others. Depending on your situation depends on your plan.

If you have a geared fund you can also offset your tax against interest paid in your loan. but I'd imagine rental property would have slightly more to offset.

Splash. Im starting on a new Career path. Im an apprentice electrician. I was a school teacher and got posted to Blackwater, but decided I'd try getting a trade. and the mine is kind enough to pay me alot more as an apprentice than a school teacher(poor teachers are well underpaid)

anyhow, I've decided im going to borrow a small amount at the end of the year and have myself a custom boat built. I dont smoke, hardly drink, love fishing like a madman. Plus I can easily afford it so im going ahead with it late in the year.

Now its a choice of boat builder, very very tough choice