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Is Buying A Boat Really Worth It?

(Read this article and you'll be able to smartly analyze the purchase of any new toy, not just a boat!)

By Bryan Rosner

This article is a work in progress. It is not complete. Please send any comments or questions.  

Boat stands for "Bust Out Another Thousand" 

"The happiest days of boat ownership are the day you buy the boat and the day you sell the boat."

"A boat is a hole in the water you throw money into."

I've heard all the sayings. So why would a person with a finance degree like myself buy a boat? I'll tell you why, in this article. But first, we are going to have to cover some money basics. So, if you want an easy answer go somewhere else. But if you want an answer that will really cause you to evaluate your life and re-think your priorities, keep reading! 
(Note: I also write a money blog for fun, to read more of my thoughts on money, start here.)

Introduction: What Does It Take To Be A Money Expert?

My father has been self-employed since I was born, even owning a company with around 20 employees for much of my childhood. I have a business degree from Cal Poly, San Luis Obispo. I myself have been self-employed my whole working adult life, which, after college, now totals about 15 years.

You would think that with this kind of background, I would have a deep grasp of the topic of money; I should have it nailed, right? Not quite. If there's one thing I've learned about money over the years, it is this: Money (and how to handle it) is much more complex than you would guess, and the available resources for learning about how to handle your money are much more scarce than you'd guess. In fact, at age 34, I'm just beginning to grasp the complexities of money, despite my background which should give me a head start. The moral of the story? If a money decision or question you are pondering seems simple, you are probably missing something - it is probably a lot more complex than you actually realize. And the complexity of money isn't just about spreadsheets and interest rates, it's also about your own psychology and consumer brainwashing that has bombarded you since birth, as we'll see in this article. 

So, this article on whether or not to purchase a boat is really about a much bigger topic, and I hope you'll walk away with some much more useful life skills than just answering a simple question about the purchase of a toy. Boating is one small example of a money decision. 

Key Point:

As a hobby, I maintain a money blog and share many of the things I've learned about money. If you are interested in reading these thoughts, feel free to visit my blog. In the meantime, I'll just cover some basics here before we get started talking about boating. However, if you really want to start to understand money, you need a lot more than this article; start reading my blog, and start asking questions of people who are financially successful and who live beneath their means.

What's Your Most Valuable Resource In Life?

Let's start with the first, and most important, principle: Most people give away much too much of their lives and get back much too little in return. In other words, most people's entire financial lives are a bad bargain; a losing bet, sad to say. And you may be surprised to learn that this is the case regardless of how much money you make. Well, almost regardless. 

Think about it: millions of Americans go to work for the majority of their waking hours, without even giving much thought to what they spend their money on. And you must remember, money isn't just a trivial resource to be throwing away: it is literally your life, since you have to give your life in order to get money. Every minute you spend at your job is a minute you'll never get back; a minute that's gone forever. As the famous saying goes, "Time is the currency of life." Money isn't the currency of life, time is! Money is a renewable resource, people can get more of it and some people have obscene amounts of it. But time? Everyone has about the same amount of time, give or take, and time is not something you can buy more of. 

OK, so why does this matter? Because it ought to make you start thinking a lot more seriously about your money. Your money is your time, which is your only precious, non-renewable resource. This line of thinking should get more people to think much more deeply about what they buy and how they spend their money. Are you spending your money on that thing because you really value it, or because you are trying to keep up with the Jones's? Or how about, because you are simply unsure of what to do with your money, so might as well buy a toy? Or perhaps, because you think that toy will make you happy? There are many reasons why we spend our money; but the common thread among them, for most of us, is that we don't really take the time to do a thorough value analysis of what's important to us. Now, this is a huge topic and we can't cover everything; read my blog for more thoughts on the topic. 

Here are a couple examples, taken from real life friends of mine, to illustrate the above statements.

The first is Mr. Money Mustache, a now-famous money blogger who I've learned a lot from. After living on a tight budget for the first decade or so of his work life, he and his wife retired at age 30. Now, their idea of retirement wasn't what you might be thinking; no lavish golf courses or Learjet's for them. Instead, they live on a modest budget now of around $25,000 per year. How could that be a fun life, you ask? Well, Mr. and Mrs. Money Mustache decided that their most valued resource was time. They are willing to trade extravagence for having free time. In fact, they have way more free time than you or I will probably ever have, because they decided that is a priority to them. See where I'm going here? You make your bed and then you sleep in it; if you decide that the $60,000 Lexus is a priority to you, you'll be paying for that with your time, and your life, for a long time. Is it worth it? Time is the currency of life! People may ask, "how did they give up so many pleasures in life to save enough money to retire?" But I would ask the people who work 40 hours per week until they are 70, "how can you possibly feel good about giving all your waking hours away to a boss, right up until you are at the age where you need a walker, can't see anymore, and might be bedbound or even dead?" 

Most people, when they really ask themselves the question deeply, "what do I value?" will agree that time is their most valuable resource. However, getting to this conclusion can be arduous because you have to cut through all of the socialization and brainwashing that's been thrusted upon you since you were a kid. In our capitalistic country, you are a robot consumer and the big corporations have made sure to hypnotize you into believing that you can spend your way into happiness. Undoing this programming requires a lot of time and effort. You have to sit down with your family, rewind through all the brainwashing and programming, and finally start rebuilding from scratch. "What do I really value," you need to ask yourself. I promise that, once you've counted the cost, you won't really want the Lexus. People buy Lexus vehicles to brainlessly fit in with the modern culture of consumerism; not to satisfy their deepest desires. About 1% of people who buy a Lexus can actually afford them given our above criteria; the rest are committing financial suicide without even knowing it. But I digress.

Another example of real life people: Starting from scratch is exactly what my friends over at did. Like Mr. and Mrs. Money Mustache, this family "woke up" one day from the rat race and really figured out what they wanted out of life. After a stint living in their in-law's garage, they landed in South Lake Tahoe living a completely different life. They gave up high pay and high society to regain their time, and redefine their priorities. They are some of the happiest people I know. But it wasn't easy for them; undoing consumer brainwashing is hard work.

Key Point: 

Understanding money involves a little bit of spreadsheet knowledge; but mostly, it involves soul searching. Don't be intimidated; not everyone can handle a spreadsheet but everyone can soul search! 

After You Finish Soul Searching

OK, so we'll fast forward a few years and assume you take my advice and really analyze what's important to you, even if it takes you years of reflection. I'm going to assume you land where most of us will land; you want to live a meaningful life and you want your time to belong to you, no one else. Sure, you may love your job, and you may love working, but you'll agree that you want to do this on your terms, not on your boss's. You'd like to give up that financial pressure and reclaim ownership of your own time, life, and future. OK, so we've got that out of the way.

Unfortunately, that's just the start. Now, you've got to learn to manage money, optimize taxes, save for retirement, get an emergency fund, and many other topics too broad to cover here. You've got to get some skills, or the money you do earn will be wasted on a less-than-optimal understanding of how to make money grow for you. And more importantly, you've got to learn self-control: just because you now realize that wasting money on consumer crap won't bring you satisfaction, doesn't mean that it will be easy to say "no" to those temptations that come up. And most important of all for the middle class is to understand why owning your primary home (the one you live in) is the most important investment you'll ever make. OK, so there were some of the hairy details.

We are getting closer to being able to talk about boats. I know, I know, this is the long route; the detour. But trust me, it's important. Read my blog for more on money topics. The rest of this article, to be utilized properly, will require that you do some long hard thinking about your priorities and develop some new money handling skills. 

Once you have re-defined your priorities and learned some money skills, now you are ready to start talking about whether boating is a good investment for you and your family (remember, the question of boating is just one of many similar questions which all get answered nicely once you understand the broader framework of money psychology). 

Digging Deeper

I'm sorry, but I'm still not ready to talk to you about boat ownership yet. Don't throw rocks at me! We've covered some ground, but there's one more place we need to visit before moving on: Your own unique, personal situation when it comes to money. You see, we all fall on a spectrum somewhere. So your answers will be different than mine. And I'm not just talking about the income and savings we each possess: that is just the beginning. 

Let's look at 5 areas you can assess to determine whether you are in the "green zone" (healthy) or "red zone" (unhealthy) when it comes to your finances.

1) Income. This is a reality of life, regardless of how cruel. Your annual income will determine a lot of the parameters of your toy buying. Those with higher incomes can leverage frugality more effectively to save huge sums of money in short order. That, in turn, will give them peace of mind and flexibility, some of which they can use to buy toys. However, even people with high incomes must be careful: if you spend most of what you make, you are just as poor as someone with hardly any income. What matters at the end of the year is how much you keep, not how much you make. Still, though, if you have a higher income, after you reassess priorities and decide not to be a consumer robot, you can make some big changes and start saving serious coin. Lower income individuals may have little wriggle room when it comes to their basic living expenses, so even a thorough analysis of their lifestyles may not produce much change in their balance sheet. (If you are a low income individual and you want to get serious about saving and taking back control of your life, I strongly recommend you read Mr. Money Mustache's blog). To summarize, high income people can buy toys without giving up as much of their time (their life!) as low income individuals. Still though, a more useful measurement of income is this: what percentage of your income do you spend on living expenses? If you are middle class and only spend 50% of your income on living expenses, you have a lot more room in your budget to buy toys than the rich guy who is already living beyond his means and spends 110% of his income on living expenses. How much savings do you have? Are you able to pay all your bills easily? These are some questions to start asking. They are related to income but also related to what percentage of your income you spend on living expenses. Those who spend a lower percentage will have more room in their budgets to buy toys. 

2) How much you like your job. For those who love their job, escaping the work life and becoming financially independent is only minimally urgent. For those who hate their job, saving every penny to get out of the work life may be a top priority. If you hate your job, don't be buying boats or any toys for that matter; you should be streamlining your living expenses as much as possible so you can leave your job and enter a new field that you like more. 

3) Debt. If you have any kind of debt other than a home loan on your primary property or investment property, you are in an emergency!!! Consumer debt will swallow you up faster than almost any other financial ill. Not only do you have to pay interest on consumer debt, you also have to shovel money into the mouth of your debt to pay the balance down to zero, and you then have to learn to save money in order to get a savings account established. And if you went into debt in the first place, it means you were living outside your means or spending more than you make; so, you also have to somehow create a situation where you have a net positive cash flow instead of a net negative cash flow. As simple as consumer debt may seem, it's not simple at all. There are a lot of moving parts and it will take a lot of dedication to get back on your feet. Don't buy a boat - or ANY toys - until you are out of debt! Understand why you went into debt in the first place, and remedy that misstep. And more than anything, understand why consumer debt is so destructive. 

4) Grasshopper or Ant Mentality? You know the story of the grasshopper and the ant, right? The ant just likes to work, work, work, and save up money for a rainy day. The grasshopper likes to play, play, play, and doesn't worry about the future. Which one are you? Some of us are a good mix of the two; that's where you want to end up. But most of us are extreme versions of one or the other. You need to know which one you are: this will determine whether or not it is smart to buy a boat, or some other toy you are considering. If you are an Ant, and you only occasionally splurge, then the purchase of a big toy probably won't throw you off course too much; after all, you'll be right back to your hard work and money saving after you buy the boat, and you probably won't splurge again for a long time. On the other hand, if you are a grasshopper, and you are always in debt and always seeking the next consumer fix, then your challenge is to actually restrain yourself from purchasing expensive toys; develop self control, and begin to behave more like an Ant. Ants, on the contrary, might never have any fun at all if they don't force themselves to have some fun. See the difference? We aren't all wired the same; and so the answer to the question of buying toys really depends a lot on YOU.

OK, let's finally talk about that boat!

If you skipped the above sections, I adamantly refuse to give you my blessing with the following advice. If you skipped the above sections, your answer is, DON'T BUY THE BOAT, IT IS THE WORST DECISION YOU CAN MAKE!


If you actually read the above sections, then here's what buying a boat boils down to:

What are you giving up in order to get the boat? What is the cost/benefit ratio of the purchase?

You can only evaluate these questions if you know what "cost" and "benefit" mean to you in your own life, given your own value system, your own income-generating ability, your own love or hate for your job, and your own evaluation of what is important to you in life. 

Spending money on toys can be thought of as converting your time into consumer products. If you make $25/hr, you probably take home about $17 after taxes. If you work 40 hours per week, your take home pay might be around $34,000/year. If you buy a $34,000 car, you just gave away a year of your life to get that car.

On the other hand, if you make $2 Million / year, and you buy a $34,000 car, you probably only gave up a week or two of your life.

Similarly, even if you only make $20,000 per year, but have $500,000 in savings, the boat won't be a life-or-death financial decision. However, if you make $1 Million per year but you've committed to a lifestyle of extravagence and you spend $1 Million per year, the boat might push you over the edge into financial ruin.

See the difference? See the complexity? See the analysis we need to undergo? It's not all that simple, is it!

Now, bring all of the criteria we discussed earlier in the article into your mind here. How much money do you make? Do you like your job? Are you on track to save money and be out of debt? Are you an impulse buyer, a grasshopper or an ant? Should you be working on self-discipline, or should you be trying to relax a little from your ant-like behavior? Do you own a primary home? Do you have an emergency fund?

OK, now your brain is primed, and ready to move on!

Why I Bought My Boat

The below discussion will explain why I personally bought a boat. It won't apply to you exactly. You'll have to read the first part(s) of the article to make your own decision. But perhaps my thinking will help you understand the evaluation process. 

The following reasons comprise my choice to purchase a boat. But remember, these reasons are just the surface; the deeper reasons and thinking are the topics we've already discussed in this article; topics which require some serious soul-searching to get a handle on. 

1) I can always sell it later! This is self-explanatory. If it doesn't work out, I can sell it, I can end the money drain. This isn't so for people with other kinds of liabilities like consumer debt. You can't stop making your payments, even if you want to. So, the ease of exit when it comes to a boat purchase is very favorable. 

2) I can pay cash. If you can't pay cash for toys, don't buy them! Financing toys is a very bad idea, no matter where you borrow the money.

3) I have a partner. I bought my boat with a partner, which splits all the costs in half.

4) Buying a boat didn't change my financial picture drastically. Purchasing the boat costs me about $3000/year in ongoing costs and $7500 up front, for my half of things. This amount of money doesn't drastically change my financial position in life. It helps that I'm an Ant, and splurges are rare for me. So, they don't throw me off too much, unlike a grasshopper, who might need to resist splurging at all costs.

5) I want to learn something new. Boating is exciting to me because I get to learn something new.

6) I've always wanted to try boat ownership, and this is a way to get it "out of my system." Sure, I could have self control and just avoid the purchase if I wanted to, but in this case I'd rather buy and regret than not buy at all; I just want to know what it's like to own a boat and I want to get it out of my system.

7) I believe the government will keep taxing us at higher and higher rates, and that the middle class will be a dying breed, so I've decided to convert a little bit of my money into fun, now, before I become poor anyway. The government is on a ruthless mission to obliterate the middle class, despite the rhetoric we hear coming out of Washington. Therefore, I've decided to convert a little bit of my middle-class resources into fun now, before it's too late.

8) I like that boating is a friends- and community- driven activity. You are all together on a boat, you can't leave. I like that this will bring my family closer, and give me the chance to hang out with friends and community in a new environment. I also like that I can use the boat as a ministry tool to bless those who couldn't afford their own boat.

9) I live at a lake. Some people drive their boats 5 hours to put them in the water; I will be able to access my boat in 5 minutes; and, no less, at one of the most beautiful places on earth; Lake Tahoe!

10) Boating is an activity that is compatible with my family, our place in life, our limitations, our abilities, and our patterns of recreation. While we travel sometimes, we don't travel as much as many people do, so boating is a new activity we can do here in our home town. It's something we can all enjoy, from adults, to teenagers, to kids, and even very young kids. 

11) I've counted the cost. I've evaluated our finances, how much we save, how much I like my job (read the above sections!), other things we are saving for, etc. I've made a conscientous decision about buying a boat; it's not just something I'm "doing to keep up with the neighbors."

12) We bought a used boat. This is self-explanatory; buying new cars and new boats is financial retardation. 

13) I might be experiencing a mid-life crisis. I think it's important to be humble, and I wouldn't want to claim that the decision is perfectly calculated and 100% correct. I'd rather admit that some of the decision may be driven by other psychological factors. I may not have my internal psyche all figured out; but at least I would like to think that I can admit it; and that I can do some self-reflection in that area. 

14) In investing, we talk about "hedging risk." For example, some people own gold and silver to hedge against a huge market collapse. You can buy bonds and stocks, which move in opposite directions, to hedge risk. Spending some money now on a boat is actually a smart hedge, in my opinion; what if I don't live long enough to enjoy retirement savings (and anyway, will I even be able to operate a boat at age 70+?). By using some money now for fun, I hedge against the risk of early death.


I hope you can see that the real value of this article is in doing some self-examination that extends much further than just whether or not to buy a boat. The question of whether to buy a boat is just one of many questions you'll face, and you'll screw up, if you don't start at Step 1. Step 1 involves examining your values, your income potential, and how much you like your job. The question of boating is Step 10 on the road of understanding your money and what to do with it. Skip the first 9 steps, and you might have some fun on the boat, but there may be a huge shadow of impending financial disaster on the horizon. 

However, if you put your time in now to build a frugal lifestyle and re-define your priorities, then you may end up finding yourself buying a boat, enjoying it, and not paying for it in form of financial servitude for the foreseeable decades of your life.

If I can leave you with one final thought, it is this: Money topics aren't easy, they aren't intuitive, and the right answers are often the opposite of what we are taught through society. To really understand money and how it affects your life, you must literally deconstruct everything you know about it and start building from scratch. It's not an easy process, but it's one that will reward you with peace of mind, ownership of your own time, and the satisfaction that you are making decisions based on your actual values, values which you may not yet even know exist deep inside your heart, soul, and mind.

This article is a work in progress. It is not complete. Please send any comments or questions.  

(Note: I also write a money blog for fun, to read more of my thoughts on money, start here.)


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