This post is not just about buying a boat: it’s about buying any major items that you don’t really need such as a larger house, a vacation cottage or condo, an airplane, a fancier automobile, a motorcycle, or whatever.
Everyone makes mistakes. It’s almost always easier and less expensive to learn from the mistakes of others than from your own. So congratulations for reading material like this! It may help you the next time you are buying a boat or something similar.
There’s a right way and a wrong way of buying a boat.
The right way has three steps: decide what you are trying to accomplish, research your potential purchase, and pay for it properly.
Thanks to the internet as well as traditional publications such as Consumer Reports and the Yellow Pages, it’s much, much easier to do the research than it used to be. So the second step should not be a problem.
Sometimes, people are not clear about what they are trying to accomplish. They sometimes fail to think through a major purchase. The first step can be a problem.
My suspicion, though, is that the step that causes the most trouble is the third. Still, let’s consider them in turn.
I. As Aristotle pointed out two and a half millennia ago, it’s impossible to make a rational decision without first deciding what you are trying to accomplish.
You might be interested in buying a boat because you want to go fishing or water-skiing or sailing or speeding on the ocean blue or just cruising slowly around a small inland lake.
Many people try to use one boat for many tasks. They may try to use a fishing boat also for water-skiing or a pontoon boat for fishing.
What is your primary purpose for buying a boat? Do you also want it to serve any secondary purposes? One boat can’t do everything.
What else will you need? For example, when you are buying a boat will you also need an outboard engine, life preservers, or a trailer?
Can you get them in a package deal without compromising exactly what you want? Where will you store you boat?
I happened to do step one correctly. Unless you count a canoe as a boat, I waited until I was middle-aged to purchase a boat. By then, I knew exactly what I wanted: I wanted a small boat for camping and fishing in Canada. I purchased a 14’ boat and matching trailer that has served me perfectly for many years.
Initially, I purchased an 8 hp Honda outboard for it, but experience taught me that that was too small an engine. I soon traded it in on a 9.9 Honda outboard and it, too, has served me well for many years. That boat, trailer, and outboard are exactly suited to my needs. Furthermore, when it’s empty of all my camping gear, and there’s just me and perhaps one other person in it, people have often remarked how amazingly fast it is on the water!
II. Obviously, I didn’t do as well with step two because I initially purchased an engine that was too small. However, as I recall (and it was decades ago), I’m not sure that, at that time, I could have afforded the larger engine anyway.
(Incidentally, even though the boat could handle it, in my case an even larger engine would not be appropriate. Many inland northern lakes do not permit boats with over 10 hp engines, which is probably why there is a 9.9 hp engine manufactured. Since I sometimes go on those lakes, my engine is the perfect size for my purposes.)
Don’t forget subjective as well as objective research. For example, suppose you are buying an exercise machine such as a treadmill or an elliptical machine and discover the top-rated kind. It would nevertheless be a gamble to purchase it without trying it. In other words, it may be the top-rated kind for most people but not for you.
III. The real reason I wrote this post is to try to prevent people who are buying a boat or other luxury item from wasting money by not paying for it properly.
If you win the lottery and have always wanted a boat, just go ahead and buy one you like.
(Actually, that’s similar to what happened to me. When my aunt died, she left her sister, my mother, a $10,000 life insurance policy. My mother gave each of her 5 children $2000. I used my money to buy my first boat, trailer, and outboard engine. I named my boat after my aunt. I didn’t want just to use the money to pay bills; I wanted something that, year after year, would remind me of my aunt and mother, which is what I have. So, for me, buying a boat resulted in a memorial as well as a boat.)
People waste enormous amounts of money buying boats, planes, luxury cars, huge houses, and so on. It’s possible to buy exactly the same items but to do it properly.
However, to do that, you must let go of the desire for immediate gratification. When it comes to money, it’s important to think long term.
Let’s suppose that you are interested in buying a boat because you don’t have one, you’ve wanted one for many years, and you have $20,000 to spend buying one.
Simple question: Should you spend that money to buy a boat?
Simple answer: No!
Instead, buy a long term investment and let that investment pay for the boat.
For example, put that $20,000 down on a small apartment house. Using good management techniques, improve the cash flow of that apartment building. Then, either wait until you have set aside enough money from that cash flow to purchase the boat or finance the boat using that monthly cash flow. Either way, you’ll wind up with both a boat and an investment property that keeps generating income!
Unfortunately, even when they hear this, many people just don’t get it. Apparently, they are overwhelmed by their desire for immediate gratification. They must have the boat or larger house or plane or whatever now!
Imagine going through life like that. Imagine being a slave to desires. What a terrible, foolish, and unnecessary way to live!
If you are that out of control, even good financial advice won’t do you any good.
However, if you are willing to take charge of your desires instead of letting them run your life, then you can begin to put your money into investments that will, if you do it well, buy you all the luxury goods you could ever want.
As always, if you know someone who might benefit from this, please pass it along.
Additional resources: Robert T. Kiyosaki with Sharon L. Lechter, Rich Dad Poor Dad and The Cashflow Quadrant.