• 02:53:03 am on February 18, 2009 | 21
    Tags: , , , , ,

    Get Your Motor Runnin’…

    Jeff discovered something that I found out by accident fairly early on, and that’s  “I could buy a high-end used European sports car for less then a low-end new econo-box” … I used that little ‘trick’ to buy myself a 10 year old (1972 model … it was 1982 at the time) Porsche 911 S (that was the one with the ‘hot cam’ that would push you in the small of the back and take your breath away when it hit 3,500 revs) when all of my friends were buying their new Ford Taurus equivalents (ho hum … guess who was getting all the looks on the freeway?).

    For me the dynamics were: $13k purchase + $6k subsequent maintenance (gearbox rebuild cost $4k alone!) but sold for $29k (really!) … compare that to a $13k boredom-box-on-wheels that would sell for $7k in the same time frame. A $17k financial advantage, and a hell of a lot of fun in the meantime …

    Now, tell me your second hand car war-stories – and, don’t forget to help Jeff decide where he’s going right/wrong … hint: look at the boat first!

    Now, gotta go … forgot that this was Jeff’s post and I can hear him warming up his singing voice with some off-key scales 🙂

    ______________________

    Head out on the highway

    Looking for adventure

    In whatever comes our way

    Ok, I’m done singing, I promise.

    Heading out on the highway is definitely in my future (or maybe my past by the time this is published).  As I write this I’m knee deep, no make that shoulder deep in boxes.  The computer should have been packed up by now, but I owe Adrian and the team a post.  We head out Friday, Feb 13th on our move to Massachusetts.  I know, I know, who in their right mind starts a new life on Friday the 13th?

    Unfortunately for me I won’t be racing up and down the freeway with the wind in my hair like Adrian, nor behind the wheel of a freebie ultimate driving machine like Scott, but I’ll be motoring none the less.  Have you noticed how many members of “team millionaire” either own or pine for a BMW?

    For my next adventure on the road, I’ll be driving a mini-van.  A 2004 Honda Odyssey to be precise.  It’ll be loaded for bear with personal belongings, two kids, a dog, movies running on the DVD player and a boat in tow that looks more like a utility trailer than a sea worthy vessel.

    Bottom line…I get to look like the gypsy.

    nullMy wife on the other hand will be traveling in style.  My style that is.  She’ll be driving my 2001 Mercedes Benz E320.  She says she would prefer to drive the mini-van but  pulling the boat scares her.  She thinks it will be safer for me to drive the tow rig.  Likely story… 😉

    In general I love anything with a motor in it.  I’m intrigued by the mechanics and I’m in love with power.  Over the years I’ve owned everything from a classic American muscle-car to Japanese econ-boxes to European sports sedans.  Yes, I’ve even owned a BMW at one time.  🙂

    As a brief aside, if you are a car fanatic and ever have the chance to see the BMW Museum in Munich, Germany, I highly recommend it.  I had a great visit there in Oct 2008…but that’s a story with pictures for another day…

    My first car was a 1969 Mercury Cougar with a 351 Windsor under the hood.  She was fast, very fast, and way cool.  Sequential turn signals and pop up light covers!  I’m sure that was boss in 1969.  I was excited at 16 when my Dad paid $2700 for her.  She taught me and my brother (four years later) to drive.  I routinely did donuts in empty parking lots and raced other cars while my brother established the Olathe, Kansas land speed record in her.  He out-ran the police in that old Cougar racing home one night to make curfew.

    Between crossing the police or our mother, who was born in a dirt floor Montana ranch house, he chose the lesser of two evils.  Cross the cops.  I made this same choice several times growing up…but never ran across the police during the race home.

    May my first car rest in peace.  She caught fire and was destroyed after both my brother and I left her behind for college.  My Dad started her one day in the front driveway and the carb overflowed onto a hot engine.  The fire department handled the rest.

    After my brief muscle car phase, I turned to the Japanese.  A Honda Accord hatchback that my father bought brand new when I was a sophomore in college.  Yes, I was spoiled at this point in my life, but remember, he set my other car on fire. 🙂

    Four years later I was a fresh faced Ensign in the US Navy and I needed to buy my first “Ensignmobile.”  I had dreams of a new car but just couldn’t justify living a car poor existence for a low-end new vehicle.  At that point I started learning about the used car market.  When I discovered I could buy a high-end used European sports car for less then a low-end new econo-box, I was hooked.

    BMW was my first love.  That Ensignmobile was a 1988 535i (5 speed manual).  While I owned it, I couldn’t imagine ever driving anything but a BMW.  But then one day a Mercedes caught my eye.  Could it be?  Could I enjoy something other than the Ultimate Driving Machine?  Three Mercedes later (all used I might add) I can tell you that there is indeed life after BMW.

    I typically buy used cars so I can buy “more car” than I could afford otherwise.  My E320 sold new for close to $55K in 2001.  When I picked it up in 2005, I paid just under $23K.  Sure it had 69,000 miles on the clock, but that’s nothing.  When I look at the new cars available for less than $25K, I’m convinced that my approach to car buying works well…at least for my desires.

    We did violate the “used car” approach with the Ody.  It was closeout time, the end of the model year, and the end of the production run for the 99-04 Ody body style.  So while we purchased it new, it was at a discount.  We’ve certainly lost more money on the mini-van than on the Mercedes, but the hardest part has been watching the pristine body get dinged in the parking lot over time.  We will most likely return to the used car purchasing model.

    We own both cars free and clear.  We made some aggressive pre-payments during the life of the loans and paid both cars off early.  In retrospect, the pre-payment pain was worth it.  By paying off the loans early and shifting the money to savings we were able to stash away enough cash to enable us to seize a significant real estate opportunity when it presented itself.

    My future car purchases are well down the road.  I’d like to downsize the Mercedes, an E-class is more car than I need.  But in reality, I have no “need” to buy anything right now and with my cash reserves depleted, I’d have to finance a new-to-me purchase.  Also, Boston has a decent commuter rail and subway system that I plan to experiment with.  So I think I’m set for vehicles right now.

    Although, I do own a boat.  I bought it when it was a year old with only 25 hours on the clock for half of what the original owner paid….  I’m starting to get “two footitis” and may need to….

     

Comments

  • Josh 8:28 am on February 18, 2009 | #

    Nice rides Jeff. I assume the boats coming with you to Mass. Are you going to keep it on your property or store her somewhere?

  • Diane 9:30 am on February 18, 2009 | #

    Let us know how that city system works for you. From most reports, Boston has the worst traffic of all US cities. Not sure if it’s complaining or bragging however.

  • Scott 3:57 pm on February 18, 2009 | #

    Well Jeff, it looks like you’ve got a good situation going with the vehicles, but I’ll bet Adrian is referring to your boat in a matter that might mean selling it until you get to your number. Unless of course, you can come up with a plan to earn some money renting it out, that would superseed the upkeep cost of keeping it and storing it until you reach your number 😉 Any plans for it as of now?

  • Jeff 7:21 pm on February 18, 2009 | #

    Thanks for the feedback guys.

    The timing of this post is perfect. I just had internet service turned on today in MA. The trip went well and both the Van and the boat are none the worse for wear from the trip. I’m sure I was a tad overweight for both the boat and the van.

    Josh – The boat is in the new garage which has three holes, so one boat and two cars fit nicely.

    Di – We shall see. Fortunately the commuter rail station is within five minutes of my house. Maybe I’ll only need one care up here.

    Scott – I don’t have any immediate plans to sell the boat. I own it free and clear as well and I don’t have a ton of money tied up in it. Originally, it sold for ~$22K. I bought it in the summer of 2006 for $11K. According to NADA, it’s worth around $9K.

    I am interested to see what Adrian’s take is on the boat. I know I alluded to buying a new one, but was more a joke/wish than an actual intent.

    I tend to think he’ll see it as an early (read needless pre-number) luxury. But we’ll see.

  • Scott 7:39 am on February 19, 2009 | #

    Jeff that’s great that you have good storage space for your boat and that you own it free and clear. I wouldn’t see very much of a financial burden in keeping the boat if it’s not costing you anything much to maintain it. Have you researched any great spots to take it out and use it in MA?

  • Jeff 9:18 am on February 19, 2009 | #

    Scott, I agree with you on the boat’s financial burden. By my estimates, it costs under a thousand dollars/year to operate (insurance, registration, maintenance and fuel).

    The boat just barely fit in the new garage….but it did fit. 🙂

    The big win is that the Mercedes now has a home again inside the garage. It was the odd man out in Virginia.

    As for MA boating…there is a ramp within five minutes from my house that leads out to a protected bay with a beach. From there I can get out to the Atlantic if I want. I’ll have to try some lake boating up here. It looks like there are some options up north a bit and out in western Mass if I like.

    My boating days are a ways off. The only sea time I have in the near future is navigating the sea of boxes that have filled my house. 😦

  • Scott 1:21 pm on February 19, 2009 | #

    I know how ya feel man. I went through that whole headache less than a year ago 😉 You’ll be settled down in no time and back to life as usual.

  • Ryan 4:10 pm on February 19, 2009 | #

    Solid post Jeff. It sounds like you are really into boating, so the boat may be well worth what little you pay. But I’m wondering what the real costs are. How often do you go boating? Are you able to rent a boat where you go? How much would that be each time?
    Obviously, if you sold the boat you’d have $9,000 to invest in something that returned (hopefully) at least 8%, so I’m just trying to see if, based on how much you use it, it really is worth it to keep.
    Just playing devils advocate here, as many people have “toys” in there garage that are costing them a lot.

  • Adrian 7:00 pm on February 19, 2009 | #

    @ Jeff – Actually, who I am to tell a bloke that he can’t have a boat, a beer, or a cigar?!

    Even more so, I can’t tell you anything, because you haven’t listed the current ‘asset value’ of either the cars or the boat on your NWiQ profile:

    https://www.networthiq.com/people/f18lumpy

    … all I can see is the $18k car loan (what’s this for? how long to go? etc.? And, how did you pay for the boat?).

    So, until you fill us in on the NWiQ ‘blanks’ all I can tell you is what my granpappy once told me:

    1. The two happiest days in a man’s life are (a) when you buy a boat, and (b) when you sell it, and

    2. The rule of thumb is that, unless you use the boat for more than 5 weekends a year, you can usually charter the ‘next size up’ boat … without any of the ownership joys/hassles 🙂

    Of course, since you bought so well, this one’s only costing you a couple of $k a year in running costs and depreciation ….

  • Jeff 8:24 pm on February 19, 2009 | #

    Ryan – Thanks for the compliment on the post. I’ve thought about the numbers you mentioned as well. I could probably rent a boat, but I know that if I didn’t have one sitting in the garage, I wouldn’t get out as often as I do.

    I typically go out almost every Saturday during the boating season, so I usually exceed 15 outings or so each year.

    Adrian – You caught me on the 18K. 🙂 I forgot I put it in there on the NWIQ. While it is indeed a loan on my car, it’s actually part of my recent home purchase.

    Long story short, I hocked my van (sorta) to get a short term bridge loan. The bank I used for my home loan didn’t like the fact that I had some money in the deal that came from an unsecured line of credit. I guess my good name and 830 credit score wasn’t good enough for them.

    To put the lending institution at ease (they were giving me ton of money so I had to keep them happy) I went to my every day bank and “secured” the line of credit with the pink slip to my van. That 18K is truly a short term bridge loan, is part of the housing deal and will be gone by May 09 at the latest.

    Sorry for the confusion.

  • Jeff 8:32 pm on February 19, 2009 | #

    Oops, I missed one of your questions Adrian.

    I paid cash for the boat in 2006.

    I have one question for you and the team. Is it really worthwhile including cars, boats, jet skis and gold chains in your net worth? I would definitely list any debts associated with these items (well, maybe not the gold chains 🙂 ) against my Net Worth.

    But assets that depreciate rapidly don’t seem worth including in the calculations on the positive side of the equation. Same goes for my personal belongings, furniture, etc.

    I’ve always done my Net Worth math based solely on major assets (monetary investments and real estate) and all debts (mortgages and loans).

    Thoughts?

  • Josh 9:36 pm on February 19, 2009 | #

    yea, I just through in 1K for good measure. I figure all my junk has gotta be worth that.

  • Adrian 9:51 pm on February 19, 2009 | #

    @ Jeff – I thought we just went through that ‘what to include’ stuff on somebody else’s post? The difference is your Net Worth v your Investment Net Worth. Whilst the latter is most important (but, it leaves out your own home, as well) NWiQ is geared for the former …

    … also, the former (your plain ol’ vanilla Net Worth) is useful to the extent that:

    1. It reinforces that these so-called ‘assets’ are really junk (sooner or later), and

    2. It help us get a metric using the asset rules: e.g. 20% Equity Rule; 5% ‘Junk’ Rule.

    So, right now, we are talking ‘Ordinary’ Net Worth, so I recommend that it all goes back in, at least for now …

    Also, the Car Loan seems to be really a Home Mortgage Loan (or, Other Mortgage Loan … I’m not sure which property/s all these loans are for) that happens to be secured with your car – obviously, the bank thinks it’s an asset … poor fools 😉

    In other words, the loan also needs to be recategorized (is that really a verb?!) …

  • Jeff 10:00 pm on February 19, 2009 | #

    Sorry for covering old ground. I just turned 40 this month, so I’m chalking it up to old age, being over the hill and early onset of Alzheimer’s.

    Regarding “these so-called ‘assets’ are really junk” – that’s exactly why I don’t include them in my Net Worth calculation.

    Regarding “it help us get a metric using the asset rules: e.g. 20% Equity Rule; 5% ‘Junk’ Rule.” – I’ll play along and include my cars and boat in the assets column if it helps paint my NW picture a bit more clearly.

    My first comment to the bank was YGTBSM! I had to secure the money with something and I was dead set against pulling money out of my 401K to do this, so offering up the pink slip on the van seemed like the lesser of all evils.

    Bottom line on the 18K… It’ll be gone this spring, so I hesitate to even concern myself with it too much for my Net Worth calculations. It was just a necessary evil to make the real estate deal happen. I could easily have added it in to the mortgage balance, but it will be paid off long before the loan ever matures.

    Thanks for the feedback.

  • Adrian 1:24 am on February 20, 2009 | #

    @ Jeff – just 3 strokes of the ‘pen’ … I think it’ll be worth the update 🙂

  • Scott 5:39 am on February 20, 2009 | #

    I tried to estimate as good as I can the ‘junk’ that I have and it’s value to the networth. I contemplated really putting nothing in my profile as well in that section, however it includes valuable jewelery that was passed down by my great grandparents(wedding rings, etc..), my wife’s engagement and wedding ring, both of pretty significant value, a couple of old Gibson and Taylor guitars (both of which have actually gone way up in value significantly since i’ve had them!) as well as some old vintage guns that are worth quite a bit according to gun auctions that i’ve researched.

    Particularly if you been somewhat of a collector of heirlooms, you’ll be surprised what you’ve got in that ole’ ‘junk pile’ that may be going up in value 😉

  • Moneymonk 10:39 am on February 20, 2009 | #

    Nice Jeff,

    Why would your woman, drive a Van with a boat attached, lol

    No woman will take that plunge!

  • Adrian 6:24 pm on February 20, 2009 | #

    @ Jeff – It looks you have updated your NWiQ here:

    https://www.networthiq.com/people/f18lumpy

    And, with $32k in those ‘junk’ assets, and $550k of net worth, you aren’t too far off the ‘rules’ … which means you probably won’t need to be selling (or buying!) any of those cars/boats/stuff soon 🙂

    I think you moved the $18k loan to ‘other’? But, it’s probably really a property loan, right?

    Also, you probably have a little too much equity tied up in your own home right now … again, not too far off the mark?

  • Jeff 11:02 pm on February 20, 2009 | #

    Thanks Adrian.

    I did move the bridge loan to other. I suppose I could dump it into the Mortgage, but I think it’s starting to become “six of one, half dozen the other.” The loan will be paid off by the spring time.

    I’m aware of the excess equity in the new home. We’ve discussed this previously and my impression from your comments was that with a three year time horizon, buying a foreclosure and buying at/near (hopefully) market lows, the home was more of a speculative investment vice a “forever” or at least “for a long time” home. That being the case, I haven’t been too concerned about the equity/net worth ratio on the new home.

    Did I misunderstand your comments?

    Thanks again for looking over my shoulder. I really appreciate it.

  • Adrian 12:34 am on February 21, 2009 | #

    @ Jeff – No, you’re on the ball, with one rental and one home that you intend to get rid of the excess equity (in fact 100% of all the equity) on when you ‘flip’ it 🙂

  • Car or curse? 7 case studies … « How to Make 7 Million in 7 Years™ 3:01 am on February 24, 2009 | #

    […] Jeff has the cars the boat and the airplane (well, the airplane is supplied by the Navy!) … but, at what point is it better chartering a boat than owning one?! […]


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