Requesting finance advice(and obligatory first post)

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Serenity1980
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Requesting finance advice(and obligatory first post)

Postby Serenity1980 » Sat Apr 07, 2012 1:53 pm

Hello GRS readers, I like you have been reading GRS for some time and have made changes to my finances and investing based on the exceptional information ive found here. I do still have unanswered questions and im in need of advice. First though a snapshot of where i stand financially.

I'm 31, I live in florida and work a middle management job(not my career) earning about $2000 per month, I'm very good at my taxes and regularly get a $3000+ return for the last few years. I have a Roth ira started last year with a little over 3000 in it, a savings account, ally CD, checking account, and a 401k from work(my job matches 2% total pay invested, which is maxed) I have no serious credit card debit(under 400$). I tend to invest 150-200 per month across these accounts plus whatever extra i have to work with. I currently live at home due to the wonderful economy and my own need to save as much as possible, I have a girlfriend and we spend about 300 per month on dates and junk food:)

I use excell spreadsheets and my ipad to track monthly expenses and my investments and i spend allot of time regularly trying to reduce monthly cost and expences.

I'm working on getting back in school to finish my bachelors, and my primary financial goals are retireing early(before 50) and spending my retirement traveling the world(likely on a sailing yacht). In the short term I want to finance a sailing yacht this year or early next to live aboard, I'll have to finance as the boat will cost around $50,000.

Some hurtles I have currently are my credit and or credit score, my car payment(my biggest monthly expense), school loans, and the desire to move out.

So my questions are really, how would i go about reducing my car payment/paying it off, I have roughly $20,000 left to pay off, and pay $453.56 per month. Is it ok or advisable to cancel some credit cards?

I have a chase best buy card, amex gold, platinum, blue, target visa, and a first national visa, the amex cards really kill me on fees(platinum is 450$ per year) would canceling thses hurt my credit score?

nptaszek86
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Re: Requesting finance advice(and obligatory first post)

Postby nptaszek86 » Sat Apr 07, 2012 2:06 pm

Closing credit cards that you've had for awhile can decrease your average credit age, thereby lowering your score. Closing credit cards with significant limits can harm your debt to credit available ratio, also lowering your score.

You would need a decent credit score if you want to look into refinancing your auto loan with another company to reduce your monthly payments. I'm assuming because of the remaining balance it's a fairly new vehicle and most credit unions that I've dealt with offer great rates for refinancing vehicles that are less than three years old.

That said, if I were in your shoes, I'd scrounge up a good chunk of cash and pay down the principal a little (tax return) and then refinance it. If my current lender wouldn't do it, I'd shop around for the best rates. After lowering my monthly car payment and with the mindset that I'm not going to be taking out any more loans or a mortage for the next few years while going to college, I'd cancel my high annual fee credit card if it doesn't make any sense for me to keep it (HOWEVER, it can't hurt to call AMEX first and see if they can convert it into a no fee card which would be a win/win for everyone. They keep your business and you keep your active credit history).

EDIT: I missed a part of your post. Don't just jump right on student loans without looking into other means to pay for college. I have it easy with my military 9/11 GI bill, but I still use the Pell Grant to cover any non-reimbursed expenses and have applied for several small scholarships to ensure I never have to spend a dime out of pocket for my Bachelors at a 4yr University. Some people do the 2 and 2 method with a Community College and a University to save money (just make sure the credits will transfer or go to a CC that has a partnership with a UNIV. that allows direct transfers after 2 years).

And I know you want to retire early, I do too, but get that auto loan debt paid off first, finish your Bachelors, find a good job and pay off any student debt before you even think about taking out a loan for a boat.
Nick

bill o
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Re: Requesting finance advice(and obligatory first post)

Postby bill o » Sat Apr 07, 2012 2:46 pm

3 AMEX cards is too many. Save the $500+ per year, take a credit hit and move on.

Getting back a $3,000 refund on $24,000 income doesn't mean you are good at taxes...it means you are having too much withheld from your paycheck. Revise your W-4.

Boats are bad investments, especially when you have to finance them. But, you also need a place to live, and living on a boat may really fit your lifestyle. As long as you know what you are getting into. Sounds like fun.

DoingHomework
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Re: Requesting finance advice(and obligatory first post)

Postby DoingHomework » Sat Apr 07, 2012 3:30 pm

bill o wrote:3 AMEX cards is too many. Save the $500+ per year, take a credit hit and move on.

Getting back a $3,000 refund on $24,000 income doesn't mean you are good at taxes...it means you are having too much withheld from your paycheck. Revise your W-4.

Boats are bad investments, especially when you have to finance them. But, you also need a place to live, and living on a boat may really fit your lifestyle. As long as you know what you are getting into. Sounds like fun.


Agree withe everything said here but want to add something critical -

Have you looked at where you will par your boat? Usually a berth is several hundred dollars or more per month. It will probably far exceed the boat payment. You need to be fully aware of that before you get to committed to that idea. It's something I'd love to do myself but probably could not afford it.

Serenity1980
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Re: Requesting finance advice(and obligatory first post)

Postby Serenity1980 » Mon Apr 23, 2012 10:17 am

First let me say I really appreciate the replies and great advice! This is exactly what I was looking for as I feel I have a good foundation for my goals, but not a great plan for the future.

nptaszek86, to your advice, I was thinking about doing just that with the car loan, paying down a chunk of it this year, then saving for the yacht, I'd basically be putting all my yacht fund savings into the car loan to pay it down, I have roughly 20,000 left on the car loan, with 450$ monthly payments, I can double that per month to pay down the principle without hurting my month to month finances.

I have roughtly the same ammount in school loans, with another 12,000 needed to graduate. I will be looking for other loan and grant opportunities.

bill o, I make a little over 32,000 a year before taxes, not sure what you mean about withholdings from my W4 but I'll research it. I'm planning now on calling amex and seeing what they can do about that lovely platinum card.

The yacht for me is really a win win situation if I can get ot off the ground, there is a glut of very reasionable boats available on the market as plenty of affluent people are hit with hard times and prices are utterly silly compared to original value and equipment. Most of the boats im looking at are under 20 years old with little use and alot of essentially free equipment thrown in. In particular the one I have my eye on is just under $50,000 for a 35 foot 1990 yacht with less than 3 years of use that originally sold for 200,000. Add to that the total lack of property taxes, availability of births here in florida and along the eastern seabord, and relative low cost of do it yourself repairs(which im great at, Dad is a mechanic) and the cost of living is very well below the average appartment rental in my area(1000-1500 a month minimum). Plus, of course, to my retirement plans, you can literally sail anywhere theres blue water:)

DoingHomework, like I said above, theres some great low cost berths in the area, many municipal docks and harbors rent yearly or day to day with small fees per foot, i/e $17 per foot of boat. Even with the financing payment for the yacht(if I need it) its really affordable!

Again everyone, thanks so much for all the advice! I allready feel more confident about my plans.

DoingHomework
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Re: Requesting finance advice(and obligatory first post)

Postby DoingHomework » Mon Apr 23, 2012 12:25 pm

Serenity1980 wrote:The yacht for me is really a win win situation if I can get ot off the ground, there is a glut of very reasionable boats available on the market as plenty of affluent people are hit with hard times and prices are utterly silly compared to original value and equipment. Most of the boats im looking at are under 20 years old with little use and alot of essentially free equipment thrown in. In particular the one I have my eye on is just under $50,000 for a 35 foot 1990 yacht with less than 3 years of use that originally sold for 200,000. Add to that the total lack of property taxes, availability of births here in florida and along the eastern seabord, and relative low cost of do it yourself repairs(which im great at, Dad is a mechanic) and the cost of living is very well below the average appartment rental in my area(1000-1500 a month minimum). Plus, of course, to my retirement plans, you can literally sail anywhere theres blue water:)

DoingHomework, like I said above, theres some great low cost berths in the area, many municipal docks and harbors rent yearly or day to day with small fees per foot, i/e $17 per foot of boat. Even with the financing payment for the yacht(if I need it) its really affordable!


Are you sure that berth cost is $17/ft/YEAR? I'd expect that to be a monthly rate. I admit to being fairly ignorant about that kind of thing (though not completely ignorant). If it is really $595 per year for a 35 foot boat then it seems to be a good deal. Maybe things are different in Florida. The places I am familiar with are around $300 minimum per month for a smaller boat. And I know people with boats in another part of the country that can't get a berth because they would have to buy the berth first for hundreds of thousands of dollars and then still pay ~$1000 a month. Instead they have to pay for out of water storage every time they want to use their boat. But again, if you've got that all checked out and your numbers are right then it might be a smart move.

The price of $50k for a 22 year old 35 footer seems reasonable depending on condition. I hope you hire a competent marine surveyor to give you an independent opinion before you buy anything NO MATTER HOW MUCH OF AN EXPERT YOU ARE! Boats are always risky purchases so you'd be a fool not to get all the advice and expert opinions you can.

I agree, if you are correct about the prices then this could be a relatively cheap way to go. A friend of mine lived on a large yacht in San Diego for about 10 years and loved it. But after 10 years he was ready to move on! He spent far more time maintaing to boat than he did actually using it.

flinch13
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Re: Requesting finance advice(and obligatory first post)

Postby flinch13 » Tue Apr 24, 2012 3:09 am

I don't know much about boats, but I know that owning ANYTHING (a house, boat, etc) in your financial situation might be a mistake. You have to consider ongoing maintenance costs. Boats are expensive. Houses are expensive. Owning stuff is expensive.

I strongly suggest you get your financial house in order - pay off your loans, take the hit on your credit to get rid of ALL cards that have annual fees - and pay off your car loan. Then secure a loan (gov't if possible) and get your degree. Establish an emergency fund to safeguard yourself against unexpected events. Then and only then would I consider buying a boat.

babysteps
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Re: Requesting finance advice(and obligatory first post)

Postby babysteps » Tue Apr 24, 2012 5:54 am

Serenity1980 wrote:I'm planning now on calling amex and seeing what they can do about that lovely platinum card.


If you haven't called Amex yet - you might be able to have Amex merge your 3 cards so you keep the total credit line intact for your credit score & have at worst 1 annual fee instead of 3 (if you get lucky they might make the surviving card the longest-open one as well).

Also, at most CC companies the attitude of the folks answering the phone can...vary. Start your call saying you are just 'gathering information', and then if the rep isn't very helpful, say 'thanks, I won't do anything just now'. And then redial and try another rep :) If on the first call the rep *is* helpful, run with it and take action while you have the chance!

An idea for FL mooring - if/when you buy a boat, how about checking with Realtors? I bet they have some very nice properties listed with docks that they would love to have a large, nice boat at to impress the prospective buyers...might be able to get cut rate/free moorage. I know in NYC it can make $ sense to purchase a boat vs. renting an apartment - so it I can see that it might make sense in pricier areas of Florida. Where I live, you can buy a house for $50,000 so it wouldn't be quite as compelling here.

Hey, one more thought - until you buy your own boat, how about asking boat owners or marina owners if they would like some free security and boat maintenance in return for your living on a/their boat? Would be a low-cost way to 'try before you buy'.

jaiko
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Re: Requesting finance advice(and obligatory first post)

Postby jaiko » Sat Jun 16, 2012 1:17 pm

I'm sure you'd have fun living on a boat. The trouble is, you don't seem to see a downside. And there must be downsides....every situation has them.

The economy is improving, but very slowly and tentatively. If you see a good deal now, you'll probably see one equally as good, or better, next year.

You have been given some great advice. Take it, and then start talking to marina managers to see if there are any owners who would be open to renting to you, so you can try out living on a boat during hurricane season. If you can still love it after a full year, your financial house should be in order by then and you can more confidently go forward with your plans.

There's no reason why you need to jump into this. It may be more boring, or feel more restrictive, but it is usually a lot better to do something new or big in phases. Burning bridges financially is seldom worth it in the long run.

Bichon Frise
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Re: Requesting finance advice(and obligatory first post)

Postby Bichon Frise » Sat Jun 16, 2012 10:32 pm

when we looked at buying a sailboat, it was VERY expensive to just park the damn thing. And all those people who thought living aboard was cool never got to sail. The good thing about never sailing the boat is you won't have many maintenance costs.

Regardless if you are mechanically savvy, repairs cost money. New sails, new paint etc. All these things can be done by you, but that doesn't mean it is free.

Have you spent much time on boats? I'd find 35 foot to be the minimum and I'd look more in the 40-50 foot range.
Bichon Frise

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Re: Requesting finance advice(and obligatory first post)

Postby fantasma » Mon Jun 18, 2012 7:09 am

Do you have a pot of gold somewhere? You seem to be all over the place.

You are looking to go back to school to finish your bachelors. How much credits do you need in order to finish? How would you pay for school? If loans, then you will have to pay off the loans.

You need to finish paying off the car loan. How quickly can you pay off the car loan?

You want to finance a yacht to travel the world. This shouldn't be done until after the bachelors and you've paid off the car.

If you finance the boat you can still pay it off, the car loan should be paid off before you start on this particular endeavor.

How will you pay off: student loans if you have any, the payments on the yacht and expenses, and the car?

How will you earn income while travelling?

I am not sure if I missed any other questions I would ask myself if I were you.
Be what you want to attract.

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Re: Requesting finance advice(and obligatory first post)

Postby Eagle » Mon Jun 18, 2012 9:13 am

While living on a boat might be fun I agree you should rent one for at least a week or so before commiting to making that your home.

I agree with Fantasma's questions. What is your plan of action 1, 2, 3, 4... The top two questions I would ask myself are:

Do you already have a budget you review each month?

Do you have a savings account specifically designated as an Emergency Fund?

For fun yet inexpensive activities with your girl check out this thread.
~ Eagle
www.eaglesoaringhigher.com

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Re: Requesting finance advice(and obligatory first post)

Postby Eagle » Mon Jun 18, 2012 11:53 am

Also check out this thread for ways to cut expenses and save money. ;)
~ Eagle
www.eaglesoaringhigher.com


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