mich800 wrote:
Gdetrailer wrote:
dadmomh wrote:
We just sold our Rocky 2604 after only having it for 1 1/2 years. We bought it for about 33% off MSRP. Never expecting the changes we're making in our lifestyle now, we looked at 5% interest we'd pay on a loan vs 8%+ on our investments. Debated whether we should take money out and pay cash, but decided that seemed like a no brainer with making 3%+ more plus being able to deduct the interest as a second home. Now the bad news. Long story short, it cost us about $1000 to sell it. One of those things that if we knew then what we know now, we'd probably have kept our '07 ROO 23SS or just gotten out of camping entirely at that point. I can't imagine how folks that trade every couple of years keep from taking a bath on it....maybe they don't avoid it. I checked NADA, did tons of online searches and our price was right where it should have been, except for that darned $1000. So guess the answer is that you need to keep it for 3 or 4 years or so to come out at least even, maybe ahead a smidge. In any event, it was a key part of our changes and we're just thankful it wasn't any worse. The man who bought it is from LA and had seen the layout, but he said he never buys new and had a heck of a time finding a really good almost new. We feel like he'll be a good "dad" for Rocky and take excellent care. Making this huge change is like watching money flying out the door, which it really is, but in the big picture we'll be ahead when the dust settles.
Sorry that you had to sell off your trailer, sounds like you really liked it.
However, your experience should drive home the point that I have made numerous times on this forum and others have argued that I am totally wrong that buying a RV with CASH IS YOUR BEST BET WHENEVER POSSIBLE.
Taking out a loan on a depreciating HOBBY "asset" like a RV and comparing interest of a loan VS pulling SOME money from "investments" is a fools game.
In your case, circumstances can and often change which CAN make a loan payment no longer feasible or at the least a family or health issue can make a RV sit in your yard or storage for years with no use..
I understand not everyone has the "cash" just laying around, BUT there are things you can do like start putting money aside like you are paying a loan payment to a bank.. But instead of a bank you are paying yourself into an account that is separate.. It is an "old fashion" term called "SAVINGS"..
That is pretty much how I get the next down payment for my next vehicle.. I put a lot of miles on for my commute and have no choice but to replace vehicles often.. I put down a good size down payment then pay extra against the principle.. This allows me to pay off a 5yr loan in about three years.
Once loan is paid off I then put the the same amount of money I WOULD HAVE been paying to the bank until I need to replace the vehicle.. This builds up the next down payment.. When done right it will snowball and the next down payment will be larger to cover the rising cost of the next vehicle.
As far as the OPs question goes.. There is no real "set" amount of depreciation on RVs.. In the used market, AGE is typically the main "factor" in what it is worth.. The older it is the less it will be worth to the next buyer..
A used RV is really only "worth" what the next buyer is willing to pay regardless of what some "book" tells you.. And in the used market there are many more used ones for sale than buyers..
I drive by several used car lots that have had at least two TTs and one 5ver pretty much all the time.. several have been sitting on those lots for several years..
They would have taken the depreciation hit whether they financed it or paid cash. And in fact if they had the cash to purchase outright then the difference in interest paid vs. investment gains was most likely small. If they paid the entire purchase with cash their hit would actually be higher as they would have lost all the investment income plus the depreciation.
Actually paying cash would REDUCE the loss down to just depreciation only instead of depreciation AND interest paid on the loan.. In reality the interest paid on a loan is considerable and that eats into your buying power.
example, $20K loan at 3% for 10 years with a payment of $193.12 per month is costing you $3,174.58 in addition to the depreciation loss.
That $193.12 per month only applies a mere $143.12 toward paying off the principle and $50 is the interest owed..
Now if you put a down payment of $5K (this would come from your "investments" or cash "savings") and only borrow $15K the same loan terms now would be monthly payment of $144.84, interest paid would now be $2,380.93.. Out of that monthly payment you only pay a max of $37.50 per month in interest!
So just putting $5K down will save you $48.28 in payments per month which you could turn around and either add back into your savings or investments OR use as an additional payment towards your principle borrowed and drastically cut the length of the loan and even pay much less interest to the bank!
You can figure that out for a bigger down payment if you wish and you will find you will have more money to work with each increase in the down payment.
Yes, if you take some money out of your "investments" you will lose SOME of the "potential" gains but it is for a SHORT TIME.
Personally, I wouldn't take money out of my investments for this type of purpose.. Instead I SAVE and SET ASIDE some money EVERY MONTH for these types of purchases BEFORE I BUY..
Yes, it IS and "old fashioned" and out of date "approach" to handling money and finances.. But it DOES WORK..
I was taught in basic High School Economics 101 that every time you pay interest to a bank you lose buying power. Many people seam to have slept right through those classes and don't seem to mind forking over hard earned money just so they can get immediate, instant satisfaction..
I don't mind waiting and saving for those things I would like to have and I am not in a big hurry and because of this I can easily afford to buy the toys I want when I want..
