Cash Management: The Price of Our “Toys” is High
July 18, 2011I was talking to my 23 year old son, Brian, last night and had to smile when he told me of his latest financial mistakes. I say smile because this young man really has his act together – he is happily married to a sweet young lady, just graduated top of his class from the nuclear program with the United States Navy in South Carolina, and they are keeping him on to teach for two years. This guy is no slouch. Earlier this year, when the federal government hadn’t passed a budget and threatened to withhold pay from the military until it was passed, he called to let me know he was fine and had 4 months of emergency savings. The rest of his buddies were scrambling.
His financial mistakes involved “toys” — specifically a boat. I have heard the saying, “The best two days of your life are the day you buy your boat and the day you sell it.” Well, Brian will probably agree. He bought a used boat that was not in working order and the seller offered to “help him fix it,” which never happened. Then, he somehow ended up with a second fixer upper which was probably to get parts for the first one (or the other way around). I didn’t pry too much into the details, but I had the feeling, as the story unfolded, that this might be going in a costly direction that didn’t involve much fishing. That is how it turned out, unfortunately.
No matter how you look at it, when you get older, toys are expensive and make matters worse when you can’t even use them or can only use them from time to time. Thought, and weighing alternatives that may be more cost effective (and frankly possibly more fun), needs to go into the purchase. Before making a purchase such as a boat, camper, ATV, jeep, mountain bike, motorcycle, road bike or even a kayak, ask yourself these two questions for starters:
How many times are you realistically going to use it? Do you do that activity regularly? Do you have a group of friends that are doing it? Does it fit in your lifestyle? I personally love to kayak, but decided not to invest in kayaks and a car rack because I have a dog. My best friend, Ginger the yellow lab, can’t kayak so my husband and I hike instead and bring her with us. I just couldn’t go kayaking every weekend and leave my dog at home to stare at the walls; I want to do things with her, too. (Hiking is also basically free, which is another benefit and another blog.) Calculate the “per use” cost of owning your own “toys.”
What are the other alternatives? When you add up the cost of purchasing the boat as well as the repairs, insurance and storage, it can be shocking! There may not be a market for your used boat when you are ready to sell due to a poor economy, or a technology upgrade could make yours obsolete. Renting is a good alternative. Consider the cost of renting a boat for the morning, even using a guide, what does that cost? About $200 maybe? It might seem expensive at the time, but you could go fishing ten or twenty times with a guide for the cost of getting an old used boat. With a guide, they also have the local knowledge to get you to the right spot.
If you decide a boat (or your toy of choice) is the right fit, and you know you’ll get full enjoyment out of it and your money’s worth, go for it. Otherwise, you may be penny smart but pound foolish and get into something that doesn’t pay off in the long run.