New Interstates and total cost-of-ownership

[85MH325]

Originally Posted by Alex AVI

85MH325 - If you have to ask the above 3 questions, then any possible answer, rationale, or justification I give will never make sense to you.

No that makes sense... and is exactly what I was asking. You can afford to lose the $60k without being harmed financially. As a public employee all of my adult life, I've just never been in an income bracket that would allow for that kind of loss and still be "ok" financially, so it's difficult for me to think in those terms I guess.

Well done!

[Piggy Bank]

There is a also the question of can you afford it vs do you want to do that?

I think it is perfectly fine to decide that you can afford to act in a way that is not maximizing asset creation/retention if there are other reasons for the decision.

I think it is perfectly fine to decide that something seems wasteful and is not for you.

Back to the total cost of onwnership question. For trailers, the TCO is only marginally higher for a new Airstream trailer vs a new SOB trailer. I would expect this logic to hold up for drivables as well.

For purchasing a Used Airstream vs Used SOB, the math converges even closer.
(our first rig was a used/1 year old 22 sport, and we got a heck of a deal on it. If a used rig that new had been available when we needed to replace it, we certainly would have been interested. But we also were wary enough of repaired trailers that when ours was in an accident we traded and spent more money vs accepting a repaired trailer with no additional financial outlay. So the new vs used also has to consider condition.)

Initial purchase cost
Taxes and insurance
Storage costs
standard maintenance costs
cost of use while traveling
cost of repairs
Value of rig after 3 years, 5 years, 10 years, 15 years.

The TCO is virtually constant for
storage costs
standard maintenance costs
cost of use while traveling
repairs (that may be higher for the SOB if quality is lower)

The differences are only really between the initial cost, taxes and insurance, and the residual value after 3 years, 5 years, 10 years, or 15 years.

To my perspective this difference is the real cost of an Airstream over a different product.

For trailers (unlike drivable), the SOB after 10-15 years is worth virtually $0, and the Airstream trailer will probably be worth 20% of the new purchase price.

Looking at this difference was how we made our decision about what we could afford and wanted to spend our discretionary money for.

[85MH325]

Originally Posted by Piggy Bank

There is a also the question of can you afford it vs do you want to do that?

I think it is perfectly fine to decide that you can afford to act in a way that is not maximizing asset creation/retention if there are other reasons for the decision.

I think it is perfectly fine to decide that something seems wasteful and is not for you.

Back to the total cost of onwnership question. For trailers, the TCO is only marginally higher for a new Airstream trailer vs a new SOB trailer. I would expect this logic to hold up for drivables as well.

For purchasing a Used Airstream vs Used SOB, the math converges even closer.
(our first rig was a used/1 year old 22 sport, and we got a heck of a deal on it. If a used rig that new had been available when we needed to replace it, we certainly would have been interested. But we also were wary enough of repaired trailers that when ours was in an accident we traded and spent more money vs accepting a repaired trailer with no additional financial outlay. So the new vs used also has to consider condition.)

Initial purchase cost
Taxes and insurance
Storage costs
standard maintenance costs
cost of use while traveling
cost of repairs
Value of rig after 3 years, 5 years, 10 years, 15 years.

The TCO is virtually constant for
storage costs
standard maintenance costs
cost of use while traveling
repairs (that may be higher for the SOB if quality is lower)

The differences are only really between the initial cost, taxes and insurance, and the residual value after 3 years, 5 years, 10 years, or 15 years.

To my perspective this difference is the real cost of an Airstream over a different product.

For trailers (unlike drivable), the SOB after 10-15 years is worth virtually $0, and the Airstream trailer will probably be worth 20% of the new purchase price.

Looking at this difference was how we made our decision about what we could afford and wanted to spend our discretionary money for.

Once the decision is made to purchase a trailer, residual value is a very large part of TCO. And typically in an Airstream trailer, the residual value for any given year and length is going to higher, percentage-wise, than just about any other trailer. Motorhomes depreciate more like a car or truck and tend to return less value used and depreciate more quickly than the trailers do. Of course, it could be argued that you must have a reliable tow vehicle to use it, so the depreciation of the tow vehicle needs to be included in the total cost of ownership calculations.

With both trailers and motorhomes, the key is finding the coach you want, in the condition you want, at a price that already allows for 80% or so of the depreciation. Or, in my case with my current Interstate, I bought the motorhome and was in an equity position of about 60% more than the purchase price. While unusual, those deals can occasionally be found, and are what I try to look for. The last several coaches I've bought, I've at least been in a break-even position on resale from the purchase price I paid. At the very least, I try to find a coach that can be used for three or four years and still not lose anything from the original purchase price on the resale. That allows me to calculate the TCO solely on the costs of consumables, maintenance, registration and insurance, with no loss to depreciation.

Obviously, this formula doesn't work buying new; with the exception of my '16 Jeep Rubicon which, because of the great buy I got and the continued high resale value, hasn't depreciated much at all in the three years I've owned it.

[uncle_bob]

Hi

If indeed you are talking about a couple who both work and have no kids, they may have a pretty substantial income. There are a lot of people out there with disposable incomes that you might find a bit crazy. There are also those in professions that happen to pay them quite well.

Should everybody own a couple million dollars worth of house? Should they put it all in the bank forever and ever? Is dying at age 110 and each leaving a couple million to each of several charities the best approach? We could argue all that for a *very* long time.

It's not just RV's that depreciate. Just about any "cool car" is going to have the same sort of hit. You see a *lot* of them on the road. Drive by a marina and do the math .... There are way more examples than there is time to list.

The ones I can't understand are the ones who never spent a dime in their entire life and get to age 80 wishing they *had* done something at least once in their lives ....

Bob

[Mansderm161]

Amen !

[rustyoldman]

You can not afford to take a major loss (as you put it). My father ( who grew up during the great depression) always told me....work hard and you will get ahead, buy only what you can afford. If an individual can not handle or afford the loss, the that individual should not put himself in an AS. To get away NJ on great trips, visit wonderful new places and to have fun with friends and family, one does not need an AS. Having an airstream is like having a Mercedes or a BMW.....do you need it to drive to work or out for dinner? No....look at things realistically.

[PatLee]

Piggy Bank - I couldn't have said it better!

[Titus]

We take
1) one extravagant 2-3 week vacation in January/February each year and
2) travel about 15,000 miles in 40-50 days in our Interstate over the course of six months each year.
The cost of each is about the same. So, on a per-day basis, the Interstate is a much better deal. Not that we care. We like doing each, and can afford to do each. The only loser is our kids - less $ for them to inherit.

[85MH325]

Originally Posted by Titus

We take
1) one extravagant 2-3 week vacation in January/February each year and
2) travel about 15,000 miles in 40-50 days in our Interstate over the course of six months each year.
The cost of each is about the same. So, on a per-day basis, the Interstate is a much better deal. Not that we care. We like doing each, and can afford to do each. The only loser is our kids - less $ for them to inherit.

I understand that you enjoy your coach. We all do or we wouldn't have them. The question is, financially, how do you (or did you) deal with losing $60k on a new Interstate in two years (if you bought new?) Apparently from your reply, you're wealthy enough that you have it to lose without harming yourself financially?

[85MH325]

Originally Posted by uncle_bob

Hi

If indeed you are talking about a couple who both work and have no kids, they may have a pretty substantial income. There are a lot of people out there with disposable incomes that you might find a bit crazy. There are also those in professions that happen to pay them quite well.

Should everybody own a couple million dollars worth of house? Should they put it all in the bank forever and ever? Is dying at age 110 and each leaving a couple million to each of several charities the best approach? We could argue all that for a *very* long time.

It's not just RV's that depreciate. Just about any "cool car" is going to have the same sort of hit. You see a *lot* of them on the road. Drive by a marina and do the math .... There are way more examples than there is time to list.

The ones I can't understand are the ones who never spent a dime in their entire life and get to age 80 wishing they *had* done something at least once in their lives ....

Bob

Bob, that's a LOT of "justifying" going on without much actual explanation of how folks can absorb a $50-$60k loss in a couple of years.

What I've heard from the few who have responded who've bought new coaches is that they had the money to lose, and it doesn't represent a big problem for their net worth or retirement planning.

I was hoping to hear more about how people actually deal with that loss rather than justifying it by pointing to other depreciating assets as examples.

[jhayesas]

Originally Posted by uncle_bob

Hi
The ones I can't understand are the ones who never spent a dime in their entire life and get to age 80 wishing they *had* done something at least once in their lives ....
Bob

I couldn't have said it better myself. Sometimes people spend to much time counting their money instead of enjoying their lives which will always cost.

I don't have wealthy friends who can pay all cash for an RV. If they choose to do a 20 or 5 year note and can afford it, then so be it. All this talk about depreciation, ownership cost and etc reminds me of the debate between renting and buying a home.

[Bill M.]

I figure that people who are smart enough to make enough money to buy an Interstate are smart enough to figure the cost if they want to and do not worry about them at all. The ones I know and camp with are awful nice people in addition to being highly successful at making money.

[RICKBETTY]

The same depreciation applies to boats, equity memberships to country clubs..How do you value great memories, family vacations, etc. . They are not investments!!! Remember, "you can't take it with you"....

[RICKBETTY]

A educated buyer can purchase $190 AI for approx 150 to 155,000., 18% discount.. Your numbers are a little off, starting at 190,000 . I do agree , they do depreciate , you have to buy they at the right price. I would never buy new....

[weirdstuff]

I used to own an Interstate, which I had bought brand new. Sold it three years later. Lost $48,000 on it (purchase price plus taxes/fees, minus sales price).

Your question, "How did I deal with the loss,".....

I dealt with it by saying, wow, we had 3 fabulous years of adventures all over the USA and Canada...adventures of a lifetime that most people never get to experience...I'm so glad we did that, even though we took a big hit when we sold it.

And sure, we could afford to be out that much money (didn't love taking the hit, but could afford to do so). If we couldn't afford the hit, we wouldn't have purchased the vehicle.

[Titus]

No doubt the Interstate does not make financial sense compared to other Class B's that were nearly equivalent functionally. I am not sure that any MH makes financial sense, but I have long wanted to do some comfortable traveling (ground gets progressively harder each year) after I retired. I mentioned it to my parents who said: "We thought about getting one after we retired. We wish we had." That clinched it for me. I didn't want to be 80 'wishing we had'. We could afford it. We wanted it. We bought it. We don't think how much it cost it each year. We just enjoy it.

[PatLee]

I’m starting to think that none of us responders understand your question because you keep coming back with how do we deal with the “loss”. Or you like to beat a dead horse. Doesn’t it have everything to do with priorities, dreams and why we work?

[85MH325]

Originally Posted by PatLee

I’m starting to think that none of us responders understand your question because you keep coming back with how do we deal with the “loss”. Or you like to beat a dead horse. Doesn’t it have

I've acceded a number of times that we all enjoy our coaches, me included.

No my question specifically precludes having "everything to do with priorities, dreams and why we work?" I specifically asked about the practical issues of the financial end of how losing the depreciation affects your long-term net worth, and how you deal with that. Is there some way you work to recoup it; do you just write it off; is there some way to mitigate it?

The reason I've responded regularly in the thread is that rather than answering the question directly, most people have responded the way you have... that they enjoy their coach which makes the financial loss worthwhile. Few have replied HOW they address that loss to their net worth.

What I'm gleaning from the replies so far is either folks who buy a new coach either don't think about it; or they've planned for it and can afford the loss; and/or the remainder justify it the way you have "it has to do with priorities, dreams, and why we work" without actually considering that actual financial cost TO their net worth.

I agree that life isn't about money. As a matter of fact, pretty much all of my life choices my entire adult life have been about lifestyle rather than earned income. That said, nine years into retirement, but not yet old enough for Medicare or Social Security I find that I need to be more circumspect about wealth preservation; hence my question. It's an interesting place to be.

[lsbrodsky]

I do not find the concept any different than leasing a nice car; you are just burning the money, never to see it again. Just a choice you make.
Larry

[Hittenstiehl]

I was beginning to think like PatLee also and thought maybe I just didn't really understand what the depth of your question was. Your further explanation may have put it into a different light and might get you different answers now.

It seems you might be asking about the actual real life tangible things they do in their financial portfolio to make such a big purchases with such big depreciation. Yes that's what you said initially but maybe we didn't read it that way.

That might be personal information they're not willing to respond to but the information could be eye-opening.

As our income levels have changed throughout our life so have our expectations. I can no longer imagine how I managed to exist on the income levels I had as a young soldier versus what I have now. And then I think that my father had a family of 7 on even less.

Maybe we can only truly wrap our heads around a financial portfolio that is an impacted by that kind of depreciation when we actually have the experience of having a portfolio big enough to handle something like that.

I would have an equal curiosity question for you. As you said you're nine years into retirement and not yet medicare-eligible (65) then you have retired quite young. I have never been able to fully comprehend the financial tenacity and savings that it takes to be able to do that.

I recently went to the grocery store with a relative who's on a much tighter current budget than we are. We were buying the makings for a big family get-together. As we were buying cheese for the Mexican food I opted for a more expensive higher-quality cheese and she said shouldn't we buy the store brand it's a lot cheaper. I told her I was in a financial position to purchase the higher-quality cheese and I thought it would make a positive impact on our meal. Afterwards as we were packaging up the leftovers she told me that she thought the dishes she had prepared were better with the higher-quality cheese we used this time. One of my lessons from that was that I chose to pay more for the cheese but we chose to make the food ourselves and save money and we diligently packaged up the leftovers to enjoy them later versus throwing everything away. Saving money where we had to, but maybe not at all the areas we could have, but enjoying it.

In our family we call that r&j, rationalization and justification. When getting ready to make big purchases we try to hold off a little bit so we can get our wants and needs into the correct category. Amazing what we can live without and amazing what we can rationalize that we need. Sorry to ramble on in your thread :-)