Financial Planning Can I Afford It? Big Toys Edition Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Farnoosh Torabi Modified Jul 24, 2018 4 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. Save more, spend smarter, and make your money go further Sign up for Free Did you know that Sunday was National Splurge Day? To me, that means an excuse to take Lyft instead of the subway. To others with deeper pockets, it may mean springing for that fancy boat, Maserati or second home. If you like to go big, here’s a piece on what to know ahead of springing for these mighty splurges. Boats A boat is a true luxury. But it can run the risk of becoming a money pit, “a hole in the water you throw money into.” The upkeep – oil changes, filters, waxes – can cost up to 10% of the boat’s value each year, says Priceonomics. If you paid $50,000 for your vessel, that’s $5,000 in annual maintenance costs. For this purchase, you may want to go used. According to the PowerBoat Buyer’s Guide, boats and yachts can lose up to half their value within the first five years. Just be sure to have it properly inspected ahead of time (Priceonomics recommends a marine surveyor), in case there are any small issues that could end up snowballing into hefty repairs later. Entrepreneurs: A possible tax perk to owning a boat, says Sophia Bera, founder of Gen Y Planning, is that the maintenance costs may be deductible if you use the boat to entertain clients. “Consider talking to your accountant to see if this can be deducted as a business expense,” she says. Sports Cars While you may be able to afford the sticker price on a sports vehicle, can you afford to maintain it? “Finding a good mechanic can not only be costly but difficult,” says Ray Montoya, senior consumer advice editor at auto site edmunds.com. “For example, there’s a car called the Nissan GT-R and not every Nissan mechanic has the requirements to work on this vehicle.” And once you find someone who can work on your specific car, they will likely be expensive since it’s a special car, he says. Prepare for higher fuel and insurance costs, too. Your Corvette will probably require premium gas and since they’re designed for driving at high speed and have pricey parts, insurance companies will demand a bigger premium. Shop around and compare rates to find the best deals on insurance. Finally, you better love the car. That’s because the resale market for sports cars is not huge, says Montoya. “Unless you have a high-end Ferrari or exotic car you can’t really make money off the sale of a sports car,” he says. Vacation Homes Some financial planners recommend easing into a second home purchase by renting in the area first to be certain the location is right for you. “Often times, it might be less expensive and less of a headache to rent an Airbnb for a few months or a year…rather than buy a second home,” says Bera. Can you afford it?” The only way to know is by analyzing your complete financial picture,” says Brittany Castro, founder of Financially Wise Women. This includes evaluating your monthly budget to see if you can comfortably afford a second mortgage payment, as well as your cash cushion. Your retirement savings and life insurance payments should also take precedence over a second home purchase, advises Castro. As far as financing the purchase, plan to have more cash for a down payment than you would to buy a primary home. That’s because banks tend to rank second homes as riskier ventures and prefer borrowers to have more skin in the game. The rational is that if you come upon great financial hardship, you’re more likely to bail on that second home than your primary residence. While a 10 to 20 percent down payment is the norm for primary home loan borrowers, banks may ask for a 25 percent or greater down payment to qualify for a mortgage on a second home. Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at email@example.com (please note “Mint Blog” in the subject line). Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend. Save more, spend smarter, and make your money go further Sign up for Free Previous Post How to Avoid the Expensive Mistakes People Make in College Next Post Refinery29: Do You Pay Your Bills Like Everyone Else? Written by Farnoosh Torabi More from Farnoosh Torabi Browse Related Articles Housing Finances How Much Home Can You Afford? Relationships #RealMoneyTalk: This Trip Is Costing Me Too Much Financial Planning How Much Does It Really Cost to Own a Boat? Family Finances MintFamily with Beth Kobliner: 5 Money Lessons Kids Lea… How To Taxes Done? It’s Time for the Annual Financial Me… Financial Planning 7 Signs You are Living Beyond Your Means Housing Finances How Much House Can I Afford? 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