Getting a loan, would you?

[DavidJayUden]

"The key question is, do the benefits (appreciation and the satisfaction of ownership) exceed the borrowing costs?"

I respectfully disagree. I would re-phrase it to read: "Does the mere joy of ownership justify extending your debt level into dangerous territory."

[m1903a3]

Originally Posted by DavidJayUden

"The key question is, do the benefits (appreciation and the satisfaction of ownership) exceed the borrowing costs?"

I respectfully disagree. I would re-phrase it to read: "Does the mere joy of ownership justify extending your debt level into dangerous territory."

Where do you get the idea that dangerous territory plays a part?

I'm retired. I was debt free, having no loans of any kind nor any carryover credit card debt from month to month. To me it was a pretty simple math question. A cash withdrawal from an IRA would have been additional income taxed at the highest rate I pay both the feds and the state. In addition, since a withdrawal is treated as ordinary income, it would have put both me and my wife into a higher rate for our monthly Medicare payments. Having a low interest rate loan is far cheaper.

I could pay off the loan tomorrow, but it's cheaper to keep it.

As for investment value, I didn't buy it as an investment. i bought it because I wanted it and can afford it.

[4 Scale]

Originally Posted by DavidJayUden

I would re-phrase it to read: "Does the mere joy of ownership justify extending your debt level into dangerous territory."

While I agree that it is foolish to get into "dangerous" debt, on anything, it's hard to imagine that on even a really nice Luger. If debt for a Luger is "dangerous" for a given collector, that person should not buy at that level via either cash or debt.

I just refinanced my house and used a small portion of the proceeds to fund a 1940 Mauser P 08 collectible. I have no debt other than the mortgage. Debt is cheap right now and as my overall debt is low even with the mortgage, the risk is low in using debt to fund investments. If I had liquidated an investment to buy the Luger, I would have to pay taxes and lost investment earnings on the money. I.e., a similar analysis to Mike's. Each must look at their own situation to decide if debt makes sense. In Mike's case and mine it makes perfect sense.