A boat is quite expensive and many boating enthusiasts take boat loans to fund the boat purchase. But as they make their monthly boat loan payments, they feel the pinch, especially when they have other loans to pay off such as mortgages. They then get tempted to pay off the boat loan at one stroke by using their retirement money. But would that be the right thing to do?
The following points would provide an answer to this question.
Retirement money is exactly that – money meant for retirement. This is a time when a person would not be earning a regular salary. He will be using his savings and the retirement money for all his expenses. So if he were to use it for paying off loans, what would he do when he needs money later? As much as possible, it would be better to avoid using this retirement cushion for any other purpose.
Paying off loans taken for the purchase of items which one really does not need should not be a priority. In fact, if it’s getting difficult to make the loan payment, it is better to sell the item and pay back the loan. A boat is an item of luxury which one can do without. It should be purchased only if one is financially comfortable and is sure that there will be no problem in paying the loan. If one has already bought the boat and is now finding it difficult to service the boat loan, it would be advisable to sell the boat and repay the loan.
To reiterate, paying off a boat loan with retirement money is a strict no no. Sell the boat and hire one when you feel like taking a boat ride. It works out much cheaper, and there is no headache of loan payment and maintenance.