Spinoff: Can you truly afford horses?

[marewithflare]

There's been much buzz on that thread mostly centered around lying about the debt to your significant other as well as risking the future of your family.

However, what if you've accrued some debt chasing your dreams of riding and aren't married/ don't own a house/ have an excellent job, etc...? Are the opinions still the same?

I guess I'm somewhat in that kind of a situation and I'm super happy that my equine dreams are finally coming true but I was a little stupid in my early 20's and spent waaaay too much money on a TB with problems out the wazoo who got me in a bit of a hole. I also have ~16k in student loans. I have a new young horse now and he's awesome, I have him at a show barn and and with trainers I need to achieve my goals. I haven't used a cc in ~ 2 years and I make more than the minimum payments I'm just not choosing to pay it all off right now so that I can show like how I've always wanted to while I have the time, no one to answer to, health, etc... I have a financial plan to pay it off w/in 5 years which will put me at 33 years old.

If something catastrophic were to happen (lose my job) I don't have a mortgage (I live with friends under no lease), and own my car. I live simply other than the horses.

I'm happy with the choices I've made and feel I'm not putting anyone at risk doing this but are there other successful singles out there who are in similar situations? I'm not looking to get crucified, would just like opinions from others' on a different situation than previously posted. Thanks!

[Giddy-up]

Can I afford them in a Suze Orman type of way thinking?

No.

Do I afford them?

Yes.

[Woodland]

Originally Posted by Giddy-up

Can I afford them in a Suze Orman type of way thinking?

No.

Do I afford them?

Yes.

More importantly can you afford them on a Dave Ramsey total money make over?

Before = NO

After = Yes Yes YES!!!

of course i kept mine during, but how liberating it is to be debt free mortgage free AND have my horses & business - WOW! It hurt like hell having to do it. But far better than being an ostrich!

I believe debt is bad. There is no such thing as good debt. A "credit score" is really a debt score. It's a sad way to count someones value! Never ever will i have credit card debt again. i will never use credit cards to pay for my hobbies(I never have in 20+ years). It is good and right to SAVE then spend!

[dixiedolphin]

As I said in the other thread, I'm holding off on horse ownership until I'm done paying off all the debt I racked up in my extreme poverty days.

I guess perhaps because I've lived in so many extremely bad situations, I want to make sure I have plenty of padding before I get into a heavy expense like horse ownership.

Besides, I'd rather layer on as many lessons as possible and perhaps do a little showing in the meantime--all of which might taper off to a trickle or into nonexistence once I actually have a horse of my own.

But that's just me. =)

[gieriscm]

With a family your priorities and responsibilities change, and your finances need to reflect that (unless you have a trust fund or win the lottery). After I married while I didn't sell the horse, activities like going to shows got scaled back due to time and financial constraints.

[Trixie]

I believe debt is bad. There is no such thing as good debt. A "credit score" is really a debt score. It's a sad way to count someones value! Never ever will i have credit card debt again. i will never use credit cards to pay for my hobbies(I never have in 20+ years). It is good and right to SAVE then spend!

You know what the problem with this is? I did everything right - wracked up NO debt and NO loans through college, paid cash for everything, and never had a single overdraft fee or anything - and I now have a 24% interest rate on my credit card and wound up with a low credit score because I didn't have "enough" credit.

I wound up having to wrack up a little credit card debt and pay it off slowly in order to build a score to qualify for a decent mortgage rate.

[marewithflare]

Thanks for the replies so far. Just to clarify, my credit score is >700 despite my cc debt. I make a good living (80k/year) with a job I worked my butt off to get. I feel like now is the time to go for my dreams with the understanding that I can scale back if I ever get in that "red" zone.

I'm just totally in love with my riding right now and have made it a priority. I have no one to answer to which makes it much less stressful than the other post but at the same time debt is debt. I will pay it off in ~5 years but right now it's just not a priority for me. Some may consider it irresponsible but I can't ignore that nothing else seems to really make me happy.

[Trixie]

Mare, is that actually sustainable?

While it may be true that you have no one to answer to, which is certainly a big difference between you and the last poster, I ask because you're losing a lot of money paying the minimum monthly payments on a credit card. If you want to keep showing, that money could probably pay for a lot of horse shows.

http://www.timevalue.com/calculators...alculator.aspx

This website will explain to you just how much you're paying in interest charges. Even if you just pay double the monthly payments, it makes a huge difference.

Of course it's totally your decision. Personally, I just show within my means - which isn't alot, but I can pay cash for entries if I want to. We are fortunate to live in a very horsey area (although extremely expensive area) and can haul to bunches of awesome trainers.

If I went with "what made me happy" instead of considering the future, I can't see how I will manage to afford the lifestyle I want, and I want to own a farm. That's how I look at it. I'm fortunate that our version of "settling" is pretty awesome.

[greysandbays]

Originally Posted by Trixie

You know what the problem with this is? I did everything right - wracked up NO debt and NO loans through college, paid cash for everything, and never had a single overdraft fee or anything - and I now have a 24% interest rate on my credit card and wound up with a low credit score because I didn't have "enough" credit.

I wound up having to wrack up a little credit card debt and pay it off slowly in order to build a score to qualify for a decent mortgage rate.

Something is not right with a system that deems "bad credit" better than "no credit history".

[Trixie]

Yeah, it wasn't until I took out a secured credit card, wracked up some bills, paid them down, and then took out a "store" credit card, put $60 on it, and paid it down in three months that I finally had a good credit score.

It drove me up the wall because I always had the money to pay off my bills, and was well used to just paying my bills - leaving debt on PURPOSE was crazy to me and it seemed like such a huge waste... but I suppose the few small interest charges are pennies compared to what a better credit score will save me.

[SaddleFitterVA]

Credit in and of itself is not bad and used wisely, for the right purchases, it can help a person go from having nothing at all to having modest assets, to having a decent portfolio. Businesses use debt all the time to grow.

Credit scores are fascinating and the formulas to calculate are closely guarded secrets by the companies that produce them (well, they used to be, maybe they are an open book now).

I use my CCs for my convenience, paying the entire balance off at the end of the month. There was a brief period, about 2 years into always paying off my card, where I had the savings to pay at the end of the month, but didn't want to see the savings balance drop, but I quickly did the math on paying CC interest for 2 or 3 months vs. what I was earning on the savings, and quit that practice.

I used to have a card that showed one of the credit scores monthly, with a 2 year history. In a 2 year history of always paying off all balances, it was interesting to see the score go anywhere from 785-820, based upon ???. I think sometimes a big month like December, would show a higher balance, thus drop the score a few points, but then other times, it would go UP on months where there was a higher use.

As soon as we are done paying for college, I intend to start paying my mortgage down. My one regret at selling the old farm and moving to the new one is that we were in a 10 year mortgage at the old farm and would have been mortgage free in another 2 years or so.

I have found that savings is addictive. Once I started getting a big number in that account, I would choose to not buy something because I did not want to use up my savings.

Back in the days when I had CC debt, I would buy things that would just drive up debt higher, or if not driving it higher, slow down the debt reduction. I honestly do not understand how that mental process worked, almost a mental giving up, thinking that there was no point in attempting to be debt free.

I will say, some of the things I've used debt to purchase have been long-term items, that with proper maintenance have long life expectancies...tractors, zero turn mowers, farm improvments, etc. And, I did that with very, low interest cards, or often 0% financing, using balance transfers to keep interest rates low while it was always paid down. Once those big ticket items were purchased and paid off, they last, and the debt is gone, but I then started to save the former payment, so hopefully next time a large item is needed, the only reason I'd choose to finance is because of a 0% financing rate, or one lower than my savings are earning me.

I created a rule for myself a few years ago that if I did not have zero CC debt and 5000 in a non-retirement savings account, I could not take lessons or show. Each year, I'm increasing that self-imposed limit by some amount. Since it is a self-imposed limit, I do sometimes allow myself some latitude in breaking my own rule for lessons, but not for high-ticket rated shows. My son's college tuition, vet expenses or vehicle repairs are usually what have cause the savings to drop below my self imposed limit.

This financial discipline did not come overnight, and I had serious CC debt in my 20s, and it was reducing in my 30s, and by 34, it was nearly gone.

I'll be honest, if I had not had a farm, horses, dogs, cats, and a child, I could have been in the black WAY faster.

[ReSomething]

Personally OP, if it were me, I'd quit showing and hammer that debt down. When it is gone is the time to cut loose.
I think there are two kinds of happiness, long term and immediate. I made it to long term with a Dave Ramsey style plan, and yes right now we spend too much, but there is no commitment in the form of mortgage, car payments, cc debt.
I ate a ton of Ramen noodles and mac n' cheese to get here. I know other people who took trips and did what they want, died young and left nothing but debt, the rest of us wind up subsidizing that, not just in higher interest but in lost investments nowadays.

If things were to change in your life, would you be positioned to handle them? What would you do with your horse? If you have made a plan and are comfortable with it then who am I to judge?

[Perfect Pony]

I tell you what, I wish I had started a lot sooner being virtually debt free than my mid-30s...

It really hit home for me at about 35 years old, when I was suddenly faced with the possibility of working in this cubicle A LOT longer than I want to! Had I starting spending less and saving more and not racking up debt in my 20s I could be thinking about an early "corporate" retirement so I could do what I want to be doing in the second half of my life. Instead, I will be working at this job a lot longer than I ever imagined.

[magnolia73]

I have excellent credit before I bought the house. Always had a couple of CC's that I paid in full every month. I think they just want to establish that you pay people, not have you run up debt and pay it off.

[Libera]

Working on it...

Am still in college now, but paying it as I go. Major is RN so hopefully will be able to start paying everything off when I get out of school and get a job.

Our only debts right now are the carloan, which will be paid off in 2012, some CC bills, mostly racked up from remodeling our house, and the mortgage, which has about ~100k left on it, and am planning to pay that off as soon as I can.

My husband is supporting us with his job, so all my income will be going towards our debts. As soon as those are paid off, I will start showing my horses!

[marewithflare]

I pay more than the minimums on both my cards I carry balances on (double on one). I racked up the debt in my 22-26 age (thought that 20% pay increase meant my funds were unlimited... dumb I know) and have been paying it down for the last 2 years. As I said, I have a 5-year plan to pay it off at a maximum, probably sooner putting extra money towards it the months I can (bonuses, tax returns, etc...) I pay cash for everything now and it's manageable as long as I don't spend unnecessarily.

I hear ya Saddlefitter, I'm greedy with my savings. I like that number to be high and have a hard time dipping into it to pay off bills. Same with my horse account.

If something bad were to happen, I could sell my horse and I'd still be able to afford board until he did sell. Truthfully, my trainer would buy him back in a heartbeat.

I love what I do. I'm a well-educated scientist who's done well at my job so I don't have that "I hate my cubicle job" like some do. I'm fully content doing this until I can retire. It's a job/industry that makes a decent living.

While I've made some bad choices in the past I'm not making the same ones over and can comfortably afford to go after my dreams with the debt being the second biggest priority I have right now. Guess I'm the only one who thinks this way and I'm ok with that since I don't have anyone else depending on me financially.

[SGray]

Originally Posted by marewithflare

.......
I hear ya Saddlefitter, I'm greedy with my savings. I like that number to be high and have a hard time dipping into it to pay off bills. Same with my horse account. ......

.....While I've made some bad choices in the past I'm not making the same ones over and can comfortably afford to go after my dreams with the debt being the second biggest priority I have right now. Guess I'm the only one who thinks this way and I'm ok with that since I don't have anyone else depending on me financially.

you're not really hearing Saddlefitter


step 1) find the interest rate you are paying on your credit card debt

step 2) find the interest rate the you are being paid on your savings account

I will put $100 on the amount in step 2 being less than the amount in step 1

thus you should seriously think about taking the $ out of savings and paying off the cc's -- then take the amount you were paying on the cc's each month and pay back your savings account

you will have more $ in the end if you do

[marewithflare]

DGray... thanks for catching that. I'm trying to follow this thread amongst a full work day so I mis-read the first time. Anyhoo, I've considered going that route and stop contributing to my savings and put that towards the CC bill so maybe that's something to move towards next month.

[SGray]

happy to help

[SaddleFitterVA]

Also, minimum payments are ridiculously low, so paying double the minimum payment is still ridiculously low on the vast majority of CCs.

Minimum Payment is usually 1.5-3% of the balance, with some minimum of say, $30, if you have a really low balance.

Assume 3% minimum payment for the following on 3000 principle. Assume it is not being used at all, only paid.

Interest / Payment / amount paid / time
12.5% / $90 / $4,496 / 12 yrs 8 mos
15.0% / $90 / $5,005 / 13 yrs 1 mos
18.0% / $90 / $5,798 / 15 yrs 11 mos
24.0% / $90 / $8,554 / 22 yrs 10 mos

Just in interest, that was $1496, $2005, $2789, and $5,554.

In my area, a day at a local H/J show runs me $75-125, a local dressage show $30-50, a licensed dressage show, $125-200, a rated H/J show, $400-800 (on a budget).

Don't forget that assumes you never use the cards at all while you are paying them down.

Oh, if you are paying 2x the minimum, that would be 6% so:
Interest / Payment / amount paid / time
12.5% / $180 / $3612/ 6 yrs 3 mos
15.0% / $180 / $3767/ 6 yrs 6 mos
18.0% / $180 / $3970 / 6 yrs 10 mos
24.0% / $180 / $4454/ 7 yrs 7 mos

Significantly faster, but still, what was bought with that $3000 in cc debt? Will you have it in 6, 7 or 23 years?

Is it eating out, gas, clothes, tack, groceries? Or, did you buy a car on a CC? Which is insured and might still be around?

You might be comfortable paying that much interest over that many years, and US Banking, Visa and Mastercard truly do want us all to be comfortable with that lifestyle, but it is not a great way to future financial health.

So long as anyone uses the "minimum" payment method of budgeting, they will be able to "afford" a lot of luxuries for a short while, or even years, but it might be kinda stressful, or even harmful to those around you.

Personally, I think if someone goes to even ONE rated show a year and has a credit card balance, they might want to rethink their priorities, but that's just me.