Ok here's a real answer.... figure out the cost of the airplane you want. Now, can you afford to go to vegas and loose it all gambling or on hookers/blow/whatever and still be able to afford the legal fees from whatever terrible stuff you did? Then if you have all that covered, can you come up with another $20-40k for a replacement engine if you absolutely had to?
Haha an interesting way to look at it... I don't know that I could lose six figures in Vegas, pay legal fees and cover an engine rebuild, but I also don't think that lacking that capability makes someone unable to afford an airplane.
Technically he’s right. It’s a depreciating asset. Even in an up airplane market, you’re flying the hours off of the engine and airframe, and those are hidden costs until it’s either time to sell, or its wrecked and you get a check for the value of the scrap. That’s your worst case scenario and what you budget for.
I don’t see a reason to throw those $100 bills into the fire. One could at least spend them on a nice M1A, or maybe another high end firearm. Here’s a recent acquisition, a German K98 rifle.
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Purrrty. My airplane habit keeps my gun collection to something above a few, and somewhere below an arsenal. ;-)
Aviation is the only industry where I've seen people try to rationalize purchases and account for every dime they spent. I have yet to run into a boat owner or classic car restorer/hot rodder that ever really thinks about the cost. They just buy what they want. Ironically, many boat and car guys don't seem to be nearly as well off as the average airplane guy, yet they manage to figure out how to make their finances work.
I’ve met plenty of rational motorsport owners. Most pay cash for those toys. The ones that keep them longer than a couple of years do, anyway. The key is they buy what they want with cash on hand. And many of them trade a lot of sweat equity in working on them or modifying them that’s a lot harder to do in the Aviation world unless you’re building and flying experimental.
when your diet consists of Ramen noodles.....ice tea unsweetened....you drive a +12 year old car.....and you have a few bucks left over at the end of the month.....you should be good to go to own.
LOL. I like ramen. It’s horrible for you. But I lived on the crap when I was broke and acquired a taste for the occasional pile of fat covered in salt! Hahaha.
I've said this before, but it bears repeating. Once I assiduously totally everything I'd spent on flying and aviation for the year. I was very careful to include everything, and checked my figures twice. I then firmly decided that I would never again undertake such an exercise.
I would. Yes, the numbers are staggering, but the experiences are divine. I’ve spent “stupid money” on a number of other hobbies over the years, and none gives the satisfaction of flying.
This is really true. I wonder why us pilots analyze every penny where other enthusiasts could care less. I hate looking at per hour costs to fly - it makes every hour a little less enjoyable. I couldn’t tell you what I spend, down to the penny and on an hourly basis, in any other aspect of my life, so why do I care so much what this minute of flight time ran?
I can tell you where every penny of mine goes for everything. A written budget is a rarity amongst Americans (most estimates out the number of people who write one and use it below 20%). Today with automated transaction importing, it’s incredibly easy compared to the bad old days of dragging receipts home.
This pretty much sums up the internal struggle for me. Renting zaps the fun for me since i'm doing mental calculations of how much a given flight period will cost. Once I get over that obstacle, I will be making the plunge into ownership and just enjoy the ups and downs as best I can (like enthusiasts of virtually every other hobby/sport in the world).
Nothing changes about that feeling of “how much is this costing me per hour” once you own. I’m not sure why you’d think that is something only a renter would feel? You can gas up the airplane and fly it and ignore everything but that credit card transaction at the fuel pump for a month, just like any other bill... but the bills still show up monthly. And then you think about it a little and write the checks.
Suze Orman gives bad financial advice in my opinion. Not ALL debt is bad but can provide leverage for further investments only if you know what you are doing.
Very few people become wealthy by taking out loans. Single digit percentages, from most studies. Nothing about an airplane is an investment. It’s a depreciating asset.
Businesses can often bridge a cash flow gap with loans when they know where the revenue is coming from to pay the loan back with a generous profit, but individuals buying essentially toys, no loan ever made that cheaper or any additional income to pay back the loan, possible. Except maybe buying a hulk and trading sweat equity and lots of time to rebuild it, let alone the parts costs.
An example of good debt might be real estate. Single digit interest and perhaps an appreciating asset that can also be rented out to cover costs plus a profit. Or cash flow break even and an appreciating property market. It only works with tiny interest rates on the loan. Larger percentages approaching or exceeding double digits makes the ability to recoup that loss, nearly impossible. Compound interest is a bugger.
Other life factors nobody has detailed, just asked in generalities...
What’s your annual income?
How much personal debt besides your home do you have? Consumer credit. Vehicles. Student loans. What’s the written plan to kill those and how long will it take?
Do you own a bunch of toys/depreciating assets and what ratio of your annual income do they consist of?
Do you have three to six months of expenses saved up in cash for your eventual rainy day?
On top of that, do you have cash on hand in accounts that won’t take a tax penalty to spend them, enough to replace the engine or do other unforeseen major maintenance?
Are you insurable in the aircraft you want to buy? What’s the monthly cost?
Besides owning and operating expenses, have you budgeted for continuous (even small) upgrades? What’s your plan when the interior rots out, or the paint starts to look really shabby? Panic or a plan?
If you have kids, are you putting money away for their education as well as putting a significant amount of money into your own retirement savings? Any investments that will throw enough I
residual cash to keep your SO in the manner to which they’re accustomed?
All those things come first before buying an airplane. Family is more important than flying. If you start hurting the family budget with, aviation. It’s time to reassess.
