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So when would you borrow?

7K views 69 replies 39 participants last post by  Remali 
#1 ·
First the disclaimer, I of course realize that any suggestion of borrowing money is the precursor to ****ation - but I am interested..

Now personally, I have never borrowed money to buy a horse, I always buy cheap horses.....but a comment made else where about not borrowing for a hobby, made me wonder..

Yes, we have become a world of 'must have it now, take a loan go into debt people' but I'm wondering where the line comes.

I guess most of us borrow to buy a home, some of us to buy a vehicle, those of us in business get used to scary amounts of borrowing at times...

When it comes to hobbies though, I mean Fergie at $1500 I could afford, but Troy at $8000 I would of had to borrow for. My trainer has a few horses listed, from $8000 to $20,000, do people really have that sort of money saved up? I'm not sure how many people make money at their riding hobby, can you make money jumping or other English disciplines, LOL I know that you don't make money at dressage.

So question one, would you EVER borrow to buy a horse, maybe for breeding, or competition?

SO now you have your horse, how many people borrow to buy a trailer, and maybe upgrade their vehicle so they can tow said trailer, once again, nice to have the loose change to do that, but it is a significant amount of money to buy something reasonably nice...

Question 2 would you borrow to buy a trailer?

Just interested, for number 2, I'm lucky, we have a heavy duty farm truck to tow, and I found a trailer that I could afford, it is functional, but not pretty.....
 
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#2 ·
I would borrow to buy a trailer without hesitation. It's similar to an auto loan and, if you keep up with your payments, an only help your credit score.

Borrowing to buy a horse is a grey area. I think if you're a serious competitor and need to upgrade to a horse that will allow you to reach higher levels, then borrowing is an option. If you're just wanting to buy a horse for pleasure or as a trail horse, borrowing money doesn't make sense to me. Like you said, you can get a good trail or pleasure horse for under $2000 in most places. You can even get a good used saddle for under $500 (just look at the Hereford I was going to buy for $350). If you have to borrow that much, maybe you can't afford a horse as easily as you thought. It wouldn't take that long to save up the amount you'd need to purchase a good horse and tack. Probably less time than you'd be paying on that loan, because of interest.
 
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#3 ·
I have never borrowed to buy a horse. But then again, the most expensive horse I have was $1500. My race track rejects (Standardbreds) are not expensive to buy...I can honestly say I would never borrow money to buy a horse. But then again, I do not show or breed.

After moving to our acreage and realizing I needed a horse trailer, I thought about taking out a loan to get one. But I don't want to be in more debt than I already am, so decided to get something less fancy and just pay cash.

As for a vehicle...I used to drive a Jeep (which isn't good for towing). I already had a car loan for the Jeep, so ended up just trading it in and getting a pickup truck. So the car loan is there for the truck, but it was there before anyway.

My reasoning is that if I can't afford to pay cash for the horse, then I probably can't afford to keep it. Horses are expensive.....I am realizing how expensive they are now that I am the one taking care of them. Never mind the vet bills, farrier, tack, etc. There is the truck, trailer, fencing, shelters. Add to that the cost of lessons....it is a big endeavor and the initial cost of the horse is the smallest factor.

Easy for me to say though....I am happy with my 'cheap' horses. My opinion might change if I had the opportunity to ride a $8000 horse and fell in love with him. LOL..
 
#4 · (Edited)
Nope. Wouldn't borrow money to finance a hobby. The cost of the horse, unless you are buying a top end horse for $70,000, is the least of the costs you will incur over the life of the horse.

As a for instance, last fall my daughter's horse coliced and the standard in-field treatments didn't help. (had not coliced before in the three years we had him). $300 for the emergency after hours call and treatment.

We ended up trailering to a 24/7 vet hospital where he spent two days trying to get to the bottom of his colic and high white cell count. Bang! $1,200.

When we brought him in, they asked if it was determined that surgery was necessary, would we be wanting to go that route. Cost estimates 6-10,000. Because we had set money aside for emergencies, we were able to say "yes". We paid $900 for this horse as a 2 year old, so he is not a high $ value horse, but he is my daughter's everything.

The cost of buying the horse is nothing compared to the responsibility of owning. There is a reason I didn't buy my first horse until I was 35!
 
#5 ·
I think once you start passing up, say...4 zeros on the price of a horse, it becomes more than a hobby for most and most will be looking for some sort of return.

With that being said- For question one- I haven't borrowed to purchase a horse.

Question two- I did borrow to purchase my trailer. Having a trailer meant I could have my horses at home, board free. But I had no place to ride so I would need to trailer to an arena. It wasn't practical to be borrowing other people's trailers, so we figured out that the payment for a trailer would still be significantly less than board. (That lasted about a year and now I'm boarding again, but hey...I got a nice trailer out of it :redface:)
 
#6 ·
I would think that the most people who own the very expensive horses have that sort of money in their petty cash - mainly because it costs an arm and a leg to keep them and compete them at the top level
If you were doing it as a money making venture then you'd need to have them on a really watertight insurance policy
 
#7 ·
I'll just do a quick nutshell version of what I did in the other thread, about financing the horse.

We, as a society, don't make long term financial plans anymore and it hurts us in the pocket book really bad. When I want something, I make what I call a "sinking fund" for it and I put $XXX in it each month. So when I am ready to buy, I have cash. The only thing we have borrowed for is our home. If we don't have the cash for other things, we wait until we do. I paid $11,000 for my 3 horse Logan trailer, totally customized the way I wanted it, back in 2001. We knew that we were going to need a truck and trailer and had been saving money for the truck for sometime. We had enough cash in the "new vehicle" fund to pay cash for the truck & the trailer at the same time. The savings are significant if you pay cash. For one thing, you aren't paying interest which will cost you close to 25% (over several years) on top of your purchase price. Most places are going to give you a significant discount on the purchase price if you pay cash today. My trailer added up to about $15K before I was done. When I told them I'd give them $10K out the door in cash today, they were very happy to make that deal. Tax & Title added up to the other $1000.

I take care of my things. I still have that trailer, it still looks pretty new, nobody thinks it's a 15 year old trailer. I have kept on making my "vehicle fund" payments to myself over the years. If I want a new trailer, I can go buy one, but this one still has LOTS left in it, so why would I.
 
#8 ·
[W]ould you EVER borrow to buy a horse, maybe for breeding, or competition?.....
I would probably not borrow to buy a horse unless I was in serious competition, which will be unlikely for me. I paid cash for Pi but she was priced at a bargain basement clearance price. Star was a gift. I have leanings toward young horses (although not really what I need, LOL) so they tend not to be so pricey & getting Pi at the price I did has me spoiled that I can find another like her. Unrealistic, but there it is. I would not buy a horse for breeding. Long story short, I cannot think of any situation where I would borrow to buy a horse.


SO now you have your horse, how many people borrow to buy a trailer, and maybe upgrade their vehicle so they can tow said trailer. * * * [W]ould you borrow to buy a trailer?
I have borrowed to buy a used trailer and used truck. But my first trailer, a older used 2H straight load that I used as a one horse slant, I bought with cash. I had already had a beefy Ford Ranger that I pulled it with. Hauled with that rig for bout 10 years. It was not pretty but it served my purposes at the time.

Then I got Pi and a few years after getting her, I upgraded. Found my current trailer (2005 Trails West Adventure MX, 2H slant with dressing room) on Craigs List in Texas at a bargain price (About $4k) and a friend who was in TX hauled it to CA for me. Got my Truck (2001 GMC Sierra 2500HD Diesel 4x4 with LOW mileage) about a year later through friends at $12k. I am currently hauling with this rig and LOVE it. Trailer is paid off and truck will be paid off this year.

I'm casually thinking of a small LQ, which I would have to borrow for. But I'm not sure I'll ever get one. It is not an essential, but nice to dream about. :)
 
#11 ·
I've only had mortgage and vehicle loans all of which got paid off early. Not overextending yourself with debt frees up money that can go into savings so that you can afford to pay cash for hobbies. It helps when you're willing to bide your time and wait for the right deal. I've done that with horses, saddles & horse trailers.

Working in the banking industry during my working career showed me a lot of the horrors of what happens when you live on credit. It usually doesn't end well.
 
#12 ·
The short answer is: Yes, on occasion.

I have two very expensive hobbies: horses, and string instruments.

If I would save up to buy a string instrument I would be waiting for years, same with horses. (Well I assume because to date my most expensive horse was $1,000 even, I tend to pick up the diamonds in the rough before I pick up the $12,000 animal.)

My rule of thumb about borrowing for anything (and one I think many people look over) is I must have at least 45% - 75% down. I just bought a brand new cello. Not top of the line but pretty pricey, not something I can easily justify as that for me is JUST a hobby. However I had 80% of the total to put down on it. I used a credit card for the rest and had it paid off the next two weeks.

As for horses and getting loans.....

Horses are both my hobby AND my career. I make enough working with horses to keep me comfortable, and I'm not a huge spender, cello aside. While I personally won't spend big bucks on a horse and am happy with my $1,000 animals some clients do spend those big bucks which is okay.

IF I were to decide to go for an expensive animal (and show/breed) I probably would borrow. BUT I would make sure I had at least 45% - 75% down, could take it off my business expenses and would have a nice profit off of the animal in some way. It would be for my business first and foremost, and any pleasure I got would be a bonus.

The other factors I look for when borrowing are interest rates and how reputable the bank is. I have a really great relationship with my bank, they know I pay my bills I have excellent credit and I've never even been late on a payment. Ergo, I get a pretty decent interest rate and a little bit of leeway on my payment schemes. (For instance if I'm going to be able to pay but six hours after it's due, they don't count that as 'late'.)

I think constantly about the long term finances for my business. It costs me more to run horses than it does to own them so I have too. Every big purchase is made with strict conditions on my part. There's no issue with borrowing in itself. It has been very useful for letting me buy things but make it easier to pay in chunks.

Whether it be for my hobby (music) or my business (horses) being able to pay a small amount off over time (and improve my credit) benefits both of my accounts in the long run because there's ALWAYS enough for a 'rainy day' fund as well as enough to pay off all the bills immediately should I need too.

All I say to my clients is "Planning, planning, planning. Have enough down that your payments will only take a couple of weeks (or months) and put a little on every week and never ever say, 'I'll pay it later'."
 
#14 ·
No, but then I never borrow for anything whatsoever (including my house, but that had a lot of unusual circumstances which made it possible). I always save up and then pay cash. That limits me to what I can afford, which is, to my mind, a great excellence. I would never in a million years borrow money for a discretionary purchase like a horse.
 
#15 ·
Having been on the thread you mentioned, you know my answer on the horse part! :lol:

As far as a trailer and truck, I feel that borrowing for purchase on them is different in a lot of ways. They are going to keep their value for longer than a horse would, they don’t get sick or injured – which brings me to my next point. You can also insure a trailer in case it gets damaged or stolen – you can do the same for a horse, but it’s trickier and usually not worth it unless the horse is worth some serious change. You are also going to be paying less in interest on these items if you do have to borrow for them since auto and trailer loans are based, again, on holding the title to the item until it is paid off. If you lapse on payments, the lender can repossess the item and sell it at auction to recoup their loss.

Borrowing for a horse would be feasible if your business consists of needing a horse to perform it. A lesson barn might be able to use a business loan to purchase lesson horses and tack, or a trail riding stable purchasing horses for guests to ride; a carriage company that books weddings or other events might do the same for horses and carriages, or a breeding barn for a stallion of a certain line who brings in decent money for stud fees.

However, those horses are “working” to pay off their debt in that instance. It’s still a high risk to borrow for it, but usually in that case there is a business plan and an expected income range to be met after so much time has passed- we’re not talking small potatoes or somebody who is dinking around with it part-time. The horses’ presence is bringing in money for people using them, so in a sense they are how you are making your money in the first place. Under that umbrella, you could even insure a horse for a certain amount (though take that with a grain of salt- I’ve never been in a business like that so I don’t know if anyone has actually done so).

A larger horse business is also operating as its own entity many times – an LLC or suchlike – where the business debt does not fall squarely into the lap of the owner should something fail. A personal loan is slap-bang right on your lap if something goes amiss, and you might be hurting from misusing it for YEARS if you don’t manage it properly.

Be that said, I absolutely would encourage someone to borrow as little as possible for any debt, but sometimes it’s unavoidable in certain circumstances. For the vast majority of us, horses are hobbies and pets – not our livelihoods or our business.
 
#16 ·
I've never had to borrow for a horse, but I've purchased cheap horses mostly. Lol. Horses are a requirement for ranch work, so I actually do need a horse. It is not a requirement that the horse be valuable though. Value is where the hobby comes in for me. Good bloodlines and the ability to show down the road are the hobby part, and I probably wouldn't get a loan for a hobby.

I have gotten a loan for a truck and trailer, but these too are mandatory...
 
#18 ·
It's a funny thing that when you save up a large amount of money it takes a lot of work to achieve it. First you get little expenses that make you question if you should put aside the amount each week/month for the savings. Then there's that big disaster/thing/whatever that suddenly appears that aims to take all the money you've just saved up in one go.

Taking out a loan for a single big expense tends to get around that; sure you're still paying the same amount (actually more) in the long run; but in the short term you've got repayments that have to be made in smaller amounts and nothing can take away the big reward before its due (because you've already got it).



Of course the warning is that it very easy to get into debt; especially because if you miss a payment window you get stung with huge interest (although its important to note that many times you can avoid this IF you contact the group you're repaying in advance and get in writing/email confirmation that you can miss a repayment - it might only work once or twice depending on the duration of course).


Horses also add something many other markets don't have; exclusivity and limited time frames. Granted there is always another "perfect" around the corner; but at the same time if you want something very specific chances are it won't remain on the market forever. So there is additional pressure/enticement to wanting to loan for a hobby.




In the end its a personal choice; you can pay now and repay slow or pay later and save up. We all have to make that choice ourselves. i would say though that for any repayment system you want to make sure you can more than cover the costs; you want a safety net between what you earn and what you pay out at the end of the month so that you don't leave yourself with nothing. If you do then you'd run a high risk of missing those payments and landing yourself with ever increasing debt.
 
#19 ·
In the end its a personal choice; you can pay now and repay slow or pay later and save up. We all have to make that choice ourselves.

I would say though that for any repayment system you want to make sure you can more than cover the costs; you want a safety net between what you earn and what you pay out at the end of the month so that you don't leave yourself with nothing. If you do then you'd run a high risk of missing those payments and landing yourself with ever increasing debt.
Wise words, indeed. :thumbsup: Bears repeating ... often.
 
#20 ·
Borrowing means that you pay a large surcharge (aka interest) and take on the risk that you can't pay it back, all for the privilege of having something now instead of later. In some cases this makes sense, but these cases are mostly confined to business, in which you often must take just such calculated risks in order to maintain or build your business.

Something that is purely a hobby? I don't think so. For me this is more a moral issue than anything else. I so prefer freedom from debt and being beholden.

If you want to go into debt so you can 'advance' in your hobby, I believe you should think a bit more carefully about what advancement really means. If you have gotten to the point that ordinary-priced horses can't give you what you need, to me that's a weird place. If you are as great as all that, why don't you turn a nice prospect into the finished costly horse of your dreams?

But that is just me. I know that for many, many people, not just equestrians, one of the great motivators in group enjoyments is playing the game. Not always necessarily winning, but simply playing, and there is very often a big and ever-increasing entry fee -- the right horse, tack, trainer, clothing, etc etc. in order to make progress -- which is also a huge part of playing the game. Otherwise, you are relegated to the ranks of the pathetic losers, the uncommitted, the flakes; no one worth even speaking to. I know how it goes.

Obviously my point is that if you have to go into debt to keep playing, is this game really in your interest to continue? Only you can answer that.
 
#21 ·
If you want to go into debt so you can 'advance' in your hobby, I believe you should think a bit more carefully about what advancement really means. If you have gotten to the point that ordinary-priced horses can't give you what you need, to me that's a weird place. If you are as great as all that, why don't you turn a nice prospect into the finished costly horse of your dreams?
I guess it depends what you call an 'ordinary priced' horse....my ordinary is up to $3200, which is what I paid for Gibbs, my most expensive purchase.

Again the English horses I see advertised, who are at a higher level, being advertised in excess if $10,000, do people really have that sort of cash available? I would struggle paying that much anyway, borrowing or not, but I'm left wondering how people fund themselves...
 
#23 ·
Everyone's 'ordinary' will be a little different obviously. I think up to about $5K is 'ordinary' these days.

Truthfully if you can't afford a $5000 horse it's not that likely you can afford to keep a horse anyway, unless you have some kind of special deal going on.
 
#24 ·
That is strange thinking to me, I have never been able to afford to pay $5000 for a horse, simply because I need to have that buffer to keep one, $5K is a lot to pay for me, as I say Gibbs was my most expensive at $3200...

I'm still struggling to see how a young up and coming rider takes that next step without rich parents, or some sort of backing
 
#27 ·
I wouldn't borrow to buy a horse ever. I've never borrowed for a car either and hope never to. I don't think it's smart to borrow for something that isn't really making you money. A house or business loan makes sense because, for a house at least, you're paying off something that should grow or maintain value I definately. There are few ongoing costs in comparison to purchase price. Improvements add value.

Horses cost a lot to buy, and then they cost a lot to maintain. Each year I pay about the same as the purchase price to maintain my horse without training or anything. I will not ever be making money from him. Most people, even with project horses, will never make money.

The problem with a loan is that first accumulates interest, raising th purchase price. Second it eats into your weekly costs when you're already not too flush.

The way I see it lets say a horse costs $50 a week to maintain, not including training or tack or even associated costs like fuel to get to the horse, time etc. plus let's say a loan of $5200 ie $6000 incl a year of interest paid back $100 a week. If the person were to not buy a horse they could save $150 a week - $7800 in a year. If they pay the loan over 2 years at $50 a week that's $5000 in a year that they could save by not having that horse or loan.

If you have to get a loan for a hobby in my opinion it means that you can't afford it. Wait, save and buy later. And yes a young rider can't afford to progress competitively, but that is because life is tough. Horse riding is not about equality and most people are never going to have financial resources to properly compete. That doesn't mean a young person should turn to debt.

I'm thinking about getting a new car soon, and taking out a loan, partly because they field I plan to work in comes with special tax free opportunities for loans, however I would not feel comfortable borrowing anymore than I could pay back in one year.

It's hard to wait things out and save, but I think that for things like horses it's the best thing.
 
#28 ·
I would never keep a large amount of money in a savings account, money isn't doing anything in there. So when I have a big purchase to make, like a new horse trailer or expensive horse, I use my line of credit, then cash in on some investments. Now if I had no investments or line of credit, nope, I don't buy nothing I can't afford unless it is something that can make me money, like a house or some property.
 
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#29 ·
I borrowed to buy my first and, as of now, only horse. I was able to afford the daily expenses, including boarding, but the owner of the horse was asking for an, honestly, unreasonable amount and I was desperate to get nobody else, but the aforementioned horse, for personal reasons. As the owner was advertising the horse and getting potential buyers to visit him, I knew I could wait no longer, so I took a loan of about 2200$.

I didn't feel very comfortable about it, to be frank, but I could afford the monthly payments and, after a few months, I succeeded to do the only thing that had me convinced I could risk taking the loan - sold a property and thus gained the necessary funds to pay off everything (and invest into savings). If I hadn't had this chance, I doubt I would have really taken the plunge and borrowed that money - and it's a lot of it, by the (rather poor) standards of my country.
 
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#31 ·
I have never borrowed to buy a horse, if I don't have the money, I save it up but I am good at saving. I also don't ever spend much for a horse and have been lucky to get healthy sound horses that usually came with bad habits and bad habits were something I could correct and have a good horse.
I did take out a loan once to buy a truck but had the loan paid off in less than a year but continued to put away the money in an account so I was sort of making payments in advance to I had the money already saved for the next vehicle.
I don't borrow to buy trailers or tack but I am careful to look around and find good deals on good used equipment.
I really don't like to owe money, I am from the old school, if you don't have the money save it up then buy.
 
#32 ·
I might add that I have gone to some good sized horse shows with my old truck and trailer and pulled in and parked beside some pretty impressive and expensive outfits but my horses didn't care that they had the oldest trailer there, they always knew which trailer was theirs and went right to it past the lovely ones.
We also managed to get our share of the ribbons sometimes more than our neighbours. My horses self loaded into their old trailer while on either side of us horses were taking ages to coax into their trailers.
 
#34 ·
Well... managing money is not in my portfolio of skills, although I am working on it. I have just switched tax accountant/financial planners, in hopes of getting better advice. Everything in my financial life is so extreme; I routinely write business checks for $13,000.00.. $20,000.00, and then have to tear apart the truck seats to find coffee money.

I swear, it's the manic-depressive father thing: one moment you own a brand-new Hasselblad camera that you found at a flea market, and the next you are selling it to pay the dentist. We always did things without enough money to actually do them. Doesn't mean it's smart...

BUT... I've kept at least one horse at a time for the last 30 years, and they've never gone hungry, or unkempt, or not had a farrier or vet regularly. And I would borrow to buy a horse, within reason. I hate selling or re-homing a horse, and I would rather borrow and get a horse I wanted, rather than a horse I could afford, again, within reason. Horses cost SO MUCH to keep in time and money, that having a horse I don't really want feels impractical, and if I can be sure to pay the loan off within a reasonable time, I would do it.
 
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