Monday, May 18, 2015

Having it all - and Having nothing.

Like anything else, in RVing, it is possible to take a good thing too far!

We have been traveling to the Keys for a couple of weeks with our tiny camper trailer.  This was just a getaway for a while.  We usually spend about four months of the years this way.  For most folks, two weeks is about it.

Why is this?  Well, we have a tiny camping trailer that cost $8300 used, and a cheap Japanese pickup truck, all paid for.  I don't have to go back to work on Monday to earn money to make payments on toys.

Others in the campground have different ideas.   It is not unusual to see a large camper costing $100,000 to $500,000 (or more) with several cars parked next to it - including BMWs and Mercedes.  In addition to this, are motorycles, scooters, bass boats, jet skis, and the ubiquitous golf cart.  Apparently, riding around in a golf cart (not for golfing) in the campground is the height of entertainment.

I am sitting next to our tiny camper trailer and adding up the amount of motorized depreciating goods at each site around us.   And on each site, is literally hundreds of thousands of dollars of equipment, sitting around baking in the hot sun and getting rained on in the rain and depreciating by thousands of dollars a month.   Literally, some of these folks have more "invested" in camping toys than they have in their principal residences.

So what's the harm in all of this?  Lifestyle choice, right?   Well, that's true, in America you can do as you please.   But these choices are often toxic ones, as the hazardous outcomes are delayed by years or even decades.   So the victims are having fun now - but paying for it later.

As I noted in another posting, most RVs are poorly, poorly made.   The fiberglass walls delaminate over time, leaving unsightly bubbles which are testament to the leaks in the unit.  Rubber roofs bubble up and then crack and leak - often leading to the delaminating sides.  The colorful graphics fade and mildew.   After a decade or so, most of these units are trashed.   And yet many are financed on 20 year notes.

And I can see this on a neighbor's rig.  The rubber roof is starting to chalk up and run down the sides - and wrinkle and bubble at the edges.  Parts of the fiberglass laminated sidewalls on the slideouts are bubbling as the glue holding the fiberglass to the luan plywood starts to fail.   A clapped-out, cheaply made "bread truck" Class-A?   Hardly - a five-year-old "Rock Star Bus" Motorhome costing a quarter-million or more, new.

And each RV'er I talk to says the same thing.  "Well, that will never happen to my rig!  I maintain mine properly!   I treat the rubber roof each year with a cleaning compound and that will keep it from leaking or bubbling up!"   But the reality is, it is just time that wears these things out.  Time and the flexing of the multitude of joints as these things go down the highway.

Everything wears out over time.  Cars get old and go to the junkyard.   And no, buying the right brand of motor oil isn't going to get you to 300,000 miles - it is just going to sell motor oil.  It is the latest marketing gimmick - selling cars and car care, by implying that just anyone can make a car last forever, "if they have the inside secret!"   Same folks selling the "trick to the tiny belly!" and those hot penny stock tips.

The reality is, any piece of machinery or even a building or whatever can be made to last forever, provided you throw enough money at it.   But practically speaking, there comes a point where the cost of repairs exceeds the value of the item, and it is time to start over.

Replacing the rubber roof on a motorhome can cost thousands of dollars (and is a time-consuming pain in the ass).   By the time it is necessary to do this, the motorhome is worth only a few thousand dollars - and many other things need replacing as well.   Thus, it becomes time to cash it in.

And there is the rub.   It is money over time - the 4th dimension of money.  You finance an expensive motorhome, boat, or whatever, and the payments are equal for all the years of the loan.   However, for the first years, you have a nice shiny new motorhome.   For the last years, you have a dilapidated worn-out piece of crap.   Same payment.   And oftentimes, you are "upside down" for most of that loan.

So the folks I see in the campground with all the toys and cars and junk (who all have to leave on Sunday night to get back to work Monday to pay for it all) don't yet realize how much they have spent on all this crap, as they have made only the payments on these things from their bank account, but have not realized the loss in terms of depreciation over time.

At the end of the day, the $250,000 motorhome is worth $125,000 after five years.   And that represents $125,000 subtracted from your net worth.   But since folks see things only in terms of monthly payments, they think, "Well, it is only $2000 a month!" which doesn't seem like a lot of money for a house on wheels - right now.   In five years, or ten years, when it starts to wear out, well, it starts to seem like an awful lot.

Maybe if the RV had a "depreciation counter" in LEDs on the side, they could understand what I am talking about.   A $250,000 motorhome depreciates about five cents a minute, for the first five years (actually very quickly the first years and then slowing down over time).   I would be scary, to be sure, to watch such a clock tick by and run out your bank account over time.

One poor fellow in the campground was starting to feel the effects of time on his RV investment.  He had a nice trailer which was now ten years old and starting to show the usual signs of trouble.   And he had two tow vehicles, one to tow the trailer and another to tow a flatbed trailer carrying the wife's car, golf cart, and motorcycle.   A lot of junk to be hauling around camping.   And one of the tow vehicles, a Ford diesel, was firing on only seven cylinders (most likely the notorious cavitation problem with the powerstroke diesels - if you don't add water wetter to the coolant, it cavitates around #7 cylinder due to an idiosyncrasy in the design, and eventually eats through the cylinder wall).   So now he has to buy a new truck.   Or maybe just make do with less motorized shit in his life.   Myself, I would (and am) choosing the latter.

We've managed to avoid a lot of these problems by insisting on paying cash for "toys" in our lives.   It is tempting to sign those loan documents for the "low low monthly payments" but we've said "No" for more than one reason.  To begin with, usually loan rates for "toys" are higher than rates for ordinary car loans or mortgages.   Secondly, the depreciation on these things is murder, and it is all-too-easy to get "upside down" on an RV or boat loan and end up not being able to sell these albatrosses when you want to.

I guess, too, my thinking is that as "toys" they are not really necessities.  And as such, it is really sort of scandalous (at least to me) to leverage myself so I can have nicer toys - at the expense of my future self.

And since we don't have payments to make, we don't have to rush back to work on Monday morning to earn yet more money to pay for depreciating assets.   We can afford to stay all week - and maybe the next.

The guy next to us, who "has it all" has his motorhome buttoned up for the week and his boat under cover.   Come Friday, he'll fight traffic down the causeway, dunk the boat in and try to get in two days of fishing, if the weather cooperates.   It is a great way to spend a weekend.   But a lousy way to spend money.

It is possible to "have it all" and have nothing.  It is possible, too, to have less and end up with more.