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Moving up from leasing to owning
Topic Started: Feb 6 2008, 02:26 PM (556 Views)
french_toast
We're on a bridge, Chaaaaaaaaarlie!
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I've been leasing for the last couple years and am thinking about moving up into actual ownership. It's something I've wanted really badly for the last few years, so I'm thrilled at the prospect, but I also get freaked out a little when I think about the commitment and responsibility!

Cost-wise, I've priced out board, training, supplements, farrier, and insurance and can certainly afford it. In my leases I've ridden as much as 5 days a week (and showed every 2-3 weekends), so I am aware of the time commitment. I'll be showing at some point, but I'm not sure if that'll happen this summer (at least, not larger AA shows), so those costs won't really factor in yet. I've never had any medical problems with my leases (knock on wood), so I'm worried about something happening and not being able to afford it (or having it be catastrophic and career-ending) and I'm slightly panicked that I'm forgetting something really important that will render me broke and unable to care for the horse.

I suppose part of my worry is that I had made a resolution to pay off my CC bills this year, and instead of being really aggressive and paying what amounts to the cost of keeping a horse per month, I'd be taking a lot longer to pay them off. I was expecting to start looking next year sometime, but this one kind of fell into my lap and now I'm not sure what I should do.

Is my worry normal? Can anyone spare some advice or share their experiences with doing this? It feels so strange to have this opportunity and yet be afraid to take the leap. I'm kicking myself for being so hesitant when it's something I've wanted for so long...
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Onelanerode
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I wish I knew what to tell you, but you have my empathy!! I'm in the EXACT same situation as you, pretty much. I was just getting ready to post asking for thoughts too. :brickwall:

Been wanting to buy something for a while (it'd be my first horse), but the timing wasn't right w/ other life commitments and such ... we were planning to pay off a car loan early and then save up for the horse, and then this cute mare comes into my trainer's barn, and damn if she's not exactly what I'm looking for. Quiet, smallish youngster, just a real sweetheart. We could afford her, I've done my homework and priced out expenses, etc. It would mean taking money out of savings and paying off the car loan on time, etc.

I rode her and she was really, really nice. I liked her. A lot! :cloud9:

I don't know what to do ... we weren't looking at buying till fall, at the earliest, and so now I'm looking around to see just what else is out there in this mare's price range, and I'm not finding anything that's comparable to this mare, at least not on paper ... and I've only found maybe two that I liked well enough to go see. I'm waiting on e-mails from their owners.

Part of me feels like either I should just buy this mare now; the other part says stick with the original plan and wait till fall.

I HATE this state of unknowing/indecision ... so does DH. :unsure:
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Fish Cheeks
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It is a really exciting time to move from leasor to owner! I think it is very normal to be nervous about the situation - it sounds like you've done your homework, though.

How long would it take you to pay off your credit cards? Can you lease the horse that you are thinking of buying while you finish paying off your cards?

Insurance should cover any major medical so I wouldn't worry about major catastrophes - they'll either happen or they won't, no matter how much you try to prevent them.

The one thing that you didn't mention is the cost of new tack. Even after buying a horse, you can spend up to another $5k just outfitting your new horse - halters, blankets, wraps, bridles, saddles, pads, boots, etc... and you KNOW you'll want to shop!!

There have been times that I've bought a horse because I was so anxious (actually my first one - from leasor to owner) and in hindsight it wasn't the best decision. Looking back a year later I realized that one year isn't that much time to wait. Paying off credit card bills is important and if you are really in debt, I would say wait. There are lots of good horses out there and they will still exist next year.

But if you can swing it with your credit card bills and are prepared for the extra expenses, then do it! :cheer:

I know, I'm not much help, am I?? :teehee:
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snaffle
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It's totally normal to have that feeling of panic. I had been shareboarding for a while and really wanted my own horse. There was a mare at our barn and I made an offer for her, but I was really nervous. When I found out there was commission on top of what I was already agreeing to pay, I totally got cold feet and decided I wasn't ready. :(

Three months later, I bought Tyler for half as much as the mare. Even though he was relatively cheap compared to the fancy horses other people in my barn were buying, I felt really panicky. It's kind of like buying your first house...you think, what have I done? How am I going to afford this? But then you just get used to the bills. :lol:

Good for you for not taking this lightly. It's a big commitment and it sounds like you've given it a lot of serious consideration.

I would definitely get major medical coverage.
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OpticalIllusion
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Unfortunately, there is no way of predicting if something major will happen to your horse that will cost you tons and tons. If it makes you feel any better, Ive only ever had one horse (we run a larger lesson/ show barn) that has had to be completely retired. Try to shop around and find a good vet that has different options to fixing different things, and doesnt cause an arm and a leg. Learn to give your own vaccinations and wormer. Insurance is a great idea. At least major medical and mortality.

If you can comfortably own the horse, without worrying pay check to pay check if you are going to be able to afford something, go for it. Horse ownership is a wonderful thing. Its an experience you cant get anywhere else.
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Delia
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Very exciting! It sounds like you've considered everything, but it's still a leap of faith. The only thing I would add, is that you should ask yourself how you would feel if your new horse developed a career-ending problem, and what you would do with him/her if that happens. That happened to me when my horse was 12. He lost vision in one eye, and decided that jumping with only one good eye really wasn't his cup of tea. So we went from showing in the A/Os to hacking around fields and trail riding pretty darn quick. I was committed to keeping him, have never regretted it for one minute (he's 20 now and going strong), and enjoy him every single day. But it was bad timing when it happened. And with horses, you must always expect the unexpected!
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french_toast
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Delia, I think that's part of the concern - I love to compete and I definitely have showing goals, but if something career-ending did occur, I'd also be committed to keeping the horse. So I'd be very disappointed not to be able to show anymore but would accept it as that's part of the responsibility of horse ownership.

In thinking about this the past few days I have realized my concerns are more over the delay in paying off my bills. It would take me the rest of this year to pay them off the way I have been, but if that extra money were going to the horse, it would take me quite a bit longer to do that. I would certainly not be living paycheck-to-paycheck, but it would take me twice as long to get debt-free than originally planned. Luckily I have everything but blankets for the horse (unless the bridle is the wrong size or the horse's back is one of those hard-to-fit types), so that cost outlay wouldn't be thousands of dollars. The other hard thing is that the price of this one is next to nothing, and my horse fund right now is fairly small - I'd be getting a really quality horse for UBER cheap, and if things didn't work out, it would probably make a great resale prospect.

Hmmmmmmm....what to do!
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vxf111
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I feel a huge sense of panic EVERY TIME I buy a horse. It never goes away. It doesn't mean buying is the wrong thing to do. I think it's only natural. I'ts a HUGE committment and you invest yourself in your horse. I think the worry is NORMAL. If you've looked at your finances and you truly can afford it, then I wouldn't let the worry stop you.

You can ask OpticalIllusion. I don't think I breathed from the moment I got off Somerset he day I tried him until the moment he stepped off the trailer in NJ. I actually had a little breakdown in the car wondering whether the owner would, in fact, sell him to me! And then the vettings... and the waiting... and the worrying... There is so much that can go wrong, so much uncertainty...

But when it's right, it's magic. Despite all the worry... buying each of my horses was the best decision I ever made.

Even though I am currently sitting on an inflatable doughnut pillow. Thank you Shane. ;) :pissed:
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Won for Me
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vxf111 said it really well. If you are not worried, you are not taking horse ownership seriously enough. I have three right now on full board. It takes some budgeting. The retired guy spent 4 days in the vet hospital in December. But, I am not going to sell my horses and sit on my couch so nothing financially challenging ever happens again.

I knew a woman who saved and saved so one day she could have a horse. She had her own place (nothing fancy but a double wide with some pasture), but she would not get a horse until she had so much put away. I would go to horse shows, lessons, clinics and just have such fun, but she was waiting and waiting until she felt secure enough. She was a little older than I am and I always wondered if she ever took the leap. Life can be short and unpredictable.

Some people actually sell their horses, too. So, it does not have to be a life sentence if you get into it and then don't think you can handle the finances. I, of course, just collect them, but I have heard of others who sold them for money...I don't know...could be a rumor. ;)
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Jersey Fresh
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I don't know but I'm going to disagree with most of the people who posted already (please dont flame me!).

I think you should pay off your debt first. I want a my own horse more than anything, and I want to buy one as soon as I finish school this spring. But, I will probally wait until I have a bit of money in emergency savings (several months salary) before I do so. I don't have any debt other than a $200 MC balance from my dogs surgery (well and my car which I owe $$ to my parents) but I also don't have much in savings. The little that I do have will probally be drained this summer on travel and moving myself cross country.

You can't live for the "what if"s but you do need to keep them in mind. If you pay off your debt now, before you make a huge investment, then you will be better off financially should something happen in the future. What if you lose your job? If you have the horse AND the debt, its going to make things that much harder. What if an emergency vet bill or medical bill comes up? You will just dig the hole deeper.

I tend to be conservative with money though, so what do I know. ;) My boyfriend tells me constantly that I worry too much about money and savings. But I guess I think that you have to put your needs before you wants. My vote is to take a few months and take the money you would spend on the horse and put it towards your debt. If you can't get rid of it, make a big enough dent it in that should something happen you don't dig yourself into a hole you can't get out of.
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KaliTude
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I know I always sound like Suze Orman, but seriously, can you afford it? If you are carrying a balance on your credit cards then the answer is no.

Right now is not the time to be buying anything when you can't afford it. The test? If you are in credit card debt and you are not maxing out your retirement savings, then you cannot afford it.

We are in a recession, unemployment is going up, and financial companies are facing huge losses forcing them to increase fees and interest rates. If the interest rate is above 0% for the life of the balance, you need to pay the credit cards off. Credit Card companies have the legal right to raise you interest rate, and right now many are raising rates. Right now is not the time to be carrying unsecured debt.
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jn4jenny
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french_toast
Feb 7 2008, 04:05 PM
Luckily I have everything but blankets for the horse (unless the bridle is the wrong size or the horse's back is one of those hard-to-fit types), so that cost outlay wouldn't be thousands of dollars. The other hard thing is that the price of this one is next to nothing, and my horse fund right now is fairly small - I'd be getting a really quality horse for UBER cheap, and if things didn't work out, it would probably make a great resale prospect.

Hmmmmmmm....what to do!

I was totally on the "buy the horse" side of the fence until you posted this. Now I'm zipping my flame suit and giving you the devil's advocate perspective.

Please keep in mind that when I was put in the same situation (albeit with less debt and no credit card debt), I DID buy the horse. It has made things very tight for my husband and I, but every time I see that head over the stall door, I know that I made the right decision despite all the scrimping and saving. Nonetheless, I'm trying to give you some things to seriously consider here that you may not have considered as a leasor.

You THINK the cost outlay won't be thousands of dollars, but let me assure you, it can add up FAST, and many of the expenses involved are things I'd have never considered as a leasor. Blankets rip beyond repair. Horse's backs change dramatically as they get into serious work and/or start growing up (and you'll quickly become FAR more picky about saddle fit as an owner--I used to be a "medium tree fits almost everything" gal, now my horse goes in a semi-custom.) You start learning about things like equine nutrition and suddenly you're re-thinking the feed plan, and that often means more $$. You'll need a tack trunk, and $200 in first aid/medical supplies, and extra lead ropes, and hoof oil, blah blah blah. Even the most frugal folks I know (that would include me) spent upwards of $1K on supplies in the first year, and anyone who bought a saddle spent more. A few of them attempted to economize by purchasing a saddle that would "do" for a little while, but ended up spending more in the long run when they took a loss on that saddle's price AND ended up buying another more expensive saddle (that they were now in a big fat hurry to buy because horsie was back sore, meaning no leisurely weeks-or-months-long saddle search possible.)

And let's not even get into the increasing cost of board/vet/farrier/etc. I have been incredibly lucky in this department, but even so, most barn owners in my area are reporting cost increases of 20% or more. The board cost of today will not be the board cost of tomorrow, and even a $50 increase per month equals $600 more per year. $600 extra on your credit card balance per year = upwards of $100 additional in fees. When you budget, be sure to over-budget every category, because pretty soon those won't be over-budget figures at all.

Also, buying a horse and saying "I could always dump him as a resale project" is a very, very, VERY dangerous game to be playing in the new horse economy that emerged over the past 2-4 years. With the dramatic rises in hay/gas/feed/shavings/everything costs, a lot of the middle class buyers who used to buy these high-four-figure and low-five-figure horses have literally disappeared from the market. If they're still involved in horses at all, they're buying the sort of horse you're talking about: uber cheap steal of a deal instead of the "flipped" horse, and those steals of a deal are far more common these days than they used to be. I don't ever recall a time in the last 25 years that it's been HARDER to get rid of a resale project horse, even a nice one, and it's extremely hard to get rid of one at a profit unless you've put significant show miles on the horse.

I do agree with Won for Me's point that some people wait far too long--until they're incredibly financially secure, but possibly also too old to enjoy their flip project. But there's a difference between waiting 10 years and waiting merely one more year. I can assure you that the horse market is only going to get softer, not harder, and in a year, there will be even MORE uber-cheap quality animals for you to choose from.

And while we're thinking about the future, you may also want to think carefully about how this horse will fit into your much larger life plan. Of course there's the fear that the horse could go unsound tomorrow, but there's also the chance that it will stay sound and useable for 20+ years in the future. What will you do with the horse when you get pregnant/have young children that limit your riding time? What will happen to the horse when you retire from work (do you plan to travel in retirement)? Will you be likely to outgrow this horse's abilities when the horse grows older? For example, if the horse can no longer go above 2'6" at age 18 or 20 or 22, will you come back down to 2'6" to accommodate him? In my mind, a very key question in this department is whether the horse will have lease potential when it gets older. If it's a hot, flashy jumper type, maybe not. If it's the Adult Ammie Special in temperament, maybe you won't have so much trouble leasing it out. Certainly you can't plan for any specifics that far ahead (after all, horse could still be suitable for your goals until it falls over dead or horse could go lame and need to be retired or whatever), but when you're a middle-classer with a budget, I think it's important to buy the most "what-if-friendly" horse you can find.

Now that I've been a fatalist for a few paragraphs, let me repeat what I said above. Every time I look at my horse, I know that I made the right decision. But I thought hard about all the issues I listed above before I bought him. Good luck to you in making this choice, and best of luck to you whichever decision you choose to make!
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french_toast
We're on a bridge, Chaaaaaaaaarlie!
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Thanks for all the replies, everyone! It's hard to balance what you really WANT with what you really NEED :) I'm leaning on the 'no' side, but this just seems like one of those deals you can't pass up and I don't want to be kicking myself next year thinking I made the wrong choice. But I'm glad I got everyone's input - it's just what I wanted (and needed) to hear.

My credit card bills are leftover from a few years ago, when I first graduated from college and had spent 6 months traveling in Europe. They are not from living above my means since I started working. I've worked my ass off paying them down and am almost there, and as a reward to myself I started leasing and showing last year after "suffering" through once-a-week lessons and dying to do more. So I've been essentially supporting a horse while paying a pretty hefty chunk of my balance per month (4 figures). I know I can afford it - I just want to have my bases covered in case I overlooked some major expense that comes with ownership, and to make sure that this really is a responsible thing to do.

p.s. Kali, I am maxing out my retirement funds and have 3 months' savings set aside. Just because I have a balance doesn't mean I am living paycheck to paycheck.
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KaliTude
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french_toast
Feb 8 2008, 09:39 AM
p.s. Kali, I am maxing out my retirement funds and have 3 months' savings set aside. Just because I have a balance doesn't mean I am living paycheck to paycheck.

I guess we define it differently then. When I have a credit card balance I cannot pay in full every month I DO consider myself living paycheck to paycheck. I would personally pay off and credit card debt asap, if you have saving why aren't you paying off the debt? You can always use a CC for an emergency, even the highest yield savings rarely pay out more interest than credit cards charge.
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french_toast
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Yeah, I have always thought of living paycheck-to-paycheck as barely being able to cover your minimum payment and the rest of the bills, not having 1200+ at the end of the month to dedicate to the CC balance. My savings have been sitting around for a little while, and I've thought of using them to pay more of the bills, but for some reason it makes me nervous because I'd rather not put more back on the cards!
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