How do you fund your flying "hobby"?

Discussion in 'Hangar Talk' started by Matthew K, Sep 17, 2016.

  1. DaleB

    DaleB En-Route

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    Buy or build an experimental. :) If you do, you can do any and all of the maintenance yourself. If you're not comfortable doing it yourself, or want someone to check your work (it's a good idea), you can call an A&P or one of your local EAA tech counselors if you're an EAA member.

    Even on a non-experimental you can do your own routine maintenance like oil changes, tires, brakes, that sort of thing. Of course it's a good idea to have someone show you how to do it right, but you don't need a signoff. For everything else you can do the work under the supervision of an A&P, if you have one you can call who will work with you.
     
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  2. JOhnH

    JOhnH Touchdown! Greaser!

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    I know this won't help you YET, but you asked what we do.

    I pull money out of my savings accounts to fund my flying.

    That is why I saved aggressively for almost 50 years. I always lived below my means and always maxed out my IRAs. I put in a huge number of hours and invested heavily in starting and running my own business. And I married a woman with similar long term goals and desires.

    That is how I can afford to keep my own V35 Bonanza in a hangar and keep it maintained and fueled to go anywhere, any time I wish.

    I bought my first plane (C172) with a 1.99% (tax deductible) home equity line of credit and paid interest only until I sold that house and paid it off. Then I bought my Bonanza for cash.
     
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  3. midcap

    midcap Cleared for Takeoff

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    Like become an A&P?
     
  4. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    All for building an experimental. Really want to do that. It's a definite long-term project, though.
     
  5. JCranford

    JCranford Pattern Altitude

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    Funds are those things you had before you started flying
     
  6. mondtster

    mondtster Pattern Altitude

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    That's what earning a mechanic certificate is.
     
  7. DaleB

    DaleB En-Route

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    True. Some longer term than others. I spent three years building an RV-7 before changing course, selling it and buying the 12.

    You're at K81? I've been meaning to get down there for some BBQ, it's only an hour and a half or so down the river.
     
  8. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    We want to build a Zenith 750. I think that's one of the shorter term deals for a homebuilt, especially since we'd be going bare bones. Still, realistically talking about a multi-year project. I figure I probably need to get a few other things taken care of before I could consider starting on something like that. The timing may work out well, especially if we do it as a "family build" when the kids get old enough to use the tools.

    I'm based at KMKC, but live not far from K81. Let me know if you fly down for BBQ! We like going there.
     
  9. DaleB

    DaleB En-Route

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    Heck, didn't they build a 701 in a week at Oshkosh? :)

    I landed at MKC on my student pilot night X/C. Nice place, pricey gas though. I do need a little X/C time to collect data after changing prop pitch a little. I'd love to do it this weekend, but I have to take an aluminum tube to FL for a week. :( I'll ping you when i get a chance to make the trip.
     
  10. Bill Jennings

    Bill Jennings Final Approach

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    THIS is one BIG nugget from this thread, never borrow on anything that depreciates. So, for most people, their home is the only thing they should have a loan on, everything else should be save up and pay cash.

    Lance, good to see you're still around here!
     
  11. midcap

    midcap Cleared for Takeoff

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    I see. I doubt I would have the free time to do that unfortunately.
     
  12. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    I'm just slow, I guess. :)

    The FBOs at MKC are big bucks, but the self serve pump is about 20 feet from my hangar door and is very competitive for the area. That's part of why we're based there. I'm not sure how transient parking works for self-serve. I see a decent number of transient pistons at Atlantic, which is right next to the T-hangars and only has Jet-A.

    Really, it's a great airport. It's by no means the most convenient to our house, but they've got excellent facilities and everyone I've met who works there is great to deal with. Guys in the tower are excellent, too. Lots of good approaches, long runways...
     
  13. Matthew K

    Matthew K Line Up and Wait

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    Buying your first plane on the home equity line isn't a bad idea actually, I'll consider that when I go to buy my first plane. Even though some people have mentioned on here waiting to buy your plane in cash, in some cases it can be good to instead invest your cash in other things and get a good loan for the plane(when your younger especially).

    I like those V35 Bonanza's. If you don't mind me asking how much did you buy yours for?
     
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  14. Matthew K

    Matthew K Line Up and Wait

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    To me getting the rating is interesting separate of potential financial savings. If I ever get the rating though it will probably be through a part 147 school for the purpose of saving money on a personally owned aircraft/working on friends planes.
     
  15. JOhnH

    JOhnH Touchdown! Greaser!

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    There are no hard and fast rules. Just guidelines, and every situation is different. Just make sure you don't borrow foolishly.

    As for my Bonanza, it was listed for $90k, but a thorough pre-buy from an excellent Bonanza specialist turned up around $10-$12k worth of squawks. A few were air-worthiness issues but most were minor. But I got the seller to come down almost $10k, and I had everything taken care of. So with that, and a few other updates, I have around $!00k in it. Now, if it only had air conditioning, it wold be perfect.
     
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  16. rtk11

    rtk11 Line Up and Wait

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    My wife secretly funds my flying. When she isn't looking, I "borrow" money from her purse.


    The sad reality is that I bought a block of time to help reduce the hourly rental cost of the aircraft. Good deal and happy to be flying, but it's the big spend up front that hurts like heck...
     
  17. FormerHangie

    FormerHangie Pattern Altitude

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    I've heard a number of people say that they drive an old car so they can fly, but I've never been able to make the numbers work on that. If you were leasing a new 5 series BMW every few years, then yes, if you switch to an old car you can save enough money to fly a basic airplane, but very few of us are spending that much on a car.

    If you were to buy a new midsize sedan in a middle trim level every five years, the total of depreciation, maintenance, and repairs is about $15,000 for the five years, according to Edmunds: http://www.edmunds.com/honda/accord/2016/sedan/cost-to-own/. That's $3000 per year. If you go to an older car, you'll spend less on depreciation but more on maintenance and repairs. Maybe you could spend half of that $3000, but when I've had older cars, I never could spend that little. The difference is only $1500 per year, that won't get you a year's worth of tiedowns around here. I suppose I could drop the collision and comprehensive, but that's only $240 per year. $1740 per year isn't even a renter's budget.
     
  18. Matthew K

    Matthew K Line Up and Wait

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    When I pull up that link, including fuel, it says it costs almost 30k to own the honda accord over a 5 year period so....

    Personally speaking, I own a used(older than 10 years also) diesel pickup. Buying used prevents the major depreciation drop that you get from a new vehicle. I maybe drive this truck 10k miles a year at most. General maintenance (I do it myself) Ex: Oil and oil filter change, fuel filter change, occasional transmission flush, tires(last many years) probably doesn't cost me more than $600 a year(this is the high end considering my yearly millage). Being it's a diesel it should be a long time before I have to fix anything major. Also, depreciation is very little as diesels hold their value far longer than gasers. So this way is far cheaper for me. Just my personal experience.
     
    Last edited: Sep 20, 2016
  19. FormerHangie

    FormerHangie Pattern Altitude

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    The $28.5K includes everything, including gasoline, insurance, and taxes. These three things aren't much different used versus new.

    In your case, a new diesel pickup is indeed a pricey item, it's in the price range of that 5 series BMW I was writing about, so yes, there's (hopefully) lots to be saved by driving an older model. I say hopefully, because I had my last two cars 10 and 12 years, and found that at the end of the run I wasn't saving anything, but again, that's on two cars that cost $16000 each, one in 1992 and one in 2002. It was things like alternators and fuel pumps that would fail, never anything internal in the transmission or engine, so nothing major. I drive a little more than you do, but my midsizer sold new for about half of what a diesel pickup would.
     
  20. Matthew K

    Matthew K Line Up and Wait

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    As far as insurance goes, new car insurance is much higher during the first few years of ownership compared to a used. Also, taking a better look at that edmunds table, I'm confused about their insurance quote. Their showing about $2,400 over the 5 year period for insurance costs. A quick search of my homestate shows aveage car insurance being $2,200 a year.

    As far as diesels go, they are incredibly expensive these days, just about completely negating the fuel cost savings(unless you tow a lot). As far as gas cars go though, unless you just have bad luck you should still be saving tons by buying used. Depending on the brand of car though, those larger maintenance costs (like the alternator and fuel pump like you mentioned) should cost less than $200 each(unless you decide to own a Cadillac which is more like $600 for a new alternator, speaking from a family members experience).

    I used to have a 2000 f150, besides the usual maintenance for a gasser of its age, it most definitely saved me money compared to a brand new f150 every 5 years. Different brands cost different amounts over the years to, so there's that.

    Now I will say one thing, if I ever find myself buying a nice luxury car (say $50k plus) I would most definitely exchange it within a 5 year period because after that those cars seem to fall apart. And luxury cars can be really expensive to fix.
     
  21. SoCal RV Flyer

    SoCal RV Flyer Pattern Altitude

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    Just going with liability coverage and uninsured motorist saves a lot on the insurance bill. I pay about $550/year for a 2002 BMW 325i, and California is certainly not the cheapest place to buy insurance! If I were to finance a new car, I believe I'd be required to have full-blown collision and comprehensive. Couple that with the depreciation hit, where a typical new car loses, what, 40 percent of its value after 5 years, and you're paying some serious coin for ground transportation.
     
  22. JCranford

    JCranford Pattern Altitude

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    Ya, its not a 'bad' idea, it a horrible idea. You want to put your HOUSE at risk to buy a plane?? Better YOU than ME!
     
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  23. Bill Jennings

    Bill Jennings Final Approach

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    It's not bad in that:

    1.) You're borrowing against an appreciating asset, much better than against one the depreciates.
    2.) Some portion of the interest will be tax deductible.

    IF you have to borrow to get a plane, it's not a bad way of going.
     
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  24. FormerHangie

    FormerHangie Pattern Altitude

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    Like I said in a previous post, collision and comprehensive on my car is $240 per year. That's on a two year old Fusion. Previously, when I dropped the comprehensive and collision on my old car, it was about $200 per year on a nine year old Focus. When it was just my wife and myself, we were paying $1240 a year for full coverage on two late model cars. We've since added a teenaged daughter, so it's now about $2800 per year for all three of us.
     
  25. JCranford

    JCranford Pattern Altitude

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    Different strokes I suppose. IF I borrow for the plane, it wont be against my house. The house is only an appreciating asset if the market says it is. Normally yes, but no guarantee. Ill borrow against the plane. That way the plane's the only thing at risk to fund the plane hobby.
     
  26. FormerHangie

    FormerHangie Pattern Altitude

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    The alternator that failed was $240 over the counter from the dealer. You can get a somewhat cheaper one from Autozone, O'Reilly, etc, but plan on replacing it within a year or two. I've had no luck with no name parts. When the alternator failed on my wife's Odyssey, it was $650 installed.

    One day, on my way to work, I stopped at the school bus stop to drop my daughter off, and my car wouldn't start. I had to have it towed, and it turned out to be the fuel pump. The fuel pump itself was $300, and there was $400 labor to replace it, as it's on top of the fuel tank. The tank has to be drained and lowered to get at the fuel pump. I have no facilities to do either of those things, I don't have a place to put 10 gallons of gasoline and I can't get the car high enough in the air to drop the tank anyway. That's assuming I have the time to do it at all. I can handle most maintenance items, but when the car breaks, I generally have to pay to get it fixed, and it's not cheap.
     
  27. neilw2

    neilw2 Line Up and Wait

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    For me I funded my plane expenses by buying a rental house.

    When I got out of college 2008 it was in the midst of the financial crisis. I graduated from pharmacy school in May, bought my 2 family in June. I remember sweating through my board exams wondering how I would afford my mortgage if I failed and didn't get my license to practice. Fortunately all went well- I passed and my house has seen a very healthy increase in value.

    Now I rent it out, managing the property myself and make a little more on it than mortgage + expenses + repair fund so I was able to siphon some off for my 1/4 share of my plane. Plus I still got my retirement out of it someday.
     
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  28. Joshuajayg

    Joshuajayg Line Up and Wait

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    I couldn't afford my aviation hobby so got my commercial and fly for a living. Now I can't afford anything.
     
  29. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    This is why people like me can drive old luxury cars that we buy for pennies on the dollar. :)

    Wife's daily driver is a '97 BMW 740iL. My daily driver is an '03 Mercedes E55.

    We've had the BMW for about 2.5 years and I've done a lot of work on it, but most of it had to do with a suspension rebuild (not surprising at all at 140k on one of those) and then the water pump exploding resulted in me also changing out the timing chain and guides, because I had taken a good sum of the required bits apart already at that point. Since I can do the work myself, it wasn't time consuming but not a huge deal. The Mercedes has been a better car, although I do need to fix the headlights on it (only the high beams work).

    Running the math, they're cheap to own. Even factoring in, purchase, parts and a $0 resale value, the BMW has only cost us about $250/month average (plus gas and insurance, which is cheap since it's not worth enough to have collision on). Resale will be slightly above $0 (although probably not much), and that number keeps on going down. The Mercedes I'm doing on the "drive till it explodes" maintenance plan, but we also don't drive far with any regularity - that's what the plane is for.
     
  30. DaleB

    DaleB En-Route

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    If you're worried about losing your house on a home equity loan deal, then you shouldn't get a home equity loan. I'm paying a little under 2% on that loan, which I'll have paid off before the rate bumps up due to the low interest. I look at it as extremely low risk. If things go badly I can sell the plane for more than I paid for it. It's insured for more than I paid for it. If tomorrow morning the government bans personal aircraft and I can't sell it, I can still pay off the loan and use it for yard art. Getting a loan secured by the plane would have essentially been a signature loan at three or four times the interest. The HE line made a lot of sense, and I'm not worried at all about being able to pay for it.

    My advice would be to never borrow money if you have even a slight concern about being able to pay it back. It's easy to screw yourself with borrowed money if you're not careful. We plan for the worst case and take a very conservative approach, but the market has changed a lot over the years and it pays off if you're able to adapt.
     
  31. EminiTrader

    EminiTrader Cleared for Takeoff

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    You've been given great advice: Live frugal, work hard, save all you can. ONce you own a plane the savings will stop :)
     
  32. linuxjim

    linuxjim Pre-takeoff checklist

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    For me owning an older car isnt the one-for-one that allows me to own a plane. Rather, it is representative of a lifestyle that allows it. I way underspend on what I could get in a house. Dont remodel something every year. The price point for a car is whatever I can pay in cash. I don't carry credit card debt. I use a 6 year old smart phone. I don't have to have every new gadget, etc. etc. It's really about living a lifestyle that is way below my income so that I have enough left over to fly.

    Sent from my XT1080 using Tapatalk
     
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  33. charheep

    charheep Pre-takeoff checklist

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    You have the right idea. You never have to worry about having too much money. LOL
     
  34. JOhnH

    JOhnH Touchdown! Greaser!

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    Off topic, but I used to insure my plane for more than I estimated the true hull value. That is until someone told me that if you do that, the insurance company is more likely to repair major damage than to junk it and pay you off. If my plane sustains that kind of damage, I don't want it repaired.
     
  35. DaleB

    DaleB En-Route

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    Well, since I'd be doing any repairs, and I can buy whatever parts would be needed, I'm OK with that. And bear in mind -- I'm not insuring it for some outlandish sum that's more than the plane is now worth. It's insured for more than I paid for it.
     
  36. JOhnH

    JOhnH Touchdown! Greaser!

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    In your position,that is what I would do too.
    That is the problem with rules of thumb. Everyone's thumb is different.
     
  37. labbadabba

    labbadabba Pattern Altitude

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    Not to mention it's one of the most beautiful airports around. How many airports are left that are right in the urban center of a major city? Having KC on the bluff overlooking the airport is just a cool view.
     
  38. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    Yep, and that's the view from my hangar. :)
     
  39. Matthew K

    Matthew K Line Up and Wait

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    The whole purpose of using the home equity line is to get lower interest rates. I don't know about you but I'm not going to buy a plane if I'm worried about not being able to pay for it completely in the near future so putting up my house "at risk" would not be a concern.
     
  40. Matthew K

    Matthew K Line Up and Wait

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    I can understand you there. I just finished reading Squawk 7700, by Peter Buffington. He mentions pilot salaries a lot. One thing that surprised me is that flying freight in a Cessna 414 can have a higher salary than flying a ATR 42 with 50 passengers on it...It amazes me that many people I talk to that run their own aviation business say there is a "Pilot shortage", yet pilots with 4 year degrees have starting salaries with regional airlines at $16,000 according to that book.