Negosentro.com | How much is too much money for a hobby? Occasionally an innocent hobby turns into a lifelong commitment. Sometimes, the hobby can turn into an investment. For most people, hobbies are both and are extremely enjoyable. For example, a watch collector spends upwards of 15k on a watch but knows that it will appreciate over time. Having the watch in their collection brings them immense joy, but the expense is also an investment for the future. As hobbies turn into niche investment opportunities it can be hard to afford the pleasurable habit. So to fix the urge to snap-up the latest collectible without the liquidity of funds, here are a few ways to finance expensive hobbies.
Hobbies aren’t always about collecting watches, stamps, or rare books. Sometimes they are larger, much larger, like improving a home. It isn’t much different than watch collecting, because the satisfaction that comes with renovating a home is also an investment. Whether it is demolishing an interior wall to make the home open concept or financing a pool HELOC’s are great options. A HELOC stands for Home Equity Line of Credit. This is when a person borrows money from a bank or lending institution against the equity that they have built in the home. Many times it is a great option to increase value in the home without having to liquidate a saving account. These are favorable because they typically have a long draw period, an average of 10 years, to which money can be pulled from the line of credit. Although, one drawback for this option can be closing costs. They can be similar to those of mortgages, about 2-4 percent of the properties value.
Occasionally hobbies are expensive because they require more than a single large purchase. Someone who enjoys traveling and trying rare and exotic foods may need a creative solution to finance their expensive hobby. One such way is using a rewards card. Even if the hobby is building things like motorcycles, cars, sheds, jewelry, or stained glass, a rewards card is a great option. There are a plethora of cards to choose from and many of them offer great incentives like cash back, points, and discounts. The rewards card is often overlooked because its ideal candidate normally spends cash for their purchases. However, they are missing out on tremendous opportunities to save money. For example, getting 2% cash back for all purchases is still 2% more than paying cash. That means that the money saved can help finance even larger projects- dream projects.
A lesser-known option for financing expensive hobbies is that of security interests. A security interest is when collateral is placed on an object in order to get a loan. While it may not seem immediately appealing, it may be a good option for someone who is a car enthusiast. They can place a security interest on a paid-off vehicle in their collection while they work to get an even rarer vehicle. It is a good way to help grow a hobby without having to liquidate the savings account. On another positive note, this can also be good for the spur of the moment purchases, when funds are low. In the instance of our car enthusiast, it would be buying a rare dream car that just went on the market. A security interest could bring an end to a decade long search.
There are dozens of ways to keep a hobby long past financial sensibility. Financing an expensive hobby is a creative way to bring sense and savings into an enjoyable act. All three options allow individuals to keep doing what they love doing. They allow hobbies to grow and many times can help save money.