Personal Financial Accounting

[kneelingatlas]

Reading threads on the forum as well as in society at large it seems many people are misding some concepts of accounting which can really help individuals make sense of their personal financial situation.

 

In the context of our sport, the most useful may be the difference between an expense and an asset.  For example, a pistol is an asset, the value it loses with use is an expense (depreciation), whereas a match entry fee and plane tickets are examples of expenses.  Consumables (bullets, powder, primers) are also assets, but are fully depreciated with their first use.

 

So rather than think of buying a new gun for $1,000 as a $1,000 expense, understand the expense is the difference between what you paid for it and what you could sell it for, so if you could get $800 for it used, the depreciation expense is $200.  You traded $1,000 cash (asset) for $800 gun (asset) with $200 in depreciation.

 

If you buy the gun used for $800 and it's worth $800, the expense is zero (in the real world there are transaction costs such as dealer fees and taxes).

 

Now if you bought the same gun for $600, you've decreased your cash $600, and increased your gun asset but $800 for a net increase of $200.  Before you scoff at this last example, remember a Colt Python was $125 in 1955.

 

I'm not telling anyone not to buy a new gun because there are other intangibles and risks to factor into your individual assessment, merely offering a tool for you consideration.

 

A discussion of reloading presses sent me down this path as I thought about what a great investment a Dillon reloading press is; the parts carry the best lifetime guarantee I've ever seen and because of that, depreciation expense is very low.  So the question of whether or not to reload is really just a question of your time and cash position, because the expenses are a no brainier

[EEH]

In that case I’m Rich.

[Youngeyes]

[Hi-Power Jack]

Guess I should  INVEST  in few more guns and at least one 1050     

[blacklab]

This is actually really good advice. I do "invest" in firearms. If I see a good deal on a firearm I buy it. The way I see it I don't have to feed them and they need nothing. They just sit in the safe and over time go up in value taking into consideration inflation and the political climate. And they are in my possession, and they will still be in my possession even if the market crashes like in 2008. I would loose nothing unlike investing in stocks.  

[Flatland Shooter]

38 minutes ago, blacklab said:

 I would loose nothing unlike investing in stocks.  

 

I've been buying guns for over 50 years.  Still have most of them.  Of those few I've sold, I've never lost money.

[tha1000]

I have to explain this concept to my wife on occasion...  she generally responds with the stare.

Edited October 22, 2018 by tha1000

[caspian guy]

20 hours ago, blacklab said:

This is actually really good advice. I do "invest" in firearms. If I see a good deal on a firearm I buy it. The way I see it I don't have to feed them and they need nothing. They just sit in the safe and over time go up in value taking into consideration inflation and the political climate. And they are in my possession, and they will still be in my possession even if the market crashes like in 2008. I would loose nothing unlike investing in stocks.  

If you had bought an hk drop in auto sear or a registered receiver m16 during the last recession you'd have much more than doubled your money between then and now. As an example.

[blacklab]

3 hours ago, caspian guy said:

If you had bought an hk drop in auto sear or a registered receiver m16 during the last recession you'd have much more than doubled your money between then and now. As an example.

Exactly, the current president will not be in office forever and who knows what will happen after that. It wasn't too long ago that a $400.00 AR was selling for $1500.00 or more when people were in a panic buying mode.

[blacklab]

4 hours ago, tha1000 said:

I have to explain this concept to my wife on occasion...  she generally responds with the stare.

I think your wife and my wife went to the same school.

[HUYTERII]

Investing in firearms seem to be profitable at all times, I agree with the author here
I think it`s extremely easy to find a customer for your gun

[CuttingEdgeAmmo]

On 10/16/2018 at 12:17 PM, kneelingatlas said:

Reading threads on the forum as well as in society at large it seems many people are misding some concepts of accounting which can really help individuals make sense of their personal financial situation.

 

In the context of our sport, the most useful may be the difference between an expense and an asset.  For example, a pistol is an asset, the value it loses with use is an expense (depreciation), whereas a match entry fee and plane tickets are examples of expenses.  Consumables (bullets, powder, primers) are also assets, but are fully depreciated with their first use.

 

So rather than think of buying a new gun for $1,000 as a $1,000 expense, understand the expense is the difference between what you paid for it and what you could sell it for, so if you could get $800 for it used, the depreciation expense is $200.  You traded $1,000 cash (asset) for $800 gun (asset) with $200 in depreciation.

 

If you buy the gun used for $800 and it's worth $800, the expense is zero (in the real world there are transaction costs such as dealer fees and taxes).

 

Now if you bought the same gun for $600, you've decreased your cash $600, and increased your gun asset but $800 for a net increase of $200.  Before you scoff at this last example, remember a Colt Python was $125 in 1955.

 

I'm not telling anyone not to buy a new gun because there are other intangibles and risks to factor into your individual assessment, merely offering a tool for you consideration.

 

A discussion of reloading presses sent me down this path as I thought about what a great investment a Dillon reloading press is; the parts carry the best lifetime guarantee I've ever seen and because of that, depreciation expense is very low.  So the question of whether or not to reload is really just a question of your time and cash position, because the expenses are a no brainier

Thanks for the thought simulating input.

 

But I have a hard time with a couple parts of this.  Selling a gun that you bought new for anything near what you paid for it (unless it's been a long period of time) tends to be rather difficult.  Unless it's no longer available new and or is approaching antique status, folks seem to hesitate.  One of my friends is currently attempting to sell an AR-15 for under half of what it took him to build and he's only got ~300 rounds through the thing.

 

And as far as the press goes...  it literally costs more for the components to make ammunition than you can buy a finished product for in many cases.  Yes, the big brand stuff doesn't shoot sub-MOA, but a great deal of folks are far more concerned with price than quality.  Same with the textile industry.  The True Cost is a documentary about "cheap" cloths.  Sad stuff.

[kneelingatlas]

20 hours ago, CuttingEdgeAmmo said:

Selling a gun that you bought new for anything near what you paid for it (unless it's been a long period of time) tends to be rather difficult.  Unless it's no longer available new and or is approaching antique status, folks seem to hesitate.  One of my friends is currently attempting to sell an AR-15 for under half of what it took him to build and he's only got ~300 rounds through the thing.

 

The point of this post was not to judge any particular investment as wise or foolish, but to highlight the difference between assets and expenses.

[vgdvc]

On 12/17/2018 at 8:38 AM, kneelingatlas said:

 

The point of this post was not to judge any particular investment as wise or foolish, but to highlight the difference between assets and expenses.

Imagine the worth today of a 3 band Springfield musket purchased when first available to civilians after the American Civil War versus then. Monetary value is a great basis to judge an investment. Here's another way I look at it if I ever need to console myself after or convince myself of a good purchase.... I just spent $2,000 on a gun that will give me exponentially much more enjoyment then if I would have spend it on something else. Therefore  it encourages me to do better in my business and life in general since I will be happier

[GrumpyOne]

As to the original post, I bought a 6" Stainless Python in 2010 for $1,000. Today, it is worth much more, depending on who wants it. Most on GB are up past $3k now.

 

The trick to using fire arms as investments is to buy quality and rarity. Sure, they are gonna cost more initially, but has anyone ever seen a mint condition 15 year old Hi-Point go for more than a new one would?