Rationalizing Loss On Firearms You Sell.

gmerkt

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I’m cheap. I don't buy new or late model cars. I don't have an RV or a boat. I grew up cheap and that's just ingrained I guess.
Pretty much the same here. And I married right because Mrs. Merkt is the same way. I don't care if everyone around me is in their shiny $60K truck either. They do their thing and I do mine.

There are worse things than guns to spend your money on. I can think of three right off the bat. Alcohol, drugs and tobacco. You don't get any money back out of those. I would throw gambling in there too for 97% of those who engage in it.
 

CLT65

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There are worse things than guns to spend your money on. I can think of three right off the bat. Alcohol, drugs and tobacco. You don't get any money back out of those. I would throw gambling in there too for 97% of those who engage in it.
I have a friend who smoked most of his life (finally quit for good a couple years ago). He tries to generally avoid alcohol because once he gets started he has trouble stopping- the old "One drink is just right, two is too many, and three is NOT ENOUGH!"
He recently mentioned that he calculated how much money he was saving per month by not buying cigarettes and alcohol. I don't remember the number, but it was a lot, definitely more than I spend on gun stuff in any given month!

People have a lot of hobbies. A good friend spends a lot of money on stock car racing. He knows he's never going to get his money back out of his cars. :) Even something like golf- how much is that new set of clubs worth after you've used them a time or two?

A funny story: years ago I worked with a guy who bought a brand new Harley Sportster. He spent a fair amount adding some custom parts to it. He was one of those meticulous types who took very good care of everything he owned, and meticulously kept track of every nickel spent. He rode it for a couple years, enjoyed it, and then was done, so he sold it.

He was complaining at work that he took a loss on it. He had added up the new purchase price plus all the goodies he had added to it, and ended up selling it for $200 less. The rest of us were dumbstruck. You rode a brand new Harley for two years, customized for you, and it only cost you $200; and you're complaining?? He must have found a sucker who really wanted it.

He was a funny guy, super particular and meticulous; his house and vehicles were incredibly neat and clean at all times (single of course). I would have made certain assumptions about him, if it weren't for the fact that he'd get plastered on a regular basis, and after enough alcohol would always end up crying about how he could never find a woman who'd have him. We all eventually learned to make our leave before that point.
 

gmerkt

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Back in times when the stock market had its ups as well as some downs, many investors would "rationalize" their holdings by dollar cost averaging. Say they bought some equitities at $100 the share, then later the price went down, they bought in at $50 the share. They would dollar cost average their investment at $75. A person could do the same thing across their gun holdings.

What you realize from a sale is determined in advance by what you bought, what you paid, and maybe when you bought it. And sometimes, when you choose to sell it. If you bought something common and still in production, and didn't buy it on sale or second hand, you're likely not gonna get what you paid when you sell. Unless you hold it for a long time, then you're still probably not going to get the equivalent of what you paid due to the time value of money (meaning, inflation).

Popular brand names and higher quality pieces, as shooters or collectibles, tend to hold up better in price. So when you buy something, it's better to pay the extra money if you can for something "better." It will return more money on a relative basis than something of lesser quality.

You can combine the pleasure of shooting with an eye to collectibility, sometimes. Like buying what is a current offering in a less than mainstream cartridge. You have to be careful in this. It's a fine line to avoid buying something that later turns into an orphan cartridge, rather than a niche cartridge that has a long-standing fan base. Using .41 magnum, for example, as a good bet. Another good bet is just about any Smith & Wesson revolver that has something different about it. Collectible Kel-Tecs? Maybe not so much.
 

arakboss

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If I keep all my guns for thirty years then likely I too will be ahead.
Still not an investment strategy though.
Good point. Even if I come out ahead selling a firearm I bought 5 years ago, I would likely have made much more by investing that money in the stock market. Definitely not an investment, it's simply an addiction for me.
 

arakboss

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I don’t remember taking a loss on a gun over the years, but I almost never sell anything. That, and until recently I almost never bought new. I’ve also never bought anything high-dollar. I don’t think I’ve ever spent over $650 for a single gun in my entire life. I’ve typically bought old surplus or used guns that were a good value. Not so much with an eye to investment but mostly just because I’m cheap. I don't buy new or late model cars. I don't have an RV or a boat. I grew up cheap and that's just ingrained I guess.

I’ve long mused about how money is so often about numbers, more that actual money. I remember seeing an acquaintance shop around at a gun show and haggle for hours to get the very best deal on a new gun, had to save that last $5. He walked away feeling pretty smug, got into his $60k truck and dropped $100 on dinner on the way home. His pocketbook wouldn't have even noticed an extra $50 on the gun, but he felt good about the numbers.
It's a dopamine fix to get that $5 savings.
 
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Luckily for me the last thing I sold I almost tripled my money. But I know it’s not the case with most firearms. I always wait til demand is high and supply is low. COVID was a good time to sell in some ways. In other ways it is not. My local gun store have me a bad price because they said no one is buying guns since there is no ammo to feed them…
 
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I am planning on selling some of my firearms in the near future. In today's over supplied market, I'm expecting to take a loss on the sales. One way I am trying to make myself feel better about the loss is by estimating what it would have cost to rent the firearm vs buying it for the same period of time I have owned it.

Another way to look at the loss is how much did my ownership of the firearm cost per day. For example if I paid $300 for a rifle 5 years ago and sold it for $150. It cost me about 8 pennies a day to own the rifle. I doubt you could rent one for anywhere close to that.

Is renting a firearm by the month or year even an option in this country?

How do you make a loss on a firearm sale more palatable?
Here's one great thing about living in a private sale State. I can sell most any used gun private sale for $50 to $200 over what it costs new
 
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Didn't read all 7 pages so it may have already been mentioned....

If you have any debt of any kind in your life you can figure that you are paying that exact rate on the guns you own. 20 guns in the closet worth 15k? 15k owed on a car loan at 4%? You are paying 4% interest on the guns for 60 months or whatever the term is! Do some amortization pencil math magic and you won't be losing money at all by selling the guns at a little bit of a loss. Just my .02 and a method that I have used in the past to stomach taking a loss while selling guns or ANYTHING else for that matter.
 
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Didn't read all 7 pages so it may have already been mentioned....

If you have any debt of any kind in your life you can figure that you are paying that exact rate on the guns you own. 20 guns in the closet worth 15k? 15k owed on a car loan at 4%? You are paying 4% interest on the guns for 60 months or whatever the term is! Do some amortization pencil math magic and you won't be losing money at all by selling the guns at a little bit of a loss. Just my .02 and a method that I have used in the past to stomach taking a loss while selling guns or ANYTHING else for that matter.
Not so simple.

Although my mortgage is 4.1% (originated in 2012 on a manufactured home on acreage), the property has appreciated in value at 7% on average, per year - i.e., doubling in value since I bought it ten years ago.

Although I pay interest on that debt, when I sell this year, I will not only make a profit, but I will have basically lived here for free once the value of the property is realized in a sale. This is not debt I could easily pay off by selling my guns & ammo (which, while something of a hobby, as a prepper, they are also a prep, therefore a survival requirement) - granted, the guns/ammo value would make a nice dent in the mortgage.

Other than the mortgage, I have no debt and I pay cash for all other purchases/expenses.

Had I paid off the mortgage with my 401K contributions, I would have no debt, but I would have paid 25% tax on that income too. Now going forward, with my reduced retirement income, I will pay 10-12% (although I expect to pay capital gains on some of the appreciation of the property as it will exceed $250K).

---

I have taken "losses" on a lot of things over the 50 years I have lived as an adult and shelled out $ for things. Vehicles is a major one. Rent is another. Guns are very minor in comparison. I am also in good shape financially - not "rich", but "comfortable" and I have a fixed income that pays the anticipated bills as long as the US government is able to pay it out, hopefully for the rest of my life.

A few of the guns I own have increased in value ten fold - not that I ever expected them to - and I won't sell those even though I would make a very nice profit. Hopefully I will never need to use most of the guns/ammo I have accumulated for the purpose they were bought for, but someday they may help save my life, and more importantly, may save the lives of my family - so I don't mind the expense, it is minor compared to other life expenses that have accumulated over 50 years.

 
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Yes, since you can still write off a mortgage it does help. I'm personally not a fan of paying several thousand annually in interest on a mortgage so that I can write it off of my taxable income at the end of the year. Sure it helps but it just doesn't pencil for me. Debt is the enemy IMO. Especially debt on depreciating assets [cars, toys, etc] or unsecured debt [credit cards, student loans, etc].

Of course debt can be played well during times of high inflation [like now] but that can certainly swing the other way during deflationary times when the value of everything collapses [like when you bought your home in 2012]. Don't forget its not always a sellers market. The fed will collapse the housing market soon. When the equity is gone after paying interest and principal for a decade its not a real sweet spot to be in. Been there, done that ;[

My simple point was don't feel bad selling 10k in guns [even at a small loss] to pay off 10k in toxic debt that is costing you thousands to simply maintain let alone pay down. I know people with lots of debt and lots of nice stuff they don't need. They work there behinds off just to make the payments on all of the banks stuff. It sounds like you are doing well though, which is awesome! Hopefully many of us will end up in a similar situation eventually....
 

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