Critique My Escape Plan...

[CruiseFan]

Hello. You will notice this is my first posting but I have been a loyal follower of this site for almost a year. My wife and I have found your stories and discussion topics to be informative, inspirational, and often entertaining. We are putting together a plan for our future that is centered around a liveaboard lifestyle. I'd love to learn from any experiences you have had - positive or otherwise. Constructive (or critical) comments are welcome.

I will start with a bit of background and our plan, followed by some specific questions at the end....

My wife and I are in our mid to late 40s. While we are lucky to both have jobs which afford a comfortable, middle class lifestyle, both of see the signs of burnout on the horizion. I guess it is best to say that we both have 'jobs' instead of 'careers' or 'vocations'. I am not of the age nor is this job market conducive to finding something better to do. Besides, it has always been both of our goals to save towards an early retirement.

Yesterday I got back from my annual meeting with my financial planner. It is not that I have this huge portfolio. No. Instead, my employer I suppose felt guilty in eliminating our company pension so they offered this to those of us who stayed around. Right now, he has me on a track so that I can retire comfortably at age 65. He tells me that I am in better financial shape that 99% of his clients who live paycheck to paycheck and will basically have to work until they keel over. The thought of working 18 more years is a real buzz killer for me. 55 I could do. That age represents some pretty major milestones in our lives - paid off house, kids out of college with residual tuition expenses paid, and at that age I qualify for my company's retirement medical plan.

However, in looking at the numbers, checking out at age 55 has a lot of risk. Who knows what will happen with social security. If it is "means tested" I am probably hosed. (That will teach me for saving and planning so diligently!) My wife is vested for a modest public school pension she can draw at age 60 which helps, and we have invested aggressively in our 401K plans. It is that period between age 55 and 60 that I need to find something interesting, exciting, and relatively inexpensive to do. Hey, what about living on a boat in the Caribbean???

My plan involves a liquidation. Sell our house, cars, and toys. Have the largest garage sale in history. I figure conservatively (at present value hope to increase since market conditions are improving), that I could clear $400K. Of that total (also at present value because I have no clue if boats will appreciate faster than real estate), I would find a nicely equipped 38-40 foot catamaran (sorry singlehull crowd - that is a deal breaker according to the missus) for $300K. This would leave me $100K tax free along with another $50K I have in cash investments currently to fund our 5 year adventure.

After that, it would probably be time to sell the boat and (a) buy a condo near the grandkids, and spoil them rotten (wife's plan) or (b) upgrade to a bigger boat (my plan). I would have to think that, purchasing a nice boat at a fair price and taking care of it, that it would still have a residual value of $200K including whatever maintenance and other expenses it needed before it was put on the market. Surprisingly enough, in running the numbers with conservative return rates on my 401K and other investments, I found our net worth projections actually increased during this time. Granted, they would have gone up a lot more had I continued to work - but chances are I would have been dead from stress and unable to enjoy the extra $$.

So here are my questions about the plan:

1) Are there any significant flaws in my assumptions?

2) Have any of you done something similar? Did it work? What would you change?

3) Is $35K a year, tax free, enough to fund a reasonably fun cruising lifestyle? We are frugal but not to the point of going "off grid" for everything.

4) Maintenance worries me. I am industrious and self sufficient but not a diesel mechanic. The posts that say that you need to fund 5% a year for maintenance ($15K a year on a $300K boat) scare me. That is almost half my budget. Is that a realistic budget item?

Thanks in advance for your help. Fire away!

[maxingout]

You have long range plans with lots of assumptions about the future.

My experience is that life is a non-linear experience, and assumptions about the future are not worth very much.

Long range plans to me only have meaning for six months to twelve months in the future, and even then things can change radically.

I wrote a page on one of my websites called "The Man With The Unplan".

THE MAN WITH THE UNPLAN*** I am the man with the unplan

I am the man with the unplan. What is the unplan? The unplan is simple: my long range plans are firmly set in jello, and are therefore subject to revision, reversal, and massive change. Although I know who I am and where I am going, I don't have any long term plans set in concrete.

My life is full of maybes, perhaps, and possibilities, but real long range plans are clearly out of the question. Three of my colleagues who had long term plans are no longer alive, and the handwriting is on the wall and in clear focus. The message says, "Today is the only day I have, and I need to make it count for something good."

I used to be a man with a plan, When I was halfway through college, I made a plan to go to medical school, and I did it right on schedule. But after that, the unplan took over. When I was an intern, I planned to become a pathologist, but instead, I became an eye surgeon. I planned to practice general ophthalmology, and instead became a retina and vitreous surgeon. I made a plan to work overseas in Saudi Arabia for five years, and instead stayed for eleven years before I set sail on the ocean of my dreams. I planned to spend two years sailing around the world on my yacht, and it took eleven more years to complete my circumnavigation.

Life has been full of twists, turns, and reverses, and it's easy to see why I am the man with the unplan. I didn't realize I was the man with the unplan until I had a car accident in New Zealand. When I rolled the van I was driving, I broke two legs, five ribs, one scapula, and I punctured one lung. I spent nine days in the intensive care unit, had three operations, and received seven units of blood - all of this was quite unplanned. I stayed in the hospital for two months and gradually regained my ability to walk. It took six months to be able to bend my right knee ninety degrees, and that made it difficult to climb on and off my yacht.

While I was hobbling around on crutches in Whangerei, New Zealand, I passed a real estate office that had an advertisement in the window for waterfront property - one kilometer of ocean frontage. At the bottom of the advertisement were the words, "For long term plans." I looked at those words and burst out laughing. Those words - long term plans - were massively presumptuous in the world in which I lived. In my world, I didn't know if I would ever walk normally again. Skipping and running were out of the question. First, I had to progress from hobbling to limping. Even my trip around the world on my sailboat was up in the air; I didn't know when or if it would ever continue.

I realized then and there that I was the man with the unplan. Although I had a general direction to my life, and I had a list of things a mile long I wanted to do, I no longer had solid plans or even a schedule. My life was full of possiblities, but long term plans were a thing of the past. When you are fifty old, and you don't know how much time you have left, you leave the long term plans to young whippersnappers who feel like they are immortal.

Since that time, I have been living more in the moment. I have a general direction to my unplanned existence. I planed to sail across the Atlantic Ocean sometime in November, December, or January, conditions permitting. I will probably cruise in the Caribbean from January to June, and then I will arrive back in the USA in June, July, or August. That's my unplan.

The truth is, I was never very good at squeezing my life into any type of mold, and plans are sometimes the most restrictive molds of all . Anyway, the majority of my plans have turned out different, maybe even better, than I had hoped. So I have decided to stick with my unplan and see what happens. One thing you know for certain, we will be surprised when we see how it all turns out.

By the way, God, if you happen to be listening, I would appreciate it if you would extend my unwitting and unplanned existence for another forty or fifty years, because there is so much to do and so little time, and I want to make the next fifty years into a real adventure. I promise I will do better this time. Amen.

[MarkJ]

Originally Posted by CruiseFan

3) Is $35K a year, tax free, enough to fund a reasonably fun cruising lifestyle? We are frugal but not to the point of going "off grid" for everything.

4) Maintenance worries me. I am industrious and self sufficient but not a diesel mechanic. The posts that say that you need to fund 5% a year for maintenance ($15K a year on a $300K boat) scare me. That is almost half my budget.

I am not for the USA so I don't know about your countries financial planning.

$35,000 tax free per year is good.
$15,000 per year maintenance on a newish $300,000 boat is over the top. I think $5,000 is more realistic after it has been fully set up.

The future: Cats are very expensive to get into a marina and all folks do need a marina at time: water, scrubbing, supermarket shopping/big provisioning trips etc. To have a comfortable lifestyle I think its importnat to be able to budget a marina night or 2 once per month.
the prices for marinas now are expensive, but there is a new trick being done in th eMediterannean that is outright draconial for Cats: marina fees are by square meters: lenght x max beam. That increases Cats marina fees dramatically. Also marinas here are vastly overcharging for short stays. Here in Turkey (and this AIN'T Europe) for our 11.6m mono the fee for ONE night was 52 Euros, thats US$70

So in a few years time when marinas in the Caribbean suddenly find these ideas then whammo your budget could be right out of kilter.
Its fine to say you will always be at anchor, but theres times you do need a marina, going home to visit the kids etc. That can really blow a budget. we would never be able to afford to fly home. Ever.

My thoughts are to be careful in your assumption that a cat is the only way to go. Go in with an open mind because closed mindsets can make obvious errors. Compare a $300,000 Mono with a $300,000 cat. As for that price you will be getting quite a significant sort of mono.

The last thing is that goal setting is very importnat. If you set good goals you can fight to acheive them. If its 55 years old then every time in the next few years you feel too lazy to cook and want to eat out say: One bought meal here is 2 in the Caribbean watching the setting sun!!


Mark

[MarkJ]

I just checked my figures and did some for a Lagoon 40 foot in Turkey (not south coast of France etc)

Our mono: Lenght : 11,62 m Beam : 3,95 m = 45,90 m2
In the water daily price is 52.-Euro
= 1.133 per day/sq meter

Lagoon 400
Length: 11.97 m
Beam: 7.25 m
86.8 m2
Daily price = 98 Euros = US$130

Thats $130 to go shopping! A 5 day trip home when first Grandchild is born is near $1,000 before airfares!

Those prices may be the cheapest part of the Med now, but when you are 55 do you think the Caribbean willk have latched onto the idea? Yes, I think so. Highway robbery!


Mark

[Southern Star]

Hi Cruisefan and welcome to the forum. While I tend to agree with Dave, I can also understand your need to plan for your future. Does your plan sound 'reasonable'? Absolutely, although as we all know (and as John Lennon so aptly put it), 'life is what happens when we are busy making other plans'.

As to the boat that suits your needs - well, we can debate mono versus multi all we want (and this site certainly has beaten that topic almost to death), but for what it is worth, I can understand you wife's preference for a catamaran - even if it is more expensive to dock/maintain. Certainly, if you are considering having family visit while you are in the Caribbean (and most children/grandchildren are more apt to spend some quality time with you, if you are in a interesting location), then a cat has some significant advantages. Yes, space overall - but also staterooms that are truly private (separated from the other staterooms) and a stable platform that is much easier for non-sailors to adapt to.

As the time for your departure comes closer, assess your situation. It may be that you will choose to purchase a slightly less expensive cat in order to increase your available cruising budget. It may be that circumstances will put off your permanent departure (as circumstances have put off mine), or that you decide to leave earlier and go on less. If you keep your eye on the ball, but also keep an open mind, you will be on the right 'track' for this, just like any other endeavour.

Cheers!

Brad

[gonesail]

work till you're 55 .. get your life and boat ready to go .. start downsizing now. sell the house. take longer vacations. good luck with convincing your wife. go with a nice monohull. save all the money you can until you go.

[Mustang Sally]

Planning is the easy part. It takes real guts to actually start selling stuff and do it. Our house was sold and when the last of our furniture was being carried out the door we look at each other and asked if we were nuts.

[Southern Star]

Mustang Sally is absolutely correct - about this, and I suppose any huge change in lifestyle. That being said, I still think some planning is in order (and I suspect that they agree); and, it seems that you have already given this some considerable thought.

We all fear the unknown, but there is no need for you to be paralyzed by that fear, especially at this point; to put it another way, while I am sure you will have some doubts both before and after you are committed to going, I see no reason to believe that it will be because your plan was flawed, or because you have inadequate resources to finally cast away the docklines and take off.

Brad

[LauderBoy]

Does work have to be all or nothing? My thinking has been to do my full time job until I have a solid base of savings then transfer over to something part time I can do at leisure that's enjoyable that will supplement my savings and give me more flexibility. If my savings hold solid I can do my "retirement job" just as something to keep me sharp and active. If unplanned things happen I'll have a source of income available to me.

[bloodhunter]

CruiseFan,
Welcome aboard
We are in the process of doing what you are planning, but a bit later on in life. I disagree entirely about planning. I've found that people who don't plan don't get things done. I would just add that no plan is written in letters of fire on marble tablets, you should always be ready to change your plan when circumstances warrant.
That being said, You seem to have a good handle on your finances so far. Your adviser might be able to give you and ball park range giving you the minimum and maximum you can expect from your investments. Looking ahead 10 years is not really possible but a ballpark estimate would at least give you some starting points so long as you don't take it as revealed truth.
You may noy need to start getting rid of everything now -- especially property, given the state of the market but it would be a good idea to take inventory of what you have. We did that and divided everything up into categories storage (mainly some valuable art work); auction houses and consignment shops (for more valuable items); Ebay or CraigsList for specialty items like my wife's professional easel and drawing table and a couple of collections and garage sale for everything else. We also had our kids over to pick out what they want when we leave.
Make yourself a tentative cruising budget --lots of threads on this here and on blogs and other sites. As far as we can tell it's gonna cost us a lot less to live on our boat in the Caribbean than in our house in Baltimore and I think that you can get by reasonably well on $35k as long as you don't have an extravagant life style. Our major monthly expenses seem to be boat insurance and medical insurance (my wife is a type-1 diabetic so medical insurance is not an option for us but it may be for you) and if we're not careful email/internet/phone service.. Then we have our reptile fund -- in case our boat is beset by dragons and sea serpents eating our engine sails or rigging or other major boat repairs . Even if you do the work yourself parts can be expensive. This NOT boat maintenance. We're figuring basic expenses at about $3k a month including insurance and maintenance, fuel, food, occasional docking, etc. Plus we'll start with $15k in the reptile fund.
We plan to do all our banking and financials on-line.
Extra monetary cushion will come from sale of our property. We planned this, ran the numbers and all seesm to be working out. as I'm sure it will for you.
Good luck and hope to see you out there if we're still around

[MarkJ]

i wasn't trying to start some inane mono-cat war. Just making an example of many, many things to consider over the next few years.

Bloodhunter is obviously working well on it. Planning and goal setting are, imho, of ultimate importance... not the "what island are we stopping at in May 2015?"

A football coach or one of those motivational talkers often have good views on goal setting: long term goal, medium term, short term and facilitating goals etc etc.
The interesting thing is why do all those management consultants etc speak up this goal setting stuff? Because it works

[Southern Star]

Hey Mark, not suggesting that you were trying to start another inane mono-cat war, but the original posting specified (with apologies to the monohull crowd) that they were getting a cat or nothing at all (he called it a dealbreaker). I'm sure others (including yourselves) see that as shortsighted or misguided (and there are, as we both know, good arguments on either side of the issue); I was merely trying to point out that in spite of the cost of docking, even with their briefly stated objectives, there are some good reasons for their decision to buy a cat.

On the key issue, it seems that we are in agreement: planning and goal setting are important and the orignal poster seems to be, as you put it, 'working well on it'.

Cheers and good sailing!

Brad

[slomotion]

I like to think of myself as a long range planner, but of course it’s not true, at least when it comes to going cruising. I’m more of a get-a-boat-and-go kind of guy. So, FWIW:

1. I don’t know much about buying boats that I plan to sell in 5 years. Every time I buy a boat, I think I’m going to keep it forever. So far, this hasn’t worked out. I also don’t know where the grand kids are. But when I was a kid I would have been a lot more excited about visiting grandma and grandpa on their boat than in their condo. A 40' catamaran makes a pretty good condo.

2. If you anchor, you can live very well in the Bahamas/Caribbean on 35k a year. Cruising lifestyles vary enormously and certainly some people spend more than that. But most people probably spend far less and just about everyone spends less than they do living on land.

3. You are right to be concerned about maintenance/repair and related boat costs because it is the one kind of expense that you can’t easily predict or control. I think the percentage of cost formulas are silly. You know that you will need periodic bottom paint, oil changes, filters, fuel, etc. But things break or wear out or you decide to add or upgrade equipment. It all depends on the particular boat. The better it’s condition when you start out, the less likely you are to have expensive surprises.

4. No matter how much sailing experience you have, if you don’t have much experience living on a boat, do a crewed charter on a 40' catamaran in BVI. This is expensive and it is not an accurate view of what real cruisers do every day. But, it is the easiest and most fun way to find out what living on that kind of boat is like. If you don’t have liveaboard experience, this should be the first step in your plan.

[YOGAO]

...$35K/yr in today's dollars will give you a pretty comfortable life afloat. Maintenance is perhaps the biggest budget exercise since you will have some years where you never come close to spending that budget followed by others that will blow it away - remember the old saw, "cruising is making repairs in exotic locations."

If the boat is initially "ready to go", your first few years will likely be less. On the other hand, the first few years of "letting go" of your land-based lifestyle will probably result in higher daily expenses, so it can be a wash.

I think your initial purchase will likely be higher, but if you are only doing a 5-year cruise, the back end could be higher as well.

In the meantime, I would concentrate on building up your experience on all types of boats. Make boating friends and go sailing at every opportunity. This experience will help you make the right decisions on buying the boat, dinghy, safety gear, etc, etc. It will also help you in getting insurance (if you decide you want it), since experienced boaters have more options.

Building experience may cost you some $$, so now is the time to work on saving every penny possible.

If you are not an experienced diesel mechanic, it would be very worthwhile to sign up for a comprehensive multi-day course the day you take possession of your boat (but NOT before!).

FWIW, I couldn't disagree with Mark about 1 - 2 nights/month in a marina more (at least for East coast US and E. Carib). Dirty, smelly, no breeze, loud neighbors, costly - who needs it? Other than haul out, we rarely spend a night in a marina.

Fair Winds,
Mike

[CruiseFan]

Hi everyone. Thanks for all the responses, encouragement, and suggestions. No doubt there are risks in any long term plan, but we will certainly remain flexible and adapt accordingly (save more, work longer, downsize our boat options, etc, etc). We took a BVI charter in the past - loved it - and are looking at all our options for getting more time on time on the water. Obviously that is important for many reasons - affirming our commitment to the lifestyle, identifying our requirements in a boat, safety, insurance costs, etc.

I will continue to monitor these posts for information and other good suggestions. Thanks again!