Figuring Out the Cruising Budget

[Captain Peppers]

I know there have been numerous threads written about cruising budgets, but I'd like some opinions where people stand when figuring their budgets.

1. While figuring the cruising budget do you:

A. Set a budget and number of years to live off that cash balance
B. Set a budget while figuring in interest and inflation and live strictly off interest
C. Set a budget and cash balance while planning to work while cruising
D. Continue to own a company while cruising

2. What range would you settle leaving with to cruise (cash in bank & investments):

A. $0-$50,000
B. $51,000-100,000
C. $101,000-200,000
D. $201,000-500,000
E. $501,000 +

3. Would you leave with the boat

A. Paid for in full
B. Making payments on boat while cruising

4. What would be your realistic conservative cruising budget monthly, taking into consideration haulouts, travel expenses, and major maintenance

A. Less than $1000/mnth
B. $1000-1500/mnth
C. $1500-2000/mnth
D. $2000-2500/mnth
E. Over $2500/mnth

Just a thought to see what everyone's opinion is about this topic.

[scook1]

Peppers,
Nice job phrasing the question. I feel like this will give some more solid answers than budget threads have in the past.
1. mostly A.
understanding that it is an estimate, we will try to plan for a flexible amount of time. For my wife and I, our cruise is really more of a sabbatical than a complete change of lifestyle. We may work when we are back in the states in order to refill the kitty.
2. B.
Not that it can't be done on less than 51,000, but I would love to leaves some money untouched for the future. eventually we may want to return to the sea, and it would be nice to have some retirement built up.
3. A.
Most definitely
4.B.
As an average, we will probably come in right around the middle of B. probably have a few months over and a couple of months under.

Spencer

[sailorboy1]

cash balance to live off off that includes interest and inflation

101-200k (this is based on heading out at 55 and hopefully never having to return just due to money)

Boat paid for prior to leaving


1500-2500/mo (depends on how pissed I am each time I play with my spreadsheet)

[Captain Peppers]

Wow!! Some really good responses already.

scook1

I think your ideas hit the nail on the head.. Its a great idea to leave on a sabbatical to take some time off and enjoy life. Just last year I did a 2 month stint in the Bahamas and came back completely refreshed and had my best sales year ever in 2010. I understand you speak of a much longer sabbatical than that, but just goes to show what getting away for a short time will do!

Don,

Great time to be leaving and headed off cruising. Your ideas are in perfect alignment. I love the "depends on how pissed I am each time I play with my spreadsheet" I am sure I will be right there along with you!

[gettinthere]

Yes or No or It depends

Really, anything goes depending on soooo many factors.

If you want to live off the interest, what is the interest rate you expect to receive? Currently it's, what 2%? And what will be the rate of inflation? Currently it's either less than 1% or it's about 3% or more depending on who is counting. And it's likely to go way up so factor in ?% inflation to any calculation.

And what are you paying for? Good meals in restaurants or cans of beans & rice?
Is your boat a 30' bare bones or 60' palace?
Health insurance?
Where are you cruising, USA, Europe, Carib, S. Pacific?
How many years?
Do you have a profession you can easily go back to?

[Captain Peppers]

Lets start with an average return of 6% over a 10 year period. Then calculate in inflation of 3.7% over that same 10 year period. Obviously every individual will have their own set of numbers to this question. So it all relates to you individually. So people might expect a 2% return rate, but then wouldn't you be in the negative after inflation over a 10 year period if you were living off interest alone? We could go on all day about interest rates and inflation, but in the end its all about your own thoughts and ideas. Keeping it simple!

The question asked was where YOU stood on the below answers. So YOUR budget would consist of whether you are eating out or rice and beans, if you had a 30 bare bones boat or a 60+ Swan, health insurance, cruising grounds, years. All of these are things you would have to know about yourself in order to answer those questions.

So all in all it depends on the person/couple/family cruising. That's why there are multiple answers for these questions!

[sailorboy1]

Originally Posted by Don Lucas

cash balance to live off off that includes interest and inflation

101-200k (this is based on heading out at 55 and hopefully never having to return just due to money)

Boat paid for prior to leaving


1500-2500/mo (depends on how pissed I am each time I play with my spreadsheet)

I probaly should state that the amount of cash is cash on hand. It doesn't include money in my 401k (because thats for after 59.5), a small pension I collect starting at 60. Or Social Security I can stat collecting at 62 (I know the agruement for waiting).

[UWOA]

1. E.
You left out an option: E) Live off pension(s) and Social Security.

2. A.

3. B.
They are very nice pensions ....

4. E.
I told you they were nice pensions ....

[jackiepitts]

I agree you left out a option for people that have a pension?
1. E. (pension)
2. B.
3. A.
4. D.

[rebel heart]

1. While figuring the cruising budget do you:
C. Set a budget and cash balance while planning to work while cruising


2. What range would you settle leaving with to cruise (cash in bank & investments):
A. $0-$50,000

3. Would you leave with the boat
A. Paid for in full

4. What would be your realistic conservative cruising budget monthly, taking into consideration haulouts, travel expenses, and major maintenance
C. $1500-2000/mnth


-----------------------------------------

The "major maintenance" thing is really a tough call. Dropping a new engine and sails in shouldn't really come out of your monthly budget anymore than you'd factor "buying a new car" into your land based monthly budget. Not to say that $20K is chump change but there's not much I've seen that costs more than that you absolutely need done pronto, so as long as you have that much floating around for surprises you can otherwise budget for foreseeable expenses. My $0.02.

[6string]

The answers for each would be based on their particular situation. Ours being on a 40' boat. Age 53 on departure. Indefinite time frame. Could be just a year, could be 10. All depends on how well the admiral likes it. Taking actions as though it will be 10years. So we are selling the lake home.

Q1. B. We are looking at the long term investment returns. Anything used in early years is cash on hand. Not much earnings in first few years. Let account grow some.

Q2. D, no ones business how much more. $500,000 isn't all that much money if you have been working smart and doing some savings.

Q3. A. the only way to go and have no worries.

Q4. D,E. We will be trying to stay near the $2000 or less point but my plan gives me the option of going higher without breaking the budget. Less would be good because someday we will swallow the anchor and would like to not have to be a slave to the 9-5 when we are done. Some side work would be fine. Sell photos etc.

[capt_douglas]

1. B/C - I seldom turn down a chance to add to the cruising kitty.

2. B - I'm trying to make that "C" but the cost of refitting a 30 year old boat is a bit more expensive than I planned.

3. A - Any other option generally requires insurance and the level depends on the financial institution carrying the note. With no payments, I can get coverage I think adequate. I also have one less bill to pay, 'cuz some places ain't got no wifi or post office or inhabitants.

4. B - This is my second go round so I've got a better idea. I'm also going solo this time and am no epicurean, although I do enjoy the burger and fries and beer at the end of the voyage.

I'd be interested in the totals of this.

[Mambo]

Originally Posted by capt_douglas

1.
2. B - I'm trying to make that "C" but the cost of refitting a 30 year old boat is a bit more expensive than I planned.

Aw shoot Douglas, we get at least a couple of weeks of new boat giddiness from you before you start getting grouchy again, now don't we?

Congrats, btw.

[Dave the Canuck]

1: E
2: E
3: A
4: E

This is early retirement. No budget cruising initially so 4 is high. That might change when the dust settles, but for the first bit...WOOOHOOO!!!

[Captain Peppers]

Its great to see so many good replies and different ideas. Everyone talks about how much it will cost to cruise, but it doesn't seem like anyone has really broken it down for people to think about using different categories.

I apologize about leaving out the E category.

E. Cruising while on a pension

(lets go ahead and add that one into question 1)

I didn't put this in the blog mainly because it skipped my mind since I don't have a pension, and I considered the higher numbers for those closer to retirement to include 401k, Roth, and other retirement accounts.

I will also work on getting some totals together and an overall synopsis of the replies people have given about their different situations. I'll give it a few more days and get an overview for everyone!

If there are any other questions or if you feel I left something out let me know!