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Old 20-07-2010, 12:00   #1
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Sailing Is for Rich People

or at least people who used to be rich and then spent all their money on a boat

i'm curious how much our financial situation differs from most, so let me open our books for you guys:

i make just over $100k/yr. my wife makes about half that, with a combined income of $157K last year. we're in our early 30's and, other than a 401k, haven't really focused on savings of any sort (prior to the cruising plan).

the boat was $45K of which we financed 90%. between the down payment and tax, that pretty much wiped out any liquid savings we might have had prior. by the time we leave, we will have ended up putting just about $30K into fixing the boat up - an astounding number in my opinion, but when i consider where it's gone (standing rigging, new sails, life raft, yada yada) there are only a few places where we spent money unnecessarily. of that $30k, we've managed to come up with about $20K in cash. i've got the remaining $10k on a credit card that i'm now planning on paying minimum payments on while we sail.

between the boat insurance, our health insurance, the boat mortgage, afore mentioned credit card and student loans, we have a fixed cost of about $1k/mo when we're cruising. i'm budgeting an additional $1K/mo miscellaneous fund for food, repairs, etc. i think that's tight, but realistic. so, for a 2 year cruise, we're leaving here with just under $50k in cash.

so, i'm rich. in two years we've managed to save $50k, and still pay $20k in repairs - coming up with $70,000 in liquid cash after taxes and after living expenses is more than most people can afford.

but...

we somehow fall in the "budget cruiser" category in so much as:

1. i've literally left us zero dollars in the budget as a "reentry" fund - we're coming back flat broke. dunno how that one will play out, but should be interesting.

2. we're leaving with $10k floating on a credit card. yikes!

3. our boat's pretty cheap as far as bluewater capable well found boats go - no bow thrusters, watermakers, air conditioning units, stainless anchors or vacu-flush heads for us...

so to the extent that there are any questions in this thread, here they are:

if i'm rich (which i think i am - making 3x the median income in the richest country on earth makes me, in my opinion pretty damn well off) does that mean all you guys are too?

if not, how the hell is that possible?
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Old 20-07-2010, 12:03   #2
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Old 20-07-2010, 12:08   #3
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Originally Posted by kb79 View Post
... if i'm rich (which i think i am - making 3x the median income in the richest country on earth make me, in my opinion pretty damn well off) does that mean all you guys are too?
if not, how the hell is that possible?
I agree that youíre dam well off.
Weíre not, and never have been.
I donít know how this can be; but itís so.
It shouldnít be possible in a just world.
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Old 20-07-2010, 12:11   #4
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if not, how the hell is that possible?
I dunno. I'm tied to the dock

But on those income figures, I'm guessing your rent is astronomical, your taxes are ludicrous. or you have a crack habit

Either that or you haven't yet nailed down the living on a tight (any?! ) budget thing yet.

In your shoes I would want a good plan B in case you come back before the 2 years is up..........
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Old 20-07-2010, 12:15   #5
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Rich is relative, but I think I read somewhere recently that if you make the median American familly income of about 50K/year, your are in the wealthiest two percent of all human beings, which sounds about right. At three times that, you're doing pretty well indeed. Keep in mind that generally, we Americans all consider ourselves "middle class" no matter our income. There are bazillionaires who will look you in the eye and say "I am middle class" as will the typical bus driver.

As for your budget, 1,000 a month for two people for two years is really cutting it close. My bet you won't make it for two years on that, but so what, go for it.
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Old 20-07-2010, 12:22   #6
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if i'm rich (which i think i am - making 3x the median income in the richest country on earth makes me, in my opinion pretty damn well off) does that mean all you guys are too? if not, how the hell is that possible?
For me it's taken probably 20 years longer to get to where you are and along the way I undoubtedly haven't lived the lifestyle you have. Oh, and a few kids saps up some spare cash but I wouldn't have it any other way.

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Old 20-07-2010, 12:27   #7
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A 45K boat financed with a 10% downpayment is what, $60K? Then you spent another $30K in repairs, so you're talking about $90K worth of boat investment? That's hardly a "budget" boat price range. You could have spent 20K and pumped another 10K in and had something that is equally capable.

Quote:
our boat's pretty cheap as far as bluewater capable well found boats go - no bow thrusters, watermakers, air conditioning units, stainless anchors or vacu-flush heads for us...
None of those things are "bluewater" requirements. Those are "floating condo" requirements. I think I'm the only guy on here who is pretty much an L&L Pardey follower (not as much as I'd like, but if I had to start over I'd follow nearly every thing step by step).

You're certainly more than welcome to make your own definition of what the "minimum" of a cruising boat is, but just remember that it's your minimum based on your lifestyle, expectations, experience, and specific concerns and needs (valid or not). Just arbitrarily as an example, I'm more than happy using paper charts and never turn our radar (bought installed by the previous owner) on, although someone else might consider a chart plotter and/or integrated radar a "minimum" requirement. We have a manual windlass that works just fine, but plenty of folks don't have the back strength or desire to haul that much chain.

In backpacking the joke is that however big your pack is, you'll fill it. I think the corresponding sailing joke is you'll spend all your money, however much of it you have.
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Old 20-07-2010, 12:29   #8
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Since I have done it once and am now budgeting for a second time, here are my observations:

You are not rich. You are broke. You are way beyond just being broke. You are in debt up the wazoo, and you haven't even left yet:


Quote:
Originally Posted by kb79 View Post

1. i've literally left us zero dollars in the budget as a "reentry" fund - we're coming back flat broke. dunno how that one will play out, but should be interesting.

2. we're leaving with $10k floating on a credit card. yikes!

...between the boat insurance, our health insurance, the boat mortgage, afore mentioned credit card and student loans, we have a fixed cost of about $1k/mo when we're cruising. i'm budgeting an additional $1K/mo miscellaneous fund for food, repairs, etc. i think that's tight, but realistic. so, for a 2 year cruise, we're leaving here with just under $50k in cash....
to be NOT broke:

- pay off your boat loan. Ridiculous to have one. Get a cheaper boat.
- pay off your student loans. You gotta be kidding.
- pay off your CC. That is a financial killer and the banks love you. Once it starts rolling you will never be able to catch up.
- have money to re-enter and sustain you for 1 year on your boat.
- have 3 years of cruising kitty in your pocket. 2 is not enough.

I'm single, which makes it more difficult, but I plan and am doing quite well at:
- have 3 years of kitty
- pay off my student loan - yeah i have one!
- buy a boat with whatever budget I have wherever i can and start there; fix it along the way.
- have 1 year of re-entry
- outfit boat with necessities.

I'm not rich, but I'm not broke. I'm also older, which for me means a difficult time getting a job after and retiring.

PS: I'm planning on leaving in 2 years. Buying boat in 1 year and have savings. Gonna take a year to refit and get my sea legs
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Old 20-07-2010, 12:29   #9
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A lot depends on the rest of your life. Average new car costs you at least $700/mo between payments, insurance, maintenance, depreciation....2 cars, double that. House mortgage? When I was making 150k a couple of years ago I had a big mortgage, 9 cars scattered about in various stages of deterioration or restoration, an apartment in Colombia, paying for school for a couple of kids there, lots of travel....The economic crash really put things in perspective, sometimes painfully so. My income in now 1/3 of what it was, but having gotten rid of the rest of the stuff, I'm better off, less stressed, and now actually able to head South in Nov. Priorities priorities.....at least I paid off and completed the boat first.
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Old 20-07-2010, 12:31   #10
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But on those income figures, I'm guessing your rent is astronomical, your taxes are ludicrous. or you have a crack habit

Either that or you haven't yet nailed down the living on a tight (any?! ) budget thing yet.
we live in california which adds a ton to the budget - after we bought the boat, we moved from a $2800/mo house to a $650/mo apartment, and pretty soon will be living aboard full time.

i actually think quite the opposite is true - it's amazing to me how much we've been able to save in such a short time. on the other hand, you're certainly right that we blew through money like crazy before the sailing plan came along.
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Old 20-07-2010, 12:32   #11
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There are plenty of people here who have very little cash and went very far. Most built their own boats or fixed up old ones and scrapped for parts etc. Those in my mind are the real cruiser/sailors on this board.
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Old 20-07-2010, 12:42   #12
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Since I have done it once and am now budgeting for a second time, here are my observations:

You are not rich. You are broke. You are way beyond just being broke. You are in debt up the wazoo, and you haven't even left yet:




to be NOT broke:

- pay off your boat loan. Ridiculous to have one. Get a cheaper boat.
- pay off your student loans. You gotta be kidding.
- pay off your CC. That is a financial killer and the banks love you. Once it starts rolling you will never be able to catch up.
- have money to re-enter and sustain you for 1 year on your boat.
- have 3 years of cruising kitty in your pocket. 2 is not enough.

I'm single, which makes it more difficult, but I plan and am doing quite well at:
- have 3 years of kitty
- pay off my student loan - yeah i have one!
- buy a boat with whatever budget I have wherever i can and start there; fix it along the way.
- have 1 year of re-entry
- outfit boat with necessities.

I'm not rich, but I'm not broke. I'm also older, which for me means a difficult time getting a job after and retiring.

PS: I'm planning on leaving in 2 years. Buying boat in 1 year and have savings. Gonna take a year to refit and get my sea legs
with all due respect, salty:

if i was as financially conservative as you're suggesting, we'd never get off the dock. i'd MUCH rather be broke, than be one of those people who are constantly planning for a trip they never take.

since i'm baring all for you guys, the other consideration that's pushing us to go now rather than later is kids - my wife's 33 and will be 35 when we come back. it's kinda now or never (or at least now or WAAAAY later).

so it's now, money be damned.
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Old 20-07-2010, 12:48   #13
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So you two have been clearing $100,000 above the median US household income for a few years? Simple, your spending has been out of control. Wasted perhaps?

I'm cruising full time on a boat much more expensive than yours after retiring at 52 from a job paying far less than yours. Zero debt except for some leveraged investments. Raised a child who's about to enter college and I have her entire private university tuition in an investment account which I'll spend on the boat if she doesn't keep her grades up.

Had a goal from my first day on the job to retire as soon as possible. Saved every cent. Lived grand in cheap but nice California apartments. Owned a series of sailboats I could afford and restored or kept them in perfect condition with a huge amount of sweat.

Travel worldwide on cheap flights, cheap hotels, staying with friends in expensive places like St. Barths, Paris, Milan.

Still not rich. Living in Malaysia where I can eat and drink for less than US$10 per day.

Where did you money go? Sheesh.
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Old 20-07-2010, 12:52   #14
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I won't argue that cruising is for rich people. Clearly it is. However, I'd say that your problem with funding a sailing lifestyle is/was the lack of focus on savings of any sort.

1. Most of the US lives on less than 47k a year. I suspect that you'll find you can too. I find that for two people where I live in the US 36k a year pays for utilities, food, rent, stalite TV, internet, car payments. In otherwords a rather nice lifestyle. The trick to that is understanding that just because you make 157k a year doesn't mean you have to act like it. You could spend money like you make 40k a year.

2. Even accounting for taxs, living expences of less than 40 k a year would leave you just under 100k a year in "excess income" that can be used for loughts and loughs of things. For example, it sounds like 6 months of "excess income" could reduce your boat morgage to zero. Another month or so could reduce your CC ballance to zero. Even more might be avalible if your able to live on your boat while you get the feel for her, and continue to work. That can be a double edged sword however.

3. Instead of saving, your using the alternative, your carrying debt. Take a CLOSE look at your debt payments. I bet your paying most of your $1000 a month in interst. Next up take a CLOSE look at your insurance. Do you REALLY need collision on a 45k boat with 30k of repair work when you making 157k a year? If you lose the boat, it's less than a year worth of savings. Just gotta make damn sure you don't crash the boat! Do you REALLY need a low deductable health insurance? (I don't know what you have, I'm just telling you what I'd ask myself.) After all, you've got quite a bit of liquid cash. If you get hurt, and the deductable gets sucked up, it just cuts your trip short. After all, just getting hurt in the first place will likly cut your trip short, so is that a big deal? The lower you can get these fixed costs, the cheaper it becomes.

To make it worse, you've likly been flighting that debt, and the interst that goes with it since you left school.

Those that do mannage to go out, and actualy fund their adventure over an extended peroid do it with planning. They work goals, and stratigies. Eventualy everything lines up, and it all works out. Honestly, I'm boring as hell. I've been working on saving toward SOMETHING since I graduated high school. I have no debt from college. I have a marketable degree. And I've saved enough cash to buy a boat, but not enough cash to cruise for the rest of my life. I'm only starting to get close to the end of my 20s. (OK, I'm 28.) With any luck, I'll be leaving when I'm 30.

After all, what your talking about is taking an extended vacation. Not that much of the planet gets the ability to do that. Those that do typicly are very lucky, and scraficed to make it happen. After all, EVERYTHING costs something!

As far as kids go, HAVE THEM NOW. There is never any time like the present to have kids. It's taken me 5 years to teach my wife that. Once you've got 'em, take 'em with you. At least that's my plan. If only my wife and I can have that blessing.
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Old 20-07-2010, 12:52   #15
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Well there KB79, I'm not exactly financially conservative either, but I am able to do it - twice - within a relatively short period of time. The second time not much a different budget than yours except I'm resourceful in the outfitting and living costs, and I'm not throwing money away on interest payments.

You think you're gonna handle kids down the road on that come back financial attitude and position? If I were in your situation, I'd have the kids now, and then leave on a trip when they are 3. They can grow up on the boat and you can have a nice kitty to move anywhere else in the world without pressure.
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