EUREKA!! (but advice needed)

[senormechanico]

Sean,
I don't post a lot, but I'm a "can do and fix almost anything" kind of guy.
As such, I agree with Inthewind and others. If you were already an accomplished welder maybe, but you've got to ask yourself this question:

"Do I want to go sailing soon, or throw money at a dirty, heavy, project with a questionable outcome for the unforseeable future?"

Sorry to be blunt, but I hope it helps.

Steve B.

[Thermal]

Sean,
Here's my 3 cents worth (that's 2 cents plus interest):
I have to agree with Alan that it would be very difficult to make money doing up boats - even if you assign an arbitrary wage for your time of say $0/hr, you would probably be doing well just to break even. There IS value to the time and money you have put into your current boat, but that value is not monetary, its in having the boat as you want it and in the familiarity with every system and nook and cranny in that boat hat you have gained. If you sell it to start over, that value will disappear as fast as that of Enron stock.
And for that steel boat, its probably worth what you would be paying for it, maybe a bit less. Of course you can learn to weld, and would probably be quite good at it - AFTER you have spent countless hours welding that boat back together. Now about the quality of the welds before that time ...... ?
If you really want to fix up boats to get to your goal, I would suggest you stick to that five year plan and find somebody else who wants to fix up THEIR boat but doesn't want to do the work. Around here there are plenty of those types around but not very many folks to do the work - just a lot of slackers, and that's probably the case in your area too. In this way, somebody else ends up with the bad financial math of fixing up boats, you could be living on a nice boat that you already have and even go for a sail now and then. Also, any any cash you have set aside or earn to fix up another boat could be used to pay down the principal on your loan: what makes a $100K loan hard to pay off isn't the $100K, its the fact that for most of the term of the loan, most of your payment goes toward interest. Any extra mony paid towards principal makes a HUGE difference in how long you'll be paying and the sum total of what you will have paid.

[ssullivan]

2 cents here and 3 cents there all adds up to a lot of really good advice! Thank you!!!

We have discussed everything over and over and over for days on end here. We are tending to agree with a lot of the good points so many of you have made. We just have to bite the bullet and pay off this big loan - and FAST so we don't have to pay $200K instead of the close to $100K we owe. Interest on these loans is nuts.

Also, welding is a very large drawback considering I do not yet have those skills. I can see the logic in the advice saying that I can't expect to do seaworthy welds my first day out (or month out) with a new welder.

I'd like to put out a very sincere thank you to those that posted to this thread to help us work through a difficult decision. The metal boat was basically gifted to us (price was so low it was incredible), but I think you are all right when you say it would be a bad move. Given some hard work, we should be able to pay down our current boat over the next couple years.

Anybody got a job for me? ha ha ha

Seriously, thank you very much for the advice. Sometimes when it's just 2 people, you end up going around in circles - especially when the two options are so closely matched. The advice given here was very helpful.

[Weyalan]

I hesitate to offer advice since my own life generally lurches from calamity to catastrophe and back, such that the fact that I have managed to end up with my own boat, bought and paid for, is a constant source of bemusement.

Nevertheless, keeping my trap shut has never been one of my strong suits...

Sean, it seems to me that the basis of your machinations boils down to the fact that you don't have enough dollars; correct? That may sound like stating the obvious, but it does bear consideration. Shortage of dollars is a perennial problem for many (most?) of us... I know that I have spent most of my life "on rice 'n beans". There is no simple answer to this problem, but here are a few thoughts... most of them obvious, some of them probably erroneous, but, hell, I can shoot the breeze with the best of 'em.

Not having enough dollars has 3 possible causes:
1. You ain't earning them fast enough
2. You are spending 'em too fast
3. Your idea of "enough" is unrealitic.

From everything that you have posted, I think that it is apparent that #3 can be discounted right away... you obviously know that you don't need to become a billionaire to get where you want to be. That leaves #1 & #2.

I would also suggest that #2, in general, is not really the problem. It seems to me that you and your partner live pretty frugally. Sure, servicing the loan is an issue (which I'm getting to), but aside from that, you guys do it on a shoestring.

So, really, what it boils down to is #1... you ain't bringing the dollars in fast enough. The bottom lineis that no matter how much you cut down on your expenses, you really aren't bringing enough in the door. Living on rice n beans is a good way to stretch your kitty to its maximum, but lets make one thing absolutely clear... it is no way to create a kitty if you haven't got one! Making a kitty is about making more money, not spending less money.

Now, in my experience (albeit limited), there are two ways of bringing in the dollars: a) Working and b) Asset growth.

Working:
I think it is fair to say that your earning potential is significant. You have, in the past, had the high powered, well paid job (as, from memory, has your partner). You could do so again. That well paid job may not be what you want to do. That well paid job may not be where you want to be. That well paid job may well make you miserable (but onlyfor as long as you do it)... but it is an option , and probably will always be an option. I'm not suggesting that going back to the rat-race is necessarily the correct answer, but it is certainly worthy of consideration.

Asset growth:
Not many of us get rich from working. Truth is, earning $50k or $75k or even $100k as a nine-to-fiver is a recipe for getting by, not a recipe for getting rich. Most of us, as you have probably read elsewhere, made our money through real estate or investment portfolio. There are people who get rich through their day job, but they are definitely in the minority. I only earn a tad over $50k p.a. (before tax), but I have a yacht and a kitty... I sure as hell didn't get either from working (as you know, I got lucky on real estate).

The fundamental idea that you need to get ito your head is that there is nothing wrong with debt as long as that debt is allowing you to increase your wealth... the obvious case is real estate. If you can borrow money at 6%, but your real estate is increasing in value by 8%, you are increasign your wealth. If you owe the bank at 10%, but your share portfolio is growing at 15%, you are laughing.

I owe the bank around a cool quarter mill, at 6.95%. But my current property is value at 350k and increasing at 9-10% p.a. and my managed fund, although currently only $80k, is increasing in the order of 12-15% p.a. That, my friend. is what is making me "rich", not my shitty 50k p.a. day job.

You owe a chunk of money on an asset that is not increasing in value. It is "earning" for you only insofar as it provides a means for you to earn (i.e. yacht chartering) and is "saving" for you in that it provides your house. Both of these things are plusses, but the bottom line is that when you finish paying off the loan, your 100k investment will be worth... 100k. This is, to me, a fundamental no-no. If you are going to borrow money, that money that you borrow must be earning more than you are paying for the loan.

Were I in your shoes, I would sell the boat and buy real estate. I wouldn't rush the sale... be prepared to wait 6 or even 12 months to get a reasonable price (but be realistic). Whatever proceeds you end up with from the sale after paying off the loan becomes the deposit for the real estate. Even 10 or 20k can get you a good asset with a 90% or even 95% loan. Get your property even if it isn't where you want to live, even if you don't much like the house, even if it is 100 miles from the ocean... Choose your property for growth, not comfort or pleasure. Go back to working the rat race. Both of you. Earn as much as you can. Make the loan payments, but put everything else that you can into a managed fund.

Give yourself a target... say 8 years. In 8 years (give or take), your real estate value should be getting close to doubling in value. If you bought a $200k place and have made your loan payments, it will be worth $400k and you will only owe $150k. There is a cool quarter million dollar profit right there. If you have also been making say $1k per month payments into a fund for 8 years, if you started with 10k, your fund will (conservatively) be worth 150k (if you can make 2k per month payments, it is like $330k). So, 250k from real estate and 150k from managed fund. That gives you 400k to buy a boat and have a kitty.... and bear in mind that was a fairly conservative plan.

Now I may be talkingout my ass (as I often do), and the figures I use are only ballpark, but it is what I would do.... your mileage, or course, may vary. To summarise... gotta climb the mountain to enjoy the view.

[charley]

Sean,
The idea of the steel hull with a dozen or so holes below the water line is not good. If you have not welded before getting your skills up to snuff to repair, reweld "below water line" will take some time, a couple years.
Now sandblasting is always so much fun!! If you are going to be doing that near the water you will have to prime immediately to prevent surface rust that can turn into rusted through hull once again.
It took two of us to a full weekend 2, 10 hour days to sandblast a 40 foot ocean container, with a sandblaster that has a 300 pound hoper on it. The hull would need inside and out right! Twice the amount of time.

Now for the boat you have now. If it is the same one that I saw listed for sale last year, damn nice boat, and I couldn't believe that you where selling it that cheap to be honest with ya.

If I where you I would move south during the winter and run a "sailing school" for the retirees in FL. Most charge ruffly $300-600 per head for a weekend course 2 days sailing round showing old guys new tricks of course you want at least 6 people per "class". Your local marina might have a bulliten board that you can print up cheap fliers to hang there also. Maybe a few days a week doing this will allow you to keep the boat you have now and still afford to enjoy some regular cruising.
We are about the same age and I have been racking my brain with a way to make my cruising plan 10 years from now. You are ten steps ahead of me in that regard.
IMO you should keep the boat you have now make a little extra doing a few extra charters every month or "sailing classes". Might be worth a shot, sinse you have so much time and money into your current boat.

[charley]

Also do remeber form my days as a mortage broker the small tricks of paying off a loan faster = less interest. First divide payment by 2, send half of payment at the beginning of the month marked principal only. This will reduce principal by that amount monthly so there will be no interest for that amount. Now not all banks will allow you to do this but it is worth a try. Also one extra "principal only" payment anually may not break you but sure does bring down the amount that they can charge interest on.
Good luck in what ever you decide.

[charley]

I have concidered and told my wife several times that we should sell everything and buy a boat and run snorkeling charters to afford not going to work daily. I am all for it, seems that I need the kids to leave home first though.

Here is a link that might interest you for making a living while sailing internationaly, you already have the charter bussiness.
Mahina Expeditions conducts sailing and navigation training and expeditions in the South Pacific and offers offshore sailing seminars

[44'cruisingcat]

Originally Posted by ssullivan

Selling our boat has turned into the most simple thing to do. Our asking price is well below market value and we had close to a dozen interested parties (as in ready to put offers and deposits) once we took her off the market in the fall. We have brokers with people already lined up to buy.
I think our most difficult thing is going to be finding the right move and re-fitting yet another boat. Live and learn... ha ha

I would suggest that you were selling too cheap. Remember, it's your labour that got the boat into the desirable condition it is now in - don't give your labour away free!

Overall, I'd have to agree with Weyalan - probably the quickest way to get cruising would be to sell your boat (for as high a price as possible) and buy a house, (hopefully in a growth area) and pay as much off the loan as you can as quickly as you can. Establish equity as fast as possible, then when you feel you have enough, sell up and buy a less expensive, but suitable boat.

[Boracay]

When I have found myself landlocked I think of building another boat.

This is next to impossible in Sydney these days. Land values are too high and NIMBY (Not In My BackYard) rules.

So if you have some flexibility in where you are going to live I would suggest going to an area where one could build a boat, or maybe even where a boat can be kept cheaply.

An area where local conditions allow a boat to be built next to a home.

It may well be easier to build a new boat from scratch than to fix up an old hulk.