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Old 15-12-2015, 10:18   #46
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Re: How much can I responsibly afford to spend?

Cruising, as a life choice is a risky business. By definition you are venturing out into the great unknown.

Asking some people who don't know you, your lifestyle or your minimum needs is like asking us "Should I get married?" or "Should I move to Hong.Kong?".

REALLY not trying to be snarky here, I understand the trepidation, but it is an answer only you can answer. As Lizzy said so well we have all.made our decisions and some are living this life on less than others might spend for a week in St Barts.

The answers inside.you. good luck and.hope to.see you out there.
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Old 15-12-2015, 10:48   #47
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Re: How much can I responsibly afford to spend?

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Originally Posted by 2Hulls View Post
There's a huge difference between:

How much can I responsibly afford to spend?

and,

How much do I need to spend?

Based on what you described as your resources, you can afford to spend a lot more than many happy cruisers.

But only you can decide if this is enough. And you won't know this until you try.

Dave
+1

Its much more than required to buy & maintain a ~40ft production cat and cruise very comfortably as long as you want without touching whats left of the 1.2M.
You could easily be wealthier after a few years cruising than you are now as its kind of hard to spend 10k per month in many remote places.

But is this lifestyle good enough for you? Only you can answer!
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Old 15-12-2015, 10:57   #48
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Re: How much can I responsibly afford to spend?

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Originally Posted by D-Vector View Post
Hello all, new registrant here. Like many on this forum, I have dreamed of living aboard a multihull for quite a few years now, and I have worked towards the day that I leave the rat race and become a cruiser. To this end, I have prepared financially by saving money and by developing a passive income that can support a cruising lifestyle.

Once I take the jump, my plan is to cut my teeth in the Caribbean for at least a year before setting sail for other destinations. I'm writing today because I would like your opinion on whether or not I am financially prepared to take the leap, and for your thoughts on how much money I can responsibly spend on a boat, given the up front and ongoing operating costs.

In sum, here's where I stand financially. Excluding retirement funds, I have $1.2M in the bank, a passive income of conservatively $120K / year, and I expect annual increases of at least 5%. I am 47 years old and plan to live the cruising lifestyle for at least a few years.

At this point I don't know anything about the vessel I will purchase, other than it will be a multihull. I figure that I need to know how much I can afford to spend before I seriously consider any options.

Thanks for considering my question, and I look forward to your feedback.

Kind Regards.
If I read it right? You are in fine shape. financially. Your question may be better directed at boat choice and attaining the skills required. Best of luck.
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Old 15-12-2015, 14:10   #49
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Re: How much can I responsibly afford to spend?

A lot of posters here seems to be missing the point...he's had experience on the water (cat and mono & he prefers the cat), he's got the funds to make the dream a reality. He just wants to solicit a bunch of off the cuff responses on the internet from people he doesn't know that probably are qualified to even answer the question & definitely don't have enough information to do so if they were qualified.

I kid, mostly because I've asked the same silly type of questions here because its fun to get a variety of peoples takes on this stuff. I'm in a similar situation and hope to be out there next year cruising myself...even if you had ten times the funds and more experience you are going to second guess yourself. Just make a responsible plan and go for it. What I worry about is if I don't do it, I may never get out there. It is easy to fall into the routine of making a lot of money, consume stuff you don't need, rinse & repeat vs. doing something a little more meaningful with your life than adding to your portfolio balance.

Hopefully see you out there and we can commiserate on all the crazy first timer mistakes we've made...like everybody else on here did when they were first timers. I'm willing to bet I make some doozies, but they make for good stories!
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Old 15-12-2015, 18:48   #50
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Re: How much can I responsibly afford to spend?

Thanks to all the individuals who have posted constructive and useful comments. I very much appreciate your insights.

To be honest, I didn't really think anything of posing my question to the cruising forum, as I assumed that most of the members here are boat owners, and that the majority of you have gone through a similar exercise at one point or another. Despite reading many articles and blogs, and seeking out information that specifically addresses budgeting for a live-aboard lifestyle, I hadn't yet reached a conclusion about what I could responsibly spend on a vessel. As useful as the information on the Web is, it wasnít written specifically for me, and more importantly, reading a blog is very different than engaging in a dialog, like the one thatís facilitated here via this forum.

I really don't have an agenda other than trying to get a sense of what an informed community thinks. I realize now that the question is more difficult to answer than I had originally thought, since nobody but me knows the totality of my wants/desires/abilities/risk tolerance/etc. Nonetheless, your comments are instructive.

As an example, if I said that I had $50K in the bank with little to no income, and I was going to somehow finance a $400K Lagoon 39 to make my dream come true, Iím guessing that a bunch of people would quickly chime in and tell me that Iíd be nuts to exercise such a plan. The consensus would be that buying the Lagoon 39 with borrowed money would be irresponsible. This is useful information.

In my case, the consensus seems to be that I could reasonably afford a new-ish cat in the 40' range, with a ceiling of perhaps $400K. This is helpful, and incidentally, is consistent with what I have been thinking. Call me nuts, but I find the opinions of a bunch of strangers on the internet useful and informative, particularly when asking a group of individuals with the depth of knowledge that I presume is present on a forum that is geared towards cruising and sailing catamarans.

In closing I'll say that I like a64pilotís suggestion of a Lagoon 380 that I could use to ďcut my teeth.Ē Then, if the lifestyle suits me, I could upgrade in a few years, assuming I even thought that an upgrade was necessary. I would feel very comfortable taking this (or a similar) approach as I think itís responsibly within my means.

Again, thanks, and I do hope to meet some of you on the water one day soon.
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Old 15-12-2015, 20:49   #51
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Re: How much can I responsibly afford to spend?

I would think after purchasing a 40-50ft good used cat, that you would have enough money to last you a very long while, if not for the rest of your life. It would me.
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Old 16-12-2015, 03:47   #52
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Re: How much can I responsibly afford to spend?

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Originally Posted by D-Vector View Post
Thanks to all the individuals who have posted constructive and useful comments. I very much appreciate your insights.



To be honest, I didn't really think anything of posing my question to the cruising forum, as I assumed that most of the members here are boat owners, and that the majority of you have gone through a similar exercise at one point or another. Despite reading many articles and blogs, and seeking out information that specifically addresses budgeting for a live-aboard lifestyle, I hadn't yet reached a conclusion about what I could responsibly spend on a vessel. As useful as the information on the Web is, it wasnít written specifically for me, and more importantly, reading a blog is very different than engaging in a dialog, like the one thatís facilitated here via this forum.



I really don't have an agenda other than trying to get a sense of what an informed community thinks. I realize now that the question is more difficult to answer than I had originally thought, since nobody but me knows the totality of my wants/desires/abilities/risk tolerance/etc. Nonetheless, your comments are instructive.



As an example, if I said that I had $50K in the bank with little to no income, and I was going to somehow finance a $400K Lagoon 39 to make my dream come true, Iím guessing that a bunch of people would quickly chime in and tell me that Iíd be nuts to exercise such a plan. The consensus would be that buying the Lagoon 39 with borrowed money would be irresponsible. This is useful information.



In my case, the consensus seems to be that I could reasonably afford a new-ish cat in the 40' range, with a ceiling of perhaps $400K. This is helpful, and incidentally, is consistent with what I have been thinking. Call me nuts, but I find the opinions of a bunch of strangers on the internet useful and informative, particularly when asking a group of individuals with the depth of knowledge that I presume is present on a forum that is geared towards cruising and sailing catamarans.



In closing I'll say that I like a64pilotís suggestion of a Lagoon 380 that I could use to ďcut my teeth.Ē Then, if the lifestyle suits me, I could upgrade in a few years, assuming I even thought that an upgrade was necessary. I would feel very comfortable taking this (or a similar) approach as I think itís responsibly within my means.



Again, thanks, and I do hope to meet some of you on the water one day soon.

Now you've got it!!! Do that, and have a great time. The best advice so far was to spend as much as would not cripple you if you decide in 2 years time that you want out.


Sent from my iPad using Cruisers Sailing Forum
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Old 19-12-2015, 05:03   #53
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How much can I responsibly afford to spend?

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I'm thinking troll ... Surely anyone bright enough to put himself in that financial position is bright enough to answer his own question.

I am thinking no troll.

Reflecting tomfl's ideas, bright people learn to leverage the expertise of others as a basic personal skill to constantly develop. Yes, it's easy to think otherwise but for the time being, this thread shows no drift away from being authentic despite a few snarky, troll-like sarcasms that take us off topic.
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Old 19-12-2015, 05:30   #54
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Re: How much can I responsibly afford to spend?

As for boat design, a two step incremental approach that would allow for refining your taste could be Mahe Evolution (36')' Lagoon 380, and even Seawind. The Seawind and Mahe will deliver better sailing performance vs. the Lagoon. Seawind is more Spartan vs 380. Mahe rivals the accommodations of the 380 but still delivers a more crisp sailing ability. Lots of available inventory on the used market.

After a few years navigating your learning curve you could buy the boat of your dreams. Why buy a Lagoon 39 or Leopard 40 when you could get a Catana? (Accommodations + performance).

Two step lets you move into this sooner than later.
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Old 23-12-2015, 10:05   #55
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Re: How much can I responsibly afford to spend?

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Okay I'll throw my $0.02 in on this one since I went through a similar exercise. I assure you the question is not crazy, I just didn't bother asking because you'll get a ton of various responses...all of which are correct to the person giving them to you.


First off, congrats on creating such a nest egg and a passive income stream, that is awesome! I too came from an industry that although rewarding, definitely would grind on your soul...thankfully I saved up my pennies and made my escape earlier this year. There is no replacement for the freedom provided by escaping the rat race, its awesome and I highly recommend it! Couple questions regarding your passive income, (1) is this after taxes or before taxes (2) how secure/steady is it? Only you can really answer (2), but just something to consider.

Regarding how much to spend here is my rule of thumb. This is not an investment...it is a depreciating asset...a toy. Granted it is an awesome life changing cool as hell toy that you can live on, but don't mistake it for an investment or think of it that you can spend as much as you would on a house on land. My financial advice for a person our age (I'm 45) is that the boat purchase should not make up more than 10% of your total net worth (I'm actually going with a lower % personally). You mentioned you had other retirement investments and maybe the source of your passive income is real estate or a business that has value. Add it all up mark to market of what you could liquate today for and take 10% of that number. So let's say its $200k. You have a very nice boat, that won't get you in too much trouble (financially at least!).


If $200k means you get a 5 year old Lagoon 400, then that is what it means, or you could get a nicer Mono...but IMO that would be the range I would look at in your shoes. Also, it is okay to take things slow to make sure you make the right decision, but just keep making progress towards the eventual goal. Good luck and make sure to report back how things shake out for you!
Seriously, can I buy a 5 year old Lagoon 400 that floats for $200,000? Where?

I like your methodology but think you may be a little conservative, nothing wrong with that but with a million plus disposable and with your example a million non disposable I think he is safe in the $400,000 range as long as he insures the boat. His income is more than enough to cover a comfortable lifestyle aboard and would probably add to his disposable income unless he is a seriously big spender. Problems-problems, we all have them but they are all different.
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Old 23-12-2015, 13:29   #56
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Re: How much can I responsibly afford to spend?

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Seriously, can I buy a 5 year old Lagoon 400 that floats for $200,000? Where?

I like your methodology but think you may be a little conservative, nothing wrong with that but with a million plus disposable and with your example a million non disposable I think he is safe in the $400,000 range as long as he insures the boat. His income is more than enough to cover a comfortable lifestyle aboard and would probably add to his disposable income unless he is a seriously big spender. Problems-problems, we all have them but they are all different.

Seems like quite a few available ... http://www.theyachtmarket.com/boats/...ts/lagoon/400/
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Old 23-12-2015, 20:38   #57
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Re: How much can I responsibly afford to spend?

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Seems like quite a few available ... http://www.theyachtmarket.com/boats/...ts/lagoon/400/

Nothing under that figure ($200k) on this list
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Old 24-12-2015, 06:30   #58
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Re: How much can I responsibly afford to spend?

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Nothing under that figure ($200k) on this list
There are multiple boats within negotiating room of $200k...if you can negotiate 10% off a used boat you, well...I'll leave that one alone

My point was not specific to the actual model or final sails price it was generally what range of options were available. Yes I guarantee it is possible to purchase a 200k used lagoon 400 that floats...I know because it was a consideration. Its a tough value proposition but I'm going newer with the full realization of the depreciation I'll pay.

Yes Iaagnus, totally agree with you that my methodology for coming up with the "responsible $" figure is super conservative. I suppose it is the tightwad engineer in me that keeps that way. My limited experience traveling and enjoying such items just tells me that eventually we all get tired of stuff/places and are ready for a change of scenery or the next adventure. Sailing I suppose extends that timeframe because you can hoist the anchor and pick an new home.

Earlier this year I was sitting on a beautiful beach in Costa Rica at an awesome little B&B thinking to myself "damn, this is paradise...I could see living here forever". I met the ExPat owner who was great and happy as could be. Out of curiosity (and an episode of House Hunters International on HGTV) I started looking at real estate prices there, and to my amazement, the exact perfect place in paradise I stayed at was for sale. It was good for me to see that personally because it just helped me realize that no move or decision has to be permanent (other than maybe getting married or having kids).

If you keep your depreciating assets (aka toys) in the 5-10% range of your net worth, odds are pretty good you won't be eating cat food in retirement. So I would suggest to the OP that if you take my $0.02 as the one extreme on the ultra conservative side vs. other more aggressive approaches and end up somewhere in-between you'll come out just fine. I realize that I'm weird when it comes to all this financial stuff!
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Old 25-12-2015, 09:19   #59
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Re: How much can I responsibly afford to spend?

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There are multiple boats within negotiating room of $200k...if you can negotiate 10% off a used boat you, well...I'll leave that one alone

My point was not specific to the actual model or final sails price it was generally what range of options were available. Yes I guarantee it is possible to purchase a 200k used lagoon 400 that floats...I know because it was a consideration. Its a tough value proposition but I'm going newer with the full realization of the depreciation I'll pay.

Yes Iaagnus, totally agree with you that my methodology for coming up with the "responsible $" figure is super conservative. I suppose it is the tightwad engineer in me that keeps that way. My limited experience traveling and enjoying such items just tells me that eventually we all get tired of stuff/places and are ready for a change of scenery or the next adventure. Sailing I suppose extends that timeframe because you can hoist the anchor and pick an new home.

Earlier this year I was sitting on a beautiful beach in Costa Rica at an awesome little B&B thinking to myself "damn, this is paradise...I could see living here forever". I met the ExPat owner who was great and happy as could be. Out of curiosity (and an episode of House Hunters International on HGTV) I started looking at real estate prices there, and to my amazement, the exact perfect place in paradise I stayed at was for sale. It was good for me to see that personally because it just helped me realize that no move or decision has to be permanent (other than maybe getting married or having kids).

If you keep your depreciating assets (aka toys) in the 5-10% range of your net worth, odds are pretty good you won't be eating cat food in retirement. So I would suggest to the OP that if you take my $0.02 as the one extreme on the ultra conservative side vs. other more aggressive approaches and end up somewhere in-between you'll come out just fine. I realize that I'm weird when it comes to all this financial stuff!
Not gonna argue at all, I agree with your approach. The boat listing website in the link above seems much more realistic in price than any other website I've looked at, negotiating is not a problem for me. Right now I'm just looking to see what I might be looking at in a few years, Of course there is always the danger of a deal I can't pass up.
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Old 27-12-2015, 09:47   #60
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Re: How much can I responsibly afford to spend?

I think this is one of the things that people do wrong when managing their finances, and why banks LOVE people like this. Determining "how much you can spend" FIRST almost ALWAYS leads to over buying. This is why so many people become house poor. You go to the bank to apply for a loan.. the bank runs the numbers and decides you can afford $500,000. So, you go out and look for a $500,000 house, even if it far exceeds your needs.

Step one.. (in the financial world, according to Scarlet.. ).. sit down, and determine what you need. how many cabins? do you anticipate visitors? how many visitors do you want to limit yourself to at one time? How big of a galley do you really need? how much counter space do you typically use in prepping food? What are the appliances you just can't live without? what about electronics? which ones are cheaper and better to put in post purchase? what water Capacity do you need? What about rigging? will you single hand? how big of a crew will you have?

Step two.... start looking at boats that have these items as a bare minimum. Make a point of looking at new and used, in different age ranges, to determine whether you really gain that much buying new. (from watching the market, I'm seeing at least a 20-25% depreciation rate with in the first few years on new boats!! sometimes more!) THIS will give you your price range. If you spend more than this? Then you overbought.

It's really that simple.
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