Budget Be Damned

[Fiveslide]

Originally Posted by Dennis.G

Wondering if any depreciation of value of your boat was included in your "difference of our current assets" amount? We have been cruising for 5 years, and have owned boat 9 years and can only estimate value of boat but likely will in the end (when selling) see depreciation as a significant cost item of our time cruising.

He's already said he doesn't include the boat's value, considers the purchase money spent on it lost and doesn't consider it an asset.

This makes sense to me. His numbers can loosely apply to any one of us when you leave the purchase price of the boat out of it. For the purpose of these threads the boat's value is irrelevant.

[Paul L]

Originally Posted by Kenomac

I’m guessing when you wrote that.... you forgot about me. I get by just peachy on about €15 euros per day.

Did this include the two spinlock life vests and two AIS beacons you mentioned that you just bought? That would be about 3 months of your budget.

That's the problem with looking at other peoples budget. There are ones where so much is left out they are meaningless and the ones where they include expenses for boarding their dog or parakeet that no one else is likely to have.
I followed one budget on a blog of a friend for awhile. They were on the low budget end of cruising. He included everything in the budget except costs of a rental building they had. The nice monthly budgets stopped about the time they had to reengine.

[a64pilot]

Originally Posted by Paul L

The nice monthly budgets stopped about the time they had to reengine.

That’s the thing, if your just barely getting by and staying in the budget and not saving some every month, how are you going to handle even minor things that happen like clockwork, like a bottom job, much less a dismasting, blown engine or new Sails.
Many pull out that Credit card, and that’s a mistake, but they have no other option, add another disaster, cause sometimes bad things come in threes and they are sunk, sitting in some place while they try to find work to pay off the credit card.
It’s how I think at least some of those derelict boats we all see, occur.

[chowdan]

I tend to agree with with a64. I am in a refit and I still value the boat as zero. I know I wont get what I put into her in financial side of things, but it gives me a cushion that I can have in emergencies.

Great post SB. I applaud you for showing your numbers. It's one thing I am trying to get better at. I am very open about my income and expenses in person(and online) but I lack the time to display tracking measures(though I am working towards starting my own threads).

I am young(29, my wife is 26), we have already taken a 2 year mini retirement. I want to say to all the young folks out there, it's very possible to take "time" off work and travel. When I quit, I had a net worth of around $180k, and my job was paying $85k/year.

Now that I am back and in the working world(for just over a year), my salary is $95k, with bonuses that should push my income to around $110k. My current net worth is somewhere right around $125k and I should finish this year out at around $145k on the lower end of things.

My refit should be completed by end of the year and my expenses should dramatically decrease and my savings shall start growing much faster.

Its possible to live life differently and I implore that everyone should pursue what happiness really is.

[thomm225]

Originally Posted by chowdan

I want to say to all the young folks out there, it's very possible to take "time" off work and travel. When I quit, I had a net worth of around $180k, and my job was paying $85k/year.

You might want to rephrase that to some of the young folks out there.

The young backhoe operator I saw this morning while stopped at a redlight may not be able to take time off and travel

Also the guy that delivered 24 UPS batteries to me one early evening when it was going on 6pm. He said he had started at 4am.

I'm thinking he may not be one of the group of young folks that can take time off and travel for a couple years either.

These young guys are pursuing the happiness of feeding their families and paying their rent.

But if you are lucky enough to leave near the coast and are not making big money you can still sail/race/cruise locally which is great and you gain tons of experience without taking any extra time off from work!

[Paul L]

Originally Posted by chowdan

I tend to agree with with a64. I am in a refit and I still value the boat as zero. I know I wont get what I put into her in financial side of things, but it gives me a cushion that I can have in emergencies.

....

I just don't understand the logic that the boat will have zero value when you finish cruising. What benefit is there to making decisions on false data? I see hundreds of nice, equiped cruising boats every year out cruising. I have never seen any of these go on the market after the owners were done for zero dollars.

If you take good care of the boat it will sell for a decent price. Probably something between 50% and 100% of what you paid for it. The many thousands you dumped into it are long gone, but the base, cared for bones have decent value.

For those that think their cruising boat will be worth nothing when they are done, lets make a contract where I buy it from you for $1 when you are done - not to over pay, just to make it legal.

[letsgetsailing3]

Originally Posted by Paul L

I just don't understand the logic that the boat will have zero value when you finish cruising. What benefit is there to making decisions on false data? I see hundreds of nice, equiped cruising boats every year out cruising. I have never seen any of these go on the market after the owners were done for zero dollars.

If you take good care of the boat it will sell for a decent price. Probably something between 50% and 100% of what you paid for it. The many thousands you dumped into it are long gone, but the base, cared for bones have decent value.

For those that think their cruising boat will be worth nothing when they are done, lets make a contract where I buy it from you for $1 when you are done - not to over pay, just to make it legal.

They're not saying it will be worth $0. What they're saying is that they're not counting on money from it in their financial plan. If they get some money out of it at the end, it will be found money. And probably go into another boat.

Which is probably the smart way to do it.

[sailorboy1]

Originally Posted by letsgetsailing3

They're not saying it will be worth $0. What they're saying is that they're not counting on money from it in their financial plan. If they get some money out of it at the end, it will be found money. And probably go into another boat.

Which is probably the smart way to do it.

I wouldn't call it smarter that I consider the boat a $0 asset (I know it is really worth 1.5 years cruising cost as a fast sell price) but there is a time factor needed to get cash for it. But I consider it safer to not count it as 85-90% of my other assets are liquid.

Again this is just how I am doing it.


BTW - It's better to plan than fall into "failing to plan is planning to fail"

[a64pilot]

A boat is a luxury, one of the first things to lose value in tough times are luxury items.
When we are done cruising, will it be a bull or a bear market?
Yeah, I don’t know either, so when what something is worth is an unknown, the safest course of action is to assume zero.
Plus is was old when I bought it, when it’s time to quit cruising, it may be OLD, old things aren’t usually worth much.
Then will it be in as good a shape as it is now? Of course not. Why? Because I’m not replacing the rigging and buying new Sails, installing a new Watermaker, new windlass, new generator or new electronics before I sell it, and all that and more is new now.

[letsgetsailing3]

Originally Posted by a64pilot

Then will it be in as good a shape as it is now? Of course not. Why? Because I’m not replacing the rigging and buying new Sails, installing a new Watermaker, new windlass, new generator or new electronics before I sell it, and all that and more is new now.

This is the rule more than the exception.

People are trying to get value out of their boats, which makes sense. It's also why many find themselves doing a refit a year or two after they buy a boat.

Boats (and all of their components) degrade faster than most of us realize.

[Kenomac]

Originally Posted by letsgetsailing3

This is the rule more than the exception.

People are trying to get value out of their boats, which makes sense. It's also why many find themselves doing a refit a year or two after they buy a boat.

Boats (and all of their components) degrade faster than most of us realize.

Purchase a high quality product to begin with, and that doesn’t happen.

Sailorboy has his way of budgeting a good life for him and wife until death, and we have ours. His works for him and ours works for us.... both are the correct answers.

Lots of thread drift here, maybe it’s time to get back to the topic.

[a64pilot]

Originally Posted by Kenomac

Purchase a high quality product to begin with, and that doesn’t happen.

Lots of thread drift here, maybe it’s time to get back to the topic.

Ken, if memory serves I remember you saying you had to replace all the pumps in your boat soon after buying, had to redo the teak deck, which I’m sure was a huge amount of work and I’m sure other things.
Not beating on your boat, just saying it’s the nature of a boat.

[Paul L]

Originally Posted by a64pilot

A boat is a luxury, one of the first things to lose value in tough times are luxury items.
When we are done cruising, will it be a bull or a bear market?
Yeah, I don’t know either, so when what something is worth is an unknown, the safest course of action is to assume zero.
Plus is was old when I bought it, when it’s time to quit cruising, it may be OLD, old things aren’t usually worth much.
Then will it be in as good a shape as it is now? Of course not. Why? Because I’m not replacing the rigging and buying new Sails, installing a new Watermaker, new windlass, new generator or new electronics before I sell it, and all that and more is new now.

Do you know what the market will be for real estate, stocks, bonds, CDs, US dollars, Euros, or bitcoin when you stop cruising? Of course not, but there is still no reason to value that stuff as zero when financial planning. A boat is just another asset when its time to stop using it. Valuing it low is conservative, valuing at zero is just bad data.

[letsgetsailing3]

Originally Posted by Kenomac

Purchase a high quality product to begin with, and that doesn’t happen.

Sailorboy has his way of budgeting a good life for him and wife until death, and we have ours. His works for him and ours works for us.... both are the correct answers.

Lots of thread drift here, maybe it’s time to get back to the topic.

Agreed. Tell us how to get by on 15 Euro a day!

[GerryL]

SB1, many thinks for this candid look at finances and costs. It gives some of us hope of really being able to pull off an early retirement.