Budget Be Damned

[Trimaran Ken]

Originally Posted by letsgetsailing3

No worries, none of it really matters. Different people plan differently, and it all works out in the end.

No, it doesn't always work out in the end. There is no one size fits all system, but not thinking about your financial situation vs life style is dangerous.

Discussions about groceries and other expenses are helpful because they get people to think about their total cost of living.

Ken
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[Whisper 2]

You planned, I planned, we have a similar situation...Well done to both of us!

[a64pilot]

Actually I believe I do understand.
However as you say no one can truly predict inflation or ROI, so to cover even the worst case scenario, you have to have what will most likely turn out to be an excess of money in the pot.
I do understand it’s variable, you can vary your expenses to some degree.
In our plan, we buy a house in 2022. I don’t expect to do that, and the longer I leave the money invested, the more I can spend later in life.

However you should have a plan, what if we hated cruising, want about if or when she says it’s me or that **** Boat? So I planned so that cruising could end in 2022.

So long as your plan is flexible and you don’t put unrealistic number into it, it will work.
The people who think a 20% ROI is sustainable, I’m afraid will be in for a rude awakening.

[RickG]

Another great post. We are cruising and I am still working remote. I expect that will get old for my business partners in a year or so. We don’t live on a budget now, but I do max out 401k and add funds to the cruising kitty. Your numbers show the way forward for us when I stop working full time and just do occasional gigs. Thanks.

Cheers, RickG

[Trimaran Ken]

Originally Posted by sailorboy1

Boat is pay off I’m debt free

I read your original post. My only criticism is that you should be including your boat and rental house (at market value) in your net worth calculations.

It makes no sense to value your house at what you paid. It's value is what you would get if you sold it. Zillow.com will give you an estimate of value. You can subtract sales costs from that (maybe 7%). You should have a rough guess about the value of your boat.

Ken
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[sailorboy1]

You guys are working too hard to complicate it and try to put a square peg into the round hole. It will go in with the right conditions even f it doesn’t fit.

All I did in post 1 was show how it’s been working for ME

There’s no exact “right” answer to whatever you guys are trying to win discussion wise.

[sailorboy1]

Originally Posted by Trimaran Ken

I read your original post. My only criticism is that you should be including your boat and rental house (at market value) in your net worth calculations.

It makes no sense to value your house at what you paid. It's value is what you would get if you sold it. Zillow.com will give you an estimate of value. You can subtract sales costs from that (maybe 7%). You should have a rough guess about the value of your boat.

Ken
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I know all those things and it makes sense for me, and since they are my numbers that’s the only one they need to make sense to.

Thanks

[letsgetsailing3]

Originally Posted by Trimaran Ken

No, it doesn't always work out in the end. There is no one size fits all system, but not thinking about your financial situation vs life style is dangerous.

Discussions about groceries and other expenses are helpful because they get people to think about their total cost of living.

Ken
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I agree that it's a useful discussion. Nothing in any of my posts would be in contrast with that. And it does always work out in the end. Maybe not optimally if it isn't well thought-out.

This overall discussion is useful, but budgets are only useful if people are honest about their expenditures, the more comprehensive, the better.

Sailorboy's original post is useful input, as it's both comprehensive and provides the basic parameters on which it's based.

[Painless]

1970 -2017 (47 years) S&P averaged 10.8% return.

[brettnkay]

Great post, very relevant for anyone trying to put a realistic plan in place. Thank you.

Would you be willing to share how much of the $48K annually was going to boat maintenance/repairs/upgrades, and whether it is coming it at the common rule of thumb of 10% of boat value?

[SoundWave]

We are planners, moving aboard in 5 weeks (!) after 30 month countdown.

We have enjoyed your transparent posts, please know that you have helped several other sailors.

Bravo!

[Trimaran Ken]

Originally Posted by Painless

1970 -2017 (47 years) S&P averaged 10.8% return.

As the old saying goes:
"Past returns are no guarantee of future results".

There are some five or ten year periods in there where things did not go so well. The older you get, the less time you have to recover from a bad time in the stock market. If you are counting on 10% every year to maintain your lifestyle, you may end up high and dry.

Suppose your only income was from your S&P returns. You are living on your 10.8% when things go south. Now you have a 2% return. This is not enough to live on, so you are now drawing down your principal every month. Eventually, the market goes up again, but by this time you have decreased you principal, thus decreasing your overall income even after returns are high again.

There are lots of different ways people use to plan their finances. There isn't any one way that is best or even good for everyone, but anyone who thinks financial planning is simple is not being realistic.

Ken
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[daletournier]

Originally Posted by Painless

1970 -2017 (47 years) S&P averaged 10.8% return.

Or..... Produced by JP morgan recently.

[daletournier]

Originally Posted by daletournier

Or..... Produced by JP morgan recently.

[daletournier]

Originally Posted by Trimaran Ken

As the old saying goes:
"Past returns are no guarantee of future results".

There are some five or ten year periods in there where things did not go so well. The older you get, the less time you have to recover from a bad time in the stock market. If you are counting on 10% every year to maintain your lifestyle, you may end up high and dry.

Suppose your only income was from your S&P returns. You are living on your 10.8% when things go south. Now you have a 2% return. This is not enough to live on, so you are now drawing down your principal every month. Eventually, the market goes up again, but by this time you have decreased you principal, thus decreasing your overall income even after returns are high again.

There are lots of different ways people use to plan their finances. There isn't any one way that is best or even good for everyone, but anyone who thinks financial planning is simple is not being realistic.

Ken
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Exactly, and this is where I find fault with the "FIRE" movement.