remote workers financing a live aboard

[MondayNever]

"Rich" techies, young inexperienced couples buying big boats, boat mortgages - this is ground zero for Stuff that Annoys Sailors on the Internet.

One line of thinking seems to be dominating the responses to this thread:

"If they make so much money they should be able to pay cash." Maybe, maybe not. Perhaps they are just profligate spenders and haven't saved much. Or maybe they have been investing aggressively and would prefer to not liquidate those investments. Also, keep in mind that they have been in the work force for <10 years, didn't start at that salary, may have gone to grad school, had student loans, etc etc. Making $300k when you're 33 is not the same as being 50-something and having had 25+ years of earning and investing behind you. And what should be obvious to absolutely everyone is that someone who grosses $300k is not taking that home. They are in a high tax bracket and still have ongoing living costs. It doesn't all get saved.

My own opinion about their situation: if they are very confident that they can indefinitely maintain enough income, then it's not an outrageous plan. But from my stand point, being in a similar position, I wouldn't be comfortable with it. My wife and I are temporarily (and maybe permanently) working remotely in similar industries to these guys, but I feel like it puts a target on our backs when lay offs come. It's easier to fire the guy that they don't see in the office every day. We always spend/save as though one of us is going to lose their job tomorrow. We have always felt that way, but triply so given the current pandemic and the real likelihood of a prolonged economic downturn. We think of our boat as a potential hedge against some of that hardship precisely because we paid cash and we know that we can move onboard full time and dial back our spending to bare bones. If we had major fixed monthly expenses we'd be absolutely reliant on keeping the money hose turned on high, which may not always be possible.

So... depends on their risk tolerance and ability to keep the money flowing.

[aybabtme]

Lots of good comment since my last post. I think I agree with a lot of what people are saying along the lines of: "This only works if they never get laid off and never lose their income". Which is super risky, since it's not an asset you can turn into cash in a month or two. Unless they have enough invested/savings to cover the amount they financed.

I'm not exactly sure why they're still based in CA for their taxes, it's obviously not optimal. They wouldn't be the first people I see like this... who didn't bother to change their residency yet. I know California makes it hard. When I left Canada, I had to fulfil a bunch of stringent checks to prove that I was indeed leaving Canada, or else the Canadian tax office would have asserted their right to tax me. Had to close most of my bank accounts, move/sell all my stuff out, and avoid spending too many days in Canada that year. It's kind of a hassle to leave a high tax jurisdiction, so it's probably the same for them in California. If you own anything in the jurisdiction that could make you look like you're not reaaaally leaving, the state will call ******** on you and send you a bill.

All in all, I guess their argument only makes sense if they count on never losing their income. Seems super risky to me. Hopefully that's convincing to them! But in the end, it's also not my problem.

[Carl-T705]

Originally Posted by aybabtme

Friends have had this idea of financing their next boat. My default is to only pay cash for boats/cars/etc, since it's a depreciating asset. But their argument is that they would use it as a primary residence. Here's the rundown:

They're a couple in their 30s who live nomad lifestyles and work remotely (from wherever they're located) in the tech industry, bringing home tech industry average salaries 150k/y each and more with equity grants (I'm not privy to how much), and have been for years. Their income is steadily growing year over year. They have no debt, they max out their 401K, etc...

They're currently in short-term rentals moving from cities to cities, spending seasons in different part of the world from time to time. They're uninterested in buying a house and staying put. They'd like to continue being nomad but with a boat, to avoid paying rent. They have boating experience; they know they want to live aboard. They'd like to get a newer, bigger sized boat than the day-sailer they have right now, which they find is too cramped to live on. They think they could better spend their rent money on a marine mortgage. They think they can afford payments on a 400 to 500k$ boat. They don't have the cash to buy outright, but can afford a 20% down payment.

Would it make sense for these people to get financing?

Like I said in the preface, I'm feeling pretty icky about their situation. My default position is that they should wait and save money until they can buy it outright. Their counter argument is that while they wait, they're throwing the same amount of money at a rent for a place they don't own, and that financing a depreciating asset is better than throwing money at their landlords. Their argument gives me pause, and I'm not sure how I feel about it. In a way, it makes sense, but at the same time, it feels wrong for some reason. Maybe I'm too conservative?

. What they can't AFFORD to buy a boat, either they are scamming you or they are childlike in their lifestyle . I wouldn't sell them a used car... Or I suppose they would lease a used car because of their nomadic / careless lifestyle. Good Luck with the plan.

[aybabtme]

👍🏻 awesome contribution

[ArmyDaveNY]

Originally Posted by letsgetsailing3

Inflation means PRICES get inflated, not money. But there's an awful lot going on in the economy right now, so some of the conventional wisdom is going to be a little off. Tread carefully with the major financial decisions.

Exactly, which is what I said. Given the massive amounts of money being printed, somewhere in the economy we will most likely see inflation. I apologize if I was unclear.

[aybabtme]

If today's dollars takes 1h of work to produce, and there's inflation, tomorrow's dollars takes 2h to produce, and you would have been better off buying today than tomorrow. Inflation encourages spending as soon as possible since tomorrow's money is worth less. Deflation discourages spending, since you're better off sitting on your cash.

So if an inflation period is coming, if anything, it means today is a better day to buy than tomorrow.

[letsgetsailing3]

Originally Posted by aybabtme

If today's dollars takes 1h of work to produce, and there's inflation, tomorrow's dollars takes 2h to produce, and you would have been better off buying today than tomorrow. Inflation encourages spending as soon as possible since tomorrow's money is worth less. Deflation discourages spending, since you're better off sitting on your cash.

So if an inflation period is coming, if anything, it means today is a better day to buy than tomorrow.

A boat is a depreciating asset, with maintenance and carrying costs. It's not an investment. So from the perspective that you're definitely going to own a boat, you're right. If you're thinking of it as an investment, I'm not sure the math is so clear cut.

[letsgetsailing3]

Originally Posted by ArmyDaveNY

Exactly, which is what I said. Given the massive amounts of money being printed, somewhere in the economy we will most likely see inflation. I apologize if I was unclear.

I figured that's what you meant, but you said:



so they'd be paying back any loans with inflated money

I'm not sure it's the overriding factor when you're considering the purchase of a depreciating asset that requires maintenance, time, and carrying costs. The calculation is a little different than real estate. Right now, and for the foreseeable future, cash is king.

[Shrew]

This discussion is weird and somewhat moot.

1) The subject is, apparently, not the OP. So at that point, who cares??

2) There is not enough financial information to discuss beyond speculation. So why bother?

There is no way to discuss or debate finances when the financial data isn't present.

[AZ Parothead]

Our two cents since we DO this (finance a remote work/life).

Background: Wife and I have been remote workers (independent contractors) for 15 years. We have a successful business, no short term debt, and a decent book of business. Joint income: between 150 and 300K USD per year depending on how good a year it is.

We currently finance our RV (2020 Grand Design Reflection 315RLTS Travel Trailer towed by a 2019 Ram 2500) and are about to own a cruising sailboat again. We are digital nomads full time in our RV (and soon 50/50 boat/RV).

Thoughts:

We finance our Truck/RV combo for 2 reasons: we need reliability and we need business expenses.

We travel around the country to our client sites which makes the RV/Truck an invaluable resource and a legitimate business expense. It's our office, our place of work, and our home. Our legal base for the business is AZ (and it's our home base) and most of our clients are East Coast based so we spend the majority of our time working remotely from various locations on the East Coast.

Our RV/Truck (approx 100K financed) is our primary business expense and allows us to reduce our business income and associated biz taxes. Obviously each situation is different but our business couldn't survive without the deductions. The money we pay in interest to the bank is much less than than the value of our deductions (especially under the new tax law that allows complete depreciation and roll overs).

The boat is a different story: we spoke to our accountant and several other independent contractors. Legally you can take the boat as a primary residence and deduct the mortgage interest but the value of that deduction was substantially reduced under the same new tax laws. We bought an older boat (1984) that's well past her depreciation curve. If we maintain and slightly upgrade her, we can recoup what we paid for her and cruise at the same time. Our office will still be our RV/Truck combo as we will use both to visit clients while on "boat time."

The second reason we need a new, warrantied, truck and trailer is that we need it to ALWAYS work; or at least we need to be able to get parts when they do break. We need to get to our customers in order to get paid.

This is a greater concern for the trailer as the RV industry is NOTORIOUS for lack of quality. We toured the factory, did our homework and purchased what we believe is the best travel trailer on the market for the price. (You can make an argument that Airstream is better but they are expensive and we just don't like them....)

The truck was purchased as a matter of price versus functionality. We would have preferred an F250 over the 2500 but the deal wasn't there at the time we bought. But all the auto manufacturers over a good warranty service network (that we've taken advantage of twice since we got the truck in January) so, to us, which truck to buy was primarily a matter of money, not product. We like the 2500, just not as much as the F250.

So I suppose it comes down to a matter of risk tolerance and planning. Your friends MIGHT be smart to finance, but they also might not be. They need a plan and to talk to an accountant. They need to design a strategy that works for them.....

[ArmyDaveNY]

Originally Posted by aybabtme

If today's dollars takes 1h of work to produce, and there's inflation, tomorrow's dollars takes 2h to produce, and you would have been better off buying today than tomorrow. Inflation encourages spending as soon as possible since tomorrow's money is worth less. Deflation discourages spending, since you're better off sitting on your cash.

So if an inflation period is coming, if anything, it means today is a better day to buy than tomorrow.

Yes and no. If they buy today and pay cash that is true. If on the other hand they buy today, but take a loan/mortgage then they are paying it off with devalued dollars, especially given today's artificially low interest rates.

This is why the Fed and some other central banks seek a target of 2% inflation. Inflation allows central banks and governments to spend what they don't have because they are paying off today's debt with tomorrow's devalued money.

Someone earlier made a great point, and that is whether they are likely to continue to receive their present income. If that is in question, then clearly they should not take a loan.

[letsgetsailing3]

Originally Posted by Shrew

This discussion is weird and somewhat moot.

1) The subject is, apparently, not the OP. So at that point, who cares??

2) There is not enough financial information to discuss beyond speculation. So why bother?

There is no way to discuss or debate finances when the financial data isn't present.

It's true, as the devil is certainly in the details.

[aybabtme]

Originally Posted by letsgetsailing3

A boat is a depreciating asset, with maintenance and carrying costs. It's not an investment. So from the perspective that you're definitely going to own a boat, you're right. If you're thinking of it as an investment, I'm not sure the math is so clear cut.

If the value of dollars depreciate faster than the boat, then it's an investment! 🤣

[GeminonTraveler]

Originally Posted by hamburking

A boat is going to cost a lot more than rent.

That depends wildly on your standard of living. I was paying 1100 a month plus 1000 in utilities and car note and insurance and have spent about a tenth of that sense living aboard even gradually upgrading.

[kevin_j]

I usually don't wade into topics like this.... but I have to speak up a bit.

So a little background. I've been working in the tech sector for over 20 years. A good bit of that time included carrying a rucksack, rifle, and a computer. So the not so gracious comments about "Techy's" or "Silicon Valley" types is pretty disappointing.

For the last five years I've been working fully remote, on the road, working a loop from BC to Baja Sur in a truck camper. There are a surprising number of us out here doing this. What's more surprising is that there are currently well over 2 million full-time nomads in the United States, but that's another story.

In tech today and yes even before COVID, remote work was common. A large number of companies even started with a "Remote First" ethic. Remote work in Tech is here to stay and the number of open jobs grows daily. Hell I have 9 open positions right now!

When I landed my spot, the very first thing we did was downsize and start moving. I also owned a sailboat in Puget Sound at the time.

Even fully financed into the boat, considering insurance, moorage, and maintenance, the boat was drastically cheaper than the rental house. As for "why not buy"? I'd much rather have cash in the bank and invested making money and cover loan points. My thinking however is contingent on the idea that the boat I'm buying has:
1. Already hit a large portion of it's depreciation curve.
2. Is a brand and make that has a history of holding value.
3. Has an active sales market.
4. Is not a restoration project.

I'd put Nordhavn or Hallberg Rassy in these categories. For me personally, 500K doesn't fit my payment tolerance, but there is something to be said for buying in to a better known boat.

So maybe I'm missing something here, but the cash I would have paid for the boat could be invested making a return instead of burning. Plus for DINK folks (Dual Income No Kids) we need every damn tax break possible while at the same time not having to fight the damn HOA about the type of bushes in the yard.

There's a philosophy in the Nomad community which deals with full commitment to the lifestyle. Both emotionally and financially, if you can cut ties to your stuff/house and still earn, going full in on a RV or a Boat or even a cabin in the Backcountry works.

Lastly the only thing that matters is time, I can always make money or change my lifestyle. No two people in the world have the same exact financial values. It's not really about the money though right? Its about the experiences, the value of a life built on self-sufficiency, exploring, pushing your limits, committing to an environment where learning is continuous and risk management is your life line.

OP, tell your friends congrats on making a commitment. Nothing the rest of us out here think really matters