What should I do. Cost of owing/maintain and living questions

[letsgetsailing3]

Originally Posted by a64pilot

Even though we didn’t buy a starter boat, well actually we did but it ended up being our cruising boat. I’d advise you to buy an inexpensive 30ish foot mono.
Reason is they are cheap, and will teach you everything you will need to know before you begin to cruise, maintenance, expenses, even what is a nice to have item and what is necessary. Even if you end up giving it away, you won’t be out of a lot of money.
Many things we have are actually nice to have and not necessary.

Once you have some significant time in the 30ish foot mono, I guarantee you your beliefs will change and you will have a much better idea of what you want.

I believe you can spend a lot of money on courses or Chartering and at the end of the day all you have is a thinner wallet and a piece of paper.
Just my opinion.

Had you started with a 30 foot boat, what would it have changed about your experience, or about the boat you ultimately purchased?

[boatman61]

OP.. No Money Guy here..
You only live once and you cant take it with you.. just dont jump off a cliff.

[sailorboy1]

Originally Posted by letsgetsailing3

Had you started with a 30 foot boat, what would it have changed about your experience, or about the boat you ultimately purchased?

Well I started with a 39’ boat. If I had gotten my current boat to start with it would have changed my experience by having about $10k more in my account now.

That just shows how little having a 30’ boat verse a 40’ plus boat probably teaches you from as cruising/live aboard. All a 30’ boat teaches you is that you want a bigger boat. In my case going from a 39’ foot boat to a 41’ was a huge increase in quality of boat living space.

[Shammi]

While I have been reading many recommendations for not financing a boat, I can’t get rid of an idea niggling me as to why it is a bad idea for someone who wants to cruise for a limited number of years (say 3 to 7 years). The way I see it, getting a 20 yr boat loan at 6% with 20% down, getting interest deduction as ‘primary residence’, and investing remaining 80% that you would have otherwise put in boat, and letting it grow at 8% (or more, which makes it even more attractive to do so), seems like a viable option. What am I missing?
When you are done cruising, sell, take the depreciation hit that you would anyway, and walk away.
Obviously, this assumes that you would do better with investing than the borrowing rate, but that’s not incredibly hard to do. Thoughts anyone?

[dwedeking2]

Originally Posted by Shammi

While I have been reading many recommendations for not financing a boat, I can’t get rid of an idea niggling me as to why it is a bad idea for someone who wants to cruise for a limited number of years (say 3 to 7 years). The way I see it, getting a 20 yr boat loan at 6% with 20% down, getting interest deduction as ‘primary residence’, and investing remaining 80% that you would have otherwise put in boat, and letting it grow at 8% (or more, which makes it even more attractive to do so), seems like a viable option. What am I missing?
When you are done cruising, sell, take the depreciation hit that you would anyway, and walk away.
Obviously, this assumes that you would do better with investing than the borrowing rate, but that’s not incredibly hard to do. Thoughts anyone?

Being debt free allows you more options if things go bad. If you have cash reserves available then financing can be an option like you described (then you can pay off the loan if the investment world changes for the negative).

The OP has concerns about financial stability and low monthly income. Not having to worry about a monthly payment gives you options in regards to instability and stretches the monthly income further.

I recently lost a well paying job (4x monthly expenses). Since I own my boat outright I was able to relocate to a location that was cheaper/more convenient for anchoring/mooring out, finding a job that, while it pays dramatically less, pays the monthly bills and allows me to continue on my boat projects. If I had a mortgage payment I would have had less options available as I couldn't settle for the lower paying job. I would have been required to stay in a less desirable location.

[TheLastPirate]

Originally Posted by Shammi

While I have been reading many recommendations for not financing a boat, I can’t get rid of an idea niggling me as to why it is a bad idea for someone who wants to cruise for a limited number of years (say 3 to 7 years). The way I see it, getting a 20 yr boat loan at 6% with 20% down, getting interest deduction as ‘primary residence’, and investing remaining 80% that you would have otherwise put in boat, and letting it grow at 8% (or more, which makes it even more attractive to do so), seems like a viable option. What am I missing?
When you are done cruising, sell, take the depreciation hit that you would anyway, and walk away.
Obviously, this assumes that you would do better with investing than the borrowing rate, but that’s not incredibly hard to do. Thoughts anyone?

You can play around with loans, and interest, and hoping your investment makes more than your loan...but it wont.. newer boat is going to have a quicker depreciation ..and its going to have more gizmos that if you don't keep up, when you sell its going to be worth even less.

Take your monthly income, buy a cheap boat cash, and go from there. You make enough to squeak by on a live aboard on the hook...not at a marina. Squeek by...not have a bunch of extra..you shouldn't even be thinking about a loan. Add a loan to that and three other things that have to fall together to make sure you've got the jack each month to live and youll regret it.

Didn't you say you had like 150 or more K anyway? Today a new cat is say...250k or a almost new one...and that's what you want to finance...so its going to depreciate like crazy for at least the first ten years. And its going to have issues from the factory to deal with..a shake down if you will.If you buy one for 150k that's a say...1986 for example...its depreciation has come to a crawl..remember in 1986 it was brand new, top of the line, but now its been worked,and stuff that didn't work has been removed, and things that were missing have been added, and weak links have been replaced and fixed etc...and you are saving tons of money, and have a better resale, plus the stress of a payment is gone.


Bottom line...the only winners in a loan , is the bank..you can quote some clichés, nd a banker will tell you why its better to get a loan, he or she may even believe it...doctors used to believe in bloodletting too.

I have never had a loan in my life..Ive owned two houses and many boats. I have bought what I could afford, and been able to travel, change careers on a whim, live a carefree life because of it..When you only really really have to come up with food money to live..so many stresses are gone..and isn't that what cruising is about, travel and a stress free cheaper life?

[letsgetsailing3]

Originally Posted by sailorboy1

Well I started with a 39’ boat. If I had gotten my current boat to start with it would have changed my experience by having about $10k more in my account now.

That just shows how little having a 30’ boat verse a 40’ plus boat probably teaches you from as cruising/live aboard. All a 30’ boat teaches you is that you want a bigger boat. In my case going from a 39’ foot boat to a 41’ was a huge increase in quality of boat living space.

Maybe it saved you a lot more than 10K. Because, who knows, maybe your SECOND boat would have been a 38, and you'd just now be coming to the realization that you need a 41!

[Mattm]

How much longer do you have left on your mortgage? In most cases property is an appreciable asset that you should absolutely not sell. This asset is leverage able which you could borrow against if an emergency were to arise. further if you have 120k invested in effective vehicles you could earn passive income on your equity. In many cases what you will earn on a 120k investment will pay out higher yields than what you'd pay on the financing for a 120k boat. It would not be unreasonable to say that if you were to finance the boat and invest the capital after a 15-20 year period the boat would be yours and that 120k could now be worth 200-500k. And that is without making a single boat payment from your own income. This is not without risk. But everything in life contains risk.
If you are creative there are many ways to make your dreams come true. A good financial advisor could help you come up with many strategies to make this dream happen

[AKA-None]

Originally Posted by thomm225

Since you have never sailed, why would you throw most of your savings into something you may not even enjoy.

You have to consider the time and the space.

You will have to spend a lot of time on the boat and there isn't a lot of space compared to your home or apartment.

Plus when you are not in the mood, the weather will change and you will have to deal with it.

It's not like coming home at the end of the day saying Ok, I'm done!

Buy a boat for $5,000 - $30,000 and try sailing for a while to see if you enjoy it.

My apartment feels small at times and it's about 1000 sq ft. The house is 2100 sq ft. My boat is 27' and has an 8' beam and is the perfect amount of space for a few days to a couple weeks, but I don't know if I'd like it for a few months

This really is a very important point. You really need to understand if you’ll even like it. I sailed for a few years on other people’s boats Beto bought my boat. And that boat is smaller than live aboard and sail anywhere. Just to make sure I liked it and to learn how to fix stuff. And cheap enough I could walk away.

[captlloyd]

Originally Posted by Shammi

While I have been reading many recommendations for not financing a boat, I can’t get rid of an idea niggling me as to why it is a bad idea for someone who wants to cruise for a limited number of years (say 3 to 7 years). The way I see it, getting a 20 yr boat loan at 6% with 20% down, getting interest deduction as ‘primary residence’, and investing remaining 80% that you would have otherwise put in boat, and letting it grow at 8% (or more, which makes it even more attractive to do so), seems like a viable option. What am I missing?
When you are done cruising, sell, take the depreciation hit that you would anyway, and walk away.
Obviously, this assumes that you would do better with investing than the borrowing rate, but that’s not incredibly hard to do. Thoughts anyone?

I think cruising/live aboard folk tend to want to cut as many strings as possible to conventional living, nothing wrong with that. But it can be emotional thinking, and lead to rash decisions. For some people you spell out a strong case, or, “ don’t throw the baby out with the bath water”.

[Pete17C]

Originally Posted by Shammi

While I have been reading many recommendations for not financing a boat, I can’t get rid of an idea niggling me as to why it is a bad idea for someone who wants to cruise for a limited number of years (say 3 to 7 years). The way I see it, getting a 20 yr boat loan at 6% with 20% down, getting interest deduction as ‘primary residence’, and investing remaining 80% that you would have otherwise put in boat, and letting it grow at 8% (or more, which makes it even more attractive to do so), seems like a viable option. What am I missing?
When you are done cruising, sell, take the depreciation hit that you would anyway, and walk away.
Obviously, this assumes that you would do better with investing than the borrowing rate, but that’s not incredibly hard to do. Thoughts anyone?

I agree, taking out a car loan doesn't make too much financial sense, but lots of people do it so they get to drive a nicer car.

why is a boat different?

[Shammi]

Originally Posted by TheLastPirate

newer boat is going to have a quicker depreciation ..and its going to have more gizmos that if you don't keep up, when you sell its going to be worth even

Depreciation will not change whether you finance or buy full in cash. Besides, one can always finance a nearly fully depreciated boat, too


If one wants an equipped, cruise ready, greatly depreciated 40’-47’ catamaran, you are still in the $400-$500k range, conservatively, after adding any upgrades still needed. That’s a LOT of money for most people, even if you had the cash. And a lot of money to take out from an investment.

[daveball]

In 1994 I retired and bought a used 40' mono which appeared to be perfectly suitable for $85k. Over the next two years learned to sail it and spent almost as much again on upgrades. Lived aboard for the next 16 years traveling from Victoria BC though the Pacific (see Dreamers and Doers Sailing the South Pacific) to NZ, Australia then on to Malaysia. A great experience, good days and bad. No debt, some income, always something needed on or for the boat.

[januszr]

Originally Posted by chuckr

A couple of thoughts - first thanks for your service.


second - take a couple of sailing lessons and learn if it is for you or not. I would suggest ASA 101 and a couple after that and learn just a little. You will get a feel for whether you like it or not.


Third - if it were me and we made this choice - DO NOT BUY A STARTER boat. you can not afford to take the lose on selling it when you want to get a bigger boat. Our first and only boat and still our boat is 40' Jeanneau - are we great sailors? Nope have we sailed a lot? yep - we have probably 40k nm underway and a crossing of the Carib from east to west and an Atlantic crossing - all 2 handed - you can do this.
Find a sailing club nearby you and join but watch out for the racers who think they are the reincarnation of Dennis Conners.


Fourth we have put our cost out there for the past 10 years here http://www.cruisersforum.com/forums/...ta-213259.html

some years are good last year was really really bad but with a 15 year old boat that has been underway for 11 years it was time for some major upgrades and work


any other way we can help just let us know and good luck

The spreadsheet is absolutely invaluable for someone looking into buying a boat. Thank you Chuck so much for sharing.

Janusz

[Lost Horizons]

Originally Posted by Pete17C

I agree, taking out a car loan doesn't make too much financial sense, but lots of people do it so they get to drive a nicer car.

why is a boat different?

If you plan to use the boat as a daily commute to work, there is no difference.