Long-term financial preparation for boat ownership

[SuburbanBeat]

Hey everyone. I'm Sean. I'm 25 years old and only recently got it in my head that open-ocean sailing is something that I would very much like to do one day, possibly after graduate school (another 6 years potentially).

Anyway, I am completely wet behind the ears when it comes to sailing. I have a million questions, but one that keeps bugging me is how individuals afford boats if they weren't born with a trust fund or are in fields with fairly low salary caps. Can an individual finance a boat the same way they might finance a house, especially if it's being lived in? Thanks in advance for answering this beyond-basic question!

[sailorboy1]

Originally Posted by SuburbanBeat;1150583
Anyway, I am completely wet behind the ears when it comes to sailing. I have a million questions, but one that keeps bugging me is how individuals afford boats if they weren't born with a trust fund or are in fields with fairly low salary caps. [COLOR=red

We get jobs work and save! [/COLOR]Can an individual finance a boat the same way they might finance a house, especially if it's being lived in? Yes or course. Thanks in advance for answering this beyond-basic question!

On the other hand you have years to come to your senses!

[mmr]

Hey SuburbanBeat,

Sounds like you are where I was six years ago. I am 31 and 2 months away from defending my dissertation ( and 5 months away from buying a boat)!

With six years of grad school the math puts you just on the positive side of buying a house. I bought one that was a former crack house and spent the next year fixing it up. After that, I rented out the other two rooms to kids I worked with. I just sold that house on Friday. Between that one and another I did as an under grad, the wife and I are hoping to have enough to do a two year cruise. I also have a little savings from working in the summers.

If I was going to do it again I would definitely do it the same way.

Mitchell

[hellosailor]

"Can an individual finance a boat the same way they might finance a house, especially if it's being lived in? "

Your best bet is to go to your local credit union, bank, and marine finance company (probably nothing local so you'll call them) and ask each one what their terms are. All will be different.

Most won't finance a liveaboard with no land residency because, duh, you might just skip town and sail away. Most won't finance a boat over a certain age. A few won't care if you are living aboard but that will often be a stopper.

Bottom line? you've got to ask the lenders, because each one will have a whole different set of requirements. Six years from now, those may all be different.

[Mimsy]

It all boils down to are you willing to live below your means now to reap the rewards later?

I think it is really crucial if you want to do this to NOT borrow money. If you have big student loans, it will move your departure date because you need to clear that off first. So you might have to choose between grad school or sailing.

I would live well below your means and sock everything away until you have the cash to buy a boat. Then I wouldn't buy the most expensive boat I could find but the cheapest that will meet my needs. Then move aboard, then stock pile cash to go sailing. It will mean not going out to eat, not buying a nice car but a used one that meets your needs, not taking vacations, noy buying that iPhone, big screen tv, pr wahtever is the latest must have gadget, not going to the movies, etc.

Sometimes it will suck but the pay off will be big. It is not fun, but it is doable. We did it and will be leaving sometime between next Dec and Feb unless we decide to delay for another year for our eldest daughter to tie up some loose ends on her American school experience.

If we can do it, you can do it. No trust funds here.

[David_Old_Jersey]

Yeah, you can buy a boat like a house (Marine Mortgage) - just not so easy. In practice will likely involve a greater deposit than a property and quite possibly a good / stable track record ashore. You really need to speak to lenders yourself to get a handle on their requirements - less of those than for houses and their terms not so standardised.

[Kettlewell]

The first cruising boat I bought cost $1700 and was good enough to learn on sailing from Newport out to the islands and such for a couple of years. You can find a nice 30 footer that is capable of going anywhere for a lot less than the cost of most cars. Don't get trapped into thinking you need all the stuff advertised in the magazines. Buy things cheap in boatyards from other boaters getting rid of stuff, or often get it for free. Do all the work yourself. Once you've got the boat it is a lot cheaper to live on than on land.

[SVNeko]

Although there are all types of cruisers out there, you will find two common types are older folks who have saved and can afford their cruising lifestyle and younger folks doing it on a shoestring. Both types are having a blast. I imagine you will fall into the latter category. My advice is NOT to finance a boat. Being tied to making payments and working to do so, will slowly sap the life out of you. Work and save a bit and buy a cheap, sound boat. Then fix it up as needed with your labor. And go.

[Tia Bu]

The last two posts are good advice. You can do this, sooner than you think. A couple of thousand bucks will go a long way. And if you're handy and work hard, you could probably make some money selling the thing later on.

In the meantime, you can have some fun sailing. Go for it.

[Kettlewell]

When I first bought a boat I was living in Rhode Island and I knew a lot of people that drove real clunker cars and had nice boats. We have always done the same. I knew people my age who had stereo systems that cost more than the first boat I bought. It is a matter of priorities. Start prowling around local boatyards and talking to the staff. There are often dirty boats out in the weeds someplace that someone has abandoned and you can get for cheap.

[boatman61]

You don't go boozing every weekend
If you smoke you smoke roll-ups
You shop at Zara, Primark and other cheap outlets restricting yourself to one quality item a year
You stop eating at resaurants and learn to cook your own fresh food.. not tinned (it'll serve you well later).. and sandwiches for work/school.
Get a part time job evenings and weekends
No more clubbing... unless its work..
No more cruising in the wheels (if you have any)
If you have a party its bring a bottle and a pot...
and before you know it you'll have enough for a 25-27ft fixer upper..
how long it takes is down to you...
And you'll find who your real friends are...

[bobconnie]

+ 1 for boat man ! Great bunch of truths there !!

[Teknav]

Before buying a boat, you should ask yourself how many days in a year you'll be sailing it? You need to determine which is cost effective: buying or leasing. A boat is a continuous labor of love that never ends. While on land, you can follow a realistic budget. While on a boat, a budget is not even in the vocabulary; that is reality. Another thing to consider...when you're very young and in good health, you can rebuild your finances if things go south. As you advance in the years, 60+, it will be difficult to rebuild your finances as you were once capable of doing. My suggestion...lease when you're young, and learn from your experiences. As you get advanced in the years, you will be in a better position in assessing if you should own your "dream boat." Mauritz

[GrowleyMonster]

Find something cheap that floats, and live aboard. If you can save $10k, even half that, you should be able to find something that will do you for now. The money you save by not paying for a house or apartment will add up, if you don't have to fix too much expensive stuff on your first boat.

If youa re really serious, INVEST, don't just save. Historically, stocks have generally gained better than 8%/year. Current conditions and short range forecasts should not discourage you. You are looking at the long term, and in the long term, a well balanced portfolio ought to give you good growth. If you know nothing about stock investments, I suggest getting into Mutual Funds. Just pick one that looks popular. Better yet, pick 2 or 3 for diversity. Read some good books and learn more. Remember the tax angle, too. While you are at it, while you are young you should be taking advantage of a 401k. Live poor now so you don't live poor when you are retired. Put the MAX in your 401k, especially the first 10 or 15 years, cause those are the years that really matter. When you retire, whatever boat you got, you can get one twice as nice when you are a multi millionaire in spite of only making a modest income your whole life. I believe the max for young folks is $10,500/year. That amount is likely to increase 10x by the time you retire, thanks to the magic of deferred taxation. Make 30k a year? put 10k in your 401k and only pay taxes on 20k. Cool, or what? And you still got your 10k, and it grows, and the earnings aren't taxed so they all get plowed right back in. At your age you should be investing about half in higher risk, higher yield stocks or funds, and the rest more conservatively. Lose it all early on, not such a biggie. You can earn more and start over. As you get older, you want to minimize your risk with more conservative investing, so you don't lose a big chunk of your nest egg when you are getting close to retirement.

Likely, you are looking at 3 boats... the old wreck you buy now to live aboard and learn sailing, the nicer one you get 10 or 20 years down the line so you can make some longer passages and live in a greater degree of comfort, maybe even raise kids on, and your final boat for your retirement years.

[Charlie]

Financial planning...

Dan was a single guy living at home with his widower father and working in the family business.

When he found out he was going to inherit a fortune when his sickly father died, he decided he needed to find a wife with whom to share his fortune.

One evening, at an investment meeting, he spotted the most beautiful woman he had ever seen. Her natural beauty took his breath away.

"I may look like just an ordinary guy," he said to her, "but in just a few years, my father will die and I will inherit $200 million."

Impressed, the woman asked for his business card and three days later, she became his stepmother.

Women are so much better at financial planning than men.