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Financial Freedom Afloat - Cruising Costs

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redviking
Master Marine Consultant

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USA
1771 Posts

Initially Posted - 04/30/2008 : 07:40:43

Moved from does your SO like to sail...

Quote: "Sten, I'm not trying to pick a fight with you. If cruising works for you, more power to you! While I disagree with you I think we're talking about slightly different things.

I agree that once you're all set up, it is indeed cheaper to live aboard. What I was trying to describe is the overall cost of long-distance cruising.

Let's imagine that, starting from oh, say, where I am now...fast forwarded 15 years to about retirement age. I have a house, investments and a C-25 and I want to go sailing.

First question: do I want to get rid of the house? Let's say I decide to keep it so we'll have a place to live when we're done cruising. So I get rid of the little boat, sell or store the furniture and set up to rent the house and have someone manage the property. I'll even concede that I can cover the mortgage payments with rental income. Revenue neutral for argument's sake.

Now the boat. I'll buy a...oh, say 40 foot boat that's been cruised before. Let's upgrade some systems, repair/replace sails and rigging, have stuff like the dinghy, its outboard, the liferaft, windvane and the diesel serviced, etc. Let's call it $150K outlay up front which is arguably a lowball number for most cruisers but I'm cheap.

OK, we go sailing for a couple of years. I'll be generous and say that our cruising costs are 1/2 what they would be if we lived at home. We'll call trips home to see our putative grandkids the equivalent of the traveling we'd have done if we'd stayed home.

Now we're done cruising and sell the boat and move back home. My experience is that you wouldn't get back half of what you put into your boat what with wear and tear and depreciation of costs for new cruising gear that's now well used.

So by my reckoning, I've lost $75K on the boat. Lost another $20K on the 7% annual return I didn't get from that up-front money that was tied up in the boat. Gotta buy furniture and cars, another $20K. Let's say we've saved $40K in living expenses by living on the boat.

That still puts us down $75K on my back-of-the-envelope calculations.

I don't know about you but that's real money to me. That's what I mean by it costing money to go cruising. That doesn't make it bad, as I've said before the experience is well worth it. It just isn't free."

I'm not a fighter much of the time, but I will tell you that your perceptions mimic those found in much of the sailing world regarding proper boats, money, depreciation, etc... There are a lot of well found sailboats for less than $150 fully equipped. Our C&C 39 was $51K out the door with all of the aforementioned "tricks of the trade" except for a watermaker. I know of several nice yachts available for anywhere between 50 and 85K.

Now let's go to the back of the envelope again. Sell cars and furniture. Rent house. Go for 5 years or longer. In that 5 years the house will appreciate $50K. (Boston prices) In that 5 years I'll pocket at least $25K a year in reduced expenses. So far I am $175K ahead in 5 years. Good ole boats don't depreciate much once they get to their true value. But let's just say that there is a C&C 39 listed for $85 K with no toys, not even a dodger. I'll easily get the $50K back and then some in 5 years. Or not...

I paid $6400 for my C25 and sold her many years later for $9750 to two women who had her trucked to NJ! How am I doing so far?

Working... OK I'm luckier than some in that I can generate revenue while cruising just by using a 'puter and a phone. BUT, we have met many a cruiser that works at West Marine for a season while at a dock replenishing the cruising kitty. Varnishing boats, delivering boats, food service industry, assistant dock master, sailing instructors, kayak instructors, writers, photographers, etc... read the book "Financial Freedom Afloat." One of the points noted in the book is that many a cruiser will get bored just cruising into a different harbor every couple of days or so. You'll have sundowners with the same people, talk about the same stuff and see each other in the next port... Stay somewhere long enough to earn a buck and you'll develop a real sense of community and you'll feel better about your lot in life. You'll get to know places other than the tourist traps.

Now that you are generating revenue occasionally and are truly cash flow neutral, your savings and investments can continue to do what they would be doing if you were living on land - hopefully making money. Your car won't need repairs, you won't be paying car payments or insurance, and your purchases will just plain stop. Sorry big plasma flat screen TV for the big game costing $5K - no room on the boat. Sorry latest fashion wear, sorry golf, sorry gas pumps for the daily commute, sorry SO MANY THINGS! OK, put another $10K a year on your envelope. $50K for 5 years. By my calculations, If my wife and I generate $50 K a year for 5 years and bank half of that PLUS, we'll be better off than if we had stayed on the treadmill.

But I like to say that if it weren't for GW i'd still be a landlubber. As an employer for 13 years, I created jobs and paid a lot of taxes. Since the professional environmental industry is in the tank due to reduced enforcement, economy, etc. It is more profitable for me to be out here than sitting behind my desk struggling to make payroll in a depressed economy.

Thanks George!

My point is, it can be done. You are right Steve Roberts that there are costs associated with maintaining a true blue water boat or installing components required to make it a blue water boat, but it's all about attitude and compromise.

I hear from friends and clients all the time, "Have a good trip!" - "Enjoy your vacation!" My wife and I just look at each other and smile knowing that neither are true and that there is just no easy way to explain. It's a lifestyle. You all live in a house and drive a Lexus, or a pickup - whatever... We live on a boat which we consider home, and we drive a dinghy... The only real difference is that our home will move and our costs associated with living on that home are substantively cheaper than if we were living on land.

But PLEASE don't listen to me. There are enough retiree boaters out here already. Driving up marina prices, anchoring too close to my boat, and generally being Dock Potatoes. Don't do it! Stay where you are! I may need your job in 15 years

- if it is still there

Sten

DPO C25 #3220 "Zephyr", SR, FK
SV Lysistrata - C&C 39 - St. Augustine FL for flipping ever!!!!

Edited by - on

Steve Milby
Past Commodore

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USA
5902 Posts

Response Posted - 04/30/2008 : 08:34:18

I agree with Sten. You can easily invest $150,000, or more, in a boat, and lose much of it, or you can buy a nice older boat with all the goodies, that has already depreciated about as far as it will, so long as you maintain it. Like Sten, I bought a nice boat in good condition that will hold it's value well, but, even if I lose the whole value of it (which is unlikely, as the boat is insured), it won't be disastrous. This is my fifth year with the boat. I bought some sails, did some upgrades, and believe I could still get most of my money out of it. Meanwhile, I have been having the time of my life. By far, the least expensive part of my life is aboard the boat. It's far more expensive to live in the house during the winter. When I die, my son will receive a nice inheritance. I'm sure he won't begrudge me this little extravagance. During your working life, you tend to plan for the future, but after you retire, you realize that this is the future that you planned for. Within reason, it's time to enjoy the fruits of your labors.

Edited by - on

redviking
Master Marine Consultant

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USA
1771 Posts

Response Posted - 04/30/2008 : 08:56:38

Quote: "Sten - What are you doing for internet conection when you are on a mooring?"

Sprint broadband - we also have a wifi antenna that does work, but broadband is only 2 bucks a day... One of our major costs...

sten

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redviking
Master Marine Consultant

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USA
1771 Posts

Response Posted - 04/30/2008 : 09:13:11

I do.... needs work.... www.svlysistrata.com nice idea though... I make money faster than that when consulting...

sten

Edited by - on

ClamBeach
Master Marine Consultant

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3072 Posts

Response Posted - 04/30/2008 : 09:19:12

Cruising costs? Here's the most accurate description I've ever read:

"As little or as much as you want"

From $5 a day anchored out somewhere in Central America... eating rice and beans all the way up to living the high life in a resort marina.

Edited by - on

Frank Hopper
Past Commodore

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Pitcairn Island
6776 Posts

Response Posted - 04/30/2008 : 09:56:45

One of my several hats is Registered Barber, I always figured I could cut hair in port to buy some diesel.

Edited by - on

Dave Bristle
Master Marine Consultant

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Djibouti
10005 Posts

Response Posted - 04/30/2008 : 11:09:08

The Barber of Sanibel

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JimB517
Past Commodore

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USA
3285 Posts

Response Posted - 04/30/2008 : 11:44:10

I did an extensive financial analysis of the costs of cruising based on my 1 year voyage Milwaukee to the Bahamas with a family of 4 and a dog. My figures include buying an $85,000 boat, outfitting, and selling at the end.

The cruise cost $36,000 which came out to $110/day. That covered everything - food, fuel, repairs, cell phone, internet, entertainment, marinas. We met people doing it on $25/day for a couple. Marinas were the biggest expense. We only ate out one day per week. I planned on $100/day so we were over budget. Our biggest unplanned expense was a new outboard for the dingy. It cost $7500 to ship the boat San Diego to Milwaukee. Nothing broke I could not fix with equipment and spares on board.

Karen's mom stayed in our house for the year, fed dogs, cared for gardens, mowed lawns, forwared mail, handled our business. We paid her $500/month.

We bought the boat for $85,000, put $25,000 into her, and sold for $75,000.

The only thing I did not consider was lost income, which was large. But there was the concern that if I didn't do this Karen would be collecting my life insurance. We did not sell our cars nor cancel the insurance.

Read my book, on line at www.indiscipline.org, or I can send you a copy.

Edited by - on

SteveRoberts
1st Mate

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USA
45 Posts

Response Posted - 04/30/2008 : 12:31:35

<blockquote id="quote">quote:<hr height="1" noshade id="quote">My point is, it can be done. You are right Steve Roberts that there are costs associated with maintaining a true blue water boat or installing components required to make it a blue water boat, but it's all about attitude and compromise.<hr height="1" noshade id="quote"></blockquote id="quote">

First, Sten, I have to say that the fact that you're out there doing it and making it work for you gives you much more authority than I have. You make a number of great points. My wife and I have met a number of people who have found ways to be out there and make it work long-term.

Second, I'm not that interested in being out long enough to have to replenish the kitty so I'm looking at things from a little different perspective than you are. When we arrived in New Zealand we had to decide whether we wanted to stay there and replenish the kitty (and have our first child who was on the way by then) and then go on around or bag it. By that point, we were tired of traveling and wanted to be home near family to bring up our kids. It's a personal choice, one of many that get made in a cruising life. You can accuse me of a lack of commitment if you want!

Let's talk about boats. The boat we took across the Pacific was a 1977 Valiant 32. It was a "donation" to the local sailing club, who didn't want it so they sold it for a very good price, $26K (1987-ish). It was probably a $40K boat but the owner was impatient. The boat had no bluewater gear when we bought it. We lived aboard for 3 years while we outfitted it and built up the kitty.

Both my wife and I were in jobs that paid very well; we made nearly $100K between the two of us. We lived on roughly half of that; the rest went to cruising prep. We used to joke that I should just take my paycheck directly to West Marine rather than waste time at a bank.

I'm not sure of the numbers now but at a guess we put at least $25K more into the boat: sails, rigging, dinghy & outboard, liferaft, medical supplies, EPIRB, Sat-Nav (yup, this was before GPS), sextants, windvane, blah blah blah. Had to repower although most of that was covered by insurance. Had to do a blister repair (lived on the hard for 3 months while I and another guy re-skinned the bottom with epoxy).

As I said, I'm cheap and I like it simple so no watermaker, no refrigeration, no SSB, no HAM radio. You don't have to have that stuff and it's just more to maintain.

So: we cruised for a year, ended up in New Zealand and wanted to come home. We borrowed the $15K from family to ship the boat home (NZ taxes precluded selling the boat there...because they don't want cruisers dumping their boats and killing the local yachtbuilding industry -- fair enough). Back home, we cleaned up the boat, varnished and put a for sale sign on it. It took three months and a price reduction but we finally sold for $42K.

Paid back the shipping cost and had enough left for a down payment on a (small) house in Seattle.

The reason I'm telling y'all all this is to point out that I know something about finding boats on the cheap and outfitting them for bluewater cruising. Gear from a boat that's been cruised for 5 years is nearly worthless, I'm sorry to say. There would be very little premium over an un-prepared boat because that gear is worn out.

I'm going to stick with my assertion that you (generic "you", not Sten specifically) will never recover the money you put into outfitting for your cruise. Again, that isn't a bad thing and as Sten points out perhaps can be offset by other savings.

And Sten, I agree that it's all about attitude and compromise. Boy do I know about compromise; we had to compromise a lot to be able to cruise in our early 30s. You have every right to be proud of the fact that you're doing it -- that's much more than a whole bunch of people can say!

Again, more power to you!

Edited by - on

stampeder
Master Marine Consultant

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1608 Posts

Response Posted - 04/30/2008 : 13:11:08

In 1988 when my daughter was 6 yrs old, we took a year off and flew to Fiji-NZ-Aus-Rarotonga and various other places in the south pacific. Although we didn't sail there, there are a lot of similarities to this thread... mostly we rented motorhomes and met people whom we struck friendships with and then stayed with (bummed off of). We did a lot of sailing and windsurfing and scuba diving.

We are planning on taking another year off, but this time we're going to buy a boat in the Carib and sail there for a year or so. We don't want to cross any oceans, we just want to be in the happy cruising grounds for a year, on a boat.

Lessons we learned: keep the house, rent it out. Establish a budget. Have a contact person at your bank that knows your travel plans.
Don't buy anything other than food and memories. (we carted home a lot of stuff and very little of it remains other than the pictures nad memories) Take a lot of pictures, write in a diary every day. Keep your eyes open for business opportunities. I have several that I daydream about and am now in a better financial position to take advantage of.
Know where the countries and beaches are where women go topless. I liked the Aussie beer, especially the XXXX, but the beaches were spectacular. Young women taking their clothes off so they could put bikini bottoms on. I made eye contact with a lot of attractive women

Most important thing we learned: Do it.

So, as far as the boat goes, we are thinking about getting a boat that would be suitable for a charter fleet, using the boat for a year and leaving it behind, in the charter fleet. If we finance it, all we have to do is have a year's worth of finance payments in the bank instead of $150K for a purchase. However, there are a lot of variations on this. I'm in the finance/banking industry - so I often think about the financial and cash flow strategies.
If a person wanted to take a year or so off and then return to a job, financing the boat can make the whole thing happen faster than waiting til you have several thousand $K in the bank. You can leverage your house, get a 10 or 20 year Recreation asset loan - so that when you get home, you still have to maintain the loan but it would probably be less of a financial burden than setting aside after-tax cash.
Just do it.

Edited by - stampeder on 04/30/2008 13:18:19

dreddick
Navigator

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117 Posts

Response Posted - 04/30/2008 : 16:13:02

What about health insurance? If you're not working a 9 to 5 you'd most likely be paying for that yourself and that would seem to be a major monthly expense (depending on your age). It would be pretty scary to go without these days.

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SteveRoberts
1st Mate

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USA
45 Posts

Response Posted - 04/30/2008 : 18:13:58

<blockquote id="quote">quote:<hr height="1" noshade id="quote"> What about health insurance?<hr height="1" noshade id="quote"></blockquote id="quote">

Sounds like Sten might have been paying for health insurance already as a business owner.

I think we paid about $400 per month for really basic, very high deductible catastrophic insurance back in '90 but that may be off by a bit. Sten can probably give you more up-to-date and accurate numbers.

However, in Fiji and New Zealand they have universal healthcare and my wife's visits to OBGYNs in her first couple of months of pregnancy (some early difficulties) were (nearly) free.

At the risk of once again derailing a thread, I think socialized medicine is exactly what we need. YMMV.

Edited by - on

Dave Bristle
Master Marine Consultant

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Djibouti
10005 Posts

Response Posted - 04/30/2008 : 20:23:05

DUCK!!

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Steve Blackburn
Master Marine Consultant

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Canada
1091 Posts

Response Posted - 04/30/2008 : 21:36:59

Mike, interesting point of view on the 1 year off, renting the house and leveraging. I may be able to do so if 5 years from now (will be 46 then). Sounds like we're going to have interesting conversations racing on Sylvan lake this summer on my C250 if your still up for it (Wednesday evenings).

Edited by - on

redviking
Master Marine Consultant

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USA
1771 Posts

Response Posted - 05/01/2008 : 06:56:51

OK, Steve Roberts - Your viewpoint from my perspective only reinforces my belief that blue water fixer uppers are not generally a bargain. By the time you get the boat ready to handle the job, your costs are non-recoverable no matter what you do. I hear you and you are VERY right about that, especially based upon your own experience. Lysistrata has spent some time in New Zealand and Australia, hence the wierd parts here and there

!!!!

I did a quick survey of the cruisers on A dock and on B dock here at the oyster creek marina. All cruiser capable boats, some blue water ready, all offshore capable and the average price was around $75K. This includes a Pearson 424 ketch, a 37 foot Crealock, an Island trader, and so on.

I am always quick to promote drinking the "koolaid" and essentially defend our own life choice - so forgive me for trying to set things straight based on our experience and experiences. Cruising can be tough, expensive, etc... We've already seen folks who have made a few bucks and just went and bought a boat, dragged anchor once - because of inexperience - and promptly left the boat at a dock and flew home. Boat for sale! Game over!

Canadian on a Bayfield 37, currently for sale in oriental NC for $80K - nice boat - went to Cuba and then back to Florida via the islands. Got back to St. Augustine, recruited a Captain to help him bring it to Oriental where he bought it, and that's it. His cruising days are over... But the retirees who have 4 cats onboard a 34 foot boat are going strong and intend to stay out here forever! You never know!

Health insurance sucks!!! And is really only an issue in America for cruisers. From others we have learned that health care is not only cheap and affordable, but faster and more available in most parts of the world. Gawd bless America. When circumnavigators tell you that they only fear for their health and the lack of insurance in the USA, you know something is very wrong. Socialized medicine IS working!

We currently have an HMO and we pay about $650 a month. $35 doc visits, $100 emergency room visits. I recently had to fly home to have myself checked out as the HMO is very reluctant to give an out of state referral... Again, health insurance sucks and is in fact one our biggest costs. Granted, maintaining a corporation means that these monies allocated to health insurance come out of a different pocket!

But you all wanna know the number one cost associated with cruising?
Drummmmmmmrooooooll.... Beer!

can't live withour refrigeration either!!!

sten

Edited by - on

redviking
Master Marine Consultant

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USA
1771 Posts

Response Posted - 05/01/2008 : 07:17:30

Quote "One of my several hats is Registered Barber, I always figured I could cut hair in port to buy some diesel."

Don't laugh. We've seen many cruisers cutting their husbands hair. My wife watched my barber in Boston and took tips from him. I learned how to wax her.....

BROWS!

Anyhow, I meant to talk about one of our plans for cruising cash. We were going to install 2 ovens and make pizza. Name the boat "Pizza Pizza" and monitor 71 for orders.

sten

Edited by - on

Dave Bristle
Master Marine Consultant

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Djibouti
10005 Posts

Response Posted - 05/01/2008 : 08:10:13

Pizza ovens inside a 39' boat in Florida...

With my luck, a state revenue commissioner would be in the boat on the next mooring.

Edited by - on

SteveRoberts
1st Mate

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USA
45 Posts

Response Posted - 05/01/2008 : 10:27:39

Wow, great conversation...thanks everybody.

Sten, your point about finding a boat that's been set up and going from there is a good one. It's certainly true of RVs and I've done pretty well shopping for them that way. Did I mention I'm cheap?

I may be wrong but I think there are more boats like that on the east coast than out here on the west coast. When we bought Huckleberry, we were pretty inexperienced and I can't honestly remember if we looked for a bluewater ready boat. It is certainly possible that we could have done better. OTOH, we (meaning "I") pretty much knew every system on the boat by the time we went out.

In any case, assuming we do the Europe trip we'll certainly go boat shopping on the east coast -- and keep an eye out for the "abandoned" bluewater boat.

Edited by - on

stampeder
Master Marine Consultant

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1608 Posts

Response Posted - 05/01/2008 : 15:40:06

If blue water cruising gear has a life expectancy of 5 years...find a boat that has returned from a one year cruise. A returning cruiser might be pretty excited about a quick sale. When you've sailed that boat yourself for one year, you can sell it with the understanding that there are three years left on the gear.
Damn, this is simple.

Edited by - on

redviking
Master Marine Consultant

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USA
1771 Posts

Response Posted - 05/01/2008 : 15:47:52

Quote: "It's certainly true of RVs"

My wife and I always have to chuckle when we see the big RV towing the "dinghy." SO, your anchorage is a trailer park or the nearest Walmart?

Positives. No dinghy docks. Can't fall overboard. Can't run out of beer. Meet other cruisers at the gas pumps.

national parks are how much? Pumpouts are better? The head works better on a RV? Smells better? Is obviously larger. Your bed is bigger provided the extenda thing works. Your satelite tv changer doesn't care how you swing....

sten

Edited by - on

Dave Bristle
Master Marine Consultant

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Djibouti
10005 Posts

Response Posted - 05/01/2008 : 20:32:59

Ya know, Sten, when you get to 80+ (the age of my aunt and uncle who "cruised" most of N. America--Mexico to Quebec to Alaska--in a little "land yacht"), we'll see whether you're still chuckling. It's a great way to see our continent--including more than a few places and people you can't get anywhere close to on yours.

Edited by - Dave Bristle on 05/01/2008 20:36:11

redviking
Master Marine Consultant

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USA
1771 Posts

Response Posted - 05/02/2008 : 08:49:27

Ya know Dave, nothing scares me more on the highway than the 80+ "Captain" of the "Land Yacht" weaving all over the place and unable to turn their heads much more than 12 degrees. By then, I'm hoping for a driver or that someone will take the keys away... Or not... Life is all about when you get there.

sten

Edited by - on

Dave Bristle
Master Marine Consultant

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Djibouti
10005 Posts

Response Posted - 05/02/2008 : 09:16:21

Well, they stopped at about 80... Are you giving up your keys in your seventies? Some people like to see waves, land on the horizon, and marinas... "When you're in a sailboat, you're already there." Some want to see canyons, mountains, forests, towns, cities, museums, friends, relatives,... a different definition of "there".

Edited by - on

redviking
Master Marine Consultant

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USA
1771 Posts

Response Posted - 05/02/2008 : 10:01:45

I once bought a motorcycle from a guy with Altzheimers. In the tank bag and a few other places were cards written by the wife instructing whomever to guide her husband home in the right direction. Apparently he never crashed, just never knew where he was always. he was only 65 or so... the keys gotta go when you can't function properly. look at all of the tragedies wherein 10 people get mowed down by an AARP member...

Sailing too, just saw a fellow in the marina who recently lost his wife and isn't doing well. He was helping a dockmate move his vessel for repairs, and after watching him not able to comprehend which line to throw or whatever, I worry about him soloing. Drive 'til it's stupid, sail for a few years more.

sten

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