# Cruising Finances



## engineer_sailor (Aug 27, 2011)

The $500/month and $3000/month threads were interesting as are the many blogs with breakdowns of cruising costs by category (food, maintenance, etc.).

I am interested in planning to eventually cruise long term and curious as to how people achieve the monthly cash flows. I am sure its varied and different for everyone. Are people using funds from:

Pensions?
Pure cash savings?
Trust funds?
Drawing down on 401k principals? Just interest on 401ks?
Social Security?
Working side jobs?
Loans?
Inheritances?
Working the stock market?
Magic? 
Other?

Do people buy their boats early and pay them off or just pay a monthly loan payment like they would a home? How early do they buy the boat (at leave time, 5, 10, 15 years)? Seems like buying the boat at least a few years early and refitting in preparation would be useful.

Not trying to overly pry into people finances but it seems like an aspect of the cruising life that everyone avoids discussing. 

Josh


----------



## killarney_sailor (May 4, 2006)

My feeling is you certainly would want to have the boat paid off before you go unless you have a very substantial, reliable cash flow. Would suck to be sitting in Pago Pago harbour and realize that you have to choose between the boat payment and food. If the boat you want is to expensive to pay for before you leave then choose a cheaper boat. Certainly you would want to own the boat for a time before you go to allow for upgrades ($$$) and gaining considerable familiarity.

For our cruising, we were in good shape financially (not remotely rich - that was our friends on an Oyster 53 (54)). We have no debts at all. I have a solid private pension and the Canadian equivalent of Social Security. First one kicked in at 55 and the second at 60 and both are indexed. We did not have to touch other investments or our house at home. We did not waste money while cruising but have a big, complex boat to look after. We also did considerable land travel in South America, NZ, Oz, and South Africa. We generally did this pretty economically - staying in backpackers, travelling on local buses, renting cheap camper vans, that sort of thing


----------



## christian.hess (Sep 18, 2013)

no debt is key unless you want to be paranoid in paradise...

boat paid off in your name is the only other thing id be adamant about

having said that there are many that short term cruise with boat payments and hefty insurance premiums and have a ball too...

soo pick your poison


----------



## kwaltersmi (Aug 14, 2006)

I'm going to vaguely generalize and state that I believe most cruisers have paid-for boats and live off of retirement savings, real estate rental income, hard earned & saved cash, inheritance and/or work while cruising.

You might find these resources helpful:

Make Money While Cruising podcast episode from The Sailing Podcast

Earning While Cruising - Lessons from the Pros

The Cost of Cruising


----------



## Don L (Aug 8, 2008)

For my $3k/mo budget:

- the boat will be paid off and there will not be a land base being paid on
- the first 3.5 years we will be living off cash savings
- year 3.5-5.5 we will be living off savings, 401k earnings, 1 small pension, and 401k principal draw
- year 5.5-6.5 we add 1 social security check to the mix
- year 6.5-7.5 we add a second social security check 
- year 9 we add some money from a company ESOP plan
- year 10+ we just cruise
- year 44 we run out of money at age 90 and have to live on SS alone

Far as getting a boat early to fit out and pay off; unless you plan to sail during that period don't do it! All it is doing is spending money that could be going into the cruising kitty and earning interest, the only reason to get a boat before you are planning to head out is that you want to sail now. So if you don't, save the money and allow it to grow and use the cash later to get a boat.


----------



## MarkofSeaLife (Nov 7, 2010)

engineer_sailor said:


> Pensions?
> Pure cash savings?
> Trust funds?
> Drawing down on 401k principals? Just interest on 401ks?
> ...


You have said the word twice. But neither time relevantly. Both times almost dismissively so.

WORKING!

Everyone I know cruising has no bum because they've worked their a$$ off!

Most people have WORKED all their lives, the rest WORK while cruising.

Their ain't no magic, no shortcuts, no bank robberies, just work.

The number who have inheritances, gifts or winnings is so remotely few you don't have to worry about it. Just think: Work: Before, during, after or all 3.

People who run share portfolios worked to get the money for the portfolio; same with people who have houses paying rent; same with people who have pensions, superannuation, 401ks etc they all worked for every dollar in those plans... OH! Look at that word "Plan"! They worked and they planned and now they are able to cruise the world.

Thats one of the best things about long range, long term cruisers: there are very, very few lamers out here 

Mark


----------



## engineer_sailor (Aug 27, 2011)

Mark

Wasn't implying there was (or looking for) a free ride somewhere/somehow. Just interested in how people make it happen. May help create a longer term plan. Also interested in how people might finance cruising in the pre-retirement years of 40's and 50's.


Don

Thanks for the details. Very interesting.

Josh


----------



## killarney_sailor (May 4, 2006)

My sense after meeting hundreds of cruisers (mostly circumnavigating) is that there are precious few people in the their 40s and early 50s cruising. A substantial majority are retired folks from 55 to 80, the next largest group were 25 to 33. They were off for a three year adventure before returning home to go back to work.


----------



## aeventyr60 (Jun 29, 2011)

We were and still are amongst the younger crowd. I left the at race at 37 in 99' for full time cruising. Yes, we did have a plan. Boat paid off, no debt and some very serious investments in real estate, stock market, 401K's, IRA's and our own education and training. We skipped the kids part. Part of my idea for my life was only to work 50 percent of my time. So it looks like this: 5 of the last 15 years(while cruising in exotica) in some sort of employment: some professional other work just to have something to do. Total work of 10 out of 25 years. Guess I'm a little ahead of myself. Current cruising funded by gains in the stock market, dividends, capital reduction. Retirement is looking real good too.....Only another 6 years or so until I can take out 401K funds, then after that SS will kick in. Yes, have a plan. Go for it. Don't wait until your 65 to do this, you probably won't have the energy or the vision to enjoy voyaging.


----------



## paikea (Aug 3, 2014)

engineer_sailor said:


> I am interested in planning to eventually cruise long term and curious as to how people achieve the monthly cash flows. I am sure its varied and different for everyone. Are people using funds from:
> 
> Josh


I am myself going down this road now and indeed, its quite daunting. But I need to have a clear plan, and although I know the plan will change and reshape as I go along, the plan is still a foundation to build the rest on.

- My first goal was to be totally debt free. That's accomplished. 
- Next step for me is to get rid of most of my things, and get rid of the financial monthly responsibilities, change the current living situation to the point that I hardly have any fixed unnecessary expenses (phase I am in now). That would allow me to save a lot. With that in mind living on a boat in a marina is already one way to do it even if I am pretty unexperienced to sailing or managing and maintaining a sailboat. All the more that will be a great way to learn. So while I learn all that I also live minimal and save. Save for later and save for the investments I want to make on a boat. Granted, its easier to do this when alone as opposed to having family responsibilities. 
- Pension, hmm, personally I wouldn't want to depend on it much. Governments and economies constantly change. They always give me the shivers. I will just want to consider that as a bonus I don't absolutely depend on. 
- Few well defined investments will certainly help, but these are always risky and need to be well calculated. Too many make bad calls on these.

Then pretty much, you just take a leap of fate and off you go. If I will wait and wait till I am 100% sure and fully ready and fully prepared, well, I might end up waiting for the rest of my life. 
While one start cruising, yes, I would say one looks for additional ways of income and what ways are these that depends pretty much on the individual. What fits one might not fit the other.


----------



## MarkofSeaLife (Nov 7, 2010)

killarney_sailor said:


> My sense after meeting hundreds of cruisers (mostly circumnavigating) is that there are precious few people in the their 40s and early 50s cruising. .


I agree. I retired at 48 and was the child of the cruising community... now at 54 I am in the waiting room of the floating retirement home. The problem is the old bastards are so fit from the lifestyle none of them die off 

Mark


----------



## Omatako (Sep 14, 2003)

Our boat is paid for through lots of hard work and manipulating mortgages on assorted properties over the years. One of the important considerations for us is that if we lose the boat, as long as we survive we will accept the loss. Why is this important? Because we know we can't afford the insurance when we're cruising.

We have some small investments that are deemed dispensable if a crisis with the boat requires an emergency cash injection (lost rig, new engine, etc).

By the time we leave, our own home will be fully paid for and will be rented out to generate income to fund a part of our cruising.

At that time both of us will be drawing a pension (social security) that in itself will be enough to cruise albeit without a high level of luxury. Supported by above rental we reckon we'll be financially quietly comfortable while we're sailing. But, to be sure, there won't be money for airfares home every other week.

The boat will be fully prepped and most systems (sails, standing rigging, engine, fridges, genset, watermaker) will have been made over and will hopefully last for the time we intend to be out there.

Many of the island groups are only a week's sail from and back to home with six months of liesurely cruising in between. So our plan is to spend NZ winters in the islands and NZ summers cruising New Zealand (away from cyclone season).

When either one of us expresses a desire to go home and we permanently return to NZ, the boat will will be traded down to a smaller boat to put some money back in the bank whilst still enabling us to sail locally until we die.

For the record, the birth of this plan was back in 1985. It is no longer a plan - more of a process.


----------



## B.J. Porter (Aug 1, 2013)

killarney_sailor said:


> My sense after meeting hundreds of cruisers (mostly circumnavigating) is that there are precious few people in the their 40s and early 50s cruising. A substantial majority are retired folks from 55 to 80, the next largest group were 25 to 33. They were off for a three year adventure before returning home to go back to work.


At age 47 my wife and I are in that minority. As a rule we are generally either the youngest couple in a social group, or the oldest...

In our case its a matter of planning ahead, amassing assets and so on. We were fortunate in career choices, and we planned accordingly - we could not have done this without a lot of income in our 30's and 40's. At least not in this boat and level of comfort.

Unfortunately no plan survives contact with the enemy and ours has not. We bought our boat in 2006 with plans to leave "around 2009, after the house sold". We had to decide between waiting longer for the house to sell or cruising with our kids. After the house was on the market too long and our oldest was heading into high school we decided to damn the torpedoes and get out there cruising with them before we missed the opportunity forever so we left in 2012 with a house still on the market.

After all, what was the "worst case?" Two years out and we still have the stupid money sucking house? Never happen, we can just dump the price, right? Fast forward two years...and we're damned close to a buyer! Seriously. But we've few regrets (yet...), the two years with the kids has been priceless. We couldn't have left in 2014 with a Senior in high school.

It remains to be seen how well "The Plan" will hold together through two college educations, two extra years of home ownership, and all the rest. We could certainly do this cheaper, and likely will at some point in the future by moving to a smaller boat when we don't have kids on board any more.

But the point is it takes some planning, no matter your income or planned cruising lifestyle. You need to learn about finances and money and how to make more money with it. And think long and hard about how your money is spent today, in your non-cruising, cash-flush existence and down the road when your bank account doesn't get refreshed with a paycheck every week or so.

One thing we did the last year was try to spend more like we would on the boat. With lots of income its tempting to go out to dinner, drop $5-6 on coffee at the drive throughout day, still buy a $10-15 bottle of wine on impulse - all the sloppy financial habits you get into when you know there is more money coming in.

For the last twelve months before we left we scaled that back, a lot more than we had already done, and I wished we'd done it many years earlier. Even stupid things, like getting my coffee at Cumby's ($.99) versus Dunkin' ($2.79? - that was ~$1,000 saved) and setting a "$10 rule" on wine (since cruising reduced to a "$5 rule") and switching from premium brands to less expensive (No more Bombay Sapphire, but I discovered I liked New Amsterdam better at 1/3 the price) choices cut out a lot of fat. Never mind cutting dramatically on dinners out, convenience food, delivery pizza & Chinese and so on. And buying strictly what was on sale at the grocery and planning meals around that while aiming at less expensive food choices in general. And looking long and hard at various reward programs, incentives, coupons and other things that are either costing money for little value or generating value we'd never taken full advantage of.

Good prep for a fixed income life, I learned to revel in frugality and savings.


----------



## christian.hess (Sep 18, 2013)

thats an awesome post man! very good and true points


----------



## MarkofSeaLife (Nov 7, 2010)

B.J. Porter said:


> For the last twelve months before we left we scaled that back, a lot more than we had already done, and I wished we'd done it many years earlier. Even stupid things, like getting my coffee at Cumby's ($.99) versus Dunkin' ($2.79? - that was ~$1,000 saved)
> 
> I learned to revel in frugality and savings.


And what does coffee do for you?

Great achievements you've made.


----------



## CaptnBry (Aug 9, 2014)

Maybe off-thread, but I met several interesting (!!) cruisers in the Sea of Cortez who "WORKED":

Favorite; Guy who convinced ALL his clients that the ONLY rational time of year to paint rental houses was during the fair summer weather in Ohio...when his yacht in La Paz Mexico was too hot for his tastes! 2 months as "Boss", 10 as a VERY good Razor clam-digger and adventurer! AWESOME !

Christmas Tree Farmer, yes, really. Back-breaking work a few months in the PNW...then ice that back in Puerto Escondido at the Hidden Yacht Club - Love It!

Two dentists that split the practice and yacht 6 months of the year.... and their wives are best friends and fly down to _either _Skipper when they feel like it!! LoLx2 (OK high dollar but it would make a great movie too!)

Couple who had a Kettle Corn booth for just two repeatable events a year. Evidently, the "privilege" of getting space is nearly impossible to get and the days are brutally long....but two months floated their boat for the whole year and gave them a chance to catch-up with friends and family; smart!

Collecting specimens for universities and research groups; This requires very specialized knowledge, credentials, permits and more. But its SO fascinating I had to mention these Eco-Scientists...bare footing the beaches for Freedom Chips!!


----------



## killarney_sailor (May 4, 2006)

I agree, people fine ways to boost the cruising kitty. I write high school textbooks. Have been doing one since February (had to leave the boat in Grenada). It will be done before we head back south in the fall. Royalties will still be coming in twice a year in 2020. Whatever floats your boat (literally).


----------



## Omatako (Sep 14, 2003)

CaptnBry said:


> Two dentists that split the practice and yacht 6 months of the year.... and their wives are best friends and fly down to _either _Skipper when they feel like it!! LoLx2 (OK high dollar but it would make a great movie too!)


That's a cool way to do it.

We have a friend in one of the marinas here that shared a business with another cruiser. They did house/building cleaning (outside of the property not housekeeping), bought all the required equipment together, built a client base over time then started sharing the business. Owner 1 would go sailing for a year or whatever they agreed, Owner 2 ran the business and whatever he made in this time was his. When Owner 1 returned, Owner 2 went off to do his thing and Owner 1 earned the income for himself. Equipment maintenance was shared at all times.

This way, the business stayed healthy, the client base was preserved and both owners made enough money to cruise for a decent portion of his life. Like us, the islands are in their backyard so quality cruising can be had in reasonably short spaces of time.


----------



## flandria (Jul 31, 2012)

Good posts... I think all bases have been covered.

Frugality has been touched upon a few times and I believe that the cruising lifestyle generally referred to here is not a sumptuous one. Thus, $2, $3 or more per foot overnight in a marina equals paying for a hotel room - not something one would do as a landlubber. Anchoring seems to be the only practical, sustainable way to go, which means that you may have to avoid some destinations where charter flotillas occupy the anchorages. The more I read about that, and mooring fields giving you less room to swing on your own hook, the more I believe hardy cruisers seek out more remote locations. That raises questions of re-supplying at reasonable cost.

Now, if you can say good-bye to all the "necessities" we seemingly cannot live without, you should indeed try to live without them before leaving, but it is pretty well impossible the get away from land-based costs as realty taxes and insurance, utilities and "deemed necessities" such as telephone (wireless or not), TV entertainment and, indeed, that local coffee shop... Go wilderness camping for a month to see how you like that: a tent costs less than a boat even if you have to pay access to park facilities.

One quite valid strategy seems to be leasing your mortgage-free home - provided you can rely on someone to make sure the lessee lives up to the contract while you are 10,000 miles away: an absentee landlord has his own risks to consider, but a rental income possibly between $10K and $20K net of taxes and insurance (and agent fees) would be great... until the roof needs to be re-done...

As I now approach age 70, with a partner who does not wish to live the cruising life, I can only add that health concerns WILL start looming larger as you age and you sure do not want to confront anything catastrophic - be that injury or illness. That is possibly the elephant in the room, aside from unexpectedly large maintenance costs to the vessel.

In short: yes, it takes a lot of thought and planning and an absence of wishful thinking.

Good luck and fortitude to all who make the move and sail away!


----------



## Capt Len (Oct 9, 2011)

Not a lots of income is required to be self sufficient up the BC coast.And what you need is easily earned as you cruise.After many years of very successful bottom feeding I started taking tourists cruising up the coast. Then only 3 hour sail. Now with a few paid for rented out properties I've spent the last twenty years sailing summers and traveling each winter as a tourist. Fortunately health care here is good so not a worry but becoming a concern as heart problems and motorcycle accident keep getting in the way. My only regret is that at 71, women don't fawn over me as much. Ps Oh yeh ,and I sold the boat


----------



## CaptnBry (Aug 9, 2014)

killarney_sailor said:


> I agree, people fine ways to boost the cruising kitty. I write high school textbooks. Have been doing one since February (had to leave the boat in Grenada). It will be done before we head back south in the fall. Royalties will still be coming in twice a year in 2020. Whatever floats your boat (literally).


I can't resist asking, did you use "fine" in place of "find" in your post to test us?
We're all back in High School folks, and the Pop Quiz is ON! LoL!! :laugher


----------



## killarney_sailor (May 4, 2006)

I had a left serious hand injury on the boat in South Africa a couple of years ago. It is mostly better but my left hand typing is not all that great (not that I was ever a good typist) so things like this sneak through when the typo is not found by the spell checker.


----------



## outbound (Dec 3, 2012)

Just retired. Wife has another 2 years. I will snow bird from caribe until she retires. 
Amassed enough to generate living expenses from very conservative portfolio. Loans on house and boat at significant lower percentage than return on investment. Boat new so low maintance costs. Do as much as I can on boat to decrease yard bills. Boat insurance high but should decrease as my experience goes up. Live style modified so don't need to touch principal. 
Financial manager pays/ receives fix expenses/ income so things covered in my absence. Everything on autopilot as much as possible. Choose to not have rental income as needs active involvement. Selling office condo for that reason. If tax laws change will pay off house/boat. Once a month conversation with financial manager and emails suffice. Quarterly with accountant. Biggest problem is arranging cat sitter when wife with me cruising. Planned this out over 15yrs. Saved for 40. No free lunch. Kids marriages and schooling done. No significant health issues for us two. No dental or other expenses. On no obligate meds. Never lived anywhere as large as income so life on boat is living large. Still drink macclellen, Hendricks and small batch beer but one drink every few days. Cook and freeze for trips. Have solar/wind so genset on maybe two hours a week. Never run A.C. Unless plugged in. Buy boat supplies when on sale and put aside. Find equilivents outside chandleries. 
For me big thing was to get through the days without needing to be engaged in the rat race. Figuring out boat stuff is all I want to handle.


----------



## xort (Aug 4, 2006)

Income from my "escort service" is still holding up. Its a hard job but I'm up for the challenges.


----------



## outbound (Dec 3, 2012)

X got you beat. For the next two years I can tell folks I'm a " kept" man.


----------



## Capt Len (Oct 9, 2011)

X, you didn't say whether you are self employed or employ staff. I imagine that one has to bend over backwards sometimes to offer good service.


----------



## killarney_sailor (May 4, 2006)

outbound said:


> X got you beat. For the next two years I can tell folks I'm a " kept" man.


I have gone that route. When we lived on the boat in Jersey City for a year and a half my wife worked in the financial industry (nice brief ferry trip and walk from the boat) while I stayed on the boat spending the money she made. I think I had a direct connection with Defender. Have to give a lot of credit to the USPS. I would order at 3:59 pm and the stuff would be there in the morning.


----------

