Financing It

Here is the second most common question(s) I am asked:

  • “How will you work”?
  • “How do you get money”?
  • “How much does that cost”?
  • “You must be rich”?
  • “Did you win the lottery”?

 

There are a couple other variations of these questions, but they are all looking for the same answer. People want to know how it’s financially possible to quit work and go live on a sailboat. They are hoping for a shortcut answer or a holy grail. Well unfortunately I can’t give you any magic answer. Every cruiser has their own story and path and I can only tell you mine. Remember there are 1000s of ways to achieve this goal. However, %90 of the cruisers “out there” share a common element in their stories… Sacrifice.

First step is to pick a boat type (Catamaran or Monohull) and then set a budget. For me, I was only comfortable with a catamaran and I needed to own it, no financing. In the end, our budget for a blue water cruising Catamaran was set at $165,000USD. That budget had to cover the costs of both the boat and any improvements required to get it safe and ready for our family.  Unfortunately, I learned that $165K was not a reasonable budget for a “bluewater” cruising cat, setup for 5 people. Our budget was eventually increased to $180,000USD

Second step was to settle on a monthly budget we felt comfortable with. I had spent years reading blogs and forum posts on this subject and was confident I could put together a solid budget. Once all the numbers were crunched and the spreadsheets were filled out, the number was set at $3000/month. This may seem to be a pittance, and would be in regular “North American Life”. However, things are different when cruising, aside from food, fuel and maintenance, cruisers have almost no other bills.

So now that we have those 2 numbers we can come up with an initial capital required to do this. So if we had zero income, then we would require the following for the number of years we wanted to cruise.  Yes, my plan assumed zero return on our boat once we were done cruising. There are many reasons why I assumed this, but lets just say it was the safest route for the plan

  • 1 year – $165,000 + $36,000 = $201,000USD ($216,000USD adjusted)
  • 2 year – $165,000 + $72,000 = $237,000USD ($252,000USD adjusted)
  • 3 year – $165,000 + $108,000 = $273,000USD ($288,000USD adjusted)
  • And so on.

Although these are large numbers we are talking about, they are certainly not what most people would consider “Rich”. I suspect a large number of people reading this have access to these amounts through the equity in their homes. The question is where your level of comfort is. I know quite a few cruisers who “Traded their castle” to have their adventures. Others however, planned, scrimped and waited until their “cruising kitty” was big enough. You would be shocked how much money you can save when you just live with necessities. Examples are:

  1. #1 is vehicles. Vehicles consume a huge amount of income and in most cases are only used to get to work. Many cruisers reduce to a single vehicle or sell all and use public transit.
  2. Smaller living quarters. Fact is, once you move on the boat you will only have a few hundred square feet of living space. Why not reduce your living space before you go. Reduced living space means ALL your bills are reduced.
  3. No frivolous spending. Things like eating out, morning coffees (Starbucks, Tim Hortons), movies, ect are eliminated.
  4. Almost all cruisers I know sold almost EVERYTHING. They don’t own TVs, Stereos, Couches, ect. They have one rule, if it can’t go on the boat, don’t buy it. They live by this rule for years before actually leaving.
  5. IN A WORD, SACRIFICE.

In our case, we had some successful investments over the years that allowed us to achieve this. We also have a small amount of income from ongoing investments that will offset the monthly living budget. Lastly we sold all our “worldly possessions” to help fund the initial purchase and outfit of our boat. Intuition also helped here as I felt the time was “right” to purchase the boat in early 2015. Turns out I was right as the Canadian dollar plummeted this year and I was able to execute before that happened.

As part of our planning, we did an interesting exercise. I made a list of our possessions and the amount of money I thought I could get for them if I put them on Kijiji or Craigslist immediately. I then “pretended” that I took all those items and put them in a storage container for 5 years. I then wrote down what I thought those items would be worth in 5 years. It was very eye opening to realize that the possessions we buy and cherish are literally worthless in such a short time, even without use.  It was so profound, that I came up with a new definition of “The American Dream”.

American Dream = “The quest to move objects from the store shelves to the landfill, with borrowed money”

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Stay tuned for the next chapter. We go to Cuba and play chicken with horse carts!

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