The Money Mustache Community
Learning, Sharing, and Teaching => Case Studies => Topic started by: chowdan on May 17, 2019, 07:46:07 PM
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NOTE - This is the first post and may not be EXACTLY accurate(401k totals not present, total value at end of month of stock accounts), but moving forward I will hopefully get this data to be more accurately represented!
The goal of this case study is to show others a different way to live life, one that is over a long term can allow them to travel like a turtle with their home on their back, all the while not blowing the bank; and most importantly, not destroying the pale blue dot.
Details:
First off we are not inheritance babies, we work hard, forgave a lot to build the life we have chosen to live. I believe in hard work, strong work ethic, and continuously improving yourself, and in turn, you will be rewarded in a life that will be fulfilled.
My fiancee and I live aboard a 1980 42ft Sailboat in a marina on Bainbridge Island WA. We have been living aboard since August, 2018. When we purchased the boat, we had just returned from a 18+/- month journey that took us through Europe via backpacks and through the USA and Mexico via our converted 4Runner(SUVlife?). The boat is in need of repairs(not cheap), but we got her at a price we felt was a good deal versus what she should be valued at in a decent condition. The other reason we bought her was because when she’s done, she’ll be a world cruiser for the two of us(and maybe a stowaway) and is our home at the end of the day.
Moving forward I will have a segment on the months overview, break down any changes, list out big ticket items I bought.
GOALS:
* To become FIRE by age 47($750,000 in funds)
* Take 2 years off work to do a Pacific crossing aboard our sailboat
* After FIRE? Who knows, maybe a 10 or 20 year circumnavigation?
Life Situation: Seattle, WA. Age 28, partner 26, filing jointly
(ESTIMATED)Gross Salary/Wages:
Me: $95,000/year(salary)
Wife(works per diem): ~$30,000/year
Bonuses:
Me:
* Quarterly performance bonuses:
* Q1: 14% - $3150
Individual amounts of each Pre-tax deductions:
Me(bi-weekly):
* 401k: $237.51
* Healthcare: $45.82
* Dental: $16.56
* Vision: $1.11
* HSA: $273.29
* Transit: $54.80
Wife:
* 401k: $100(fluctuates based on how much she works)
***NOTES***
* Categories are coming from YNAB directly
* Moorage includes water/power/internet/dock box storage
* Quality of Life group had a large change in expense due to not investing anything the prior month
* Income included first quarter bonus
INCOME:
MONTHLY TOTAL: $12,643.51
AVERAGE(since Jan 2018): $7,444.03
TOTAL(since Jan 2018): $37,220.16
EXPENSES:
MONTHLY TOTAL: $7,145.67
AVERAGE(since Jan 2018): $5,427.02
% Difference from previous month: +24.27%
TOTAL(since Jan 2018): $27,135.11
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IMMEDIATE OBLIGATIONS:
* Moorage: $765.77
* Phone: $134.02
* Groceries: $704.87
* Transportation: $99.20
TOTAL: $1,703.86
AVERAGE: $1,481.48
% Difference from previous month: +19.94%
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TRUE EXPENSES:
* Business Expenses: $86.85
* Smokables: $162.85
* Propane(cooking): $0
* Heating(diesel heater): $0
* Gas: $178.62
* Auto Maintenance: $0
* Boat Maintenance: $2340.32
* Gifts: $14.81
* Software Subs: $75.48
* Stuff I forgot to budget for: $250.10
* Auto Insurance: $0
* Boat Insurance: $0
TOTAL: $3,109.03
AVERAGE: $2,634.12
% Difference from previous month: +3.74%
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Quality of Life:
* Investing: $1650
* Wife Spending: $22.31
* Vacation: $358.30
* My Spending: $102.19
TOTAL: $2,132.80
AVERAGE: $1,130.77
% Difference from previous month: +69.76%
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Just for Fun:
* Dining Out: $155.99
* Fun Money: $43.99
TOTAL: $199.98
AVERAGE: $180.65
% Difference from previous month: +10.81%
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Assets:
Car: 1996 Toyota 4Runner - $3500
Boat: 1980 Pacific International Marine: $40,000
Stocks(Active management - Will move away to personal management soon): $84,000
Vanguard Index Funds(Personally managed): $24,000
Cash: $18,000
TOTAL: $169,500
Liabilities:
No liabilities
I use YNAB for all of my budgeting - - YNAB.com referral link (https://ynab.com/referral/?ref=VB3uBSrr4fTxjyRx&utm_source=customer_referral) (You get a month free + I also do too)
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I guess I'll start by saying this. You've lived on the boat for about 8 months. Are you really sure you (and your fiancee) are up for living on the boat forever? I know a few people who lived on a boat in Seattle in their mid-20s; none of them still lives on a boat. To me, this is by far the biggest wildcard in your plan.
I'll give you credit for the assets you've accumulated at a young age. Otherwise, your expenses are pretty hard to follow. What kind of expenses would you be looking at if you were sailing full time in FI? A 750k stash would support about 30k a year in expenses. Is that realistic? This amount wouldn't seem to cover your current expenses. Boats are also notorious for large, irregular expenses.
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I guess I'll start by saying this. You've lived on the boat for about 8 months. Are you really sure you (and your fiancee) are up for living on the boat forever? I know a few people who lived on a boat in Seattle in their mid-20s; none of them still lives on a boat. To me, this is by far the biggest wildcard in your plan.
This is a GREAT question I will say and agree too! I will definitely say that it is the single largest wildcard. One thing I learned while traveling for the 2 years was that there will always be wildcards in the "plan" and that we must roll with the punches. We set our goals, if things change, we change and adapt to it. So today we may believe this will be our goal, we may get in an accident and be forced to change our path. Que Sera Sera - Whatever will be, will be.
I'll give you credit for the assets you've accumulated at a young age. Otherwise, your expenses are pretty hard to follow. What kind of expenses would you be looking at if you were sailing full time in FI? A 750k stash would support about 30k a year in expenses. Is that realistic? This amount wouldn't seem to cover your current expenses. Boats are also notorious for large, irregular expenses.
I will definitely agree that expenses are hard to follow - This is partially why I am doing this. I am hoping that sharing it will allow me to figure out a better method of accurately representing our expenses. The other part for doing this case study is that HOPEFULLY over the long term, this will morph into something that is "pre cruising" to "actively cruising" budgets. There aren't many people in the public openly sharing their expenses that are doing life this way.
Current expenses are higher than they should be IMO. I know that once the refit on the boat is done, I'll easily cut out $2k-3k/month from the budget. That alone will still be higher than what I want the expenses to be vrs income. However, I will focus on that in future months. One thing to note - the expenses field does include the "investing" category. Hopefully that I can change the way I represent this as I believe investing should not be an "expense".
As you said boats have "irregular" expenses and I will agree with that. In general, these expenses shouldn't be a surprise IF you aren't deferring maintenance as many people do. An actively cruised boat with liveaboards will know of issues that are due in the future.
Things that could be "irregular" include:
- Haul out(bottom paint, zincs, thru-hulls - 3-5 year while thruhulls could be once in a lifetime) - I'd budget $3,000
- New rigging(8-10year lifespan) - I'd budget $12k
- New sails(5-8 year life span) - $15k for my boat
- Chain plates(30 year life span or more) - $3500
- New engine(diesels are not common to replace) - $12k
- New mast(in the event you got dismasted - uncommon) - $20k
With all that and say you have an incredibly bad luck streak would cost you $65,000, add say 8% for over budgeting sake puts you at $70,200 or $8,775/year over 8 years.
Sure that does sound like a scary number, but the chance of you needing a new mast, and a new engine is incredibly small. You could probably drop those numbers a bit if you're shopping around for different suppliers. I will also say that those costs would be for someone who pays others to do most of the work - which most liveaboard sailors, including myself, do not do.
I believe that my expenses while cruising will be SIGNIFICANTLY decreases, and I believe I would be able to cruise on a $2000/month budget and that in itself would be quite generous.
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Here's a thread about people sailing full time: https://forum.mrmoneymustache.com/post-fire/anybody-sailing-full-time/msg2107916/#msg2107916
Maybe see how your goals, experience/sailing skills, expenses, etc. stack up if you haven't already done something similar?
Generally, given that you two have a relatively high income, already have good savings, and are young, hitting $750k by age 47 is totally doable.
On your expenses, cutting down the $700 in groceries would help. Also, how do you pay $0 for auto and boat insurance? Finally, you might get more feedback if you posted your average monthly expenses by category, instead of the way you have them organized.
For your investments, are you following this investment order? https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153
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This sentence confuses me a bit -* " The boat is in need of repairs(not cheap), but we got her at a price we felt was a good deal versus what she should be valued at in a decent condition. "* - I am not a boater and the closest i have for experience is a grandfather who lived on boats for many years, the last one being a concrete hulled {!} sailboat [ although i don't think it travelled far when he owned it ] .
Boats are money pits like cars. Maybe not so much if they are just tied to a dock. But if you want to get it to a condition where it is ready for cross ocean sailing, sometimes you are just better off financially, buying the nicest example of the model you want, rather than buying a project hoping to bring it up to that "nice + dependable" level. Your boat having a major issue in the middle of the Pacific, is not like a car blowing a radiator / flat tire on I-5 or I-90. That said, did you "test drive" the boat on a long voyage before buying it ? How long was the boat for sale before you bought it ? Boats just seem like a not very liquid asset to me.
$3000 to haul a 42 foot boat out of the water at a marina, and redo the hull in marine grade paint + zincs sounds pretty cheap...
How do you have $0 for both propane [ cooking] and $0 diesel {heating} expenses over 8 months ?
I would classify "smokables" as a "fun" expense.
A diesel engine rebuild is not something you'll do at your galley kitchen table if it needs any machining.
Regardless of my pessimism, good for you for living a non-conventional lifestyle !
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How do you have $0 for both propane [ cooking] and $0 diesel {heating} expenses over 8 months ?
I would classify "smokables" as a "fun" expense.
In a case study you should preferably calculate your variable expenses as an average amount per month.
I would also put the smokables under "fun", as it is a potential savings thing you could cut out if you really wanted to.
You monthly spending on groceries (704$) is huge. And you spend an additional 155$ for eating out.
My average spending on groceries is about 400$ for 2 adults, in a much more expensive country, including washing powder and such.
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Following.
Wife and I have aspirations for living on a boat. We aren't quite ready to move and buy our own yet, but we learned how to sail a few years ago and now sail regularly in the summer.
Cool on you guys for already having the boat and Bainbridge is a pretty cool place to have one!
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Check on Gone with the Wynn's. They RV'd for a number of years and are now full time boaters. They have lots of videos, budget stuff, etc. via their webpage, facebook, etc.
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If you aren't on Cruiserforums yet, you should probably check that out. Lots of sailors and cruisers on there with a lot of knowledge.
Good place to start
Cruising on 500 per month (http://www.cruisersforum.com/forums/f2/cruising-on-500-per-month-40051.html)
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May Overview:
The month of May has been a crazy AND expensive to say the least. We had a major propane leak(we knew propane system needed a rebuild) which lead to a full rebuild of the propane system including a new stove. My wife took a trip to Israel while I stayed back and painted the boat. I have to rebuild and install the last 4 windows and then will be progressing on to some of the interior rebuild starting middle of June. Each day we are getting closer to being able to start sailing on a regular basis! Painting the boat took somewhere around 200 hours by my estimates. Most of that time was spent in the prep phase, but a professional paint job would have costed somewhere around $6500-$8000! By my estimates, materials costed somewhere around $600(though I haven’t calculated it).
Boat Repairs:
* Replaced spinnaker halyards(2 of them)
* New stove and propane system
* Painted cabin top and cockpit)
Budget Change:
* Revised how I budget for each month
* All categories are given a "total sum” in which we deduct from on a monthly basis. The remaining “sum” should never roll over into the following months and should be transitioned into “investing”.
* Moved investing categories into their own group
* Split “investing” category into “Vanguard” and “Crypto”
* “To be Budgeted” should never have funds for the month, rather all excess spending should come directly from “Vanguard” category.
* Budget only 2 months worth of expenses rather than 3.
GOALS:
* To become FIRE by age 47 ($750,000 in investments)
* Take 2 years off work to do a Pacific crossing aboard our sailboat
* After FIRE? Who knows, maybe a 10 or 20 year circumnavigation?
Life Situation: Seattle, WA. Age 28, partner 26
(ESTIMATED)Gross Salary/Wages:
Me: $95,000/year(salary)
Wife(works per diem): ~$30,000/year
Bonuses:
Me:
* Quarterly performance bonuses:
* Q1: 14% - $3150
Individual amounts of each Pre-tax deductions:
Me(bi-weekly):
* 401k: $237.51
* Healthcare: $45.82
* Dental: $16.56
* Vision: $1.11
* HSA: $273.29
* Transit: $54.80
Wife:
* 401k: $100(fluctuates based on how much she works)
INCOME:
MONTHLY TOTAL: $ 7,734.73
AVERAGE(since Jan 2019): $ 8,841.24
TOTAL(since Jan 2019): $ 44,206.20
EXPENSES:
MONTHLY TOTAL: $8,013.45
AVERAGE(since Jan 2018): $6,806.87
% Difference from previous month: +11.45%
TOTAL(since Jan 2018): $34,034.34
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IMMEDIATE OBLIGATIONS:
* Moorage: $759.00
* Phone: $132.69
* Groceries: $354.72
* Transportation: $230.20
TOTAL: $1,476.61
AVERAGE: $1,700.19
% Difference from previous month: -14.29%
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TRUE EXPENSES:
* Business Expenses: $184.73
* Smokables: $40.00
* Propane(cooking): $0
* Heating(diesel heater): $0
* Gas: $87.55
* Auto Maintenance: $15.00
* Boat Maintenance: $3,934.01
* Gifts: $0
* Software Subs: $16.48
* Stuff I forgot to budget for: +$46.14(refund)
* Auto Insurance: $0
* Boat Insurance: $0
* Medical Exp: $129.81
TOTAL: $4,361.44
AVERAGE: $3,367.45
% Difference from previous month: +33.52%
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Quality of Life:
* Wife Spending: $65.32
* Vacation: $1,080.31
* My Spending: $98.81
TOTAL: $1244.44
AVERAGE: $713.65
% Difference from previous month: +88.19%
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Savings:
* Vanguard: $87.99
* Crypto: $570.00
TOTAL: $657.99
AVERAGE: $794.51
% Difference from previous month: -85.96%
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Just for Fun:
* Dining Out: $196.56
* Fun Money: $76.41
TOTAL: $272.97
AVERAGE: $231.08
% Difference from previous month: +30.86%
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Assets:
Car: 1996 Toyota 4Runner - $3500
Boat: 1980 Pacific International Marine: $40,000
Stocks(Active management - Will move away to personal management soon): $79,262.44
Vanguard Index Funds(Personally managed): $23,312.15
Cash: $18,448.25
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On your expenses, cutting down the $700 in groceries would help. Also, how do you pay $0 for auto and boat insurance? Finally, you might get more feedback if you posted your average monthly expenses by category, instead of the way you have them organized.
For your investments, are you following this investment order? https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153
I unfortunately dont have time to respond to everyone's questions, but since you were at the top, I'll respond :)
We have $0 for auto and boat insurance due to the fact that I pay in full and budget out over the course of 10 months to get the funds needed. I prefer having a month or two of $0 contribution towards that category.
As for propane, I only fill our tanks every few months(believe it is every 3 months), so I tend to budget around $30 towards the category, and after month 1, I no longer need to budget into that category.
I do believe my expenses are FAR higher than what they should, or what I'd like them to be. That being said, I am in the middle of a refit and therefore I have ZERO time to focus on "cost savings". We eat out 1 or 2 times due to our lack of time to focus on cooking. That said, our grocery bill is "higher" than what we have averaged in the years past, but that strictly is due to our diet - higher quality foods, nothing really processed and a LOT of fruits and veggies.
I like the idea of grouping categories to be more "general", but that requires more time of me which I don't have currently.
In the future I am hoping to list out my vanguard investments to give people an idea of how my portfolio is organized. This will be done in the future by why of a python script which grabs all the data and inputs it into a spreadsheet which would then be copied into these posts. That may be a few months out, but overall, I like documenting my progress and budgets to give a historical view of what someone can do and give others ideas of what costs may be like for them.
On a side note - this is my view today while I work from home:
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I would recommend getting in touch with Behan and Jamie at Sailing Totem. They are very open about the ups and downs of cruising life including the costs. Jamie is a sailmaker and they also coach wannabe cruisers. They launched from Eagle Harbor 11 years ago with three little kids. We are landlubber college friends of Behan's, with no sailing aspirations but have learned a ton from their blog. Armchair sailing is enough for us, those ocean crossings require a bit more intestinal fortitude than the DH and I have!
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I would recommend getting in touch with Behan and Jamie at Sailing Totem. They are very open about the ups and downs of cruising life including the costs. Jamie is a sailmaker and they also coach wannabe cruisers. They launched from Eagle Harbor 11 years ago with three little kids. We are landlubber college friends of Behan's, with no sailing aspirations but have learned a ton from their blog. Armchair sailing is enough for us, those ocean crossings require a bit more intestinal fortitude than the DH and I have!
Will definitely have to reach out to them! I didn't realize they were in Eagle Harbor! I currently am located there :)
Thanks for the recommendation :)
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Why do you invest in crypto currency? That is not exactly a safe investment. Your investment can disappear overnight, or you could loose your acess code.
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Why do you invest in crypto currency? That is not exactly a safe investment. Your investment can disappear overnight, or you could loose your acess code.
Good question. I've been apart of the industry for some time now(2011). I do believe it can disappear overnight, but so can just about anything. I believe the technology is here to stay, and will change the way we do things in the future as it stays around longer.
As for loosing access - I have ways of securing it that will prevent me loosing access to it - alas nothing is perfect, but keeping multiple copies of a wallet in cold storage is the route i choose to take. I do not store it online. I make my purchase and immediately have it transferred to the offline wallet.