Author Topic: Case Study for future sailors  (Read 2926 times)

Crazycarl

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Case Study for future sailors
« on: March 31, 2016, 01:53:44 PM »
Hi All,

First post after reading all the blogs on this site, so thank you for taking the time to read.

We believe we live pretty frugally and are looking for advice and thoughts on our situation and to see if any others have gone the same route.

I am 32 and wife is 31 with a 2 year old and another on the way. We are saving as much as possible and plan to sell everything, "retire" and live on a sailboat in the Caribbean and eventually sail around the world. Our plan is for August 2020 to set off. We are hoping to live off of about 20-25k per year max, which should allow us some spending money and account for smaller repairs as needed, but also allow us to trim this down if needed (down market, unexpected big expenses, etc).

Current situation:
 
I, engineer,  earn 1582 biweekly after all taxes, 401k, etc. (should be raising to around 1750 after a raise in the next couple months)
Wife ,teacher, earns 1380 biweekly after taxes, health insurance and other teacher pensions etc.
We also earn about 500/month from loans to our real estate business.
We have three  4 unit buildings that generate 6k gross when full and have fixed expenses of about 2500/m. I assume about 1500/m can be transferred to us after all expenses, vacancies, etc. This should hopefully start in the next couple months after the LOC for the business is paid off.

Current assets:
3200 - checking acct
1250 in scottrade - 50/month deposited
6250 in vanguard - 900 / week deposited starting 4/8/16 (will increase once business starts paying us more)
2020 in Robinhood 100 / month and 35 / week deposited
4350 in Prosper - 50 / month deposited
56000 in 401k - 8% with 4.5% employer match
7500 in IRA - 2500 /year deposited


Business - 250k - minus 38k in mortgage/business loans
House - 72k mortgage left on 120k house

monthly expenses

mortgage is 758 piti plus we are putting an extra 300 towards principle (will be incrementally increasing this to hopefully have house paid off by 2020)
car (2011 sonata)- 266 /month - 5000 left - 4.5% rate
insurance for 2 cars and a motorcycle - 1200 / year
student loan 4k left - 199 /m (2.5%)
electric - 40 /m
gas - 50/m
water - 20 /m
phone - 90/m
internet/tv - 75/m
food - 300 / m   
gas for car - 150 /m
dogs - 50 / m
charities - 75 /m
misc - 150 / m  (this will go towards wedding gifts and the occasional house needs and outings with friends)
whole life insurance policies - 350 /m  (these will act as emergency funds as they have a cash value and pay ~ 5% dividend/year after fees - Mass Mutual)
credit card gets paid in full every month

We do a lot of biking / walking / kayaking around town and water front, use gift cards when we want to go out to eat. We have been very selective on where we spend our money and try to save everything. With the new kid on the way, I know some of our expenses will go up, but by that time, we both should have gotten at least one raise to cover any increases. Her health insurance should cover all medical expenses as well.

I try to setup everything as automated as possible and just keep an eye on things and watch the stash/kitty grow!

We are hoping to sell the apartments near 2020 to not have to worry about managing them and put the money in our vanguard acct. Our house sale will go towards the boat purchase/refit, this will allow us to not have to pay capital gains on taking money from another account to buy the boat. My plan is to have about 600k by 2020 in accounts (not including house). Does this seem doable/reasonable with my situation as long as nothing drastic happens such as losing a job?

Anyone do anything similar? Any other suggestions or comments? Am I crazy?...haha

Thanks again!
« Last Edit: March 31, 2016, 05:30:23 PM by Crazycarl »

Bateaux

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Re: Case Study for future sailors
« Reply #1 on: March 31, 2016, 07:34:27 PM »
Totally doable.  You must sell it all.  No anchors back on land unless someone else is handling it for you.  Buy a reasonable boat.  You'll spend $50k to $250k on a seaworthy boat once fit for the ocean.  Our plan is to launch to a Catamaran between 2018 and 2020.  Current savings will generate 50k to 60k @ 4% withdrawal.   Real estate sale will cover the boat and cruising kitty.  I read sailing blogs all the time and cruisers are living on $1500 a month having the time of their lives.  Now that does mean much more sacrifice as far as on shore spending goes.  Eat a lot of fish and spend more time on the water.  The Cat I want will cost between 200k and 350k depending on condition and size.  400 Lagoon is a potential buy.  I figure boat expenses will run 25k a year maybe more.  Then our personal expenses will run another $25k for my wife and I.  I'm not sure where we'll travel.  Have to get to that step.  Likely a few years in the waters closer to the US.  Then maybe a passage to Europe for a year.  If all that works out a passage back and trip to the Pacific via Panama Canal.  One thing I know, since I'll be starting all.this at 50 I'll be looking for able crew.  Keep us updated on your plan.

chemistk

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Re: Case Study for future sailors
« Reply #2 on: April 01, 2016, 06:06:15 AM »
Kudos to you and your plan! You and your wife seem to have everything figured out as far as what you want to do. I can't speak for the financial side of things - I don't yet have enough experience/am not far enough down the FI path to have a strong opinion of what is a "good" number.

I just have a couple thoughts:

Could you sell the bike? How about another car? Those seem like two pretty easy things that would get you that much closer to your goal.

Have you thought about a backup plan? Say 2020 comes around and you find out (medical, personal, financial, whatever it may be) that you're not going to be able to live the lifestyle you're planning for. Do you have an acceptable alternative so you don't find yourself yearning for something you can't easily have?

Have you and your wife thought long and hard about how your kids will handle it? In 2019, your youngest will be 3 and your oldest will be 5 - those are ages where social interactions with other children are paramount in shaping a child's future. What happens a month out when your oldest is missing their friends/family/old house? They may not fully understand why you chose to switch to an entirely new lifestyle. Would you be willing to abandon your new life and move back home?

You may already have answers to these questions, but I'm sure other folks around here will want to know as well.


Crazycarl

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Re: Case Study for future sailors
« Reply #3 on: April 01, 2016, 07:34:28 AM »
Thanks for the thoughts and ideas.

If the investments do great and we have some extra savings we are hoping to get a catamaran as well to allow for the easiest and most comfortable experience, especially the kids. We have been reading a ton of blogs and forums and watching video blogs on youtube to get an idea of how people are doing this now and there budget and lifestyle. I am sure we could easily live on 1000 / m based on our current situation, but want to have a safety factor built in and allow for us to really enjoy this experience. We are hoping to bum around the Carribean for a couple years then venture through panama and head that way. Bateaux, if you ever need someone to go sailing with, let me know!

Chemistk - The one great thing about FI and my plan, is that if by 2020 something were to happen and we could not venture this route, we would still have a paid off house and plenty of assets to most likely retire or move and start over somewhere else with a nice security blanket.
I have thought about the kids and from many other blogs and info I have read, the kids make friends anywhere they go. They get used to the idea of meeting new people all the time at the different islands/ports. They also still develop friends on the other boats, and everyone tends to sail to the same places at certain times of the year. With the wife being a teacher, they should get a great education and she should be able to help with them interacting with any other kids around. We would also fly back home a couple times a year to visit with Family.

I have thought about selling the bike and possibly one of the cars. Being in WNY, its pretty cold and rainy during spring and fall which would make it hard to ride, carry school supplies and still look professional. We live pretty close to my wifes school, so she drives the less efficient car and will be riding her bike once the weather is much more agreeable. I live about 15 miles and use the motorcycle whenever the weather allows. We live very frugal in many other areas, but if we are on the brink, it will be the first thing to go. 

Thanks again
 

Le Dérisoire

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Re: Case Study for future sailors
« Reply #4 on: April 01, 2016, 08:25:37 AM »
Crazycarl, have you looked at boats selling in Europe? There are a lot of very good deals there right now, especially in Turkey.

I’m in a similar situation than yours with a very similar plan.

We are 28 years old and planning to quit it all and buy a boat in about 6 years. We don’t have kids yet (miscarriage last Christmas), but we are working on that!

I’ve seen those people living aboard with only 20k / year, but the ones that post their spending did it many years ago and I fear inflation made that a bit unrealistic. We are planning to have an investment income of 40K / year for living and boat expenses, which we should have in about 6 years (taking into account the purchase of a 300K boat). Life on a boat is so different than on land that the expense budget is the most difficult item to estimate, IMO.

Crazycarl

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Re: Case Study for future sailors
« Reply #5 on: April 01, 2016, 09:15:41 AM »

We would like to start in the Caribbean for 2 years, because it is much closer to the US in case something happens and we need to cut the change short. So we have thought about finding a boat from one of the islands around there. We do see many great deals from the Med, but I think a lot of those are charters, and not equipped as well. Hopefully we can save some refit costs if it was previously used as a live aboard cruiser. If there is some amazing deal or opportunity arises, then we may jump on it as needed. We are trying to stay as open as possible and flexible.

Cost of living in the Med vs most parts of the Caribbean can be drastically different. We plan to anchor 90% of the time and not eat out. We have been trying to adjust our current lifestyle to how it may be or we think it may be, such as walking/hiking whenver possible. Our house is about 1k sqft, so we are used to smaller spaces with less "stuff" and we eat a very healthy way with lots of rice, veggies, black beans, eggs and fruits. We do not turn down other options, but do not go looking for them.

Is your investment income going to come from stocks? or other assets?

Good Luck with everything!

Le Dérisoire

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Re: Case Study for future sailors
« Reply #6 on: April 01, 2016, 01:05:14 PM »
Is your investment income going to come from stocks? or other assets?

Stocks and bonds, yes. I do not say that I would have 40K in dividends and capital gain, but that I would be able to safely withdraw 40K for an extended period.

I don't think real estate would be a good choice since I would not be here to take care of it. I would have to pay someone to do it which would take a good chunk of the profit.

Crazycarl

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Re: Case Study for future sailors
« Reply #7 on: October 04, 2016, 01:03:58 PM »
So it has been a few months and figured I would update.

Dream is still going strong as ever. Wife is pushing harder to leave sooner, but trying my hardest to keep the current plan to be sure we have the appropriate savings set aside.

We have really pushed hard to increase our net worth and get closer. Below is an update on where we stand.

Current assets:
1800 in checking acct
1300 in scottrade
20250 in vanguard
3750 in Robinhood
4800 in Prosper
69000 in 401k - have now raised this to 29%
9100 in IRA

Business - 250k - minus 31k in mortgage/business loans
House - 69k mortgage left on 130k house

We have been visiting some boats and trying to narrow down our search criteria. Currently hoping to spend about 200k on a catamaran and then have 500K in our kitty to generate the income needed. We might spend the first couple months getting the boat ready in texas while my wife is working part time subbing as a teacher and some of the grandparents can watch the kids. This should allow us to use any extra money generated to get as many extra spare parts and updates that are needed to keep the first couple of years costs low for maintenance.

Anyone else out there still saving up or currently living this dream??

bobechs

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Re: Case Study for future sailors
« Reply #8 on: October 04, 2016, 10:35:31 PM »