Day #456: What a cruise really costs (update)

A common question in our conversations with our friends back home is: „How did your financial plans work out? Do you still have enough money?“ — „Well… that’s a long story….“ Could be an answer (referring to the lengths of this blog post). But it isn’t.

Our family wrote about the topic last year (Tag Nr. 160: Was kostet eine Langzeitreise über den Atlantik?), after we have been half a year into our journey. Since then, we learned a lot, and we adjusted our plans several times. We even switched from traveling to adopting the life on a boat as our new lifestyle.

But it has not changed our answer to the money question very much.

Hunger

When you live on a boat, you need to dive overboard from time to time. Sometimes something falls overboard and to retrieve it you need to dive. A rope gets tangled into the propeller and again: you need to dive. And for this stuff, a snorkel and googles is all what you get, since you need to be in the water quickly.

Water is his element: Waterdog Vu

My challenge with diving is ‚air hunger‘ — when I am under the boat I suddenly have the strong impulse to breathe deeply. The feeling comes up from the guts and moves quickly into the head. When it’s there, I start to panic and to return to the surface.

In my head I am clear that this is just an impulse to breathe but not really required. I could be under the water two, three or even five minutes. Apnea divers can hold their breath and fight the impulse for eight minutes and longer. Since the tissue is saturated with oxygen our body works all fine without getting air for quite some time.

This is enough time to do a lot of work under the water, cleaning the boat, untangle a rope in the prop, or anything else.

Long story short: I have a little diving tank ready which I try not to use, just in case. My mind needs to learn that I will be just alright to take a breath, work underwater slowly but effectively and return after a decent period of time to the surface for another breath.

You know where I am going: Same is with money. I call it „money hunger“ and it is not about being greedy. Just the fear that there won’t be enough money for survival. I know that feeling and sometimes it leaves me sleepless. But I know: We are just alright with what we have. My mind just needs to learn that we are just alright. However, the years of unlearning the „money hunger impulse“ are many, and the learning process is not a straight line, for sure. It takes regular look into the personal finance, to understand where the money goes, how much the family requires. Plus, it takes education, reading, talking to other folks. I am constantly amazed, how many of our friends avoid to talk about money (although it appears essential to all of us, so much, that we trade an enormous amount of our lifespan to obtain money enough). Usually, coming out of education, we are equipped with the wrong set of assumptions about the function of money and the role of work. The „money hunger“ keeps us trapped into bad habits and wrong assumptions — keeping our heads figuratively underwater, into what is considered a „normal live“, gasping.

An extra tank, an excess of money won’t make us survive better or a lot happier. Such as the endless availability of air doesn’t make us happier or less anxious either. Obviously, different parts of the world require different minimum level of money at hand. There is even science on the topic (published in NATURE), which indicates, that a certain annual income for a land-based life contributes to a happier life. Exceeding the level won’t make us more satisfied.

All of this should be general knowledge, even taught in our schools. But it isn’t, no matter how many years you spend in the eduction system.

Income

We are pros already.

Steven Pressfield, „The War of Art“

In my observations, people sailing on a „kitty“ are less happy than people producing income underway. The general story goes like this: A couple saved up for their lives („a kitty“) and then goes sailing. The assumption is this:

Money saved (kitty) / annual cash burn = time to travel w/o income (in years)

One can pick a route, let’s say sailing the Med for a year, sailing the Caribbean for two years, circumnavigating the globe in three years, etc. and off you go.

Problem is: plans are changing constantly, the timing is changing, too. It does not need a pandemic to alter sound plans, like in our case. It could be that you fall in love with a place, an island. Or with the lifestyle on a boat. Or you find new friends and you just want to hang out with them a little longer. To have time and freedom to choose was the reason we all left in the first place, right?

It is much more natural and fits much better the circumstances to produce some income while living on a boat. For at least two reasons:

  1. An income provides us with the flexibility to adjust our plans. If the sail takes longer, or we have an unexpected expense — this shouldn’t trigger an episode of “money hunger” and panic. We might alter our sailing route in a way that we can still make money — stay longer in an anchorage, sail to a place with good cell reception. Or the opposite — we are good for several months and enjoy the remote beauties of this planet with the peace of mind, that we can return to civilization with all its surprising expenses and still have an income. That’s the reason why the majority of landlubbers believes, long-term sailing is only good for pensioners — since they have a guaranteed recurrent income.
  2. But here is another truth: We need meaningful work as much as we need meaningful relations to enjoy our lives (that’s a line of Ray Dalio). And work means here to work for others as a professional. Who shows up every day. Who shows up no matter what. It’s about money, it’s about eating, feeding our families. The amateur over identifies with his job, takes it too personal. A pro can bitch about his work and improves his mastery every day. The professional work is part of our identity: it doesn’t matter a lot for the happiness whether we are professional YouTubers or bloggers, book authors, charter captains, yoga teachers, carpenters, sailmakers, or chefs. Whether we help with homeschooling the kids, in the restaurant or the boatyard. Or we work remotely as marketeers, consultants, programmers, designers or just taking care about our investments or real estate. But there should be a financial appreciation of a kind (could be cash, barter or an avoided cost).

Living on a boat can be a busy lifestyle. Everyone is working somehow on the boat, doing stuff. However, being busy is a choice, on a boat or back home on land. Therefore, we should not confuse this work with professional work. With meaningful work, I mean work we do for others and we get paid for (one way or the other). And where we master the skill.

Linton Bay Anchorage

To find a paying job just takes time. Some patience is good too, and eventually the dices fall just the right way: We have been fortunate to get a call from a former colleague of mine. He asked me for help in his new job — I took the role as a consultant and worked the entire October on a remote project for him. Well paid work and very rewarding. Anyway, the best part for me was to get in touch with old and new colleagues and working with them the project. „A good cerebral exercise.“ As my former boss and friend Simon had put it.

Boats

In my post a year ago I wrote a sailing boat is about €70-120k, and a catamaran is roughly the double. Now I would still say the same, but this is the European middle-income average buyer market.

There are several other markets with cheaper boats: hurricane boats for instance. These are boats in the East Caribbean that sunk in a hurricane or fell off the stands on land. The owner claims the damage to the insurance, and the insurance owns now the boat. Many boats are a complete financial loss (repair cost by the manufacturer exceeds the residual value) and are scheduled for disposal. Consequently, insurances try to avoid transport and disposal costs and are willing to sell these ‚Kaskos‘ for a few thousand bucks. We met many people who own such hurricane boats and are capable restored them, especially in Panama. Now they own boats they couldn’t afford otherwise. But careful — you need to be a boat wizard and to understand “structural integrity of a boat” to pull off such an amazing deal. The insurances aren’t dummies…

Still, many people buy boats out of charter. I can’t believe that you can make a good buy from a charterer, since these companies know EXACTLY the residual value of the boats and their maintenance status. We met several people on charter boats — they usually sail the boat for a couple of years and sell them on another market, where they can achieve better prices. But I am biased — I don’t like charter boats at all and would never buy one.

Home work at ARGO

Another category is older boats, say from the 1980ies. These boats are in many cases seaworthy and good to live on and are traded in the 5 to 50k-area, especially in the Americas. It is pretty easy to pick up such a boat. They are not necessarily beauties and might have some technical problems. In some cases they are re-powered with rarely used sails and rigging. I definitely would consider such a boat. We met especially young people that got a boat for a few thousand bucks. And after investing another couple thousand bucks, they are pleased with their boats, being out on the oceans.

We even met a couple that bought a big 45 feet trawler for a few thousand bucks. They live permanently on this very spacious boat and move the boat every year from Florida to Mexico and back. The fuel bill is a couple of thousand bucks each year. But maintenance is quite low. Very low. That made me think, at least.

Catamarans are very comfortable and provide a different lifestyle on anchor and in the marina. A big advantage is their shallow draft, too. But still, I still am not there: They are costly and are not as flexible sailors in all conditions. But for other people that value comfort higher than seaworthiness this is a good choice — in most cases catamarans are condominiums on water with sails. And downwind, even a cupboard will sail.

So, there are good alternatives below the €70-120k brackets. Financially, I suggest three considerations before a boat purchase:

  1. Maintenance cost. We spend last year about €15k for upgrades and maintenance. For boats in the 45 feet category, €10 to 15k is a good budget. For catamarans, the budget is only slightly higher. You can do it with less money, provided you really understand a lot about boats and how to do maintenance. Plus a boat can take a very much reduced maintenance budget, but the boat will ‘memorize’ deferred maintenance and request it someday back. Watch this carefully and don’t kid yourself.
  2. Residual values and different markets. You have always the option to change boats. Thus, keep an eye on the market value of your boat. Different boats achieve different prices in the various markets. For example, there is almost no market for boats in the 55 feet arena in Europe, but in the United States. Deep drafted boats are not of big interest in shallow coastal areas.
  3. Boats can be sold, no problem. The current market is good, many boats get bought and sold on this side of the Atlantic, mostly through a broker. The broker takes 6-10% of the selling price. Most important for the purchase is to get a good survey. Polish the boat. Make sure that you take all moving parts unattainable to the surveyor, like 2nd outboard, diving equipment, SUPs etc. Check that the listing is correct. This way, you might make up the 6-10% for the yacht broker.

In a nutshell: The boat is not a constraint — a fantastic boat that can make a happy home for you and your family for a few years must not cost a fortune. Or — the other way around — a big expensive boat isn’t any guarantee for being happy or even safe on the seas. Seaworthiness of a boat isn’t usually priced. And the bigger the boat the bigger are the cost incl. maintenance and the headache for the owner.

Cost

You always spend the money you have.

Lena Szameitat

A year ago we did not know what we know now:

  • We sail less than 7% of the time. We spend more time on a parked boat than on a vessel under sails. The boat needs to be prepared for that.
  • We like living on anchor more than living in a marina, and this saves us many costs.
  • Cost of living in countries differ widely, but your supermarket bill and telephone bill doesn’t vary that much. You simply don’t buy cheese, for instance, if that’s ridiculous expensive. But you buy more fruits and vegetables.
  • Many costs simply don’t exist on a boat. Think rents/mortgages, energy, water (which is about 30-50% of the monthly bill). We live on anchor with solar panels and a water maker. Or the daily Starbucks, restaurants, cars, insurances, gas, parking fees or transport heading to work and school. Afternoon activities for kids, new sport equipment and cost for gyms. Office attire. Even some cost, which we would like to have, like for hair dressers, are not existing. Any shop is hours away most of the time — the best way of not spending.
  • Check-in cost in certain countries are a real ‚bummer‘. Like the BVI or Antigua. Check this before if you plan to sail, it can be a hefty surprise and take a big bite from your monthly budget: Visa per person, cruising permit, agent or handling fees can be easily a couple of hundred bucks. With the COVID-19 situation and testing requirements even more.

We still live with about €2.000 a months. Plus the expenses for boat maintenance. We can set off the living cost almost with our income from rents. The expenses for the boat need another source, for instance savings or working.

Cost are fixed in the most cases, but plans change. Our plans have changed multiple times since COVID-19. We extended our travel for another year. Our cost structure got slimmer. Our income side improved.

And we are thinking about selling our boat.

Now, what… enough money, or not?

Enough. We are in the ‚sweet spot‘. We have sufficient cash. Without looting our future, our family net worth is growing with a surprising rate.

We are financially sound, although we had never planned for such an endeavor. We learn as we go and don’t need to worry about our finances at all (although I still sometimes do, but this is just a bad habit of mine). Lena and I started early to fight the ‚money hunger‘, the longing for always more and more money without reflecting how much we all really need, Which is probably our biggest learning, but unfortunately, it comes in my case with age.

Of course, we have overspent a few times in the last 14 months or had sudden massive expenses. Like our new dodger or the new solar panels. But we always found sources to pay for it. Last year, our visitors took a share of these unexpected expenses — thanks for that. This year, we won some well paying work.

I learned to appreciate work for a living from a completely new perspective. That is probably my personal biggest learning when it comes to finances. Meaningful work is so essential for us as human beings. Being paid (or gaining any other financial benefit over time) is an acknowledgement for working as a professional.

That is a very positive aspect of money. If we pay someone, it is an appreciation for professional work. But of course, there are more ways to appreciate the work of others.

But that is always true in life. Life is so much more than just the money we have, or we don’t have. To a certain level. We need some money, but not endless money.

Money is like gas during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations.

Tim O’Reilly

Anyway — money has a special role in our lives. It remains a symbol, a means of interaction and exchange between humans that can always attach to numbers. Those numbers we can evaluate, compare, memorize, judge — wouldn’t you agree? But when I dig deeper into the nature of money and debt (enlightening), how much money currently exist (mind-boggling), I start to believe it’s very nature is currently challenged and changed — and experts are still arguing how it comes into existence. Money isn’t as absolute as we think. It’s not godlike, it’s nature doesn’t justify human sacrifice. It’s just a tool.

Over time, I learned to understand the question of our friends about money differently: „When do you come back home, to a normal life with work and spending and the rest?“

After school activities in Linton Bay: Ilja is “going” spear fishing

The honest answer: we don’t know yet. 2020 has humbled us in terms of our having plans several times. We want to come back to our house in Barcelona. One day. When this travel and the current troubles are over. By when? Future will tell.

PS: Check out the links in this blog post. You will be glad you did.

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