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-   -   Escaping the Paradigm with $300,000... (http://www.sailnet.com/forums/cruising-liveaboard-forum/61761-escaping-paradigm-%24300-000-a.html)

OpIvy 02-03-2010 12:48 PM

Escaping the Paradigm with $300,000...
 
I know there is lots of other posts that state if you had $1 Mil what would you do... Here is a new twist with a number that may be more realistic for some - $300,000 cash. This needs to include the purchase of the boat, outfitting, how many years you think you could make it last and any other budgeting you would do. To each there own on how they would spend it...

My thoughts...
Boat - First Tayana 42 CC then Cabo Rico 38 - $110,000
Outfit - $30,000
Yearly Budget - $35,000 (2 Adults, 2 Kids on the hook mostly)
Years on the Water - 4 (If I spend less yearly I would go longer)
Emergency Fund - $20,000
Location - Start in the Caribbean and make my way over to the South Pacific but depends on boat location...

canadianseamonkey 02-03-2010 01:45 PM

Great idea. What will your yearly budget be used for? It seems quite high to me unless you are using it to pay monthly payments ie: loans, mortgage, debt. If you're going to mostly be on the hook, I think you can cruise longer than 4 years. I know I would.

So are you going to do this?

OpIvy 02-03-2010 02:04 PM

My thoughts are that the budget should include all expenses for the year (food, dock fees, fuel, maintenance/repairs, clothing, etc and for me- 4 people).

Right now I am just scheming and dreaming.. Unless I have a life changing event (i.e. get laid off) I will continue my current path forward and plan for the day I don't have to work anymore and can choose to cruise until I don't want to (vs. when the money runs out). I just thought I would post this tread to see what other people could do with $300,000. And if the worst (but most likely best) scenario happens put the plan into motion.

What would you do with $300,000.....

canadianseamonkey 02-03-2010 03:03 PM

Quote:

Originally Posted by OpIvy (Post 566662)
My thoughts are that the budget should include all expenses for the year (food, dock fees, fuel, maintenance/repairs, clothing, etc and for me- 4 people).

Right now I am just scheming and dreaming.. Unless I have a life changing event (i.e. get laid off) I will continue my current path forward and plan for the day I don't have to work anymore and can choose to cruise until I don't want to (vs. when the money runs out). I just thought I would post this tread to see what other people could do with $300,000. And if the worst (but most likely best) scenario happens put the plan into motion.

What would you do with $300,000.....

Life changing events do happen...it happened to me and it could happen to you. Bottom line, with 300K you're good to go.

bljones 02-03-2010 03:15 PM

300K?
Step one, invest that 300K in 90 day term deposits
Take 90 days to buy the boat, ugly but solid, with no brand loyalty or preference, just the best ugly bluewater boat I can find for 75K.
Split 50K into 10K parcels, and invest in 30 day, 60 day, 90 day, and 120 day term deposits, and keep 10 k for cash. that 10K cash is the phase one refit budget. as each 10k note is freed up, it should dovetail with the next refit phase. If not, roll the cash over for another 30 days. you ain't getting rich, but you ain't losing a dime, and you are not spending it, cuz you can't touch it. The remaining 175K invest in in a combo of stocks, bonds, 12 month GICs , etc.
Quit your job- I don't care who you are, but if you are on a tight budget, chances are your current hourly wage is a hell of a lot less than the $90-150/hr that the local yard is charging to do stuff on your boat that you could probably do yourself if you weren't working. The money you save on labour costs will cover your expenses, cuz after all, you got the 300K by selling your house, so you have no mortgage, no car payment, etc., cuz you paid all that stuff off, right? If you didn't, go back and rethink step 1 and step 2, cuz your plan is different than mine.
Besides I'd rather be working on my boat than actually working.
In 6 months you are ready to launch for ports unknown, with a nice shiny looking reliable well equipped safe old boat that you know inside and out, and enough cash to cruise indefinitely, if you are frugal.

xort 02-03-2010 03:45 PM

Indefinately? On $200,000?? How?

OpIvy 02-03-2010 03:46 PM

bljones.... What ROR are you planning on $175,000 to live off? Are you planning to do odd jobs to make a little extra on the side? What yearly budget are you going to require and for how many people? Sounds like you have put together a game plan...

bljones 02-03-2010 03:54 PM

Okay, so maybe indefinitely is the wrong word. Figure a 5% rate of return on average, so 10K a year without touching the principal. If you are a retiree with pension income it is doable. If you are not a retiree, then figure that you will have to dip into your principal. Which means you could only cruise for 10 years or so before you have to get a job.

xort 02-03-2010 04:01 PM

You need to allow for inflation. right now it's low but it's doubtful it will stay low for the next 10 years. So expect an average of at least 3% inflation over 10 years. If you expect to spend only $15,000 per year at today's prices, you'd need to get 8% on $300,000 to keep that going indefinately.

eryka 02-03-2010 07:52 PM

The approach we're using is quite similar to what bljones proposes, and we are cruising on it right now. In our case we spent $50K for a sound hull with a layout we liked, and $85 to put in exactly the systems we wanted. That included new sails ($5K), new standing rigging (another $5), new Yanmar ($20), new heater, new refrig, new wiring, new dink and outboard, solar panels. Based on our pensions & savings, we budgeted $2000/month for cruising: $500/month for maintenance, $150/month for boat insurance, $150/month for communications, $400/month for food; in our case that left $700/month for discretionary & unforseen crises. Some months there wasn't much discretion -- motoring every day down the ICW, fuel cost over $400 one month. But since we arrived here, we have spent less than $50 for fuel for the last 2 months. The OPs $300K would last about 6 or 7 years on our budget without working at all, and they could stretch it by cutting back on the "discretionary" so escaping the paradigm is certainly do-able. Hope this helps. -e.


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