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  #51  
Old 11-13-2012
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Re: My Escape Plan - Insights Wanted

I appreciate all the different perspectives here, and the realities of the details.

I'm putting together the finances of my own plan, and I think I'm going to be OK, but my backup plan in case of unexpected expenses or just plain boredom is to find some part-time work I can do while cruising.

Any ideas?
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Old 11-13-2012
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Re: My Escape Plan - Insights Wanted

There is always someone looking for a mast climber!...Dale
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Old 11-13-2012
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Re: My Escape Plan - Insights Wanted

So, what did the financial planner say?
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Old 11-13-2012
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Re: My Escape Plan - Insights Wanted

Quote:
Originally Posted by CaptTom View Post
I appreciate all the different perspectives here, and the realities of the details.

I'm putting together the finances of my own plan, and I think I'm going to be OK, but my backup plan in case of unexpected expenses or just plain boredom is to find some part-time work I can do while cruising.

Any ideas?
Generally speaking, unless you have a skill which allows you to work remotely (IT, internet based business, writing, etc.), if you are anywhere except the U.S. you will be working illegally. Be discrete and leave before you upset the locals who usually do that work legally.
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Re: My Escape Plan - Insights Wanted

Just had a fascinating discussion w/ my financial planner. Basically, he said go for it (!)

Some really interesting thoughts on it as well:

- I can take my 401k, roll it over to an IRA, and set it up to take an annuity - someone here referenced this - and not only will I not have to the 10% fee, I won't even have to pay taxes because my annual income will be below $15k. There's a whole complex formula, but basically I'll be able to pull out $2-3k a year from the 401k tax free. Once you start this, you have to keep doing it though. So every year you have to take out the same amount.

He also suggested I use my savings/IRA as collateral to take out a low-interest loan to purchase the boat instead of just buying w/ cash. He's saying taxable bonds will return 5-6%annually, that I won't have to pay the taxes due to low income, and the loan might only cost 2-3% in interest since it's secured by cash/stocks/bonds. I get there is some added risk with this, and not sure if I'd go this way.

Combined with the 401k annuity, he thought other savings accounts/IRA account returns could provide me $10-15k I'd need to live off of with a fairly conservative portfolio. If I'm only spending 10k I could be growing the principle a bit, at $15k I'd probably be eating into it. It'll fluctuate based on returns. Of course inflation eats into it in any case.

I think the key would be my willingness to make up for poor return years by taking on some additional work. I can see working 2-3 months a year not really bothering me too badly, and maybe providing a welcome change of pace. And with a couple hundred grand cushion, I'll still have flexibility to work when I want and not work when I don't want.

So there you have it, financial advisor says go do it - you'll save on taxes!
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Re: My Escape Plan - Insights Wanted

Quote:
Originally Posted by eric-the-red View Post
Just had a fascinating discussion w/ my financial planner. Basically, he said go for it (!)

Some really interesting thoughts on it as well:

- I can take my 401k, roll it over to an IRA, and set it up to take an annuity - someone here referenced this - and not only will I not have to the 10% fee, I won't even have to pay taxes because my annual income will be below $15k. There's a whole complex formula, but basically I'll be able to pull out $2-3k a year from the 401k tax free. Once you start this, you have to keep doing it though. So every year you have to take out the same amount.

He also suggested I use my savings/IRA as collateral to take out a low-interest loan to purchase the boat instead of just buying w/ cash. He's saying taxable bonds will return 5-6%annually, that I won't have to pay the taxes due to low income, and the loan might only cost 2-3% in interest since it's secured by cash/stocks/bonds. I get there is some added risk with this, and not sure if I'd go this way.

Combined with the 401k annuity, he thought other savings accounts/IRA account returns could provide me $10-15k I'd need to live off of with a fairly conservative portfolio. If I'm only spending 10k I could be growing the principle a bit, at $15k I'd probably be eating into it. It'll fluctuate based on returns. Of course inflation eats into it in any case.

I think the key would be my willingness to make up for poor return years by taking on some additional work. I can see working 2-3 months a year not really bothering me too badly, and maybe providing a welcome change of pace. And with a couple hundred grand cushion, I'll still have flexibility to work when I want and not work when I don't want.

So there you have it, financial advisor says go do it - you'll save on taxes!
Then we hope to see you here soon...

Brian
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Re: My Escape Plan - Insights Wanted

Entry fees? Departure fees? Good lord, everyone needs a piece of you don't they?

So what are some low, high, avg entry fees you guys have paid?

Capt. Aaron, do they hassle you when you return to a place that charges a departure fee when you return, or do you just X that off your list of places you'll go in the future? I'm really starting to think I should follow you around for a few months!
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Re: My Escape Plan - Insights Wanted

Sorry for the late entry fee here but I have been off looking at animals in Kruger NP in South Africa before returning to the boat. A few comments:
- government fees can range from zero (Martinique, South Africa) to close to $1000 in places like Ecuador and Panama. Bahamas is $300 over 35' I think. It really varies and you have to check around. In some countries you must use an agent and that adds an extra $100 to $150 generally. In some countries you have to check out of and into each harbor, often at no extra cost, but it is a hassle.
- boat prices on the east coast are generally much cheaper than the west and the sailing south is easier plus you don't have to go to windward from Panama to get to the Eastern Caribbean
-my wife and I have cruised on an older (1982) 45' boat for not much more than $1000 a month excluding full insurance on the boat and marina costs when we have left the boat to go land cruising - generally when waiting for the local hurricane season to pass. We do not have health insurance and have spent very little on health care (<$200 in 4 years) - and we are older, but generally quite healthy
- I think you will be fine financially in particular since you would have emergency funds available if something happened like an unexpected major repair (after a serious grounding for example) or significant illness or needed operation
- I would expand the boats you are looking for. Have a friend with a Moody and it is a nice enough boat, but I think you can get more boat for less money. When considering the boat, you should consider whether you plan to stay in the Caribbean or coastal Mexico or whether you might want to head out across the Pacific or to Europe. In the latter case you might want a more substantial boat. This boat would likely not be quite as comfortable as one better suited for the Caribbean only. ie, there is a trade-off between ruggedness and comfort - unless you are prepared to spend much more money.
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Old 11-14-2012
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Re: My Escape Plan - Insights Wanted

Have fun!

The four grand a year for Maintance is not enough. Some months could run over that. Set aside about ten grand a year, and do your best to not use it all.

I read it costs twice as much money to keep a 40' boat afloat as it does a 30' boat. Larger sailboats have a harder time getting under bridges as in the Florida waters, and a harder time in shallow waters, around most any beaches you might become interested in. Bigger is not always better. Little harder to dock a 40's something sailboat over a 30's something sailboat.

Sailboat's are like gloves, pick the one that fits.

Also doubt you can stay in a monthly budget of $500. That is pretty much a beans and nothing else to eat budget. Living on the water does not mean you dine on fresh marine life every meal.

Last edited by sail123; 11-14-2012 at 01:56 AM.
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Re: My Escape Plan - Insights Wanted

Glad to hear you're feeling good about it all.

However, you're now going to make $15k on $200k per year, which is 7.5%? Ask him to give you an example of one taxable bond that yields 5-6% these days, particularly after his fee. The risk free 5 year treasury rate is about three quarters of one percent. The only way you can increase yield is to buy lower credit quality or extend maturity. The former means you may not get your principal back if the issuer bankrupts. AAA rated bonds are currently paying in the mid 3% range. Locking in for longer terms means you will still be getting those yields, when the rest of the world starts getting much more and inflation is ramping up prices.

Just be smart with your money. The choice is yours.
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