My Escape Plan - Insights Wanted

[eric-the-red]

[QUOTE=Capt.aaron;948613]It's funny the difference between northern sailors and the tropic birds. Sometimes this thread sounds more like something from stocknet.com not sailnet. QUOTE]

I'll probably get torched for this, but "changes in latitudes, changes in attitudes?" While I appreciate the financial advice and have learned much from that part of the conversation, I also think that at my age, this may or may not be the last phase of my life, and the odds are it won't be. The fact is, most decisions are reversable to some degree, and I certainly don't think this one is.

Life's an adventure and you need to be flexible and open minded to get through most adventures. That's how I've lived and how I'll live on a boat. If it's not working, there are always options to make it work or other paths entirely.

I don't feel I need to have the 100% security of having everything planned out and paid for 30 years in advance. I'd actually argue that's a false sense of security anyway.

This conversation has led me to do the most reality based thinking about this dream to date, and I'm finding a few parts of the dream may need adjusting - I might add another year of working, or I might just go and figure I'll work as I need to or as opportunities present themselves.

DavidPM - I had a long phone call w/ my financial advisor, but we haven't sat down to figure out the exact investments. He's currently managing about 10% of my assets and would end up managing much more. Good thing I trust him.

[Minnewaska]

Originally Posted by davidpm

I'm not an investor but according to this site: US Corporate Bonds Indexes - Bloomberg

Investment grade is 3.35% and high yield is 6.9 if I'm reading it right
So a mix could average out to 5 yes?

"High yield" is a salesman's term for junk bond, or anything below investment grade. Sophisticated investors in these bonds don't buy them just for a few more percentage points in interest. They buy them with some expectation that the company will perform better in the future and become upgraded. Therefore, the value of the bond itself will go up substantially. The risk is that you lose the principal on any that go the other way. Its a very risky game.

Think about how much of the OPs portfolio would have to be at risk to get the portfolio yield up to 5%.

[Minnewaska]

Originally Posted by eric-the-red

.....He is saying that taxable bonds (which I wouldn't have to pay taxes on due to low income I'll be earning) and they would get me close to 5% and additional stocks should get me a bit over, of course realizing there are risks to all of it.

Does that sound right?

Theoretically over the long term, but the market is declining right now. If any of your portfolio is in stocks, you will have to be able to spend down principal in the tough years. That makes it exponentially tougher to recover.

Glad to hear your advisor isn't suggesting anything exotic and promising high yields. That said, there just isn't a low risk way to get to 5% either, or every retired person would lock it in right now.

Enjoy the cruise. I just think you are going to have to realize you will spend down your non-401k liquidity and return when your low on funds. Many do it that way and it seems you will get several years of reasonable cruising out of it. Have a great time. You are at a good spot to do that. Unless you want to live the rest of your life without refrigeration, etc, I don't think the math on your significant savings will keep a 35-40 boat running for your statistical lifetime.

With some exceptions (Capt A being the most notable here), most cruisers eventually go home, some even sell the boat and move on after some number of years. Read these:

The INTERVIEW WITH A CRUISER Project

Newly Salted

[VallelyJ]

Sometimes this thread sounds more like something from stocknet.com not sailnet.

I thought the OP was wise to introduce the subject.
When you value self-reliance, as we all do, then you plan for future contingencies. Those include possibility that you'll need something to live on someday besides a youthful spirit and a rich uncle. Having the sense to plan for 20 years ahead makes planning for hours or days ahead come a little more naturally.
JV

[BubbleheadMd]

Eric,

I've stayed out of this until now, because I'm not especially financially savvy, nor am I about the cast off my lines for long-term cruising. The most I can say, is that I'm living aboard a 30 footer, and on a tight budget.

Now that the preface is out of the way, here's my opinion:
Go, do it. Just scale back your expectations a little bit. Buy a smaller boat, keep things simple. This will translate into a large initial savings. Instead of betting on 5% growth, revise that to 2-3%, and accept the fact that you will work a little bit at odd jobs each year, while cruising, to supplement your income.

Get some skills.

It amazes some simple stuff that some sailors can't or won't do for themselves, like splicing! I've learned to splice line by watching Youtube videos for free.

Learn to sew, and pick up a used, heavy duty sewing machine. You can do canvas work out of your boat.

Learn marine electrical and plumbing work. Learn how to do brightwork correctly. People will gladly pay you to sand, varnish and paint.

Rigging: This is a big one. A lot of people will not go up their mast.

You can parlay these skills in marinas along the US coast to bolster your income, while bouncing back and forth between the islands without worrying about violating foreign labor laws. Best of all, these skills allow you to work on your terms, when you feel like it. The more of these skills you have, the more likely you are to find an odd job when you need it.

In the end though, the most important thing is to GO. You're young, fit and unencumbered by spouse, children and debt. You have some money. I can't see how your conditions could become any more favorable.

No one wants to lay on their deathbed and say "I was the biggest X-box champion... or "I watched more football on TV than anyone I know!"

When I give an accounting of myself, I want my list to be amazing.

[MarkofSeaLife]

Originally Posted by Capt.aaron

Go get the boat and fill it with some food and sail south dude, it's actually that easy.

Ummmmm it is actually that easy.

I have completed a circumnavigation and still cruising for the next, say, ten years.
I think of all then things that tried to stop me, and that still try to stop me... It's amazing that if I had let just one thing stop me I would have been....stopped!
Even now things come up from home, curve balls, family, etc all try to stop me.

The thing about your financials (and I'm not for the USA so I dunno what this 401 thing is, but it must be like superannuation... Pay into it and get some back when you are about to die) the boat level you are looking at of, say $70,000 is quite a low percentage of your overall wealth. In a worst case scenario of sinking your boat after a triple budget year and swimming back home to a normal job again you still have two thirds of your original wealth! That's great!

At 40 years old, aprox, you can top off retirement savings in 20 years time by going back to work for 5 years.

We are from a generation that has acquired a lot of wealth and we are under a lot of pressure to obtain more and more money for no good reason. We can do a lot with a relative little.

The one thing that sets you apart from most other gunnabees in these type of threads is that you are not starting off broke. You have good assets. You won't be using the whole lot, you will just be using a small portion to really enhance your life.

Finally I disagree with Pardys Go Small, Go Now. I believe in Use Brains to Go as BIG as you can, RIGHT NOW!


Mark

[Here7ico]

Hi Eric, i hope to follow your steps in the future, so i aware of what is published in this post.

In the financial area, consider this:

-Fiscal Cliff, rigth now are preparing some changes in the tax area.
What make sense right now, it may not make sense in six months. If you can, delay few month any financial desicion.
Just wait for the result of the new tax legislation.

-If you are a US Citizen and resides in other country, just declare your earning tax and not have to pay unless you earn more than 82k $ per year. I was given this information by the tax assistants working in the embassy in Caracas (Venezuela), but remember you have to declare to IRS do not stop.

These are two points that you should take into consideration.


P.D.: My apologies for the poor drafting, do not speak the languaje as i'd like, i use an online translator.

Oscar.

[eric-the-red]

Originally Posted by Here7ico

Hi Eric, i hope to follow your steps in the future, so i aware of what is published in this post.

In the financial area, consider this:

-Fiscal Cliff, rigth now are preparing some changes in the tax area.
What make sense right now, it may not make sense in six months. If you can, delay few month any financial desicion.
Just wait for the result of the new tax legislation.

-If you are a US Citizen and resides in other country, just declare your earning tax and not have to pay unless you earn more than 82k $ per year. I was given this information by the tax assistants working in the embassy in Caracas (Venezuela), but remember you have to declare to IRS do not stop.


These are two points that you should take into consideration.


P.D.: My apologies for the poor drafting, do not speak the languaje as i'd like, i use an online translator.

Oscar.

Well, I haven't taken any actual steps as of now other than some conversations and some research...we'll see if I have the courage & strength of conviction to make the leap of faith that so many on this forum have taken. It's definitely a big step.

[tomperanteau]

Eric, great ideas and great attitude. It's really none of my business why you want to head out, so I won't really respond to that. Your investments are also yours, so I'm sure you know what you're doing there. You're a grown man and know what you want to do.

Sounds like you have a great plan! I've known several that have sailed out in the past few years with close to nothing, and they're sailing just fine. They took their skills with them and they barter/work along the way. They are having a great life. With that, I suspect that you will do just fine as long as the dollar holds its value and the government has not absconded with our retirement accounts.

Good luck to you and keep us all posted. If I'm still in southern California, give us a shout when you sail by.

[eric-the-red]

Originally Posted by tomperanteau

Eric, great ideas and great attitude. It's really none of my business why you want to head out, so I won't really respond to that. Your investments are also yours, so I'm sure you know what you're doing there. You're a grown man and know what you want to do.

Sounds like you have a great plan! I've known several that have sailed out in the past few years with close to nothing, and they're sailing just fine. They took their skills with them and they barter/work along the way. They are having a great life. With that, I suspect that you will do just fine as long as the dollar holds its value and the government has not absconded with our retirement accounts.

Good luck to you and keep us all posted. If I'm still in southern California, give us a shout when you sail by.

Thanks! It's very motivating to hear others are doing it with less...I surely know there are many doing it with more!