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This question is more of a finance question than pure boating but I know their are several SN members that are very savvy about accounting and finance and will understand the desire to get a retirement boat.

If someone had most of their capital tied up in real-estate and simple ira funds ie not cash what would be the best way or at least the issues involved in deciding how to fund the boat.

Home equity loan?
Take money from simple ira?
Boat loan?
Something else?

The problem is that the house holds most of the money.
If the house sells first then you have to rent and have to deal with leases until the boat is found and refit.
If you get the boat first it has to be funded somehow.
 

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I don't like any of those options if you're talking about traditional "retirement" -- i.e. 60+ end of career move.

Turning any of your retirement investments into a boat seems like a bad move. House, IRA... Those took a long time to appreciate and own, and a boat is just a terrible "investment".

20s, 30s, sure you can do some financially risky stuff and recover.

We'll never buy a boat that can't be bought outright with cash.
 

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David,

It all depends on what type/size of "retirement" boat you are talking about.

We bought our boat quite some time before we retired. Instead of moving up to a bigger boat, we were able to pay it off before we retired. Because we did NOT go big! The funds we would have used to go big, we put into savings. Now we use the interest from that savings to do other, off-boat trips. Think around Cape Horn, or China, and the like.

I would advise you to NOT NOT NOT sell the real estate!!

During our cruising we met a number of people who were "trapped" on there boats!! They could never sell it for what they paid for it, and didn't have the $ to return. They made fine plans to cruise, but never gave a thought of a bail out plan.

IF, you find a very good rental agency for the place, it will not only provide a way to stop cruising (when ever that time comes) but will provide an income stream for you as you cruise. That is how we handled it.

Good luck and hope it works out for you! :)

Greg
 

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Details really matter and we don't know a fraction of what someone would need to know in order to give you advice, which will get you advice all over the map. You should really lay out all your goals to an independent financial Planner, who can ask you the appropriate questions in confidence.

There are simply too many things to consider, too many questions to ask.
 

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I don't like any of those options if you're talking about traditional "retirement" -- i.e. 60+ end of career move.

Turning any of your retirement investments into a boat seems like a bad move. House, IRA... Those took a long time to appreciate and own, and a boat is just a terrible "investment".

20s, 30s, sure you can do some financially risky stuff and recover.

We'll never buy a boat that can't be bought outright with cash.
Damn, and I was starting to think I was the ONLY person out there who thought like you, and Greg... :)

Admittedly, my attitude is perhaps a bit more colored than most, by the simple fact that I own a home on the water... I love it here, and at this point in my life, I wouldn't want to have to settle for anything less. But if I sold my home to buy a larger boat, there would be no way I could ever afford to live on the water again, after I was done 'Living the Dream'... So, I'll be sticking with my 'Retirement Bungalow/Puny Boat 2-Fer', instead... :)

But Tempest is right, there are so many variables that can apply to individual situations, anyone considering this really needs to lay it all out for a pro to evaluate...

it really is amazing, how little attention is given to this in most publications related to cruising. One of the few books I'm aware of that really addresses the long term financials is Jim Trefethen's THE CRUISING LIFE. I read it many years ago, but I recall his advice and plan seemed pretty sensible to me, at the time...

There was a thread about it here, several years ago:

http://www.sailnet.com/forums/cruis...g-life-jim-trefethen-cruising-financials.html
 

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I would advise you to NOT NOT NOT sell the real estate!!

During our cruising we met a number of people who were "trapped" on there boats!! They could never sell it for what they paid for it, and didn't have the $ to return.
That depends. Do you want to go cruising, or live on dirt? You can't sail a house. Sure, a boat is a bad investment, but you need one to cruise. What to do?

We sold our home and went cruising. Got rid of everything that wouldn't fit on the boat. No storage building. Many others that we have met the past two years did the same thing. Others have a home, and cruise part time, so they have both.

We owned our boat before we sold the casa. Free and clear. Got the title here, tucked away. There is no way I'd go cruising if there was a note on the boat. Also wouldn't want to be dealing with the hassles of home ownership, with repairs, upkeep, and paying property taxes. I could not afford it, combined with maintenance on the boat.

*If* you own the boat outright, sell the home, settle any credit card debt, and have retirement income, you can sock away plenty for when you need to go back to living on land. Even now, tied up to a dock in Galveston, our cost of living is super cheap. $342.00/month for the slip...plus food and booze. Go cruising, take away the marina fee and spend on some diesel.

Not sure what your options are on acquiring the boat you want, which is the question, isn't it? You'll figure something out. You never know....you might find a private seller (no brokers) who would carry the note with a biggish down payment. That's what I did.

Thanks for buying us lunch in Marathon, David! It was great meeting you two. Now, get with it! We've been to the Bahamas twice, gone up to Georgia, and now back in Texas for a year since that lunch. Good luck man.

Ralph
Adult pool | sailing away with R & B
 

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my tactic would be to buy a big boat a few years before retirement. When you cast off, you'll only really have the boat note as a tax writeoff as your primary home will either be paid off or a rental property. A few years before retirement because when youre retired, good luck getting a loan without verifiable w2 income
 

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In your case perhaps you can look at a reverse mortgage on the house and/or property to fund the boat loan.
For me I cashed in everything, and then it was so much cash to buy and outfit the boat and an annuity; a monthly income for life. Split into two accounts, the annuity sends our living money to a money market account and the safety fund money going into an easily accessed savings account.
 
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I will say that I like to keep things simple. One step at a time, in the order that they need to be accomplished.

Without knowing your financials, I'll guess that you have a sequencing problem. Some may call it a critical path issue.

If your goal is to downsize and sell the house and it's contents and live on a boat for X number of years. Then do it. Sell the house, get rid of the stuff, invest the money, Rent in an area that has a lot of boats for sale, like Annapolis, don't sign a lease. get month to month. And start shopping for the boat, there's a boat show in 2 weeks.

The obstacle is the house, when you sell it, rent something small...like a studio!
If it doesn't fit in the Studio, it won't fit on the boat.
 

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I guess I am approaching this subject different.

As I see it, if you are renting a place to live in, you are doing two things. One, you are giving away money that could better be spent on the boat/cruising kitty. And two, you are paying some one else's mortgage for them. :(

We rented out our house, it went up & down in value, but some one else is still paying it off for us! It's now a revenue stream that pays us each month. :D

We found a good rental agency and they have helped us a lot. We just make sure to save part of the rent each month to cover the cost when renters move. For our house, we normally get a yearly lease and it's sure working good for us!

And I am not even bringing up the escalation in value over the years you cruise.

I once had a job that took me over seas. The money was GREAT and it sure looked fine. Many of my co workers thought it to big a hassle to keep or rent out there homes. So, they sold them. Saved the whole time they were working making the big $$$. Turns out, even making great money, NOT ONE OF THEM could afford to purchase there old house back!

:D :D I figure I'm not a teenager, so I can learn from other peoples mistakes. :D :D

Greg
 

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Greg....that's why it's SO difficult to advise someone on such scant information.

I too have thought of renting my house..while I cruise..but then, I have no need or desire to return to this house once I leave. I only lived here because it was close to work.

In Jon's case, he's on the water and if I'm not mistaken, he keeps his boat rent free at his house, in NJ, that alone is worth thousands a year vs a paying a marina.

Everyone is going to have a discreet set of circumstances that needs to be assessed in their entirety.

If David wants to elaborate on his situation, it might help narrow the options.
in Particular..how far/long from casting off..are we talking about?
 

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I agree completely. My concern is what the house is worth, how much is owed now and the time horizon on returning from cruising.

I didn't mention the people we were in our marina (San Francisco area) with before we departed to go cruising. Of the people who departed the same year we did, We are the ONLY ones still cruising, and us only half time. There were also two other boats that are still out there in Mexico. BUT, they are living aboard in marinas and NOT cruising, just living there because they can not afford to return to the US except for short visits by bus.

Also, the two boats that that we went down the Pacific coast with that had sold out everything, moved aboard, and quit THE SAME YEAR! One boat went so far as to go to the Mexico consulate with us and got the visa in San Diego, then backed OUT and never crossed the border?? They had actually built the boat! :eek:

But like you said, there are so many variables that each person has to decide for them self.

Greg

Greg....that's why it's SO difficult to advise someone on such scant information.

I too have thought of renting my house..while I cruise..but then, I have no need or desire to return to this house once I leave. I only lived here because it was close to work.

In Jon's case, he's on the water and if I'm not mistaken, he keeps his boat rent free at his house, in NJ, that alone is worth thousands a year vs a paying a marina.

Everyone is going to have a discreet set of circumstances that needs to be assessed in their entirety.

If David wants to elaborate on his situation, it might help narrow the options.
in Particular..how far/long from casting off..are we talking about?
 

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Selling the house because you don't want to live there anymore is one thing. Selling the house to fund a boat purchase--at retirement age after making a lifetime of mortgage payments--is another.

Of course there is no right or wrong way to do it, and everyone's situation is unique. But for me, no way would I ever turn my house, that I spend 30 years to own, into a big boat. We'll have to think smaller and older if the money isn't otherwise there.
 

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I would never suggest that someone take the entire proceeds from the sale of their home and use it to purchase a large boat. I was thinking along the lines of a typical scenario that plays out everyday.

You've reached retirement age, your kids are grown and gone, The school system doesn't matter to you anymore. The house you raised your family in is now too large for the two of you, and requires too much of your time/money and energy to maintain.
( here in the northeast it's Cutting grass, raking leaves, and shoveling snow) The dreams that you've postponed ( like sailing ) all those years while you worked and raised your family are now possible to achieve. And, there may be a shelf life to being able to sail ( physical limitations of age)

So you downsize, take some ( not all, certainly not most ) of the
cash off the table and purchase a boat. (hopefully not a project boat that takes years to refit) Some people might want a land base too, so they buy a condo somewhere or buy in to an over 55 retirement community, where there's no grass to cut, leaves to rake or snow to shovel.

Others may invest the remainder of the proceeds of the home sale and wait until they are finished cruising to purchase another home. Maybe they don't know yet where they'd like to end up.

How do you support your cruising? Pension, 401k, SS, Savings? OR, Are you relying on the proceeds of the home sale to also provide an income stream? If so, what is the exit plan? As mentioned above, you don't want to be trapped by having all your money tied up in a boat (depreciating asset) that you can't sell and wouldn't fund a land based home if it did sell.

If you love your house, it's paid for, and you plan on living there forever, and you haven't saved enough money to purchase a boat, and have to finance it, then what ?
Go back to paying a boat loan and a home equity loan and related interest ? I guess that depends on how badly you want to sail and how much, you're willing to pay to do it.

No easy answers... For me, I have lost all interest in raking leaves, shoveling snow and cutting grass.
 

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Discussion Starter · #15 · (Edited)
Thank you gentleman for helping me noodle about this situation. I can see that some more information will be necessary.

The house is almost paid off maybe a year left. I'm 63 now so have till 66 for full retirement but can take my SS now if I want to. My father is still alive so that is a big problem, I'll probably live too long unless I take up cave diving or sky diving.

The property taxes are about 1k per month plus a significant oil bill. In short this is an expensive place to keep even without a mortgage. We have a small in-law apartment currently being used by the business that is worth about 500 per month but that still will not make this place an affordable retirement home. I love the beach a 10 minute walk and our private mooring so this is a great place in many ways.

The biggest thing is that we are done with NE winters. So the house is going to be gone it is just a question of timing and sequence.

Talking it out with you guys just made me realize that I could sell this place and rent a condo for less than the carrying fees on this place. Never thought of that before.

I've never been an investor type of guy so finding someplace to park a few k and get a decent return is also a big puzzle for me.
 

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No easy answers... For me, I have lost all interest in raking leaves, shoveling snow and cutting grass.
Agree! My solution to that issue was to sell the two-family home I owned for 30+ years and buy a townhouse in a community where the grass is cut, bushes are trimmed, and snow is plowed and shoveled by the homeowners association. And the yacht club where I moor my boat is about 1 mile from the townhouse. Works for me as I am not interested in extensive cruising - lots of daysailing plus a few overnights and a longer mid-summer cruise is where I'm at.
 

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This question is more of a finance question than pure boating but I know their are several SN members that are very savvy about accounting and finance and will understand the desire to get a retirement boat.

If someone had most of their capital tied up in real-estate and simple ira funds ie not cash what would be the best way or at least the issues involved in deciding how to fund the boat.

Home equity loan?
Take money from simple ira?
Boat loan?
Something else?

The problem is that the house holds most of the money.
If the house sells first then you have to rent and have to deal with leases until the boat is found and refit.
If you get the boat first it has to be funded somehow.
Financially this is pretty straightforward: Home equity loan.

A boat loan is higher interest and taking money from an IRA is nearly always a bad idea.

That ignores the question of whether it's a good idea or not but given those choices the home equity loan is the answer.
 

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I'm 63 now so have till 66 for full retirement but can take my SS now if I want to.
My wife and I are 62 now. I just got my first S.S. check last week. That's the thing for many of us. We're getting older as the clock ticks. How many years can you cruise (different for everyone)? What's that saying? You can't take it with you. A couple of years sitting around worrying about it could be better spent enjoying the health and money you have today.

Besides....if the zombie apocalypse happens, your money won't mean much! A great book that I have read 3 times, the last in Hope Town (Bahamas), where much of the story takes place. - For Those In Peril On The Sea: Colin M. Drysdale: 9780956897473: Amazon.com: [email protected]@[email protected]@http://ecx.images-amazon.com/images/I/[email protected]@[email protected]@41sFQX8oATL

.99 cents for those with Kindles.

Ralph
Hopetown | sailing away with R & B
 

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The biggest thing is that we are done with NE winters. So the house is going to be gone it is just a question of timing and sequence.

Talking it out with you guys just made me realize that I could sell this place and rent a condo for less than the carrying fees on this place...
Or you could move to Florida. I own a house on a small lake in a rural area and my taxes are $1,000 per year. The house is now 10 years old and has three bedrooms (such a deal). It was worth about $130K a year ago, but values are going up ($170K now).

If you don't want to cut grass, move to Punta Gorda and get a condo with a dock on the water. Punta Gorda is an amazing place since it was completely rebuilt after Charlie.
 

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Discussion Starter · #20 ·
Or you could move to Florida. I own a house on a small lake in a rural area and my taxes are $1,000 per year. The house is now 10 years old and has three bedrooms (such a deal). It was worth about $130K a year ago, but values are going up ($170K now).

If you don't want to cut grass, move to Punta Gorda and get a condo with a dock on the water. Punta Gorda is an amazing place since it was completely rebuilt after Charlie.
I'll check into that thanks. Panama and Costa Rico are on my list too.

I will have to do something to keep busy so I've gotten my captains license and asa teachers cert. maybe I can find a school to teach at.
 
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