SV Belle and The Beast

How Much Boat Can I Afford?

Before we start talking about how much boat you can afford, let me say: Boats are a terrible financial decision. Terrible. Let’s just get that out of the way. But you already know that and you are still reading so may we continue? Good.

It’s a pretty common question: “How much boat can I afford?”. The answer, obviously, is different for everyone. Perhaps a better question to ask ourselves is “how much boat should I afford myself”? If you’ve taken a ridiculous loan and your payments (on everything) are a huge portion of your take-home pay, your new boat will turn into a nightmare rather than a blessing.

People are often taken aback when they learn how many “toys” we have. The gentleman from whom we bought the trailer for Belle said it plain: “You have too many toys”. To borrow a phrase “I don’t say it to impress you, but to impress upon you” that we do have a lot of toys and a lot of wonderful adventures. So how does an ordinary middle class (whatever that means) family afford to have a boat and campers and live such a life?

how much boat can I afford
Our Class A Motorhome “Fort Wilderness Express”

To back up a bit, I used to be ordinary. I got my first credit cards in college. They were handing them out in the student-lounge like candy. I got a Discover card with a stupid limit and a Shell Mastercard with a reasonable limit. Over the years I loaded up both to the max at various times. I’ve had loans for cars, trucks, campers, mattresses, jewelry and a host of over stupid things to have a loan on. I’m in my mid-forties now, can’t [don’t want to] remember how many, and things have changed.

So, what changed your asking. It’s simple. I did. I got sick and tired of being “sick and tired”. Every dollar we made was going to a bank. Everything we bought cost us at least 1.5X what it was worth, or worse. We were letting our money work for the bankers rather than ourselves. Fearing another recession on the horizon (were statistically due for one) I got scared. I was done with it.

My grandfather, a wise man, said something that took three decades to sink in: “If you can’t afford it today, you probably can’t afford it tomorrow either”. Looking back, the man lived like I am now. He had a home in the city and a home on the lake in “the country”. He had boats and cars and a basement woodworking shop. He lived well for an illiterate carpenter, didn’t he? That’s the secret. It’s not sexy and it’s pretty simple. Live within your means and let your money work for you.

Our Travel Trailer
Our Solar Powered Travel Trailer

You can disagree with me, and that’s fine. I don’t much care. There is a saying that most people credit to Henry Ford: “Whether you say you can do something or you say you can’t, your probably right”. So if you have decided that debt and overpaying for things is the way, go for it. If you want to follow the millions of people who have figured it out that being debt-free is the fastest way to building real wealth, read on.

We started our debt-free journey at a convenient time. Our pickup truck had just under 1 year left on the note. Dianas car had two, the trailer camper, 2.5, the mattress just a little more. We also had credit card debt, college loans, etc. We were completely normal as some folks like to say. I had my epiphany when over a beer with my brother he said he just wrote a giant check to pay off his house (he’d been listening to my grandfather all along (smart b@$!@&*).

I decided I wanted to do that too. I wanted to be comfortably certain when the next recession hits (I’m self-employed and dependant upon the housing industry in large part). I stumbled upon what seemed like an obvious strategy for getting debt-free. It’s called the snowball method. There are a few similar versions to this, but the gist of it is to take all your debts and list them from smallest to largest and attack them with gusto in that order. Mathematically, the ideal route is to weight them with some practicals like interest rates or how close you are to paying them off. Practically, for most, there is a more practical emotional effect of simply paying off the smallest first as you get an adrenaline boost from accomplishment and the small ones are easier to kill off.

We took the happy-medium route as I’m a fairly analytical engineer type. (interesting tidbit: statistically, engineers reach millionaire status faster than doctors who get paid a lot more money) I let some 0% loans float as technically they are paying me money since inflation rises at about 3% per year. We paid off the truck first. We closed it in 3 months vs. the six that were due. We then took that monthly expenditure and rolled it onto the car payment and closed that in another few months. The camper trailer was the next victim of the snowball. With the snowball getting huge, the credit card was next, and so on. In 1.75 years our debt is zero, apart from our house (the only debt we have/had for an appreciating asset).

How much boat can I afford
Our Vintage Harley Golf Cart

Once you get past this hurdle, you have to commit 110% to not going back. Or else, it was all for naught. Now that you’re clear and free you will start to think diffrently because you are weird. You have changed your wiring and you will think about the world differently. How so?

I caught a video once of a guy in one of China’s up and coming cities, I can’t recall which. But the video was about this guy’s huge “wine cellar”. He bragged about how big it was. It was on the upper floor of a glass skyscraper in the middle of the city. High dollar real estate for sure. We are led into at tasting area with a huge table and racks upon racks of wine with a background of city lights through the glass. It soon becomes apparent that this is not just his personal wine cellar, even though he calls it that. In reality, it is his wine club. He charges other people to store and enjoy their wine in his facility. Oh, and he sells them quite a bit of their wine too.

Another scheme I came across while drooling over catamarans I can’t afford, is a chartering/financing scheme for catamarans that opened my eyes to the tax games that people with large incomes play. The math is pretty elaborate for most, and it was the first time I came to fully understand what tax depreciation is all about, but it comes down to creating a business entity to own and operate the asset. One can depreciate, or claim a taxable loss, on the asset while simultaneously having positive cash flow. To make simple math, if you tell the taxman your catamaran is worth $1m, and you depreciate it over five years, your annual taxable income for that business is only the amount of income above $200k. So, if your charter business nets $199k per year or less, you pay no taxes for those five years.

How Much Boat can you Afford
Belle and Beast at Anchor

This is what I mean by “you will think differently”. You will start to see things in a whole new perspective. Once you have your budget drafted (and updated monthly), you will have permission to spend your play money however you like. It’s budgeted for play, so spend it! You’ve already put aside your 15% for retirement, and your money for food, utilities, mortgage (if you even still have one you go-getter), etc. So now it’s time to have some fun.

So, we use our assets to our advantage as much as we can. We started modeling the wealthy people we saw. For example, people are surprised to learn we not only have a travel trailer camper, but we also have a rather nice class A motorhome. How do we do it? Well, apart from the above lesson on debt, we also borrow the wine cellar guys model. We rent out our campers when we aren’t using them, which is 90% of the time. (We work, sail, do kids activities etc too you know). There are resources out there to facilitate the transaction like an Airbnb for campers. Over the last two years, the motorhome went out on long multi-month rentals that paid handsomely. We picked a well used but well-loved Cummins diesel-powered class A very carefully. The 20-year-old coach had less than 50k miles on it and the diesel powertrain sports a B50 life rating of 1/2Million miles. Also, due to that fact, mileage does not affect NADA values for diesel coaches so renters putting miles on the rig worries us not. The service costs are baked into the rental price so all is good.

So, that leads us to our sailing adventures. “How much boat can I afford?” The answer is: “how much cash do you have in your boat saving account and what are the ongoing expenses going to do to your budget?”

Remember that you are going to have ongoing expenses. Heck, we paid a lot more trimming out Belle than we paid for the boat. If you are getting a big’un, you will have mooring or slip fees, storage fees if your in cold climates like us, maintenance and upkeep. This ranges wildly on location and boat size/age so make sure to realistically build this into your budget. Make sure to visit the boat/marine store a bunch of time and take notes of all the little $#!* that you will have/want to buy to go along with it as well as necessities like new fire extinguishers, flares, PFDs, etc. All of this contributes to how much boat you can afford.

So, when you’ve got these number down and your targets on your prized vessel you have to do the hard part: you have to wait. Unless you have been saving for years already, you have to put your adult pants on and put money in the bank (or reputable investments if it’s a big number or going to take a while) until you can pay cash. Don’t play the “if I do this, I can afford to make this payment” game. Put the money in your pocket, not the bankers. If you want it bad enough, you will find ways to make it happen quicker. You might take side jobs or start a “side gig”. You might find a fixer-upper, but be “wicked” carefull to use the vernacular from these parts. You can easily, very easily, spend more money fixing a boat than simply buying one ready to go. My wife’s sister and her husband spent ~10k putting a new engine in their O’Day 28 and then sold the boat for only about $1500 a year later. Not to mention all the money they spent making it pretty and putting new sails on it over the previous few years. I’ll do a post/guide on buying a fixer-upper soon.

The Beast and G.v.C.

Your mileage may vary, You might make a lot more or a lot less. So your expectations of how much boat you can afford may need trimming. But from the examples I’ve seen, once you get on this journey (starting with debt freedom) you are statistically likely to become more financially successful and be able to expand your expectations.

So how much boat can I afford, as in us? At the moment, not a whole lot. We’ve still got daycare, college savings and other pursuits that we indulge in. We picked belle for a host of reasons. Primary is that it had to fit within our budget. You can read all about what it cost us to get Belle in our other blog posts. Secondly, we wanted a trailerable boat for now for a few reasons.

A. I wasn’t sure the family would take to it. So, don’t jump in the deep end if your not sure you can swim. Why pay for a slip/mooring (kinda feels like having debt now) when you are not sure you will be able to use it.

B. We are explorers on a time budget as much as a money budget. As much as I would love to cruise up the entire coast of Maine and beyond, sailboats are pretty slow. What takes an hour on the trailer would take a day or more under sail if the wind is favorable. Having a trailerable boat means we can get where we are going quickly and explore a lot more in a lot less time. For example, even though brackish water is within walking distance to our house, we’ve found we prefer to trailer and hour and twenty minutes to Portland Maine where the sailing is vastly more interesting with myriad islands, bountiful marine life, and easy and convenient anchoring. had we plunked out thousands for a mooring or slip nearby I may not have built the fan base withing my family and friends that I currently enjoy.

C. We’re not sure what is going to work best for us and boats are a terrible investment. We weren’t about to let our hard-earned money evaporate on something we might not even like. We are quickly figuring out what we like and don’t like in a sailboat and it’s cost us hardly anything by comparison. When we have our sailing budget built back up, we will have a pretty thorough checklist of what we think we want and don’t want.

D. Did you see what we paid for Belle?

So, to sum it up:

  • Get out of debt
  • Get clear on your budget
  • Calculate how much boat you can afford
  • Set your target
  • Be patient and save for it
  • Execute with care and diligence

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