Sunday, September 20, 2015

The Anatomy of a Cruising Budget


Bob over at Boat Bits is a critical thinker. He's not afraid to confront issues directly and dissect them until he understands them. He's also not afraid of ruffling anyone's feathers, nor is he afraid of discovering some tenet he held is, in fact, incorrect. Refreshing. His blog was one of the earliest in my blog reader, one where I knew I could find someone willing to call B.S. when it was needed, and it's needed quite a bit in the marine industry. He recently challenged me in an email exchange regarding the costs of cruising and, soon after, he did a post, A Small Thought About Budgets and Boats. Go ahead over and read it. I'll wait, as it's important to this discussion.

Bob's concern about reported cruising budgets is that they are horribly under reported because, well, no one wants to look like either the idiot who wasn't smart enough to figure the costs prior to starting, or the cruiser with an uncontrollable spending problem. In addition, you have the fact that income and spending are both highly personal issues and few are willing to divulge that information since our society has deeply instilled in us the false doctrine that you are what your net worth is. In mulling this all over the last few days I kept remembering a short Bible verse that kind of sums it up: "Suppose one of you wants to build a tower. Won't you first sit down and estimate the cost to see if you have enough money to complete it?" (Luke 14:28)  

Well, maybe not.

Before you can understand the realities of the cruising budget, you first have to understand reasons why people want to go cruising in the first place. It's important enough that the whole first chapter of the book we wrote deals with it. After a few years of doing this, I've found that there are about three styles of cruiser budgets. You have the bare bones Lin and Larry Pardey budget with no fridge, little electrical, very few electronics, no eating out. Some of these folks are able to cruise for $500-800 in third world countries by eating a lot of beans and rice, doing very little boat maintenance, trading work for parts when boat maintenance is needed, and never ever spending time on a dock. Next up is the group of cruisers that is mostly comprised of retirees living on pensions, investments, and Social Security. They eat well, mostly on the boat, with some treat excursions out a couple times of month. They do most of their own boat maintenance, read more than going out for entertainment, and socializing is usually potluck dinners with other cruisers. They try to anchor or to use mooring balls for the most part but may end up on a dock at least several times a month, mostly to reprovision.  The last group is the varying degrees of independently wealthy who live mostly in marinas, eat out nearly every day, frequent concerts, movies, galleries, and shopping, and hire someone to do most, if not all, of the boat maintenance. Of course, there are the folks who don't fit these neat categories, like a few younger cruisers we know who were able to sell a successful business which they worked hard to create, or who telecommute successfully from the boat. We fall in the middle group, along with most of the other people that we know and have met along the way. There's no question that the vast majority of cruisers on the east coast fall into this group. It's also the majority of the links in our cost of cruising side bar.

A couple of points need to be made as background for the following discussion.
  1. You will never have enough money set aside to go cruising.
  2. The boat will never be ready to go cruising.
  3. Money fills a void. You will spend pretty much everything you have to go cruising.
  4. Cruisers fall victim to Cost Creep, that insidious parade of "small purchases" that increase ever so slowly...
Our departure date to go full-time cruising was pushed up early due to our job losses. We could have gotten new jobs and spent two more years working to fill the cruising kitty but, in the end, we would have spent half that money dealing with storing the boat somewhere and moving expenses, since there were no jobs in aviation in the town where we lived. No question that more money would have made the last two years much easier, but the sheer hassle factor of finding new jobs and moving made us decide to go then and figure the rest out along the way. We had a savings account which we hoped would span the gap from our departure to our eligibility to claim Social Security and, once eligible, we would have enough funds to cruise on that monthly income.

Flash forward two years, and we can now see that the savings account will not span the gap and that we'll have to work somewhere for probably most of a year come Spring. Things happen. Boats break. A lot. Family members need help requiring multiple flights at short notice. The housing market takes a tumble and yields much less profit than hoped. And, yes <gasp>, some of the long list of stuff that everyone said you had to have was in fact B.S. And here is where I think the posted cruiser budgets fall short, because most of those reported budgets are normal, daily expense reports that don't include the initial refit or a periodic refit 5-10 years of cruising later. So if we look at cruising budgets in two parts we have a better feel for the actual cost of cruising.

Initial Outlay / Refit

One of the biggest gripes we have with the marine industry as a whole, and the cruising portion of it specifically, is that it's full of predators. One of our blog readers recently made this comment:

"The trouble is, they are doing business on the back of people's dreams and 
those dreams usually blind the newbie or part-time boat owner to what is 
right in front of their eyes

You peruse the boat porn on and make a list of all of the boats that interest you. The ads are great, the equipment list long. Unfortunately, while most (but not all) of the claimed equipment will be on board, much of it will be non-functioning. In our case it was the autopilot, the sump pump system, most of the lights, the VHF, the illegal propane bottles, the badly expired life raft to the point of ridiculousness, the head, the missing V-berth mattress, the missing salon cushions, the V-drive, the transmission, the ammeter, the heat pump, and repairs to the actual hull and deck. When you're looking at those ads you can't bring yourself to look at them critically. You see what you want to see. You see what they want you to see.

Even if you manage to find the perfect boat, you will also spend money on things just because you want them for functionality, comfort, or safety.  In our case that included new faucets, a salon table conversion, a workshop conversion, the pilot berth conversion, the addition of a gas detector, smoke alarms, CO detector, AIS, several new storage cabinets, spice rack, and the endless list of things like shower curtain, new sheets and blankets, new pillows, some galley items like our Magic Bullet, and tools. Ah yes, tools.

Tools deserve their own whole paragraph because if you fit into that do-most-of-the-work-yourself group like we do, tools will become a major part of your expenditure. We brought nearly half of all of Tim's tools from his aircraft maintenance stash and have still had to buy more along the way. The biggest part of tool expenditures is replacing electric tools like sanders and drills because the marine environment is so harsh for them. Harbor Freight is your friend because whether you buy expensive tools or cheap ones, you will still replace them about the same frequency. Save your money for beer. Tools fall into the Cost Creep category. None of them are very expensive. Our drill was $27. Less than a cost of two burgers, fries, and beers. But one of a long, long list of small expenditures. Your list will be different. Every cruiser's list is different because each of us have different comfort levels and desires and tolerances. Only you can know what's on your list.

The conventional wisdom is that you will spend 30% of the purchase price of your boat to get it ready to go cruising. Our reality was much higher, nearing 100%. If you have any doubt, think a larger amount.

Daily Expenses

Normal daily expenses on the boat include:

Eating out
Miscellaneous supplies (paper goods, cleaners, rags, towels, flashlights, batteries,water filters,etc)
Health care
Medical expenses 
Clothing and shoes
Tools and equipment 
Bottom cleaning or supplies to do it yourself (scrapers, etc)
Entertainment (books, Kindles, movies, computers, museum tickets, concert tickets)
Transportation (bus fares, cab fares, metrolinks)
Travel (airline tickets, rental cars, hotels)

Make yourself a spreadsheet and play with the numbers. You're going to find that while living on a boat is definitely cheaper than living on land, a lot of the numbers are the same. Food will likely be more expensive, you will likely drink more alcohol due to socializing, water is very expensive in the Bahamas. Gasoline for the dinghy and diesel for the boat are both going to be more expensive than on land. Marinas charge a premium because you can't just drive somewhere else to save a couple pennies. Depending on how much land travel you do, that category can have a huge impact on your budget. Remember that communication (phones, internet) is often one of the largest items on the list. Once you get some numbers you think you can live with, talk to some cruisers and show them your list and see what they think. Remember that everyone lives at different comfort levels, but their input can be invaluable in determining if you're dreaming a pipe dream.

If you're already cruising, how does your current budget compare to what you thought it would be?  We definitely spent substantially more than I had planned and hoped. One of Bob's critical thoughts was that few cruisers are willing to admit that they made mistakes on their spending. As I look back on the years since we bought our first boat in 2007, there aren't many of those "WTF was I thinking, I spent HOW MUCH for that, and Boy-Howdy-I'll-never-make-that-stupid-mistake-again" moments Bob refers to, except for the initial purchase of Kintala. We clearly spent way too much money for the boat initially. We clearly spent way too much money on the surveys and inspections we hired out that were jokes. And we clearly had to spend way too much money to replace equipment that was on the list in the ad that wasn't actually there or wasn't functioning. Stupid, yes. We were the dreamers, they were the predators, and we were blind to what was right in front of our eyes.

Since leaving, though, our higher than expected expenses can be tied to two major issues:  too much time spent on a dock, and Cost Creep.

Every time you land on a dock you will spend at least $100 a day. Dock fees (average $2 per foot per night=$84 for us), electric fees if you don't have solar ($5-10 avg), and the fact that restaurants and bars and grocery stores are close, all add up to at least that $100 per day.

Cost Creep are those myriad of expenses that cause money to slip through your fingers. They are all the expenses you don't quantify when planning that add up incredibly fast. It was stuff we just didn't think about when we planned. Examples?
  • Water filters: we use two types and replace them every 6 months at $100 each time.
  • Water purifier: we use the Camco brand in our water tanks every time we fill them $5 a bottle, 12 per year. It's stabilized and works better than bleach.
  • Ice: averages $2.50-$3.50 per bag and when it's really hot we go through one every couple days. Could we do without it? Yes, but this is a comfort choice.
  • Laundry: averages $1.75-$2.50 to wash and $1.50-$2.00 to dry. We wash by hand a lot, but when we're near a laundry we generally use it.
  • Water: in the States it's usually free, but in the Bahamas it swings wildly from $.20-$1.00 per gallon.
  • Batteries: we go through a lot of AA and AAA batteries. We use rechargable when we can, but due to electrical draw on the inverter we do use a lot of disposable ones. I lucked out recently and got a box of 72 of them for $14 on a Groupon special but we frequently pay that for a dozen of them.
  • Internet access to Skype with grand kids: There is virtually no free internet in the Bahamas. You can get data cards for $30 for 2gb, or you can go to a restaurant and order a meal and get very slow internet, or you can go to a coffee shop and get a $5 coffee and use the internet, but open wifi is virtually nonexistent. Even the restaurants and coffee shops change the password every single day. Have grand kids? Figure minimum $10 to Skype with them.
  • Oil: We change the oil every 100 hours. Not a huge expense, but just another one at average $20 per jug.
  • Engine diapers: they're required in a lot of places and we change them frequently. $.85 each.
  • A spare impeller kit for our water pump is $85.
  • A new toilet brush $3.95. Toothbrushes - about the same. Boat cleaning brush? Set you back $50
  • Some new towels to replace the ones with threadbare holes $8.25
  • Boat cleaning stuff: Prism Polish (we use a lot of it for stainless and fiberglass and ports), Simple Green, bleach, rags, etc. Just the Prism is $29.95 per can.
  • Oh and then there's ice cream...nuff said.
So regarding the WTF expenses. We did make a few errors in purchasing over the four years of owning this boat and all of them, yes every single one, was based on buying what everyone in the industry and fellow experienced cruisers said we had to have.
  • Stereo system: Turns out we like our iPads better with a Bluetooth speaker. We were able to sell the stereo we bought and recoup all but $20
  • Spinnaker: Not knowing the difference in spinnakers due to lack of experience, we bought a symmetrical spinnaker that we found used at a good price. Turns out it was a good price because no one uses them any more. Turns out we will never deploy a spinnaker with a short-handed crew. Yes, I realize that some people do. Just not us. $375 lost and the spinnaker gifted to a friend of ours to make bags with.
  • SSB: We bought a used SSB for the boat and after carrying it around for a year, we sold it for what we paid for it. Turns out that installing it in Kintala would have been a nightmare of epic proportions and we were done with nightmares. We spent $99 and  bought a portable receiver instead.
  • Cordless power tools: We already had cordless drills that we brought which died within a few short months. They require a lot of power to recharge, they're expensive to buy, and the replacement batteries cost more than the whole new set. $135 for a lower-end cordless, or $27 for our corded drill. No brainer there. We threw away the cordless ones when they died and bought a new extension cord that will reach all over the boat from the inverter.
We made countless smaller purchases of materials to complete projects that ended up not fitting, or not being quite the right material, or not being quite what we thought we wanted. Took us two tries to find a nav seat we were happy with. Another example of this is some screws that we ordered to replace some missing ones in the bimini frame mounting jaws. Sailrite doesn't offer them as spares and told us we could "find them at any hardware store." Not so much. We ordered them twice from different manufacturers and still don't have the right size screw. We have those screws sitting in the spares bin and maybe they'll fit something somewhere down the road. Yet another example would be some cup holders that didn't fit in the teak rack I had hoped they would fit in. Yes, I measured the hole. Yes, the holder labels said they would fit. No, they didn't fit. No, they couldn't be returned. Only $7.95 each, but this is the type of thing that adds up.
So my WTF??? moments in regards to expenses are, for the most part, not major ones. It's the list of $22 and $31 and $14.95 and $8.75 and $3.57 expenses that pop up on my credit card bill. Cost Creep. Figure out how to nip it in the bud and you'll get your cruising cost numbers down to something bordering wishful thinking. And, since I'm sure you're wondering, our wishful thinking goal for monthly cruising expenditures would be $1750. The reality is much worse. Since leaving to go full-time cruising, we have averaged $3544. It doesn't include the initial refit. It does include everything else: our summer refit, the money we spent helping the kids last summer and health insurance (which is not in our monthly cruising expense reports only due to the fact that it comes out of a different account and is hard to include in our reports). One of the things that pushed our numbers that high was an unexpected medical issue for me in December and January of the past year that cost us nearly $10,000. Things happen.

Our hope is that now that most major projects are done on Kintala, our expenses will go down. We also hope that, since we're more experienced, we will stay off docks more and utilize free anchorages. If our expenses don't go down? Then we'll be working a bit longer. It's a price we're willing to pay for having had the opportunity to leave early. I wouldn't trade the last two years of cruising for anything.

As you read through the data so graciously provided by other cruisers in our cost of cruising links, and as you scour the internet for some I missed, here's a few concise tips to keep in mind.
  • Try to come up with a sustainable budget that matches your resources.
  • Expect the unexpected and find workarounds.
  • Develop your creativity. Some of the best budget savers are those that were created as a result of budgetary pressures.
  • Be kind to yourself and to your significant other. If you make a mistake, even a whopper, dust yourself off and start over.
And finally, remember that what works for us or for other people may not work for you. Take your time to decide what you need and what your comfort levels are. Don't rush out and buy things on the advice of even seasoned cruisers. Listen, evaluate, do without, then see if you really need it. I promise you the marine goods hawkers will still be there to pluck your money from your wallet a few months from now. You might just find out you don't really need or want whatever it was in the first place and the money you save might just equal another Skype visit with your little ones. And at least for this cruiser, that's an non-negotiable cruising budget item.


JC3 said...

Good post. Well thought out, well written, Thanks, JC

Unknown said...

Well said. Get the basics and figure out what you need as you go. There is no rule here, just suggestions. We have stuff that broke and we needed to fix and others that are luxuries. Everyone is different and you need to decide what you can live with and without.

s/v Odin the Wanderer said...

I appreciate but dislike the budget blogs at the same time. To many wild cards. A recent budget blog said, in fine print, "Does not include alcohol & [something else, I forget])."
Forget maintenance. My newly retired guy drinks a lot of beer!

The Cynical Sailor said...

As always, a wonderful post. It is the little things that do add up - like the plastic sheeting I bought for $12 the other day. I only needed a little bit of it, but it only comes in rolls so that's $12 down the drain (or into the bilge).

We've been tracking our costs as well ( and find it really helps to focus us being clear about our decision making process - should we invest in this now or later, do we need this or can we live without etc.

SV Odin raises a good point that it isn't like comparing apples to apples when looking at other people's cruising budgets, but it does give you some data to work with when thinking about your own. Always read the fine print about what people include and don't and how they categorize their spending. We leave out booze, chocolate, health insurance and storage for our camper. Other people leave that kind of stuff in but exclude other stuff.

I'd be interested in knowing more about your SSB receiver. Getting an SSB is on our list, but further down in priority due to the cost. How have you found going with just a receiver instead of the full kit and caboodle?

Cheers - Ellen

Latitude 43 said...

Good post. I'm curious how you find time to write all this and to plug everything into a spread sheet. I haven't seen a spreadsheet since I left work.

I always figured that if I needed to track every penny to exist out here then I shouldn't be out here. It can be done, but then is it really retirement as we expect?

Deb said...

@Ellen- I'll do a separate post on the SSB. To much information for a comment.

@ Paul - The spreadsheets were before we left and were planning our budget. Mostly I now track expenses with our credit card bill. We put everything on our U-Promise card because they put a ton of money in our grand kids college funds then pay it off once a month. Between that and Quicken's spending reports it's pretty easy. Time? We spend a good part of every day writing and time doesn't ever seem to be an issue.

I wish we were able to be out here without tracking every penny but that fortune didn't befall us. Count your blessings. Even counting pennies, I wouldn't trade it for the world.

Deb said...

@ Bonnie - I agree wholeheartedly. Read the fine print. Our monthly reports come from our Quicken spending reports because that's easy for me and less time consuming. Unfortunately, our health insurance doesn't come out of there so it's not in those reports. I have that stated at the toop of that post and hopefully everyone is reading it. Not including alcohol in our report would heavily skew it so I can't imagine not doing that, but everyone makes their own decisions. You're correct that it is just raw data for you to use in formulating your own budget.

Latitude 43 said...

Ha! Not blessed at all when it comes to cash, just can't count every penny else I'd go insane. We find that if you stay out of marinas and restaurants and you are able to get through a season without a boat repair it's all doable on even the lowest budget. It's the surprises that nail you but this is true even on land. Plan for surprises.

Budgets are as diverse as the people that are out here. I'd be much younger if I could get back all the time I spent reading and stressing over cruising budgets before we left.

The Cynical Sailor said...

That would be fantastic if you do a separate SSB post!! Love to get your take on the whole issue. Thanks so much! Cheers - Ellen

Deb said...

@Ellen - just posted it. Let me know if you have any questions.

Robert Sapp said...

Some thoughts...

The best money you will ever spend on your boat is that required to make your partner comfortable with the thought of going cruising. You want AIS, radar, and night vision before you'll feel comfortable going offshore at night? You got it, honey. Just can't stand the thought of sleeping on that latex mattress? Well let's go buy a nice memory foam or innerspring if that's what it takes for you to feel good about going. Absolutely can't go more than a few days without talking to the kids? Well let's sign up for an Iridium plan. Money spent helping your partner own the dream is an investment in your future adventure.

The single worse expenditure we ever made? The set of davits we bought for our previous boat. As we discussed in out post, it was $2,500 to no good end. Much better investing in a good Garhauer engine hoist and working out a good way to lift the dink onto the foredeck. We couldn't help but notice that the couple we sold that boat to immediately took them off. I hope they got a decent price for them!

The single best piece of advice we ever received, which has made all the difference in the world for us, was given to us by our broker, rigger, and friend Rick Zern. He told us when it comes time to finally buy the boat you intend to take cruising, look only at freshwater boats in the Great Lakes and central US, and plan to shop in the August to October timeframe. That's when owners are trying to decide whether to sell at a good price or incur the cost of hauling out and storing for another winter. The boats will be lightly used and suffer none of the effects of prolonged exposure to sun and salt water. The cost to transport is a pittance compared to the cost of the major refit a typical Florida boat requires.

I often read Boat Bits, but since he doesn't allow comments, I consider the author to be more of a pontificator than a sage. I have much higher respect for those who engage their readers through comments. You know, like you guys!

Rhonda & Robert
S/V Eagle Too
Pensacola, Florida

Carl said...

Great post, we're finding that we will probably spend at least 35 % of our initial purchase on upgrades/repairs/initial maintenance. About 20% was projected initially. Thanks for laying out a little more clear path to rational planning than is generally portrayed. Our monthly expenditures at the 6 month Rinitiation of our travels is all over the place but hits on all your categories. "Helping family" and " eating out with drinks" the most notable. Hope to run into you guys soon.
S/V Northern Star

Deb said...

@Robert - well said. I think you need to do a separate post about that on your blog.

@Carl - You're doing well at 35%. I hope you keep it up!!

Anonymous said...

This is the most thorough post I've read so far--thank you!