Finances

Everyone is always so tight lipped about their finances. And I usually don't say much about them other to complain about how much things cost, but I think it is about time I offer up the goods, so-to-speak. The title of the blog "Sailing; Freedom of Simplicity" probably seems confusing when I start complaining about the $56,000.00 we have into the boat already. Refit not finished. When realistically, a simple boat would be much cheaper. And, if we end up cruising for more than a couple of years, I can see that number growing. But, that's not what this post is about, this is about, how much do we have, how did we get there, how much we plan to spend, and what kind of shape are we going to be in when we finally decide to swallow the anchor and head home.

How did we get here?

That one is easy, Serena is cheap. So cheap that she could squeeze a penny and get two nickels. Okay, that's part of it, but there is a long story here, with the most important thing being that we learned to "live below our means", and put the rest away. We retired at age 40, I from the Military, and Serena actually a couple of years earlier from the minimum wage slog. We had saved up about $120,000 in investments, and about $180,000 in real estate equity plus my small pension. Then we built a house with our own hands, earning us some needed sweat equity. Add to that a small check from Veteran's affairs; compensation for broken body parts due to service related injuries. And we end up with a net worth close to $400,000.00 and $1919.00 per month. To some this probably sounds like a lot, to others they are probably scratching their heads trying to figure out how we eat. We bought the boat, have been refitting it, and plan to leave Aug 2013, assuming the house sells.

Ready to go?

Assuming a certain value for the house, our reserves look like this.

$200,000.00 in stocks, hopefully making us about 6% per year or better, between dividends and capital appreciation. This is not to be touched if we can help it. Some of this money will be in a non-registered investment account, and we may use some of the dividends if needed, for unexpected expenses; like beer.

$60,000.00 in a high interest savings account. Not to be touched. This money is so we are guaranteed that we will be able to start building a house when we eventually move back home. Just in case the stock market is not doing well and we can't get at the rest of the money.

$20,000.00 in a US account just to hedge against fluctuations in the dollar. But a lot of this will be spent while we travel, in lieu of using Canadian funds from our chequing account. Plus, when you exchange more than $10,000.00 you get a much better exchange rate.

Then we will have some money in our chequing account, plus my pension of $1919.00 per month. This will be our cruising budget. Minus storage for the Truck and our camper. Insurance for the truck and the boat, and yacht club fees. So maybe a cruising budget of $1600.00 per month. And, unfortunately my pension does not get indexed for cost of living increases until I turn 60, so in ten years it will not be enough to live on for sure. Hopefully the investments will be able to offset the increases when they are required.

We purchased the travel trailer so that we would have somewhere to stay when we were home visiting, to provide somewhere to live when we build our next house, and maybe allow us to do something a little different once in awhile. We own two building lots, 1.75 and 2 acres respectfully where we can park our trailer for a bit, or to build a house on when we return. And we are keeping the truck for a a couple of years just because we like to have access to a vehicle when we come home to visit. As you can probably tell, we are selling out. When we leave our assets will be limited to the boat, the 9 year old Dodge, a new 21' travel trailer, 2 building lots in a rural subdivision, about $300,000.00 in cash, and $1919.00 per month.

We are pretty sure that we can cruise on this indefinitely, if we are very careful, and still come home if/when we want and settle down.

I have spent a lot of time surfing the web looking for budget information for cruisers. And although there is lots to read, the truth is that there is no way any of it is going to do us any good, other than letting us know that it is possible for others to live within our means. It still may not be possible for us personally, we won't know until we are out there doing it. I intend to publish our results, and we'll get to see whether or not our original thinking/planning is anywhere close to what it actually costs us.

Eventually I'll do a cost breakdown of the refit as well, but since it is still underway, it will have to wait.

I think the key though in making all of this work and maintaining our "freedom" to do as we wish, is sticking to a small boat, and of course, living below our means, or a "simpler" lifestyle. Hence the name of the blog.