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Old 04-04-2017, 12:29 PM   #1
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Budgeting the Cost of Boat Ownership

For those who budget other aspects of their lives, this is pretty straight forward. For those who don't budget anything, this may be like a foreign language. Regardless, I shall tread into these dangerous waters.

Some aspects are easy and others far more difficult. Step one is just to make sure one is considering all aspects of ownership and not overlooking an item that could shock them. I budget for one simple reason, I don't like surprises.

Purchase Price

The biggest thing here is to add in all the costs anticipated in the first year to get the boat to where you want it. More than any other boating costs, these tend to be drastically underestimated. Don't assume more DIY than possible. Look at yard rates too.

Depreciation, Interest, Mortgage
Mortgage and interest on a financed boat are easy to calculate. One pitfall is many are sold on financing based on the interest being tax deductible. Careful, as it is deductible but only by itemizing and benefits you only by the amount it increases your deduction. Fewer and fewer people each year are able to benefit.

Transport
This is typically a one time expenditure at purchase for getting the boat home. However, some boaters do want to shift cruising grounds later and that incurs a cost.

Dockage
There are two components here. First is your home dock. Second, is docking while cruising. In both cases don't overlook electric, water, cable, trash, pump out and any other costs. Also consider size of boat. Not only does a bigger boat give more linear feet but often the price per foot increases as the size does. If you intend to anchor while cruising, don't overlook places you might use mooring and the occasional marina.

Fuel
Base it on anticipated and desired usage. Don't assume you will always run at the most economical speed, use a balance. And, don't assume today's fuel prices will stay. Here like everywhere else in budgeting you need to allow for inflation. Also, don't overlook fuel for your generator or for your dinghy.

Routine Engine Maintenance
This may vary widely based on location, brand of engine, number of engines and what work you will DIY vs. using yards. Start with the owners manual and recommended maintenance schedule. Talk to some mechanics or yards about prices. Don't overlook the prices of filters, impellers, and fluids. Engines should include your generator.

Contingency Engine Maintenance
Things will break. Talk to other owners about major expenditures they've had. While you may not need a rebuild, you will at some point have some unexpected service requirements. As to a rebuild, at least know worse case and have a contingency plan if it ever comes to that.

Other Equipment Maintenance
Every piece of equipment will at some point require maintenance. Repair of shafts and propellers can be very expensive. Don't overlook electronics repairs, stabilizers, thrusters, toilets, holding tanks and pumps, watermakers, refrigerators, laundry equipment, oven, dishwasher. If it can break, it will. Your best source is crowd sourcing owners of similar boats, but be specific in what you're asking so it's comprehensive.

Electronics
Consider the likelihood of upgrades and the costs as well as the costs of updating charts and software. Electronics have shorter lives in general than most other boat equipment. Much has built in planned obsolescence.

Deck, interior, hull and superstructure routine maintenanceThis would be cleaning, diving, including supplies if you do it yourself. If teak or other wood, the maintenance of it. Include bottom painting at whatever frequency is required. Do not underestimate the cost of any haul outs.

Major on deck, interior, hull and superstructure
Know the costs of replacing the teak deck or painting the entire boat, the cost of redecorating the interior if there's the possibility of that need arising.

Dinghy and toys
These items have initial costs but then often have limited lives. If the outboard is old, what is the cost to replace? Will you be satisfied with what comes with the boat or want something new? What about kayaks, bicycles?

Communications and equipment
Satellite tv? Internet? Subscriptions and equipment. Cellular phones with additional phones for different areas? Cost of data. New televisions, tablets, computers.

Insurance
Find out what others are paying but also what it includes. What will be your cruising ground? Will there be surcharges?

Taxes and Licenses
This starts with purchase and sales tax, but I consider that a cost of the boat. Property taxes vary significantly on location. Consider your present location but also future plans. Add in registration and documentation, then include cruising fees and customs fees for places you might go. This would include canal permits too from the NY Canal system to the Panama Canal. Many are shocked at the charge in the Bahamas, so don't overlook it.

Shipping, postal, etc.
If you're cruising, there will be a cost for handling your mail.

Travel and lodging
These are the costs of traveling to and from your boat if any. Some leave their boat away from home periodically. Also, costs of lodging while boat is on the hard.

Ordinary Costs of Living
There is a tendency to say that this will be the same as if on land. Only if you maintain the exact same lifestyle. Some find it much less expensive as they eat for less and don't incur auto expenses as much. However, if you check out all the fine restaurants in San Francisco or New York, go to the opera or a Broadway musical, it will be more. Don't overlook entertainment costs. It's a shame if you go to great places but don't enjoy them because you didn't anticipate the cost. Also, anticipate guests and any arrangements there. Perhaps it will be less than when you're home on land, or perhaps more.

Recommendation
My recommendation is to take one's best shot at all these things and then add some level of contingency, 10-20% perhaps. Budgets are just projections, but by having one at least you'll know where your initial estimates are high or low. The biggest purpose of all this is to be able to enjoy whatever boat you buy without feeling financially stressed. If one boat is stretching your tolerance and resources, then enjoy a boat that will not.

The best time to get a feel for costs is prior to purchase. To me, boating pleasure is greatly enhanced by knowing, even the surprises, I planned for. I build reserves for major items, either on paper, or actually in a bank account.

I'm sure I've overlooked some items others consider important and I hope they'll be added. Also, I hope some will note the areas that have cost them far more or far less than they anticipated.
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Old 04-04-2017, 02:23 PM   #2
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“No battle plan survives contact with the enemy.”
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but

“Plans are useless, but planning is indispensable.”
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Old 04-04-2017, 02:40 PM   #3
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We don't budget. Don't even think about it. If I have to add it up I can't afford it.

I think there is a problem with boat buyers though. I think they often buy a boat they can afford to buy, but not afford to maintain
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Old 04-04-2017, 02:59 PM   #4
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We don't budget. Don't even think about it. If I have to add it up I can't afford it. ...................
My feelings as well. If the cost of owning and operating a boat is going to have a serious impact on your income or wealth, you can't afford it.

When we head out on a cruise, I do keep track of fuel and marina costs but I don't use these as a basis for where we go or how long we stay out. It's just a summary to go along with the cruising story. I can go for months on my own boat for less than a week on a cruise ship.
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Old 04-04-2017, 03:14 PM   #5
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Aren't there lower-income full-time liveaboards like in the RV and sailing world that chose the lifestyle, cheaper than renting or owning/maintaining a sticks 'n bricks home?
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Old 04-04-2017, 03:16 PM   #6
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BandB,

A good start.
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Old 04-04-2017, 03:29 PM   #7
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Greetings,
Mr. BB. HAH! Who keeps track?

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Old 04-04-2017, 03:41 PM   #8
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If you have never owned a boat then it can be quite difficult to figure future costs. After owning boats for quite a few years the budgeting can be very close to the future reality. Since we collect all costs in quicken they are easy to review and update for whatever we were doing over that time period providing a good basis for future budgets.
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Old 04-04-2017, 03:41 PM   #9
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Aren't there lower-income full-time liveaboards like in the RV and sailing world that chose the lifestyle, cheaper than renting or owning/maintaining a sticks 'n bricks home?
Yes, but do they use pump out facilities or just dump their sewage overboard?
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Old 04-04-2017, 04:05 PM   #10
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survey
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Old 04-04-2017, 04:46 PM   #11
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I just helped a friend locate and buy a boat. During the initial planning stages I mentioned the cost of the survey.

He said he could not believe that he would spend almost $1500 only to potentially walk away from the boat if the survey was bad. I told him if he couldn't afford to walk away from $1500 then he had no business buying a boat of that size. It sank in and he got a great boat.

I have always figured that the boat will cost me 10% of the purchase price per year to keep and maintain. I added it up once and told my wife that if I ever did that again I would sell the boat.

In the end you can make memories or you can make excuses.
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Old 04-04-2017, 04:51 PM   #12
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survey

Good idea for addition. Actually two surveys, one marine and one mechanical.

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Old 04-04-2017, 05:35 PM   #13
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I know this will piss off a bunch of people but I remember something from Clark Howard's personal finance radio show probably fifteen years ago that stuck with me - about vehicles - "If you can't afford to pay for it in two or three years, you can't afford it". Rapidly depreciating assets should not be leveraged heavily. It is absolutely insane to me folks who spend 10-20% of of their nest egg on something like a boat (or RV)

Also:

"Everyone has a plan until they get punched in the mouth" - Mike Tyson.
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Old 04-04-2017, 06:46 PM   #14
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Unless it becomes your home, and you would otherwise be spending more on the land-based version.

Most people spend 30+% of their income on housing, add in utilities, likely tax savings, not needing a car, probably adds up pretty quickly to making sense for many financially, if it's also the lifestyle you want.
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Old 04-04-2017, 07:09 PM   #15
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I find no joy in knowing where every penny went, so I don't keep track. If I kept track of what I spent on my boat, I would likely realize I couldn't afford it . So I'm probably a lot happier not knowing......I know my wife is.

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Old 04-04-2017, 07:29 PM   #16
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I find no joy in knowing where every penny went, so I don't keep track. If I kept track of what I spent on my boat, I would likely realize I couldn't afford it . So I'm probably a lot happier not knowing......I know my wife is.

Ted
Ain't that the truth,..all of it.. And my wife does not ever ask for any receipt either, except for something that may have a warranty attached to it. Then it goes in a dedicated envelope with the manual, if applicable.

While I will never own a boat bigger than probably 28 to 30 ft, I don't float a loan on a hole in the water . This also applies to any and all power for it if the need arises . We have done big boat traveling until we had our fill of it, and have been beat up cause we had to more than we would like to talk about. Now its just purely pleasure,,,

Oh and with every boat its the same ole song, "Its our last one". Dang drugs are addicting you know.
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Old 04-04-2017, 07:35 PM   #17
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Great point and start for the budget check list.
My point on a related thread...this is a much better approach than asking for a % of purchase price for estimating annual cost.
For those that don't wanr to know costs thats ok ypu are likely within whats acceptable for you. For those considering getting into serious boating good to go with eyes wide open and to hsve an idea what it will really cost vs just purchase price.
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Old 04-04-2017, 07:50 PM   #18
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Sadly, I have just about every receipt I've spent on this boat in the past 11 years, scanned to a series of PDF files, as well as a Quickbooks full accounting of every dime. I don't even want to know the total.
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Old 04-04-2017, 08:07 PM   #19
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Don't know & don't care to budget.

Paid cash for the boat and never looked back.

Considering how much money I used to waste on alcohol and cigarettes (with their negative impacts on myself and my family) I can honestly say we are light years ahead despite the monetary costs of having a boat.

Quality of life improvement and memories made have more 'value' than money anyway, and our daughter now knows in her bones what an amazing place we live in
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Old 04-04-2017, 08:42 PM   #20
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It is absolutely insane to me folks who spend 10-20% of of their nest egg on something like a boat (or RV)
Why not???

Simple fact is that we are all going to grow old, and we are all going to die.

If you have plenty put away for a nice retirement, why not spend the rest?

We all get this one shot at life, and the old saying is true... You cant take it with you.

So why not put the excess in a boat, or a RV, or spend it on good whiskey, or whatever else you want...
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