Budgeting Operational Costs

[Ranger59]

Hi Folks, New Member here

We're hoping to buy a trawler to live on at least 3 months a year in the Warm Caribbean/Bahamas. We're from the North East US.

Looking for advice on how to plan an annual budget. ASIDE from the cost of fuel, what should I budget for. The Brokers say 10% of purchase price but that's too vague for me.

Assumptions: Dockage for 6 Months year, Haul out once a year, No Crew, Am basic handy (can do most usual boat repairs, some engine maintenance like fluid changes etc)

Is there any spread sheet or resource out there to help plan a budget?

Thanks!

 

[O C Diver]

There have been a number of threads on this. Search "Annual operating budget ".

The simple answer is, it depends.....

A brand new 10 million dollar boat could have a 10% annual operating cost. A $50K dollar Taiwan trawler from the 1980s could have a 50% annual operating cost.

It all depends on where you keep it, cost of insurance, how much stuff you have to fix or replace each year depending on age and condition, and then there's actually the using it part.

It would be helpful to link to your perspective purchase.

Ted

 

[firehoser75]

Not trying to be evasive, but I agree with Ted!! It depends.
My own example. We have spent a lot more on the boat than I had originally thought we would. Our boat is a 2002 Nordic Tug that was in the best condition of any boat of that vintage that our surveyor had surveyed (and he had over 25 years experience). His list of issues was quite short.

However, We have spent over $45,000 in repairs, upgrades, preventative maintenance, additions, etc. and we still have 2002 era electronics! That is in the first 3 years of ownership. On top of those expenses, we have spent $6,000 per year moorage, $2,000 insurance, and $2200 per year in fuel, not to mention any transient moorage we paid along the way. I do about 70% of my own work. I hire out fibreglass, electrical (most), and some mechanical (not typical maintenance).
Imagine if this boat had been a bit of a project, that required alot of work!!!!!
For basic budgeting, start with moorage costs, insurance, and basic maintenance costs (such as oil changes, fuel filters, impellers, overhauling the saltwater cooling side every 4 years, etc). Then add in "other costs" like transient moorage, estimated fuel costs, etc. Finally add in a figure for "what if" that would cover repairs, longer term maintenance items like alternator, starter, raw water pump rebuilding/replacement, and breakdowns. Unfortunately, there is no easy route. You will have to do the research that applies where you boat for YOUR boat.

 

[Southern Boater]

Not trying to be evasive, but I agree with Ted!! It depends.
My own example. We have spent a lot more on the boat than I had originally thought we would. Our boat is a 2002 Nordic Tug that was in the best condition of any boat of that vintage that our surveyor had surveyed (and he had over 25 years experience). His list of issues was quite short.

However, We have spent over $45,000 in repairs, upgrades, preventative maintenance, additions, etc. and we still have 2002 era electronics! That is in the first 3 years of ownership. On top of those expenses, we have spent $6,000 per year moorage, $2,000 insurance, and $2200 per year in fuel, not to mention any transient moorage we paid along the way. I do about 70% of my own work. I hire out fibreglass, electrical (most), and some mechanical (not typical maintenance).
Imagine if this boat had been a bit of a project, that required alot of work!!!!!
For basic budgeting, start with moorage costs, insurance, and basic maintenance costs (such as oil changes, fuel filters, impellers, overhauling the saltwater cooling side every 4 years, etc). Then add in "other costs" like transient moorage, estimated fuel costs, etc. Finally add in a figure for "what if" that would cover repairs, longer term maintenance items like alternator, starter, raw water pump rebuilding/replacement, and breakdowns. Unfortunately, there is no easy route. You will have to do the research that applies where you boat for YOUR boat.

Yep, good points. Nobody really knows what they will find once they buy the boat and start using it, especially if it's been sitting idle for some time.
Also depends if you are the sort of owner who is proactive in preventative maintenance or someone who just waits for things to fail. The latter of course is the one who will have the biggest bills.
In saying this, you also have to weigh up the compromise between accepting the unknown to a degree or not be able to settle on the right boat to buy.

 

[Ken E.]

Much of what you're asking has a high degree of cost variability. Do you intend to do minimal maintenance on the boat or do everything required to make it safe and capable? Will you get towing insurance? Do you want the boat to be bristol (really nice) cosmetically or just average? Are you handy enough to do some or all of the work yourself? These are just examples of how your decisions will determine your cost of ownership well beyond the basics of moorage, fuel, insurance, and routine maintenance.

 

[Lollygag1]

10% of purchase price is a good start but there are many variables. I figured out the fixed costs (slip, winter, annual maintenance, fuel) then added $3000 for unexpected and have been pretty much in point every year. We also have a list of desired upgrades which we do when funds allow.

If you can do maintenance, engine work etc your costs will be lower. For me I just assume it will be done by a pro. However I have learned to do a few things which likely save $500-1000 yr

 

[Arc]

Forget that 10% bull. A new $1,000,000 boat is not $100,000 and a old $20,000 boat is not $2,000.

 

[Art]

First: Purchase a boat in good condition at best price you can negotiate

Second: Start a contingency checking account used for the boat only

Third: Deposit $15K into the new checking account

Fourth: Begin spending out of the account to do things necessary [e,g, dockage, ins... etc] as well as what you desire to improve or buy new for the boat [e.g. paint, electronics, bedding... etc]

Fifth: When checking account gets down to $5K balance - Deposit another $10K

Sixth: Use and enjoy your boat!

Seventh: Use and enjoy your boat!

Eighth and Onward: Use and enjoy your boat!

Happy "Boat Search" Daze! - Art

 

[Lou_tribal]

For cost of "maintenance" 2 variability factors:
1. How much maintenance/repair will you be able to handle yourself vs paying someone else to do it.
2. What is the level of perfection you want to reach and how much you will be tolerant to not so perfect things.

L

 

[ScottC]

[FONT=&quot]Hi Ranger59,[/FONT]

[FONT=&quot]I agree with the others here that the maintenance and operational costs are VERY specific to the boat and its condition.[/FONT]

[FONT=&quot]However…[/FONT]

[FONT=&quot]When researching the purchase of our boat ~11 years ago, I had the same question. I, too, found the "10% answer" all over the place. So, to help me determine how much boat I could afford...and still retire when I wanted to, I used 10% of the purchase price. Now, a little over a decade later, I can say that 10% was, indeed, a very good SWAG (strategic wild-ass guess) for my particular situation. And yes, I am now retired [/FONT]

[FONT=&quot]Some specifics:[/FONT]
[FONT=&quot]- new 33' boat[/FONT]
[FONT=&quot]- single screw, single helm[/FONT]
[FONT=&quot]- mix of my own labor (~20%) and expensive boat-yard labor (~80%)[/FONT]
[FONT=&quot]- maintain in top condition from the beginning. Did not cut any corners.[/FONT]
[FONT=&quot]- dockage and winter inside storage included. [/FONT]
[FONT=&quot]- Fuel and marina overnight expense for travel not included.[/FONT]
[FONT=&quot]- replacement and/or upgrade of some existing electronics [/FONT][FONT=&quot][FONT=&quot](MFD, Radio)[/FONT], including digital (and paper) charts included.[/FONT]
[FONT=&quot]- addition of functionality that did not originally come with the boat is only partially included in this 10% figure, however. I added most of this “enhancement expense” to the asset value and depreciation plan. For me, this meant addition of: AIS, Radar, NavTex, Fire Extinguishing system, stern thruster, air conditioning, ZipWake trim tab system. Any subsequent maintenance of these items I considered to be annual maintenance expense (i.e. covered by the 10%).[/FONT]
[FONT=&quot]- Insurance included in the 10%[/FONT]
[FONT=&quot]- EDIT: mvweebles' comment made me realize I forgot to mention one important item: Capital costs are not ncluded in the 10% (i.e. it's paid for)
[/FONT]
[FONT=&quot] [/FONT]

[FONT=&quot]Hope this info helps a bit with your planning. Good luck![/FONT]

 

[mvweebles]

A guy on Cruisers Forum, a sister site to TF that's more sail oriented, has tracked in detail his total expenses over 3-1/2 years. A 40-ish foot sailboat he and his wife cruise full time in the US and Bahamas. All-in including medical, insurance, maintenance, etc but excluding capital cost of boat (its paid for) is around $40k/yr, with some considerable variability for years he hauled for bottom paint and maintenance. He has stopped posting updates as he got tired of people saying they could do it for way less by anchoring more, drinking less, etc; or saying it was impossible to say; or saying it takes whatever money you have. But to my eyes, seemed like as good a starting point as any.

First 1-2 years of ownership tends to be pretty high due to upgrades

Good luck
Peter

 

[SoWhat]

Budget? It's a boat. Order checks 5 boxes at a time.

 

[Shrew]

The problem with these numbers is the PER YEAR concept. After 10 years, you will always be able to sum all costs and divide by 10 and have a nice neat, Per Year number.

However that is not how boats work. A new generator might be $13K in one year, the next year you pay for Fuel and Dockage only (Let's say that's $5K). So is it accurate to say that over two years you paid $11.5K per year?? Sure, but one year was actually $17K, while the next was only $5K.

 

[Lollygag1]

Wife created a "boat fund" where she allocates money every month for expenses based off of the last few years average, anything left spent rolls over but is not included in the next years funding. This gives us a cushion should we need something not planned. So far it has worked pretty well. If i could do more work myself I would budget significantly less

 

[Giggitoni]

The problem with these numbers is the PER YEAR concept. After 10 years, you will always be able to sum all costs and divide by 10 and have a nice neat, Per Year number.

However that is not how boats work. A new generator might be $13K in one year, the next year you pay for Fuel and Dockage only (Let's say that's $5K). So is it accurate to say that over two years you paid $11.5K per year?? Sure, but one year was actually $17K, while the next was only $5K.

This ^

I knew going in about the 10% of purchase price per year thingy. I experienced the first eight years of ownership with low cost; fuel, dockage, insurance, etc. Then in 2016 had to replace both fuel tanks. $$$. Wow! The “10%” rule turns out to be pretty close over time for me!

 

[Pete Meisinger]

If your boat is under 38 feet, it will cost you $500 per month, year round, including fuel. It will be twice that amount for the first two years until you get everything the way you want it.

Fuel cost will be your smallest expense.

pete

 

[Art]

This ^

I knew going in about the 10% of purchase price per year thingy. I experienced the first eight years of ownership with low cost; fuel, dockage, insurance, etc. Then in 2016 had to replace both fuel tanks. $$$. Wow! The “10%” rule turns out to be pretty close over time for me!

OK- - Now ya got us interested... just how much was the $$$ for fuel tanks?

 

[Shrew]

Wife created a "boat fund" where she allocates money every month for expenses based off of the last few years average, anything left spent rolls over but is not included in the next years funding. This gives us a cushion should we need something not planned. So far it has worked pretty well. If i could do more work myself I would budget significantly less

We do the same. I have a dedicated savings account and a recurring monthly transfer that goes in 12 months of the year, whether the money is getting spent or not. 1 years worth of storage divided by 12 plus extra expenses.

 

[Pete Meisinger]

I do just like Shrew, transfer a couple hundred a month into a dedicated savings account. It's a money market account so I can only withdraw in $500 increments which sort of keeps my hands off for minor things.

It covers dockage and storage and when we go for a cruise it is nice if there is $500 in cash available to cover all expenses.

pete

 

[mvweebles]

OK- - Now ya got us interested... just how much was the $$$ for fuel tanks?

I just replaced a pair of 225g rusted steel tanks (450g total) with four 110g fiberglass tanks. Work was done in Mexico and required engine removal and plenty of fittings. Around $10k all in.

Fiberglass is forever.

Peter

 

[O C Diver]

If your boat is under 38 feet, it will cost you $500 per month, year round, including fuel. It will be twice that amount for the first two years until you get everything the way you want it.

Fuel cost will be your smallest expense.

pete

There are lots of places where $500 per month won't cover dockage for a 38" boat. Lots of places where insurance alone is half of that.

Ted

 

[mvweebles]

There are lots of places where $500 per month won't cover dockage for a 38" boat. Lots of places where insurance alone is half of that.

Ted

I agree. I can tell you that in Ensenada MX 80 nms south of San Diego, slip fees at the mid-tier marina was close to $500/mo for a 40-foot slip. Not a lot cheaper than Emeryville in SF Bay for a similar sized slip.

 

[Art]

I just replaced a pair of 225g rusted steel tanks (450g total) with four 110g fiberglass tanks. Work was done in Mexico and required engine removal and plenty of fittings. Around $10k all in.

Fiberglass is forever.

Peter

Peter

Thanks, for cost appraisal.

Our gasoline powered 1977 Tolly as two 100 gal aluminum tanks. Water has always been kept away from their exterior. Additives to reconstitute any interior water consistently added.

Although both tanks present to be in good condition... at 43 yrs age of tanks... ya just gotta think??

Many times I've visualized replacement techniques regarding the tanks' positions. Would be heck of a task; however, can be done if required.

So far, everything appears okay!

Mexico is a bit far from SF. Marine costs here are prohibitive. Being a masonry, concrete and tile contractor; I know just who I'd pull off the crew to assist me. We'd make it a fun project!

 

[BDofMSP]

As much as you think plus as much as you can afford, times 2 seems to be my experience.

BD

 

[BandB]

Budgeting isn't something that is going to initially be accurate, it's a tool for helping you to understand and monitor what you spend. Therefore, it's something you need to do yourself, not use a formula or someone else's work. Budgeting x dollars for fuel doesn't help you if you don't know what cruising that was based on. Budgeting y for dockage means nothing to you if you don't know what dock it was.

I'm going to toss a list of things to budget your way just to guide to the costs you need to include. Some will not apply in your situation.

Owner Expenses
-Food
-Beverage
-Transportation
-Entertainment
-Tips

Crew Costs (You won't have most of these but don't overlook the guy you pay to wash it or the diver
-Salaries
-Day Workers
-Food
-Health
-Travel
-Uniforms
-Hiring
-Training (and if you don't have crew, maybe training for you)

Administration
-Insurance
-Tow Membership
-Licensing, including equipment
-Mail and package Delivery (Don't forget getting parts shipped to the Bahamas)
-Communications (Phone, Internet)
-Legal Fees

Dockage and Fuel
-Home Dockage
-Transient cruising dockage
-Yard storage costs
-Customs and fees
-Storage costs
-Fuel
-Lube Oil and fluids
-Towing and diving
-Electric and water at docks

Maintenance
-Charts and navigations
-Consumables and spares
-Repair of navigation equipment
-Deck repairs and maintenance
-Equipment repairs and maintenance
-Audio Visual repairs and maintenance
-Cleaning
-Interior provisions including toiletries and supplies
-Repairs and maintenance of galley and laundry equipment
-Small appliances (just look at the coffee and cooking threads)
-Propane
-Haul and launch
-Bottom Paint
-Stabilizer and thruster maintenance
-Crane or davit maintenance
-Dinghy or tender expense
-Safety supplies and equipment
-Lines and fenders

Capital expenditures and reserves (you may have substantial needs initially and then go years with little but wise to plan for those times they do hit you)
-Furniture
-Carpets
-Decorations
-Galley Equipment
-Hull blasting and recoating
-Hull and superstructure painting
-Varnish, teak and wood, cabinetry
-Engine rebuilds
-Generator rebuilds
-Shaft and engine alignment or replacement
-Propellers
-Rudders and shaft seals
-Exhaust system
-Anodes
-Plumbing
-Through hulls
-Air conditioning and heat
-Replacement AV
-Replacement Dinghy and toys
-Replacement electronics

Then there's depreciation. Doesn't matter if your first boat is your last boat, I guess. However, ask around. How many really do that. So, if you're going to end up moving up in boats along the way then you need to consider the value your boat is losing along the way.

Now everyone budgets at a different level of detail or not at all. The one thing I'd just advise is to be prepared. Don't underestimate or you'll be a boat owner but not a boater as it just sits or you'll wish you weren't an owner. Prepare for more than you'll likely encounter so you can handle the surprises. If it's going to be tight and stress you, then likely you bought too much boat and could have spent a little less, gotten a little less boat, and boat pressure free. If a boat puts you under financial stress then it was a mistake as that's not pleasure. Make sure it's a pleasure boat.

 

[ScottC]

So well put, BandB!

 

[mvweebles]

When I stopped delivering boats in 2004, I returned to IT Consulting into a role in a boutique management consultancy specializing in re-structuring IT for G2000 clients. I specialized in building very early business cases to test feasibility. I always chuckle at threads like these that give so much data but zero information. It's why companies hire expensive consultants - to get an answer.

Attached is the summary from a guy on a 40-foot sailboat of all his expenses after 44-mos of full-time cruising. He provides the month-by-month build-up of all cost categories but I have only shown the monthly average. Works out to around $3500/mo or around $40k/year. Right now, he has just returned to Florida from Bahamas where his costs were near zero due to Covid.

What's amazing to me is that there are still people who will argue this. The answer may be different for some people, but his numbers are what his numbers are. Take them for what they are and figure out how yours will differ, but don't dismiss them. For example, I have a well-heeled friend with a 52-foot Horizon Powercat. $3500 probably lasts him a few days.

Peter

 

[Art]

Peter

Thanks for providing breakdown of that fellow's per month cost numbers. Some seem relatively high for people who would be a bit more intense than he to save capital. Many look spot on.

One cost is huge: $47,278.44 [$1074.51 per mo. X 44 mos.] total for "Boat Repair Maintenance and Upgrades" during the 44 months.

There must have been some sort of unusual expense that unexpedly beset him during his voyage. Do you know what cost him so much?

 

[mvweebles]

Peter

Thanks for providing breakdown of that fellow's per month cost numbers. Some seem relatively high for people who would be a bit more intense than he to save capital. Many look spot on.

One cost is huge: $47,278.44 [$1074.51 per mo. X 44 mos.] total for "Boat Repair Maintenance and Upgrades" during the 44 months.

There must have been some sort of unusual expense that unexpedly beset him during his voyage. Do you know what cost him so much?

Interesting that he has a list of big ticket items, though not all have costs associated with them. Missing are haul-outs. The XLS is pretty extensive and gives locations for each month. What's interesting is he lists the first 36-months are about $4k/mo total whereas the last 8-months were significantly lower, mostly due to COVID and drove the average down to $3500/mo.

For me, in looking at his spreadsheet, my sense is my style of cruising will be roughly similar to his - mix of anchor-out and marina. Fuel for a trawler will be higher than a sailboat, though under maintenance, XLS shows expenses for sails/rigging so perhaps its a shift of costs. That's the benefit of looking at a long term summary. I know cruising can be done on a shoe-string, but my sense is many folks on lists like these focused on discretionary items have planned for retirement. If I had to pick a number for comfortable cruising budget including maintenance, somewhere in the $50k per year feels about right, and adjust from there.

EDIT - here is the link to the CruisersForum post where I pulled the XLS if you want to pull the XLS itself. Just not something I want to share without permission even though it's posted in a public forum.

Peter

 

[Art]

If I had to pick a number for comfortable cruising budget including maintenance, somewhere in the $50k per year feels about right, and adjust from there.

That = $962 per wk. avg / $137 per da. avg. Living high while at anchor??

Or... budgeting for possible major repairs while on trip??