|
|
02-25-2021, 09:15 AM
|
#1
|
Veteran Member
City: Malletts Bay, Vermont
Join Date: Sep 2020
Posts: 39
|
Finance, Boats, Retirement how do you decide?
Hey all,
I know this has been discussed in specific ways (how much boat can you afford kind of threads), but I'm interested in a broader, more general discussion about how people approach understanding how boats (well trawlers?) fit into their financial plans.
I'm in my mid-40's and have been very fortunate. I started my career working for Crowley Maritime in Jax, Oakland, and Seattle. Left that to become an engineer, and somehow, as much by luck as by skill, anded up as a senior executive in engineering. What I suck at is finance.
Currently I live on Lake Champlain and just have a little Swift 30 trawler. Which is the perfect 5-6 month per year kind of boat for a family of 3 and a couple of dogs. Occasional longer trips out to the Atlantic, stuff like that.
But as my daughter gets older and ready to move out, my plan is to go liveaboard. We'll look to buy something bigger and more solid like a Kadey, maybe one of the bigger tugs, whatever. So some questions:
How do decide how much you can afford as a function of savings and income? or retirement? It's not like a house which likely appreciates. Do you just sorta look at a boat as a complete write-off in the sense of long-term finance? How do you budget living expenses? Fuel? Maintenance? and feel comfortable that you're within your income or retirement targets?
Do you have rules of thumb? I spend x percentage of my monthly on y? something else? Would love advice as my wife and I start getting ready to change things up a bit.
So I guess I'm sort of asking: How do you approach your overall finances with regards to owning or even living on a boat and make sure you're not going to far? or not far enough (and end up annoyed because you didn't buy a comfortable enough home)? Stuff like that. Any advice appreciated.
Also mods. If this should be in the finance forum, maybe move? Apologies if so.
Lastly. First post. Thank you all for this great resource. I've learned a lot reading this forum
|
|
|
02-25-2021, 10:21 AM
|
#2
|
Enigma
City: Slicker?
Join Date: Oct 2007
Posts: 16,563
|
Greetings,
Welcome aboard.
__________________
RTF
|
|
|
02-25-2021, 10:26 AM
|
#3
|
Moderator Emeritus
City: SEWARD ALASKA
Vessel Name: DOS PECES
Vessel Model: BAYLINER 4788
Join Date: Feb 2011
Posts: 6,266
|
I look at my boat no different than my land based home in that it has zero value unless I sell it.
Because of that my boat is not part of my financial plan. It is simply a trapped asset my son will have to deal with some day.
|
|
|
02-25-2021, 10:35 AM
|
#4
|
Guru
City: Gulf Islands, BC Canada
Vessel Name: Sea Sanctuary
Vessel Model: Bayliner 4588
Join Date: Jul 2019
Posts: 5,017
|
My approach has always been, boats are a luxury item, not a necessity. All my boats were loan free purchases and not dependent upon income flow, except for maintenance, moorage and insurance. If income flow stopped, boat got sold, usually at a loss.
Also, once I make the boat mine, thereafter if I work on it more than use it, it goes up for sale.
On this cycle (pun) the boat is getting the greater attention with use and I keep looking at the parked Harley wondering if it is time to sell it, only rode it 1K last year. I don't like luxuries to sit unused, I am not a collector.
__________________
SteveK
You only need one working engine. That is why I have two.
Sea Sanctuary-new to me 1992 Bayliner 4588
|
|
|
02-25-2021, 11:00 AM
|
#5
|
Guru
City: Northport
Join Date: Aug 2015
Posts: 2,046
|
Quote:
Originally Posted by newt
Hey all,
I know this has been discussed in specific ways (how much boat can you afford kind of threads), but I'm interested in a broader, more general discussion about how people approach understanding how boats (well trawlers?) fit into their financial plans.
I'm in my mid-40's and have been very fortunate. I started my career working for Crowley Maritime in Jax, Oakland, and Seattle. Left that to become an engineer, and somehow, as much by luck as by skill, anded up as a senior executive in engineering. What I suck at is finance.
Currently I live on Lake Champlain and just have a little Swift 30 trawler. Which is the perfect 5-6 month per year kind of boat for a family of 3 and a couple of dogs. Occasional longer trips out to the Atlantic, stuff like that.
But as my daughter gets older and ready to move out, my plan is to go liveaboard. We'll look to buy something bigger and more solid like a Kadey, maybe one of the bigger tugs, whatever. So some questions:
How do decide how much you can afford as a function of savings and income? or retirement? It's not like a house which likely appreciates. Do you just sorta look at a boat as a complete write-off in the sense of long-term finance? How do you budget living expenses? Fuel? Maintenance? and feel comfortable that you're within your income or retirement targets?
Do you have rules of thumb? I spend x percentage of my monthly on y? something else? Would love advice as my wife and I start getting ready to change things up a bit.
So I guess I'm sort of asking: How do you approach your overall finances with regards to owning or even living on a boat and make sure you're not going to far? or not far enough (and end up annoyed because you didn't buy a comfortable enough home)? Stuff like that. Any advice appreciated.
Also mods. If this should be in the finance forum, maybe move? Apologies if so.
Lastly. First post. Thank you all for this great resource. I've learned a lot reading this forum
|
Good questions posted here....
"feel comfortable that you're within your income or retirement targets?"
"How do you approach your overall finances with regards to owning or even living on a boat and make sure you're not going to far? or not far enough (and end up annoyed because you didn't buy a comfortable enough home)?"
Best method to view solutions for these questions:
1. Calculate your comfortable retirement needs
2. Ensure you have the comfortable plan covered well
3. Whatever is left in addition to the retirement plan can be spent on anything else.
If you should have questions about the best way to figure out a retirement plan there are various other sites that could/would help greatly.
|
|
|
02-25-2021, 11:51 AM
|
#6
|
Guru
City: Oconto, WI
Vessel Name: Best Alternative
Vessel Model: 36 Albin Aft Cabin
Join Date: Oct 2012
Posts: 3,145
|
Unless you have a lot of steady retirement income, say from patents, rentals or royalties you really don't want a big boat payment. None at all is best for retirement.
I may be wrong, and if I am I'm sure the other, more experienced members will tell me in short order but here goes. I think the type of boat you are looking for will cost you about the same to purchase as a decent home in your area. I would further go out on a limb and say that it will cost you about the same to live on as that similar house.
The ten percent rule carries a certain amount of credibility here. (10% of the cost of the boat is about what it costs to maintain and use, annually)
good luck, welcome aboard
pete
|
|
|
02-25-2021, 12:05 PM
|
#7
|
Moderator Emeritus
City: Au Gres, MI
Vessel Name: Black Dog
Vessel Model: Formula 41PC
Join Date: Jul 2015
Posts: 21,185
|
Welcome aboard. As to what to spend on a boat, what works for me may not work for you. So I tend not to give advice on that since everyone’s situation is different. Good luck and enjoy the search.
__________________
Boat Nut:
If you are one there is no explanation necessary.
If you aren’t one, there is no explanation possible.
|
|
|
02-25-2021, 12:39 PM
|
#8
|
Senior Member
City: Cairns
Join Date: Jul 2019
Posts: 499
|
Quote:
Originally Posted by Pete Meisinger
I may be wrong, and if I am I'm sure the other, more experienced members will tell me in short order but here goes. I think the type of boat you are looking for will cost you about the same to purchase as a decent home in your area. I would further go out on a limb and say that it will cost you about the same to live on as that similar house.
The ten percent rule carries a certain amount of credibility here. (10% of the cost of the boat is about what it costs to maintain and use, annually)
good luck, welcome aboard
pete
|
I'd agree with the 10% for years 3 onwards. I've found that the initial costs to cater to our personal preferences much higher than a house for my newly purchased boat.
She doesn't like the fridge? He's OCD about the rat's nest wiring? These cost much more than a house.
|
|
|
02-25-2021, 12:52 PM
|
#9
|
Guru
City: Galveston, Texas
Vessel Model: 24" El Pescador
Join Date: Nov 2014
Posts: 744
|
I'm a big believer in Cash Flow and keeping a cushion.
If you have a quality cash flow that will easily include a boat payment then it is OK. Many people in retirement keep their boat only for a few years due to a variety of reasons.
I reluctantly sold my big boat after making two 6 month trips thru B.C. to SE Alaska and was wife's turn for something else. The people I sold it to were excited to move aboard full time and a year later something changed and boat was for sale again.
The point being--I made monthly payments for 2 years and didn't have to commit a large sum of money at one time and the difference between boat costs for 2 years and my sale price was the cost of a total 12 month adventure.
__________________
Ken Diestler
Galveston, Tx
|
|
|
02-25-2021, 12:55 PM
|
#10
|
Veteran Member
City: Malletts Bay, Vermont
Join Date: Sep 2020
Posts: 39
|
Wow. Great advice all around. Thank you all.
|
|
|
02-25-2021, 01:15 PM
|
#11
|
Guru
City: Aventura FL
Vessel Name: Kinja
Vessel Model: American Tug 34 #116 2008
Join Date: Oct 2017
Posts: 10,595
|
Every time I talk to my CPAs about paying off the boat loan, they get real excited and I hear a collective concert of NO NO NO.
It is the only the only interest write-off I have.
I realize it would be a one year tax event but the CPAs all say NO NO NO.
__________________
Two days out the hospital after a week in the hospital because of a significant heart attack.
|
|
|
02-25-2021, 01:34 PM
|
#12
|
Senior Member
City: Seattle
Vessel Name: Mabuhay
Vessel Model: Grand Alaskan
Join Date: Jan 2018
Posts: 399
|
Quote:
Originally Posted by OldDan1943
Every time I talk to my CPAs about paying off the boat loan, they get real excited and I hear a collective concert of NO NO NO.
It is the only the only interest write-off I have.
I realize it would be a one year tax event but the CPAs all say NO NO NO.
|
How is a boat loan interest considered a write-off?
|
|
|
02-25-2021, 02:09 PM
|
#13
|
Guru
City: Warwick RI
Vessel Name: Lollygag
Vessel Model: 34 Mainship Pilot Hardtop
Join Date: Aug 2016
Posts: 872
|
We bought our boat and paid the loan off in just a few years and also have paid off the house. Could I afford better/bigger yup but don't want to have debt as I move towards retirement
|
|
|
02-25-2021, 02:28 PM
|
#14
|
Guru
City: Aventura FL
Vessel Name: Kinja
Vessel Model: American Tug 34 #116 2008
Join Date: Oct 2017
Posts: 10,595
|
Quote:
Originally Posted by w8n4sun
How is a boat loan interest considered a write-off?
|
My and no doubt your boat satisfies the IRS's definition of a 2nd home. Hey, the IRS writes the rules. I just follow the rules.
Years ago, I learned most boat owner's keep their boats less than 5(?) years and then buy a bigger boat or get out of boating so why spend your assets if you are going to change something in a short period of time.
__________________
Two days out the hospital after a week in the hospital because of a significant heart attack.
|
|
|
02-25-2021, 03:00 PM
|
#15
|
Guru
City: Delaware
Join Date: Mar 2017
Posts: 681
|
Quote:
Originally Posted by OldDan1943
My and no doubt your boat satisfies the IRS's definition of a 2nd home. Hey, the IRS writes the rules. I just follow the rules.
Years ago, I learned most boat owner's keep their boats less than 5(?) years and then buy a bigger boat or get out of boating so why spend your assets if you are going to change something in a short period of time.
|
Do you still itemize your deductions (schedule A)?
My wife and I always itemized our deductions, but when they changed the tax code a few years ago, we found it more beneficial to start taking the standard deduction.
Jim
|
|
|
02-25-2021, 03:14 PM
|
#16
|
TF Site Team
City: Westerly, RI
Vessel Name: N/A
Vessel Model: 1999 Mainship 350 Trawler
Join Date: Jan 2014
Posts: 4,160
|
Is your mortgage and retirement plan funded? If so, then work out how much boat loan you think you can afford.
Unless you plan on doing passages, I wouldn't focus on a passage making boat (e.g. Kady Krogen, Nordhavn, etc)
|
|
|
02-25-2021, 03:32 PM
|
#17
|
Guru
City: Aventura FL
Vessel Name: Kinja
Vessel Model: American Tug 34 #116 2008
Join Date: Oct 2017
Posts: 10,595
|
Quote:
Originally Posted by JLD
Do you still itemize your deductions (schedule A)?
My wife and I always itemized our deductions, but when they changed the tax code a few years ago, we found it more beneficial to start taking the standard deduction.
Jim
|
To take advantage of some of the other rules, I still itemize as per the recommendation of my CPAs.
__________________
Two days out the hospital after a week in the hospital because of a significant heart attack.
|
|
|
02-25-2021, 03:50 PM
|
#18
|
Veteran Member
City: Boulder
Vessel Name: Skipper
Vessel Model: Everglades DC230
Join Date: Oct 2020
Posts: 52
|
Quote:
Originally Posted by OldDan1943
Every time I talk to my CPAs about paying off the boat loan, they get real excited and I hear a collective concert of NO NO NO.
It is the only the only interest write-off I have.
I realize it would be a one year tax event but the CPAs all say NO NO NO.
|
Man, that makes no sense to me, but I'm no CPA.
Say you pay $5,000 in interest in a year, and that's a write off. So it would save you $1850 in taxes if you are in the highest tax bracket.
So, you are paying $5000 to save $1850?
Am I missing something?
|
|
|
02-25-2021, 04:07 PM
|
#19
|
Guru
City: Saint Petersburg
Vessel Name: Weebles
Vessel Model: 1970 Willard 36 Trawler
Join Date: Mar 2019
Posts: 7,179
|
There's a guy on CruisersForum who publishes his cruising costs every month for past 4-years. He's on a 40-foot sailboat, spends time in Bahamas, mostly in Florida, and lives a pretty normal retirement lifestyle of eating out several times per month, traveling to see family, etc. His costs vary between $2500/mo and $5000/mo based on maintenance items and upgrade items, but averages around $4200/mo. Boat is paid for. Probably not a bad single number to work from.
You're young and you have kids for college. Depending on big of a windfall you hit, you still need substantial capital appreciation. Unlike a house, boat will not appreciate. A friend of mine bought his house in 2005 for $400k and is about to put it on the market for $1m. Now, he's done a ton of work so much of that is sweat equity, but I've done that amount of work on my boat over a similar period of time and the value hasn't really budged. I'm not saying houses are good investments, but I am saying that sometimes they are a great savings' account. Not so with a boat.
Unless you've really hit the lotto, it's a really hard decision. You will exit a lucrative career just as you enter your prime income earning years. And there's always the unknown of health insurance.
In the end, you will forego a lot of money. If/when you return to a house, you will likely have a much more modest lifestyle than if you had kept working. It really depends on your state of mind whether that's okay.
The flip side is there's no prize for being the richest stiff in the graveyard. Good luck.
Peter
__________________
_______________________________________
Cruising our 1970 Willard 36 trawler from California to Florida
Join our Instagram page @MVWeebles to follow along
|
|
|
02-25-2021, 04:15 PM
|
#20
|
Guru
City: Delaware
Join Date: Mar 2017
Posts: 681
|
Quote:
Originally Posted by H2O_Doc
Man, that makes no sense to me, but I'm no CPA.
Say you pay $5,000 in interest in a year, and that's a write off. So it would save you $1850 in taxes if you are in the highest tax bracket.
So, you are paying $5000 to save $1850?
Am I missing something?
|
Maybe?
Being able to deduct the interest on the mortgage (boat loan) is only part of the equation. The other is what is the return that one would get on the money they have not invested into their boat?
If one paying 4% interest on their boat loan, but can make 5% interest investing their money elsewhere, financially it makes sense to finance the boat. Any tax savings would then be icing on the cake!
Jim
|
|
|
|
|
Thread Tools |
Search this Thread |
|
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Trawler Discussions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|