How can we afford this?
Updated November, 2016
The question that seems to get raised the most when average folks start blogging about their amazing adventures: How can you afford all of this?
Our answer is simple: We never buy anything we can’t afford to pay cash for! While we still had a ton of fun while getting ready to go cruising (and quitting our full time jobs), we spent frugally and put lots of money in the bank. We bought and sold practice boats (usually at a profit) and went out to dinner when we felt like it. It saddens me to hear how some people get “nickel and dimed to debt” buying useless things they think they need.
When we bought our boat we made sure it wasn’t a fixer upper and would have a good resale value (more on that here). We added a lot of gear and when we sold Camille after nearly three years of ownership we made enough to get our money back – including the gear we had put into her! So basically the boat was free and all we had to pay for were our normal expenditures and maintenance.
We always ask ourselves Do I NEED this or do I simply WANT this? And impulse shopping is out of the question – not an easy task. If I accidentally make an impulse purchase I usually end up returning it because I realize I don’t really need it. If I see something I really like I try to let at least a week pass by. If I still feel it’s something I can’t do without and that it will improve my life I might buy it. Also, for 1-2 years before moving aboard I always asked myself: Is this something we can someday use on the boat?
PAY ME FIRST!
We set up an automatic payment to our savings accounts on pay day. By making it a little more than we thought we could afford it made us pay more attention to our spending habits. The checking account never looked very conducive to shopping and the savings just kept growing! We saved for about five years before the economy tanked and asked to be laid off before mandatory layoffs started. Currently we are working about 3-6 months out of the year as hydrographic contractors, collecting data for nautical charts.
We have been debt free since we paid off our student loans in 2004. If you’re not debt free you cannot save any money. We get asked a lot if we make payments on the boat. To me that would not be debt free. So, yes, we paid cash for our boats just like everything else.
It is amazing to see where the bulk of the money really goes once you start tracking every penny! By tracking our expenditures we noticed just how much money we were wasting at coffee shops. To track our spending I use Mint.com (it does all the work for me and is safe to use on questionable wifi connections). I bring all of our accounts into one place and can easily analyze our spending with handy graphs. Then I use the graphs to show our readers our monthly cost of cruising.
We try to use them for everything and then pay them off monthly and collect the cash-back and travel points. Before we started all the big spending to outfit the boat we got a new credit card that refunds all fees, charges no foreign transaction fees, gives us lots of airline cash (not those points that limit when/where you can fly!), charges no annual fee and has excellent fraud protection. Four months into it we already had to get a new card since someone else was charging to it!
SHIPPING NEW CREDIT CARDS OUTSIDE THE US
- Our primary card is a Capital One Venture Visa Signature credit card. It was compromised a while back and we had to get a new card and account number. They will send a card anywhere in the world but be prepared to wait for at least a week and make lots of calls to check on progress.
- We receive two points for each dollar spent and it goes towards ANY travel expenses (hotels, flights, cruises, etc). If you spend $100 on a flight you simply get reimbursed by using 10,000 points.
- The card does have an annual fee but we have never paid it because we have been able to get it waived for the past 5 years
- We have a couple of other cards which we never use. They are simply backup cards in case our primary card is lost, stolen or compromised. But be careful as some credit cards will not mail new cards to an address other than your home.
CASH FROM THE ATM
We use our Capital One Debit Card (not capital One 360 – they charge an ATM fee!!) to get money in the local currency. They do not charge any foreign transaction fees and reimburse all ATM fees. However! you have to request the ATM fees if you are not in the US because the foreign banks simply send totals to the US bank. Never, ever get US dollars from a foreign ATM machine – you will get ripped off!
After meeting the crew of Bumfuzzle and hearing of their new book we are going to delve into the world of day-trading. We’ll let you know how it goes… Check out Pat’s book “Live on the Margin” and companion website.
We have never owned any real estate. It wasn’t for lack of want. Some rental income while cruising would have been nice but was out of our reach due to the housing bubble. By the time that bubble burst we were close to our monetary goal and buying a rental-property would have set us back many more years.
We have always bought used cars that we can pay cash for. We don’t really care how “cool” a car is as long as it is utilitarian. This is why we currently own a mini van. We installed a bed in the back so we don’t have to pay for hotels all the time when we are on the road.
Clothes and shoes take up a lot of space in a boat or mini van. We have learned to widdle the shoes down to the essentials: 1-2 pairs of flip flops, and 2-3 pairs of walking/hiking/everyday shoes. We have tons of clothes we never wore on the boat… I stored our spare clothing (cold weather clothes, work clothes, etc) in 2-gallon ziplocks and they held up great. The photo below is a snapshot of my current shoe selection as well all of my tops. Add to that the usual staples, four pairs of pants, a bunch of jackets (turns out we have 6-7 jackets each! ranging from down coats for the cold in Alaska to light jackets for San Diego weather) and that’s it.
We love to go out to eat! There is nothing like someone else making the drinks, cooking the food and doing the dishes.
As is quite apparent from our blog we love to travel. This is why we’re doing this whole thing anyway, right? We try to do it cheaply yet comfortably. The best deals are usually online – even if that means sitting in the hotel lobby and using their internet right before checking into our room. We also like to rent houses by the month since that is a lot cheaper than staying for a night or a week.
RENTAL CARS IN MEXICO When we first found a $6/day rental car we were ecstatic. By the time we picked up the first car we realized how grossly underquoted this price was. Mexico law states that every car have liability insurance and that amount is never part of the online quote. Add another $15/day to any quote you get online. The great part about renting a car in Mexico is that many rental car companies will pick you up if you call the local office directly after reserving online. I wrote a detailed post on it here.
RENTAL CARS IN THE US If you need a rental car, reserve it on Priceline or Costco online before heading to the counter. There is no need to pre-pay or leave a credit card so it’s ok to make several reservations and check back every day before you leave for your trip to see if the price went down.
Goodwill! Neither one of us has ever owned a single piece of expensive furniture. Our homes in our 30’s looked much like they did in college. When it was time to get rid of our furniture we took most of it back to Goodwill. Since we sold the boat we have been staying in furnished houses.
This is actually one of the first things we did to start saving because we were shocked at just how much money we were spending every month. By reducing our fancy coffee habit to once a week we started looking forward to “coffee day” (usually Fridays to celebrate the last day of the work week). After a while we just naturally stopped going as much and are down to once or twice a month.
SUBSCRIPTIONS AND MEMBERSHIPS
Have you ever added up all those memberships and subscriptions you pay for every month? Cable TV, internet, Netflix, Hulu, Pandora, Amazon, newspaper, gym, phone, phone data plan, magazines, etc. We try to re-evaluate what is really important EVERY month. Currently all we pay for are car insurance and health insurance. You also don’t need a cell phone plan. We make and receive calls via WiFi using Google Voice and Skype.
STAYNG IN TOUCH
Calling to the US is free using Google Voice and you get a free phone number with voice mail. It’s all we used in Mexico.