How can we afford this?
Updated May, 2017
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 still 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 first cruising boat we made sure it wasn’t a fixer upper and would have a good resale value (more on those decision 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 cruising expenses (<< check out our monthly expenses while cruising!) and boat maintenance.
SO WHAT DO WE DO TO KEEP THIS LIFESTYLE GOING??
When we first quit our corporate jobs in 2011, we had only planned on going cruising for a year or two. We spent two years in Mexico not working at all. Since being back in the US, we work part of the year as hydrographers. Yay, science! Rather than our old 9-5 with weekends off, we are lucky in that we can work several months out of the year for 12+ hours a day, 7 days a week. So we work really hard for a few months and travel the rest of the year.
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 we always asked ourselves: Is this something we can someday use on the boat?
PAY ME FIRST!
We set up an automatic payment to our savings accounts on payday. 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.
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. I see a lot of people out cruising and making payments on their boat. To me that is not being debt free. 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 use credit cards 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!), and has excellent fraud protection. After four months cruising in Mexico we had to get a new card since someone else was charging to it! Make sure your credit card will send you a replacement card (with free shipping) anywhere in the world – not just to your home address.
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. Just call and ask.
- 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, Mike has been dabbling in the world of day-trading. Check out Pat’s book “Live on the Margin” to learn how they make a living while traveling the world. And be sure to check out their website – it’s one of the few blogs I follow routinely.
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 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 minivan <<check out how we easily convert our minivan into a campervan.
Clothes and shoes take up a lot of space in a boat or minivan. We have learned to whittle the shoes down to the essentials: 2-3 pairs of flip flops and sandals, and 2-3 pairs of walking/hiking/everyday shoes. Now, in the Pacific Northwest, we also have rain boots and warm slippers. When we cruised Mexico, we had tons of clothes on board that we never wore… I stored our spare clothing (cold weather clothes, work clothes, etc) in 2-gallon ziplocks and they held up great (just sit on the filled bag while zipping it and it functions just like a vacuum bag).
The photo below is of all of our tops/shirts in the aft closet (I took this right after doing the laundry). Add to that two drawers each for the usual staples of undergarments, and shorts and pants. And a lot 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. On our current boat our jackets fill up the entire forward hanging closet. Lesson: cruising in high latitudes requires a lot more space for clothes!
We love to go out to eat! There is nothing like someone else making the drinks, cooking the food and doing the dishes. Back when we had cubicle jobs we ate out 2-5 times per week. Now we are lucky if it’s 2-3 times per month, as you can see in our budget.
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 THE U.S. Oftentimes, it can be a lot cheaper to rent a car than to use a shuttle or taxi. If we need to rent a car, I 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 I make several reservations and check back every day before our trip to see if the price has gone down. In Florida we had to take our car to storage before flying out to Mexico. A taxi would have cost around $50. A rental car was less than $20.
RENTAL CARS IN MEXICO When we first found a $6/day rental car we were ecstatic. By the time we picked up the 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 (in Panama half of the required insurance is the Collision Damage Waiver, which is covered by Visa – you can get this lower rate with a lot of discussion). 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. Check out more about how we rent cars in Mexico here.
Goodwill! Neither one of us has ever owned a single piece of expensive furniture. When it was time to get rid of our furniture we took most of it back to Goodwill. After we sold the sailboat we stayed in furnished houses for over a year before buying the new boat. We have some furniture that we hand-made in our storage trailer. I don’t know how we could live this lifestyle with our handy trailer. Learn more about our storage trailer here.
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. Our current monthly budget allows for $20 per months and we hardly ever reach that.
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. Instead of paying for Netflix I use our local library. Make sure you use a big library as they have a much better election. For a big city like Seattle, our city library has a very limited selection compared to our county library. I also get free books for my Kindle from our library. << Click on the link to read my how-to guide on borrowing from your library.
CELL PHONES AND INTERNET
While in Mexico, we made and received calls via WiFi using Google Voice and Skype. Calling to the US is free using Google Voice and you get a free phone number with voicemail. We occasionally paid for a data plan for the iPad to get connected to the internet where there was no WiFi. Now that we back in the US, we are lucky in that my parents added us to their cell plan for next to nothing now that we are back in the US. We paid them $120 for the entire year. The plan we have also covers us in Canada and even Mexico for unlimited talk, text and data. Too bad this wasn’t around when we were cruising in Mexico!