How can we afford this?
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” by 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 decisions 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 everyday expenses (<< check out our monthly expenses while cruising) and boat maintenance.
SO WHAT DO WE DO TO KEEP THIS LIFESTYLE GOING??
WORK
When we first quit our corporate jobs in 2011, we had only planned on going cruising for a year. We spent two years in Mexico not working at all. Since being back in the US, we work part of the year as hydrographers. Rather than our old 9-5 corporate jobs 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.
NEED/WANT ANALYSIS
We always ask ourselves Do I NEED this or do I simply WANT this? And impulse shopping is out of the question – not always an easy task. If I accidentally make an impulse purchase I usually end up returning it because I realize I didn’t need it. If I see something I like, I try to let 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 (or fit) on the boat? Since we still live a nomad lifestyle over 12 years later, we still ask this question with every purchase.
PAY ME FIRST!
We set up automatic payments 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 over five years before the economy tanked in ’08 and we asked to be laid off before mandatory layoffs started.
DEBT FREE
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 boats. To me, that is not being debt-free. We paid cash for our boats just like everything else.
HOUSESITTING
We have been having so much fun pet/housesitting. And saving a ton in rent. We get to choose where we want to be and when, have a great place to stay, and best of all: get in some needed time to spend with dogs or cats. This is a win/win all around.
MAKING MONEY
After meeting the crew of Bumfuzzle in Mexico (and running into them again in the Bahamas and later Key West, Florida) and hearing of their new book, Mike has been dabbling in the world of trading. Check out Pat’s book “Live on the Margin” to learn how they make a living while traveling the world.
We also read this excellent book. Most financial help books seem to be just about getting out of debt. This book teaches you how to go beyond that. How to invest and spend your money and how to live a life where you don’t have to count every penny.
SPENDING TRACKER
It is amazing to see where the bulk of the money 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 RocketMoney (I used Mint for years but it is no longer available). 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.
CREDIT CARDS
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 travel cash (not those points that limit when/where you can fly!), and has excellent fraud protection. After four months of 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.
USING CREDIT CARDS OUTSIDE THE US
- Our primary card is a Capital One Venture Visa Signature credit card. It has been compromised several times and we had to get a new card and account number. They will send a card anywhere in the world pretty much overnight (many banks only send new cards to your home address).
- 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. You do this after the travel has happened so it’s super easy. No need to go through a special website.
- The card does have an annual fee but we hardly ever pay it because we have been able to get it waived all but twice for the past 10 years. Just call and ask.
- Get your own Venture card using our link and get 50,000 bonus miles and unlimited 2x miles for every dollar spent! Click here for our link.
- 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 to be reimbursed for the ATM fees if you are not in the US because the foreign banks simply send totals to US banks. Never, ever, get US dollars from a foreign ATM – you will get ripped off!
HOUSING
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.
CARS
We have always bought used cars that we can pay cash for. We don’t 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 camper van.
CLOTHES
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 zip-lock bags 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 both of our shirts in the aft closet of our trawler (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 the trawler, our jackets fill up the entire forward hanging closet (the same size as the one shown below). Lesson: cruising in high latitudes requires a lot more space for clothes! 
DINING OUT
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.
TRAVEL
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 affordably 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 just 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.
FURNITURE
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.
COFFEE SHOPS
This is 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 workweek). 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 month and we hardly ever reach that.
SUBSCRIPTIONS AND MEMBERSHIPS
Have you ever added up all those memberships and subscriptions you pay for every month? Internet, Netflix, Hulu, Pandora, Amazon, gym, phone, phone data plan, magazines, etc. We try to re-evaluate what is important EVERY month. Instead of paying for Netflix, I use our digital library account. Make sure you use a big library as they have a much better selection. 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 anywhere in the world. << Click on the link to read my how-to guide on borrowing digital content 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 are back in the US, we are on a group plan with my parents for $40 per line per month with T-Mobile. This plan we have also covers us when we are in Canada and even Mexico for unlimited talk, text, and data. Too bad this wasn’t around when we were cruising in Mexico!