How much boat can I afford?

It is often recommended to not spend what you "have to" on a boat, but to spend what you have left. Those of us with limited resources can very easily end up buying more boat than we need and putting on more equipment than we can afford, only to find ourselves with a lot less money than we planned on for cruising. So first off I need to figure out how much money I can accumulate before I set off cruising. For now on I am assuming that my 30th birthday will be my target date. This is realistically the time I think I can save the amount I need, and the real goal of wanting to do all of this by the time I enter my 30's. I turn 30 in June of 2012, so this will give me 6 months of cruising before the world ends that December hehe (just kidding, but seriously 2012 is freaky).

So from now till then I have 3.5 years to save. I am saving at a pretty heft rate right now, and I can safely assume my saving will get better as I approach my launch date, especially after I have moved onto my boat permanently. Since I know it is prudent to be conservative in projections, I will use my current savings rate and hope to improve on it. Without revealing too much and doing a bit of rounding, I am going to say $50,000 is my cash savings forecast.

I have a small chunk of assets that I plan on selling to pad that savings. I am already in the process of getting rid of some big items so the actual dollar value of everything will become clearer as I sell. These assets include my car, furniture, electronics, gym, and everything else that I won't need when I go cruising. Just using my best guess and comparable selling prices on craigslist, I have roughly $10,000 in assets. To account for some depreciation, I'll assume $6,000.

As mentioned previously, I have a 401k, but do not plan on touching that for the cruise. I want that nest egg for my retirement years. The 401k is just a little more in value than the current balance of my student loans. Therefore they net each other out, and since I plan on keeping both throughout the cruise I won't include them in my cruising net worth.

So now it looks like I could realistically have $60,000 in cash by cruising time. Of course, I plan on getting my boat and outfitting it well before the launch date, so that money would be spent over time.

Now lets combine all of the costs I have developed in previous posts to see what I need annually to cruise:

Low High Average
Provisions $3,000 $4,500 $3,750
Entertainment 700 2,000 1,350
Marina/Mooring 400 1,000 700
Communications 400 600 500
Fuel 700 1,000 850
Officals/fees 200 500 350
Other Living 600 1,000 800
Boat Insurance 500 1000 750
Boat Maintenance 2500 5000 3,750
Health Insurance 500 1500 1,000
Discretionary 500 1000 750
Travel Home 500 500 500
Student Loan 1440 1440 1,440
Subtotal $11,940 $21,040 $16,490
Contingency (20%) 2388 4208 3298
Total Annual Expenses $14,328 $25,248 $19,788

As shown here, I can expect between $14,000-$25,000 in annual expenses. Keep in mind, these expenses were designed for a cruising COUPLE. If I have to go sailing solo, these expenses will be much lower. For the sake of projection, I will assume that I need $10,000 a year. I know it is very possible to spend less than this, especially if I don't bother with many capital costs while I am voyaging. This budget will be fine tuned as often as possible as I gain a better understanding of these costs. Keep in mind I also plan on working a bit while out there, so my spending will most likely increase with income (average to high side of the budget).

So if I am planning on having enough saved up for two years, I will need $20,000 in my cruising kitty saved up. This leaves me with roughly $40,000 left over for my boat. This includes the money I will use to upgrade and outfit the boat for offshore use.

Next up, we talk boats!