What % of Net Worth on a Boat

[38Chevy454]

Well, according to the replies I must be the worst financial justifier. I have a big RV, an inground pool at my house, and 5 old cars that are driven hundreds of miles per year. Plus 4 regular daily driver type vehicles.
I also have a big smile on my face when using any of those. Now I do admit that they have initial and ongoing costs. Figured into my budget.
We all have different things that make us happy. Some have second vacation homes, others take long distance traveling trips around the world. Some may have extensive collections that cost money. Point is when you have your budget covered, you can spend extra on things for enjoying life. You worked hard accumulating, so now you can enjoy the fruits of the nestegg.
I am certainly over 1/4 of net worth for all my extra things that don't have financial justification.

 

[kgtest]

I have just retired (54) and am spending 51% of my time in Florida. I am thinking about getting a boat (stinkpot) to run around in with the family. Does anybody have a point of view about what % of your Net Worth you use to calculate how much you will spend on a "toy".

Here are some of the thoughts that are running through my head:

- Every $ of net worth spent on toys means less income BUT
- Say I have 30 active years and I spend time haveing fun during those active years It is worth spending money on things that can enable fun experiences.
- The cost of any boat is not the outlay but the cost to buy, own minus what you get back at the end amortized over the time of ownership, so maybe that is a better number to look at.
- Nobody should ever actually calculate the cost of owning a boat

Overthinking much!! Help appreciated.

PS Interesting article I just found for cars https://www.financialsamurai.com/net-worth-rule-for-car-buying-guideline/

Like any "active" sporting lifestyle it takes a level of sharpness and physical ability. As one ages boating becomes less "doable". My ole man is almost 70 and we are thinking of hanging up sailing and switching to a cruiser.

I do a lot of the [-]hard[/-] physical stuff on the sailboat and still will on the new boat.

Don't overspend, we are looking at about ~ .02% total NW for the 29' trailerable boat we want.

But, we more have a range of price for the type of boat we are "willing" to pay, just happens to be it comes out to .02 of pops nw.

 

[kgtest]

Do you know what is better than having a boat?

Having a friend that has a boat!

The boat club sits nicely between those two.

sterlingmossy, you never said what size boat you are looking for. A 18 footer with a trailer, or a 40 footer with living space. Or bigger? There is a big range to boating as you already know.

THIS! Know what's better than having a friend with a boat? Having a friend with a plane!! I'll pay for the boat rental, but even better skip the boat rental and find a friend with a FLOAT PLANE!

 

[Major Tom]

I agree with the approach, that others have suggested here, of simply asking yourself how much you want a boat, and figuring out whether you can fairly easily afford it. I recently purchased a camper van, which significantly increased my living expenses. When estimating whether I could afford it, I broke the process into 2 steps -

1) The purchase price of the RV. This included sales tax and registration, as well as the initial estimated amount to get the whole thing "ship-shape", so that I could start using it.

2) The estimated amount for ongoing use and maintenance. This is an estimate, at best, as you can't tell for sure what major expenses are going to arise. The longer the time frame you own it for though, the more accurate the estimate is likely to be for major expenses.

I deducted the initial expense in 1) from my total portfolio. In my case, it made little to no difference in what I could withdraw for living expenses going forward. The big difference for me was made by the ongoing expenses in 2). When I eventually decide to sell it, I'll get a nice little chunk of cash to put back in the coffers. However, in my situation at least, it is those maintenance and usage costs that take the biggest bite out of my finances.

Certainly, some folk will be able to devise a formula to help in deciding whether to go ahead with such a purchase but, for me, it is much more of a qualitative decision. How long have you wanted a boat for? How much do you really want it? Can you afford it? Think of the worst case scenario, and how bad that would really be. Although a creative and very risk-averse soul could dream up some truly awful worst case scenarios, the most likely one would be that, for whatever reason, the boat doesn't work out and you end up selling it. Ask yourself how bad that would be. Probably not very bad at all. In my case, I had been interested in owning an RV for about 10 years. I got to the point where I felt that I needed to do it, in order to discover whether it was what I really wanted. If it didn't work out, I'd sell it and carry on with my life.

Oh, one more thing. Someone in this thread mentioned noticing that many people who own boats don't seem to use them much, noting that their craft remain in the slip nearly all of the time. I have owned my RV for 6 months now, and haven't been out in it a whole lot (yet). However, I have derived a lot of interest and enjoyment from working on it. Perhaps the people who don't seem to go out in their boats much are spending happy weekends caulking, painting, and reading up on what improvements they can implement? However you get your enjoyment, it is still legitimate.

Anyway, those are my thoughts.

 

[CRLLS]

True. Was thinking about a used Boston Whaler 270 or 320 Vantage.

I can't help. Way out of my experience with smaller lake boats. My last boat was a 25 yr old 20 ft Maxum I/O. Paid $1,350 in non- running condition. Spent ~ $1K in repairs and few upgrades. Ran it around it for a couple of years, and sold it in February 2017 for $3,400. Never a consideration in NW for sure.

A Boston Whaler should handle the coastal waters well in FL. Good luck whatever you decide.

 

[W2R]

Do you know what is better than having a boat?

Having a friend that has a boat!

+1000

My late ex and I had a trailerable 18.5' inboard/outboard boat with open bow for decades, back when we were young and still working. We used it on lakes or ocean once or twice a week for all those years. So I feel like really have a good, practical understanding of what having a boat of that type entails.

I love going out on the water and fishing; I mean, for heavens sake I'm a retired oceanographer who grew up mostly on a beautiful beachfront in Hawaii, of course I love the water! But to me the last thing I would ever want in retirement is a boat and trailer to maintain, clean, and store when not in use. YMMV

 

[HenryD]

What did you get? We also bought a 34 foot sailboat, a Pacific Seacraft.

Jeanneau SO 34.2, owner's version. All 3 POs used her gently, although one did some club racing and upgraded the prop and sails. <100 hrs on a rebuilt Yanmar. She'll be a solid learn-the-lines platform before we upgrade to a salty center cockpit.

I'd have loved a Pacific Seacraft or Tartan, but DW's tastes run a little less boaty. What a great playground the PNW must be. Only chartered there once, and for too short a trip!

 

[Franklin]

My most trusted advisors once told me...If it Fly's, floats, or F_____ lease it!

 

[ckelly78z]

After having several small boats (Open bow runabouts), I can honestly say, I won't have another one unless it is a small, low powered, fishing boat very much like this one;

Research Alumacraft Boats on iboats.com

I like the idea of a solo, small lake, boat that I can troll around looking for crappies/bass, not blasting around pulling tubes/skiers.

I don't like being the one in charge of everyone's fun factor, or paying all the expenses either. It seemed like all the passengers I took out appreciated the ride, but didn't contribute much, and blamed me if things didn't go well.

 

[RockyMtn]

There are boating clubs you can join where you pay an annual fee and get to use their boats without paying for maintenance, storage, insurance, etc.

I did this for a couple of years when I first retired. Found out I didn't like boating all that much after all. Saved me from making a big mistake with a large purchase.

 

[GreenEggs]

Life's no fun without toys.

When you're calculating the costs remember to factor in how many people can enjoy the toy at the same time. That's where a boat shines. Your wife, children, grandchildren, friends, extended family, your pets, etc. can all enjoy the boat with you. You all can fish, swim, eat, drink, listen to music, dance, maybe have some romance, etc. on a boat. Yes, boats cost money. But boats offer a unique way to unwind and spend time with your loved ones, so remember them when you're crunching the numbers.

 

[teejayevans]

Ive owned boats, I live on the water and have a nice dock. BUT...Ive learned you never use it as much as you might think and the upkeep ( a time waster) and recurring cost never end.

Unless you live aboard, then you use it 24/7. And yes they are cheaper than an apartment, especially in expensive parts of Florida.

<—- note the avatar

 

[Teacher Terry]

My parents had a small cabin on a lake and bought a used boat that we enjoyed for many years. It was easy as it just stayed there. If you have to haul it every time you want to use it that’s different.

 

[CaptTom]

I say no to the boat. If you are going to try to cost-justify it, you're wasting your time.

The three "F's" which should be leased (see Franklin's post, above) apply here.

I've had boats my whole life. Even when I had no money, there was always a way to own some kind of boat. Right now, I'm working on getting my house ready to sell. I can do without a house for a while, but not without a boat.

I know my kind of crazy, and you're not one of us. I see your peers at the marina all the time. These are the boats which never leave the dock. Oh, they dream big. But ask them if they're going to take the boat out and you get all kinds of excuses.

If you do the math, you'll see that the only people who make money with boats are the billionaires who own mega-yachts, and lease them for more than it costs to maintain and staff them. And frankly, someone who helicopters in for the occasional weekend aboard isn't really a boater.

I know a lot of boaters who are also pilots. Yes, they have the same sickness, just at a slightly different level.

 

[RobbieB]

My boat is a sort of refuge, I don't need to have some people with me to have fun or entertain. I would prefer if you didn't join me. Out on the rivers and sloughs of the delta there is peace and nature and fish. Don't care if I catch anything but when I do supper will be especially fine.

Especially during the week when the crazed water skiers and the bass tournament guys are working. All alone just me and the river and the cry of the Hawks.

 

[teejayevans]

Yeah I went through the same exercise with a plane. The issue seems to be the ability to rent exactly the plane/boat you want. For the plane I want to back country fly in ID. A 182 can work for that but most rentals will limit off airport landings.

Plus they charge you a minimum per day (loss revenue). So using the plane for a cross country trip gets expensive. I disagree with the 3 Fs saying, if you are going to buy, then use it, if you don’t use it, sell it.

 

[NW-Bound]

I have just retired (54) and am spending 51% of my time in Florida. I am thinking about getting a boat (stinkpot) to run around in with the family. Does anybody have a point of view about what % of your Net Worth you use to calculate how much you will spend on a "toy"...

PS Interesting article I just found for cars https://www.financialsamurai.com/net-worth-rule-for-car-buying-guideline/

That financial samurai guy said 5% of networth is reasonable for a car. Heck, I paid that much for a car back in my 30s when I did not have the money I do now. At this point, I still buy the same type of car I did back then. I do not desire any 6-figure car now.

A boat is negative net worth. If you spend 1% on a boat, it takes 2% off your net worth until you sell it.

Most people can get only a bitty boat with 1% of their networth. But for one that's only 1% of NW, you don't have to think too hard.

True. Was thinking about a used Boston Whaler 270 or 320 Vantage.

I don't know anything about boats, but look on the Web out of curiosity. A used one will run $50K and up. It's more than I thought for a used boat of this size, but then I don't know anything. In any case, it's about the same as a nice car, and people buy cars in this price range all the time.

I'll say that if you have the money, go for it. As an earlier poster said, the longer you wait, the less time you have to enjoy it in good health.

 

[doneat54]

Not a boat, but I have maybe 3% of my NW "tied up" in 3 vintage cars that I own. All 3 are desirable in the right markets and would probably sell in hours for the values that I am thinking about.

I tell my friends that I can't drive my mutual funds around on a sunny day with the top down....

 

[wsmurdoch]

We have about 2% of our net worth in our sailboat. It is a 1988 Pacific Seacraft 34 that we bought in 2004 and have taken from North Carolina to the Bahamas twelve times so far. Click on my name, profile, and about me, and your will find a link to my wife's blog. Along with pictures you can get some idea of what we do.

Bill

 

[street]

If it isn't going to make or break you, I would buy it and enjoy it, and have fun. One way to look at it is you know your WR and if maxed at 4% then budget it for the X number of years. If your not using all the 4% then use the remainder and budget what is over for the X year of years.

 

[ckelly78z]

My boat is a sort of refuge, I don't need to have some people with me to have fun or entertain. I would prefer if you didn't join me. Out on the rivers and sloughs of the delta there is peace and nature and fish. Don't care if I catch anything but when I do supper will be especially fine.

Especially during the week when the crazed water skiers and the bass tournament guys are working. All alone just me and the river and the cry of the Hawks.

Thanks for reminding me what I liked about boating...the quiet Tuesday mornings on small inland lakes, with a line in the water, watching an eagle swoop down for a fish, or spying a few deer taking a sip of water, and no jet skis making constant noise.

 

[RxMan]

My wife and I have a dream if buying a Class A motorhome when we retire and full time in it for a while. In fact we’re seriously considering buying a Class B camper van in the immediate future to be able to part time in it for some road trips.

We will be having the same consideration regarding how much as a percentage of net worth would be reasonable to buy the RV which similar to a boat is a depreciating large ticket item with upkeep costs. We’ll probably sell our home which will help free up additional money but eventually we will need a place to buy again.

I’m not sure what percentage we’ll feel comfortable spending when the time comes. The good news is that we can plan for this and I will run our retire numbers based on what’s left after buying the RV. Plus, if we end up spending the money on the Class B now we’ll at least have something to trade in possibly.

Like the boat purchase buying an RV comes down to how much you think you’ll use it verses the opportunity cost. I’m hoping we won’t go over say 5% of whatever our net worth is at the time to buy the RV. We can also push retirement out a little further than the earliest possible point to allow for extra funds to cover this major cost.

Good luck. I don’t think there is a rule of thumb. Be sure buying the boat will not put you in a financial hardship. If all else fails you could sell it after owning it for a while. At least you will have that time to enjoy it.

 

[ckelly78z]

^^^I think buying a used RV, or boat will eliminate some of the HUGE depreciation that is experienced on both when bought brand new. I am certainly glad that folks are still buying $90,000 boats, and RVs, but 1/3 of that cost will buy you a really nice 5 year old unit.....let someone else take the initial hit !

 

[Midpack]

As a former boat owner, 25 years, there is no right answer. If you really plan to use it often, we used ours 1-2 times a week May thru Oct all the years we were owners, you can justify spending a good chunk (5%?) - though % of net worth isn’t germane IMO. But if you don’t know or won’t use it often, you shouldn’t own a boat at all - rent, join a boat club, or make friends with boat owners.

The reason? Beyond purchase $, costs of ownership are much higher than some first time buyers realize. Insurance, fuel, slip/mooring costs, haulout and launch, club/org memberships, maintenance and periodic replacements, etc.

I spent $8K/yr owning a 30 foot sailboat NOT including purchase payments (paid cash). The years I raced the boat it cost $15K/yr. Resale on sailboats can be decent (less so on powerboats), so you get a good chunk back. It’s the year in year out running costs that really make boat ownership expensive, and you don’t get ANY of that back.

Years ago a friend with a 35 foot SeaRay power boat they used once a week, was out on the boat with his wife one day - and came to the realization each outing was costing them $500/outing. He asked his wife if she thought it was worth that, or were there better ways to spend $500/week? They sold the boat after that season and never looked back. And those costs were more than 20 years ago...

 

[audreyh1]

I just see things as - if I need X in investments to support my retirement withdrawals, and I have X+Y, then I can tap into Y for toys or other spending if I like without endangering my retirement.