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What % of Net Worth on a Boat
Old 01-19-2020, 08:44 AM   #1
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What % of Net Worth on a Boat

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...ing-guideline/
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Old 01-19-2020, 09:11 AM   #2
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I never consider depreciating play toys as part of my NW. I am more of a builder/repairer of "projects". Small stuff really. I usually end up selling my projects for slightly more than I have invested, not including labor. I consider it more of a hobby. In spite of that, I still do not count it.

Remember, BOAT is an acronym of Bust Out Another Thousand. And they always cost more than you anticipate. I would say, if you have the desire and the finances to support boat ownership, then why not go for it.
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Old 01-19-2020, 09:19 AM   #3
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If you're asking if there's a way (or point) to determining "If I have X dollars, then that means I can safely blow Y dollars on my Z"

then, I've not seen that used before. I think the answer for any "Z" is by determining an amount that doesn't impact your SWR.

And of course book the maintenance, storage, gas, etc. into your monthly budget to figure out if you can wiggle it in.

I would like a pony. I can afford to buy a pony. Do I want to pay the upkeep, boarding, training costs for the next many years? Nope.
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Old 01-19-2020, 09:25 AM   #4
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I live right next to the boatyard, so the thought has crossed my mind many times. This is how I analyze it.

I would be buying a fairly rapidly depreciating asset that comes with often substantial storage, maintenance and repair costs. Therefore, I am increasing my ongoing expenses while at the same time reducing the nest egg I have available to generate the income to cover those increased expenses.

Even though I enjoy the water and boats, I have many things going on in my life and I know that I would not spend as much time on the boat as I might otherwise want to. For confirmation, I can look out my window to see just how many boats get put in the water in the spring, taken out in the fall and never leave the dock in between (as far as I can tell). And if I needed further confirmation, I must acknowledge that in the 30 years I've lived here, I have not once rented a boat for the day, even though I could.

From a purely mathematical standpoint, I would make a fair estimate of the ongoing yearly operating costs of owning the boat, including dockage/mooring fees, haul out and re-float fees, gasoline, hull scraping, painting, new electronic gizmos, etc. (I assume you would pay cash and not finance the boat) Add that to current yearly expenses. Then multiply the total by 25. (Call that "A"). You can spend whatever the difference is between your current investment portfolio (not net worth, because you typically can't spend 4% of your house every year) and "A". Note that this gives you no safety margin.
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Old 01-19-2020, 09:31 AM   #5
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Check out Yacht Business Ownership where the asset is part of a charter management group. My friend is doing this and the depreciation aspect has really reduced his taxes. Not saying it makes it free, but definitely changes the cost of ownership. Granted, he is still working and high income person (maybe $400k - $500k) I think.
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Old 01-19-2020, 09:32 AM   #6
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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.
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Old 01-19-2020, 10:27 AM   #7
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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.
That's a good way to test the waters, just like a lot of people say to rent an RV for a month or even six months before committing to buying one.

Sterlingmossy, I've been debating large expenditures upon retiring; I even started a thread on it, although it wasn't as much about the logistics. But my thinking is that if we buy properties to snowbird it, 1) they will come from the sale of our current residence, and 2) we will probably travel much less. I've had similar thoughts about buying a really nice RV.

Anyway, the second one is more what I think would apply to you -- are there other recreational activities that you've budgeted for that you might give up to spend time on your boat? It doesn't have to completely cover the cost, but it should be part of your planning.
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Old 01-19-2020, 10:34 AM   #8
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I have just retired (54) and am spending 51% of my time in Florida.
Might I hazard that you spend the other 49% mostly in a relatively high state income tax state?
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Old 01-19-2020, 10:36 AM   #9
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If I moved to FL, I would definitely want a boat. If a new one is above your financial comfort zone, either purchasing a used one or checking out the boat clubs could be good solutions.
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Old 01-19-2020, 10:45 AM   #10
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Why not just get what you want, assuming that you have the money? Don't worry about X% of your savings. Subtract the boat costs and if you have enough left for your expenses then it is ok.
I am not sure you can justify any boat/RV/other toy type expenses from financial point of view. You justify it from the happy factor and the experiences you gain.
Unless your financial position is tight, stop overthinking. In Robbie's infamous words "blow that dough "
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Old 01-19-2020, 11:19 AM   #11
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At one point, I was considering buying a plane. It is an even larger money sink than a boat.
I approached it from a financial standpoint, figuring both the fixed and variable costs. I made the assumption of flying about 50 hours a year.
When the dust settled, it came out to about to within a dollar an hour of just renting a plane.
Being retired has the advantage of flying (or boating) during the week, when the demand is lower.

I am sure in FL there are boat rental 'laces and/or clubs. DW (the boat driver) and I rented an 18 foot bowrider in West Palm.
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Old 01-19-2020, 11:28 AM   #12
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My 2cents: I love the aspect of clubs or rental for a while. If you do buy, especially in FL, buy a used boat. Lots of people buy new, use for tens of hours, then tire of it/health impacts/move to be near grandkids/etc. and sell nearly-new boats for dimes on the dollar.
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Old 01-19-2020, 11:30 AM   #13
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Originally Posted by sterlingmossy View Post
- Nobody should ever actually calculate the cost of owning a boat
Exactly! The enjoyment you get from a boat is not quantifiable in monetary terms, so there is nothing to gain by trying to calculate if it makes financial sense. Buying a boat never makes financial sense. Just buy it and enjoy it!

Quote:
Originally Posted by sterlingmossy View Post
- 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.
Another thought -
The longer you wait to get the boat lessens the amount of active years left to enjoy it
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Old 01-19-2020, 11:30 AM   #14
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A boat is negative net worth. If you spend 1% on a boat, it takes 2% off your net worth until you sell it.
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Old 01-19-2020, 11:32 AM   #15
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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.
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. So, like the posts above, I joined a boat club. The club has about 40 boats and you can take your pick. They gas it up, clean it up, and greet you with a hand when you return. I pay $200 per month for unlimited usage yet no more than 4 days in a row. I ran the math and it was a no brainer.
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Old 01-19-2020, 11:33 AM   #16
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I had a similar experience with consideration of buying a pool. A nice inground pool with landscaping to go along with it. In the end, the reason I went ahead with the purchase is that I believe I will use it enough to make it worth it. Financially, there’s no way to justify a hobby, fun, etc. Its either something you enjoy and it’s worth it, or it’s not. I have grandkids that live very nearby so my hope is that I will enjoy it and that it will become a central location for family gatherings in the summer. If that happens, it will be worth it. If not, it will be a big hole in the ground. Time will tell.

As to affording something like this, as others have mentioned, reduce your NW by the purchase price and increase your budget by the operating expenses and see if it works out. Be realistic with your budget. Of course there will be operating expenses, but will you be eating out more, incur boat club fees, extra costs for accessories . . . In my case, the pool itself is about 60% of the total budget. The landscaping and other things that go along with the pool are the other 40%.

After all that, if you can afford it, go for it. You only live once and experiencing something you really enjoy is a nice part of the journey.
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Old 01-19-2020, 11:37 AM   #17
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Not retired yet. We bought a 34 ft sailboat last month. It's 5% of current NW and a major stepping stone in our FIRE plan of full time living aboard a 40+ ft boat in 5 years. At 20 years old it's essentially done depreciating in the short season, freshwater north. We expect upkeep to run 1-1.5% of current NW annually. Those numbers feel manageable, given how important it is to us as a learning and lifestyle testing platform.

Do a few charters of various boats to find out what you do and don't like. Get a pre-purchase survey and insurance if you spend more than a couple month's worth of blow money IMO. Good luck!
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Old 01-19-2020, 11:40 AM   #18
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Not retired yet. We bought a 34 ft sailboat last month. It's 5% of current NW and a major stepping stone in our FIRE plan of full time living aboard a 40+ ft boat in 5 years. At 20 years old it's essentially done depreciating in the short season, freshwater north. We expect upkeep to run 1-1.5% of current NW annually. Those numbers feel manageable, given how important it is to us as a learning and lifestyle testing platform.

Do a few charters of various boats to find out what you do and don't like. Get a pre-purchase survey and insurance if you spend more than a couple month's worth of blow money IMO. Good luck!
What did you get? We also bought a 34 foot sailboat, a Pacific Seacraft.
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Old 01-19-2020, 11:44 AM   #19
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At one point, I was considering buying a plane. It is an even larger money sink than a boat.
I approached it from a financial standpoint, figuring both the fixed and variable costs. I made the assumption of flying about 50 hours a year.
When the dust settled, it came out to about to within a dollar an hour of just renting a plane.
Being retired has the advantage of flying (or boating) during the week, when the demand is lower.

I am sure in FL there are boat rental 'laces and/or clubs. DW (the boat driver) and I rented an 18 foot bowrider in West Palm.
One of my colleagues had a plane, and an amphib at that, and I was always impressed - mainly by the incredible costs involved. When he initially bought it, he could write it off as a business expense but after 10 years or so that ended and he bore the entire cost. I loved going flying with him and to this day thank him for the experiences he gave my family and me. At 65 he still has the plane and still flies - but he did retire 10 years later than I did and I'm guessing that the plane had something to do with it.

That said, boat, Florida, retirement... if you have tons of excess money - go for it. I just wouldn't be looking too carefully at the cost. The 'boat club' idea sounds like a great idea - although of course you are still paying for maintenance, docking, etc - it's just that you can walk away from it at anytime. We had a seadoo and a Hobie Cat and I am glad we never went beyond that. As we drive up to the cottage, the number of boats that sit roadside on trailers with 'For Sale' signs is instructive.
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Old 01-19-2020, 11:45 AM   #20
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Haha, yep!
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