The burning question that every wannabe sailor out there wants answered is- how do you afford to live the dream? Unless you are fabulously wealthy, (which I assure you, we are not!) financially, how do you save enough/make enough to actually retire early, and cast the lines?
We were able to figure out fairly quickly that the other seemingly insurmountable items on our list (education, boat schooling, sailing instruction, etc.) were pretty straight forward, actually. The truly difficult thing is to figure out finances, live the life, be responsible enough to plan for the future, etc.
For a normal, middle class, suburban family of 6, this can seem like climbing Mount Everest. We spent MONTHS planning, running numbers, figuring out budgets, trying different approaches, wondering how we could continue generating an income and more. Some of the things we tried worked and others were less successful. I'm here to talk about what worked, or what seems to be working thus far. We're still a few years out from pushing off the dock permanently, so I will update this as we go.
The number one thing you need to do, is figure out what you plan to spend while you're out there. If you don't know how much you will need to live monthly, then you can't figure out how much money you need to save/generate. Some people go about this the other way- figure out what they can save and vow only to spend that much. I don't think either way is right or wrong, but I do think it's more realistic to know what you will need and strive to match that number. You can squeeze your living budget, but unexpected costly surprises are bound to rear their ugly heads eventually- best to be prepared.
In addition to our planned monthly expenditures, we knew that we want to save up a certain amount in cash to buy a boat outright, and refit it for blue water cruising. We want to avoid the additional monthly expense of a boat mortgage.
We also want to have a kitty banked for emergencies, and we want to include a certain amount in our monthly budget to put towards retirement savings (for when we are too decrepit to continue sailing- haha).
Once you've got a good idea of what all these numbers look like for you- you're ready to begin!
This is a big one. Every dollar of debt you have, you're paying interest on. And every dollar you spend on interest is a dollar wasted, gone forever, with nothing to show for it.
With this thought in mind, our first order of business was to accelerate the paying off of debt as much as possible. Our mortgage wasn't an option, but we paid off credit cards, medical bills, our car, a loan we'd gotten to remodel our kitchen, and student loans. It's worth it to call these companies, because a lot of times you can settle your debt for less than you owe. We combed through and pushed as much extra towards these bills for several months. We started with the one that garnered the most interest monthly, and as as we paid them off, we pushed the additional amount saved towards the next biggest and so on until we were just about debt free.
Budgeting is the name of the game. We sat down and combed through our monthly expenses. Month by month, every single cent we spent. Then we asked ourselves, could we cut that out? If the answer was yes, then we did.
Gone. No more newspapers, magazines etc.
Target runs where I'd aimlessly wander the aisles and picked up stuff for later because it was on sale?
By the way, just monthly haircuts for the boys, this saved about $60 a month. I was super nervous the first time I cut their hair, but we figured it out fairly quickly.
You get the picture.
Now what was left were essentials. Mortgage, insurance, groceries, cell phones.
Things we really couldn't live without.
BUT we COULD cut those expenses.
Our mortgage had mortgage interest on it. We were able to refinance and get rid of the mortgage interest which saved us money monthly.
We shopped around for auto insurance and home owner's insurance and saved several hundred per year by doing this.
Health insurance- we switched to a Medi-Share plan. A Medi-Share plan is NOT regular insurance. You pay a minimal monthly share (this looked like a couple hundred dollars per month versus over a thousand for us) that goes in a pot to help with other's medical expenses. You pay for normal well visits, exams, etc out of pocket. Medi-Share covers you when you're ill, need surgery etc. You need to read the fine print because this is not the ideal plan for every individual, but we felt it was right for us. This literally saved us thousands of dollars every year. Our health insurance through the exchange had high deductibles, high co-pays, and cost a fortune. Even paying for 4 kids well visits and vaccines out of pocket, we still saved substantially doing this. I KNOW this isn't right for everyone, but we were all young and healthy and felt that it would work for us.
We shopped around for our cell phone plans, our internet, cut the cord on cable, and anything else we could think of.
Groceries!! With a little ingenuity we managed to cut hundreds of dollars from our monthly grocery bill. We're talking over $1200 per month to approximately $800 per month.
It adds up y'all!
Steve used to routinely go through the pantry and take out non-perishables that had been buried in the back and scour expiration dates. This drove me nuts, lol.
We started to cut coupons, but we ONLY used the ones that we were actually planning on getting. This means that we didn't stock up on 10 toothpastes just because the toothpaste was on sale. If we needed a toothpaste, we would get one. Coupons can be great when utilized properly, but they can suck you into buying things you don't need, or weren't planning on buying.
Shopping apps and circulars. These are great tools for planning out my grocery runs.
I would create my list of EVERYTHING I needed for the MONTH, based off my meal prep list (including diapers, formula, wipes, personal care products, alcohol and anything else we might need that month). Then I would create lists for each place that I shop. Target, Costco, Stop & Shop and so on. For each item, I would check my apps and circulars to see who had the best deal, and that item would go under that store's list.
Did I mention I only shop once a month? This is crucial to saving! It requires more careful, thought out list building, but it's great prep for provisioning for passages, and the lists prevent me from impulse buying a bunch of stuff we don't need.
When it comes to groceries I've got a ton more tips, but I'll save those for my provisioning blog! Be on the lookout for it!
Once your debt is paid off, and you've budgeted your monthly expenses to the hilt, you can focus on SAVING! For us this meant saving for our boat, saving for it's refit, saving for any investments we felt might create an income for us (more on this later), and saving for our banked kitty that we hoped not to touch!
The obvious way to go about this is to add up everything you need to save.
Got that number?
It's probably a big and scary number!
Now set your date for casting the lines, if you haven't already.
Do the math.
How much do you need to save per year?
How much do you need to save per month?
Now, if you're like us, you'll probably save less the first year, because you're focused on paying off debt and working on budgeting. As the years pass, you should theoretically save more. Work it into your plan.
Accept the fact that this savings goal is just that. Some months we will hit our goal, and others we won't. If your goal is not attainable based on your current monthly expenditures, then review, and see what you can cut to get you closer to that goal. Our point of view is it's worth it to cut or suffer a bit now, in order to make this happen. You'll have to decide if the same is true for you!
Increasing our Income
This is a big one, and it's worth it to try a few different things and not put all your eggs in a basket.
We knew that we wouldn't be able to take Steve's income with us. Unfortunately, although it's possible for him to work remotely; it's not work that is possible with funky hours, and more importantly, it's reliant on good WiFi.
We considered the idea of renting out our home early on. We still aren't 100% sure if we will do this, but if we can cover all of our carrying costs, and maybe make a little, it will be worth it. It's a good fall back plan, and as it pays down our mortgage, we will gain equity thereby making more in a future sale. Our primary home is on Long Island, which is a hot market, and will probably continue to be. Ultimately we would love to hang onto it until retirement age, but who knows what the future holds? The cons to renting out this house is the fact that carrying costs are so high. Property taxes in New York are exorbitant, and should we lose a tenant for a few months, carrying it could put a big dent in our savings. The other consideration is that we may need to sell it just to have enough to initially buy the boat. We're trying not to do that, but it will depend on how much we can save without the bump that selling the house would afford us.
We also decided fairly quickly that if possible, we wanted a second property for the sole purpose of short term/vacation rentals. We decided that if we can swing it, we'd like to make that happen in Florida. Cost of real estate, property taxes, and demand for rentals in Florida create a perfect storm for making money. After running numbers in various different communities we settled on the west coast, and if we can pull it off, we should pull in a tidy profit on renting that home short term (AirBnb, VRBO etc) after covering all our costs. The carrying cost in Florida is significantly lower than it is in New York, which is a big part of the appeal, and which makes it less of a risk.
Starting a Business
Starting a business might seem risky when we're trying to set off, but we are hoping that we can make this a thing, and that it will provide us an income AFTER we're out there. I expect that it'll take a few years to take off, and I've got just under 5 years before we leave to make it successful. It needed to be something that was self sustainable, and wouldn't require me to make and ship items while we were out there. After doing a ton of research I decided on print on demand products from companies that offer drop shipping. I design each and every product myself, which is something I can do offline. I upload my designs, order samples, make sure everything meets my expectations for quality and sell on Etsy, and in my online store. It works because I don't need to carry inventory, and I don't need to worry about shipping. When an order goes in, my print on demand company will create the ordered product and ship it for me. It cuts down on waste dramatically, and it's sustainable financially. Even if you're not interested in the products for yourself, a like, a follow, or a recommendation from each of you would go SUCH a long way towards making this a success and would be appreciated from the bottom of my heart!
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Learning a Skill
We threw around SO many ideas of possible skills one or both of us could learn to make money while we were out sailing.
I love the idea of creating video content- it suits my creative personality. Steve is camera shy though, and ultimately we didn't feel it was a good fit for us.
At least for now. Maybe it's something we will revisit in the future!
Selling stock photography is another thing I considered doing, and I actually started to do it. I even sold a bit, and I still routinely add photos to Adobe and Shutterstock. It trickles in, but every little bit adds up, and it costs me nothing but time.
I started out with 2 separate blogs, but decided to combine them. My blog covers crocheting, DIY projects, gardening, favorite recipes, holistic remedies, sailing, traveling, raising kids, DIY cosmetics and more.
Money also trickles in from Amazon affiliate links and Google AdSense.
None of these are significant incomes, but I hope with time they will grow, and as I said before, every little bit adds up!
Plus, it gives me a creative outlet.
I've always loved writing and blogging, and it gives me a little time to do my own thing.
Working for mturk is something that I do occasionally. It's mainly filling out surveys, political polls, shopping polls and the like. Some are psychological, some are games, and some are translation or writing pieces. Pay varies from a few cents to several dollars per job. If you work it a few hours a day diligently, you can make about $500 a month. It's not great pay, but it does add up relatively significantly. I do it here and there when time allows. They direct deposit in your account every 3 days. Some months I do quite a bit, and other months I barely log in.
We're always looking for other possibilities to increase our income while out there or before we leave!
What recommendations do you have?
What's worked for you?
What pitfalls should we look out for?
How did you make YOUR dream a reality?