For many years I've fantasized about writing a novel. I actually did, once. It was a story about a guy, named Scotty Sparks (catchy, eh!?), who gets out of the Coast Guard, steals a boat, and sails off in it. Scotty made his way to Mexico and found himself both in love with a Mexican surfer girl while also in trouble with the local drug cartel at the same time. Using his cunning wit ( all of which I wrote!) he talks the cartel into not killing him and actually ends up getting paid to run drugs to Miami for them. Of course Maria (yes I did name her Maria) joins our hero on his boat, Pequina Ave, for the adventure of a lifetime.
The last decade has seen an uprising of sorts from the 99% being fed up with the 1%. I'm not even sure those were actual terms before "Occupy Wall Street," but anyone will recognize what I'm talking about when I mention the 1%. I'm also quite certain that most people will feel some form of resentment towards the 1%, so maybe I'm crazy for admitting I want to be a 1 percenter.
I'm confused as to what the 99% want from the 1%. With a few exceptions on both sides, most people are in one of the two categories because they want to be. The few exceptions being those 99 percenters that are incapable of escaping because of injury, illness, or what have you; and those 1 percenters that were just lucky and born into it. Anyone else that has an idea, a skill, a dream, etc., can become a 1 percenter.
How am I going to do it?
Step 1. Get out of the rat race. No longer will I fight everyone else for scraps when I am fully capable of going for higher prizes. This is why I sold my truck that did nothing for me but impressed a lot of other 99 percenters. I know it impressed people because almost every day someone told me I had a nice truck. Compliments on a stupid truck aren't what I want out of life. That is not the reason I get up at 5:30 every morning to go to work. I work because my ideas haven't brought me financial independence, yet.
"I work because my ideas haven't brought me financial independence, yet."
Now I drive a beater, and guess what...People treat me differently. I don't fit most people's ideology of what a middle class person, much less a 1 percenter, should drive. Driving a beater is like having a people filter. If I want to see if someone is the type of person I want to associate with, one who will help me grow and enrich my path to getting out of the rat race, I just show them what car I drive. If they scoff, it's because they are forever stuck in mediocrity, and I don't want to play with mediocre people.
I recently posted this video on our blog from a YouTube channel called "The Art of Improvement" that perfectly sums up why 99 percenters that are fully capable of becoming 1 percenters never will. In it, the narrator says that jealousy is a waste of time, and any time spent being jealous is time the person you are jealous of is working towards becoming better.
I refuse to spend my time loathing the 1%, and will instead strive to join them. I don't understand why more 99 percenters haven't joined me. Actually, the video above explains it quite reasonably: It is hard to get into the 1%. And what is hard to achieve normally doesn't have much competition because few other people want to put forth the effort to achieve it. That's why the 1% is only made up of 1%, while 99% of us live in mediocrity fighting for scraps.
An analogy for easy vs hard: Look at the astronomical odds of winning the lottery. The odds of winning are so high because millions of people play it. Millions of people are playing the lottery because if they win, it's easy money. Aside from leaving the house and spending a couple of dollars, they had to do very little to earn it. But at the same time, starting a business that has a greater potential to earn more money than winning a lottery is hard, so very few people actually put forth the effort to do it. Or living below our means to save a larger portion of our income so we can retire earlier is hard because we want to impress people with that nice car, big house, and putting on a facade of what 99 percenters think it looks like to have money.
What does it mean to be 1% of the population? Does it mean being wealthy? I think that's what a lot of people associate it with. No matter what Daniel Tosh says about money buying happiness, and money buys wave runners (ever see a sad person on a wave runner?) becoming wealthy will not cure anyones problems. First of all, what is wealthy? Is it a million dollars? Billion dollars? Wealth is defined as 'having a plentiful amount.' It doesn't have to be money, but having a monetary value makes up the meat of the definition.
My personal definition of being in the 1% is when I no longer need to rely on a job to finance my lifestyle. Yes, that means I could sell everything, quit my job, and live in the mountains or a on a boat at sea and consider myself part of the 1%, but I want a more comfortable life than that. So to me, being in the 1% means a little bit more than homeless, and a little bit less than being a billionaire. In other words, it means I no longer have to fight the 99% for scraps.
Travel by personal watercraft (PWC) can be very fun, but being on such a small craft in a large body of water can pose challenges. Riding 50+ miles in a day can really add a level of stress to what is usually something very fun.
Most people ride their skis a few hours a year. Maybe they'll take them to the lake and putz around for an hour or two, then put it in the driveway to dry out for a few weeks in between runs. Then, there's us. We ride our skis (well, ski now) several times a week, and year round, often racking up over 50 hours a year. Since we aren't wanting to take on the additional expense of boat ownership at this time, we ride our skis all over the Chesapeake Bay. And I mean, ALL OVER!
I'm an old Coastie, so safety on the water is my number one priority. In this blog post, I'm going to detail exactly what we do to prepare for the safest long distance rides possible, even in rough weather. Preparing for a long distance ski ride is similar to a trip on the boat, but with a few extra nuances that shouldn't be overlooked.
File a float plan
The number one rule for boating is to file a float plan every time you get underway. This doesn't have to be a formal report to the nearest Coast Guard Station, or even a written plan. Just tell someone, preferably someone that cares about you, and consider two people if you aren't very well liked, where you are going, what time you are leaving, and when you will return.
The number one rule for riding skis long distances is to file a float plan.
The basics of an effective float plan start with telling a trusted person:
When I ride long distances, it's usually to meet up with someone. So I'll shoot them a text when I'm on the ski and departing the ramp where I splashed. In the text, I'll say, "I'm leaving now and expect to be there at 'x' o'clock." If I'm alone on the trip I'll shoot a message to Kari, also. When I get there, the people I'm meeting will know, but I'll shoot Kari a message letting her know I made it safely.
We also have an app on our phones called Life360 that allows us to see each other in real time. We can keep an eye on each other, even when it's not possible to make a phone call due to rough conditions, or whatever the case may be. We share our positions with the people that we boat with the most, so we can all keep an eye on each other.
As morbid as it may sound, having a last known position when you go missing greatly increases your chances of being found.
Proper equipment and gear is one of the challenges of a safe PWC trip that you normally don't have to consider on a boat. If you are going to haul yourself across a body of water like the Chesapeake Bay, you have to have the right gear. What started off as a calm morning, can quickly turn into a rough, and potentially dangerous, afternoon. Skis aren't only susceptible to weather, but being as small as PWC's are, they can be greatly affected by boat wakes and small chop. The Chesapeake Bay fills up with boats on the weekends, especially in the afternoon. All those boats rip up the Bay, even when calm weather conditions are predicted. The number two rule for riding long distances on a ski is to prepare for rough water, no matter what, because even a 1' chop can be challenging to a PWC.
The number two rule for riding long distances on a ski is to prepare for rough water, no matter what.
It's imperative that your ski is up to the task. Perform your pre-ride checks per the owners manual. Don't attempt to cross the Bay if the ski needs maintenance or repairs. We generally keep our skis until they have over 100 hours, then we sell them. Sea Doo's like we ride are expected to last several hundred hours, and we change the oil every season, even if they are below the hours for an oil change. When we sell them, the new owners are getting a great ski that has been well taken care of, but they are reaching that point where I'm not comfortable taking it across the Bay. In my mind, it won't serve my purposes.
Have a full tank of gas.
Although you are a responsible skier and you checked the weather and distances and have concluded you can make it to your destination on half a tank of gas, keep in mind you might have to return on that same tank of gas. There aren't many places to fuel up on the Bay, especially since PWC's don't have the range boats do. I always leave with a full tank of fuel, and it has saved my butt on at least three occasions when the fuel dock was closed at my destination, or there just wasn't a fuel dock at all.
I prefer to fuel my skis up at a gas station because the gas is much cheaper on land than on the water. This also insures that I'm getting in the water with a full tank of fuel and I don't have to worry about whether the local fuel dock is open or not. Also, it saves time on my trip since I can get in the water and go without having to stop for gas. I normally haul the skis to the gas station up the road the night before a big trip.
Riding a big trip isn't the same as taking the wave runner out for a spin on the weekend. You are going to need to conserve fuel, which means you aren't going to be in Sport Mode jumping wakes and doing doughnuts. Remember, you are going to be all alone and miles from the nearest fuel source. There are plenty of times on our rides we are 20 or more miles from the nearest fuel dock. Most of the time we are 5 to 10 miles from a fuel source. Still not a distance I want to paddle the ski just to find out the fuel dock is closed.
We own our particular Sea Doo skis for several big reasons. But one of the biggest reasons is fuel economy. The skis burn about 3 gallons per hour in touring mode, or 1 or 2 gallons per hour in Eco mode. Eco mode is your friend on long trips and can help prevent a stranding due to running out of fuel short of your destination. This brings us to our next section:
Pick the right ski!
Although many jet skis on the market today are capable of making long distance trips on the Chesapeake Bay, you need to do your research and choose the ski that is right for you. For example, as much fun as it is to go 70+ mph on a Sea Doo, I would not recommend a Sea Doo RXT 300 for touring. Here is why.
We have owned two types of Sea Doo hulls: a GTI and GTX. The GTI hull was our first ski; it was inexpensive so we could see if this was something we really want to do or not. Well, I guess it is something we really want to do! The GTI was great on gas, even better than the GTX we have now, but it was not comfortable.
After doing some research, we decided the Sea Doo GTX 155 is the best ski for us, for the following reasons:
There are certain laws in place for PWC's, so make sure you know them before heading out.
Wear, and fasten your freaking life jacket.
Other gear. This is the basics of gear. Leave a comment if you travel with something I haven't mentioned here:
Know the rules of the road!
My biggest pet peeve on the water is some idiot not knowing, or worse, ignoring, the rules of the road. It isn't hard. Here's the parts you need to know on a PWC:
Pay special attention to rule 4. It is very important. It means if some yahoo is breaking rule 1 or 2, it is YOUR responsibility to prevent a collision. This goes for all boats in all situations. PWC's are difficult to see, so stay vigilant to keep from getting run over.
In my experience, it's difficult to see to the left and right beyond my shoulders from the seat of my Sea Doo. This is because of the splash from the bow wake that comes up about 4' in the air right next to where I'm sitting. Also, I wear goggles over my glasses, so they are normally wet, which makes it even more difficult to see. Most boaters on the Chesapeake Bay do not realize that PWC's fall under the same rules and regs as all other boats, and seem to be under the impression that their boat always has right of way. Very rarely has anyone given way to me when I'm on the ski. In almost every case, I have had to avoid the collision, whether it's ignorance on their part, or they can't see me is up for debate. I assume I'm invisible unless they give some sign that they see me and are giving way.
The hardest boats for me to see are center consoles. I can see other jet skis from pretty far away. Long before I see the actual ski and rider, I can clearly see the splash. Larger boats are easy because you can see the superstructure, and most smaller boats create enough of a splash and wake that I can see that before I can see the hull, much like another PWC. But center consoles are small enough you can't see the hull from much more than a mile out, and they cut through the water so efficiently that there is no splash to give them away. Every close call I've had in the middle of open water has been with a center console that snuck up on me. They cruise at about the same speed, and faster in some cases, as jet skis do, so if you don't see them until they are a mile from you, you can easily miss them until they are right up on you honking a horn.
I wish more boaters understood how difficult it is to maneuver a PWC in rough conditions, which even a 1' chop can be rough on a ski. But, they don't and never will. So it's up to us to keep an eye out and start avoiding the collision miles away from the intersection.
Have fun out there! Share your trips by PWC on the Chesapeake Bay on social media with the #ChesapeakeWanderlust and #ChesapeakeBay so we can see your posts and give them a like! We love hearing from anyone that loves exploring the Chesapeake Bay, so all boaters are welcome to flag us down and say hi if you see us out there!
The most financially disastrous thing we ever purchased hasn't been a jet ski or a boat. It hasn't even been the very expensive Toyota Tacoma, or the numerous other cars we've gone through over the years (6 in 5 years). No other item in our lives has put us in more debt and costs us more monthly and annually, than this freakin' house.
"Well, you have to live somewhere, so suck it up, Buttercup."
It's incredibly easy to fall into the housing trap. There is a plethora of misinformation floating around about owning vs renting. Period. As if those are the only two options. Let's talk later about housing options and the one that will work best for us, but, first, lets concentrate on why we all think owning a home is such a great investment.
We fell for all the so-called money 'gurus' telling us what a great investment real estate is for the middle class. The big hook for this scam: Real estate always appreciates. The appreciation of our house has been slower than the money we've put into it for maintenance, taxes, insurance, and interest. From talking to other homeowner's, we've found this to be true across almost all homes.
Our house is pretty old, and although it had been remodeled in the few years before we purchased it, we quickly found areas of neglect that had been covered up rather than repaired. We are still in the process of finding and replacing all these areas, so our total costs of owning this home aren't anywhere close to being completely calculated, and until we are finished, we have no idea what the total cost of keeping it standing will be.
That's right, keeping it standing. We haven't even been able to spend our money on areas where we want to, like a new kitchen or bathroom remodel. We've had to do things like replace the roof that wasn't installed correctly, and replace the aging heat pump, and remediate mold because of the previous roof that leaked.
"When you rent, you are paying someone else's mortgage, plus making them rich."
I thought I wanted the "American Dream," and a key component of that dream is owning my own home. A little piece of 'Murica I get to call all my own.
It's a trap. I knew it was as I was signing the paperwork at the closing table, but I couldn't think of a way out of it. We all laugh at people for falling prey to obvious scams all the time. Yet I still allowed myself to fall prey to the most obvious, and biggest scam of them all: Homeownership. Now I'm stuck to a geographic location, and stuck to a job for the rest of my life. Thirty years is a really long time to owe money on something.
In many cases, renting is the best option.
"What about equity!?"
Home equity is a sham; in most cases. If you pay market rate for a home, you are losing money, no matter how long you keep it. Gone are the days, in most areas of the U.S, of purchasing a home and selling it for 500% more 30 years later. Kari and I looked at a waterfront house earlier this year that we really wanted to buy. The sellers purchased the home in 1980 for $80,000 but were losing it in pre-foreclosure in 2019 for $400,000. The home needed extensive work. The after repair value (ARV) would be around $500k, but would need about $200,000 to get there. So now a buyer has $600k in a $500k home. Plus taxes, insurance, landscaping, maintenance and another $100k+ remodel that will be needed to sell it in 20 years, you would have eaten up all the "equity" in that home if it sells for 20% more than the purchase price. Barring a huge market bubble, or millions in renovation/rebuild, that home will not be worth $2 million in my lifetime.
"This sounds terrible! What about those options?"
They say sometimes you have to hit rock bottom in order to realize you ever messed up in the first place. My rock bottom was a mortgage, a couple of car payments, and some consumer debt. I never got in over my head, but I wasn't moving in the financial direction I wanted to. Instead, I was fleecing myself into believing these things were making me happy. Rock bottom was realizing the things I owned were owning me, and they were delaying my real happiness: goals.
My goals are simple: 1. Make my money work for me so I don't have to have a job, and 2. Travel while spending time with my wife, family, and friends on my schedule, not my jobs schedule (vacation/sick days).
I did some math and figured out how much earlier I can reach this goal of early retirement without all my stuff holding me back. Sure, I'd eventually get there with all the nice things, but I'd be too old to enjoy retirement; or dead. I'm not putting my life on hold to obtain this lifestyle, by the way. I'm just declaring enough is enough and cutting things out of my life that are not carrying me towards my financial and life goals. We still travel, eat out often, and have fun. We've always been responsible with our money, making sure to contribute to our retirements and ensure we have money left over every paycheck so we aren't living paycheck to paycheck. But that's how employees think. Now we are thinking more like investors, and less like employees. In other words, we are thinking like wealthy people.
If you read this blog post, you know I sold the cool truck. That was one step in the right direction. Now we are halting putting any more money into the house, while we pay off our consumer debt.
What does this have to do with other housing options?
Housing is our biggest expense. Our house is old, and we got it for cheap compared to the area we live in, but what we save in mortgage payments we spend elsewhere on maintenance and general upkeep. So here are some options we were looking at:
So buying a new home was quickly struck from our list. The huge downpayment, plus the huge mortgage and additional costs just to move in made existing homes look much better to us.
That's another positive to renting: You can move any time you want! Either wait for the lease to expire, or pay the penalty and move early. It's completely up to you when you just walk away from that situation. My mortgage holder pisses me off? Too bad.
The water heater goes out in your rental? Call the landlord. You are out a few days without hot water while they work it out. My water heater goes out? I'm out a few days without hot water AND I pay well over $1,000 to have it replaced. A rental's roof leaks? Call the landlord. My roof leaked and it cost me $20,000 to have it replaced, plus a year later my bedroom is still torn apart and unusable due to the damage that insurance won't cover. So I have about $20,000 more work that needs to be done in there.
This is what rock bottom looks like, y'all.
"But paying rent is making someone else rich!" So what!? Every time you spend money you are making someone else rich. You buy groceries, you are making the grocery store owner rich. You buy a car, you just sponsored the dealership owners' next yacht. You aren't going to get rich owning a home, so why not make some rich dude pay for all the repairs to your house so you don't have to?
"So if owning a home is making me poor, and I can't get over the fact that paying rent is making someone else rich, what are those options you keep teasing me with!"
You want to get rich owning a home?
What did we decide to do?
Living on a boat has it's challenges. This is why homeownership isn't for ONE of us (hint: it's me, Aaron!). Kari loves living in a house. She loves living on a boat, too. But she loves living in the house more. For one, she has pets; 2 large dogs and a cat. And they don't get along. Also, our pets are aging, so getting the two big dogs on and off the boat for walks is going to be difficult in the coming years.
For us, the only show stopper to moving onto a boat is the pets. Moral of the story: As awesome as pets are, they keep you poor. Don't get pets. If you have them, don't be an asshole and give them away. Keep them, love them, give them a good life with comfortable beds (the expensive ones) and lots of treats, then don't replace them when they unfortunately pass away. That's Aaron Johnson's guide to pet ownership.
"Uhhhh, you still live in a house that is costing you tons of money. What is your plan to save money until you get the boat?"
Man, we really struggled with this one. I lost lots of sleep, and there were some times I was ready to just give up and accept my fate that I'd made a huge mistake buying this house, and now I would be stuck with it. But, in despair comes mans most creative achievements. In my rock bottom, I got creative and figured it out.
Step 1. Stop working on the house. We replaced the roof and the heat pump at a combined cost of about $40,000. Luckily, we have roughly $70k in equity today. Put no more money into the house, for now.
Step 2. Pay off debt. Minimize expenses, spend no more than $2,000 a year on vehicles, and pare down so we can retire on much less pay. The less monthly income we need, the quicker we can retire.
Step 3. Save, save, save. Invest in our retirement accounts, mutual funds, and index funds. Maybe even buy some real estate and become landlords. We aren't sure about that yet. Somewhere during this step, we lose our pets to old age (NOT looking forward to this. It's gonna suck). When that happens, we move on to step 4.
Step 4. Fix the house on borrowed funds, then immediately sell. Repay the borrowed funds at sale so we minimize the interest paid on repairing the house we don't even want anyway.
Step 5. Buy that boat! This could come between steps 3 and 4 if the pets live a long time and we have enough invested. We aren't trying to live the lifestyle of the rich and famous, we only want to finance our minimalistic lifestyle without the need for employment or sitting on the street corner with a cardboard sign. Although I'll sit on the corner in the Virgin Islands with a cardboard sign before I ask my employer for their permission to go on vacation when I'm 62 years old.
Step 6. Continue saving and investing until we have enough to retire early. Sail away. Spend the summers (hurricane season) in the Chesapeake Bay, and winters in the Caribbean being pirates or mermaids. I haven't decided which one I want to be. This is when Chesapeake Wanderlust will reach its peak.
Y'all are awesome! Thanks for reading, please leave some feedback in the comments. Go do something today that makes you happy!
August 10, 2019
We just made a HUGE decision. We decided to put our earned income to work for us.
What in the world does it mean to put your income to work for you?
For several years we have studied the lifestyles of couples (and singles!) who are living debt free. As with many people that are frustrated with being committed to the "norm," we started listening to Dave Ramsey. From there, we dove down a rabbit hole of information, influencers, and shining examples of people quite a bit younger than us that have made it, or are well on their way to retiring early. People are retiring as early as 35! Yes! RETIRING!
We've had our doubts, for sure! In almost every YouTube video we watched or Podcast we listened to, the people were living in vans or areas of the country, or the world, where it costs MUCH less to live than where we do. It's almost like they have zero responsibilities. As romantic and tempting all of those options sound, we can't do it! We can't live in a van because we have two large dogs and a cat. Plus, we don't want to live in a freaking van. We certainly can't move to the mountains of West Virginia and live off grid in a tiny home, or even an inexpensive real-home. As awesome as that would be, we are tied to our desk jobs in the DC area.
Other factors were equally discouraging. Not only are our housing costs higher than most of the people in this movement, although our housing costs are quite low for the area we live, we aren't making as much money as some of them. Many people desiring to retire early are business owners. Our situation is like most other peoples. We are comfortable in our jobs, and we earn enough that it would be crazy for us to leave to start a business. Unlike some of the other employed people in the early retirement world, we actually enjoy our jobs. Still, we were surprised to learn many young couples are making this work on much less income than what we earn. Despite earning less income than us, they are saving more than we are. That's where we are messing up.
So we can't use the old line, "we just don't make enough money!" We do make enough money. It's not about how much money we earn. It's about the money we SAVE. Obviously, higher earnings can directly contribute to higher savings, which in turn can contribute to an earlier retirement. But the trick to making our money work for us is to live not WITHIN our means, but well BELOW our means and save, save, save. No matter what our earnings are. THIS is how we plan to make our money work for us!
To get started making our money work for us, Kari and I followed Dave Ramsey's advice and made a budget. Let me tell you something about budgeting: It's freaking hard. Our first attempts were miserable failures. We ignored all the warnings about budgeting being difficult. Until you make that first budget, I mean a real budget, you honestly have no idea where your money is going or how difficult it really is to figure out how to track it.
For example, our first mistake was underestimating how much we were spending on things like gas for the cars and groceries. We had to guess on how much money to leave ourselves for pocket money, which many times we guessed too low. Making a budget is a lot of work. That's why successful businesses hire people specifically for that role and hold regular budget meetings. Unless you are incredibly wealthy, it doesn't make sense to hire a CPA to do your budget for you. Taxes, yes. Budget, no.
Not to sound like a Boomer (which I'm not a Boomer), don't be lazy. You just have to figure it out. This is one of the few Baby Boomer philosophies I've found that still work with the younger generations. "Don't be lazy. Grow up, work hard (on this goal), and figure it out."
Although we are still growing up and still figuring it out as we go, after a few pay cycles, we had a self sustaining budget. All of our bills are on autopay, we have a small emergency fund set up so we don't have to rely on credit cards, and we have been able to put away money for "normal" retirement and save for vacations and fun stuff.
But we still aren't financially independent. We aren't anywhere CLOSE! Being on a budget, and living within our means hasn't been enough. We've realized the secret ingredient to FIRE (Financial Independence, Retire Early), which is what we really want, is SACRIFICE. That word is in bold and caps for a reason. Dave Ramsey says it best, "If you will live like no one else, later you can live like no one else." He is telling us to make sacrifices now. Learn to NOT live within your means, but BELOW them!
We thought we had it all figured out. A few years ago we began contributing to our retirement accounts at work. We have been making payments on student loans, two cars, a mortgage, a couple of jet skis (you gotta live!), and some work we've done on the house. In addition to our retirement accounts, we've been able to contribute to a high yield money market account. If we kept this up, everything but the house would be paid off in 10 years, the house would be paid off in 15, and I might be able to retire at 55, followed by Kari a few years later. But that is relying solely on our retirements from our jobs, what we call "normal" retirement.
The problem was, the money market account and emergency fund have always been eaten away by unexpected expenses. That money is meant for investments, but a dog gets sick, then the other one. The roof needs to be replaced, the heat and air conditioning died, mold grew in our bedroom (which led to a whole host of other very expensive problems). The list goes on and on. This means we essentially have nothing in savings, outside of our retirement accounts.
Retirement accounts are useless and a pretty bad investment strategy for someone that wants to retire early, so even though we are putting money in them, we don't count that money as savings. We say it's useless because I'll be damned if I'm working until 75. That's ludicrous! I want to see the world and spend all my time with my family, not working and being dependent on a job for the rest of my life just to make payments on things that aren't getting me any closer to my goals.
Our goals for FIRE involve saving cash for easy access, investing in markets and businesses, purchasing a rental property portfolio, and maybe even starting some businesses of our own that can we can run remotely. The cash flow from all of these sources will provide us enough income to quit our jobs and live the life we want, like no one else.
We want a boat (not a yacht), and to travel the world on it. We don't want our vacations to follow someone else's schedule (I'm looking at you, jobs). We want to live on our time, not vacation time, and spend as much time together as possible. If we ever have children we don't want to miss a moment with any of them. We don't want our jobs and nice things with monthly payments telling us when we can have time with each other and travel.
So we looked at our budget again to see where we could make sacrifices to save more. 'Nice things' should have been a category in our budget. It would have made it easier for us to find the extra money we need in our savings column of the budget. The first sacrifice we made for an early retirement? The nicest nice thing we have:
I sold my one year old truck.
Last year we were seduced by a beautiful, brand new Toyota Tacoma. If you follow us on Instagram, you've probably seen it. We had heard all about the reliability and great resale value of the vehicle, but what really sold us was the leather interior, premium JVC audio with subwoofer, moonroof, power everything, and all the bells and whistles that screamed to everyone that saw it, including us, "WE ARE SUCCESSFUL!"
What other purpose does a vehicle serve? If it's flashy, the owner is successful (aka, rich), if it is practical, the owner is middle class, if it is crappy, the owner is poor. Of course none of these are true, they are all stereotypes. What is the net worth of the lawyer driving the Porsche? Most would look at him in his $1500 suit and waterfront home and assume millionaire, right? Statistically speaking, you would be very wrong to assume any real amount of accumulated wealth with that person.
One of the best books I've read is The Millionaire Next Door. This is a great book that explains the correlation between high income earners and high spenders. Cars and houses don't make you wealthy. In fact, they do the opposite and will keep you middle class forever. I don't want to be middle class forever, I want to be independently wealthy and not have to worry about a job. Getting there will take sacrifices. My sacrifice is to drive a beater for the rest of my life. Being independently wealthy doesn't mean yachts and mansions and trust funds. It means living BELOW your means!
I plan to spend about $2,000 a year on cars for now on. That includes purchasing and repairs. I came up with $2,000 based on three things: 1) it's something I've done before, so I know it's possible, 2) I don't want to ever spend any more than $2,000 a year owning a car ever again, and 3) it's a practical number for me. I consider $2,000 as below my means. $2,000 is a small enough percentage of our combined income that we can still meet our goals for FIRE. For others, it may be more or less, it all depends on your income and how quickly you want to reach your goals. I would much rather put that money towards life experiences with my wife and family, and owning a boat!
Here's the logic (or illogic, however you want to look at it) that led me to this decision.
We purchased the Tacoma in June 2018 with $5,000 down and made 12 payments of $586.45 throughout the fourteen months or so we owned it. All maintenance was included since it was under warranty, and I won't consider any other costs of ownership, like gas.
$5,000 + (12 * $586.45) = $12,037.40.
I spent over $12,000 in ONE YEAR on a CAR! Factoring in insurance, I paid another $900 for it. To me, I threw away almost $13,000. To me, I look at this and think to myself that I could have $13,000 more in my money market account than I do right now. If cars are your thing, spend your money how you want. I still have a jet ski. But I want experiences. The only experience this truck gave me was at a red light I could look at the guy next to me and think to myself, "My truck is nicer than his." This isn't the person I am, and it isn't the type of experience I'm looking for. I'm not going to lay on my death bed thinking about the cars I've owned. I'm going to lay on my death bed remembering the good times I had sailing the Chesapeake Bay with my wife and seeing the world. I'm going to think back at how crazy we were for riding a Sea Doo ALL OVER the Chesapeake Bay! That's fun, man! It's L.I.V.I.N.! Sure, I'll think about road trips, but I won't think about the car I was in.
I'm going to do some math to show my $2,000 justification for selling a new truck. I'm not any good at math, so let's say we agreed to pay $40k for it, although the final sales price was a little more.
$40,000/$2,000 = 20 years.
I would have to own the Tacoma for over 20 years, without any repair costs, to make up for spending $2,000 a year on beaters. I won't even want that truck in 20 years, even if it hasn't needed any repairs. For the future we are planning, we won't need cars. In the words of Doc from Back to the Future, "Where we're going, we don't need roads!"
A lot of new cars today are about $30,000.
$30,000/$2,000 = 15 years
$20,000/$2,000 = 10 years
$10,000/$2,000 = 5 years
Can a $10,000 car go 5 years without repairs? The more I spend on it, the longer I have to own it to make up for the $2,000 rule of thumb. In my recent search for a new vehicle, cars are very expensive. I'm not sure a 20 year old Jeep Wrangler for $10k will last another 5 years without major repairs needed.
This doesn't mean I have to spend a max of $2,000 on a car, then throw it away if it needs repairs in less than 12 months. If I can find a really good deal on a $10,000 car, you bet your ass I'll buy it. I'd rather not spend any more of my precious time working on a beater than I would mowing the lawn. But I'll work on a beater before I make the mistake of ever spending more than $2,000 a year on a car again. I'll just be stuck with the $10,000 car for a very long time.
What I haven't mentioned, yet, is that we still have a new car. Dave Ramsey acts like anyone can drive a beater, but he's wrong. Sorry, Dave. We had no need for two new cars, but we live in a rural area where public transportation and Uber don't exist, and we still make trips, both for work and pleasure, that require one reliable automobile in our household. My $2,000 a year formula actually does factor in the peace of mind of driving a reliable car. For example, in December 2017 we purchased a new Volkswagen Jetta. Here's the math on it:
Volkswagen was going through some hard times with the diesel scandal, so they were selling gas cars for dirt cheap. We got a mid-level Jetta, brand new, for $17,000. The payments are $263 a month, insurance is about $70 (which is well over $2,000 a year), no down payment. Going by my $2,000 rule, we will have to keep this car problem free for at least 10 years, which we plan to do. I don't mind extending the time we have to own the Jetta if a repair is needed that pushes us over $2,000 a year in 10 years. We drive less than average miles a year, so making this car last 10 years free of needing repairs beyond normal maintenance is possible. It's a practical car that meets all of our wants in a vehicle, so we will have no reason to get rid of it before it is completely dead and has to be sold to a junkyard.
Where's the sacrifice?
I grew up without much. My mom did a superb job with what she had. She was very resourceful and provided very well for us. But we didn't drive the nice trucks my friends parents had (I grew up in Texas), and we didn't have a nice house (we lived in a necessary house that happened to be a trailer). We did get a go-kart for Christmas one year, and motorcycles another. But they were old, and didn't run for very long. I got really good at working on small engines; I was being resourceful with what I had!
But it bothered me we didn't live like other people. Yep, we didn't live like the Jones', and I was bothered by that. So when I grew up, I worked hard to make good money. I bought a house, and I've had some nice cars over the years. I was trying to impress 16 year old Aaron and the neighbors. I was not trying to impress 30-something Aaron that is resourceful and knows better.
Now I'm 40 and behind in the retirement game. I wanted to be retired at 40. But I also wanted to make good money, own my own home, and have nice cars. I had to experience those things in order to realize they weren't what I wanted. Now I'm scrambling to fix those mistakes so I can quit my job and live the life I want.
I loved the Tacoma. I'd always wanted one. They are nice trucks, and this one was especially nice. I received compliments on it almost every day, which made it even more difficult to get rid of. Not only did I like it, I was receiving positive reinforcement from complete strangers on nearly a daily basis that THEY liked it, too.
It was fun to drive, it was convenient having a truck, especially as a homeowner. No restrictions on when to make runs to the hardware store or dump. It was comfortable. It was safe. The safety factor was another one that was hard for me to get over. Beaters are not as safe, and there is something to be said for that. It had a great stereo system, something I've always wanted in a vehicle but have never had. It had every option available on a Toyota Tacoma, except for some of the off road options offered that I would never use.
I loved driving this truck. It made me happy. It didn't break the bank for me to dish out $650 a month for it, so it made me happy that I could "afford" it. Driving with the moonroof open made me happy. Watching through the auto dimming rear view mirror as the back window opened at the touch of a button made me happy. The feel of the fancy interior made me happy. I truly enjoyed driving this truck, and now I'm driving an old Jeep Compass with the check engine light on and a broken air conditioner. Instead of playing on the water next weekend, I'm going to have to take it apart and try to remedy the check engine light so I can get it to pass emissions testing in October. But, I'm $650 closer to my goal of sailing away with my wife forever, and that makes me even happier than the Tacoma.
For now, I'll use the money from payments and insurance to help pay off other things we can't get rid of, like student loans and loans for repairs to the house. After that, we will make that money work for us. It'll go into a high interest money market account to save for our first investment property.
There's a lesson in here, what is it?
The tl;dr version: We fell in love with a new truck after driving a few beaters, bought it, realized that was stupid, sold it, driving beaters again. Will be retiring early by living BELOW our means instead of WITHIN them.
Earlier this summer I discovered a YouTube channel called, "Nine Hundred Dollar Luxury Yacht." I LOVE this channel and it's creator because he thinks so much differently than most YouTube sailing channels. Instead of spending a ton of money on a ready made boat, he found a boat with years of neglect; the type of boat that most people think is beyond repair. With some sweat, he brought the boat back to life and...well, go see for yourself! His channel is worth getting lost in for a couple of hours, in my opinion.
Some time before I found Nine Hundred Dollar Luxury Yacht, we were deciding whether to buy a boat or invest more in our jet ski's. We looked at a very nice 1997 38' Catalina. It was love at first sight; we didn't even bother looking at the other boats on our list. The asking price was in our range, the boat was in great condition, and it was the exact boat we were looking for. As anyone who has ever owed a boat will tell you, purchasing the boat is only step one in spending money on a boat. After a few days of researching the cost of insurance, and asking around about marina fees, we realized we were in over our heads. Buying a boat is easy. It just cost too much money to own a boat.
The following week, I was the somewhat-happy owner of a brand new, shiny Toyota Tacoma. The up-front purchase price of the new truck and two new jet skis is about the same as the cost of the boat, but the cost of ownership is drastically less. We can't travel the Chesapeake Bay as comfortably on the jet skis as we could have in the boat, but we can get there much faster. For whatever the trade-off of comfort vs speed is worth.*
Notice I said somewhat-happy owner of the truck. Don't get me wrong, Toyota did a great job designing the new Tacoma, but it doesn't replace the hole left in our lives by no longer owning a boat. If we were in a position to pull off ownership of the "luxury yacht" we want right now, we would happily sell the truck and skis for best offer!
You are probably asking yourself what all this has to do with a YouTube channel called Nine Hundred Dollar Luxury Yacht, and the difference between us buying a boat or a truck.
Let me tell you about a 27' sailboat called Rhumb Line.
I purchased Rhumb Line for $2,000 around 2007. Little did I know how much Rhumb Line would affect me throughout one of the worst decades of my life, coincidentally, but completely unrelated to the boat. Rhumb Line became my salvation when I had nowhere else to go. In better times, Kari and I had our first date on Rhumb Line. I fell in love with Kari when I realized she liked spending more time with Rhumb Line than she did with me. We had our honeymoon, and our first big fight on Rhumb Line. Rhumb Line was a literal physical extension of me.
Like all of us tend to do, Rhumb Line got old. Kari and I loved sailing because of Rhumb Line, but despite it all, we were ready to move up to a larger boat. As she aged, more and more parts seemed to fall right off of her. I grew tired of working on a boat, and decided I'd rather be sailing. So in the late winter of 2017 as she sat in the boat yard with a pile of used-up sandpaper and various broken parts collecting under her hull, I wrote a sign with numb, blistered hands that simply read, "It's been fun, but it's time she goes to a new home. $100."
A young man from Virginia bought her for my asking price, cleaned her up, replaced a few parts, and sailed off. For the second time that I know of, Rhumb Line had helped a young man become a yachtsman on a shoestring budget.
After selling Rhumb Line, we decided to get a boat that is ready to go in the water without anything other than a light dusting off. Fast forward over a year and a half of unsuccessful shopping for a turnkey boat that meets our standards, and we are both ready to take on another project boat. I really can't stop laughing at myself over the irony.
I'll spare you the details and fast forward to the next part:
How to Become a Yachtsman on a Shoestring Budget!
"Awwww. I was going to go yachting in those feet!" -Bender
We found a project boat. It was shockingly easy to find. We actually had options and had to choose one! We didn't find this one on Craigslist, but it's a really good resource. Search "boat" on the Craigslist "Free" category. There is a $1 sailboat on there right now. Be honest with yourself and don't waste people's time. This is a decision that you need to think through, and realize buying a boat is the easy part, but owning a boat, even a $1 boat, is very expensive. By the way, we spent way more than $1 on our project boat. Part 3 of this series will detail all of our expenses.
We ended up purchasing a 1980 25' Catalina sailboat that needed some TLC. After many hours of labor, and over $1,000 in supplies, she has been cleaned up and looks real pretty.
Part 2 of this series will include all the work we did every weekend one August to bring this boat back from the boneyard. Stay tuned and sign up for email alerts to be the first to know when the next post has been published.
*It's worth absolutely nothing! :)
We are all guilty of this: We want a quality item that will last a long time, but we want to get it for the cheapest price we can find. So we usually turn to the internet and start reading reviews. We find the item we want, we sort by price (lowest to highest), we select the cheapest one...
Then we are deeply disappointed when the reviews suck. 3 stars or less. "Piece of junk. Broke the first time I used it. Sending it back. Would not recommend. Would give 0 stars if possible."
Some of us buy it anyway and hope for the best, some of us move on to read the reviews on the higher priced items. In the "Amazon Economy," as I call it, we demand quality, but we refuse to pay for it.
That leads me to the topic of this post. Would you be surprised if I told you that most of the items we use everyday are available at incredibly low prices, and will last virtually forever? I say virtually, because forever is a long time. Let's face it, what actually lasts forever?
Products made of these space-age materials last anywhere from a few hundred years to several thousand years. We can get just about anything we want in this stuff: Cups, utensils, plates, clothes...even cars!
This isn't some magical material of the future. You are already using this stuff. The weird part is that you may not be aware how long it lasts, so you've been throwing away these items after just a single use! Imagine that! All you've wanted your entire life is to get something for cheap that will last forever. You actually have it, and you're throwing it away after only one use.
If you haven't guessed already, I'm talking about plastic.
A sturdy set of utensils can easily run $50+ a place setting (fork, knife, spoon for one person). We hold on to these items. Take care of them. Pass them on to our grandkids. They become family heirlooms.
For less than 2 cents, you can purchase a fork that would last just as long. I bet you've purchased or been given thousands in your lifetime. But instead of taking care of it and passing it down to our grandkids, we've been throwing them away after a single use.
It's absurd that we demand quality at a low price, in the first place. It's even more absurd that once we have a quality item at a low price, we chuck it in the garbage after using it only one time.
To demonstrate the absurdity, here is a short list of single use plastic items we use every day. Items that could last generations and become family heirlooms if they were taken care of. If you are interested, we have posted links to alternatives that we have been using ourselves. For transparency, we get a kickback if you purchase from the link.
What are your tricks for moving away from plastic?
Work on our house!
The best things you can do to protect the health of the Chesapeake Bay start with your home. Chesapeakify your yard (Brent's Native Plantings term for making your yard Bay friendly), and make your home more energy efficient.
Chesapeakify your yard!
A Bay friendly yard reduces runoff and the pollution it carries to the Bay. Blame farmers and construction sites all you want, but there is more surface area of yards in the Chesapeake Bay watershed than there are farmland and construction sites. As homeowners we are not regulated, or very good at measuring correct doses of all the chemicals (fertilizers, pesticides, weed killer, etc) we spread across our lawns to keep them beautiful.
A Bay friendly yard consists of local plants (non-invasives!) that are hardy enough to need less water and need no chemical fertilizers or pesticides. Our yard is beautiful and safe for pets and kids, and other than regular weeding in the beds, requires very little maintenance.
Be more energy efficient!
On this rainy day I've been in the attic adding insulation and sealing holes that are allowing cool air from the house to escape into the hot attic. By making your home more energy efficient, you reduce the need for fossil fuels being burned to produce electricity. The burning of fossil fuels lead to poor outdoor air quality, but also pose a hazard for our waterways. Pollution from power plants is a source of heavy metals in the water, which is the cause of seafood being dangerous to consume.
Prevention is the best medicine!
The first run of Chessie stickers are available! If you missed your opportunity to win one on Instagram last week, they are only $3 and we will ship them for free!
The stickers have been really popular, so get them before they run out. This first batch is a very limited run, and we probably won't offer this exact sticker again.
Proceeds from the stickers will go towards Chesapeake Bay conservation efforts.
We are an adventurous couple exploring the Chesapeake Bay by boat, paddle board, jet ski, and whatever other means necessary!
Friends Of chessie
For the best in Chesapeake Bay liveaboard lifestyle and reviews on boating products, visit our good friends at Lifesaport (hint: say it out loud).