It’s springtime here in Virginia which means my mind often wanders to adventure. We live close to the Potomac River and the Chesapeake Bay. When the weather gets nice, I’m often thinking about how it would be cool to own a boat or an RV, get the family out, and have some fun. As a kid I remember some great times out on my parents’ boat on the Chesapeake Bay.
If you spend some time following blogs or YouTube channels, you’re bound to run across lots of folks having grand adventures sailing around the world or traveling cross country in RVs.
Weekend Warriors vs. Modern Nomads
There are generally two types of folks here: Those modern nomads who have chosen to live on a boat or in an RV full-time and those who are enthusiasts who make these large purchases for recreational purposes. Since the second group is vastly larger, that’s who I’m talking about today.
So, if you actually live full-time on a boat or in an RV you’ve already achieved a high degree of minimalism and don’t need these tips. Unless of course you’re thinking about buying a house to have a home base for your RV or boat, then please read on.
Let’s say you’re feeling sort of flush, the stock market has been on a 10 year run, you’ve gotten some raises and bonuses at work, or some other financial windfalls. You decided it’s time to scratch that itch and make the leap to a big boat or RV purchase. I mean, RV sales are at an all-time high, and based on a lot of YouTube videos, it looks like a lot of fun.
Or maybe you’re not feeling flush but feel like you need a better way to relieve stress from work. And, after all, you’ve worked hard and you deserve to reward yourself with this boat or RV. Maybe the dealer has some “too good to be true” low-interest 20-year loan for the six-figure RV of your dreams.
Scratching that itch
You won’t feel this itch just once. It may come back every year and one of these years it’s bound to get you, especially as you get closer to retirement. So, as I’ve said many times with any purchase, it’s a great idea to hit the pause button and really think about it.
The bigger the purchase, the longer you need to pause and think about it. In this case, I would recommend going through these six steps whenever you get the itch again.
Six steps to talk yourself out of any boat or RV purchase.
1. Do the math.
According to Camper Report, towable RVs can cost between $20,000 and $300,000, depending on the style and features. Most Type A motorhome prices usually start around $70,000. This is on the low end of the market, including the plethora of used RVs available. The higher end of the market picks up from there and runs up to about $1 million. There appears to be no shortage of $80,000 tricked out camper vans out there as well.
If you’re looking for a boat with a similar number of beds, you can start in the $100,000 range and go up from there, new or used, the sky’s the limit.
Financing the $100,000 boat or RV is just the beginning of the $ adventure. As anyone who’s ever owned a boat has heard: “A boat’s a large hole in the water you pour money into.” Consider an RV to be hole in the ground that you pour money into. Not the same hole you need to pump out the head into. A good idea is to create a spreadsheet with some of the costs you project in owning a large vacation vehicle. You can start with the monthly payment then start adding some of the items I’ll go through here.
Well, maybe you don’t feel like making a spreadsheet. I can tell you this, if you make one of these purchases, you’re going to be making spreadsheet anyway with a budget for what it’s going to cost to keep one of these giant vacation vehicles running.
Here are a few of the things that were on my “thinking about a boat” spreadsheet.
Fuel, winter storage, dock fees, winter prep, spring prep, repairs, pull-outs, trailers, training, permits, insurance, fuel, supplies, tune ups, and safety equipment. Not sure what these costs may be? You can take a look at the handy boat cost calculator below based on a used 2011 midsize cruiser.
You can also jump on YouTube and do a quick search on “the real cost” of owning a boat or RV. I promise you, no matter how experienced you are, you will find something that you did not think of. Don’t just take their word for it. Your experience will be different, primarily you just want to list out the types of expenses they experienced then do your own research.
2. Time, the over and under.
Once you start with the costs then create another column for time. I have found that time is vastly over or under estimated on boats and RVs in two ways: The first is the time estimate of how often you’ll use your giant vacation machine. This is often high. The next beautiful day stop by any Marina and notice that almost all of the slips are full, especially the bigger boats (This includes most weekends!).
The second item is the time all of those things on your cost spreadsheets will take. Time gassing up, maintenance and cleaning, pumping out the head, safety checks, dealing with lots of new expensive vendors for fuel supplies and other related items like giant plastic shrink wraps they put on your boat after they pull it out of the water with an industrial crane. That’s often when they find some damage and other necessary repairs.
You need to be there, that takes time. In many cases, the time required for the maintenance and management of owning a large boat exceeds the actual time on the water. Need evidence? Look at some used boats for sale and in the description you’ll often see (low hours).
Instruments track the time that boat engines run, so you may see a 10-year-old boat with less than 500 hours of run time. Here’s a 2011 boat with 140 engine hours. It’s the first boat I clicked “only $115,000.” It includes the trailer but you’re going to need a truck to pull that bad boy, it’s over 30 feet long.
This handy calculator from Sailio shows the 10 year cost of owning this used 2011 runabout above at $440,000 this includes: financing, insurance, taxes, docking, maintenance, fuel, add-ons and other. If you sell the boat after 10 years, your final cost will still be $372,000. This is with a generous 40 days of use per year.
This particular boat is in Madison, Wisconsin. The further north you are, regardless of how big a boat enthusiast, the fewer hours you’re going to get on the water. It’s not just the weather, there are lots of full marinas in Florida as well. A friend of mine in Florida, who learned this the hard way, said it’s much better to have friends with boats rather than have friends out on your boat.
If you’re trying to reduce the amount of stuff in your life then you will definitely want to spend some time in deep thought before jumping into the boat or RV game. You don’t think you’ll do it but before you know it, you’re outfitting your family in boat shoes, buying $200 water tubes, coolers, life vests, safety equipment, special tools, special paint, and cleaning supplies only available at the supercool boat store. We should get some extra deck chairs just in case.
Don’t forget all the fishing gear, water toys, and GPS upgrades. Your smartphone and your old fishing pole won’t cut it. Books, maps and charts, training classes because you can’t just depend on that fancy GPS. Lots of snacks and beverages for your friends that you’ll be inviting onto your pleasure cruiser. The more drinks and snacks you serve, the more pump out you’re going to be doing back at the dock. Of course, you can pay for this as well.
All of this stuff needs to be stored and packed up in the winter. Even in warm climates you’re going to be dealing with moldy stuff, especially on the water.
4. Exploring options like boat clubs and RV rentals.
Years back, we figured we had found a simple solution for our boat habit. The couple of summers that we did have a boat, we did it through a boat club. A $700 initiation fee, then about $4000 per year, not including fuel or a lot of the stuff I listed above. We felt like the boat club was great solution because we only paid for the boat for the hours we actually used it. We would get about 20 half days out on the water or 10 overnights. We got a 28 foot Albin express cruiser that could sleep 2 kids and 2 adults.
At the time, I felt like it was a good deal. And I still think it is certainly preferable to buying a boat. In the second year we didn’t use all of our hours. Something always got in the way, birthday parties, sports etc. Our boating season runs from late April to early October so we found ourselves late in the season with quite a few points left over. Because it was a club, there was no boat to sell, we just didn’t renew the following year.
In addition, we still took a lot of the vacations that we were taking before we were in the boat club. Many will justify RV or boat ownership by convincing themselves they just won’t take any other vacations and put that money Into this one option. Those are good intentions but you may find it very hard to stick to that in the dead of winter when some friends invite you to Florida or the Caribbean.
We’ve also found that we like a lot of variety vacationing in different parts of the country or the world. A big boat or RV will definitely put a dent in those plans. We prefer to have a budget available and maximize frequent-flier and credit card points to travel light.
5 List out the benefits of traveling light
Think of some of the best weekends, vacations you’ve had in the past. What did they have in common? I’m betting that they were not over-scheduled, they did not involve the stress of trying to dock $150,000++ boat in crosswinds and tides after a few beers. Parking a big RV in an expensive or illegal spot or a Walmart because no place is big enough.
To us, traveling light is closing the door on a free hotel room or an AirB&B after a week of fun and not having a care in the world once we check out. Even when we were in the boat club, we still had to clean the boat, pump out the head, go through the pre-and post trip checklists, unload all of the food and coolers and stuff, pack the car and drive home In weekend traffic.
6. What is your ROI
Once you run the calculations, on the cost of boat and RV ownership, add all those items to your spreadsheet including time.
Time is really the essential component here because when you think about recreation, you want to make sure your spending as much of that time enjoying yourself, or enjoying time with your family as possible. I go as far as putting down what I could potentially earn per hour if I was working, because that’s what I would be doing if I was scrubbing the deck on a boat or pumping out a toilet on an RV.
Now that you have all the numbers, divide them over the 10 year period and come up with a weekly cost. Once you have that weekly cost, multiply it by 752. This will give you a good idea you what your boat or RV spending would be worth in 10 years if had you invested that money in a low-fee index fund returning on average 7% per year.
So, in our used boat example above using this formula we would have accumulated $495,000 in our index fund account after just 10 years. This even accounts for the fact that the boat would have been sold at the end of 10 years, which lowered the total boat costs. Good luck selling a 21-year-old boat.
In thinking about all this, I still miss having a boat occasionally. But, as I’m riding my bike along the Potomac on a beautiful day, gliding along the bike path, I often swing by the Marina and look at all of the bobbing boats just sitting in their slips. It’s because their owners are too busy working to pay for them to enjoy days out on the water.
Instead, I think of all the fun places where our family will be going next. We can even go out on a boat if we like.