|Maybe UP isn't the preferred direction?|
Bootstrap's bootstraps. Hehe.
- From Pirates of the Caribbean
Bootstrap Economics: Reaching for Escape Velocity
I've been mulling over a reader's recent comment regarding the building of our new boat, WAYWARD:
To tell the truth, it is a little hard to see how 30 grand in materials for a boat is exactly shoestring living. Maybe it's different on the water, but where folks around here live close to the land, owning our own little places, people are very hard pressed to gather into one place a little pile of money one-sixth of that. HARD pressed.
We don't think of WAYWARD as a shoestring build, despite many shoestring aspects of our operation.
The actual number is closer to $20K for materials (now in retrospect... reduced by discounts and adjusted to eliminate costs of building remote). Our labor is 'free' to us. Almost half of that is copper plating costs, which we feel pays for itself over time AND - as a commodity metal - has intrinsic value. By making other choices we could possibly have cut the remainder in half (we made some expensive choices based on our build situation... it could have been much simpler and cheaper to build elsewhere).
So before copper but including infrastructure, our materials came to about $11K.
But the point is well-taken. THIS boat swallowed up a chunk-o-change. The question is a good one...
How do low-income folks sweep together this kind of cash money?
Income - Overheads => Disposable Income
Disposable income is money free to be directed where one will. Toward ease, entertainment, travel... or the fulfillment of dreams.
It is the left-overs from income after overheads - those costs necessary to one's lifestyle.
Low income folks seldom have reasonable opportunity to substantially increase our income. In fact, the general trend is downward. But lifestyle can be changed to reduce overheads.
Life on the water is potentially very low overhead. This fact underlies bootstrap economics that make it possible to attain the dream, even on low income.
Let's start with the simple life on land...
"...Folks around here live close to the land, owning our own little places..."
A whole economy is implied in this phrase.
Nowadays, property for habitable land must be rented, purchased or gifted. Before and after land is paid for, it is subject to property taxes based on assessed value (which may be far above actual market value). Access and rights-of-way must be reserved and maintained.
Structures either came with the property or must be constructed. If not let run to ruin, they must be maintained, often in accordance with zoning laws and regulations. Generally, their scale produces proportionally large expenses. Their value increases taxes.
Whether you rent or own, these costs find their way to the Occupant.
Generally, one or more vehicles are involved. Purchase, maintenance, repair, fuel, insurance. Secondary costs creep up, too... that trip to see Auntie, a wedding just a few hours away, that rendez-vous just a state over... each side-trip is festooned with small, extra-vehicular expenses.
From the full quote, above, the folk in question seem to be keeping up. Foreclosure is not mentioned, and some savings are possible.
NOTE: Children are sometimes thought of as generating overheads, but I'm not so sure. In our case, we're a couple of LINKs (Low Income, No Kids). This frees a certain amount of cash, though not as much as our culture generally assumes. Kids don't require cash... they mostly thrive on love, food, water and fresh air. I won't go into it further, here, but there are plenty of quality families persuasive on this point.
Crunching Some Numbers over a 5-year Span
Let's look at rent. Since 1985, $500/month has been near what's considered to be low end for a functional space in places I've lived (Pacific NW). That's $6K/year. Over 5 years, that's $30K!
NOTE: That rental price used to be for a modest apartment - nothing fancy - in okay condition... now it's getting to be dive price. In some parts of the country, rents may be somewhat lower, but will nevertheless generate large figures over time. My contacts assure me that ALL these numbers are wildly conservative.
How 'bout a car? Let's say $1K purchase price. You put 5K miles on it per year - half the national average - at 25mpg and $2/g for gas. Legally required liability insurance costs, say, $100/month. Over five years, you replace the tires with retreads for say, $500, and do your own oil change/tune-ups every 2K miles averaging $25 a pop (oil, filters, plugs, etc). In five years, these conservative numbers generate costs close to $10K!
Okay... that's a $40K lump swept together from $8K/year given over to rent + vehicle.
If we could eliminate just these two overheads, the same, low income that had been narrowly paying the bills would generate relative heaps of disposable income.
Fortunately, there is a way...
Bootstrap onto the Water and Deep-Six Overheads
Once on the water overheads can be low to niggling - especially for engine-free sailboats, with solar or wind electrical generation and biomass heat/cooking.
If you anchor out, no rent. No utilities (though on-board electrical is in effect a utility cost). No fuel. No taxes. Reasonable costs to meet Coast Guard regulations. Low maintenance. Replacement costs are low and spread out.
How to get there?
Bob Wise, at Volkscruiser, has a lot of good advice on the how-tos of getting a boat under you for reasonable outlay. When I say 'reasonable' I mean obtaining a home for the cost a used car. It's a buyer's market, out there, with a lot of lonely, serviceable boats at fire-sale rates.
With both feet still on land, one can save toward a small cash-down purchase or build. The bar can be lowered by arranging 'owner-financed' terms.
Consider avoiding credit with attendant interest payments (which can easily double the cost of purchase).
We Water Rats have in our favor the ability to take on remote work while providing our own infrastructure, plus the generally handy skills we WILL develop aboard. Having to make-do naturally suits us to a range of jobs that drive Professionals nuts on the urban frontier.
We can get a job done without an employer having to worry about our transportation, care and feeding. Out-of-the-way work affords a substantial and uncrowded market niche for our services.
Odd jobs suit our kind; commuting to regular work does not... leave that to the Lubbers! We strike a bargain, fulfill our commitments, collect our pay and sail off.
Micro-streams of income, thanks to low overheads, can play a large role in our micro-budgets.
Special situations may call for something like a 5-year plan. In effect, we financed WAYWARD by working two extra seasons (seasonal caretaking), between recent every-other-year gigs. That extra push provided the 'extravagant' wherewithal without raising our prospects to anywhere near the official poverty level.
We're now looking forward to recovering from chronic employment. 8)
Much of this presupposes that we live aboard in areas which are not yet rigged to milk us, nor yet move us along. There are generally two types of suitable waters:
Waters remote from population centers - Concerned Citizens - and conformity regulations they tend promote - are few and far between. They're more likely than not to be friend, client and employer material. Much of Cascadia is an example of this type, especially its mid- to northern reaches.
Cracks - In these, regs might well be in place, but enforcement is low to lackadaisical. If Concerned Citizens inhabit the neighborhood, it has enough blind spots to keep out of their view. A bit more shuffling around might be in order to diffuse the profile. The Sacramento Delta is such an area.
Sometimes, a funky marina can be found for a reasonable trade-off between increased income (earned nearby) and low rent. But careful... a lot of us who enter, never return. Escape was hard enough the first time round!
If you wish to attain escape velocity but don't currently live in an area where on-board life is inexpensive, consider relocation as part of your plan.
Disposable income is very often disposed of. Money burns holes in pockets. A splurge here; a luxury there. Just doesn't seem to accumulate.
Your Money or Your Life recommends we spend consciously. Put that money toward realizing dreams, not impulses.
You might be surprised how quickly it accumulates. How powerful money, well spent, can be!
Our Escape Trajectory
In 1990, Anke and I bought our first boat, used, for $5K - $1500 down and $500/month for 7 months (could see it as short horizon rent-to-own). To pay it off, I flipped pizza at a notch above minimum wage, while Anke worked at a winery and childcare for a notch below. We both quit steady work the day we put paid. From then on, we were able to live on odd jobs (easier to manage from the water), yet sock half our piddly earnings away.
We lived on BRAMBLE for five years, learning to sail and boat carpentry. When we sold her, we recovered our purchase price.
The financial story is a bit more complex than this, but the gist is, the low overheads enabled by that first boat freed up 'capital' for use toward building our own. A sizable portion of our investment in each vessel has passed from one to the next (equity). Our moderate income over the years has been divided between low overheads, family related travel and a short run of DIY, liveaboard vessels.
An important point... BRAMBLE was not our dream boat, but rather our 'kindergarten boat'.
All inadvertently (and thanks to Anke's pragmatism), we lucked into a viable, bootstrap approach which broke the financial burdens of life on land. If we'd followed my lead, we'd have dithered away years - if not our lives - vainly scraping for that 'perfect' boat, anchored by overheads.
From our first days on the water, it has been different.
NOTE: There are many reasons to council that one NOT build one's first boat, but rather buy used. There is so much that first boat will teach you; lacking that experience to inform your choices, it's difficult to justify the time, effort and expense invested in building, unless you simply enjoy the process. Triloboats attempt to lower that cost, while this blog attempts to fill some experiential blanks. But the main goal of both is to help those of you who wish it toward the water!