There's a Recession Coming

Dear Debt,

Hi debt, you antithesis of freedom. You short-term savior and long-term captor. Oh debt, how you can be tweaked and twisted in so many ways to look so attractive. It's like that saying, "You can put lipstick on a pig..but it's still a pig." which I heard 5 times a day from fellow stockbrokers. No matter how much makeup people slap on you debt, at the end of the day, you're still soul-sucking debt.

I should probably stop here and offer up a disclaimer. This post will be a little more into the weeds than our usual personal finance posts but so many of you have pleaded with us to get into the weeds, so here we are. And this post may come with up to two scary graphs but I can assure you, they will be accompanied by a layman's guide to being understood. 

I should start by describing how Kelsey and I treat debt because let's face it, not all debt is bad - just 99% of it. We look at debt rationally and understand that if an asset, meaning a car, house, etc. comes with a loan - it is not an asset, it's simply a liability. Now if the asset comes with a loan or mortgage but it provides monthly income, it is then an asset because you are simply using debt as leverage to increase your monthly income. An example of this would be using a 15yr or 30yr fixed mortgage to buy a rental property. That's good debt, pretty much everything else is lipstick on pigs. 

Now debt has some surprisingly strong supporters nowadays considering how 4 out of every 5 Americans carry over $50,000 in debt. A lot of people we talk to about debt like to say they can 'beat' their interest rate on their loans. The reality is these people virtually never invest their discretionary income to 'beat' their interest rates and continue to only own stocks via their 401k or IRA (retirement accounts). They then continue spending as they typically would. In order to beat anything, you have to at least play, right?

Now prepare for the scary graph and me throwing out clickbait headlines like "there's a recession coming" because let's face it, there is.

This chart is showing how little people save nowadays (green line) compared to how much debt compared to their income (pink line) they carry.

It's been nearly a decade since our last recession and the U.S. business cycle likes to mean revert (meaning go back to equilibrium) every 8-10 years on average. Now before you say this time is different understand that no time is different, ever. Yes, everything is unicorns and rainbows right now so no one wants to talk about scary what-ifs but seriously, we're overdue for the market to balance out again. Now I'm not calling for another great recession like we experienced in '08 & '09. All I'm saying is things currently look expensive and if we're patient enough we'll be able to buy things at cheaper prices. (Aka 3 months later when the market dropped 25% in December of 2018)

So what does this mean for our plans? Well as all of you know, we have no debt. We sold the old boat for 60k and bought the new one for a lot less so we have some cash to put to work. A big factor for us selling the old boat to buy a smaller one was setting ourselves up to make our lifestyle of consuming less & adventuring more, permanent. Meaning we did not want to continue to remain 100% reliant on AC for our income because what happens to Patreon when a recession does hit? Being in this weird space of people voluntarily paying for a service typically means we're pretty high up on the discretionary income totem pole. Sure, going through another refit and a big change (like a new boat) doesn't bode well for our YouTube series but in the long-term, us owning a cheaper to maintain boat while having more cash in the bank equates to AC not being another flash in the pan like other short-lived YT series. 

Now back to what we're doing with our extra cash. Since we've been Airbnb hosts off and on since 2015 and it's something we thoroughly enjoy, we may buy an investment property for short-term rental. Or maybe we'll just sit on the cash for a little while waiting for more opportunities to pop up. Because as we all know, it's much better to buy things when they're on sale and last time we checked it's been awhile since our last sale - close to 10 years. So we're happy to let the good times roll but it doesn't mean we're not preparing for when the music stops. All we can do is position ourselves to make the most of when the cycle does complete and treat it as the buying opportunity it truly is. 

Consumers aren't the only ones that have a newly found love affair with debt, corporations do as well. This shows corporate debt at all-time highs.

Companies call debt leverage, and so should we. Some of the best personal finance advice we've received is to treat your bank account like a business. Given we're approaching the end of the business cycle, we're looking to deleverage and put our eggs in other baskets. Now don't take this blog post and go move your 401k into all cash. If you're investing for a traditional retirement, business cycles shouldn't mean anything to you. But for us, we don't want a traditional retirement. We want to be happy, and doing meaningful work where the amount of money we earn from our work isn't a factor, for the duration of our time on this blue marble. 

We plan on doing AC for the long haul and if we want to continue to be self-reliant that means we need to diversify our income. As we've learned from sailing, patience keeps us out of trouble and preparation is all we can do - everything else is out of our control. 

The Fear

A lot of people have commented on our most recent episode noticing how mad some people are in the comments about our decision to downsize. It’s a sad reality, but pursuing a dream or great adventure will always be met with adversity along the way. Negativity from friends, family, or co-workers has no place in pursuing dreams, although it’s the most abundant - or it just stings the most. Going against the grain is part of pursuing this lifestyle.

The truth is we all have a choice to make. Do we focus on the positive or the negative? Unfortunately, we are all conditioned to focus more intently on the negative. Regardless of how baseless someone’s opinion may be, the negative always seems to leave a bigger dent than the positive. Fear has a scary way of consuming people’s lives.

While we were pursuing our dream, for every doubter we had, there was a supporter. Like someone who once had a similar dream but gave it up because life got in the way and they now could look back on their life with the subtle awareness of knowing, they didn’t want someone else to do what they did and ultimately, give up. Kelsey was told it’d be impossible to pay off $25,000 of student loans a year on a $34,000 yearly salary. We were told our eventual slaughter would come from hosting guests on AirBnB. With the benefit of hindsight, we know 75+ guests later we have yet to have a bad guest and we’ve been happily debt-free for 2+ years now. 

Teddy Roosevelt is accredited with a quote talking about ‘the man in the arena’. It’s a long one so I’ll paraphrase. “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena...” 

I write this post in the hopes of reaching people who find themselves in our situation a few years back. The person with the big, hairy, audacious dream that seems impossible - until it’s done. Know that you are on the right path. Living a life dictated by fear is not a life well lived. Follow your dreams and let your values drive your decision-making. Treat everything else as just noise, because that’s really all it is. You don’t have to answer to anyone other than yourself as to whether you lived the life you had envisioned when it comes time to say goodbye to this world. Remember that. Harness the power of mortality and use it to combat fear. 

Life is a lot more fun when you’re in the arena. 

Abandon Convenience

Abandon Convenience is what I originally wanted to call this vlog-blog thing we’re doing here. As with most of my ideas, Kelsey played her part of the sieve, laughed, and said try again. It definitely doesn’t have the same ring as Abandon Comfort, nor the dual meaning of pushing your comfort zone while also reducing the amount of comfort we surround ourselves with and ultimately waste money on - but it tells a clearer story. 

Now don't get me wrong, we both enjoy comfort and convenience, but typically only after we feel we've earned it. Like after spending 24 hours on a passage with little to no sleep, then arriving at your protected anchorage and rowing over to the closest restaurant to woof down some grub. Living without constant comfort and convenience truly makes you appreciate these luxuries when you do get the chance to enjoy them. 

My fellow millennials are the biggest culprits of taking convenience and rebranding it as experience. That local coffee shop you visit twice a week for lunch isn't an experience, it's a convenience and its crushing your ability to live out your dreams simply because its tying spending to happiness. The sad part is this is such a basic concept: Don't buy stuff, embrace frugality and eventually live out your dream, yet virtually no one actually does it. The reasons why are still befuddling to me. I assume most people construct some false narrative in their mind that allows them to write off others living their dreams as trust fund babies or just being luckier than them. Or maybe its because we've all grown accustomed to instant gratification and don't want to put in the hours to lay the foundation for executing our dreams.

It probably has something to do with us humans not being wired to think of things from a “long-term” perspective, hence why so many of us spend money on things that are unrelated to our dreams, while we work jobs we hate, to watch our limited savings and prospect of not having to participate in mandatory work slowly slip away. It’s hard to be rational when everyone around you is smothered in the usual, daily luxuries and conveniences of our modern, rich world. 

Then, of course, there are the stigmas surrounding it. Being cheap has never been cool nor will it ever be. There are no corporate interests promoting frugality. You can't make money off telling people not to spend it. There's no billboards or 5-second ads harassing you on YouTube telling you to save your money so you can actually follow your dreams. The same could be said for reducing your environmental impact. If there's nothing to sell, there's no awareness. We don't treat frugality and the ability to not buy useless shit as the golden tickets to freedom that they truly are. 

Some say comfort is the biggest killer of dreams, I'd argue convenience is.

Failures

It may not seem it on the surface but our path to being financially independent & working for ourselves has been riddled with countless failures along the way. I tried to be an online professional poker player, full-time stock trader/blogger and launch a handful of unsuccessful startups that I ultimately gave up on.

Looking back a year ago I almost ended up working for Robinhood and shipping Luci out to the west coast. Instead, I launched Spared and quit my full-time job as a Financial Advisor. You really never know what awaits you around the next turn.

Over the past 7-8 weeks, I've given trading another shot and have been consistently returning on average $75-$100 a week. It's great to see some results and I'm planning on continuing to trade part-time while we cruise. Moral of this short story is this:
⬇️
Celebrate failure and know you're on your path, even if it seems scattered. Click here to join me in using Robinhood and continuing to grow our financial independence. I can't recommend them enough for free trading and being an actual mission-driven, socially conscious company.

P.S. Use our link so we both get some free shares (up to $150/share for free) and comment/email/carrier pigeon to tell us what stock you got for free! #neversponsored

Hints of Nostalgia

Taken the day we purchased our 352. Mark Twain giving us a subtle reminder of why we needed to do this.

One of our viewers left this quote as a comment on our most recent episode. It struck a cord deep within me and brought about the not-so-distant feelings of taking the leap from our 2 bedroom home in ritzy Hyde Park, to 150 square feet of freedom. While reminiscing upon the liberating feeling of having all of our stuff finally constrained to a 35' boat, my mind was transported back to the origination of our journey. 

To us, abandoning comfort is leaving behind the excess in pursuit of what truly matters to us. Comfort clutters our dreams and quells our instinctual nature to get out there and explore. Sure, there is nothing better than coming home to a comfy king bed after spending a week on the trail or a hot fresh water shower after a 5-day journey underway. But it always takes the former to appreciate the latter. It reminds me of a quote John Krakauer mentions in "Into Thin Air".

"How much of the appeal of mountaineering lies in its simplification of interpersonal relationships, its reduction of friendship to smooth interaction (like war), its substitution of an Other (the mountain, the challenge) for the relationship itself? Behind a mystique of adventure, toughness, footloose vagabondage - all much-needed antidotes to our culture's built-in comfort and convenience - may lie in a kind of adolescent refusal to take seriously aging, the frailty of others, interpersonal responsibility, weakness of all kinds, the slow and unspectacular course of life itself."- David Roberts

Removing the clutter in our lives brought about our true north. It dialed us back in to what really matters. It reminded us about the intense fragility of life itself and how important it is to pursue your dreams while you have the privilege to do so. Nothing is ever guaranteed. Tomorrow isn't as certain as it may seem. It took us almost 2 years to the day to create this opportunity and it’s something we will not take for granted. The halyards are attached, time to catch some breeze.

Sailing Plans, An Oxymoron

Man, Kelsey and I are planners to a fault. We're your stereotypical Type-A couple and then some. And by then some I mean I grew up in a military household then spent 5 years in the service myself, where my branch's motto was about always being prepared and having a plan. Now being prepared and things having a place works incredibly well with living on a sailboat. Plans, however, do not. 

Our lovely sailboat we call home is not a planner. By her nature, she is always going wherever the wind takes her. Plans are not something she controls but something Mother Nature does. She's a stoic who knows what's in her sphere of influence and what isn't. 

For us, this lesson has been a hard taught one. For example, when we bought Lucidity about a year ago we planned on keeping her on the hard in Indiantown for a month to do a bottom job and install an ice box conversion. Didn't happen. Bottom job is now overdue and we own an Engel. How about our first year cruising plans? Ha! We were bound for Havana & Dry Tortugas by last Fall at the absolute latest. Poor Luci hasn't left the dock in 11 months! 

I could go on and on sharing our other best-laid plans since moving aboard but I'll spare you the monotony. We can plan all we want but at the end of the day, old man universe is going to do whatever the hell he wants. We've found what works best for us is having a few loose plans in place so that way when it comes time for one to come to fruition, it usually involves either a combination or deviation of all of them. 

Sailing the Caribbean by the end of 2017 was admittedly a very loose plan. After founding an early-stage tech company this past October, the Caribbean seemed more like a distant dream than anything reminiscent of a plan. 6 months out it's looking like our reality now. But who knows. We've learned to take after Luci and just go wherever the wind blows us.

Survey & Sea Trial Basics

Disclaimer: This post is meant for educational purposes mainly for people who have little to no prior boating experience. These are questions Kelsey and I had before we started the survey/sea trial process. Also, these are questions we've been asked by friends with no boating experience who are thinking of pursuing this lifestyle. We hope this helps you in choosing an alternative, location-independent lifestyle! 

First off, what's a Survey?

Well, if you're considering a survey, you are admittedly a novice boater or feel the need to have a professional look over your big purchase before you dump endless sums of money into some POS. Either way, smart move on your part. So, a survey is very similar to a home buying inspection. You hire a "Surveyor", preferably one who is SAMs certified, to inspect your boat prior to buying it. This is what is known as a "Pre-Purchase Survey".

Real life red flag during our boat hunt - a boat's owner says they had a survey done for you so there's no need for you to have one done yourself. Well, the previous owner had an "Insurance Survey" done, about 1 year prior to us seeing the boat and the boat was in the water during the time of survey. Huge difference between pre-purchase survey (extensive inspection 4-6 hours) and insurance survey (start the engine, check dates of flares, roughly 2 hours).

How about a Sea Trial?

Sounds like something that happens in an episode of Game of Thrones. No Hodor, a sea trial occurs at some point in the survey. Think of a sea trial as the boat buying version of test-driving a new car. Except in this case the guy or gal trying to sell you this vehicle (Broker or Owner) is probably behind the helm the whole time. Also, if a surveyor is present they'll be helping with hoisting the sails or line handling coming in and out of the slip. Just sit back, enjoy the ride and the soon-to-be short lived peace of mind of not having to worry about running aground or your engine dying in the middle of a power-boater laden channel. 

Is a survey required before buying a boat?

If you pay cash, no. If you're getting a soul-sucking boat mortgage accruing more interest than average stock market returns, then it's probably required by the bank you're becoming an indentured servant to. Think you can't pay cash for a boat or save up tens of thousands required to make a big purchase? You totally can! If you're born in the U.S. you're born into the top 10% of wealth in the world, regardless of what class you fall under. Give your spending the check-up it deserves by reading this. 

Should I get a survey?

Depends! What's the boat's value? If you're paying $4,000 for a boat you probably shouldn't be spending 15% of the purchase price on a $600 survey. If you're spending $25,000 on a boat, it probably makes a lot of sense to get a survey done to know exactly what you're getting into.

Have more questions? leave them below for us to answer :)

Don't Let These 7 Things Steal Your Money Next Trip

It's no secret that traveling these days can be relatively affordable. With the widespread availability of Airbnb, Couchsurfing, and lower prices of plane tickets, it's not unheard of spending a few hundred dollars on an extended weekend getaway. We all know the feeling of having our batteries charged after exploring a new location is well worth saving for. However, more often than not we end up spending more than planned while on our trips. Typically this isn't because we bought too many souvenirs (People still do that?!) or from splurging on priority boarding for your plane ticket. It's usually from the little things that tend to add up in the end. And more often than not, these little things yield little happiness or add to the adventure! 

We're huge fans of this 64oz bottle & sport cap.

1. Forgetting an (empty) water bottle

Sure, you can't fly with a full water bottle but luckily for you, all airports have water fountains available. Besides, do you really want to be buying bottled water throughout the duration of your trip, when you could be spending that money at the new taco shop with raving reviews? BYOB - Bring your own bottle is what all the cool and environmentally aware kids are doing these days. So, join the club! 

2. Paying for parking

This is assuming you buy a rental car because you'll be exploring the surrounding areas of your destination. Is that parking garage a half-mile closer to your restaurant really worth it? You could've spent that $20 for parking on some kick-ass coffee from the hipstery spot around the block. The best way to understand a city is by foot, bar-none. It took humans hundreds of years to learn how to walk upright, show evolution some gratitude. Ladies, bring a bag big enough to fit some walking shoes if you need to rock some heels for your night out. 

3. Overpaying for a rental car

With the recent expansion of Turo, you can get rental whips for less than 45 bucks a day in almost any city. Sometimes, rental agencies can be even cheaper. Especially with a USAA discount! Now you may be thinking I don't have a USAA membership so I'll skip over this non-applicable section. Well, perks of being a previous employee there I know it's open to everyone, member or not! So be sure to click on this link before booking your rental car to score some sweet discounts. 

4. Flying on peak travel days

This should come as no ground-breaking Abandon Comfort tip. Flying on Friday evenings and Saturday mornings are more often than not the most expensive. Try to take off an extra day of work to adventure more and you'll probably end up saving money by flying out on early Tuesday morning, as opposed to Sunday night. Also, with the new Hopper app, you can track prices for months in advance and it'll tell you exactly when's the best time to book! Be sure to check out mid-weekday flights to score the most bang for your buck. 

5. Eating out every single meal

Boooo! Who is this guy who is telling me I can't be a foodie? Knifing through the local restaurants is half the reason I even travel! Well, check out your credit card statement from your last trip. I'm sure you went to some lame chain restaurant or Chipotle. You've eaten there before and it's available at home, why not just pack a lunch one day or cook some breakfast at your Airbnb? Check out the local market to get some fresh bread, meats, and cheese to create yourself something tasty for lunch. Think about it, if you and your adventure buddy don't eat out for a total of 3 meals you will have saved half of your plane ticket price for your next bucket list stop. 

6. Paying $$$$ prices for an expensive restaurant

Here we go again, condoning me for wanting my belly to be happy! Ask yourself this, do you really need to eat at Morton's or Capital Grille in LA when you've had it in NY before? No, you don't. Once is more than enough at those exorbitantly priced chains. Go check out the local Ramen or Thai place which shows $$ or $ on Yelp. I bet it'd be a far better experience and show you how the real locals do it there.

7. What actionable tips can you share that'll reduce our travel expenses? 

On the Record

Kelsey and I had the pleasure of having The Penny Hoarder on board a few weeks ago for an interview. They wanted all the intimate financial details of our lifestyle and we happily obliged. The article provides another person's perspective of our lifestyle and goes into greater detail about The Chaise. Read more about it here! 

Potential Social Impact

I recently watched Live like Alex and it left me questioning if what we were going to do was going to give me the answers I so relentlessly sought. Alex, someone who I could relate to in numerous ways, circumnavigated and did it in unprecedented style. I by no means am as charismatic or downright risky as he is but a lot of the things he was searching for I find myself seeking. What impact, if any, am I going to leave behind on this earth? Why am I here? What is my purpose and how can I live a fulfilled life?

View fullsize

Alex did it all, man. He brought people who have never even considered they would be lucky enough to be on a real boat and let them get behind the helm, just so he could bask in the joy they experienced. During his circumnavigation, Alex did something very few sailors actually do, he got to know this world's people. Yet after all of this, he completed his journey and was left feeling unfulfilled. During the film Alex says before he left he was confused, he didn't know what he wanted out of life and thought once the trip was complete he'd have all the answers. In reality, the exact opposite happened. He was more confused when he came back than he was when he left.

This left me questioning a lot of what we had planned to do. If this guy, someone I could only hope to emulate, was unfulfilled after a 3+ year circumnavigation, how could I be fulfilled after sailing the Caribbean for a year? Maybe I wasn't making the right move. Maybe traveling isn't meant to be fulfilling in this way, just rewarding and thought provoking? Once Alex arrived back home after his trip all I was thinking was he needed to do something like his Dad did - embrace his entrepreneurial spirit and do something centered around social impact. For those who haven't seen the film, Alex's Dad was an extremely successful entrepreneur who founded one of the nation's largest egg producers. Now I never had the pleasure of meeting Alex so I can't say for sure but for me as the viewer, I felt like that was what he was missing.

View fullsize

The company Alex's Dad founded

I tried to keep my doubts off my mind. We were pretty much on cruise control at this point, we had enough saved for our trip and were just waiting until next Fall to cast off. Then old man universe decides to throw me a curve ball.

As I'm talking about Abandon Comfort in my graduate class, a classmate of mine pitches me his business idea revolving around sparing Millennials from the burden of student debt. He knew it'd be right up my alley and he was right. Kelsey and I paid off our 50k in debt and we can't recommend it enough to anyone else who feels tied down by their finances and wants to travel. Fast forward 6 weeks and we have an incorporated business ready to launch this week. Our mobile application, known as Spared, has the potential to save our average user $9,000 in interest payments and get them debt-free 7 years faster. I want my friends and my generation to relish in the freedom that living debt-free awards them. I want to stop seeing people put up travel quotes and inspirational videos of people living life on their terms on social media, and start to see videos of them actually doing it themselves. I feel fulfilled in knowing I can get them there quicker and I can't wait to see my fellow Millennials actually out there doing the things they've always dreamed of doing.

So what does this mean for sailing the Caribbean for a year or Abandon Comfort in general? As of right now all of my time is being dedicated to Spared but Kelsey and I are by no means giving up on our plans. Sure the majority of my funds have been thrown at the business but I can recuperate if Spared fails and we have the time to sail as planned. But for right now I know I feel fulfilled and am overjoyed at the opportunity that has been laid out in front of me. Who knows what the next few months will hold or even the next year for that matter. All I know is I'm moving towards making my days count and leading a life of purpose. 

For those who haven't seen it, carve out 1.5 hours of your time and learn about Alex and his adventures.