Uh Oh, Again

E

El and Bill

New member
In January, 2008, we started a discussion about the economy and its potential affect on boating. Many folks contributed some great ideas and thoughts that helped to direct our thinking to meet the challenge of a new economic time for boaters.

http://www.c-brats.com/viewtopic.php?t=7851&postdays=

Then, in January 2009, we continued that discussion of the economic downturn and its affect on boating. Again, the discussion was interesting to many of us and it was a good sharing of views. Unfortunately, a non-C-Dory owner, chimed in with thoughts that were off the topic and offensive to many so the thread was (rightfully) shut down since it began to violate our idea of "just be nice."

http://www.c-brats.com/viewtopic.php?t=10564&highlight=

However, we miss the shared ideas and viewpoints of how economic change might alter our use of our boats and future plans. Consequently, we'd like to re-open the discussion, for those who wish to partake. This is not a forum to discuss who is at fault for the economic downturn, or the alternatives government might take to rectify the problem. We would just like to focus on the 'facts' as we perceive them in the economy, trends we believe might affect us boaters, and steps we are individually taking to adjust to the changing times.

To begin with, we are currently in a sharp deflationary trend - the result of slow sales, bank problems, over-extension of personal credit by purchasers, and government actions. Anyone who doesn't think we are in a deflationary period has certainly not looked at the price of houses recently. What does this mean for us boaters?

These are some of our thoughts:

1. Pay off any outstanding debt. With deflation, debt is more difficult to pay. Save money - in deflation, it becomes more valuable with time and will buy more tomorrow than today. Savings rates have recently moved from negative to 4%, still below the 'traditional' 7% of the 70's.

2. Watch falling prices for any larger purchases of a boat or boating equipment - be patient and watch the trends. We are now seeing excellent 'sales' of boating equipment by manufacturers. Although it seems favorable to see falling prices at the boating store, in the long run it spells trouble. Manufacturers have to pay employees, and with falling prices, wages may go down or unemployment go up. This further reduces prices folks can afford to pay, and deflation may become a self-fulfilling downward spiral.

Ultimately, there will probably be a reversal back to inflation. The return of inflation will probably come with an abrupt change, when the economy stabilizes. Inflationary times are difficult for investors, and those saving money for a boat purchase or for cruising money. Last summer, when gasoline prices had inflated abruptly, it certainly reduced the number of miles we cruised on Halcyon.

There is still much uncertainty about the economy, so we continue to 'keep our powder dry' with less long-distance cruising. Although the price of fuel is down from last year, and we have no debts, we want to preserve our IRA's.

How about others? Any thoughts of how the economic sea change has affected your boating plans?
 
Certainly last year, we were impacted mostly by fuel prices--Over $6,00 a gallon in Canada. We also had $4.00 a gallon on the IcW, so that a trip to Apalachicola (a 200 mile each way, one day run) costs $800 round trip!

We have seen local gasoline prices jump 15 cents in the last 3 days, and I think more is coming.

The one boat is for sale, and we have what appear to be 5 serious potential buyers. No matter what happens the price of this boat will remain about the same. However, I agree with Bill that as we pull out of this recession, we will have to see inflation. It will certainly hit the boating market hard. There are large numbers of boat building companies out of business. This is very much like the mid 70's in Calif. Many of these companies never came back (Columbia, Cal, even though they had the majority of the business at that time)

On a personal level, as a retiree, our assets have droped in value so we are more careful with our spending. Also as retirees, although we still save, there is no opportunity to take a job which pays more, or to have increased income with the inflation. Thus I see this entire cycle as being perticularly difficult for retirees. I know several friends who were going to retire, and have now postponed that for at least several--maybe as much as five years. This is to see where the economy is going and realizng that they have to put away more money for retirement.

We also see hidden taxes going up. For example my wife pointed out to me that our Cable/internet/phone bill has about a 12% tax on it. There will be marked increased in energy taxes. These will be on fuel, electrical generation, and probably natural gas/coal. No matter what, there will be increased costs of financing the programs which the government has entered into. This has to be paid for, and it will not be just a "tax on the rich". Locally we are facing a $25 per 100,000 assesed evaluation increase in property taxes. Sales tax has gone up very dramatically in some areas --some by 2%. Some states will not have enough to fulfill their budgetary needs, and will have to raise state taxes in some fashion.

Health care will become much more expensive (this electronic record conversion is very time consuming--we went to our cardiologist today and over 30 mintues for each of us was spent in trying to get the correct information on the electronic system. Even then there were many errors. This took both clerk, nurse practicioner and physician time. Also the government will be dictating what can and cannot be done in the way of proceedures as well as what medications may or may not be prescribed. For example, medicare dings the physician for hand writing the prescrition. It took a clerk, with the physician's help about 20 minutes to get the proper forum to write out and then FAX the Rx to our provider. Then the medication will have to be "justified". All of this distracts from the care given to the patient--and raises the costs of care). On the same subject, a number of our friends in Calif. are entering into conciegre physician plans. In this case, the physician gets from $600 to $2000 up front per year, in return he will always see the patient the day they call, will make house and hospital calls, and limit his practice to no more than XXX patients (typically 600 to 1000). This has already created a two tier system. Its going to get worse--a bit off topic from the basics of inflation/deflation--but it is the writing on the wall and all inter related.
 
As Bob points out those retired and on a fixed income are somewhat trapped but in some cases it's a blessing. In my particular former line of work industrial electrical construction things are terrible. I'd guess at least 40% of my friends still working in the business are unemployed of course once unemployed they can pay cobra to keep their health care going but it's sometimes so expensive some don't pay it. Of those who are working most are working in some oil related job refineries and the like. There are a few working on projects began before the recession. Many projects typically power generation have been cancelled due to the fact the power is just not needed as industries are shutting down. Being retired I'm pretty comfortable but I went through something similar in 1981 and 82.

My major concern is what is going to happen to health care I can't see it being able to survive in the direction it's going. I have one medication for my lungs that cost $6200 a month. Between medicare and my supplemental it's paid for at 100% but how long can insurance survive or be affordable paying these ridiculous prices.

I don't think my life style has been impacted at all by the economy but more by my health problems so I really haven't been to concerned. My best investment in recent years has been a insurance plan I bought through AARP Health Care Options. It pays me $90 for each day I'm hospitalized. Just yesterday I got a check from them for $1260 and will convert it to gas and use it to make a trip south on the ICW so things are good at Murphy's House!
 
I have seen another side of this with my daughter's family. When I was visiting at spring vacation, her husband was laid off. He was in a very well paid position in automotive advertising as a manager. My daughter didn't have a contract to teach next year--and it was as frightening time for them. In the mean time--about a month--my son in law has had two good job offers, and accepted one. My daughter has a contract to teach next year. So things can move fast, but it takes a lot of hussle. My family was going to forgo Cobra--and I strongly advised them to take it no matter what the cost. There are jobs available--but they require a very specific set of skills, and there is alot of competition for these. Lets hope that things are going to turn a corner soon.
 
The effects of this recession are far reaching, but if you are not in an industry that is affected, still have a job, and aren't in a position of having to dispose of a large asset like real estate, it may be mostly the bad news you see/hear in the media. As early retirees, we are watching our bucks. The discussion of health insurance reminds us each month of one of our largest expenses. We are too young for Medicare and were self-employed, so that big expense comes right out of our pockets. In fact, insurance (home, vehicles, boat, health) is our biggest expense.

Now, regarding our boating... we stayed close to home in December through February because there isn't anyplace in the continental US that has better winter weather. We were able to day-trip on Wild Blue most days. For the last couple months, we've been out and about with our RV. The expenses are similar with RVing and boating, and somewhat controllable. We are staying longer in each place to take advantage of weekly/monthly rates. We plan to head back to the boat in another month or so, and will then decide what the summer cruising will be. Fuel prices are reasonable, but they've gone up about $.20 locally in the past couple days... hopefully not a sign of things to come.

Of course, the least expensive thing to do would be sit at home (or in one place), don't use fuel, don't eat out, etc... but, that's not why we retired. Slow cruising and anchoring out is a pretty inexpensive way to go... but we still want to get off the boat daily and that's where the expenses rack up. A walk through an interesting area is free (except for the ice cream stops). Same with the sunsets.

Not to get all mushy, but it's less about the destination and more about enjoying the time with the Blonde next to me. We can ride bikes, walk the cat, window shop, read books and magazines in the exchange "libraries" in RV parks and marinas, play some music. The traveling - it's fun to see new places or revisit old favorites; but it's the fact that we're enjoying it together.

We intend to do what we've been doing: taking it a day at a time. Watch the expenses. Travel isn't free, but the expenses are controllable. Extended traveling isn't like being on vacation. I can't tell you the last time I bought a "we were there" t-shirt. :wink: It's a lot easier to keep the day-to-day costs in check.

Glad you brought this up again, Bill.

Best wishes,
Jim B.
 
Jim touches on a good point. I think most being retired try to control their expense's and spending to some degree. I know I do but of the expense's I seem to have no control over are insurances. In my case I'm very fortunate to have a very reasonable supplemental health care plan but my other insurances are crazy. One problem is I have just to many vehicles and really need to get rid of some. My homeowners has become ridculous (since the hurricanes) plus I have some rental property that the rates have sky rocketed on the last few years. The truth of the matter with the rental property it's merely a break even proposition anymore and there's nothing I can do to change that so I'll just hold on until things improve. I even have a policy to protect my computer how crazy is that! I think my goal will be to streamline some of this stuff in the coming year.

As far as expense's for recreation I think even with the gas prices as they are Traveling on the C-Dory is about as economical as it can be and you have the option of staying in that $60+ per night Marina or merely anchoring out and enjoying the sunset.
 
For us the recession really has not had an impact. My wife works at the University of Wisconsin Hospitals which in pretty shielded from the recession and layoffs. I own commercial real estate (commercial spaces, apartments, mini-malls, storage units) that have so far come through the recession completely leased. We live in Madison, WI and have mainly state, university, county, city, health care, insurance, and bio-tech jobs -- basically no manufacturing, which keeps our unemployment low.

I was more concerned last year with the gas prices. We have a cottage that is about 150 miles from our house that we spend many weeks/weekends at throughout the year. With the cost of gas at $4 plus, that gets a bit pricy. Also, all my dreams for our future involve the use (and a lot of it) of gas - motorhomes, boats, travel, etc.

Like I tell my wife, we are always in a "recession mode". I have owned my own businesses for the last 12 years and even though I have been successful, I never have enough cash - like they say "Cash is King". So, I'm always on a budget and cutting out the things that we don't need. I live on the motto that it isn't how much you make, it is how much you spend that matters.

Now with gas prices back in check, I'm looking forward to being able to trailer our CD22 to a few distant locations this year.
 
I get my medicines from the VA. They have an eight dollar coinsurance for a months supply. Dotty's plan has a $9 coinsurance. Not bad, but we take about 20 meds between us. Lately I've found that by checking online at the Costco pharmacy we can save an additional substantial amount on some drugs. Walmart is a little harder to search on the net and not as convenient to drive to, but even cheaper than Costco.
Oh, so far none of this has affected boating.The 16 cruiser fits our needs just fine. Our 16 year old 4 cylinder Volvo pulls it easily to the ramp on Lake Washington or to the Sound at Everett. I think I would get rid of the Ford Hybrid or the house before I'd sell the Lizzie. Then again, sometimes I wish I had a 14 footer.
MartyP
 
Even though I sold Naknek in May 2008 (...not one of my better moves, by the way!), I am sensitive to the economic issues surrounding life and recreational boating.

Like many C-Brat's we're retired (gee, could it already be eleven years??) and the realities of this economy seem to be impacting most folks to some degree. Even if you're reasonably comfortable, most folks that I know are watching their income and spending since NONE of us know with any certainty what the next months (years?) might hold. WE might be doing ok, but most have children or other relatives that are closer to a financial edge, and the inclination to help them is understandably strong.

I agree with much that has already been mentioned in this thread. Being as debt-free as possible is wise, and tends to prepare a person for a somewhat less-than-lavish lifestyle. (Living within one's financial realities isn't bad, and reduces a LOT of stress.) With a C-Dory, the ability to trailer to various boating venues, travel with some economy, anchor-out, and camp onboard really make it a nautical magic carpet. One might ask why I sold Naknek; you're not alone. I've asked myself that question several times during the past year. (After several months of analysing the situation in unemotional adult terms, I opted to sell her. ...probably one of my largest mistakes in Years. Go figure.)

I suppose my only real input for this thread is this: If you own your C-Dory free-and-clear, and are thinking of selling her - unless there is a SPECIFIC reason for you to sell: Reconsider. Without boat payments, the opportunities a C-Dory represents are almost limitless. You can store her on a trailer for little (or no) cost, and use it only when and where you choose, and still be within your financial horizons. Once you give that up; it's costly to reenter the Game, and you will want to find other options.

As to the future of "the economy," Bill's correct. We are currently in a deflationary environment that will likely deepen (possibly into the dreaded "deflationary spiral" if we're not already there), as a result of numerous economic fundamentals that are still sickly (but improving somewhat). Given the trillions in bailouts and financial sector losses the stage has been set for significant inflation (hyperinflation?) in the future. We are in the midst of theoretical economics, and ALL the experts are going on educated hunches. On top of that, in this multi-faceted World, the chance of another Black Swan events is pretty likely as well.

A good time to keep one's powder dry.

Best,
Casey Casebeer
(vice) C-Dory Naknek
The Villages, FL
(soon headed back to AZ and AK)
 
There was an interesting article in today's (05/10/09) Sunday newspaper magazine, Parade: the gist of the article was how being frugal is now popular. So, if you were frugal before, you're now "in"; and if you weren't, it's time to learn. :wink:
 
So, if you were frugal before, you're now "in"
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My wife and myself hardly argue, but since the recession and the "frugal is in" idea - now she is 100% on board with the budget/spending/etc and life is great. She is not a spender, but she always thought I kept the ship a bit tight - now she understands why. With small businesses like ours it is prepare for the bad times in the good times - it's too late when the bad times hit and you did not prepare.

Once everyone is doing it, it makes me feel more normal.
 
"Frugal" ... gee's, I'm finally IN STYLE !

Seriously, at the expense of seeing more in this economic situation than there is, if the situation continues to slide or has a protracted recovery (some suggest there might be an "L" recovery versus a "V" or "U" recovery) we could witness a broad changes in individual social and financial values. (Sorry about the Mother of All Sentences.)

For the past 10-20 years US consumer's have been at or near the top of the financial mountain even with flat wages; but that has often been a product of too easy credit and massive debt. That is changing. Several pretty smart folks are suggesting we may be on the verge of social changes we haven't seen in a very long time (heck, even the antiquated tendency to SAVE is on the rise!). Many folks are hearing voices speak to them; and it's the depression era voices of their Grandparents, with the value-set they learned during that horrific experience.

Will we be able to learn new financial values without being thrust into the economic abyss? Who knows? ...stay tuned - it's guaranteed to be interesting!

Rereading this, clearly it has nothing to do with C-Dory's, but it has a lot to do with the care-and-feeding of C-Brats. We need to be watchful, analyse our position, shepard our resources and use them wisely. For most C-Brat's that shouldn't be a problem; it's what we did when we first joined the C-Brat family!

End of sermon.

Best,
Casey Casebeer
(vice) C-Dory Naknek
...on the road
 
This is a great discussion thread. I am mid-career, with 20 years or so until retirement. And, as I work for a public university system (California State University) I have a comparatively high degree of job security. At the same time, though, like many public employees a significant portion of my annual income is generated by overtime (teaching extra classes). The budget situation in California is such that unless the economy is growing well public services are underfunded since the general fund is tied to income taxes (disproportionately from high earners) and sales tax. When the economy slows, both sources fall faster than the economy as a whole. In the current economic, both sources have taken an historically large dive. The result, significant cuts in overtime. Ouch.

But, as an academic, there really is not a good time time to buy a boat. The upside of academic life is that I have a lot of time with my family -- the downside is the relatively modest salary. Still, when my family went through some unsettling changes a couple of years ago we decided to make a boat purchase a priority (actually my lovely bride allowed me to make a boat purchase a priority -- she wasn't convinced).

I grew up on boats, and had my own boats until my kids were born and we no longer had the time or money. But, kids grow fast -- as you all know -- and I realized that if we didn't get back into boats it would be something that my kids would miss (and I would miss with my kids).

Now, two years later, the economy is in a tailspin, my kids are getting older, and my elderly parents are going through some very tough times. I realize that the only thing my father and I really ever shared was boating -- and though my kids and I share lots more -- I think the boating is one of those things that I will share with them for many many years.

The C-Dory was a great choice for us because, though I always imagined we'd eventually move up to a larger boat, the reality is that the 22 is a boat I can afford (sort of) even when the economy tanks. I think of it as a small big boat -- rather than a big small boat. It's the largest boat I can pull with a minivan, and the smallest boat I would feel comfortable taking my kids out to the Islands on.

So I guess what I am saying is, live within your means, but live. In my case, an older boat was the only way I could do both. Life goes by fast, and to put things off may mean never getting to them.

Matt
 
So I guess what I am saying is, live within your means, but live
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Well said Matt. I could not agree more. Our oldest boy is 16 yrs old and slowly becoming more independent. We have cruised all over the Great Lakes and spent 2 months with the kids in the North Channel in 2006. Those are memories that money just can't buy. We have 2 more summers with him on the boat (hopefully more) and plan to make the most of them.
 
Big ditto on Matt's words. It has been refreshing to hear many of my (formerly) free-spending acquaintances speak of living within their means and concentrating on the values dear to their loved ones. As many of the rest here did, I grew up in a household fueled by the depression-era experiences of my parents. Who needs a Beemer when you got the love of your family, and "enough" toys to bring the splendor of nature to your transom!

Hoisting one here [tonight; 6 am is a bit early to start in on the beer!] for us all!
 
Whew! Are there some good deals going around during these hard times. Grand Canyon RR (A great rail ride from Williams, AZ to the South Rim) has offered free round trip ride to those celebrating a 50th birthday within 7 days of their trip and a free ride all year for those with a 50th anniversary. Guess who'll be riding the rails, for a few days off Lake Powell, in the next few weeks?
 
dotnmarty":2pc56yxg said:
Then there's always "Saver's Remorse"....

http://www.nytimes.com/2009/05/17/us/17 ... ml?_r=1&hp
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Marty-

I saw that article somewhere a few days ago, but when I saw your "Saver's Remorse" title, I thought about a concept of having been remorseful that one saved all their money and invested it, only to have the market and most all the forms of investment and savings go South!

Gives rise to the thought: "I wasted all my time on saving and investing my money over the years. Now where am I? Should have just spent it on wine, women, and whoopee while I was still young enough to enjoy it!"

(Fortunately, my investment were so conservative I lost very little, and I did enjoy what I spent every bit!)

"and the beat goes on........" :note :note :note


Joe. :lol: :thup
 
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