Finances of A Fantasy Life

Where's the duck face, bro?

I started an Instagram account a while back. My aspirations are apparently a little different - I wanted a place to store some travel pictures and science stuff, both to indulge my creative urges, store some pleasant memories, and have a reference in hand when someone asked me for travel recommendations. 

As a new instagrammer, I find it difficult to find real content that's not just advertisement/self-promotion garbage. I was shocked at the amount of people who appear to be trying to make money off Instagram and social media. I am constantly followed by accounts promoting a small business, promoting themselves, their club, promising to get me more followers, etc. When I don't follow them back, these people inevitably unfollow me and move on. Everyone is a seller who wants followers.  

The most in-your-face form of this species comes in the form of so-called "lifestyle bloggers" who populate the Instasphere in incredible numbers. I'm pretty sure you know what I'm talking about, but just in case, let's set a definition. There are the travel bloggers, the most common of this group seem to be generically pretty girls who post photos of themselves in bikinis accompanied by a whimsical quote. Then there are the #vanlife people who travel around taking posed photos of their Volkswagen Westfalia, and then there are those who live the life of perpetual traveler. Probably more subtypes, but I think you get the idea.

People eat this shit up, and with the low barriers to entry, everyone seems to aspire to be the center of attention. And they'll go to great lengths to get that attention. For example, this Instagrammer (who has a whopping 2 million followers) may have created a(n actual) fake news story claiming someone was copycatting her. 

I'll admit - I'm fascinated with these people. I'd love to meet one and ask them the questions: is it exhausting to post five-plus Instagram videos a day? Do you feel like a narcissist? 

But perhaps the biggest question: how do you support yourself? Does having 50,000 followers mean you can make money doing something that is possibly fun?

Obviously, this is a hard question to get a straight answer on, one made no simpler by the fact that it can vary quite a bit by who you're talking to and how transparent/honest they choose to be. Google searches reveal a lot of bullshit and, beneath that, you quickly find that the one aspect of their lives that lifestyle bloggers aren't eager to share is their bank account info.

As I tend to do, I wanted to perform a little quantitative analysis on this life, as it seems impossible that a perpetual traveler with no reliable revenue stream would be able to continue indefinitely. And yet there are so many people doing this. Are they all (or at least mostly) fakes, or can constantly sharing pictures of yourself having fun really support your fantasy life?

With no means to conduct any really broad empirical analysis, we're left to look at individual cases. As is the case when n=1, we must select our example very carefully for it to carry even a shred of (non-significant) analytical value.
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I think I might have an example we can use: a few years ago, Susan and I read an article about a couple named Matt and Jessica Johnson who sold everything they owned and bought a boat to travel the world. The comment section was all over the place - everything from people accusing them of having their parents paying for everything to "they'll have a rude awakening when the money runs out" to "they're living my dream. And a surprisingly vigorous discussion about whether the wife has breast implants. 

Along the way they created a blog and, later, a Youtube channel. Driven by my existing curiosity (about the lifestyle... and maybe a little about the implants), I followed their adventures off-and-on over the years.  

I wanted to showcase Matt and Jessica for several reasons. First, they 're a little bit of everything - perpetual travel/professional nomad bloggers, world travels, a little "look at me in my bikini" thrown in. Second, they've been doing posts on their personal finance for some time (cost of sailing, with the occasional trajectory vid), so there's some numbers to work with. Third, they've been around for a while; this is important - it's easy to say you're a professional traveler for six months or a year, until the money runs out. Fourth, they use many of the same avenues for revenue generation that lifestyle bloggers rely on (Patreon, Google Adwords, etc.). Fifth, they have a mature, established audience, to better allow us to see a relationship, if any, between audience size and income. Last (but not least), the life they lead is (at least superficially) attractive to outsiders. Many of us would leave the "rat race" (how I hate that term) to trade places with them. What costs - if any - are extracted by taking the fun route in life? 

Most of the up-to-date information comes from this recent post, while the rest comes from their blog (note that this seems to be petering out in favor of their Youtube Channel, possibly for monetization reasons). I'm doing my best to piece together their chronology, but I'm not an expert on their lives and there could be missing pieces, so take this with the normal caution. 

A timeline of events:

Quick background: Matt and Jessica Johnson. Upwardly mobile blue-collar couple. White. Moderately attractive. Average camera presence. Michigan. Began sailing late 20s-30-ish (now mid 30s). Not much college education, but good family connections that led to good (pre-sailing) jobs, a house and the ability to save a little money and have all the little luxuries often regarded as normal. The couple begins sailing around 2010. Enjoys it. Starts a low-key blog at some point. Decides they want to do this full time. Begins planning in 2010, early days of their blog. In 2012 they take the plunge: the pair moves to buy a larger boat, liquidates their home and other assets to buy said conveyance, and invests the rest. Decides to sail the world until the money runs out. They plink around for several years, eventually (almost sailing across the Atlantic before deciding they need a bigger boat with a metal hull (ostensibly to travel to the Arctic Circle in future journeys). They buy a project boat in Florida in 2015, sail back there and sell their boat. They settle down for an estimated 6-8 months of work on the boat. Two-and-a-half years later, they finish the project (typical renovation!) and have recently set sail (again) to fulfill their dreams. This is where they are now, two months back on the water. 

My (Incomplete, Sketchy) Financial Analysis

My basic analysis is centered around one question: could you or I, as a average people, do this? And what sacrifices would doing so entail? 

Background Analysis

Matt and Jessica started out from a good spot, in my opinion, but not an amazing one. They skipped advanced schooling and entered the work force relatively early. This yielded few/no student loans and an early acceleration of earning and saving. A college-educated couple would likely make more than them over the long term, but at the age of 25-30 these people would be ahead, financially. 

We know (from the info they provide) that they were able to save and invest approximately $100,000 prior to their departure. This is in addition to their sole asset, the boat. This money, which is bizarrely called a "kitty," is the main source of funds from which their living expenses would be drawn. The amount of money they start with seems reasonable to support their initial goal (i.e., sail around until the money runs low, then return to society). 

We all COULD do this. College education would put a damper on plans - you'd lose four years of working wages and would perhaps have loans. It would take longer to accumulate the capital to attempt this. Plus student loans increasing your burn rate. Plus there are opportunity costs to consider - a college person's traditional career trajectory to more lucrative levels requires working your way up. Not saying this is better/worse, but I'd guess Matt and Jessica had less to lose long term by walking away, at least compared to the average college path person.  

The Journey

I'd divide this into three parts: early cruising (from their launch until the boat refit 2.5 years later). 

The one-time costs of start-up are about $93,000 for the boat and getting it ready (it is, apparently, quite expensive to prepare a boat for blue water sailing). This is $59K to buy the boat and $34K of parts/supplies, which doesn't account for their own labor in preparing it. Costly, but cheaper when viewed as a car + residence together. I'd take a camper van, but whatevs. 

The significance of this is that they needed nearly $200K to begin, $93K for their boat and $100K of sailing funds. A little harder to match, but two people should be able to manage it. 

How much does it cost to cruise? Well, they helpfully post their spending numbers for several years between 2012-2015. The answer is surprisingly modest.

I first made estimates from data provided on their blog and got the following numbers:

2012: $23,088*
2013: $20,409*
2014: $12,619
2015: $19,128*

*Extrapolated from partial year data provided on their blog.  Note they cruised 2.5 years, spread over four calendar years. I extended monthly reports to the full year. Interestingly, Matt and Jessica report they spend about $1400  a month (17K-ish a year), which is closer to what they report for the only full year data is available. 

But our numbers are within hailing distance, so let's go with it. If they started with $100K, this amount would be far from depleted. This is, by their own admission, a minimal-ish cruising budget.

It's worth noting that the stock market was on fire during the whole of their travels, giving us something of a best-case return scenario, i.e., their money lasted as long as it could. The stock market was +16.5% (2012), +22.6% (2013), +11.3% (2014), -6.7% (2015) for the years they were traveling. Using these numbers along with their spending, I'm seeing them left with $57K (a Noah estimate, to be sure), certainly enough for a number of additional years of cruising. Add to this some other windfalls, a small inheritance and some odds 'n ends income, and a little revenue from incidental income not noted on their normal expense reports and it gets better. In fact, at the end of this period, the couple reports being left with $85K, which is roughly the $57K of their original money plus the incremental income listed above. 

So it works, at least during a good economy. There was some luck with the timing - if they did this before the 2009 crash, they would have been on fumes by the end. Still, we see that, even in this favorable scenario, that they are depleting their assets at a good clip. This is not a sustainable life, although they never claimed it was. 

You could end the analysis here, as the next part is a lengthy boat refit to pursue their future goals. 

Chapter 2 - The Boat Refit

Then we begin part two of their journey. In 2015, the couple bought a new boat and moved into a marina in Nowhere, FL to do a full gut rehab. I'll say right now, this was almost certainly a terrible, terrible mistake. 

I think I know exactly how the idea went in their minds. They sold their old boat for more than they paid ($20K, btw) for the new boat. This put cash in their pocket, some of which would go into refitting the new boat and, with a little sweat equity, they would emerge with a fixed-up larger boat and with a little extra cash. After all, they'd fixed up their first boat, but this was a gut rehab. Living in a property (a fucking boat in this case) is a BAD IDEA, but trying - and failing - at this kind of scheme is one everyone seems to go through at one point or another. 

From 2015-2017, for 27 months, they worked on the boat. In central Florida. Living in the boat they were working on. For multiple years. This is, conceptually, hell. If you watch the videos they post from 2015 to 2017, you can see the two of them unravel from the strain of rehabbing the boat on the cheap.

It's also when the money crunch hit the couple. Boat work is expensive - there are repeated references to them going over budget, both in time and money (here is their report on the costs involved, should you be interested). They report spending an additional $47K on just the material (this doesn't include the value of their time or their normal living costs). In retrospect, getting regular jobs and buying a ready-to-go boat probably would have been a better return on investment. 

I would argue that this part of their lives are no different from a normal workers. In many ways, it's much worse: they're technicians with full-time jobs, only they're working for free. Their nest egg is being eaten away by the minute (with few ways to replace it) and the boat renovation is inching along at a glacial pace. You're hot, poor, tired and you've already sunk so much time, effort and money into the fucking boat that the only way you can possibly recoup your losses is to just keep going. 

If the last bit sounds a little bit like a gambler's mentality, you're probably not alone.

I'll also note that they began monetizing heavily at this point. They shifted to Youtube to become vloggers instead of bloggers (the four of you reading this should already know that no one likes to read anymore;). Google Ad revenue harvesting began and they also began a Patreon account (this is a pledge-based system where donors give a certain amount per video that's autobilled). Lastly (and most annoyingly) they started doing that "partnership" shit, where they do giveaways of some company's overpriced crap. For example, they toted some brand of yuppie wooden watches for awhile, and they're doing something with sunglasses at the moment. All of this is a shift to the "traditional" income generation methods of blogger/instagrammers.  

At the conclusion of their refit, they do have a seaworthy boat, but at a high cost:

Remaining funds at the start of the refit: $85K

Income: a combination of ad income, patreon, and reselling and working on other's boats (that last one sounds dangerously like a part-time job): $30K (or $1,100 a month).

Total expenditures (living expenses, boat materials, marina fees, etc.): $110K

Balance after refit: $5,500.

They're broke, basically. 

Chapter 3

A few months ago, Matt and Jessica returned to the water. At this point, the couple has a boat in good condition, a mature, monetized audience, and - having destroyed their financial cushion - very little money. They need to perform now if they're going to make this a sustainable lifestyle. They think they can do it. 

Can they? 

I am cautiously optimistic that, yes, they can. At least in the short term. Since returning to the water, they've posted three videos a month. Matt and Jessica say it takes them 35-40 hours a week to produce these so, for all intents and purposes, this is a single full-time job (or two part-time jobs). In the two financial updates they've posted over two months, they've made a total of $5200 and spent $4100. So they're successful, in that they're spending less than they make. And, yes, they are making money. A little bit. But two months is a short time to draw conclusions.

Final Analysis and Concluding Thoughts

I'm a little bearish on the whole "vlogger for income" thing - there are virtually no barriers for entry, a ton of competition, particularly in the lifestyle space where people throw away their regular job to become a travel blogger - those stakes are high, and you better put out a good product. How much growth can you have with all that competition for market share? There's always the lottery chance they become mainstream and make oodles of money, but it's statistically unlikely. Also, you can lose your audience in a second with a single boorish remark (this disqualifies me from trying, yeah?).

Under current conditions (vis-a-vis their earnings and spending), I'd guess Matt and Jessica will just about break even, which is to say they could cover their costs of traveling and not continue to deplete their resources. Which allows us to sort of address the question of "is it worth it?" 

For me, the answer is "no." Living in a tiny space on a tiny income. Not having the money to do what I want is too large a sacrifice. 

The analytical part of me also thinks it's a bad idea. For the bean counters, it's worth noting that there are some other costs associated with avoiding the 9-to-5. For example, it doesn't appear as though Matt or Jessica are paying into social security or medicare. This could well bite them in the ass if they travel long enough (social security benefits are based on your ten highest years of income, I think). They're also vulnerable to big medical bills that would be blunted by job-provided health insurance (on that note, I don't think they have health insurance at all, but I'm not certain of this). And there are the various opportunity costs, ranging from things like potentially re-entering the work force at a lower point or not having kids (although some don't see this as a disadvantage). They're also missing adding to their savings and losing out on 5-10 extra years of compounding interest. And then there's home ownership - they've now lost out on ten years of appreciation, principal additions and tax deductions from mortgage interest. All in all, I have no doubt they'll be financially behind a cube warrior, even one who only saves 2% of their paycheck (this isn't far from the average American savings rate, btw).

These real costs are - hell, must be - offset by being able to travel to new places, live a life that is externally interesting, etc. Is it worth it to them? 

I sure hope so, because these guys are front-loading their lives with fun experiences, possibly at the expense of being out of position for the rest of their lives. Or maybe I'm just a frightened old man who's afraid of leaving the neighborhood. 

Thinking about this also made me consider the idea of sunk costs - people like Matt and Jessica work pretty darn hard to build up a readership, generate a little revenue in a tough, tough space. Like the boat rebuild, where the only choice is to go forward, does the fact that their livelihood and lifestyle are inextricably linked make them stay in a situation they're not so happy with? Obviously I don't know this either, but it's an interesting idea, that travel bloggers may be trapped by their ideology or success.  

Although I've never met them, I'd like to thank Matt and Jessica for being so transparent. It takes a lot of courage, and they're providing a very valuable service in allowing me to de-mystify this type of life.