Finances and Budget - Circumnavigation

[Anders]

Reckless? Possibly.
Will you and your family remember it for the rest of your lives? Absolutely.
Two years is really not enough for a circumnavigation. If it was me I would try to go earlier rather than later since I beleive it would be more fun before you have a teenager...

[cAmstar]

Wow, what an amazing array of comments and suggestions. I'll be completely honest, this has been a good dose of reality for my wife and I. Although I understated some of retirement savings above, I realize we may be behind somewhat if we expect to be comfortable at 65. However, life has so many variables to it. We won't give up our dream just yet, but this gives me a LOT of thinking to do when it comes to planning financially.

Chartering a boat first seems like a great idea but the cost is so high. Perhaps sharing a charter rental with another family is the way to go in the short term to get our feet wet, so to speak. We're also planning on crewing some races when the covid restrictions ease up.

Cheers.

[TrentePieds]

You say: "Chartering a boat first seems like a great idea but the cost is so high. Perhaps sharing a charter rental with another family is the way to go in the short term to get our feet wet,"

"So high" compared to what :-)?

Think on this: TrentePieds is, obviously, a thirty-footer. About 5 ton displacement and therefore would be rather cramped for a family like yours. Buying her was no trick at all. You can basically buy a boat like that for spare change these days.

However - OWNERSHIP costs are a very different thing from ACQUISITION costs. Owning TP and keeping her in reasonable nick requires me to transfer a thousand bux a month from my (personal) "operating account" to the dedicated "TrentePieds" account, so that is twelve grand a year removed from any budget for other pleasurable activities. As I said in a previous post - it's only a viable MO for us because we hung on to the real estate and are long past the need to provide for kiddiewinks!

For that twelve grand a year I've had NO sailing since last October, thanx to Covid restrictions, and I expect to get none this summer. But I'm locked in because much of the expense is moorage expense. Were I to sell TP, which I could easily do, I would lose my slip, and it is HIGHLY doubtful that I would ever find another in my lifetime, what with the present pressure on moorage given that this 'ere coast is "overpopulated" with boats - many of which never move.

Now, even without Covid restrictions, If you were to charter from some organization like Cooper's you'd probably get your year's sailing for half of my ownership costs, and certainly for no more. As owner you need to worry about whether your bilge pump is still working, whether something has drained and killed your batteries, etc. etc. etc. When you charter, you can sleep far better on windy nights :-).

Now I could go on drawing 'orrible pictures of the trials of ownership. But my intent is not to frighten you off. It is to set you thinking in a structured fashion about the relative merits of owning and chartering. You can only do such structured thinking if you quantify your deliberations, in other words, if you prepare comparative budgets.
And if you are honest with yourself while you do it :-)!. As MySaintedMother taught me: "If it ain't quantified, it don't count!

You should know that in my callow youth I skippered a biggish boat (27 ton ketch) on "Crooze'n'learn" vacations on which I often had three couples aboard. They were always unrelated, just thrown together by the booking office of Cooper's predecessor organization. I still - fifty years later - have a T-shirt a student sent me from his home in the Bahamas as thanks for the vacation I gave his family in that ketch. So don't get to thinking that you have to be a boat owner to enjoy some seafaring :-)!

Cheers

TrentePieds

[Joh.Ghurt]

Originally Posted by cAmstar

Chartering a boat first seems like a great idea but the cost is so high.

The cost of chartering is peanuts compared to the cost of ownership. Think of it as an insurance against future stupidity and education. I guess in the US-VI you'll get one for about $7000 per week in the 39-40 ft range during mid-season.

Originally Posted by cAmstar

Perhaps sharing a charter rental with another family is the way to go in the short term to get our feet wet, so to speak.

That's fun if the families have similar interests and like each other. Even better if one of the other family is already a somewhat experienced sailor.

[Cheechako]

Originally Posted by cAmstar

Thinking seriously about a circumnavigation with my family in a few years and want to hear from others who have done it about what it does to your financial state. Here are my circumstances:

- Married, both of us are mid-40s
- Two kids, 8 and 5
- Single income, on the high side
- Own a condo worth USD 650k, but still have USD 100k of mortgage
- USD 200k in retirement savings
- Sailed a lot when younger but not super handy or knowledgeable about boats or boat maintenance

How reckless would it be to sell the home (this would give me USD 550k after paying off mortgage), buy a boat for USD 300k, then budget USD 50k/year for two years of travel, assuming no income during the sailing. How much would i be able to sell the USD 300k for after the trip? Am i completely messing up our financial trajectory and kids future for a few years of fun? Should i instead buy a USD 100k boat? Is that safer?

I'm sure this question has been asked and answered many times, but can't seem to find exactly what I'm looking for so will ask again. No doubt opinions will vary depending on viewpoint and circumstances. I hear all the time about people selling everything and buying a boat, but are they selling everything and buying a boat with half of their savings? 75%? 15%?

cAmstar

Are you currently a sailor? If not get some experience with the whole family aboard; at least buy a smaller boat or charter a few times for a couple weeks. See if it's going to work. I've seen it many times; people spend years preparing a boat, then they quickly decide they dont like cruising at all! It's a real thing.

[joelhemington]

Originally Posted by cAmstar

Thinking seriously about a circumnavigation with my family in a few years and want to hear from others who have done it about what it does to your financial state. Here are my circumstances:

- Married, both of us are mid-40s
- Two kids, 8 and 5
- Single income, on the high side
- Own a condo worth USD 650k, but still have USD 100k of mortgage
- USD 200k in retirement savings
- Sailed a lot when younger but not super handy or knowledgeable about boats or boat maintenance

How reckless would it be to sell the home (this would give me USD 550k after paying off mortgage), buy a boat for USD 300k, then budget USD 50k/year for two years of travel, assuming no income during the sailing. How much would i be able to sell the USD 300k for after the trip? Am i completely messing up our financial trajectory and kids future for a few years of fun? Should i instead buy a USD 100k boat? Is that safer?

I'm sure this question has been asked and answered many times, but can't seem to find exactly what I'm looking for so will ask again. No doubt opinions will vary depending on viewpoint and circumstances. I hear all the time about people selling everything and buying a boat, but are they selling everything and buying a boat with half of their savings? 75%? 15%?

cAmstar

Given that you'll have at least four people on board, this will probably intail a catamaran not just for the additional cabins but also the comfort level while under sail and on the hook. So you'll be looking at the $300k number (ain't going to happen on $100k). It would be best to keep your condo and hopefully rent it out to cover the remaining mortgage and travel expenses so you're not plundering your savings. By the time you are ready to go, the eight year old should be capable of becoming your first mate. 24/7 watch is essential if you want to be safe, so with four people that makes six hours a day. Standing watch is not like digging ditches and you'll be at anchor a good deal of the time so this should not be too big of a hurdle for you. There are numerous threads here that deal with budgeting but it seems like $100 a week per head for food is about right. Ongoing repairs will be extra and cheaper if you learn to do them yourself. The popular answer to "how much does cruising cost?" is "how much have you got?"

Ps: If you don't get your kids involved with the project, they'll be bored to death and you'll be hearing "are we there yet ?" ad nauseum.

[Hardhead]

The fact that you have the dream shows that you're still alive in life. I wouldn't be discouraged by the financial issues, but I'd downsize the plan to buying a used cruising boat, and keeping the adventure in more domestic waters to start out. After fixing up a boat, you'll have a non-material attachment to it, and that and some salt spray in your face makes one heck of a memorable time wherever you cruise to. After a few years of this, you're ready to scale-up the plan with some valuable insight, and as newly perceived opportunities arise. One door always opens another. An unaddressed dream often leads to some degree of regret.

[mglonnro]

Originally Posted by cAmstar

Wow, what an amazing array of comments and suggestions. I'll be completely honest, this has been a good dose of reality for my wife and I. Although I understated some of retirement savings above, I realize we may be behind somewhat if we expect to be comfortable at 65. However, life has so many variables to it. We won't give up our dream just yet, but this gives me a LOT of thinking to do when it comes to planning financially.

Don't give up on your dream!

If anything, and if it gets financially tough, give up on your expected standards of living. They do not correlate with happiness, anyway, as long as you don't have to worry about the really basic necessities of living.

From thirty years of having watched my mother wither away, due to Parkison's, from her mid-forties, and also from some other events in my own life, I think sooner rather than later, and doing rather than not doing, may be a valuable life philosophy.

Chartering a boat first seems like a great idea but the cost is so high. Perhaps sharing a charter rental with another family is the way to go in the short term to get our feet wet, so to speak. We're also planning on crewing some races when the covid restrictions ease up.

I think chartering isn't the optimal way to jump into it, because you set up this very short (and expensive!) week (or so) to confirm all of your expectations, and depending on whatever slightly random circumstance (bad weather, seasickness), there's a big chance you won't meet these expectations.

Getting into sailing (with your family, your own boat), is in my mind, a much longer process, and getting far enough in that is easier when you can't just exit and walk away after a not-so-good week of chartering.

So, how I would do it:

a) Yes, go for that 300K boat for your big project, especially since one forum member said the single guys always have old and cheap boats (so to stay married, that is!)

b) If at all possible, get the 30-40K "learn to sail together" boat now, and start the big project by learning, as a family, to together do the small project first.

My .02

[MJH]

Originally Posted by cAmstar

Thinking seriously about a circumnavigation with my family in a few years and want to hear from others who have done it about what it does to your financial state. Here are my circumstances:

- Married, both of us are mid-40s
- Two kids, 8 and 5
- Single income, on the high side
- Own a condo worth USD 650k, but still have USD 100k of mortgage
- USD 200k in retirement savings
- Sailed a lot when younger but not super handy or knowledgeable about boats or boat maintenance

How reckless would it be to sell the home (this would give me USD 550k after paying off mortgage), buy a boat for USD 300k, then budget USD 50k/year for two years of travel, assuming no income during the sailing. How much would i be able to sell the USD 300k for after the trip? Am i completely messing up our financial trajectory and kids future for a few years of fun? Should i instead buy a USD 100k boat? Is that safer?

I'm sure this question has been asked and answered many times, but can't seem to find exactly what I'm looking for so will ask again. No doubt opinions will vary depending on viewpoint and circumstances. I hear all the time about people selling everything and buying a boat, but are they selling everything and buying a boat with half of their savings? 75%? 15%?cAmstar

When I consider all the possible outcomes of your proposal I would think most of them to have excess risk.

It is a change of life type decision and one that doesn't leave much room for recovery to your present status. Returning to land life and employment after 50 with comparable salary is not probable particularly if you are in a fast paced industry returning with outdated knowledge. If you make a second change to a trade of self employment that would stand a better chance but will you have the capital to get started...a well thought out plan would be recommended.

Finally, right now you are the prisoner of your dream with no practical experience as to what the realities of the cruising life are. Time spent getting some actual experience on the ocean and doing boat maintenance would be recommended for both you and your wife. Don't believe everything you see on the YouTube videos...there are CF postings on that subject alone. Similarly, chartering is not the same as world cruising; your only dipping your tow in the water with that one.

Good Luck.

~ ~ _/) ~ ~ MJH

[Macrophylla]

First I think the idea is great in concept (make sure wife is 100% bought in)

Your annual expenses are too low, insurance and maintenance will easily eat up $30k/yr of your budget. Sure in some third world countries your $ goes further but in the normal cruising grounds it doesn't and y'all will need to eat.''

Do you have savings on hand that could be used as a downpayment to finance the boat? Say 30-40% down (should cover your eventual depreciation) finance the balance. Then sell the condo, use proceeds from the sale to cover your boat loan payments, 30k of annual boat expenses, plus living expenses while you cruise.

Eventually, sell the boat (if you put 30-40% down and maintained her well you should be slightly above breakeven on the payoff) and rent housing while you get back into the workforce and reestablish creditworthiness to eventually buy real estate again.

Numbers would look something like

Down payment - $90-120k
Total of P&I for 2 years cruising - $40k
Insurance, maintenance, etc 2 years - $60k
Living expenses for 2 years - $60k

$250-280k out of pocket out of $500k from the sale of your condo and assumes eventual boat sale is nearly breakeven for you. If it were me I'd have the unspent money invested in something more attractive than just a money market account.

Is there any way to get your employer to keep you on as a contract/consulting employee (no salary/wage but an as-needed hourly consulting fee) if you can avoid having a large gap in your employment history it will help your career long term. If this isn't an option then when you return home you'll likely need to rent to reestablish your work history before qualifying for a mortgage but you'll have the down payment ready.

Lastly, if you go the boat loan option don't talk about what you want to do with the broker/lender initially. Ask to review sample loan agreement docs and consult with an attorney to ensure that if there are stipulations around maintaining employment, etc. you meet them or negotiate those terms away. You DO NOT want to intentionally defraud the lender.

[Timreyn]

If you ask me, you should do this if this is what you want to do. We did when we hit 60 but I wish we had done it much earlier. Our excuse to finally go sailing was "you never know how long you will live so we are going to have a blast for the next few years" Little did I know that four years later my wife would come down with brain cancer and die within 5 months! The years on the water with my wife are priceless. We bought a 10 year old Lagoon that was in excellent condition. I wanted to buy a nice boat that was on the flat part of the depreciation curve. If I were to sell the boat now I believe I can get all my money back less maintenance. We did not sell the house back home and hung on to property and things that ate our kitty like crazy so I recommend strongly selling your Condo and anything else that costs money and then your money for sailing will go far. 50 is pretty young and you can always make more money when you come back. Lots of it if you try! Good luck!

[Letterkenny]

Originally Posted by Timreyn

If you ask me, you should do this if this is what you want to do. We did when we hit 60 but I wish we had done it much earlier. Our excuse to finally go sailing was "you never know how long you will live so we are going to have a blast for the next few years" Little did I know that four years later my wife would come down with brain cancer and die within 5 months! The years on the water with my wife are priceless. We bought a 10 year old Lagoon that was in excellent condition. I wanted to buy a nice boat that was on the flat part of the depreciation curve. If I were to sell the boat now I believe I can get all my money back less maintenance. We did not sell the house back home and hung on to property and things that ate our kitty like crazy so I recommend strongly selling your Condo and anything else that costs money and then your money for sailing will go far. 50 is pretty young and you can always make more money when you come back. Lots of it if you try! Good luck!

Great life advice, horrible financial advice. Would strongly suggest against selling the house to buy a boat. You made no indications what you do for work but what I would suggest is waiting some more years before doing this. If anything, sell the home when ready to cruise for investment property(ies) paid for with cash that yield the best ROI. While waiting to do that, save up for the boat for a couple years and get what you can afford and have the rental income to supplement what you do while cruising. Lastly, dependent on your profession, I would work remotely while cruising to again supplement what you can. Hopefully in a few years time, we will see Starlink come online with affordable satellite internet. At the end of the day, you would a) not become less marketable in the work space, b) have continual income while cruising, c) have a house to come back to once you finish cruising and for which you are not playing catch up for any market movements during your cruising period, and d) maintain the original wealth accumulated. I’d expect the boat market to be a lot more of a buyers market 5 years from now than the seller’s market that it currently is. I would consider this advice from me being an irresponsibly responsible CPA.

[sailorboy1]

To me chartering a boat for a weeks teaches you as much about cruising on a boat as staying a night n a Holiday Inn Express teaches about owning a house. But of course at a much higher cost.

[Fore and Aft]

It's only a question you can answer yourself. I wouldn't limit yourself to just a cat either. Look at some modern yachts. Lot's of room to live on for MY family and that's the problem with your questions only you know what your family likes.
The cheaper the yacht the more spare money for shore excursions which is half the fun of traveling.
As long as the wife is keen a gap year or two is great fun and bugger the consequences. I have repeatedly heard those it's going to ruin your career stories and I am close to fifty earning good money and none of my clients care that there are large gaps in my employment history. The family memories we have made make up for any extra money I might have earned.
Cheers

[Paul L]

Originally Posted by sailorboy1

To me chartering a boat for a weeks teaches you as much about cruising on a boat as staying a night n a Holiday Inn Express teaches about owning a house. But of course at a much higher cost.

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