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Old 13-05-2021, 07:25   #1
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Finances and Budget - Circumnavigation

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
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Old 13-05-2021, 07:31   #2
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Re: Finances and Budget - Circumnavigation

Fine if you decide to do this, but do you think you will be able to retire in the future with only $200k in retirement today? What about college for the kids?
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Old 13-05-2021, 07:39   #3
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Re: Finances and Budget - Circumnavigation

This would happen when I’m 48. I’d be back working full time from 50 and plan to work until 65.

I suppose no one can really answer this except me.

Although I’m curious about the boat depreciation and selling costs etc. Will I lose much more on a $300k boat than a $100k boat?

If it sinks in hurricane will insurance cover me? Or is there a chance I lose the entire thing?
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Old 13-05-2021, 07:58   #4
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Re: Finances and Budget - Circumnavigation

The ones I hear about selling everything to buy a boat don't actually have much in the first place. Remember that couple that was financially devastated when they went hard aground with their $5000 boat on one of their first trips?

The size boat you choose will affect costs and value. A $100k boat might need more work than a $300k boat. If the $300k boat is nearly new, you might be facing depreciation. If it isn't new, resale value will depend on the condition (cruising tends to be hard on boats), as well as the market when you are ready to sell.

Could you rent out the condo and make a plan that works in that scenario so that you have a home to return to?

How old are the kids? Is this something to do now before they go off to college or are they very young and will share a berth, whereas you might need a bigger boat later or ...
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Old 13-05-2021, 09:10   #5
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Re: Finances and Budget - Circumnavigation

Can't rent out the condo for two reasons:
- no rentals allowed
- it would be tough to afford a $200k or $300k boat without selling the condo

I live in Canada so College tuition isn't as financially demanding as USA. I have some money saved up for that and while this may impact the extent to which i can pay for both kids for everything, I will at least be able to make a huge dent, maybe 75%.

Kids are 5 and 8. We want to do this in two years so there will be time after to save up the remainder of the college tuition.

My thoughts on the type of boat:
- This will probably be a once in a lifetime excursion. If i'm going to be selling the boat afterwards anyway, i'd rather buy something nice and comfortable to maximize the experience, and to be able to host friends and family for vacations once in a while.
- Since i'm not yet that familiar on boat maintenance etc, i'm thinking a newer boat makes sense.
- Currently looking at a CAT, ideally over 40ft, built sometime in 2008 or newer.
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Old 13-05-2021, 09:41   #6
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Re: Finances and Budget - Circumnavigation

I was expecting you to be younger than that. I am not familiar with Canadian retirements, but it sounds like you are already behind on retirement savings and proposing to take a couple of years off in what are probably prime earning years, then try to find a new job in your 50s.

In creating your budget, have you been looking at cruisers with cats the size you want? That are doing it the way you want and where you want?

For myself, stretching so much on the boat would mean more financial anxiety, rather than more enjoyment of the luxuries. But then, I am the same age as you and your retirement accounts would give me palpitations, as well, even if I were single again. I also have a brother who quit his job to travel in an RV and ended the trip by moving his family in with our parents while searching for a job right after the dot com bust, so I am very leary of plans to "just" go back to work.

On the other hand, if you are giving current numbers, you have two more years to focus on building that cruising kitty. Make cuts in your budget and save more than ever, build additional buffers. Aim for the $300k boat financially, but keep an eye out for the $150k boat.
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Old 13-05-2021, 10:03   #7
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Re: Finances and Budget - Circumnavigation

Yea doesn’t sound like a smart decision. Not sure what line of work you are in but you will take a marketability hit being away for a couple year. Further, I think it’s fair to say that $50k a year is on the low side for a family of 4 plus boat operating and maintenance.
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Old 13-05-2021, 10:14   #8
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Re: Finances and Budget - Circumnavigation

Quote:
Originally Posted by cAmstar View Post
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
I think your plan and fun would be better if you replace the word “circumnavigation” with the word “cruise”.

Far as the difference in a $100k and $300k cruiser if you are looking at same size it is just difference in boat age (not necessity condition, just age)

And yes you question gets asked weekly and there are lots of threads. It is rare to heard from anyone who does it (i have been full time cruising 4.5 years and been on the forum from before i knew how to sail.

I feel your plan is too short and too low in costs. People will say $50k/year is a lot, but from what i bet of your dream it it isn't (i post monthly costs here every month)

I hope you go and have a great time. But .........
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Old 13-05-2021, 10:21   #9
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Re: Finances and Budget - Circumnavigation

Quote:
Originally Posted by cAmstar View Post

- Married, both of us are mid-40s
- income, on the high side
- Own a condo worth USD 650k, but still have USD 100k of mortgage
- USD 200k in retirement savings
This doesn't add up.

What you're proposing is to:

-> liquidate your assets

-> transfer the bulk of the equity from an appreciating asset to a depreciating asset.

-> Spend the rest of the liquidated equity from an appreciating asset as income.

When you get back, the boat will have depreciated while real estate will have appreciated, you'll have spent the remainder of our equity. You'll have a huge hole in your resume as you're quickly approaching a difficult age to re-enter the work force (50 is as good a dead for many professions).

And, I hate to say it, you're sort of behind the 8-ball on your retirement savings (or lack thereof).
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Old 13-05-2021, 10:22   #10
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Re: Finances and Budget - Circumnavigation

Financially smart? Definitely not. But then is a boat ever?

You are making a decision that only you and your family can make. I understand the questions asked and why. But they are pointless questions to offer to others. You will find some that say go for it and lots that say not to. I am sure your own family and friends think it is a crazy and irresponsible thing to do.

Many of us probably have/do ask the same questions you are asking (at least to themselves). The value of this decision will not be known until after its too late. Could be the best decision you ever made or the worst. But in my opinion the no risk, no reward statement applies here.

If it were me and my wife was on board and I had reasonable confidence I could reenter the job market competitively, the answer would be yes-Do it.

I don't have a wife that would be on board so the question for me is just a "what if" day dream. I have a wife that supports my sailing which I am grateful for. I don't have a wife that does a lot of sailing with me. Especially extended or offshore.

I also need to point out that I am typing this from my desk in my office...Drowning in my wanderlust at times. There is an argument for being "responsible". But there is definitely an equal argument for the"you only live once "theory.

Good luck in making your decision. I hope the you make beings you peace with it regardless of the outcome.

Foster
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Old 13-05-2021, 10:41   #11
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Re: Finances and Budget - Circumnavigation

Not every decision in life should be made just based on financials. Is your plan financially irresponsible? Probably.

I took two years off work when my kids were about that age, and would happily do it again. We did not go cruising, we traveled the USA and made some wonderful memories.

I would go. You can always go back to work, buy another condo, help your kids with college, etc. You will never get back your time. Those kids grow up, and move on with their lives.

Be as financially responsible as you can be, maybe spend less on the boat, maybe sacrifice something now to save more money. If your wife and kids our on board, why not?

Plan for the future but live for today. Good luck with your decision.
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Old 13-05-2021, 11:11   #12
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Re: Finances and Budget - Circumnavigation

Camstar,

whose dream is it to go sailing? Your wife's or yours?

In case it's yours, seriously consider chartering a boat for a fortnight in the Caribbean first to check, how compatible living on a boat is with your family. Go for a boat about the size you'd expect to be able to afford.

You're both rather old for children at this age and the idea of letting go of a good single income at this stage is often quickly followed by the family breaking up. Most people can afford to go cruising only earlier when still young and careless or later when the children are mostly gone. It also should tell you a lot that a big part of men on older or cheaper boats are divorced. Let this be a warning to you.
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Old 13-05-2021, 11:17   #13
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Re: Finances and Budget - Circumnavigation

You've already gotten a lot of great comments here, all of which I agree with. My wife and I have done this twice, each time for a 3-year period. Most recently when I was 40 (53 now) with two kids at 9 and 13. We have a lot of great memories, my daughter especially, and it influences her still (she's 26 now).

However, both times we chose a boat we could afford to lose completely, and not be devastated financially. We still got to enjoy the same nice places that the people on the more expensive boats got to enjoy, but with a lot less worry, perhaps, and ongoing cost.

That also meant that our investments continued to appreciate so that we now have a comfortable amount of money for retirement, though I'm still some years from that. We did sell our house the last time, not to fund the trip but to invest the money, We do wish we hadn't sold the house, because we liked the people we knew in the neighborhood, though perhaps financially the investments made more sense. It definitely doesn't make sense to sell the house and buy a large expensive boat.

I am in the trades, not a professional field, and my impression is it's much easier to reenter a trade than what I have heard about re-entering a profession, particularly at 50 years old. But others would know better than I.

Either way, I doubt it will end up being a huge mistake, given where you are now you likely will be successful when you return. And you will have a lot of great memories with your kids, which will be harder to have later.

The comment, about having your wife on board with the plan is spot on, that's very important and makes a huge difference. I've been blessed to have a wife who has been totally on board with both trips and many other crazy ideas.

Best of luck, but by a cheaper boat!
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Old 13-05-2021, 11:29   #14
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Re: Finances and Budget - Circumnavigation

cAmstar:

You say: " I’d be back working full time from 50 and plan to work until 65."

That's an awfully iffy supposition! What guarantee do you have that you can take a two or three year sabbatical and then get back into your profession/trade when you get back?

I think, not to put too fine a point on it, that if you do do what you are proposing, you will be selling you children's future education as well as the future security of your wife and yourself for a mess of pottage.

My expectations as a fellow Canadian is that we will suffer enormous increases in the CPI as the chickens now being hatched under the Covid umbrella come home to roost and as both our secondary and tertiary economic sectors continue to be sold off to "off shore" corporations. We will continue to be the "hewers of wood and drawers of water" that we have always been. The ONLY protection a man has against future destitution is the possession of real estate - even if it be "only" a condo. The pressure of unstoppable population growth upon evermore inadequate quantities of accommodation will ensure that!

Depending on where you are located, your statement that there is a prohibition against a condo being rented out may not be true. Under the legislation obtaining in BC a strata corporation CANNOT deny an owner of one of its condos the right to rent it out. Tenants are, however, subject to the bylaws of the strata corporation. So you may want to check this out.

Now don't get carried away by the stuff bruited about by the glossy magazines. Here is a link to a type of boat that sold in our marina for Can$65K summer before last. It's an excellent, excellent boat for a cruising family like yours, and this one was fully found, just in from a circumnavigation and ready to "provision up" and go again tomorrow:

https://sailboatdata.com/sailboat/fast-passage-39.

Since you are not yet a salt-encrusted seafaring man, you might like to consider that a boat perfectly suitable for cruising on both of Canada's coasts as well as The Lakes can be had any day of the week for less than ten grand. TrentePieds (a thirty footer, obviously) is such a boat, acquired for a pittance precisely because selling the condo would have been absolutely daft given the level of financial acumen that characterizes "Canada's Natural Ruling Party". One of TP's sister ships (there were only a coupla dozen ever built) was in New Zealand last I heard of her. The type is perfectly able to cross oceans. The fundamental question is always whether the SKIPPER is up to doing it!

Now if you would like to shift the discussion onto the practical aspects of living aboard for prolonged periods of time and to such delights as navigation and the husbandry of boats, you will find CF an inexhaustible source of advice - and even of opinion ;-)!

All the best

TrentePieds
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Old 13-05-2021, 12:07   #15
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Re: Finances and Budget - Circumnavigation

Quote:
Originally Posted by cAmstar View Post
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
First this amount is too low for your class. you must save more money.
second by new cat he first year grow in price 15-20 to 30% ussualy for example Nautitech 40 explorer version (full) one dealer,businessman bay ,pay every couple month deposit and payment rate to distributor around 315000-350000€ after 4-5 year saling pice is 400 000€
https://www.yachtworld.co.uk/core/li...rtByPriceAsc|0

the best time for negotiation baying new cat is June July delivery next year august-September in charter season-high because the charter company doesn't bay boat in this time if be 1/2 price.

search dealer in a small country because all dealers must sell some number of the boat. lot dealer panic sale boat because having a contract with factory minimum annually yacht sale.
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