# Financing a Family Circumnavigation



## engineer_sailor (Aug 27, 2011)

I've read many books, blogs, and other accounts of families setting out to cruise for several years. Everytime I ask myself: how did they finance this?
I know there are many different answers and budgets based on lifestyle choices, timelines, risk tolerance, etc. So to set some parameters:

Say a 4 year trip for 4 people, 2 adults and 2 kids

Boat: $300k
Yearly costs: $50k (assuming no boat payment)

Lets call the total $500k and ignore yearly interest and such. Where does this $500k come from? Are people raiding their 401ks and taking the penalty? Are people financing the boat and making monthly payments? Does the insurance issue prevent the boat financing, which means you have to $500k liquid?

When I think about incomes, the cost of living on land before the trip, and the required trip dollars, it never seems to add up.

So, how do people do it?

Josh


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## jimgo (Sep 12, 2011)

Josh, for starters, I think many people aren't going off in $300,000 boats. Many are doing it in $50K-100K boats, and some even less expensive. I'm also not sure that $50K is accurate for some. Many are working while they cruise, too. Most also don't own real estate; some sold while the market was good, and had enough to buy the boat and have a nest egg, too.


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## bljones (Oct 13, 2008)

All sorts of answers. some sell their homes to buy their boat, some have made it a ten year plan and lived beneath their means for a decade to be able to take a year or two off at a time, some are lucky enough to be able to telecommute and can continue to work while cruising. some some went small and went now.
If you want to do it bad enough, you find a way.


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## Minnewaska (Feb 21, 2010)

Lot's of way, as mentioned. Personally, I would not blow that kind of money on a circumnavigation. I don't really get why circumnavigating is so attractive anyway. Awesome accomplishment, perhaps that's the draw. However, I will never get to everything I want to see in the Atlantic, so I don't get why I would need to go further.

Another method commonly used, is to put your boat up on the hard from time to time, fly home and go back to work.


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## chall03 (Oct 14, 2002)

Among the long term family cruisers/circumnavigators we know, there are lots of different answers.

Like BJ said all of the above. You find a way that works for you. Cruising around the world will not ever make economic sense. You either get over that, or you get over sailing around the world until you retire at least. There is always going to be some sacrifice.

I know several people who were successful small business owners, who have sold the business and are doing it off the back of that and I know some that do a bit of work as they go, and I know others who are on limited budgets for a limited amount of time. They are the common three stories.

What I can tell you is what our rough plan is. Subject to change, YMMV.

Our Boat: 35ft. 20 years old. Worth 100k. Payed off while still working. Major refits/upgrades undertaken now before we go, so no 'big ticket' maintenance while cruising( We hope).

3 years cruising with an option to extend on 35k a year.
We expect to spend far less in Asia and more in the Med if we get there. ( We are not necessarily circumnavigating, because of the Gulf of Aden/Cape Horn pickle- subject for another thread .

Our total 105k.

We will rent out our house, which will cover the mortgage and give us something to come back to and help a bit but not much with money while cruising.

The balance of the 105k needed is just savings from blood, sweat and tears, not buying stuff, new cars, not going on holidays etc. Our get out of jail card is that once the 100k is gone, we can sell the boat and recoup the 100k back.

Our plan I guess can be summed up as 'cheap boat, low to moderate cruising budget, but with minimal financial risk'.

When the money is gone we sell the boat and come back. The house is untouched. We are free to cruise, but we also haven't sold the farm to do it. The perfect 'Have your cake and eat it too" approach? Will it work?? I don't know, ask me in 2018.

We could of however sold the house, bought a Hallberg Rassy and gone for broke. Trust me everytime I see one those darn pretty boats I am real tempted. For us though it wasn't the right fit. Other families are in different situations and have made different decisions.

For example if you can be smart about the boat you buy, how you buy it and what your plan then selling a house to buy the boat might be an option if your plan is a fixed 4 years. For this to work think buying a popular easy to sell 2 year old production boat, keeping it in good condition, and having in your plan that you will sell it in 4 years, hopefully only at a modest loss.

Several Australians I know actually have over the past few years bought a 2-3 year old Beneteau 40 something in Europe and sailed it back to Oz and sold it for a profit.

If you haven't already I would suggest having a good look at S/V Totem - a family sailing the world. Behan talks honestly about what there costs have been so far and how the money is working out.


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## killarney_sailor (May 4, 2006)

If you have to ask the question about the $300k boat and $50k cruising budget you can't afford to go that route. Some people just have lots of money - we met folks cruising on $2 million boats and they weren't worrying about paying for it all. Most people do it with a much cheaper boat and much lower budget. the methods mentioned here pretty much make sense except it is very, very rare that people work on route unless it is some form of telecommuting. Flying home to work also happens. i am back in Canada now working and will return to the boat in Grenada after hurricane season.


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## GreenNonic (Feb 26, 2014)

I don't think i know enough about sailing to reply to this but i do know a little about budgeting and living without a lot of money. 
Firstly i honestly do not see how cruising would cost so much per year. what are they spending the money on? i feed myself and 4 others on less then 400 a month that is 4,800 dollars (it would most likely be even less since most of the stuff we eat, you couldn't take on a boat cruising because it would spoil) whats the other 25,000 dollars for? obviously i dunno how much it is to live in other countries but if you are cruising, i assume you are not "living" in places as much as sailing past them, so i assume the money is for food and fuel, i have other posts on how i would cut the cost of food down to practically nothing,so i wont go into it here, i just think a lot of people cruise, and i think a lot of people are doing it for less then the numbers i see being projected., i have seen you tube videos of people who work between trips though . a lot of cruisers seem to be retired people also with fixed incomes and stuff. i think cruising is like everything else, I've seen people who make 37 dollars an hour piss and moan about being broke, wile i live pretty happily on so much less, i think the trick to cruising is actually sacrifice, you are going to have to give stuff up to go , i really don't think you are going to be able to sail a 20 year old 37' around for 2 years and then resell it for 100 grand. there is to many newer boats for less. but like i said, i am ignorant of sailing right now, and the cost of sailing SO i could just have really optimistic ideals about the cost of it or something, i think i could cruise for a lot less then 30k budget though.


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## Minnewaska (Feb 21, 2010)

GreenNonic said:


> ...... Firstly i honestly do not see how cruising would cost so much per year. what are they spending the money on?.


Boat repair
Mooring
Entertainment
Restaurants
Insurance
Medical care
Immigration fees
Every other incidental you might need over the course of several years. You'll even need to replace some of your clothing.


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## engineer_sailor (Aug 27, 2011)

Thanks for the details chall03, those are the kind of details I am trying to understand. I picked those parameters as rough guesses. I also didn't intend to over constrain to circumnavigating, perhaps sabbatical is a better term.

Boat: $100k
Yearly costs: $35k

Is still a solid $250k one had to come up with. 

I could see that being in reach for retiring boomers with pensions or houses that appreciated during the housing boom. Might be tough for someone in their 30's today to get to

Josh


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## blowinstink (Sep 3, 2007)

engineer_sailor said:


> Thanks for the details chall03, those are the kind of details I am trying to understand. I picked those parameters as rough guesses. I also didn't intend to over constrain to circumnavigating, perhaps sabbatical is a better term.
> 
> Boat: $100k
> Yearly costs: $35k
> ...


I like a combination of the scenarios above (assuming you are a typical engineer with a house and a little savings): Buy the boat while you're working. If you already own a home, what extra can you pull from it by renting it while you're gone? Even if the rental of you house only nets you 1K / month, you then only need 80K for a 4 year trip (on that 35K budget). Can you burn your IRA? Tell the kids that a year cruising is gonna pretty much it for the idea of college savings (who is gonna be able to afford college when they get there anyway, right?)? Maybe just take a 2nd on the house for that extra cash. It all depends on how much it means to you and what you're willing to give up (you realize you'll have to do something illogical . . . right? ).

A 3 year tour of the Caribbean might only require 50K to buy and outfit a boat . . ..

If you are hand to mouth on land, and you really want / need to cruise, you'll probably have to re-conceptualize what cruising means to you . . . as you say maybe something other than a circumnavigation. Kids who grow up on a boat probably take away an awful lot regardless of the cruising grounds.


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## outbound (Dec 3, 2012)

Every one's circumstances are different. Have repetitively done spread sheets with financial advisor and to do it again in a week as we finally are getting close to spitting up the anchor. After researching this don't expect to do the clock but rather N.Atlantic then canal to S. Pacific. 
Multiple unexpected variables:
flights home
medical care
professional services at home to keep land side concerns/family stable, safe and happy.
Land side costs while cruising- purposeless to go to all these lovely places and not be able to enjoy the cultures/sights/cuisines.
Big issue is what in my profession is called QOL ( quality of life). It's this that will determine what boat you get, what you put in it, and what you will spend travelling.
If contemplating this sure read the books and blogs but talk with your S.O. and professional advisors so you can truly be realistic as it concerns your life.


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## engineer_sailor (Aug 27, 2011)

I started this thread just to begin to understand the mechanics and even vague numbers. Lots of good info to start assessing if such a trip could ever be possible. The key is to formulate a plan instead of relying on serendipity and/or luck.

Pretty fascinating that people manage these trips. Seems like it's a great experience for all involved including the kids. I am sure it's the right choice for some and not for others


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## killarney_sailor (May 4, 2006)

engineer_sailor said:


> Thanks for the details chall03, those are the kind of details I am trying to understand. I picked those parameters as rough guesses. I also didn't intend to over constrain to circumnavigating, perhaps sabbatical is a better term.
> 
> Boat: $100k
> Yearly costs: $35k
> ...


What we noticed in our travels is that probably 90% of cruisers living on whatever pensions/savings they have. Some live quite frugally some not. We did see quite a few cruisers in the late 20s to 35 year old group.
general observations:
- 35% singlehanders; 55% couples; 10% with young children (met a French couple in Panama who had two young ones and she was nine months pregnant. They were going to have the baby and carry on. The other kids had been born in Tahiti and New Zealand. They were on their way to Thailand

- 95%+ were cruising for a finite time before heading back to work. It was funny in South Africa because they had all sailed 20,000+ miles and were running out of money and going back (mainly Europe) to get a job. Some were going to just save money for a few years and then take off again, some were going to 'settle down' and have kids

- boat prices were $3000 to $25000 range with size from 27' to 34'

- monthly budgets were very low; highest might have been ~$1200; lowest $200ish? The $1200 people were able to rent cars and go off touring to Kruger park that sort of thing so they were not suffering.

- overwhelmingly they were European and especially from Scandinavia. Most of the Swedish and Norwegian boats we saw were young people.


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## Alex W (Nov 1, 2012)

I think it's all about a plan. 

Given your alias including the word engineer you are probably near the top of the income scale in the US. I'm an engineer (about 5 years older than you?) and work with a lot of engineers and it's certainly easy and comfortable to match lifestyle to income. Many of my friends and coworkers have done this. It can be a happy way to live if you don't have big travel desires.

I made a choice about 10 years ago to try and limit spending and pay off all debts (so not moving into nicer and nicer houses or needlessly upgrading cars or sailing bigger and newer boats) and concentrate on being able to "retire" earlier (I put "retire" in quotes because it will probably mean switching to a lower stress/lower income job after some extended travel). I don't know that retirement will ever include sailing around the world, but it will certainly include some extended cruising. 

I don't know how to do this without a plan.


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## B.J. Porter (Aug 1, 2013)

There are probably almost as many answers to the question as there are people that want to do it. More probably, because more people obviously try to make it work and can't...those might not be the right answers.

In our case it was a long term plan, combined with good earning power and saving some money and having some OK investments.

But we started planning to do what we are doing now almost ten years before we finally left.

Some people just GO, and worry about the nickels when they do it. In our case my wife was not up for that financial risk as she wants to make sure our kids can go to college.

The permutations and combinations are endless...we ended up leaving before we'd achieved every financial goal (#1 being sell the stupid house for a lot of money) because we wanted to go with our kids. We were already a couple of years behind leaving (see house not sold...) and just said "lets so it" so we could be with the kids.

What I've learned so far...

- Get the house sold. It is worth more to you gone than bleeding money while you are out there. If you want to keep it an rent, do it...but get a rental manager. You do NOT want to be trying to deal with a flooded basement from 5,000 miles away.

- Smaller and simpler really is cheaper. We love our boat, it is fast, comfortable and we can carry frozen meat, make water, etc. But we've spent a lot of money and time fixing stuff. Simpler boat = fewer things to break = less $$ spent on repairing things. When you anchor things like your boat length don't affect your costs, but when you have to paint the bottom, haul out, or get a slip it adds up fast.

- That being said...people on simpler boats spend a lot of time fixing things too; you have to include that in your plans.

- Start trying to live cheaply NOW. The last year before we left we almost made a game of it. The year before that we took some steps...but weren't really on it. If we'd been doing that for five years we'd have had a lot more in the bank.

- Many of your costs that you are used to now will be lower of go away. Clothes, cars, etc. all drop off a lot. Communications ends up being more than you expect, but not awful. People in this day and age are used to being in touch!


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## chall03 (Oct 14, 2002)

engineer_sailor said:


> Thanks for the details chall03, those are the kind of details I am trying to understand. I picked those parameters as rough guesses. I also didn't intend to over constrain to circumnavigating, perhaps sabbatical is a better term.
> 
> Boat: $100k
> Yearly costs: $35k
> ...


We are in our 30's. It is tough but possible, the tough bit makes it worth it!!

The bigger issue for us was and still is leaving and then re entering careers.

Where do you want to cruise??
Do you want the 300k boat or could you do it in a 80k boat?

All these things can change the sums widely.

We seriously thought about selling the house, BJ Porter makes a good case for this. For a myriad of reasons we are not, but it does make a lot of things easier.

Either way yes for a family to go cruising will you have to do something different and makes some changes, very few are doing it with their spare change.


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## B.J. Porter (Aug 1, 2013)

engineer_sailor said:


> I started this thread just to begin to understand the mechanics and even vague numbers. Lots of good info to start assessing if such a trip could ever be possible. The key is to formulate a plan instead of relying on serendipity and/or luck.
> 
> Pretty fascinating that people manage these trips. Seems like it's a great experience for all involved including the kids. I am sure it's the right choice for some and not for others


Starting some time around 2006 or so I made a spreadsheet.

They idea of the spreadsheet was to see if the lifestyle cost was *theoretically* possible. My figuring was that if I can't make it work in _theory_ than my odds of making work in practice were pretty slim.

I've taken one of the more recent versions of the spreadsheet, swapped out our real numbers with some basic assumptions to make it look "real", but you can play with it.

It lets you enter things like...
- When you plan to buy your boat (or if you have already)
- Pay cash or finance the boat
- Broad assumptions you can set for expense categories.
- Children in college, how many and when (current set up for two, which I have)
- Retirement funds vs. non retirement and when you can touch them w/o penalty
- Baseline assumptions about post tax returns on invested money.
- Cross reference of your planned expenditure level, versus different monthly levels of spending and your cash on hand (assumed invested) over time.
- Change baseline assumptions about things like college costs etc.

There may be bugs in it, I still found some after years of using it.

The cash flow numbers, if you finance your boat, include your monthly payment in it. You need to fill out the boat purchase information.

I even had one version where we sold today's boat when the kids went to college and bought a smaller one...too complicated for this exercise, but it helped me.

I've uploaded it to my web site. Feel free to download it and play with it. If nothing else the way the numbers change between say, buying a $100K boat with cash and financing a $300K boat make you think.

Here is the file...

Happy to answer questions and discuss.


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## outbound (Dec 3, 2012)

+1 on Need to do the spread sheets and run them through your advisors. Do this with"what if" in mind. For us with interest rates what they were, and tax structure what it is it was cheaper to partly finance the boat,keep that lump in assets with liquidity. That way could pay off the boat if either tax structure, inheritance law,or markets shifted. The lump is invested in conservative returns but liquid. If doing now would have bought the boat cash as interest rates have since gone up. Also establish plans for management of your assets when you are gone. Has taken some effort to delegate these responsibilities but now feel my manager is watching when I'm not. In example above designated assets will be sold and boat loan retired if triggering shift occurs in my absence. Secure email and other advances make it possible for you to be engaged or disengaged as life demands. Note B.J. Is on a great boat. A 53'H R . We have the benefit of being just 2 so can go smaller. As stated size does matter. Think about future plans. For us we want to do the South Pacific and also not be crew dependent. The canal and our physical capabilities kept us under 50'.


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## kwaltersmi (Aug 14, 2006)

chall03 said:


> There is always going to be some sacrifice.


This is the heart of the matter for us. We don't have a goose that will be laying a golden egg anytime soon, so making lifestyle trade-offs before cruising and realizing that the journey itself is where the real value exists are what we're banking on. Maybe that's a lie we're telling ourselves to stay motivated, but I can't prove otherwise yet.


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