How we afford long term family travel

I don’t claim to be a financial guru – not even close.  I won’t even claim this post will have any information that might be helpful to you in planning your own family adventure.  What I will claim is that what I write here is totally honest and is how we managed to travel for three years with our children. What you do with this information is up to you.

Now that I have that out of the way…  One of the most common questions we get is the big “F” one – how did we handle it financially?  How did we manage to spend three years on the road not working?

To understand our situation, you need to understand a few things:

  1. John and I are both old foagies who have worked many years and always saved for retirement; we’re not young 20-somethings at the beginning of our careers.  Because we worked overseas, our retirement savings was just a normal savings account – not a special tax shelter that we can’t access.  If you’ve worked in the USA, your situation is most likely different.
  2. We live cheaply.  Our basic day-to-day expenses on the road were around $1500/month.  We also allotted another $500/month for other expenses – we didn’t spend that for months on end, then something would come up and we’d spend 5 months’ worth in a week.

Just as life evolves and changes so, too, did our plan.  I’ll take this step by step so you can see the decisions we made throughout the past few years – maybe something in there will be more helpful to you than a general overview.

2008: Well before we took off, we contacted property management firms and asked them about renting out our house.  They all felt we could rent it for $1400/month.  Of course, we would have to pay the manager fees, taxes, insurance, and repairs – but even so we figured we could clear $1000/month.  Halfway there with just the house.

our house

Remember that the big economic collapse of 2008 hadn’t happened yet, so we were getting 5% interest on our retirement savings.  We figured we could easily survive on the rent from the house and the interest on our savings, so we hit the road.

And then the collapse hit.  We were a mere four months into our journey.

Interest rates plummeted, but our savings were locked in CD’s at the higher interest rate – for a while.  Many people lost their homes because they couldn’t pay the mortgage; they couldn’t pay a high rent either, so our house rented for just under $1000 rather than the $1400 we had counted on.  We tightened our belts and continued on.

All was well for the first 1.5 years on the road.  The rent on the house was a steady source of income and our retirement savings were locked in at a higher interest rate.  We didn’t have as much money coming in as we had planned, but it was OK – we dipped into our savings a bit, but not too much.  It was a sustainable level of spending.

Late 2009: Our CDs came due and that was a problem. A BIG problem.  I had heard about the low interest rates, but was woefully unprepared for what I saw when I logged on to reinvest our savings.  0.5% *gulp* The interest we would get on our entire life savings wouldn’t be enough to pay for ten days of travel.

This… well, this was a problem.

By that point our website was generating a few hundred dollars a month in ads, but we knew we were heading into more expensive countries so our budget would need to be higher.  Should we call it off and head back home?  But how could we take the dream away from the boys when they had come so far?  We vowed to continue on, even if it meant dipping into savings even more.

Early 2010: I started thinking about some words I had heard throughout the years: “Make your money work for you.” Hmmm… how could we possibly do that when interest rates were so low?  The only income we had coming in was the rent on our house and a bit from our website.  Upping the income from our website would have demanded enormous amounts of time we didn’t have.  I could try to write more articles about our journey, but that would be a lot of time too.  What about rent??  Could we somehow do something in that arena?

I contacted our property manager and threw out the idea of buying another house as an investment – housing prices were the lowest they had been in years.  We did a bit of research… had our property manager head out with a realtor friend of hers… they found a beautiful house for a great price that had been foreclosed upon… and we bought it sight unseen.  It was rented before we even owned it.

With two houses being rented out, our cash flow improved significantly.  We were basically back to where we had been before with the higher interest rates – taking small amounts out of our savings each month at a sustainable level. We could manage that for a long time.

Late 2010: One thing led to another and I got an email in my inbox one day.  “We found an awesome house at an incredible price.  If you want it, it’ll go fast – fill out these forms and get them back to me ASAP.”  We filled out the forms and faxed them in.  A month later, we owned another house, and the balance in our retirement savings account was very low.

Spring 2011: That leads me to right here, right now. At this point, we have three houses that are rented out.  Our property manager has found wonderful tenants for each of them; they pay their rent on time and are taking great care of the property.  The income from the houses is enough to live on – although frugally.  If any big repairs come in, we will have to take that out of savings.

When we arrived into Boise we faced yet another dilemma – where do WE live?  We could kick the tenants out of one of the houses, but we felt badly doing that – they had made them their homes.  Besides that, if we lived in one of them, we wouldn’t get the rent and would have to find jobs in order to make ends meet.

One day our property manager happened to mention in conversation about a house in the area that had sold in 2006 for $169,000.  It had been foreclosed upon and just sold for $50K.  Wow!  We had never even entertained the thought of buying another house, but if we could find a killer deal like that…

Long story short – we are in the process of buying a house now for $47,000.  It’s fairly small and the bathroom will need to be gutted and rebuilt, but it’ll be perfect for us.  And we can afford it with the last bits of our savings.  With any luck, we’ll be in the house soon.

Were our decisions wise?  I have no idea, but at this point in time they seem to be working for us.  Time will tell if we made the right decisions.

What I do know is that we managed to travel for three years and had the time of our lives.  We learned more than we could have dreamed and enjoyed our time together as a family.  Those experiences were well worth every penny we put in to them.

UPDATE April, 2014. Three years after completion of our journey: Buying the houses still appears to have been the right decision. Three are rented out; we live in the fourth. The rent from the three houses pays for about 60% of our living costs, and we have started a couple small businesses to cover the rest.

Cash flow would be a problem if something major happened to one of our houses because all of our money is tied up in the houses themselves. We are crossing our fingers and hoping for the best, knowing that if we needed to sell a house we could do so.

Here are some other posts related to making the decision to travel you might enjoy:

How can you live your dream?
Family travel: A life changing event
Regrets about long term family travel?
How do we pay for our extended family travels?
How much does an extended family trip cost?
Here is a detailed breakdown of our expenses.
7 Truths of location independence

Other bloggers are a valuable source of information.  Here are posts from other bloggers about how they finance long term travel that may help give you a better idea of creative options.  I’ll add more as I find them.

Wandermom: How much does a family RTW trip cost?
Livin on the Road: Why and how we came to be a traveling family
The Dropout Diaries: Funding a dropout
Around the World is Easy Ways: Turning our travel dreams into a reality
Break Out of Bushwick: Prioritizing, taking life by the balls and making my travel dreams come true
Worldschool Adventures: Decide. Commit
Raising Miro: Inspired Dreams, Inspiring Travel
Mojito Mother: How to dream big
The Creative Homestead How to take a sabbatical without going broke

 

books by Nancy Sathre-Vogel

About Nancy Sathre-Vogel

After 21 years as a classroom teacher, Nancy Sathre-Vogel finally woke up and realized that life was too short to spend it all with other people's kids. She and her husband quit their jobs and, together with their twin sons, climbed aboard bicycles to see the world. They enjoyed four years cycling as a family - three of them riding from Alaska to Argentina and one exploring the USA and Mexico. Now they are back in Idaho, putting down roots, enjoying life at home, and living a different type of adventure. It's a fairly sure bet that you'll find her either writing on her computer or creating fantastical pieces with the beads she's collected all over the world.

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27 Responses to How we afford long term family travel

  1. Justin April 21, 2011 at 7:23 pm #

    Funny, people ask me about this everyday and we are not even traveling yet. Thing is, it is really no different than how people make money in any other way. I would say that if you are the type of person to take a risk on an investment or start a small business, you can travel and find creative ways to fund your travel lifestyle.

    Thanks for the post. It does help.

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  2. wandering educators April 22, 2011 at 7:09 am #

    fascinating – and how long will you stay in this house? or are you back on the road soon?

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  3. Richard Masoner April 22, 2011 at 11:51 am #

    In California, rent prices went through the roof with foreclosures forcing thousands of families into the rental market. It’s interesting that they fell so much in your market.

    I was a long distance landlord for a few years. Glad it worked out for you, but it’s not something I’d care to do again.

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  4. WanderMom April 22, 2011 at 6:48 pm #

    This is great info – and I’m glad that the financial crisis ended up benefiting you.
    One thing I wonder: did you start/end from Boise? I mean would it have been different if you’d been from a city (housing market) where house prices are still pretty high (e.g. Seattle)?

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  5. nancy April 22, 2011 at 6:57 pm #

    Thanks all! At this point, we have no idea what our long term plans are – the main thing now is to see what’s best for the kids. Traveling and seeing the world may continue to be the best, but it may be better now for them to have more stable friendships that last longer than two weeks. Time will tell!

    Wandermom – that’s a tough question. I have no idea what we would have done if circumstances were different. Maybe if we had been from another city with higher housing costs, we never would have taken our journey in the first place? Maybe we would still have been paying for the house so renting it out wouldn’t have provided income? I don’t know.

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  6. Mikayla B April 23, 2011 at 9:18 pm #

    Thank you for the tips! I appreciate you sharing your thoughts and solutions – everyone has a slightly different situation but it is important to know that things do sometimes change WHILE traveling and it is important to be flexible.

    Great videos – the TIME OF YOUR LIVES is the most important in life, because that is what you REALLY enjoy remembering?

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  7. Lisa Wood April 23, 2011 at 11:54 pm #

    I love how you bought a house unseen!! I am a bit like that – I bought our motorhome sight unseen :)
    The other night I was talking to David and I think we need to buy another house (or at least three) and rent them out so that we can keep traveling after 12 months. Ideally I would love to travel at least for two years but if we like it I would be happy to keep going. I like you ideas of buying/renting out a house for extra income. Thanks for sharing

    Cheers
    Lisa

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  8. nancy April 24, 2011 at 12:04 am #

    Fortunately, we trusted our property manager and knew she would pick a good house. I don’t know that we could have done that if we didn’t have her.

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  9. Sophie April 24, 2011 at 12:29 pm #

    Great post! It gave testament to the saying that “if there’s a will, there’s a way”=)

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  10. Yvette April 24, 2011 at 8:31 pm #

    Great read! I always find it strange when people find it crazy to think extended travel is so financially impossible and suspect that’s a big part of why so few seem to do the numbers out.

    Granted I’m still in the 20-something travel brigade so my angle’s a touch different as yet, but the funny thing about travel is it’s reinforced that I want kids someday in part because I can’t wait to show them the world. So I always quietly file away articles like this one in my mind!

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  11. Harry & Ivana April 27, 2011 at 6:30 am #

    People don’t realize that bike travelling is usually far cheaper than staying at home. Now we have stopped for a while, we spend so much more than while travelling!.

    I answered some frequently asked questions about how we afforded on our blog as well, you can add this link if you want: http://worldonabike.com/about/faq/

    Enjoy thinking of new plans!
    Abrazo de Patagonia,

    Harry & Ivana

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  12. Lourdes Worrell April 28, 2011 at 6:18 pm #

    It is very interesting to see how others have financed their journeys. We do have our own plan in place, but the biggest thing I got from your post is that we have to stay flexible… because life happens no matter where you are. Thanks for the tips.

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  13. Wendy May 4, 2011 at 7:46 pm #

    Nancy, your post was very interesting! But, how did you qualify for mortgages on the additional houses if you didn’t have steady employment? Or, did you pay cash for them? Not many people have enough cash lying around to purchase extra houses…

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  14. nancy May 4, 2011 at 7:54 pm #

    Wendy – We did pay cash for the houses. I know most people can’t access their retirement savings – that’s why I put that bit in there about our retirement being in a regular savings account rather than being tied up in a “tax shelter”. Another thing to consider is that housing in Boise is still quite affordable. We bought two houses for 1/4 the price someone would pay in another city.

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  15. Barbara August 1, 2011 at 7:06 am #

    Australian house prices are just crazy at the moment. I’m not sure I’ll be able to buy back into the market when I’m finished traveling. But I do have enough for a deposit waiting for me back home, if and when we decide to return “home”. For now, home is where every my little family is.

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    Nancy Reply:

    The housing crash in the USA has worked in our favor – we were able to pick up a couple of rentals and now this small house for us. A few years ago there would have been no way we could have done that!

    The decision to return “home” is a tough one – where will your needs best be met? Who knows?

    [Reply]

  16. Susan August 2, 2011 at 4:08 pm #

    Thanks so much for including my blog in your list! And glad to read more about how you made it all work. It’s refreshing information everyone should get inspired by.

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  17. Krista Beauvais August 4, 2013 at 5:03 am #

    Hi Nancy, it’s SO nice to find someone talking about real estate as a viable means of funding long-term travel! I have been scouring the net looking for people who are out there living the life they WANT (for my site wodara.org) and came across you. I love it! If you’re keen to share your story, please let me know. Anyway, my house in London, which I am renting out as a holiday let, is funding our long-term travel, and it’s such a brilliant source of income that I’m so surprised nobody is talking about it – and now I find your post. Wonderful! I’m so glad it’s working well for you guys! I love that you’ve acquired more properties while on the road. I haven’t yet been brave enough to try that one, but am hoping to buy another when we’re back in London for a few months at the end of this year. Thanks for sharing! Krista

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    Nancy Sathre-Vogel Reply:

    @Krista Beauvais, That’s great Krista! The rentals have been great for us so far. I would love to talk with you more – please email me at familyonbikes@gmail.com

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  18. Deia @NomadWallet November 1, 2013 at 10:48 pm #

    Great story, Nancy! Seems like it all happened quite naturally for you. My husband and I took advantage of the low prices during the crisis as well. But since we’re Canadians, we had to jump through some hoops to invest there. Also, we’re younger with a lot less saved up, so we had to be more creative with the money, too. :)

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    Nancy Sathre-Vogel Reply:

    @Deia @NomadWallet, It’s funny how it all happens. I think the key is being open to all possibilities and will to jump when they present themselves. I wish you two the best of luck – you’ve got many years to make it work!

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  19. sabretoothedchickenstour October 24, 2014 at 2:32 am #

    Congratulations on living the dream. Doing it is priceless and worth every sacrifice. The memories will last a lifetime and beyond into your children’s lifetimes. No possession or amount of money is worth as much.

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    Nancy Sathre-Vogel Reply:

    @sabretoothedchickenstour, Indeed! The memories are incredible and will be with us the rest of our lives.

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