$ and RTW planning

Hi,

My wife and I are planning a RTW trip and I’ve been consulting this board for great bits of advice. This is my first post and I’d really like some feedback. I guess I just want some reassurance from seasoned travelers about my plans. It seems as though the majority of RTW travelers save for quite a while for their trips (2-3 years), then quit their jobs and off they go. My wife and I have had the “travel-bug” ever since our first backpacking trip to Europe 6 years ago. We can’t seem to shake this wanderlust, and it seems we need to travel every couple of years or so to stay sane. With our careers becoming more serious and the desire to start a family soon, we decided two months ago to take our last chance at serious travel and do a 1 year RTW, beginning April 2010. We both have asked for leave of absences from our employers, and on the most part they were granted to us. However, there is no absolute guarantee that our jobs will still be here when we get back (the current state of the economy doesn’t help much). After coming up with a rough estimate of how much money we need, we have realized that we will not be able to raise this sum in the required time. We are looking at getting a line of credit to finance this trip and pay it off after we return. I’ve never heard of someone doing this, and I’m just wondering if anyone sees any serious flaws with this plan.

Thanks for the advice!

Here's an idea. Yes, you could get a line of credit, but unless you have good job to come back to, how are you going to repay this loan? Keep in mind that large companies and small look at your credit rating before hiring you. Especially in this economy.

So, assuming you don't suddenly get a a huge infusion of cash, you could always travel normally for a time, then take a break. Get jobs teaching English, make money as you go along. You may not see much of the world, but by teaching your students and getting to know your co-workers, you'll learn far more about a foreign culture, which is, after all, one of the major reasons to travel.

I've even gotten a job washing dishes in a hostel in exchange for room and very bad food. I almost learned French in Brussels there. Almost.

When you start getting low, start looking for a place you'll be comfortable, because you'll be in that city or town for most of the time you are working. When you find it, look for a job. Teaching english, translating, there are a few options.

Stay a few months, maybe 3-6 months, and hopefully you've paid for expenses by your job. Now you have enough to finish out your tour.

Also, keep in mind that touring in Central America, South America, and asia is a lot cheaper than touring in Europe, where jobs are NOT so easy to get. India can be dirt cheap, but a serious challenge.So can Indonesia.

Hi NSJ,
My husband and I are planning a RTW for April 2010 as well. We are in a similar situation as you: wanderlusting since an extensive trip to Europe 6 years ago, traveling in between to stay sane, getting more serious with our careers, and a desire to start a family. However, we have been saving for a few years. With the help of financial advisor/friend, we were able to put a solid plan in place to make this happen.
A crucial factor to budgeting is the post-travel funds, but I'm sure you already know that. Personally, I think a line of credit is risky, especially since your position is not guaranteed, but I also know the sense of urgency you feel. Is there a way you can travel with the funds you are able to save for a shorter period of time without having to resort to a line of credit? What is your budget like? Where do you plan to travel to? If you like, you can PM me and I can kind of give you an idea about how we budgeted for our 7-month trip.
Christina

Thanks for the posts, Tortuga and Christina!

Time is of the essence, and we like to see as much as possible – so staying in one place for an extended amount of time is not an option. Also, our employers do not allow for leaves greater than 1 year.

To your point, Christina, I know the line of credit is risky and that’s what makes me feel uneasy about this trip. This has been a dream of ours for quite some time – so making it happen as opposed to passing up the opportunity makes it very tempting to roll the dice and take some calculated risks. We currently own a condo and we’re planning to rent it out for the year (making a slight profit too). I’m thinking if worse comes to worst, we can (ouch!) move into my in-laws house (I think I may value my sanity too much for that though!).

With respect to our budget, it’s very preliminary at the moment, as we don’t have a solid list of countries yet. We’re planning on splitting up the year between S. America, Africa and Asia, while trying to avoid countries that are too hard on the wallet. We’re figuring that $60K (Canadian) should be more than enough for everything, including flights and we have just over a quarter of that saved. Comments on budgeting would be more than welcome.

Taking risks is not my forte, and I can’t get rid of this nagging feeling in the pit of my stomach about the loan – but the idea of canceling, putting off or shortening the trip hurts a whole lot more!

Everybody's circumstances are so different but this is how my husband and I financed our one year RTW Jan 08 to Jan 09. We sold our house, paid off our bills and then saved like crazy people for a year. Not sure how well that would work now due to the value of property being so low. We spent about $75,000 and that includes 3 months in expensive European countries as well as 7 months in Asia and 2 months in OZ/NZ. The thought of a line of credit or a loan to finance an RTW would make me very uncomfortable. I would do almost anything not to go into debt again (except for mortgage). I'm not sure how old you are and how fast the biological clock is ticking but I would consider delaying the trip for a year to give you more time to save so you can finance the trip without taking on debt. Of course, that depends on if your employers will allow you to change your dates. We originally planned to leave for our RTW in November of 2006 and ended up leaving in January of 2008 due to various reasons one of which was me being 100% vested in my retirement benefit.

Here are my thoughts on your situation:

1. Debt is generally a bad thing. IMHO, traveling is not good reason to go into debt. On the other hand, I took my first 3 month trip to S. Am. on student loan money and that debt is long gone. So, maybe it is not such a bad idea. You only live once, and realizing your dream may be worth it.

2. $60K sounds about right for your trip. If you don't mind me asking, how long did it take you to save $15K? Perhaps, you could shorten your trip a little, focus on cheap regions of the world (India, SEA, some part of S. Am.). Also, focusing solely on, say, Asia or S. America you will cut down significantly on airfare costs. Many people find that trying to squeeze too many regions/countries into a RTW ends up being a big rush. I would be careful of including Africa (in terms of budget), I have heard that it is more expensive than you would think.

Perhaps you could cut down your trip costs, save a little longer and not have to take out a loan?

Cheers and good luck in making your decision,
Nick

It's a comfort thing. Taking out a loan to finance such a trip does increase the cost, and paying it off after you come back will take money away from the other things you want to do later. But if you're comfortable with that, I don't see what makes this any different than deciding to take on debt for any other purpose. If you're uncomfortable with it, then take the trip that you can afford to take without debt. I'm not a big supporter of a buy-now, pay-later mentality, but if it's important to you and the opportunity will pass you by if you wait, then it is an alternative worth considering. What makes a taking on debt for a trip different from taking on debt for a liberal arts education?

If you do take on the debt, of course, make sure to keep funds available to meet your obligations for a few months after you return, just in case.

A note. People obsess about credit reports, and imagine that any thing that might negatively affect such a report is to be avoided. They're actually quite flexible for people who manage their money well, and points against you from things like hard pulls, credit utilization, etc, will not pull you from "good credit risk" to "bad credit risk" if you never miss a bill payment. Simply put, having a line of credit won't make your credit report look bad. Most everyone has debts of some sort, and there's nothing on your credit report that says "took out a loan irresponsibly to go traveling." It's just a number, and so long as you make your payments on time and consistently, and don't have an excessive debt-to-income ratio, it's no different than a student loan, car loan, or a line of credit for any number of generally acceptable, "responsible," uses of debt.

edit: Lastly, I see you're Canadian which makes Tortuga's comment about employers looking at credit reports moot. To do so in Canada would be illegal, unless the employer can show how your credit report directly affects your ability to perform the job.