Take a Year Off and Go for a Spin Around the World
Today travel ranks high on the Long Term To-Do list of much of the western world. The purposes are different: pleasure, learning, relaxation, challenge, social causes, but the result is the same. World travel is now a burgeoning business, exploding as a good part of the ninety million North America baby-boomers and much of the European middle-class rove the earth.
Globalization, relative wealth, new market economies in post-communist countries, technology and telecommunications have changed forever the face of the planet. People seek increasingly remote locations, and trends such as low-cost, no-frills airlines are making travel possible in ways never imagined twenty years ago.
Long-Term Travel Takes Planning
Millions of folks take short two or three week vacations every year. Yes, these trips require planning, but do not disrupt home life. However, if you hanker for an uninterrupted journey or several months off to the far reaches of the earth, the architecture of your life must be reconstructed on different footings. Your current accommodations, possessions, medical needs, life and travel insurance, banking, mail, communications will be managed from afar? How to do this? Read on.
Give Yourself Lots of Time
Start planning at least six-months in advance for long trips abroad. Inevitably, some snags will occur. If your systems work well at home before starting your trip might, just might, have some peace of mind.
House/Possessions
Renting? No problem. Put your possessions in storage and go. Home owners have many options as well; your house can be sold, rented, swapped or house-sat. If you plan extensive trips over a number of years, a lock-and-go condominium might work for you. Leaving your house vacant for more than thirty days may invalidate your insurance. Check.
If your retirement plans include moving, determine if you should sell before you leave or rent it and sell when you return. Calculate investment yields of your capital. For example imagine you have a net $500,000 from the sale of your home. At 5% interest, this would provide $25,000 a year taxable income. If you plunk that in a secure interest-bearing guaranteed income product, your life could be relatively hassle-free.
Real Estate
Now consider your real-estate situation. If you plan to rent your home, determine gross income and deduct expenses such as insurance, mortgage payments, property taxes, property management fees and other miscellaneous expenses. Calculate your net taxable rental income and compare this with your projected investment returns from placing your money in a conservative financial instrument. However, this is only part of the picture; other calculations are necessary. What comes into play is the future trend of real estate in your specific area.
If you keep your real-estate, you are banking on future growth. This is a bit of the "bird in the hand worth two in the bush" dilemma. While you know current real estate market prices, future real-estate prices are unknown. Real estate projections are just that - projections. When you eventually sell, market conditions of supply and demand at that time will determine your yield.
Look at current and trending mortgage interest rates. Pay for a market-value home appraisal before you leave. Check with your tax accountant for specific details, as rules do vary from state to state. Keeping or selling your real estate comes down to your belief on future trends. Realistic market information might help in deciding whether to rent or sell your home. An additional factor is your emotional attachment to your home.
Everyone is different. Do you love your home, or is it just a place to live? Determine your psychological need for a home base. Would you feel wonderful or horrible roaming the world without a home? Consider your comfort level with situations such as nasty marijuana grow-operations, or, if you just want to move on. Remember, you can buy again when you return. If you rent your home out, hire a property management professional to handle the tenant selection, rent collection, and repairs. Better not be "penny-wise and pound-foolish".
Storage
Apparently an average three-bedroom household weighs in around ten-thousand pounds. Storage costs for this are $350.00 to $400.00 per month in my large urban city, excluding insurance, and cartage. This is for containerized indoor-storage. Your possessions are loaded into a container at your residence, locked, moved and stored. I researched in November, 2006. While this may seem expensive, with property taxes, insurance and condominium fees, an empty condominium can easily be $5,000 per year as well. You would need to consider your rental income less storage if you go this route.
Contemplate moving your home base, if you will spend several months or years in an area. For example, if you plan to explore Europe for a year, move to an inexpensive flat in a city with good airline connections and go from there.
Remember, you will not lose your friends. They will be coming to visit you.
More on passports, visas, mail, banking and telecommunications next time.
©Mahara Sinclaire, 2006
Related Tags: house, sell, real-estate, rent, plan, storage, possessions, long-term travel
Mahara Sinclaire, M. Ed. is the author of the forthcoming book The Laughing Boomer: Retire from Work, Gear up for Living. This book focuses on baby-boomers and how their retirement activities are changing the world. The Laughing Boomer presents ideas on how to make dreams a reality. Travel is number one on the To Do list of millions of people as globalization has exposed us to different cultures and we want to experience these.
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