View Full Version : Silly Math Exercise
03-08-2001, 10:42 AM
We have been keeping a spreadsheet that records all of our point usage since we purchased in 1997. We have taken 8 trips, and have stayed mostly at OKW, with some time at BWV and VB. And we've stayed in rooms of all sizes.
What I'd like to do is calculate how much my accommodations would have cost if I were paying cash. Then I could say to people "well, my membership cost x dollars, but I've already had y dollars worth of vacations. With 40 years to go."
To do that, I'd need to get an idea how much these rooms would have cost. Would anybody care to give me some rough estimates so that I can do the math? We travelled entirely in May and October/November, if that matters. I also plan to add in $3000 for our DVC passes, figuring that I got the equivalent of 4 annual passes for three years.
I don't need this to be too accurate, so any help is welcomed.
03-08-2001, 10:54 AM
Boardwalk and Old Key West are "roughly" in the $250 - $300 per night range. Depending on the time of year.
03-08-2001, 11:05 AM
Sometimes I think we're crazy...but I may be able to give you some numbers. I'll try to get it together later today. It'll be rack rate. I once asked about discounts people had received and it seems like 25% would be the max.
03-08-2001, 11:13 AM
I do the math all the time!! I usually get my prices from WDW's website. They will give you prices based on the season, room size etc. Have Fun! I know I did when I found out how much $$$ we were saving :) I know you can also get prices from the DVC site for VB and HH.
When you wish upon a star...DVC will take you far...anything your heart desires....will come your way
03-08-2001, 11:22 AM
We did this based on the rates when we bought. The value just increases from there.?
03-08-2001, 11:32 AM
Here's a start. May is Regular Season for OKW & BWV. Oct-Nov. is Value Season
OKW Regular Season (Rates start at 1997 and go across to 2001)
Studio - $229, $239, $244, $254, $269
1 Bed - $305, $315, $325, $335, $365
2 Bed - $410, $430, $450, $485 ,$525
GV - $845, $875, $890, $980, $1,050
OKW Value Season
Studio - $209, $224, $229, $234, $244
1 Bed - $285, $295, $325, $305, $315
2 Bed - $390, $410, $420, $435 ,$459
GV - $825, $850, $850, $890, $955
03-08-2001, 11:33 AM
Do you want to give me types of rooms for Vero & BWV since there are so many with Inn Garden/Ocean; Preferred & Standard for BWV? It's hard to get them to list properly here.
03-08-2001, 11:54 AM
We have tracked our membership since '93- we broke even in early 98 and are waaaaay ahead now.
Current rates at OKW for May are:
GV's are $1050 and $1440. Enjoy!
03-08-2001, 01:49 PM
Well Jimbo, you got me thinking about how much I will save and when I will break even. I did the math and if I continue at the pace I'm going. We will break even in the middle of our summer trip in 2003. We just purchased in Feb 2000. We have been on 2 trips already and have another booked for August 2001. I figured all our future trips at this years rates and did not even add tax. This is much better then I originally thought.
The only time I ever did the math was right after our tour guides presentation of the DVC program. We received a voucher for a free lunch on the BW to "talk it over" and as soon as we sat down I grabbed one of the paper place mats and one of my DS's crayons and started my calculations. I figured it against staying in either a moderate or economy room. My calculations told me we would break even after about 6-8 years. I figured this would give us roughly 35 years of vacations for dues alone. I was sold!
After scowering the DVC book and doing all sorts of point usage scenarios, I came up with an ideal situation where we could go on two trips a year, maximizing our point usage. I can't get enough.
Of course I am now comparing apples to apples and I am not figuring any "lost interest" but I feel more comfortable with my decision then I ever did, especially after my first stay at our home resort (BWV). I now know buying DVC was one of the best things I have ever done.
:D :D :D :D
Owner BWV Feb 2000
03-08-2001, 02:04 PM
Pam and Doc - That's exactly what I was looking for, and much more than I was hoping for! If anyone had numbers for a VB studio and a BC, it would all be complete. Tonight I'll plug it all in, and I'll be ready the next time someone tells me that we made a bad decision.
03-08-2001, 02:08 PM
Why are there two different prices for BWV GVs?
03-08-2001, 02:19 PM
1997 Regular Season 4/20-5/31
1997 Value Season 6/1-12/18
1998 Regular Season 4/9-6/11
1998 Value Season 8/16-10/31 & 11/1-12/31
1999 Regular 4/25-6/5
1999 Value 8/22-12/25
2000 Regular 4/30-6/3
2000 Value 8/12-12/21
Regular Inn Ocean or a Studio (Rates are 1997-2000)
$200, $210, $215, $220
Regular 1 Bedroom
$250, $260, $270, $275
Regular 2 Bedroom
$305, $215, $335, $365
$615, $635, $665, $715
Value Inn Ocean or a Studio
$180, $160, $160, $165
Value 1 Bedroom
$210, $210, $220, $230
Value 2 Bedroom
$260, $260, $290, $300
$580, $590, $610, $650
03-08-2001, 02:23 PM
Jimbo,you can go right to DVC web page,they list all the resort rates as if you were a non-dvc member.Scarey what a Grand Villa cost per nite at Christmas.
03-08-2001, 02:24 PM
I'll just give you Boardwalk Preferred View since they've eliminated view choice for Disney hotel guests.
I've got 1999 through 2001 which is little different than the others.
Studio in Regular Season
$284, $294, $309
1Bed in Regular
$385, $395, $415
2 Bed in Regular
$550, $620, $670
GV In Regular
$1,250, $1,375, $1,440
Studio in Value
$264, $269, $279
1 Bed in Value
$355, $365, $375
2 Bed in Value
$480, $495, $520
GV In Value
$1,150, $1,210, $1,275
03-08-2001, 02:55 PM
Aargh!!! Why do posts keep disappearing and reappearing!!!
I enjoy the method posted by another board member:
Mantenance 720 x 41hrs = $29520
29520 + $14880 (orig. cost)= $44,400
$44,400/41 years = $1082.93 per year
This is for my 240 point contract.
At $250 per night this would get me 4 nights and
I am getting a lot more than that out of it. I have the potential for 21 days in a studio at Adventure Season. Forget the opportunity cost and the maintenance increases! I am having way too much fun going myself and also sending my older children.
03-08-2001, 06:22 PM
<BLOCKQUOTE><font size="-1">quote:</font><HR>Why are there two different prices for BWV GVs? [/quote]
My fault! The $1050 is for OKW and the $1440 is BWV. Sorry for the confusion.
03-08-2001, 08:23 PM
Well, I'm already ahead of the game. I took a 20% discount off of the rack rate for all my stays, added 11% tax, and added $3000 for the value of my three years of DVC passes. When I compare that amount to what I paid for my contracts, plus what I've paid in dues, I'm about $1200 ahead. The next 40 years are pure gravy!
Many thanks to those that helped, especially since you had to battle the boards to do it.
03-09-2001, 04:42 AM
Now....let's take that $1,200 and buy some more points!! ;)
03-10-2001, 03:49 PM
Quote from BobH:
Maintenance 720 x 41yrs = $29520
29520 + $14880 (orig. cost)= $44,400
$44,400/41 years = $1082.93 per year
I see only one problem with this logic - the true cost of DVC as calculated here doesn't take into account the interest lost by locking up $15,000 for 41 years.
If one were to take that money and invest it, even in a moderate-earning mutual fund compounded at 8% per year, after 41 years that $14,880 would be worth:
(14,880)(1.08)e+41 = $349,121.75 !!!
So, the true cost of DVC would be:
29520 (maintenance fees)
+ 14880 (initial investment)
+349121 (interest lost by tying up capital)
This works out to $9598 per year over 41 years.
Even this doesn't take into account the interest lost by not investing the maintenance fees.
If our investment goals were a bit more optimistic, say at 12% per year earned in the stock market, our interest lost over 41 years would be $1.55 million dollars, coming to a grand total of $38,906 paid per year of DVC.
This is assuming our investment would be compounded only annually - if it was semi-annually, or monthly, the numbers would be even higher.
If one were to simply pay the rack rate per year (which of course nobody does) and invest the difference in our RSPs, versus DVC, which one really comes out on top?
dvcdudes addresses this issue earlier in the thread, stating that the "only time I ever did the math was right after our tour guides presentation", and that he was "not figuring any 'lost interest'", but this is the most important point.
It really is important to do this "silly math exercise" - even at the rack rates, I couldn't see myself spending over $1.5 million on Disney hotels over the next 4 decades.
03-10-2001, 03:59 PM
Aaron's calculations also assume that you will not be spending anything on vacations during this time period. Once you start deducting the room costs for those stays (whether rack rates or discounted), the principal in the mutual fund is actually a declining balance and those figures won't hold true.
So, if you don't join DVC and just count those invested dollars (by the way- how did those mutual funds do in 2000??), then you will be way ahead of those of us who have squandered away our kids inheritance on family vacations to WDW. :(
03-10-2001, 04:02 PM
Will probably be dead long before they could enjoy the money because they're killing themselves with the stress of worrying about it.
Don't you read the docs, DVC members live longer any others due to the stress free vacations for the next 41 years. ;) x
03-10-2001, 05:18 PM
As always, Doc is right on the money. When I figured that I was $1200 ahead, that's compared to what staying on property would have cost. And make no mistake about it, I would have been vacationing the last 4 years. Maybe not at WDW, but somewhere nice, I'm sure.
The other thing worth mentioning is that all of this left out the resale value of our membership. Our 300 OKW points and 100 BWV points could quickly be sold for $25,000. More if we wanted to hold out for the best offer. So am I actually $26,200 ahead?
03-10-2001, 05:19 PM
This "if you invest the money" discussion always comes up. Are we to take every dime we earn and invest it so that when we are too old to enjoy it we'll have lots of money? Of course, I understand having investments for the future but I don't see comparing investments to buying DVC. As Doc just said, not every year sees a 8% return on the $15,000. Even if you just spend the interest on WDW rooms, what do you get for $1,200? A week at a moderate? Even if you kick in what the dues would cost...$2,000? And then you aren't compounding your interest, you're spending it and keeping the $15,000.
The money used for DVC should come from disposable income. Not from money needed for investing or for what that investment might purchase (home, college education, etc.)
03-10-2001, 05:24 PM
Let's See - at age 88 we would have $350,000 in the bank. If we put $5000 a year for three years tax free in a 401K at the same time we would also have close to the $350,000 in the bank at 88. BUT - we had 45 years of five star vacations, memories that our children and grandkids still talk to us about when they visit us in the nursing home, and no regrets!
I wouldn't suggest you take all savings or forget about a plan to save for retirement when buying
DVC. If you plan to vacation, and Disney is your priority for a fun place to go, then DVC makes alot more sense. I can hardly wait until 25 or so years from now and tell my kids how we paid $58 for a point back in the 90's. One would even suggest we go to resale market as the points now are $215 each and resale is a bargain at $199.
All kidding aside, either you spend some of your hard earned cash for vacation and enjoy life while you can or save it for the kids who hopefully have more enjoyment in life than the parents who didn't take them on vacation as they needed $350,000 in the bank at age 88. With inflation, which will only be worth - (math wizards help me out here) maybe $150,000 in todays dollars.
Balance - in life - in work - in love.
03-10-2001, 06:59 PM
As far as I am concerned this is an investment, only the return doesn't have a dollar figure to it . It has a return that is far more important than any money can buy....it's an investment in your family. All of us, especially kids today, have way too much stress in our day to day lives. So for some of us this is the best value for our bucks....one other little note, if you were to survey any 100 elderly people and ask them what their regrets were I think you would find the majority of them would tell you their regrets were not things that they had done but things that they didn't do.
03-10-2001, 08:17 PM
During the 41 years I'm earning money on $15,000 original buy in,what am I doing for a vacation.
Lets assume 15,000 original buy + annual dues is 200 pts.200 pts gets me 20 value days at OKW studio,with tax assume 250.00 a nite.thats 4500.00
that 15,000 earning an outrages 20% that year only earns 3000.So to pay for my trip I spent 1500.00 more then I earned,and I still owe 38% tax on interest earned. Without a 41 yr headstart on the interest,I don't think your math works.
03-10-2001, 08:53 PM
All points of view are great and not to depress anyone but I work with nursing home patients every day and have seen people with LOTS of money be leveled to poverty, being reduced to welfare with nothing left for children or grandchildren. And yes I know there are ways around it and with a price of course; but my point is there comes a point where saving and investing makes sense and living here and now for today makes better sense. Let's not any of us be fooled into thinking we are going to be better off with 300,000+ dollars in 40 years from now.
03-10-2001, 09:01 PM
Having been thinking of joining DVC for a while I put a bunch of numbers into a spreadsheet. Ibased my original numbers on historical values. The stock market produces 8 to 9% over the long term but I assumed 8 hotel rooms go up about 8% annually and not having long term info on the annual expenses (10 years isn't long term), I assumed a 4% annual increase. Since non-retirement stock profits are taxable that 8% long term value has to be reduced for taxes so my final value for the market was 5.5% annually.
The idea was to see which would cost more, the total of the room that I prefer for 40 years *OR* the total of the DVC. DVC cost is the lost opportinuty of investment plus the total cost of the annual support payments.
The room type I will pay for not currently being a member of DVC has a rack rate of $260 and it usually has a AAA discount. I assumed the AAA discount because sometimes there is no discount and sometimes it's more than 10%. So, the normal room rate is 1700 for a one week stay.
When looking at DVC, I would need to buy 200 points in order to get a 1br at OKW, the closest I can figure DVC has to the FW cabin I'll be in, in May. I used $72 per point and assumed paying cash.
Over the course of 40 years, this room will cost $475,000. I certainly am not looking forward to paying $37,000 for a week in 2041!
The opportunity cost of investing the $14,400 used in the DVC contract is $123,000. The cost of the upkeep is $69,000. This means that DVC costs $192,000 over the 40 years.
Using a slightly less conservative long term market return of 10% and assuming you fall into the 15% bracket, DVC would "cost" $445,000.
DVC is the clear winner here. The market values are long term Dow 30 so no comments about how the market did last year or the year before are needed. The person who is able to do slightly better long term than the Dow 30 and who has less of a tax burden will find DVC a lesser value than someone who has a larger tax burden or who invests more conservatively. The difference just gets bigger if your normal place to stay is as expensive as DVC rooms are to the general public.
03-10-2001, 09:06 PM
I my case I disagree with the statement that "lost interest is the most important point". The most important point of a DVC purchase is the family vacation time that you're guaranteeing. My son turns 18 this year and will be away at college this fall, I am painfully aware of how fast time passes. If I had saved that money and not enjoyed family vacations I would feel cheated out of more than the lost interest. Also, I readily give up the chance at spending nothing and having $350,000 when I'm too old to enjoy it for the chance to have family vacations in WDW for 41 years. If we were to save the money and not touch the interest where would our vacation $$ come from?
03-10-2001, 09:25 PM
There are some very financially sophisticated people commenting on cost,value,interest,etc... I'm not one of them. My wife and I bust our butts to buy a house,raise two boys,max out our 401k's and now pay for college. We look at DVC as the best gift we ever got for ourselves. With two boys in college there isn't any way we spend 3 wks in OKW each yrs if we weren't members.
There are many "intangibles" that go into the decision to join besides money - but being an anal engineer I do have spreadsheets! :) As, Doc pointed out, a reasonable comparison means you're planning to visit Disney often and plan on staying on-site DVC or not. If you are not going every 2 years and you don't care to stay on-site - forget about DVC! But if you are going WDW you need money to finance these vacations. I made an annuity of the initial cost - putting $x into your vacation fund earning y% per year gives you $z per year to spend on vacations. 'x' would be what you pay for your points, 'y' would be your estimate of the rate you could earn on that money over the next 40 years, and 'z' would be the money this fund wolud pay each year for the next 40 years. This amount 'z' plus your annual dues are your non-DVC vacation budget. Compare this number to what your stay would cost ( Rack/Rack-20%/whatever...), don't forget that 11% tax. Now - one more twist - on years where DVC saves you money account for the savings at the same interest rate you assume for your annuity. By playing with three variables - interest rate, rate of increase of rooms, and rate of dues increase you can explore different finacial realities. Keep in mind the interest rate you receive for your money must reflect after-tax earnings. Money in a 401K or IRA is not available to use each year wihtout penalty. In playing with the numbers conservativly (I believe), I used an interest rate of 6% and room and dues inflation of 3% each. In this case, after 8 years, I could give my membership away (I said COULD not WOULD) and walk away even. Of course the result is only as good as your assumptions (past perormance is no guarantee of future return, your milage may vary, figures don't lie but liars figure etc...) but it makes me feel better! I hope this makes sense and is not just confusing gibberish. I think we all want to see the "numbers" work out and looking at it this way helps me.
The absolute best part about DVC is that I don't feel I have to "do everything" on each visit home - my wife says that's worth a lot to her
03-10-2001, 10:23 PM
These discussions always remind me of a very in-depth article I read in one of the investment magazines about 10 years ago. They did a comparison between buying/leasing a new car every 3 years, versus buying one, keeping it for 10 years, paying for required maintenance, and investing the difference. As might be expected, once a car is paid off, the cost of maintenance is nowhere near monthly payments for a new car. So investing the difference does earn a lot of money over 40 years. Basically you would have bought 4-cars in 40 years instead of about 13. The difference is that most of the time you're driving an older car.
Disney is no different. You can stay home all the time and invest what you would have spent and have lots of money after awhile. But if quality of life means anything, having some things now is worth more to us and our family.
One final twist on everything. I think buying DVC has actually helped me in the long run. Eight years ago when I purchsed DVC, I locked in some pretty good prices for vacations I was going to take anyway.
Those same vacations would have cost me more each year than they did. So, over all those years I essentially was putting that money I saved into my 401(k) plan and it grew. Maybe it is having your cake and eating it too because I was definitely able to invest money that would have had to go into ever increasing vacation costs that I was able to avoid by being a DVC member.
Food for thought...
03-11-2001, 07:12 PM
I always love these discussions. It has been three years since I first looked at DVC and I have changed my mind 18 different times about joining.
The main thing that was holding me back is that we own a Lake Home in Northern Wisconsin along with our primarary residence.
This winter we decided to sell the lake home, it restricts us to much.
I started thinking about DVC again, and if I do all the math - investing is better financially for me.
So, I've decided not to look at DVC as an investment, but something I'm going to buy because I want to.
You know you can buy this and also invest.....
<img width="60" height="68" src=Http://homestead.juno.com/rpeot/files/glittermick.gif><img width="68" height="68" src=http://homestead.juno.com/rpeot/files/TiggerFrog.gif>
<FONT color=darkblue size=2>Feb 1995 - Caribbean Beach</FONT>
<FONT color=cadetblue size=2>Feb 1997 - Port Orleans</FONT>
<FONT color=darkred size=2>Nov 1997 - Offsite</FONT>
<FONT color=darkgoldenrod size=2>Feb 2000 - Dixie Landings</FONT>
<FONT color=orangered size=2>Nov 2001 - All Star Movies </FONT>
03-12-2001, 02:40 PM
I wont even go into the rack rates for rooms.
We traded our points 2 times.
One was to go on a carnival cruise and the other time was last summer to go white water rafting.
To pay cash for either one of the trips would have cost us about 4,000 each trip.(we are a family of 4).
And none of that inclueds the 30 or so times we stayed at OKW.
So our intila investment paid for itself in those 2 trips alone.
Aaron - thanks for math lesson. I'd rather enjoy my life and not go bonkers over investing every penny I ever earned. I assume you are way too smart to be a DVC owner.
03-15-2001, 09:01 AM
The DVC has paid back our initial investment based on the rack rate, in just 4 years. That is with subtracting the yearly dues. We can sell at what it originally cost us. Would we have really invested that money? I don't think so. We would still have gone on vacation. To plan for the future is important, but if you dodn't enjoy the present, the stress will kill you. Then your heir can use the money to buy into the DVC.
03-15-2001, 01:50 PM
I apologize if I ramble a bit here. The most important thing to remember is that DVC is not a "financial" investment (I realize that there is the initial financial outlay). DVC is an investment in your family, future vacations, relaxation, and maybe even your sanity! Another thing to remember is that the general assumption is that the money would have been spent on vacations, or more specifically rooms at Disney, anyway and that money would NOT have been invested in some sort of financial vehicle. So we CAN ignore interest lost. I know that in my case it would have been spent at Disney Hotels/Resorts anyway (even though I am a DVC owner, I still make the occassionally cash ressie to try out other Disney resorts, especially some of our "old" favorites on a little weekend get-away here and there). To us, owning the DVC is probably one of the best "financial" decisions we ever made. We know that we would never be able to stay away from Disney (we go MANY times a year)and,to us, there is nothing like staying on property. We feel this is the perfect way for our family (and along with some friends as well) to vacation and we love Disney soooo much. There is no doubt in our minds that DVC was the best way for us to "invest" that money. Thanks for letting me ramble
03-15-2001, 02:23 PM
Some of those other investments aren't doing so well right now, anyway. :)
Raising Disney Princesses
03-15-2001, 06:27 PM
The analysis that includes the lost interest on the initial investment assumes that you would not be spending any additional dollars to vacation at Disney and instead would be investing it in a mutual fund. I think a more appropriate analysis would be to invest the inital investment in a mutual fund and let it earn interest but when you are ready for your next Disney vacation, withdraw your accommodation expense from the mutual fund investment. Continue to do this each time you take a vacation. If you run out of money in your mutual fund before you stop wanting to vacation at Disney, you know you made the wrong decision. If your mutual fund outlives your desire to vacation at Disney, then you made the correct decision. Only problem is that it is all in hindsight (unless we estimate the cost of future rooms)!! :)
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