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View Full Version : The folly of Borrowing points


Nlihte
07-15-2004, 08:27 AM
This is just an observation about borrowing points. No doubt there are times when it is appropriate. My warning is to be prudent. As Americans many of us live in debt with little regard of the consequences. I have seen a lot of folks needing to sell their Disney property and being forced to sell at a low price or having difrficulty selling because of so few points avaliable for a prospective buyer. Also, if we get too excited about harvesting all of our points for the moment it might be that we go through withdrawls having to wait longer for our next trip to Disney.
I feel the urge also but am trying to be disciplined. Just a reminder for all of us to use good judgement. Dennis

bobbiwoz
07-15-2004, 08:30 AM
Yup, that's a problem, but there's also no time like the present. Yesterday is gone, the future is not guaranteed, so live in the moment.

Bobbi:D

Granny
07-15-2004, 08:46 AM
We borrow points every year. But we also bank them.

Two contracts, you see. :p


But I'd hate to be in perpetual "point debt". It has to catch up to us at some time, and I wouldn't like to sit out a year from WDW but still pay dues on points! :)

Still, I don't see it the same as living beyone one's means, piling up credit card debt, or things like that. Even if someone has to sell, a fully stripped contract only knocks $5-10 per point off the asking price. Not a good thing, but also not the bulk of the selling price.

crisi
07-15-2004, 09:00 AM
We also borrow every year - and bank every year - bi annual trips.

I bought my contract to use, not to sell, and only when I could easily afford the contract. If I antcipated having to sell under distressed circumstances, I would have never bought the contract.

Happy Birthday Cat
07-15-2004, 09:21 AM
There is a big difference between borrowing money and borrowing DVC points. The biggest difference is that there is a limit on the number of points that you can borrow. If there was a way of borrowing all of your remaining years' points, I would agree more with the premise.

If someone chooses to borrow points they shouldn't feel guilty. The system is set up to allow it. Even if you borrow all of your points every year all it means is that you will have 37 years to your DVC contract and not 38.

If you have to sell your points at a discount because of borrowing, at least with DVC you are still able to sell and it was your choice to use the points in the first place.

HBC

Beth
07-15-2004, 09:26 AM
Wow - I guess I'm in the extreme minority, here, but I am ALWAYS in a state of borrowing.

I blame that partially on the fact that our use-year is October. So, when I think of using my "2005" points, I think of using them in calendar-year 2005, even though they're actually intended to be used primarily in 2006.

I guess in 2042 it will bite me in the butt, but right now it works for me. Living so close, I will ALWAYS be out of points at one time or another, since those last minute one-nighters are so easy, but it's never been that big a deal. I have about 360 points left in my October 2005 use-year, and I anticipate I will be borrowing them all into my 2004 use-year at some point.

But I would never consider my point-usage as careless or 'having little regard for the consequences.'

When I chose to sell a small add-on two years ago, yes, the points were borrowed from the next year, already. But, thru re-allocation, I was able to save the reservation and free up the points to make a nice resale contract.

mbw12
07-15-2004, 09:31 AM
I don' think borrowing is a bad thing....like someone else said...you are not borrowing years and years worth of points. You are only borrowing the certain number from the following year.

We had to borrow last year to splurge and bring family....so this year, we have to stay less days, and use a studio instead. Now I know alot of people aren't fond of studios....but a studio in WDW is better than not going at all and being stuck at work! My husband was totally against borrowing in past years, but for this situation he saw how it still worked out and how we can just utilize less points for our next trip.

I think you just need to use your points wisely for what suits you best....whether it be borrowing, banking, or staying within your yearly allotment!

Bobbi

Laurabearz
07-15-2004, 09:57 AM
We also take the borrow to the max approach.

We have Zero Dec 2003 points (current UY), we have Zero 2004 points left, and I just started making ressies in 2005 with borrowed points from our Dec 2005 UY.

I have found that with a December UY is is easier for us to be in a borrowed state, and use our Dec 2005 points in 2005 instead of 2006 when they are current. Just like Beth's reasoning! LOL

I did fall a few points short for our trip this October (invited a freind along) and I had to rent 70 points from a fellow DISer.

So far we have not had a canceling issue, and our last trip of the year is usually in October and we use our August UY for that trip....

As for the OP's word of caution.... Um, er, um..... thanks.

BTW Are you looking for a fully loaded resale contract and one to your liking isnt showing up?

bwvBound
07-15-2004, 09:59 AM
Ah ... but my entire DVC strategy involves both banking and borrowing.

We own only 150 points ... with plans to spend 200 each year. With our 2005 BWV stay already booked through Interval International ... we'll bank 100% of our Oct-04 points. We'll drain those off over the next three years ... then slide into a borrowing mode for the 3 following years. Somewhere during the borrowing years we'll hope to snag another reservation through II ... giving us the chance to bank the DVC points again.

Sounds good on paper ... ;)

chrissyk
07-15-2004, 10:04 AM
My husband will laugh when he sees this post. We don't have one red cent of debt in this world...not even a mortgage! We are the poster-children for living within our financial means. However, in a Dr. Jeckyl/Mr. Hyde twist, I am also the queen of point-debting:o :p My husband calls me "point debtor" all the time:hyper: Honestly, we only ever planned to stay in studios until I learned the joys of the 1 BDR accomodations. That has led me down the slippery path of perpetual borrowing. Well, maybe we just need more points:earseek:

vernon
07-15-2004, 10:22 AM
Actually borrowing points is the most $ economically sensible way to use your DVC.

mbw12
07-15-2004, 10:56 AM
Originally posted by chrissyk
My husband will laugh when he sees this post. We don't have one red cent of debt in this world...not even a mortgage!

I must say that I am quite envious of that statement!!!! Good for you!

Nlihte
07-15-2004, 10:59 AM
Well, I appreciate the responses. Reading your theories I now have a clearer picture on the simplicity a safety of borrowing.
Since this is my first year as a member I didn't see the safety net built in to the process. Thanks for helping me see the light. Dennis

chrissyk
07-15-2004, 11:57 AM
<I must say that I am quite envious of that statement!!!! Good for you!>

Thanks:D If points were money, we'd be on the brink of bankrupcy though, LOL:p :rolleyes: :eek: I'm still not entirely sure how I can be so discipilined about money and yet so out-of-control about borrowing points. It makes no logical sense.

By the way, I'm envious that you are going to a dude ranch in 10 days! That's my current vacation obsession. Have a blast:Pinkbounc

SleepyatDVC
07-15-2004, 12:03 PM
There are those that follow the school of thought that you should borrow to the max every year until 2042. My aunt and uncle follow this borrowing school of thought.

I, myself, don't feel comfortable doing this all the time but I understand the reasoning behind this school of thought. It's always nice to know that I have plenty of points in my "kitty" for all my future plans, but I have no problem with borrowing either.

Some background: My aunt is a fellow DVCer. She and her DH have 8, yes 8, children. They bought over 6oo points way back when during the very first year of DVC when park passes were included - when they only had 3 kids. :rolleyes: I think they mentioned that they actually paid presale prices?

My uncle is an extremely busy bank financier. My aunt is an avid traveler who home schools her kids. She always off some where to an "educational" trip. He purchased DVC for her so that she would have a place she could feel comfortable taking the kids WITHOUT him. He only goes with them maybe once a year or every other year.

This is how he explained to me why always borrowing is a good thing:

1 - My aunt is extremely busy with all the kids. There's always the potential for banking deadlines to pass or points to expire. Two less things for her to worry about when they are in a borrowed state.

2 - Financially speaking, it's a much better value to be borrowed to the max. You prepay for the accommodation. You pay maintenance for the cuurent year's points or accommodations. Each night of accommodation is worth $$ - as rack rate or as a calculation of the price per price and the annual maintenance. Regardless, when you bank points, you are essentially "lending" the value of those points back to DVC interest free. Whereas, when you borrow points, DVC is "lending" you the value of the points earlier interest free. You are not paying any more or less money at any different time. But you are reaping the benefits of the value of the accommodations earlier. Ahhhh.... the working mind of a banker...

3 - Who knows what will happen the last year of the DVC contract. Will they have enough units at the times people want to go in the last year or two? (THEORY - They may suspend banking the last few years to allievate the "rush.") Will there be the potential of expiring points :eek: if the dates you can go aren't available? By borrowing until the very end, you'll be taking your points earlier out of that "glut" of points that HAVE to be used the last year or lost.

4 - Borrowing was a REALLY good idea the last year that the free passes were availalbe because they provided the passes even on stays on borrowed points.

Well, these are some of the reasons why some people believe that borrowing to the max is not a bad thing and is actually a smart thing to do. My uncle thought that the most important reason was the financial reason. Time vailue of money and all that. O'kay...

Bottomline: Bank, borrow, do what you feel comfortable doing. But it's always nice to realize the pitfalls and advantages of each choice. So, thanks for the warning.

timC
07-15-2004, 12:11 PM
I really don't see much difference either way... Bank/borrow, I still end up with a bigger trip one year, and a smaller trip in another year...and at some point you have to use them or lose them.

There's a balance of (minor) pros and cons either way... but nothing to distinguish one being better than the other.

Personally, I lean more towards borrowing... I increase (slightly) our vacation experiences now, while our kids are still kids...


By the way, nice avatar. Us pigs need to stick together. ;)

princess&tig
07-15-2004, 12:59 PM
I disagree too. The real risk is not being able to use all of your points and losing them. Say you got sick for an extended period of time. You could sell them but I personally believe they are worth more than $10 per hour. You could loose your job and it could some time to find a new job.

I think the real risk is missing a trip to WDW. Go while you can, you could be dead next year.

sssteele
07-15-2004, 03:10 PM
I agree with those who borrow. I hate to be negative, but if I die, I want to die in debt. Not financially, but point wise. I don't want my wife to grieve for a month, and then head off to WDW with my "replacement". I'm kidding of course. I just borrowed from '05 Feb points to go to WDW (WVL!!!!) this Xmas. I don't like having only 1/2 of our total of 300 left for '05, but I don't want to pass up an opportunity to go either. We retire in 2 years (knock on wood), and we hope to purchase more points. Until then, we'lll probably be "in debt"

OneMoreTry
07-15-2004, 03:54 PM
I don't like to borrow points. It's a psychological thing. I like knowing I would have points for a last-minute trip if we wanted one.

If we're short on points I pay cash for weekend nights rather than borrow. That said, I borrowed 20 of our 2004 points and used 34 banked 2002 points for this past May's vacation (total 354 points used).

I don't buy more points because I know we'll have a surplus when the kids get a little older and leave home, and we like to vacation at places besides Disney resorts, too, where we rent condos and houses that are not time shares. Eg. We're staying at Colter Bay cabins at the Tetons next summer instead of WDW.

Doc and Family
07-15-2004, 04:53 PM
Tomorrow is gone, the future is not guaranteed, so live in the moment.

UH-OH. Tomorrow is already GONE!!!!!!
Then I guess I just have to wait for yesterday to get here!:teeth:

gchiker
07-15-2004, 08:51 PM
We are disciplined and prudent spenders. We don't borrow money unnecessarily and we pay back the debt ASAP. We pay our credit card in full each month and pay no interest. We save for a rainy day and prefund our vacations. We don't face big bills upon our return from WDW or other vacations. But when it comes to borrowing DVC points, we have no problem. In fact, we prefer to be "out of points." USE IT OR LOSE IT! I don't want to be in a situation where we have lost the value of our points because they expired. If we have no points available to us and we want to go to WDW, we will either pay for a hotel or rent points.

So what if you want to sell and have to take a lower price because the points are not there any more. Sour grapes! The points are gone because you used them and got value for them. You can't have your cake and eat it too. Either save the points and sell for a higher price, or use them and accept the lower price you deserve.

JimC
07-16-2004, 06:09 AM
The contract sales that I have watched indicate that the market is pretty efficient at pricing. The prices paid for the points remaining on the terms of the contracts are ending up in a fairly tight range. So I question the real "discount" that stripped contracts have as well as the "premiums" that contracts with banked points claim.

bobbiwoz
07-16-2004, 06:26 AM
Thanks Doc and Family!

Bobbi:rolleyes: Sometimes it's hard for me to say what I mean!

LIFERBABE
07-16-2004, 11:09 AM
The contract sales that I have watched indicate that the market is pretty efficient at pricing. The prices paid for the points remaining on the terms of the contracts are ending up in a fairly tight range. So I question the real "discount" that stripped contracts have as well as the "premiums" that contracts with banked points claim.

I have been noticing this too. Most of the BCV and BWV contracts listed have been stripped and they are still selling for $74 ppt and have sales pending. Not only are the 2004 points depleted, but most of the 2005 points too. I have been waiting on an add-on thru DVC because when it finally comes through, at least it will have points before 2006.

So borrowing seems to have very little impact right now if you own the smaller resorts.

Boardwalk4us
07-16-2004, 12:15 PM
I have never looked at borrowing points in a negative way. We paid cash for our points and know we have to use them or lose them (or rent them). Would rather use them. At this point in our lives we like to bless others in our family with the DVC experience and have done so for the last 7 years. We would not be able to have a grand gathering with 12 family members at the Boardwalk this December without borrowing. All of us going look at this as possibly a once in a lifetime opportunity as one family member is ill and as younger families grow.

DH & I planned how many points we would want per year as we near the empty nester stage without borrowing points. We also planned for a few left over points to spend with the future grandchildren.

We are very pleased with the flexibilty of DVC, it fits into so many lifestyles and schedules. By the rate of sales at SSR so are a few other members.

Nancy

Doc and Family
07-16-2004, 02:29 PM
Thank you Bobbi!

I was not having a particularly good day and reading that made me smile. I knew what you meant and also have a way of taking a simple concept and making it damn near impossible for anyone to understand.
By the way, we agree with you.

Have a great one! :wave:

CarolMN
07-16-2004, 03:21 PM
If it weren't for borrowing, there wouldn't be any banking! ::yes::

If borrowing and banking get too far out of sync, DVC will have to suspend both.

Therefore, those of us who borrow make it possible for the "savers" among us to bank!

Borrowers perform a vital service for their fellow members! How could there be any shame in doing that!!!!!

:teeth: :crazy:

TDC Nala
07-16-2004, 10:54 PM
"Reallocating" would have been a better word that "borrowing."

I think the only downside to being in "point debt" in my situation is if I had to sell my contract and do it quickly (which I don't anticipate doing).

Desperado
07-16-2004, 11:14 PM
Sorry, but worrying about borrowing points seems a bit silly to me. We borrow and bank. When you borrow, there's no worries about loosing points because you missed a banking deadline. It's let have some wonderful large family vacations with parents, that may not be possible in the future. Bank, borrow, do whatever you want to arrange for nice vacations, that's what we purchased with the flexibility of DVC. Calling borrowing folly is itself folly. Vacation!!! You can't get that family time back. My $0.02.

disneycrazed139
07-16-2004, 11:51 PM
We have Zero Dec 2003 points (current UY), we have Zero 2004 points left, and I just started making ressies in 2005 with borrowed points from our Dec 2005 UY.

I am new to this and in a borrowed state, with the same reasoning about the December use year. What struck me about the above is that you said "borrowed points from our Dec 2005 UY"

I thought you could only borrow 1 use year ahead--meaning that you could borrow Dec 2004 now for use whenever. You can borrow Dec 2005 now too?
:confused:

SleepyatDVC
07-17-2004, 12:04 AM
disneycrazed139,

You can borrow from Dec 2005 points to make reservations anytime between 12/1/04 to 11/30/05 - only one use year prior.

Laurabearz
07-17-2004, 12:16 AM
Originally posted by disneycrazed139
I am new to this and in a borrowed state, with the same reasoning about the December use year. What struck me about the above is that you said "borrowed points from our Dec 2005 UY"

I thought you could only borrow 1 use year ahead--meaning that you could borrow Dec 2004 now for use whenever. You can borrow Dec 2005 now too?
:confused:

Like Sleepy said.... I borrowed 2005 points for a reservation in January 2004, IN my 2004 UY, thus only borrowing 1 UY ahead. As long as your within the booking windows.

John, Lesley and Sam
07-17-2004, 03:01 AM
Borrowing was key to our decision to buy DVC. We live in Europe and plan to visit every two years. We purchased 200 points, and this means we can stay in a 1br for 12 nights each stay.

If Disney ever remove the banking and borrowing then I guess we will need to rent points, but I see this as much more work for us, with more risk than just banking and borrowing.

I think the banking and borrowing is one of the bestt things about DVC.