I tend to get pretty amused by "break even" analysis anyway. I usually find those calculations rather twisted attempts to justify what the analyst is going to do anyway, no matter how the numbers look.
I agree with you to a point on this. I, too, have seen some very creative break even analyses posted here on the DIS (specifically the one illustrated by Missyrose a few posts up from here). However, if done honestly, I do feel like it can be a useful tool, specifically for those who currently rent DVC points for their stays and are wondering if making the switch from renting to ownership makes financial sense. I don't think you were suggesting it, but I would disagree with you if you suggested that my personal analysis was an exercise in "financial gymnastics".
In fact, as I'll talk about below, my first analysis led me to the decision
not to buy, even though I really wanted to. I remember looking at my wife when all was said and done and saying, "I really want to own this timeshare, but at these prices I just can't justify it."
Those analyses also usually leave out the annual MF's, which actually are the largest component of your true cost of lodging.
I think a much more sensible financial analysis is to assume a ten-year useful life and no recovery at the end of ten years -- so divide your initial cost (including finance costs, if applicable) by 10 to get an annual cost. Then add the MF's for the year. Then divide that total by the number of points you receive each year -- that's your per point cost including all components of that cost.
To calculate the cost of a night's stay, multiple your per point cost X number of points needed.
Compare the per night cost to other options and see if it seems reasonable to you for the lodgings you will be receiving.
This is a good point. When illustrating the break even analysis, DVC salespeople will calculate all of the points you will receive over the life of the contract and then divide that by total purchase price to get an actual cost per point. By narrowing the scope to 10 years you are making things more realistic.
To clarify my methodology (and reasoning behind it), I was originally an offsite Disney vacationer. We own at Marriott Grande Vista which very easily traded into more time at Marriott Harbour Lake (which was perfect for us because we have little kids). It wasn't until we got a little tired of spending so much time in the car that we looked at onsite options. Clearly we couldn't go back to standard hotel rooms, so we looked at DVC. I knew about renting at the time, and when I broke down the financials provided by my salesperson, I simply couldn't justify the expense when I could simply rent points for $11 each quite easily. Then I came here to the DIS and learned more about resale. When performing the same analysis (buy vs. rent) I found that the crossover point was right around the 5 year mark. And I actually feel like my method is more conservative because it does not amortize the purchase price over ten years but instead includes it up front.
In my method I had one column that included initial buy in plus maintenance fees added each year (assuming a 3% increase). In a second column I had the cost of renting an equal number of points at $11 per point. When the numbers in the second column were higher, that was the point where renting was actually a more expensive proposition. In the case of my BWV contracts, that point came right around year 5. (The key was finding contracts with three years points. That greatly accelerated the break even point as those points did not carry any maintenance fees and were most likely not valued properly in the price of the contract).
My BLT resale contract, however, was motivated more by non financials. I simply knew that I wanted to stay at BLT at times and in rooms that would most likely require booking at the 11 month window. Sure I could've bought SSR for $30 less per point, but I decided it was worth more for the peace of mind that comes from owning BLT and being guaranteed the 11 month window. That being said, I still bought a fully loaded contract resale, because I can't afford peace of mind at direct prices.
That said, I think most of us have legitimately justified our purchases using non-financial criteria...which usually are more rational than the financial gymnastics people typically use.
I think this is a point that often goes overlooked. There are many, many ways to visit Disney for less money than staying at DVC. There are offsite timeshares, weekly specials, vacation home rentals, etc. etc. But one thing that we often forget to put a price tag on is the benefit we get from owning DVC and being able to book and manage our own reservations for onsite accommodations. That has value, even if we forget to quantify it.