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[ELMC]

There's just no way this is ever right. You cannot take something that pays off over time and just divide the cost by the years and get an accurate cost.

Sure you can. Cost is defined as the amount of dollars it takes to acquire an asset. What you are talking about is value, which is different than cost.

You may introduce time value of money and purchasing power, as I agree that those phenomena exist. But they are not cost in the true definition of the word. My position is that you are complicating matters by introducing these variables into the conversation. If the value of money and the costs of alternatives rise at a corresponding rate, there is a net zero effect vis-a-vis the future value of discounts by using DVC. If you really wanted to get technical you should predict future models that account for the projected difference between the value of a dollar and the price of the goods to be purchased and introduce that information into your calculations. But again, that's unnecessarily complicating matters.

Accounting for sunk cost has to work this way. When you buy an instantly depreciating asset, you lost the depreciated money. It's gone. You account for it the same way you account for buying fancy food or a skydiving trip - it's consumed. And you should feel foolish for consuming it, because you got absolutely nothing with it. At least food tastes good and skydiving is fun. The depreciation on your DVC purchase bought you basically nothing except perhaps a faster time to get your points (for new resorts) and the right to use your points for some stuff you should never ever use your points for. But once you've done it, it's done. Accounting for it as though you could go back in a time machine and undo your consumption is unrealistic.

In no way am I implying that the sunk cost is free. On the contrary, I'm forcing the buyer to face up to the fact that they just sunk a huge cost that they will never get back.

That's fine, but that information was not included in the analysis. I have no problem with an analysis that "writes off" the loss in value, provided that information is included in every example given with the analysis. It needs to have an asterisk. It's not ok to say "I saved $800 on this cruise by using my points as compared to paying cash". It is ok to say that and add "but it cost me $8,500 up front in order to do so". But then that brings me back to my original point...you need to attach a number to that discount in order to have it make sense. Simply acknowledging that it was a bad move or a sunk cost is insufficient.

 

[dmunsil]

I just want to say, first, that I love this conversation. This is what people should be thinking about. Well, they should also be thinking about churros and fireworks and Splash Mountain, but if you're trying to figure out the best way to pay for your churros and fireworks, this is the place to start.

Secondly, what kind of mystifies me about your disagreement with my analysis is that I'm saying that the membership costs *more* than you are. My analysis may be confusing; I'm not saying it isn't. But it's a more accurate assessment of the true cost of DVC, and it comes up with a higher cost than your analysis. So I'm not in any way ignoring costs. I'm adding in costs that you're ignoring.

Sure you can. Cost is defined as the amount of dollars it takes to acquire an asset. What you are talking about is value, which is different than cost.

I don't think this is a useful distinction. When you don't own an asset and you're contemplating buying it, it's worth accounting for the sunk costs versus the amortizable costs and confronting them head-on. I advocate that strongly. After you buy the assets, you've sunk the sunk costs. You shouldn't count them as an ongoing cost any more, except in the column "dumb purchases I have made in the past."

You may introduce time value of money and purchasing power, as I agree that those phenomena exist. But they are not cost in the true definition of the word.

No, they are absolutely costs. Real costs. Quantifiable costs. They are not made-up or theoretical or virtual. They are measured in dollars and I mean real dollars American. Opportunity costs are costs. If you don't recognize them, you're not being realistic.

My position is that you are complicating matters by introducing these variables into the conversation.

Yes, of course it's a complication. That's my point. Simple calculations of costs for DVC underestimate the true cost.

If the value of money and the costs of alternatives rise at a corresponding rate, there is a net zero effect vis-a-vis the future value of discounts by using DVC.

That's not correct, because you pay a bunch of money up front for DVC, whereas the alternatives like hotel rooms are paid on an ongoing basis. That's the core of why you don't account for time value of money by just dividing cost by years.

I have no problem with an analysis that "writes off" the loss in value, provided that information is included in every example given with the analysis. It needs to have an asterisk. It's not ok to say "I saved $800 on this cruise by using my points as compared to paying cash". It is ok to say that and add "but it cost me $8,500 up front in order to do so". But then that brings me back to my original point...you need to attach a number to that discount in order to have it make sense. Simply acknowledging that it was a bad move or a sunk cost is insufficient.

Here I totally agree. But again, we have to be careful about the question we're asking. "Am I paying less money out of pocket this year by paying for this cruise with points?" is a different question than, "Did buying DVC help me save money on this cruise?" As we've established, the answer to the first question could be yes, while the answer to the second is a big fat NO.

I get the impression that you think that if someone asks the first question, we should, as responsible people, give them the answer to the second question. I kinda agree, but it doesn't help endear us to people.

 

[DougEMG]

With DVC there are two separate items that I look at:

(1) Is buying DVC cost effective over the long run.

(2) What is the best way of using my DVC points given I own them

For number one I look at comparing the costs per point of owning DVC vrs renting the points or paying cash at a Disney hotel. To come up with the costs per point for owning it makes sense to look at purchase price + annual MF. Using the time value of money function from excel (PMT) we can calculate what the purchase price per point is. The example I’ll use is VGF with a purchase price of $145, 50 year contract and interest rates of 4.5%, 1.5% and 0.0%. This gives us a number of different costs per point (pick the one you like).

PMT(4.5%,50,145) = $7.34
PMT(1.5%,50,145) = $4.14
PMT(0%,50,145) = $2.90

VGF has MF of $5.41, so that gives us a range of costs per point this year of $12.75, $9.55 and $8.31. Compare that to rental rates of $11-$14 a point or to the price of booking a deluxe room and paying cash. The point to take away here is that minor changes to one's assumptions can make a big difference in how the numbers work out.

Once I’ve purchase though I just want to look at what my options on using the points are. I'm no longer interested in calculating the “real” costs of each option based on the time value of money, I just want the cost of each option in the here and now.

Take an example of a cruise that costs $2000 or 300 points (made up numbers). There are lots of ways you can look at it for determining what it is costing you:
(1) Pay $2,000 cash purchase
(2) Use 300 points * MF = 300*$5.41 = $1,623
(3) Use 300 points *(MF+PurchaseCosts at 0.0%) = 300*$8.31= $2,493
(4) Use 300 points *(MF+PurchaseCosts at 1.5%) = 300*$9.55= $2,865
(5) Use 300 points *(MF+PurchaseCosts at 4.5%) = 300*$12.75= $3,824
(6) Rent 300 points at $11/point - pay $2000 cash – MF = $323

What I care about are the two options that I can actually do using my points, which are
(2) Use 300 points * MF = 300*$5.41 = $1,623
(6) Rent 300 points at $11/point - pay $2000 cash – MF = $323

So renting out the points and paying cash clearing works out to be a cheaper way to use the points to go on the cruise over just using the points directly. What this does not say is was this a better deal than not owning DVC in the first place and just paying cash. That is no longer an option so I don’t care about the costs for those options. Just don't go telling someone that all you paid was $323 do go on the cruise.

So after I convinced myself that owning DVC made sense financially, I also looked at where the breakeven point was. In other words how many years would I have to own before I started seeing any savings. I wanted the breakeven point to be low enough that I was comfortable assuming the risk of owning DVC long enough to see the benefit. Remember you are paying lots of money up front in the desire to save in the long run. If you sell the contract before you reach that breakeven point you are most likely going to lose money. For me that was in the 6-7 year range.

 

[misslissa]

Ok, quick question - Hubby cancelled our direct purchase today after reading this thread and is looking into resale. Do you guys think $69 per point is a good deal?

 

[NoleFan]

Ok, quick question - Hubby cancelled our direct purchase today after reading this thread and is looking into resale. Do you guys think $69 per point is a good deal?

I would check the ROFR thread. Also, it depends on the size of the contract, whether it is loaded or stripped, & what resort? Smaller contract tend to cost more per point. I personally would expect to pay less for a stripped contract (no current year points). Some resorts tend to have higher pp prices than others. Beyond all this, it is what you are comfortable paying & if the contract suits your wants/needs. Good luck!

 

[misslissa]

Thanks for that thought. We will look into it.

I have another quick question about resale. Would we still be able to pay for and attend things like member events/parties/cruises? Or, is there any way around this? I know we can't use the points to pay for cruises.

 

[misslissa]

I would check the ROFR thread. Also, it depends on the size of the contract, whether it is loaded or stripped, & what resort? Smaller contract tend to cost more per point. I personally would expect to pay less for a stripped contract (no current year points). Some resorts tend to have higher pp prices than others. Beyond all this, it is what you are comfortable paying & if the contract suits your wants/needs. Good luck!

What does ROFR stand for? Sorry, new to this.

 

[Missyrose]

Thanks for that thought. We will look into it.

I have another quick question about resale. Would we still be able to pay for and attend things like member events/parties/cruises? Or, is there any way around this? I know we can't use the points to pay for cruises.

You will still get member discounts at the parks, including discounted party tickets. But you must own at least one qualified contract (i.e. bought directly from Disney or purchased resale before March 20, 2011) to be eligible for the member cruise.

 

[ELMC]

Ok, quick question - Hubby cancelled our direct purchase today after reading this thread and is looking into resale. Do you guys think $69 per point is a good deal?

I'm glad that we were able to be helpful to you (despite the mega tangent this thread took).

ROFR is Right of First Refusal. It's basically Disney's right to step in and buy any agreed upon contract at the agreed upon price. It doesn't happen a huge percentage of the time, but it does happen and ROFR activity has been higher recently.

As far as prices, click on this link to get an idea of some contracts that are being bought and sold recently. Regardless of what you pay, it will still be a significant savings over direct, so keep that in mind and good luck!

http://disboards.com/showthread.php?t=3001288&page=162

 

[misslissa]

I'm glad that we were able to be helpful to you (despite the mega tangent this thread took).

ROFR is Right of First Refusal. It's basically Disney's right to step in and buy any agreed upon contract at the agreed upon price. It doesn't happen a huge percentage of the time, but it does happen and ROFR activity has been higher recently.

As far as prices, click on this link to get an idea of some contracts that are being bought and sold recently. Regardless of what you pay, it will still be a significant savings over direct, so keep that in mind and good luck!

http://disboards.com/showthread.php?t=3001288&page=162

Another Thank you!

 

[happyann79]

Yay

 

[dbs1228]

I would check the ROFR thread. Also, it depends on the size of the contract, whether it is loaded or stripped, & what resort? Smaller contract tend to cost more per point. I personally would expect to pay less for a stripped contract (no current year points). Some resorts tend to have higher pp prices than others. Beyond all this, it is what you are comfortable paying & if the contract suits your wants/needs. Good luck!

Just keep in mind the ROFR thread is showing the results for the most part of the past months. Resale prices have gone up a lot over a short period of time. Still a BIG savings over direct! Good luck - what resort did you decide to focus on?

 

[misslissa]

Even though I love a few other resorts more... we looked at the point totals, etc. and narrowed it down to AKV and SSR, despite neither of them being my favourite... they were the best financial decisions. And, my hubby decided to still go for AKV. I'm happy with that! The end dates did make a difference to me.

 

[dmunsil]

Even though I love a few other resorts more... we looked at the point totals, etc. and narrowed it down to AKV and SSR, despite neither of them being my favourite... they were the best financial decisions. And, my hubby decided to still go for AKV. I'm happy with that! The end dates did make a difference to me.

One nice thing about AKV is that Disney has (thus far) not really been exercising ROFR on those contracts, probably because they still have new inventory and don't need more. So if you can find a contract you like and get the deal accepted, it should go through. Well, unless it's super low, like $50 or less per point. The median price in May was about $68 per point, and it's probably gone up a few bucks since then, but not a huge amount. You should be able to get something for $72/point or less without massive trouble.

Definitely start with The Timeshare Store, but there are other brokers worth checking with. I bought my first contract from Timeshare Store, had an excellent experience, but then saw another contract at Resales DVC and jumped on it. So far they've been very good as well.

Good luck!

 

[iluvthsgam]

Even though I love a few other resorts more... we looked at the point totals, etc. and narrowed it down to AKV and SSR, despite neither of them being my favourite... they were the best financial decisions. And, my hubby decided to still go for AKV. I'm happy with that! The end dates did make a difference to me.

If you are still looking at buying 100 points you can also try to get a 50 point contract to start at AKV and keep looking to find a contract that works for you at the other resorts - or wait to see if the market cools down and the prices come down. Or buy 100 at AKV and still keep your eye out for another resort you want for a smaller contract that you can use to bank/borrow where every other or every third year you can get priority at the resort you want.

 

[dbs1228]

Even though I love a few other resorts more... we looked at the point totals, etc. and narrowed it down to AKV and SSR, despite neither of them being my favourite... they were the best financial decisions. And, my hubby decided to still go for AKV. I'm happy with that! The end dates did make a difference to me.

As I said before I love AKV! I will certainly stay there again - actually we want to bring MIL and FIL sometime soon I know they would love the resort more then the parks!

Fidelity has a 100 point contract listed now Aug UY for 80.00PP which is on the high side (only asking price of course) they also have 160 point for 66.88 and it has some 2012 points and all going forward! Good luck!

 

[brmillsy]

For what it is worth I used the timeshare store about a year ago to acquire some wilderness lodge points. They were AWESOME to work with. I was completely surprised at how on top of things they were and how smooth everything went.

I would also say, for what it is worth, I would not get too obsessed with the purchase price via resale. Trying to hold out to save a couple bucks a point is probably not wise. On 100 points your looking at few hundred dollars which when you plug that into these models these propeller heads are on about will not amount to much in the long run as compared to buying direct at 2X's the cost. Finding the right resort that is not stripped with the right use year for you is much more important.

Good luck and again for what it is worth I think you are making the right decision. I've bought both direct and resale and even the direct was BLT. I can't see buying most other resorts direct unless you want to lose 50% for the honor of buying via Disney. Forget the restrictions on resale too as other have pointed out in excruciating detail it's not wise to consistently use your points in that manner anyway.

Let us know how you do.

Also why not buy beach club if that is your favorite? Just the length of the contact?

 

[misslissa]

If you are still looking at buying 100 points you can also try to get a 50 point contract to start at AKV and keep looking to find a contract that works for you at the other resorts - or wait to see if the market cools down and the prices come down. Or buy 100 at AKV and still keep your eye out for another resort you want for a smaller contract that you can use to bank/borrow where every other or every third year you can get priority at the resort you want.

If you are traveling in a studio at the cheap time of year, is it really that hard to get a different resort 7 months out? It is fine if it is, I'm just curious.

Fidelity has a 100 point contract listed now Aug UY for 80.00PP which is on the high side (only asking price of course) they also have 160 point for 66.88 and it has some 2012 points and all going forward! Good luck!

I'm in touch with Fidelity but unfortunately their website listings are currently out of date and sold pending... those are some great ones though!

Also why not buy beach club if that is your favorite? Just the length of the contact?

Thanks for the thoughts! We're hoping to move ahead soon and not hold out. When we looked at the point charts, it seems like AKL requires less points per night/week when it comes down to it. (Same with SSR) So, that seems to be a better idea, then also factoring in contract length.

 

[Missyrose]

If you are traveling in a studio at the cheap time of year, is it really that hard to get a different resort 7 months out? It is fine if it is, I'm just curious.

Actually, yes, it is. The busiest of times for DVC are when 1) the parks aren't crowded and 2) the points are cheap. That's one of the best lessons to learn about DVC: The DVC crowd calendar doesn't always match up to the parks crowd calendar. Also studios tend to go first, then 2 bedrooms and finally, 1 bedrooms.

 

[NoleFan]

When we looked at the point charts, it seems like AKL requires less points per night/week when it comes down to it. (Same with SSR) So, that seems to be a better idea, then also factoring in contract length.

Although the point charts & pricing logistically make sense, are you going to be truly happy staying there ? Big investment & in the end, I think thoroughly enjoying your vacation is very important. I firmly believe buy where you want to stay. Just a thought. Good luck in your search.