Making sense out of insanity (DVC purchase)

Discussion in 'Purchasing DVC' started by blackacex2, Jan 9, 2013.

  1. ELMC

    ELMC DIS Veteran

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    It's not an "either/or" proposition. You're young. If you like Disney that much you will be going for many decades. Many of us on here are older and have gone through the "I'm not yet financially stable so if I want to go to Disney I'm going to have to stay offsite" phase. Don't completely rule out DVC, but maybe table it for a few years and see what happens.
     
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  3. Tunseeker1

    Tunseeker1 Mouseketeer

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    I have been going to DIsney most of my life and I have owned DVC since I was too young according to most folks here.

    I have a friend that has gone to disney 2 times in the last 3 years and are planning another trip right now, staying at disney resorts for the perks(dining plan,transportation,EMH). I talked to him before he went about DVC and he could have bought direct 50 points for about what he spent on the first trip and had the second trip on points he owned.

    He is looking at it now after 2 trips and regretting not buying something with his money.

    If you are already planning on going to disney you could buy direct for 50 points at saratoga and finance it for a year with 50% down at I think 8%. That would be about 200 a month with 2700 down.

    After you get your first points (50 will get you 4-5 days in low season studio) then add on resale or direct.

    It isnt the smartest plan, and many will call it foolish but it might make your numbers more tolerable.

    50 points currently, with 50 coming this year say sept/oct and borrow next years point means 150 points for a trip this year in sept/oct
     
  4. ELMC

    ELMC DIS Veteran

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    This reminds me of a comment that Missyrose made on the "break even" thread...it is one of those examples where people take what they spent on an entire trip (including food, tickets, etc.) and compare it to the buy in cost of DVC. I highly doubt, however, that someone could take two trips using only a 50 point contract, so it's not an accurate comparison.

    With all due respect, you can count me as someone who would call this plan foolish. Between paying nearly double per point compared to what can be had on the resale market and the finance charges, this is one of the least cost effective plans for purchasing DVC. I understand that we all want to own that perfect contract, but this plan advocates overpaying AND financing. A much more fiscally responsible plan would be to delay gratification for a few years, stay offsite, and save up the money to buy a more appropriate contract at a more appropriate price, in cash.

    A few months ago Tunseeker1 brought up a good point about a lack of true savings between buying 50 point contracts resale. Between the premium in price per point and the closing costs amortized over fewer points, the savings are often not worth it. Where we differ, however, is that he suggests that 50 point direct contracts are the alternative whereas I suggest that 50 point contracts should be avoided altogether. Frequently one can purchase a 100 point contract (100% more points) for 25-50% more money. Yes, I know there are more maintenance fees, but that's a conversation that should be separated from cost per point as there are ways to mitigate that.

    I'm not doubting your sincerity or even that this plan worked for you. To me though, it sounds a little more like "gotta have it now" and less like a sensible plan. But then again, I would venture a guess that most timeshare purchases are "gotta have it now". But that's what we're trying to combat against here on the DIS. :)
     
  5. Tunseeker1

    Tunseeker1 Mouseketeer

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    I know that it seems strange for some people but my friend has 3 tween/teen kids so they need a room that can accommodate 5 people They stayed at a I thought OKW in a 1 bedroom and spent right around $3000 for the first stay just in rooms. not tickets and food. They paid for QS dining and cooked in the room a few meals and they got a ticket in cash because they did i think a day or two at universal.

    Their vacation habits would mean that 100-150 points would be more then they need a year. You could get a smaller contract and save on dues.

    There are a lot of reasons people buy the way that they do and you can always tear apart their decision by placing your values and priorities on it but that does not make them wrong.

    I remember when I was looking at resale contracts for him and I told people I bought at Vero. I was told that Vero is the stupidest financially to buy. I bought there because we like to go to the beach and I want 11 month booking. My wife has a co-worker that owns at saratoga that wants to trade points so they can go to vero because she is locked out of the room choices they want during the busy season.
     
  6. chalee94

    chalee94 <font color=green>I thought all sand was ground up

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    you can even still rent a DVC stay...

    but i completely agree about paying direct prices just so you can add interest to your total cost...
     
  7. Tunseeker1

    Tunseeker1 Mouseketeer

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    You COULD rent but some people WON'T.

    I have argued the pricing of direct on small contracts in the past and I decided to agree to disagree when people say to never buy direct.

    I don't see the point of staying offsite and spending the money when Disney will finance 50 points to a new member for 1 year at around 9% with 50% down payment.
    The totals direct on a 50 point contract at Old Key West would be.
    50 points @ $100= $5000
    Closing is about $80

    Down payment of $2540
    Loan of 1 year
    $222.13 a month
    Total interest 125.52.

    That is for OKW 2057 points.
    OKW extended are selling for high $60 to Low $70 a point on smaller contracts with $500-$700 in closing.
    Total difference in price at 50 points is about $1000 or 20% of the total.

    That $1000 can be quickly eaten up in a stay or two offsite.
     
  8. ELMC

    ELMC DIS Veteran

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    Right, and that's my point. They could have paid $3,000 for a week in a 1BR at OKW or $3,000 for a 50 point VB contract that would've gotten them two nights in that same room. It's an apples and oranges comparison. If they bought the contract then they would've have had the money for the trip and they wouldn't have had enough points to stay either.

    I agree with this point, but I don't think that I am placing my values and priorities on your decisions. What I am doing is disagreeing with your financial reasoning. The opinions given on here have almost exclusively been financial in nature, and numbers don't lie. Spending more per point and financing on top of that is a poor financial decision. However, if you are chronically depressed and those trips to Disney are what keeps you in balance, then it might be money well spent. (I'm not saying that you are depressed, I'm just citing an example of an emotional reason to make a purchase). We don't really know each other on here and we don't know an individual's life situation. So all we can talk about is what we do know, and that's finances. (And even then we often don't have the full picture, but in this case the OP shared a lot of helpful info). If people choose to live their lives in the moment and make costly financial decisions in exchange for immediate gratification, that is their right and it very rarely gets questioned. But the OP was asking for financial advice, and that is what he received.

    At any time someone can post on here "I know that $165 a point for BLT is crazy high but it's been a lifelong dream for me to own there and the only way I can do it is to buy direct and finance and despite all the costs it will make me happy and that's all I care about" and they will receive very little arguments. They may receive advice citing the possible financial pitfalls, but rarely does anybody say anything derogatory about them or their decision. Where disagreements happen is when people make inaccurate financial statements (like your post above) to justify what for them is an emotionally driven purchase. That will almost always get questioned, and rightfully so.

    I have no doubt that this is how you remember it. However, I don't remember anyone questioning your wanting to own at VB for the purposes of staying there, because we are well aware of the demand for VB in the summer months and the need for the 11 month window.

    What I remember people saying, and it is true, is that from a sheer financial standpoint, VB is the worst contract to buy. The high maintenance fees make it an extremely risky purchase and with limited options for exit strategies. A direct purchase at VB has almost no possibility of break even as compared to renting points. And, buying at VB to stay at WDW resorts is a risky proposition because it is more costly and there is no 11 month booking window. I don't know how you can debate that from a financial standpoint.

    I'm sorry that you are feeling attacked, but if you're really reading what I'm saying it has nothing to do with you personally and it has everything to do with math.
     
  9. ELMC

    ELMC DIS Veteran

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    Very good point about the renting. In this case I mentioned staying offsite because that is what the OP said was other choice. But you're totally right, renting and saving to purchase is another way to go.
     
  10. Tunseeker1

    Tunseeker1 Mouseketeer

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    I don't feel attacked. It is the nature of a public forum.

    I brought up a financial choice that I believe makes sense to some people and can pass the smell test.

    I understand you looking at a 50 point contract and saying it is 2 nights which is true. But I was saying he would have had points banked, current year and borrowable to allow the same length stay at that resort. You only see the 50 points a year, I see 150 every 3.

    I understand staying offsite and saving money to get a contract in cash, but how much are you going to spend offsite that you could have used to offset the higher cost of direct points?

    My friend has 5 adults essentially which is not a cheap room wherever you go. He would need 2 adjoining or a 2bed suite.
    If you stay offsite you have to factor in transportation to the resort and to the parks.
    Where I live it is usually a plane ride then Magical express or a rental car. If you are offsite you are either renting a car or some sort of public transportation from the airport. If you can drive to the hotel it is $14 a day for parking in the park.
    You have to look at the cost of food. Staying onsite dvc means you can at least get a dining plan if you want to try and save money at the park, but you can't if you stay offsite.
    When you look at the financing aspect of any purchase you have to remember that many people that stay off-site pay with a credit card and carry the balance for a few months which also generates interest costs.

    I am looking at the financial costs of 1 trip not many. The OP said they will stay anywhere to go to disney, they will not take time off to save up to pay cash for resale.
    The cost for a right sized contract resale plus the costs incurred in one off-site stay could very well be higher then buying direct and paying interest for a year.

    How is this advice worse then everyone saying to stay in an offsite hotel? I think that you have to look at the total cost of not only the individual point but the cost of the next year of travel.

    I think it is wasteful to give $900 to $1800 to a resort to attempt to save about $1000.
    I believe in buying the minimum amount of points you need, and if you have to you could buy 24 single use points to help make up the difference until you add on.
     
  11. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    And that's on a DVC site. If you ask somewhere like TUG I'm sure it's far skewed to those for off site, esp when you factor in the higher costs. Even at the same costs it's likely not better than 50/50 on TUG.
     
  12. ELMC

    ELMC DIS Veteran

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    If I'm being truthful, I don't think that you are accurate or honest with your numbers. I'll comment throughout in order to give examples of this statement, but my general comment is that your numbers don't add up mathematically, they seem more like rationalizations and justifications. That's why I disagree with so much of what you say.


    Well that's good to hear. :) I'm going to go point by point in my response so that I can speak specifically to the points in which we differ. Sorry if it seems a little dry that way.

    Maybe I'm wrong. I would love to hear another voice in this discussion that thinks that your option makes sense. However, I don't think your numbers pass the smell test.

    You conveniently forgot to factor in maintenance fees for any of the three years in your calculations. And I'm not sure how this helps your friend with the second trip he took if he spent all his money on this contract that he used up all the points for.

    According to the OP, about $580 as opposed to $2,800 staying onsite. Which still leaves quite a few dollars left over should he save for the resale contract. Plus, your "direct" argument has the buyer paying off the loan in one year. Instead of doing that it would simply be cheaper (by $500-$1,000) to pay for the offsite stay, make the monthly payments to himself and then buy the resale contract at the end of the year when he has saved up enough money. He still gets his trip. He still gets his 50 point contract. He still is paid off in 12 months. And he's got between $500 and $1,000 left in his pocket. (This money comes from the difference in price per point minus closing costs, which for a contract of that size would be $325-$450, not $500-$700 as you suggested).

    Didn't you just say that he stayed in a 1 BR? It's really hard to discuss these issues when the facts keep changing.


    True. Except the OP was talking about staying at Bonnet Creek which has its own shuttle service.


    This is what I mean about your numbers not being accurate or honest. I don't know of an honest financial analysis of the DDP that suggests that it can be used as a way to save money. You can certainly eat more than you pay for if you order the most expensive menu item at every possible opportunity. But that is a big difference from saving money. Saving money would be not having dessert with every meal and splitting some of the ginormous sized entrees. So your rationale of staying onsite to save money on food makes no sense.

    This is sheer speculation and can be assumed for either side of the debate. The fact that you use it to discredit my position while not applying it to yours is an example of your fuzzy math.

    That's now how I read it. To me what he said was that he was going to stay offsite and save the difference to put towards a future resale purchase. Plus, your strategy of spending all his money to buy a contract that is good for one vacation but woefully inadequate for his future vacations is not sound advice.

    That's simply not true. There is no math to support this whatsoever. Especially when you are comparing a "right size contract" to your suggestion of a 50 point contract.


    Because if you use your example of financing for a year (with accurate numbers), he is paying at least $500 more doing it your way than if he payed to stay offsite and bought a resale at the end of the year. Remember, this just pertains to purchasing 50 point contracts direct vs. resale and you still come out behind. Take a look at the numbers when you start to compare purchases of 100 or 150 points direct vs. resale, you're not even close at that point.

    Good thing we're not suggesting that.


    So just to be clear, you would advocate buying at direct prices, financing, AND paying $15 per point for one time use points, but you would not recommend renting and/or saving money for a resale purchase?
     
  13. Tunseeker1

    Tunseeker1 Mouseketeer

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    I am using a single person as an example.

    The difference between a 1 bedroom and 2 is that okw is 5 people in a 1 bedroom vs offsite of a 2 bedroom or adjoining single rooms.

    The friend who went to Disney actually saved money on the ddp quick serve plan.
    This bit of math goes back to you putting your habits or values on someone else. You think it's too much food he didn't. I have had dinner at his house and they eat dessert every day and eats snacks. How 2 boys can eat everything served and still be hungry I will never understand. This for him is a fact that ddp makes financial sense. You are different.
    I am using a 50 point contract for a reason.
    A 5 night stay in a 1 bedroom at okw is 105 points in sept. that's not using all his points for 3 years .
    If you buy direct in march and get an sept UY you would get 2012 points you could bank to 2013. Travel in sept 2013 using 50(2012),50(2013) and 5(SUP)
    Travel in sept 2014 same number of points but with (2014),(2015),(SUP)

    Again there are a lot of people that will say this is a smart way to go. There are a lot of people that have bought direct which allows disney to build these resorts and allows a resale market to exist.
     
  14. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    With the 2012 or 2013 QS plan the ONLY way to save any money are to factor in a fair portion for WPE, combo meals for those few places that have them and PM and then for short stays and for those that it matters, the mugs. Even then you've got to maximizes it at every turn including drinks, other meals and snacks. Without those options I mentioned, about the best you can do is around break even.

    When we stay off property our costs vary and depend on where we stay and how we secure the reservations. Since I've recently been chastised by someone for using past costs, I'll only use future costs as they stand right now as best I can estimate them. I routinely include acquisition costs when they are significant and ignore them when they are negligible, they are only significant for Orlando for DVC using DVC points. I include exchange fees and underlying maint fees where applicable but will round them off since they vary by company and by the specific exchange options.

    II usually to Marriott's Grande Vista 2 or 3 BR. I generally get this with a very cheap deposit, bonus week, one of my free deposits that I put in II (vs the ones I put in RCI) or a Marriott studio using the internal trading prefernce. Respective costs are around $200-250 or less/$299 plus tax (less with some discounts)/$154 (the web based exchange fee)/$410 (prorated fees of the studio portion plus internal exchange fee).

    BG directly it's normally around either $650-800 for a week in a 2 BR or just under $600 if I do cash though normally it's in a presidential suite when I do cash there.

    RCI at a number of places for RCI weeks around $300 (exchange plus cost of underlying deposit) but varies a little up or down depending on TPU on both sides. RCI points (lower exchange fee) around $550 underlying costs ($300-400) plus exchange fee. To DVC currently based on the summer DVC availability around $450-500 for a 1BR, slightly more (higher TPU) for a 2BR including the $95 resort services fee.

    Buying VB for WDW is mathematically a more expensive option even including the time value of money but can be reasonable if used a fair portion of the time for VB.

    There is no scenario that financially justifies buying retail CURRENTLY IMO unless one is ONLY planning to buy a small contract of around 50 points or less. There may be other factors, we'll see one coming soon with GF. But it's the fact it's a small contract and not the other factors that makes the differences less or put another way, makes the savings less with resale, not the retail portion cheaper.

    The fact that some make poor choices and finance vacations (DVC or otherwise) does not justify one over the other. It's always a bad idea though there are many worse in life. The fact that we all have made poor choices at times or that a lot of people do it or even that one enjoyed the memories does not change that fact. Lastly, the current scenario (difference in costs) has not always been the situation. To compare and justify retail purchases you've really got to limit yourself to the last roughly 3 years or less to compare retail vs resale. Prior to around that the differences were far less than they are now where resale was more in the 80% of retail range instead of the around $50-60% it is now. Since resale has decreased in price/value and retail has continued to go up.
     
  15. ELMC

    ELMC DIS Veteran

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    For what it's worth, I read that thread and I don't think you should make any changes to the way you share information based on those "criticisms". That poster would've argued with you if you had said the sun was bright and water was wet.
     
  16. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    LOL, thanks. I think the ultimate point was/is a valid one but did feel that the main purpose was something different and more personal for some reason. Then again I know I've posted things that people took personally that were not intended as such so I try to give the benefit of the doubt when possible.
     
  17. blackacex2

    blackacex2 Mouseketeer

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    This discussion took an interesting turn!

    In the long (and short) run, it's looking more and more like DVC is a huge rip off bought retail and financed.

    Resale paying cash makes sense if you have $10,000-$15,000 in the bank on top of other savings for emergencies and retirement. Also need to have $80/month to painlessly send away for main. fees. Still, you can stay at very nice resort for a week every year at Disney for the cost of maintenance fees alone and rent points around $11 a point if mods or bonnet creek etc. don't cut it.

    $7 a point over life of the contract vs $11 a point resale. About 38% off. Nearly 48% off vs $13 a point.

    Or I could pay $700 or less for a 1 bedroom at bonnet creek for 7 nights vs $1,500 a week at old key west based on $7 a point and 217 points for a week.

    So DVC purchased resale and not financed is still double the cost of similar non-disney accommodations located on site. That's what gets me!
     
  18. disneynutz

    disneynutz DIS Veteran DIS Lifetime Sponsor

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    Anything associated with the Disney brand has a high cost. Disney is very good at creating perceived value and now more than ever they are increasing prices while lowering true value. Yes the Disney experience is still the best in the industry but at some point their price gouging will tip the scales.

    :earsboy: Bill
     
  19. wulfekamp

    wulfekamp Mouseketeer

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    We bought though Disney and we borrowed the Money to do it. We are very happy with our purchase. Its some of the best money we ever spent but we could affort the monthly payment. If you want DVC and can afford it go for it. Some people are into crunching the numbers and big saving I'm not its about vacation and spending time with my family to me.
     
  20. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    As you can see, I'm pro resale for DVC and pro off property for many people due to cost and to the added options for non DVC trips in other areas. I also have the belief that off property is not as different (done right) as many think it is. There are certainly many people who feel as you stated in this post. However, I still feel DVC has it's place for some and that there are worse choices in life than buying retail in spite of what some thing about my position. The truth is that I will consider a small to moderate purchase coming up when GF comes on board depending on specifics because it won't be available anywhere else, will be hard to get into I believe and is unlikely to save money buying resale for the same location for some time if ever. I'm not optimistic the numbers will line up and it's unlikely I'll purchase but I will look at them and consider it.

    IMO, one of the things that gives DVC a better value is it's flexibility. While there are those out there that will say DVC is far more flexible than everything else across the board, this is simply not true. You really have to look at the context and situation. However, when it comes to staying at WDW, needing different sized units, staying odd and varying lengths and changing your plans at times; DVC is the most flexible I am aware of for the average member (non VIP with other points systems). For those that fit into that situation, DVC's value rises and the cost for many other options increases modestly (in comparison). Thus for one who generally goes in increments of a week in the same size unit most of the time during the same time of year, DVC's value in comparison falls dramatically.

    The truth is that I feel that for many owning a smaller DVC package and non DVC timeshare (esp another mini system) is the best mix of cost, value and options.

    Let me also go back to your impression that DVC is double. While it is more, I don't think it's quite double for the small player. There is an economy of scale for non DVC timeshares and certain situations that does not exist for the person getting started. Just to pick some situations, here are a few comparisons for someone looking at this small time, say a week a year in Orlando in a 2 BR at a nice place for summer. I'll use rough numbers but I think there really very close.

    DVC SSR resale $15-16K with fees around $1500-1600 a year in fees (300 points)

    Bluegreen resale - $500 with yearly fees $1100 (18K points) or so plus maybe another $50 a year (averaged) for banking fees and cancelation fees. This will get you a week a year in Orlando any season at the top resort in the best non presidential suite. It will also give you the option to trade in to DVC for a 2 BR, add another $284 currently if you do. It also gives you direct access to other options and a much better trade option than using DVC for non DVC locations.

    Wyndham 2 BR deluxe at Bonnet Creek roughly $1000 (224K points) inclusive to buy in assuming you get a good contract, maybe less if you get a resort that has higher fees. Yearly fees somewhat variable but roughly $1000-1200 a year. All the other statements about Bluegreen apply pretty much the same.

    Marriott - buy at Grande Vista $3K (or less if you try) with yearly fees $1000-1100. Add II membership (?$89/yr) to it if you plan to trade and $109 currently if you trade to another Marriott, $189 for non Marriott. You do get the option of 2 trades a year instead of one though. Worst case scenario would be $1300 a yr currently for one week. For most GV contracts you can also reserve at the other FL club sites and can do 3 & 4 day stays instead.

    Marriott other places and trade in could be as low as $2-300 purchase including closing (assume $600 or so) and yearly more in the $900 range for the one I'm thinking of and up to $1200 if you trade to Orlando one week a year though you might trade for a 3BR instead of a 2BR.

    Marriott trust points simply too high for this purpose.

    RCI points maybe $1500-2000 purchase for enough points with good fees and yearly fees very variable but where mine are would give you fees roughly $800-850 for around 100K points which should get you into any 2 BR anywhere except DVC and would be enough to get you every year with DVC about half the time. Add yearly RCI points membership under $100, exchange fee $139 and for DVC, $95 resort services fee. Roughly $1100 a year with direct access to the entire RCI inventory (points and weeks).

    There are many other options but these are some of the more simple and better choices and are ones I know enough about to at least be coherent. So for this comparison that favors non DVC options and negates the current flexibility of DVC, DVC is close to double (likely a little less than double without running the numbers) if you factor in the time value of the up front costs and the higher fees. Given the other benefits and flexibility to DVC, I normally look at it as about 30-40% more. Historically the up front costs haven't been as dramatically different as they are now so the last couple of years have skewed the numbers to favor non DVC even more. DVC also gives many the ability to avoid a rental car and there are a few other added value perks (pass discounts).

    Thus, IMO, DVC is still very reasonable if you meet certain situation requirements and on property has value to you and yours.
     
  21. crisi

    crisi DIS Veteran

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    I don't know in any case if its a huge ripoff. It is a luxury purchase. Right now, bought direct, it it is a luxury on the scale of a new, high end Mercedes.


    You want a new car, and you decide you need a German engineered car. You can buy a $100,000 Mercedes brand new off the lot. You can buy a mid range Audi brand new off the lot for $60k. You can buy that Mercedes a year old for $80k and that Audit for $40k. But you could also by an older Jetta for $5k that is perfectly servicable and will get you from point A to point B.

    I don't know many people who drive brand new $100k Mercedes. I know a few people who choose to afford a $40k slightly used Audi (that's my husband's car - a slightly used mid range Audi), but most people I know drive a car that is perfectly serviceable - and a few just use public transportation and don't own a car.

    I'll add one thing to Dean's post - the best choice for flexibility is CASH. Whether you rent timeshare units for your travels or stay in hotels, cash provides the most flexibility.
     

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