Why are DVC members paying so much?

Doc:

The "fun chart" DOES take into consideration that the interest you would earn would be on a declining principle. Your balance would slowly dwindle until you had nothing at year 40.

If I hadn't, I would have reported to you the true but misleading result that you could have had a principle balance of about $375,000 after 40 years which would equal over $9,300 per year. I didn't do that because I wanted an apples for apples comparison, which I have provided.

Sorry, but the figures are correct as they stand. I will disclose, however, that the one assumption I made was a 7% annual return on investment. If you assume a higher return on investment, then the $1700 per year figure would be higher. If you assume a lower return on investment, then the $1700 per year figure would be lower. If you assume a zero percent return on investment, then you do indeed get (approximately) $600 per year as some people have tried to suggest.

I just don't think a 0% return on investment is a realistic assumption. I believe 7% is realistic and is in line with most mortgage and bond money. Of course, if you are financing through Disney at 13% or whatever, then that $1700 per year figure goes way up to $2900 per year.

By the way, I can save you a TON of interest on your home mortgage. And I'm not selling anything. I'm just providing information on what you can do with your present mortgage to save oodles of money. Or you can get the book "The Banker's Secret". Same thing.

Right now I'm saving my money for more Mickey Premium Bars. Boy those are good. . .
 
<BLOCKQUOTE><font size="-1">quote:</font><HR>The "fun chart" DOES take into consideration that the interest you would earn would be on a declining principle. Your balance would slowly dwindle until you had nothing at year 40. [/quote]

Ahh, but can you actually vacation on the amount of declining interest with your "fun chart"? (Especially in year 40?) I certainly can with DVC.

I assume you couldn't get your sister to follow your logic either? :)
 
I'm just trying to take all this in here. So the figure of 1700.00 is in the assumption that if I didn't spend this money towards DVC, that I would be investing it? i suppose that would be the smart thing to do, but how could I afford to invest the money if I'm paying 4000.00 to stay at disney every year with out DVC? :D
 
Doc:

"Can I actually vacation on $1700 forty years from now?" (Not an exact quotation).

Probably not. Like I said, inflation protection is one of the better arguments for DVC.

I provided the chart and the hypothetical to explain why $25,000 is not the same thing as $600 per year. It isn't. But just what it does equal is subject to an assumption on rate of return.

I missed your second post about tax issues until after I had posted my prior response and it is valid. If you went with 5.5% tax free municipal bonds, then you get $1500 per year instead of $1700. Point well taken.

If inflation rages out of control, then DVC could be a great deal (assuming your other fees don't bury you). If we experience recession bad enough to cause deflation, well that's a big problem. I'm probably on your side on this isssue. I own my own home whether its inflation, deflation, or whatever. And I've never looked back.

Let's do a quick calculation assuming 3% inflation (reasonable? who knows!). If we took our $25,000 invested it in 5.5% tax free municipal bonds, and withdrew an amount so we could withdraw 3% more every year until year 40, how much could we withdraw? About $1000. ($1030 next year, $1061 the year after, etc.).

Of course, if someone were financing DVC then they are paying that finance cost with after-tax dollars so the actual cost is much higher. In that case we are at about $2900 per year. This would also be true for anyone who is paying a credit card (at 13% interest) to have DVC instead of paying off the credit card. We can adjust the interest rate and final result to reflect anyone's actual result. There will be someone who is paying 18% on a credit card ($3800 per year). And they certainly aren't going to join in the discussion to tell us what a dope they are.

I'm sure this is way more information than anyone wanted. Sorry.

Back to Disney: Splash Mountain is my favorite ride . . .
 


Pixieduster:

A whirlwind of figures, yes?

The calculation I did was simply to show what $25,000 was equal to per year. The whole point was I wanted everyone to be using good figures for their cost comparisons. If we go with $1700 per year and add to that your fees ($1100?) you get a total cost to you of $2800 per year for the DVC. If you would normally pay $4,000 to do the same thing without DVC, then it shows you are saving about $1200 per year doing the DVC.

Some folks were saying they were paying $600 per year plus $1100 in fees for a total of $1700 and therefore they were saving $2300 per year. This just isn't accurate because you are paying the $25,000 up front (or financing --- same thing as $25,000 up front).

Feel better? If you were going to spend $4000 instead of doing DVC then you are saving $1200 per year. You are still saving. Just not as much as some would have you believe. But now you can be confident that you have more solid figures to work with.

I guess one of the things I have trouble grasping is $4000 (or even $2800) for accomodations only. When we stayed at the Boardwalk Inn, I was assured by my sister that we wouldn't need a rental car. Boy was I sorry I didn't get a rental car. We ended up eating on site and couldn't walk away from a place for under $50 (with two young children) unless we had junk food and even that was way too much money. It was either $20 for coffee and donuts or $50 for a breakfast buffet. And we had trouble finding Disney restaurants that served salad, something we were missing by the end of our stay. If we had the rental car (cheap in Florida --- we usually rent a minivan), we could have run over to Bob Evans for $20 and had our salads to boot. It was an amazing trip, but everything we did cost a small fortune.

If your going to do Disney no matter what, I am definitely on your side. Do DVC. It will pay in the long run.

As an aside, our family of four will be traveling to Morocco this April. $4000 covers air fare, resort accomodations, all meals and drinks, and nightly entertainment. No Mickey or theme park rides though :( .
 
Seems you have skipped over my justification....

My amatorized cost goes down every year. This year my vacation cast under $400 a night for a three bedroom Grand Villa at OKW. This room has a rack rate of $1200-1800 per night depending on season.
Or you can think of it this way....My original cost for 430 points was about $23,000, add to that my first two years of dues, $2,500, then I went on two twelve night vacations in the Grand Villa at OKW during my first two years of membership. At that time the rack rate was aroung $1,100 per night, plus the 10% room tax, and I actually broke even the second year.

Now my vacations are only costing me dues. I get a three bedroom Grand Villa for slightly over $100 per night....makes me feel giddy knowing what a great bargain I got with DVC.

$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!
$100 per night, on site three bedroom villa!!!

Every year for the next 42 years!!!!!!!!!

Creeping socialism was seen hundreds of years ago when James Madison said: "I believe there are more instances of the abridgement of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations."
 
lsjp -- Ah, now we can start talking food cost savings. I don't go on vacation to cook I go to enjoy the restaurants but I do like having my kitchen at DVC. I can whip up bacon & eggs in my villa with juice for a lot less than I'm going to buy it anywhere on site and I enjoy it while watching the Great Blue Heron walk across the golf course at OKW. Salad would be a no brainer in terms of convenience and savings. I'm telling you ... we "live" at WDW, not just stay in a hotel room.

Some more cost comparisons -- I realize you can sometimes get DVC at a discount but I have no way to track those numbers. I have tracked rack rates for the varying seasons. Looking at just OKW since 1997 room rates have gone up

Studio up 17-43%
1 Bed up 16-50%
2 Bed up 18-72%
GV up 16-50% biggest increase in Christmas Week

Our dues from 1997 to 2001 have gone DOWN -- ever so slightly from $3.1448 to $3.1272 or a little less than 1%.

[This message was edited by PamOKW on 01-04-01 at 08:45 PM.]
 


LOL.... I have some figures for you... just in case you are the least bit curious...

Since you insist on looking at that 25,000 figure... I'll give in.. of course that is not what most people have, but we'll use it for the sake of convenience... Before I get to my numbers, I will say that when Pixiedust refers to spending 4 grand for her accomodations, I'm sure that she is referring to 10 nights in a 1 bedroom unit....

Since you have insisted on discounts, I've given you the lowest AP rates as of two years ago, that should suit your fancy... BUT there is no way you could stay at either OKW or BW on an extended AP rate, the inventory just is not there.. but to make it easy... I used the AP rate...

Well, if I spent 25 grand at 55.00 a point - that is what I paid, I bought myself 454 points...

This is what 454 points will get you, in consecutive nights....

We vacation in September, it's low usage, and I like that... especially with an AP rate.. you can't get an AP rate, let's say school vacation week... or at any time during the month of December or October....

454 points at OKW translates to
21 consecutive nights in a 1 bedroom
21 * 230 = $4830
September 1-October 11 in a studio... 41 nights?
41 * 190 = $7790

This all takes into consideration you can get the AP rate... last time I got an AP rate, I called for 3 months straight... see DVC resorts don't open availability for a long time...

Now, if you are somewhat flexible, and don't need a concurrent stay, and want a week here or there, and don't want those weekends the picture gets even dimmer for our cash paying friends....

454/8= 56 (Cash rate at AP rate of 190) = $10640
454/16=28 (Cash rate at AP rate of 230) = $6440


This has provided you with the best possible option - the AP rate that you are alluding to... Paying cash even with the AP rate, adds up quickly...

So if you want to use the 25 grand figure... know what 25 grand gets you in a disney resort... if you don't want to pay the cost, that is fine... don't.. But don't expect that you are saving all your money in the bank, because you really aren't.... If you want 10 nights in a 1 bedroom, buy yourself 230 points, and spend more in the neighborhood of 13 grand... that 13 grand diminishes VERY quickly when paying cash every year of 2660 for a studio (14 nights) or 2300 in a 1 bedroom (10 nights)

If you don't want to go on property every year, don't buy DVC or buy half the points you will need in a routine visit.

As for people selling points on the DVC board... for the most part, those are people selling very small increments of points... The people that are selling larger increments are people that bought those points with the intent to sell them.. they sell them for double what they actually cost an owner....

There is more to DVC than meets the eye, but be sure when you are doing your comparisons, that you are comparing cost vs. actual gain
 
First, DVC may not be for everyone and there are comparisons that must be made which will be different for each person and family. I too tend to look at this as a strictly financial decision. Not because I use it that way, just that it's the only way I can function. There are so many variables on the cost like deductions for use, interest paid on loans, parking and transportation savings, meal savings, etc., that you must decide what variables are pertinent to you.

DVC is for the person who plans on going to WDW most years and staying on property. It has not saved me money because I was staying off property prior to my purchase but I feel the cost is roughly the same as I paid staying off property and I have crunched the numbers but don't care to go back through the entire spreadsheet of info again. If that's not helpful, I'm sorry. There is no comparison in the relaxation and vacation feeling for me and my family between staying at a cheap hotel and staying in a luxury Condo on property. And let's face it, vacation is all about feeling.

DVC ownership utilizing a studio costs roughly the same as staying the same number of nights in a moderate WDW resort, even if you assume current discounts will continue. A 1 or 2 BR may be somewhat more depending on whether you would need two rooms at the moderate. What do you want to compare to: WDW deluxe, WDW moderate, cheapie off site, Marriott World center (or comparable), cheap timeshare or deluxe timeshare or any variant you can think of. The comparisons will all be different. Actually the cheapest cost will be for a cheap timeshare somewhere other than Orlando and then trade into Orlando every year. You can accomplish this by buying a cheap Marriott off season week for about $1500 (yearly opportunity costs say $105), yearly fees about $500, exchange company membership $74 and exchange fee $69 for a grand total of around $748 for a luxury 2 BR for a full week. Considering the other benefits, extra room and meals cost savings, this method is likely much cheaper in the long run than staying at Best Western, etc. You could come out even cheaper by buying somewhere like Hilton or Fairfield and likely get the cost down to around $400-500 per year.

One of the WDW tour books has a chapter (or at least did previously) titled something like "Evolution of the Second Class Guest" where they tell about the benefits of staying on property and the problems of not doing so. First I believe you are guaranteed admission if you are on property and can even get into one park an hour earlier than everyone else. You can make dinner reservations in advance and use the kennels overnight. Free parking if you chose to drive to the parks and obviously you are much closer. For MK, the WDW bus system takes you directly to the park where otherwise (even if the hotel has a shuttle) you must get there in 2 steps by going to the Transportation and Ticket Center. None of these matter to some but are very important to others.

If you're just as comfortable not having an automatic cost yearly, having more flexibility but at the risk of a higher long term cost and staying off property; please enjoy. For me, I plan on staying at DVC when I visit WDW but will stay at other Orlando timeshares for off site excursions.

As for the cost per point, you can't just take the up front cost, divide by the years left then add the yearly fees and call that your cost, on that we agree. Otherwise, you should just buy extra points and let me rent them at your cost. LOL. True there are many out there that would never save the money and would pay directly for vacations so they may want to view the financial outcome accordingly. I took the money out of my savings, paid cash and when I spend my points, I look at it like I'm paying cash again so I'm very discriminating in spending my points.

Just a few numbers to wrap up. For around 150 points you can get a studio for roughly a week (more or less depending on resort and season). Cost around say $9000 resale at OKW ($60 pp) with yearly fees more like $475. Lost opportunity costs of say a max of $550 depending on tax bracket but more like $400 for most members. That's roughly $1000 a year where a moderate will cost around $925 at current costs and discounts ($119 per night plus tax) and that price will go up every year (and discounts are getting less common). A cheapie hotel will cost around $400 to 600 for a week depending on season (maybe more at high occupancy times).

Finally any timeshare requires planning and therefore if you're not the type that can or will plan say a MINIMUM of 7-11 months in advance for vacations (how much advance planning needed depends on which timeshare), timeshares are not for you anyway regardless of the savings that may be realized. DVC (or timeshares in general) may not be for YOU and that's ok. We don't want you to buy something that's not right for you. If you decide to buy, we will welcome you to the family with open arms. You're certainly welcome to participate in this board as we all enjoy different points of view and discussing (even arguing at times) various aspects of DVC. What we don't welcome is arguing for arguing sake but I don't think that's the case here.

Dean
 
Dear Isjp:

Quote: hotels are at slash and burn prices (except Disney) Then you say that I reject rack rates, I think comparisions to discounted rates people ACTUALLY pay would be more realistic.
This is an oxymoron?? How can you compare discounted rates at DISNEY, in summer in my instance- when YOU yourself could not get "cheap rates at disney"? I am a bit confused on this issue. By the way, I am going to let the "DVC experts fight this one out, I am in total agreement that DVC is the best thing we ever did, and I hope you will soon change your thinking, if not, stay at the cheap International Drive places, and stay there. By the way, have fun fighting the lines of cars to and from disney, did the I drive thing, and hated it.--- But to each his own. By the way, we bought our DVC for 11000 or so, plus dues, and in 2 years, we have gone on or will go on 8000 dollars worth of vacations, that is counting the Disney cruise, which is a portion that people may not have mentioned to you. Maybe not the best use of points, but I for one am paying $500 for a $3800 cruise this summer- How does that play out in your figures??
Also your figures do not include the tax deductible second home mortgage for my finacing through Disney-Another thought about redueing your figures.. Just my .02 cents worth..
deerh :)
 
I really appreciate everyone's responses so far. I think this has been a good discussion. And many have helped change my perceptions of DVC. Thank you.

No, DVC is not for us. But I can see how it could be the right thing for some.

Best regards. Good health to all.
 
We all know why we joined! Some people feel better saving some money and staying off site. Not Us. Some people don't want to keep going back to WDW. Not Us. Some people don't mind staying in an economy class room. Not Us. We get deluxe accomodations on WDW property and can go back every year sometimes 2-3 times / year. I did the math and came up with the figures and it isn't a great deal. You could get a cheaper timeshare off property. Dues are fairly high. Initial outlay is pretty high. SO WHAT! I own a piece of the magic. There's nothing like waking up and going to the balcony and looking out and realizing you don't have to go to Disney World... Your already there.
One last thing. I may sound nieve but in this fast paced world, I think some people forget that money isn't everything. I can honestly say that my DVC ownership is one of the best things I have done. I have a trip in Feb and I'm like a little kid waiting for the big day when we finally leave. DVC is definitely for me!


DVCDUDES
Owner BWV Feb 2000

 
I am selling everthing I own, quiting work, applying for SSI, moving into a cardboard box, and will eat only out of trash cans the rest of my life, its cheaper.

anidragon01.gif


Feel free to send me an email :)

If you need help with your Disney problem click here:Calbay's 12 Steps of Disneyholics Anonymouse


My recent trip to the Disneyland Resort
Calbay's Holiday 2000 Disneyland Trip Report
 
With the capital invested in our house, we could have a cash flow that would let us rent an apartment instead -- at least until the rent goes up beyond the income that our investment is generating. Oh, and the apartment wouldn't be as nice as our house.

With the capital invested in our DVC membership, we could have a cash flow that would let us rent hotel rooms instead -- at least until the room rates go up beyond the income that our investment is generating. Oh, and the hotel rooms wouldn't be as nice as DVC.

-----
Werner Weiss, Curator of Yesterland, featuring discontinued Disneyland attractions
 
Playing with the numbers is fun, but what I remember most is the looks on my kids face the first year we stayed in a two bedroom at OKW. We spent the previous two years for 10 nights each at DxL and PO, and the space to spread out at OKW was beyond our imagination. My kids are grown now but I couldn't have replaced those summers (1994-98) with future money or future vacations, it had to be done then!!!
 
Help me out here.

If dues increase at only 3% annually on 150
points, you will end up paying near $50,000 in dues alone over 42 years. Add this to the $10,800 in points and divide by 42 years and you get close enough to $10.00 a point for discussion purposes. If however dues never increase you are right on the money., Right??
 
I'm going to go out on a limb here and assume isjp isn't fully aware of the benefits of DVC ownership. By this I mean, along with the obvious choices in vacation destinations (OKW, BWV, WLV, Hilton Head and Vero Beach) our DVC points can also be used for other more 'exotic' vacations by making exchanges thru Interval International and Buena Vista Trading Company. Here's a partial listing of DVC vacation opportunities:

Feel like traveling abroad? Try the
~~World Passport Collection
20 choices in the British Isles
47 choices throughout Europe including Austria, France, Greece, Italy, Portugal and Spain)
23 choices in Mexico and Central America
13 choices in South America
12 choices in Canada
16 choices in the Caribbean
5 in Australia
4 in New Zealand
and various other destinations in Afria, Norway, the Philippines and Malaysia.

Going on a romantic getaway? Looking for a 5 star hotel? Look in the
~~Concierge Collection
27 choices throughout the US and Great Britain including some of the most famous names in Big city hotels, inns and world renowned spas.
Tanque Verde Ranch in Arizona
Boston Harbor Hotel in Mass.
Hotel Jerome in Aspen, CO.
Kapalua Bay Hotel in Hawaii
just to name a few.

Would you rather go on an African safari? An eco-trip? Rafting or Biking expedition? Alaskan cruise? Try the
~~Adventurer Collection
Tanzania
Costa Rica
Tuscany, Italy
France
Grand Canyon, Arizona

Last but not least, how about a Disney cruise?

Ok, you get my point. There are many other alternatives to Disney vacations. Isjp, let me ask you this. What would you do if you found out your vacation destination in Morocco was included in one of the DVC exchanges? Your $4000 would go alot further in DVC than in one trip to Morocco. Something to think about :)

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<font face="comic sans ms"><font color="ff69b4">Jennybºoºbenny</font>
<font color="4169e1">DVC Member: 3/99
Onsite: Poly '76, Contemp '98, BWV '99, CBR '00, BWV '00
Offsite: '74 '80 '82 '88
Next trip: CBR~Jan '01, BWV~June '01, BWV~Nov '01</font>
<a href="http://people.ne.mediaone.net/jsmith12/jillian&kylecharacterpage.html">Jillian & Kyle's Disney Character Website</a></font>
 
You captured exactly how I feel about DVC. I wanted a piece of the magic and the financial sense was secondary. People who said I was nuts when I bought have shut their mouths now that they've seen it too!
 
I think it all boils down to choice. Either you like Disney or not. We could never afford to go to Disney twice or even three times a year if we stayed either off-site or in another Disney location. However, with the DVC, we are now able to plan two, sometimes three, vacations a year at Disney because our accommodations are already paid for the next 41 years. Averaged out, it certainly makes sense to join DVC. Our room rates never rise, we have incredible accommodations with incredible service, we have access to all the other resorts at will to visit or dine, we have a wonderful home base with several pools and the Boardwalk, and we are walking distance to two of Disney's wonderful parks.

It may not seem like a big thing to some people, but for those of us who know what we like and want to be there, it makes perfect sense to buy into DVC. By in large, we don't have to worry about second-rate accommodations. We don't have to worry about service. And we know that the Disney people are only too willing to go the extra mile to help us. Those are priceless features.

My brother has a time share at World Marriott. It's lovely to look at, but believe me, what a hassle it was just to get an extra towel or a roll of toilet paper. We don't have that problem at DVC, or at least we have never had that problem to date.

We may not all be rocket scientists. We may not all be major economic whizzes. We are, however, discerning people who have made decisions that are right for us. And whether you agree or not is your perogative. I think, however, that you have to "walk a mile in my shoes" before you can properly judge the intelligence of our decisions.

Just a thought...
 
I really think the piece that Ispj is missing is not having toured the facilities. What sold me on DVC was the not the studio, which is comparable to a hotel room, but the 1BR and up (especially the GV which I will stay in someday). I am just plain tired of staying in a regular hotel room, they're cramped and I want to spread out on my vacation. I also wanted someplace to make a meal. Schlepping my kids to find food at the end of the day is NOT my idea of a good time!

The last time we went to WDW we toured SilverLake Resorts which was very nice, however, it was about $3K higher than 200 points at DVC. When we factored in the savings in financing, their rate was about 17%, DVC was much cheaper. And I get to stay on Disney property. When I go to WDW I don't want to look at 192 or International Drive except in relief at not having to stay there.

I used to have the same mentality as Ispj, however, as I have gotten older I find that I am more willing to pay for my comfort and I feel that with DVC I can have my cake and eat it too!!

Kimberly-Lucas and Ripley's Mom

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