10-15 year DVC Financing - "Its a trap!" - Admiral Ackbar

[atthebeachclub]

fully fund my 401, Roth, HSA and 529 plans for grandchildren

This is a non-trivial amount of money you are bringing in annually to be able to do all this, even if you are exceptional at keeping your costs low so you can fund this level of savings.

You must understand that the majority of people in the US do not have this amount of money coming into their possession annually, and never will have this amount of money coming in, no matter their ability (or lack thereof) to delay gratification.

It may be helpful to look to see what percentile your income falls into within the country to recognize you are earning much more than most. And also recognize that other people may make different decisions about these things, and they aren’t always incorrect even if not always financially optimal.

I say this as someone who does very well myself, but I recognize there are still lifestyles that will always be out of reach for me, and I also know my usually frugal lifestyle (outside of some Disney spend) is out of reach for many as well.

We all have to decide what matters to us. I used to save and save and save. We never vacationed. My house is paid off. I have a very healthy HSA and 401k balance. And then out of nowhere, I suddenly almost died one year. I’m well now, thankfully; it was a total random type thing and I probably delayed medical care longer than I should have.

My kids are young. I realized I didn’t want to suddenly leave them with few family memories if something happened. I adjusted my savings to prioritize making great memories with my family, because it turns out that is also important. That’s why we have DVC (all resale, no loans). It makes me take vacations we love. And I think that’s worth a little less in my 401k, to me. I no longer max it out. My 529s could be better; I am probably going to have to cash flow a lot of college and emphasize scholarships and other money saving opportunities. I am still ahead of the game though, and feeling ok about it all. It’s a marathon, not a sprint.

But that’s just my personal take on balancing the present with the future.

 

[Disneydad14]

I've read that before but at some point those children become adults and have the potential to make their children's future less precarious. I'm in a position where I see the consequences of people's decisions more than most and some people are just horrible money managers regardless of their social or economic capital.

I grew up in a very small, very rural, very economically depressed area. My childhood would definitely be considered precarious by modern standards. I would have never purchased DVC in my 20's and 30's simply because I was planning for the future. Doing so allowed me to be well prepared financially entering my 40's and 50's. Only then did I start buying DVC.

I don't really care how others spend their money until they expect me to pay more in taxes to support their poor decisions. Financing DVC for 15 years at current interest rates is a poor financial decision no matter how much mental gymnastics is used to justify the decision. As I said before, just because you can pay for it doesn't mean you can afford it.

On a different note, we're headed to WDW tomorrow. Even though the wife and I have DVC and annual passes, it's still crazy expensive. The cost of the points will only be a fraction of the total dollars spent at Disney.

Finally someone sane .

 

[Disneydad14]

This is a non-trivial amount of money you are bringing in annually to be able to do all this, even if you are exceptional at keeping your costs low so you can fund this level of savings.

You must understand that the majority of people in the US do not have this amount of money coming into their possession annually, and never will have this amount of money coming in, no matter their ability (or lack thereof) to delay gratification.

It may be helpful to look to see what percentile your income falls into within the country to recognize you are earning much more than most. And also recognize that other people may make different decisions about these things, and they aren’t always incorrect even if not always financially optimal.

I say this as someone who does very well myself, but I recognize there are still lifestyles that will always be out of reach for me, and I also know my usually frugal lifestyle (outside of some Disney spend) is out of reach for many as well.

We all have to decide what matters to us. I used to save and save and save. We never vacationed. My house is paid off. I have a very healthy HSA and 401k balance. And then out of nowhere, I suddenly almost died one year. I’m well now, thankfully; it was a total random type thing and I probably delayed medical care longer than I should have.

My kids are young. I realized I didn’t want to suddenly leave them with few family memories if something happened. I adjusted my savings to prioritize making great memories with my family, because it turns out that is also important. That’s why we have DVC (all resale, no loans). It makes me take vacations we love. And I think that’s worth a little less in my 401k, to me. I no longer max it out. My 529s could be better; I am probably going to have to cash flow a lot of college and emphasize scholarships and other money saving opportunities. I am still ahead of the game though, and feeling ok about it all. It’s a marathon, not a sprint.

But that’s just my personal take on balancing the present with the future.

I’m not saying that you don’t have the balance life with savings but we are talking luxury . Not financing dvc contract for 15 years doesn’t mean you can’t make memories. I didn’t grow up staying in luxury resorts and I have great memories of my childhood. We use to go on vacation for 2 nights and I looked forward to those trips more than my daughter who is 4 years old and has been taking luxury vacations.

 

[Brob2132]

Perspective? Nah. It’s way more fun to brag about his/her savings balance to a Disney message board.

What a nerd. Rich people don’t tell people they are rich. Just saying.

 

[Girlstar30]

I find it hilarious that some people on here are so pretentious and argue how financially savvy and smart they are, how other adults make poor decisions and shouldn't own this product under any circumstance because they can't pay it off right away and may not be able to if they use a credit card in the future, yet they are all also buying a timeshare that is depreciating in value and heading straight to zero, by your own logic, you can actually invest this money in other things instead of letting it go to zero

This is not a sound financial investment for anyone and you should be buying this to enjoy it not because you think you somehow made a smart move paying off these timeshares heading to zero in one shot.

In the end I am potentially saving more money than someone who bought direct and paid it all off at once. Why? because my wife and I are pixie dust pass eligible which will save us thousands over the course of our years going to WDW. People who have airline credit card miles may save thousands in flights even though they financed and thus come out ahead. Maybe someone negotiated a killer deal and they are still paying less financing than someone who paid it all off right away. My point is there are many ways to do this and save money and nobody's way is entirely the right way.

 

[Brob2132]

I’m not saying that you don’t have the balance life with savings but we are talking luxury . Not financing dvc contract for 15 years doesn’t mean you can’t make memories. I didn’t grow up staying in luxury resorts and I have great memories of my childhood. We use to go on vacation for 2 nights and I looked forward to those trips more than my daughter who is 4 years old and has been taking luxury vacations.

I don’t think people said it was a good idea. I certainly didn’t. I said the opposite actually.

I took umbrage with your other content and the overall way you carried yourself. That’s all.

 

[atthebeachclub]

I’m not saying that you don’t have the balance life with savings but we are talking luxury . Not financing dvc contract for 15 years doesn’t mean you can’t make memories. I didn’t grow up staying in luxury resorts and I have great memories of my childhood. We use to go on vacation for 2 nights and I looked forward to those trips more than my daughter who is 4 years old and has been taking luxury vacations.

And there is nothing wrong with that.

If I had to choose to book a vacation every year, I would unfortunately go on zero vacations. Having a use it or lose it product works in my favor here because the decision has already been made for me. The product doesn’t have to be DVC or luxury, of course, but this worked well for me so I chose it.

But you have to recognize there are shades of grey in nearly every situation. People have a lot going on in their lives and have complex issues. They might finance on a temporary basis. Or not at all.

I didn’t finance anything but I am not going to tell somebody they are wrong for doing so because I don’t know their whole story. What I would be more than happy to do (if they are interested) is lay out exactly what it will cost them and compare with alternatives that may be better for their scenario, if they exist. But since nobody on this board has personally asked for my input on their financial choices, I don’t feel the need to do this.

 

[hammer1995]

This is a non-trivial amount of money you are bringing in annually to be able to do all this, even if you are exceptional at keeping your costs low so you can fund this level of savings.

You must understand that the majority of people in the US do not have this amount of money coming into their possession annually, and never will have this amount of money coming in, no matter their ability (or lack thereof) to delay gratification.

It may be helpful to look to see what percentile your income falls into within the country to recognize you are earning much more than most. And also recognize that other people may make different decisions about these things, and they aren’t always incorrect even if not always financially optimal.

But that’s just my personal take on balancing the present with the future.

I've always "payed myself first" even when my income was much, much lower. I didn't start buying DVC until later in life and my income reached the point where I could afford it and not just pay for it. Disney is incredibly expensive and would otherwise be out of reach to many, if not most, without the 15 year financing.

I never said they were "wrong". Two things can be true at the same time-you can feel good even when making a bad financial decision. I've done that a time or two in my life as well-just not on something as expensive as DVC.

 

[Girlstar30]

And there is nothing wrong with that.

If I had to choose to book a vacation every year, I would unfortunately go on zero vacations. Having a use it or lose it product works in my favor here because the decision has already been made for me. The product doesn’t have to be DVC or luxury, of course, but this worked well for me so I chose it.

But you have to recognize there are shades of grey in nearly every situation. People have a lot going on in their lives and have complex issues. They might finance on a temporary basis. Or not at all.

I didn’t finance anything but I am not going to tell somebody they are wrong for doing so because I don’t know their whole story. What I would be more than happy to do (if they are interested) is lay out exactly what it will cost them and compare with alternatives that may be better for their scenario, if they exist. But since nobody on this board has personally asked for my input on their financial choices, I don’t feel the need to do this.

 

[atthebeachclub]

I've always "payed myself first" even when my income was much, much lower. I didn't start buying DVC until later in life and my income reached the point where I could afford it and not just pay for it. Disney is incredibly expensive and would otherwise be out of reach to many, if not most, without the 15 year financing.

I never said they were "wrong". Two things can be true at the same time-you can feel good even when making a bad financial decision. I've done that a time or two in my life as well-just not on something as expensive as DVC.

Please read my message again. I don’t believe you understood it.

 

[Brob2132]

Please read my message again. I don’t believe you understood it.

How can that possibly be? I was under the impression we were talking to Warren Buffet himself.

 

[atthebeachclub]

How can that possibly be? I was under the impression we were talking to Warren Buffet himself.

LOL. Warren would NEVER. Honestly, I LOVE Warren Buffet.

 

[Brian Noble]

at some point those children become adults and have the potential to make their children's future less precarious.

Yes, we all make choices. But, the options from which we can choose are often quite different from those others have before them.

I don't really care how others spend their money until they expect me to pay more in taxes to support their poor decisions.

I'm not sure what this has to do with DVC? I suppose you might explain it to us, but I won't bother reading it.

 

[Brob2132]

I just hope that he/she imparts more of their wisdom on me. I do have such difficulty with complex topics. #saint

 

[Brian Noble]

If I had to choose to book a vacation every year, I would unfortunately go on zero vacations. Having a use it or lose it product works in my favor here because the decision has already been made for me. The product doesn’t have to be DVC or luxury, of course, but this worked well for me so I chose it.

This was me too.

During my initial appointment as an Assistant Professor, I was sitting in an annual review meeting with my Department Chair. It must have been near or maybe just after the end of Winter term, because he asked me where I was going on vacation that summer. Note: He did not ask if, he asked where. I thought the correct answer was "Oh, I don't take vacations."

He stopped, steepled his hands, and looked over the top of his glasses at me. "Brian," he said, "vacations are important. I want you to take one. It is too easy to burn out otherwise."

[As an aside, when I tell that story to most of my colleagues at other schools, their first reaction was: "Wow. I wish I'd had your Chair!"]

Even after that, it was like pulling teeth to get me to go. There was always some draft of a paper, some grant proposal, some <whatever> that seemed more important. That changed when I started putting together a timeshare portfolio---all resale, unitl just this past year. My net acquisition cost was negative, in that I had more value in free years' worth of use than I paid to buy any of them. In other words, they were very much not Disney (or Marriott, or Hilton, or Sheraton, or ...). But, they were certainly nice enough.

With a little time spent learning the ins and outs, I was able to turn those into some VERY nice vacations---including at Disney (and Marriott, and Hilton, and Sheraton, and...) But that's not the important part. The important part is that vacation became a first-order concern, and something that I planned as part of my calendar rather than fitting in around other things when there was time.

 

[Cfabar1]

I take DVC trips, I take Swan/Dolphin Trips, and I take Disney Cruises right now... Prior to kids we did none of these things....

Here's a few things I have noticed:

1. We have been members for about 3 years, I could sell the DVC product for THOUSANDS of dollars less than I paid for it, and still be ahead of what it would have cost to take those trips on cash rates.

2. DVC is only a FRACTION of the cost of vacationing with Disney.... Even for us, not having to fly, getting AP discounts (and cheaper APs available to us), it is still an expensive hobby.

3. My DCL cruises are wonderful, but they depreciate to zero as soon as they are over. And they are EXPENSIVE.

4. A few years into DVC, I am learning that the rates from a few years ago at WDW are significantly higher (after discounting) than the rates today... This is not something I had envisioned when starting DVC...

 

[Disneydad14]

I don’t think people said it was a good idea. I certainly didn’t. I said the opposite actually.

I took umbrage with your other content and the overall way you carried yourself. That’s all.

The way I Carried myself ? You resulted to petty name calling when we made logical financial points.

 

[Brob2132]

To be clear, I didn’t call you any name. I said your tone was sanctimonious, which I stand by.

Anyhow, I’ll refrain from blowing up further notifications.

Cheers.

 

[hammer1995]

Perspective? Nah. It’s way more fun to brag about his/her savings balance to a Disney message board.

What a nerd. Rich people don’t tell people they are rich. Just saying.

Please share where anyone posted a balance.

Please read my message again. I don’t believe you understood it.

Maybe you could enlighten me on what you perceive that I misunderstood.

 

[WeIcomeHome]

To get back on track before the thread gets locked down for too many people bickering, trying to assume typed words are carrying a certain tone - I think everyone can agree there are plenty of people out there making bad financial decisions or living above their means whether they own a timeshareor not. Maxing out credit cards, living paycheck to paycheck, ect. This is not limited to people with low income or people with high income.

The idea of a double digit interest rate for 10 to 15 years sounds terrible to me because I understand the cost of just the interest over the life of the loan. There are plenty of people who don't understand how amortization works and only consider what the monthly payment will be. My goal with my posts is that someone who looks at purchases in this lense will reconsider their options or research the total cost of financing.

I think @Brian Noble made a good point that you should figure out your goal (IE owning 200 points at X resort) and consider the options to complete your goal. IMO there are better options than buying direct and paying it off for 15 years. Maybe the solution is buy 150 points at Y resort via resale and pay it off over 5 years, then in 10 years buy 100 points at X resort via resale.

If you look at one of my earlier posts, the cost of interest over 10 or 15 years would get you a nice sized deed via resale. In this scenario would you rather have 200 points direct, or 300 to 400 points via resale. If the answer is still direct and you get that you are lighting 5 figures on fire to pay interest, then at least you thought about options.