Am I crazy?

[jodifla]

On "what could happen" - About a dozen years ago we started trying to conceive. Nine years ago we adopted our son - $20,000 into infertility treatments (and we didn't do much) plus another $20,000 for adoption (all this has gotten much more expensive since we did it). We wouldn't have been able to afford that had we had out a DVC loan. We did take out loans for adoption - and got REALLY lucky in that we inherited money unexpectedly that let us pay it off - or we'd really have struggled.

My sister also had problems conceiving - she has two $40,000 children. Hers would have come much earlier except her husband was unemployed for nine months about the time they wanted to go with IVF.

People on this board say two things I know are wrong for me. One is that DVC is the best money they've ever spent. Best money I ever spent went to Children's Home Society of Minnesota and Eastern Child Welfare in Korea. The other is that they wish they'd have bought sooner. At no point until shortly before we bought was there a time I wouldn't have regretted not having that cash available or regretted having a DVC loan or dues.

Having less debt and/or cash on hand gives you more flexibility when life throws you a curve. If you are lucky enough to never know what I am talking about, I envy you.

And what we're suggesting here, is if you take out a loan for DVC and already have it paid off before you have kids, then what on earth is the harm? You still have plenty of flexibility that way.

Because I bought way back when I did, our payments were no more than a car payment, the time financed was less than five years, and all the money we spent on DVC payments we diverted from other vacations, focusing our holidays at WDW. It was a financial wash for us....

There's more than one way to do things. If a person decided they needed an influx of cash, they could always sell their DVC. I'd get back more than I paid at this point.

 

[crisi]

And what we're suggesting here, is if you take out a loan for DVC and already have it paid off before you have kids, then what on earth is the harm? You still have plenty of flexibility that way.

Because I bought way back when I did, our payments were no more than a car payment, the time financed was less than five years, and all the money we spent on DVC payments we diverted from other vacations, focusing our holidays at WDW. It was a financial wash for us....

There's more than one way to do things. If a person decided they needed an influx of cash, they could always sell their DVC. I'd get back more than I paid at this point.

If it all works out, great. My life hasn't always worked out as planned.

Had we purchased DVC on our honeymoon, a year later we'd have had been starting our $40,000 child quest. We borrowed about $15,000 to complete our child quest. About the same time we also built a house. So we had a bigger mortgage, a adoption loan - and wouldn't have had cash for DVC those DVC payments.

So, maybe you wait until your DVC is paid off. I would have wanted that money that I would have paid off DVC with to be able to fund the treatments and adoption. I've had loans for longer than I intended because I got divorced or because other priorities just stepped in. Or maybe you end up with baby Surprise - "we weren't currently trying" happens to a lot of people (including myself with my second child). Curves aren't always bad.

If the curve comes too quickly after the purchase, you are in a loss situation, often when you can least afford to be set back by a couple grand. Sure, if you lose your job you can sell DVC - if you bought SSR through Disney recently, by the time you pay commissions on the sale you'll probably lose $10 or $15 a point. Now, if you'd paid cash, you'd still be in that loss situation, but you wouldn't have to scrape up a few grand to close on your sale just to get rid of it. So, you don't sell, because you'd take a loss - but now you have to keep making payments and paying dues. Or you decide you'll just default - not good on your credit and you are out your downpayment and any principal you've already paid. Pay cash and you might get less cash out - but you won't ever need to put more cash in (that if you had, you wouldn't need to sell) to get out.

 

[BroganMc]

And what we're suggesting here, is if you take out a loan for DVC and already have it paid off before you have kids, then what on earth is the harm? You still have plenty of flexibility that way.

I think the two sentiments being argued here is cautious vs. risky. Any financed debt is risky because you're playing with money you don't have. You have to look very closely at how realistic is your expectation of earning the money necessary in the future. What will you be risking with that debt?

Debt is necessary in life but must never be accrued more than what is reasonably expected to be earned. That's why money experts often recommend that before people start spending on luxuries they be sure to have the necessary investments of housing, transportation and 6 months savings to pay for food.

In general, the more years you have as a wage-earning adult the more reliable your risk assessment judgments become. It's very hard for a young, fresh college graduate to know exactly how well they'll do in their career. Even a freshly divorced former SAH mom will have issues getting settled. That's why many lenders look closely at how long a lendee has been in a place, how much they owe and how much they have available.

When I hear stories of a young person earning good money in their first full time job and then spending like crazy, I get nervous too. So much can happen to complete change a life, especially under the age of 25. I get nervous when they plan marriage and kids as well. Though if it all works out in the end, then it's a happy story for everyone.

What has inspired this debate is more the confluence of debt, buyer's remorse and youth. All three red flags that give the cautious folks heebee jeebies. Something seems like a rash emotion unduly influencing the situation. Emotions and money are recipes for disaster, just ask any married couple.

 

[El&Asmom]

I think the two sentiments being argued here is cautious vs. risky. Any financed debt is risky because you're playing with money you don't have. You have to look very closely at how realistic is your expectation of earning the money necessary in the future. What will you be risking with that debt?

Debt is necessary in life but must never be accrued more than what is reasonably expected to be earned. That's why money experts often recommend that before people start spending on luxuries they be sure to have the necessary investments of housing, transportation and 6 months savings to pay for food.

In general, the more years you have as a wage-earning adult the more reliable your risk assessment judgments become. It's very hard for a young, fresh college graduate to know exactly how well they'll do in their career. Even a freshly divorced former SAH mom will have issues getting settled. That's why many lenders look closely at how long a lendee has been in a place, how much they owe and how much they have available.

When I hear stories of a young person earning good money in their first full time job and then spending like crazy, I get nervous too. So much can happen to complete change a life, especially under the age of 25. I get nervous when they plan marriage and kids as well. Though if it all works out in the end, then it's a happy story for everyone.

What has inspired this debate is more the confluence of debt, buyer's remorse and youth. All three red flags that give the cautious folks heebee jeebies. Something seems like a rash emotion unduly influencing the situation. Emotions and money are recipes for disaster, just ask any married couple.

Very well said. This has been an interesting thread that seems to reflect more on the way many Americans live and accept debt than the virtues of DVC. I can see both sides of each of the arguments made here.
I agree that it is "impressive" that a 21 year old that does not appear to be independantly wealthy has taken on $40000 worth of debt. In some ways I agree that it was better to "invest" in DVC rather than an expensive car that so may young people, (I'm still kinda included in this group), choose to do. At least she has something that can be relatively easily sold without the signifcant loss similar to many other luxury items. This is something she can enjoy for many years either alone or with a future family.

It seems that the hot button issue that has gotten so many people riled up is the OP age. I certainly wouldn't have had the balls to do it, but it's not my personality. Many others are risk takers and it pays dividens in the end. For others that risk ends up causing huge financial burdens. Many of us who have lived a bit longer understand that life can throw you curves. When the marraige, house down payment and mortgage, and kids come along, cost of living changes significantly. Add on unforeseable challanges such as injury, infertility, change of career, and things change even more.

I always feel bad to posters when people they don't even know make personal comments about their personal lives. Granted it also surprises me that they don't expect it when they put themselves out there.

 

[jodifla]

If it all works out, great. My life hasn't always worked out as planned.

Had we purchased DVC on our honeymoon, a year later we'd have had been starting our $40,000 child quest. We borrowed about $15,000 to complete our child quest. About the same time we also built a house. So we had a bigger mortgage, a adoption loan - and wouldn't have had cash for DVC those DVC payments.

So, maybe you wait until your DVC is paid off. I would have wanted that money that I would have paid off DVC with to be able to fund the treatments and adoption. I've had loans for longer than I intended because I got divorced or because other priorities just stepped in. Or maybe you end up with baby Surprise - "we weren't currently trying" happens to a lot of people (including myself with my second child). Curves aren't always bad.

If the curve comes too quickly after the purchase, you are in a loss situation, often when you can least afford to be set back by a couple grand. Sure, if you lose your job you can sell DVC - if you bought SSR through Disney recently, by the time you pay commissions on the sale you'll probably lose $10 or $15 a point. Now, if you'd paid cash, you'd still be in that loss situation, but you wouldn't have to scrape up a few grand to close on your sale just to get rid of it. So, you don't sell, because you'd take a loss - but now you have to keep making payments and paying dues. Or you decide you'll just default - not good on your credit and you are out your downpayment and any principal you've already paid. Pay cash and you might get less cash out - but you won't ever need to put more cash in (that if you had, you wouldn't need to sell) to get out.

By this thinking, you never ever buy DVC, because life can throw you curves at any moment.

I think 40 grand is an awful lot for a young person to start out with....I wouldn't have done it....But, if you can pay it off, and you don't start down the house and cars and kids path too soon, it would be one more asset you'd have.

A lot of it is the time line. Do you have to buy the house first?

Everyone is always all hepped up to buy a house and pay it off. If you buy DVC and pay it off, why is it any less of an asset?


One of the differences now as well that as DVC points have shot up in price, the financing deal changes. I hear some people are paying off over 10 years....we did less than half that amount of time, so for us, it was just like another car loan....and we put off getting new cars.

 

[crisi]

By this thinking, you never ever buy DVC, because life can throw you curves at any moment.

I think 40 grand is an awful lot for a young person to start out with....I wouldn't have done it....But, if you can pay it off, and you don't start down the house and cars and kids path too soon, it would be one more asset you'd have.

A lot of it is the time line. Do you have to buy the house first?

Everyone is always all hepped up to buy a house and pay it off. If you buy DVC and pay it off, why is it any less of an asset?


One of the differences now as well that as DVC points have shot up in price, the financing deal changes. I hear some people are paying off over 10 years....we did less than half that amount of time, so for us, it was just like another car loan....and we put off getting new cars.

But spending money you have and leaving a cushion carries much less risk than spending money you haven't even earned yet.

(Not surprisingly, I don't do car loans either - I'd really rather have people pay ME for using MY money rather than the other way around).

 

[vwlvette]

Hmmm, a 22 year old responsible student in my town went out with some friends a weekend ago and ended up getting shot in the neck by a disgruntled driver. She's now paralyzed from the neck down.

Point being, never EVER ask a loaded question like "What is the worst that can happen?" I guarantee you, most early 20-somethingers have no idea how bad life can get. That's why their boring parents are constantly judging their frivolous expenditures and lack of planning for the future. (It's also why such phrases as: "oh to be young and stupid" or "youth is wasted on the young" exist.)

I think what threw alot of folks here is that they were presented with two red flag moments: (a) a new buyer who wants to flip contracts for a loss and (b) a buyer who financed $40,000 on a timeshare. Timeshares are not real estate investments. They lose value as soon as the ink is signed. That's why the smart financial move is to pay cash, so you only put what you can truly afford into such a luxury. Buying a CD, burger from McD's or fancy shade of lip gloss is relatively minor in the game of discretionary spending. Discretionary spending is what you use AFTER you've prepared yourself for that worst case scenario.

Of course I'm against all timeshare financing for any age. I hate financing. It's necessary for a few big ticket items like house and car, but everything else you save for the future. Otherwise the worst happens, you can't pay your bills and have to give away all those lovely luxuries just to survive.

Now MissMet, if you're still listening, I highly advise you follow some of the advise given. It really makes poor sense to try and flip that contract right now. Much better to hold it a few more years, work the system a bit better, get into renting and trading points.

If you are going to use a quote use all of it, I placed the question with an answer. Folks are never happy who live life with the attitude that the glass is half empty. They are always looking over their shoulder for something bad to occur. After reading all these negative posts, I sure am glad I teach my children the glass is half full. I was taught that way, I love and respect my parents, in fact I treat my entire family every year to a Disney vacation.
Enjoy!!!

 

[crisi]

If you are going to use a quote use all of it, I placed the question with an answer. Folks are never happy who live life with the attitude that the glass is half empty. They are always looking over their shoulder for something bad to occur. After reading all these negative posts, I sure am glad I teach my children the glass is half full. I was taught that way, I love and respect my parents, in fact I treat my entire family every year to a Disney vacation.
Enjoy!!!

I don't want you to get the wrong idea. I'm not a negative person, I'm a pragmatic person. And I'm actually very happy, thank you. I think that the contents of the glass will change over time, and I don't want to bet on full and end up with spilled milk. So I put a cover on my half full glass when I'm not drinking from it and make sure to put the milk back in the fridge. Experience has taught me that this is the safest approach. I enjoy what I have more when I don't regret it later.

I'm a live for today, plan for tomorrow person. I think that living only for today without planning for tomorrow is short sighted. But planning only for tomorrow and not living for today is sad.

I think that the simple pleasures bring as much joy than the expensive ones. Making cookies with my daughter or watching my son catch a fish or playing Spoons with my family or visiting with my girlfriends is as joyous as a Disney trip - don't get me wrong, we take Disney trips and enjoy them, but they aren't needed for make my glass half full - its full without Disney.

We also take a vacation every year, not always Disney. Last October we cruised on Disney, treating my parents. We went to San Francisco in March. We are going to the North Shore in August and to Disney this October. I've travelled throughout Europe and Asia as well when I was single.

 

[flyerron]

WOW, you need to read "The Secret". a very good book about the attitudes of life & how it interacts with us. A small book with a big impact. take some time & do it.

 

[Princess Stitch]

I don't think people are trying to be rude, it's just that when you're young your priorities tend to change really fast! I have a loan from school that I probably woudlnt' have needed to take out if I was alot smarter with my money. Now I'm 23 and have been dating my bf for over a year. We're talking about getting a house, and now I'm wishing I hadn't taken on that debt, or had been more agressive about paying it off this last year since I've been out of school. I've been seriously considering DVC too but have been talking myself out of it at least until we get a mortgage. I don't know if anyone else ran the numbers, but to pay off $30,000 in 2 years (which is what i'm assuming the OP owes at $75 X 400pts) the payments are over $1200 a month.

I have no doubt that the DVC contract will be loved and enjoyed by you for years to come, but if you meet someone and want to move out of your house in the next 3 years or so you'll probably be wishing you had that $1200!

 

[crisi]

I don't think people are trying to be rude, it's just that when you're young your priorities tend to change really fast! I have a loan from school that I probably woudlnt' have needed to take out if I was alot smarter with my money. Now I'm 23 and have been dating my bf for over a year. We're talking about getting a house, and now I'm wishing I hadn't taken on that debt, or had been more agressive about paying it off this last year since I've been out of school. I've been seriously considering DVC too but have been talking myself out of it at least until we get a mortgage. I don't know if anyone else ran the numbers, but to pay off $30,000 in 2 years (which is what i'm assuming the OP owes at $75 X 400pts) the payments are over $1200 a month.

I have no doubt that the DVC contract will be loved and enjoyed by you for years to come, but if you meet someone and want to move out of your house in the next 3 years or so you'll probably be wishing you had that $1200!

With interest - if its only $30,000 in debt (and its probably between $30k-$40k if she financed as much as she could - she owns VAK points and those didn't sell for $75 to anyone - but $40k is high), she'd need to pay $1,395 a month to pay it off in two years if her DVC loan is at 10.75% - plus around another $150 in dues. Now, we don't know a lot about her situation - it is possible she is relatively rich and had $25,000 worth of downpayment and that loan is only $5k. I believe she mentioned that she is engaged - its possible her fiance is wealthy or employed in a $150k a year job. I have a number of friends who are trust fund kids, they get $80k every few years just for being born into the right family. I'm really not making any judgement about what MissMet can afford since I have no idea what her financial situation is. My opinion is simply is that if you can afford 400 points, you can afford to switch resorts to be at the resort you really want.

 

[Snookies]

Very well said. This has been an interesting thread that seems to reflect more on the way many Americans live and accept debt than the virtues of DVC. I can see both sides of each of the arguments made here.
I agree that it is "impressive" that a 21 year old that does not appear to be independantly wealthy has taken on $40000 worth of debt. In some ways I agree that it was better to "invest" in DVC rather than an expensive car that so may young people, (I'm still kinda included in this group), choose to do. At least she has something that can be relatively easily sold without the signifcant loss similar to many other luxury items. This is something she can enjoy for many years either alone or with a future family.

It seems that the hot button issue that has gotten so many people riled up is the OP age. I certainly wouldn't have had the balls to do it, but it's not my personality. Many others are risk takers and it pays dividens in the end. For others that risk ends up causing huge financial burdens. Many of us who have lived a bit longer understand that life can throw you curves. When the marraige, house down payment and mortgage, and kids come along, cost of living changes significantly. Add on unforeseable challanges such as injury, infertility, change of career, and things change even more.

I always feel bad to posters when people they don't even know make personal comments about their personal lives. Granted it also surprises me that they don't expect it when they put themselves out there.

I've just recently read through the thread and think the above summarizes the issues nicely. As someone said previously, the discussion points seem to be age, debt, and level of risk aversion. While there is arguably some interrelationship between these 3, I think it is also plausible to assume that this relationship changes over time.

With respect to the OP's question, I would agree with the advice given many pages ago, i.e., since you already own 2 contracts I would wait awhile and see if you invariably have difficulty booking what you want before selling 1 contract to buy another. Granted, this advice reflects my level of risk aversion, but I think it has an added advantage in your case of seeing if your tastes and preferences change while waiting to see if your booking preferences are typically unavailable. Good luck with your decision.

 

[Princess Stitch]

With interest - if its only $30,000 in debt (and its probably between $30k-$40k if she financed as much as she could - she owns VAK points and those didn't sell for $75 to anyone - but $40k is high), she'd need to pay $1,395 a month to pay it off in two years if her DVC loan is at 10.75% - plus around another $150 in dues. Now, we don't know a lot about her situation - it is possible she is relatively rich and had $25,000 worth of downpayment and that loan is only $5k. I believe she mentioned that she is engaged - its possible her fiance is wealthy or employed in a $150k a year job. I have a number of friends who are trust fund kids, they get $80k every few years just for being born into the right family. I'm really not making any judgement about what MissMet can afford since I have no idea what her financial situation is. My opinion is simply is that if you can afford 400 points, you can afford to switch resorts to be at the resort you really want.

Actually I don't think she was engaged. I doubt she's rich either if she's taking out a second job to pay for the DVC, although that's a smart move on her part. I was just responding to all the comments people made about her being too young or whatever. It is certainly her money to do as she wants with it and of course I'm even a little jealous! I sure wish I could afford 400 pts in DVC! Just trying to explain why all the adults seem to be so upset at the large purchase at a young age. I get a hard time too from adults about the way I choose to spend my money sometimes. Everyone just has to decide what's right for them.. besides, she's already bought the points so I don't see why this is even part of the discussion!

 

[rugrats2001]

honestly, I wish I would have been smart enough to join DVC when I was younger.

I'm sure all the money I spent on frivilous, discarded things between the ages of 16 to 25 like CD's, makeup, purses, shoes, clothing, beauty products, just going out with friends, out to dinner, alcohol, etc.. could have paid AT LEAST a quarter of what it takes to become a DVC member. When I think back on how recklessly I spent my money in my younger days I totally regret not saving more of it or at least spending it on something like DVC that I could get years of enjoyment out of.

Sure, It's easy to give up those things that we have ALREADY enjoyed, but now think of as useless! Maybe it would help to look back and think about the enjoyment these 'throw-away' purchases gave you at the time, instead of being angry at the past 'you' for not spending 'your' money for the benefit of the present and future 'you's' instead of having fun!

 

[rugrats2001]

With interest - if its only $30,000 in debt (and its probably between $30k-$40k if she financed as much as she could - she owns VAK points and those didn't sell for $75 to anyone - but $40k is high), she'd need to pay $1,395 a month to pay it off in two years if her DVC loan is at 10.75% - plus around another $150 in dues.

And she's paying it all with a part-time job cleaning a church! Why can't I find a job like that?

 

[rinkwide]

...paying it all with a part-time job cleaning a church! Why can't I find a job like that?...

The key is to only clean the offering plate.

 

[rugrats2001]

The key is to only clean the offering plate.

 

[Jaaron2]

For a Mets fan you seem really well spoken and even have good writing skills (Just Kidding) ...and no I am not a Yankees fan either (but I do live near a city with brotherly love)...anyway...I know where you are coming from. I recently bought 200 points at AKV and am loving that decision but also really wanted points at BCV to make it easier to get reservations. So...I just got a contract for 100 pts at BCV (awaiting ROFR) through timeshare (who will also provide financing if you need it).

Keep in mind I paid cash for my AKV contract and financed very little for the BCV. Make sure the money works for you. If you are still paying off the SSR contract and lose money on it I would wait. I never would have bought into DVC if I already didnt have the money availabel to put up front.

See you on the boardwalk!