An article on "Does DVC save you money?"

[Vulnox]

I agree to a point. If this is bought through resale is not a 50 year commitment if thing get tough you can rent points and make some money or sell all together and recoup your money. You may lose a little but not all. But I do agree its hard to figure what life is gonna throw at you.

Oh for sure, there are a thousand factors I didn't include, and some I may not have considered despite a lot of research into DVC. I guess that just goes to my point, with about a dozen ways to be part of DVC, from direct finance (and different variations there), to direct in cash, to resale finance, cash, renting, whatever, and then life's unknowns and all that. At some point you just need to... make a decision... and see how things fall.

 

[Starport Seven-Five]

The problem with the assertion that you should just know your budget or whatever, is this is a purchase with a potential 50 year outlook included. There is almost nothing in life that requires that level of future estimation. Even a mortgage generally tops out at 30, which is also an almost impossible amount of time to estimate. In the last five years alone, we had a second kid, moved out of the state we were living in away from two jobs we loved, because we were far from the rest of our family and wanted our kids to be closer to them. We got great jobs here of course, wouldn't have left if we didn't have that lined up, but the point is life happens. All the spreadsheets in the world can't account for it all.

With that in mind, you have to be pretty confident in wanting to visit Disney annually, or as they say AT least every other year. Or be comfortable renting out points or whatever. Then you have to be confident you have the financial cushion to cover your mortgage, car payments (if you have them), insurance, food, gas, DVC, and whatever else if you lose your job. I would say most here, even those giving out advice on finances, don't have that all covered to a 6+ month level without borrowing from 401k or whatever.

I guess the point is, the financial analysis part is a little unrealistic. All you can realistically analyze is what you can do now, and maybe likely moves for the next five years, on an up to 50 year commitment. I am sure some of you will come back saying "well of COURSE I know my 50 year plan!" or something insane, but even if that's true I again don't believe that is true for an overwhelming number of people. So for DVC the biggest questions should just come down to, do you like the resort enough to pay a likely premium to stay there? Do you like Disney enough to return annually? Can you buy this without harming your families general financial well-being RIGHT NOW? Because it can and will all change. Kids get older and care less, or maybe care more. Grandkids come along, or one of you suffers a back injury that makes going around the park miserable. Again, spreadsheets won't cover it.

While I understand that "life happens" you still need to go into a purchase of this magnitude with a set of assumptions and make sure it fits with your life. The post I replied to made it sound like you shouldn't even do the math because if you had to calculate it, you can't afford it. I know plenty of people that live their lives that way and none of them are in a good place financially.

And yes we're those weirdos that could handle a 6+ month layoff without touching our 401ks. Our backup plans have backup plans. We didn't get there by accident.

 

[Vulnox]

While I understand that "life happens" you still need to go into a purchase of this magnitude with a set of assumptions and make sure it fits with your life. The post I replied to made it sound like you shouldn't even do the math because if you had to calculate it, you can't afford it. I know plenty of people that live their lives that way and none of them are in a good place financially.

And yes we're those weirdos that could handle a 6+ month layoff without touching our 401ks. Our backup plans have backup plans. We didn't get there by accident.

I gotcha, and I don't think that's a weirdo thing, it's what we aim for as well, and grow from there even. I know there are many that do, but many, MANY more that don't or can't. I don't think not having a 6 month savings though is an indication alone or even very significantly that DVC can't work for you. It just means if things go south for you financially, expect to post those points on a resale board the next morning.

 

[suebeelin]

After the cost of maintenance and constantly hosting extended family every few years or so, no.... no monies saved. Lots of good memories!

I told my 11yr old that BWV expires in 20yrs, and BLT in 40yrs. He was sad BWV ends before he will likely have children, but asked that I give him and his 7yr old brother BLT so they can go with their children “8 to 10 times”..... more money down the drain by the next generation!

 

[CarolMN]

I guess the point is, the financial analysis part is a little unrealistic

I agree! (although I'd leave out "a little"). .

Every calculation and algorithm that I've seen is full of assumptions. One can change an assumption and get an entirely different result. Emotions can (and do) play into setting the assumptions.

DVC is a long term commitment to regular, expensive vacations. It is a want, not a need. IMO, wants come out of discretionary funds.

I am very conservative with money. I wouldn't buy unless I could pay cash and be OK if I couldn't get any of the purchase price back if/when I sell. That worked out when I bought in 1999. With current prices, that's no longer true, so no additional contracts for me!

 

[upritbass]

15 pages so far...

Two caveats missing from every post:
1) past performance is no guarantee of future returns
2) this analysis does not apply to VGC

You can’t make a profit? Pfffft. I did, but it happened under very favorable circumstances. We bought AKL when DVC had a never-before-never-again free 20% add-on. We sold just before Avatar opened and resale prices jumped 20%. So, yeah, we were PAID TO GO ON VACATION AT WDW! Woo-hoo! But see caveat 1.

VGC is unique among DVC properties. It has only 48 rooms (71 if all 2BR lockoffs are split) to serve the millions of visitors each year. It has direct access (zero steps) to two Disney properties— DCA and DTD. There is a lot of price pressure for a rare commodity. We bought VGC in December 2019; resale prices are now >$40/pt than what we paid. Yay! But see caveat 1.

 

[crisi]

we shouldn't assume that people can't do the math. If they make an error it not the purchase of DVC that puts them over the edge. its the every day things.i think overall most people know what's important and take care of those thing first and where ever Vacations land in the scenario they can make a good decisions.Again the thread was if there was savings in DVC not people financials and I still say there is

Why not? I don't assume my neighbors can do financial math, they don't assume I'm capable of installing new electrical circuits through my house, performing surgery on my dog, or programming a ecommerce site. A lot of skills are specialized. Accounting and finance are specialized skills. Mix that with some economic theory and you are in a realm that most Americans get almost no formal education on - and even fewer practice those skills regularly enough to keep them up. Most people didn't go to school for them - and I've met MBAs that took a few classes and yet don't understand depreciation or taxes or ROI. And while you can learn without getting a degree, most people don't.

And every day there is proof that people do NOT make good financial decisions. This just showed up for instance: https://www.cnbc.com/2021/02/24/how-much-americans-have-saved-in-their-401k-by-age.html. Or someone selling stock 30 days before they would only have LTCG on it.

During Covid I have been cutting my own hair. Something I'm not trained to do (and the back is HARD). I've gotten better, but I'm really looking forward to getting my hair cut by someone who was actually trained for it. And the only reason I do it myself is that in these times, the only people who see my hair are my husband and son, and the other customers at the grocery store - there are no consequences for a bad haircut.

 

[4luv2cdisney]

Why not? I don't assume my neighbors can do financial math, they don't assume I'm capable of installing new electrical circuits through my house, performing surgery on my dog, or programming a ecommerce site. A lot of skills are specialized. Accounting and finance are specialized skills. Mix that with some economic theory and you are in a realm that most Americans get almost no formal education on - and even fewer practice those skills regularly enough to keep them up. Most people didn't go to school for them - and I've met MBAs that took a few classes and yet don't understand depreciation or taxes or ROI. And while you can learn without getting a degree, most people don't.

And every day there is proof that people do NOT make good financial decisions. This just showed up for instance: https://www.cnbc.com/2021/02/24/how-much-americans-have-saved-in-their-401k-by-age.html. Or someone selling stock 30 days before they would only have LTCG on it.

During Covid I have been cutting my own hair. Something I'm not trained to do (and the back is HARD). I've gotten better, but I'm really looking forward to getting my hair cut by someone who was actually trained for it. And the only reason I do it myself is that in these times, the only people who see my hair are my husband and son, and the other customers at the grocery store - there are no consequences for a bad haircut.

OT , but....
Wow.
I'm having a hard time digesting that boomers only have 200K in retirement savings. I thought they had all the wealth. The youth are doing better than I expected, frankly.

 

[smisale]

Why not? I don't assume my neighbors can do financial math, they don't assume I'm capable of installing new electrical circuits through my house, performing surgery on my dog, or programming a ecommerce site. A lot of skills are specialized. Accounting and finance are specialized skills. Mix that with some economic theory and you are in a realm that most Americans get almost no formal education on - and even fewer practice those skills regularly enough to keep them up. Most people didn't go to school for them - and I've met MBAs that took a few classes and yet don't understand depreciation or taxes or ROI. And while you can learn without getting a degree, most people don't.

And every day there is proof that people do NOT make good financial decisions. This just showed up for instance: https://www.cnbc.com/2021/02/24/how-much-americans-have-saved-in-their-401k-by-age.html. Or someone selling stock 30 days before they would only have LTCG on it.

During Covid I have been cutting my own hair. Something I'm not trained to do (and the back is HARD). I've gotten better, but I'm really looking forward to getting my hair cut by someone who was actually trained for it. And the only reason I do it myself is that in these times, the only people who see my hair are my husband and son, and the other customers at the grocery store - there are no consequences for a bad haircut.

Wow that is very close too profiling in my books. this is not MBA math it a simple budget which if people want to learn its all over the internet.People don't take classes for having children but I think most people do a good job at raising them. I think you don't give people enough credit.I have run a business for 30 years and when I started had no financial experience but I learned and today have a very successful business I not wealthy but I still run on a budget and with a few investment made enough to afford DVC

 

[upritbass]

Or someone selling stock 30 days before they would only have LTCG on it.

Apparently you missed the reply:

Disney shares down 190 can buy back in and still pay for my small contact at HH there’s my logic

In other words, give something up to get something better.

 

[crisi]

OT , but....
Wow.
I'm having a hard time digesting that boomers only have 200K in retirement savings. I thought they had all the wealth. The youth are doing better than I expected, frankly.

Keep in mind that many boomers are in the spend down phase of their financial lifecycle. And boomers are the ones most likely to have entered a job market expecting a pension, only to have the rules change. I'm early Xer - and I started my working career with a pension and no 401k option.

 

[Bing Showei]

Apparently you missed the reply:

In other words, give something up to get something better.

I was going to walk away from this because smisale has repeatedly demonstrated a propensity for making broad statements such as “math doesn’t lie," but when challenged to expound on this, fails to provide the math to supports such claims, instead choosing snark in lieu of demonstrative, verifiable numbers evidence.

That a 4% drop in stock price justifies a sell just shy of long term capital gains qualification warrants a response given you, among other members, seem to believe this supports the notion that this was a smart financial move. So let's look at the maths.

400 shares bought at $89/share (remarkably near 6-year lows in the midst of a market implosion) and then sold at $198/share (remarkably near all-time highs) yields $43,600 of appreciation.

Disposition of these assets at 11 months is taxed as ordinary income. Waiting the additional 3 weeks would tax as long-term capital gains. Below would be the difference in actualized gains less taxes depending on income bracket. We assume 4 scenarios in increasing income.

Taxable Income	Gains if Sold at <12 months	Gains if Sold at >12 months	Difference
Income 1 - $43,600	$38,368 (12% Tax Bracket)	$43,600 (0% Tax)	$5,232
Income 2 - $93,600	$33,136 (24% Tax Bracket)	$37,060 (15% Tax)	$3,924
Income 3 - $193,600	$29,648 (32% Tax Bracket)	$37,060 (15% Tax)	$7,412
Income 4 - $243,600	$28,340 (35% Tax Bracket)	$37,060 (15% Tax)	$8,720

At the various income levels, Disney stock price would need to drop to the following levels for it to compensate for the three week difference.

Income 1 - $184.92/share
Income 2 - $188.19/share
Income 3 - $179.47/share
Income 4 - $176.20/share

In every case, selling at 3 weeks shy of LTCG when the stock is at an all time high, should not be celebrated as a brilliant financial move. It may prove to be a good gamble, but any cost-benefit analysis would categorize this as decidedly shortsighted.

I invested in 400 shares in disney at 89.00 dollars a share in march and now I cashed out at 198 per share. now that's an investment I think ill buy more points and it won't cost me a penny. invest 35,600 and got out at 79,200 in 12 months not 18 years

Disney shares down 190 can buy back in and still pay for my small contact at HH there’s my logic

I use this as an example because it's the same type of simplistic calculation that is the pitfall some Disney timeshare buyers will fall into when they calculate out how much they are "saving" by virtue of just buying in. Rudimentary approaches that embrace this sort of math is careless. Proselytizing it as sound financial thinking is reckless.

 

[yaya74]

OP here... Thanks to 15 pages of wonderful suggestions and comments. Definitely have learn a lot about DVC...
Not that you would care but I have come to the conclusion that DVC is definitely of value and is definitely a less expensive way to stay on property comparing to renting points or paying cash for those DVC accommodations.

I hope that in the near future, I will be able to procure an AKL resale contract with 150 points, for the slight chance of staying at the concierge level. I will work hard and pray about it.

 

[smisale]

I was going to walk away from this because smisale has repeatedly demonstrated a propensity for making broad statements such as “math doesn’t lie," but when challenged to expound on this, fails to provide the math to supports such claims, instead choosing snark in lieu of demonstrative, verifiable numbers evidence.

That a 4% drop in stock price justifies a sell just shy of long term capital gains qualification warrants a response given you, among other members, seem to believe this supports the notion that this was a smart financial move. So let's look at the maths.

400 shares bought at $89/share (remarkably near 6-year lows in the midst of a market implosion) and then sold at $198/share (remarkably near all-time highs) yields $43,600 of appreciation.

Disposition of these assets at 11 months is taxed as ordinary income. Waiting the additional 3 weeks would tax as long-term capital gains. Below would be the difference in actualized gains less taxes depending on income bracket. We assume 4 scenarios in increasing income.

Taxable Income	Gains if Sold at <12 months	Gains if Sold at >12 months	Difference
Income 1 - $43,600	$38,368 (12% Tax Bracket)	$43,600 (0% Tax)	$5,232
Income 2 - $93,600	$33,136 (24% Tax Bracket)	$37,060 (15% Tax)	$3,924
Income 3 - $193,600	$29,648 (32% Tax Bracket)	$37,060 (15% Tax)	$7,412
Income 4 - $243,600	$28,340 (35% Tax Bracket)	$37,060 (15% Tax)	$8,720

At the various income levels, Disney stock price would need to drop to the following levels for it to compensate for the three week difference.

Income 1 - $184.92/share
Income 2 - $188.19/share
Income 3 - $179.47/share
Income 4 - $176.20/share

In every case, selling at 3 weeks shy of LTCG when the stock is at an all time high, should not be celebrated as a brilliant financial move. It may prove to be a good gamble, but any cost-benefit analysis would categorize this as decidedly shortsighted.


I use this as an example because it's the same type of simplistic calculation that is the pitfall some Disney timeshare buyers will fall into when they calculate out how much they are "saving" by virtue of just buying in. Rudimentary approaches that embrace this sort of math is careless. Proselytizing it as sound financial thinking is reckless.

I gave my math in detail so if you missed the math lesson it’s on you. You should not say that I haven’t proven math because that is untrue. I put it in a few threads

 

[smisale]

Not that it matters but in Canada we are only get taxed for capital gains on 50% of the profit at our taxation rate.unless you shelter it under a TFSA. also your RRSP contribution can off set the tax you pay.Your math may be right but its not the only way. it seems if you don't agree your wrong. I didn't know that was what this board was about judging people on there opinions.

 

[upritbass]

you, among other members, seem to believe this supports the notion that this was a smart financial move.

You can read minds too? Cool! I'm impressed.

 

[Bing Showei]

Not that it matters but in Canada we are only get taxed for capital gains on 50% of the profit at our taxation rate.unless you shelter it under a TFSA. also your RRSP contribution can off set the tax you pay.Your math may be right but its not the only way. it seems if you don't agree your wrong. I didn't know that was what this board was about judging people on there opinions.

It does matter, and you have my apologies. If you’re Canadian, it blows up the entire premise of my long term vs. short term capital gains commentary, as it’s completely inapplicable to you, apparently.

I’m also sorry I was so judgmental. It’s not a universal thing. You’ll find most people on these boards don’t take themselves quite as seriously as I do.

 

[Wakey]

He did no research on buying resale.
He assumes purchase price is dead money, with no resale value (never mentions you can sell later for good money and thus the real cost may be the time cost of money).
He doesn’t mention the up to 10% you can acheive on a rental return etc.
Article is mainly junk.

 

[smisale]

It does matter, and you have my apologies. If you’re Canadian, it blows up the entire premise of my long term vs. short term capital gains commentary, as it’s completely inapplicable to you, apparently.

I’m also sorry I was so judgmental. It’s not a universal thing. You’ll find most people on these boards don’t take themselves quite as seriously as I do.

I accept and you have mine too.

 

[Nabas]

I am very conservative with money. I wouldn't buy unless I could pay cash and be OK if I couldn't get any of the purchase price back if/when I sell. That worked out when I bought in 1999. With current prices, that's no longer true, so no additional contracts for me!

This is such an important point, it should be emphasized. Those who bought DVC years ago saved within a few years.

In recent years, Disney has increased direct prices faster than inflation. In 2000, the direct price was $67/point (without incentives). Adjusted for inflation, that's about $102/point. Today's direct price for RVA is $201/point (without incentives).

At today's direct prices, it could take 20 years or longer to reach the point where buying DVC costs less than renting points.

Earlier on this thread, I mentioned I bought a resale 10 years ago for $55/point. To date, I've averaged $12.10/point for all of my DVC stays. Even with incentives, at today's discounted price of $180/point (at the Riviera), I would have paid more than $24/point for my 10 years of vacations to date.

Even the most expensive DVC rentals today are at $20/point.