An article on "Does DVC save you money?"

[havoc315]

I have never sold my points my self but I talked to the sponsor of this site and they say a different story they say it’s quite easy they now make packages with your point so it’s even easier and dreams unlimited travel actually sell them. As for why did you buy them if your not going to use them I thought it was you that points out things change and even at that he still see the value in it and not to sell it but to rent them even in COVID still had no trouble renting them

That is the point. People do change over time --- but they may feel psychologically and practically locked in by their points. I know, for example, it's hard for people to get much value for their points renting them out right now.

 

[smisale]

Not really. Pop Century still is much less.
Buying 130 direct points, with closing costs, would be about $25,000. Dues are about $1050.


So if you were ONLY paying dues, then it would be $1400 vs $1050. ($350 difference)

But it's putting $25,000 up-front is not worth an annual payoff of just $350

Even putting aside the potential for growth of the $25000 if you didn't pay it upfront, even assuming no growth to that money..
You're effectively paying $1744 per year. So Pop Century is actually significantly cheaper than DVC. (If you factored in a resale purchase instead of direct, then it's a bit closer to break even but still doesn't make DVC any cheaper).

Again quoting from only one point of view do the same math with resale it seems that you quote what ever makes your point work

 

[Bing Showei]

Instead of making up some phony-baloney quote, you could have used a real one. Please find the posting where I actually wrote that.

You didn't write that. Someone else did. Revisit my post. I literally quoted where it was said. Let me know if you need more guidance navigating that.

Well said.

Better said:

There are so many great reasons for owning a Disney timeshare. Saving money probably isn't one of them.

 

[Grumpy by Birth]

Not really. Pop Century still is much less.
Buying 130 direct points, with closing costs, would be about $25,000. Dues are about $1050.


So if you were ONLY paying dues, then it would be $1400 vs $1050. ($350 difference)

But it's putting $25,000 up-front is not worth an annual payoff of just $350

Even putting aside the potential for growth of the $25000 if you didn't pay it upfront, even assuming no growth to that money..
You're effectively paying $1744 per year. So Pop Century is actually significantly cheaper than DVC. (If you factored in a resale purchase instead of direct, then it's a bit closer to break even but still doesn't make DVC any cheaper).

I didn't buy direct. My cost per point comes out pretty close to the cost quoted for Pop Century. That includes my initial purchase plus dues.

 

[havoc315]

Again quoting from only one point of view do the same math with resale it seems that you quote what ever makes your point work

a I cited both direct and resale pricing.

 

[Eric Smith]

Right, over time the original purpose price will get spread out over a longer period of time.

Conversely, the annual Maintenance Fee will continue to up in price.

I'm not sure if these 2 will wash over time.

On a longer contract, the maintenance fees end up costing a lot more than the initial purchase price.

 

[Nabas]

On a longer contract, the maintenance fees end up costing a lot more than the initial purchase price.

I did some math on this. (Excel is great!)

The current Riviera (RVA) Maintenance Fee is $8.3833/point.

Over its history, DVC Maintenance Fees have increased by an average of 3.3% per year.

Let's say you buy 160 RVA points at $187/point ($201 - $14 incentive).

If you crunch these numbers, Maintenance Fees will pass the cost of the averaged purchase price in 14 years (2035).

In 2035, the original purchase will have cost $12.47/point while Maintenance Fees are estimated to be $13.21/point, a total of $25.68/point in 2035.

The most expensive DVC rental today costs you $20/point, and it's not difficult to find $16/point. If you start with $20/point and assume the same 3.3% annual increase, renting DVC points will cost $31.51/point in 2035.

Over the course of the first 15 years of the contact, the original purchaser will have paid an average of $23.09/point. (This assumes the original purchaser did not finance their DVC purchase of $29,920 plus fees.)

Over the course of those same 15 years, the DVC renter will have paid an average of $25.35 per point.

Over the first 15 years, a DVC purchase would have saved about $2.26/point.

 

[Ssplashhmtn]

I did some math on this. (Excel is great!)

The current Riviera (RVA) Maintenance Fee is $8.3833/point.

Over its history, DVC Maintenance Fees have increased by an average of 3.3% per year.

Let's say you buy 160 RVA points at $187/point ($201 - $14 incentive).

If you crunch these numbers, Maintenance Fees will pass the cost of the averaged purchase price in 14 years (2035).

In 2035, the original purchase will have cost $12.47/point while Maintenance Fees are estimated to be $13.21/point, a total of $25.68/point in 2035.

The most expensive DVC rental today costs you $20/point, and it's not difficult to find $16/point. If you start with $20/point and assume the same 3.3% annual increase, renting DVC points will cost $31.51/point in 2035.

Over the course of the first 15 years of the contact, the original purchaser will have paid an average of $23.09/point. (This assumes the original purchaser did not finance their DVC purchase of $29,920 plus fees.)

Over the course of those same 15 years, the DVC renter will have paid an average of $25.35 per point.

Over the first 15 years, a DVC purchase would have saved about $2.26/point.

Interesting analysis. Does your math imply the contract is worth $0.00 at the end of 15 years? It’s hard to estimate what it would be worth, but financial analysis theory would suggest putting some (risk adjusted) value on the contract, rather than depreciate it to zero in 15 years. It's most likely worth something at the end of a chosen time period (unless it's near expiration). I believe that ending value projection should be part of the math since at some number, it's quickly and easily converted to cash.

Many here like to say “you never know, it could be worth zero....a lot of really bad things could happen in year 15; could be difficult to sell, there might be a recession right at that moment”. It's true, bad things could happen erasing all resale value, exactly at the moment one decides to sell. That’s just not a balanced financial analysis, to assume zero, given DVC resale history.

btw - nothing wrong whatsoever with the more conservative math you’ve done above. There are many different approaches and ranges to estimate the value and risk. Just pointing out my approach.

 

[Ssplashhmtn]

There are so many great reasons for owning a Disney timeshare. Saving money probably isn't one of them.

How are you defining saving money? We have a lot of friends that bought for the same reason as we bought. For all of us, the purchase (via resale) was made because it saves us money VS what we previously expected to pay to vacation in what we consider an equivalent room (for us, our DVC resort stay is equivalent to a cash room, same resort at WDW). It’s not even close.

The math was very clear for all of us. Is that not how you are defining savings (i.e. spending less than we would otherwise spend for something we consider equivalent)?

 

[upritbass]

How are you defining saving money?

Buckle up for some brutal responses.

The definition of ‘saving money’ has been rather fluid in this thread. Many agree with your point of view, but there are others that will shriek “You aren’t saving money!!!”

 

[Nabas]

Interesting analysis. Does your math imply the contract is worth $0.00 at the end of 15 years? It’s hard to estimate what it would be worth, but financial analysis theory would suggest putting some (risk adjusted) value on the contract, rather than depreciate it to zero in 15 years. It's most likely worth something at the end of a chosen time period (unless it's near expiration). I believe that ending value projection should be part of the math since at some number, it's quickly and easily converted to cash.

In 15 years and the RVA's resale restrictions, what do you think? There will be 15 years of inflation and plenty of years left but then someone buying resale can only stay there at the moment. Just a guess, perhaps $120/point?

 

[DVCSunDevil]

No one is saying DVC ownership is wrong. I think it's great that so many people find VALUE in ownership. However, value isn't the same as SAVING money. This is a question of saving money. The psychological aspects of ownership and how it makes you travel more cannot be ignored.

DVC is NOT a discount program. Honestly, why would Disney create such a thing? How would that benefit them?

For all the "accountants" on the DIS, just know that Disney has better accountants that have determined that they will get MORE money out of DVC owners than non DVC owners over a period of approximately 50 years (the contract period). If the math didn't work out in Disney's favor, DVC wouldn't exist. Bottom line.

Maybe it saves YOU money because you weren't getting the best deals that you could have before, and it's okay to admit that. But anything that forces you to pay money EVEN IF YOU DON'T USE IT is a liability. Sure, people rent out their points sometimes, but I will bet you there are people who don't use their points every year and just let them expire, because they DON'T KNOW they can rent them out, or don't want to bother. Disney counts on this. They sell these contracts using pixie dust promises and a LOT of people fall for it. Those same people were likely ALSO paying rack rate, and yet, Disney lured them over to DVC. Think about that for a minute.

Sorry, but you are incorrect. DVC absolutely saves A LOT of money on room cost (I won't rehash the math, because it has already been laid out pretty well by other posters). The benefit to Disney to offer such low room discounts via DVC is that it locks the member into future Disney vacations. So rather than the member going on a Norwegian cruise or a beach vacation one year, they come to Disney and spend their vacation dollars there. It's a two way street and DVC benefits both the owner and Disney. The owner gets super low room costs and Disney gets the commitment from the owner to keep coming to Disney. Not sure why that is so hard to understand.

 

[DVCSunDevil]

ok, so you have more money in your savings account/retirement account now, then if you never purchased DVC. And even if you never purchased DVC, you would always book your vacations 7-11 months in advance, etc, etc.

I think we are defining savings in very different ways. I define savings as: You put $100 in the bank. It is FDIC insured. It is guaranteed to be $100 + interest next year.

If I purchase a DVC for $25,000 today, am I 100% guaranteed that I can still get my $25,000 back next year?
If I put my $25,000 into a CD, I can guarantee myself I'll have $25,000 + 0.67% next year.
So compounded over say... 20 years... I will have $41,414 in 20 years..
So if I buy DVC for $25,000 today, will I have an extra $41,414 in my retirement account in 20 years?

I think I see the point you are trying to make, but you are making it sound like every single dollar earned has to go to "savings". Do you not go to the movies? Or golfing? Or skiing? Those activities are all entertainment. Vacations are entertainment as well. I have a robust 401k (I max out the yearly contribution every year) and a separate portfolio (to which I also contribute regularly) that is managed by a financial consultant. I also contribute monthly to my children's college plan.

Knowing that, my family takes yearly vacations (sometimes more than one) and we have a separate allocation for those vacations. I view vacations as an entertainment expense, so it's not like I am taking away from my "savings" in order to go on vacations. In my mind, I would NEVER stop going on vacations...the memories made and valuable time spent with my family means too much. It means something you can't put a dollar figure on. We have vacations built into the yearly budget and I can't imagine a life where I would look back at the money I spent on last year's beach vacation and say "you know what, I could have invested that money and as result have more in my IRA". That sounds...terrible.

 

[DVCSunDevil]

Is there a simple calculation to figure out what the $ cost would be for a resort stay but using your DVC points?

Someone said to me the number of points for the duration of your stay multiplied by the point cost of annual dues?

Im just trying to get a real world cost comparison from paying Out of pocket

Yes. Take the cost to buy the contract and divide that by the total points in that contract. That will give you the "buy in" cost per point. Then add that cost per point to the yearly MF per point. That will give you the total per point for the year. Now you can multiply that number by the number of points required for the reservation to get the cost for that reservation. You can compare that to the cash rates available to see the difference.

Example: I bought BCV resale for $28,000 and there were a total of 4650 points available for the life of the contract. That comes out to $6/point. The 2021 MFs are $6.55/point. So the total per point cost (for my contract) for 2021 is $12.55. We are going to BCV for a week in April and the total points required for the trip is 149 points. Multiply the 149 points by $12.55 and the total is $1,869 for the trip (which happens to be 7 nights from a Saturday to Saturday). Just quickly searching, that same week booked through Disney (the 35% discounts are not valid over that week of Easter) is $5,347. You could spend more time trying to find a better deal, but that is the "simple" calculation.

 

[crisi]

How are you defining saving money? We have a lot of friends that bought for the same reason as we bought. For all of us, the purchase (via resale) was made because it saves us money VS what we previously expected to pay to vacation in what we consider an equivalent room (for us, our DVC resort stay is equivalent to a cash room, same resort at WDW). It’s not even close.

The math was very clear for all of us. Is that not how you are defining savings (i.e. spending less than we would otherwise spend for something we consider equivalent)?

Here is my issue....would you have stayed in that room if you didn't own DVC? If not, it isn't saving money as I define it - its adding value. We would have never stayed in two bedroom units without DVC. With DVC we did, it was wonderful, and it improved the quality of our vacations. But a regular hotel room at CBR, which is what we stayed in pre-DVC and would have continued staying in, even moving to a Deluxe regular hotel room, would have been cheaper than a two bedroom. I know this because most of our non-DVC vacations have been the four of us in one room - we don't book connecting rooms when we cruise with the kids, we will put all of us in a room in Australia, etc.

We would also have never paid for hotel rooms for friends. Again, don't regret it for a second, its been great. But adding value, not saving money. And we would have done fewer of our trips at Disney - we still would have spent money on vacations, but some of those vacations would have possibly been cheaper - because park tickets and food at Disney make it an expensive vacation. (pre-Covid I go to London every year and spend a fraction of what I spend at Disney - my youngest is out at college near Boston, so I've done several New England vacations tacked onto visits to them - way cheaper). And while I don't begrudge Disney the money, I have come to begrudge some of the time. The kids are adults now, and I never got them to the Grand Canyon or Mammoth Cave.

Now, if you really would have booked a bigger unit, or taken friends, or gone as often or whatever, then yeah, DVC saves you money.

ETA: In other words we got a LOT more for a little more money.

 

[Runnsally]

I’m sure all of the people on a thread like this thoughtfully considered their DVC purchase to make sure it works for them. And for many on this thread, I imagine DVC saved them money based on what they would have done at Disney otherwise.

Although seems crazy to me, I think the reality is that a lot (most?) of the people that buy a DVC contract don’t do the math (my neighbor for example) and it is definitely not a savings for them.

 

[fgaini]

I agree with crisi.
Is like upgrading with points to first class. It is a saving vs. the full $ price? Sure. Would I buy a first class ticket without the miles? Definetely not...

 

[crisi]

Yes. Take the cost to buy the contract and divide that by the total points in that contract. That will give you the "buy in" cost per point. Then add that cost per point to the yearly MF per point. That will give you the total per point for the year. Now you can multiply that number by the number of points required for the reservation to get the cost for that reservation. You can compare that to the cash rates available to see the difference.

Example: I bought BCV resale for $28,000 and there were a total of 4650 points available for the life of the contract. That comes out to $6/point. The 2021 MFs are $6.55/point. So the total per point cost (for my contract) for 2021 is $12.55. We are going to BCV for a week in April and the total points required for the trip is 149 points. Multiply the 149 points by $12.55 and the total is $1,869 for the trip (which happens to be 7 nights from a Saturday to Saturday). Just quickly searching, that same week booked through Disney (the 35% discounts are not valid over that week of Easter) is $5,347. You could spend more time trying to find a better deal, but that is the "simple" calculation.

Finance people will tell you you are missing two important things - time value of money and salvage value. Now, one of the reasons I don't play this game any longer is that both of those require assumptions. I always assume that TVM is a wash - yeah, you can make money in the stock market if you invested it, but inflation - especially Disney inflation - makes it a wash - and so was fond of the simple calculation you are doing. But people who do TVM in their calculations get very different results. The other one is salvage value - what will it be worth when you sell it. The assumptions here are huge - because while a lot of DVC owners get appreciation - some are forced to sell in a down market. And my BWV is going to start dropping in value at the end of its life - which is starting to look closer. A third cost would be financing, which if you need to finance over a few years, will dramatically increase your costs.

Economists will tell you that you are missing another soft calculation - opportunity costs. What else could you have done with the capital. This is where those of us who are financially conservative say "make sure you are saving for retirement/college/etc." Those college bills are HUGE. If in going on vacation in general and not setting aside college funds, the cost could be $400 a month student loan payments for your kids when they are young adults. If you aren't sufficiently funding your retirement, your days with the Mouse might cost you some comforts in your old age.

 

[DVCSunDevil]

Financial math is hard. I have a four year degree in it. It isn't something that you should expect people to "do for themselves" without some background in it - which the vast majority of people don't have.

To your point, this is exactly why I had my financial advisor do the math before I bought into DVC. He asked a lot of good questions and knows my travel preferences. He confirmed that we should move forward with DVC. I came to that conclusion with my own numbers, but it was good to get confirmation from someone who knows how to evaluate those things.

 

[havoc315]

I think I see the point you are trying to make, but you are making it sound like every single dollar earned has to go to "savings". Do you not go to the movies? Or golfing? Or skiing? Those activities are all entertainment. Vacations are entertainment as well.

Of course I do. Well, I don't golf or ski... so does that mean I'm saving money because I don't golf or ski?
And when I go to the movies (well, haven't done that in over 12 months), I don't say "I'm saving money!"
Now, if I go to the matinee instead of the evening showing, I'm paying less.... So it would be fair to say, "in comparison to going at night, I'm saving money." So it's a comparative savings to an alternative, but any activity can be defined as a comparative savings.
You're going skiing -- I'm going to the movies, so I'm saving money compared to you.
You're staying at the Grand Floridian, I'm staying at Pop Century, so I'm saving money compared to you.
I'm booking with points 11 months in advance, so I'm saving compared to someone who pays rack rate at the last minute.
I'm using free dining for my family of 5 in the cheapest qualifying room, so I'm saving compared to the person using DVC.
I'm staying in a small condo off property and cooking all my own meals, so I'm saving compared to almost any on-site guest.

In this regard, it's hard to call it savings. Yes, it's "cheaper" than some compromises, but more expensive than some compromises.
In the end, it's a compromise that makes the price a bit cheaper.

Knowing that, my family takes yearly vacations (sometimes more than one) and we have a separate allocation for those vacations. I view vacations as an entertainment expense, so it's not like I am taking away from my "savings" in order to go on vacations. In my mind, I would NEVER stop going on vacations...the memories made and valuable time spent with my family means too much. It means something you can't put a dollar figure on. We have vacations built into the yearly budget and I can't imagine a life where I would look back at the money I spent on last year's beach vacation and say "you know what, I could have invested that money and as result have more in my IRA". That sounds...terrible.

My mindset is basically the same. But I can't state I would NEVER stop spending significant money on vacation. If, I lost my job, if health issues prevented me from traveling or drained my bank accounts, if I was on the verge of bankruptcy, I wouldn't continue to spend thousands on annual vacations.

That said -- Does DVC ultimately "reduce" my vacation budget, and thereby transfer more money into savings? No, not really. It's really an additional expense that potentially is giving me more. Best case scenario, it's giving me more for my money.
But don't we do that most (if not all) the time we spend? Don't we always look for ways to get more for our money? When booking a cash room at WDW, don't most people book through special offers, if available? Don't we all weigh our budget against our accommodation. Deciding whether a deluxe resort is "worth it" compared to a mod/value... Deciding whether on site is "worth it" compared to saying off site.
So at all times, we are weighing the objective cost of something versus the perceived value. When we opt for a cheaper option, it "saves money" only in the context that we didn't find the more expensive option to be worth the price. But for any purchase, there is always a more expensive option.