Dave Ramsey on Timeshares

[mafibisha]

but I like having the full kitchen, jacuzzi in the room, in room laundry, etc. etc...all the amenities of home.


Now if you are talking about financing, then I think you have a point. I would not want to finance a prepaid vacation like a timeshare. It would defeat the purpose.

Just curious, do the Disney Timeshares provide daily Mousekeeping? Is that an extra fee?

The very LAST thing I'd want on vacation is to clean -- or cook (other than breakfast cereal in the AM before we leave for the parks).

It wouldn't be a vacation!

Which is another reason why I don't like convention hotels; the last thing I want is a reminder of work!

 

[square pond]

My Aunt and Uncle have a time share that is a quarter share. It is within driving distance (about 2 hours) from them so they go A LOT. They own it with 4 other people. They get 13 weeks a year and every 4th year they have Christmas and New years week back to back. There time share is at a ski resort in Sunday river. They love it. They bank a lot of their weeks with RCI to trade for other resorts and have traveled all over the country! They only paid about 30,000 and have reaped tremendous rewards. They have given aways weeks to many family members, myself included. We have stayed at Orange lake twice! It is deeded property and will go to there kids when they die. I have to agree that time shares that involve only one week a year at a place you are not able to frequent often and check how the property is being kept up is not a good idea but I think their arrangement sounds great!

 

[MrsPete]

I think Dave is responding to the question based upon old 70s type information. And if 70s type time shares were all that were available to us today, he'd be giving good information.

My grandparents bought two time shares back then, and they were sorely disappointed in their purchase. One of their time shares was for a mountain resort (nothing special, especially since neither of them ski), and they were limited to the same condo, the same week every year. No flexibility. They grew tired of visiting, and eventually they returned the ownership to the company to get out of the maintenance fees.

Today's time shares are much more flexible and are a much better deal FOR THE RIGHT PERSON. If you buy a good property on resale (oh, the price difference!) and learn how to finagle good trades through RCII, you can do well.

 

[MrsPete]

Someone on TUG mentioned that boats are to Dave Ramsey what timeshares are to him. Apparently Dave is a real boating enthusiast so I wonder what his answer would be if they were asking about buying a boat. . . Additionally there are some resale timeshares out there that are great deals if you know what to buy and how to use them. There are many people who buy very inexpensive timeshares with low maintenance fees just so that they can avail themselves of the RCI and II system.

I think you're right about the boat analogy. I think we've all heard boats called "a hole in the water where you throw money". But realistically, they are in the same category as timeshares: Very nice luxuries for people who can afford them, a burden on people who overextend themselves to buy something they can't afford.

You're also right about the need to know how to use the time share once you own it. Typical story: Couple goes to the presentation, is taken in by the sales pitch and the need to buy now (because they happened to come in just before a big price increase is scheduled). They buy quickly, without understanding the whole process and without researching other options. Then they use it "at face value" year after year. That's not the smart way to do things. You can get exactly the same time share on re-sale for considerably less money; by trading it wisely, you can get two -- or maybe even three -- weeks of vacation from your one time share (plus a few fees). You have to do your homework to maximize your value.

 

[MrsPete]

I'm assuming you never stayed at a DVC villa....or may not care for the villa type resorts. You can't compare a villa to a moderate resort.

DVCers say this all the time. I comletely understand that there's a huge difference, but the DVC-fantatics just don't grasp that all of us don't care!

When I go to Disney, it's for the parks. We go early, come back for a quick nap, then go back and stay for the late fireworks. The separate bedrooms, the jacuzzi tub, the DVD player go UN-USED by my family. We don't want to cook in the kitchen. We economize on meals at home, but at Disney we want to eat out at the one-of-a-kind restaurants. A small fridge with a couple soft drinks and a box of cookies is more than enough for us in the room. Maybe some sandwiches and some yogurts.

On the other hand, when I go somewhere for a relaxing, big breakfast-cooking, lazy morning, movie-watching, hanging-with-the-family type vacation, then I DO care about having a nice big place with a washer and dryer, a porch with ceiling fan, and all the extras. Since my vacation money -- whether I spend it on DVC, another time share, or in some other way -- is limited, I'm going to stay in a moderate hotel at Disney and reserve my big bucks for my other vacations.

I'm not uninformed about how nice DVC villlas are; they just don't fit my vacation desires! Comparing DVC against rack room prices to see how long it'd take to "break even" doesn't convince me because I'd never pay rack room prices anyway.

 

[mamalle]

god- we love ours! just got back from one wonderful winter vacation
we have a flex week- can trade it, bank it, use it or rent it out! very affordable for us!

 

[littlestar]

When we bought our DVC points, we knew we wanted to stay at Disney's deluxe properties. Most of our points were bought at about $72.00 a point. You can stretch 200 DVC points in value season at OKW into 2 straight weeks in a studio (14 nights = 80 + 80 = 160) and still have 40 points left for another trip of five nights in the fall (October). That's almost 3 weeks.

Our daughter called us today from Animal Kingdom (she let me listen to the yells from the Everest ride) while I was reading this thread. We gave her and the son-in-law 5 nights in a studio at Old Key West (5 nights Sunday through Thursday = 55 points). That same studio when I checked booking through CRO was $1,945.70. With a AAA discount (if I could have got it) it would probably have been about $1,550.00. They stayed their first two nights at Comfort Inn Lake Buena Vista at about $50.00 a night - they were doing non Disney stuff - outlet malls, visiting friends, etc. She said when they drove up to Old Key West and the guard said, "welcome home," she let out a sigh of, ah, now it's luxury time.

DVC (if you love staying deluxe) can be a real cost-effective way to stay deluxe onsite at Disney. If you don't care about a deluxe room and would rather stay offsite or in a value resort, then DVC probably won't appeal to you. But our family has really gotten a lot of great trips and I feel a pretty good value out of our DVC points.

I have thought about buying a Marriott resale, but in my heart of hearts, I absolutely adore the Disney Vacation Club resorts that we stay at. On our next trip coming up in April, I'm staying part of the time at Marriott (on a great deal) and Sunday through Thursday (again maximizing those DVC points) at OKW in a 1 bedroom. Sometimes I stay a full week at DVC, but most of the time I like to streetttch those points (more trips that way).

Last fall we took our niece and her daughter, our two grown daughters and son-in-laws to Disney. We booked 2 studios (BWV standard view - 45 points + 45 points = 90 points) and a 1 bedroom for 80 points. 170 points total. Those reservations on cash (even with a AAA rate) would have run over $5,000 cash.

I may eventually try to buy an EOY (every other year) Marriott some day (resale, of course), but for right now, our DVC purchase is working quite nicely. I like the flexibility of the points system and being able to call up member services and pick the time I want to go (I do try to book at least by 7 months out, though). If we didn't mind staying off site more often, I could probably make out like a bandit with a regular timeshare that was a 2 bedroom lockout. But, I LOVE Disney onsite deluxe accomodations.

 

[TDC Nala]

I LIKE my DVC. Didn't buy it to make money. Although right now I could probably sell my Beach Club Villas points and make some.

 

[janette]

I'm a DVC owner and I'd have to say I agree that a timeshare shouldn't be considered an investment. I didn't buy it for an investment, it is a luxury and it is great for our vacations. It is nice to know that where many timeshares have very limited value I could sell both of our DVC contracts at a profit.

What I do like is the ability to take a vacation that I'd never pay cash for and knowing I can do it for several years to come . I've got a 2 bedroom booked for 9 nights at BCV. On Disney's website they don't have availability there but the same rooms at Saratoga Springs would be $7,225.20 before taxes. If I want to try another vacation spot I can rent my points and use the cash to pay for the vacation or trade out.

This isn't something I'd include in my financial investment listing but I do consider DVC one of the best personal investments we've made.

 

[ScottOKW2K]

You would have to include me as another happy DVC owner. We purchased resale in 2000, and first stayed on DVC property in june 2001. The next year my wife left work to become a stay-at-home mom, but we have still managed to have nice vacations to WDW due to our ownership. No matter how we calculate it, our purchase has worked out well for us. Our contract is 250 points - about average - and we purchased resale at $53/point , $56/point effective after fees. With point prices at what they are now we could probably sell (not likely !) and recover our original price and most , if not all of the dues we have paid. What have we gotten for 5 years of travel ?

Date/Location/Room Size/ # nights/Rack Rate per Night(w/tax)/Total Cost

June 11,2001 / VWL / 2 bedroom /5 /$724.75 /$3,623.75
Dec. 30,2001 / OKW Grand Villa / 2 /$1,440.00 /$2,880.00
January 1,2002 /OKW Grand Villa /4/ $1,170.75 /$4,683.00
June ,2002 /BoardWalk /1 bedroom /5 /$485.00 /$2,425.00
June , 2002 /OKW /1 bedroom /5 /$430.00 /$2,150.00
June , 2004 /OKW /1 bedroom /5 /$429.00 /$2,145.00
June , 2004 /Beach Club Villas /1 bedroom /5 /$485.03 /$2,425.15
Jul-04 /Old Key West /1 bedroom /5 /$379.10 /$1,895.50
Dec-04 /Old Key West /2 bedroom /5 /$534.09 /$2,670.45
Jan-05 /Beach Club Villas /studio /2 /$327.81 /$655.62
Jun-06 .Old Key West /1 bedroom /10 /$451.58 /$4,515.80



Grand Total $30,069.27


Even discounting these prices with AP codes we still have made out like bandits. In addition, the money we haven't had to spend during this timeframe has allowed us one trip at te Poly, 4 trips to AKL (our favorite non-dvc resort) , a trip to Marriot's Cypress Harbour combined with Discovery Cove, and others. And 5 years isn't long enough to worry about lost opportunity cost. We have enjoyed DVC ,and with the exception of one stay at BC haven't used studio accommodations to try to maximize points usage. We have simply managed to truly enjoy every stay we have had !!

 

[chris1gill]

Dave, obviously, doesn't know everything.

Some of the smart tuggers (timeshare users group) would differ on his opinion. But, you've got to learn how to maximize the value of your timeshare. A lot of people bought resale and know how to make their timeshare work for them compared to paying cash rates for high end resorts/timeshares.

A lot of smart timesharers don't share their secrets on how they travel economically and stay at really great resorts for super prices. Like I say, Dave doesn't know everything.

I know somebody that bought a great timeshare for practically nothing resale. His maintenance fee is $350 a year. When he trades it through II, he gets a bonus week from Interval. So he gets two vacations out of that one week. Plus, he has access to II's great "Getaway" weeks - which includes some great Vacation Club properties (sometimes Marriotts come up) for way cheaper than renting.

Last year this is what he got for the money:

$350 - resort dues
$ 84 - II membership
$129 - trade fee through II
$299 - AC (bonus week) (used at Marriott Grande Vista two bedroom)
$ 95 - Extra fee for trading into DVC's Old Key West 1 Bedroom

Total $957.00

This got him 1 week at Disney's Old Key West in a 1 bedroom and a two bedroom at Marriott's Grande Vista (using the AC). That comes out to $478.50 per week. I'm sorry, but you can't do that paying cash.

Oh, and if he wants to, he could grab an Interval "Getaway" week later in the year and take another great vacation for probably $300 to $500 dollars at a top resort anywhere in the world.

Dave is stuck in the 70's when it comes to timesharing.

P.S. Some people who buy 2 bedroom lockouts actually get "3" vacations a year out of their one timeshare week. They lock it off - 1 one bedroom, a studio, and if it qualifies, a bonus week from II. That's three vacations out of one week.

I think I may own at the same place as the tugger you reference Maybe, maybe not, but same deal...

We just bought a particular timeshare in October... we got it for pennies on the dollar. I joined II for 84.00 & paid an exchange fee of $129.00. My maintenance fee's were 440.00, let's just say the cost of the unit itself was about a hundred dollars (pennies on the dollar I tell you.....) AND, we have a bonus week AC that I haven't used yet (planning to use it for a week at Disney or somewhere else)

Anyhow, we are now booked at the Westin Kaanapali Ocean Resort Villa's, Ocean view, Maui in a 1 bedroom villa for a week in December! This is a 600.00 a night resort & deservedly so, it's gorgeous.... we used Frequent Flyer miles to get there for the four of us.

Additionally, this is a dual affiliated resort, so I signed up for RCI, just two days ago I grabbed a last call for Smuggler's Notch in Vermont for 199.00!!! A 2 bedroom unit for 199.00 & now, we check in Sunday for a week, during my kids spring break next week, and they are going skiing! This is a 4000.00 cash rental to go through the resort!!! AND, I haven't even used my AC yet!

Now, I am a DVC'er & the points I don't use I rent out for roughly double what we pay for them when considering our initial payment & dues... we bought in EARLY.... it works for us, because we kept staying in the DVC 1 bedrooms on CASH... we like them and won't stay elsewhere...

So, although Dave Ramsey is a smart kind of guy, if you do your homework and you're a bit shrewd, timeshares can be a very good deal... You do have to vacation a lot however Which we do!

 

[unixadm]

I'm assuming you never stayed at a DVC villa....or may not care for the villa type resorts. You can't compare a villa to a moderate resort.

DVCers say this all the time. I comletely understand that there's a huge difference, but the DVC-fantatics just don't grasp that all of us don't care!

That was exactly my point. People like Dave condemn timeshares all together, including the DVC without taking into consideration that there is a market of people out there where it makes sense and is a financial savings.

It doesn't make sense for YOU, or YOUR family because of what your requirements are for an enjoyable vacation. It does make sense for MY family and MYSELF because our requirements for an enjoyable vacation include villas and the other extras that I outlined in my previous post.

Blanket statements about what vacations plans are good or bad are ALWAYS wrong since each person has a different vision as to what a dream vacation is.

 

[littlestar]

I think I may own at the same place as the tugger you reference Maybe, maybe not, but same deal...

We just bought a particular timeshare in October... we got it for pennies on the dollar. I joined II for 84.00 & paid an exchange fee of $129.00. My maintenance fee's were 440.00, let's just say the cost of the unit itself was about a hundred dollars (pennies on the dollar I tell you.....) AND, we have a bonus week AC that I haven't used yet (planning to use it for a week at Disney or somewhere else)

Anyhow, we are now booked at the Westin Kaanapali Ocean Resort Villa's, Ocean view, Maui in a 1 bedroom villa for a week in December! This is a 600.00 a night resort & deservedly so, it's gorgeous.... we used Frequent Flyer miles to get there for the four of us.

Additionally, this is a dual affiliated resort, so I signed up for RCI, just two days ago I grabbed a last call for Smuggler's Notch in Vermont for 199.00!!! A 2 bedroom unit for 199.00 & now, we check in Sunday for a week, during my kids spring break next week, and they are going skiing! This is a 4000.00 cash rental to go through the resort!!! AND, I haven't even used my AC yet!

Now, I am a DVC'er & the points I don't use I rent out for roughly double what we pay for them when considering our initial payment & dues... we bought in EARLY.... it works for us, because we kept staying in the DVC 1 bedrooms on CASH... we like them and won't stay elsewhere...

So, although Dave Ramsey is a smart kind of guy, if you do your homework and you're a bit shrewd, timeshares can be a very good deal... You do have to vacation a lot however Which we do!

That is awesome, Chris1gill. I've seen the Westin Kaanapali villas and that is one gorgeous property. Even the studios have a jacuzzi tub and those great heavenly beds. I can just imagine how awesome the 1 bedroom is at that Maui resort. What a great trade. Be sure to watch for turtles. We saw plenty right out in front of that resort.

You probably would like to hug your timeshare if you could, huh?

 

[vascubaguy]

Yes, this is correct, you need to look at the opportunity cost. We owned at BWV for six years, and we came out ahead. However, we paid cash, and when DVC is financed the "break even" date is moved out considerably. Also, DVCers always use "rack rate" in their comparison when rack rate is rarely paid, unless you travel over Christmas or Easter, and during that period you pay *dearly* with your DVC points as well.

We paid $16,250 for our points in 98. Had we invested the same amount, earning 7%, we would have earned an roughly $7,500. We also have to count maintenance fees, but here is what we did. We always rented out half of our points, and that covered our yearly maintenance fees plus at least one of our APs. So, dues never came out of our pocket. We sold DVC in 2004 and made $3,000 on the transaction....$2,550 after capital gains. And so we took seven week long trips in deluxe accomodations for $5,000...and at least one of our passes was covered. For us, it was a good deal. Our cost per night was roughly $100 to stay in a studio. Not bad.

But we were a little creative, and stayed almost exclusively in studios (which are the best deal by far). We also traveled in lower point seasons. The argument for DVC loses a lot of punch when you get into higher point seasons, 1 bedroom on up accomodations, financing DVC...on and on. Also, your value decreases considerably when you trade out and use your points on cruises.

Overall though, for folks who travel to Disney at least once every other year and can afford to stay on-site at a deluxe Disney resort, you'll save some money with DVC. It is not an investment though, it is a pre-paid vacation plan.....

I'm not going to throw out any more numbers, figures, or calculations, but just wanted to mention that your calculations do make some assumptions. Mainly, that you are investing that $16,250 and not taking future vacations. For that you would need to reduce the interest you earn by the amount you would spend on other accommdations for the vacations you do take.


For those that want to use the financial loss/gain comparison, I would recommend considering the following:
1. How much could I earn if I don't buy into DVC and invest the money I would spend and do not take any more Disney vacations?
2. What would the numbers look like if I purchase into DVC now, but then invest the money I would have spent on accommodations (less MN fees) each year?

There is a lot to consider... this is definately a complex math problem that involves many factors. One thing I think everyone can agree on, "DVC or other timeshares are NOT for everyone!"

Oh, and I forgot who posted this, but for the person that mentioned being able to stay in a mod for the amount spent on annual dues and taxes (MN fees). Sure, I can do that too. I'd get about 6 nights in a mod (AP rate) for the cost of my dues. However, with my points, I can get up to 19 nights in a studio at a Deluxe resort.

 

[MermaidsMom]

There is not a one size fits all answer for every family. Sometimes people take it to extremes with the "no payments" thing. If that's what they want, great and if you're happy leave it at that and let others decide for themselves. Many people appreciate the fixed payment nature of the timeshare for their vacations and it works for them. As long as we all get to WDW who cares?

 

[Chicago526]

I'm not going to throw out any more numbers, figures, or calculations, but just wanted to mention that your calculations do make some assumptions. Mainly, that you are investing that $16,250 and not taking future vacations. For that you would need to reduce the interest you earn by the amount you would spend on other accommdations for the vacations you do take.


For those that want to use the financial loss/gain comparison, I would recommend considering the following:
1. How much could I earn if I don't buy into DVC and invest the money I would spend and do not take any more Disney vacations?
2. What would the numbers look like if I purchase into DVC now, but then invest the money I would have spent on accommodations (less MN fees) each year?

There is a lot to consider... this is definately a complex math problem that involves many factors. One thing I think everyone can agree on, "DVC or other timeshares are NOT for everyone!"

Oh, and I forgot who posted this, but for the person that mentioned being able to stay in a mod for the amount spent on annual dues and taxes (MN fees). Sure, I can do that too. I'd get about 6 nights in a mod (AP rate) for the cost of my dues. However, with my points, I can get up to 19 nights in a studio at a Deluxe resort.

That was me, and I was able to get 7 nights with the AAA discount in Value season. True, you can get 19 nights at a studio Villa, but for me, 19 nights is a waste, DH and I can only take 1 week of vacation a year (8 nights, tops).

I posted on this thread several times, and in previous posts I did say that DVC is NOT A BAD deal, I actually think it's a good program (as far as time shares go) and for some people, it can make sence. But in a country where a recent study says 70% of the population is living paycheck to paycheck, do you really think Dave was far off the mark when he said time shares are a bad idea?

Dave Ramsey was replying to someone about to go into what sounded like a traditional time share sales pitch. This was NOT someone looking to pick up a re-sale, this was someone asking for advice from DR, meaning he likely is a person trying to get OUT OF DEBT. For someone that is trying to pay off the credit cards, Time Shares are the last thing they need.

Dave would say that once you've gotten out of debt, have a fully funded emergency fund, and your retirement savings are on track, THEN it's okay to blow money on the luxeries in life, boating (his hobby), vacations, sports cars, whatever. And I think most people here would agree, the time to buy a time share (DVC or otherwise) is not when you're up to your eyeballs in debt and are one paycheck away from disaster. THESE are the people Dave was talking to, not people who can afford to drop $15,000 to $20,000 in cash on a DVC memembership and can take 20 days of vacation every year.

As I said in a previous post, if you bought DVC and are happy with your purchase, MORE POWER TO YOU! But for the vast majority of the people in this country, it just isn't a good idea.

 

[Lewisc]

I haven't read the entire thread but my understanding is that Dave Ramsey gives advice to people who are in financial trouble and need help with budgeting ideas.

I certainly those people shouldn't be purchasing time shares. Even a good deal has an annual maintenance fee. A few months ago people were able to book a week through Skyauction for less than some timeshare owners maintenance cost.

DVC may be the exception but most people get much better deals in the resale market and the question was with regards to a person who wanted to attend one of the presentations to get the free stuff.

 

[salmoneous]

I haven't read the entire thread but my understanding is that Dave Ramsey gives advice to people who are in financial trouble and need help with budgeting ideas.

The thing is, Dave isn't just telling people, "if you are having financial trouble, don't buy a timeshare." He is saying that timeshares are a horrible idea for *everybody*. He is anyone who buys one is a fool. He is giving out blatantly untrue information such as there being virtually no secondary market for timeshare.

The guy gets some stuff right - but comments like this one are just reckless and irresponsible.

 

[Lewisc]

The thing is, Dave isn't just telling people, "if you are having financial trouble, don't buy a timeshare." He is saying that timeshares are a horrible idea for *everybody*. He is anyone who buys one is a fool. He is giving out blatantly untrue information such as there being virtually no secondary market for timeshare.

The guy gets some stuff right - but comments like this one are just reckless and irresponsible.

I'd say buying retail, after a presentation, from almost any of the heavily promoted time-shares is a horrible deal. Buy a timeshare from Cypress or Westgate and see what the re-sale price is for the same, or similar units. Anyone not willing to do a lot of research should run from any timeshare.

DVC is a good deal, in part, because it gives you access to accommodations that otherwise wouldn't even be available.

 

[Lewisc]

The thing is, Dave isn't just telling people, "if you are having financial trouble, don't buy a timeshare." He is saying that timeshares are a horrible idea for *everybody*. He is anyone who buys one is a fool. He is giving out blatantly untrue information such as there being virtually no secondary market for timeshare.

The guy gets some stuff right - but comments like this one are just reckless and irresponsible.

I'd say buying retail, after a presentation, from almost any of the heavily promoted time-shares is a horrible deal. Buy a timeshare from Cypress or Westgate and see what the re-sale price is for the same, or similar units. Anyone not willing to do a lot of research should run from any timeshare.

DVC is a good deal, in part, because it gives you access to accommodations that otherwise wouldn't even be available.