Dave Ramsey on Timeshares

[Kay7979]

Interesting timing for this thread. Today, Feb 28th, is the start of our annual week in a timeshare in Maui. This year,like last year, we are renting it rather than trading. Even after the resort takes their cut for renting the unit, we should end up with about $1100. Last year we got a bonus week as a thank you for depositing another unit we own on the Kona Coast of Hawaii. We paid $350 for the bonus week and stayed at Old Key West in a one bedroom, and paid for our airfair and car rental out of our $750 Maui rental profits.

We bought our three weeks, Maui, Hawaii, and (off-site) Orlando all resale for a combined total of about $11,500 and I could sell them tomorrow and get back that much or more. The maintenance fees are about $1600 total. We ALWAYS use all three weeks, and sometimes more thanks to the bonus weeks, so Dave is mistaken when he says people seldom get to use their timeshares. We have owned our weeks for about 10 years and so far have been to the Hawaiin islands for two weeks twice, Orlando 5 times, Cancun for two weeks, Puerto Vallarta, Las Vegas, Grand Cayman, Key West, etc. etc. etc. Yes, if we had paid full price from a developer it would not have been a great deal, but Dave is sure painting this topic with a pretty wide brush when he says that timeshares are worthless things no one wants or uses. There is no way we would have traveled to half these places or stayed in such nice resorts, if it were not for the timeshares.

 

[kfeuer]

However, if my financial situation ever starts to worsen, a timeshare, even DVC, will become a financial burden. Luckily DVC is one of the few that can be sold without a LARGE financial loss. Most timeshares will not hold their value - like a car, it depreciates the second you sign on the dotted line.

You hit the nail on the head. I have no doubt there are ways to manipulate the system to get some really good deals. I'm also sure people who take regular deluxe vacations to Disney save some money with DVC. However, my issue with timeshares is that they take something that's a luxury--vacations--and turns it into a fixed expense.

 

[Lisa loves Pooh]

I do not know this person "DAVE", but does he always make blanket statements like this with LIMITED KNOWLEDGE of the subject?

FTR--he is not the only financial guru who has made this statements. I have read them countless times for the general subject.

For everyone who says they got great use out of a time share--I can find one for whom it was a waste of money. They are not for everybody.



As far as boating--well---probably ranks up more with "toys" . Dave can pay for his boats.

I suppose if the person who wrote Dave said he was completed with all of his baby steps and could pay cash--it would be a non-issue other than personal preference.

 

[CarolA]

I do not know this person "DAVE", but does he always make blanket statements like this with LIMITED KNOWLEDGE of the subject?

Yes, that's him...

Dave is a man who managed to get himself into MILLIONS of dollars of debt doing real estate development. He got out of debt and decided there was MORE money to be made as a self appointed finanical genius.

He does have some good common sense advice on getting out of debt. After that he is off in areas where his knowledge is very limited.

A lot of folks act like Dave is some wonderful guy doing his finanical services out of the goodness of his heart.. more like out of the "wants of his wallet" .

 

[Anewman]

For everyone who says they got great use out of a time share--I can find one for whom it was a waste of money. They are not for everybody.

See Dave's answer and then see yours.

Which one is a BLANKET STATEMENT, with limited knowledge of the subject?
Again does he always do that?

I also know some persons in my family that have wasted thousands on timeshares only to find they could not get out of them.
But I also know some persons that have had a Ford vehicle break down on them(sure you have too), should we all now believe that ALL Fords(new and used) will break down and nobody should buy them?

 

[dawnball]

We purchased for $57/point, and could sell today for about $80.

We can get a Studio, weeknights, at the Boardwalk Villas in March for 11-points/night. At roughly dues of $4.25/point, that comes to $46.75/night, including all taxes. A Studio villa includes kitchenette, and sitting area, besides the Bed.

Yes, I left out the initial purchase. At $57/point, spread out over the 49 years of the program when I purchased, that's minor, coming out to about $1.16/point. Of course you can't do it that way, as you have to calculate the 'value' of the dollar. But many have done extensive financial analysis, with spreadsheets, showing a considerable savings.

I have a fair amount of financial background, and I can make the analysis come out either way. However - you really do need to account for your initial purchase price, not just for the value of the money, but for the opportunity cost. For example, lets say a week in a BWV studio in march. That's 111 points. Those 111 points, purchased in 1993 cost $6,327. Invested very conservatively (in a CD) they would earn at least $316/yr. Your dues are another $472. If we aren't plannig to sell the DVC points, then there's an additional $128 to spread the value of your principle. That's $130/night. Not a bad deal. At $80/pt (where people are buying in now), that would be $166/night, which is less of a good deal. Buying in at $80/pt, you lose money renting points out at $10/pt, which is the price point I can rent them at right now.

This is a pretty simple analysis and leaves out the transaction costs, but the more complex ones came out about the same to a little worse for DVC. Purchasing dvc right now is only a good value if you anticipate visiting and using all your points until 2042. It's also a better value buying aftermarket than direct from Disney.

DVC is also one of the best timeshares to purchase because Disney props up the price. In general, timeshares have terrible depreciation over the first 5 years as newer/better properties come online.

 

[TammyAlphabet]

I saw Dave in person during one of his financial peace seminars in Tennessee where he was lecturing and selling his financial peace university stuff. I was really into him for a while.

I can totally see Dave saying what he did about timeshares. From a standpoint of investment, they are a poor choice. But, there is more to a timeshare than an investment. A timeshare means you have to take off time to spend with your family every year or you lose your "investment". I have met many many people who NEVER take a vacation and, if they do, it is for just a long weekend or to visit relatives only. I think this is a shame.

I bought DVC last year and I consider it one of the best moves I ever made. I am pretty cheap when it comes to accomodations and figure the cheaper the better. That has always been my motto. But, with DVC, I figure I get the great accomodations and the low price. AND, most importantly, I get to spend time with my children doing something that we both love. Is money more important than that??? I think not. And if it is, that is a shame.

Now, you don't need a timeshare or a vacation to spend time with your kids. But for me and my family, it is the perfect solution to a naggy issue, quality time together at an affordable price. If beauty is in the eye of the beholder, then value is also. I see value in timesharing, Dave does not. We will have to agree to disagree.......

 

[DisFlan]

If you go to WDW on a regular basis and you prefer to stay on-site, DVC is a logical choice. If you do your homework, know what you're buying and that it fits your needs, why would you care what Dave Ramsey or any other "money guru" has to say? Answer: you wouldn't. It's the folks who don't know anything (or enough) about DVC who pay any attention to him.


DisFlan

 

[ducklite]

He's dead wrong. We bought BCV as soon as they were available. Sold it about two years later, and even after maintenance dues and sales commission, we still made a profit. Plus we used it during the time period we owned it, and sold with some of the points for that use year already used.

If he doesn't believe me I'll be happy to show him my tax return wher I had to pay capital gains on it.

Anne

 

[unixadm]

I agree with Dave. I've had the DVC pitch, and for what we'd pay in taxes and maintenance fees each year, we could just book a moderate and go on our own! Sure, you own points and your hotel room/villa is "free", but you're still buying food and park passes, air fare to get down there, maybe a car rental too. Then add in your yearly dues and taxes, and you're right back where you started. I don't see how the points save you any money in the long run.

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.

The best comparison within Disney is to a deluxe resort, and even that isn't a true apples to apples comparison. The only real comparison that can be made is to compare the discounted cash rates of villa rental.

Park passes, airfare, car rental, etc are not a factor here...you would need to pay for those whether you stayed at DVC, at a moderate or even a value resort. The food can be a savings at a villa since you can make your own for the week.

I wouldn't stay anyplace but a villa type resort when we are vacationing. We stayed at The Polynesian and although we loved it, we would never again do a week there since it is really nothing more than a deluxe hotel. Prior to buying DVC, we have stayed at places like Marriott Residence Inns.....and that isn't even nearly as nice as DVC villas, but at least has some of the same amenities.

The main amenities that are important to us, that are NOT in moderate or deluxes:

1. Villas have separate bedrooms.....a BIGGIE for DW and myself. With DS5 and DS3, we like to have our own room and privacy. No moderate or deluxe have this (with the exception of very expensive deluxe suites)

2. Villas have a FULL kitchen and dining table. Another biggie for us. We drive down and bring some of our own food or stop at a local supermarket. My wife enjoys cooking, so usually at least 1 or 2 nights, we have a nice dinner in the villa. On top of this, with a full refrigerator/freezer, we have drinks, snacks and sandwiches for the week. No moderate or deluxe has this.

3. Villas have DVD players....a nice touch for that relaxing downtime.

4. Villas have Washer/Dryers...another BIGGIE for my wife and I. We can bring less clothes, and also go home with clean clothes so we don't have extra work when we get home from vacation.

5. Villas have jacuzzis....not a huge thing for us, but nice. No moderate will have these...and unless you get a suite, no deluxe has this either.

6. Some properties, such as BWV, BCV, and VWL are walking distance or a quick boat ride to a Disney Park. Even OKW and SSR are close to DTD. No moderate or offsite resort has that.


There is no way in the world that we could find all of these benefits that are IMPORTANT TO US at any moderate or even deluxe resort. When I'm paying $150/night for a 1BR villa when you factor in all the costs, the cash price is $400-$500/night for the same villa. Even with supersaver discounts, the cash price will be about $300/night. It is a HUGE savings based on the type of vacation we like to take.

Sure, I could go "on the cheap" and save thousands of $$ per year...but the accomodations would not be to our liking.

Read my thread Doing the math - The real cost/savings to look at the savings based off of MY family's travel habits.

The problem with people like Dave, is that they make blanket statements about something without ever taking into consideration that people have different travel habits, different likes and dislikes and different tastes.

Yes, a timeshare, any timeshare, including DVC, is a very bad idea for a family that is struggling to pay off bills and make ends meet. A good timeshare, such as DVC, can save lots of money for those are financially stable, who tend to take several expensive vacations per year at expensive resorts.

 

[Laurajean1014]

Well, I paid about $30,000 for my DVC but could easily sell it (in separate contracts) for about $85,000 - that's better than other investments that I have been involved with in the past 12 years. Dave may not know all.

 

[Lisa loves Pooh]

For arguments sake--techincally DVC is not a time share.


I did work at a DVC and am quite familiar with what they are.

I still think they are the bee's knees.

However for the audience that Dave speaks to--his answer was correct. His audience is people who are in debt...some big time.

Maybe he has never heard of DVC. Big deal. blanket statement or not he is not the first nor last financial person credible or otherwise to make a statement such as that b/c for the general population--it is a true statement.

Don't we have discussions like this all the time about what one can afford and what one cannot afford--for most--yes most of the population...you know the one that has been blasted on her b/c 90% is in debt and has no savings too speak of (number made up on purpose--I don't remember it and wont' go dig up the thread).....that is the majority for him that this in general is a bad idea.

90,000 DVC members someone said--and what is the population of the US and what does that represent??? A very small %.

You guys are in a special place! Can you at least appreciate that?

One day I would LOVE to own DVC.

At the time of our presentation (I did one as a CM---shoulda bought then--ARGGGGHHHHH!!!! and one as a guest). They showed us a chart--remember they are not high pressure and they are pretty truthful in their disclosures....at the time--it didn't make financial sense for us. They said that there is a magical date for you to break even--if based on your vacation expenses...you don't break even by that point--it isn't a good use of your money. This was a solid 5-8 years ago--so I do not remember the details. ETA: We are still on target for what the guide showed us that the decision for us not to buy was the best decision--we weren't trying to do or not do that--just how it ended up.

However--I dont' think he is making a blanket statement and I don't think he is speaking of DVC b/c it isn't a timeshare and for people who will vacation for x # of years it can be a good deal.

And as with all investments, pseudo or otherwise---the rate of return is not guaranteed.


And lastly--this is DAVE we are talking about--he is giving a people a kick in the pants to encourage them to get out of debt. While his travel to Europe might be a bit far fetched----let us consider--the last thign he is encouraging these people to do is go on these fabolous vacations in accomodations they think they can deserve. For some--a $10/night at the KOA is all they can afford until they get their head out of their wazoo and get financially straight.

I'm sure that the Bradley chick with teh $7K/year hairdo would be eating this up and using it like a crutch to retain her DVC if she had one. BUT IT ONLY cost me $800 per year....yeah and you financed it and you are in debt to the heavens--it passed your eyeballs long ago.


Basically in general--it is fine to try to convince people who are on the fence that it is a great investment--it is a far cry though to try to justify the expense to someone who should have no business making the purchase.

While this purchase has worked for all you DVCers--it is just as much of a blanket step to proclaim that DVC is the best thing since sliced bread and that you cannot go wrong with DVC or timeshares in general.

 

[PrincessDadx2]

Timeshares are just like anything else. If you put in the time to become knowledgeable and fit the profile you can get great value.

We are very satisfied owners of two Marriott weeks. We use them to get 4 weeks vacation per year and have stayed at DVC and other very nice places. We would never even consider going back to hotel rooms with our kids as our primary vacation. We probably spend the same or more for our vacations, but we have improved the quality 150% through Marriott.

In order to be happy you do need to:

1. Plan in advance - best is 1 year in advance. If you can't do that you probably won't be happy.

2. Be flexible - some of the best deals are within 60 days of leaving when any trade available is open. Also, if you are not tied to the school schedule shoulder season timeshares are one of the best values around.

If you fit the profile you should check out TUG and become educated and you can easily upgrade your vacation enjoyment. If not, then you should not waste your time on a timeshare.

 

[dianeschlicht]

I agree with Dave. I've had the DVC pitch, and for what we'd pay in taxes and maintenance fees each year, we could just book a moderate and go on our own! Sure, you own points and your hotel room/villa is "free", but you're still buying food and park passes, air fare to get down there, maybe a car rental too. Then add in your yearly dues and taxes, and you're right back where you started. I don't see how the points save you any money in the long run.

DVC is one of the better deals for time shares. I do like the flexibility of points, not being locked in to one week or one resort, ability to bank/borrow points year to year, being able to use the points on DCL,at DLR, Vero Beach, and you can trade with other time share programs for non-Disney trips. But it's still a time share at the end of the day. You won't make any money (although DVC does at least maintain it's value, if you have to sell, you usually get close to your purchase price), and what it "saves" you is marginal at best.

I'm not saying people who've bought into DVC are "fools" or "stupid" or anything like that, if you're happy with your purchase and get good use out of it, more power to you! It's not a bad deal, just not a great one.

The problem with your logic is that you are comparing a moderate Disney hotel room to a 1,2, or 3 bedroom villa. If I wanted to stay in a moderate or value hotel room, I might feel the way you do, but I like having the full kitchen, jacuzzi in the room, in room laundry, etc. etc...all the amenities of home. If my only intent was to stay in a studio (read here as hotel room), I wouldn't do DVC either, but I don't stay in studios, and hate to stay in hotels, so DVC makes PERFECT sense for me. Besides, I DO save money over the long haul. We have been DVC members for 9 years. Sure we have airfare, food costs, etc, but we would have that no matter where we vacationed. The fact that we can get by on trips for just the cost of maintenance fees and those things we pay all the time anyway (transportation and food etc), makes this a very affordable prepaid vacation for us. We can vacation longer and nicer and more frequently for the same amount of money each year, even after taking into account our initial purchase price.

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.

 

[Anewman]

For arguments sake--techincally DVC is not a time share.

^Well for arguments sake you wait until your 4th post in this thread to claim that DVC is not a timeshare? Why because they are refered to as "members"
Well the place I purchased my last car referred to us as "guests", so I guess we were not really customers.

"I also don't think he cares if it is Disney or motel 6--it is not an investment and even Disney says you if you are value resort kind of people---it is not the purchase for you."

^ In your second post here it sounds like you refer to DVC(since it is a reply to post about DVC) as a timeshare.

"Maybe he has never heard of DVC. Big deal. blanket statement or not..."

^It even sounds like you refer to DVC as a timeshare in the same post that you say it is not a timeshare.

it is just as much of a blanket step to proclaim that DVC is the best thing since sliced bread and that you cannot go wrong with DVC or timeshares in general.

I agree 100%
Please feel free to quote a DVCer do such, to me it sounds like they are discussing their own experiance and I have not seen anyone claim that it is FOR EVERYONE.

 

[dvcgirl]

I have a fair amount of financial background, and I can make the analysis come out either way. However - you really do need to account for your initial purchase price, not just for the value of the money, but for the opportunity cost. For example, lets say a week in a BWV studio in march. That's 111 points. Those 111 points, purchased in 1993 cost $6,327. Invested very conservatively (in a CD) they would earn at least $316/yr. Your dues are another $472. If we aren't plannig to sell the DVC points, then there's an additional $128 to spread the value of your principle. That's $130/night. Not a bad deal. At $80/pt (where people are buying in now), that would be $166/night, which is less of a good deal. Buying in at $80/pt, you lose money renting points out at $10/pt, which is the price point I can rent them at right now.

This is a pretty simple analysis and leaves out the transaction costs, but the more complex ones came out about the same to a little worse for DVC. Purchasing dvc right now is only a good value if you anticipate visiting and using all your points until 2042. It's also a better value buying aftermarket than direct from Disney.

DVC is also one of the best timeshares to purchase because Disney props up the price. In general, timeshares have terrible depreciation over the first 5 years as newer/better properties come online.

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.....

 

[ducklite]

Actually, legally DVC is a timeshare. They can call it a club, a plan, or a Heffalump, that doesn't change it's legal definition.

From the home page on their web site:

"THIS ADVERTISING MATERIAL IS BEING USED FOR THE PURPOSE OF SOLICITING SALES OF TIME-SHARE PERIODS."

Anne

 

[Lisa loves Pooh]

^Well for arguments sake you wait until your 4th post in this thread to claim that DVC is not a timeshare? Why because they are refered to as "members"
Well the place I purchased my last car referred to us as "guests", so I guess we were not really customers.


^ In your second post here it sounds like you refer to DVC(since it is a reply to post about DVC) as a timeshare.



^It even sounds like you refer to DVC as a timeshare in the same post that you say it is not a timeshare.


I agree 100%
Please feel free to quote a DVCer do such, to me it sounds like they are discussing their own experiance and I have not seen anyone claim that it is FOR EVERYONE.

Wow--why the attitude?

 

[Lisa loves Pooh]

Actually, legally DVC is a timeshare. They can call it a club, a plan, or a Heffalump, that doesn't change it's legal definition.

From the home page on their web site:

"THIS ADVERTISING MATERIAL IS BEING USED FOR THE PURPOSE OF SOLICITING SALES OF TIME-SHARE PERIODS."

Anne

Thanks--I do recall it being a marketing ploy.


(thanks for being nice about it)

 

[Anewman]

Wow--why the attitude?

Attitude???

Ooops sorry next time I will not point out the back peddling or the false implications.

Now I know who "Dave" is, it must be David Koresh cuz some still defend him too.