Doing the math - The real cost/savings

[unixadm]

We are new DVC members and I've seen some posts and talked to some people that were leary of the costs and questioned the actual savings. I've done the math and although expensive, the savings are very good for MY family based off of they type of vacations we normally take and plan to take in the future. Here is the calculations I did prior to purchase:

200 points@ $85/pp - $17,000
We did finance part of it, but will have it paid within 2 years, so I factor in $2000 for that.
120 points@ $87/pp - $10,440
Same with financing
$1500

TOTAL BUY IN COST: $30,940

Current maint costs is $3.85/pp - $1232/year

Assume a 2% increase each year on maint

Per Point
YEAR Maint Fee Yearly Maint fee
1 $3.85 $1,232.00
2 $3.93 $1,256.64
3 $4.01 $1,281.77
4 $4.09 $1,307.41
5 $4.17 $1,333.56
6 $4.25 $1,360.23
7 $4.34 $1,387.43
8 $4.42 $1,415.18
9 $4.51 $1,443.48
10 $4.60 $1,472.35
11 $4.69 $1,501.80
12 $4.79 $1,531.84
13 $4.88 $1,562.47
14 $4.98 $1,593.72
15 $5.08 $1,625.60
16 $5.18 $1,658.11
17 $5.29 $1,691.27
18 $5.39 $1,725.10
19 $5.50 $1,759.60
20 $5.61 $1,794.79
21 $5.72 $1,830.69
22 $5.84 $1,867.30
23 $5.95 $1,904.65
24 $6.07 $1,942.74
25 $6.19 $1,981.59
26 $6.32 $2,021.23
27 $6.44 $2,061.65
28 $6.57 $2,102.88
29 $6.70 $2,144.94
30 $6.84 $2,187.84
31 $6.97 $2,231.60
32 $7.11 $2,276.23
33 $7.26 $2,321.75
34 $7.40 $2,368.19
35 $7.55 $2,415.55
36 $7.70 $2,463.86
37 $7.85 $2,513.14
38 $8.01 $2,563.40
39 $8.17 $2,614.67
40 $8.33 $2,666.97
41 $8.50 $2,720.30
42 $8.67 $2,774.71
43 $8.84 $2,830.21
44 $9.02 $2,886.81
45 $9.20 $2,944.55
46 $9.39 $3,003.44
47 $9.57 $3,063.51
48 $9.76 $3,124.78

TOTAL MAINT FEES: $97,763.54

Plus Original Buy in cost of $30,940

TOTAL COST OVER 48 years = $128,703.54

Now....that really seems like a huge amount of money, but then you have to look at what we will get.

We went to Disney Beach Club villas for 5 nights for 140 points. The rack rate for the villa was $500/night for the nights we went. That was $2500. That wasn't even using 1/2 of my points (although we didn't stay a Fri/Sat). Pretty much in a DVC resort, I figure I will get about $4500-$5000 worth of vacation every year depending on the time of year we go, whether we do a Fri/Sat stay, etc.

We are doing the cruise in January. Rack rate for that is $3800 and that will use all of our yearly allotment of points plus a few, so we are getting less value for our money, but still getting a great trip.

Outside of the main DVC resorts, we will get less value for our money, but that isn't a problem. We typically do 2 trips per year, so we figure 1 week in a DVC resort, 1 week somewhere else.

Based off of that, I am averaging the dollar value of our yearly trips to be about $4000/year. I did NOT take into consideration that the cash cost for these resorts/vacations will most likely go up over time which would give us more value for the money.

The costs for us for similiar vacations with DVC would be ~$192,000 for 48 years of $4000 trips.

BOTTOM LINE SAVINGS: $63,296.46

So, although the cost seems big, I think the savings is big as well.

Also, I didn't factor in the fact that we got 100 extra points for this use year (about a $1500 value), nor did I factor in that my extra 120 points came maint free this year ($462)

Just thought I would share the thought process I went through when making my decision. The savings may be different for each family depending on the type of vacations you take every year. If you plan on going outside of Disney for many vacations, doing the cruises each year, etc, the savings will be less and may end up being close to even.

 

[Greg K.]

That's impressive!

I took out my calculator and divided the numbers -- $128,703, divided by 48. It comes to $2,681 per year.

Considering how hotel costs keep climbing, I can't help but think that is a sweet deal.

 

[unixadm]

Good point....I forgot to include that nice yearly cost calculation, which does prove the savings a little more in the 'here and now'.

 

[FamilyGuy]

Though I gave it some thought before I purchased, I could never do all that math to figure out that I am pledging just way too much of my money to Disney!

By the way you may get the "cost of money" comments. The "lost opportunities for your money" comments. "inflation." The increase in points values (ie. points were half of what they cost today just 12 or 14 years ago). Etc Etc Etc. There are so many factors that you can put into the equation.....

The best motivation to buy into DVC is that it gurantees you will be back on a regular basis!

 

[unixadm]

Yeah, it is a little daunting at first, but then if you add up how much you spent on vacations every year before DVC, that would add up pretty quick too!

 

[Dean]

A couple of reality checks. One is that unless you would pay rack rate for the BCV, I don't think it's a reasonable comparison to use that. Since you seemed to suggest a lot of previous experience, what have you done for the past few years as that's likely your best comparison from a cost standpoint. Another is that 2% on the dues is very low. I think 3-4% is more reasonable with 3% being the lowest I'd even consider using and 3.5% likely being the best current choice.

Most people should also consider the lost income on the dollars invested, especially if done as a large lump sum over a fairly short period of time, as in this case. I think if you run the numbers more reasonably the savings would be minimal to non existent in this situation but it ultimately depends on how you use it in terms of unit size, points costs of the rooms for the nights you go and the like. The scenario also assumes continued use at and only at DVC resorts thus it depends on how you use it in the future.

 

[unixadm]

You are correct that most people don't pay the rack rate if they are planning in advance. I have gotten 2 BR villas (not Disney) for bargain basement rates at times. On the other hand, I have paid top dollar for places because we wanted to stay there and couldn't find a discounted rate. One of the advantages I look at with DVC is that I don't have to bargain shop anymore for where we are staying. A good bargain hunter that enjoys doing it could probably make out better on their own each year, but the time invested in trying get the best price each year should be factored in. I am tired of spending weeks or months searching on line to get lucky and find a great price for a particular resort, sometimes not getting what I want and settling for an alternate resort. I just want to decide where to go and book.

Although I do try to plan vacations, there are many times that we end up booking a month or two in advance, and for long weekends only a couple of weeks or even days in advance. Sometimes it is difficult to get a good price when booking with shorter notice, so we end up paying higher prices anyway. With DVC, no matter when I book, as long as it is available, it is the same cost to me.

Basically, it really depends on how you plan vacations, what type of places you like to stay, etc. Considering we have been spending over $5000/year for vacations prior to DVC, this represents the savings to us. It is definitely not representative of savings for everyone.

If I do the math with a 3.5% maint fee increase every year, it brings it close to break even. But I can't imagine it going up like that every year...that would mean that the maint fee of $3.85/pp and $1232/year this year will be $19.39/pp and $6205/year in 2053. That seems like way too much. I can see that early on the maint fees increase is higher each year because they are still adding additional recreation, etc....but then they should even out and not go up much...then as the resort gets a bit older, the fees will go up again to cover renovations.

The other thing is that if maint fees are going up like that, we also have to factor in the cash cost for the same resorts going up each year as well (which I did not in my original calulations). If the cost of a vacation is $4000 this year, then in 48 years at 2% increase every year, it would cost $10000 in 2053, adding up to a whopping $317,414. Of course they wouldn't go up every year like that, I wouldn't think, but they WILL go up.

As far as lost investment income, I am sure that there are people who can take the money, invest it and make much more over time, still spending the money for nice vacations each year....but that is not me. I am not a good saver...and many times we end up putting vacations on credit cards then paying off over the year. This keeps us from doing that, so it works for us.

Who knows....either way, I am happy with my purchase. It is a relief off of my mind that I won't have to bargain shop for resorts anymore.

 

[Dean]

unixadm, that's why I tell everyone to look at their own situation. As long as you know the facts, it's your decision. Certainly putting a vacation on a credit card and paying interest on it is another discussion and i won't go there.

 

[vascubaguy]

Of course everyone's calcualations and factors are different. I don't intend on having as many points, but I do plan to eventually have enough points to have 2 nice vacations, and then a few extra that I could rent to help cover the cost of the maintenance fees. I don't consider it a financial investment, but an investment in happiness. When I buy in it will be my encouragement to take at least 1 trip a year and I have the flexibility to go to different resorts arourd WDW and then there's also Vero and HHI, not to mention any others that could be added in the next 40-50 years.

 

[crisi]

I can figure mine at a "savings" or I can figure mine at a "loss"

Lets just take the last trip. Two bedroom BWV in October for 282 points, seven nights. Valued at $6 a point gives me room costs of $1692.

Had we paid rack rate for that room, we'd have spent around $5200 - whoohoo savings!

Had we not owned DVC we very likely wouldn't have made the trip at all! We spent about $10,000 on that trip, taking my mother in law and her sister.

Had we taken the trip without DVC, MIL and her sister wouldn't have been invited. We'd have spent about the same on a room at the AAA rate at WL or AKL. We would have the kids in the room with us, but we'd have coped.

Was the trip nice, you bet. Glad I took it. Did DVC save me money? Well, it depends on how I look at it.

 

[Muushka]

Looking at this thread, gave me a headache.

I'm just glad we bought .

 

[Wish I lived in Fl]

In 21 years of marriage we have taken 6 vacations. That is why i want a prepaid vacation. Shelling out maintenance fees, tickets and food is less of a psychological hurdle than all that PLUS lodging for my DH.

And no way would we put it on a credit card.

 

[vascubaguy]

I was sitting here browsing thru the resale listings and thinking about prices, etc... I have read over and over again about how you would only save money with DVC if you would usually stay in moderate or deluxe rooms. Well, here's just a comparison I did....

To stay at All-Star Movies (assuming 4 adults so there is a surcharge for the room) in a standard room. This is the price from disneyworld.com for a 5 night stay, October 23-28, 2005. $672.40 or $134.48 per night. For 2 adults it would be $627.20 or $125.44 per night.

Then I checked the AAA rate, which is probably the method I would have used to book a package. With this, the room for
4 Adults: 588.45 or 117.69/night
2 Adults: 475.45 or 95.09/night

Ok, now I had previously calculated that over the life of the DVC membership, the total number of points would equal out to about $6-7 per point. However, I'll simply use the $10/point rental rate.
For OKW Studio (4 Adults) during the same time, it would take 40 points: so $400.00. (And even though this would be a studio, it would have the microfridge, etc.. .which is an extra charge at the value resorts). I realize if you start looking at the one bedroom villas there's a much bigger difference... but for the studio... it's even cheaper than a value resort.

 

[y2khardtop]

I did a similar analysis 10 years ago when we joined, and the numbers were MUCH better then. We got FREE park tickets for the first 4 or 5 years of our visit, so paid for half of our initial purchase with free park tickets.

Bottom line, if you visit Disney regularly AND enjoy the benefits of staying on Disney property, than DVC is a definite bargain. If you are just as happy visiting the parks then staying off property at a bargain hotel/motel, then DVC is a total waste of your money.

Obviously, we enjoy the full Disney experience, and hardly ever leave property once we arrive!

 

[tamu91]

Bottom line, if you visit Disney regularly AND enjoy the benefits of staying on Disney property, than DVC is a definite bargain

I'm not sure about the bargain part but I agree that if you visit WDW on a regular basis, you should at least consider DVC as an option if it's within your financial means. I wouldn't recommend people buying DVC, or any other timeshare for that matter, on a long term loan.

 

[CHOPR]

I put a Disney cruise on credit card with 6 mos. no interest intending to pay it off before the interest started accruing. Well a water heater in addition to some plumbing repairs later----you know how it goes. I paid off the cruise in 18 months and paying the interest. With DVC I AGREE WITH UNIXADM and am happy not to scour the internet looking for deals and will never again put a Disney trip on a credit card. There are so many ways to look at it as a bargain or not,but I for one believe we will save plenty of money in the coming years in addition to the next few trips already paid for!

 

[ColoradoBelle1]

I'm gonna try to have a little fun here:

Had you bought Disney in 1996 instead of investing, say $40,000 in the stock market...OUCH. $40,000 in the stock market doubled in 3years.

HOWEVER, had you put $40,000 into Disney in 1999 INSTEAD of in the market. (or better yet, had you sold those doubled stocks!)..WHOPPEE! YOu would have been a genius.

Which tells ya only that you have to do your research, trust your family values, and then decide...Because there are always pluses and minuses and you can drive yourself crazy with statistics!

I would never have bought DVC if I didnt' have my kids college fund taken

care of first. I would never have bought DVC if I didn't have enough money to pay for my family's health care. I would never have bought DVC if my retirement fund wasn't on track. But that's just my personal spending values (and I am the child of depression-era parents.)
I made a committment that I would buy DVC with cash that I could afford, knowing full well that for the next 5 years that I would be able to sell my DVC...if my circumstances changed....and not lose any money on the resale.
I also made the committment that I would rent enough points to cover the maintenance fee for all the points, and then use the remainder of my points to enjoy my purchase. So for me, this was a no brainer and a wise investment. But what works for me, isn't necessary what floats your boat.

It's hard to put a price on magic and smiles and pixie dust. I say, research and make a strong financial committment...but after you've done the financial analysis, follow your heart!

 

[DisneyJam]

Wow great pricing thread!!! I just returned from a WDW trip (fantastic as usual BTW!! ) , and I am now a new DVC member!!

Just to add some more thoughts and some costs analysis....

Some are comparing the rack rate and some not... When we were in our presentation we did mention to the sales person that we never pay rack rate for anything Disney especially since you can find so many great deals on rooms. In our case, we compared a AAA rate at a deluxe (AKL) which is where we stayed this time. We were even luckier in that while we paid only the standard room rate, we received a complimentary upgrade to a savanah view!

So basically and just to keep it simple we paid $220 a night to stay at a deluxe upgraded room. We stayed 9 nights $1980 total cost (it was actually a little more, because our friday and sat nights were a little higher per night, but this gives you an idea). So my calc is (275 points * 85 per point) /50 (yrs) = 467.5 a year. Plus maint $1053.25 = $1520.25. Our 275 would cover a studio at a DVC resort with points to spare or even a 1 bedroom for an 8 night stay. And I also didn't mention some of your maint costs are tax deductible, since it goes towards property tax.

I won't go through every year with maint increase cost, because I think we all know the cost of every hotel will increase over time as well, so as our maint cost increases so do the Disney hotel room costs.

We have been thinking about this for some time, and beleive it is overall a good deal for our family and we are extremely happy with being new members, but I will say it probably isn't really for everyone.

Oh some one mentioned losing investment oppourtunity and what you could gain had you invested such a sum. Well really you could only invest what ever your down payment was since you don't pay out the $100k+ up front. Even if it is the total buy in costs it's still only on average about $20k. And lets not forget investments don't necessarily mean gains!!! But a DVC membership does guarantee you your points every year! And we also look at it this way... we certainly have our investments / college savings etc..., but our DVC membership is part of our vacation budget. We can pretty much guarantee that our family will take a 1-2 week vacation a year, so pretty much we are just prepaying to help keep the costs down. Much like the pre paid college plans that are available.

 

[disneyfan551]

Great thread! Thanks to all that spent time to post their own experiences in making the DVC decision! I am trying to make that decision myself at this point and need all the help that I can get!

 

[PinkTink63]

Though I gave it some thought before I purchased, I could never do all that math to figure out that I am pledging just way too much of my money to Disney!

By the way you may get the "cost of money" comments. The "lost opportunities for your money" comments. "inflation." The increase in points values (ie. points were half of what they cost today just 12 or 14 years ago). Etc Etc Etc. There are so many factors that you can put into the equation.....

The best motivation to buy into DVC is that it gurantees you will be back on a regular basis!

I looked at it this way...They seem to get our money every year anyway! We just get to stay in nicer places and we know for sure we get to go back!
Stephanie