DVC Cost Analysis

[vickivale]

Another thing to think about is the risk of losing your points because you can't go in a give time period.

 

[joeytdog]

wow, have not seen this thread in a few weeks......

Anyways, I have been looking at buying DVC for four years now--

I put some of my thoughts up in the earlier posts in this thread

I always come to the same conclusion:

-Renting at $10pp and buying resale basically come out to the same costs over time

-Renting is riskier (I guess, I have never had problems though) but really renting is just more cumbersome---i.e. not as easy as owning the points

I guess for me, right now, it is just not a convienence that I can afford to make in my life

Would I like to own? yes absoultely

But unfortunately, my financial portfolio cannot justify the outlay

I have so many other things to look at--my 401k and roth contributions, college savings, etc etc

If I were more stable in those areas I would take the plunge

But for now....300 points? $3000 renting
300 points (annual fees at say $5pp) is $1500

So I am spending $1500 more a year right now on reservations

Say 300 points costs 60pp OR $18000 total

So, it would be 12 years before I started "losing" money (and really longer than that, because I could invest my $18k now in something else....)

Bottom Line: I cant spend $18000 right now because I will lose $1500 per year 13-18years from now----thats really what it comes down too

-And after 13-18 years I would probably be letting my kids use the points more often than me, so if by that time, I am stable (I would hope!) then I could buy the points then, or 5 years from now

But if I had a nice balance on my financials, YES I would take $18k and buy DVC

If you dont have stable financials in your life (whatever that may be--whatever YOU are comfortable with in your 401k, roth, savings, home, car, etc etc) than you are just not making a smart financial decision for your family

Some examples:
-You have ANY debt with interest on it weather it be a car, a credit card
-You have not enough in your 401k and/or roth
-Your savings especially if your job is not secured and stable

I dont think anyone could argue against these statements

DVC=LUXURY PURCHASE

Is it actually cheaper? Yes, probably, maybe? over time, but just be sure you have the outlay to do it

Whats more important?

Savings on vacations 15 years from now?
OR
investing in a 401k? (company match???)
OR
childs college account
OR
roth ira?
OR
paying off a car loan or credit card

The only reason for this post is to hope someone out there is not trying to justify a luxury purchase---

renting is JUST AS FINE AS OWNING if thats what you have to do

NOTHING IS WRONG WITH THAT!!!

ok -- off my soapbox!

c u at the world!

 

[disneynutz]

One of the biggest costs is that you are committing to vacation or the use your points every couple of years, it's not just about buying a contract.

Airfare, food, admission tickets, Disney extras, and dues can add thousands to your vacation cost and all of these expenses increase every year.

Bill

 

[Mickey'sApprentice]

wow, have not seen this thread in a few weeks......

Anyways, I have been looking at buying DVC for four years now--

I put some of my thoughts up in the earlier posts in this thread

I always come to the same conclusion:

-Renting at $10pp and buying resale basically come out to the same costs over time

-Renting is riskier (I guess, I have never had problems though) but really renting is just more cumbersome---i.e. not as easy as owning the points

I guess for me, right now, it is just not a convienence that I can afford to make in my life

Would I like to own? yes absoultely

But unfortunately, my financial portfolio cannot justify the outlay

I have so many other things to look at--my 401k and roth contributions, college savings, etc etc

If I were more stable in those areas I would take the plunge

But for now....300 points? $3000 renting
300 points (annual fees at say $5pp) is $1500

So I am spending $1500 more a year right now on reservations

Say 300 points costs 60pp OR $18000 total

So, it would be 12 years before I started "losing" money (and really longer than that, because I could invest my $18k now in something else....)

Bottom Line: I cant spend $18000 right now because I will lose $1500 per year 13-18years from now----thats really what it comes down too

-And after 13-18 years I would probably be letting my kids use the points more often than me, so if by that time, I am stable (I would hope!) then I could buy the points then, or 5 years from now

But if I had a nice balance on my financials, YES I would take $18k and buy DVC

If you dont have stable financials in your life (whatever that may be--whatever YOU are comfortable with in your 401k, roth, savings, home, car, etc etc) than you are just not making a smart financial decision for your family

Some examples:
-You have ANY debt with interest on it weather it be a car, a credit card
-You have not enough in your 401k and/or roth
-Your savings especially if your job is not secured and stable

I dont think anyone could argue against these statements

DVC=LUXURY PURCHASE

Is it actually cheaper? Yes, probably, maybe? over time, but just be sure you have the outlay to do it

Whats more important?

Savings on vacations 15 years from now?
OR
investing in a 401k? (company match???)
OR
childs college account
OR
roth ira?
OR
paying off a car loan or credit card

The only reason for this post is to hope someone out there is not trying to justify a luxury purchase---

renting is JUST AS FINE AS OWNING if thats what you have to do

NOTHING IS WRONG WITH THAT!!!

ok -- off my soapbox!

c u at the world!

Remember...you can buy 100 points for about $6K now. Just a thought.

My hubby and I couldn't justify $18k either, but we were able to justify $8k a few years ago when the economy was better. We also bought at BWV so we could get boardwalk or standard view.

I still think that OKW and BWV are the best value overall.

 

[ToddyLu]

Of course life changes at a moments notice sometimes. Will I be able to even use or enjoy a year's worth of retirement in the 401k or whatever I am investing in? Will I loose my home in a hurricane or fire? Could DH or I have an illness that affects our livelyhood?

Will I be doing Disney every year? For us we will be doing Disney and investing. I understand that it is improtant to save money and watch your spending but I also enjoy the control I have over owning my own points and having a great vacation.

For us there are no hobbies or really other vacation destinations. DH does not like to travel but he loves Disney and I have no trouble getting him there. My problem is not with the initial layout of DVC but the ability to surpress adding on to it. When we purchased it was because we really only see Disney as our "family vacation destination".

I am a firm believer in the mental/emotional rationalizaton of DVC as opposed to the financial. So while I learn a great deal from these threads it makes me a little sad that sometimes folks put off what would make them happy because they are concerned with cost. Should one own insurance and retirement? Yes. Should one also have fun and maybe have a couple of splurges in their life? A piece of art, new car, Rolex? Sure, why not (again, if it is not taking food off the table and causing much debt).

If I am going to Disney every year regardless, then DVC makes sense to me and I am willing to pay for it. Once that decision is made I stick to it and don't look back.

It just is interesting to me how people can sometimes "overthink" spending $20,000. I mean in a life that may be 75 years or longer is it really that much? And once you have spent it, if you can then get a great week a one of the World's best vacation destinations for $1100 dues, tickets, food and transporation...have you really lost anything? Maybe a few bucks but will always have the "memories". I can definitely understand renting and its perks and how they are justified...I can also justify my direct purchase in 2009.

Maybe I "underthink" things......

 

[crisi]

It just is interesting to me how people can sometimes "overthink" spending $20,000. I mean in a life that may be 75 years or longer is it really that much? And once you have spent it, if you can then get a great week a one of the World's best vacation destinations for $1100 dues, tickets, food and transporation...have you really lost anything? Maybe a few bucks but will always have the "memories". I can definitely understand renting and its perks and how they are justified...I can also justify my direct purchase in 2009.

Maybe I "underthink" things......

Over time, yeah, its that much.

There was a thread here about buying DVC in your 20s. If you took $20k in your 20s and averaged 8% over 40 years (still reasonable over that timeline), you'll have $450k as you near retirement.

Now, you wouldn't have annual trips to Disney in a Villa....the question is, can you afford both and do you want both, a comfortable retirement and annual, fairly luxurious, vacations.

I think the problem is people under think. They go for the short term. DVC makes them feel like they are making a good long term decision. And it may be. But it should be reviewed in context...and that context is big and involves a lot of thinking....

• Are you putting away enough for retirement (are you likely to retire?)
• Do you own a home (do you have a desire to)?
• Is your life likely to change over ten years in ways that impact your expenses and income (kids, promotions, someone choosing to stay at home, retirement, employment in an industry with great or questionable long term prospects?, parents who may need financial help in their own retirement?, a grandmother who you expect to die and leave you a "change your life" sized inheritence?)
• Do you have kids? Do you want kids? Are kids going to need college money, hockey fees, private school tuition? Are they going to increase the cost of your Disney trip beyond affordability with additional airfare and tickets (when the family goes from two adults and no children - or your kids are under three and airfare lapbabies - to four or five Disney "adults," - and with the inflation in gate ticket prices that has been way more than 3%, the cost of the trip gets a LOT more expensive over time).
• And a lot more....

I suspect MANY people on this board can look at this list and still make a thoughtful decision to own DVC to their overall financial advantage. I also suspect that there are people on this board that shouldn't - from a long term financial stability standpoint - be going to Disney ever year if they stayed out at the KOA campground and ate hotdogs, but value Disney more than their overall long term financial stability.

DVC can be a great value. It can also be a financial trap. The difference between the two isn't the objective numbers between renting and owning, or owning and staying onsite at the Poly. The difference between the two is each individuals situation - financial, values, priorities.

 

[a742246]

I agree with Toddylu 100 percent. Life is a balencing act. You have to live smart but enjoy life.
I know many people who are well off that are miserable.

Why??
They were so practical all their lives that they never spent money on themselves, no vacations, no hobbies, no interests, they would say they were saving for a good retirement.

Now they are in retirement, they don't spend, still no vacations, no hobbies, and no interests.

Why???
Now they say they are worried about the cost of retirement homes and they have to save more.

 

[Dean]

wow, have not seen this thread in a few weeks......

Anyways, I have been looking at buying DVC for four years now--

I put some of my thoughts up in the earlier posts in this thread

I always come to the same conclusion:

-Renting at $10pp and buying resale basically come out to the same costs over time

-Renting is riskier (I guess, I have never had problems though) but really renting is just more cumbersome---i.e. not as easy as owning the points

I guess for me, right now, it is just not a convienence that I can afford to make in my life

Would I like to own? yes absoultely

But unfortunately, my financial portfolio cannot justify the outlay

I have so many other things to look at--my 401k and roth contributions, college savings, etc etc

If I were more stable in those areas I would take the plunge

But for now....300 points? $3000 renting
300 points (annual fees at say $5pp) is $1500

So I am spending $1500 more a year right now on reservations

Say 300 points costs 60pp OR $18000 total

So, it would be 12 years before I started "losing" money (and really longer than that, because I could invest my $18k now in something else....)

Bottom Line: I cant spend $18000 right now because I will lose $1500 per year 13-18years from now----thats really what it comes down too

-And after 13-18 years I would probably be letting my kids use the points more often than me, so if by that time, I am stable (I would hope!) then I could buy the points then, or 5 years from now

But if I had a nice balance on my financials, YES I would take $18k and buy DVC

If you dont have stable financials in your life (whatever that may be--whatever YOU are comfortable with in your 401k, roth, savings, home, car, etc etc) than you are just not making a smart financial decision for your family

Some examples:
-You have ANY debt with interest on it weather it be a car, a credit card
-You have not enough in your 401k and/or roth
-Your savings especially if your job is not secured and stable

I dont think anyone could argue against these statements

DVC=LUXURY PURCHASE

Is it actually cheaper? Yes, probably, maybe? over time, but just be sure you have the outlay to do it

Whats more important?

Savings on vacations 15 years from now?
OR
investing in a 401k? (company match???)
OR
childs college account
OR
roth ira?
OR
paying off a car loan or credit card

The only reason for this post is to hope someone out there is not trying to justify a luxury purchase---

renting is JUST AS FINE AS OWNING if thats what you have to do

NOTHING IS WRONG WITH THAT!!!

ok -- off my soapbox!

c u at the world!

You bring up a point I've made over the years, and I think it's important, that one can get MOST of the benefits of owning by renting with more short term risk but less long term risk. For many I think owning is still far better but it depends on specifics. I would totally agree with Mickey'sApprentice in that owning less can be a great in between option. I'd also add that other timeshares can often get you what you need at a fraction the cost and in some cases, even staying in DVC resorts and in many cases, give you more and better non Disney trip options.

I agree with Toddylu 100 percent. Life is a balencing act. You have to live smart but enjoy life.
I know many people who are well off that are miserable.

Why??
They were so practical all their lives that they never spent money on themselves, no vacations, no hobbies, no interests, they would say they were saving for a good retirement.

Now they are in retirement, they don't spend, still no vacations, no hobbies, and no interests.

Why???
Now they say they are worried about the cost of retirement homes and they have to save more.

It depends. Life is a balancing act but to many, that $20K plus maint fees will be make or break.

 

[crisi]

I agree with Toddylu 100 percent. Life is a balencing act. You have to live smart but enjoy life.
I know many people who are well off that are miserable.

Why??
They were so practical all their lives that they never spent money on themselves, no vacations, no hobbies, no interests, they would say they were saving for a good retirement.

Now they are in retirement, they don't spend, still no vacations, no hobbies, and no interests.

Why???
Now they say they are worried about the cost of retirement homes and they have to save more.

I don't see anyone saying you should have no hobbies or no interests. And I know a lot of poor people who are miserable. I know a lot of people who have a lot of stuff and are miserable. And I know plenty of people who are very content without luxury vacations. Happiness is not bought.

Balance over the long term is achieved through thinking things through and balancing all your needs - those needs for enjoyment, for relaxation, for security, for fulfilling work, and all sorts of other needs.

 

[Mickey'sApprentice]

You bring up a point I've made over the years, and I think it's important, that one can get MOST of the benefits of owning by renting with more short term risk but less long term risk. For many I think owning is still far better but it depends on specifics. I would totally agree with Mickey'sApprentice in that owning less can be a great in between option. I'd also add that other timeshares can often get you what you need at a fraction the cost and in some cases, even staying in DVC resorts and in many cases, give you more and better non Disney trip options.

It depends. Life is a balancing act but to many, that $20K plus maint fees will be make or break.

I got a shout out from Dean!!

 

[jkersman01]

There has been referenced on numerous occasions the opportunity cost of the initial DVC purchase. By letting that sit over 40 or more years, I think that assumes you would not have used that money on vacationing elsewhere. In other words, DVc won't look too appealing from a financial standpoint because you are comparing it to a scenario in which you don't vacation.

In my model, I'm taking that 20k adding 7 percent interest each year and then withdrawing from that fund the balance of my annual expected vacation costs. The greater the DVc savings per year over your comparable the quicker that fund diminishes. My comp to 2 rooms at Caribbean beach lets my fund last longer then my comp to a 1 br BWV. Just my 2 cents

 

[zeferjen]

Lol, considering the history of our investment success over the last 10 years, I considered my opportunity cost to be lower.

But seriously, I did the same. I figured that we will always be going on vacation somewhere. To compare apples and apples I assumed it would be at a minimum at a Moderate resort at Disney. That had the longest break-even, although I still broke even after 10 yrs or so.

 

[Dean]

There has been referenced on numerous occasions the opportunity cost of the initial DVC purchase. By letting that sit over 40 or more years, I think that assumes you would not have used that money on vacationing elsewhere. In other words, DVc won't look too appealing from a financial standpoint because you are comparing it to a scenario in which you don't vacation.

In my model, I'm taking that 20k adding 7 percent interest each year and then withdrawing from that fund the balance of my annual expected vacation costs. The greater the DVc savings per year over your comparable the quicker that fund diminishes. My comp to 2 rooms at Caribbean beach lets my fund last longer then my comp to a 1 br BWV. Just my 2 cents

I don't think anyone assumes you won't vacation, assuming one can otherwise afford to. I think most that discuss the lost opportunity are looking at it ilk your second paragraph states incorporating yearly dues, I know I do. The other assumption is that one is adult enough to invest the money reasonably. Everyone realizes there are many risks to both directions.

 

[bakerworld]

There has been referenced on numerous occasions the opportunity cost of the initial DVC purchase. By letting that sit over 40 or more years, I think that assumes you would not have used that money on vacationing elsewhere. In other words, DVc won't look too appealing from a financial standpoint because you are comparing it to a scenario in which you don't vacation.

In my model, I'm taking that 20k adding 7 percent interest each year and then withdrawing from that fund the balance of my annual expected vacation costs. The greater the DVc savings per year over your comparable the quicker that fund diminishes. My comp to 2 rooms at Caribbean beach lets my fund last longer then my comp to a 1 br BWV. Just my 2 cents

Do y'all do this same math when buying a car No interest and lots of costs (depreciation/maintenance)

 

[Dean]

Do y'all do this same math when buying a car No interest and lots of costs (depreciation/maintenance)

Comparing one car to another (Honda vs Acura for example), absolutely. One would be foolish not to, IMO.

 

[joeytdog]

I didnt say not to splurge on anything?

In fact I said the opposite--

That I would rent for the next few years--splurging every year--

Plus another advantage of renting?

The flexabiity of how many points I need--i.e. one year a one bedroom, years later a two bedroom, then back to a one bedroom, etc etc

I didnt say NOT to splurge---

I guess my point is

--YOU DONT NEED TO OWN IF YOU DONT HAVE THE OUTLAY TO BUY--

-Renting is JUST THE SAME as owning for some

 

[jkersman01]

Comparing one car to another (Honda vs Acura for example), absolutely. One would be foolish not to, IMO.

Agreed

 

[jkersman01]

I don't think anyone assumes you won't vacation, assuming one can otherwise afford to. I think most that discuss the lost opportunity are looking at it ilk your second paragraph states incorporating yearly dues, I know I do. The other assumption is that one is adult enough to invest the money reasonably. Everyone realizes there are many risks to both directions.

Dean, I don't think anyone would spell that out in words, but by compounding interest annually on untouched principal appears to factor that assumption in the model. And to clarify, when I said numerous, I didn't mean majority- I meant a few and just wanted to note my observation.

 

[Dean]

Dean, I don't think anyone would spell that out in words, but by compounding interest annually on untouched principal appears to factor that assumption in the model. And to clarify, when I said numerous, I didn't mean majority- I meant a few and just wanted to note my observation.

While it may not be spelled out very often, I think almost all posts discussing purchasing vs not purchasing assumes that you will vacation for as similar trip as being discussed, assuming one can afford to at all. The only exception I can think of is when discussing money that doesn't have to be spent at all like the difference between resale and retail or a more expensive vs lessor expensive option.

 

[crisi]

While it may not be spelled out very often, I think almost all posts discussing purchasing vs not purchasing assumes that you will vacation for as similar trip as being discussed, assuming one can afford to at all. The only exception I can think of is when discussing money that doesn't have to be spent at all like the difference between resale and retail or a more expensive vs lessor expensive option.

Though that's one of the problems with these strict "apples to apples" models. For many people, possibly most people, owning changes your behavior. You squeeze in an extra trip. You go when maybe you'd put it off because you have the points and "the room is paid for." You take guests and pick up their room. You get spoiled quickly with a one, or even two, bedroom. Or, without a room bill facing you, you spend more - dinners out, Cirque. And then, there is the prevalence of "addonitis."

Not that these things don't bring their own value. The trips we've taken family along and gifted them the room have been wonderful. The "enforced vacations" were really nice, particularly when the kids were younger. Having the kids sleep in another room has been a nice little "marital perk." And its nice not to face a room bill and we have been going to nicer dinners and seeing Cirque. But the possible behavior patterns changes should be acknowledged.