DVC Financial Analysis

[Brian Noble]

I've hit the cap in PTO time and won't get more unless I start using it

I had a staff member who had PTO expiring, I finally told them: "We've been open since 1817. We will be here when you get back. Go on vacation."

 

[atthebeachclub]

I had a staff member who had PTO expiring, I finally told them: "We've been open since 1817. We will be here when you get back. Go on vacation."

I love this. I can get paid out for my unused PTO and I sort of view it like a piggybank in case of emergency, but knowing I have a designated vacation that is use it or lose it will help me get over the mental hump of spending the time/money annually. Vacation is good for the soul and the family.

I expected a negative reaction from my kids’ teachers when I told them I was pulling the kids from school for a week for a WDW trip (the only PTO times I could get approved). Instead they were super supportive and said it was a great idea. Turns out teachers know a few things about life that my usual non-vacationing self did not.

 

[mgarbowski]

First Brian is correct that a major and often overlooked value of a time share is that you reliably use it.

Second, the basic math of how to compute the cost/benefit and break even point is pretty clear. Where folks mostly differ are the variables of the discount rate for the time value of money and the assumed alternative cost of lodgings. My thoughts on those which I have not seen mentioned are:

• You have to account for what you in fact would have done with the money otherwise. If you would have invested it in a tax-deferred account and invested in equity funds, then yes, maybe 7% makes sense. But if you would have bought something else like a boat or second car, then not so much. You also should account for investment fees and taxes and how you would have invested it. When we bought DVC my wife and I already fully funded our tax-advantaged accounts every year but we were a bit cash poor. If we didn't buy DVC we likely would have had more money in cash savings earning <1% interest during most of the 2010s. Applying a 7% discount rate to my DVC purchase amortization makes no sense, because for me the alternative use of that money would not have returned 7%.
• I don't think applying the cash price of the hotel rooms you would have booked absent DVC is clearly the proper measure. Yes, maybe you would stay at values or moderates absent DVC. But once you buy DVC you in fact stay in Disney Deluxe and that needs to be accounted for.

I personally use 3% and the going commercial point rental costs of my actual stays at the time I book them. I use the point rental method even though we likely never would have rented points because I don't like the lack of flexibility and control one has as a DVC renter. It just seems like an imperfect but reasonable compromise between an aggressive and conservative extreme. The same is true for my 3% assumed cost of money/assumed rate of return.

Neither is necessarily right for you or anyone else, specifically but I think the approach has general merit.

 

[2010dvcfan]

Although I have degrees in both Economics and in Finance, sometimes a very simplistic view may help you decide. As most of the extensive analyses indicate, DVC probably makes sense if you:

1. Will go to WDW regularly (at least every other year) for the foreseeable future
2. Always stay on property in Deluxes
3. Can plan ahead (at least 7 months)
4. Are able to purchase points without financing

1, 3, and 4 work for me, but I stay at values, moderates, or off property so the decision is easy; DVC is not for me.

Fair points to be made, some considerations to your thoughts if I may please

#2- I never stayed at Deluxe resorts due to not being able to get past the price tag, once I joined DVC and that whole new world of Deluxe resort was opened for me it became clear DVC was a choice so many people if open to the idea could experience for close to the same price of moderate stays each year. DVC will elevate your vacation experience if you stay at values and moderates.

#4- I had to finance my first contract way back when I was young I knew I was going to vacation with my young child to Disney each year, there's no saving up for that by the time you do they have grown up and that "season of your life" is gone for good.

DVC payments were not that much more each year then what I was spending to go to stay 10 days at a moderate resort each year paying and having nothing but memories when the trip was over. My thinking was if I'm going to go anyway, which I was going to go each year with my young child. Why not put the money towards securing a resort room for future trips instead of renting a room at moderate each time. Financing DVC allowed me to continue vacationing each year during that "season of my child's youth" while also working towards owning a paid off contract with decades of future resort stays ahead.

I do not regret financing that first contract at all. The value in this membership is not only about the financial cost it takes to own it. It brings so much more to the table then just "cost".

Your financial aspects are very valid but do not take into account "priorities" in life, my priority was vacationing to Disney making memories every year and DVC has made that more possible then I would have ever imagined. For some families "financing may be the only way to make an experience like this happen in the "season of life they most value it".

 

[CastAStone]

4- I had to finance my first contract way back when I was young I knew I was going to vacation with my young child to Disney each year, there's no saving up for that by the time you do they have grown up and that "season of your life" is gone for good.

This is undoubtedly true but the question I have isn’t “should you take this vacation if you’ll accumulate some debt you can pay off” it’s “if you have to finance this purchase, is it still cheaper than just booking a trip the way most people do”

The answer might be yes today with how high savings rates are vis-a-vis the significantly-better-than-credit-card financing rates monera and palm financial are providing, but in many financial situations in the future the answer will be that one will spend less money by just finding Disney’s best hotel offer and booking the vacation with cash.

 

[atthebeachclub]

Fair points to be made, some considerations to your thoughts if I may please

#2- I never stayed at Deluxe resorts due to not being able to get past the price tag, once I joined DVC and that whole new world of Deluxe resort was opened for me it became clear DVC was a choice so many people if open to the idea could experience for close to the same price of moderate stays each year. DVC will elevate your vacation experience if you stay at values and moderates.

#4- I had to finance my first contract way back when I was young I knew I was going to vacation with my young child to Disney each year, there's no saving up for that by the time you do they have grown up and that "season of your life" is gone for good.

DVC payments were not that much more each year then what I was spending to go to stay 10 days at a moderate resort each year paying and having nothing but memories when the trip was over. My thinking was if I'm going to go anyway, which I was going to go each year with my young child. Why not put the money towards securing a resort room for future trips instead of renting a room at moderate each time. Financing DVC allowed me to continue vacationing each year during that "season of my child's youth" while also working towards owning a paid off contract with decades of future resort stays ahead.

I do not regret financing that first contract at all. The value in this membership is not only about the financial cost it takes to own it. It brings so much more to the table then just "cost".

Your financial aspects are very valid but do not take into account "priorities" in life, my priority was vacationing to Disney making memories every year and DVC has made that more possible then I would have ever imagined. For some families "financing may be the only way to make an experience like this happen in the "season of life they most value it".

Thank you for sharing this. I honestly would never have thought of it this way. I am a very debt averse person. Probably to my detriment; even my main home doesn’t have a mortgage. But your reasoning makes sense.

 

[Brian Noble]

You have to account for what you in fact would have done with the money otherwise.

Pet peeve, but: This is why I wish MouseSavers did not use the phrase "opportunity cost", because this is not what it means. A better term would have been "the time-value of money" or something similar--anything that captures the idea that $1 today almost certainly buys more than $1 does ten years from now.

You can still argue over how much less that future-$1 buys, but it buys less, and how much less it buys has nothing to do with what you do with the today-$1. If it doesn't, and we are in a deflationary economy, we have much bigger problems than what our DVC contracts are worth.

 

[Brian Noble]

As an aside: Timeshare sales agents have, from time immemorial, made hay on the fact that very few people understand the time-value of money.

 

[CastAStone]

As an aside: Timeshare sales agents have, from time immemorial, made hay on the fact that very few people understand the time-value of money.

Well Brian if this vacation costs $10,000 now just imagine what it will cost in 2047. Or 2060! Why just 30 years ago you could come to Hawaii just using a few dozen Marlboro Miles plus $6.95 postage and handling and now look at it! Just imagine the future costs Brian. LOCK IT IN NOW BRIAN!

 

[Brian Noble]

"...and if you pay $40,000 now, and use it for 20 years, you'll only be paying $2,000 each year!"

 

[atthebeachclub]

"...and if you pay $40,000 now, and use it for 20 years, you'll only be paying $2,000 each year!"

Hmmm, why does this seem suspiciously like how certain large companies assess for “most cost effective” resale DVC resorts? lol.

 

[mgarbowski]

Pet peeve, but: This is why I wish MouseSavers did not use the phrase "opportunity cost", because this is not what it means. A better term would have been "the time-value of money" or something similar--anything that captures the idea that $1 today almost certainly buys more than $1 does ten years from now.

You can still argue over how much less that future-$1 buys, but it buys less, and how much less it buys has nothing to do with what you do with the today-$1. If it doesn't, and we are in a deflationary economy, we have much bigger problems than what our DVC contracts are worth.

I used the phrase "time value of money" in another part of my post and I do not see how it changes any of my points. In particular I think people should consider their individual expected rate of return after fees and taxes while engaging in the hotel vs DVC computations (and I should have added inflation, which is a partial TVOM counterweight), instead of a generic reference to the S&P, or T-bills, or whatever benchmark is commonly offered.

Also, I think opportunity cost remains one of several useful concepts for the thought exercise, because maybe instead of buying DVC this year your next preferred option would be to remodel your kitchen this year, or some other big purchase for about the same money at about the same time. Then you have no prepaid WDW lodgings and maybe take fewer vacations. But you have a new kitchen instead (which becomes less new over time). In that case the time value of money is a very different factor as it is when comparing saving the DVC purchase money and dues against annually paying cash for resort rooms over 10-20 years. There's also no formula I know of to compute the pleasure of a remodeled kitchen against DVC membership, so yes, you probably end up back to the TVOM calculus if you want to put a number on things (which is my tendency). But it's also always worth reminding there are non-Disney and non-travel options for both your time and money. Once you focus on hotel vs DVC you've (maybe unintentionally) blinkered your thought processes.

 

[Instagramhusband]

These responses are all gold.

I think I may be the only person that can say it definitively saves me money. My wife stays in WDW or surrounding areas roughly 20 nights a year. I go about a 1/3 to half of that with my son. She will take her mom, sister and niece, she will go with her girlfriends, and she will typically overspend on rooms/suites/etc. She is simply not rational in any way when it comes to Disney and she loves luxury accommodations.

The DVC pins her down to planning things out and using the points in the most judicious way. It also monopolizes our vacation time in a way that prevents the spontaneous costly trips from ever occurring.

 

[bakerworld]

Thread Drift:
For those with PTO issues, as a former HR assistant every year I removed employee time. Believe it or not, some didn't even notice. Seriously. Darn it.

 

[Genie+]

I didn’t think deeply in terms of breakeven. I focused on what rooms we were likely to want/get and at what costs. We took a good look at the advantages and disadvantages of different strategies. TVM also mattered. Opportunity cost varies on the individual circumstances but TVM exists in any case.

The math was important as was the enjoyment factor. If one room’s ok at $x, is it worth another 10 or 20% to get something you’ll enjoy more than that. How much will that bump in cost improve trips.

After thinking about that, we also realized some resorts offset that premium by giving higher odds to lower point stays, in the rooms we liked best. Trading into RIV, BLT, BWV, VGF, etc… odds are it will mostly be premium views at higher point costs. While premium view can be worth the extra points, some trips it doesn’t matter. The resort itself can matter more than the view. Plus not all standard views are equal - some resorts it might mean possibly parking lot or not good rooftop view, while other resorts like Poly and VGF standard is still a lovely resort view for the most part. If I love any of those resorts and would be happy and able to book standard view 50%+ of the time, my overall average point usage per trip may decrease. It is possible for that to offset much of the initial 10 or 20% resort cost premium.

We considered lowest costs and most satisfying together.

Also kept in mind what I call the Tale of SSR/BLT. When both resorts were in active sales some choose SSR with the idea if you already plan to try different resorts why not save 10-15% and buy SSR. We started looking into DVC 2017/2018 and some of the first discussions I came across were lament of buying SSR over BLT because the resale gap grew to 35% for years. This mattered for people thinking of changing to newer resorts. Looking back they realized they could’ve owned BLT, the resort they preferred, at a lower cost if they sold in those in those years. Will always involve speculation but the one thing I wanted to avoid was compromising to save a few bucks only to later find out it didn’t even really save any money.

 

[atthebeachclub]

Thread Drift:
For those with PTO issues, as a former HR assistant every year I removed employee time. Believe it or not, some didn't even notice. Seriously. Darn it.

Wait…you took their PTO time? Was that allowed??

I track mine in my budget app (shoutout to YNAB!) so I always know how much PTO I have and can crosscheck the number work tells me. At a certain point the number caps out and I have to sell it or use it or it won’t accumulate further. I haven’t reached that ever though.

 

[Chili327]

This is an under-valued aspect of owning a timeshare. Owning nudges you to take vacations, because they are use-it-or-lose-it. I am 100% sure that I spent more money on vacations by owning timeshares than I ever would have just paying as I go. That's because I've taken some vacations with timeshares that I would NEVER have taken otherwise.

This was one huge factor in my joining DVC, my business is open 7 days a week, & I have a hard time not being there. lol

Although I have degrees in both Economics and in Finance, sometimes a very simplistic view may help you decide. As most of the extensive analyses indicate, DVC probably makes sense if you:

1. Will go to WDW regularly (at least every other year) for the foreseeable future
2. Always stay on property in Deluxes
3. Can plan ahead (at least 7 months)
4. Are able to purchase points without financing

1, 3, and 4 work for me, but I stay at values, moderates, or off property so the decision is easy; DVC is not for me.

So you pay for moderates, but actually stay at moderates, that alone seems like a good reason to buy into DVC... Why not pay for moderates, & stay deluxe.

Fair points to be made, some considerations to your thoughts if I may please

#2- I never stayed at Deluxe resorts due to not being able to get past the price tag, once I joined DVC and that whole new world of Deluxe resort was opened for me it became clear DVC was a choice so many people if open to the idea could experience for close to the same price of moderate stays each year. DVC will elevate your vacation experience if you stay at values and moderates.

#4- I had to finance my first contract way back when I was young I knew I was going to vacation with my young child to Disney each year, there's no saving up for that by the time you do they have grown up and that "season of your life" is gone for good.

DVC payments were not that much more each year then what I was spending to go to stay 10 days at a moderate resort each year paying and having nothing but memories when the trip was over. My thinking was if I'm going to go anyway, which I was going to go each year with my young child. Why not put the money towards securing a resort room for future trips instead of renting a room at moderate each time. Financing DVC allowed me to continue vacationing each year during that "season of my child's youth" while also working towards owning a paid off contract with decades of future resort stays ahead.

I do not regret financing that first contract at all. The value in this membership is not only about the financial cost it takes to own it. It brings so much more to the table then just "cost".

Your financial aspects are very valid but do not take into account "priorities" in life, my priority was vacationing to Disney making memories every year and DVC has made that more possible then I would have ever imagined. For some families "financing may be the only way to make an experience like this happen in the "season of life they most value it".

So much "This is the Way" here.!!

Also, just for info-sake, I finance all of mine now, just because its so easy & I usually pay it off within 6 months so the actual interest paid is pretty minimal. (and I have more money in my bank incase anything comes up that its needed)

 

[Unclelude]

Team "Forced vacation".

A number of years ago we were part of a (gifted) 'once in a lifetime' extended family Disney trip during Xmas. Unbelievably great time. Lifelong memories.

We spent lots of time doing the dollar analysis. I could never pay the nightly rate. ever. But those memories are priceless. For us we realize ( especially as we got older ) time is our most valuable currency... The $$ exchange for time with loved ones is 'priceless'.

Since then we've made lots of new memories. And as @Brian Noble suggested... we love our Toy.

Good Luck! Have fun!

PS ... it's still fun to go nuts optimizing the $$ on contracts, stays etc.

 

[Jack Kerouac]

Here's our personal experience (and likely not able to be replicated in the current resale market): We bought PVB resale in late 2022 ($149/pp with 162 banked points we didn't know existed at the time) and stayed 22 nights in deluxe resorts across DSs, 1BRs, and 2BRs between 2023 and 2024. After we sold the contract for a profit in May 2024 (even after including the 8% comp), our total cost (dues minus the profit) was less than $3,000 for those 22 nights.

 

[Chili327]

Here's our personal experience (and likelyl not able to be replicated in the current resale market): We bought PVB resale in late 2022 ($149/pp with 162 banked points we didn't know existed at the time) and stayed 22 nights in deluxe resorts across DSs, 1BRs, and 2BRs between 2023 and 2024. After we sold the contract for a profit in May 2024 (even after including the 8% comp), our total cost (dues minus the profit) was less than $3,000 for those 22 nights.

I love to see these types of stories. That's an average of $136.36 per night... and that including Studios up to 2 Bdrms!!