DVC-How did you finance

[DisFlan]

Speaking of financing (or not).... We've discussed how to pay for the initial DVC purchase on this thread, but it would be interesting to hear if people have clever ways to handle other WDW expenses.

I'm exploring ways to creatively invest, save, or whatever to handle our dues and, primarily, park tickets (for 6). Airfare isn't as much of a concern as we rack up miles at an alarming rate thanks to my husband's travel schedule for work. My goal is for our WDW vacations to be completely self-sustaining.

I had considered the Disney Visa, but at only 1%, I would have to charge $80,000 to pay our dues next year!

Good question! We're always working on this. Even with DVC, trips can be on the expensive side. We don't have that many FFM for flight tickets, so we have to search out the best fares. We offset some of the trip costs and dues with investments, but "self-sustaining" would be great!

DisFlan

 

[psu4glory]

Home equity for a luxury purchase???? Sounds like a ticket to the poor house. Hold off the purchase until you can pay cash. If you can't pay cash for the buy in, you cannot afford it. Not a popular stance on here but it is the truth. WDW trips are not cheap even with the paid for lodging. Do yourself a favor and wait. If you really want to buy in you'll find a way to save the money. If not you'll be glad you didn't buy in.


DAVE

i know that the more posts i read from folks like this, the less surprised - and appalled - i should be.....yet, i find that's not the case. certainly these boards are open to the opinions of all. and the OP did nothing less than ask for our advice on the subject. frankly, it's awesome to have a place like this forum to go to for this kind of "wisdom".

however....posts like this are - for lack of better words - unnecessary and uncalled for. this is NOT an opinion. neither is it advice. this is one person blanketly passing judgment on others, based on WHAT? do you know the OP personally? do you KNOW that they can't afford it? i'm fairly certain that you don't know ME.....and i didn't pay cash for my buy in.....but lo-and-behold, i've had no problems "affording" it. your definition of being able to afford something is not always going to be the same as someone else's. in fact....after reading the 100 posts or so in this thread, and adding to that what i know about the lifestyles of pretty much everyone else i know....your definition of being able to afford something is hardly EVER going to be the same as everyone else's.

to be honest with you, i "did MYSELF a favor" when i financed DVC and gave me and my DW the opportunity to enjoy what it has to offer. i would bet that nearly everyone that has financed would say the same. in my mind, i would have been doing nobody a favor by waiting.

i realize that we're all just speaking our minds here. but in my opinion, the boards could do without the 'holier than thou', judgmental attitudes that show up here from time to time.

 

[newfamilyman]

in my opinion, the boards could do without the 'holier than thou', judgmental attitudes that show up here from time to time.

Here, here, though that particular post didn't offend me. It's the ones that make liberal use of the word "should" which I find the most vexing, and this particular thread has produced at least one such post.

 

[DisFlan]

In my case, both my wife and I have pensions through our employer. I had planned to use my 457 for luxury uses, assuming that our pensions would cover the "basics." For us, I think it makes sense, but if I didn't have a pension, I would agree that borrowing from a vital source of retirement income would be risky.

Sounds like we're in about the same boat as you. We have the federal TSP (the 401k for fed employees) plus pension. We swore that we would NOT touch the TSP prior to retirement except for the most dire of reasons. None of us knows what we'll be needing in 20 years. SS is looking a little dicey right now, people are living longer, health status can change and retirement won't be cheap. We may need every cent of that savings.

DisFlan

 

[Disneyrsh]

I could not justify the cost of buying DVC if I had to pay interest to someone else, so I borrowed it from myself, through my 457 (the government employee's version of a 401(k)). While I will have to reduce my pre-tax contributions (and employer match) while I am paying the loan back, which will likely also increase my income taxes somewhat, I still think I come out better than paying interest to somebody else. We enjoy taking vacations, and I guess I like the idea of using money that I had contributed to my 457 prior to having children, when I could afford to max out, to use for the larger family, now that we have children.

While I'm itching to comment in an unrestrained fashion on this whole college eduction issue, I think I will just say that I'm uncomfortable with people on this board making others feel guilty or bad about how they are budgeting their money. I guess a depression era-mentality would suggest that everything be saved before any luxuries like DVC be purchased, but there are so many variables that every individual family has to consider.

Well, I feel *very* uncomfortable with the idea of borrowing against my retirement, but I don't blame that on you. You shouldn't say that the people who are paying cash are *making* you feel uncomfortable, I think you just feel uncomfortable with your decision, and are resentful of those who have chosen other paths.

It's like the people in the standby line giving dirty looks to the people zooming past in the fastpass lane. What?! It's not like I kept you from getting the fastpass 40 minutes ago and I put you in this lane, so why are you so mad?

 

[evaready51]

We used Disney Finance for a 1.5 years and this past Nov we refinanced with a home equity loan.

 

[newfamilyman]

You shouldn't say that the people who are paying cash are *making* you feel uncomfortable, I think you just feel uncomfortable with your decision, and are resentful of those who have chosen other paths.

It's a good thing that I'm the psychologist, not you! You have obviously misunderstood my point. I am not at all uncomfortable with people who pay cash for the memberships; more power to them. What I don't like are people who believe that their method is the only right one and that others who go about it a different way are somehow in the wrong. With your post, though, I will add that I also am uncomfortable with people making false attributions about my statements; in my field, we call that projection. Sorry, projection overruled! Perhaps you could do all of us a favor and restrict your use of the words "should" and "shouldn't" to your children...

 

[shantay1008]

You know, I'm almost regretting sharing that very personal story about adoption with y'all. I thought it might help some people understand that while the head is certainly important, the heart sometimes has its reasons, too. But some people just want to argue.

 

[Disneyrsh]

No, Shantay, I think you're right about following your heart, but you also seemed to work out all your numbers so you *could* follow your heart!

I thought it was a wonderful story .

I don't get what all the resentment's about, though with the other posters, and I think taking on an inordinate amount of debt when you're a parent puts your kids at risk, but neither of those issues apply to your family.

I also find all the psychiatry stuff *immensely* entertaining.

 

[drakethib]

We just stumbled upon the information about DVC, and it seems like it might be a viable option for us sometime in the future. My question is, what is the best way to finance it? Did anyone use home equity, home line of credit, Disney finance? At what rate? Although we won't be doing it immediately we were toying with the idea of looking around SSR and BWV on our trip in Aug, just to check them out before we consider buying into them.

Also, are the fees paid yearly or monthly?

The only right answer is to research it and pay the way the best suits your family needs.

We were lucky enough to be able to pay cash for ours (I came into a little money at the time). The wife and I had talked about DVC years earlier and I was just not comfortable paying a note on a timeshare. (I am also the guy who doesn't believe it makes good sense to put 20% down on a house. http://www.disboards.com/showthread.php?t=1026604 )

With that being said I also know some people who make very good livings (300K + per year) and financed DVC.

Again, while I would be scared to finance something like DVC, I won't say it is a bad idea for everyone.

 

[2giddy4wdw]

After reading this whole post I am surprised at people who are so closed minded. Like others have posted this is all our opinions. Some definately get their opinions out there and just don't care how it sounds. When DH and I decided to buy into DVC, we looked at all different options. DH gets a large bonus at the end of every year, we have a moderate savings. Although we did decide to finance our DVC, I know that it was best for us. DH work tends to slump in the winter months and having the extra cash in our savings helps us, IF we need it. I know that we will have this paid for before the end of our loan. But to the posters who said you shouldn't buy if you don't have cash is just harsh. Not everyone has that kind of money laying around. And not all of us have a husband who went through medical school. But if you know that you can handle the payments that you have set up for you DVC, I say go for it. I know that we were spending a lot more for a vacation at Disney, then I am paying in monthly payments now. We look at it as a pre paid vacation.

For the person who posted, that he would rather make the memories with his son now and for the wonderful post about adopting your daughter, that's what Disney is all about. Making the most wonderful memories possible with your loved ones now. With our family we needed a bigger place to stay since our kids (boy, girl) couldn't sleep together. DVC was a great option for us. On our first trip home we got a 2br at SSR. There were 8 of us: me, DH, DS17, DD11, DDbest friend13, MIL, FIL, and SIL. My in laws had never been to Disney. They had the time of their lives. And now are talking about a family reunion with DH whole family. I am thankful for all of my disney vacation with my kids. DS is off in college now and can't come with us, but I have the best memories of our trips. I also know that by having DVC, we will have many more memories in the future.

As with any big purchase, you need to decide for yourself what is most important and if you can afford it if something were to change in your income. We chose what was best for us and no one else can tell us we were wrong in our decision.

And to those of you who felt "uncomfortable" about the people who posted that you shouldn't buy if you don't have the cash, don't let them bother you. It's their way of making themselves feel better that they have that kind of cash.

 

[sajetto]

Well, for some it makes no sense not to finance. I have more than enough money to buy into DVC with cash and have plently left over. However, all that money is in my trade account with an extremely high interest rate of 11% and has been at that percentage for quite some time. I would be an idiot to take any of that money out of the account b/c my money makes money

The interest that I will pay on my DVC is $2,000 and that is nothing compared to the money I would loose out by taking the lump sum to pay the entire DVC off.

 

[Lisa F]

We looked at it from a "what would we pay anyway for vacations" vs "what would it cost us to finance" point of view. We initially bought 170 points, enough for our usual 2 weeks the first two weeks of January trip in a studio. Before DVC we always stayed in an AP rate Deluxe. At the time the numbers worked out something like this:

$169/night in a BWI room * 14 nights + 11% tax = $2626 per year on accommodations. Our yearly payment for financing those 170 points is $1512. At the time dues were $4.02/point so we paid another $683 in dues, for a total of $2195/year in payments toward DVC. The way we looked at it, we were saving over $400/year over what we would have been paying for vacations anyway and then after 10 years our costs drop WAY down to the cost of just dues. This formula doesn't take into account the interest deduction we get on our taxes every year, which is always another few hundred dollars.

This year we are paying $2310 for those same points because, of course, dues go up. This year if we wanted to do two weeks in a value season deluxe accommodation the best AP discount was $96 off rack rates, which look like they are $305. So that's $209/night in a BWI room * 14 nights + 11.5% tax (has it gone up? I always remembered 11%) or $3262. The difference between what we are paying for financing DVC vs. what we would pay for the same vacation straight up is nearly $1000. That's IF we can get AP rates and from what I am reading it's not always a given.

In just 3 more years we will be able to take vacations for the cost of dues. Assuming that dues rise at a rate of about 10%/year (which is higher than the average but only a little higher than the amount they went up from last year to this year) for the next 3 years, our 2 weeks in a studio in early January will cost us $1061. Assuming Disney's AP rate rooms don't go up in the next 3 years (not likely but possible) we will be saving $2200 by using DVC.

So there you have it. We are obviously financial morons for financing our DVC.

Just as a disclaimer, our vacation patterns have not really stayed the same since we bought into DVC. What has stayed the virtually the same was a yearly cost for accomodations... and at the end of that 10 year finance period, we will be paying less than half that for dues alone.

Whether we stick $200/month in a savings account for a year and then pay disney cash for rooms or whether we pay $200/month to DVC for our financed points plus dues, it's pretty much the same from our point of view... the only difference is that at the end of paying $200/month in cash for accommodations, all we will have to show for it are much higher cash prices. At the end of 10 years financing DVC, our accommodations will suddenly cost us much less (dues alone). That 10 years is just flying by.

 

[TreesyB]

I think to some, debt is a dirty word. To others, debt is the cost of living. I guess when you make your decision, you just have to decide which one you are.

However, I really don't think anybody should finance if the money need to be used for necessities such as food, clothing, shelter. A person must look at what they are financially comfortable with.

 

[DisFlan]

Well, flash forward to the present day. We had an awesome trip to China to pick up our little girl, who is an absolute delight. We took the kids and my parents, who helped us tremendously through the process, to WDW in Feb. and we had an incredible time. My mom and I stood there with tears streaming down our faces watching "Cinderellabrations," still amazed that this little girl was at Disney World, for goodness sake, instead of sitting in an orphanage. An official Disney princess, just like her older sister.

I'm glad you shared this. My sis and her DH have TWO little girls from China. They were one of the reasons we bought DVC. We shared WDW with our older niece in 2004 and we'll be going back with both girls next year. The look of joy on my niece's face while watching Spectromagic and meeting Pooh was amazing. I felt so blessed standing there holding her trusting little hand, knowing that a little more than a year before she'd been in an orphanage a world away. I had to explain to her that the tears in my eyes were "happy tears". I can hardly wait to spoil both of our little Princesses at WDW next year. Congratulations on your expanded family!

DisFlan

 

[shantay1008]

I'm glad you shared this. My sis and her DH have TWO little girls from China. They were one of the reasons we bought DVC. We shared WDW with our older niece in 2004 and we'll be going back with both girls next year. The look of joy on my niece's face while watching Spectromagic and meeting Pooh was amazing. I felt so blessed standing there holding her trusting little hand, knowing that a little more than a year before she'd been in an orphanage a world away. I had to explain to her that the tears in my eyes were "happy tears". I can hardly wait to spoil both of our little Princesses at WDW next year. Congratulations on your expanded family!

DisFlan

Oh, wow, that is so wonderful! You've got me sniffling here. People always say our daughter is lucky, but we're the lucky ones, aren't we? I'm so glad you had that experience with your niece, and that you'll get to have many more in the years to come.

 

[Jen D]

shantay and DisFlan, thanks for sharing your stories!

 

[shantay1008]

shantay and DisFlan, thanks for sharing your stories!

It was nice to get to tell this story to a group of people who totally get the Disney thing. I've actually never told anyone about the adoption/DVC connection because, well, either I didn't think they'd understand or else I thought it might come across as bragging or something. So I'm so glad to have found a group who totally get how the thought of WDW could help someone get through the adoption process!

 

[3DisneyNUTS]

we charged it to our amex for the rewards points then transferred it to a 0% card and paid off the balance with no interest YAY!

 

[3DisneyNUTS]

Here is my thinking...... If you can "afford DVC" then why can't you pay cash? If you aren't saving or have no savings to speak of then you have no business buying into a timeshare. I use this term all the time, it is a luxury purchase. It should only be for those with disposable income. Also paying cash for things really helps you decide what is important. It is far to easy to just make another bill. You'll really know you want it when you hand over a check to DVC for $30,000. Wait everyone until you've saved the money, believe me it will be far more satisfying that way than paying thousands of dollars in interest for a non neccesity.


DAVE

We had the cash but why not get reward points and still earn interest on the cash in the bank while paying 0 interest on the card offer we had? Our AMex gave us 2 free rental cars for our first 2 trips (from that purchase and was a value of $400)and our Discover card had 0% on transfers till paid off. We let our cash sit in the bank and collect interest while paying the 0% off each month. So I don't see a need to pay cash upfront when there are options for 0% interest.