Financing DVC's...Good/Bad???

[psu4glory]

I agree, tons of people have $20,00 "laying around". The ones who don't are the ones who shouldn't be buying a timeshare. Don't kid yourselves folks into believing financing is the way to go. If you must finance it you cannot afford it.

i wasn't aware that this was the thread for free financial consulting...but i sure am glad that i didn't listen to advice like this when deciding whether or not WE were going to buy into DVC.

to say that those who don't have $20,000 "laying around" shouldn't be buying into DVC is at best, ignorant and at worst, condescending. i whole-heartedly agree with the posters that have said that EVERYONE has the right to take a vacation when and where they please - and each person/family must examine their own situation to determine if financing is a viable option for them.

the best - and really, the only - advice that anyone here can give on this topic is for each person to carefully weigh all options before making a decision, and to ultimately do what's best for them and their family. beyond that, all we can do is offer up our own experiences as examples...

 

[crisi]

i wasn't aware that this was the thread for free financial consulting...but i sure am glad that i didn't listen to advice like this when deciding whether or not WE were going to buy into DVC.
.

You are funny. There have been few threads on the DVC portion of the DIS boards that are clearer in their request for free financial advice. Financing DVCs...Good/Bad? You may not agree with the advice (or the tone), but this is the thread for it.

 

[Cruelladeville]

This is true, and if I took $20,000 out of the bank to finance my DVC purchase, I would no longer HAVE an emergency fund to fall back on, now, would I? I say, finance your purchase. If you normally save most of the year to pay for next year's vacation, you have enough disposable income to pay DVC off in about 3 years, or less. I financed all my contracts for 10 years, and then paid them off in 3 years or less, which gave me flexibility to pay for my transmission if it fell out of my car, and still not touch my savings.

I can't understand emptying out your savings to pay for DVC because you are being very careful, meanwhile you have no cash on-hand for any emerency that should arise. You are walking a tightrope if you don't leave a sufficient cushion in your bank account.

 

[qgallo]

If you can afford the payments, then by all means go for it. If I had $20000 lying around the house I would not be stupid enough to put it into a timeshare. You could invest that much money and make enough to pay at least half of you payments to DVC. And trying to save that much, yeah right. I want my kids to enjoy this now. They are only young once. If I did try saving then I guess our vacations now would be at a motel 6 off I-40. I dont think so. Sounds like some people think maybe only the rich should be going and buying into Disney. Oh well for those of you who feel this way I hope that your Mercedes breaks down, I will be sure to blow the horn as I pass by in my VW.

 

[Anewman]

Anyone that can not afford to pay off a CAR in full without financing, should not buy one. They simply cannot afford it.

Of course this BLANKET statement has no knowledge of anything attached to it, just my own sarcastic opinion.

 

[Mommo]

I want my kids to enjoy this now.[/QUOTE]
Who doesn't? We want the kids to enjoy life and a big part of that is learning to live within your means. Will they be happy making $60k a year if they are spending $65k? Will they wish we had taken more vacations when they don't start out with any debt at college graduation?
Choices, choices.
Just want to be sure I'm choosing what I really want.

Beth

 

[Olaf]

Everyone comes at it with a different set of circumstances. We financed a portion of the payment because we didn't want to liquidate investments. Paid it off in three years. Yes, we paid some interest, but we also got some of that back in our taxes. We don't like to liquidate investments. It may not make the most sense when you compare the bottom lines, but odds are we wouldn't have used the loan payoff money (over three years) for investments anyway. Should we have, probably. But we're not the most disciplined of investors.

 

[browniemtb]

Wheres the love....we are all DVC family here. It all boils down to this. Crunch the numbers at home to see what your monthly payment would be for your point purchase with dues. Now if your barely going to be able to pay this you may think twice about joining. But if its confortable and you still have extra money to through at the debt then do it. I financed...payments for me are comfortable and I also have the means to pay it off with 3 years. But instead of emptying my bank account I like to finance things to see where I'm going as long as the interest rates aren't killer. Its always nicer to use some one elses money...but there is a cost associated with it. I really enjoyed the comment about the car. How many here actually go to a dealer and pay cash for a car....isn't a car sort of a luxery? There is public transportation in most communities.
This is an investment in your kids and your own mental wellness.....they will remember this to the day the put us in the ground. Thats what its all about.
I love my kids and I look forward to each and every year that I step off that plane and see there little faces glow. I'd take an extra job just for that.......

Brownie

 

[Frankiesmom]

We are buying in today! We did all the researching etc;and we will be financing.We have 4 kids 17-off to premed in the fall,13,4,and1. We have been to disney 4 times in under 2 years-This made better sense for us financially-our vacations were always at Deluxes-conceirge level and for us this will be a savings.This promo is to good to pass up.We are both not al all worried about our jobs-we are both nurses and will always have job security;everyone is getting older and we have a larger nursing home population that will continue to need care. Instead of using our tax returns for vacations we can now put them toward DVC and have it paid off sooner. My children love Disney and everything about it! We will be getting so much more out of DVC than it will be getting out of us-that's how I'm looking at it. My kids smiles make all of it worth it-especially for a child with an austistic disorder;0ur 4 yr. old-it's the place where he is the happiest. Just my 2 cents. All of you have been just wonderful on these boards-Thanks for all the advice and the explanations! Angel

 

[crisi]

This is true, and if I took $20,000 out of the bank to finance my DVC purchase, I would no longer HAVE an emergency fund to fall back on, now, would I? I say, finance your purchase. If you normally save most of the year to pay for next year's vacation, you have enough disposable income to pay DVC off in about 3 years, or less. I financed all my contracts for 10 years, and then paid them off in 3 years or less, which gave me flexibility to pay for my transmission if it fell out of my car, and still not touch my savings.

I can't understand emptying out your savings to pay for DVC because you are being very careful, meanwhile you have no cash on-hand for any emerency that should arise. You are walking a tightrope if you don't leave a sufficient cushion in your bank account.

I think if you have a sufficient emergency fund, financing comes under "moving cash flow" for me. You'll be able to make your payments even in a financial crisis. And in that case, I'd finance, too, rather than emptying out my savings - especially in a case like yours where cash flow was sufficient to pay it off in a small timeframe (I did the same, only mine was three weeks or something rather than three years - could an emergency have cropped up in three weeks that would have had me regretting it - yep. But the risk over a short time frame with savings is much less than the risk over a long time from with little or no savings).

The cases that make my tummy tighten are the cases where someone was just over on the budget board - and I know enough about their finances to know there isn't an emergency fund. I know enough about their finances to know they are wondering how to cut their grocery bill to afford their next trip. And then they show up over here within a week wondering about DVC.

 

[crisi]

If you can afford the payments, then by all means go for it. If I had $20000 lying around the house I would not be stupid enough to put it into a timeshare. You could invest that much money and make enough to pay at least half of you payments to DVC. And trying to save that much, yeah right. I want my kids to enjoy this now. They are only young once. If I did try saving then I guess our vacations now would be at a motel 6 off I-40. I dont think so. Sounds like some people think maybe only the rich should be going and buying into Disney. Oh well for those of you who feel this way I hope that your Mercedes breaks down, I will be sure to blow the horn as I pass by in my VW.

My investments have made 6-8% over the past few years on average (but I'm a conservative investor). DVC financing is approximately 9%. And then there are $1000 or so in dues on 200 points. How do you make money on a negative 1-3% interest delta, plus the dues?

I don't think only the rich should go. But, I don't think its wise for most people (and yes, circumstances are different) to commit yourself to giving someone else money you don't have yet. I happen to know a lot of pretty average people who have money set aside. Have you ever read "The Millionare Next Door?" Not a great book, but it does say "the guy next to you may have a lot more money than you think - and he has it because he hasn't spent it and when he has spent it, he's spent it wisely."

I drive a VW. So does my husband. His is almost ten years old now. Mine's only two. We financed them because you can get such a great deal on car financing (the interest differential works there).

 

[browniemtb]

I don't think only the rich should go. But, I don't think its wise for most people (and yes, circumstances are different) to commit yourself to giving someone else money you don't have yet. I happen to know a lot of pretty average people who have money set aside. Have you ever read "The Millionare Next Door?" Not a great book, but it does say "the guy next to you may have a lot more money than you think - and he has it because he hasn't spent it and when he has spent it, he's spent it wisely."

I do agree that everyones circumstances are different. Also I have one of those millionaire next door people you speek of. He wakes up every morning by himself...no kids...no spouse....he's not a nice person, to money oriented to have anybody else spend his money. I'd rather have less money and great wife and be able to watch my kids really enjoy themselves at WDW. Money isn't everything...investing in you family makes for a happy life...not a big bank account.
Brownie

 

[Rence]

Different folks handle the finances differently. There are lots of different ways as to looking at whether in the long run you are better off to finance now or save up.

There have been some posts that have bothered me in the past, but I know that on topics of someone else's finances it is best to keep ones mouth shut. But it sure is hard when you see a post similar to:

"We just declared bankruptcy for the second time and cash is really really tight. We're only going to be able to put two percent down, will DVC have a problem with this?. If I buy now when will the payments start? because we won't have any extra cash until we at least October. I'm thinking of 1500 points, or will 1200 be enough, we like to take 17 trips a year now that we're both unemployed"

 

[crisi]

I do agree that everyones circumstances are different. Also I have one of those millionaire next door people you speek of. He wakes up every morning by himself...no kids...no spouse....he's not a nice person, to money oriented to have anybody else spend his money. I'd rather have less money and great wife and be able to watch my kids really enjoy themselves at WDW. Money isn't everything...investing in you family makes for a happy life...not a big bank account.
Brownie

I agree, but I want both - a great life and financial security. And I don't think you need to choose, if you choose wisely on how you are going to get there.

I know a few people who fit the "Millionaire Next Door" profile too - but the people I know are nice people. And they have families. And many of them have taken their kids to WDW. What they don't do is live in the biggest house they can afford, drive Mercedes, and take frequent and expensive trips to WDW

One of my friends who has a very nice family, savings, a stay at home wife, and a moderate income did just take his family to Austrailia - they do own the ugliest furniture bought secondhand! And his wife can stretch a dollar farther than anyone I've met - I don't know if she has ever paid full price for anything. The type of person that if you say "nice shoes" she says "aren't they great, I got them at some outlet store out of a bin for $2!" Another friend who has a lot of savings, a normal job, a stay at home wife and two kids just brought his family back from Cancun - but it was the first "big" vacation they'd taken in three or four years - and both their cars are old. Neither of these people are millionares, but neither are cheating their families to save either.

I love taking my kids to Disney, but honestly, they don't care that much if we stay in a DVC unit or if we'd stay offsite - they are there for the attractions and the characters. And they enjoyed a weekend we recently spent in Des Moines - the hotel had a pool and they had hot and cold running movies and video games, and cousins. We went camping last year, and - except for the bugs and the latrine - they thought that was pretty cool.

 

[crisi]

"We just declared bankruptcy for the second time and cash is really really tight. We're only going to be able to put two percent down, will DVC have a problem with this?. If I buy now when will the payments start? because we won't have any extra cash until we at least October. I'm thinking of 1500 points, or will 1200 be enough, we like to take 17 trips a year now that we're both unemployed"

Yep! That is it! You remember some of the people I remember.

And I have no idea what the OPs situation is. Perhaps she has ample savings. Good cash flow. A job as a nurse (nice security there, btw - I wouldn't worry about that one either). A mutual fund that's been returning 30% a year. No need to save for retirement because everyone drops dead of heart disease in her family at 50 (I have a friend like that - if he follows family history, he'll have made a good decision). A high tolerance for risk.

 

[browniemtb]

Crisi....................

Well said!

Brownie

 

[Groucho]

I'd much rather be the "happy guy next door" than the "millionaire next door who spends all his time researching mutual finds, owns cheap stuff, and better not drop dead at 45 otherwise it's all a waste".

What's right for one isn't right for all. If you're happy managing financial stuff all day, fine. If you'd rather spend the time researching WDW, fine. Ultimately, it's all about what you're comfortable with.

More importantly, if you crunch the numbers, you'll find that you'll save money by financing during the current promotion than you would by waiting a few years then paying cash or financing for half the time - possibly by a significant amount. That's the reason that I'm waiting for a call back from my DVC guide to buy in now despite car payments - I can comfortably swing the 10-year payments for a couple years then will be free of a car payment and should be able to pay off the DVC in under five - for probably thousands less than waiting, thanks to the ability to rent points for the first couple years.

Besides, it's real estate and tax-wise, it's not so bad to have real estate financed. And if you're able to pay cash for your house, and your cars, and your DVC - well, bully bully for you. But it doesn't mean that you're necessarily making better decisions than the next guy.

 

[Hibernians]

We recently purchased and financed it with no regrets. The 15% discount is a great window of opportunity to get in. Also with the financing we were able to set up our annual maintenance fees to be billed on a monthly basis forever - meaning after we have payed off the mrtgage, we will still be paying the maintenance fee on a monthly basis (interest free) - this will become a big benefit years from now when the fees increase.
I have never thought of DVC as an investment; its more like hedging your cash against the costs of future vacations with the realization that you are deliberately choosing to stay in very, very nice accomodations at one the most fantastic places on earth.

 

[Olaf]

... we will still be paying the maintenance fee on a monthly basis (interest free) - this will become a big benefit years from now when the fees increase.

Sorry to be so dense, but I don't understand what you mean here. What will be a big benefit?