How did YOU finance DVC?

[logan115]

I'm another one "on the fence" about buying in. We've gone the last 2 years and rented ressies and it's been a huge savings over what we would've paid otherwise (or for the same money we would've been in a value or moderate for the same money that we paid for a 1 BR at BCV and our studio at SSR). I keep doing the math and it all boils down to how often are you planning on going. For us, DW, DS-5, DD-2months and me I see us going at least every other year for the next 10 years. To state the obvious going to WDW ain't cheap when you factor in airfare for 4 from Chicago, park tickets, food, and a room. Each of our previous trips have been about $5K when it's all said and done.

The one thing that I've seen left out of most of the analysis done on whether to buy or not is the resale value. Most people do the math assuming you'll own this until expiration (2042 or later). The way I see it is I buy a 75-80 pt resale contact, and I pay $100/pt upfront (or finance it). If my first trip is next year and I have banked my 09 points, I will have paid 2 yrs of dues (roughly $800 assuming 80 pts and $5 dues), otherwise I would have paid $1500 if I rented a ressie (savings of $700), or closer to $2500 (at least) going straight thru Disney. Now if I can recoup $700 per trip, and I take 5 trips making back just under 1/2 my investment I'm in good shape. If I decide in 5 years that it's not for me I can sell (albeit at a loss) and get back some of my money.

I figure that by not going this year, I'm saving $5K which will cover most of what I'd spend on owning DVC. Perhaps not the most intelligent view, but to a certain extent it's a reality. You work to make money to provide for yourself and family, and be able to do the things you really love doing. If for $8K (which will not cause any major financial hardships on us) I can own my own little piece of Disney and I HAVE to go there every other year, oh well..........

Not sure what I'll end up doing, and I would suggest you continue to solicit the advice here because you'll get every possible angle. But remember this is a decision that YOU need to make, take in all of the information you get and decide if it's really for you.

Good luck - perhaps we'll both be flipping a coin on the same day making the decision

Chris

To add to the above, another way to look at it is assuming you can afford it now (whether that means you pay it off completely or finance a part of it), each trip you make should save you "some" money which lowers your cost basis. If I recoup $5 pt for each trip I make, that helps give me some cushion should I want/need to sell in 5-10 years. This should help offset some of the decline in resale values (since it's an expiring asset all other things being equal prices should naturally decline in the future).

Again, DVC is not really a wealth builder or equity creator, but at the same time it's not as if you're completely throwing money away.

Good luck on your decision,

Chris

 

[nunzia]

Although no one NEEDS it..to me it is peace of mind about future vacation travel. You don't want to know what I spent (just on rooms since that is the fair comparison) to take my adult kids and their kids to DLR last May and stay at the Grand Californian. And it was a nice chunk of money for the trip we're doing now( leaving today!) got a pin offer for a discount which is nice..but..this is long term and pins and low rates may not always be there. Also, the rack rate will go up so that will also dilute those imaginary future deals. What I know about DVC is I have a paid for room with only yearly expenses of MF. Some people choose a big screen TV as a splurge, some choose to go very frugal and ride a bicylce and not own a car. This is no different..it's a choice each family has to make as to if it is right for them.
That said...I paid cash for my small OKW resale and should be able to have cash for one of my VGC add ons, but will need to finance one. I don't like putting a line of credit on my house..just me..so will go through Disney and pay it off as quickly as possible.

 

[december14disney]

It's a personal choice that only you can make!

We financed, still make payments however, my kids get to enjoy vacations every year, sometimes 2-3 times. We may pay off a little early...nothing to write home about.

Family memories are worth some interest $$$$ to me.

I love this. Sometimes people need to look in the mirror and say "I only live once is this how I want to live?" So you end your life with no debt, a huge savings that you cant take with you, and no memories to pass on to friends and family that should have spent good times with you! Needless to say we paid part on my Disney visa which we paid off right away to get "points" and financed a little. We didnt even bat an eye at financing a part. We are young, in our twenties and have so long to take friends, family and soon kids that it was like...why not!" I think our monthly payment WITH dues is like 100 bucks. I spend that in Starbucks. Not to be but do what you feel is right in your heart. No one here or anywhere else can tell you what is best for your family.

 

[DeblovesPoohbear]

We are planning on purchasing at the end of this year. We are saving our $$ so we can make the biggest down payment possible.
Will we still have to finance some? Probably, but I could care less.
We have no credit card dept whatsoever and I also will not tap into my home credit to make that purchase.
Sorry, but I don't agree with those that say you shouldn't purchase if you have to finance. Everyone is different.
So, in the end, we will make a large down payment and then pay it off in about 3-5 years. Good luck with your decision

 

[CarolMN]

I agree with Dave - IMHO, there are lots and lots of contracts for sale right now because people chose to finance and then their circumstances changed. We may think our jobs or investments are secure, but we may also be very wrong.

DVC is definitely a luxury, one that includes a commitment to regular vacations and annual maintenance costs. DVC covers only lodging, not transportation, not park admission, not food and not souvenirs.

A competent financial adviser will tell you that luxuries should come from discretionary income. If a person isn't on track for retirement, doesn't have 6-8 months' worth of expenses in an emergency fund (average time it takes to find a new job in this economy), doesn't have adequate life, disability and health insurance, etc. then taking on debt to finance a luxury is a poor decision.

The above may not be a popular opinion and it's OK with me if others do not agree with it.

 

[Sandisw]

My husband and I decided when our children were little that a yearly family vacation was something we were not willing to compromise on. We have been fortunate enough to have between $5,000 - $7,000 per year to put into our vacation fund. Most years, our vacations were spent at Disney in deluxe accomodations for my family of 5. My children, now 20, 16, and 13, have wonderful memories and love WDW as much as we do.

Because of this, I have been going back and forth as to whether I should buy in to DVC. I have run all the numbers and feel that as long as what I pay out for vacation (that includes MF and costs for financing) stay withint what I am spending now, it is not costing me anything more than what I am already spending.

I am waiting on ROFR on a small VWL resale contract which I will pay for in cash. But this was a way for me to become a member of DVC, so that I can purchase, in August, when I go on my next trip, 100 BLT points, which I will be financing.

My feeling is that you have to look at your situation and that while being debt free is great, it is not the end all be all for everyone. I don't think someone should finance if it will cause a hardship but I think you have to weigh what is important for you and go from there

 

[dianeschlicht]

We paid cash for two of our three contracts and financed our first one for 3 months while we waited to get the rest of the funds together. It is my feeling that you should NOT finance a luxury item like a timeshare.

 

[Pakey]

We paid cash for all 3 of our contracts but I would have bought them anyway. However, I do agree with dandave that DVC doesn't "save" you money at all. With my $2000+ in annual dues I'm paying, it's not exactly the deal of the century.

 

[Anal Annie]

While we could've paid cash we chose to keep the money in our emergency fund and we used our home equity line which has a very low rate. This way we have the additional interest deduction on our tax return. IMO the DVC financing rate is REALLY high - especially compared to other methods out there these days. The prime rate is almost nothing right now. To pay over 10% is not worth it in my book if you can do it for 4% somewhere else.

I am dying to do a small add-on at BLT but I'd like to do any future purchases with cash since they will be small and I just can't bring myself to part with the cash right now. Got until the 14th to change my mind (and DH's) tho for a small one at BLT... I still wish they were waiting until spring for that minimum add-on increase. I'd rather use unexpected income like a tax refund than dip into our savings.

 

[JonS99]

I think if you have to finance it, then you shouldn't buy it. I am definitely not trying to be snooty or holier than thou, either.
I've been wanting to own a small piece of DVC "just because", since 1999. The economy and my saved up cash have only now come together, so that I am able to buy a small piece. It's a luxury, like dessert. I certainly don't *need* either one.

And I think it makes no sense to go to Disney since 2001, staying on site, wanting to be a DVC member and still paying cash rates.. Even with the interest paid, you would have been money ahead buying in 2001, not to mention staying in a better resort..

 

[december14disney]

We must remember in these posts that unless the OP asks "in your opinion should I finance DVC or not" it is rude of us to tell him or her what we think of their financial move. Whatever our opinion may be, a helpful answer is from those of us who did finance and how we did it.

 

[brandip22]

OK- Back to the real question!! We put down about a 40% down payment and then financed the rest through Disney for 5 years. This was 4 years ago, so the rate was lower and we were about to sell our house, so I didn't want to use a home equity. When we pay off this contract, I will be adding on and financing that as well.

 

[dandave]

And I think it makes no sense to go to Disney since 2001, staying on site, wanting to be a DVC member and still paying cash rates.. Even with the interest paid, you would have been money ahead buying in 2001, not to mention staying in a better resort..

Where to start, where to start...
Let's see. First off, I have no problem with financing a needed thing like an affordable house that is comfortably within our means, a car, a college education, etc. I also have no problem financing a thing that will, in the long run, end up not only paying for itself but making me a profit.
For instance, we moved to Florida in 2002. We bought a comfy brand new home and financed it at 5% flat for 30 years, no points and no money down. Housing prices then doubled here over the next few years. So, we used a home equity loan with low interest to put in an inground 32 X 18 pool and beautiful aluminum fence that is neither elaborate nor ordinary, but is almost paid for.
This was a worthwhile financial decision for several reasons. In my neighborhood, at least half the homes have pools. Buyers in this particular market not only want, but often expect a pool. My children (Dan 14 and Dave 12) have already gotten their money's worth out of the pool, and my home with pool is worth $100,000+ more than we paid even in this depressed market. Therefore, it was a worthwhile "investment".
As for my Disney trips, I'll argue that I came out ahead by not having bought into DVC on credit. In 2002, DH decided that he was tired of being a Math Prof and wanted to go to work for the Federal Gov. I'm a housewife, and I have my own savings which I use to dabble in the stock market so I don't care where we live.
When we moved, we ended up paying over double the price of our small town GA house as we now live on a Florida coast, which was necessary for the government job DH chose. The two 10+ year old cars that were just fine for our travel needs in GA had to be replaced with new cars that would take us safely the 11-12 hour drive back to visit family in SC, from the far corner of Northwest Florida. And don't forget the 5% fixed rate we acquired for the (needed) house, by not being burdened with DVC and the like in *luxury* debt.
So, all those vacations you see were paid for in cash for about the same amount dues plus principal and lost interest would have cost. Prior to June 2002, we paid AP rates or stayed at SOG. When we moved, it was AP, FL res, SOG, renting points for $10 a point, etc. The Poly stay was $175ish a night in those years for GV, a 1 BR at BWV SV was $220ish, and the biggie was $300 a night AKL concierge SV to celebrate our 10th anniversary for the lodge's inaugural year. Ohhhh..ahhhhh. AP and FL resident rates are about 40% off rack rate, and I'm committed to absolutely nothing. If you can show me how DVC will save me over 40% in a 10 year period (1999-2009), then have at it. BTW, I do love a Villa, but don't do any figuring that involves me cooking. I do that at home. Other than handy coffee for me and a cold fridge for leftover desserts, the kitchen does me no good on vacation.
We went when we could afford it with *extra funds*. I'm no Suzy Ormond, either. If I can comfortably pay all my bills, have sufficient emergency savings, and need for absolutely nothing, well, whatever is left over is "extra" in my book. I'm in no hurry to pay off a 5% fixed interest rate home loan that constantly gains in value by mere coincidence of where it was built, or the 3.75% interest rate we paid for a new Honda Pilot and a new Toyota Tundra last summer. The market was so depressed and gas prices so high that some of you would swear "we made money" if you knew what we paid.
The money I'm now planning to use to pay for a small DVC contract is extra. It is money that I made last year with my stocks. I also made enough to take my first trip to Europe, which was a wonderful solo trip through London, Inverness, and Prague for 3 weeks in April/May of 2008. I liked it so much that I treated the boys and DH to 9 days in London and Edinburgh for Thanksgiving. The four WDW trips, spring break trip to New Orleans, two trips to Myrtle Beach in the summer to see family, a week's trip to the NC mountains in June, and two weeks at Myrtle Beach for Christmas, all in 2008, were DH's treat from extra "family" funds that he earned.

That makes glorious sense to me. I'll never be too good to stay in an All-Star Resort but, God willing, I'll never have to worry about drowning in debt due to lack of common sense either.

We must remember in these posts that unless the OP asks "in your opinion should I finance DVC or not" it is rude of us to tell him or her what we think of their financial move. Whatever our opinion may be, a helpful answer is from those of us who did finance and how we did it.

It's rude to suggest that one is rude.

 

[CheapMom]

with GMAC - I put down about 60% cash and opened a 0% (for 12 months) Discover Card for the remainder. They will let you charge up to $4000.

 

[JonS99]

Where to start, where to start...
Let's see. First off, I have no problem with financing a needed thing like an affordable house that is comfortably within our means, a car, a college education, etc. I also have no problem financing a thing that will, in the long run, end up not only paying for itself but making me a profit.
For instance, we moved to Florida in 2002. We bought a comfy brand new home and financed it at 5% flat for 30 years, no points and no money down. Housing prices then doubled here over the next few years. So, we used a home equity loan with low interest to put in an inground 32 X 18 pool and beautiful aluminum fence that is neither elaborate nor ordinary, but is almost paid for.
This was a worthwhile financial decision for several reasons. In my neighborhood, at least half the homes have pools. Buyers in this particular market not only want, but often expect a pool. My children (Dan 14 and Dave 12) have already gotten their money's worth out of the pool, and my home with pool is worth $100,000+ more than we paid even in this depressed market. Therefore, it was a worthwhile "investment".
As for my Disney trips, I'll argue that I came out ahead by not having bought into DVC on credit. In 2002, DH decided that he was tired of being a Math Prof and wanted to go to work for the Federal Gov. I'm a housewife, and I have my own savings which I use to dabble in the stock market so I don't care where we live.
When we moved, we ended up paying over double the price of our small town GA house as we now live on a Florida coast, which was necessary for the government job DH chose. The two 10+ year old cars that were just fine for our travel needs in GA had to be replaced with new cars that would take us safely the 11-12 hour drive back to visit family in SC, from the far corner of Northwest Florida. And don't forget the 5% fixed rate we acquired for the (needed) house, by not being burdened with DVC and the like in *luxury* debt.
So, all those vacations you see were paid for in cash for about the same amount dues plus principal and lost interest would have cost. Prior to June 2002, we paid AP rates or stayed at SOG. When we moved, it was AP, FL res, SOG, renting points for $10 a point, etc. The Poly stay was $175ish a night in those years for GV, a 1 BR at BWV SV was $220ish, and the biggie was $300 a night AKL concierge SV to celebrate our 10th anniversary for the lodge's inaugural year. Ohhhh..ahhhhh. AP and FL resident rates are about 40% off rack rate, and I'm committed to absolutely nothing. If you can show me how DVC will save me over 40% in a 10 year period (1999-2009), then have at it. BTW, I do love a Villa, but don't do any figuring that involves me cooking. I do that at home. Other than handy coffee for me and a cold fridge for leftover desserts, the kitchen does me no good on vacation.
We went when we could afford it with *extra funds*. I'm no Suzy Ormond, either. If I can comfortably pay all my bills, have sufficient emergency savings, and need for absolutely nothing, well, whatever is left over is "extra" in my book. I'm in no hurry to pay off a 5% fixed interest rate home loan that constantly gains in value by mere coincidence of where it was built, or the 3.75% interest rate we paid for a new Honda Pilot and a new Toyota Tundra last summer. The market was so depressed and gas prices so high that some of you would swear "we made money" if you knew what we paid.
The money I'm now planning to use to pay for a small DVC contract is extra. It is money that I made last year with my stocks. I also made enough to take my first trip to Europe, which was a wonderful solo trip through London, Inverness, and Prague for 3 weeks in April/May of 2008. I liked it so much that I treated the boys and DH to 9 days in London and Edinburgh for Thanksgiving. The four WDW trips, spring break trip to New Orleans, two trips to Myrtle Beach in the summer to see family, a week's trip to the NC mountains in June, and two weeks at Myrtle Beach for Christmas, all in 2008, were DH's treat from extra "family" funds that he earned.

That makes glorious sense to me. I'll never be too good to stay in an All-Star Resort but, God willing, I'll never have to worry about drowning in debt due to lack of common sense either.




It's rude to suggest that one is rude.

The increased price per point from 2001 to now and cash paid for reservations for those vacations would have been more than any interest and dues you would have paid, its basic finance.. And that doesn't even count the factor of staying in a better resort.

 

[homedad]

we bought a small resale(100 pts) and paid cash. I wouldn't say not to buy, I would look at a Heloc bacause rates are low to finance. The other thing that I would suggest is that if you look at a resale you can buy a smaller contract and then you don't "have to" vacation at disney every year. I could go every year but my wife is every other kind of girl. This allows other vacation spots without have to rent points or trade to other resorts which can be a hassle or not valued fair.

 

[dandave]

The increased price per point from 2001 to now and cash paid for reservations for those vacations would have been more than any interest and dues you would have paid, its basic finance.. And that doesn't even count the factor of staying in a better resort.

OK. That's twice now that you have referred to "better resorts". Better than what? I've stayed at AKL,BWV,BC,BCV,Poly,OKW, 2 or 3 stays at the WL, POFQ (which I actually like much more than the Poly) a few times, SOG several times and the original grand SOG suite once, etc. The stays at the All Stars often involved treating my parents or the boys' friends. We got 2-3 rooms for ultimate privacy, space, and plenty of bathroom space. Sometimes we all 4 shared one room. What exactly is better than staying exactly where I wanted? If you're trying to have a contest, you'll be playing with yourself. I'm not interested.

Since there was a wonderful, handy DVC resale price chart on a current thread I'll give you a link:

http://www.disboards.com/showpost.php?p=29622750&postcount=42

I don't have any interest in wasting my time digging for anything going back to 1999 just to prove a point, so I'll leave that to you. I would never have bought a 160 contract, so only the resale prices are relevant. My offer is on a VWL contract for $77 a point with 50 2008 and 2009 points, and we half closing costs. So, it looks like I did OK. Actually, I think I did far better investing my principal cash in the stock market than I would have if I had invested it in DVC, but who knows?
We all just do what we want in the end, anyway.

 

[JonS99]

Just pointing out that if a family is going to Disney on a yearly basis anyway, its probably going to be cheaper to finance and pay interest than to pay cash and buy DVC after a few years of saving..

 

[cogero]

We financed while we were there came home and wrote a check and paid off the entire contract. Decided to finance a car instead since they were giving way better deals and DH wanted a new car.

We are blessed to be in a great financial situation and DH has job security and is due to retire in 5 years with a really good pension.

We regret we didn't do it sooner with how much we have spent going to disney since 2003.

Also our kids love anything Disney. It just makes us happy to be there.

If you have to finance and have the means to pay it off go right ahead. Life is meant to be lived.

 

[kikiq]

OP, if this is the time for you to purchase your DVC resale, then put in a sizable down payment and find a decent HLOC to pay off the rest. Remember it is your decision. Took us almost 13 years to come to that place where we felt we could financially take on DVC (I went back to work when my DDs went to college) and making sure my DH took vacations was a top priority. I think the only other suggestion I would make is if you know that your income will not change and you can swing it, look for a 0% card with rewards to pay off quickly. If you decide to finance, make it work for you.