In need of opinions

[septbride2002]

Dh and I have been considering the DVC for about 4 months now. We've gotten all the info and have talked to a representative on the phone. Here is the issue. We just bought our home as First time home buyers so we only put 3% down on the house. Therefore an equity line is not possible for us and we would have to go with Disney financing at 9.75% not a big deal since there are no prepayment penalties and is 3 years or so our house might have enough equity to pay it off with an equity line.

We want to buy 150 points at Saratoga Springs which with the cash back offer right now our monthly payments would be $135.00 or so and dues of $47 a month coming to $185.00 a month. We can afford the extra $200 a month it just means that we won't be able to put as much in savings every month and we would be depending on my commission a little (currently all of my commission gets banked and we live completely on my and his salaries). I hate to miss the cash back and it would make things tight for a year or so. So we have two choices we can go for it now, budget and have things be tight for a year or so....or wait the year or so and see where we are and then join. What would you do? DH and I are 25 and 24 respectfully and have no children. The idea is to have the majority of this paid off so when kids came we could still afford to go.

~Amanda

 

[princetonnj]

IMO, since you have just purchased your first home, you should wait a year or two before purchasing. Get used to the new budget, the costs that popup for the house and taxes that usually increase. A new home is usually followed by new expenses for furnishings, decorating etc. Again, IMO, I would wait and not make cash flow too tight. Then if you can save some you will not need to finance as much. I think the disney rate of 9.75 is a ripoff in todays market.

If I read your username correctly you are recently married (1 year). No need to add the extra stress of more debt to your life.

Best of luck with the new home and your decision.

 

[disneyberry]

IMO, i would wait.
why put yourself in even more debt right away?
the home purchase is already a huge deal.

keep on saving. treat the next year or so as if you did purchase DVC and tighten your budgets so you can put more into savings. in the end you'll come out ahead.
perhaps by then you can pay for more of DVC in cash.

if you did a great job at saving, maybe you can pay for the entire DVC purchase in cash. then you can consider buying via resale to save even more money. or perhaps start w/ a small contract < 150pts (whatever you can afford in cash), and keep adding on whenever you can afford buying more DVC in cash.

good luck.

 

[Dean]

I'd definitely wait. Married a year, who know when there might be an extra family member or two with the expense that brings and many times lower income if both are working.

Also, if you just bought a house, financed for 30 years (I'm assuming) and only put down 3%, you should not make any unnecessary capital purchases. No new cars, no major vacations and certainly not $12000 on a timeshare. At least not until you've gotten the house paid down to 80% and gotten rid of that extra insurance they almost certainly made you buy for putting down that little.

Talk to your accountant, tax advisor, etc and see what they tell you but I can bet it will be no, at least not right now. I would expect the advice to be 6 months worth of expenses for cash ASAP, term life insurance then pay extra on the house until you have it at the level noted above. After that, the decision becomes more reasonable. Good luck.

 

[mom2rb]

My husband and I thought about buying at our honeymoon in '96. I am so glad we didn't. I had to quit my job a year later when pregnant with my twins ( high risk, bedrest). We never would have been able to make the payments then or when the boys where little. I know we would have gotten it cheaper 7 years ago but now is a much better time for us. Wait and try to pay cash or buy after you have had at least a year in your house.

 

[K9pal]

Agree with the other posters. Do you realize how much your total interest would be if you financed this for the full 10 years at 9.75%? You'd be paying over $6,000 in interest - WAY too much. Wait until your financial situation is a bit more comfortable, and you can afford a larger down payment and finance for less years.

By the way, we just purchased 150 points at SSR, doing the 1-year financing and paying only a couple hundred $$ in interest.

 

[Richyams]

Nah, don't be so conservative. You guys are young, your income is only going to go up. You will never have as good of a price as you have now. Go for SSR, the extra twelve years will be worth it.

Nowadays, a woman only has to miss six or eight weeks from work with having a kid. You live real close to one of your mothers, she can help out the first year, then get an Au Pair for the second year.

Out of tough budgets and finincial hardships, opportunities are siezed.

 

[septbride2002]

Thanks for all the responses!

Dean: At least not until you've gotten the house paid down to 80% and gotten rid of that extra insurance they almost certainly made you buy for putting down that little.

Actually because we went with First Time Home Buyers loan instead of a Conventional loan we are not paying as much PMI Insurance as some think. With a FTHB loan they cut your PMI in half over what you would be paying with conventional because it is secured with a Government loan...or something like that... so our PMI is really only $40 a month.

Disneyberry: if you did a great job at saving, maybe you can pay for the entire DVC purchase in cash.

I WISH! That would be great but I doubt that DH and I will be able to save up $12,000 in one year.


I have decided that it would be best to wait this out a little. We already have one tripped planned for 2004 and in all honesty wouldn't be able to go back until late 2005 anyway. Plus after we also realize there are other things we need in our new home right now. We need new couches and a bedroom set and that is going to cost us in the $3000 to $4000 range. Plus we have to buy a "newer" car for DH the one we are driving is about to give out.

Thanks for all the sound advice. As much as I think we could afford it I think we will be much more comfortable waiting the additional time.

~Amanda

 

[kaf7878]

My DH and I bought young like you are but then had our first child and I decided I wanted to stay home (I was making good $$). So everything went, including selling DVC.

We just bought back in now that we are in a better place financially. I would also wait a year or so. Why don't you put the $200 every month into a DVC fund, that way when it comes time to buy you will have a nice sum to make a downpayment!

 

[tinkgrl]

Originally posted by kaf7878
My DH and I bought young like you are but then had our first child and I decided I wanted to stay home (I was making good $$). So everything went, including selling DVC.

We just bought back in now that we are in a better place financially. I would also wait a year or so. Why don't you put the $200 every month into a DVC fund, that way when it comes time to buy you will have a nice sum to make a downpayment!

Hi,

I'd wait & I like the idea of putting some $$ away each month until you feel ready & then you can put down a good downpayment. Good Luck!!

Allison an associate

 

[Richyams]

Wimps, all of you

 

[littlestar]

I would take the $200 a month and bank it towards a future DVC purchase. One thing about it, just because you don't buy now doesn't mean you can't buy later. And you could always perhaps buy a small resale package in a few years with the savings. Maybe a small package that would get you a studio for a week. One thing about the point system, you could bank a small amount of points and go every two years. Just an idea.

Our daughter (also an Amanda) just got married in May and her and her new husband built a new home. They are still getting used to being married, getting used to a budget, and I know she wouldn't want a DVC loan right now. They also have some student loans they are paying on. And if she became pregnant, that would be another expense and life adjustment for them(although I would love it).

My husband and I talked about this same subject a few days ago. I said I wish we had bought in the early 90's and he said, no, he thinks us buying in early 2002 was the right time for us. Our favorite hotel location (VWL) was selling and he said we were much more comfortable financially then compared to the early 90's.

Good luck.

 

[septbride2002]

Just to clarify because everyone keeps mentioning kids...we don't plan on having any until I am at least 28 or maybe later. DH and I got together young and life and things haven't always been easy for us. We were forced to move out of our homes at the ages of 21 and 19 get our own place. So we are somewhat use to budgeting and being tight in the pocket books. This month we will finally payoff our credit cards (what a great feeling) but because we feel we were forced to grow up and become responsible for oursleves so quickly we want to wait and have children for awhile.

Thanks,
Amanda

 

[septbride2002]

Wimps, all of you

Rich I am not a wimp! I am just a scaredy cat!

~Amanda

 

[disneyinthedesert]

I would go for it. You have no intention of taking the full 10 years to pay it, so the cost of interest is negligible. The monthly payment becomes part of your total expenses, and you build your budget around it.

I wanted to purchase 4 years ago and did not. Instead, I have spent many waking moments thinking, researching, and wishing I had, all the while finding other, less exciting ways to blow the money each month. I finally took the plunge this year.

 

[tinkgrl]

Amanda,

Just wanted to say that I love your Captain Jack Sparrow quote!!! How did you choose, there are so many great lines in that movie! If you want you may use my picture.

Allison an associate

 

[septbride2002]

It was hard to pick a quote but I just LOVED that one! It cracked me up in the movie theatre every time I saw it. Although I also thought about, "Welcome to the Carribean." Or, "What about the RUM!" that whole scene in the movie was the best scene ever! LOL! Only a couple more months until it is out on video! I can't wait!

~Amanda

 

[Lexxiefern]

I'm with Rich on this one. Everyone on these boards says their only complaint is that they didn't buy sooner. Less than $200 a month isn't bad at all. I am also 24, DH and I bought in April. We put it on the disney visa (to get the rewards and it was 0% for 6 months). We just paid it off last week. I think if you know you aren't going to have any children for a while and you think you will be able to pay it off early, then go for it.

The prices only go up. The longer you wait, the more you will pay for less years. If you find that you can't swing it, you could always sell. JMHO. Good luck!

 

[Richyams]

With his usual brilliance and clarity of thought, Lexxiefern said:

I'm with Rich on this one.

Yeah, if you are not planning kids for a while, go for it now. The couches can wait, they are only going to get trashed by the kids anyway. Your income is only going to go up, DVC is only going to go up(a big jump coming Oct 31), c'mon, get with the program!!!

 

[tjkraz]

I won't comment on what's right for you and your husband, but here's some food for thought.

150 SSR points @ 89 = $13,350
Less 10% down payment -1335
Less $10 per point incentive - 1500

Net financed amount = $10515

SSR purchase is interest free with no payments or dues until May or June of 04. So after your down payment, you pay nothing else out of pocket for 8 or 9 months.

Now, let's talk worst-case scenario. One of your loses a job or some other financial hardship ensues. I'm assuming you've looked at your situation and believe this to be highly unlikely, but it also represents your greatest fear.

If June '04 rolls around and you absolutely cannot afford the monthly payments, you could immediately begin the process of selling your SSR interest. The going rate for the other DVC resorts is about $72 per point. Given that SSR costs $89 PP through DVC, and has a longer contract than any of the other DVC resorts, I think you can safely count on getting at least $72 PP upon selling your interest.

And it's safe to say that there would be a market for SSR points at that resale price since it's $17 per point less than the DVC rate.

The resale would then net you $10800, which immediately relieves you of your outstanding debt to DVC.

So, if you look at it from this perspective, the only dollars you really have at risk are your down payment. You likely will not recoup those dollars through a resale.

I agree with many others that you don't want to overextend yourselves. A house can be VERY expensive, and financial worries often do not make for a healthy marriage. But the current promotion on SSR may be a once-in-a-lifetime opportunity.

On the negative side, don't forget to factor in all of the additional recurring expenses that will accompany DVC. If you plan to visit at least once per year, park passes, transportation, meals, souveneirs, etc. can easily cost $1000+ per week just for the two of you. To avoid putting those expenses on a credit card or hitting the savings account, you'll have to set aside another $80-90 per month in your budget so that you have the cash available for your next trip.

It's a tough decision. Many people (myself included) have said the "I wish I'd have done this years ago". But I bet few of them actually go back and review their budgets from 3-4 years ago and figure out whether they could have squeezed in another $150-200 per month, plus expenses. The cost of DVC doesn't stack up well against the all-star resorts, or even the moderates with the proper discounts. It's truely a luxury resort. It permits people to take MORE vacations which are of a higher quality. That's great IF you can afford it. But a week at WDW in 5-star accommodations won't help you in the long-run if it destroys your budget the other 51 weeks of the year.

Do what's right for both of you.