Is this worth a DVC ownership at Villas at Disney's GF?

[SuperRob]

IMO there is no good consumer debt. Personal finance is mostly about behavior and choices rather than math. You're essentially saying the lessor of evils, I'm simply labeling both as such.

Debt is a tool. Used correctly, it can be of huge benefit to the consumer, but there are few out there who use it correctly.

For example, we do all of our day-to-day spending on credit cards with generous rewards. We pay them off every bill cycle, so we pay no interest, so it's basically like buying everything at a discount. Additionally, our bank accounts are fairly high interest, and we make a little money by holding our cash in reserve for as long as we can. We can play both sides of the game, and it lets us take fairly luxurious vacations our friends only dream of, because those savings are pooled into flights, hotel stays, etc.

Likewise, there are other kinds of debt that can be beneficial for the consumer, assuming they are managed properly. Clearly, the example in the OP is NOT one one of them, and I'd have a really hard time giving a good example of anything at 18% (bordering on usurious, if you ask me), but to say that there is no good consumer debt just isn't true.

 

[ToddyLu]

Why don't you just rent the vacation from David's Vacation Rentals if possible at VGF....if not stay at SSR through his service and have the best of both worlds. A DVC stay without the purchase and 18% interest. And this is coming from someone who loves my DVC, bought direct in 2009 and is currently paying on it at 10.75%, which was preferred at the time. Would I do that now, heck no. Resale all the way....but my points are now the same resale as they were direct, almost. DH and I use our DVC and stretch it as far as it will go and have had wonderful trips.

But dang, VGF at 18%, even I see that as crazy. Well gotta go...have a flight leaving in a few hours for our May trip...life is good.

 

[suebeelin]

Debt is a tool. Used correctly, it can be of huge benefit to the consumer, but there are few out there who use it correctly.

For example, we do all of our day-to-day spending on credit cards with generous rewards. We pay them off every bill cycle, so we pay no interest, so it's basically like buying everything at a discount. Additionally, our bank accounts are fairly high interest, and we make a little money by holding our cash in reserve for as long as we can. We can play both sides of the game, and it lets us take fairly luxurious vacations our friends only dream of, because those savings are pooled into flights, hotel stays, etc.

Likewise, there are other kinds of debt that can be beneficial for the consumer, assuming they are managed properly. Clearly, the example in the OP is one one of them, and I'd have a really hard time giving a good example of anything at 18% (bordering on usurious, if you ask me), but to say that there is no good consumer debt just isn't true.

This is true regarding credit cards. However, most ppl do not pay off their cc in cash every month.

The best cc IMO is the discover card where you get 10% bonus on many gift cards. Otherwise, the Amex for grocery points (6%) is decent but there's a $95/yr fee. Otherwise I go around applying for cc to get their $100-150 plus first year free bonus, then i cancel a year later to avoid the yearly fee. Then there's the target cc where you can get dis gift cards off 5% to apply to maint fees, etc

But that's extremely short term debt-- one month (for cc payments) to one year (to avoid cc yearly fees). The OP debt is 10yrs.

IMO, any debt where you pay more than the interest that a bank gives you, or more than what you can conceivably make in the market (or to grow your business) is bad debt, barring a critical life circumstance like health needs or higher education needs. The only exception is a mortgage if you cannot pay cash for your home.

 

[Dean]

Debt is a tool. Used correctly, it can be of huge benefit to the consumer, but there are few out there who use it correctly.

For example, we do all of our day-to-day spending on credit cards with generous rewards. We pay them off every bill cycle, so we pay no interest, so it's basically like buying everything at a discount. Additionally, our bank accounts are fairly high interest, and we make a little money by holding our cash in reserve for as long as we can. We can play both sides of the game, and it lets us take fairly luxurious vacations our friends only dream of, because those savings are pooled into flights, hotel stays, etc.

Likewise, there are other kinds of debt that can be beneficial for the consumer, assuming they are managed properly. Clearly, the example in the OP is one one of them, and I'd have a really hard time giving a good example of anything at 18% (bordering on usurious, if you ask me), but to say that there is no good consumer debt just isn't true.

We'll have to disagree somewhat though I don't necessarily consider a CC used the way you mentioned (I do that as well at times) as debt though technically it is. But I also realize that when people use a CC they tend to spend more all else being equal, the last I saw was around 14% more IIRC. Debt is risk. It's a little different for companies mostly because they're often playing with OPM and don't have personal risk in the same way we do.

 

[Minniesgal]

Debt is a tool and used correctly can make you money. I like you use the 60 days on my credit card to get extra interest on my money. To me spending on a credit card isn't debit as long as you have the cash to cover it when due.

But buying a timeshare at 18% interest I can't see anyway to spin that one positively to me that's a mugs game.

 

[SuperRob]

We'll have to disagree somewhat though I don't necessarily consider a CC used the way you mentioned (I do that as well at times) as debt though technically it is. But I also realize that when people use a CC they tend to spend more all else being equal, the last I saw was around 14% more IIRC. Debt is risk. It's a little different for companies mostly because they're often playing with OPM and don't have personal risk in the same way we do.

Well to give another example, with mortgage rates being at historical lows, if the interest rate on a loan is greater than the appreciation of the asset used to secure that loan, it's a better deal for the consumer. Offsetting liabilities is part of the "game." Other examples are in managing cash flow. There are a lot of ways debt can be positive for the consumer.

Even in the case of a DVC membership, a low-interest loan (combined with the fact that DVC memberships tend to hold more of their value over time) isn't necessarily a bad option. 18%? Screw that. But if you can get a lower interest loan, and calculate if that increase in cost is lower than the historic price increases on rates at the resort, it could make sense to get the loan and hold your cash in reserve. My wife and I are using a financing option as a "bridge loan" to hold our cash until my semiannual bonus when we can pay off the entire loan. In the meantime, making as small as possible payments so as to hold our current cash in reserve.

I think what you're getting at is that it's always a bad bet to borrow money to purchase something you can't afford. And that is very much true. It's just not the case that it's flat out bad. It's bad if not properly managed, but I will fully admit most people are not educated enough in what that means, or disciplined enough to stick with the plan.

 

[Dean]

Well to give another example, with mortgage rates being at historical lows, if the interest rate on a loan is greater than the appreciation of the asset used to secure that loan, it's a better deal for the consumer. Offsetting liabilities is part of the "game." Other examples are in managing cash flow. There are a lot of ways debt can be positive for the consumer.

Even in the case of a DVC membership, a low-interest loan (combined with the fact that DVC memberships tend to hold more of their value over time) isn't necessarily a bad option. 18%? Screw that. But if you can get a lower interest loan, and calculate if that increase in cost is lower than the historic price increases on rates at the resort, it could make sense to get the loan and hold your cash in reserve. My wife and I are using a financing option as a "bridge loan" to hold our cash until my semiannual bonus when we can pay off the entire loan. In the meantime, making as small as possible payments so as to hold our current cash in reserve.

I think what you're getting at is that it's always a bad bet to borrow money to purchase something you can't afford. And that is very much true. It's just not the case that it's flat out bad. It's bad if not properly managed, but I will fully admit most people are not educated enough in what that means, or disciplined enough to stick with the plan.

My caveat has been consumer debt but the idea of making money on the spread is not a good one because it eliminates the concept of risk, IMO even for zero interest CC and the like.

 

[BWV Dreamin]

Why don't you just rent the vacation from David's Vacation Rentals if possible at VGF....if not stay at SSR through his service and have the best of both worlds. A DVC stay without the purchase and 18% interest. And this is coming from someone who loves my DVC, bought direct in 2009 and is currently paying on it at 10.75%, which was preferred at the time. Would I do that now, heck no. Resale all the way....but my points are now the same resale as they were direct, almost. DH and I use our DVC and stretch it as far as it will go and have had wonderful trips.

But dang, VGF at 18%, even I see that as crazy. Well gotta go...have a flight leaving in a few hours for our May trip...life is good.

It's not always easy to rent VGF through the brokers. First an owner has to deposit those points with the broker. Not always easy to find for one's desired week. Would also check the DIS rental board for available VGF points.

 

[_auroraborealis_]

It's not always easy to rent VGF through the brokers. First an owner has to deposit those points with the broker. Not always easy to find for one's desired week. Would also check the DIS rental board for available VGF points.

Better to stay at BLT instead than to pay 18% interest for home resort points. VGF isn't worth that.

 

[BWV Dreamin]

True. I was just making the comment that in general VGF is not easy to rent through brokers. The resort is in demand coupled with the small size of the resort, it's just difficult all the way around to book VGF. Owning at the resort does not necessarily make it any easier. It's the best option but not a given.

 

[intertile]

I am not saying anyone should do this, but to just show how bad of a deal this really is...240 points retail is $180/pt, and then 18% interest...if OP went Resale, they could probably buy 240 points @ $135-145/pt. That is a savings of $8400 at least. Then if you really needed to finance (again I'm not advocating this) they could go through Monera and get an interest rate of 9.9% - 14.9%. They do no credit checks, and the rate is based on the size of your down payment and the length of the loan you use.(You may have to lower the amount of points a little as they have a cap at $30000, after which it requires additional paperwork)

 

[DougEMG]

Hi...so confused and hoping someone with DVC experience can help out. Looking at 240 points at Villa's at Disney's Grand Floridian for a monthly payment of $600.00 due to an approval at 18% interest for ten years plus the annual dues. This is directly through Disney not a resale. Is this worth it in the long run with these figures?
Thanks a bunch for any information you can provide.

That works out to $72,000 or $300 per point. In my opinion this makes it way too expensive to make it worth while to own; and I really like VGF.

 

[mustinjourney]

I didn't think they were actively selling GFV and no waitlist because it was full.

for people willing to pay 18% interest they probably make exceptions