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[kedkin]

Great thread, very entertaining!

 

[ImagineerTHAT]

It's not a great breakdown, it's an awful breakdown.

Hahaha! Too funny. I did my own cost analysis on cruising with points for a new VGF purchase vs. renting points and cruising on a BLT resale . Cruising with points did not make my ROI analysis happy.

Didn't check the numbers on that post, but cheerleading is in our blood as Disney people!

 

[dmunsil]

It completely ignores the purchase price of the BLT points, which are approximately $3.50 per point right now.

I want to nominate your post as "reality check of the month." I wish more people would really run these numbers and think about what they're buying.

Just to kill the buzz a little more, the points are actually quite a bit more expensive than $3.50/point. That would be what they cost if you just take the cost of $165 and divide by the 47 remaining years at BLT. But that's misleading. You have to pay the money now but you get the benefits over time, so you have to do an amortization calculation (essentially a mortgage, only you're the bank and Disney is the one doing the paying back )

If you imagine a time value of your money of 4.5% (a defensible number; lots of people have gotten that over time with safe bond funds), then each point is costing you $8.50 per year. Even if you only value your money at 1%, it's worth $4.40 per year.

My point is that when you buy DVC, you're buying a series of discounts that you can cash in each year. If you use the DVC points to book DVC rooms, you're getting a much larger discount than the cost of the points plus the maintenance fees in essentially every case, no matter when you go to Disney or what discounts you could have gotten on rooms. The DVC discount is so massive that it always pays off.

Every year you use your points to book a cruise or stay at a Disneyland hotel, you're getting a negative discount, or in some cases a tiny discount. You're paying more in amortized buy-in and dues than you are getting in cash value. I hope it doesn't require a degree in finance to see that something that costs you money year after year is worth less than $0.

Buying points and using them to rent out will pay off eventually even if you buy direct, but for the first many years, it's hard to actually come out ahead because of that amortization issue. At 4.5% interest, the dues plus amortized buy-in (at direct prices) is $8.50 + $4.50 = $13. Unless you're renting for above $13, which most people aren't, you're losing money.

If you buy resale, at say $105/point, the amortized cost is $5.41, which plus dues is $9.91, so you're ahead right out of the gate by renting for any amount over $10, and it just gets better as long as rental prices roughly go up in tandem with dues (which not everyone thinks it will, but that's a whole other long thread. )

 

[ELMC]

It's not a great breakdown, it's an awful breakdown.

By the way, I don't say this to be insulting. Any analysis that ignores the very real and very substantial acquisition costs of purchasing DVC is fundamentally flawed. I don't think it's too much of a stretch to call it awful.

 

[BestDadEver]

Apparently math is more fun then then going on vacation .

 

[iluvthsgam]

This thread is so completely off the rails it's not even funny.

Mea cupla - I know it was off topic, but lets be honest, most threads stray.

Here's what I find interesting. This post below is actually trying to tell the buyer that they could actually save money using their direct points to book a cruise, and that they actually did a good thing. They're wrong, of course, but we'll save that for later.

First, I am not sure why you must respond with an apparent attitude. Your post comes across that way, so if you were not trying to come across that way, I apologize. If you were, why?

But on to the discussion. If you recall the poster who I was directing this to said:

We have been DVC members since 2010 and we LOVE it! We have 200 points at BLT and just added 100 at VGF, and it's really been fantastic. We've stayed at BLT, AKV, BWV and BCV, and this October, we're already booked in a one bedroom at VGF! Our kids are 12 and 14, and regular size rooms just don't suit us anymore, so it's been ideal from that standpoint. Plus, I used points to pay for two of us for a cruise next April, which really helped to lower the cost. Congrats on your points, and "welcome home"

They already own. They bought in 2010. They are not deciding to buy direct vs. resale.

Here's the real problem:

It's not a great breakdown, it's an awful breakdown. It completely ignores the purchase price of the BLT points, which are approximately $3.50 per point right now. That actually makes the cruise more expensive by using points, not less. The analysis then goes on to say that if you rent out your points and use that money to pay for the cruise then the cruise is actually "free". Again, this is flawed analysis. There is a big difference between something that is free and something that is cash flow positive.

I don't see how it is an awful breakdown - maybe you could elaborate? I understand that the purchase price of the BLT points is ignored, but the poster already bought in. That cost is a sunk cost. They already have the points. The question is now: how do you use them? My analysis simply and only was on that point - how do you use them?

It does not "make the cruise more expense" by accounting for the up-front purchase price of the points, according to my calculations. Let's allocate the up-front costs across the entire lifetime of the membership? Let say BLT was purchased at $120, this means it is an extra cost to them of $2.4 per point per year. That would change the numbers slightly to show that:

Booking the cruise with cash: same $3,034.24
Booking the cruise on points: now $2,951.60 ("saved" $82.64 in cash flow from cash price)
Booking the cruise with cash after renting points: now $1,336.84 ("saved" $1,697.40 in cash flow from cash price)

So including the up-front cost of the points and renting the cruise is not "cash flow positive" but still cheaper than paying the cash price of the cruise.

Did I miss something here? Can you explain the math where it is more expensive to use points than to pay the cash price?

And I do not know if you noticed but I put the word "free" in quotes because I was trying to imply that it wasn't actually "free" but rather cash flow positive. Hence the quotes.

In the end, these types of threads rarely go well. An OP will come on here and start an "I did this so tell me why it's awesome" type of thread. They don't want to hear any actual thought or analysis, they're just looking for some cheerleaders. They'll get some of that, then they'll get someone else (sometimes it's me, but not this time) asking them thought provoking questions, and then inevitably there's someone who chastises the ideas person for not simply being a cheerleader. This thread has a dash or two of poor analysis and misinterpretation thrown in for good measure. It's all very strange.

Instead, why don't you offer your advice on the analysis - maybe that would be more helpful to other members rather than criticizing others. You are right that I did not put into the math equation how much the original point purchase factors in. But I think at the end of the day my post tried to convey the message that (a) using your points for a cruise isn't the best value for your points and (b) you are better off renting your points and using the cash you get to pay for the cruise. Trying to put some actual numbers to the math so it is easier to see for some people. Would you not agree that this proposition is what most people advocate here when someone asks about using their points to go on a cruise? So maybe you have a problem with a piece of the analysis, but do you disagree with the premise?

 

[iluvthsgam]

Just to kill the buzz a little more, the points are actually quite a bit more expensive than $3.50/point. That would be what they cost if you just take the cost of $165 and divide by the 47 remaining years at BLT. But that's misleading. You have to pay the money now but you get the benefits over time, so you have to do an amortization calculation (essentially a mortgage, only you're the bank and Disney is the one doing the paying back )

I was doing the analysis for the poster above who bought BLT in 2010 - at probably around $120/point maybe less and had (about) the full 50 years. So this should bring those numbers down a bit.

Every year you use your points to book a cruise or stay at a Disneyland hotel, you're getting a negative discount, or in some cases a tiny discount. You're paying more in amortized buy-in and dues than you are getting in cash value. I hope it doesn't require a degree in finance to see that something that costs you money year after year is worth less than $0.

This was the point I was trying to convey. If you can't go to Disney. And you want to go on the cruise. You best choice is to rent your points and pay cash for the cruise (assuming you can swing it and comfortable renting) rather than using your points on the cruise.

 

[dmunsil]

I don't think it's too much of a stretch to call it awful.

Well, it's not... "diplomatic," let's say.

Also, I don't think iluvthsgam's analysis was awful. It makes his point pretty well, the same point you and me and others have made over and over again because it's an important point, in short:

DVC memberships are valuable because of the discounts on DVC rooms. Nearly every other use is actually a waste of money. You get less value out of it than it cost you. About the only thing these other non-DVC options have going for them is they're better than letting your points expire unused.

It's like someone sold you a coupon that costs $3 a week and gives you the right to buy a large pizza for $5 every week. It's a good deal - other people are paying $15 for that pizza all the time, but you get it much cheaper. And then they tell you that if you want, you can also use the coupon to buy some breadsticks, which are worth $2. And people say, "Isn't it great that I have so much flexibility in this pizza coupon system I bought into?"

 

[ELMC]

Mea cupla - I know it was off topic, but lets be honest, most threads stray.

Haha, very true. That wasn't really what I was getting at. My point was that one post included some very suspect analysis with an attempt at cheerleading. The response post completely misinterpreted this support and chastised the first poster. Then a third poster comes on and praises the suspect analysis. It was just a big comedy of errors, that's all. I won't ever criticize thread drift because once posters start responding to each other and not the OP it's inevitable, and part of the evolution of the conversation.

First, I am not sure why you must respond with an apparent attitude. Your post comes across that way, so if you were not trying to come across that way, I apologize. If you were, why?

I'm sorry you feel that I have an attitude as that's not the case. Just imagine a very pleasant tone in your head when you read my posts, that might help. Seriously, though, I think it's important to be honest and to the point. With all due respect, I thought your analysis was awful. I'm sorry if you feel that has attitude or is meant to offend you. I don't think you are awful, but that analysis was. I'll elaborate in a bit.

But on to the discussion. If you recall the poster who I was directing this to said:



They already own. They bought in 2010. They are not deciding to buy direct vs. resale.

Fair point. I was using current prices, which does skew the numbers a bit. So modify the point cost to $2.40 instead of $3.50 and plug that into your equations. It makes the cruise slightly less expensive than paying cash but more expensive than renting the points and paying cash.

I don't see how it is an awful breakdown - maybe you could elaborate? I understand that the purchase price of the BLT points is ignored, but the poster already bought in. That cost is a sunk cost. They already have the points. The question is now: how do you use them? My analysis simply and only was on that point - how do you use them?

This is your fatal flaw, both from a logical and accounting perspective. Yes, the money has been paid up front, but it has been paid. It cannot be ignored. I am reluctant to use a car analogy here because they frequently do not directly apply, but I believe this one does. Let's say you go buy a new car for $20,000. You pay cash. Would you then say that your transportation expenses for the next five years are only the costs of gas and insurance? That makes no sense. There is another cost...the cost of the car. The fact that you paid for it up front does not diminish the fact that it cost you money.

Even the DVC salespeople attribute a cost per point in addition to maintenance fees when comparing DVC to other options. If they didn't they would be fined for misrepresentation...because that's what it is.

It does not "make the cruise more expense" by accounting for the up-front purchase price of the points, according to my calculations. Let's allocate the up-front costs across the entire lifetime of the membership? Let say BLT was purchased at $120, this means it is an extra cost to them of $2.4 per point per year. That would change the numbers slightly to show that:

Booking the cruise with cash: same $3,034.24
Booking the cruise on points: now $2,951.60 ("saved" $82.64 in cash flow from cash price)
Booking the cruise with cash after renting points: now $1,336.84 ("saved" $1,697.40 in cash flow from cash price)

So including the up-front cost of the points and renting the cruise is not "cash flow positive" but still cheaper than paying the cash price of the cruise.

Did I miss something here? Can you explain the math where it is more expensive to use points than to pay the cash price?

Please see my point above about using $165 purchase price instead of $120. In this analysis you have accounted for the cost of the points, which makes it a much stronger analysis.

And I do not know if you noticed but I put the word "free" in quotes because I was trying to imply that it wasn't actually "free" but rather cash flow positive. Hence the quotes.

I noticed. Still misleading.

Instead, why don't you offer your advice on the analysis - maybe that would be more helpful to other members rather than criticizing others.

I thought I did, but perhaps not. Hopefully I cleared that up. I'm sorry that you don't like my criticism. I try to be respectful at all times, especially when I disagree with someone. I would suggest that my criticism is more helpful to other members, because it helps paint a clearer picture of how these things really work. I think it's important that the members of the DIS strive for accuracy and reliability in our content, and that we should hold each other accountable, just as you did to me when I erroneously used a $165 purchase price instead of $120. I caused confusion by making that error.

You are right that I did not put into the math equation how much the original point purchase factors in. But I think at the end of the day my post tried to convey the message that (a) using your points for a cruise isn't the best value for your points and (b) you are better off renting your points and using the cash you get to pay for the cruise. Trying to put some actual numbers to the math so it is easier to see for some people. Would you not agree that this proposition is what most people advocate here when someone asks about using their points to go on a cruise? So maybe you have a problem with a piece of the analysis, but do you disagree with the premise?

For the most part I agree with the premise. From a straight financial perspective, your best bet is to rent out the points and pay cash for the cruise. From a convenience perspective, it's a toss up. Some people view renting as a huge inconvenience, others don't like the rigidity that comes with booking a cruise on points. While I don't think it's a good decision (financial or otherwise) to buy DVC predominantly for cruising, I think the occasional cruise using DVC points isn't the worst thing in the world, even if it's not maximizing financial value. All work and no play does indeed make Jack a dull boy.

 

[misslissa]

Congratulations! I'm thinking of buying a small GFV contract tomorrow. I'm curious, what incentives were you given and what is your home resort?

We bought 100 points and were given $1300 on our downpayment from Disney. And, they backdated our year to start in Feb. We also took advantage of the lower price, as all prices go up tomorrow. If we had waited a few weeks, we'd be paying more - at least that is what they told us.

We did not buy GFV, we aren't fans of the Grand Floridian, although we did see the models.

I have just joined as well! I see your last stay was Marriott Grande Vista. We stay there sometimes as well, but I wanted to also be able to stay at VGF during the holidays I too did a lot of research and feel like most people that are members really enjoy being members, so that made me feel comfortable.

Hope you enjoy it!!! Where is "home"?

Home is AKL!

Thanks for all of the info - especially that about renting out points to finance a cruise, I'd never considered that before.

Last of all, a question for the 'buzz killers' (I'm saying this all tongue in cheek )... Are you guys members? Do you like it? (Aside from the pros and cons of ownership stated above).

Thanks~!

 

[jillmc40]

Congrats!!! And Welcome Home!!! Kinda smart to get in the queue as I think this will sell out fairly quickly (not to mention price will rise).

Thank you!
I was happy to be added to the list and not have to worry about it on June 19. My guide told me I should have the paperwork a couple of days after that. I'm curious to see what happens there. How quickly it sells, what price goes to, etc.

I think the op got scared off . I alway appreciate the cost analysis of timeshares. I also think it varies per person. Some will use it much more to its advantage than others. For instance. I will save 600.00 every time I buy the family a set of ap's. I would buy them anyway, that is how we travel to wdw. That has to factor in to the equation somewhere, right? I know I am saving some money by buying dvc. Is it the smartest financial investment I have ever made? No! But I did worse in the stick market. I am guarantee I will have more fun with this . No cheer leading necessary. I am my own cheerleader. Woo-hoo!

 

[iluvthsgam]

I'm sorry you feel that I have an attitude as that's not the case. Just imagine a very pleasant tone in your head when you read my posts, that might help.

Noted. Not saying you intended to have an attitude, that is just how I interpreted it.

For the most part I agree with the premise. From a straight financial perspective, your best bet is to rent out the points and pay cash for the cruise. From a convenience perspective, it's a toss up. Some people view renting as a huge inconvenience, others don't like the rigidity that comes with booking a cruise on points. While I don't think it's a good decision (financial or otherwise) to buy DVC predominantly for cruising, I think the occasional cruise using DVC points isn't the worst thing in the world, even if it's not maximizing financial value. All work and no play does indeed make Jack a dull boy.

See now I am confused. You were upset with my analysis because it originally did not include the up-front cost. That is a fair critique. But then you only agree with my premise for "the most part" and only from a "straight financial perspective."

First you make sure to call me out about how the analysis is wrong and the finances aren't right and don't mislead people about the real costs and then you nonchalantly conclude with "taking the occasional cruise isn't the worst thing in the world, even if not to maximize financial value."

I can't figure you out! Usually people either look at it strictly from a dollars and cents side or strictly from the emotional vacation "experience" side. But from you I am getting both!

I am of the type to never use my points for a cruise. Don't care how inconvenient it is to rent points out (not really inconvenient to me at all). And the $$$ back that choice up (I think) in almost every scenario.

 

[ELMC]

We bought 100 points and were given $1300 on our downpayment from Disney. And, they backdated our year to start in Feb. We also took advantage of the lower price, as all prices go up tomorrow. If we had waited a few weeks, we'd be paying more - at least that is what they told us.

I haven't seen anything that suggests a price increase in the next couple of days, so either you were misinformed or misunderstood. As far as the backdating, could you please explain exactly how that worked? There's a chance that was not advantageous for you, depending on your use year. Also, out of curiosity, when did you sign the final contracts of your purchase?

We did not buy GFV, we aren't fans of the Grand Floridian, although we did see the models.


Home is AKL!

Thanks for all of the info - especially that about renting out points to finance a cruise, I'd never considered that before.

Last of all, a question for the 'buzz killers' (I'm saying this all tongue in cheek )... Are you guys members? Do you like it? (Aside from the pros and cons of ownership stated above).

Thanks~!

I am both a buzz killer and a member. I own at BLT, BWV and SSR, each contract for a very different reason. I enjoy having and using my membership very much. Full disclosure, I purchased resale at prices lower than what I could sell for today. This added level of security helps me enjoy my purchase even more. I am not sure that I could ignore the financial realities found in comparisons and simply enjoy ownership for ownership's sake. I have to feel like I'm getting one over on DVD by saving more than what the traditional paradigm suggests. This is not necessarily a good thing.

I encourage you to keep reading the DIS to find ways to maximize your ownership and enjoyment. Congrats again.

 

[misslissa]

I think the op got scared off . I alway appreciate the cost analysis of timeshares. I also think it varies per person. Some will use it much more to its advantage than others. For instance. I will save 600.00 every time I buy the family a set of ap's. I would buy them anyway, that is how we travel to wdw. That has to factor in to the equation somewhere, right? I know I am saving some money by buying dvc. Is it the smartest financial investment I have ever made? No! But I did worse in the stick market. I am guarantee I will have more fun with this . No cheer leading necessary. I am my own cheerleader. Woo-hoo!

Not scared, and not looking for any cheerleading. I'm happy with the decision but still do have time to change it. So, I'm looking for the financial equations as well as a bit of 'way to go' 'cause I have been very excited too . I like seeing these conversations. We all view it differently and will use our points differently but I don't mind seeing both sides at all.

In our household, we are still having the resale vs. direct debate... and are going to look at resale ads right now. I'd love to hear some opinions on this too! Anything we should know? Please feel free to either cheerlead or buzz kill.

 

[Breyean]

Noted. Not saying you intended to have an attitude, that is just how I interpreted it.



See now I am confused. You were upset with my analysis because it originally did not include the up-front cost. That is a fair critique. But then you only agree with my premise for "the most part" and only from a "straight financial perspective."

First you make sure to call me out about how the analysis is wrong and the finances aren't right and don't mislead people about the real costs and then you nonchalantly conclude with "taking the occasional cruise isn't the worst thing in the world, even if not to maximize financial value."

I can't figure you out! Usually people either look at it strictly from a dollars and cents side or strictly from the emotional vacation "experience" side. But from you I am getting both!

I am of the type to never use my points for a cruise. Don't care how inconvenient it is to rent points out (not really inconvenient to me at all). And the $$$ back that choice up (I think) in almost every scenario.

I think ELMC's being pretty reasonable here. He seems to realize different people will value their points differently and some will use them for cruises while some will not.

The fact that he's not doing what you mention (falling into the dollars and cents camp or the emotional camp) is a credit to how he does his analyses and tries to share with others, w/o becoming pedantic.

 

[misslissa]

I haven't seen anything that suggests a price increase in the next couple of days, so either you were misinformed or misunderstood. As far as the backdating, could you please explain exactly how that worked? There's a chance that was not advantageous for you, depending on your use year. Also, out of curiosity, when did you sign the final contracts of your purchase?

I am both a buzz killer and a member. I own at BLT, BWV and SSR, each contract for a very different reason. I enjoy having and using my membership very much. Full disclosure, I purchased resale at prices lower than what I could sell for today. This added level of security helps me enjoy my purchase even more. I am not sure that I could ignore the financial realities found in comparisons and simply enjoy ownership for ownership's sake. I have to feel like I'm getting one over on DVD by saving more than what the traditional paradigm suggests. This is not necessarily a good thing.

I encourage you to keep reading the DIS to find ways to maximize your ownership and enjoyment. Congrats again.

I'm glad I've come across you then! I love a good financial analysis and I need someone smarter than me in this area to give me some points to think about Please see my post above about resales.

I couldn't find anything official about the price increase but I did find this thread: (Crap - URL won't post... *edit*) This is exactly what they were telling me on Saturday. That is when we signed the papers. From what I understand, we still have 10 days from then to backout.

Our use year begins in February. What do you think?

And, thank you! Whether we stick with direct or decide to pull the plug and go resale is up in the air... but I'd love to hear your (and anyone's) advice. I'm not the biggest fan of AKL so a resale wouldn't be completely horrible to me at this point.

 

[iluvthsgam]

I think ELMC's being pretty reasonable here. He seems to realize different people will value their points differently and some will use them for cruises while some will not.

The fact that he's not doing what you mention (falling into the dollars and cents camp or the emotional camp) is a credit to how he does his analyses and tries to share with others, w/o becoming pedantic.

If you think I am trying to say that one has to pick only one side or the other, that was not my intended point of view. It appeared that ELMC was taking the strict dollar and cents side while criticizing my analysis and then taking the emotional experience side after my responses. My point was it felt ELMC was flip flopping based on what argument was being made.

Obviously different people will value their points differently. It is impossible to quantify "value" any other way besides using dollars and cents. But if it were as simple as dollars and cents there really wouldn't be much discussion, would there?

 

[misslissa]

Here is a DIS version of the link: http://www.disboards.com/showthread.php?t=3105501

 

[ELMC]

Not scared, and not looking for any cheerleading. I'm happy with the decision but still do have time to change it. So, I'm looking for the financial equations as well as a bit of 'way to go' 'cause I have been very excited too . I like seeing these conversations. We all view it differently and will use our points differently but I don't mind seeing both sides at all.

In our household, we are still having the resale vs. direct debate... and are going to look at resale ads right now. I'd love to hear some opinions on this too! Anything we should know? Please feel free to either cheerlead or buzz kill.

This is what I was looking for when I asked when you signed your final contracts. There's no point talking about resale if it is no longer an option. There is one very simple thing that you need to consider regarding your direct purchase. When the 10 day recission period expires, the points you paid approximately $132 for will now be worth about $65 after commissions should you decide to sell. That's an immediate 50% depreciation in the cash value of your asset. (The use value remains the same, so if you never sell then it is pretty irrelevant. We don't buy these things planning to sell, but so many of us end up doing just that.) If I were you I would strongly consider resale, especially considering your openness to renting points and using the cash to pay for a cruise. With resale you are getting essentially the same product for half the cost. Another option would be to consider purchasing VGF direct instead. I know you don't love the resort, but VGF projects to hold its value on the resale market much better than AKV and is currently similar in cost. Unless you are traveling at peak times or wanting to book the value rooms or concierge level at AKV, you will most likely be able to find availability at AKV at the 7 month window using your VGF points.

To me you sound unsure. If you have any doubt at all I would cancel your contract and take the time to make a firm decision that you are comfortable with. That very well may mean you make the same decision. Odds are it will cost you very little, if anything and you will be no worse off. But if you choose resale, you will have saved over $6,000 and you will have enabled yourself to act on a decision that you won't be able to make after the next few days have passed.

Good luck!

 

[ELMC]

Here is a DIS version of the link: http://www.disboards.com/showthread.php?t=3105501

I stand corrected, as I missed that. Regardless, I would investigate what promotions will accompany that price increase. Typically in situations like these, DVD will run a promotion that keeps the price somewhat equal. This would be good information for you to know. That being said...there is a 50% off promotion with no expiration date going on right now at resale brokers.