Long term value of DVC

[GAN]

Who says people don't pay attention to their money? Why -because someone took $15,000 of their cash and put it into future vacations ....that's not watching their money? I'll be willing to bet there are people who "watch" their money, by investing the same amount and watched it turn into little more than $15,000. What's the difference? Everyone's situation is different ...maybe $15,000 is not a big number to some people. If you want to say there are people invested in DVC that shouldn't be ...sure, I'd believe that. But we can only worry about ourselves -a lot of good advice falls on deaf ears.

Here's the bad deal that I signed up for. I dumped $12,500 on my points and I've been paying between $600-700 a year in maintenance fees. I've owned for about 10-years and have rented maybe 4-1/2 years worth of points(most to the same person) for a total of around $8,000. In addition, we've personally stayed (3) one-week trips in 2-BR units, and a one-week trip in a Studio (there may have been another trip in there as well). I just checked, and it looks like my points are selling for the same as I bought them. I could continue to rent the points(EASILY) for the next 30-years if I wanted to ...in simple math, that would be about a $1000 gain per year on my $12,500 "investment."

I guess my point is -don't worry about me and my money. We're doing just fine, thanks!

 

[Dean]

Who says people don't pay attention to their money? Why -because someone took $15,000 of their cash and put it into future vacations ....that's not watching their money? I'll be willing to bet there are people who "watch" their money, by investing the same amount and watched it turn into little more than $15,000. What's the difference? Everyone's situation is different ...maybe $15,000 is not a big number to some people. If you want to say there are people invested in DVC that shouldn't be ...sure, I'd believe that. But we can only worry about ourselves -a lot of good advice falls on deaf ears.

Here's the bad deal that I signed up for. I dumped $12,500 on my points and I've been paying between $600-700 a year in maintenance fees. I've owned for about 10-years and have rented maybe 4-1/2 years worth of points(most to the same person) for a total of around $8,000. In addition, we've personally stayed (3) one-week trips in 2-BR units, and a one-week trip in a Studio (there may have been another trip in there as well). I just checked, and it looks like my points are selling for the same as I bought them. I could continue to rent the points(EASILY) for the next 30-years if I wanted to ...in simple math, that would be about a $1000 gain per year on my $12,500 "investment."

I guess my point is -don't worry about me and my money. We're doing just fine, thanks!

I don't think anyone is worrying about an individual, only discussing the question at hand. You decided to join the discussing in a snarky and unhelpful way (IMO) and bring your personal situation into the mix when it was not applicable from what I can tell. If you have the opinion that people shouldn't pay attention to their money, that's fine. Mine is they should but I do realize the difference between paying attention and micromanaging. Now if we want to compare successes, I'll call and raise you three 1 BR units coming up as exchanges, total cost about $1800 combined including all indirect costs.

 

[GAN]

You decided to join the discussing in a snarky and unhelpful way (IMO) and bring your personal situation into the mix when it was not applicable from what I can tell.

What? Sorry I came across that way. But please tell me why MY situation isn't applicable. It seems there is a lot of advice -I think people should make their own decisions.

 

[Dean]

I guess my point is -don't worry about me and my money. We're doing just fine, thanks!

Was what I was referring to.

 

[GAN]

Was what I was referring to.

I didn't mean it to be snarky -I feel all the calculations that people do are meaningless. The ONLY person they can be helpful to is that particular person. So while I respect your opinion, and you have some very good points, its just that you can't fit them inside a box that will work for everyone or maybe anyone ....except yourself. Like my example -it only works for me.

 

[luckyman_apd]

Gan and Dean.....both of you have valid points. I for one can say I'm in the boat with Gan......my points value to me has been well worth it. I'm sure i've had plenty of money go out the window in poor decisions and bad purchases.....but DVC was not one of them. I've benefit $ wise but that's not the only calculations worth making. One could argue that the extra trips we've made cost me MORE money...not saved. Valid point. We would NOT have traveled as much if we didn't purchase DVC.....but we have traveled because DVC cost us less to do it. It's a catch 22. But those trips have brought family time and experiences that can't be replaced. My family is the closest when hanging with the mouse. I can't explain it, but it's just our thing.

We know others that own and have very poor decisions with it. Wasted points....purchased too many, bought site unseen and don't like their resort.......I agree with Dan that this is not a one size fits all equation. However, Dean you bring up excellent points for others to think about before purchasing. I've always appreciated your perspective (as well as another on these boards who is very negative). Balancing all opinions and perspectives can only help one make their one personal decisions.

 

[Dean]

I didn't mean it to be snarky -I feel all the calculations that people do are meaningless. The ONLY person they can be helpful to is that particular person. So while I respect your opinion, and you have some very good points, its just that you can't fit them inside a box that will work for everyone or maybe anyone ....except yourself. Like my example -it only works for me.

Apology accepted. Still, I disagree completely with your point if I'm understanding it correctly. I would agree that every situations has some nuances but I would suggest that they are ONLY nuances and that the larger principles apply. I would suggest there are 2 issues for anyone considering DVC, math and personal situation/preferences. I would also suggest that the math has to make sense first for the personal issues to come into play. I do not believe that because someone made a decision that it was automatically the correct one for their situation but I do agree they have the right to make a decision even if it's wrong. When I speak to these issues I'm speaking to the principles far more than a given person's situation, and the point of principle's is that they apply over a much broader range than a given person.

 

[GAN]

I fully understand. Listen, I don't plan on working my entire life -but you know what, there are people that make bad financial decisions ...and they are perfectly fine with the fact that they might work the rest of their life. It's crazy -I know, but that's their decision. Me dying with more money isn't going to make me a winner. I'm part Swiss, I know enough about money to realize what I need to get where I want to go.

But I know you ....you're my father!

 

[Minniesgal]

They divided their MF by 52, so they pay $40 per week. They stay 2 weeks so $80 per vacation. I guess people who don't know math may be happier.

Seriously? Surely not?

 

[Minniesgal]

I'm trying to understand- this is a page about DVC, right? But here's a thread with a group of smarty-pants smugly looking down their noses at people who have bought DVC, and denigrating them for being stupid for having done so. Why would you even come to this board? Just to troll and hopefully make people feel bad for being so stupid while professing how you're so smart?

Guess you showed us! Bravo.

LOL I think most people on this thread are owners

 

[Dean]

I fully understand. Listen, I don't plan on working my entire life -but you know what, there are people that make bad financial decisions ...and they are perfectly fine with the fact that they might work the rest of their life. It's crazy -I know, but that's their decision. Me dying with more money isn't going to make me a winner. I'm part Swiss, I know enough about money to realize what I need to get where I want to go.

But I know you ....you're my father!

We all make bad decisions but we'd prefer not to. Hopefully we don't make big ones, too many or the same one multiple times. Thanks for the complement though I'm not sure ethnicity has anything to do with it. Back to the topic, my opinion is that it's only a value if one can afford it. By definition that means be able to pay cash for it and have the rest of their financial house in order, IMO. I heard recently that 70% of people in the US have a net worth of around zero or less. I think they were quoting a NY Times or Washington post article IIRC.

 

[GAN]

I heard recently that 70% of people in the US have a net worth of around zero or less.

Sure ...I'd believe that. And those are the people that either just don't have the means, or have decided that they will live life the way they want(perhaps beyond or right at what their income will allow) and work till they die. If they're good with that, I'm good with it.

 

[Dean]

Sure ...I'd believe that. And those are the people that either just don't have the means, or have decided that they will live life the way they want(perhaps beyond or right at what their income will allow) and work till they die. If they're good with that, I'm good with it.

I doubt most of those people simply chose to be in that position. It's likely they simply didn't know any different or have a plan. It's just like the fact that most people who buy lottery tickets are low income and that the payday lenders are almost always located on the poorer side of town. If it's their choice, so be it, but I doubt that's their preference.

 

[davidl81]

Gan and Dean.....both of you have valid points. I for one can say I'm in the boat with Gan......my points value to me has been well worth it. I'm sure i've had plenty of money go out the window in poor decisions and bad purchases.....but DVC was not one of them. I've benefit $ wise but that's not the only calculations worth making. One could argue that the extra trips we've made cost me MORE money...not saved. Valid point. We would NOT have traveled as much if we didn't purchase DVC.....but we have traveled because DVC cost us less to do it. It's a catch 22. But those trips have brought family time and experiences that can't be replaced. My family is the closest when hanging with the mouse. I can't explain it, but it's just our thing.

I think sometimes some people on here get a little too caught up trying to figure out the value of DVC down to the penny. If you follow some of the logic on the board you may convince yourself that a vacation in general makes no financial sense and you should work every day of your life so you can retire 2 years early. Sure you won't get to enjoy those working years, but look at all of that money in your Roth account! Obviously that is an extreme example , but sometimes I get that feeling in the board. I feel as though DVC has been a good purchase for us because just like you our family just seems to be in our happy place at Disney and DVC has "made" me go there maybe more than I would have without it.
The other thing that DVC has done is allow us to take big family trips. We are going in May with my wife's parents and her brothers family. We are getting a grand villa at SSR for 5 nights. Even with some kind of discount just the rooms alone would have cost us $6000 or so to stay there. It would have been hard for me to pay that for room (not that we can't afford it, just the thought of 6k out of pocket for 5 nights of rooms). With DVC we just use our points and done. I know we already paid this money when we bought in, but I guess it just feels different when we using points not cash. Once again people can talk about the time value of money and if we would have put our intinal purchase in some investment account we could have netted more money etc, but we feel as though DVC has been great for us and I guess that's really all that matters.

 

[Brian Noble]

I think sometimes some people on here get a little too caught up trying to figure out the value of DVC down to the penny. If you follow some of the logic on the board you may convince yourself that a vacation in general makes no financial sense and you should work every day of your life so you can retire 2 years early.

I can't speak for others, but that's never the stance I take. When I offer an analysis for the "costs" of DVC, I assume that someone will vacation in exactly the same resorts for exactly the same number of nights. The only question is how one pays for those stays, and there are four options: Rent the stays directly from Disney at prevailing rates, including applicable discounts; rent the stays from an owner (or owner-broker); buy resale and use those points for the stays in question; or buy directly from Disney and use those points for the stays in question.

So, the question isn't go on vacation or not. The question isn't even stay in DVC resorts or not. The question is: what's the most cost-effective way to stay in DVC resorts? This is a purely objective analysis, because it's just about how to get the best price on a thing you are already committed to buying.

There is a secondary question that's worth thinking about: Given the costs of even the best option to pay for your desired stay pattern, is it "worth it" to stay in a DVC resort vs. some other option? That's a purely subjective question. But, you can't ask it unless you actually know what the darn thing costs in real terms. It could be that it is so important to you that you would do it even under the most pessimistic set of assumptions. That's great! But, that's probably not true for everyone.

 

[Mickey'sApprentice]

I agree that it is important to consider the Time Value of Money in making these considerations.

It is also important to consider that when someone bought OKW in 1992 at $51/point they were purchasing 50 years worth of points. If you purchase a 2042 Old Key West contract today, you have 27 years worth of points to use. Since our maintenance fees are far less than paying cash for a room, we are even more ahead.

 

[Dean]

I think sometimes some people on here get a little too caught up trying to figure out the value of DVC down to the penny. If you follow some of the logic on the board you may convince yourself that a vacation in general makes no financial sense and you should work every day of your life so you can retire 2 years early. Sure you won't get to enjoy those working years, but look at all of that money in your Roth account! Obviously that is an extreme example , but sometimes I get that feeling in the board. I feel as though DVC has been a good purchase for us because just like you our family just seems to be in our happy place at Disney and DVC has "made" me go there maybe more than I would have without it.
The other thing that DVC has done is allow us to take big family trips. We are going in May with my wife's parents and her brothers family. We are getting a grand villa at SSR for 5 nights. Even with some kind of discount just the rooms alone would have cost us $6000 or so to stay there. It would have been hard for me to pay that for room (not that we can't afford it, just the thought of 6k out of pocket for 5 nights of rooms). With DVC we just use our points and done. I know we already paid this money when we bought in, but I guess it just feels different when we using points not cash. Once again people can talk about the time value of money and if we would have put our intinal purchase in some investment account we could have netted more money etc, but we feel as though DVC has been great for us and I guess that's really all that matters.

I think the mistake many make on this subject is taking their historical information and personal situation and extrapolating it going forward for new buyers, it's really not that applicable most of the time. DVC is a different animal now financially, and otherwise, that it was even 5 yrs ago and this group represents a skewed population, namely those that bought and it's working for them to some degree (with a few exceptions). My view is I want DVC to be a blessing and not a curse for those that buy in, DVC isn't for everyone.

 

[Mickey'sApprentice]

Looking at my Boardwalk points that I bought 10 years ago, resale for $84/point...let's say I sold these points for $80 point and paid a 10% commission. That would mean I would get $72, point and LOSE $1200. In that time, I have paid maintenance fees and went on many vacations. For my March vacation in a Boardwalk View Studio, I will pay $102/night in maintenance fees. However, if I were to rent that room out right...I would have spent $513/night. I would only have to spend 3 nights in my room on this trip to knock out that entire $1200 loss if I assume that I at least broke even on my nights stay being worth what I paid in maintenance fees.

Using the TVM with 3% inflation, $84 in 2005 is the same at $112 in 2015. To absolutely break even, I would have to sell for $121/point.
Truthfully, I believe that I would be able to sell my 100 points for $90/point, or $81 after the commission. That would relate to a $3,000 loss.

Over 10 years, I have used approximately 1000 points, and have spent approximately 72 nights in a DVC room in that time. Assuming that I saved $200/night (which I consider conservative) that is $14,400 which far exceeds my $3000 loss.

So, if I were going to go on vacation at Walt Disney World for the entire 10 years (which I was) then I saved money.

However, I would not pay $500 per night for a hotel room. We would have definitely started staying at Port Orleans Riverside by now, and would not have come to Walt Disney World nearly as much.

Finally, if I had taken that same $8400 in 2005 and bought Disney stock for $25/SHARE, I would now have $35,000. This doesn't even take into account whether or not I would have added approximately $600/year to purchase more stock and the dividends received from the stock, much less the extra money spent on tickets that could have went toward more Disney stock.

 

[George4]

No, it's not a silly game. I'm continually amazed by the fact that otherwise well-educated people simply don't (or refuse to) understand the time-value of money. Nearly every single DVC "cost" analysis I've ever seen just divides the cost of a points purchase by the number of years on the contract, and calls that the annualized purchase price. The reasons why people refuse to use opportunity cost are many and varied. But, those who insist on not using it are essentially saying that they'd be willing to give me $30,000 today, have me give them back $1,000/year over the next 30 years, and would call it even at the end.

While your statement is generally true about the time value of money, you also have to keep in mind that for many people, this investment is simply their vacation funds pulled forward, which can be considered an investment of sorts. When we looked at it, we assumed that we spend about $2k on a hotels each year for our vacations. We purchased ours DVC for $15k. At the time, we bought 46 years worth of vacations for the cost of 7.5 vacations (hotel only). If we had invested the money, could it be worth more? Maybe, but it could also be worth less. For instance, our investment and income hit between 2006-2014 was so significant that we would not have been able to take a vacation in those years had we not owned a DVC property. We didn't even use the parks on two of those visits because we couldn't afford the tickets, but we enjoyed the time on vacation.

The time value of money is defined differently for different people. While you might be correct that many people don't understand it, it is also possible that many people define it differently than you do. Those vacations are worth every penny I pay - even as a future dollar, even if it comes out that those $15k could have been worth a lot more than $15k at the end of our contract. In the short term we lost our investments, but they will bounce back in time. However, I never lost my vacations because I had a DVC purchase. That was nearly priceless for those eight years. I don't need every dollar to be an investment for later in life. Our purchase was perfect for our family, and met our needs for time-value of money. I think the value of money over time, for me, is different than it is for you. That $15k could be worth $240k at the end of our contract if everything works out well to average, or it could have nearly disappeared over the past eight years and be worth $1,000 today, and a total of $16k at the end of the contract - which is how our current investments seem to be moving. Or, I could have taken 46 vacations guaranteed, no questions asked at beautiful resorts with lots of amenities in comfortable central Florida. My money was well spent. I thought it at the time, and no matter what happens over the remaining 36 years, I will have been happy for every penny I spent and enjoy all of the memories I have created with my family.

We just see the time-value of money differently. Not all of us are just stupid about money over time.

 

[suebeelin]

I know this is an old threat but very interesting to peruse.

I think if you have that extra $15-30k in the bank not doing ANYTHING, and that amount is a fraction of your savings (assuming you'll go to DW for another 10 times), then dvc is a good purchase.

For us, we initially dipped our toes with a 200pt resale at boardwalk. After fees, it was less than $15k. We project $1200/year in maintenance fees.

I'm still comfortable with that amount. My concern is that I might have overbought recently with a 200pr BLT purchase for under $20k.

However, assuming BLT prices remain the same, I plan on reselling that in 5-10yrs. If I can resell at the same or similar price, then I'm ok.

For us, this is just cash in a savings account. We do not plan on investing this amount on anything- it would be sitting in cash anyway. As a result, the first dvc purchase made sense for us.

Not so sure about the 2nd BLT purchase, but I think it still made sense.