Math help

[perchy]

Can you share your formulas/calculators/Excel cheats for figuring out the cost of a contract over its lifetime?

For hoots and giggles, I've been playing with cost (including closing)+dues every year for the life of the contract, with a 4% increase in dues every year. All of that added together and divided by the number of points is the lifetime cost per point. That right?

 

[CanadaDisney05]

Can you share your formulas/calculators/Excel cheats for figuring out the cost of a contract over its lifetime?

For hoots and giggles, I've been playing with cost (including closing)+dues every year for the life of the contract, with a 4% increase in dues every year. All of that added together and divided by the number of points is the lifetime cost per point. That right?

For the most part yes. One thing that calculation is missing is discounting for inflation. If you don't discount, then an $8.00 maintenance fee will be $26 in 30 years. While that may be true, in theory your salary should increase by roughly 2% annually over 30 years as well

 

[ONeilcool]

There is no way to predict how much dues will increase or how much inflation will matter. Most contracts will will end up between $12-$18 per point over the lifetime of the contract, but any number you arrive at is going to require a large amount of guesswork and assumptions.

At the end of the day, DVC is a luxury product for people who like to stay at deluxe accommodation at Disney Resorts and are willing to plan their vacations 7-11 months early. If that sounds like you and you are excited go ahead and buy a contract that fits your needs. DVC CAN save you money, but it's not an investment and it's not guaranteed to save you anything. If you are worried about the cost DVC might not be right for you.

 

[perchy]

There is no way to predict how much dues will increase or how much inflation will matter. Most contracts will will end up between $12-$18 per point over the lifetime of the contract, but any number you arrive at is going to require a large amount of guesswork and assumptions.

At the end of the day, DVC is a luxury product for people who like to stay at deluxe accommodation at Disney Resorts and are willing to plan their vacations 7-11 months early. If that sounds like you and you are excited go ahead and buy a contract that fits your needs. DVC CAN save you money, but it's not an investment and it's not guaranteed to save you anything. If you are worried about the cost DVC might not be right for you.

I just asked for help with the math. I didn’t ask if DVC was right for me. Lots of people here do the math. Clearly, you’re above it. Good for you.

 

[Lorana]

I definitely feel it's worthwhile to do the math. After all, most resorts have had a CAGR of 4-5% over the lifetime of the resort, and if salaries only raise 2% per year, it's worth figuring out if you will be comfortable with dues that increase faster than your salary increases over time. I think the vast majority of us do need, or at least want, to calculate future expenses, to at least ensure long-term that we still feel we're getting value from this, let alone making sure it will fit into future planned finances.

One of the things we did, which admittedly many on this board will argue against, is bought more points than we expect to use in a typical year. We did this for 3 reasons
(1) we want to be able to splurge from time to time on Cabins, or upgrade from Studios to 1 BRs and 2BRs
(2) we want to be able to treat friends and family some times to come with us to Disney, and thus want to be able to book Grand Villas (for example, we're treating a bunch of friends and family in 2022)
(3) on years we don't do (1) and (2), we want to be able to rent out points to help offset the cost of dues. I completely get that this is not the wisest course, and that if you do the math, it is certainly not the most economical decision. I get that the wiser course may have been to take that extra money and invest it to pay for future, BUT, personally, we wanted the flexibility of having (1) and (2) when we wanted, while the option of curtailing back DVC in the future, either by renting points to cover dues or selling some of our contracts. It's impossible to truly know what the future will bring, and while right now we believe we will always be able to cover our dues expensive with our salaries, I can't definitively say where I will be working and for how much in 10 years. As we could afford to buy more contracts than we need (and we paid "cash," using the advantages of the Disney Visa to spread payments over 9 months for 0% interest and get 2% back), this was the approach we decided to do after looking at the numbers. It is certainly not the right approach for everyone.

 

[mattburmeister]

Can you share your formulas/calculators/Excel cheats for figuring out the cost of a contract over its lifetime?

For hoots and giggles, I've been playing with cost (including closing)+dues every year for the life of the contract, with a 4% increase in dues every year. All of that added together and divided by the number of points is the lifetime cost per point. That right?

When I consider the price of my contract I like to think about the true cost per point in the year I'm spending it. What I do is take the total cost of the contract, (in my case $22,100) Divide by the number of points (210, divide by the number of years left on the contract (33) = $3.19 per point, then I add the current dues (SSR) = $7.11. This year I've spent 10.29 per point on DVC, and next year I just add the original $3.19 to the new dues amount and consider that number. I find that considering the whole life of the contract to be unhelpful as I don't have an expectation of maintaining the contract over the 34 year life of the contract as I'll probably upgrade or move to a new home resort.

 

[sethschroeder]

Have to be honest when I am looking at my cost of points I don't include MFs in the future. I just took the point cost and spread it out over the contract length. Then I add in this years MFs and consider that the price per point.

The reason I don't include future MF increases in the math (unless comparing two DVC options) is that in the future that MF of $12 is not really going to be $12. Yes its "$12" but its more equivalent to $8.50 or $7.75 or whatever since inflation is happening.

Now when looking at DVC A vs DVC B then I include the MF difference so that way I can see the gap that occurs long term. Example I did it when I finally decided to add-on to RIV vs buying more points at BWV. I could get a rough idea in 2042 how much money I would have "saved" by getting the cheaper BWV and come to the conclusion that I would be unlikely to buy another 30 years worth of DVC points for that cost savings (think it was like $250/point or something and if it was more expensive than RIV would be cheaper for me to get today).

 

[skippytx]

One of the better ones I've found

https://www.disboards.com/threads/break-even-value-calculator-for-dvc-per-resort.3790117/
I've ran the numbers for my contract, and used a 5.5% CAGR for BLT dues. If I keep the contract, I'll have paid something like 160,000 dollars in annual dues when it ends.

 

[perchy]

One of the better ones I've found

https://www.disboards.com/threads/break-even-value-calculator-for-dvc-per-resort.3790117/
I've ran the numbers for my contract, and used a 5.5% CAGR for BLT dues. If I keep the contract, I'll have paid something like 160,000 dollars in annual dues when it ends.

I don't understand it.

Always stayed after school for extra help in math....

 

[upritbass]

Don't forget to factor in the cost of an equivalent hotel room to estimate the break-even point. Those costs can become eye-watering in the future depending on demand. For example, when I was doing the cost benefit analysis for VGC I was using $500/night for a view room at the Grand Californian (but no kitchenette, no balcony). I came up with a break-even of less than six years even if my point value went to $0. Such rooms are now going for ~$1000/night!

 

[perchy]

Don't forget to factor in the cost of an equivalent hotel room to estimate the break-even point. Those costs can become eye-watering in the future depending on demand. For example, when I was doing the cost benefit analysis for VGC I was using $500/night for a view room at the Grand Californian (but no kitchenette, no balcony). I came up with a break-even of less than six years even if my point value went to $0. Such rooms are now going for ~$1000/night!

I do want to keep a journal.... what it cost me.... what it would have cost me paying cash.... any income from renting.... less taxes paid.... anything to show the real break even.

I am really bad about vacationing, coming home with all my receipts and figuring out what I actually spent. Playing with numbers before I travel is more my speed. haha

 

[peabody58]

Cost with DVC: Life is better + stress level lower + learned to enjoy time off + retired early = Worth it.
Cost w/o DVC: Very expensive Divorce * major health issues * still working with no life = See Above.

Your calculations may vary.

In all honesty, I have a couple spreadsheets which vary in methodology, but after 10 years of DVC, the cost is no longer an issue. It's paid for, I can afford the MF, and we still love the product. We would never had gone to WDW so many times without DVC, let alone enjoyed ourselves as much.

What ever 'calculation' you use, be sure you can afford the MF's and Tickets moving forward.