Not drinking the cool aid on resale!!

[chitwndan]

One might suggest that if you want to have money for things when you retire, you should be investing money now for that purpose, not spending it.

I'm not trying to go out of my way to but heads with you, I promise, but this statement indicates you've missed the entire point of what Pete and I are doing. (I apologize Pete if I'm speaking for you but I think I understand your plan/logic)

1st, you can save for retirement and spend at the same time, they are not mutually exclusive.

2nd, We can both go on vacations for the next ten years paying cash as you suggest, and it will cost more than buying DVC. So you then save money which can then be put toward whatever you want.

So provided we can be diligent in our payments, can manage the risk of having debt by having a savings, and not taking on permanent structural debt we are both saving by saving, and saving by spending as we would be spending that money regardless.

Is this the right course of action for everyone, no. But the logic is built on sound financial principals.

 

[ELMC]

I'm not trying to go out of my way to but heads with you, I promise, but this statement indicates you've missed the entire point of what Pete and I are doing. (I apologize Pete if I'm speaking for you but I think I understand your plan/logic)

1st, you can save for retirement and spend at the same time, they are not mutually exclusive.

2nd, We can both go on vacations for the next ten years paying cash as you suggest, and it will cost more than buying DVC. So you then save money which can then be put toward whatever you want.

So provided we can be diligent in our payments, can manage the risk of having debt by having a savings, and not taking on permanent structural debt we are both saving by saving, and saving by spending as we would be spending that money regardless.

Is this the right course of action for everyone, no. But the logic is built on sound financial principals.

I think the problem here is that I am talking in general principles and you and Pete think that I'm making it about you. I'm sorry that it seems that way, because that's not my intent at all. I don't know enough about your individual situations to comment on them, but I do think that when you bring up general strategies, it's fair to comment on them given the fact that others who are reading and thinking of employing similar strategies may not be in the same financial position you are.

There is one comment that keeps coming up in this thread that makes me uncomfortable. People (not sure who) have said that the reason they choose to finance is because buying DVC would wipe out all their savings and they would rather have the money on hand. To me that is way more aggressive than I think one should be. I've done that in the past, and although it worked out fine, in hindsight it wasn't a great move. I'm sure you're familiar with the whole financial pyramid, so I'm not going to explain it here. A DVC purchase belongs at the top of the pyramid. Unfortunately, for many it is the entire pyramid and that is worrisome.

Again, I sincerely apologize if you think I'm questioning yours (or Pete's) individual decisions. I'm not, and I am certainly not assuming that I know enough about you to make a judgment about you (nor would I if I did). However, there are decisions you are making that I would not make for myself or advise others to make, and that is the core of the discussion. As with anything, you could be right and I could be wrong. But even if I am wrong, I still believe it's a discussion worth having.

One other thing that I think is worth mentioning, I'm not entirely comfortable with the cost structures of DVC. You make a statement above that says you are going to spend money now so that starting year 11 you will save money on vacations. That's an accurate statement depending on the variables, which I'm sure you have thought out. And that works for many, many people. I'm just not one of them (and this is a fault of mine, but I hope it gives you perspective on my position). I am way too much in the now, and I get that. I don't want to be in the red for ten years so that I will be in the black for year 11-40. FWIW, I bought my DVC contracts in 2012 and early 2013 when the prices were much different. Based on the same numbers you have used in your examples (apples to apples) my "red" period is only about five years, and I'm just barely comfortable with that. So as you can see, I am beyond fiscally conservative when it comes to DVC, and I think that people should know that when reading my posts.

Hope this helps to alleviate (and not aggravate) the head butting.

 

[chitwndan]

I think the problem here is that I am talking in general principles and you and Pete think that I'm making it about you. I'm sorry that it seems that way, because that's not my intent at all. I don't know enough about your individual situations to comment on them, but I do think that when you bring up general strategies, it's fair to comment on them given the fact that others who are reading and thinking of employing similar strategies may not be in the same financial position you are.

There is one comment that keeps coming up in this thread that makes me uncomfortable. People (not sure who) have said that the reason they choose to finance is because buying DVC would wipe out all their savings and they would rather have the money on hand. To me that is way more aggressive than I think one should be. I've done that in the past, and although it worked out fine, in hindsight it wasn't a great move. I'm sure you're familiar with the whole financial pyramid, so I'm not going to explain it here. A DVC purchase belongs at the top of the pyramid. Unfortunately, for many it is the entire pyramid and that is worrisome.

Again, I sincerely apologize if you think I'm questioning yours (or Pete's) individual decisions. I'm not, and I am certainly not assuming that I know enough about you to make a judgment about you (nor would I if I did). However, there are decisions you are making that I would not make for myself or advise others to make, and that is the core of the discussion. As with anything, you could be right and I could be wrong. But even if I am wrong, I still believe it's a discussion worth having.

One other thing that I think is worth mentioning, I'm not entirely comfortable with the cost structures of DVC. You make a statement above that says you are going to spend money now so that starting year 11 you will save money on vacations. That's an accurate statement depending on the variables, which I'm sure you have thought out. And that works for many, many people. I'm just not one of them (and this is a fault of mine, but I hope it gives you perspective on my position). I am way too much in the now, and I get that. I don't want to be in the red for ten years so that I will be in the black for year 11-40. FWIW, I bought my DVC contracts in 2012 and early 2013 when the prices were much different. Based on the same numbers you have used in your examples (apples to apples) my "red" period is only about five years, and I'm just barely comfortable with that. So as you can see, I am beyond fiscally conservative when it comes to DVC, and I think that people should know that when reading my posts.

Hope this helps to alleviate (and not aggravate) the head butting.

It's all good.

No personal offense taken as I'm content with my decision. It is more about the general strategy as you put it and our situations are not that unique I don't believe. I think there are a lot people in my situation, but maybe I'm naive there. Again I have not been on the boards long enough to hear the horror stories.

I'm completely content with the idea that my plan is more aggressive and yours is more conservative. There's nothing wrong with being conservative, you'll never go broke that way, and there can be something wrong with being too aggressive. But there also can be some significant benefits. It all about if the benefit is worth the risk and if you have the financial forethought to put measures in place to manage that risk.

It's no different than choosing a savings vehicle. Some people choose savings accounts and CD's as they want that FDIC insurance, others choose money market accounts or conservative mutual funds, others choose moderate to aggressive mutual funds, and there's always a few nut jobs who have no idea what their doing trying to day trade penny stocks from their e-trade when their boss isn't around.

Even when considering these as general strategies, and not specifically tied to our situations. They are valid and worth considering for some people, just not for you.

I am sorry to hear you got "burned" a bit on your purchase. I can see how that would color your perspective.

 

[Dean]

You're missing the bigger picture here, and that is the general principle that people accumulate wealth by earning interest, not paying it. The wonderful thing about numbers is that you can make them say anything you want. But what your analysis fails to account for is the fact that if you constantly finance the things you want, you will forever be stuck in a "buy now, pay later" mode. Once you break that cycle you will accumulate the wealth that is needed to see something you want (like DVC) and just go buy it without financing and without depleting your savings. The problem is that requires delayed gratification, something many of us are not good at.

I'm not trying to be judgmental, and I lived for decades in buy now, pay later mode. It wasn't until I broke that cycle that I was able to truly "afford" things like DVC.

That and the even more important issue of limiting risk.

The problem with this is you assume that every person who takes any form of loan are doomed to be in debt in perpetuity.

No one debating your point is suggesting that permanent long term debt is a good thing.

This transaction is an isolated event, and does not sentence someone to financial servitude for ever as you are suggesting.

That's just it, for many, likely most who make these type of choices, it isn't a single isolated event. That's a point I've tried to make a couple of times. They make this type of choice across their lives and it does often prevent them from getting ahead and not too uncommonly leads to a bad outcome.

This circles back around the original topic of this thread - sure, if I could go back in time and buy into DVC 10 years ago direct from Disney, that would make really good financial sense versus buying re-sale today. The same argument could be said that I should go back in time and tell the 35 year old me to start saving $100 a week because you are going to want to buy DVC in 2014. (I can tell you right now the 2004 me would not have believed the 2014 me that we would be going to Disney every year.)

I believe it was in an attempt to suggest that a current retail purchase is a good choice now and financially, that is likely not the case or is in a very limited set of situations, basically those who would pay for VGF anyway on cash and will only use those points there.

The problem with this is you assume that every person who takes any form of loan are doomed to be in debt in perpetuity.

No one debating your point is suggesting that permanent long term debt is a good thing.

This transaction is an isolated event, and does not sentence someone to financial servitude for ever as you are suggesting.

I'm not trying to go out of my way to but heads with you, I promise, but this statement indicates you've missed the entire point of what Pete and I are doing. (I apologize Pete if I'm speaking for you but I think I understand your plan/logic)

1st, you can save for retirement and spend at the same time, they are not mutually exclusive.

2nd, We can both go on vacations for the next ten years paying cash as you suggest, and it will cost more than buying DVC. So you then save money which can then be put toward whatever you want.

So provided we can be diligent in our payments, can manage the risk of having debt by having a savings, and not taking on permanent structural debt we are both saving by saving, and saving by spending as we would be spending that money regardless.

Is this the right course of action for everyone, no. But the logic is built on sound financial principals.

That's just it, many if not most people can't get ahead and make poor choices. Some people can out earn their poor choices but many can't. I know lots of people making six figures and more that are living month to month. Regardless, they would get further ahead or get there faster by making better choices. In my book that includes limiting risk and keeping things simple whenever possible. As a minimum, financing
is saying I want it now but I really can't or won't afford it now. Not having the cash is the former, being unwilling or unable to take it out of funds is the latter. Most of us have been there but that's the bottom line when you strip everything else away. That we get there differently or it's a bigger risk for some than others doesn't change that.

 

[skier_pete]

You don't have to defend yourself to me. I'm sorry that you felt I was lumping you in, or even that I was calling people irresponsible. What I'm doing is speaking in broad generalizations, and without an in depth look at your finances (which I don't want) I can't have an opinion one way or another about any individual situation. I do however, stand by my statement that there are things that one should take loans for (houses, college, cars) and things that one shouldn't (timeshares, jewelry, vacations). Feel free to disagree.

I'm not trying to go out of my way to but heads with you, I promise, but this statement indicates you've missed the entire point of what Pete and I are doing. (I apologize Pete if I'm speaking for you but I think I understand your plan/logic)

1st, you can save for retirement and spend at the same time, they are not mutually exclusive.

2nd, We can both go on vacations for the next ten years paying cash as you suggest, and it will cost more than buying DVC. So you then save money which can then be put toward whatever you want.

I think the problem here is that I am talking in general principles and you and Pete think that I'm making it about you. I'm sorry that it seems that way, because that's not my intent at all.

ELMC - I do understand that you are not directing things at me, but you are also generalizing and saying that any and all loans (unlress it's for a house) for anything are a bad idea. For that reason, it FEELS like you are calling out chitwndan and I as well.

While I agree with your statement about taking out loans for a vacation or jewelry or other luxury purchases is poor financial planning, I disagree with lumping DVC in there. DVC is a case where I am basically pre-buying a portion of my vacation for the next 42 years. In order to do that, I take a loan for the next 10 years (which I do intend to pay off faster, probably in 3-5 years). Between the low interest and the long-term savings on DVC, I consider this a smart "investment". Yes, I know not a traditional investment that I am going to make money on, but one in which I am going to SAVE money, and much, much more money than the $2000 in interest I am going to pay over the life of the loan. In fact, I will likely save tens of thousands of dollars over my lifetime. The only real risk is (1) Disney going out of business or (2) our family deciding we don't want to go to Disney World anymore. #1 seems very low likelyhood, and #2 is mitigated by the fact that I could use resale as well.

And I don't think we ever said we would "wipe out our savings" if we paid in cash. We said we had a certain amount of cash available in our back account for emergency purposes, and prefer to take out a loan than to use it. I have significantly more money invested in my 401K and other IRA/Roth IRA accounts, and college savings accounts that would be harder for me to touch.

chitwndan - While we probably shouldn't "speak" for each other, I definitely think we are on the same wavelength. We used slightly different methods (me a HELOC, you a 401K loan) to get there, but are well aware of the risk as well as the reward.

One thing to remember - the main reason we get to take advantage of resale at such a discount over Disney's rates is that there are plenty of people out there that make dumb/rash purchases. Without them, many of us wouldn't be buying into DVC. I know I wouldn't at $150 a point. So, I am perfectly OK with letting people out there make bad decisions.

 

[Goofy DVC]

First and foremost, I've really enjoyed all the perspectives shared in this thread. One quick comment, I think that for most, the decision to buy into DVC will not be realized as a good or bad one until years after the purchase. Regardless of how people justified their purchase when it was made. The best that most can do is limit the risk to best prepare for life's unexpected little surprises.

 

[mnra]

i agree with the comment about buying at 150 a point. I simply would not do it and since I bought way back in 1992 I find it hard to believe the current prices.

 

[skier_pete]

i agree with the comment about buying at 150 a point. I simply would not do it and since I bought way back in 1992 I find it hard to believe the current prices.

I really is kind of amazing that if you want the latest and greatest DVC you are paying $150+ a point, but if you just want to get into DVC you can get in at $70 a point. Yes, the $70 a point limits your options at certain times a year, a limits your ability to use your points for other things such as DCL or ABD or other resort collections - which BTW basically cost you the same as cash if you use your points. However, the difference seems relatively small to me compared to the extra cost. As I said in my original post, retail DVC prices is what kept me out of DVC, resale is the only choice that makes sense to me. Obviously the OP did not think so, as he was "not drinking the Kool-aid"!

 

[Dean]

ELMC - I do understand that you are not directing things at me, but you are also generalizing and saying that any and all loans (unlress it's for a house) for anything are a bad idea. For that reason, it FEELS like you are calling out chitwndan and I as well.

I think this is an important distinction. If one speaks to a principle and it ends up applying to an individual, they should not take it personally. Otherwise you couldn't speak to any principle. I'm always reminded of the group that took it as a personal insult when we discussed the negatives to the system that SSR brought with it.

 

[skier_pete]

I think this is an important distinction. If one speaks to a principle and it ends up applying to an individual, they should not take it personally. Otherwise you couldn't speak to any principle. I'm always reminded of the group that took it as a personal insult when we discussed the negatives to the system that SSR brought with it.

Well, "taking it personally" is probably too strong a turn of phrase. It's more the point that it made me feel like I wanted to defend that side of the argument. I respect everyone's opinion in this thread, and actually really like that it hasn't gotten "personal" as these thread sometimes do. Just a good ole fashion argument!

 

[chitwndan]

Well, "taking it personally" is probably too strong a turn of phrase. It's more the point that it made me feel like I wanted to defend that side of the argument. I respect everyone's opinion in this thread, and actually really like that it hasn't gotten "personal" as these thread sometimes do. Just a good ole fashion argument!

I agree completely.

 

[Bellecruiser]

Hi There,

I think there is another set of facts to be considered whether or not you are buying direct or resale. In your graph below I have added the cost of the original purchase in constant dollars, or real dollars, or 2014 dollars. The additional info shows what it would cost in terms of 2014 $$$ if you were purchasing the contract today. I also added VGF.

Looking at the DVC resorts in Orlando and California, and looking at there opening sales prices, I really don't see how there is much, if any savings if you buy early when the resort opens. Just a few resort statistical data below:

OKW 1991 $51 pp 2014 resale around $70 pp, and in 2014 dollars the original cost pp = $89 pp

BWV 1996 $62.75 pp 2014 resale around $80 PP, in 2014 dollars $62.75= $95 pp

WL 2000 $72 pp 2014 resale around $80 pp, in 2014 dollars $72 = $99.47 pp

BCV 2002 $80 pp 2014 resale around $95 pp, in 2014 dollars $80 = $105.79 pp

BLT 2009 $112-$5 (incentive) $107 pp 2014 resale around $ 95pp, in 2014 dollars $107 = $118.65 pp

VGC 2009 $112 pp 2014 resale $135 pp, in 2014 dollars $112 = $124.20 pp

VGF 2013 $145 pp, 2014 resale $135 pp,[B] in 2014 dollars $145 = $148.08 pp[/B]


It seems right now people are happy to be picking up 2042 to 2054 end date contracts for more or the same money then they were sold for 10 to 20 years ago, and are pounding there chest about the resale market. A little confusing.

It might be the same money, but it doesn't buy the same amount. DVC does retain value, especially compared to other timeshares. IMO DVC really is a luxury purchase that you need to enjoy while you use it, and be able to walk away from with your family OK.

 

[buffy71]

I bought resale at boardwalk approx. 8 years ago. I would recommend resale. I did get a savings and have a wonderful home resort. just last summer I used my points for a studio at grand Floridian for a week - talk about a great value. as far as losing some years - well I will be in my early seventies when my dvc expires by that point I might be retired and living in florida year round. my dvc was purchased for my family vacations and those vacations will change as my children grow up. I don't need a Disney timeshare to last my entire lifetime. paying double the price for a dvc now just would not be the same value to me. as I look at it now, for $850 approx. in annual dues I get at least a one week vacation at an amazing Disney resort.