Share your DVC Financial formula!

[chrismiss56]

Stupid question of the moment. In the last posting they referred to 5 days at HH - what is that - Hilton Head Island?

Also you are able to take cruises with your points? How many points does that take?

Thanks!!

Have a magical Disney Day!!

 

[CarolMN]

Hi Mike...
Yes, of course I factored in all expenses including the big initial chunk. Your idea to put $9500 in money market would net you$190 less taxes at today's rate...I doubt you could pay much in the way of MF fees.
As for renting...it was the easiest thing I have ever done...took 3 phone calls to transfer all 2004 and half 2005 points. Piece of cake.

Finally, the example was based on a model of $20,000 invested in mutual funds which have been gaining very little the last few years...so giving it a net of 4% (after tax) yielded only $800 on the entire cash invested in mutuals.

Not sure if my explanation confused you...but the renting of some points each year paid all MF so....after the initial outlay those 22 days were FREE. And again, the initial outlay (20K) in mutual funds...or worse, in money market would net you $800 a year at 4% net....So lets see: a not guaranteed $800 a year OR 22 days at OKW....hmmmmmm. Let me think about that! And then there is also the opportunity to forego 22 days and instead rent those points, netting you not a measly $800 but actually nearly
$2000 net. And still having ownership of DVC which SO FAR is still appreciating. Yes MF goes up...but so does rentals ( I do transfers at $11 and rentals at $12 currently)

However, all this talk is giving away some of my best investment strategy for free! If too many of us tried my strategy....well, it wouldn't be near as good.
Each to his own! And please pass the hanname!

This strategy is not without risk - especially if you will be renting to strangers. See this thread for more info:

Owners are respsonsible for renters' room charges if renter doesn't pay!

Best wishes -

 

[JimC]

Stupid question of the moment. In the last posting they referred to 5 days at HH - what is that - Hilton Head Island?

Also you are able to take cruises with your points? How many points does that take?

Thanks!!

Have a magical Disney Day!!

Yes HH is Hilton Head. There is a DVC resort there.

And yes, you can cruise on points. There is even a DVC members only cruise each year. Points for cruise are expensive way to pay for cruise, in my view. The number of points varies by cabin category, length and season. The cruise points have and will likely continue to go up each year. There is a great analysis that a travel agent did on cruising on points or cash. If I can find it I will post a link.

 

[ohanafamily]

Hi, I don't usually hang out here, but I am thinking about my 2006 trip, so I checked the board... and a chance for me to be a DVC WITNESS!!!

Seriously, I wanted to buy in a year before I did; I was talked out of it by my guide. He told me I don't vacation enough.

I will say that since I bought in, I have been to Disney twice a year (except this year... New baby last December) and I believe formly in DEFICIT Point Spending...I have banked a total of 5 points since I bought in in 4/1999. (Those 5 points wound up being banked because I changed my Oct ressie and got them back)

DVC encourages you to go to WDW.

I have a huge spreadsheet that I keep our vacation plans in. I have all sorts of math formulas that I use to figure out if what I want to do is a better deal.

My wife and I like a 1BR, the washer and dryer make her less stressed. She plans on coming home with clean clothes. We also like the Kitchens. My dw also feels more comfortable not needing to clean the room for the maid...just a few flakey reasons we like the rooms.

Oh, I have to add this, Good Deal or not, MY CPA owns 300 pts.....

On the current resale market, I think I can get MOST of my initial investment back, which is a lot more than I can say for stock performance since 1999....

What is a "Good Deal" and what can be beat... Simple, if you stay for points at a DVC resortyou get AT LEAST the equivalent of the lowest rate availabe at that resort for that size room. It is usually at a greater savings than you could find.

If you stay at another Disney resort, you might be able to beat the price, but it will be one of the lower prices available (definately less than rack rate.

II tradeouts, it really depends, but I will give some simple results...

[the simple mat]
To compare if it is worth it on an individual basis, first you need to figure out how much each point costs per year. I usually round to $6, but here is the math...

Total cost of a single point = Total cost of contract (including interest and rebates) / number of points you buy.

Number of years your contract will run = 2054 for SS(2042 for everywhere else)- the year your contract closed

Annual Prepaid cost per point = total cost of a single point / number of years your contract will run.

The annual cost basis per point = the annual prepaid cost per point + the annual fee per point (there are charts, but you do need to include the annual maintenance)

the cost annual cost basis per point should be around $6, but varies a little.

Now to figure if you are getting a good deal, multiply the number of points it will cost by your annual cost per point.

Compare what your best deal available is to the above number...

[/the simple math]

An example,

In 2004, We stayed 8 days at BCV in a studio. it cost us 129 pts.
$774 if you figure $6 per point, $1,290 if you figure renting points at $10 per point.
The discounted DVC rate was $2,200, and the "Rack Rate" is $2,900. It is a good deal.

in 2003 we went to DL, the trade out was a similar price to the discount rate I paid, bet there was a special unlmitted fastpass deal, and I upgraded to concierge level, and we wound up paying cash... If you like the concierge level, the trade outs don't always work so good...

I hope this helps

 

[mlshields]

JimC -

I understand that the cash is better than points for cruises.....

What I don't understand is if you have the points why do people opt to use their hard earned cash?

I would rather have the money in the bank - or use it on the cruise

 

[erikthewise]

JimC -

I understand that the cash is better than points for cruises.....

What I don't understand is if you have the points why do people opt to use their hard earned cash?

I would rather have the money in the bank - or use it on the cruise

I would not dream of telling anyone how to use their points; they have paid for the right to use them any way they wish. But assuming that your question was sincere and not rhetorical...

Some people think that their points have cash value, so are just as much "their hard earned cash" as what is in their bank account. Those people have a hard time understanding why others are willing to spend so many of their "hard earned points" on a cruise that's expensive enough already at cash prices.

And some people don't "have the points" to use on their cruises, because they only bought enough for their WDW trips. So if I can do a 4-day cruise for $2600, I am not interested in spending 400 points instead, as that is 2 years worth of points for us.

 

[ohanafamily]

erikthewise, In my scenario, the points cost $6, so 400pts is $2400 and you don't have the additional taxes on it. It is a good fiscal idea. If you had to rent the points ($10 is the going rate, but they can be rented as low as $8) $3200 would not be a good buy....

What some people do is to rent out their points and use the money for the cruise... $4000 (at $10 a point) -$2400 = $1600 spending money.....

 

[JimC]

JimC -

I understand that the cash is better than points for cruises.....

What I don't understand is if you have the points why do people opt to use their hard earned cash?

I would rather have the money in the bank - or use it on the cruise

Some rent their points, pay cash and pocket the difference or use it for other cruise expenses such as excursions in port, tips, drinks, shopping and the like.

Some run out of points with their normal DVC stays so cash is all that is left.

And some consider their points a kind of currency (just another medium of exchange) and make stay by stay decisions as to use points or cash (That is us). Some even make decisions day by day (points Sunday to Thursday nights and cash for Friday and Saturday nights -- not us).

It comes down to your resources and point management philosophy.

 

[CherCrazy]

Here's how we decided to purchase...

Our 200 points cost us about $15,000. for 50 years worth of trips.

One week down the Jersey shore in a condo near the ocean runs about $5000. So in exchange for the cost of 3 years of staying in state to go on vacation, we got 50 years of trips.

Now look at the dues. We pay about $700 per year in dues. In 2004 we only vacationed 5 nights in a studio at SSR. $700 divided by 5 nights equals $140 per night. We banked the rest of our pts.

This year we used our banked points and this years allotment. We spent 6 nights in a 2br villa at HHI and will spend 7 nights in the studio at SSR again. Total 13 nights of deluxe accomodations, divided into the same $700 membership dues for a grand total of $53.84 per night.

Tell me....where else in the WORLD can you get DELUXE accomodations for $53.84 per night????!!! Or for $140 per night?? Or if it was 7 nights at $100 per night??? Can't be done!!

OK call me a DVC RA RA!!