Spreadsheet fun!

[YourEveryDayAdam]

So, i'm a math geek.

Just looking at the basic numbers, I knew DVC was far worth the cost of ownership. However, reading these boards, there are lots of people out there that use arguments like "well, if you finance it's not worth it." or "There are always coupons to use to get a discount."

So I made a spreadsheet to see just how true (or untrue) these claims were. The numbers prove that, by far, buying DVC (even when you pay full price, finance it, and no incentives) is a MUCH better value.

Just to explain the numbers: I assumed that you paid $112 per point (current retail price). No incentives on that cost. I did it based on 182 points (one week, magic kingdom view studio at Bay Lake Towers in September). I also checked the rack rate for the same room at the same time of year: $2,953 for a week.

So the numbers I ran were: Total cost (including annual dues) if you paid cash and didn't finance it for the full life of the contract. Total cost if you financed it for 10 years at Disney's standard financing rate (14.25%). I also ran the cash cost for the same time. I assumed a 5% annual increase in both annual dues and the cash rate for the room.

Here is the spreadsheet:

Break-even point on cash rate vs. non-financed purchase: 7 years
Break-even point on cash rate vs. financed purchase: 12 years
Break-even point on 40% discounted cash rate vs. non-financed: 14 years
Break-even point on 40% discounted cash rate vs financed: 21 years

Best case (non-financed, full rack rate cash) DVC savings over the life of the contract: $457,988.73
Worst case (financed, 40% discount cash rate) DVC savings over the life of the contract: $192,674.57

So, even if you financed DVC at the worst disney rate and were somehow able to score a 40% discount code for every annual visit, you will still save almost $200,000 with DVC over the 50 year life of the contract.

 

[MichelleB]

I had to laugh when I saw this.....my DH did roughly the same thing 10 years ago when we bought!!!! No matter how you look at it, DVC is a savings over paying out of pocket if you go on a regular basis in our minds.

 

[logan115]

I had to laugh when I saw this.....my DH did roughly the same thing 10 years ago when we bought!!!! No matter how you look at it, DVC is a savings over paying out of pocket if you go on a regular basis in our minds.

I did the same type of spreadsheet about a month ago when I was making the decision around buying in or just renting points. Never showed it to DW out of fear that she'd flip over seeing the cost of several hundred thousand dollars over the life of the contract regardless of whether DVC was cheaper or not.........

Chris

 

[Sheribo]

Agreed! I just want a deluxe resort with Disney quality & service. Sometimes do parks and sometimes not. If your only goal is to stay on property and commando the parks, then maybe the value resorts will work for you. That's not what we were looking for. No regrets here!

 

[5forDiz]

I do like your math !!

think I'll show this to DH in defense of our next add-on !!!!

 

[YourEveryDayAdam]

More spreadsheet fun:

So, I did some more comparisons, and I decided to do a couple apples-to-oranges comparisons:

First:
--Cumulative total cost of DVC: $160,215.90
--Cumulative total cash cost at a moderate: $286,806.75
--Savings of DVC vs. Moderate: $126,590.85

Second:
--Cumulative total cost of DVC: $160,215.90
--Cumulative total cash cost at a value: $159,941.87
--Savings of DVC vs. Moderate: -$274.03


I think the second one is most interesting: Over the life of the contract, you are staying at a deluxe resort for almost the same cost as the value resort!

 

[RLRDA]

Very interesting! It's nice to see it saves tons of money for either non-financed or financed contracts. Thanks for sharing your spreadsheet We did a spreadsheet for ourselves and it breaks even at our 6th trip . Some trips really speed up the process. For our upcoming AKV trip, our concierge 1BR would be $735.00 per night (plus tax) if paying rack rate! Ouch Thankful for our DVC !

 

[logan115]

Ok - now let's take it to an uber-ridiculous level :

Based on the following :

If I allow both of my kids to each get a Mickey ice cream bar for each day of our week long trips now, but cut back to only letting them get one every other day on every other trip, if I put that cash saved in the bank earning the same interest rate assumed in your calcs how many Mickey ice cream bars will I be able to buy my future grandkids with that money ? BTW the kids are currently DS 5 and DD 5 mos (so although she hasn't been to WDW or eaten ice cream, I expect her to in about a year when she makes her first trip).....

So what's the break-even ?

Just kidding, a bit bored today in case you couldn't tell.

 

[5forDiz]

Ok - now let's take it to an uber-ridiculous level :

Based on the following :

If I allow both of my kids to each get a Mickey ice cream bar for each day of our week long trips now, but cut back to only letting them get one every other day on every other trip, if I put that cash saved in the bank earning the same interest rate assumed in your calcs how many Mickey ice cream bars will I be able to buy my future grandkids with that money ? BTW the kids are currently DS 5 and DD 5 mos (so although she hasn't been to WDW or eaten ice cream, I expect her to in about a year when she makes her first trip).....

So what's the break-even ?

Just kidding, a bit bored today in case you couldn't tell.

That was great logan115!

Wonder if our officials in Washington DC try to figure out savings, value, etc. with as much passion as those of us who love DVC do ???

 

[mommy2emmamaddie]

 

[kerickson]

Love the Math Geeks!

 

[Tink&PirateMama]

this is fantastic! Thank you for sharing and doing this work!! It's great!

I'm terrible at math- but I'd be curious- we got a contract with extra points for an extra trip (so we're doing 3 trips in one year instead of 2), at just $67 a point (170 SSR resale- just mailed in our closing documents yesterday)- not financing, paid cash- so what is our break even point? I was guessing about 3 years? It seemed like a great deal we did not want to pass up!

Thanks again!

 

[jco_direwolf]

Total cost if you financed it for 10 years at Disney's standard financing rate (14.25%). I also ran the cash cost for the same time. I assumed a 5% annual increase in both annual dues and the cash rate for the room.

Wow Disney charges as much as 14.25% for financing? Almost better to put it on a credit card.

johno

 

[YourEveryDayAdam]

even MORE fun:

Some people have suggested that putting the money that you would have spent on DVC in to an investment account and deduct your vacation costs from that. So here's what I came up with:

Start with the initial DVC cost of $20,384. Add in the annual dues you would have paid that year on your DVC. Add a (generous) 10% interest. Subtract off the cash cost of the vacation for that year:

Year 1) $20,204.13
Year 2) $19,895.37
Year 3) $19,439.27
Year 4) $18,815.27
Year 5) $18,000.48
Year 6) $16,969.40
Year 7) $15,693.65
Year 8) $14,141.69
Year 9) $12,278.47
Year 10) $10,065.06
Year 11) $7,458.25
Year 12) $4,410.09
Year 13) $867.41
Year 14) -$3,228.72

At the end of year 13, you only have $867.41 for year 14. Not enough for your trip for year 14. While the "invest and vacation" person would run out of cash at year 14, the DVC member would have 36 more years of vacations left!

Now let's try it with the 40% off coupons:

Year 1) $21,385.33
Year 2) $21,663.48
Year 3) $21,876.42
Year 4) $22,012.98
Year 5) $22,060.64
Year 6) $22,005.39
Year 7) $21,831.55
Year 8) $21,521.60
Year 9) $21,056.01
Year 10) $20,412.96
Year 11) $19,568.18
Year 12) $18,494.62
Year 13) $17,162.19
Year 14) $15,537.41
Year 15) $13,583.11
Year 16) $11,257.98
Year 17) $8,516.16
Year 18) $5,306.77
Year 19) $1,573.40
Year 20) -$2,746.51

You can go a little longer with the 40% off coupon code...and your investment, despite going on vacation, does grow a little bit...But eventually the rising cost of vacation catches up to your investment and you run out of money at year 20.

 

[Hunclemarco]

Thanks for the info. Very interesting....about ready to add points now

 

[YourEveryDayAdam]

this is fantastic! Thank you for sharing and doing this work!! It's great!

I'm terrible at math- but I'd be curious- we got a contract with extra points for an extra trip (so we're doing 3 trips in one year instead of 2), at just $67 a point (170 SSR resale- just mailed in our closing documents yesterday)- not financing, paid cash- so what is our break even point? I was guessing about 3 years? It seemed like a great deal we did not want to pass up!

Thanks again!

The numbers would depend on what you were going to use the SSR contract for. The numbers would vary based on a few things:

1) CRO charges the same price for Fri-Sat as they Do Sun-Thur. However, DVC charges twice as many points. The spreadsheet I did above is for a full week, so there is a 5 night/2 night weekday/weekend split there. If you mostly do long weekends (maybe 2 night/2 night) that would skew the numbers to take longer to make it up. If you do mostly Sun-Thur stays, then you would make up the cost even quicker.

2) Different resorts have different costs in points and cash. Those differences will skew the numbers a little bit also based on the resort.

3) Different resorts have different annual dues, and the annual dues BY FAR are the single biggest expense of owning DVC. In my spreadsheet, the last 3 years of annual dues exceeds the initial purchase price of the contract. The initial purchase price is $20,384 but you will pay a total of $139,832.90 in annual dues over the life of the contract.

4) The different room types at the different resorts may have different proportions of cash cost vs. point cost. One bedrooms may cost twice as many points as a studio, but maybe only 50% more cash.

Overall, the numbers will work out very certainly for DVC. Even if you only stay Fridays and Saturdays, pay the highest annual dues resort, and stay at the worst cash/point room on property, the numbers will certainly be in favor of DVC, by a long shot.

To put it simply: DVC won't save you money NOW. But in 10, 20, 30, 50 years from now you will pay the same price for your vacations in 2050 as you would for annual pass or the dining plan in 2050. THEN all the non-DVCers will be sick that they paid $32,000 for a week in a studio and all you paid was your annual dues of $7,300.

 

[YourEveryDayAdam]

EXPERIMENT TIME!

Let's pose a "what-if":

Let's say we take out a Home Equity Line of Credit ("HELOC") to pay for DVC at 8%. We then decide that every year we are going to "pay" full rack rate in this manner: Take the rack rate cost of your week, subtract off the annual dues to pay them, and then use the difference to Pay off your HELOC. Once your HELOC is paid off, you still pay the difference in to an IRA.

Stocks have, over the life of the stock market, performed at about 10% per year. There are periods of large swings, but if you look at the prices from the beginning of the stock market to now, it's about 10% per year. To be conservative, we'll say 8% return on investment (same rate as the HELOC).

Time for the math fun:

HELOC/IRA Balance
Year 1 ($19,729.66)
Year 2 ($18,908.72)
Year 3 ($17,902.14)
Year 4 ($16,689.07)
Year 5 ($15,246.69)
Year 6 ($13,550.04)
Year 7 ($11,571.85)
Year 8 ($9,282.29)
Year 9 ($6,648.79)
Year 10 ($3,635.82)
Year 11 ($204.56)
Year 12 $3,687.30
Year 13 $8,085.92
Year 14 $13,041.62
Year 15 $18,609.21
Year 16 $24,848.42
Year 17 $31,824.29
Year 18 $39,607.64
Year 19 $48,275.52
Year 20 $57,911.79
Year 21 $68,607.68
Year 22 $80,462.39
Year 23 $93,583.77
Year 24 $108,089.09
Year 25 $124,105.77
Year 26 $141,772.25
Year 27 $161,238.96
Year 28 $182,669.24
Year 29 $206,240.51
Year 30 $232,145.37
Year 31 $260,592.90
Year 32 $291,810.02
Year 33 $326,043.00
Year 34 $363,559.03
Year 35 $404,647.97
Year 36 $449,624.23
Year 37 $498,828.82
Year 38 $552,631.50
Year 39 $611,433.22
Year 40 $675,668.64
Year 41 $745,808.92
Year 42 $822,364.77
Year 43 $905,889.65
Year 44 $996,983.30
Year 45 $1,096,295.57
Year 46 $1,204,530.49
Year 47 $1,322,450.78
Year 48 $1,450,882.58
Year 49 $1,590,720.71
Year 50 $1,742,934.27


By these numbers, if you continued to pay "rack rate" for your vacations, by paying your savings in to an IRA account, you will have close to one and three quarters of a million dollars at the end of your contract.

Forget your 401K! Buy DVC!
(Disclaimer: Please don't forget your 401k and consult the services of a certified financial planner).

 

[Kelblum]

Thanks for sharing your spreadsheet. I am going to show this to my husband so he knows we made the right decision!!

 

[Dillon]

Loved it all, and I also made a spreadsheet to ease my mind that DVC was the way to go, (and have maintained a running log comparing the investment to the "Rack Rates" I would have paid for the time in "the World") but all us math guys missed the point . . . . . . the reason to buy DVC is the Magic it brings into your life . . . the look on your DW or DH's face when planning the next adventure! Priceless!

 

[DiznyDi]

. . . . . . the reason to buy DVC is the Magic it brings into your life . . . the look on your DW or DH's face when planning the next adventure! Priceless!