Suze Orman said timeshares are a silly investment

[shirleyb]

It's not my cup of tea, but to each their own!

 

[jodifla]

You'd be surprised at how many people who live here do have DVC! (at least on the boards I read).

I agree with the other person who said that they'd rather have the money in the bank. If I took $12K and put it in a CD, that is like $600 per year, which is a good start to a trip. Then the maintenance fees I don't pay (and the principle and whatever interest). But if you enjoy doing it, then it's an investement in yourself!

And hey - YOU were the one who got that Kotex demo! Did I get to hand out free maxi pads? Noooooo.

$600 is about a night and a half in a two bedroom.

We bought DVC 10 years ago as a "commitment to fun" as my DH puts it. We paid it off in five, and now we vacation 10 -14 nights a year in luxury accommodations that would easily go for 3 to 5 grand for the total. Our dues are around $700 a year.

We can rent our points....and we can sell it off for more than we paid for it (cost of points has gone up 40 percent since we had the good sense to buy!)

So even though we didn't get it as an investment...it's been a darn good one.

 

[sk!mom]

IMO- I've never heard any financial "expert" say that they were an investment at all- silly or smart. They are simply a pre-paid vacation. There is nothing wrong with a timeshare if you can afford it and want to prepay your vacations for years to come just don't confuse it with an investment.


in‧vest‧ment 
–noun - the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.

 

[AmyBWV99]

A timeshare isn't really an investment (I'm sure there are some math whizzes out there that can figure out exactly what needs to be done to make money on the deal) but neither are vacations. We own 250 points at BWV and are getting ready to buy more. Financial types love to talk about needs versus wants, but I'd be pretty disappointed if all I did was live/work for my needs. LIFE is about the wants. Disney vacations are some of the most expensive around. Instead of trying to cost justify it, we just decided that we wanted to buy in. We had the wherewithall (we saved like crazy) and bought in, with cash, at age 24. It's all about prioritizing those wants.

 

[punkin]

IMO- I've never heard any financial "expert" say that they were an investment at all- silly or smart. They are simply a pre-paid vacation. There is nothing wrong with a timeshare if you can afford it and want to prepay your vacations for years to come just don't confuse it with an investment.


in?vest?ment
–noun - the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.

Whst she said.

 

[Julia M]

$600 is about a night and a half in a two bedroom.

We bought DVC 10 years ago as a "commitment to fun" as my DH puts it. We paid it off in five, and now we vacation 10 -14 nights a year in luxury accommodations that would easily go for 3 to 5 grand for the total. Our dues are around $700 a year.

We can rent our points....and we can sell it off for more than we paid for it (cost of points has gone up 40 percent since we had the good sense to buy!)

So even though we didn't get it as an investment...it's been a darn good one.

Just playing devil's advocate.....while your DVC points are worth more than what you paid for them, now, at a certain point, it's unlikely they will be. The closer it comes to the expiration (40 years, isn't it), I can't help but believe that the price will decrease.

I don't mean it as a criticsm, or not to belong, just an observation

Julia (who owns 2 timeshares, bought reasle and loves them!)

 

[jodifla]

Just playing devil's advocate.....while your DVC points are worth more than what you paid for them, now, at a certain point, it's unlikely they will be. The closer it comes to the expiration (40 years, isn't it), I can't help but believe that the price will decrease.

I don't mean it as a criticsm, or not to belong, just an observation

Julia (who owns 2 timeshares, bought reasle and loves them!)

Yes, of course. The price will eventually diminish as their life does. But I've also had 10 years worth of vacations, as well.

And as I said -- we didnt' buy it as an investment, any more than we'd buy a boat or a car as an investment. We bought the darn thing to use it, and we do!

But for us, financially, it's turned out GREAT! No way would we pay $300 a night for a hotel room....but those are just the kinds of rooms we stay in because we were so "stupid" and bought DVC!

 

[GGatheringof11+]

Mono~rail
Mouseketeer
I laughed outloud at your photo! Thanks for cheering me up, I've had two sick kids at home for too many days.

 

[Stein]

No way would we pay $300 a night for a hotel room....but those are just the kinds of rooms we stay in because we were so "stupid" and bought DVC!

But didn't you actually pay for them?

The reason we would not buy is that I ran a projection for 15 years on a simple spreadsheet comparing buying 104 points (a one-week studio stay) vs putting the same money in a money market earning 5%. The average secondary price/point is about $95, using the first 10 contracts up for sale today. That would cost me about $9900. Also, the dues would average about $470 per year for the first year, so the first weeklong vacation would cost me $10,370. After that, the weeklong stay would only cost the dues. When I crunched the dues increases averaged over the last 10 years, they increase at an average of 13% (sometimes more, sometimes less, but that is the average).

I stay offsite where you can get a nice room for $150/night, but let's say the room is $215 which gives us a good amount of leeway, and assume it is increasing at 4% a year (hotels have decreased in price recently, but over time, they go up). So, on the cash system, I put the $9900 in the bank at 5% and take out enough every year to pay the ever increasing hotel bill (because I haven't "locked" in the price of my vacations). For the first year, that is $1500 and it goes up every year.

So, what is the end result? After 15 years, if I never waste a single point, the present value cost (in today's dollars) of doing DVC is about $25,000 and the present value cost of the cash system is about $23,600. The only difference is that I can still use DVC, but the maintenance fees are now the same as I would pay for a hotel room, so it is a wash from then on. Keep in mind the maintenance fees vs a hotel room today is low because the buildings are by in large young. As they age, it costs more to keep them up and expensive things like roofs and heating systems need replacement.

In the end, I make no money and loose no money either way, so it makes little sense to shell out the money upfront and be locked in.

I do admit that I compared it to a moderately priced hotel and if you compare it to a $400 room, the outcome may differ, but for our family, we are not a $400/night family.

You can argue about % increases of hotel rooms and where you are going to vacation for the next 15 years, but the morale of the story is that if you enjoy staying at DVC properties and want to do that every year, and have the money, you can prepay and enjoy what it offers. You will have many fun vacations and lasting memories, while staying onsite and near the parks vs offsite.

If you borrow the money, let any points expire, or trade them out for other things (always at a bad exchange rate), you will loose. If you use every point every year and run it over 18-20 years, you may win. I don't worry about what I will be doing 30 or 40 years from now because I am just as likely to take a vacation in outer space as Disney.

In the end, it is more about whether you want to stay at DVC every year or the freedom of possibly choosing somewhere else. I just don't see how you can either make money or loose tons of money unless you do something that isn't too smart like letting your points expire.

 

[MiniGirl]

I though the same thing. And we don't carry balances from one month to the other (and a credit rating of just under 800 for it). Then my DH (that stupid MBA in accounting & finance ), showed me daily online one month that, yup, that balance had interest incurring daily (and adding the previous days balance into that) with no carried over balance. I'm a hard learner. And, OK, he has a degree dealing with numbers and still had a hard time figuring it all out.

We then went through every cc we owned (a whole whopping 3, one of them business) and read the fine print--all did that. Everytime we get an offer in with great bonuses, we think about switching--compare interest rates, the bonus points, and how interest is figured. Sometimes, usually, how the interest is calculated makes a lower rate card a higher rate in the end. They do have to make money; otherwise there is no point in loaning you the money.

We still use our bonus card, but twice a month where we can pay it off within 24 hours or only when we have to (booking travel) between those dates.

And, heck, not even all rebates are equal. I want a Disney cc, just for the picture , but the bonus isn't as good as our rebate (cash back) card.

Okay, I admit. I am NOT a numbers person. However, when we charge something, we enter it into Quicken. When our monthly statement comes, we check the charges on it against the charges we have entered in Quicken. If they match up (and they always do), and we pay our bill in full each month, and there are no charges for interest, etc.... how are we still being charged interest? It has to show up somewhere on our statement. I'm not trying to be argumentative. I'm sincerely trying to learn, but I just don't see it.

And to the DVC issue..... there was a thread on the DVC DIS boards a week or so ago. Someone asked, "Does DVC really save you any money?" I believe that was how the ?? was phrased. The vast majority of people said "no." They said they now have to get the AP to go with the DVC and make more trips meaning more airfare, etc. There were a few people who said that yes, DVC has saved them money. However, not 1 of them said they regretted their purchase. Several were in the process of adding points to their contracts and such, so obviously, this wasn't an investment in the traditional sense. It was more of a budgeting tool and an investment in family time. Many people said it "forced" them to take a vacation, and that is a great thing. I am not a DVC member, but I would love to be one. Dh is not on board because he thinks all time shares are bad. I love the resorts, so I have decided to start renting points. We should be able to stay in a studio for about the same price as the values or a 1 berdoom for the price of the moderates. (Here's the disclaimer: All this is subject to the day of the week and time of the year we go.) For us, for right now, renting is what works best for us.
Eva

 

[Dznypal]

I have a freind that bought a timeshare in FL about 10 years ago they have used it twice for sure maybe 3 times!!!

then one year they could trade their time in and go to Vegas so they did and bought one there

so now they own 2 time shares and have used them a total of maybe 5 times!!!

then a few years ago they took a trip to the WI Dells (its a tourest town about a 2 hr drive and are you ready for this


bought one there!!!!! they only used this one when they were there and bought!


I just cant see having 3 timeshares and never being able to use them!!

In April they're going to Vegas I asked her if they were using the timeshare and she said no---that they got this great price $169 total for 3 nites(I cant think of the hotel though but they have to sit through a timeshare!!!!!)

I asked her why they werent just staying at the timeshare-she said they got a great deal on this deal!!! yeah but the timeshare is "paid" for!!

I just bet they come back with another timeshare

I just t dont get it

 

[Brian Noble]

Who here thinks timeshares are a "silly" investment?

I've looked at a wide variety of Orlando timeshares. Every time I look, I end up with the same conclusion. The annual maintenance on a unit large enough for my family ends up being comparable to or more than what we spend renting private vacation homes or, say, a rental at Cypress Pointe. In other words, even before considering the purchase price, I'm coming out even or losing money by buying a timeshare, and I've lost some flexibility in the process besides.

I really really wish it didn't work out this way, because I'd buy a unit there in a heartbeat if I could make the finances work out. But, they never do.

 

[DisneyBill]

I have a freind that bought a timeshare in FL about 10 years ago they have used it twice for sure maybe 3 times!!!

I have a friend who bought a recreational vehicle for over $90k about 10 years ago and used it twice. Then his brother bought one of I guess the same value and and used it several times the 1st year, then not at all. Both took out longterm loans, and continue to pay insurance. I'd bet there are plenty of stories like these. So...?

Suze Orman actually told that caller to both buy the DVC and to not buy the DVC. Buy it because the caller had a strong income, not to buy it because the caller had a bunch of other debts. Then Suze went on the rant about timeshares being silly. So from her comments you could certainly see where even S.O. could rationalize it from a earnings/enjoyment perspective.

 

[rie'smom]

I've looked at a wide variety of Orlando timeshares. Every time I look, I end up with the same conclusion. The annual maintenance on a unit large enough for my family ends up being comparable to or more than what we spend renting private vacation homes or, say, a rental at Cypress Pointe. In other words, even before considering the purchase price, I'm coming out even or losing money by buying a timeshare, and I've lost some flexibility in the process besides.

I really really wish it didn't work out this way, because I'd buy a unit there in a heartbeat if I could make the finances work out. But, they never do.

We like room to spread out on Disney property. A two bedroom Boardwalk villa rents for $745/night. Our vacations usually go 7-9 nights. So we spend
say for 8 nights 5960 + 11% tax =6,615.60 x 10 =66,150. We have 300 pts and they cost 28,500.We pay dues of about 1200.00 So over 10 years =$40,500. We're coming out ahead by 25,650. If you compared it to a deluxe resort 2 bd.,then a 2 bd suite at the Poly would be 1,375.00/night + tax or 12,210.12,210 x 10 = 122,100for a savings of 81,600.
Now granted this is in simple terms and does not include increases in either maintenance fees or hotel prices. The hotel prices have been increasing at about 5% a year and the maintenance fees at about 2-3%.
Staying offsite would of course be cheaper but that's comparing apples to oranges. Basically DVC works out for those of us who prefer deluxe accomodations.
Will I go every year? I don't know but we have gone for the past 7 years in a row,so the odds are pretty good that we will.

 

[canwegosoon]

And as small as it is...I get another tax deduction

Seriously...I love Suze, but...my life, and my money

 

[MinnieGi]

We view our DVC as pre-paid resort accomadations. It is not a monetary investment to make money. For us it is an investment in our family. It is precious time we all look forward too. We enjoy vacationing at Disney and we enjoy spreading out in a one or two bedroom villa while at a deluxe resort on WDW property or HHI. I think that is how most DVC'ers look at their purchase.

We also bought our two contracts with cash. We pay our MF's once a year in Jan. I love that I can pick when we want to go, where we want to stay and if we need a one, two or three bedroom villa at WDW every year and often twice a year. I love our family fun time together and if that is silly to the "experts" than so be it. I'm silly for the Mouse!

 

[Kristi1357]

DVC is definately not an investment in the traditional sense. For us, it was an investment in family time.

We bought awhile back when I received a CM discount. We also saved up for a couple years to be able to buy our contract on cash.

We love WDW and went there 4 times last year! We wanted to buy DVC before we had children so we could still vacation in our favorite place.

I doubt we will ever have unused DVC points! In fact, we've already borrowed our 2007 allotment. And since DH is being laid off soon, the Disney trips will have to be put on hold next year. But we will never be in danger of losing points.

 

[dvcgirl]

DVC isn't an investment. It's simply a pre-paid vacation plan. Having said that, DVC isn't like other timeshares in the traditional sense. We actually sold our membership over a year ago and made a profit on the initial amount paid. We paid cash originally and so no interest was paid on our behalf. We also rented half our points out each year to cover our dues (and a good portion of our tix). So for us, it worked. We sold it because we moved to Orlando and even if we hadn't we probably would have sold it. We didn't see ourselves doing the Disney thing at least every other year anymore and that's when it's not really as great a deal.

I have seen some of my Disney friends go a bit crazy in buying multiple DVC contracts. For some it becomes an addiction. And almost all of them went with Disney financing. That's when the whole thing gets a bit more shaky in my opinion. Going into debt to "pre-pay" a vacation just isn't a good financial plan.

 

[ArielsMommy]

Dh and I were watching Suze Orman last night. A caller had a question about whether or not they should purchase a DVC membership. Suze said ALL timeshares are a silly investment! Dh and I were shocked to hear her say this. Her financial advice was to just pay each vacation as it comes up.

Who here thinks timeshares are a "silly" investment?

Who here thinks timeshares are a wise investment?

DH and I saw this episode as well. We had been going back and forth about it for 2 years and finally decided that we are going to buy when we are at WDW in Dec. We are mainly buying for our convenience, not so much because we are investing.

 

[jodifla]

But didn't you actually pay for them?

The reason we would not buy is that I ran a projection for 15 years on a simple spreadsheet comparing buying 104 points (a one-week studio stay) vs putting the same money in a money market earning 5%. The average secondary price/point is about $95, using the first 10 contracts up for sale today. That would cost me about $9900. Also, the dues would average about $470 per year for the first year, so the first weeklong vacation would cost me $10,370. After that, the weeklong stay would only cost the dues. When I crunched the dues increases averaged over the last 10 years, they increase at an average of 13% (sometimes more, sometimes less, but that is the average).

I stay offsite where you can get a nice room for $150/night, but let's say the room is $215 which gives us a good amount of leeway, and assume it is increasing at 4% a year (hotels have decreased in price recently, but over time, they go up). So, on the cash system, I put the $9900 in the bank at 5% and take out enough every year to pay the ever increasing hotel bill (because I haven't "locked" in the price of my vacations). For the first year, that is $1500 and it goes up every year.

So, what is the end result? After 15 years, if I never waste a single point, the present value cost (in today's dollars) of doing DVC is about $25,000 and the present value cost of the cash system is about $23,600. The only difference is that I can still use DVC, but the maintenance fees are now the same as I would pay for a hotel room, so it is a wash from then on. Keep in mind the maintenance fees vs a hotel room today is low because the buildings are by in large young. As they age, it costs more to keep them up and expensive things like roofs and heating systems need replacement.

In the end, I make no money and loose no money either way, so it makes little sense to shell out the money upfront and be locked in.

I do admit that I compared it to a moderately priced hotel and if you compare it to a $400 room, the outcome may differ, but for our family, we are not a $400/night family.

You can argue about % increases of hotel rooms and where you are going to vacation for the next 15 years, but the morale of the story is that if you enjoy staying at DVC properties and want to do that every year, and have the money, you can prepay and enjoy what it offers. You will have many fun vacations and lasting memories, while staying onsite and near the parks vs offsite.

If you borrow the money, let any points expire, or trade them out for other things (always at a bad exchange rate), you will loose. If you use every point every year and run it over 18-20 years, you may win. I don't worry about what I will be doing 30 or 40 years from now because I am just as likely to take a vacation in outer space as Disney.

In the end, it is more about whether you want to stay at DVC every year or the freedom of possibly choosing somewhere else. I just don't see how you can either make money or loose tons of money unless you do something that isn't too smart like letting your points expire.

I see this kind of hand-wringing number crunching all the time, but your numbers don't add up for us.

We bought in when points were in the 60 dollar range. Paid it off easily in five years, before we had kids. It was around 10 grand. Now our dues are around $70 a month.

But we typically don't stay in studios when we go. What's the point of that? And we don't usually stay weekends, which cost too many points. We stay in one or two bedroom units for five nights. That's where you see the glory of DVC!!!!!!!!! To me a vacation isn't being crammed into one room with kids..

None of our DVC points have ever expired. We bought in at the low end of the point scale, so we can always use them up.

With Pop Century rooms and even Days Inn going for $100 a night with taxes, we are incredibly happy with DVC.

To each his own. But we chuckle, margaritas in hand, at all of those folks who walk by our 2 bedroom unit on their way to the hotel room.