Suze Orman said timeshares are a silly investment

[Disney Doll]

It is not an investment like a 401K that will eventually end up making/earning you money. It is an investment insofar as you are investing money into it. I would say it is not something I would have purchased if it were going to put us into financial straits. But DH & I purchased our first contract 9 years ago for 200 points and out 2nd contract 4 years ago for 230 points and we have used all those points every year at WDW and had a wonderful time.

But it is a luxury item and I am well aware of how fortunate we to have been able to purchase it. I like Suze Orman's advice generally....she's level-headed and reasonably conservative. But, life isn't all about having the most money when you die. It's also about enjoying things along the way.

A financial investment...no. An investment in vacations, relaxation, and memories...absolutely.

 

[Julia M]

People have started throwing around the term investment for all sorts of things that aren't really investments at all, and we've started accepting the idea. We "believe" that a good classic blazer is an investment in our winter wardrobe; no, it isn't -- you couldn't resell it for a quarter of what you paid. You may love the blazer, and you may get a great deal of use from it, but it is a useful item, not an investment. We buy into the idea that it's an investment because it "gives us permission" to spend a great deal of money on the blazer, but that doesn't make it the truth. Bottom line: If you can afford it and will get good use from it, buy it, but don't fool yourself into thinking it's an investment.

Good point.......I think I've always known that, but haven't heard it explained so well.

If you try, you can find some pretty great deals on "pay as you go" vacations; however, if you've tied up all your vacation money in a timeshare (if you've put all your eggs in one basket), you may not be able to take advantage of those great deals. I'd never suggest that someone stretch his budget to buy a timeshare; it should genuinely be bought with "extra" money.

I totally agree. I inherited some money about 10 years, and used a small part of it to buy two timeshares, resale. Family was very important to my grandmother. I think that she'd be happy we got something that has been so great for our family.

Most people will never SAVE money by buying a timeshare. Instead, they get nicer accomodations for the same money they would've paid anyway, or they end up spending more on meals, souveniers, etc. because their room is "free". Few people actually spend less because they own timeshares; instead, they just reallocate what they would've spent anyway.

That may very well be true for most people. In our case, it's the opposite. Our timeshares have allowed us to take "extra" vacations, because the lodging is covered. We travel somewhere where we can drive, and with the kitchen, eat most of meals in. We can generally travel for under $1000 for our family of five.

If there is one hard and fast rule for timeshare buying, I think it'd be NEVER finance a timeshare. It's a luxury, not a need. If you really want it and think it's a good idea for your family, save the money and buy it outright (perhaps on the highly discounted re-sale market). If you can't save the money for the timeshare, you probably can't afford to make the payments (plus interest) on its loan either.

You are absolutely right. My nephew bought a place with his girlfriend. Of course, from the developer, not resale. Dh and I tried to talk to him about it, but of course, he knew better. Now the girlfriend is gone, he still owes on it, and I had to break the bad news to him that his timeshare is worth about 10%-20% of what he paid for it.

If there's another hard and fast rule, I think it's INVESTIGATE all your options. DVC seems to be the timeshare of choice on these boards, but it would not suit my family's needs. I highly recommend the book Timeshares for Dummies, which is written by an impartial author who's not trying to get you to buy specifically DVC or Hilton.

Another good resourse: Timeshare Users Group. (tug2.net) A membership is nominal, and you can access resort reviews. ALot of info is free on the site. When dh and I bought our timeshare, we considered lots of options. We made the decision to buy near where we live (on the SoCal Beach, we're in NorCal). AFter that decision, we took a quick weekend and went to everyone in the area. We brought our videocamera, looked at locations and so on. So, six months later, when we bought, we knew it was what we wanted, we knew it was an awesome deal, we paid cash and we've been happy ever since.

Overall, I like Suze Ormond's advice -- occasionally I watch her on late-night TV -- she's very practical and particularly addresses her advice towards women who traditionally have been taught not to worry about financial matters, and I like her philosophy about people first, money second; but I don't agree with everything she says. Plus, she spells her name wrong; phonetically, it doesn't match the pronunciation. How can you completely trust someone who doesn't grasp 1st grade phonics?

I like her, too. I am aware that financially, it may not be the best option. But I love that our family has gone on so many vacations. I love that I can donate a week to my kids school, for their auction. I love that I can give a week to my sister, for a vacation (I can do this without hurting her pride)

I equate owning a timeshare with any other luxury item. My dh and I choose to own a timeshare. We don't choose to own a fancy car, or buy fancy clothes (Target, Mervyns and Kohls, on clearance, is where we purchase ours!) or eat at fancy restaurants (around here, we could easily blow $150-$200 for dinner and we know people who will do that). It's all about choices. This happens to be our choice

Julia

 

[WDWorld2003]

I agree timeshares are not an investment and we have considered selling our DVC and will if it no longer makes sense for our family.

One of our favorite family memories is when we first purchased DVC and being at the Boardwalk in a 2 bedroom with a boardwalk view. WOW, I will treasure those memories forever. However, there are many other places I would like to see so DVC may not be for us in ten years.... only time will tell.

There are also other things in many of our lives that are not good investments and certainly not necessary but they enrich or enhance so we keep paying for them. Some things that come to mind are:
cable TV, cell phones, dinners out, kids dance lessons, a night at the movies, Christmas and birthday gifts, health club memberships, etc.

We have enjoyed our membership but is it a financial investment? - no way. Has it enriched and enhanced our lives? - absolutely.

I think bottom line is you have to do what is right for you and what you are comfortable with. Never go out on a limb for a vacation or a timeshare... but do enjoy life. It's short.

 

[nbodyhome]

That's assuming I was ever going to invest that money, which I wasn't. I have a 401K for that!

I think she's just saying that if you took the 12K and threw it in the bank, it'd actually make some money (which then could be used for vacations and such). So that 12K could generate like $600 a year on 5%, plus the dues - which is a pretty good amount, and you have your original 12K also.

But again - DVC isn't a financial investment per se, it's a choice as far as vacations. I like to have my money free to go anywhere, without restrictions.

 

[keishashadow]

Do you really need to listen to Suzy Orman to know that you shouldn't: live above your means, pay down debt & save for your future? Talk about re-iterating common sense & making millions of $...if you need a "self-professed" expert to validate your financial decisions, perhaps it's time to rethink your strategy.

Since most of us don't have $12 K laying around for investment purposes, either small initial purposes or financing is the option. If you're hesitant, start small w/a cash resale & bank/borrow points to do a test ride. If it's not for you, sell it off. No fuss, no muss - small contracts bring top $ & fly out the door.
Pre-paid vacations, luxurious splurge - whatever...everyone (hopefully) has a certain % of disposable income & will either save it or spend it...to each their own.

Do wish I had bought into DVC on the ground floor, my investment would have doubled...doh.

Will say that our DVC allowed us to begin our "retirement travel" while middle aged to be able to enjoy it.

For us, the writing was on the wall when rack rate @ the Values has increased almost 40% since '03...time to add on again.

 

[dvcgirl]

I think she's just saying that if you took the 12K and threw it in the bank, it'd actually make some money (which then could be used for vacations and such). So that 12K could generate like $600 a year on 5%, plus the dues - which is a pretty good amount, and you have your original 12K also.

But again - DVC isn't a financial investment per se, it's a choice as far as vacations. I like to have my money free to go anywhere, without restrictions.

Yes, that's what I meant...if the money was invested. But DVC can be a good choice for real Disneyphiles who are already shelling out the money to stay in a deluxe hotel year in and year out.

And while Suze Orman and Dave Ramsey might slam all timeshares, at this stage of the game in the life of the DVC set-up, well, Disney's version has definitely held its value. In fact, we sold our membership for a few thousand more than we paid for it because the price had gone up so much. The main reason....there's still a huge market for it. I'm interested to see what will happen over time, but honestly, I don't think DVC is going to tank like some other timeshares do.

I was thinking about the friends we have who are DVCers last night. Twenty in all....six can afford it without a doubt and paid cash for their contracts. For eight it was likely a bit of a stretch to some degree. They all financed. Some paid off their contracts pretty quickly, some are still paying. The other six couldn't afford it to start with and probably still can't. One of them paid cash...a small inheritence and bought a 150 point contract. They've had trouble being able to afford going every other year. The rest financed. One has added on to the point where they have over 600 points. Another friend went to meet up with them since they were here at the same time and suggested a spot for lunch. The woman with 600 points confided that they couldn't afford to go out....they were down for nearly 3 weeks and brought $200 for food.

With all of the financing that Disney I wonder where their largest portion of profit comes from. Selling timeshares or financing them. Sort of like Circuit City making it's major profit from extended warranties or Target's largest profit maker being the credit card that it issues. Furniture stores open up all the time, but they're really just fronts for issueing credit. What are the rates these days on the longest contract? Still around 10%? Not a bad deal at all for Disney if you think about it.

 

[dvcgirl]

Do you really need to listen to Suzy Orman to know that you shouldn't: live above your means, pay down debt & save for your future? Talk about re-iterating common sense & making millions of $...if you need a "self-professed" expert to validate your financial decisions, perhaps it's time to rethink your strategy.

.

Well, yes, I think that there are loads and loads of people who benefit from the advice given by the likes of Orman and Ramsey.

As a nation our level of consumer debt per household continues to soar, while the national savings rate has gone from 12% in the 1980s to -1.7%. So, basically, we're financing our fun (remember this is consumer debt, not housing debt), at the expense of our personal savings. We've become a nation that thinks that being able to afford "the payment" means we can afford the item. Lots of DVCers out there are making payments.

Not a whole heck of a lot of the type of "common sense" you're talking about around these days.....

 

[brivers222]

There are also other things in many of our lives that are not good investments and certainly not necessary but they enrich or enhance so we keep paying for them. Some things that come to mind are:
cable TV, cell phones, dinners out, kids dance lessons, a night at the movies, Christmas and birthday gifts, health club memberships, etc.

Add to that list ANY type of automobile that is over $10,000. While nice to have the next best thing cars going over said price is nothing more than another luxury... yet people have no problem dropping 20-30 grand on needless cars.

For us I put my money into my Quality of lifestyles while on vacation which would allow me to enjoy them more... and less on the type of car. I bought two fully load Kia spectras for $16,000. Thats all I required to get to and from work and to my prized Disney World every year.

And for us... the cost of maintaince fee's we are paying to the mouse for our DVC is still LESS than the TAXES ALONE on the hotels at Disney world for our same trip in a Smaller room.

 

[disneysteve]

Do you really need to listen to Suzy Orman to know that you shouldn't: live above your means, pay down debt & save for your future? Talk about re-iterating common sense & making millions of $...if you need a "self-professed" expert to validate your financial decisions, perhaps it's time to rethink your strategy.

If only this were true.

Hang out here on the budget board or over at savingadvice.com or creditboards.com and see the financial trouble so many people get into. The reality is that people are not living below their means, paying down debt and saving for the future. They are living for today, piling on debt and acting as if the future doesn't exist. We, as a society, NEED people like Suze Orman, Dave Ramsey, David Bach, Jean Chatzky, Oprah, etc. to keep giving people wake-up calls about what they should be doing and how to go about it. It may seem like common sense to you and me, but it is anything but common to millions of others unfortunately.

 

[keishashadow]

If only this were true.

Hang out here on the budget board or over at savingadvice.com or creditboards.com and see the financial trouble so many people get into. The reality is that people are not living below their means, paying down debt and saving for the future. They are living for today, piling on debt and acting as if the future doesn't exist. We, as a society, NEED people like Suze Orman, Dave Ramsey, David Bach, Jean Chatzky, Oprah, etc. to keep giving people wake-up calls about what they should be doing and how to go about it. It may seem like common sense to you and me, but it is anything but common to millions of others unfortunately.

I think everyone in their heart-of-hearts does know that excessive debt might be a bad idea down the road, just moreso choose to ignore the thought & enjoy the good times while they roll.

We live in a society where instant gratification is the norm, credit is easy to obtain, and bankruptcy used to be a simple solution to out-of-control spending. With that loophole tightening, guess more than a few are now forced to try & dig themselves out before throwing in the towel.

I'll confess to having more debt than I care to carry each month but, I knew exactly what I was doing when I bought a new car or had a very, merry Xmas...you've eventually got to pay the piper.

A life changing event (divorce, death of breadwinner, major illness) is another matter all together. I just think there's lots of "advisors" getting rich promising a quick fix, that just isn't out there...sad IMO.

 

[dvcgirl]

I think everyone in their heart-of-hearts does know that excessive debt might be a bad idea down the road, just moreso choose to ignore the thought & enjoy the good times while they roll.

We live in a society where instant gratification is the norm, credit is easy to obtain, and bankruptcy used to be a simple solution to out-of-control spending. With that loophole tightening, guess more than a few are now forced to try & dig themselves out before throwing in the towel.

I'll confess to having more debt than I care to carry each month but, I knew exactly what I was doing when I bought a new car or had a very, merry Xmas...you've eventually got to pay the piper.

A life changing event (divorce, death of breadwinner, major illness) is another matter all together. I just think there's lots of "advisors" getting rich promising a quick fix, that just isn't out there...sad IMO.

Oh, there are lots of people out there promising quick fixes, and get-rich-quick schemes, but I don't think that Dave Ramsey, Suze Orman and David Bach fit into that category. They are all guilty of repackaging pretty much the same book and selling them again and again, but hey.....they gotta eat too . But the advice that they give though isn't the "quick fix" type. Ramsey in particular asks his debt-laden listeners to eat "beans and rice, rice and beans" for however long it takes them to get out of debt. It wouldn't be a fun thing to follow his plan, that's for sure. I also heard Dave Ramsey say the other day that the only people who should buy a new car need to be worth one million dollars. The average net worth of Americans 45-54 is about 150K, with the top 10% in that group greatly skewing that average upwards. I'm thinking that a few of them bought a new car here and there though .

I think that you're right, most people know that they shouldn't carry excessive debt. But what many don't understand that once they shed all of that debt (if they are smart enough to do so), they still need to live beneath their means and be saving 15-20% of their income for the future. And we're not seeing Americans in general do anything close to that. That's when the piper will get paid, down the road, due to all those years of lost saving (and consequently compounding opportunity).

It's one thing to want to make "magical memories" with your family, but at what cost? And this doesn't just relate to DVC. But since that's the topic, DVC fits squarely in the "wants" category, sub-section would fall under "luxury". And in my book, if you can't pay cash for a luxury, you can't afford it. Still though, how many DVC memberships would have been sold without the aid of Disney financing? Likely less than one third.

 

[MrsPete]

I work with senior citizens and these topics always tickle me, mainly because most of the regrets I hear from the seniors always concern not fulfulling a dream (eg. regret not going to paris, regret not going back to school, regret not spending more time with their family and friends). never do I hear " I regret not saving more money"

This is one of those half-truths, closely associated with the old "No one on his death bed ever wished he's spent more time at work." While I don't doubt that this is true, I suspect MANY people on their death beds have said, "Honey, I wish I wasn't leaving you with that big mortgage, and I wish I knew the kids'd have a good start in life by going to college without worry."

But go one more step. WHY didn't those people ever make it to Paris? It's probably because they didn't have the money to vacation in Europe. WHY didn't they go back to school? It's probably because they couldn't afford to take care of their family AND study full-time. Plus it's "socially appropriate" to discuss what you've done right and wrong -- discussion of money, especially for older people, is still taboo in some senses.

I think it's more honest to say that while money isn't -- and shouldn't be -- everyone's primary goal, it is certainly a very important tool that leads to the primary goals.

 

[MrsPete]

Do you really need to listen to Suzy Orman to know that you shouldn't: live above your means, pay down debt & save for your future? Talk about re-iterating common sense & making millions of $...if you need a "self-professed" expert to validate your financial decisions, perhaps it's time to rethink your strategy.

I agree that many of us have figured these things out on our own, but many other people have failed to do so. Evidence: People on the budget boards are always talking about how they got into credit card debt when they were young and foolish, and most people are in favor of personal finance classes being taught in schools. Obviously, LOTS of people aren't getting the common-sense message that you should live within your means.

And, in their defense, I think it's harder to do than it was in the past. Anyone can get credit cards, anyone can buy "too much car" for his paycheck, anyone can get a whopper of a mortgage. Advertisers are constantly telling us that "we deserve" this or that. Advertisers are always showing us how happy our families would be, how fulfilled we'd be, how many friends we'd have and how attractive we'd be to the opposite sex IF WE'D ONLY BUY ______. People believe that their credit rating is more important than their savings and investments. Companies try to talk us into buying ___ so that we can get ____ free. Lots of people just fall victim to the constant onslaught of suggestions to buy this now, now, now . . . and that common sense falls to the side.

So I don't think her information is useless -- not by any means -- even if it IS common sense. I think more people need to hear it than don't need to hear it, and even I -- raised by the cheapest family on earth -- learn something from her every now and then.

 

[MrsPete]

Ramsey in particular asks his debt-laden listeners to eat "beans and rice, rice and beans" for however long it takes them to get out of debt

And I agree. I went to college on the "beans and rice with a little spaghetti thrown in there occasionally" diet. I never got into debt, and that's why I'm comfortable today despite the fact that I've never really earned a large salary.

I also heard Dave Ramsey say the other day that the only people who should buy a new car need to be worth one million dollars.

As I said previously, extremes are almost always wrong. Sometimes it makes sense to buy a new car, sometimes it doesn't. For example, my husband and I just bought a new car last year. We're early 40s, debt-free, good investments and retirement savings and college savings for the kids, have two professional incomes, and the car was less than 20K. We chose not to pay cash because the dealership was offering 2% financing. The car we chose is a model that's in high demand, and the used models we saw were not much less expensive than the new ones. Though our net worth is not 1 million dollars yet, I think we made the right choice. I will agree that many people buy "more car" than they can afford, but to say that a new car is ALWAYS a mistake is, well, a mistake.

And we're not seeing Americans in general do anything close to that. That's when the piper will get paid, down the road, due to all those years of lost saving (and consequently compounding opportunity).

I think the baby boomer generation (my parents) will be okay; enough of them have pensions that'll make up for their lack of savings. And they do have large paid-for houses; companies'll come in and offer them reverse mortgages, etc. that'll help them live comfortably (if not luxuriously) in their golden years -- for a price.

The first people who'll really hurt are those in my generation: Boomer children born in the 60s and 70s. We're going to be caught between our own children's huge college needs and our parents' retirement needs (financial and otherwise); plus we as a group have saved considerably less than our parents. Unlike past generations, few of us will inherit houses, businesses, farms.

It's one thing to want to make "magical memories" with your family, but at what cost?

Yep, I've never understood why people say they bought DVC (or anything else expensive) because it's necessary for family memories. Family fun can happen anywhere at any price.

 

[NancyIL]

As to the original question - I think DVC ownership is great for some people, but I'm not interested in it. I go to WDW several times a year, but usually solo. I don't need condo-style accommodations and I'm sure as heck NOT going to cook while on vacation! I'd rather pay as I go for my trips. I'm not interested in paying annual maintenance fees that equal my hotel costs for a week at WDW.

 

[keishashadow]

Whatever it takes for people to wake up & stop treading water, all the better, I suppose. Just once I want to hear someone who's up to their eyeballs in debt take responsibility & admit: I knew exactly what I was doing & had a hellofa good time doing it.

I went thru an acrimonious divorce many years ago and had to work 3 jobs to keep my household afloat thru no assistance from a deadbeat dad & managed to pay off all debts from the marriage & start anew. I wasn't even able to dream of visiting WDW for 25 years, until I accomplished it, now it's even sweeter.

Will say we "saved" and paid cash for initial resale & add-on @ DVC, squirreling away the nuts for the next one.

As I tell my DSs, ad nauseum, life is a series of trade offs...especially how you spend your "discretionary" income.

 

[momrek06]

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?

WOW, this must have been a repeat of Saturday night....because a woman called in and asked Suze if she could afford a DisneyWorld Timeshare. Yes, the woman had plenty of assets and could afford it but I was surprised as well when Suze said "I am going to APPROVE you because you have the finances but DENY you because timeshares are silly". She suggested the woman keep her money and go once a year and have a magical time. But that $15,000 for one week per year along with the $500.00 yearly fee was absolutely ridiculous.

I do not own DVC, have looked into it but I do watch Suze and love her advice but this was the first time I noticed timeshares on her show UNLESS it was the Disney that caught my eye. Hmmm!

 

[Zoemakes5]

I think time share purchase is a good financial "investment" IF you regularly vacation. At the end of your financing period (or none, if you don't finance), you only have maintenence fees to deal with. While you're financing, you get tax deductions on the interest payments. With most programs, you have the ability to trade to various locations. With many that we've looked at, you can get last minute deals (for example, if you book fairfield resorts less than 60 days out, you get get up to 1/2 the point value for that season.)

 

[Green Tea]

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.

I think she is right; just pay as you go. I have looked into DVC and Marriott, and while each would provide nice vacations, the numbers never justify the initial cost plus the maintence fees, in my eyes.

 

[shirleyb]

I think she is right; just pay as you go. I have looked into DVC and Marriott, and while each would provide nice vacations, the numbers never justify the initial cost plus the maintence fees, in my eyes.

Yep, I agree.