Thinking of purchasing timeshare

[PJHuntleyCO]

I am thinking of taking a loan from my 401K and spending it on the purchase of a timeshare. Due to family size I am beginning to think it just makes more sense than trying to squeeze into two rooms at the All Stars. Dumb question, how much on average are the maintenance fees per month? Are there any other hidden costs?

 

[Tigger031266]

Well let mw first state that I think you should not borrow from a 401kto buy a timeshare. Some day you will need that money when you get old.

I think the key question that you want to ask is: Do you want to go to Disney World 30 out of the next 40 years. If not consider another time share.

The initial cost is about 16K for 160 points. Which will get you 2 studios or one 2BR for about 5-6 days for 1 week. The maintenence is about $600 per year ($50/mo).

The other question is: Are you happy in Value type (All Star) accomidations or would you like to move to Premium hotels. If you are happy in All Star...Keep the cash in the 401K and have the flexibility to go anywhere that you want for your vacations.

Good luck with your decision. We love DVC because we love premium hotels and will always want to be at Disney. Before we joined DVC We would drop 2000K at hotels like Contemorary and Grand Floridian...

 

[drakester]

Don't ever take money out of your 401k. It really is simple. You need to ask yourself if you can afford to buy a timeshare. If you can buy one, if you can't don't.

 

[Chic]

I view taking money from your 401 a little differently. If you are interested in visiting Disney World over the next 40-50 years, I say go for it and start creating those family memories. It will pay for itself in a few years and then you can keep vacationing no matter how high the hotel rates get in the years to come. My mother saved money over the years and never spent her savings. She was saving for old age when she developed cancer and passed away at the age of 53. She never got to enjoy traveling because she put everything into the future which never arrived. If you enjoy Disney, consider all of the memories DVC will allow.

 

[a Really Bad Egg]

401K = long term investment = don't touch until retirement
Timeshare = luxury purchase = only use surplus discretionary funds

 

[Mickey'sApprentice]

You can always compromise and purchase 75 or 100 points resale.

We have stayed in a 2 bdrm, bdwlk view for 5 days during dream season (Spring Break) by banking and using our 100 point contract. We also had 70 points transferred into our account for the same trip for an additional studio.

You can pick up a 100 point contract for less than $8000, and have yearly maintenance fees in the $400-$500 range, and you can always pick up more points in 25 point increments.

Dh and I were a lot more comfortable with a 100 pt. commitment.

 

[CarolA]

I view taking money from your 401 a little differently. If you are interested in visiting Disney World over the next 40-50 years, I say go for it and start creating those family memories. It will pay for itself in a few years and then you can keep vacationing no matter how high the hotel rates get in the years to come. My mother saved money over the years and never spent her savings. She was saving for old age when she developed cancer and passed away at the age of 53. She never got to enjoy traveling because she put everything into the future which never arrived. If you enjoy Disney, consider all of the memories DVC will allow.

But what if she had lived to 100? I realize it's sad that your mother passed early, but we can't predict the future. However, lots of us will live well past the age your mother passed at. And even though you didn't get to go to Disney etc I bet you still have good memories. Not all "memories" have to be made at Disney.

IMHO a timeshare is NOT an investment. Borrowing against your 401K is not always a wise move. If you lose your job or change your job the loan is due THEN. If it is NOT paid IMMEDIATLY then you are going to pay.... The loan will be automatically repaid out of your 401K. It will then be considered taxable income so you have to pay taxes on it AND you have to pay a 10% penalty on the loan amount since you took it out of the 401K early.... It can be VERY COSTLY!

IMHO its better to take a Disney loan. Yes the interst rate is higher, but you aren't dealing with the risk of the penalty etc which can make the effective rate on a 401k loan SKYROCKET!

 

[SWB]

I agree with most people's comments here against borrowing from your 401k to buy DVC points.

I am new to DVC myself and these board are a great place to read, learn and ask questions to get up to speed on what the DVC program is all about. It has been time consuming, but I believe that I have a good working knowledge of how it works and what the pit falls can be. I looked at my families particular needs and vacation plans and came up with a number of points that we would need to start enjoying ourselves using DVC. I then started looking into the resale market and learned today that our DVC purchase had passed Disney's right of refusal.

The participants of these boards are great and have made all the difference in helping me in this process and I hope in the future I can give back as I gain hands on knowledge.

My suggestions - read all the DVC sections of the DIS boards, ask questions and explore this section of the DIS site http://www.wdwinfo.com/disney-vacation-club/index.html