What do your points cost?

[wideeyedwonder]

I'm incredibly curious how you acquired VGC for only $1.60 pp?!?!? I am guessing resale/distressed? The MFs for 2011 are $4.07. My acquisition cost for my SSR points will be $1.41 and I bought resale with banked points. I must not have done very well!

Cost per point per year.

$96 per point / 50 year contract = $1.92 per point per year over the 50 years.

Dues for my two contracts (276 points total) this year are $1035.24...dues per point for this year are therefore only $3.75 per point (yea VGC!)

So total cost per point for this year is:
$1.92 + $3.75 = $5.67

Next year may be different as dues can change...but for this year's usage, not counting opportunity costs, etc., my points cost me $5.67 per point.

 

[wideeyedwonder]

I was wondering about that calculation myself.

If my math is right, $1.60 per point for 50 years would be a sales price (with no other fees or charges) of $80 per point...and paying cash.

I paid $96 per point (VGC), 50 year contract, paid cash. That's $1.92 per point per year...I don't know where the poster got the $1.60...?

 

[crisi]

I'm not so sure this is negligible, personally---the past decade of S&P returns aside.

Ideally you do a time value of money calculation. I'd have to get out my accounting books (I'm not a CPA or a practicing accountant, I do have an accounting degree) to figure it out. But then you have to decide what the interest rate you are going to use is and you wouldn't get a consistent answer anyway.

I sort of figure that interest and inflation are a wash - that had I not bought DVC with that $10k ten years ago we would have blown it on something else, and not worry about it. Assuming we'd have taken the SAME vacations, even had we gotten an 8% stock market return between when we bought (2002) and now (I sort of doubt we'd have gotten a return), we'd have done fine.

But that is another assumption. Had we NOT purchased, we'd never have brought family. We'd still be staying in a normal room at AKL or WL or the Poly - or maybe we'd have figured out the value of off site timeshares, or maybe we wouldn't even go to Disney any longer. Our travel patterns HAVE been changed by ownership - which is why I say we don't save money, but we feel like we've gotten a good value for the money we've put in. We've spent WAY more money taking family and friends than we would have had we not bought in, but we don't regret it.

 

[KAT4DISNEY]

I'm not sure how you would value banked points.

For your overall acquisition cost, they wouldn't count at all since they are one-time points, not every-year points.

A reasonable approach might be that they would decrease your average cost for that one year. For example, if you had 200 points with 50 banked, and your total cost was $7 per point for 2011, I guess you could multiply 200 X $7 = $1400 and then divide by 250 to get a lowered cost for that one year of $5.60.

CPA's -- a little help here! Does that make sense?

Assuming you could actually make use of the points wouldn't you consider it as if there was an extra year remaining on the contract?

 

[mphillips76]

I paid $96 per point (VGC), 50 year contract, paid cash. That's $1.92 per point per year...I don't know where the poster got the $1.60...?

Oh I looked up the dues for VGC online and it said $4.07 pp, so add $1.60 and get $5.67. I guess the listed dues were wrong??

 

[JimMIA]

Assuming you could actually make use of the points wouldn't you consider it as if there was an extra year remaining on the contract?

You can if you want, Kat. I would not, even if the banked points were a full year's allotment.

They're one-year points -- maybe a full year's allotment, maybe less. But in any event, they're toast at the end of the year.

Yes, you can use them and bank this year's points...but that's THIS YEAR'S points.

I could well be wrong on this, but I don't see any way of counting banked points except as one-year points. (and this is from a guy who really enjoyed his 1/2 year of banked points spread out over about 4 years when I purchased resale)

 

[wideeyedwonder]

Oh I looked up the dues for VGC online and it said $4.07 pp, so add $1.60 and get $5.67. I guess the listed dues were wrong??

I'm going by what was charged to me each year for the past 2 years...I looked to make sure I was taking both contracts into consideration, so I'm fairly sure I captured the full yearly cost. I can't explain the discrepancy...anyone, anyone?

 

[Brian Noble]

But when you start adding in things like opportunity costs and valuations of banked points, you end up doing calculations ad nauseum.

Banked/stripped points are easy. $10 per, present-value (market rates).

Opportunity cost is also easy. It's a percentage of the purchase price, charged annually. We can ignore reinvestment, because it is "spent" in keeping the points.

It's not that hard, will make your accountant happy, and it gives you a much more accurate (some might say dim) picture of the true costs. Plus, anyone who passed high school economics should be able to do it.

Edited to add: I included it when I went shopping for my resale timeshare purchases. My metric was: owning, at 7% opportunity, had to be less expensive than renting. You'd be surprised at how many deeds ended up in the red once you thought about lost opportunity, even at the low (for the time) prices on ebay.

 

[Cajun28]

To me, the real value of this is not comparing our DVC cost to rack rates. It should be no surprise that we save money over rack rates!

Very good point, Jim.

I did the same calculations as you before we decided to buy. I took my total costs divided by number of years remaining divided by points per year plus MF's. After calculating my cost per point per year, I discovered I would pay less for a 4 night stay in a BWV studio using my points than we were paying for the same nights for a trip we had planned at the Dolphin (and that was at the nurses' rate). I thought it was more realistic to compare costs to what we were actually paying as opposed to some arbitrary figure that I would never pay.

 

[lugnut33]

Yep...and if you spent TEN GRAND on Christmas presents...Hey, this is January -- new year! Woo-hoo!

Yeah, but I may not spend that 10K again because either I don't have it or don't want to. Once it's gone it's gone.

 

[KAT4DISNEY]

You can if you want, Kat. I would not, even if the banked points were a full year's allotment.

They're one-year points -- maybe a full year's allotment, maybe less. But in any event, they're toast at the end of the year.

Yes, you can use them and bank this year's points...but that's THIS YEAR'S points.

I could well be wrong on this, but I don't see any way of counting banked points except as one-year points. (and this is from a guy who really enjoyed his 1/2 year of banked points spread out over about 4 years when I purchased resale)

Ok - here's the math on why I feel if the banked points can be used then it's like an extra year on the contract.

Your equation went: $72/37(years)= $1.95 per point cost. A valid calculation.

A different calculation that does the same thing is:

(Using a 100 pt contract for the example)

At $72 per pt the contract principal was $7200. Multiply 100 * 37 and you will be receiving 3,700 points over the life of your contract. Divide the total cost of $7,200 by total points 3,700 and you will see you paid $1.95 for every point you will receive for the entire contract.

Thus - if you receive 1 year of banked points you are receiving 3,800 points. Divide that into $7,200 and now you have a cost of $1.89 for every point that you will receive for the life of the contract.

Or $72/38(years)=$1.89

The cost per point in any scenario is only valid if you will use every single point, otherwise at any time that points are not used the total cost per point would increase. The actual expiration date of a particular point does not matter - just that all points are used.

 

[JimMIA]

Ok - here's the math on why I feel if the banked points can be used then it's like an extra year on the contract.

Your equation went: $72/37(years)= $1.95 per point cost. A valid calculation.

A different calculation that does the same thing is:

(Using a 100 pt contract for the example)

At $72 per pt the contract principal was $7200. Multiply 100 * 37 and you will be receiving 3,700 points over the life of your contract. Divide the total cost of $7,200 by total points 3,700 and you will see you paid $1.95 for every point you will receive for the entire contract.

Thus - if you receive 1 year of banked points you are receiving 3,800 points. Divide that into $7,200 and now you have a cost of $1.89 for every point that you will receive for the life of the contract.

Or $72/38(years)=$1.89

The cost per point in any scenario is only valid if you will use every single point, otherwise at any time that points are not used the total cost per point would increase. The actual expiration date of a particular point does not matter - just that all points are used.

That makes sense to me, if you want to go to that much trouble. It's probably a little more accurate than my method.

If one were going to do that, they'd have to do it consistently -- in other words, subtract stripped or distressed points.

 

[JimMIA]

Banked/stripped points are easy. $10 per, present-value (market rates).

Aw, c'mon, Brian! That's a HUGE overvaluation! I assume you're just joking, because that sounds like a timeshare salesman talking!

If you're going to use that number, the rest of your math becomes very simple -- every point, whether you use them, rent them, or lose them, costs you $10. 27 point OKW one bedroom = $270 per night. And if you rent your points for $10, you didn't make anything...you just broke even.

Naw.

 

[mphillips76]

That makes sense to me, if you want to go to that much trouble. It's probably a little more accurate than my method.

If one were going to do that, they'd have to do it consistently -- in other words, subtract stripped or distressed points.

Actually you never got the stripped points, so you wouldn't have to subtract them. Only subtract points that you allow to expire really. This is how I calculated my cost because we got two years of banked points. So even though my contract will only have x years left, it just ended up being x+2. I'm not letting ANY of those points expire, LOL!!

 

[JimMIA]

Actually you never got the stripped points, so you wouldn't have to subtract them. Only subtract points that you allow to expire really. This is how I calculated my cost because we got two years of banked points. So even though my contract will only have x years left, it just ended up being x+2. I'm not letting ANY of those points expire, LOL!!

If you're going to add banked points, you have to subtract any points that are not available or you're going to get a distorted picture.

For example, say you're purchasing a 2042 OKW contract with an October UY, but all the current year points and some of the 2011 UY points have already been used. You can't say "This is 2011 and my points are good through January 2042, so I have 30 full years left." You don't have 30 years of points -- you have 28+ years because one full year's points and part of another are gone.

I don't do any of this, BTW, because it just gets too hair-splitting to worry about.

 

[mphillips76]

If you're going to add banked points, you have to subtract any points that are not available or you're going to get a distorted picture.

For example, say you're purchasing a 2042 OKW contract with an October UY, but all the current year points and some of the 2011 UY points have already been used. You can't say "This is 2011 and my points are good through January 2042, so I have 30 full years left." You don't have 30 years of points -- you have 28+ years because one full year's points and part of another are gone.

I don't do any of this, BTW, because it just gets too hair-splitting to worry about.

Agreed! I was thinking you do the calculation based upon the number of years left in the contract starting at the year where you have all the points. Even if that year was in the past...because as long as you use them it doesn't really matter! If you got any extra banked points, those are just gravy! Or you can add them to the total.

 

[parsons98]

We are thinking about buying in...can someone check to be sure I am figuring this correctly? We would buy 110 points at AKV for $114 per point (according to dvcnews.com points are currently $120 with $6 discount) with maintenance of $5.01. Total cost (estimating closing costs) $13000. Total number of points over life of contract 5060. Gives me cost of $2.57 per point which added to MF is $7.58 per point. For example, if one week costs 102 points, we are spending $773.16 to stay for that one week which breaks out to just over $110 per night compared to at least $250 per night for regular AKL room...can that possibly be right or am I doing something wrong?

 

[crisi]

We are thinking about buying in...can someone check to be sure I am figuring this correctly? We would buy 110 points at AKV for $114 per point (according to dvcnews.com points are currently $120 with $6 discount) with maintenance of $5.01. Total cost (estimating closing costs) $13000. Total number of points over life of contract 5060. Gives me cost of $2.57 per point which added to MF is $7.58 per point. For example, if one week costs 102 points, we are spending $773.16 to stay for that one week which breaks out to just over $110 per night compared to at least $250 per night for regular AKL room...can that possibly be right or am I doing something wrong?

That sounds about right. You also won't pay taxes on your DVC room. However, there is some value to some of what you DON'T get that you should keep in mind.

1) You don't get daily housekeeping. A lot of DVC members find they don't miss it, or even prefer it.

2) You won't be eligible for "deals" - some DisBoarders find that they would rather have "free dining" or have been able to get a pretty good discount with codes.

3) You are locked in. While you CAN use your points for other things, it isn't always the best idea. And if money is tight one year, you may find yourself in a "use em or loose em" situation. When you don't own a timeshare and money is tight, you can not go, you can go, but stay offsite cheaper. And while you can rent your points, it isn't always risk free or easy to do so.

4) DVC rooms are different. That AKL studio will have a queen bed and a full pullout. DCV is different - you'll find planning is much more important, booking your room early, managing your points, and understanding and not falling victim to cancellation policies.

5) Finally, there is the time value of money part of it. To get that room for $110 a night, you need to tie up $13k. If you were to assume 8% in the stock market, that's $1000 next year in yield. About the same amount as the delta between paying cash and owning DVC. If you finance DVC, you wouldn't break even on TVM calculation at 8%. Without financing, you might depending on if that assumption held true and what happens to room rates and dues.

Between the deals onsite that have been fairly common now, the availability of nice and inexpensive places offsite, the $100 per point buy in cost, the fact that my own kids are getting older and Disney holds less appeal, and the TVM calculation - I don't think I'd make the decision to purchase direct right now. Certainly not because I thought I'd save money. But this is part of the subjective value....DVC is a great deal for some people....and a lousy deal for others.

 

[KAT4DISNEY]

That makes sense to me, if you want to go to that much trouble. It's probably a little more accurate than my method.

If one were going to do that, they'd have to do it consistently -- in other words, subtract stripped or distressed points.

Yes. I would have assumed you do that in your calculation - essentially subtracting a year for stripped points? A year in your calculation is the equivalent of the # of points available. The fact the contract is valid until 2042 etc. doesn't mean anything if the points are not there for you to use.

I would only not allocate purchase cost to distressed points if they could not be used.

 

[eljefe45]

JimMIA - just a comment on your factoid - There was no steel used in the making of the Eiffel tower - it is made of iron!!!

I thought Ron Burgandy made the Eiffel Tower out of steel and brawn. you'll have to blame the movie "Anchor Man" for the misinformation.