What makes DVC worth investing in?

[crvetter]

What do you suggest comparing costs of buying a Disney timeshare to in order to determine whether the savings that would make buying in worth it?

While the merits of comparing the costs of a Disney timeshare commitment with the inflated prices of the physically equivalent room at rack rate is questionable, it seems to be what you hang onto as a valid comparison to calculate savings.

Would you expect then for the use of such units to be a standard practice that existed prior to timeshare ownership? Or is it enough that one has decided they want to stay in those types of accommodations for the next 23 plus years?

I think the luxury purchase argument that keeps being made and that you keep dismissing is that with the exception of people like crvetter, who buy exactly what they have historically used and don’t modify their vacationing behaviors, most people who use the spreadsheets to justify a cost savings will end up looking back in 10 years and laugh at what they were going to save as it most likely that none of that really mattered much. Their travel patterns change, they suddenly go more often, they’re suddenly bringing family and friends more regularly, they needed to buy more points; the list goes on.

The nature of a Disney timeshare ownership is that your behaviors change. Putting value on determining savings for most people is a fantasy; a justification for locking away a lot of money into doing something they probably wouldn’t do as much of if they hadn’t made the commitment to doing it again and again for 23 years.

I’m not sure I disagree that people should look at the math. It’s good to understand the financials, but there is a risk of using those “savings” to justify an over-extended purchase. At the end of the day, it’s important that people who are considering committing, in some cases, 50 years of timeshare ownership, know that there are countless current “owners” who have those exact same spreadsheets collecting dust. The numbers on those sheets do not reflect at all the kinds of travelers we’ve become or the travel plan projections we made as a result of having bought a Disney timeshare.

Did we save tons of money? Sure. If I were to add up what I would’ve paid in cash for all the stays I’ve had, I could probably convince myself that I’m MAKING money.

I have nothing against spreadsheets. If you can put one together that tells you in 7-8 years you’ll be net positive and minting money, power to you. But for some of us, the more important calculations for any prospective buyer are: Can you afford to buy it? Can you afford to continue to pay the maintenance fees without adding undue stress on your family’s financials? Can you afford the additional park costs year after year? Can you afford to treat the contracts as a sunk cost that you will be able to walk away from if things went south? Because if that math tells you that you can, a Disney timeshare will probably bring you and your family a lot of joy and happiness.

If not, it doesn’t matter how much your spreadsheet clearly lays out the savings you’ll experience over the next 8 years.

Since I was mentioned I figured I’d chime in. I think both viewpoints are valid and to be considered together. On the 1 hand I would never buy anything (with a large upfront cost) that doesn’t provide me any significant savings over equivalent accommodations at the price I can expect to realistically pay (~20-30% off rack rates in my case since I travel Thanksgiving and what I was experiencing). If the financial analysis, which @CanadaDisney05 and I agree on a similar method, says it would cost more to own DVC over the time horizon I expect to maintain my ownership, which for me was to term or a residual value of 0–no resale value, I would definitely not have bought. So I bought to replace a significant part my exact vacation habits because I found net savings eventually and they add up to a nice chunk of change eventually.

I also agree with your post in that I sat down and said do I have the cash to basically throw away because I needed to make sure if I had a financial stress the loss of the money I threw towards DVC I might not be able to get back in any meaningful way in a financially stressed situation. Quitting vacationing when paying cash for hotel rooms is easier than trying to sell DVC for a dollar amount that would make you happy during these times. So would I be destitute because of DVC in a financial crisis, this is sort of the risk analysis and financial analysis of my entire life, not the DVC component or at least I viewed and treated it that way.

So in short both arguments provide merit and were equally important in my decision process. And yes I can see others changing their vacation habits when purchasing DVC thus restraint is needed or the realization one might do that and should factor that into the financial analysis (and compare to the costs of what vacations you were doing pre-DVC). Also as an aside people should compare DVC to the accommodation types they were staying in prior to DVC and not compare it to deluxe rooms if you were staying moderate to determine your “savings” because that is a trick. The savings would be overinflated because in this case DVC is being purchased as a way to justify resort class upgrades, which is effectively how DVC purchasers have changed as a whole since DVC was created.

 

[CanadaDisney05]

I think the luxury purchase argument that keeps being made and that you keep dismissing is that with the exception of people like crvetter, who buy exactly what they have historically used and don’t modify their vacationing behaviors, most people who use the spreadsheets to justify a cost savings will end up looking back in 10 years and laugh at what they were going to save as it most likely that none of that really mattered much. Their travel patterns change, they suddenly go more often, they’re suddenly bringing family and friends more regularly, they needed to buy more points; the list goes on.

A) If your vacationing habits materially change from your assumptions, it just means you made poor assumptions. Don't blame math.

B) You should probably do a few different financial analysis.

1. Cost of DVC vs expected vacationing costs without DVC. This will illustrate how much more/less the luxury of vacationing in the DVC villas will cost you vs your projected vacationing habits.
2. Cost of Purchasing DVC vs Cost of getting equivalent accommodations for future vacations. This will illustrate how much benefit DVC is actually providing you. Remember, DVC comes with more restrictions than cash rates so you should see a significant savings in order to justify the limitations.
3. Can you truly afford all of the costs associated with DVC which include ongoing maintenance fees, and travel costs (which may outpace inflation).

I have nothing against spreadsheets. If you can put one together that tells you in 7-8 years you’ll be net positive and minting money, power to you. But for some of us, the more important calculations for any prospective buyer are: Can you afford to buy it? Can you afford to continue to pay the maintenance fees without adding undue stress on your family’s financials? Can you afford the additional park costs year after year? Can you afford to treat the contracts as a sunk cost that you will be able to walk away from if things went south? Because if that math tells you that you can, a Disney timeshare will probably bring you and your family a lot of joy and happiness.

[/QUOTE]

See #3 above. But using the "can you afford it" as the only justification doesn't make any sense. I can afford to spend $5,000 on a carrot. It will not cause me to be broke if I decided to make that purchase. I will not find myself in any sort of financial hardship. I'm sure I will enjoy eating that carrot too. But paying $5,000 for a carrot would be moronic considering I can probably buy one for 50 cents, and use the savings of $4999.50 for an extra Disney trip which would provide much more enjoyment.

FYI, I am not suggesting that DVC is more expensive than cash rates. In fact, without a crystal ball, you will not be able to determine this. But it's important to be able to quantify how much you believe you can save. Atleast figure out a realistic range. If it's not much, then maybe DVC isn't a good purchase for you. You shouldn't be paying a premium for booking restrictions, long term liabilities, and locking up your cash without getting something significant in return.

 

[CanadaDisney05]

I disagree. Any vacation or leisure experience is never "worth it" from a monetary perspective for anyone. My real point is\was that if you have the money, and want DVC, or any other time share\vacation experience just do it. Don't think it over too much. Your either going to enjoy it or not. When all someone worries about is the money, they probably shouldn't even start thinking about it in the first place.

Your comparing Vacationing vs Not Vacationing.

I'm comparing Vacationing with DVC vs Vacationing Without DVC.

There is a big difference. I mentioned it another post, but if you can afford it without any major financial hardship, would you pay $5,000 for a banana? Even if you loooooove banana's, why not just buy the banana for 50 cents at the store next door? Then take the $4999.50 in savings and go on an extra Disney vacation?

DVC contracts itself don't provide any non-tangible benefit where you can argue that the perceived value is different from person to person. You can get the identical experiences through alternative financing methods. So it only makes sense if it's actually providing savings.

 

[KAT4DISNEY]

I disagree. Any vacation or leisure experience is never "worth it" from a monetary perspective for anyone. My real point is\was that if you have the money, and want DVC, or any other time share\vacation experience just do it. Don't think it over too much. Your either going to enjoy it or not. When all someone worries about is the money, they probably shouldn't even start thinking about it in the first place.

I’ll disagree as the main reason to buy a timeshare for vacation is because it will save money over paying cash for lodging for a similar type vacation. Otherwise one should pay cash as they go. There are some other reasons why people buy timeshares but at its heart it’s about lodging costs.

Vacations of course cost money but that’s a different discussion.

 

[Bing Showei]

A) If your vacationing habits materially change from your assumptions, it just means you made poor assumptions. Don't blame math.

B) You should probably do a few different financial analysis.

1. Cost of DVC vs expected vacationing costs without DVC. This will illustrate how much more/less the luxury of vacationing in the DVC villas will cost you vs your projected vacationing habits.
2. Cost of Purchasing DVC vs Cost of getting equivalent accommodations for future vacations. This will illustrate how much benefit DVC is actually providing you. Remember, DVC comes with more restrictions than cash rates so you should see a significant savings in order to justify the limitations.
3. Can you truly afford all of the costs associated with DVC which include ongoing maintenance fees, and travel costs (which may outpace inflation).

See #3 above. But using the "can you afford it" as the only justification doesn't make any sense. I can afford to spend $5,000 on a carrot. It will not cause me to be broke if I decided to make that purchase. I will not find myself in any sort of financial hardship. I'm sure I will enjoy eating that carrot too. But paying $5,000 for a carrot would be moronic considering I can probably buy one for 50 cents, and use the savings of $4999.50 for an extra Disney trip which would provide much more enjoyment.

FYI, I am not suggesting that DVC is more expensive than cash rates. In fact, without a crystal ball, you will not be able to determine this. But it's important to be able to quantify how much you believe you can save. Atleast figure out a realistic range. If it's not much, then maybe DVC isn't a good purchase for you. You shouldn't be paying a premium for booking restrictions, long term liabilities, and locking up your cash without getting something significant in return.

You're making a few different points here, so let's consider them individually.

The first is that there needs to be a savings over an equivalent product for buying a Disney timeshare to make sense. I agree with this.

The second is that people should understand the math of buying a Disney timeshare before buying one. I also agree with this.

Where I disagree is the weight and value with which you are giving these calculations and how they should influence the buyer when deciding to buy in. I see that math as a means of deluding oneself into believing that there will be financial gains by buying a Disney timeshare. The whole "penny saved is a penny earned" fallacy when buying a product that will only make you spend more and more (thereby "saving" more and more?).

But rather than address that point, you use your produce analogy as an intentional oversimplification and misdirection of that position.

By equating my position to advising that someone pay $5,000 dollars for a common .50 cent piece of produce, you're trying to undermine my bigger point about luxury purchases. No one in their right mind would pay $5,000 for something you can get for 1/10000th the cost. Suggesting this, you're attempting a reduction of my point to something "moronic."

My bigger point again, which you don't seem to want to address, is that the math you are encouraging as a measure of the viability of Disney timeshare ownership is dangerous because it can paint whatever justification people need to decide that it can work out for them. Coming up with breakeven points by comparing "comparable" accommodations ignores the fact that those "comparable" accommodations may never have been what the prospective buyer would've used in the first place.

None of those calculations matter if the answer to your point #3 question is no. If the answer is yes, sure, have at it with the spreadsheets. I have one. It's fun to see what cost savings you'll have over time.

The math you're encouraging is a false representations of financial benefits that are undermined by the spending habit changes. But again, if you can afford it, that won't matter.

 

[mco65]

If your family is going to grow to 5... which was not our plan but God had other plans (Twins)... with 5 your going to be very limited at where you can stay on a budget (Caribbean Beach Club, Port of Orleans Riverside or offsite, cabins at FW).... if you want to the flexibility of staying at other resorts and you plan on visiting at least once every other year then DVC can make a lot of sense.

 

[CanadaDisney05]

Coming up with breakeven points by comparing "comparable" accommodations ignores the fact that those "comparable" accommodations may never have been what the prospective buyer would've used in the first place.

The math you're encouraging is a false representations of financial benefits that are undermined by the spending habit changes. But again, if you can afford it, that won't matter.

I will attempt to clarify. At no point, did I ever suggest your financial analysis should be to extrapolate the spending of previous vacations, and compare those to the cost of DVC.

What you should do is attempt to the best of your ability to predict your future behaviour and compare it to the costs of DVC.

In 50 years from now, when you look back and your behaviour was different than your predictions, the math wasn't the problem, the problem was that you didn't use realistic assumptions about your behaviour.

Here is my attempt to clarify another point which maybe I wasn't clear about. If DVC leads to less money in the long-run along with more vacations, those "extra" vacations do have a monetary value and need to be factored in to your "return". Here is a oversimplified example for illustration purposes.

DVC = Costs $10,000 up front + $650 annually for 35 vacations in 35 years. Total cost = $32,750 for 35 vacations
No DVC = $1000/vacation for 30 vacations in 35 years. Total cost = $30,000

DVC = $935/vacation
No DVC = $1,000/vacation

Even though DVC ends up costing you more in total over 35 years, it's actually costing you less per vacation. This IS a financial benefit to using DVC and can only be figured out by doing a financial analysis.

 

[Bing Showei]

Here is my attempt to clarify another point which maybe I wasn't clear about. If DVC leads to less money in the long-run along with more vacations, those "extra" vacations do have a monetary value and need to be factored in to your "return". Here is a oversimplified example for illustration purposes.

DVC = Costs $10,000 up front + $650 annually for 35 vacations in 35 years. Total cost = $32,750 for 35 vacations
No DVC = $1000/vacation for 30 vacations in 35 years. Total cost = $30,000

DVC = $935/vacation
No DVC = $1,000/vacation

Even though DVC ends up costing you more in total over 35 years, it's actually costing you less per vacation. This IS a financial benefit to using DVC and can only be figured out by doing a financial analysis.

And my point is that that if you put value in this:

DVC = $935/vacation
No DVC = $1,000/vacation

You have to put equal value in this:

DVC = X number of vacations
No DVC = Y number of vacations

In practice the two are inextricably linked. If you're going to place value in the per vacation costs, you have to consider the number of vacations given the two scenarios. To separate them, you are looking at an incomplete picture that can justify buying into something based on a faulty premise of savings.

Again, it all goes back to my bigger point. $/vacation is of zero value if you don't consider how many vacations you will be taking vs. what you took without it.

 

[Philsfan77]

I just wanted the magnets

 

[Bing Showei]

I just wanted the magnets

Then I have a $5,000 carrot to sell you.

 

[Philsfan77]

Then I have a $5,000 carrot to sell you.

SOLD

 

[rg35]

We bought DVC resale -- 250 AKV points @ $65/pt. -- in 2012. We paid cash, it was an easy transaction and the price was really palatable. Thank you, lingering effects of the global recession. This might come off as completely obnoxious, but the ~$16k that we paid up front for DVC will essentially an inconsequential amount of money over the course of our lifetimes. There would also need to be an assumption that had we not bought DVC that that money wouldn't have been spent on something else and would have sat there for 50 years earning interest. We didn't stop maxing out our 401k's to pay for DVC, or stop putting aside additional money for non-retirement savings/investments, 529k plans, etc (which I have increased each year since buying DVC). This was disposable savings that we had that we decided to use on DVC because we wanted to buy it.

My grandparents bought DVC in 1993, so I had stayed at OKW several times as a teen in the late 90's. I knew these were the kinds of rooms I wanted to stay in for my own Disney vacations once I had a family of my own. There was a major sentimental aspect for me as far as buying DVC was concerned. I did a cursory comparison of what we would pay for rack rate deluxe cash rooms to sleep 5 people on a Disney vacation, but it really wasn't the primary consideration. We didn't look at DVC as an investment or that by buying DVC there was some other opportunity cost we were giving up by spending the money on it. We bought DVC because we could afford it and because we wanted to. I knew that by buying DVC we would be taking more Disney vacations than we would if we had not bought it and that we'd be spending more money at Disney than if we had not bought DVC.

If I take our initial 16k over 6 trips (the 5 we have taken and the 1 we will this year), add in food and park tickets and WDW vacations cost about the same per year as anything we have done that is not WDW related (3 non DCL cruises, an air/land trip to Aruba). Over time DVC vacations will probably wind up coming in at less as the 16k gets more diluted and we spend less money on park tickets because we don't need to go as often. I will note that as of three trips ago we do drive to Florida because the most unpalatable thing about vacation is flying. This will be our 4th trip driving down. The first two we flew. But I legit hate flying and the cost of direct airfare on a major carrier for 5 from NY to MCO has gotten to be pretty outrageous, plus needing a minivan size vehicle that could fit 3 carseats... My wife and I also both work, so we don't really want to use our spare time stalking for free dining and hotel deals and flight comparisons. We want to book our vacation and go. Actually, I book the vacations and we go. My wife tells her friends she loves our trips because I do all the planning and all she has to do is show up . But DVC has made vacationing pretty predictable.

I don't think everything always fits into a neat box. We like going on vacation. We would do it if we owned DVC or not. Perhaps some of those trips would have been to other locations, perhaps not. Owning DVC isn't a financial hardship that necessitated analysis down to the last dollar. To me, it's all a sunk cost. We have taken 5 trips that have been a blast. It allows us to take Disney at a relaxing pace -- we don't have to go nuts seeing everything because we'll be back soon. A lot of people I know don't really understand why we like going to disney so much because too often they just hear about the horror stories -- that it's miserable, it's hot, the kids had meltdowns, we ran ourselves ragged, etc. It's a little hard to convey to people that because we essentially committed to Disney upfront that it allowed us to take more relaxing trips to Disney.

I think I started off with a point but this turned into more of a stream of consciousness post more than anything. tl;dr DVC has been great times for us. We're not missing out on anything because we used the money on buying it, and we never really think about that.

 

[CanadaDisney05]

Again, it all goes back to my bigger point. $/vacation is of zero value if you don't consider how many vacations you will be taking vs. what you took without it.

We'll have to agree to disagree. Going back to the original premise of this discussion, I hope that any potential buyers do a financial analysis to understand the costs, and don't just jump to the conclusion that because they can afford something they should automatically purchase it.

 

[CanadaDisney05]

We didn't look at DVC as an investment or that by buying DVC there was some other opportunity cost we were giving up by spending the money on it.

We bought DVC because we could afford it and because we wanted to.

WeI knew that by buying DVC we would be taking more Disney vacations than we would if we had not bought it and that we'd be spending more money at Disney than if we had not bought DVC.

There is a contradiction here. DVC is not a business investment where you have an expectation of long-term profit. The "investment" in this case is that you are buying future vacations in bulk with the intention of lowering your per unit cost. It's the same reason we are willing to deal with the chaotic nature of going to Costco with the belief we can save 73 cents on a roll of paper towels. If the math of DVC lead you to taking less vacations, you wouldn't buy it. You can just as easily avoid Costco and go to the local pharmacy and buy less paper towels with the same amount of money. The "opportunity cost" of DVC is the vacations you would take if paying cash rates.

 

[Bing Showei]

We'll have to agree to disagree. Going back to the original premise of this discussion, I hope that any potential buyers do a financial analysis to understand the costs, and don't just jump to the conclusion that because they can afford something they should automatically purchase it.

I also hope that any potential buyer does a reality check on what buying into a Disney timeshare entails beyond a $/visit calculation vs. rack rate, and don't just jump to the conclusion that because the $/visit is X that it equates to a prudent purchasing decision.

You have no way of truly knowing how much owning a Disney timeshare will change your behaviors until you own it. At least understanding and expecting that you will likely spend a lot more money is an important part of that consideration. Discounting the effect timeshare ownership has on your spending habits can be dangerous.

In the case of your potential buyer scenario, even if they ended up paying more for Disney vacations. So what? They could afford it.

In the case of my potential buyer scenario, if they end up learning the hard way that they will end up spending a lot more and going a lot more often, that $/visit calculation that Disney loves to sell people on at the booths and sales center is going to do nothing for them if they are in over their heads. Buying a Disney timeshare is a luxury and should be treated as such.

 

[DougEMG]

I am firmly in the camp that DVC is about saving money on the room over the long term. I did all kinds of spreadsheets before I bought to determine what if any savings there's would be. This was all in 2010. What it seemed to work out to was that owning DVC was the equivalent to staying in a moderate with free dining, which was what we had been doing previously. It also seemed like there would be a 7-8 year break even point before those savings would start happening.

So rather than being tied to the discounts, we tipped our toes into DVC. After a couple of years we jumped totally in, buying quiet a few points.

I've kept track of all our costs and used rental rates as a comparison of our costs, and after 7.5 years, my spreadsheets total me we had broken even.

Owning though has definitely changed our vacations. We use to go for 10-14 days in a year, now it is 20-30 days with an annual pass. So our daily costs are now less, but we proabably spend just as much or more in total at Disney.

So agree about doing the financial analysis and that owning will change your behaviour.

My biggest worry these days is, is this the top of the market and should I sell some of my points to maximize my return?

 

[rg35]

There is a contradiction here. DVC is not a business investment where you have an expectation of long-term profit. The "investment" in this case is that you are buying future vacations in bulk with the intention of lowering your per unit cost. It's the same reason we are willing to deal with the chaotic nature of going to Costco with the belief we can save 73 cents on a roll of paper towels. If the math of DVC lead you to taking less vacations, you wouldn't buy it. You can just as easily avoid Costco and go to the local pharmacy and buy less paper towels with the same amount of money. The "opportunity cost" of DVC is the vacations you would take if paying cash rates.

To be honest, I have no idea what kind of point you're trying to make. You quoted three completely unrelated things from my post and are trying to relate them to fit some narrative you seem bent on convincing everyone of. You're simply drawing a false conclusion that had we not bought DVC we would be vacationing at WDW as frequently as we have because we bought it. That is a false conclusion (which I stated as much in my post) so it's not a valid comparison to look at for opportunity cost. I stated the reasons why we bought DVC and that the cost wasn't a large impact on our family's financial situation. Based on your responses to others in this thread, you appear to have formulated some idea of what you want people's motivations for buying DVC to be and are applying it to everyone's situation. Everyone's situation is not yours.

 

[Minniesgal]

Worth is massively subjective. For us we wanted to stay in 1 or 2 bedroom villas on property. DVC is the best way to do that.

 

[CanadaDisney05]

You're simply drawing a false conclusion that had we not bought DVC we would be vacationing at WDW as frequently as we have because we bought it. That is a false conclusion (which I stated as much in my post) so it's not a valid comparison to look at for opportunity cost.

Had you not bought DVC, why would you have gone less? What stopped you from going as often as you wanted?

I stated the reasons why we bought DVC and that the cost wasn't a large impact on our family's financial situation.

What did you receive from your DVC purchase that you couldn't have achieved without purchasing DVC?

Based on your responses to others in this thread, you appear to have formulated some idea of what you want people's motivations for buying DVC to be and are applying it to everyone's situation. Everyone's situation is not yours.

I have no vested interest in stopping people from buying DVC. However, there have been several responses in this thread basically suggesting that the financial impacts of DVC are irrelevant and as long as you can afford it, you should buy DVC.

Just because you can afford a new car from Dealership A, doesn't mean you should pay 10% more for the same car that is available from Dealership B. It's the same car. It will provide you with identical experiences.

To be honest, I have no idea what kind of point you're trying to make. You quoted three completely unrelated things from my post and are trying to relate them to fit some narrative you seem bent on convincing everyone of.

The point I am trying to make is that DVC doesn't offer you anything that you cannot get without DVC. So go with the option that is cheaper given your personal circumstance. The numbers matter.

 

[sethschroeder]

Coming up with breakeven points by comparing "comparable" accommodations ignores the fact that those "comparable" accommodations may never have been what the prospective buyer would've used in the first place.

You are just doing your personal analysis wrong. I compare against Value resorts, Swan/Dolphin, and renting points.

Having a faulty equation doesn't mean the math is wrong.

You also need to know where things can likely fluctuate such as package discounts, increased maintenance, and total vacation costs with tickets.

Your decision you want it and can afford it is the start of doing the math if it's worth it.