Does DVC Membership Make Sense?

[GoofGoof]

A few things that aren't mentioned:

1. In-room laundry saves luggage space, which means we fly in with carry-ons and do not have to bother with baggage claim, lost luggage, etc . . ..
2. This also means we hit Magic Express a bit faster, and thus get to the World a bit faster.
3. Kitchen saves money, foodwise. We also eat a bit healthier, and have "free" coffee in the morning.
4. After a few days in a normal room, we drive each other nuts. That's less likely to happen in a 1 bedroom villa.
5. I have a 15 year old son and 7 year old daughter. At some point, they can't share a bed. In a villa, there's plenty of floor space to set up an air mattress with a fun fort of pillows around it. Even in studios, this is possible, especially the GF studios with a pull out drawer bed.
5. Little extras, like Tables in Wonderland and sneak peeks at the Fantasyland expansion.
6. Discounts all over, usually 10% on food and merch.
7. Two TVs is nice, especially when I want to check ESPN and the rest of the family wants anything else.
8. A nap area is nice, especially when some are napping and others in the other room aren't.
9. Two toilets--need I say more?
10. When things go wrong in the parks, the CMs seem a bit more helpful when you mention your DVC membership.
11. The same holds true for dinner reservations, it seems. And with the concierges.
12. It forces us to take a vacation, which we otherwise might neglect to do. This year, we took a vacation of a lifetime to Europe already, but we're also doing 9 days at the world over Christmas as, believe it or not, a more relaxing winter vacation. If not for DVC, we might not be going. The family is only young once, and DVC pushes us to do this.
13. Eventually, we'll be inviting friends or family to come along. With 300 BWV points, we can do that.
14. It pleases me to know that my wife and I, on retirement in about 15 years, can book a Studio for about 18 days (depending on time of year, resort, etc . . .)

I congratulate those brainy people who can spreadsheet the whole thing, but my reasons for membership cannot all be put on a spreadsheet. For example, the laundry, the kitchen, and the uptick in happiness of more square footage and plumbing, are hard to quantify, dollarwise. Throw in a couple free gifts on the cruises, the magazine, the door magnets that make me smile, and I am very happy with membership even if the raw dollars may not work out wisely. Of course, my financial situation is a bit different than most people who watch every dollar, but I also am not "wealthy".

I'm pretty good with a spreadsheet. I bet I could figure out a way to factor in the laundry and the kitchen. The uptick in happiness for square footage and extra plumbing are a bit more challenging

I'm with you on enjoying the extra space and amenities in a villa. I don't think I could go back to a studio now.

 

[Ralphlaw]

Yeah, it's hard to go back to a smaller room once you've stayed in a villa.

 

[LuvtheGoof]

Yeah, it's hard to go back to a smaller room once you've stayed in a villa.

We have to agree. We pretty much stay only n 1 bdrs now (points permitting), even though it is only the 2 of us. Love the extra amenities that a 1bdr gets you.

 

[MikeyK72]

We have to agree. We pretty much stay only n 1 bdrs now (points permitting), even though it is only the 2 of us. Love the extra amenities that a 1bdr gets you.

Agree as well. My wife and I go every January for a week over our anniversary and will only stay in a 1 bedroom villa. We tend to golf 3 or 4 days and hit the parks on the others and it's so wonderful to be able to wash clothes because on "golf days" we need two changes of clothes. Having the washer/dryer right there in the room is so convenient and allows us to pack a lot lighter.

To get back to the topic of this thread though...is DVC right for everyone? HECK NO! But, is DVC right for us, HECK YES! The way I look at it, if you're a DVC member and you're happy then that's all that matters.

 

[Ralphlaw]

To get back to the topic of this thread though...is DVC right for everyone? HECK NO! But, is DVC right for us, HECK YES! The way I look at it, if you're a DVC member and you're happy then that's all that matters.

Exactly.

 

[slappy magoo]

Wow, I don't know who resurrected this thread but thanks for the memories. I forgot what a pantload that guy was.

 

[Capsin4]

By breaking even doesn't that mean the point where your initial investment (including potential interest lost) plus maintenance fees paid equal what you would have paid for a hotel room? If so, in year 9 you are just comparing maintenance fees to cash room rate.

This is precisely where I believe many peoples calculations fail, because it's just not that simple and I can't count the number of times I hear people think of it this way. Here's a couple reasons why:

1) To figure your savings you need to include all years in the figure. Using tables in wonderland as an example, you pay $100 to buy into a 20% discount. Your breakeven point is $500. You can't make it out to be a great deal because you save 20% on everything you buy after that because at $600 spent, you've saved only 3% total and at $1000, you've saved only 10% total (20% of the $500 after you broke even is $100). You will NEVER save 20% off your meals with TIW. Disney sells it as such, but even if you spend $10,000 with TIW, your total savings will only be about 19%...20% is the limit you'll never reach. DVC is the same, but the numbers are much worse for the second reason...

2) With DVC you pay more than rack rate for a number of years (until you break even), but the savings are out in distant years. Even if you include all years in the figure, you have to convert all the numbers to CURRENT dollars. This means, in your averaged savings, the money you pay OVER rack rate in the early years will weigh more heavily than savings years into the future...the further you go out the less those years contribute to your savings. You can figure the REAL savings for any given year by dividing the savings by (1+i)^y where i is the inflation rate and y is the number of years into the future.

If you ignore that part of the math, my breakeven point is 8 years and even if I were to save 80% off rack after that...I'd still only be sitting at a TOTAL savings of 40% after 16 years. If you do take into account REAL dollars, then that number goes down A LOT (my total savings max out at about 25% in year 31!) and, in my opinion, that makes it a poor investment when the rack rate for a regular delux room is already 40% less before any discount.

Believe me, I run the numbers a lot hopingt they work out, but the nevre do for me. I'm sure if I bougth in, I'd love it, but I love my money more.

 

[Capsin4]

The "time value of money" point is well taken: HOWEVER - in our current political environment, the real time value of money is NEGATIVE. Yearly inflation is greater than interest.

The best you can get on your money is less than inflation? That's nonsense. The U.S. Inflation rate through June 2014 is 2.1%...that's an annual rate. The only way you get less than that is in a checking or savings account. There are many opportunities to do much better. I'm at 8% on the bulk of my money so I would use a 6% rate. That means a $1,000 of savings in 9 years (first year after my break even) is worth less than $600 to me today.

 

[GoofGoof]

This is precisely where I believe many peoples calculations fail, because it's just not that simple and I can't count the number of times I hear people think of it this way. Here's a couple reasons why:

1) To figure your savings you need to include all years in the figure. Using tables in wonderland as an example, you pay $100 to buy into a 20% discount. Your breakeven point is $500. You can't make it out to be a great deal because you save 20% on everything you buy after that because at $600 spent, you've saved only 3% total and at $1000, you've saved only 10% total (20% of the $500 after you broke even is $100). You will NEVER save 20% off your meals with TIW. Disney sells it as such, but even if you spend $10,000 with TIW, your total savings will only be about 19%...20% is the limit you'll never reach. DVC is the same, but the numbers are much worse for the second reason...

2) With DVC you pay more than rack rate for a number of years (until you break even), but the savings are out in distant years. Even if you include all years in the figure, you have to convert all the numbers to CURRENT dollars. This means, in your averaged savings, the money you pay OVER rack rate in the early years will weigh more heavily than savings years into the future...the further you go out the less those years contribute to your savings. You can figure the REAL savings for any given year by dividing the savings by (1+i)^y where i is the inflation rate and y is the number of years into the future.

If you ignore that part of the math, my breakeven point is 8 years and even if I were to save 80% off rack after that...I'd still only be sitting at a TOTAL savings of 40% after 16 years. If you do take into account REAL dollars, then that number goes down A LOT (my total savings max out at about 25% in year 31!) and, in my opinion, that makes it a poor investment when the rack rate for a regular delux room is already 40% less before any discount.

Believe me, I run the numbers a lot hopingt they work out, but the nevre do for me. I'm sure if I bougth in, I'd love it, but I love my money more.

I'm not telling you that you are wrong. There are a lot of different ways to do the math. What I posted assumed you made a cash purchase and didn't finance. I assume you are talking about financing the purchase. The breakeven is much longer. If not I don't see how you are paying a lot more than rack in the beginning.

I get that you are calculating the present value of the future savings. What is a little confusing is that you are comparing that to a 40% rate. I'm not sure where that comes from. You also have to factor in the resale value after 16 years. You have saved money, but your purchase also still has value.

I would compare DVC to the already discounted rack room rates at the comparable hotel (for me it was CR since I bought in at BLT). If you want to use 40% off of rack that's fine. It seems a bit aggressive given that we have no idea if the discounts will still exist in the future but it's a personal thing. I can sometimes get good discounts, but not always at the times I travel. I assumed a 25% discount from rack at CR.

Here's my math based on comparing buying into DVC vs putting that money in the bank and using it to pay for cash rooms. I bought 160 BLT points at $90 for a total cost of $14,400. I used 5% for time value of money and increased both DVC fees and cash room rates at 3.2% per year. The way this works is in year 0 I would have put $14,400 in the bank. In year 1 my investment increases by the DVC dues paid plus the interest on investment and I subtract the cash room rate. In this case I took the rack rate for 1 week at CR for a lake view tower room during regular season and discounted it at 25%. The rate was $2,989.13 for the week. Here is the year by year breakdown of what the investment account would look like under the paying cash scenario. In year 7 my account goes negative. I have broken even. Assuming I was going to take a trip to WDW for the next 6 years and stay at CR at a 25% discount I'm in the exact same place financially as I would have been if I didn't buy in. After that I can either sell my DVC or continue to use it and just pay MFs vs cash room rate. I think it's much easier to look at DVC in a smaller chunk like 10 years, but If you wanted to calculate the PV of my savings over the 48 years that were left when I bought the contract it's around $152,000. I'm not sure how that number is relevant, but you could do the math.

Year Dues Cash Rate Investment
1.00 720.00 $ 2,989.13 $ 12,130.88
2.00 743.04 $ 3,084.78 $ 10,432.83
3.00 766.82 $ 3,183.49 $ 8,576.14
4.00 791.36 $ 3,285.36 $ 6,550.51
5.00 816.68 $ 3,390.49 $ 4,345.06
6.00 842.81 $ 3,498.99 $ 1,948.27
7.00 869.78 $ 3,610.96 $ (652.00)

 

[Ralphlaw]

Here's my math:

In 2010, I bought 160 BLT points for $102 per point for a total of $16,320.
Since that time, I believe I paid about $4.25 per point in maintenance fees per year, for a total of $2,720.
That's total money paid of $19,040, give or take.

I recently sold my BLT points and bought 300 point at the Boardwalk. I received, after commissions and fees, $14,400 for my 160 BLT points.

This means I paid $4,640 for 4 years of ownership. ($19,040 minus $14,400 = $4,640). In that 4 years, I stayed:
4 nights at Grand Californian (Studio)
10 nights at BayLake Tower (1 Bedroom, standard view)
2 nights at Animal Kingdom (Studio, Savannah view)
4 nights at Boardwalk (1 bedroom Boardwalk view)
8 nights at Boardwalk (1 bedroom standard view)

That's 28 nights of deluxe accommodations, which works out to about $165 per night. I don't think I could have done nearly as well per night just booking the rooms outside of DVC.

If instead I had put that money in the stock market, yeah, I would have done well, (especially given the returns of the last 18 months), but we wouldn't have had the vacations in deluxe accommodations with all the extras that I noted on July 21st in this thread (above). Yeah, this is anecdotal and not objective, but it certainly worked out well for me.

 

[Ralphlaw]

Yes - I'm aware of the stock market. We're retired & don't gamble.

I'm sorry to hear you feel that way. I read ten or so books on investing in the 1990's, and the majority of my money is in the market. Yeah, it goes down at times, but overall it's about the only way to consistently beat the rate of inflation. My investments, overall in the last 15 years, have more than doubled. One, a Hartford midcap fund, is up 500% since I bought it in 1998. My Disney stock has tripled.

The most conservative stock based investment is probably the Vanguard 500 index fund. If you had put $10,000 in there in July, 2013, you'd have about $12,000 now. If you had put $10,000 in that fund in July 1012, you'd have about $15,000 now. Even if you had put $10,000 in at the absolute worst time about 14 years ago, you'd still have about $13,000 now. In the meantime, if you had bought at 3 months intervals over the last 10 years, you would have more than doubled.

Yeah, it hurts when it goes down, but I have always seen that as a time to buy. Thus far, I've been right far more often than I've been wrong, and I'm slowly getting rich because of it. Good luck.

 

[GoofGoof]

I'm sorry to hear you feel that way. I read ten or so books on investing in the 1990's, and the majority of my money is in the market. Yeah, it goes down at times, but overall it's about the only way to consistently beat the rate of inflation. My investments, overall in the last 15 years, have more than doubled. One, a Hartford midcap fund, is up 500% since I bought it in 1998. My Disney stock has tripled.

The most conservative stock based investment is probably the Vanguard 500 index fund. If you had put $10,000 in there in July, 2013, you'd have about $12,000 now. If you had put $10,000 in that fund in July 1012, you'd have about $15,000 now. Even if you had put $10,000 in at the absolute worst time about 14 years ago, you'd still have about $13,000 now. In the meantime, if you had bought at 3 months intervals over the last 10 years, you would have more than doubled.

Yeah, it hurts when it goes down, but I have always seen that as a time to buy. Thus far, I've been right far more often than I've been wrong, and I'm slowly getting rich because of it. Good luck.

He's retired. When you are younger and have time to wait for the market to come back it's easier to stomach the volatility. If you are retired or near retirement you should not have much of the money you need to live on in equities. If you need to take the money out to live on you don't get the bump up when the market recovers. It's fine to have an account with "play money" invested in stock, but not the money you need to live on. When the market tanked in 2008 there were a lot of people who were retired or very close to retirement who had to go back to work because they didn't make wise retirement investments. I know a few people who had similar issues with their kid's college funds.

 

[Ralphlaw]

I agree. I just don't consider it gambling. Real estate and stocks are about the only way to consistently beat the rate of inflation. Anything else, and you're probably falling behind. Real estate, of course, has its own set of issues, including the duty to actively manage it, pay RE taxes, and wait for a buyer when you want to sell. Stocks and stock based mutual funds are my choice, but if I was older I'd have less of them and more by way of conservative investments. But I'd still have stock based investments at the core of it all. Even some utility stocks can kill CDs with their dividends of 4% or more.

Yeah, it depends on your comfort level. But yikes, we're a long ways off from DVC aren't we.

 

[BigTxEars]

I think it makes sense when number crunching, it does by my math for us anyways. We bought our first set of points (secondary market) early this year. Just 100 points at SSR, when I did the numbers then it would take of 7 years to break even and then start saving money. That was basically budgeting 30% off a Deluxe room at Disney vs the DVC cost per night over those 7 years taking into account DVC buy in and yearly fees.

But to us it goes beyond $ saved.

We just bought 110 more points (again SSR on secondary market) which we are transferring money for tomorrow to finalize the sale. Now I have not worked out the turn around time with these new points/cost but I don't even plan too. I don't care really how long it takes to break even, it's not about that for us. We bought more because we love the concept of WDW and DVC, that was enough for us to buy more. I have no doubt we will save money long term but I really don't care how much or when to be honest. Might not make sense to some but it does to us

 

[LuvtheGoof]

This is precisely where I believe many peoples calculations fail, because it's just not that simple and I can't count the number of times I hear people think of it this way. Here's a couple reasons why:

1) To figure your savings you need to include all years in the figure. Using tables in wonderland as an example, you pay $100 to buy into a 20% discount. Your breakeven point is $500. You can't make it out to be a great deal because you save 20% on everything you buy after that because at $600 spent, you've saved only 3% total and at $1000, you've saved only 10% total (20% of the $500 after you broke even is $100). You will NEVER save 20% off your meals with TIW. Disney sells it as such, but even if you spend $10,000 with TIW, your total savings will only be about 19%...20% is the limit you'll never reach. DVC is the same, but the numbers are much worse for the second reason...

Yes, but the other choice is to pay full price for your meals. At least with the TiW you are saving something.

 

[LuvtheGoof]

This is precisely where I believe many peoples calculations fail, because it's just not that simple and I can't count the number of times I hear people think of it this way. Here's a couple reasons why:

2) With DVC you pay more than rack rate for a number of years (until you break even), but the savings are out in distant years. Even if you include all years in the figure, you have to convert all the numbers to CURRENT dollars. This means, in your averaged savings, the money you pay OVER rack rate in the early years will weigh more heavily than savings years into the future...the further you go out the less those years contribute to your savings. You can figure the REAL savings for any given year by dividing the savings by (1+i)^y where i is the inflation rate and y is the number of years into the future.

If you ignore that part of the math, my breakeven point is 8 years and even if I were to save 80% off rack after that...I'd still only be sitting at a TOTAL savings of 40% after 16 years. If you do take into account REAL dollars, then that number goes down A LOT (my total savings max out at about 25% in year 31!) and, in my opinion, that makes it a poor investment when the rack rate for a regular delux room is already 40% less before any discount.

Believe me, I run the numbers a lot hopingt they work out, but the nevre do for me. I'm sure if I bougth in, I'd love it, but I love my money more.

So, we keep a spreadsheet with the total money paid out to DVC for points and dues, and what the room would have cost us when we are there. We have 360 points right now, and have taken 13 DVC trips so far. Using a 30% discount on the rack rate - even though there were several trips when the discount was not available, we have saved just over $9,600 total over the last several years (more lately, since we have "broken even"). We check the rate at the time we go, not some future guess, to be sure we are reflecting what it really would have cost us.

Trying to figure the inflation rate and REAL dollars is an exercise in futility, and essentially worthless to whether you will save money with DVC. The reason is simple - are you going on a Disney vacation, staying in a deluxe villa, and paying rack rate or even a 30% discount? What does the rate of inflation have to do with it? You are paying for a deluxe Disney room one way or another. The rates for Disney rooms go up every year, just like the DVC dues, though we have seen that most years, the Disney room rate goes up more than our dues.

Let me run a scenario in real dollars. Let's vacation at Disney's Animal Kingdom Villas Kidani Village from Dec. 6 - Dec. 13, 2014. In checking the Disney web site, a 1 bedroom Savannah View room will cost you $4,263.86. I will stay on my points - 209 for that week, and my dues are $1018.43 for the 209 points. So I will pay $3245.43 less than you for the exact same room. Please tell me how I am NOT saving money????

Please remember, DVC is NOT an investment, and is NOT for everyone. It works for us and how we vacation, and saves us thousands of dollars in hotel costs. We save quite a bit on our APs, the TiW, tour discounts etc. The AP discount saved us $894 this year alone. Not too shabby!

 

[Ralphlaw]

Excellent analysis, I think. The hard part is always separating out the room rate in light of specials with free dining, etc . . . $4,263.86 seems a bit high, but I wonder what a normal room with 2 beds and a futonny rollout bed would run from Dec 6th though the 13th in isolation of every other special. I must admit, the first night the 4 of us stayed at BLT in a spacious one bedroom villa seemed awfully decadent. We didn't need that much space, but now we've grown used to it.

 

[LuvtheGoof]

Excellent analysis, I think. The hard part is always separating out the room rate in light of specials with free dining, etc . . . $4,263.86 seems a bit high, but I wonder what a normal room with 2 beds and a futonny rollout bed would run from Dec 6th though the 13th in isolation of every other special. I must admit, the first night the 4 of us stayed at BLT in a spacious one bedroom villa seemed awfully decadent. We didn't need that much space, but now we've grown used to it.

I took the $4,263.86 figure directly from the Disney web site using the Late Fall Room Offer rate. The regular rate is $5,284.15. Remember, this is for a 1 bdr DVC room with Savannah view. The only regular 1 bdr is a club level, but no savannah view, and it runs $6,690.65 for the Late Fall Room Offer. That would not even include the full kitchen or washer/dryer that the 1 bdr DVC unit has!

Just a regular savannah view room with 2 queen beds is $2,765.31 with the Late Fall Room Offer for 2 adults and 2 children ages 12 and 8. The absolute cheapest would be a standard view (parking lot) for $1,901.83. And I'm still only paying $1,018.43 for my 1 bdr savannah view.

 

[Ralphlaw]

Wow, thorough. Do you want to do my tax returns next year?

By the way, none of this takes the sanity factor into account. The 4 of us stuck in a one room normal room with 2 queen sized beds gets pretty small after a few days. The joy of extra space, kitchen, laundry, plumbing, make the vacation far far far more relaxing for us. Of course, I'm easy to be around on vacation; no one would ever have a hard time being around me in a tiny room for a week or so. (Some say I snore, but I never heard it.) For my teenage son and moody daughter, well, the extra space is nice with them in tow.

And, by the way, we only stay in studios for short stays. If we're gonna be around longer than a couple days, we get the 1 bedroom.

Also, I would hazard to say that you can't form a true opinion until you give it a try. I got into the stock market 15 years ago, and promptly made a few mistakes. Now, after learning from the early small mistakes, I have a very nice portfolio. Similarly, we bought BLT 160 points a while back, realized we liked DVC in general but preferred the Boardwalk area, sold BLT, and bought BWV instead. And yes, we're happy.

 

[LuvtheGoof]

Wow, thorough. Do you want to do my tax returns next year?

By the way, none of this takes the sanity factor into account. The 4 of us stuck in a one room normal room with 2 queen sized beds gets pretty small after a few days. The joy of extra space, kitchen, laundry, plumbing, make the vacation far far far more relaxing for us. Of course, I'm easy to be around on vacation; no one would ever have a hard time being around me in a tiny room for a week or so. (Some say I snore, but I never heard it.) For my teenage son and moody daughter, well, the extra space is nice with them in tow.

And, by the way, we only stay in studios for short stays. If we're gonna be around longer than a couple days, we get the 1 bedroom.

Also, I would hazard to say that you can't form a true opinion until you give it a try. I got into the stock market 15 years ago, and promptly made a few mistakes. Now, after learning from the early small mistakes, I have a very nice portfolio. Similarly, we bought BLT 160 points a while back, realized we liked DVC in general but preferred the Boardwalk area, sold BLT, and bought BWV instead. And yes, we're happy.

One of our first stays many years ago was for 2 weeks in a studio with our 2 boys. We had given them a choice of staying for one week in a 1 bdr or 2 weeks in the studio, and they picked 2 weeks. Even though we didn't spend a lot of time in the room, we learned from that trip that a 1 bdr was the minimum for us! We also relax a lot more at the resort nowadays.

Now, when we take our boys with their wives, we have stayed in the Treehouses twice, and a 3bdr gv at OKW. Even when it's just the 2 of us, we prefer the space of a 1 bdr. Not to mention the kitchen and washer/dryer! I usually get up earlier than my wife, so tend to make coffee, and sit on the balcony while enjoying my coffee. This let's her sleep in a bit, and I don't have to worry as much about making a bit of noise in the kitchen. So much more relaxing!!