Breaking Even

yes kniguy...in this situation...i did not factor in a rise in fees over 50 years.

to me, i expect my own income to continue to grow.....so MF todays I can afford....i will assume i can afford MF in years to come.

I may be wrong...but i expect there will be a cap that MF will not be supported above. No idea what that is.....but $40 a point...would never fly.
 
I see a lot of very creative (I will steal Bing Showei's great term) "Mickey math" going on here:laughing:
 
Your MF doesn't stay $7.26, unfortunately. Each year, taxes, administration costs, housekeeping, insurance, etc. all go up.

Assuming an increase of 4% annually on maintenance fees (based on historical data), by 2067, your MF will be $47.70 per point, or $8,347.86 for 175... assuming you don't add on at the new Epcot entryway resort because suddenly you HAVE TO be able to book F&W in October (in November) for the following year.

I will bet you a BILLION dollars MF will not be any place close to $40 a point. At some point there will be a max where EVERYONE would bail and get rid of points.

but that was good for a nice laugh.

Only time will tell. Even if dues are $40 / pt. it will likely "feel" the same as your $7 dues do today. I find calculating / projecting into the future just complicates things. If you're going to assume those annual increases in dues, what are you going to assume for your annual increase in wages? What will the regular hotel rooms cost? How much will point rentals be? You are not going to be right on your projections over a 50 year time span.

I remember a time when I thought "If we only made $XX,000 we'd be set. That number is laughable now.

It's much simpler and IMO accurate to just consider costs in today's dollars.
 
so MF todays I can afford....i will assume i can afford MF in years to come.
Good point in looking at it as in what you can afford. Just as people might complain about increasing maintenance fees, but the direct Disney hotel rooms will increase in price as well. It is all relative and what it all really boils down to is if you can afford it and if it creates lasting memories for you and your family -- you can not put a price on that.
 


You are making an assumptioon that your MF are a constant for the next 50 years. You would need to factor in - increasing yearly dues to get a close estimate.
Then you need to compare it to hotel rates in future value, too. The present value of the future payments, when the rate of growth equals the rate of return, is exactly what was calculated.

In other words, in order to pay your dues for 50 years, you’re essentially taking out a 50 year loan for dues*50 today, at an interest rate equal to the rate of dues growth. Your annual payment on such a loan equals the cost of dues in that future year.
 
Well this thread turned out just how I thought. I wasn’t asking because I was trying to determine if I can afford DVC. I can. To me thinking about breaking even is more akin to going shopping because there is a big sale and then looking at the bottom of the receipt to see how much money I “saved.” I know I didn’t really “save” any money and instead the shopping trip cost me money. But I still like to look. I’m not sure what calculation I would use to determine as in the past we have paid various rates to include rack rate on a 2BR Villa at Thanksgiving, military rate on a 2BR Villa, 40% pin code on a 2 BR Villa, and rented points for a 2BR Villa. With those different rates, I could come up with a break even in a couple of years to a break even in 10-15 years. And, I do not take into account opportunity cost on the buy in because if I didn’t buy, the cash, much to my husbands chagrin, would literally be sitting in my bank account earnings a non-existent interest rate.
 
I'm not sure about a break even scenario. It's so hard to compare apples to apples when you end up changing your travel habits after buying in. We were a twice a year +moderate hotel+off-site rental family that turned into 3 or 4 trips a year +deluxe +1-2 bedroom family.

Trying to do the math on it is kind of like statistics. You can always tweak a number or run it somehow to where you end up thinking 'Disney is basically paying me to own into dvc!'. Well maybe not quite but you get the idea.

Have we spent more on Disney vacations since owning in? Heck yes. But we have also made some darn good memories, been able to invite family and friends who otherwise wouldn't stay deluxe, and had fun at members only DVC nights and using other perks. And the level of giddy I get *every time * I log into my account is worth it. Very few things in life make me as happy as DVC. That's worth a whole lotta something.

You basically need to ask yourself "does Disney make me stupid happy?" and "can I afford it?". The fake numbers on a spreadsheet are just justification. Not saying I didn't run things through a spreadsheet before we bought but now I'm able to see what a moot point it was.

my 25 point add on at BCV will have paid for itself after 5 years since it "saves" us $800 a year. After that -- it's actually MAKING us money and that's not counting the value of the points.

hahahaha
 


Only time will tell. Even if dues are $40 / pt. it will likely "feel" the same as your $7 dues do today. I find calculating / projecting into the future just complicates things. If you're going to assume those annual increases in dues, what are you going to assume for your annual increase in wages? What will the regular hotel rooms cost? How much will point rentals be? You are not going to be right on your projections over a 50 year time span.

I remember a time when I thought "If we only made $XX,000 we'd be set. That number is laughable now.

It's much simpler and IMO accurate to just consider costs in today's dollars.

Kind of like Dr. Evil asking for $1 million in 1999. hahaha

how-about-1.jpg
 
Then you need to compare it to hotel rates in future value, too.

Precisely. MFs are driven by operational costs, and those operational costs are based on a similar labor pool and resource pool as the hotels standing right next to them.
 
Everyone probably does it differently. I'm going to go off of the rental price per point I would have paid renting other peoples BLT points , and compare that to the total amount I've spent (including dues) at BLT.

The thing about DVC though is you end up spending more money than you otherwise would at WDW, so it skews things. Like we have a big family trip planned Oct 2018, and then wasn't planning on visiting again until Oct 2021 for the 50th. We're going to have about 100 2019 points we can't use on the big 2021 trip so now we're thinking about a WDW trip we weren't planning on because "we have the points to use". We'll probably end up renting them, but we may book a studio for 5 or 6 nights in the late 2019/early 2020 timeframe. We don't go often enough to buy discounted AP's so I can't use that savings towards the 'break even' total, while others might. Also hard to estimate with the possible increase of point rental prices, and contract resale value.

I definitely know I won't be breaking even in the next 2 or 3 trips thats for sure. I'm using 456 points Oct 2018 though, which would have cost 7800 dollars to rent at current prices, and there's no guarantee I would have gotten the reservations I wanted. I barely got them with an 8AM 11 month advantage.

3 happy little girls........ I'm already way ahead.

Since we are a family of 5 that becomes 7 with grandparents that help out with the little ones and enjoy spending time with their grand kids, our math is different than other people. We would need 2 hotel rooms instead of a 2 bedroom to have the same number of beds (minus the kitchen and laundry). So I figure that only after 3-4 trips we have broken even over cash rooms compared to DVC.

My DVC purchase was 10K and came from my normal vacation savings account, so I did not calculate opportunity costs - which is the big point you will see a lot of disagreements on with posters here. Basically, we did not vacation in 2017 and used 2017 and 2018 vacation funds to buy in. If I was forking over 40K up front and it was coming out of an investment account, I'd running some different numbers.

So, I based my break even by comparing to how I would have taken my Disney vacations had I not purchased DVC.

For us, that was 2 rooms at POR with (hopefully) a free dining discount. Basically, we had a budget of 5K per trip and feel that's pretty accurate as far as what the actual cost would be.

Once I add in AP's, dues, and food for our 1st 2 trips to our initial purchase, I figure we are out 15K but after that the per trip cost will drop to only dues for rooms plus tix and food.
Trips should then run us about $3K each (short term calc). I originally thought we'd break even in 3 trips, but it's honestly more like 4....but i think we will be a little ahead by #4 PLUS we will be staying at the Boardwalk. Something we probably would not have done otherwise.

The thing is you have to do a lot of guessing. Hindsight will be 20/20, but for now I am assuming those 2 rooms at POR will increase more than my dues and that there will still be DVC AP's available to buy. That's the best I can do.

Here is what I believe. If I have to calculate how many trips to break even on my DVC purchase, then I should not have bought the DVC to begin with. I know that I am a cheapskate and I know that I am staying in a much much nicer hotel than I would be if paying cash. I am very happy with that. I know that I paid significantly less buying resale than all the people that are buying direct right now. I know that I get to go to Disney 4 or 5 times a year. I know that if I did not own a bunch of DVC points that I would go maybe once and probably stay offsite some times.

Now if you really want the formula you should use: (Cost of points+closing costs+ any finance fees+(yearly maint fees+(yearly maint fees*1.3% per year that you are going to own)-the cost of whatever hotel you were going to stay in (be real here use the all stars not the GF grand villa cash price)* the number of trips per year you were going to go (this number might be .5 or .25) now add back in the number of trips you will be taking because you have a few more points that you need to use up plus the cost of airfare/driving plus the cost of food (not the cheap places you are in the DVC now so we are talking table service and you can deduct the DVC discount from that), plus the annual passes that you are inevitably going to buy, and don't forget the extensions or extra trips because the are having a DVC party in one of the parks, plus the extra points that you will also need eventually, plus the DVC special merchandise you will be buying, plus tipping bell services when you have a split stay because you cannot get a full week the 1st week in December in a standard at BLT and need to go to BWV for 1 nite and then AKL for a nite and heaven forbid SSR for the rest of your trip (of course all on your SSR points) plus the cost of your time stalking the DVC website looking for those extra days every 15 minutes plus the extra luggage you will have to buy because you are going so much that the airlines tear up your current bags, plus the cost of dog, cat, ferret, etc boarding, plus extra sunscreen umbrellas, ponchos, snacks less the cost of renting your points (but seriously you don't have any extra points to rent you need more points)....Well I think you are beginning to see why the calculations are pretty useless.

Take solace in knowing that you are going to have some really really nice vacations.

Now I have to go see if I have enough points to squeeze in another trip some time this year.

Lots of truth in all of these, and @icc2515's post may be the truest and funniest of all.

For us -
I could take our already planned trips - 5 nights in February (1BR BLT) and 5 nights over Thanksgiving (2BR BLT), sell my stripped contract and essentially break even - so 10 nights in 2018 are "free".

We are the ones who were going at least 1x a year for a week, staying in deluxe hotels on PIN codes and other special discounts at 25-30% off. With these deals -which almost always come out less than 7mo in advance and never during school breaks, we could usually get a deluxe hotel room for an average of $300/night (GF was more, BWV was less). By renting points, we could get roughly the same rate in a BLT LV studio (averaging 20pts/nt at $15 per point in late August).

So, with careful searching for discounts, we could probably have gotten roughly the same rate renting points or hunting for discounts, or approximately $2100 per week for lodging in a studio.

Super-rough estimate:

One could book the same period (BLT LV studio) annually for about 150 points per year (7-8 nights x 20 points). We paid $106 per point, so if we'd bought 150 points that would have cost $15,900. Let's round up to $18,000 to include closing costs (I have no recollection what they actually were). Dues on 150 points estimated at $6 x 150 = $900/year. So "offset" the $1200/yr savings into $18,000 purchase price - takes 15 years to recoup the purchase price, assuming no inflation or time value of $.

The reality is, though, that we bought more than 150 points, are going to stay in 1-2BR going forward, are going 2x in 2018, and we don't have to hunt for "bargain" times or finding a rental. But given that DH and I did not really take true family vacations before this and work really stressful and busy jobs (still in the office after 7, though somewhat my fault), DVC forces us to plan and take true family vacations rather than trying to jam a vacation into a conference somewhere. And, if we were to go to Disney during school breaks, we'd likely be paying $500 and up to stay in the same deluxe hotels.

We are older parents, so all of this is happening when many of our peers are going through their midlife crises. So another way to look at this is- we are paying FAR less out of pocket than we'd have paid for a little sports car, and DVC is a heck of a lot more kid-friendly than a coupe with no room for car seats in the back. And it holds its value better!

Edited to add: and no way would we have ever booked a 1BR or larger with just the 4 of us, on a cash reservation. While we certainly could afford it, it just didn't feel like value for us - not sure why that is. Maybe because growing up, I felt like that was what "rich people" did - we always stayed off site in the Days Suites, which felt luxe to me as a kid.
 
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I keep track of purchase price plus dues versus what the rack rate would have been for the trips I have taken since I bought into DVC.

It took 9 years to break even.

That's ignoring the fact that I could have rented points, which would have been cheaper than rack rate.

It's also ignoring the fact that there might have been discounts on the rooms.

But that's the way I've been looking at it.
 
We're one of those families that was already going to Disney 1-2x a year for several years, staying at Deluxe resorts on cash (many times with runDisney room discounts), and buying annual passes. DVC will essentially allow us to stay in bigger/nicer rooms for more days compared to what we were already doing/spending - should have looked into it years ago! We might try to calculate break-even for fun, but we're not too concerned about when it happens since we paid cash for our contracts and don't plan on selling them (we love Disney regardless of whether we had kids - now that we do, it's even better!).

We stay in bigger rooms, but it costs us more because we now stay in a two bedroom. And the rooms aren't nearly as nice as the Deluxes we paid cash for, IMHO. But we get to have the kids in a different bedroom - and now that they are young adults, we can take friends or they can go on their own. And since we bought back in early 2001, we paid very little for our contract.

To me, break even is simply a fun exercise for accounting geeks. It has no real value. If you can afford DVC and get value out of it - however you measure value - over paying cash for a room, its a good deal for you. If you can't afford it or don't get value out of it, it isn't.
 
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I will bet you a BILLION dollars MF will not be any place close to $40 a point. At some point there will be a max where EVERYONE would bail and get rid of points.

but that was good for a nice laugh.

I remember when a can of pop was $.25. If you would have told me people would be willing to put a whole dollar in a vending machine for a can of pop, I would have thought you were crazy. Inflation is exponential function, numbers can get big fast.
 
Edited to add: and no way would we have ever booked a 1BR or larger with just the 4 of us, on a cash reservation. While we certainly could afford it, it just didn't feel like value for us - not sure why that is.
And this is largely my point about DVC. By nature of the DVC design (a huge revenue generating apparatus), buying in will change your WDW travel patterns. I'm not saying it's a bad change, but you do end up buying way more Mouse than you have in the past.

Whenever a new thread pops up about "saving" or "breaking even" I'm not intentionally being obtuse about people wanting to know when the equivalent stay over time will equal the money they put in, it's a matter of: What is the equivalent? And What do you use to measure DVC costs against?

Like most others, my belief is that it should be a measure of costs "with DVC" vs. "without DVC." Where I split with others who have posted to these kinds of threads is that the "without DVC" factor should be reflective of your past purchases that show a DVC like pattern of consumption, or a trend towards that. Because this is a true reflection of your spending habits before the influence of DVC changes you.
To me thinking about breaking even is more akin to going shopping because there is a big sale and then looking at the bottom of the receipt to see how much money I “saved.” I know I didn’t really “save” any money and instead the shopping trip cost me money.
This was never my point about the savings. As those grocery savings are real savings over buying the same item which you would've purchased anyway and have shown a history of purchasing.

I would rather use the analogy of a crack dealer who sells in bulk.

It costs more to buy 8 oz of crack up front than than several eight balls every week, but as an addict, that definitely save me money. By my estimates, 50% because I buy crack regularly anyway! Plus the guy makes it so easy, delivering to my house regularly. Bro-hugging me every time he sees me. In fact, I'm thinking about doubling my order when I have enough money. There are even crack parties I can attend if I join. Free crack! I just have to pay for the Uber to get there.

If a crack addict asked me if they should buy in, I would be all, "Definitely. I'll refer you. I get a bonus." Their addiction is a good match for the bulk purchase.

If someone who dabbles occasionally (because that's how crack works) and enjoys it and wants to join, on paper, you can work out the math of how much, if they were to save buying in bulk over buying the same amount spread over the commitment, but the truth is they'll end up buying more because by the nature of crack, it feeds your desire to have more of it and the dealer makes it so readily available.

I use this analogy not to disparage Disney. I love that I bought in. I would love to get more points. I love the time I've spent there the last three years with my family and look forward to the years to come. But I'm honest about this relationship. As much as I get out of it, DVD is in the business of making money. Most owners won't be saving money over what they would normally do without DVC.

The exercise of calculating cost break-even is an academic one. We all have the spreadsheets with formulas that calculate for rising costs, opportunity costs, etc., built into it. But every single one assumes we would, without the influence of DVC, go to Disney every year for the next 25-50. That seems like a faulty premise which compromises the whole thought exercise. Does it make us feel better about buying in? Maybe. But like all things Disney, it's the magic of illusions.
Well this thread turned out just how I thought. I wasn’t asking because I was trying to determine if I can afford DVC. I can.
As soon as you post a thread on the forum it becomes a piece of public information. In no way was I insinuating that you, personally, couldn't afford DVC, only that anyone else reading this should think about the TRUE cost over time. Someone who's thinking about buying will happen upon this thread and as a community, we have a responsibility to dispel what we see as misinformation, just as others will counterpoint my assertions here. Telling people they can calculate breakeven by doing x calculations without taking into account their personal travel history is misleading.
 
I totally do what @hlhlaw07 does - look at the receipt at a store and figure out how much I "saved". And I will admit that after I booked our President's week trip in a 1BR, I looked at the rack rate ($900+ per night!!) and thought, "Wow, I am saving so much!!" (setting aside the fact that we would never have gotten a 1BR villa if we were paying cash, even at a 30% discount. Just, no. But the "value" we derive is intangible, as others have said. Even on our last trip, which was on rented points although we were already owners, we were much more relaxed even about our park days - because we knew we'd be back. It made for a more rewarding trip because there wasn't the pressure to see and do EVERYTHING. Do we spend more on our trips? Eh... it's probably about the same or less. We will probably cook *a tiny bit* more, especially once we are not staying in studios. Now it seems like our patterns are turning into 3 trips every 2 years, even before buying in, so we are probably the right fit for what we bought. We just upgraded a bit by getting points for 1-2Br and making our trips a little nicer.
 
As soon as you post a thread on the forum it becomes a piece of public information. In no way was I insinuating that you, personally, couldn't afford DVC, only that anyone else reading this should think about the TRUE cost over time. Someone who's thinking about buying will happen upon this thread and as a community, we have a responsibility to dispel what we see as misinformation, just as others will counterpoint my assertions here. Telling people they can calculate breakeven by doing x calculations without taking into account their personal travel history is misleading.

Some of us lived through the 2008 crash on this board. In 2007 people were buying contracts resale at ridiculous prices (sound familiar?), and the numbers that were flying around about saving money really made it look like you'd be stupid not to take out a second mortgage on your house to buy more points to feed your addiction. You could always sell at more than you bought in for (sound familiar?) or rent out your points if you were having a bad year - and it was hard to get anyone to look at reason. People justified far more points than they could afford - or really "needed" using numbers that were bubble numbers. Then people lost their jobs, and some of them lost their homes, and many of them lost their DVC while in the hole on their DVC loan because, of course, the DVC market crashed.

That was about the time myself and others started using the logic you are using more than it had ever been used on this board. I think those of us who were having fun with numbers then did a disservice to the potential buyer looking for an excuse to justify a purchase - which, as you said, isn't always the person asking the question.

So @hlhlaw07, its unlikely that anyone is making judgments about you or what you can afford - we don't know. But from experience, you won't be the only person who reads your thread - and chances are that someone is reading this thread blinded by pixie dust, who is about to have their first baby, with a job that might not be there next year, and a brand new mortgage, and student loans - intent on "making this work." And if they are disappointed or burdened by DVC once they are in, I don't want the karma for that.
 
So @hlhlaw07, its unlikely that anyone is making judgments about you or what you can afford - we don't know. But from experience, you won't be the only person who reads your thread - and chances are that someone is reading this thread blinded by pixie dust, who is about to have their first baby, with a job that might not be there next year, and a brand new mortgage, and student loans - intent on "making this work." And if they are disappointed or burdened by DVC once they are in, I don't want the karma for that.

If you really want to implement this plan, you should say “Don’t go to Disney, save your money”. :)

The problem with blanket statements based on the presumptions of a random reader’s inability to afford DVC is that they aren’t useful, and will probably be ignored.

On the other hand, facts and financial models are useful, and may actually help a reader with evaluating their purchase options. For example, it’s more useful to point out that a model relying on selling a contract should factor in market events than to use pejoratives like “pixie dust” and suggest all numbers are invalid.
 
If you really want to implement this plan, you should say “Don’t go to Disney, save your money”. :)

The problem with blanket statements based on the presumptions of a random reader’s inability to afford DVC is that they aren’t useful, and will probably be ignored.

On the other hand, facts and financial models are useful, and may actually help a reader with evaluating their purchase options. For example, it’s more useful to point out that a model relying on selling a contract should factor in market events than to suggest all numbers are invalid.

There is a very big difference between each one time trip to Disney and a commitment to a DVC contract that is going to cost you $20k up front and then the cost of Disney and dues every year. If you make the decision each year "can I afford to go to Disney" and go, that's a whole different decision than "can I afford to regularly go to Disney for the foreseeable future."

DVC ownership requires the second, but "magical" numbers can really mislead. Buying DVC with debt, and having to sell it at a loss isn't a cost in the past - its a future cost - a commitment to a spend that you can't keep.

There are some assumptions with purchase that you need to be careful of. "I can always rent my points" - in 2009 some people found that their points wouldn't rent - fewer people were going to Disney and Disney was discounting. "I can always sell for as much as I bought" - once again, if we crash, one of the first things that will see a huge reduction in price is the cost of DVC resales. If your justification for purchase if something goes wrong - you get sick, you lose your job, you get divorced - is that you'll be covered by these things - caution should be exercised. These risks go down significantly over the life of your ownership - we've owned 15 years and at this point have all the value we need out of the contract (even though I believe we spent more money than we would have) so if we had to let Disney repossess the contract tomorrow, I'd still feel like I got a good deal. But for the first few years of ownership - if you have to sell, you risk a loss.

Now, I wouldn't presume anyone should skip Disney and save their money - that's all or nothing thinking. After all, I own DVC and take vacations and have been to Europe twice in the past two years and am planning on another trip in September. My husband just flew to Germany for a weekend to see a concert. I believe that life is a matter of balance. And I also think the majority of DVC owners that post here can afford DVC. But as I said, I also don't want the karma of someone who can't afford it buying, having to sell at a loss, and putting themselves behind the eight ball in terms of regaining their financial security. A lot of DVC gets sold in bankruptcy. I would never want my advice being a contributing factor to someone having to go through that. I have no idea who will read these words, so I try and choose them carefully. Your opinion may be different and you might think that isn't your responsibility. That's fine, too.

Most people go into a purchase like this assuming that life isn't going to throw them a curveball. But my life has been full of some very expensive curveballs.
 
that's a whole different decision than "can I afford to regularly go to Disney for the foreseeable future."

DVC ownership requires the second, but "magical" numbers can really mislead.
I disagree. You can make the decision to go ever two or every three years and still make DVC work. You could even go less often thanks to the thriving rental market. Just rent out your extra points when you don’t want to (or can’t afford to) go.
 
So agree with @crisi here. To the point that, at a minimum, I go with the blanket statement that one should never finance a DVC purchase (we don’t buy cars on credit either).

Actually your thoughts here are making me think. We are now in the process of buying VGF points at $135 per point. Saw a recent broker listing VGF resale contracts at $170 and up. At first I was kicking myself for not buying another contract at $135 or close to it. But the likelihood we will “need” more points won’t come up until at the earliest 2021 or 2022. Who knows what the economy will look like by then? So now, I wait and use the points I have and I’m happy with what I have.
 

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