What makes DVC worth investing in?

[PsycProfPlum]

That sounds like an excellent case for NOT buying. If you wouldn't be satisfied if you paid out of pocket, then buying into something where you are tied to ownership, where DVC can (and has) made a lot of members unhappy with policy changes - then the psychological trick of making you happy because you are not out of pocket is just that, its a psychological trick that will keep you from getting out when the getting is good, keep you happy with something that you shouldn't be happy with. If I'm paying Disney prices for a mediocre dining experiences, I want to be disappointed, because I want to change my behavior to get me an experience that is in line with what I am spending.

Well with the restaurant example, the behavior in question is the meal you just finished. It's done and cannot be changed. You just enjoy it more if you prepaid it. Same meal and you are paying for it either way.

For DVC, I'm not saying you should lock yourself into something you don't enjoy. Just that if you are going to Disney either way, you may enjoy the SAME experience more if you have paid up front. No tricks. If something makes you happy, you are happy. If you aren't really enjoying it much, then by all means, you should not be looking into DVC.

 

[Bing Showei]

Well with the restaurant example, the behavior in question is the meal you just finished. It's done and cannot be changed. You just enjoy it more if you prepaid it. Same meal and you are paying for it either way.

Actually the behavior in question is what will you that do the next time you pass by that bad restaurant. Are you going to go back in and give it more of your money even though it was a bad experience the first time?

The cash diner will certainly have eaten the same junky food, but the next time they walk by that place, they will have the good sense to take a pass. The meal plan diner, as the psychological "benefit" suggests, may recall a decent dining experience and give a junky restaurant more of their money. How is that supposed to be a benefit for the consumer? Is it an ignorance is bliss thing happening?

I'd rather be unhappy about one bad meal than satisfied with paying for that same bad meal several times. How does that saying go? "Fool me once, shame on... shame on you. Fool me- you can't get fooled again."

 

[PsycProfPlum]

Actually the behavior in question is what will you that do the next time you pass by that bad restaurant. Are you going to go back in and give it more of your money even though it was a bad experience the first time?

The cash diner will certainly have eaten the same junky food, but the next time they walk by that place, they will have the good sense to take a pass. The meal plan diner, as the psychological "benefit" suggests, may recall a decent dining experience and give a junky restaurant more of their money. How is that supposed to be a benefit for the consumer? Is it an ignorance is bliss thing happening?

I'd rather be unhappy about one bad meal than satisfied with paying for that same bad meal several times. How does that saying go? "Fool me once, shame on... shame on you. Fool me- you can't get fooled again."

We appear to be taking about different things. What I said was that prepaying a meal or trip could make that meal or trip more pleasurable than it would be paying during that meal or trip. In other words, the benefit is in getting more pleasure from the same single experience that someone committed to doing anyway compared to paying after that experience is over.

It seems like a real leap to assume that anyone would somehow be happy with a bad experience and go back. When people are deciding future behavior, it's a complex process based not only on past experience, but available alternatives, perceived value and many other things.

 

[Bing Showei]

We appear to be taking about different things. What I said was that prepaying a meal or trip could make that meal or trip more pleasurable than it would be paying during that meal or trip. In other words, the benefit is in getting more pleasure from the same single experience that someone committed to doing anyway compared to paying after that experience is over.

It seems like a real leap to assume that anyone would somehow be happy with a bad experience and go back. When people are deciding future behavior, it's a complex process based not only on past experience, but available alternatives, perceived value and many other things.

But that was your point. Same dining experience, two different reactions based on how one pays; a variable that should pay zero part in how much you judge a restaurant.

Say you sit down to eat a slice of pizza. The guy next to you sits for a slice from the same pie. As you are about to take a bite, you notice there's a weird smell from it so you decide you don't wan to eat it. The guy next to you is on a special Hammer Dining plan. Just as he is about to take a bite, someone hits him in the head with a hammer. As a result, he doesn't really notice the smell and the pizza is pretty good.

The Hammer Dining Plan essentially altered his perception of the pizza and yes, he paid the same as you did (or more, as is the case with the dining plan), but he didn't notice the smell and felt pretty good about it. In fact, he looks forward to going back there again some time.

That survey, to me, seems to suggest that the dining plan (again not unlike prepaying for a hotel) can dull your senses and introduce an element of complacency that is absent when one is actively making a decision to spend money. It's the same principle behind subscriptions that autocharge your credit card vs. you actively making a conscious choice to judge something on a case-by-case basis. How is that better?

 

[PsycProfPlum]

So to be safe, you should probably pay double just to be extra vigilant.

 

[kboo]

The meal plan diner, as the psychological "benefit" suggests, may recall a decent dining experience and give a junky restaurant more of their money.

That is basically addonitis, no?

That survey, to me, seems to suggest that the dining plan (again not unlike prepaying for a hotel) can dull your senses and introduce an element of complacency that is absent when one is actively making a decision to spend money. It's the same principle behind subscriptions that autocharge your credit card vs. you actively making a conscious choice to judge something on a case-by-case basis. How is that better?

It’s not that something is objectively better or not. It’s that it feels less painful having prepaid than paying out of pocket each time (although using the magic band to charge also doesn’t feel as real as pulling out a CC or cash). So you aren’t constantly getting your buzz interrupted by thinking about how much this meal/stay is costing.

Put another way, yes I DO look at the cash rate of a 1-br suite at the GF/VGF over Xmas, then allow myself to feel really pleased with myself that I booked a 1br on points then, and tell myself I’m “saving” soooo much money when the reality is that I would never have paid out pocket the cash rate for a 1br anything most anywhere, and especially not over Xmas.

on the other hand, I’ve bought in way more to dvc than I ever expected to, and yet I’ll never buy a dining plan.

I think the difference for me is- with an AP or DVC points, I’ll go more often to make sure I “get my money’s worth” from the AP or make sure I wring every bit of value from my points, but I know that there is no way I could get my moneys worth out of a dining plan because I simply physically cannot eat enough food to do so.

 

[PsycProfPlum]

It’s not that something is objectively better or not. It’s that it feels less painful having prepaid than paying out of pocket each time (although using the magic band to charge also doesn’t feel as real as pulling out a CC or cash). So you aren’t constantly getting your buzz interrupted by thinking about how much this meal/stay is costing.

Right. The experience is better overall because the negative associated with the out of pocket cost is removed. It's not that prepaying something magically makes a bad experience amazing. Plenty of people have bad experiences with DVC and the dining plan and don't return to those places. Well said.

 

[CanadaDisney05]

I admire the thorough financial analyses, seriously. That said, I don't believe it's fair to assume a 3% return per year on investments for people who have some idea of what they're doing -- by which I mean dollar-cost-averaging into a fund made up 100% of stocks, without trying to time the market, stock picking, or doing anything stupid. I can't see how it's even worth doing further analysis once you consider that the average return in the market is 7% (which may not hold true for years at a time but hey - think of it as a sale). Investing 30,000 now and looking at it in 20 years at historical returns would leave you with 116,000, for example. If we're somehow comparing this to buying a liability for the same price and then paying yearly ever-increasing dues on top of it... I think there's a strong emotional component twisting our numbers and opinions.

The one thing missing from this assumption is that you are not adding in "maintenance fees", and withdrawing money to pay for vacations.

If you don't do that, you are not comparing apples to apples. The comparison shouldn't be DVC vs investing because that involves no vacationing for 20 years which is the whole reason your buying DVC in the first place.

DVC is simply a tool used to finance your future vacation costs. Therefore, the investing comparison needs to accomplish that same goal

 

[CanadaDisney05]

Over the years I've come to really dislike the financial analysis done on this site. I'm an accountant, I can do a financial analysis. I am also a successful investor, I have some idea about markets.

Not doing a financial analysis is the car salesman's dream who manipulates the monthly payment buy extending the term.

You can argue some of the inputs people put into their financial analysis, but you can't argue that financial analysis on a financial product is a bad idea. At the end of the day, math is not an opinion. It is fact.

If the end result of DVC was that ot was going to cost 300% the cost of cash rates, you wouldn't say it's a good purchase if you can afford it.

If I can afford spending 200k on a Toyota Corolla, you wouldn't say go for it.

 

[Bing Showei]

Right.
The experience is better overall because the negative associated with the out of pocket cost is removed. It's not that prepaying something magically makes a bad experience amazing. Plenty of people have bad experiences with DVC and the dining plan and don't return to those places. Well said.

It cuts both ways. You read the data as a bill making people upset because they pay cash. I read the data as dining plans (not unlike a timeshare) making people acceptable of something substandard because the reality of having to pay for it is removed. Both people paid for it, the dining plan (and timeshare) just don’t want you to remember that. That’s not done for the consumers’ benefit.

It’s a lot easier to walk away from going back to a particular hotel from year to year than it is to decide to sell your timeshare. On these boards, we’ve seen how it takes years of disappointment for people to hit that breaking point with their Disney timeshare.

People have paid plenty of large dining bills and have been happy to reward the restaurant with their patronage subsequently, and believe it or not, a lot of them are not within the Disney bubble where people had to pay with real money.

Your defense of the dining plan as a means to enjoying a dining experience more is akin to recommending a hole to keep your head in when things aren’t going well around you.

 

[crisi]

Not doing a financial analysis is the car salesman's dream who manipulates the monthly payment buy extending the term.

You can argue some of the inputs people put into their financial analysis, but you can't argue that financial analysis on a financial product is a bad idea. At the end of the day, math is not an opinion. It is fact.

If the end result of DVC was that ot was going to cost 300% the cost of cash rates, you wouldn't say it's a good purchase if you can afford it.

If I can afford spending 200k on a Toyota Corolla, you wouldn't say go for it.

Of course I would - IF it fit your families needs and added 300% worth of value - which is subjective and cannot be measured financially.

DVC changes behavior. Its HAS probably been 300% more expensive for my family - because without DVC we would have stayed in moderate studios instead of two bedrooms and Grand Villas. We wouldn't have brought guests about 3/4 of the time, paying for their hotel room, and in some cases paying for their food and park tickets. We've gone more often, we've stayed in larger rooms, we've treated guests - and without a hotel bill each trip - we've spent more money on dining than we would have without DVC. But I think that its added value and so I'm content with our purchase and ownership.

That change in behavior is very difficult to measure in a financial analysis. But most members will agree that it is the case. And its hard to predict - you might buy in planning on bringing guests, but do you really manage to predict your behavior ten years from now? Do you really predict buying a second resort, or turning the we have to see the Christmas lights trip into an annual tradition?

So the analysis is worthless except as an exercise. If you can afford it, its worthless. You can afford it. And its dangerous to those who use an analysis they don't understand to purchase something they can't afford. An argument could be made for someone on the cusp, someone who can just afford it, a financial analysis is useful - I'd respond with nope, because by the time you add in the risk of having your capital tied up, it negates any financial benefit that might be there.

The Corolla analogy is a bad one, since what you are comparing is buying a Corolla to buying a Land Cruiser. You are not buying a hotel room at Disney - you are buying into a timeshare at Disney - it isn't two apples. It is possible the more expensive Land Cruiser is a complete waste of money to you and you'll hate it. But its also possible that the more expensive Land Cruiser will be exactly what you needed. (full disclosure - I drive a $30k car because that is what I like and what I need. My husband drives a $90k car....there is no financial analysis that says his car is a good financial decision).

 

[PsycProfPlum]

It cuts both ways. You read the data as a bill making people upset because they pay cash. I read the data as dining plans (not unlike a timeshare) making people acceptable of something substandard because the reality of having to pay for it is removed. Both people paid for it, the dining plan (and timeshare) just don’t want you to remember that. That’s not done for the consumers’ benefit.

It’s a lot easier to walk away from going back to a particular hotel from year to year than it is to decide to sell your timeshare. On these boards, we’ve seen how it takes years of disappointment for people to hit that breaking point with their Disney timeshare.

People have paid plenty of large dining bills and have been happy to reward the restaurant with their patronage subsequently, and believe it or not, a lot of them are not within the Disney bubble where people had to pay with real money.

Your defense of the dining plan as a means to enjoying a dining experience more is akin to recommending a hole to keep your head in when things aren’t going well around you.

We have different perspectives and approaches. You seem eager to look for the negatives. That's not my idea of a good time, especially while on an expensive vacation, but whatever works for you.

 

[crisi]

We have different perspectives and approaches. You seem eager to look for the negatives. That's not my idea of a good time, especially while on an expensive vacation, but whatever works for you.

We are not discussing how to look at the bright side on vacation. We are advising someone we don't know about spending thousands and thousands of dollars. "Hey, you might be disappointed, but your chances of not realizing it go way down!" is not great advice.

 

[PsycProfPlum]

We are not discussing how to look at the bright side on vacation. We are advising someone we don't know about spending thousands and thousands of dollars. "Hey, you might be disappointed, but your chances of not realizing it go way down!" is not great advice.

Just pointing out that data suggest that prepaying can make people happier with experiences they are already planning on doing anyway. I assumed most people would want to enjoy their experiences more, but apparently I was wrong in that.

 

[crisi]

No, I think you are right....people want to enjoy their experiences more. I just happen to think that it is far easier to enjoy the experience of life when you haven't made poor financial decisions. Money doesn't buy happiness, but it does buy chocolate, and that is almost the same thing......

 

[CanadaDisney05]

Of course I would - IF it fit your families needs and added 300% worth of value - which is subjective and cannot be measured financially.

If you can buy the exact same rooms (identical experience) for 1/3rd of the cost, you would still suggest DVC just because they CAN afford it?

An argument could be made for someone on the cusp, someone who can afford it, a financial analysis is useful - I'd respond with nope, because by the time you add in the risk of having your capital tied up, it negates any financial benefit that might be there.

Of course, like any decision, there are quantitative and non-quantitative aspects to take into consideration. Liquidity in this case is a major part of the decision even if the NPV is positive.

The Corolla analogy is a bad one, since what you are comparing is buying a Corolla to buying a Land Cruiser

I'm comparing buying a Corolla for 20k from dealer A vs buying the exact same Corolla from dealer B for 60k.

Remember, you can go every year to Disney and stay in DVC villas without buying DVC. You can pay cash rates or rent DVC points.

I'm not saying in reality that doing this IS cheaper. A simple financial analysis will tell you this. But my point is, you need to do that financial analysis to see that.

Telling someone they should buy DVC if they have the cash available even if they don't understand the financial analysis is not good advice. Not understanding the financials is what gets people into trouble. They misunderstand whether they really and truly can afford it. Even if they can afford it, they don't understand what else they can buy with that money.

 

[PsycProfPlum]

No, I think you are right....people want to enjoy their experiences more. I just happen to think that it is far easier to enjoy the experience of life when you haven't made poor financial decisions. Money doesn't buy happiness, but it does buy chocolate, and that is almost the same thing......

Totally agree

 

[quandrea]

I’ve never really understood the heavy financial analysis that goes into buying dvc. From my viewpoint, it’s a true luxury purchase, not something anyone needs to buy or something that ever truly makes financial sense.

We bought because we could afford it and we like Disney and we wanted to make sure we vacation. Dh is self employed and unless we physically leave our home, he does not vacation. Dvc enables us to book several trips a year to a place that is easy to get to. Once there, we have plenty to do.

Does Disney get most of our vacation dollars? Yes. Are we saving money? Probably not. However, owning dvc is good for our mental health. We like the larger units and the kitchen and laundry.

I think trying to justify the costs is a fools errand. If you can responsibly afford it and you want it, but it. Don’t try to justify the cost as good financial planning. Sometimes you do something because it feels good. Nothing wrong with that.

Bottom line is: dvc is a vacation. The most financially prudent thing to do is stay home. No fun in that though.

 

[CanadaDisney05]

I’ve never really understood the heavy financial analysis that goes into buying dvc. From my viewpoint, it’s a true luxury purchase, not something anyone needs to buy or something that ever truly makes financial sense.

We bought because we could afford it and we like Disney and we wanted to make sure we vacation. Dh is self employed and unless we physically leave our home, he does not vacation. Dvc enables us to book several trips a year to a place that is easy to get to. Once there, we have plenty to do.

Does Disney get most of our vacation dollars? Yes. Are we saving money? Probably not. However, owning dvc is good for our mental health. We like the larger units and the kitchen and laundry.

I think trying to justify the costs is a fools errand. If you can responsibly afford it and you want it, but it. Don’t try to justify the cost as good financial planning. Sometimes you do something because it feels good. Nothing wrong with that.

Bottom line is: dvc is a vacation. The most financially prudent thing to do is stay home. No fun in that though.

You can buy everything that DVC offers without owning DVC. DVC at the heart of it is prepaid hotel rooms. You can buy the exact same hotel rooms using cash rates or renting DVC points.

If the cost of buying DVC was more expensive than renting points, why would you buy it just because you can afford it?

DVC at its core is just an alternative method to financing future vacations. This is why the financial analysis is important

 

[RaymOOOnd]

You can buy everything that DVC offers without owning DVC. DVC at the heart of it is prepaid hotel rooms. You can buy the exact same hotel rooms using cash rates or renting DVC points.

If the cost of buying DVC was more expensive than renting points, why would you buy it just because you can afford it?

DVC at its core is just an alternative method to financing future vacations. This is why the financial analysis is important

True. Guys - so easy to get wrapped up in DVC and forget all about the cash option. I just looked up beach club availability for late next month and there are regular hotel rooms available for less than $400. Which are kept nicer than the villas on average I'll bet. The idea of booking on more of a whim and not having to wait 11months is sometimes refreshing