Why is financing so disfavored for DVC on the boards. . . and for that matter, why do so many judge those who use it

[Oozma_Kappa]

So here is how I bought my DVC. I bought 200 CCV points direct in September 2018 and financed through Disney at a 12% rate which was about $435 a month in interest. I immediately took out 3 credit cards with 15 month introductory rates of 0%. This caused my credit score to go from 780 to about 620. I did not care about this and expected it. I paid off the DVC with these cards and about $6k in cash. My score is at 694 as of today. By the time the introductory rates end, I will take out 2 other 0% cards and transfer them over. I realize there is a transfer fee. I will have the DVC paid in 3 years with minimal fees by doing this before I even start a family. I have gotten cash rewards from these credit card points which negates some transfer fees. I am a single female (so I didnt have to consult with anyone, which I'm sure can be a challenge of its own) that sees bringing my future family to Disney for the next 50 years or so, so I wanted to buy early. My student loans are paid, and I have purchased a home, so this is one more purchase I wanted to knock out before life gets busy with children, etc. I understand that this scenario is not the norm, but this is just how I purchased and wanted to share. I enjoy reading more than posting lol. Scouring these DVC boards for several years before taking the plunge has helped tremendously, so thanks for all the great info and for everyone's differing opinions!

 

[Disney Dad ADL]

Thank you!

Agree with Bogleheads Forum, but Note that the spelling is Bogleheads (it’s named after John Bogle, who invented index funds). Lots of smart people there.

 

[Ben E N]

We invest in the stock market. Just be very careful. The one thing we lost money on was damn GM about 10 years ago. Lol. Get a brokerage account and start small until you become more confident. We use tdameritrade but there are probably better ones out there. Do your own research on companies.

Just to play devil's advocate, I reccomend avoiding a brokerage due to their high fees chipping away at growth.
An index fund in Vanguard is very safe as far as investments go, and offers a good amount of growth potential.

 

[Ben E N]

I think the overall message that people are trying to spread is to not rob your future to pay for pleasure today. Money that is invested with compound growth is an amazing thing, and money that it borrowed with interest also grows, negatively, quite amazingly.
There will always be instances where it is better to have cash on hand than invested, and there will be instances where financing something actually makes better financial sense (such as paying something off within a year vs. waiting a year, only to have the price rise by more than the financing charges).

As long as you have a firm understanding of your money, feel free to finance what you want. Just don't go in with a plan of "We'll figure it out later, but let's enjoy our DVC stays for now", or "The Jones' finance everything, so we can too!". Both of those approaches are more likely to end in misery than happiness.

 

[DLgal]

Just to play devil's advocate, I reccomend avoiding a brokerage due to their high fees chipping away at growth.
An index fund in Vanguard is very safe as far as investments go, and offers a good amount of growth potential.

I agree. Diversify and use managed funds. Investing in individual stocks is super risky and requires a LOT of research.

 

[Dean]

I don't get it... I see posts about how to use gift cards to save 5%, and those same people will pay Disney 10%+ to finance a DVC purchase.

Exactly, it makes no sense other than the lack of ability to defer gratification.

This is a very narrow point of view.

What really matters is NET WORTH. Debt is a tool that can be leveraged for good. As long as you maintain a positive net worth, there is absolutely nothing wrong with carrying debt. Literally every successful individual and company carries debt, because there are financial benefits to doing so in most cases.

Sure, as I've posted many times and specific wording that says one needs to be able to pay cash. While I wouldn't agree with keeping the money invested financing DVC, it's not the same as trying to juggle payments.

Yes, we use credit cards with 0 interest and good rewards programs. I know people advise the low car loan route, but we do not like doing that- just a personal preference.

But most don't do that and most don't pay them every month even when they say they are. I've seen statistic on the % of people that go over the terms on zero interest options and it's very high, like over 80%.

 

[Dean]

BTW, it's not about keeping people from buying DVC but making DVC a blessing and not a curse. If one can afford it and it's important to them they can save up and buy within 2-3 years or less. If they can't, it's one or the other (or both).

 

[we"reofftoneverland]

Just to play devil's advocate, I reccomend avoiding a brokerage due to their high fees chipping away at growth.
An index fund in Vanguard is very safe as far as investments go, and offers a good amount of growth potential.

I agree, dh is in the industry and his opinion is that vanguard is the best (and the least expensive) place to put your money. I opened the tdameritrade account a long ago on a whim to mess around not thinking it would amount to much.

 

[we"reofftoneverland]

Exactly, it makes no sense other than the lack of ability to defer gratification.
Sure, as I've posted many times and specific wording that says one needs to be able to pay cash. While I wouldn't agree with keeping the money invested financing DVC, it's not the same as trying to juggle payments.
But most don't do that and most don't pay them every month even when they say they are. I've seen statistic on the % of people that go over the terms on zero interest options and it's very high, like over 80%.

I agree and it took us a while before we felt comfortable doing this, but I agree.

 

[Dean]

I agree and it took us a while before we felt comfortable doing this, but I agree.

Part of the issue is people don't make great decisions then go out and finance a timeshare. Financing a timeshares is only a symptom of the problem. But the risk is different for different situations which is why I address situations rather than people unless they ask specifically. It's not about being perfect but at least understanding what the best practices are and making as few mistakes as possible.

 

[Mickey of the Villages]

To put it in the kindest terms, based on what I've read so far it seems that the objection to folks using financing to purchase DVC is based upon personal beliefs about debt. Some of the respondents seem to have real concern for others and want to encourage folks to think twice. But there are responses here that I would characterize as humble bragging and not helpful.

Of course it is ideal to pay for DVC with cash. It is ideal to pay for everything with cash. It's also ideal to look and be able to act like George Clooney.

Use debt responsibly folks. Don't overextend yourself. But don't live in fear either. Debt is a tool like any other, used properly you shouldn't hurt yourself or others.

 

[katriscari]

So here is how I bought my DVC. I bought 200 CCV points direct in September 2018 and financed through Disney at a 12% rate which was about $435 a month in interest. I immediately took out 3 credit cards with 15 month introductory rates of 0%. This caused my credit score to go from 780 to about 620. I did not care about this and expected it. I paid off the DVC with these cards and about $6k in cash. My score is at 694 as of today. By the time the introductory rates end, I will take out 2 other 0% cards and transfer them over. I realize there is a transfer fee. I will have the DVC paid in 3 years with minimal fees by doing this before I even start a family. I have gotten cash rewards from these credit card points which negates some transfer fees. I am a single female (so I didnt have to consult with anyone, which I'm sure can be a challenge of its own) that sees bringing my future family to Disney for the next 50 years or so, so I wanted to buy early. My student loans are paid, and I have purchased a home, so this is one more purchase I wanted to knock out before life gets busy with children, etc. I understand that this scenario is not the norm, but this is just how I purchased and wanted to share. I enjoy reading more than posting lol. Scouring these DVC boards for several years before taking the plunge has helped tremendously, so thanks for all the great info and for everyone's differing opinions!

I was wondering if you can pay off the loan using a CC. I have 800+ credit and definitely need to look into this. I would get approved for the entire amount of the loan I have ($14,500.00) through Disney on one CC I believe. I always get offers for cards with 0%. I have used this method to side my house, put windows in my house, etc.

 

[jarestel]

As the only person with any actual knowledge of a person's finances is that person, I wouldn't presume to preach to anyone on a subject on which I have zero knowledge. OTOH, when someone posts financial details of a potential DVC deal in a public forum, I think they are inviting opinions and should be aware of that. After all, we're not bossy, we're just helpful!

 

[Suzabella]

I hope I don't bore anyone to tears....

We purchased our first timeshare many years ago. Our oldest son was 16. We realized that time was running out to create memories with him. I have no memories of traveling as a family when growing up. My brother & sister were quite a bit older and I don't remember them living at home. Making those memories for our kids was important.

Our purchase was to travel with our son for the remainder of his HS years and through college. We hoped that having room for him to join us down the road would be an enticement to continue to join us but weren't sure as our relationship was rocky at best. It was a very rough time for our family.

We financed (Marriott) and paid it off in 2 years. At that point, interest rates were high and we paid 10%. Home loans were at 7%. We wrote off the interest on our taxes so that helped a little.

We've paid cash for all purchases since.

I will never regret pulling the trigger that first time when we did. We've had great trips with both our kids since and made some amazing memories. If we'd waited, I'm not sure we'd have the relationship with our son that we have today.

Our kids are well traveled for their ages and continue to travel with us when they can. We usually plan a trip and then let them know the dates. They come along for what time they can, if they can. (We just got back from 10 days in Scotland last week - our first trip with new DILs in the family.)

That's the important ROI to us. Those lifelong memories are worth more to us than any amount of money. You simply can't put a price on it. So I think to finance or not is a very personal decision. Everyone has their own reasons for buying/financing and it's not always black and white, dollars and cents.

JMHO....

 

[Oozma_Kappa]

I was wondering if you can pay off the loan using a CC. I have 800+ credit and definitely need to look into this. I would get approved for the entire amount of the loan I have ($14,500.00) through Disney on one CC I believe. I always get offers for cards with 0%. I have used this method to side my house, put windows in my house, etc.

Just make sure you have a plan on what to do with the remaining balance once the intro rate is up or you will be hit with that 22% interest. I mapped out my strategy on a spreadsheet and have it all set on autopay. Be ready for a dip in credit score too. I maxed out 3 cards, so mine was pretty major. It has come back up ok over the last 6 months though. I wouldn't recommend this if you need a good credit score for something in the near future.

 

[jerseyduke]

Yes, we use credit cards with 0 interest and good rewards programs.

If you go with David Ramsey, you would even go against this.

It is very easy to be brave with someone else's life, and spend someone else's money.

You have earned the money, it is yours to spend as you want.

From my point of view, anything more than an 8K used car is a 'luxury purchase' - yet ppl finance those all the time. But that is my view.

Just to play devil's advocate, I reccomend avoiding a brokerage due to their high fees chipping away at growth.
An index fund in Vanguard is very safe as far as investments go, and offers a good amount of growth potential.

Index funds are good options, and quick, easy, cheap diversification, but not tax efficient, you pay capital gains every year, even if you do not sell anything. Still part of my portfolio. Also nice since there are ones out there with no minimum and auto investing, which is a good way to save.

 

[we"reofftoneverland]

If you go with David Ramsey, you would even go against this.

It is very easy to be brave with someone else's life, and spend someone else's money.

You have earned the money, it is yours to spend as you want.

From my point of view, anything more than an 8K used car is a 'luxury purchase' - yet ppl finance those all the time. But that is my view.

Index funds are good options, and quick, easy, cheap diversification, but not tax efficient, you pay capital gains every year, even if you do not sell anything. Still part of my portfolio. Also nice since there are ones out there with no minimum and auto investing, which is a good way to save.

Yes, DR is against all credit cards. We really like DR and tend to agree with him on most things. But at this point in our lives, for us, if we have the money in the bank to pay it back at any time, we like to take advantage of the rewards. In that sense we do not view it as debt. As another poster said overall net worth matters. As long as I am not paying interest or transaction fees and have the money on hand, I am fine with it. But yes, DR disagrees. He is right in that debt becomes a way of thinking, a way of life. I do think you have to be careful if you use debt, even if you are wealthy, that you do not start the debt cycle. I would personally not finance a car, even at 0%. We just have a mortgage and use credit cards mostly for rewards.

 

[Disney Dad ADL]

Yes, DR is against all credit cards. We really like DR and tend to agree with him on most things. But at this point in our lives, for us, if we have the money in the bank to pay it back at any time, we like to take advantage of the rewards. In that sense we do not view it as debt. As another poster said overall net worth matters. As long as I am not paying interest or transaction fees and have the money on hand, I am fine with it. But yes, DR disagrees. He is right in that debt becomes a way of thinking, a way of life. I do think you have to be careful if you use debt, even if you are wealthy, that you do not start the debt cycle. I would personally not finance a car, even at 0%. We just have a mortgage and use credit cards mostly for rewards.

I’m not a Ramsey fan by any means, but I think for his particular audience, his approach to debt is good. People tend to turn to Ramsey because they can’t control their finances / debt. So when you’re in that situation, then swearing off all debt is the right choice. Being debt-free has to be a way of life, otherwise you will get sucked in the debt spiral as you say and then you will never recover.

If you have control over your finances and understand the consequences of your debt, then using debt is not universally bad, just something that has to be taken carefully.

 

[Dean]

I’m not a Ramsey fan by any means, but I think for his particular audience, his approach to debt is good. People tend to turn to Ramsey because they can’t control their finances / debt. So when you’re in that situation, then swearing off all debt is the right choice. Being debt-free has to be a way of life, otherwise you will get sucked in the debt spiral as you say and then you will never recover.

If you have control over your finances and understand the consequences of your debt, then using debt is not universally bad, just something that has to be taken carefully.

Risks vary with the situation but statistics show that most people can't control their spending, are living month to month and have a net worth around zero or less. I'd suggest control is an illusion. It's like poker, if you are sitting at a table and after a while you don't know who the patsy is, you're it. It like those who say marketing doesn't affect them but it goes at every level of their lives (yours and mine also).

 

[jerseyduke]

As long as I am not paying interest or transaction fees and have the money on hand, I am fine with it.

I'd also add that you are not spending more than you would if you were paying cash. That is a place where the consumer is "gotten". They buy something when paying with a CC that they would not have purchased having paid cash. If you avoid that pitfall, i say take the rewards!