Financing... Worth it to get in sooner, or wait it out while saving?

[Bo1203]

Reality is tons of people are putting yearly vacations on a credit card at 12-15% interest.

 

[Minniesgal]

DVC costs are unlikely to go up at a lower rate than the interest Disney charges for sure

I’m in the save and buy camp. We bought gradually. We have 315 points bought in 3 parts we bought what we could afford at the time.

 

[cbyrne1174]

I think it's a terrible financial decision to pay a finance charge on a luxury purchase. Now I will openly admit (without shame) that I charged 5k on a 0% intro APR card, but I literally forced myself to DOORDASH to pay it off before interest hit. I also sold all of my Wyndham points for the year and an extra computer as well. With the rentals + extra computer + doordashes + disposable income, I cleared that debt pretty quickly. I REFUSE to pay interest on anything that isn't a house.

 

[Sandisw]

I think it's a terrible financial decision to pay a finance charge on a luxury purchase. Now I will openly admit (without shame) that I charged 5k on a 0% intro APR card, but I literally forced myself to DOORDASH to pay it off before interest hit. I also sold all of my Wyndham points for the year and an extra computer as well. With the rentals + extra computer + doordashes + disposable income, I cleared that debt pretty quickly. I REFUSE to pay interest on anything that isn't a house.

A lot of people do as you do and others make a different choice, which is okay.

I have friends who drive very old cars, even though they can afford a new one where I lease every 3 years, both our vehicles and will die with two car payments! Lol

But, in the end, it’s all about ones comfort level, no right or wrong way, and it’s good to be able to share different view points with others so someone deciding can find their comfort level for how to pay for DVC!

 

[bbeagle]

I think it's a terrible financial decision to pay a finance charge on a luxury purchase. .... I REFUSE to pay interest on anything that isn't a house.

It depends.

There have been plenty of times in my life where instead of waiting, getting something NOW benefited me greatly. Examples:

I had an unreliable car and I landed a new job. I bought a reliable car using financing so I could get to work, and not have anyone question me coming in late because of car troubles. Plus getting a new car with a new job felt really, really, good and did amazing things for my sense of worth. Saving up for a year, battling the car every day during that year was not worth it. The $2000 or so I spent in financing was well worth it.

I needed a computer to learn skills in my career field. Having the computer for 6 months where I could learn skills instead of waiting and not having those skills was well worth it.

Similarly, DVC. Getting a DVC through financing allowed me to get a DVC vacation at Christmas for 'free' (using my points) that I would not have been able to do without getting it immediately. I would have had to pay $5000+ for equivalent lodging at Christmas not having a DVC vs. paying $1000 in financing. (I paid it off in 5 months.)

The leaking roof on my house, my broken furnace, dentistry for my son... many things that could not wait. I had to finance and could not wait until I saved up.

 

[J-Dog]

In my area, almost everyone (not me) has a couple of 4-wheelers, snowmobiles, and motor homes or camp trailers. The majority of them finance those things with at least short-terms loans. Not saying it's right or wrong, but they are taking vacations/doing stuff with those things, rather than doing nothing while saving money.

It's not for anyone else to decide what you do with your money. And, more importantly, with your time.

 

[Sandisw]

In my area, almost everyone (not me) has a couple of 4-wheelers, snowmobiles, and motor homes or camp trailers. The majority of them finance those things with at least short-terms loans. Not saying it's right or wrong, but they are taking vacations/doing stuff with those things, rather than doing nothing while saving money.

It's not for anyone else to decide what you do with your money. And, more importantly, with your time.

That is it in a nutshell! Getting others opinions on what they did is great because it may spark something one didn't think about.

As you say, some people choose to attach more value to the experiences in life rather than the financial value and it really is okay!!

 

[Stargazer65]

Just think of all the money you could save during your lifetime if you never left work, but just stayed there and were fed through a slot in the door.

Of course nobody wants to do that. Do everything in moderation. You can finance vacations, or a lot of other things to allow enjoyment of life. Just keep it reasonable, most people know what they can manage. We chose to spend more money than many on DVC. We're not sacrificing the necessities like saving for retirement. We make up for it in other ways, such as I have cheaper, older vehicles than most of my peers at work. Most of them drive fancy new SUVs to work, I'll drive my 12 year old Subaru until it becomes unreliable.

 

[Brian Noble]

There have been plenty of times in my life where instead of waiting, getting something NOW benefited me greatly. Examples:

I'm not sure many of these examples (reliable transportation for work, functional heat) are on the same plane as taking a luxury vacation.

In my area, almost everyone (not me) has a couple of 4-wheelers, snowmobiles, and motor homes or camp trailers. The majority of them finance those things with at least short-terms loans. Not saying it's right or wrong, but they are taking vacations/doing stuff with those things, rather than doing nothing while saving money.

"Do nothing or borrow for a snowmobile" strikes me as a false dichotomy. It's perfectly possible to have less expensive vacations/leisure time while simultaneously saving up to pay cash for some of these things.

In graduate school, I had only a little money, and so did a lot of camping---and not this high-tech REI-style glamping, but camping. When the kids were younger and we were just getting started in our careers, most of our vacations were with extended family at the beach in a VRBO-like place. Because we could share the house rental, and used the kitchen vs. going out all the time, we could keep a lid on the costs.

Even our early Disney trips were less expensive than they are now that we have significantly more discretionary income. We stayed offsite in private-rental condos or townhomes and limited the TS meals, which control for two of the biggest "variable costs" in a WDW trip.

Those trips were all great fun, they built fantastic memories, and we didn't have to borrow for any of them. Granted, we weren't
staying in DVC Villas back then. It turns out that those Villas are awfully nice and we enjoy them, but you don't have to do stay in one to have a good time.

Edited to add: It is true that lots of people finance lots of discretionary purchases. There are some very complicated reasons why that happens, but it's not just about the purchase itself. It can partly be what that purchase tells others about us---and in some cases tells us about ourselves.

 

[Memorymakerfor4]

OP I think you said you're going with resale. Have you considered paying for what you can now with cash, then saving up to buy more later? There's no rule that says you can't buy in gradually. Sure, your 2nd contract might cost more in a few years than it would now, but you've also removed the risk that comes from financing.

 

[J-Dog]

"Do nothing or borrow for a snowmobile" strikes me as a false dichotomy. It's perfectly possible to have less expensive vacations/leisure time while simultaneously saving up to pay cash for some of these things.

Okay. But if you really want that snowmobile, and are dead-set on not financing, then at some point you are shooting yourself in the foot if you are taking multiple smaller vacations that are potentially eating into your snowmobile savings. So you will have to wait even longer for your snowmobile, compared to doing nothing and saving.

I.e. If you are saving for DVC, but still taking other/possibly-cheaper vacations, then your chances of paying even more for DVC just keeps going up, if it takes longer to have that sweet DVC cash on-hand.

 

[bumbershoot]

I can't say what I would do NOW, but what I did in 2009 was finance. We were already spending scads on Disney trips and it seemed silly to pay more when we could just pay towards DVC. I have zero regrets.

 

[UrsulaWantsYourSoul]

Now I can't get snowmobile out of my head.

 

[Bellex917]

OP I think you said you're going with resale. Have you considered paying for what you can now with cash, then saving up to buy more later? There's no rule that says you can't buy in gradually. Sure, your 2nd contract might cost more in a few years than it would now, but you've also removed the risk that comes from financing.

This is something we considered, however, I wasn't sure if paying the closing costs twice would be a huge difference vs. the interest we'd spend if we pay it off as quickly as I am hoping to. With the price increase + double closing costs, I'm not sure that I'd come out much ahead there. I could, but I also might not.

 

[Bellex917]

I can't say what I would do NOW, but what I did in 2009 was finance. We were already spending scads on Disney trips and it seemed silly to pay more when we could just pay towards DVC. I have zero regrets.

This post has gone way longer and with more responses than I expected (thank you to everyone who took the time!) but we do have our plan finalized...

We are going to take the next 5-6 months and save every penny possible- cut down as much discretionary as we possibly can. During that time we will assess how much we can realistically throw towards DVC per month. We will take what we saved, plus what we already have that we can use towards it, and put that down (hoping for about 50% or so). We will then finance the remainder.

If during these 5-6 months we realize we cannot aggressively put extra towards the financing to pay it down quickly we will assess if this is worth it to us. We are very responsible... we really try to be as careful as we can. There is a huge emotional component piece to this that makes the interest I might pay over a year or two worth it to me, ASSUMING we see we can pay it off as quickly as I am hoping.

 

[CarolMN]

This post has gone way longer and with more responses than I expected (thank you to everyone who took the time!) but we do have our plan finalized...

We are going to take the next 5-6 months and save every penny possible- cut down as much discretionary as we possibly can. During that time we will assess how much we can realistically throw towards DVC per month. We will take what we saved, plus what we already have that we can use towards it, and put that down (hoping for about 50% or so). We will then finance the remainder.

If during these 5-6 months we realize we cannot aggressively put extra towards the financing to pay it down quickly we will assess if this is worth it to us. We are very responsible... we really try to be as careful as we can. There is a huge emotional component piece to this that makes the interest I might pay over a year or two worth it to me, ASSUMING we see we can pay it off as quickly as I am hoping.

Sounds reasonable. Don't forget to factor in the dues when you look at the monthly costs. Good luck!

 

[Bellex917]

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Sounds reasonable. Don't forget to factor in the dues when you look at the monthly costs. Good luck!

Thank you!! We actually just switched insurance providers yesterday and the switch saves us the amount of the DVC dues, so we are setting that aside as our “dues money” so that is money we are used to spending!

I’m really checking under every stone to make sure we are set for this LOL!