total annual TS cost

[DannyTS]

HI,
We have a decent but finite travel budget per year. When we decided to buy TS few months ago, we had to see how the cost of the weeks integrated into our annual budget.

The way i do it, for every week i add 1/10 of the upfront costs (buying price plus closing costs minus freebies like free 2018 usage) to the maintenance fees.

So for example if I pay $1200 MFs for a certain week and i paid $3000 (hypothetical), my annual cost becomes $1500. Then i add all my weeks calculated in a similar way and i see my total annual cost.



I read that some amortize the upfront costs over 20 years. I feel that 20 years is too long because we do not know what the future will bring us and because think I would have to add at least 5% opportunity cost which brings me back to around the 10 year annual $.

What do you think?

 

[dioxide45]

It is hard to amortize upfront cost because you may end up being able to sell that week for close to what you bought it for. So you really don't know the cost of the week until you sell it. There is of course the opportunity cost that you would have to consider, but I wouldn't bother too much with that unless you are using assets that you would have otherwise invested. For a $1000 timeshare, opportunity cost isn't significant enough to bother with IMO. Since we have paid less than $500 for all of our Vistana timeshares, I now simply just use our annual fees to determine our annual cost and don't worry about the upfront costs or opportunity cost. I would have just spent the money for the purchase price on something else and it wouldn't have been invested. Spreading the upfront cost over 10 or 20 years isn't significant enough to bother with.

 

[DannyTS]

It is hard to amortize upfront cost because you may end up being able to sell that week for close to what you bought it for. So you really don't know the cost of the week until you sell it. There is of course the opportunity cost that you would have to consider, but I wouldn't bother too much with that unless you are using assets that you would have otherwise invested. For a $1000 timeshare, opportunity cost isn't significant enough to bother with IMO. Since we have paid less than $500 for all of our Vistana timeshares, I now simply just use our annual fees to determine our annual cost and don't worry about the upfront costs or opportunity cost. I would have just spent the money for the purchase price on something else and it wouldn't have been invested. Spreading the upfront cost over 10 or 20 years isn't significant enough to bother with.

You are right and i would not bother with calculations if we had only paid 1k. However, we paid significantly more for all 4 weeks (all platinum, one part of HGVC point system, one with SOs, and two in a place we want to visit) and i feel that by adding just the MFs for annual costs in the budget would be a bit like fooling ourselves.

We intend to use them for more than 10 years and i do believe that if we were to sell we would get around the same today +- closing costs (first 2 bought at what seems to be market value then smarted up a bit and managed to find better deals).
Yet, who the heck knows what will be in 10 years? I feel that if i put a zero value in ten years there is less room to be disappointed.

 

[Passepartout]

If, as we recommend, timeshare purchases are made after all other responsibilities, like retirement savings, kid's education, emergency fund, etc, are made, and you buy resale for a few cents on the retail dollar, you free yourself from these calculations.

Jim