Resale vs Direct (Again!)

[ELMC]

Originally Posted by bakerworld

There is always a lot of derisive advice towards purchasing any other way than cash on resale. Hence those of us who purchase direct (horrors!) and FINANCE the purchase become defensive.

The reality is no one knows everyone's economic platform. We drive 10 yo cars and our CC's are zeroed out every month so we're not wasteful in the short term. Frankly, after putting multiple progeny thru College we decided that we don't like being cash poor (first due to college but also jerk-ward FP's that have us investing 15% of our gross into retirement savings) so we leave our bank account alone by financing large purchases. I won't live on my CC any longer because I have no cash in the bank when the heater goes or put my pet down because I don't have the responsible ability to afford the cost of care. I hope someday to enjoy my 15% but I don't expect to because all doctors will tell you that generics are a diagnostic tool that works.

We're chubby - not fat.

I think you bring up two great points (and I would like to add another). I am one of the vocal people that advocates buying resales with cash based on two reasons. First, when I was in my early 20s I was in a LOT of debt due to some poor financial choices I made (I bought things on credit that I simply couldn't afford). It took me years to get out of that hole. So I try to pay it forward a little by advising that people not buy something that they can't afford to pay for in the short term. That being said, my position on that is purely financial. As we have seen with all things, but especially Disney and DVC, it is an emotional purchase. I try not to tell people what to do or how to live their lives, so I can't comment on whether or not someone should buy and finance for other reasons. It may be a great decision for one personally. However, from strictly a financial position it is a risky move (especially with today's direct prices) and that's why I advise against it.

Where I sometimes get frustrated (and unfortunately I do think it shows in my posts sometimes ) is when people use the most convoluted math to try to justify their decisions. We've seen people over inflate the real costs of staying at Deluxes; ignore maintenance fees in their calculations; use how much they pay for a 7 night stay in a 2BR and comparing it to a 160 point purchase (enough for 3-4 nights, not 7); and the best of all, take how much they spend on an entire Disney vacation (including lodging, transportation, tickets, food, etc.) and using that to say that they would save money by buying DVC because they would've spent that in X years anyway. They are free to think whatever they like, but what worries me is that readers of that post who are researching DVC might read that information, take it as accurate and act on it. Quite frankly, I have a lot of respect for your position (not that what I think should matter to you ) because you're not altering facts to justify your decision. You simply said that you live every other aspect of your financial life responsibly, and you want to have a little fun and finance the purchase. Although I disagree with the decision, I can respect it, and I think that's what healthy debate is all about.

The second point you made that is so true is that we don't know each other's financial situations. So at best our advice is a generalization that may or may not apply. Someone in their early 20s comes on asking whether or not they should buy DVC and we give our opinions. Well really we don't know if they're just out of college and making a humble living or a few years out of college and working on Wall Street making $150,000 a year. Clearly their situations are different. The median annual income in the United States is $46,236 a year. That means that there are people here on the DIS that could make that, a little more, or a little less. The point is we don't know. The author of a post who talks about buying 200 points direct at BLT might be making $400,000 a year. In that case it's a much less risky move than someone buying 200 BLT direct and financing because they have to stretch to make the monthly payment. We simply don't know. So I think you're right, we need to give a little more consideration to financial background when giving advice. And since we don't know that, it's difficult to do.

The point I'd like to add is that the whole "resale vs. direct" debate really only fueled up in the past year or so when DVC prices became outrageously high in comparison to previous prices. So I think that the "resale" people (like myself) should be clearer in stating that their opinions refer to $140 a point AKV purchases and not preconstruction AKV purchases. Similarly, the line gets a lot blurrier when you are talking about the sold out resorts priced in the $100-$115 range. And I think "direct" people need to realize that "resale" people might not be talking about you specifically when they are talking about potentially financially unsound direct purchases. I would've LOVED to be you if you bought BWV direct for $65 or BCV direct for $75 or even BLT direct at opening for $107. But I wasn't that smart, so now in order for it to make financial sense for me, I bought resale.

Great discussion baker, glad you brought it up.