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Old October 22, 2006, 08:10 AM   #1
huestous
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Suze Orman's response

Did anyone see Suze Orman's "Can I Afford It" segment last night?
I doubt the Disney Vacation Club is happy with the free publicity they got.

A couple earning ~$145K/yr with no credit card debt asked Suze about a timeshare purchase at the DVC. Split screen with DVC and pricing info on one side; Suze shaking her head "no" on the other side.

Her actual response was "yes" and "no" - "yes", they had the finances to proceed with the purchase, but "no", timeshares are a foolish investment.

Lots of issues never discussed in this piece of a short segment, the most obvious counterpoint being that Suze conflated a luxury purchase with an investment. But at the end of the day, it doesn't matter. The take-away message was that timeshares in general are a bad place to spend your money, with DVC in particular highlighted.
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Old October 22, 2006, 09:13 AM   #2
andrea t
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I think that whenever you put "timeshare" and "investment" in the same sentence, bells should go off! But I guess as a financial type show, they're not going to delve into the many real advantages of timesharing, Disney or otherwise. Our timeshare purchases have been an "investment" in some great memories with family and friends that I can't put a price on. The pleasures are "compounded" yearly.

[Repaired vBcode for italics, above - mg]

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Old October 22, 2006, 09:45 AM   #3
DonM
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Quote:
Originally Posted by huestous
Did anyone see Suze Orman's "Can I Afford It" segment last night?

...Her actual response was "yes" and "no" - "yes", they had the finances to proceed with the purchase, but "no", timeshares are a foolish investment.

Lots of issues never discussed in this piece of a short segment, the most obvious counterpoint being that Suze conflated a luxury purchase with an investment.
Isn't her show about investments and how to manage debt etc.?? Therefore when she's asked a question about T/S, won't her response be based upon that context?
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Old October 22, 2006, 04:39 PM   #4
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couple

I didn't see the show, but I think there is another factor here. From your statement it was a "couple". If the couple had 3 or 4 kids, it might have made more sense since I think timeshares work better with families that are larger and would otherwise result in higher travel costs. TS do let some larger families vacation without breaking the bank.
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Old October 22, 2006, 05:05 PM   #5
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DVC is not a Timeshare...it is a vacation club (wink-wink)
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Old October 22, 2006, 06:48 PM   #6
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I did see the show and the couple do have children and Suze response to her was that "they won't always want to go to Disney World"

I agree with not buying from any developer whether it be Disney or whoever. That $15000 output would have bought her more than one week at any top notch resort in Orlando.

I stayed up late just to see her reaction to this question.
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Old October 22, 2006, 07:19 PM   #7
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well...DVC is not much higher than resale and the current promotion is almost the same.

I still think DVC represents good value for Disney trips.

What was her reaction?
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Old October 22, 2006, 07:51 PM   #8
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DVC at least does not lose value the way other timeshares do

That is a big plus for owning.

I think Suze Orman's show repeats late at night on CNBC. I have watched her when I couldn't sleep.
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Old October 22, 2006, 08:02 PM   #9
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Ack!!! We need to have the mud-wrestling match!

(...taken from a previous DISBOARD (Disney Board) post where I recommended having Dave Ramsey and Suse Orman mudwrestle each other (both are financial 'consultants' who make a lot of money off of telling other people what to do with their money) - the winner to spend a week at at a DVC studio...)

Let's put things in perspective. Let's introduce everybody's best friend: Death (i.e. the great equalizer)

During my DVC presentation in September 2006 (I did not buy - but I wanted to - and probably will), my 'guide' told me that he had just closed a $160,000.00 sale where 4 contracts were sold at $40,000.00 a piece. These were gifts to this person's 4 children. He explained to me that he saved his entire life and now had no more use for the money, so he wanted to make sure that his kids got some actual use out of the money, like he never did...

So run the numbers Suse and get everyone worked up into a frenzy. Then when you're 60-70-80 years old and staring at a nice fat portfolio (maybe), think about how 'wonderful that was...'. Yippee! My e-trade account has lot's of green lines on it...Please, pass me the oxygen because I can't reach my walker...

Money is a vehicle, it's not an end in itself. It represents a certain degree of energy that we can exchange in something called a 'marketplace'. Mr. Grim Reaper is coming - here he comes - and he doesn't care about your Charles Schwabb balances. You're going just like everyone else is, no matter if you have $$ or not.

I'm not telling people not to save, because of course most people who have enough money to buy into a timeshare or a vacation club have probably got some kind of savings plan or strategy in place. I do however take issue with someone telling me how to spend my money. I WORK FOR THAT MONEY. I wish to have it serve as a backdrop for excellent memories with friends and family - period. I'm not here to win the 'biggest portfolio at death wins' game.

Is there a magic formula for this? I don't think so. Why do millions of people work for minimun wage while others somehow rise above this? I don't know, the playing field is not level.

I personally despise Suse Orman's means of making a living (have you guessed that yet?). She makes millions on telling people absolutely nothing (or maybe VERY LITTLE - I'll give her a little bit of credit). Yet people flock to her thinking that there is some kind of magic in her message. There isn't.

Take care of business when you have to (i.e. save, invest, plan - give Ceasar what is Ceasar's) and then follow your Heart... there is just too little time and your children won't look up at you someday and say:

"...Daddy, remember back when I was 8 years old and your balance exceeded 30K and you were averaging 5.3% completely on a portfolio heavily weighted in bonds...

HAHA!!! NO!!!!!!!! It's going to be something like...

"...Daddy, remember the first trip to Disney when I was 8 years old, I will never, EVER, forget that! And you treated us to a lifetime of memories..."...
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Old October 22, 2006, 08:44 PM   #10
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Well said. I remember reading somewhere and have actually read it many times since. When you are lying on your deathbed, you are not likely to say that you wish you would have gone to the office more. I think it is the same thing.

A local consumer advocate on radio here, which is also syndicated to many parts of the country, Tom Martino, absolutely despises timeshare. He gets an occasional call from someone who is regretting their timeshare purchase and feeds on the negative. It drives me so crazy that I actually called in to argue with him. He kept interrupting and would not let me get a word in edgewise. It was very frustrating. The funny thing about Tom, he owns a motorhome and travels around in that, always complaining about the mechanical problems he has with the thing. www.troubleshooter.com
That is his website address.

I think of The Conch Man's signature line. "Don't argue with idiots, they will bring you down to their level and beat you with experience." Yeah, Conch Man.
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Old October 22, 2006, 09:38 PM   #11
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Like any financial decision, an analysis is easily performed to determine whether or not to buy.

1) First qualify that you want to go their every year (fixed resort - not points) or are willing to trade somewhere else.
2) Second, can you afford a total loss - never know when the hurricane hits

Then,

Cost to rent at the resort - maintenance fees / purchase price = # of years to payback.

If the number of years is less then 5 its probably a good fiinancial deal (and you have residiual "resale" value I don't even count here)

I have a bunch of units (mostly rent them out) that have all been bought resale. Most are less than 2 years payoff.

I've spent many years on Wall Street and have held several NASD licenses and I think Susie would agree if she understood the dynamics of the resale side.

PS. A "new" timeshare from a developer ALWAYS falls into the 10 yr plus category. The 16%+ interest rates on purchase loans are theivery and not tax deductable as personal loans (read the fine print).

I agree with Susie on those and feel sorry for all who fell for the con.

A much better investment is to put your money into stock/bond funds and just pay for vacation. Even better, rent a unit if you are afraid to buy resale (an unfounded but real fear of many).
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Old October 23, 2006, 08:03 AM   #12
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Words of Wisdom

I have a friend who has always said that if she could time her last breathe to her last dollar, she would.

My mother worked hard and saved most of it, and her heirs are grateful for the mortgage and college bills her estate paid, but I would have rather seen her enjoy more of it while she lived.

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Old October 23, 2006, 10:34 AM   #13
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Consider an analogy

I liken buying a timeshare to buying an Entertainment Book. When you buy an Entertainment Book, it is immediately worth less than you paid. At the end of the year, it is worth nothing. If before your purchase, you look at the available coupons and discover that there are coupons for purchases you plan on making regardless of whether or not you purchase an Entertainment Book then buying the book may be a good decision. It is an "investment" in future saving so that at the end of the year, you have more money in your pocket. If on the other hand, you either let the book go unused or go on a spending spree simply to use the coupons, then the book was a poor purchase.

Likewise, if you buy a timeshare so that you will have lodging for vacations you plan to take anyway, compare the timeshare purchase cost and MF to the amount you would otherwise spend on lodging, consider the final value of the timeshare when you finally sell it, you may find it is cheaper than renting. (No guarantees.) The timeshare is an "investment" in future savings. On the other hand, if you buy a timeshare you are unlikely to use or use it as an excuse to spend money on plane tickets, etc when you might otherwise vacation cheaply close to home, staying free with friends or relatives, then the purchase is a poor choice.

So based on Suze Orman's analysis, I can afford an Entertainment Book, but these books are a foolish investment.
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Old October 23, 2006, 11:41 AM   #14
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Dave H, that is such a great analogy.

Do you listen to Tom Martino? Have you heard his opinion of timeshare?
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Old October 23, 2006, 07:42 PM   #15
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Quote:
Originally Posted by rickandcindy23
Dave H, that is such a great analogy.

Do you listen to Tom Martino? Have you heard his opinion of timeshare?
I have heard parts of his show now and then but am not a regular listener. I was unaware of his opinions on timeshares, but it doesn't surprise me. However, it cracks me up that he despises timeshares, but owns a motorhome. Talk about a money pit. I wonder what Suze Orman would say about investing in a motor home?

Don't get me wrong, if you want a motorhome, will use it, and can afford it, I say go for it, but it seems like you would have a hard time making a case that it is a better purchase than a timeshare (even at developer prices).

I think the root of the problem is that timeshare ownership is too often evaluated for its investment potential (which is typically negative) when it should instead be evaluated for its money saving potential (which may be positive if the purchase is made carefully).
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Old October 23, 2006, 09:45 PM   #16
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Quote:
Originally Posted by johnmfaeth
...
Cost to rent at the resort - maintenance fees / purchase price = # of years to payback.
....).
I think it is:
purchase price / (Cost to rent at the resort - maintenance fees - II membership dues) = # of years to payback.
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Old October 23, 2006, 10:11 PM   #17
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But you guys are all T/S smart and pretty informed on the subject.

If someone called you out of the blue, had no idea of how T/S worked, and you didn't have the time right then to explain ( how many hours??)....and said, I'm going to a meeting tomorrow to buy at (any dev resort freebie), I really think you all might say some kind of negative....maybe not toward timeshae in general, but not to buy anything yet.

I would say to anyone without T/S knowledge rushing off to write a check its not a good idea (yet). Espically if I had no idea of their money situation.

And Timeshares are usually a foolish investment for most (espically for the uninformed)
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Old October 23, 2006, 10:56 PM   #18
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Cool

I did happen to catch that bit while channel surfing. I watched the whole segment.

Suzie Orman called timeshares "silly". I think she is silly.
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Old October 24, 2006, 08:03 AM   #19
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I think she's silly too. She is very opinionated when it comes to what she recommends. I think a good analogy is Suzie Orman and Dr. Phil.
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Old October 25, 2006, 03:38 PM   #20
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The one thing that I've come to realize is that there are many, many TS owners, but only a small percentage that manage them in a financially wise manner.

So from the outside, analysts see how most people manage it, and say it as a bad decision. When you do it right, buy resale or pre-con, very low or no finance, maximize value of incentives, and use to maximum value, you can make it a sound decision, but again I think only a small amount of owners do that.

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Old October 25, 2006, 04:25 PM   #21
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Good Point

Joe,
That's an excellent point. We have a consumer advocate here on the radio, Clark Howard, who regularly runs down timeshare purchases and the caller is inevitably the guy buying direct from the developer, financing the purchase and knows very little of the exchange process. I have called and challenged his views but he will never concede that even in the best case scenario it makes financial sense.

Were my timeshare purchases a great investment? I don't know, but I do know that I've gone to many places, stayed in very nice accommodations, and enjoyed vacations that I probably never would have done without the availibility and ease of use that timesharing has afforded me.
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Old October 25, 2006, 11:08 PM   #22
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I bought my DVC points for $55. I can sell them for $80-85. I have used them extensively for 15 years. I will make a nice profit when I sell. Now who's silly??
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Old October 26, 2006, 03:40 PM   #23
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Quote:
Originally Posted by icydog
I bought my DVC points for $55. I can sell them for $80-85. I have used them extensively for 15 years. I will make a nice profit when I sell. Now who's silly??
I bought my DVC points for about $65pp in 2000 and can easily sell for $80pp.

Hey Suze....who's your daddy now?
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Old October 26, 2006, 04:11 PM   #24
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motorcoach v.s TS----that's an easy one!!

we had a motorcoach (AKA walking gas station---6-8 MPG)! As a kid, it was fun, as the driver, one who pays the mechanic's bill, parks it---what a pain!

My kids saw RV and I really want to give them that experience---but for 1 week and then turn the thing back in!

TS wins hands down anyday of the week over the motorcoach.
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Old October 26, 2006, 07:15 PM   #25
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Oversimplification!

I, personally, detest Suzie Orman and find her mostly just annoying. While I know she has changed lives for the better and respect her mission ( I personally have a friend that WORSHIPS her and who Suzie Orman has likely kept from complete financial disaster), as a person in the Finance/Investments arena, I find her oversimplifications most annoying. At least the few times I have been able to bring myself to watch her for any period of time, I am annoyed that she can't simply admit, that her opinions may not ALWAYS be appropriate for every situation.

If she would simply acknowledge that, then I could respect her more, but she is just too overbearing!
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