Go ahead, buy a $1800 vaccum. Succomb to the “we’ll give you a discount if you put our home security sign up on your lawn” pitch. Overpay for more meat than you can fit in your freezer. But please, please, never-ever buy a timeshare. RCI, Trendwest, they’re not looking out for your travel budget, they’re looking out for theirs.
They are cunning… they are manipulative… they are shameless. They’re the best in the business when it comes to high-pressure sales. They draw you in with irresistible loss-leaders and tap into the mega-vulnerability of your wanderlust. They’ll convince you that unless you pony up the $25k or finance it at ridiculous rates, you’ll spend your life cooped up in an adventureless existence. But please, please, never-ever buy a timeshare.
They have one thing right – your money is better spent on experiences than on “things.” I could point you to a dozen studies that say money doesn’t buy happiness, but it can buy you experiences, and what is happiness if it’s not the sum total of your experiences? But a timeshare is neither an experience, nor is it a thing. It’s neither an asset, nor a depreciable liabilty.
When you “buy” a timeshare, you’re “buying” a committment to pay an annual maintenance fee which is likely 50% or more of the cost of a week in a vacation rental home. You’re “buying” the obligation to stay in a specific place at a specific time with limited flexibility. You’re “buying” something that is unmarketable – something that isolates your travel options to only a few destinations – and something that prohibits you from spending money in ways that compound your travel opportunities.
These are not things I would take if given to me – much less things that I would actually pay for – and certainly don’t merit borrowing to buy. Consider that investing your $25k inital purchase price at an 8% yield would spin off $2000 a year! That’s more than enough to stay a week in some incredible places. If you’re still not convinced, consider that timeshare salespeople are paid commissions as high as 20%.
But by all means – let not this extinguish your desire to see the world. There are plenty of other, more cost effective means of arranging lodging in interesting places. To illustrate, consider these options of places you could stay in Puerto Vallarta, Mexico.
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- www.SPG.com ~3-4000 Starwood Points or $79 a night
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- Sellmytimesharenow.com ~$757 +$871 Annual Maintenance
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- VRBO.com ~$395 a week
You have a home, someone else has a home. They want to go where you are, you want to go where they are. This idea is far from far-fetched. There are dozens of these, but start with www.exchangezones.com – which is free and has a ton of great listings. (Incidentally, if you like cold, blustery winters, I’d be happy to exchange my Idaho Falls house with you for the month of January – no matter where you are).
Vacation Rentals
Second homes sit empty for months and months a year. Smart owners monetize them by renting them out. Smart vacationers take advantage of screaming deals – especially at the last minute. There are many places online to search the options, but here are some favorites:
Hotel Loyalty Programs
Oh yes… the free option. We happen to be quite fond of this one at WorldWanderlusting. It’s hard to believe it’s even possible, but you could sign up for a single credit card and stay 6-9 nights in some posh hotels and resorts around the world. Check out our previous posts to get a sense for what we’re talking about.
- Starwood Loop through Alpine Europe
- Marriott Hotels in Spain
- Starwood Resorts in SE Asia
- Near Universal Studios Florida
- Club Carlson Hotels in the Baltics
Other ideas
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After you get your $100 and a Mexican blanket for attending the timeshare presentation, get online and you will find that you can buy the same points, weeks, membership, whatever for at least 50% less from someone else who regrets buying theirs. Its true. I have been to presentations at almost all of the big ones and in every case i was able to quickly find the same package they were selling for way less on the resale market. They are not an investment. My cabin on the other hand rents for $300 a night and i have traded it twice for a lake house.
Although, my brother took a trip with his wife to Cabo and every morning they did a timeshare presentation at the earliest time available, typically 8 or 9. They got cash, a fishing trip, a rental car, dune buggy excursion, meal vouchers, a Mexican blanket for each of his kids, and more. Total trip ended up costing them less than $100. He negotiated hard before agreeing to attend.
Your math is wrong. 8% of 25,000 does not spin off $2000 / month.
Thanks, Ted. I meant to say an 8% return on $25k over the year would make $2000.
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