Why A Moment Of Excitement Can Cost You A Lifetime Of Debt

Lesson 6:  Change is inevitable.

“Vacation Glasses” is a good way to explain the euphoric feeling most people feel when they go to a beautiful place away from their daily pressures and routine. They attribute magic to the location and start seeing everything through “vacation glasses”. We have all worn them. I get it when I go to the Florida Keys. I love the water, the beach, the clear skies, the bright sun and ask myself “why can’t life be this way every day forever?” Well, it can’t because if it was it wouldn’t be your perfect paradise. Oh, it might still be a great place to live but the “vacation glasses” will be tinted by working each day, paying bills, worrying about your children, the normal things in life.

When my kids were young I loved Disney and the Disney empire for the magic it could create for them. My daughters are still young but they have no interest in Disneyland any longer. Change happens. Part of us likes routine, continuity, familiarity but things change. We change. They may have other theme parks in Orlando for older children but I will not be going to Orlando’s theme parks forever. Maybe more importantly I want my children to experience other things on their vacations.

Your tastes in vacations will change. The amount of time you have and when you have it will change. Your budget and you circumstances will change. What will not change is your requirement to pay every month for the timeshare… every month whether it is the principal balance or the maintenance fee…every month….forever.

Most of my clients stopped using their time share after one or two uses. Some of them never used them.  Things change especially when you take the “vacation glasses” off.

Why are timeshares so nice and why do they put so much into getting you to buy them?

Let’s do the math. I am simplifying it to make it easy for me. If you have 100 rooms in a timeshare location and you can sell each room for 52 weeks a year that is 5200 opportunities to sell the rooms. Let’s say they are selling it for $10,000.00. That is $52,000,000.00. But then think about this, why do they never seem to sell out of the timeshares and close out a resort. Many reasons, people don’t use them, people default on them, they don’t commit you to any one room and the contract allows flexibility in moving you around, etc. On top of all this you have the maintenance charge. Let’s say that is $100 per month, which is low. So 5200 x $100 is $520,000. This means they have $520,000 a month coming in regardless of whether you or they are selling any of the timeshares. That is another $6,240,000 per year. The math is astronomical. Timeshare are a good business for timeshare company owners. They are a bad investment for you. That is my opinion.

P.S. If I messed up the math let me know. Like lawyers say, if I had been good at math in high school I would have been a doctor.

Click here for Part 5

Why A Moment Of Excitement Can Cost You A Lifetime Of Debt

Lesson 5:  You will get a lot of icing and a little cake.

The biggest icing timeshare sellers heap on the sales pitch is you can transfer it. You can either bank points, trade locations, sell your week, or a multitude of other options that makes it look like your options are endless. Much of this “icing” is crafted to address the issues I am bringing up such as your tastes will change, you will want to go to other places or not go on vacation at all, your fear of being trapped financially by the commitment. But in the end, once again, what they don’t want you to think about is how much time, effort, and the likelihood you can do any of these things. All you have to do is surf the internet to see that there are a billion (slight exaggeration) people advertising to sell, rent, swap their time share. Many of them are just trying to get out from under them. This unfortunate reality is a larger testament to the poor investment of a timeshare.

We are an “icing” society. If our car is nice we feel good. If our house looks nice outside we feel good. If we are dressed nice we feel good. A lot of what we learn about making ourselves feel good is about what we are showing and are shown on the outside. We look at our neighbors and only see their “icing” and make judgments about them. The icing is just that “icing”. Have fun with your “icing” and just be aware of everyone else’s especially when they are selling you something.

Click here for Part 4

Stay tuned for Part six!

Why A Moment Of Excitement Can Cost You A Lifetime Of Debt

Lesson 4:  You are never told the important stuff.

Timeshare sales is as much about what they don’t tell you are what they do. They don’t tell you a lot in the presentations. They leave it for the small print of the assuredly legal contract to give you the darker side of timeshares. Here is one big dark side: Even after you have paid off the outrageously high price for the timeshare you will still owe the monthly maintenance fee which over time will grow. In other words, you will never stop paying for the unit and your children will never stop paying for the unit. More on this later.

When we “want” (read “feel greedy”) we don’t want to hear bad news. The pitch of timeshare sales is crafted to keep us away from asking the hard questions or searching for the bad news. The bad news is what we need to hear to avoid problems. Bad news does not kill all deals. It is just a risk factor that needs to be weighed. Ask the hard questions in any deal and at least you will go into it with your eyes wide open. Have I ever been taken on a deal.  Absolutely. That is life. I am not telling you this because I am smarter than you. I am just trying to pass on my observations and in this case about timeshares.

Click here for Part 3

Part five coming at you next!

Why A Moment Of Excitement Can Cost You A Lifetime Of Debt

Lesson 3:  You are a “target” not a friend.

Most people that purchase timeshares have a moderate income. Timeshares and the comfort, even luxury they offer, are generally beyond the “average” American’s  budget. This is what is so attractive about timeshare pitches.  “Live like a king for a few hundred dollars a month.” You’ll pay it off in no time and own it forever. You can even pass it to your children (see next lesson).

This “lesson” might be better put under the lesson on greed but they go together. Something in our history, society, DNA has infused us with wanting better than we have. In some people this is stronger than others. When you are struggling I think it is natural for this impulse to be stronger. Tight budget – you are a target. I know you would think they would target the rich. No, there is a reason for that. A wise man once told me “it is harder to get a dollar out of a rich person than a poor one.” I believe that is true in many cases and have hypothesized about why that may be the case often. Think about it. You decide if there is something to it.

We don’t like to think we are a target but we are. We are a target for advertisers. We are a target for anyone that is trying to capture our business. But in the case of a timeshare it is more than just a one-time business transaction they are capturing. They are trying to capture part of your income stream for…ever.  Yes, there is a lot riding on it so don’t think of it as just a business transaction. Your hard work builds timeshare resorts just like losers, not winners, build casinos.

Click here for Part 2

Look out, Part four coming up  tomorrow!

Why A Moment Of Excitement Can Cost You A Lifetime Of Debt

Lesson 2:  They will tap into your greed.

In the movie “The Queen of Versailles” an employee of the largest timeshare company in the U.S. boldly state that they consider timeshare buyers “mooches” meaning a person that is trying to get something for free. The “free”, I assume, is the teasers that they offer like free hotel rooms, vacations, etc., to get you to sit through their indoctrination presentation and sales pitch. Yes, “indoctrination” presentation. These presentations are crafted and executed so artfully that the unsophisticated barely know they are being pressured.

We all love “free”.  Everyone on us has taken the complimentary soap and shampoo from the hotel. We think it is free and love the thought of getting something for nothing. The truth is it is not free, we paid for it. Believe me – those timeshare ticklers are not “free”.  You will pay for it somewhere down the line. Don’t be a “mooch” when it comes to timeshares. Stick to the complimentary soaps.

Click here for Part 1

Part three on the way Monday!