Recently, Mr. Vine sat down and plotted out each of our “big” vacations from now until our expected Financial Independence Day. By “big” we mean trips of seven days or so that will require using vacation time from work. Part of the purpose behind this exercise was to decide how we wanted to use the timeshare points we’ll be getting over the next couple of years. We wanted to consider the cost and determine whether we will actually benefit from owning additional timeshare, both in the short term and further out into retirement. One unexpected discovery is how few vacations we have left before financial independence.
At the time we prepared this outline, there were ten vacations to go. Since then, we’ve taken two of those trips. We booked airfare and lodging for the third and reserved a room for the fourth. That leaves just a handful of unbooked trips between now and financial independence. Phrased this way, by the time we plan a few more vacations, we’ll be less than a year away from retiring early. Now, this is a little bit misleading because we’ll probably sneak in a few long weekends here and there. I expect that we’ll continue to refine both the destinations and the exact dates as it comes time to book each of these trips.
By budgeting the cost of travel over the final few years as we approach financial independence, we could also make a more educated decision on whether or not to upgrade our timeshare ownership. It’s no secret that we love to use our timeshare despite conventional wisdom suggesting that timeshares are a bad deal. It is also true that many (most?) people who purchase a timeshare come to regret that decision. And even though we are happy with ours, we rarely recommend it to others. There are two ways we can upgrade our ownership: directly from the company or via resale of someone else’s ownership.
We are considering buying more timeshare time via a reseller. Buying timeshare at resale offers huge discounts. Typically resale time costs about 10% of what it costs to buy the same amount directly from the provider. Some people think resale is the only way anyone should buy timeshare. Although we recognize some benefits to buying directly, we have come around to the idea of resale.
There are three factors we want to consider in evaluating whether a timeshare upgrade makes sense and how to accomplish it. One factor is that we believe we will want to vacation with our timeshare more frequently during early retirement than we currently do. But we believe that we will want to take other forms of vacation, too. A second factor to consider is our status within our timeshare program. The program has three tiers of elite status with increasingly attractive benefits at each level. We are currently at the lowest tier of elite status. The third factor for us to consider is logistical and affects how our points are distributed to us. We currently have a biennial plan, meaning we receive our points (time) every other year, rather than every year. In the past we have had an annual plan so we understand that there are pros and cons to each type. The only way to completely switch types is to upgrade our points and to do so directly.
How much time do we want?
The first factor is the most important. Annual maintenance fees are based on the number of points we have. That means the annual cost will be higher if we purchase more time. These fees are the highest ongoing cost of our timeshare ownership and the reason so many people regret buying timeshare. This is not a situation where more is always better. We typically convert the points cost of each stay to a dollar value based on our maintenance fees. (You can see an example here for our trip to Las Vegas). Doing this helps us evaluate whether we are getting a good value out of the stay. In 2019, we determined that about six nights were “free” by comparing our total number of timeshare nights spent with what our maintenance fees would have purchased in regular hotel night stays. Our philosophy has always been that the timeshare doesn’t save us much, but it does encourage us to travel when we otherwise might not have. We have concluded that we are getting good value, but we aren’t interested in exclusively using our timeshare for all future travel. When we have a virtually unlimited amount of time to travel, how much of it will we want to spend at one of our timeshare properties?
Even though resale points cost a fraction of the price as compared to directly purchased points, the maintenance fees will cost the same amount. Getting the points at a very low cost or even free might not be worth it when we have to pay thousands of dollars annually. We view the timeshare not as getting something for free, but more like pre-paying for our vacation lodging on an annual basis. We need to consider our overall annual travel budget and how much of that we want to allocate to timeshare expenses. Because there is such a thing as too much, it is important not to simply buy the most points we can at the lowest possible price.
Does status matter?
The second factor to consider is the value, if any, we place on elite level perks. These perks closely resemble hotel status. Examples of the perks include waivers of cancellation fees, free availability-based upgrades to larger units, longer booking horizons and free nights during low seasons. Per the company policy, only time or points purchased directly qualifies for status tiers. There might be exceptions to this policy. But because the stated company line is that resale purchases won’t qualify, we aren’t going to count on getting an exception when we decide how much time to purchase at resale.
Our experience at the entry tier for elite ownership has been mixed when it comes to taking advantage of the perks. The most reliably useful one for us has been the longer booking horizon. This allows us to reserve small, in-demand properties at the most popular times of year. Even with our longer booking horizon, we haven’t been able to book the most in-demand properties at peak times. We’ve had very little luck with availability-based upgrades. We’ve only qualified for one availability-based upgrade in the last five years and even that required two phone calls and some strong-arming. I am finally wise enough not to believe that a higher tier of status will make all of my frustrations disappear. Ultimately, the perks would be nice to have, but not valuable enough to offset the additional cost of buying directly.
Based on our experience at the first elite level and our conclusion that the higher tiers aren’t worth significantly more, we do not value higher level status. That’s a hard thing for me to admit, but it is liberating. When a sales pitch is no longer persuasive, it is much easier to say no! We can, and will purchase more points based on how much additional time we need. But achieving higher status levels will not be a major consideration in how many points we decide to purchase.
Moving to an annual plan
We have upgraded our timeshare ownership on two previous occasions to arrive at our present level. At various points during our ownership, we have been on an annual plan, where we get points each year. When we made our last upgrade, we moved to a biennial plan. It made good sense at the time. There are some limitations to having our time deposited every other year. In essence, we can use all of the time in the year we receive it or split it across two years. We pay maintenance fees every year, but only receive time in even years. This means that if we use all of the time in the receiving year, we will pay maintenance fees in years that we won’t have any timeshare available to use. Reasons someone might want to do this including taking one vacation in a larger condo (like a multi-generational trip) or to a very expensive destination like New York City or a longer trip of 2-3 weeks every other year. In the off year, we could choose not to take any vacation at all or travel to a non-timeshare destination.
When we initially purchased the biennial plan, the reservation system worked in such a way that we had a better travel window for the times we prefer to vacation if we received two years’ worth of points at once. The program has since changed so we can now make reservations using time that will be deposited in the future. Overall, this was an improvement to how easy it is to use the program. The effect, though, was that our primary reason for this type of plan was no longer necessary. With that advantage eliminated, our every other year program was left with more disadvantages than benefits. As a result, we’ve been considering upgrading our ownership to move back to an annual plan.
Having decided that this move makes sense, now we need to determine the smartest way to make the move. This upgrade must happen directly, so we want to purchase the minimum [sensible] number of points to accomplish it. I say sensible because there are often price breaks at certain bundles of points so it’s not simply about buying the absolute minimum number. There is also a timing component and a hack where can end up with a year’s worth of points for “free”. “Free” meaning we still have to pay the associated maintenance fees.
We also don’t want to purchase this upgrade too early and have a glut of timeshare points to use while we are still focused on our career jobs. Between the timing and the cost, there is a lot to think about. We are still running the numbers and mulling over how to best accomplish our goals.
Share your thoughts about our approach! If you have any experience with timeshare, what has it been?