Balancing Act

As we head into the cooler Fall and Winter months it is nice to dream about that fantasy getaway! Maybe you even have a favorite destination. The idea is seductive and if you find yourself at a sales seminar for a time share you might be tempted to sign up for such a deal. Before you to purchase a timeshare, you should keep in mind these reasons why timeshares bite.

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1. Your money is always worth more today than it will be in the future.
This is known as the “time value” of money. It’s fancy sounding and perhaps it takes a little work to calculate, but when you consider the impact inflation has on your dollar you will start to get the picture.

A timeshare will suck up considerable resources up front for amenities you will use later on down the road. The lost opportunity to put your money to work should be the number one clue that buying a timeshare is a bad idea. Compound (pun intended) that with high credit card-like interest if you are considering financing your timeshare purchase and you are really getting hammered.

2. Maintenance Fees
These are ever-increasing fees that the timeshare company must charge to cover the cost of operating the resort and cover the property management fee. This is like a Home Owners’ Association fee on steroids. Worse yet, you are charged this regardless of whether you use your timeshare or not. Think of this as a built-in vacation tax.

3. It’s not an investment.
Many people think that by buying their timeshare they are purchasing an investment. In reality, it is more like buying a new Hyundai. That’s right; this great vacation getaway is going to depreciate and quick. As soon as you purchase your timeshare it is likely to lose 40-75% of the value. This is like giving money away. Even your car won’t depreciate as quick.

4. You can rent the place cheaper than you can buy it.
Check the web and you almost certain to find a similar vacation rental for less than your maintenance fees. In part this is because there are a number of units at any given time that go unused and the suckers/timeshare owners are looking to offset the costs even a little.

5. Vacationing in the same place can be a drag.
For most of us we like a change of scenery. Even if we really like a place it will eventually seem well done. To answer this issue many timeshare operators offer the ability to exchange through intermediary exchange companies like Resort Condominiums International or Interval International.

This sounds good on the surface, but guess what? You are going to get hit for additional fees. There are annual exchange fees and charges for each time you want to see a new location. Want to gift your vacation paradise to a friend or a loved one? Well that’s fine as long as you like giving away even more money.

Another caveat about exchange services is that your timeshare is worth less over time. You know a resort can really only be new once. So as it ages and becomes less sexy then so will your exchange value.

Okay, so you are probably thinking at this point that the timeshare company will make renovations from time to time. Well it might but even if it does you and all your fellow timesharers are going to be assessed a fee for that.

So after these 5 reasons offered it seems clear that there are better uses for your hard earned vacation dollars. As I mentioned at the top of the post, a timeshare is never an investment. At best it is a lifestyle expense.

Still have your eye on that dreamy resort location? The best advice is that if you absolutely have to be a timeshare owner buy your timeshare on the resale market.