3 Ways to Travel Inexpensively in Retirement
eBook: Resort Timeshares – How to Buy Them, Use Them, and Sell Them
3 Ways to Travel Inexpensively in Retirement
by Joseph T. Sinclair
This article is aimed at retirees who have time on their hands to travel a lot. It is a cost comparison between traveling in a motorhome, a travel trailer, and using timeshare units. It’s not a total cost for each. It’s simply a daily comparative cost.
Using a motorhome is like living in a manufactured home. Motorhomes tend to be large and well-finished. Travel trailers are at the opposite end of the scale. They’re smaller but livable for those who like a traveling lifestyle but are willing to sacrifice comfort. Timeshares are typically one or two bedroom condominiums with full kitchens ranging in size from 500 to 1,500 square feet.
For a motorhome and a travel trailer the following assumptions were made:
- Use of the RV for 6 months (26 weeks) of the year and 6,000 miles
- The difference in gas cost for 6,000 miles a year between driving a motorhome or pulling a trailer and driving an SUV
- 9 MPG for a motorhome, 12 MPG for pulling a travel trailer, and 18 MPG for an SUV
- Gas @$4/gallon
- A sale at the end of five years for the initial purchase price less 10% of the purchase price for each year owned
- Yearly RV maintenance (not including vehicle maintenance)
- Storage cost of the RV for 6 months of the year
There are some retirees who travel in an RV full time, but they are the exception. Retirees typically travel only part of the year in their RVs, and the half-year period assumed is likely above average but is a conservative estimate when calculating a daily cost. The assumption of 6,000 per year of RV travel requires more gas to power a vehicle than just an SUV or car traveling the same miles.
The yearly maintenance is for the RV but does not include the non-RV portion of the vehicle (e.g., motor, tires, etc). When an RV is not being used, a $100/month rent is assumed for a motorhome and a $60/month rent is assumed for a travel trailer.
RV parks are not cheap. It is assumed that a motorhome will cost $40/day and a trailer will cost $35/day to stay in an adequate full-service park. Many parks cost more. Some cost less. And it is possible to stay places where there is no cost. The assumption made seems realistic.
For a timeshare the following assumptions were made:
- One-bedroom condominium
- Purchase price vary widely, but the assumption is that you get back when you sell exactly what you paid (assuming you bought on the timeshare secondary market); so there is no amortization of purchase price
- The timeshare unit is in a point-system timeshare organization
- $350 per week maintenance
The typical timeshare is a two-bedroom condominium unit for one week during high season. For timeshares on a point system, typically a one-week owner can get two weeks per year use by using only a one-bedroom unit and staying one week in low season. The typical annual maintenance per week of ownership is $700, but with two weeks use that amounts to half as much ($350) per week.
Motorhome
Purchase price $100,000
10% of $100,000 purchase price/year price depreciation for sale price = $10,000 × 5 years = $50,000 cost of ownership
6,000 miles per year x 5 years = 30,000 miles @ 9 MPG = 3,333 gallons x $4 = $13,332
6,000 miles per year x 5 years = 30,000 miles @ 18 MPG = 1,666 gallons x $4 = $6,664
$13,332 – $6,664 = $6,668 gas expense attributed to motorhome
$1,000 RV maintenance per year x 5 years = $5,000
$100 per month storage x 6 months x 5 years = $3,000
$40 per day RV park fee x 180 days per year x 5 years = $36,000
$50,000 + $6,664 + $5,000 + $3,000 + $36,000 = $100,664
5 years x 180 days per year = 900 days
$100,664 ÷ 900 = $112 per day
Travel Trailer
Purchase price $20,000
10% of $20,000 purchase price/year price depreciation for sale price = $2,000 × 5 years = $10,000 cost of ownership
6,000 miles per year x 5 years = 30,000 miles @ 12 MPG = 2,500 gallons x $4 = $10,000
6,000 miles per year x 5 years = 30,000 miles @ 18 MPG = 1,666 gallons x $4 = $6,664
$10,000 – $6,664 = $3,336 gas expense attributed to travel trailer
$750 RV maintenance per year x 5 years = $3,750
$60 per month storage x 6 months x 5 years = $1,800
$35 per day RV park fee x 180 days per year x 5 years = $31,500
$10,000 + $3,336 + $3,750 + $1,800 + $31,500 = $50,386
5 years x 180 days per year = 900 days
$50,386 ÷ 900 = $56 per day
Timeshare
Purchase price varies and sales price exactly the same (no depreciation)
26 weeks of ownership ÷ 2 weeks of use = 13 timeshares purchased
$700 per year maintenance per ownership week x 13 = $9,100
$9,100 ÷ 180 = $51 per day
In a point-system timeshare organization, you can stay at a variety of resorts (within the organization – e.g., Wyndham, Marriott) by trading internally and are not relegated to staying in just the timeshare unit you own. You can also exchange for timeshares in other timeshare systems through an international timeshare exchange (e.g., RCI), but that costs extra money. In summation, a point-system timeshare will enable you to get two weeks use for one week of ownership and enable you to stay at multiple resorts.
Comparisons
The assumption is that retirees traveling will go from place to place around the US for six months each year enjoying their retirement and their traveling.
Habitation
Timeshare units are the most comfortable. They are condominium units—just like living at home. At many places they are quasi-luxurious or even luxurious. They are seldom sub-standard.
Motorhomes are comfortable too. Although constricted in size, they are nicely finished and have adequate room.
Travel trailers can be as large as motorhomes. However, the 20-ft travel trailer in this comparison is constricted in size and cannot be considered as comfortable as a motorhome or timeshare unit.
Settings
Timeshares typically have nice (often luxurious) amenities and attractive surroundings.
RV parks are seldom luxurious and typically provide just a slot of space in a facility that is considered second-rate compared to most timeshare resorts
Locations
Timeshares are mostly located in desirable resort locations. However, timeshare resorts are numbered in the hundreds, and the variety of places you can visit is limited. Some states have no timeshare resorts. Others states have only one or two. Orlando, Florida has one-third of the timeshare resorts in the world leaving the remainder of the country sparsely populated.
Although timeshares are usually well-located, the term well-located often means located in a resort area rather than located on a lake, river, beach, or adjacent to other natural attractions.
RV parks are ubiquitous. You can find RV parks anywhere and everywhere. They number in the thousands. There are RV slots at many camping grounds. And there are camping grounds in some spectacular locations such as state and national parks. It is not unusual to find RV parks on lakes, rivers, beaches, or next to other natural attactions.
All in all, the number of spectacular places available to motorhomes and travel trailers is far greater than those available to timeshare users as is the total number of places. However, the amenties in RV locations are often substandard.
Habitation Expense
It’s difficult to reduce your habitation expense using timeshares. The best you can do is buy them for a low price up front on the secondary market. You have to make your maintenance payments over which you have no control.
With a motorhome or travel trailer you can reduce your expenses a little by changing the places you stay. For instance, you can stay more often and longer at places that are free rather than at places that have a high daily fee. In addition, you have more choices of places to go and can visit places with a lower cost of living. Timeshare resorts are often in places with a high cost of living.
As is shown in the financial calculations above, however, a motorhome costs considerably more as a habitat than a timeshare unit. A travel trailer costs less than a timeshare unit.
Note that if you include financing for the motorhome, travel trailer, and timeshare, the outcome is different. The motorhome is going to cost a huge amount of interest and the travel trailer only one-fifth as much. The interest cost for the timeshares depends on the purchase price. For expensive timeshares it will be like the motorhome. For inexpensive timeshares, it will be more like the travel trailer.
The typical cost of a timeshare from a timeshare developer is $15,000 to $25,000 per week. At that price, the 13 timeshares would be off the scale compared to motorhomes or travel trailers. In the current market, however, where you can buy timeshares for a lesser price on the timeshare secondary market, the timeshare alternative may be attractive.
Finally, keep in mind that you don’t have to buy a new motorhome or travel trailer. You can buy a used one in top shape for a faction of the cost of a new one and experience much less depreciation over a five-year period.
Why Inexpensive?
Why do I call these three options inexpensive? Compared to what you would pay for comparable hotel or resort motel suites, the cost of these three options seem reasonable. Typically, comparable suites cost $125 to $350 per night depending on the resort and the season.
Nonetheless, you have money tied up in motorhomes, travel trailers, and timeshares. I haven’t considered the cost of such money regarding the lost opportunity to invest in something that would provide an investment return. In addition, many people will have to borrow the money to purchase a motorhome, travel trailer, or timeshare. As mentioned above, I haven’t considered the cost of such money (the interest) to be paid.
Consequently, to make a definitive comparison you will need to calculate your own figures based on your financial means of acquiring one of the three options. I have provided you a start, and you can add the facts of your own prospective acquisition to determine a final comparison.
17 Ways to Use Your Timeshare
by Joseph T. Sinclair
There are a lot of ways to use a timeshare condominium. This article covers 17 of them.
Exchange
The classic use of a timeshare is to exchange it for another timeshare. There are several large timeshare exchange organizations that make this possible for a fee. Bored with your current timeshare after a few years? Don’t sell it. Don’t ignore it. Exchange it. Go somewhere new.
Most timeshare organizations faciliatate internal exchanging enabling you to exchange for a another timeshare week at a resort within the organization for a minimal fee or no fee at all.
A popular way to use a timeshare is to buy it specifically for exchange and to go somewhere different every year. To do so you need to buy a timeshare in a popular place at a popular time of year. That will give you maximum trading power.
Vacation Near Home
You don’t necessarily have to go far away. Vacation near home. Save the travel expense. Be close to your family and business but still have a place where you can go, relax, and get away from it all. If there’s a timeshare resort near you, check it out.
Comment: There’s a timeshare resort in Napa 25 minutes from my house. Every time I suggest we do an exchange with our Colorado timeshare (1,100 miles away), my wife wants to go to Napa for a week.
The Big City
Some of the more popular cities have timeshares. You don’t have to go to a ski, beach, or golf resort. You can visit a timeshare in a city and make the city your playground. Plan well ahead, though. City timeshares tend to be popular.
Retirement Benefits
If you’re retired, you’ve hit the jackpot. You can maximize your exchanging power by taking your vacations off season. Many resorts have great weather and interesting activities in the spring, fall, and winter when families don’t travel because the kids are in school. That means you can trade into such resorts with a minimum of exchanging power because it’s low season.
Additionally, the exchange organizations sell off timeshare weeks at rock bottom prices for the off-season. You can get some real deals. I’ve seen prices as low as $199 for a week’s stay. That’s $29/night, as cheap as a tent site at KOA.
Half and Half
Who says a husband and wife have to take a vacation together? They can be together without the vacation. For instance, suppose you like to play golf but your wife doesn’t. You can go to a golf resort and play for a week while she works on her laptop in the second bedroom. She can relax more but still get more done than she does in the office.
For your next outing, you go to a tennis resort where she plays all week while you work on your laptop in the second bedroom. Beats staying at the office.
Family Reunion
Timeshares can make great family reunions. First, you have to have a family that want to meet up each year. Then each family can buy a timeshare to enable all the families to meet in the same place, same week each year.
Another variation is one family member owns a second home. It’s not big enough to accommodate the entire extended family. A timeshare week or two can make a nice addition to the second home to accommodate everyone.
Theme Vacationing
Many people like theme vacations. For instance, a golfer may want to play a different premier golf course every year. With advanced planning each year, a timeshare will enable this vacation theme with lower costs and larger accommodations than staying at a resort hotel.
Short-term
Many timeshare resorts operate on the point system today. You don’t get a week. You get points equivalent to a week. Instead of using your points for a week, you can use them for shorter stays. Some resorts even allow you to use points for just one night.
If you can’t take a week’s vacation this year, at least use your points for shorter stays.
Long-term
If you’re on a point system and have enough points to stay in a two-bedroom unit for one week of high season, you’ve got possibilities. You may have enough point sto get as many as three weeks in a one-bedroom unit in low season. Three for one. Not a bad deal considering that you don’t have to pay extra.
Business Retreat
A business can hold a timeshare retreat each year in the off-season for key employees at a low cost with nice accommodations. In other words, you can get a good deal for your business. Resorts are not as busy off-season making a retreat more relaxing and perhaps more private than during the high season.
Business Reward
If you own a business, you might consider buying some timeshares for employee (or customer) incentives. Each year you can award the weeks to deserving employees together with an extra week’s vacation for each.
Guest Room
If you have a choice, always go for the largest suite (the most bedrooms). That gives you the opportunity to invite family members or best friends to stay with you.
Kitchen Savings
Most timeshares include a full kitchen. This is a real benefit for those on a budget. You can save a lot of money doing your own cooking rather than eating in restaurants while on vacation. But make it fun. Try out those exotic recipes that you never seem to have the time for at home.
Out of School
To maximize your trading power, take your vacations in the off-season to save money and resources. It’s a struggle to get the kids out of school, but not impossible. Get all their classwork assignments ahead of time, and have them do their schoolwork the first thing each morning. With no peer distractions, they will finish quickly and still be ready for the day’s activities.
Extended Vacation
No one says you have to stay a week. You can stay two weeks, or three. You just need an extra timeshare or two. If you like a place and want to spend more time there every year, a timeshare stay makes an economic choice.
Second Home
This is the extended-extended vacation idea, one I use myself. I spend eight timeshare weeks every summer in Pagosa Springs. Every summer I get the insane idea that I might like to buy a summer home there. Since I would probably use a second home only for eight weeks in the summer and perhaps two weeks in the winter, the timeshare strategy gives me almost the same benefits. But when I compare the costs, the timeshare is so much cheaper and so much less trouble that I rein in my insanity and forgo the burden of running a second home.
Same Old Place
There’s no question that many people buy a timeshare, use it s few years, get tired of it, and aren’t sure what to do with it. But that isn’t everyone. There are plenty of places that you might be delighted to visit again and again each year indefinitely. Nothing wrong with that. And if you do eventually want to go somewhere else, you can always exchange.
The author of this article, Joseph T. Sinclair, is the author of twenty How To books published by national publishers.
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