There’s no doubt that timeshares are a bad financial move for most people. But, despite this, millions of Americans still own them. This is especially true for well educated individuals with comfortable incomes. How is it possible that so many capable people are throwing away their money on a vacation investment that is almost guaranteed to lose value over time?
The truth is that timeshares are expensive, and their annual maintenance fees typically run in the thousands of dollars. But that’s not the only reason they are a bad financial decision. Timeshares can be difficult to sell, and they are constantly depreciating. This means that the average timeshare owner will wind up selling their property for less than they paid for it when it comes time to unload it. This can be financially devastating, and it also eats into your emergency savings and retirement funds.
Many timeshare presentations are based on high-pressure sales tactics and the promise of theater tickets or other perks in exchange for an hour or two of your time. The problem is that they are often very persuasive, and they can make you remove a large chunk of your emergency savings to put down on a timeshare. Even if you don’t fall for the pitch and buy one, you should take a long hard look at your savings account to determine whether you are willing to spend more than $24,000 on a vacation that you can’t use every year.
The main way that timeshares are expensive is that they come with annual maintenance fees that average about $900 a year and sometimes exceed $3,000. If you own an older property or a resort that is in poor condition, you may face additional special assessments in addition to the regular fees. And, if you don’t pay your fees, the resort will sell them to collections agencies that will report to your credit reports and damage your credit score.
A good alternative to buying a timeshare is renting out your unit when you aren’t using it. The rental income will help offset the cost of your maintenance fees and perhaps even cover some or all of your annual costs. But, you must remember that if you rent out your timeshare, you will have to pay taxes on the rental income.
If you don’t want to rent out your timeshare, there are several ways to get rid of it. You can donate it to charity, which will provide you with a tax rebate equal to the fair market value of your timeshare. You can also give it back to the resort if they offer a buy back program. If you aren’t able to sell or donate your timeshare, you can contact a company that specializes in getting people out of their timeshare contracts.
Timeshares are a waste of money for most people, but they can be a great option for some. If you are looking for a new vacation, consider checking out Airbnb or price shopping hotels and airbnbs in the places you plan to visit before you buy a timeshare.