The Long Story How I Paid Off a Diamond Resorts Timeshare Loan with my Credit Card
A few months back I paid off my student loans, please hold the applause, you know what changed my mind go ahead and give me a standing ovation because it feels that way when I check my personal capital account and do not have any any student loans*. As I finished off paying the last of my student loans, I was not entirely finished with every piece of my debt. A while back I borrowed money from my parents who were nice enough to help me through a rough patch. I have been paying them back $200 at a time for what feels like eternity, but you see my parents borrowed money from their home in the form of a second mortgage to lend me this money, so it’s not exactly an interest free loan. As I came to the final chapter in my debt repayment book, my parents were still riddled with the second mortgage, in fact as I found out my $200 had been directly applied to the loan over the past years. The good news is the minimum payment is around $150 and I have been paying extra each month with my payment. As I looked at my parents financial situation, I knew from casual conversations about money and finances they had more than just a mortgage and the second mortgage on the house. One of the reasons I have been so eager to turn my financial life around is my parents and their financial decisions. I don’t think my parents have necessarily lived beyond their means and kept up with the Joneses, you will not see my parents driving around in a new Range Rover, buying big screen TV’s on Black Friday, or be caught on MTV Cribs. If they did appear on MTV Cribs this might be the funniest episode of all time, I’m not sure I could breathe because I would be laughing so hard. Instead they have had a business go bad, both in relationship and financially, borrowed money to buy a time share, received a zero percent loan only to miss the final payment date by a few days and get charged for the entire interest due. My parents are close to a final retirement and if I can do anything to make their lives easier, I will be the first to volunteer.
Time Share Loan
As I was sharing my parent’s financial situation, the big item I want to tackle is the loan to Diamond Resorts, a time share. I have heard over and over how bad time shares are from the internet to Dave Ramsey. The fact that you do not own any property, but rather pay to stay at the location and keep up the maintenance of the building and pay taxes sure seems like something I would stay away from. I would not buy a time share, I have no plans to buy a time share. If I want to stay in a place that I find desirable, I will rent a hotel, house, or airbnb ($20 credit off your first stay).
What is a time share?
The arrangement whereby several joint owners have the right to use a property as a vacation home under a time-sharing agreement.
I will say the best vacation I have ever had was in Kauai, Hawaii using a time share, I don’t think the time share itself had anything to do with the “best vacation” status, so I am going to chalk that up to being with my family, hiking, snorkeling, Wings over Kauai, beautiful ocean, coast line, etc. While I was in Kauai at the time share I sat through a sales presentation. My parents let me know that we did not need to go, but that they were going and a $100 gift card was provided after going through the presentation. I went for a few reasons some good, some bad.
- I wanted to protect my parents
- I have no problem being a jerk if needed, which I thought the situation might need
- I have sat through multiple high school, college classes, work meetings and have paid zero attention, this should be easy to do the same
- I wanted to see what this high octane sales pitch was all about
- $100 to listen to someone talk for an hour, yeah sign me up
- I listen to Dave Ramsey, he over time has made me really dislike timeshares
The Sales Pitch
We first met the salesmen, let’s call him James the Jerk or JJ for short. JJ took us for a walk around the facility to apparently take us to his office or sales dungeon, not really sure there is a difference. We were taken by places I did not come across since we arrived, I’m pretty sure I saw a waterfall, million dollar paintings, and some crystal goblets but I can’t be sure of any of it. JJ was doing his best to make small talk, you know the kind where they try to find a common bond. You guys live in Chicago and your Dad grew up in the area, well I have family in “insert town nearby” and we go to visit every couple years, blah blah blah…….JJ is full of Angel poop.
The good news about this sales pitch was I had prepared before hand, no seriously. I practiced saying no in my head over and over, I researched what they might say and do, from the beginning I pretended that JJ was the kid you grew up with that you wanted to punch in the face. So I was ready to say no at the very least and take this one hour as a personal insult from JJ and his intention to waste my time and get rich off my parents. Yeah I was ready.
The sales pitch itself was actually kind of soft and easy, I don’t think this was the Boiler Room “buy the f****** time share” being screamed at me that may have popped in my head. It was the “hey guys you should really get these fluffy pillows, because you know those pillows you have, yeah they are like rocks, but what we have here is fluffy pillows”. They only wanted to make Kauai as the main place my parents would use as their timeshare location, I’m guessing that’s not exactly a tough sell for most people. See the ocean and beautiful views yeah that’s what I’m selling. JJ started going over the pricing of everything and that’s when I knew s*** just got real.
I had not seen a ton of crossed arms or shaking heads in disagreement, I actually saw my Dad lean in to look at the information, which means he had some interest. My Dad told me earlier that he had no plans to purchase anything and just wanted to get the $100 gift card to use on the trip, I couldn’t fault him for wanting that, but as I looked on as an observer I became worried that I had not heard the word “No”. I had been practicing over and over how to say “NO” and I could see my father being roped into a potential sale. If you look at why I went to the time share presentation from my bullet points above, the number one reason was to protect my parents and based on what JJ was asking my parents to sign up for he deserved a verbal kick in the frankfurter.
As my Dad was looking and listening to the numbers that were provided, I knew that I came along for a reason. As JJ asked for the sale, my father looked to me and said “I don’t know let me consult my banker” as he turned his head and looked towards me. I could see JJ’s look of displeasure before he every heard a word from my mouth. I told JJ that we did not want to sign up for any additional points or have Kauai be my parents new home destination. I didn’t get into specifics but I said it is not something I think is best for my parent’s finanical situation. He knew from my original cold shoulder and lack of small “fake” conversation that I was probably his worst enemy. Once JJ knew I worked for a bank he wasted very little time to disclose the news my father had not disclosed to me, he dropped his own verbal kick in my own frankfurter, informing me that my parents had a loan with Diamond Resorts with a large balance and a high interest rate. I felt a little sick and sad at the same moment, mostly I wanted to walk out and look for JJ’s car and flatten his tires, I’m kidding of course, I would have ripped off his rear bumper, oh you guys.
The sales pitch ended shortly after another room and another sales person, this one was much easier than JJ, but maybe I stopped listening after I heard my parents had a loan with Diamond Resorts. It felt like I was told my parents owed money to a loan shark who kicks puppies and hates children, I’m not sure of the last few minutes, but I do know a signature was needed and a gift card was presented. Only my parents received the gift card, not even paid for my time those lousy jerks. I will say after the whole time share sale pitch, I did have a nice meal, drink, and dessert because of it, but in a way it all felt dirty after hearing about the loan.
I Thought You Hated Credit Cards
Right around the time I wrote a post on why credit cards scare me to death, I had actually applied and been approved for a credit card.
I probably sound like a hypocrite, but the reason for my application was I had plans to go visit my friend in Montana and the tickets were in the neighborhood of $800 each, I couldn’t drive there because of the lack of vacation time and I couldn’t see paying $800 to fly anywhere in the continental United States. I decided to research how to fly to Montana for cheap and the Alaska Airlines credit card came up, I read a couple great reviews and it actually looked fantastic for what they offered. I’m certainly not an airlines miles expert I’ll leave that to Richmond Savers and Club Thrifty, but it offered exactly what I was looking for, a companion pass. The companion pass allows you to purchase one flight at full price and then you get the companion pass for $121, which in this case would save us $600 ($75 annual fee). The long story that I will now make short is we did not make it to Montana to visit my friend and instead I now have a shiny new black credit card in my wallet. I do plan to visit my friend in Montana in the future, I would love to visit my other friend who lives in Alaska, and if all of that does not work out, I am certainly heading out to San Diego for #FinCon16 so the savings will go to good use, I promise.
The Actual Story How I Paid Off My Parents Timeshare Loan with a Credit Card
So almost 2,000 words later, I made it to the actual story headline, talk about getting side tracked. In August/September I made my first credit card payment to Diamond Resorts for $1,000, I had the $1,000 sitting in my savings account so I didn’t feel bad about making the payment, I mean I received 1,000 miles for it, which wasn’t really my reason for using the credit card but it didn’t hurt. Initially I was thrown off by the credit card balance, I was waiting forever for the billing cycle to end, it was almost painful. You see I am so used to paying for items right now with cash or my debit card. I buy something the money comes out, simple concept. In this case I was waiting for almost 30 days just to get the bill and then another 30 days until the payment was due. It was a totally different world for me, I didn’t like it one bit. I actually had money just stacking up in my accounts while I waited for the credit card bill to cut and come due, this all seemed very dangerous to me. I ended up doing this for a few months and then it finally hit me, I can actually use this to my advantage. Just this past month I made a rather large payment to Diamond Resorts, which I made just after my last billing cycle of November 5th. I will not have my next billing cycle end until December 5th or 30 days and then I will not have that payment due until January 5th or another 30 days. All of this while securing 0% interest since the payment will be made in full, this is instead of the 15.90% interest rate the loan was for. Using some simple round numbers if the loan was for $10,000 at a 15.90% interest rate, that calculates out to $4.41 cents per day or a total savings of $265!
Trust me I am not one to promote credit cards, as you have probably read or seen comments I wrote on your blog, I think credit cards are the devil. In this case it certainly is hard to argue against saving $265 (not including the $75 annual fee). I was even able to earn thousands in frequent flier miles, which I might actually use unlike my Delta airlines miles that are just sitting out there from my old debit card. In a brief summary, I did the following:
- Pay off an evil Diamond Resorts timeshare loan
- Used a credit card to pay off a timeshare loan
- Saved $265+ in the process (not including $75 annual fee)
- Earned over 10,000 miles for Alaska Air to visit friends
- Try not to promote a credit card while sharing all really great things that happened using a credit card
As I write this the final payment to my credit card has not been made, I made a large payment immediately and as I wait to receive a couple checks from my 9-5, the additional funds will be made closer to the payment date. Truth be told I did something very impulsive after reading a post found at Rockstar Finance, from Seeking Saturdays that put this payment in jeopardy. I’ll let you go ahead and check out the article, but the quick and easy is he wanted to go into full retirement savings mode and since it was late in the year, so he did what every crazy financial independence bada$$ would do and is contributing 100% of his income towards his 401k. I began to read this and couldn’t get past the thought that I was going at things like a kitten rather than a big ferocious polar bear**. After paying off my student loans, I began taking my old payment of $199.85 and putting this amount towards my Roth IRA, after a couple months I quickly switched my strategy and changed my contribution rate to my 401K to 15%, from the 4% I was previously contributing to receive my company match. I felt really good about the change and seeing the bigger amounts being added into my 401k.
For the first time I plan to contribute the maximum amount to my 401k and my H.S.A in 2016, don’t worry our FI plan is not a fraud, in fact we are heavily invested in real estate. The current plan doesn’t actually factor in retirement contributions, we just think they are a really great idea for when we turn 60 and could be a potential buffer if all of our numbers and calculations are Angel poop. So I read the article from Seeking Saturday and thought why am I not stepping up my retirement contributions, I am a polar bear and my contributions were closer to a polar cub**. So I logged on to my 401k site and increased my contributions to the monthly amount needed to max out the account. I decided to start a month early and get some practice for the new year. The good news is I have 3 paychecks since I am currently on a bi-weekly pay schedule, the bad news is I plan to use these paychecks to pay off my credit card. I have a few plans up my sleeve, but switching my contributions before I pay off my credit card was not the most thought out plan I have executed. I’m excited though after all of what I have done this year, I will end 2015 with zero personal debt. I think that writing on Even Steven Money had everything to do with it and for those who follow along or stop by from time to time, thank you.
I will be back another day, until then sign up for my blog with the annoying pop-up that comes up every 10 seconds and you have already closed out of, check me out on Facebook, or say hello on Twitter.
*So technically it does show that I owe $1,981.33, which is the exact amount of my last payment I sent for pay off, unfortunately they have not found a way to show my paid of loan as zero. They know about it, they are smart people, I’m sure they will figure it out. Sure would be nice to see that student loan balance in there…….just saying guys
**Polar bear’s are my favorite animal, just thought you should know