Burton Kent

Just talked to a friend of mine who is poor because she joined a “vacation club”.  Basically it’s a timeshare where you get points and can “buy” or trade weeks of vacation all over the world.

I sat through one of the presentations in Cancun once.  The math was complete and total BS.  Everything sounds good, except for basic finance.  They add up the total value you’ll get over the years, which sounds pretty sweet.  But would you pay $720 today for a week’s vacation in 10 years?  Even if it’s a beachfront hotel on the shimmering sands of Cancun?  I don’t think so.   That’s why their “grand total” ain’t so grand.

That’s called the time value of money.  Money now is worth far more than the same money in the future.  There’s a reason we earn interest.  There’s also a reason you can buy these things for about $1 on ebay, with closing fees of about $300.