BACK IN AUGUST, Adam Grossman wrote a thought-provoking article about regret. He offered six strategies to minimize the chances you’ll end up kicking yourself for a choice you made. That got me thinking about the financial decision I most regret.
I bought a timeshare.
I know this admission will generate strong reactions in the personal finance community. I’d like to claim the ignorance of youth, but I was in my early 50s. I’d like to blame my wife, but it was mostly my doing. Maybe we—or should I say I?—were intoxicated with the beauty of the Hawaiian Islands. Who isn’t?
But the real blame belongs to an organization so unlikely that it requires explanation. The real reason we bought a timeshare: The CFA Institute—the organization for Chartered Financial Analysts—made me do it.
I traveled extensively throughout my career. My colleagues emphasized the importance of picking one hotel chain and then maximizing the benefits of its rewards program. I spent more than 1,000 nights at various Marriott properties. I learned the rules on how to get the most out of my many nights away from home. I am now a lifetime “titanium” member. The benefits I accumulated have provided my family with a number of memorable vacations.
In 2009, we had a wonderful stay at the Ko Olina Marriott on Oahu. The hotel was great, the scenery beautiful and the weather spectacular. We toured the whole island and loved it. We were offered 10,000 Marriott points if we would tour the Marriott Vacation Club timeshares just around the cove. It would take less than an hour and we were promised no hard sell. Still, I wasn’t interested and ignored the offer for most of the trip.
But on our second-to-last day, we were swimming in the cove next to our hotel. There was another couple, about our age, swimming nearby, and they engaged us in conversation. The husband said they were from Wisconsin and they had just bought a timeshare. He extolled its benefits, saying what a bargain it was. He also said it was the most valuable property that Marriott owned and could easily be traded for destinations around the world.
I listened to him, asking questions about how it worked and how hard it would be to sell. He again pointed to the value of the Hawaiian property. He seemed pretty good with numbers, so I asked what he did for a living. He said he was a finance professor at a well-known state university in the Midwest. His specialty: developing and teaching the Chartered Financial Analyst, or CFA, curriculum.
That was all it took. I was pretty familiar with the CFA designation and how rigorous it was. If someone who taught the CFA thought this particular timeshare was one good deal, well, who was I to contradict him? We signed up to take the tour the next morning, our last day in Hawaii. The property was beautiful and the salespeople offered an every-other-year option that cost $19,000, which we could afford. We convinced ourselves we could use it to host a family vacation somewhere warm every other winter. The deal was good for one day only. We signed up.
We used it for a family vacation in Aruba the following year. There were fees for the location exchange, but not too bad. Since we were new at this, we waited too long to book. We got a nice apartment, but it was located above the building’s noisy air conditioners and didn’t have a view. We learned that you had to reserve beach chairs and water gear each day, which meant you had to be up with the sun to get in line. We quickly realized there was a lot of education required to manage the timeshare system successfully.
And then there was the yearly maintenance fee. It started around $900 and grew to more than $1,200. We paid this every year, not just the years we had access to our timeshare. Timeshares also impose deadlines to use it or lose it. Trying to organize our three families got harder. We met nice people, who did it every year, knew all the ropes and loved it. They navigated the system to their benefit. But it just wasn’t the way we vacationed. It took only a few years for the regret to start building. At least Marriott allowed you to trade your week for points, which could be used later.
After a few years, I started to look into selling, but learned it was almost impossible. There were too many units on sale at a steep discount to our purchase price. And the value of the Hawaii property was not what we were led to believe—there were too many units available. After a few years, I started to wonder about the friendly CFA professor. Could he have been a plant, luring innocent tourists with the CFA designation? I’ll never know.
I kept researching how to sell. Last fall, I became aware of a Marriott program to buy back units. I called and the representative made an instant offer. It was about 20% of the purchase price. It took four months, but I was able to sell the unit just before the pandemic hit and I didn’t have to make the 2020 maintenance payment.
To be sure, many people make timeshares work for their families and love it. If you’re willing to put in the time to learn and navigate the rules, you can no doubt have some great vacations in beautiful places. I would carefully research the timeshare program’s rules and check out the secondary market to get a discounted price.
That said, if you ever find yourself swimming in an idyllic tropical cove and are approached by a CFA instructor, take my advice: Swim the other way.
Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. Rick enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. His previous articles include Much Appreciated, Victims of the Virus and Refi or Not. Follow Rick on Twitter @RConnor609.