Strategy 59 of 107
Sell a timeshare or vacation property that costs more than it gives
What it is
Add up its yearly fees, taxes, insurance and travel. If you rarely use it, it is a second mortgage-sized drain.
Steps
- Add up its yearly fees, taxes, insurance and travel. If you rarely use it, it is a second mortgage-sized drain.
- Sell through a licensed agent or the developer's own resale or exit program. Never pay a reseller up front.
- Send the proceeds and the ended yearly costs to principal.
Repeat: Once.
Measure: Net proceeds plus yearly costs ended.
Try it in the calculator Enter its amount in "One-time amount to principal". Add a payoff goal of 5 years to see what is still needed.
Risks
- Timeshares often resell for little; the gain is the ended fees.
- Resale scams are common; check with the state attorney general before paying anyone.
Who it fits
Grandmas and grandpas (62 and over), Married couples, Higher net worth, with assets, Higher earners, Average household
Needs
Owns a timeshare or vacation property
How predictable
Depends on markets or variable rates
A worked example (hypothetical, not guaranteed)
Picture a hypothetical household (grandmas and grandpas (62 and over)). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.
They follow the steps: add up its yearly fees, taxes, insurance and travel. If you rarely use it, it is a second mortgage-sized drain.
Suppose it brings a one-time $30,000 on principal. The loan would be paid off in 22 years 10 months instead of 30 years, saving about $134,798 in interest. To finish in five years, they would still need about $3,387 a month more from other strategies. That is why the five-year sequences stack several at once.
The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.
Sequences that use it
- Sell what you don't use: Turn idle things into principal, end their carrying costs, then recast to lower the payment.
- Five-year sprint: sell what is not the home: Large one-time sales carry most of a five-year payoff. Pay the tax first, send the rest to principal, then recast.
Sources and more information
- FTC: Timeshares, vacation clubs and related scams consumer.ftc.gov
- FTC: Thinking about selling your timeshare? Key steps to avoid scams consumer.ftc.gov
Where to get help
- CFPB: Find a HUD-approved housing counselor (free or low cost) consumerfinance.gov
- USA.gov: State consumer protection offices usa.gov
Related strategies
- 58. Sell what sits unused: gold jewelry, collectibles, a boat or a second vehicle
- 51. Split off and sell extra land, with the lender's partial release
- 67. Move idle savings above the emergency fund to principal
- 71. Sell in a high-cost area and buy for cash somewhere less expensive
- 72. Live-in improve and sell, every two years, tax-free gain each time
- 73. Sell a rental property and pay off the home