Is a Timeshare a Waste of Money? Here's What Dave Ramsey Thinks

The financial guru makes his stance on the matter pretty clear.

Have you ever sat through a timeshare presentation -- perhaps based on the promise of free theater tickets or another nice perk in exchange for giving up an hour or two of your day? You may have gone into that presentation thinking there's no way you're about to remove a chunk of money from your savings account to put down on a timeshare.

But the people who sell timeshares can be very persuasive. And you might actually find yourself contemplating a purchase.

While timeshares can work out for some people, financial expert Dave Ramsey says they're worth avoiding. In fact, he even goes so far as to call timeshares a "real estate trap."

The problem with timeshares, according to Ramsey

You might argue that buying a home can constitute a great investment. Now the reality is when you go to sign that mortgage loan, your goal should be to put a roof over your head, not to make money. But still, home values can increase over time. Ramsey argues, however, that this doesn't happen with timeshares. Because you don't own a piece of property outright, you can't really treat a timeshare as an investment that might gain value.

Plus, timeshares can be very difficult to sell -- namely because you're not selling a piece of property, but rather, the option to use one. And also, timeshares come with ongoing maintenance costs. Those might turn prospective buyers away.

And speaking of timeshare fees, those, warns Ramsey, have the potential to rise over time. And you'll be stuck paying them even if you don't use your timeshare due to a range of circumstances, from not being able to get away to wanting to try out a new destination.

Not only can timeshares be difficult to sell, says Ramsey, but they can also be tough to rent out. Many timeshare companies don't allow you to do that. And even so, you can only rent your timeshare for the weeks you're entitled to it. That gives you a narrow window.

Finally, if you can't pay for your timeshare outright, you'll need to finance it. And that could mean paying a lot of interest on a loan.

Don't throw your money away

It's easy to see why you may be motivated to buy a home you live in full time. But there's a big difference between buying a home and buying a timeshare. And the latter is something that Ramsey strongly cautions against.

Remember, over time, your vacation-related tastes and needs might change. And if you buy a timeshare, you might end up leaving yourself with fewer options.

Imagine you have a timeshare in Florida, only you're tired of Florida and you'd rather visit an island instead. If you can't find someone to do a timeshare swap, or figure out another arrangement, guess what? You might get stuck going to Florida.

To be clear, there's nothing wrong with Florida. The point, rather, is that timeshares can be very restrictive and turn something that's supposed to be fun -- a vacation -- into a source of stress. And so it's not worth spending your hard-earned money on a purchase you might end up sorely regretting.