I have mentioned that we got an extended warranty for our washer, which we bought 2 years ago. I asked dh what the warranty cost at that time … He thinks it was about $300 for several years, 2-3? He then reminded me it more than paid for itself on ONE of the several service calls… when the transmission went out, just the transmission cost $900 to replace. That $900 was well more than the cost of the washer alone. I think the washer was about $500 give or take. In this instance, it has been well worth it, regardless of what Martin recommends.
It covered everything except consumables (belts, tires, brakepads etc.) when we bought the Honda pilot which had 30,000 miles on it and covered up to 150,000 miles. It was $700. I didn’t want to do it, but DH made a valid point: if something happened to this vehicle, would we be more or less likely to have the $ to cover it when it happened (particularly since this is our only really road-worthy vehicle.)
At the time we weren’t even on the DR plan, so DH’s point made sense. I’m glad we did. We have had to put the warranty to use, technically speaking, we are at about breakeven, but what it bought us more than that, was peace of mind, similar to BS #1.
We also bought a warranty for our laptop computer. $50 for two years, and it covered everything. We’ve used it twice and the $50 versus having to spend $400-500 to replace the computer, or even replace the hard drive for whatever that would have cost, were well worth it.
When I bought the kids’ iPods 5 years ago at Walmart, I spent $20 each and bought an extended “warranty.” The company Walmart uses is a scam, and magically, nothing is ever covered. I wouldn’t buy an EW with Walmart unless my life depended on it. And even then, I’d think hard.
In hindsight, our warranties have cost us 5-10% of replacement costs, and covered everything. For a big ticket item, like a car, I’d probably get it. For a computer, if I had $ in BS1, and I knew I’d only use it for emergencies, maybe not. For smaller electronics, or items which could be replaced for less than $300, definitely not.
Strangely enough when the cars had problems the repairs were not covered. We had a drive train warranty, and when the drive train went bad, they claimed that particular section wasn’t covered. Had it for electronics repair—not covered. Was told that the motor was covered when we purchased extended warranty—nope they found a loop hole. These were not cheap warranties either. We never bought one again. Never will. Now that we are “Plan” we just budget for repairs.
We come out way ahead, we aren’t out any more money than the actual repair—which most of the time my guys can do. We no longer finance cars/trucks, but if you do then you are paying interest on that warranty too. Far better to put the same amount of premium payment in a savings account and earn interest on it.
Now that all being said we do put them on computerized things like our wireless printer. Everyone that has been on here for a while knows how I’ve already had my printer completely replaced twice. I do pay the $15 for the extended warranty in cash because the printers tend to wear out around here about every 18 months. We do not purchase cheap printers either. Photo quality, all in one, etc. So for that $15 we get a new, better quality printer about every 18 months, which we pay another $15 for another extended warranty and repeat.
I make the decision on extended warranties for the appliances and such based on how much the item costs to replace vs how much the extended warranty is AND how likely we feel the item is to die before we have gotten x amount of use out of it. Doing this we generally only get them on the computer equipment. Most everything else, washer, dryer etc dh can repair for the cost of a part.
Some of the sinking funds envelopes we have are for:
Roof–this is actually started WAY in advance of needing one. We put a roof on a year ago and I figured what we’d have to save if the roof lasts 20 years. Divided that by 20 years then by 12. I am saving $50/month. Realistically I believe our roof won’t last 20 years simply due to living in hurricane territory. If it’s ripped by a hurricane, we’ll have a deductible, then the rest covered by insurance. I figure anything we save will go torwards the deductible if it has to be replaced sooner than 20 years.
Car–tags, drivers licenses, maintenance, etc.
Car Insurance–We make a single payment every 6 months and this saves us a $5 monthly fee that is charged when paying monthly. Recently I figured out that our next insurance bill will cost us more and have had to amp up how much I am saving, kinda putting a squeeze on the budget. 🙁
Blow Money–dh and I each get this in cash. He gets less than me because his clothes basically come from our store, which is taken out of end of year profit. It covers clothes, personal entertainment, meals that are taken personally, not part of the family eating out, hobbies, etc.
Hair cuts/color–a haircut for each of us and a color for me. I have been getting mine at the beauty school and it saves a ton of money. All students are supervised by instructors and their work is checked before the client gets up from the chair.
Pedicure–I have issues with my toe nails that would require going to a podiatrist, or getting a professional pedi. I choose not to sit in a doctor’s office. Plus I get my nail painted! 🙂 The nail technician I go to has been doing this about 25 years, by appointment only. Not one of the walk-in places where no one speaks English!
Restaurants–we budget for eating out as a family. It’s not quite a much money as I’d like but close enough.
We have a lot more sinking funds but I think you get the idea. I am very tactile … I love to touch and feel things … it is part of my scrapbooking, coaster business, etc. so it is natural it would carry over to handling money. It makes it much more real to me to see the cash dwindling or growing in any given envelope.
I’ll quit for now but I hope that helps.