Extended Warranties

There is always the fear you might have a needed repair if you don't buy the extended warranty every company seems to offer at time of purchase (and many times well after that, via mail offers).  Basically, it gets down to managing risk in your life for your consumer purchases. 

What can you afford? 

Will a $500 repair send you to the payday loan operation for a high interest rate loan?  If so and the item you've purchased couldn't be lived without (like a TV or computer, or something really important like that), then maybe the warranty is the way to go.

But, as you start making the inevitable initial and replacement product purchases over your lifetime, think about how many warranties you can skip and still come out ahead.  In our case, my wife and I could have purchased a warranty on the following items:

* Washer
* Dryer
* Range
* Dishwasher
* TV
* DVR
* Computer
* Printer
* Phones
* Cars

There are more, but those are kind of the basics and it's a round number of ten.  Making a reasonable estimate of how much those ten warranties would have cost us, I'd say around $2,000 (give or take).  That's money we now have available to pay for various repairs along the way. 

And, if we don't have any repairs, then it's money in our pocket for future replacement purchases.

If you do have a problem and it's not covered by warranty, you can always drop a line to the manufacturer saying you really like the product, but expected it to last longer.  Most companies want to retain customers and they will sometimes take care of small items.  Always mention you would like to buy your replacement of whatever it is you having problems with, from them, which indicates you'll be an ongoing customer in the future.

People Who Should Be Fired

The vice president of our local office once lamented to me that we had several employees who were not taking advantage of the 401(k) match provided by our employer.  It was 50% on the first 6% of the salary we contributed.  So, someone contributing $3,000 would receive $1,500 from the company as the "match." He wondered how we could inspire people to make at least the minimum contribution so they would receive this immediate 50% return on their investment. My suggestion to him was, we ought to fire them.  If someone is not smart enough to put even a few dollars in an account where they immediately get a match of 50%, then they may not be smart enough to be working at the company.  That's a little harsh maybe, but anyone who can contribute the money and doesn't might need a refresher course in basic math.