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When to Buy Extended Warranties

If you are coming to my blog from Tight Fisted Miser, I would like to welcome you.  Stick around, read an article or two, and feel free to subscribe.

One of the greatest things about personal finance is that it is so personal.  You can take some thoughts or ideas that you read and apply them to your particular situation.  Not all of the information may be applicable at the time, but it may very well be something that you can tuck away for the future to be used at a later date.

While most of the PF blogging world would advocated against buying an extended warranty, I would like to explain why there are certain situations when I think it make sense.  I know that it has made sense for me with certain products.

Warranties Based Upon Time

One has to understand that I have six kids and there are certain items for which it makes sense to purchase an extended warranty, and these are the items that are based upon time and not usage.  For example, we use our dishwasher twice per day at a minimum.  Paying $600 for a dishwasher and adding $100 for a four year warranty is worth it to me since I know that I will be putting between 8 and 12 years worth of use on that dishwasher.

It was just last spring that at about the 3 year mark our dishwasher needed a new motor.  We ended up getting a new motor for free when the cost would have otherwise been $360.  Now I can figure that I can get another 2 years or so out of the dishwasher before needing to either repair or replace.  The warranty was solely based upon time so it makes more sense for me to get it than an old retired couple that might run it 2 times per week.

The same holds true for the washing machine and dryer.  I purchased the same four year warranty for these appliances as well.  Again because we run about 2 loads of laundry per day on average to keep everyone in clean clothes, it only makes sense that the wear and tear on this appliance is well above average compared to the typical family.  About 2 years ago, we had to have the washing machine motor replaced which would have been a $600 repair.  Instead, it was absolutely free.

On the other hand, we don’t bother with the extended warranty on vehicles or computers.  The amount of traveling that we have to do with 6 kids involved in activities is quite substantial.  The fact that these types of warranties are based on mileage doesn’t work well for our family.  Our Chevy Suburban turns 3 years old this month and has 102,000 miles on it.  Much of the mileage is highway as well.  It doesn’t make sense to waste the money on a warranty.  Instead, we try to keep the vehicle in top working order and repair what is necessary.

Computers, on the other hand, are either purchased as cheaply as possible for the kids to do schoolwork on or are used by the adults only in the house.  I have now had 3 laptops in about twelve years.  The first one lasted for five years and the next one for four.  I am on year two for the current laptop which is used for work, blogging, and personal projects.

My feeling is why pay almost 25% again the cost of a computer that I can likely take very good care of and make last for several years past any warranty.  Plus when the computer finally dies, I usually benefit from the added features of the new technology such as wireless and processing speed.

So, these are my thoughts on extended warranties.  For me, I have found something that seems to work.

Readers, what is your experience with extended warranties?  Have you purchased and wished you hadn’t or vice versa?  Share in the comments.


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10 comments - What do you think?  Posted by Cash Flow Mantra - March 26, 2012 at 9:00 pm

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