This has been an incredibly busy summer, and it has been tough to keep up with 3 blogs so Cash Flow Mantra has been getting the short end of the stick. For the last few weeks, I have been playing softball 3 nights since the playoffs for one of the leagues has been Monday and Thursday with another league on Sunday evenings. So that has really taken a lot of writing time away. Also, I really haven’t felt like I had anything worthwhile to share, so it has been easier to just take some time off as a sort of mental break while trying to recover physically from softball.
But I would like to share why I wish I had a better emergency fund cushion. The main reason is that when it rains, it usually pours (and hails, too). Over the past month, the following has happened:
- The dishwasher developed a leak that poured out into the kitchen. Of course, it happened while my wife and I were out enjoying a rare evening together. The kids were in bed, but at least had some sense to put down a few towels. These ended up soaked, so my wife replaced them while I was at worked and they soaked again. Sounds like the leak was active! We got the water shut off, but the wood in the kitchen and the ceiling in the basement needs lots of repair/replacement. At least homeowner’s insurance will be covering 90% of the cost, but I still have a deductible to deal with.
- One of the vehicles starting making noise. Turns out the front wheel needed a new brake rotor and some other stuff. $600 evaporates fairly quickly.
- Another vehicle started making noise and smelling of gasoline. Turns out the rear spring was broken and there was a leak in the gas tank. Needed to get a new gas tank. Thankfully, we had an extended warranty so the $800 in repairs only cost $200. So we ended up taking care of some other maintenance issues pushing the bill to $600 for that car as well.
- HAIL!!! The adjuster for the roof was here on Monday. I don’t know the results of the inspection. Plus we have 2 cars with lots of hail dings. At least the windshield didn’t break as happened to some friends of ours.
Like I said, the financial storms seem to occur in packs and waves. Whenever it seems like we are making headway, something comes along to push in the wrong direction.
Of course, all these things had to happen when I have two heading off to college (one for the first time) so money is being spent on books and a laptop. But the girls are doing a reasonable job of keeping those down, but it still hurts when trying to climb out of debt.
Needless to say, the cash flow around the house hasn’t been all that great. Maybe next month will be better. But I am thankful that the health of everyone in the household (save for my pulled muscles from softball) has been good. Things could always be worse, and the current troubles are only temporary.
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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.