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Refrigerators, stoves, furnaces – you can’t live without them. They store our food, cook our meals, and keep us warm. That’s why you’ll even spend money the last dime we have to get them up and running again.
The problem is, too many of us are in that precarious position. Last year, a pair of frightening statistics came to light. First of all, 40% of us don’t have enough cash to cover a $400 emergency. And second, 78% live from paycheck-to-paycheck. 78%.
Next to medical bills, there is no shock expense WORSE that home repair or replacement bills. Stoves can cost as much as $300 a pop to fix. Dryers can soak you to the tune of $1,000. And furnaces? If your sole source of heat quits for good, replacing it can cost upwards of $6,000.
How can any of us live in peace with such expensive bills hanging over our heads? Putting it out of your mind until the inevitable happens is NOT a viable strategy. Instead, we advise being proactive by pursuing the protection that warranties provide. Manufacturers warranties, extended warranties, and home warranties offer a fiscal umbrella from the rainy day that WILL come someday.
Not convinced? In this post, we’ll show you how warranties can help you save money on home repair and replacement bills.
Appliance Repair/Replacement Bills Can Cost More Than You Think
It’s amazing how we take these amazing machines for granted. They keep our food, make meals without us choking on fire smoke, and clean our clothes within an hour. And yet, on a turn of a dime, their breakdown can throw our lives into disarray.
Few of us can go long without a functioning fridge, stove, or washer/dryer. So, when these appliances break down, we’ll chuck hundreds, even THOUSANDS of dollars at the problem.
How much does the average appliance repair cost? If you’re lucky, a minor problem with a fridge compressor may only cost you $100, labor included. But that’s the floor. As issues get complicated and parts rarer, costs can escalate fast.
A busted ice maker may set you back $330. A broken agitator or drive belt on your washer can cost upwards of $500. If the fan motor in your AC unit dies, you’ll shell out $700 to replace it.
As annoying as these costs can be, it gets worse if you need to replace your broken appliance. Like, much worse. Let’s start with ovens and fridges. Technically, you can find ovens for $350 at the bottom end – however, most models retail between $700-$1,200. It’s a similar situation for refrigerators – bargain-basement units start in the 400s, but most sell between $800-$1,500.
However, costs really spike once you leave the kitchen. New washers/dryers usually run $1,500-$2,000, with the cheapest units costing $1,000. Climate control appliances are the priciest by far – furnaces start at $2,000, and central air units begin at $3,000. If you have a top-of-the-line model, expect to pay as much as $6,000.
Breakdowns Can Wreak Havoc on Your Household Budget
The implications of the numbers mentioned above are clear. If you run into ANY serious trouble, it will either clean out your savings account or put you into debt.
Some live in active denial about their predicament, only to end up in crisis when something DOES happens. Even if you’re mindful about repair/replacement costs, the mere possibility of a colossal expense has a chilling effect on family finances.
Want to go to Disneyland, or on a mid-winter holiday to a sun destination? What if the furnace fails? After all, it’s been making weird sounds lately.
Want to start putting away money for your children’s education? You will – as soon as you finish paying the bill from that emergency washer repair.
Dream of a comfortable retirement? Well, your repair/replacement fund is sucking up the cash that would go to your 401k. Maybe next year.
The crippling costs of home repair/replacement aren’t the only thing that is killing your dreams. The mere POSSIBILITY of these expenses is what holds many people back. So, some choose to defy reality and live life in the moment.
This idea seems like a brilliant one – until their luck runs out, that is.
An Expensive Replacement Bill Can Bankrupt or Plunge You into Debt
The climate is in crisis, and political revolutions are erupting worldwide. Against this backdrop, it’s tempting to live life to the max. Nothing held back. No regrets.
Often, these folks harbor a cavalier attitude towards their finances. “Who cares about a perfect credit score when the world might collapse in a decade?” the carpe diem couple says. And so, they live their financial life on the edge.
It’s all good fun – until reality bites them square on their rear ends. For this example, we’ll assume our hedonists have come back from a month in sunny Mexico. The winter’s not over yet, but that’s fine – they’re looking to get in some late winter skiing.
When they open their front door, the air inside is just as chilly as the outdoors. In moments, the problem is clear – their endlessly-cycling furnace has gone on the fritz. The next morning, their HVAC technician gives them the bad news – their furnace is beyond repair. They’ll need to get a new unit ASAP.
Well, that’s a problem. Our couple only has $1,000 in their account. The cheapest furnace available costs $3,000 + labor. That’s $3,000+ they’ll have to charge to a card that gets 30% interest.
However, some are far more responsible than that. But, despite this, those who count their pennies are in a similar situation, working two jobs that barely pay the bills. Through no fault of their own, replacement bills can sink them deeper into unpayable debt – or drive them bankrupt.
Warranty Programs Offer Protection From Budget-Busting Repair Bills
We didn’t bring up the case of the “carpe diem” couple to guilt you into living a boring life. If anything, you work INCREDIBLY hard. You deserve to realize your potential.
However, before you do that, you have to take care of your finances. And, as long as shock expenses like repair/replacement exist, it’s going to be challenging to do that. So, what can you do? Start by seeking out home appliance insurance firms.
Better known as home warranty companies, they offer protection against unanticipated repairs and replacements. Pay their monthly premium, they’ll fix your appliances when they break through no fault of your own. You only pay a nominal service fee (or deductible) at the point of service.
So, instead of shelling out $800 for a new fridge, you’ll pay no more than $125. Often, service fees are lower than that, making this deal even better.
When looking for a home appliance warranty, don’t let higher prices scare you. Often, these are for premium or comprehensive plans. Usually, you can find an appliance insurance plan that costs no more than a few hundred dollars per year. However, do note that furnaces and AC units are considered to be systems. To cover those bases, get a comprehensive plan or get optional coverage.
Even when the cost of appliance insurance approaches repair expenses, it’s still preferable to the status quo. An appliance insurance plan smooths out the spikes in repair/replacement spending. Every month, you’ll pay the same amount in premiums. When repairpeople do work, you’ll pay the same service fee.
No more canceled vacations because your refrigerator decided to die. That, by itself, is reason enough to get appliance insurance from a home warranty firm.
Null & Void: Neglecting Preventative Maintenance Can Lead to Rejected Claims
So, all you have to do is get an appliance insurance plan, and you’re good? Well, not exactly. The fine print of these packages contains many exemptions. One of them concerns preventative maintenance.
For instance, a fridge needs to have its condenser coils cleaned every three months. If you have an ice-maker, you also need to change its filter regularly. If you neglect to perform these steps, your home warranty company could deny your claim.
Also, keep meticulous records that demonstrate that you are maintaining your appliances. Some firms require evidence of preventative maintenance before they’ll approve specific claims.
Built to Last: How to Find Quality Home Appliances
Don’t want to lose sleep over your dishwasher quitting? Purchase solidly-built appliances right from the get-go. Most consumers, understandably, impulsively buy the cheapest appliances they can get their hands on.
This is almost always a mistake. Fridges, stoves, and other appliances that are cheap are put together with inferior materials, and by cheap labor. Also, there’s no guarantee that they’ll come with an appliance warranty or a manufacturer’s warranty.
These policies protect consumers from mechanical defects. These problems arise from errors made in the manufacturing process. To protect their reputation, they cover replacement costs for mechanical failures that happen within the first few years.
When shopping, look for energy-efficient and quiet appliances. Units that have care poured into them tend to be more solidly-built. And, of course, ask about an appliance warranty. If the maker doesn’t offer one, avoid.
Sleep Easier at Night
Your appliances should make your life easier – they shouldn’t keep you awake at 3 am. Money is tight these days – home appliance insurance can shield you from budget-busting bills. Protect yourself today, and get on with living your life!
My name is Jason Wuerch and I'm currently located in Madrid, Spain running a personal finance blog called Frugal For Less. My goal is to help everyone and anyone willing to make and save money through easy and simple ways that don't require much effort. Just because you're frugal doesn't mean you have to give up life's luxuries.