DIY Extended Warranty

Extended warranties are often stupid purchases as you never actually get the item fixed or it does need fixing but the cost of the warranty meant you could of purchased a new device anyway. This happened with my camera. Camera $300 + Warranty $160. Admittedly I did claim on the warranty but now I have a barely working camera that 5 years old, I can very easily purchase a new camera with similar specs now for the $160 and I am in fact thinking of upgrading anyway. So why not just transfer the money that you would have spent on the warranty to a savings account? Eventually this will accumulate and you make get some good interest going. If anything does break or needs repair you can dip into the warranty fund. This is not a foolproof plan and may not apply to everything eg iPhone warranty is worth its weight in gold.

Stupid warranty Purchases - Cost of Warranty
Camera - $160
TomTom - $80
VCR/DVD - $220
Dishwasher - $300

Total $760

It probably wont apply to big ticket items (even then the device is most likely to break after the extended warranty period as our dishwasher has recently done and was therefore worthless).

from fivecentnickle

Thus, while extended warranties were once reserved for high dollar purchases, many retailers have started pushing them for relatively minor items, as well. And why wouldn’t they? They’re practically printing money.

In most cases, however, you’re only paying for marginal coverage when you buy an extended warranty. Consider the case of a gadget with a one year manufacturer’s warranty. You can easily extend that to two years by using the right credit card.

Thus, the three year warranty that you’re being offered is essentially a bet that your purchase will break between 24-36 months after you purchase it. And guess what? Even if it happens, you can probably get something far better (and cheaper) by then.

Instead of buying warranty after warranty, why not create an “extended warranty fund.” In other words, whenever a retailer offers you an extended warranty, simply transfer that amount of money into a dedicated savings account.

This is essentially 'self insurance' which I have been toying with, but with no solid theory as yet, before doing anything like this you do have to convince your self of what it is you are trying to achieve by taking on the risk your self and if you have the will power not to use the money for other things.

P.S. Change Experiment Mini Update: I have not been buying too much stuff with cash lately (trying to save real money) so my change jar has not been filling up as quickly. Will do a change dump at the beginning of next month to see whats what.