Save Money By Creating Your Own Warranties
Do It Yourself Extended Warranty
When shopping for new electronics or appliances, consumers are often inundated with extended warranty offerings that prey upon the fears of buyers. Often times these warranties are overpriced and unnecessary (especially for media items such as DVDs or video games). Even for big ticket items, such as cars, such extended warranties often go unused. (Source: Consumer Reports) However, when making a large purchase many people would like some kind of peace of mind. This is where the DIY extended warranty technique comes in.
It's really quite simple. First, set up a separate savings account that is to be used only for repairs and replacements. Whenever you are tempted to buy an extended warranty, instead deposit the money that you would have spent into this account. This will force you to create an emergency repair/replacement fund without actually spending any money! If your device does not break, then great, you still keep the money! If it does, well at least you will not have to go through the hassle of dealing with the company!
One piece of advice:
When choosing a savings account, be sure to select one with a decent interest rate. It would be nice if your saved money could grow along to help mitigate the costs of inflation (this makes it even better than an extended warranty)! If you are confident that you could pay for repairs using some of your more liquid cash assets, then I recommend setting up a CD account for this repair fund that you can use to reimburse yourself later.
Third Party Warranties
Another option to consider is third party warranties such as those offered by SquareTrade. While this does eliminate some of the benefits of making your own extended warranty, they are still often a better deal than manufacturer's warranties and you can often find discounts for them on Amazon or Slickdeals which can help sweeten the deal even more.
When buying these though, make sure that your item was purchased in the past 90 days (this was the case at the time of writing this, double check their terms and conditions yourself) and that your item is in good working order. Otherwise your purchased warranty will be null and you will be out the money for it! So if you are trying to insure something older, it'[s a good idea to just do it yourself!
A Quick Summary
How to make your own extended warranty.
- Set up a savings account of some sort (preferably one that pays interest).
- Next time you buy something, deposit what you would have spent on a warranty into the savings account.
- After a few purchases and deposits, you should have a repair/replacement fund that should provide you with some peace of mind. Plus you won't have actually spent any money!
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