How Do You Handle Costly Household Repairs?

[Retired To Win]

A suddenly-dead refrigerator could easily bust one's budget for the month it happens.  A major failure of one's heating or cooling system could be financially much worse.  So how are you prepared to handle a costly household repair like that if it happens to you?

For the last 14 years,my solution has been to carry a home repair warranty policy.  Which basically means that I carry insurance against costly household repairs.  And that has certainly worked for me.  My dead refrigerator got replaced.  My central heating furnace got repaired.  Etc, etc, etc.  Without my finances getting dinged.

What works for you?  Cash out of pocket?  Reserve repair fund?  The ol' credit card?  Or a warranty policy like mine?

[Dimitri]

Both terrorism and insurance sell fear -- and business is business.
 - Liam McCurry, Terminal Policy

In insurance, like gambling, the house wins.  Not every time obviously otherwise there would be no more players.  I guess my question is if you have "won" over the last fourteen years.  And if you have, do you think your lucky streak will continue.

If a household appliance/system broke tomorrow I would just put a new one on a 2% cashback Citibank card and pay the balance when it came due out of a checking account.

[2Birds1Stone]

By renting =D

[Jack]

A suddenly-dead refrigerator could easily bust one's budget for the month it happens. 

I question your definition of a budget-busting expense. A refrigerator (in an emergency) is only about $100 off Craigslist, and then you can sell it again after you've saved up for a nice one.

A major failure of one's heating or cooling system could be financially much worse.  So how are you prepared to handle a costly household repair like that if it happens to you?

Even when there is an HVAC failure, it isn't likely to be catastrophic. When my AC quit working, it only took a new capacitor to fix, which cost $100 or so (because I didn't have any clue about AC, so I hired it out).

What if my roof started to leak? Well, I'd find the leak and fix it (with the shingles and/or roofing sealant I have left over from last time).

Of course, if these little failures are becoming more frequent -- or if, in the course of fixing them I find myself saying "hmm... that's looking pretty worn out" -- then it's time to start saving up for a full ($$$) replacement.

My point here is that you should be able to see the vast majority of large household repairs coming ahead of time, and conversely, that most unexpected repairs are small. And if a repair is both large and unexpected, it most likely was caused by some discrete event that would be covered by insurance (e.g. if your roof suddenly has a lot of damage... it's probably because a tree fell on it or something).

Of course, if there were a repair that was simultaneously sudden, too large to cash-flow, and not covered by insurance, then I'd just put it on a credit card (even if I had to pay interest for a little while). Or, for something really big that would take a while to pay off, I'd put it on a credit card and then take out a HELOC to pay off the credit card.

I can't justify the opportunity cost of keeping a large emergency fund in cash, let alone paying for a home warranty. I'm willing to bet my investment returns, over time, will exceed any hypothetical interest I might pay.

[horsepoor]

That's what emergency funds are for. 

Our old fridge just crapped out.  The new one was only pricey because I'm finally getting the French door fridge I've been wanting for a long time.  When we needed a stove and fridge for our rental, I found a smooth top and a side-by-side on Craigslist for $200 each and they were still working perfectly after four years when we sold the property.

HVAC replacement is obviously more expensive.  When we bought our house and it needed a whole new system, it was easy to get 0% financing and pay it off over a year or so.

Although it's arguably not the "right" way to do it, we keep our withholdings to where we get a few thousand in tax refund each year, and use that to pay for repairs and improvements around the house.  Roof replacement can be anticipated in advance, so we'll stash the money over time.  Homeowner's insurance will cover roof damage from the elements.

The one big thing that could happen with our house is the septic failing.  We're in a development where we can't do major repairs on existing septic, so if that happened we'd need to cough up about $10K to hook up to the city sewer.  If that happens, we'd pay cash for part, and depending on interest rates, potentially pull from savings/investments or get a HELOC or something but pay it off quickly.

[retired?]

We did use the home warranty that came with the purchase of our current home three times.....new pool pump (would have been $200 part plus labor), pool heater (all labor.....perhaps would have been $100), and sink disposal (new disposal plus labor).

We had to pay $75 for each call.  When renewal came up, the cost had gone up by about 20%.  I inquired why, but never got an answer.....perhaps they discount them for home sales.  I tell ya, I was hoping my older AC unit would crap out.  That said, we didn't renew.  I agree that the average owner of these policies loses over time......otherwise, the firms wouldn't be in business.

I consider it part of the regular cost of owning a home.  No home repair would be a financial burden to us, but of course we want good service at a good price.  I get multiple bids, ask neighbors/friends for referrals, check on BBB, and if a significant job I will ask for references from people who used that firm.

[aspiringnomad]

My dishwasher just crapped out, so I'm buying a new appliance for the first time in my life. It puts me well above my monthly spending trend, but it's a manageable amount. Like others, I just put it on a card to collect whatever rewards I can and hope the new dishwasher lasts a long time.

[bzzzt]

Fix them myself. A hefty percent of the cost of replacement is labor.

My furnace is old (31 yrs) but is still an 80% unit. At our current usage, a 98% furnace would save us $20/month for 5-6 months/year. So, payoff is about the life of the furnace and doesn't make sense to replace until this one cracks the heat exchanger. In the mean time, I replace parts that break or wear out. Last year it was the thermostat, control board, and pilot switch. Total cost, $180. The draft inducer fan is getting weak, so I'm going to replace that this weekend. Cost $75.

[AlwaysBeenASaver]

Each month we put a fixed $ amount into a home maintenance account (short term bond index fund we have earmarked for this purpose). When major maintenance issues come up, we pay out of this account. We don't consider our monthly input into this account as savings or optional, we consider it part of our expenses, same as paying the mortgage. We calculated the amount we need to set aside each month by thinking about major failures that could occur, how often they were likely to occur, and what the likely cost would be. This needs to be calculated based on a long time period, such as 30 years, since a roof can last that long, but will cost a lot once it needs replacing. So far this has worked well for us; when we needed to replace the garage and carport roof,  it didn't impact our finances, just reduced the balance in this account. We don't include the balance in this account when calculating our net worth.

[Retired To Win]

Both terrorism and insurance sell fear -- and business is business.
 - Liam McCurry, Terminal Policy

In insurance, like gambling, the house wins.  Not every time obviously otherwise there would be no more players.  I guess my question is if you have "won" over the last fourteen years.  And if you have, do you think your lucky streak will continue...

You are right that a home warranty policy is like an insurance policy; in fact, that's how I treat mine.  Which means that you cannot discount the "protection value" of having such a policy even if you should never, ever use it.  That's how I view my umbrella liability insurance, my home insurance, my automobile insurance, etc.  There's value to them even when not used.  And I consider the same to be true of my home warranty policy.

That having been said... yes, I HAVE "won" over the last 14 years.  ;)

[BBub]

I'm a little skeptical of your claim as well.  I looked at these when we bought our house & opted out.  The policy was $500/yr then $75 per call.  I would be interested to see in hard numbers how you've won over the course of 14 years.

Not to split hairs, but if over the last 14 years you had invested the $500/yr + service fees and withdrawn the cost of repairs, would you still be ahead?

And even that type of analysis would not necessarily be an "apples to apples" comparison to the standard mustachian line of thinking.  A home warranty company will likely pay a technician full price to install a brand new unit purchased at retail.  While a crafty mustachian might cruise craigslist or some other platform to find a deal then repair or install the item him/herself.

[Argyle]

AlwaysBeenASaver, that's a wonderful way to do it!

I just have the money in an emergency fund.  Whatever happens or doesn't happen, over five years it's predictable that some semi-pricy house repairs will be necessary, which is why there is money stashed away for it.  So I don't consider it a budget-buster; I consider it business as usual.

[I'm a red panda]

I have no interest in retiring extremely early (though maybe a bit early)- but to me this is a benefit of FI.  I'm not super rich at all, I am upper middle class. My job doesn't pay 6 figures.  However, I have a very high savings rate.

If I have a costly repair to my house, it isn't a big deal to just make it.  I just dig into the 'stache a bit.   (But I don't think a fridge is expensive- that's like what, $1,000? That's basic emergency fund right there.)

(On the same note- when I wanted to buy a new car I didn't "save up" for my car.  I just went to the dealer and bought a car, after a lot of research.  It won't take long at our savings rate to replace the money in the account I took it from.)

We probably stay more liquid than most mustachians, because I am still really risk adverse and don't like to invest too much, so my bank accounts are larger than I know they should be.  But it sure if nice when you need cash.

I'm not sure I am the audience for this question though, because I don't keep a budget at all, so a purchase like this isn't budget busting, since I have no targets to hit.

[Thegoblinchief]

I've never seen a home warranty policy worth the paper it was printed on. Even if the numbers make sense (the companies in my area most definitely do NOT), you're stuck with the insurers sub-standard contractors. Every experience friends and family have had have been terrible at worst, merely acceptable at best.

Since we lack equity in our house, we save $ each month. Once we have equity, if the rates remain favorable, we will go the HELOC route so I can get my green employees working harder.

[Emilyngh]

Meh, since moving into our house almost 5 years ago we've had to replace the furnace, the water heater and the dishwasher.   The dishwasher cost like $500, the water heater $1200 (including installation), and we not only replaced the furnace but upgraded to a heat pump which also replaced the ac for a total of $6000.   So, even with these replacements we've spent less than $8000 in about 5 years (or about $130 a mo).   These is really not a big deal and something that can easily be built into a budget.

[MillenialMustache]

We fix it ourselves. As well as our rental. I tell people we are making a good amount of money each month on our rental even though we have a mortgage, and they seem surprised. We do not have a property manager, and even though we have had several repairs (water heater, leak in sink, broken sprinkler) all of those repairs cost less than $200 total.

We also are smart about things. Our home came with a dishwasher that we didn't want to use (rusty in the inside) but we just did without for awhile. A nice stainless steel one showed up at our favorite thrift store. They didn't know if it worked, so we bought it for $80 and had noticed it was the same brand as our current one. Well, it didn't work. But, we took the motor out of the old one and put it in the new one. It has been working great for years.

Our AC broke one day. My DH went out there to look at it, turns out a lizard died on something, causing the whole unit to stop working. My DH cleaned it off, and it started working again. I couldn't even imagine the cost of having someone come out. They probably would not have even told us about the lizard and charged us something ridiculous for a part, or even a whole new unit.

[bogart]

I haven't researched the issue, but can't imagine a "warranty repair" policy would be available (or worthwhile) on our 1970s home. 

Depending on the task, we either pay for it (OOP) or do it ourselves.  As others have noted, that's what an EF is for.  For things like appliances, where we have some choice on what we get, we tend to lean lower-end.  My mom did insist on buying an extended warranty on the nice fridge she gave us as a gift, and that, certainly, proved worth the cost -- a sad commentary on the quality of the product (it's since been replaced, under warranty, as it died -- ironically, my mom's own fridge, which is still running strong, is the same one I learned to stand up (as an infant) by grasping its door handle, and like me, it is older than that 1970s house I mentioned now owning).

[gaja]

DH fixes it. In the rare instances the thing is truely dead, we cash flow a new or used one, depending on need and how much cash we have.

[Retired To Win]

I've never seen a home warranty policy worth the paper it was printed on. Even if the numbers make sense (the companies in my area most definitely do NOT), you're stuck with the insurers sub-standard contractors. Every experience friends and family have had have been terrible at worst, merely acceptable at best...

Well, are you speaking from first-hand personal experience?  How many home warranty policies have you actually seen?  Because I have not only seen them, but reviewed them in detail; and my original post here is based on my 14 years of first-hand experience carrying home warranty policies on 3 different houses in 3 very different market areas.  And in all that time -- which includes over 40 service calls from warranty company contractors -- I only ONCE had a no-show and only ONCE found it necessary to call the home warranty company back for a re-do.  And on both occasions the company did exactly that: sent another service person right away to take care of my problem.

In no way would I call the warranty company's performance -- or their contractors -- substandard.  So, anyway, that's my 14-year experience.  And considering the many years, different market areas and many different contractors that includes, I find it very hard to believe that I have simply been "lucky."  Luck does not hold for that long.

[Dimitri]

Both terrorism and insurance sell fear -- and business is business.
 - Liam McCurry, Terminal Policy

In insurance, like gambling, the house wins.  Not every time obviously otherwise there would be no more players.  I guess my question is if you have "won" over the last fourteen years.  And if you have, do you think your lucky streak will continue...

You are right that a home warranty policy is like an insurance policy; in fact, that's how I treat mine.  Which means that you cannot discount the "protection value" of having such a policy even if you should never, ever use it.  That's how I view my umbrella liability insurance, my home insurance, my automobile insurance, etc.  There's value to them even when not used.  And I consider the same to be true of my home warranty policy.

That having been said... yes, I HAVE "won" over the last 14 years.  ;)

Umbrella liability policy - protecting maybe $1M in assets.  Home insurance - kind of costly if your house is destroyed (pick your favorite disaster) and you have to pay out of pocket to rebuild.  Automobile insurance - liability to protect your assets - comp and collision if you can't afford to buy another car or the loss would be financially unbearable.  But insurance for a home appliance?  In my opinion absolutely not if you can afford to repair or replace.  Not even in the same ballpark.

Would you buy an extended warranty on a new color television?  I'm guessing not.  So why buy for an appliance that isn't worth much more and very well may be worth much less (microwave, garbage disposal, etc.)?

And since you've beaten the casino (or in this case home warranty company) for fourteen years isn't it time to take your winnings and quit the game?

[eil]

You are right that a home warranty policy is like an insurance policy; in fact, that's how I treat mine.

No, it's not "like" an insurance policy, it is an insurance policy.

Like someone else already said, these things are engineered the same way casino games are. Sometimes the occasional person gets lucky but on average, the house always has the advantage.

My insurance policy is learning how to fix the things I own myself and I can tell you it's saved me thousands of dollars just over the past few years alone.

Which means that you cannot discount the "protection value" of having such a policy even if you should never, ever use it.  That's how I view my umbrella liability insurance, my home insurance, my automobile insurance, etc.  There's value to them even when not used.  And I consider the same to be true of my home warranty policy.

That's some awfully backwards rationalization right there. An insurance policy that you never file a claim against isn't just worthless, it provides negative value. That is, you put a lot of money into it but get nothing out of it. Except "peace of mind," which you could have achieved much cheaper through spiritual meditation or moderate drinking.

That having been said... yes, I HAVE "won" over the last 14 years.  ;)

Then prove it. Show us your total premiums vs claims over the last 14 years.

[Eric]

Insurance in case your refrigerator dies?  You have to be joking.  This whole thread belongs in the anti-mustachian wall of shame section.  At no point did you even analyze how much you spent vs the benefits received.  And you've been paying these premiums for 14 years!  Wow.  Hey, we all make mistakes.  Most of us don't brag about them.

http://www.mrmoneymustache.com/2011/06/02/insurance-a-tax-on-people-who-are-bad-at-math/

[justajane]

I am of the opinion that home warranties are a scam. This comes largely from personal experience. It was paid for by the seller the first year we owned our house. We called them twice in the first year for the water heater and a plumbing problem. Both times I listened to the plumber fight with the insurance agent on the phone to get them to pay. If you didn't have any problems getting something covered, then you are lucky. These companies are notorious for refusing to pay for things.

Anecdotally I watched two people on Facebook this summer rant and rave about the home warranty companies they had used for over a decade and how they were refusing to replace their broken HVAC systems. One waited sweltering at least 2 months for a new system, and I'm not sure in the end they even got them to pay. Expect the most push back on the large ticket items.

How much are you paying for this? 500 a year? Over ten years, are you honestly telling us they gave you 5,000 in value (minus the payments you gave upfront when the contractor came)?   

They don't even provide piece of mind, since anyone in the know knows that they are notorious for denying claims.

[Retired To Win]

... An insurance policy that you never file a claim against isn't just worthless, it provides negative value. That is, you put a lot of money into it but get nothing out of it. Except "peace of mind," which you could have achieved much cheaper through spiritual meditation or moderate drinking...

So, based on that reasoning, you would have to consider just as "worthless" every other type of insurance you may have.  Auto, home, health, liability, life.  All worthless?  Instead, just do some "spiritual meditation or moderate drinking" and hope for the best?

[Thegoblinchief]

Yes. I want to see hard numbers.

I when I say contractors are sub-standard, that's because as an avid DIYer, most work is substandard to me.

My largest house expenditures have been major planned renovations/upgrades, not repairs that would have fallen under a "warranty": replacing shitty 1950s single-pane aluminum windows, replacing a roof that wasn't leaking yet but was badly curled, replacing a totally grungy and deteriorating fiberglass shower liner.

The repairs have actually been very light. I have hired out HVAC because it's really hard to get parts in my area. I also hired out a plumber once because I just couldn't get the snake where it needed to go. A different drain my BIL and I fixed ourselves. All in all my house repairs have been under $1,000 for 9 years of ownership. Home warranties cost at LEAST $400/year, and don't even pay 100%.

Even if my AC goes out next year, my house is small enough I would still be ahead. My furnace is old, but at this point basically every part in it is nearly new except the control board. (Even the heat exchanger, which was replaced under warranty for $0 at ~20years old. Gotta love Carrier.)

[RetiredAt63]

I once read that a homeowner should expect to spend 1-2% of the house's value a year in maintenance. That is house value, not property value (i.e. not the value of the land) and not upgrades, just maintenance.  Some years will be more and some less, but that is a guideline for budgeting. Same with a vehicle, some years will just be regular maintenance and some will be emergencies or the big maintenance items.  Not to mention new tires every so often.

So I have never thought of things like new appliances as emergencies, they are simply maintenance.  I've been in this house over 5 years now, and I have ripped out icky rugs and put in hardwood, I have replaced a leaky hot water tank (and repaired the damage without using my house insurance), I have had the master controller for the furnace replaced, I put in AC, and this summer I will be getting the roof re-shingled and the back deck repaired.  Those are all house maintenance expenses as far as I am concerned.  I have other projects planned for down the road - new front walk and repairs to the front steps, maybe a new front door, way down the road a bathroom renovation (it is starting to need it, but it is not urgent).    As the money accumulates I will know where I need/want to spend it.  If something needs to be done and requires more money than I have in the maintenance budget, there is always the HELOC (that is what it is for, after all, not to be used as a lower interest credit card for general purchases).

Now if we have a major storm and major house damage as a result, that would be covered under homeowner's insurance - and presumably this mustachian group would have a high deductible on that.

[justajane]

... An insurance policy that you never file a claim against isn't just worthless, it provides negative value. That is, you put a lot of money into it but get nothing out of it. Except "peace of mind," which you could have achieved much cheaper through spiritual meditation or moderate drinking...

So, based on that reasoning, you would have to consider just as "worthless" every other type of insurance you may have.  Auto, home, health, liability, life.  All worthless?  Instead, just do some "spiritual meditation or moderate drinking" and hope for the best?

The difference is that those have the potential to be very worthwhile. The amount one could spend on health is essentially limitless. Your home would be between 100K to who knows what in replacement value, depending on how fancy your house is. Auto insurance is usually mandated, and in the case of death, life insurance (esp. when you have dependents) could be essential to the future life of who is left behind. I think you could make the argument to drop life insurance if your savings were large enough. 

I challenge you to find one thing over 10K that would be replaced with your home warranty. Any damage caused to the roof would likely be under the home insurance, as would extreme damage to anything (water, etc.). Basically you're talking about your appliances, plumbing, electricity, and your furnace/AC. If you had 10K earning interest in an investment account instead of paying it to one of those companies, there's very little chance that you wouldn't come out ahead.

Also, what you have isn't really insurance; it's an extended warranty.

[Spork]

I'm with a few of the others here: I don't think some of the examples meet the bar for costly repairs.  Even a brand new mid range fridge is < $1000.

Small repairs I'd do myself.  Things I consider costly repairs that need to be done NOW... I probably would not.  On this list I would put:
* replace entire HVAC system (been there, done that.  Yes, the whole system.  Old and busted and we limped it along for several years before it just died.)
* new roof (I've done these myself, but it is a lot of work and requires time off of work and good weather for a crew of 1 or 2 to handle.)
* slab foundation repair/under slab plumbing repair - these just are not DIY for me.  Too much time/equipment/engineering required

I've had all of the above.  We handled them via an emergency fund and just paid cash.

[KD]

I'm with AlwaysBeenASaver...we put back monthly for it. 

At the condo we owned for a short period it came with a Home Warranty. So did use it that first year - re: plumbing issues.

This house purchase has no Home Warranty...since we've been here 2 1/2 years in a now 6 1/2 year old home ...year one we had a major jamb up on the heat pump where it needed some sort of coating (yeah, who knows if this was a scam or not?) to the tune of about $1500. 

Last year the house was struck by lightning and blew my well cap off and the well pump.  This cost apprx. 100.00 for the well guy to come out - easy fix - Hubs had never lived with a well before and it was money well spent as the repairman took pity on him and gave him a good lesson on exactly how our system works and what to do next time.  I'm considering myself a lucky dog because we weren't home at the time and I'm just glad our house didn't catch fire.   

A few months back the cook stove had the electric element blow - $75.00 repair. 

HE washer acting like a be-oootch!  Had the GE repairman here three times.  Gave the washer/dryer pair to the mission and bought new matching top loaders on sale $1350.  All of these came out of regular cash flow and didn't have to hit our 'Home Repair Fund'.  BUT, if we couldn't of, we could've used the 'Emergency Fund', and then the 'Home Repair Fund'.  And, I also have a 'Appliance Repair/Replace Fund' and a 'Roof Replacement Fund'.  Yeah, I'm silly like that. 

In the near future I can see that we might need to replace the fridge - Hubs has had it apart three times already working on keeping the fan going.  And the dishwasher is a pain as well.  I see these being replaced in the next couple of years possibly.  I don't consider these things emergencies.  I consider them foreseeable expenses and plan and execute savings in order to make sure that I'm in a good financial place to cover them.  By being mostly of a frugal nature it means after funding all these lil' funds monthly I still have enough in my regular cash flow to cover them should they come up.  When you first start out it seems like you're always hitting the Emergency Fund.  Over time, you build reserves and these things become minor roadbumps instead of an 'OMG, what'R'weGonna Do????' emergencies. 

I will say this about my home that the house was four years old but it appeared AFTER WE MOVED IN that we should have done a closer inspection of the appliances.  They were all new looking stainless, top end appliances.  However, it now appears that they were probably bought used by either the home builder or the young couple we bought from.  Possibly they had better ones that they were using and put them in storage before listing the house and put used in for the sale.  I just don't know.  I kick myself for not looking closer.  I will say that I don't feel like appliances being manufactured now are as reliable as the older models we boomers grew up with.  Seems they are on the planned obsolescence trajectory. 

[caliq]

Maybe it's because I'm a first time homeowner who made sure to buy a house with relatively new mechanicals (and cosmetics, actually), but I don't really see how this can be a huge issue.  It's not like home maintenance is an out of the blue emergency...

Like everyone else is saying, either it's small enough to cash flow or it comes out of savings.  We're young and kind of house poor but I still manage to keep a decent chunk of money in savings while working towards paying off 0% interest debt.  If there was anything too big for my savings to handle, my homeowner's insurance would be covering it. 

[Spork]

Maybe it's because I'm a first time homeowner who made sure to buy a house with relatively new mechanicals (and cosmetics, actually), but I don't really see how this can be a huge issue.  It's not like home maintenance is an out of the blue emergency...

Like everyone else is saying, either it's small enough to cash flow or it comes out of savings.  We're young and kind of house poor but I still manage to keep a decent chunk of money in savings while working towards paying off 0% interest debt.  If there was anything too big for my savings to handle, my homeowner's insurance would be covering it.

Do not count on that unless you've fully read and understood your policy.   My under-the-slab leak and subsequent foundation repair was about $20k.  The home owner's policy had specific language to exclude it this sort of leak damage.  This was in one of those big book of "policy changes" you get every 2 or 3 years... it did not start out with that coverage missing.
[edit: typo]

[caliq]

Maybe it's because I'm a first time homeowner who made sure to buy a house with relatively new mechanicals (and cosmetics, actually), but I don't really see how this can be a huge issue.  It's not like home maintenance is an out of the blue emergency...

Like everyone else is saying, either it's small enough to cash flow or it comes out of savings.  We're young and kind of house poor but I still manage to keep a decent chunk of money in savings while working towards paying off 0% interest debt.  If there was anything too big for my savings to handle, my homeowner's insurance would be covering it.

Do not count on that unless you've fully read and understood your policy.   My under-the-slab leak and subsequent foundation repair was about $20k.  The hom eowner's policy had specific language to exclude it this sort of leak damage.  This was in one of those big book of "policy changes" you get every 2 or 3 years... it did not start out with that coverage missing.

I did/do actually fully read and understand my policy :)  They sneakily upgraded it/raised the expense this past December after our first year and the mortgage company just passed it on to us as an increase in escrow cost.  When I realized it a month or so later I went through and triple checked everything and made sure we had the kind of coverage we wanted.  Since we have 'extended repairs' coverage, we're covered for anything that's not listed specifically on the non-covered list; in my case, the only kind of leaks that aren't covered are those caused by frozen pipes that freeze and burst because the homeowner made no effort to winterize the house upon leaving for an extended period of time. 

Thanks for the heads up though :)

[Rural]

I can't see he justification, more for us than for most, even. And that's in the absence of homeowner's insurance.

• A new water heater would run $250 if we overpaid at lowes.
• A new through-the-wall heat pump would run $850, and since we have two, if it was a hardship, we just wouldn't replace for a while. Or ever, since the house won't drop below 54 with no heat at all (I know because that's the lowest it got the winter before we installed heat.) We'd get hot in the summer, wouldn't die.
• There's are a couple of used appliance places in this area with $50 refrigerators that would work for a while, or we could just live out of a deep freezer again - been there, done that. Or live out of a fridge if the deep freezer dies.
• Microwaves - well, we have an extract the barn. If it died, too, they run $65.
• Dishwasher - I'd hate it, but I'm aware they are optional. Realistically , though, I'd shell out out of pocket.
• Plumbing we'd fix, and the floor is concrete. Would suck refinishing drywall, because neither of us is very good at it, but I know that because we've done it.
• Electrical? Fix it. Turn off the main first. We did install it in the first place, after all.
• If a tree falls on the roof, we replace the fucked up section. It's metal, which is actually much easier to work with. If we lose some of the decking, well that would suck, because that would mean to lose the spray foam insulation. Replace the decking (we put it there in the first place), and deal with the spray foam when we can. Stick up some fiberglass if it's going to be a while. Anyway, a warranty wouldn't cover that, though the homeowners insurance we don't have probably would.

Edit: fucked-up code

[Sid Hoffman]

By renting =D

Yeah after 14 years as a home owner, I got divorced and am now a renter.  Anything major breaks and it's my landlord's problem now.  As for during my home ownership days, I used the MMM method.  I've pretty much always had enough credit card credit available that I could cover anything semi-significant (like $500-1500) and what I've seen is that on the truly major stuff like roofs, and A/C systems, the contractors themselves often have low-interest financing available.  Even credit cards are still a valid option, IMHO, if you only need 3-6 months to either liquidate an asset or pay it off via your normal savings rate going towards the CC instead of savings.  That's how I did it during my years as home owner.  A mix of credit cards, semi-accessible savings or investments, or low interest financing through the contractor.  I never had an expense over $7000 in one shot, otherwise I'd have looked into HELOCs or something I guess.

[dunhamjr]

By being handy and willing to diy anything feasible.

I can do plumbing, electric, drywall, etc.
Most of it just takes Google searching and the confidence to try.

On my primary house I have,
Replaced my kitchen sink disposal.
Replaced the ignitor in my gas dryer.
Replaced any ignitor and drain trap in my furnace.
Replaced a burst pipe in the wall of my garage.
Replaced the water heater when the original caught fire.
Fixed some water damage around a poorly installed sliding door.
Rehung a couple of windows that had shifted after having some foundation jacking done.
Replaced a toilet whose tank mysteriously had cracked.

Etc.

[likeavision]

I like the certainty of knowing what my home and appliance repair costs will be.  Ten years ago we got rid of all the cheap builder-grade appliances in our home and replaced them with high-end appliances.  About three years later, the range needed a repair (just out of the manufacturer warranty period, of course).  We called the home service arm of our local utility provider for the repair.  The computer mother board had to be replaced (a $300 part) and there were additional charges for labor.  The repairman offered us a chance to sign up for a home appliance service contract instead for $40/month.  It was a no-brainer to do so.  This contract covers all parts and labor.  I pay nothing additional for each service call.  That one repair would have cost more than the premiums for the year.  Over the years, the monthly premium has increased to $45/month.  But, I have come out ahead every single year with that contract.  I have had three new computer mother boards replaced on the refrigerator (each also a $300 part), two new ice makers ($250 part), got a $100 credit for spoiled food in the refrigerator/freezer, the dishwasher repaired three times, a replacement rack and soap dispenser for the dishwasher, the range computer mother board replaced three times, a new replacement grate for the range, service calls and fuse replacements on the water hear, the dryer fixed twice, and the washing machine fixed twice.  The last repair on the washer was a few months ago.  It took three trips out by the repairman and needed several new parts including a drum replacement (a $900 part).  The washer repair took two repairmen over three hours to do.  That one service call covered the cost of the contract for three years.  The contract also covers an annual HVAC checkup.  I suppose a number of people here could fix basic appliances but I doubt they'd be able to fix the computers in modern appliances.  Even the professional repairmen don't--they just replace the computers and those parts are expensive.  And replacing all the high-end appliances (with the corresponding high cost repairs) with cheap appliances isn't really a good option either if you live in a relatively expensive home.  I doubt putting in craigslist finds are going to favorably impress potential homebuyers when I go to sell my house.

When my husband's health declined a few years ago, we added a plumbing and electrical rider to the contract because he could no longer make those repairs himself.  It costs $15/month.  So far, I have only ever been charged a flat $50 on services calls for plumbing and electrical repairs/installations.  I had the kitchen sink drain unclogged last week.  It took the plumber almost three hours to do it.  Still only cost me $50.  It would have been much more for the labor charges if I didn't have that contract.  So far, I'm way ahead for the year.

I have never ever filed a single claim under my homeowner's insurance or car insurance policies.  If I was going to bitch about paying any kinds of insurance with no seeming return (and I'm not) it would be those.  Insurance and a budget for non-covered repairs is just part of the price of being a homeowner and having a car.

[caliq]

I like the certainty of knowing what my home and appliance repair costs will be.  Ten years ago we got rid of all the cheap builder-grade appliances in our home and replaced them with high-end appliances.  About three years later, the range needed a repair (just out of the manufacturer warranty period, of course).  We called the home service arm of our local utility provider for the repair.  The computer mother board had to be replaced (a $300 part) and there were additional charges for labor.  The repairman offered us a chance to sign up for a home appliance service contract instead for $40/month.  It was a no-brainer to do so.  This contract covers all parts and labor.  I pay nothing additional for each service call.  That one repair would have cost more than the premiums for the year.  Over the years, the monthly premium has increased to $45/month.  But, I have come out ahead every single year with that contract.  I have had three new computer mother boards replaced on the refrigerator (each also a $300 part), two new ice makers ($250 part), got a $100 credit for spoiled food in the refrigerator/freezer, the dishwasher repaired three times, a replacement rack and soap dispenser for the dishwasher, the range computer mother board replaced three times, a new replacement grate for the range, service calls and fuse replacements on the water hear, the dryer fixed twice, and the washing machine fixed twice.  The last repair on the washer was a few months ago.  It took three trips out by the repairman and needed several new parts including a drum replacement (a $900 part).  The washer repair took two repairmen over three hours to do.  That one service call covered the cost of the contract for three years.  The contract also covers an annual HVAC checkup.  I suppose a number of people here could fix basic appliances but I doubt they'd be able to fix the computers in modern appliances.  Even the professional repairmen don't--they just replace the computers and those parts are expensive.  And replacing all the high-end appliances (with the corresponding high cost repairs) with cheap appliances isn't really a good option either if you live in a relatively expensive home.  I doubt putting in craigslist finds are going to favorably impress potential homebuyers when I go to sell my house.

When my husband's health declined a few years ago, we added a plumbing and electrical rider to the contract because he could no longer make those repairs himself.  It costs $15/month.  So far, I have only ever been charged a flat $50 on services calls for plumbing and electrical repairs/installations.  I had the kitchen sink drain unclogged last week.  It took the plumber almost three hours to do it.  Still only cost me $50.  It would have been much more for the labor charges if I didn't have that contract.  So far, I'm way ahead for the year.

I have never ever filed a single claim under my homeowner's insurance or car insurance policies.  If I was going to bitch about paying any kinds of insurance with no seeming return (and I'm not) it would be those.  Insurance and a budget for non-covered repairs is just part of the price of being a homeowner and having a car.

Holy crap, what brand of high-end appliances did you buy?  Just asking for personal reference, so I can be sure to stay far far away.  That is an excessive amount of repairs. 

I guess I am spoiled by the fact that DH was an electronics engineering tech and is very competent and capable of making repairs to wiring/motherboards/other computer-y things. 

I wonder what your cost differential would be between what you're doing now vs. using cheap, easy to fix appliances and forgoing the excessive repair costs in favor of putting in new fancy appliances when you list the house?  It probably depends on how high-end you're talking...

[Spork]

I like the certainty of knowing what my home and appliance repair costs will be.  Ten years ago we got rid of all the cheap builder-grade appliances in our home and replaced them with high-end appliances.  About three years later, the range needed a repair (just out of the manufacturer warranty period, of course).  We called the home service arm of our local utility provider for the repair.  The computer mother board had to be replaced (a $300 part) and there were additional charges for labor.  The repairman offered us a chance to sign up for a home appliance service contract instead for $40/month.  It was a no-brainer to do so.  This contract covers all parts and labor.  I pay nothing additional for each service call.  That one repair would have cost more than the premiums for the year.  Over the years, the monthly premium has increased to $45/month.  But, I have come out ahead every single year with that contract.  I have had three new computer mother boards replaced on the refrigerator (each also a $300 part), two new ice makers ($250 part), got a $100 credit for spoiled food in the refrigerator/freezer, the dishwasher repaired three times, a replacement rack and soap dispenser for the dishwasher, the range computer mother board replaced three times, a new replacement grate for the range, service calls and fuse replacements on the water hear, the dryer fixed twice, and the washing machine fixed twice.  The last repair on the washer was a few months ago.  It took three trips out by the repairman and needed several new parts including a drum replacement (a $900 part).  The washer repair took two repairmen over three hours to do.  That one service call covered the cost of the contract for three years.  The contract also covers an annual HVAC checkup.  I suppose a number of people here could fix basic appliances but I doubt they'd be able to fix the computers in modern appliances.  Even the professional repairmen don't--they just replace the computers and those parts are expensive.  And replacing all the high-end appliances (with the corresponding high cost repairs) with cheap appliances isn't really a good option either if you live in a relatively expensive home.  I doubt putting in craigslist finds are going to favorably impress potential homebuyers when I go to sell my house.

When my husband's health declined a few years ago, we added a plumbing and electrical rider to the contract because he could no longer make those repairs himself.  It costs $15/month.  So far, I have only ever been charged a flat $50 on services calls for plumbing and electrical repairs/installations.  I had the kitchen sink drain unclogged last week.  It took the plumber almost three hours to do it.  Still only cost me $50.  It would have been much more for the labor charges if I didn't have that contract.  So far, I'm way ahead for the year.

I have never ever filed a single claim under my homeowner's insurance or car insurance policies.  If I was going to bitch about paying any kinds of insurance with no seeming return (and I'm not) it would be those.  Insurance and a budget for non-covered repairs is just part of the price of being a homeowner and having a car.

Holy crap, what brand of high-end appliances did you buy?  Just asking for personal reference, so I can be sure to stay far far away.  That is an excessive amount of repairs. 

I guess I am spoiled by the fact that DH was an electronics engineering tech and is very competent and capable of making repairs to wiring/motherboards/other computer-y things. 

I wonder what your cost differential would be between what you're doing now vs. using cheap, easy to fix appliances and forgoing the excessive repair costs in favor of putting in new fancy appliances when you list the house?  It probably depends on how high-end you're talking...

Sadly, this is the state of most high end appliances made today.

On the other hand.... high end appliances made in the 40s, 50s and 60s are bullet proof (and offer sort of a neat retro look).  [warning: stove nerd alert ahead.]   A top of the line stove from the 50s can be had for a couple hundred bucks in working order -- sometimes even given away free on craigslist. 

[gaja]

I can't see he justification, more for us than for most, even. And that's in the absence of homeowner's insurance.

• If a tree falls on the roof, we replace the fucked up section. It's metal, which is actually much easier to work with. If we lose some of the decking, well that would suck, because that would mean to lose the spray foam insulation. Replace the decking (we put it there in the first place), and deal with the spray foam when we can. Stick up some fiberglass if it's going to be a while. Anyway, a warranty wouldn't cover that, though the homeowners insurance we don't have probably would.

That is easy to avoid. We never keep trees within falling distance of the house (always keep height of tree < distance from house). Chopped down 30 trees the first year we lived in the last house, had firewood for a couple of years just from the back yard. Cheapest insurance ever. The new house only has a few tall ones close to the garage, will try cutting the tops of those later this spring.

[caliq]

I like the certainty of knowing what my home and appliance repair costs will be.  Ten years ago we got rid of all the cheap builder-grade appliances in our home and replaced them with high-end appliances.  About three years later, the range needed a repair (just out of the manufacturer warranty period, of course).  We called the home service arm of our local utility provider for the repair.  The computer mother board had to be replaced (a $300 part) and there were additional charges for labor.  The repairman offered us a chance to sign up for a home appliance service contract instead for $40/month.  It was a no-brainer to do so.  This contract covers all parts and labor.  I pay nothing additional for each service call.  That one repair would have cost more than the premiums for the year.  Over the years, the monthly premium has increased to $45/month.  But, I have come out ahead every single year with that contract.  I have had three new computer mother boards replaced on the refrigerator (each also a $300 part), two new ice makers ($250 part), got a $100 credit for spoiled food in the refrigerator/freezer, the dishwasher repaired three times, a replacement rack and soap dispenser for the dishwasher, the range computer mother board replaced three times, a new replacement grate for the range, service calls and fuse replacements on the water hear, the dryer fixed twice, and the washing machine fixed twice.  The last repair on the washer was a few months ago.  It took three trips out by the repairman and needed several new parts including a drum replacement (a $900 part).  The washer repair took two repairmen over three hours to do.  That one service call covered the cost of the contract for three years.  The contract also covers an annual HVAC checkup.  I suppose a number of people here could fix basic appliances but I doubt they'd be able to fix the computers in modern appliances.  Even the professional repairmen don't--they just replace the computers and those parts are expensive.  And replacing all the high-end appliances (with the corresponding high cost repairs) with cheap appliances isn't really a good option either if you live in a relatively expensive home.  I doubt putting in craigslist finds are going to favorably impress potential homebuyers when I go to sell my house.

When my husband's health declined a few years ago, we added a plumbing and electrical rider to the contract because he could no longer make those repairs himself.  It costs $15/month.  So far, I have only ever been charged a flat $50 on services calls for plumbing and electrical repairs/installations.  I had the kitchen sink drain unclogged last week.  It took the plumber almost three hours to do it.  Still only cost me $50.  It would have been much more for the labor charges if I didn't have that contract.  So far, I'm way ahead for the year.

I have never ever filed a single claim under my homeowner's insurance or car insurance policies.  If I was going to bitch about paying any kinds of insurance with no seeming return (and I'm not) it would be those.  Insurance and a budget for non-covered repairs is just part of the price of being a homeowner and having a car.

Holy crap, what brand of high-end appliances did you buy?  Just asking for personal reference, so I can be sure to stay far far away.  That is an excessive amount of repairs. 

I guess I am spoiled by the fact that DH was an electronics engineering tech and is very competent and capable of making repairs to wiring/motherboards/other computer-y things. 

I wonder what your cost differential would be between what you're doing now vs. using cheap, easy to fix appliances and forgoing the excessive repair costs in favor of putting in new fancy appliances when you list the house?  It probably depends on how high-end you're talking...

Sadly, this is the state of most high end appliances made today.

On the other hand.... high end appliances made in the 40s, 50s and 60s are bullet proof (and offer sort of a neat retro look).  [warning: stove nerd alert ahead.]   A top of the line stove from the 50s can be had for a couple hundred bucks in working order -- sometimes even given away free on craigslist.

Guess I'm just not sure what's considered high-end...Viking? Wolf?

I've always had (well my parents really, since I just bought my first house last year) nice Bosch/LG/etc. type stuff and I can't remember a single incidence of appliance failure except for the electrical surge that fried their entire house and everything that was plugged in (yay power company, not replacing the grounding wire after you removed it during post-hurricane repairs...).  They were very glad for homeowner's insurance and new-cost replacement!

[Rural]

I can't see he justification, more for us than for most, even. And that's in the absence of homeowner's insurance.

• If a tree falls on the roof, we replace the fucked up section. It's metal, which is actually much easier to work with. If we lose some of the decking, well that would suck, because that would mean to lose the spray foam insulation. Replace the decking (we put it there in the first place), and deal with the spray foam when we can. Stick up some fiberglass if it's going to be a while. Anyway, a warranty wouldn't cover that, though the homeowners insurance we don't have probably would.

That is easy to avoid. We never keep trees within falling distance of the house (always keep height of tree < distance from house). Chopped down 30 trees the first year we lived in the last house, had firewood for a couple of years just from the back yard. Cheapest insurance ever. The new house only has a few tall ones close to the garage, will try cutting the tops of those later this spring.

Not the route we've chosen. The old growth deciduous trees on the south side of the house are the flip side of our passive solar heating setup - they keep us from getting the heat gain in summer. Our odds are good because that's a steep slope away from the house, and the trees tend to lean away because of that, but some roof repair may be needed one of these days, and that's part of the deal. We don't allow pines near the house, but the big oaks and hickories stay.

[Spork]

Not the route we've chosen. The old growth deciduous trees on the south side of the house are the flip side of our passive solar heating setup - they keep us from getting the heat gain in summer. Our odds are good because that's a steep slope away from the house, and the trees tend to lean away because of that, but some roof repair may be needed one of these days, and that's part of the deal. We don't allow pines near the house, but the big oaks and hickories stay.

Back when I lived "in the big city" -- we had a tiny lot which had lots of trees for its size.  A couple of observations:
* our back yard was at least 10 degrees cooler in the summer than everyone around us.  They were all getting passive radiation off of their houses, concrete, dirt, etc.
* we had to cut down a very large mature maple.  It wasn't a great tree... but with the crappy insulation that house had there was almost $50 difference in cooling costs per month after the tree was cut.

so yeah: trees can make a big difference.

[queenie]

We haven't implemented a "Home Repair Account", but I like the idea of that being a fixed expense and readily available.  It makes more sense to me to pay $150 or so into that every month than to pay twice that or more for an insurance policy that may come with restrictions on use.

DH fixed the dishwasher that came with the house himself.  He also replaced a leaky faucet.

We had to repair a couple of cracks in the foundation of our house when we first moved in a couple of years ago.  That cost us $1,550 because we hired help in to do it.  My uncle thought that it wouldn't be to difficult for us to repair ourselves, but it was out of the scope of what we felt comfortable tackling.

Our washer and dryer cost us $50 all together.  The dryer was a free one that wasn't being used that a family member passed on to us - it's probably 20 years old and still going strong.  The washer we bought on kijiji.  It did it's job, though the drum was always loose and banging around and we couldn't figure it out.  It lasted us 2 years before giving up on us and we replaced it with a new basic washer for about $450.

We also hired contractors to replace the insulation and drywall that we tore down for that initial foundation crack repair.  They also replaced our stair railing that was not to code and we had placed plexi-glass across to keep our kids from falling through to the basement level.  The contractor work cost us $3,000.

That is about $5,050 in repairs in about 2.5 years that we paid all out of pocket.  I really do think that I am going to start that account - $170/month since we moved in would have covered all of that.  So smart.  This house was not in great shape when we bought it, so I am sure that we are in for some more surprises along the way.

[Trimatty471]

When I purchased my house, the homeowners inspector told me to save one percent my home's purchase price for the cost of repairs

[gaja]

Not the route we've chosen. The old growth deciduous trees on the south side of the house are the flip side of our passive solar heating setup - they keep us from getting the heat gain in summer. Our odds are good because that's a steep slope away from the house, and the trees tend to lean away because of that, but some roof repair may be needed one of these days, and that's part of the deal. We don't allow pines near the house, but the big oaks and hickories stay.

Back when I lived "in the big city" -- we had a tiny lot which had lots of trees for its size.  A couple of observations:
* our back yard was at least 10 degrees cooler in the summer than everyone around us.  They were all getting passive radiation off of their houses, concrete, dirt, etc.
* we had to cut down a very large mature maple.  It wasn't a great tree... but with the crappy insulation that house had there was almost $50 difference in cooling costs per month after the tree was cut.

so yeah: trees can make a big difference.

For us, heat is not an issue. Storms are. So keeping trees for shade would never make financial sense, since the average cost of a destroyed roof almost certainly would be larger than what we could ever hope to save in cooling.

[Jack]

Small repairs I'd do myself.  Things I consider costly repairs that need to be done NOW... I probably would not.  On this list I would put:
* replace entire HVAC system (been there, done that.  Yes, the whole system.  Old and busted and we limped it along for several years before it just died.)

That was not a "costly repair that need[ed] to be done NOW." That was a costly repair that you were able to defer for several years!

It's actually a perfect example of what I was saying earlier, that you should be able to see most large expenses coming ahead of time.

[gt7152b]

Fix them myself. A hefty percent of the cost of replacement is labor.

+1. The last major problem I had was when the upstairs A/C quit working. Never worked on an HVAC system but did some online research and found out that a $7.50 capacitor needed to be replaced.

[Secretly Saving]

We do most of the work ourselves.  When it's not within our comfort level, we hire out using our network of contractors.

[PatStab]

We did all our repairs and upgrades on our old house, we had some done.

This house is 12 years old so pretty new.  We don't get warranties on appliances.  We paid cash for it.
We did find out the roof had issues and put on a new standing seam, no we should have not
had to, but we found the original owners likely got took.  We think they got charged for a low quality roof
and likely paid for better they were supposed to be architectural shingles.  We know them so know they
were doing quality.  We also debated on just fixing the loose shingles or putting on another asphalt
roof it would be $18k, but then we decided we would have to do this again likely in our 80's. We bit the bullet and paid
the $28k required for it, but its a 40 year warranty, we would be 109 by then, so I think it will do us.\
We have saved and just pay cash and move on, we are very fortunate to be able to do so.  The other things coming
up is painting, hubby will do that.  Also changing carpet to hardwood in the next couple of years and finishing
out the partially finished basement.  We will do it ourselves. 

[Patrick A]

Insurance in case your refrigerator dies?  You have to be joking.  This whole thread belongs in the anti-mustachian wall of shame section.  At no point did you even analyze how much you spent vs the benefits received.  And you've been paying these premiums for 14 years!  Wow.  Hey, we all make mistakes.  Most of us don't brag about them.

http://www.mrmoneymustache.com/2011/06/02/insurance-a-tax-on-people-who-are-bad-at-math/

+1

Way to dole out facepunching where facepunching is needed.  Opinions don't matter when it comes to the numbers!  Show me the math!