Ralph: Have you ever found yourself at the checkout counter?
Wondering if you should purchase that extended warranty for that new electronic device you just bought.
It's a decision that can leave many of us scratching our heads and questioning what's the right choice.
Well worry, no more.
In today's episode, we'll dive into the world of extended warranties and explore whether they're a wise investment or a financial trap.
This is a show you don't want to miss.
Intro: Welcome to the Ask Ralph Podcast, where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines, and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting.
Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.
Now here's your host, Ralph Estep, Jr.
Ralph: Welcome to our technology Tuesday show.
I'm so glad you chose to join us.
I just want to thank you for listening and supporting the program I'm coming to from the Estep Farm in the Saggio Accounting studio.
And like I said, yesterday in Delaware, it is allergy and pollen season.
So I feel like I am just stuffed up, but bear with me as we moved through this.
So let me put on my podcaster hat, let's put down those overalls and push that adding machine to the side.
And let's get some financial wisdom from a Christian perspective.
Today, we're discussing a topic that affects many of us.
Listen, we've all got these electronic devices and that's whether or not to buy an extended warranty on our electronic devices.
Now, as Christians, we're called to be wise stewards of the resources.
God has entrusted to us.
So let's examine this issue through the lens of faith and from a lens of practicality, because that's really the key.
And don't forget to subscribe to the show and join our email list.
You do that at askralphpodcast.com . So you don't miss tomorrow show.
Tomorrow's going to be our wacky Wednesday.
show we're going to do this.
We're going to talk about the procrastinators guide to bill payment.
So if you're a procrastinator and you're always putting off paying those bills, we've got to show for you tomorrow.
So don't want to miss that.
So let's start today with our relevant Bible verse.
It comes to us from the book of Proverbs chapter 16, verse three, and it says, ask the Lord to bless your plans.
And you will be successful in carrying them out.
This encourages seeking God's wisdom and discernment for decisions rather than relying solely on our own reasoning about perceived the benefits.
The spirit of this verse applies when considering pros and cons of purchasing a warranty.
Listen, folks, I try to tie faith and finance together.
It's a bit of a reach today, but it really talks about plans.
So let's dive right into this.
Talk about my personal experience.
I remember when I bought my first smartphone, the salesperson was incredibly persuasive insisting that I needed that extended warranty.
To protect my investment boy was I torn on the one hand I wanted to ensure my device was covered in case of any mishaps.
On the other hand, I couldn't help, but wonder if I was falling for a sales tactic.
Hey, that's what it feels like sometimes.
when we're at that register and they ask you, would you like to buy the three-year extended coverage?
So after some research and prayer, I made my decision.
I'm going to share that decision with you later in the episode.
So before we dive deeper, let's clarify what we mean by extended warranties.
These are service contracts that offer additional coverage beyond the standard manufacturers warranty.
They typically cover repairs or replacements for a specified period often ranging from one to three years after the original warranty expires.
And my experience has been with electronics.
A lot of times, those warranties are 30, 60, maybe 90 days.
It's very unusual for them to be any longer than that.
And the truth is folks extended warranties are available for a wide range of electronics from smartphones, laptops, televisions, home appliances.
It seems like every time I go to best buy or one of the big box stores.
Every time I purchased something that plugs in or has a battery.
The next thing they ask me is, do you want an extended warranty with that?
So there's a lot to talk about here.
So let's jump right into the main part of our discussion.
And that is the pros of buying these extended warranties.
Well, number one, it's pretty straightforward.
It gives you peace of mind knowing that your device is covered beyond the standard warranty can provide a sense of security, especially if you rely heavily on your electronics for work or personal use.
Now, the truth is folks in our everyday lives.
I feel like we're attached to those cell phones, those smartphones.
So to have a warranty, might indeed give us that peace of mind.
And I'll talk about that a little bit later.
Number two, it could provide potential savings if your device does experience a major malfunction.
And I feel like all of us has seen this happen a time or two outside of that manufacturer's warranty an extended warranty could save you significant money on repairs or replacements.
Again, I'll talk to you about my personal experience.
A little later in the show.
Number three, there are some added benefits, some extended warranties offer additional perks, such as accidental damage coverage.
Like if you drop it in the toilet or something, Something like that or drop it in the sink or drop it in a swimming pool.
or in a lake or the ocean, some offer free tech support, which can also be valuable depending upon your needs.
Now as with anything, we have great pros, but there are also some cons of these extended warranties.
And I don't mean cons like the type that are going to jail.
I mean, just things that maybe you hadn't thought about.
And the first one is this cost versus value.
Extended warranties can be expensive.
Often adding a substantial percentage to the original purchase price.
I remember checking out at Walmart one time we were buying a new toaster and the checkout person said, Hey, would you like to buy the extended warranty?
I think the toaster was 10 bucks.
And she said, would you like to buy the extended warranty on this toaster?
It's $5.
I said, wow.
So for 50% of the cost, I can get an extended warranty.
But for a $10 toaster, didn't make a lot of sense to me.
In many cases, the cost of the warranty may exceed the potential repair or replacement expenses.
Like I talked about with the toaster, if the extended warranties $5 and a toaster was $10.
Now, maybe I need to think about where I'm buying toasters that only cost 10 bucks, but didn't make a lot of sense in that case.
The second thing.
You got to look at the limitations and exclusions.
Extended warranties often come with fine print.
Sometimes the fine print is 10 pages long.
Nobody reads that.
Certain type of damage such as water damage or normal wear and tear may be excluded.
So if you bought that extended warranty for your smartphone.
You better check the fine print and make sure if you drop it in your neighbor's swimming pool, it's going to be covered.
Cause it might not be.
And number three, it's unnecessary for reliable devices.
If you're purchasing a high quality, reliable electronic device, the likelihood of needing major repairs within the extended warranty period may be low.
I may counter that a little bit.
When we get to my personal story.
Now, here are some actionable steps.
I always try to give you action items because without action, we haven't accomplished anything.
So here's the first thing I'm going to tell you to do research the device you're buying before making a purchase.
Research the reliability and more importantly, the durability of the electronic device you're considering.
Look at user reviews and expert opinions to gauge the likelihood of needing repairs.
With the internet, you can go Google just about anything.
So maybe when I was buying that toaster at Walmart, I would have been better off to do a Google review, but again, for 10 bucks, I'm not sure.
I would have spent a lot of time on it.
Second thing.
Compare your warranty costs evaluate the cost of the extended warranty in relation to the devices price.
As I talked about with the toaster, if the warranty costs five bucks and the toaster was only $10.
Doesn't make a whole lot of sense.
So you got to determine if the potential savings justify the upfront expense.
Number three.
And I've said this before, and that's read the fine print, carefully review the terms and conditions of the extended warranty.
Pay attention to what is covered.
What's excluded and any deductibles or service fees actually had this happen to me about 25 years ago, I bought a 60 inch big screen TV.
Yep.
That was back when it was like a piece of furniture in your house.
And I remember buying it from this Big TV place, right?
And.
And they're checking out and I think the TV.
I don't hold me to this.
I think it was around $2,500.
You know, now that same TV would be about quarter of the price.
But the guy says, Hey, you want to buy an extended warranty because there's guns in there cannons in there, they do this, they do that.
And I said, yeah, that's a great idea.
Let me buy that extended warranty.
And I want to say the extended warranty was $300 and they said, Hey, you know what, if you buy this extended warranty, we're also gonna throw in free setup and delivery.
I said, that's fantastic.
So I bought the extended warranty, got the thing all set up in my house.
And then about six weeks later, the store closed.
So then I said, what am I going to do?
So I pulled up paperwork and guess what?
I was out of luck because that extended warranty was only covered by that particular retailer.
So that's why you've got to read the fine print now, fortunately.
That thing stayed around like a piece of furniture and we carted it from house to house.
Truth is I think I paid movers more than what the TV was worth.
Another thing you need to look at is your usage.
Think about how heavily you rely on the device and the potential impact of a malfunction.
If it's crucial for your work or daily life an extended warranty may provide valuable peace of mind.
Like I said, we all are tied to the cell phones.
So you might want to think about apple care or some kind of extended warranty on your thing.
And ultimately here's the deal folks you got to trust in God.
You got to ultimately remember that our security lies God not in.
Material possessions.
So don't fret about these things.
Don't make them the center of your decision making process.
Pray for wisdom and discernment when making financial decisions.
And I say this about everything and trust that he'll provide for your needs.
Now let's talk about my personal situation, my personal thing that I went through, and I'm a case of my smartphone purchase after weighing the pros and cons.
Now, remember, this is my first smartphone purchase.
Back in the day when it was the old star tech flip phone.
If I remember correctly, And I decided to forego that extended warranty.
I trusted the quality of the device and felt the added cost wasn't justifiable for my situation.
So instead I chose to set aside the money.
I would've spent on a warranty and I don't remember how much the warranty was at the time.
I want to say it was about 20, $30 a month.
And I put that money into a separate savings account for future repairs or replacements.
If they were ever needed.
Well, that's what I was planning to do.
Until I bought my next iPhone.
and I've been an apple user for a long time, and I decided not to buy that apple care.
What a mistake that became when I had an issue with the glass in the back of the phone.
If you've got an apple phone, you know what I'm talking about?
That back piece on your phone is made of glass.
Well, this one day we were traveling to visit my son in Texas.
And I looked down at my phone and the back of it was shattered.
So I.
Called right away to Verizon was my carrier at the time.
And I said, Hey, my apple phone is broken.
what do we need to do to fix it?
And they said, well, you know, you don't have coverage.
I said, what you mean?
I don't have coverage?
Well, you're going to go to the apple store.
I said, okay, well I need my phone.
So went to the apple store.
Very nice people waiting on me there.
And they said, okay, Mr.
Ralph, we've got your phone here and we can repair this.
And, uh, we looked and it doesn't look at you added AppleCare.
I said, no, I really didn't think that was necessary at the time.
So the kind lady she says, that's are we going to fix your phone?
It'll be $400.
And I looked around for a minute.
I said $400.
I said, how much is this phone new?
Well, I already knew the answer because I bought the thing.
I'm one of these people that gets the new iPhone every year.
And I think the price of the iPhone was up to about $1,200.
So I was faced with a dilemma.
I had a iPhone that cost $1,200 to replace, or do I pay the $400 to fix it?
Well, here's the funny part of the story.
So I said to the lady, okay, that's fine.
You know, I need to go ahead and pay for this.
I need to get it fixed.
And she goes, all right, well, let me give you a replacement phone.
And I said, what do you mean you're going to make a replacement.
You're not gonna fix her.
She goes, we can't fix those.
At the time, maybe they could.
I don't remember honest to God truth.
I'm not sure.
But they actually gave me another phone and I said, well, how could I protect myself better?
She goes well, if you had bought AppleCare, you would have come in.
I would have handed you a new phone.
You paid a deductible and you would've been on your, on your way.
So the moral of the story is now I always add apple care to all of my apple devices right at the time of purchase, I do this not only based on the cost of repair, but also the importance of the devices in my business.
I buy it on my iPad.
On my iPhone.
I have an apple studio computer.
I've got two monitors.
They all carry that AppleCare.
Now that doesn't mean that Apple's a bad product.
I think apple is a fantastic product, but I'm all in for apple.
But I recognize the value of how much those devices cost and how truly expensive it is to fix them.
But more importantly, how mission critical they are in my everyday life.
So let's recap a bit today.
We've explored the complex question of whether to buy an extended warranty on electronic devices.
We discussed the pros such as peace of mind to potential savings and the cons including cost versus value.
And you learn not to buy the $10 toaster at Walmart.
We also outline actionable steps to help you make an informed decision, such as researching a device, comparing costs and considering your usage..
Remember this folks as Christians, we're called to be wise stewards of our resources.
It's kind of the focus of this whole program.
By prayerfully considering our choices in seeking God's guidance.
We can navigate financial decisions with confidence.
Now, before we wrap up, when remind you to visit our podcast page, you do that at askralphpodcast.com for more engaging episodes and a ton of valuable resources.
We've got 400 episodes more out there.
Found this episode, helpful.
Do me a favor and share it with others who may benefit from the information we discussed.
If we can ask every person to just tell one more person about our program, we will absolutely double our audience.
Well, thank you for joining me today.
As I always say, stay financially savvy and may God bless you on your journey to mastering your finances with a Christian perspective.
God bless you.
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And remember, financial issues don't have to be complicated.
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Saggio Accounting Plus and AskRalph Media Inc.
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