Dear LPG Readers, 

Are you any good at saving?   

I read with interest what CI said about keeping a cool head.  She was talking about the pros and cons of paying for insurance and an extended warrantee when you buy a freezer and what she had to say got me thinking laterally. 

MY sideways thinking took me back to the good old days, or at least the days of my 1960’s youth.  When I think back to our family kitchen when I was a child we had a fridge, a twin tub washing machine, a mixer, cooker and a few other mod cons of the time.  Our kitchen was pretty well equipped at the time and when things went wrong there was always a local shop that specialised in fixing them, even though we all had a bit of a moan about how much repairs cost. 

Having gone down memory lane for a bit, I left my lap top and went downstairs to take a look at the household appliances I have in my home now.  Before getting to the stored gadgets I could see my freezer, dishwasher, food processor, food chopper, slow cooker, washing machines, microwave, air fryer, coffee maker, sandwich maker, and the list goes on.   

Then there is the cost of leaving the kitchen and taking a look at the rest of your reception area where you will find one or more televisions while your tablet, laptop and phone  need to be taken into consideration.  Just keeping the place clean also has a serious cost when you take your vacuum cleaners, steam cleaner, carpet washer and lawn mower into consideration, and I think that I only really have the bare essentials. Many of us would also be lost without that hair dryer and the heating system is not exactly white but has to be included.  Finally, if you have one we cannot omit the cost of having a car, no matter how old. 

Most of us accept that the vast majority of the things I have mentioned are necessities rather than luxuries these days and, while some will have been bought and used until they really need to be replaced, others will outlive their usefulness when they are superseded by some newer and questionably more convenient or innovative invention.   

We all know that there is only one thing that we have to insure by law and that is the use of our cars but how many of us have individual insurance for each of those aforementioned little items although we rarely add up the cost of all the bits together.   It is alarming when we think of the many things that we have now while our parents lived perfectly successfully without them back in the day, and when it comes down to insurance the cost can be mind boggling.  I took a look on line and insuring any one of these things can cost quite a bit.   

She is not an appliance but when I got her seven years ago I got a quote for insuring my cat which would have costed £15.oo a month at the time.  I declined but, without taking any inflation into consideration and had I accepted, I would have paid out £1260.00 by now.  I know that probability is the watchword when it comes to insurance, and while she has been to the vet a couple of times with a cost of about £300.00 over the years, had I paid the insurance the other way I would be truly out of pocket and she would be no better off.  

I have come to the conclusion that when it comes down to insuring anything in your house there might be a better way than paying out all that money for things that don’t happen as often as we think.  The answer for me was creating my own personal insurance fund. 

I have come up with a formula to offer.  The chances of more than one or two of these things going wrong at the same time is pretty low, so I have found a list which offers the average life of each appliance and another with the average replacement cost.  If for each entity you divide the price by the cost to get an annual cost for each of them, add them all up and divide the answer by the amount of items you included, and then by 12, you will come up with a starting point when assessing the amount, you need to save for insurance each month.      

Martin Lewis’s website explains a simpler version of my principle (I have been doing this for years) but you do have to be good at saving (which means not using little bits of it when you run out of money you budgeted for shopping) he suggests putting it in a savings account.  


There is only one real down side which is that if you have been doing this for as long as I have, there is a sizable amount of money in your ‘just in case’ fund and no matter where you keep it, it will be counted as savings if the government ever needs to assess your finances.  

If the answer to the question at the beginning of my message is ‘YES’, it is unfair that if you save the money to make sure you can repair and replace these things rather than pay it to all these insurance companies, you will be seen to be a lot richer than you are.   This is just another example of how unfair life can be…  

DS, Kent 

 

 

DS shares what she has learned about the life and costs of protecting household appliances

(LPG again reminds readers to read the information and not to get drawn into any of the sales patter that goes with it)…

 

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… and she suggest that you take a look at the section on Self Insurance on this site …

 

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