[cgoddard]

i'm sorry. that tip is a good one, but not for the reasons you gave. it's only a good idea because saving more is almost always a good idea.

if someone is unlucky the money they set aside from this wouldn't be enough to cover the costs of repair / replacement. Warranties are similar to insurance, in that risk can be spread out over the pool of customers that bought the warranty. As long as its unlikely that a customer will have to use that warranty, a warranty can be offered for a price that's much less than the average cost of repair / replacement.

If you're the only one contributing into a warranty / insurance pool, risk isn't spread out at all. You might end up being fine, but its also possible that a lot of your stuff will break at once, and you won't have the money to replace everything. That might be unlikely, but you're still taking a personal risk.

[philwelch]

The risk is spread out over all the different purchases made by you or your family. The risk that everything breaks at once isn't particularly high, since things tend to fail independent of each other. You're still bearing a risk, but it's also an EV-maximizing move.

[sukuriant]

Or you could pay up front/at regular intervals (health insurance? homeowners insurance? renters insurance? Car insurance? extended warranties, etc), and reduce the surprise factor, thereby permitting you to spend money on other things, knowing you won't need to spend more money on {car, house, health} because it's already taken care of ahead of time.

To some people, the value of peace of mind is huge.