My $18K/Yr Basic Expense Budget

[daylatedollarshort]

I realize quite well how much being in our house costs over other alternatives. Most people here either have budgets or carefully review their costs.

I didn't say you or even most people here on this forum. Offline how many people do you know who even have realistic budgets (including reserves for roof replacements, car replacements and medical emergencies) let alone carefully review their costs?

 

[Live And Learn]

Ok, I can now see the $18k budget. Its approximately the same that my mom lives on. She lives in a 900 sq ft apartment and has no car. She has only basic cable, no cellphone, no internet, and a $20 land line. She dries her clothes on a clothesline. She keeps her house warm in the summer and cool in the winter. So yes, its possible to live on $18k a year.

To Alexis' point, the less you spend on the "basics" the more you can spend on the discretionary. Cable TV and Internet are choices .... you can spend $1200 per year on that or on a four day cruise. Both are discretionary.

I guess the same could be said for most the "repair and replace" budget. At the most basic level, living in a house is discretionary. Its my choice to live in a 1500 sq ft house and budget $6k for insurance and taxes plus $4k / year in maintenance (including roof accrual). I COULD spend $5k a year living in an apartments and spend the other $5k on a vacation. I choose the house.

I do think there needs to be a repair/replace figure in the basic budget for things that are trully non-discretionary like basic appliances, a car if it is needed to get to a j*b and public transport is not available, and a television (although I guess that could be considered discretionary also).

 

[W2R]

Ok, I can now see the $18k budget. Its approximately the same that my mom lives on. She lives in a 900 sq ft apartment and has no car. She has only basic cable, no cellphone, no internet, and a $20 land line. She dries her clothes on a clothesline. She keeps her house warm in the summer and cool in the winter. So yes, its possible to live on $18k a year.

To Alexis' point, the less you spend on the "basics" the more you can spend on the discretionary. Cable TV and Internet are choices .... you can spend $1200 per year on that or on a four day cruise. Both are discretionary.

I guess the same could be said for most the "repair and replace" budget. At the most basic level, living in a house is discretionary. Its my choice to live in a 1500 sq ft house and budget $6k for insurance and taxes plus $4k / year in maintenance (including roof accrual). I COULD spend $5k a year living in an apartments and spend the other $5k on a vacation. I choose the house.

I do think there needs to be a repair/replace figure in the basic budget for things that are trully non-discretionary like basic appliances, a car if it is needed to get to a j*b and public transport is not available, and a television (although I guess that could be considered discretionary also).

+1

More rambling thoughts along these lines - -

I think it is kind of wonderful that almost every expense can be considered to be discretionary, in a sense. My grandmother was penniless and supported my 100% blind grandfather while raising 4 kids out in the middle of nowhere, so she was pretty good at penny pinching. She used to grow her own food and used the excess to barter for meat. So for her, even the food expenses were discretionary. To me, clothing is not discretionary since even in New Orleans one can be arrested if wandering around nude (not to mention the sunburn). But then, there are always charities from which to get free clothing, or one could dress in animal skins as was done in historical times, so in that sense clothing is a discretionary expense. As for housing, there are plenty of people who spend zero on housing although I would not prefer that sort of lifetstyle and the choices it involves.

I don't fully understand the purpose in deciding what is discretionary (to me), and what isn't. Whether I (falsely) feel compelled to buy something or not, I am still buying it and still must plan on spending what it costs to maintain my lifestyle choices. The only purpose I can see is in trying to figure out what expenses I could drop. The answer to that question, though, is "everything". Every expense has a priority to each of us, and when minimizing ones expenditures it is pretty easy to figure out what has the lowest priority and drop that.

 

[Options]

This frugality is very easy to duplicate--buy a cheap house with low taxes on a well and septic. No secret to that. Not sure what someone who is Medicare aged is saving the surplus $6k to $14k of his passive income for. Is social security going to add to that income in the future? What is the goal here? I think we all know how cheaply we "could" live, but there is no intrinsic virtue in competitive frugality, is there?

Another thread here (forget where) majority of posters budgeted anywhere from $5K-$7K for health care annually even post-medicare. This includes medigap ins, hearing aids, dental, etc. FIDO RIP tool budgets about $7K per person for total health expenses, although I'm staying with $5K as I see that as excessive in my situation.

 

[NW-Bound]

...To me, clothing is not discretionary since even in New Orleans one can be arrested if wandering around nude (not to mention the sunburn)...

Ah, one does not know what sunburn is until she lives in AZ, particularly the high-country where the sky is often 100% clear and the air layer is 7000-ft less thick than at sea level, hence less attenuation to the UV. Also, in NO one can go topless during Mardi Gras.

However, for not getting arrested while being completely nude, one can go to London. Search youtube for "London 2013 Naked Bike Ride", as I just searched for Naked Ride and found it. The video looked more funny than erotic.

But what's this? "New Orleans Naked Bide Ride"! Hmm... Well that's one is definitely more benign, and even misleading as many riders are fully clothed or in bikinis.

 

[W2R]

Also, in NO one can go topless during Mardi Gras.

This is a common misconception. The reality is, that:

It's is important to know that nudity is illegal in New Orleans just as it is anywhere else in the country. So, if you believe everything you hear and see on TV, be careful. There are hundreds of arrests every year for public nudity and being in Central Lockup until your friends sober up enough to bail you out is no way to spend Mardi Gras.

from A Complete Guide on How to Plan a Trip to New Orleans Mardi Gras

This is why only tourists can be seen baring their breasts for beads. They just don't know any better.

 

[Alex in Virginia]

Hello there NW-Bound, Tom52, Animorph and Alan...

Thank you all for participating in the discussion and definitely thank you for drilling down on my basic expense line item for gasoline (which I presented as covering 200 miles per month at 20mpg for a cost of $35.)

It turns out that I've overstated my monthly gasoline cost under the basic budget. Every errand I could possibly have to run, I can do -- and do -- traveling a 20-mile round-trip loop once a week. That's 80 miles for the month, not 200. (Even my vet, my bank, my dentist, my mechanic, my Jiffy Lube station and my library are all on that same loop.)

(No, I never have to run out for an "emergency" quart of milk or a printer ink cartridge or what have you. I maintain redundant backup/substitute supplies of literally everything and that is why I never run out of anything.)

Of course, it also helps that I don't have to drive to a job and that I have the time flexibility to bundle errands together.

So I have to admit that a little discretionary driving has snuck into my basic living gasoline expense line item. That surplus 120 miles a month goes for drives to my favorite hiking/biking/fishing state park (an 8-mile round trip), hanging out visits to the library as opposed to returning/getting books during an errand run (a 9-mile round trip), possible meals at 2 or 3 "high toned" restaurants in town (all about a 10-mile round trip and totally discretionary, I know) and so on.

So, let's adjust the gasoline line item down to $14 a month and throw the excess $21 a month into the error allowance line item, which we'll now consider to be $950 a year. The overall budget is still $18,000 but we've actually got a little more elbow room for things that may have slipped through the cracks (like those dang-blasted postage stamps!).

My weekly 200-mile round trips to spend time with my wife are not included in my basic budget. Those costs get accounted for under discretionary spending (a separate and much more flexible budget) and are shared by my wife and I equally.

I hope that clears things up just a little bit more.

Cheers...

Alex in Virginia

 

[haha]

I think conventional house often come with a higher price tag than most people realize. Many of the posters I see on forums who have really low expenses but don't live in RVs often live in paid for condos with low HOA fees, they rent or they live in manufactured housing.

I could not get down at the claimed level being discussed here, no matter what I gave up.

I live in a paid for condo, for which in my opinion the dues are too low to adequately maintain the building long term. I currently do not own a car. I do very minimal traveling outside of Seattle, though in the future that might change. I eat few restaurant meals, though a Monday night football at a sport's bar with happy hour prices on good burgers and drinks will set me back $45-50 for two. In my experience, there just is no magic. You want some casual entertainment, you pay for it. You like heat in your house so your hands don't feel like they will fall off, you pay for it. You want medical care, you pay for it, one way or another.

For my condo, I pay 4% of purchase price in property tax and dues alone, and though the dues have been stable the tax goes up as the real estate market recovers. I don't think this amount is outlandish at all, our grounds are nicely landscaped the sidewalks kept clear of leaves and snow, the street-strip grass kept mowed. We get a break on this as a guy who lives here likes to do it, and is good at it, and needs the cash income. Leaves are a big deal, but without the trees along the street, it would be far less pleasing to live here. They are just now fading to yellowish from red, the ones which haven't yet blown down.

Something always equalizes. I used to live in the country where things were cheaper than Seattle. However, when my well pump gave up 400' feet down, that was not cheap. I couldn't walk down the street and go to a coffeehouse or meet a friend, so I put a lot of miles on my car. When I quit commuting I thought I would drive much less, but instead I learned that my amount of driving was largely driven by my needs for diversion, so if driving decreased at all, it was maybe 5%. And I was a 15 minute walk from the Sound, through a park. Still some days I wanted to fish in a river instead of the Sound, or go to town. Living in Seattle, I feel very little need to travel, but when I lived in LA, before I moved to the beach, it was out to the mountains or desert every weekend. Once at the beach, I went no farther than the 3 blocks to the sand, but my rent was higher, and I had to commute farther for work. Beyond a few easy things, frugality means doing without, at some level.

All I have to do when I read a thread like this is ask myself, would anything short of stark need make me choose to live this way? Absolute must-do need might, but I think then I might consider a step van and the Slabs first. Pull out the djembe and watch the dancing girls.

Ha

 

[NW-Bound]

Recently, I saw a news on how a topless bicyclist was causing traffic accidents in Massachusetts. The police stopped her and had to let her go because she was wearing pasties.

Oops. Should I have made it "him" and "he" in the above sentence, as Stacey Schnee is a transgender?

Well, to tie this to the thread topic, I will suggest that pasties cost less than a blouse or a T-shirt.

 

[NW-Bound]

I will try to be more serious now.

As we have been LBYM all our life and always underspent our income, we never had a budget. There was always money left over at the end of the month, and as we also never had a goal to save x% or y$, we never really cared what our expenses were.

When I seriously thought about ER, and came here to see how people stressed expense control, it dawned on me that I did not really know what our outflow was. Sure, we were LBYM, but when my earned income stopped, my M would be curtailed drastically. I also did not know what WR I should plan for.

I know a lot more now, thanks to Quicken. And that's all I use. No spreadsheets, but with a few quick clicks, I can see what I can cut down in case of an economic prolonged downturn. No more travel, no more dining out, no more charities and gifts, what that would save me? Sell the 2nd home (whose value is not even included in Quicken, only the expenses) for market value, what would that save me in yearly expenses?

So, in a way, although I do not have a set of "essential expenses", I do have a ranking order of priorities. For me, the bare necessities are not as low as $18K, but a lot lower than what I am spending now, and I feel safe enough with that.

 

[calmloki]

It is possible to live on less than $1500 a month....
A web site for people who live this ultimate cheap life, but not to the level of the full-time residents of the infamous Slab City, has the following excerpt.

Let me prove to you right off the bat that you can live the free life......​

Was out at the Slabs this weekend offroading the BMW with sport suspension. There are good areas and real creepy areas. Liked much of it (during the bright of day at least) but the lack of discretionary items like roads, public transportation, electricity, gas, water, and sewer made us kinda better pleased with our current lifestyle.

OTOH, Leonard Knight lived w/out any of those effete items out at the entrance to the Slabs since the early eighties and by all accounts was a heck of a guy and left his mark on the world. Salvation Mountain is a very moving experience - see it soon, as Leonard isn't doing the care any more and his art is distinctive but impermanent.

​

 

[Alan]

Just curious, Alex--how do you accrue enough Amex points to buy clothes if your budget is so low? You don't seem to be buying much of anything.

I would have to buy a ton more stuff on my Visa than I do right now in order to get even $25 in reward points.

My thoughts exactly and I use Amex Blue Cash. I also would like to know how much spend on Amex per year Alex has in order to cloth him with the reward points, and he says it includes shoes.

Hello there NW-Bound, Tom52, Animorph and Alan...

My weekly 200-mile round trips to spend time with my wife are not included in my basic budget. Those costs get accounted for under discretionary spending (a separate and much more flexible budget) and are shared by my wife and I equally.

I know how my wife would react if I told her that my weekly trips to see her were "discretionary"

 

[Major Tom]

OTOH, Leonard Knight lived w/out any of those effete items out at the entrance to the Slabs since the early eighties and by all accounts was a heck of a guy and left his mark on the world. Salvation Mountain is a very moving experience - see it soon, as Leonard isn't doing the care any more and his art is distinctive but impermanent.

He's a pretty neat guy. I spent some time out there with him in 2007. It was shortly after the film crew for "Into The Wild" had been out to film him. He was quite excited about it.

 

[calmloki]

Salvation Mountain Nov 2013 Photo by calmloki | Photobucket

IMG_8031.jpg Photo by calmloki | Photobucket


Very neat. I never met him - not religious and felt like just going in and spectating would be disrespectful to him so we would just slowly drive by. This though I'd read that he didn't push his very simple message. He's been in a care facility in San Diego for maybe a couple years now and others are trying to keep up his mountain, but if you stand back and look you can see his work vs their work. The area had a big rain this summer and a section of the hill slipped - that has been repaired. The museum and it's alcoves are remarkable - going in and puffing the dust off the scripture passages and ID cards and pictures to uncover them was very moving. Maybe I was adding meaning, but a room full of abandoned ID cards and driver's licenses right at the entrance to the Slabs brought up feelings of "abandon hope all ye who enter here" in juxtaposition to feeling like folks were maybe going to a new life and marking it in Leonard's alcove.

 

[Tom52]

Hello there NW-Bound, Tom52, Animorph and Alan...

Thank you all for participating in the discussion and definitely thank you for drilling down on my basic expense line item for gasoline (which I presented as covering 200 miles per month at 20mpg for a cost of $35.)

It turns out that I've overstated my monthly gasoline cost under the basic budget. Every errand I could possibly have to run, I can do -- and do -- traveling a 20-mile round-trip loop once a week. That's 80 miles for the month, not 200. (Even my vet, my bank, my dentist, my mechanic, my Jiffy Lube station and my library are all on that same loop.)

(No, I never have to run out for an "emergency" quart of milk or a printer ink cartridge or what have you. I maintain redundant backup/substitute supplies of literally everything and that is why I never run out of anything.)

Of course, it also helps that I don't have to drive to a job and that I have the time flexibility to bundle errands together.

So I have to admit that a little discretionary driving has snuck into my basic living gasoline expense line item. That surplus 120 miles a month goes for drives to my favorite hiking/biking/fishing state park (an 8-mile round trip), hanging out visits to the library as opposed to returning/getting books during an errand run (a 9-mile round trip), possible meals at 2 or 3 "high toned" restaurants in town (all about a 10-mile round trip and totally discretionary, I know) and so on.

So, let's adjust the gasoline line item down to $14 a month and throw the excess $21 a month into the error allowance line item, which we'll now consider to be $950 a year. The overall budget is still $18,000 but we've actually got a little more elbow room for things that may have slipped through the cracks (like those dang-blasted postage stamps!).

My weekly 200-mile round trips to spend time with my wife are not included in my basic budget. Those costs get accounted for under discretionary spending (a separate and much more flexible budget) and are shared by my wife and I equally.

I hope that clears things up just a little bit more.

Cheers...

Alex in Virginia

Sorry Alex, I didn't fully grasp the purpose of your original post. If I now understand correctly you are saying $18,000/year is your basic budget, but your actual yearly spending is this basic budget plus an unspecified discretionary budget?

Without too much detailed calculations I would say mine would be about $35,000 for the two of us but we have property taxes over $6400 plus our house is more than twice the size so our utilities would be proportionally larger. I could see that downsizing to a much smaller house in a lower cost area could save some money.

 

[scrabbler1]

My annual expenses have actually gone down the last few years but that was because in 2011 I switched from an overpriced individual HI policy to a bare-bones HI policy I had no plans to keep beyond 2013. (I knew I would get a cancelation notice but I already bought a new ACA plan like the old one but for half the price after the subsidy.) My annual expenses will rise slightly for 2014, to about $22k. I live in a paid-off studio apartment in a co-op
whose maintenance dropped slightly in 2013, partly offsetting increases in other non-HI expenses.

 

[ESRwannabe]

I don't think $18,000 would be too hard to live on.

I spend about $24,000 a year. If I didn't work then I could drop that down quite a bit. Also, if I owned a house instead of renting an apt that would also lower the expenses.

Right now I eat out almost every meal. Rent a pricey apt and spend freely on movies, and video games. I could easily cut my expenses but there is no need to. I'm living on around 1/3 of my w-2 income. Investment principal is mid-six figures.

Plan is to maybe semi-retire in eight years or so (age 45).

 

[jkern]

Due to higher Property taxes, utilities and driving more, my budget is:

Essentials: $27,000/year (housing, food, utilities, medical/dental, transportation)

Routine Spending: $14,000/year (clothes, gifts, vacations, recreation, entertainment)

Non-routine Spending: $14,000/year (replacement items, car, furniture, appliances, and buying new stuff)

Total lifestyle budget: $55,000/year

 

[rbmrtn]

I don't think $18,000 would be too hard to live on.

That's about where mine is at, and $5K of that is Health Ins premiums ( that should drop in 2014). I used 30K when doing firecalc runs or other tools but that is much more than I actually spend. Actual retirement income is more, the difference goes into the reserves pool to pay for the unexpected.

 

[Alex in Virginia]

“It’s Not a Real Budget Without a Replacement Fund”

Hello, Katsmeow, ERD50, LiveandLearn, Tom52 and Mulligan…

Thank you for bringing to the forefront of the discussion arising from my original post the question of including a replacement fund in my basic living budget.

I had to think about it for a while, but now I have. So here’s my take on the question.

The Home Warranty Policy Alternative
It seems to me that a lot of folks on this Forum have elected to self-insure against the future possible (okay, probable) need to replace a refrigerator, a well pump, a roof or some other major appliance or home operating system. So naturally these folks find it necessary to incorporate accruing replacement fund contributions into their basic living budgets. I, on the other hand, have elected not to self-insure. I let my home warranty policy (hwp) cover me instead.

Home warranty policies have worked for me -- big time. Over the last 13 years and 4 houses, those policies have covered the replacement of a well pump, a refrigerator, a stove, a clothes dryer, and an entire incoming water pipeline system. They have also covered major repairs to a propane furnace, a heat pump, another refrigerator, a central air conditioning unit, a dishwasher, and more.

I know a lot of people on this Forum think that it’s cheaper to self-insure than to pay premiums on a home warranty policy. That’s fine. But the fact remains that I do pay those premiums. And I would hope that we could agree to consider those premium payments of mine as a reasonable substitute for contributions to a replacement fund.

My Roof Has Its Own Replacement Protections
It’s certainly true that a roof replacement is one of the costliest hits to the pocket book that can come from home ownership. And it’s also true that being unprepared for that expense would not be very prudent. But I don’t expect to have to pay for a roof replacement. Or, at least, not very much of it.

If my roof gets blown away by a major weather event, or if a meteorite punches a hole through it, my homeowner’s insurance policy is going to cover the roof’s replacement. I don’t need to build up a fund for that.

If my roof fails before its manufacturer-guaranteed shingle life expectancy, the 100% coverage and very robust written warranty policy that I have from that manufacturer makes it clear that it will pay for the roof’s repair or replacement. And I don’t need to build a fund for that.

What about after that shingle life expectancy is reached? That’s 20 years from now. I can guarantee you that I will be out of that house before that time comes. So I don’t need a fund for that.

My Take on Car Replacement Is Not Yours
I’ll replace my 1996 Dodge Dakota when it dies. If it dies. I know it’s been properly maintained. I know it’s safe to drive. I know it’s been driven gently (by me!). And I like it.

I’m perfectly willing to repair or replace any system that fails on my truck if and when that happens. Even up to and including replacing the engine. And it doesn’t matter to me if the cost of such a repair exceeds the used-vehicle value of my truck. I don’t look at my Dodge Dakota as a disposable balance sheet asset; I look at it as my tried-and-true personal transport solution.

But what if the cost of a repair is going to exceed the accrued balance in my auto maintenance fund? No problem. I’ll just “take an advance” from my discretionary spending fund and pay it back later from already budgeted monthly auto maintenance fund contributions.

And There’s Always My Surplus Cash Fund, You Know
I keep an $18,000 balance in my discretionary spending fund. But that’s not what I’m talking about here. I’m talking about the other $30,000 to $35,000 that I keep in bank accounts because (a) I don’t need to build up my investments book value or passive income yield any more, and (b) I can’t think of anything to spend the cash on.

Maybe some day I will overcome my “scroogerism” and use some of that excess cash to buy or do something wild. But in the meantime, I’m convinced that having that cash makes it utterly unnecessary for me to incorporate a replacement fund contribution line item to my $18,000 annual basic living budget.

And, anyway, what major item would I need to repair or replace out-of-pocket that I haven’t covered in the discussion above?

Cheers!

Alex in Virginia

 

[Alex in Virginia]

How does the home warranty work and what does it cover?

JDARNELL

Hi there, JDarnell...

A home warranty is sort of an insurance policy covering repair or replacement of major home systems. Mine covers all appliances, electrical systems, plumbing systems, heating systems, etc. I also added an optional rider to have my well system covered.

If one of those appliances or systems fails to work, I phone the warranty company and report it. The company then gives me a claim number and the phone number of a pertinent repair company for me to contact to come look at the problem. When the repair person comes, they diagnose the problem and either fix it or they phone the warranty company on the spot to either get approval for a major repair or to report that the appliance or system will need to be replaced. In the case of repair, the warranty company will give the go-ahead (unless the specific situation is excluded in the policy) and the repair person will proceed. In the case of replacement, the warranty company will locate a comparable/equivalent unit and then phone to arrange for delivery of the replacement.

Home warranty policies, like insurance policies, have deductibles. I've seen home warranty policy deductibles ranging from $50 to $100. There is no limit to the number of times one can call the warranty company to have something fixed, but one has to pay the deductible (directly to the repair person) for each initiated claim.

I hope that helps,

Alex in Virginia

P.S. -- The warranty company also guarantees the repair and if there's a problem will keep approving additional repair visits (without additional deductibles) until the problem is fixed properly.

 

[jazz4cash]

How does the home warranty work and what does it cover?

JDARNELL

I think I recall Alex posted in another thread about the home warranty....something I had been considering and procrastinating about. We got one last Feb for $54/mo. It has a $60 deductible per call and a $10k annual limit. We've used it 3 times so far and the service has been very good. I remain skeptical about how they would handle a major repair, but so far so good. I don't believe it covers replacement when items are considered non-repairable (will have to check on that). It includes four annual inspections (Plumbing/Heating/Cooling/Electrical) at no add'l charge. The inspections alone are worth worth the annual fee in our area.

Edit: checked the policy and it says if an item must be replaced, there is a fee a $75
replacement fee (plus $60 deductible)

 

[Katsmeow]

Alex

Addressing several points.

Home Warranty

It sounds like you have been lucky with your home warranty. I have had a home warranty in the past. Around here, when you buy a house usually the seller provides a home warranty. I've sometimes renewed the home warranty as well. I've used a few different companies.

Typically a home warranty contract will have a list of what is covered and what is not covered. There is often a lengthy excluded list.

There is often a limit of what they will pay. There may be a limit for what they will pay for a particular problem - I think the limit on our last home warranty was $2500 for a problem. And there is typically an aggregate limit for how much will be paid in a year. There may be other lower limits for specific items.

Now, we never exceeded the limit on any problem. I do note that for HVAC replacement, in particular, would likely not be fully covered due to hitting the limit.

As far as how good they have been, we have had mixed results.

In several cases, the home warranty company used good repair people. In fact, they used the repair company I would have used if I didn't have the warranty. In those cases, the repairs usually went fine. However, between the premium for the home warranty (they are not cheap) and what I paid for the service fee I'm not sure I came out much better than I would have without the home warranty. It was probably a draw.

The last 2 home warranties I had did not go as well. In one instance, I had what I thought was a plumbing problem (toilet overflowed). The plumber sent out was totally incompetent. Took the toilet apart and finally said the problem was too hard for him and left without bolting the toilet back to the floor again. (Turned out to be a septic problem. THis came close to going over the limit).

Then the next home warranty was for our current house. There was a problem with the microwave (above the cooktop). It took multiple times for a repair person to come to get it fixed. Each time, the repair person (who was from Sears) wasn't allowed to actually do the repair without having to go back to the home warranty company. In some instances, they were required to try particular fixes that they told me they knew wouldn't work but they were required by the home warranty company to do them.

And, that is part of the problem with a home warranty. You don't have control over the repair effort. You don't control who does the repair or what they do. If they replace an item, you don't choose the replacement. There have certainly been times we had a great repair done by a competent person. But other times it was not so great. The thing is that it is luck of the draw and trying to tell them that the repair person is incompetent is largely a waste of time.

When a home warranty repair goes well, it goes very smoothly. But, lots of time it doesn't go well. It is very much luck of the draw and you aren't the customer of the repair person. The home warranty company is the customer and they have to go by what they want.

When our most recent home warranty came up for renewal we didn't renew. The cost had gotten to be enough that it was unlikely that we would ever have enough repairs to pay for it. And, given the cap on what they will pay we weren't confident about having a large repair paid for.

Non-Home warranty claims

Home warranty claims don't cover everything. Home warranties have a lot of excluded items and lots of items were the amount of the repair would exceed the max the company will pay for. Furthermore, home warranties usually cover certain systems and appliances in the house, but don't cover maintenance or certain things related to the house. Obviously, every home warranty may vary so people should look at their warranty or the specific wording of a warranty they are considering.

But in the home warranties I've had they would not cover things like: Repainting the house, replacing the carpet, garage door, roof leak, damage to trees, home maintenance (and failure to maintain may cause the company to deny coverage on a claim if they think the failure to maintain caused the problem).

The home warranties I've had covered specified systems and appliances that had problems due to normal wear and tear. They did not cover normal maintenance, would not cover any problems due to failure to maintain properly, did not cover any of the many other problems that could happen to a house other than to those covered systems and appliances and did not cover things that would be caused by the type of perils that would be covered by a homeowner's policy. If my house itself (not the systems and appliances that are in it) had a problem, my home warranty wouldn't cover it.

Roof Replacement

Basically you argue that any roof replacement that would need to occur in the next 20 or so years would either by covered by homeowners insurance or by the roof company warranty. I agree that those things could cover a roof replacement. I would point out that most people probably buy used houses so a roof may not have 20 years left on it when they buy the house.

As for having a roof replacement covered by homeowner's insurance that certainly does happen. Of course, you will need to pay your deductible. But, if the roof damage is caused by something covered by your policy that is very viable.

Roof company warranties can be complex. Sometimes people don't have as much coverage as they think they do.

1. Does the warranty cover the contractor's workmanship as well as defects in the roofing material? Manufacturer's warranties may not cover contractor workmanship and lots of roof problems are workmanship problems.

2. Contractor workmanship warranties may not be as long as roof defect warranties.

3. The warranty might not cover all subsequent owners of the house.

4. The warranty might not cover all components of the roof or might not cover them equally. Just because the shingles have a 30 year warranty does not mean that everything else on the roof has that same warranty.

5. The warranty may be prorated. That is, with a 30 year warranty, if the shingles need replacing 15 years in the warranty might pay for only half the shingles because it is considered the roof only has 15 more years of useful life.

6. The company that gave the warranty has to still be in business when a claim is made. The contractor may have given a great workmanship warranty but if he is out of business 10 years later it doesn't help you. And, even big manufacturers can go out of business.

A lot of people are surprised to find out that their roof warranty doesn't cover contractor workmanship or that it didn't transfer to them when they bought the house or that the warranty is prorated. In some cases, the manufacturer may have better warranties available (for a price) and if you happen to have one of those warranties and you are covered by the warranty then that is good. But, a lot of people don't have nearly as good a roof warranty as they think they have.

It is always a good idea on things like warranties and insurance policies to read them very carefully to see what is and what is not covered. This can be hard to do at time, so you may want to consult with an attorney in your own state to get advice as to what a warranty means or what a policy covers and as to what is required in your state (it does vary from state to state).

Suffice it to say that while I think warranties are good to have, I wouldn't depend upon a home warranty or roof warranty to cover all of my home maintenance and repair needs.

 

[tuixiu]

And a vehicle with 128,000 miles on it still has a lot more room to run, if it has been and is kept up properly.

Let me fix that for you:

And a vehicle with 128,000 miles on it might have a lot more room to run, if it has been and is kept up properly.

 

[tuixiu]

I live in a paid for condo, for which in my opinion the dues are too low to adequately maintain the building long term.

I've thought about this too (the relationship between repair costs and our HOA fees) and I think part of it is economy of scale.

Hiring a company to do inspections and regular upkeep of 100 units where 3 all share a roof is probably a lot cheaper per unit, same with having a regular repair guy on call who works for the management group instead of hiring someone by the job.