Frugal Living 

BVC #15: Repair or Replace Rule of Thumb [VIDEO]

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Don’t you hate it when something breaks before it’s “supposed” to? You spent hours researching the best product for the job, the one with the best features, the longest life, and it has the nerve to break down before it’s supposed to? Well, it happens to us all and the hardest decision to make is whether it’s worth fixing or whether you should just pitch it.

What’s the rule of thumb you usually use in determining whether you should repair or replace something that’s broken before its expected “useful” life?

{ 33 comments, please add your thoughts now! }

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33 Responses to “BVC #15: Repair or Replace Rule of Thumb [VIDEO]”

  1. indio says:

    I never like the idea of some item sitting in a landfill someplace taking years to breakdown. I usually will go ahead and do what I can to repair it. If it’s an old table with rust on it, I will scrape/sand it down, prime and repaint it even if I can buy a new one cheaper. If it’s something I don’t know how to fix, I will research it until I figure it out. Rarely do I throw things away in the trash.

  2. Lucy says:

    I’m ashamed to admit that I’ve never attempted to get anything repaired. I’ve always just bought a new replacement. I don’t know why the concept of repairing things never occurred to me. Now that I’ve seen your video, I’ll definitely keep this in mind the next time something breaks down. Thanks, Jim.

  3. Jimmy P. says:

    I hate tossing anything that could be fixed. I will usually spend up to 1/2 the cost of new to try and repair the item. The only exception to this rule for me is when it involves an appliance which could be upgraded to an energy star compliant appliance. I’ll usually try and find used parts to get the old unit running while shopping for a new one. Once the new appliance is found, I will donate the old one.

  4. I tend to use what i like to refer to as the “totaled” calculation. just like a car it is considered totaled when the cost of repairs become greater than a certian percentage of the price of the car.

    I tend to think if the cost of repair is more than 25% of the cost of the item brand new i am better off just bitting the bullet and getting a new item.

    • Jim says:

      I guess that’s really what I did right? I just set the percentage as how much “useful life” is remaining, I just never thought of it that way.

  5. Julio says:

    If the cost of repair is more than 50% of replacement, then I will usually just go ahead and replace the item. That being said, if the item has been significantly improved and there is a benefit to upgrading then I will simply replace, regardless of cost. In this economy I do find myself trying to repair many things myself that I would otherwise not have attempted before. I’ve also been taking advantage of “Lifetime” warranties and Credit Card extended warranties and to my surprise the items were replaced or repaired, where I may have just overlooked that in the past.

  6. I’m more of a “just replace it” type of guy. At my church we recently had a projector go out on us and it wasn’t just the bulb burning out. I thought the projector was fried and was going to get a new one. The maintenance man asked me to wait on that. A few days later he had found an electrician who was able to repair the projector for about $30. I wouldn’t have even thought to check on that.

  7. The other Schmitty says:

    Excuse me, but I have to be pedantic here,
    You use the word “sunk” in a way that bothers me.
    If you buy a $100 coffeemaker that you’re expecting to last for ten years and it dies after six, the $100 is a sunk cost that should have no effect on future decisions. If you can get four years of use from a repair or pay $200 for a new coffeemaker that will last ten years, then the repair is worth 4/10*$200 = $80. Of course that ignores the other issues you mentioned.

    • Jim says:

      You are right, I should have simply referred to it as the acquisition cost of a coffeemaker. I could should have talked about it in terms of the cost of the coffeemaker amortized over the life of the device. I simply referred to it as sunk cost because I was thinking about it in terms of the existing coffeemaker rather than the replacement.

  8. Dave says:

    I try to fix everything first…

    Jim, did you make this video in response to my big screen TV blowing up, and all the trouble I’ve had trying to get the replacement parts I need?? 🙂

    • Jim says:

      Hahahah no, I think I was talking to a friend who had car problems and was deciding whether to repair or get a new car.

  9. Wanderfowl says:

    My metric is fourfold:

    1) Is repair possible? Many electronic items these days are designed to be irreparable, and as such, the point is moot. This is both sad and disappointing, and a bad reflection of our society on the whole. If an item is irreparable, then automatically, I’m buying a new one

    2) Was the item getting the job done beforehand? No matter the repair price, if an item wasn’t working well for me before, it’s time to cut bait and get what I really need. There’s no sense spending money to repair a poorly working item, when you could spend money to just move to one that works better. Conversely, if the item has been a tank, no sense in “upgrading” to a modern plastic version.

    3) Is there an upgrade that’s worthwhile? This is yet another factor that might tip me towards replacement. Luckily, most of the time such upgrades are just an addition of three features that are likely to break before I need them.

    4) If all of the above entries point to repair, is the repair more or less expensive than replacement? Here, you weigh the prices, the sentimentality, and, eventually, make the call.

  10. Rich says:

    I am willing to spend a little more upfront for something of quality, then, I fix/repair it myself until the item is begging to be retired! The resources available now on the web for spare parts makes it easy to aquire what you need. You will want to factor in your own time value in the repair estimate. Don’t underestimate your own ability to fix something and the feeling of accomplishment really has no equal. You might find a blog post on the stories of appliance resurrection and the resource/sites interesting! The best to you!

  11. Fairy Dust says:

    I confess I’m usually ready to throw something out when it stops working. Luckily, my husband is the exact opposite – he will always try to repair first. That has saved us a bundle over the years, so I definitely bow to his repair talents! If I were living on my own, I would have bought new much, much more often than we have.

  12. It might matter what the item is and how much it costs. On a coffee maker at $100, if you only got six years out of it, it would probably be better to ditch it in favor of a new one if for no other reason than finding anyone who repairs smaller gadgets is tough.

    On a big item like a car it’s complicated by the fact that replacing the vehicle you purchased six years ago for $20,000 will probably cost something well north of $25,000. I’d lean toward repair as a way of avoiding the debt attached to the replacement.

    Culturally, in America we have an orientation toward throw away and replace, but if you look at the immigrant population you see a pronounced retain and repair habit. Our culture could stand a shift in that direction.

    One thing we all have in our favor on the repair side is that given the state of the economy there’s no shortage of people available to fix what ever’s broken. We should be able to use that to some advantage.

    Jim, you’re a natural teacher; you present well on the video…

  13. Adam says:

    Please, please, please practice your speech before your video. This is really rambling and does’t offer 6:30minutes of information. Really poor.

    Also – why use a whiteboard if you write so small your viewers can’t read anything?!?

    Hope your next video is much better than this.

    • Jim says:

      Thanks for the feedback Adam, I didn’t realize the whiteboard was that difficult to read or that I rambled all that much. I’ll try to improve it for next time.

  14. ian says:

    The math you use to come to your conclusions utilizes bad assumptions and understanding of cost. Once you buy the coffeemaker, you spent $100 – not $10 per month. You hoped for $10/month but it didn’t happen. Once the coffeemaker broke the money was gone. You need only consider the cost of a repair & the cost of the new machine.
    Have you done any research on this or did you come up with your ideas independently? I look to your articles as a reference to facts and advice, this rule-of-thumb that you developed in 20 minutes is not what i hope for in a personal finance blog.

    • Jim says:

      I agree with you and I merely framed the discussion incorrectly, I should’ve talked about the remaining years of useful life in terms of the replacement unit, not the one I already owned.

      This idea was something I came up with independently. I’m sorry I could meet your expectations of a personal finance blog and hope I’m able to do better next time.

  15. Ted says:

    I don’t think this is a good rule of thumb. In the repair case you are basically paying $14 per year ($100+$40, lasting 10 years). In the replace case you are paying $12.50 per year ($100+$100, lasting 16 years). Much better apples to apples comparison than adding a “replace” on the end of the “repair” to extend it. Does your rule of thumb work if it fails after 2 years? after 8? Two years would be $18 per year for repair and $16.67 per year for replace. Eight years would be $12 per year for repair and $11.11 for replace. Nope, bad rule of thumb.

    • Jim says:

      That’s an interesting way to think about it. My rule doesn’t work if it fails after 2 years, probably because I’ve never run into that problem?

      Do you have a rule of thumb that you like to use?

  16. Ted says:

    I don’t think your rule of thumb works for any number of years, as long as you are counting by dollars per year.

    My rule of thumb doesn’t work for most people. I’m pretty handy, so if I can fix it myself, I do, if I can’t, I replace it. 🙂 Most manufactured goods are so cheap now that repairs are cost prohibitive. Add to that the added costs of taking the item to be repaired and picking it up when its done and I think it is hard to make any case for repair.

    • Jim says:

      At some point there’s a cost benefit analysis being done, it just happens that your repair abilities make the cost much lower than someone else, right? You certainly wouldn’t repair a $100 item if it required you to replace a $50 part, if you only had a year left right?

      By not assigning numbers to the question, aren’t you just making gut decisions? I mean you make a blanket statement that it’s hard to make any case for repair, what if it’s a $1 part on a car? 🙂

      I’m not trying to pick a fight here, just saying that your rule of thumb would be a bad one for me, just as mine is a bad one for you. So life goes 🙂

  17. Ted says:

    You are totally right about me making a blanket statement, busted! 🙂 I was thinking about consumer items like coffemakers/electronics not big ticket items like cars (or homes). Imagine if a neighbor kid broke a window in my house, replacing the house… 🙂 Though in some sense having a car (or house) is open ended in how long it will last. So maybe my rule of thumb has an element of “Do I expect to have this thing in 10 years if I repair it?”. Still no numbers though… 🙂

    • Jim says:

      I am also partly to blame, I am probably not as analytical in my calculations for cars as I am with coffeemakers 🙂

  18. Jim says:

    Repair or replace…. I find that repair is possible in most cases. I am always curious about why something failed in the first place. My most recent repair was for a magnetic switch on a toro riding mower. I could replace the switch for $180 myself, but I took it apart and found that it was nothing more than something I could pick up at nearly any electronics store for $4. In several cases I have found that just taking it apart cleaning everything and putting it back together does the job… It worked with an power window regulator and with a Toshiba DLP TV. So, my advice is, find out why it failed. You’ll learn something and might also find out that the repair is cheaper than you thought.

  19. One variable you’re not factoring into the calculation is inflation. After six years the $100 coffeemaker will cost more like $120 — or more, since makers of these devices drive up the price by adding new features.

    @ Adam: Get a new pair of glasses, yuh poor guy! I didn’t have any problem reading the whiteboard, and I’m an old bat who needs bifocals.

    And I thought your presentation was pretty good, Jim: you’re getting better at this with practice.

  20. somekidfromfl says:

    Hey Jim,

    Im trying to figure out how to apply this to whether or not to fix my car that literally just broke down.

    Its a 99 Corolla that I pretty much only use to get to and from work. But truth be told, and this might change everything, I dont live THAT far from work that I couldnt bus or even walk on some days.

    I bought the car about 8 months ago for 1300. In addition to 150k miles on its in bad shape physically and mechanically so I dont see it being sold for the price I bought it. I figure I can get maybe…I dunno, about $500 if I sell it.

    I dont know yet what repairs it will need but I estimate its an alternator problem, so Im ready for them to tell me about $200 – $400 total.

    Whatdya think…repair or replace?

  21. Damon Day says:

    This post reminded me of all of these extended warranties the sales people push on us these days. I mean, if I am going to pay $1,000 for a TV, do I really need to pay another $400 to insure the stupid thing will work for more than 3 years?

    As far as replacing something for me it always comes down to the cost and how much more improved the new model is. For instance, I paid $1400 for a 48″ rear projection TV (on sale) back in 1999. Sometime in 2003 the picture went out. I decided to have a TV guy come to the house, fixed it and charged me 75 bucks. Much cheaper than a new similar sized LCD or plasma ($5,000)back then.

    However last year the TV started to get fuzzy every once in awhile to where I had to whack it on the side to clear up. Checked out the deals and got me a brand new panasonic 50″ plasma for only $899.

    Then I sold the old TV at a garage sale for $100 bucks. So I didn’t do to bad, I got 10 years of use out of it.

  22. Rickkd says:

    Can you say fuzzy math? This type of reasoning assumes far too much about the reliability of a product and the use or abuse it receives. Another good piece of advice would be to buy used, if you can buy same used you’ll have a parts machine. Time is on you side, wait until you find a bargain. If you can fix things yourself with glue and a little Yankee ingenuity than do so. Labor is cheap. There’s always a better way. Use the old bean.

  23. FlyFisher says:

    Nice overview. Seems rather complicated in practice though, trying to figure out useful life, etc.

  24. Dean says:

    “The useful life of ten years”

    A major item that has been forgotten is the cost of money over time.

    At the point of year six you are into the coffee maker to the tune of 140 dollars. Try the figures for a breakdown at year number 2, year number 4 or 8. A breakdown in year 2 is really tough to swallow. A repair and still left with a fragile piece of engineering? I’m not gonna chase 80 or 90 bucks after something that has already proven deficient.

    I like most of what you say, yes there is a lessened ability or function at the end of the service life. Thi si just another reason not to fix.

    The fly in the ointment of what I am about to conclude is , “Will it be recycled or end in a landfill?” And the value of that is unknown.

    At your original point of 6 years and a repair is required, the budget should be HALF of the prorated value remaining.

    40 bucks left? 20 bucks is the most to spend… Or buy new.

    Another feature that supports this,,,,,and forgive me, you are too young to have dealt with this the proper number of times, is the waiting and the appointment for the repair guy.

    Our time has value as well.

    So my formula has been, and will be, the repair must not exceed half of the prorated life remaining. This accounts for my lost time, cost of money, suspected unreliability, crappy performance in its final year.


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