306 – Warranties or not – That is the question: Tom talks Extended Warranties

Episode 306 – Extended Warranties
[00:00:09] Welcome to Screw the Commute. The entrepreneurial podcast dedicated to getting you out of the car and into the money, with your host, lifelong entrepreneur and multimillionaire, Tom Antion.

[00:00:24] Hey everybody. It's Tom here with Episode three hundred and six of Screw the Commute podcast. We're not doing an interview today. Had a topic come up about maintenance agreements and extended warranties and are they really worth it? Well, sometimes they are and sometimes they aren't. This episode, I'll tell you all about that and whether you should spend your money or not. All right. Hope you didn't miss Episode 305 with Dr. Winifred Bragg from The Bragg factor. And she is a prolific pain specialist doctor that tries to kid people out of getting surgery, if at all possible. But she also billed her practice being a female in a male dominated society using these networking techniques. And they're really easy to do.

[00:01:17] But, you know, she's really laid it out for you in this episode on what to do. And she built a practice up to twenty thousand patients, starting with nothing. All right. So check her out episode 305 if you missed it. And of course, every episode can be found by going to screwthecommute.com slash and then the episode number. So she was 305 and this is 306.

[00:01:40] Make sure you get a copy of our automation e-book. It's free for listening to this podcast. It's screwthecommute.com/automatefree. It's very powerful and I kind of run my business using all the techniques in this book and it'll save you tons of time and money. All right. And grab our podcast app while you're at it at screwthecommute.com/app. So you can put us on your cell phone and your tablet and take us with you on the road. Now, everybody's sitting here in this pandemic and freaking out. Well, it doesn't have to be that way. You can get skills to give you highly in demand skills in a very short period of time. And I was just watching TV last night with Mike Rowe, the guy from Dirty Jobs, and he's a blue collar guy and believes in actual skills.

[00:02:31] And he's coming back with a new called The Road Show. You know, Mike Rowe Road Show, get it.

[00:02:38] And just spent his whole time on TV last night talking about how people need to have actual skills and they're doing six figure jobs when all their buddies that went to just general education and don't have any skills are suffering. So this is what we teach. And I've been preaching this for 26 years in my school, not my school has been around 12 years. But I've been living this lifestyle business for twenty six years because I have a skill. It's not like Liam Neeson on that movie. I have skills and, you know, I'm going to come after you. Well, I mean, I wish I could come after you. I wish I could come after you and force you into doing this, which I have some people. And afterwards they're saying, oh, thank God you you did this for me, Tom, because now I have a skill.

[00:03:29] Now I can save money in my business and have a massive web presence and I can work for others if I want. I can create products and I don't have to worry about a pandemic. All of these things. So I formalized this training in my school, IMTCVA.org, distance learning currently.

[00:03:48] So you can be anywhere, you can get an Internet connection and go to this school and learn these skills. And within several months you'll have a skill that you can start making money.

[00:04:01] Now if you stick out the whole score, it'll take us six months to a year. But you don't have to wait that long to be making money. Lots of people don't have to. So. So anyway, check it out at IMTCVA.org.

[00:04:14] It's a great legacy gift for your children, grandchildren, nephews, nieces, if you know, rather than giving them some money that they're going to blow on weed or something. Get him a skill. All right. And call me and check it out and I'll discuss it with you.

[00:04:30] All right, let's get to the main event. Let's talk about extended warranties and maintenance and service agreements. And are they worth it?

[00:04:37] Well, I'll say right up front. Most of the time they're not.

[00:04:41] I actually tease and I have a laugh with many people at checkout lines when I'm buying groceries or fast foods, I say I want to get the extended warranty on these steaks or at Wal-Mart.

[00:04:56] I might say I want to get the extended warranty on this underwear.

[00:05:01] You know, I really work hard and I. And I want coverage.

[00:05:04] Get it coverage.

[00:05:07] You know, if I had to get them repaired, you know, parts and labor can be really expensive.

[00:05:13] So if I have a cashier that's going along and they're lively and they get the joke, I might ask them, do I have to launder them before shipping them back for service or who pays the shipping when I return them for sir.

[00:05:29] Anyway, just about everything you buy today, you will be offered the extended warranty. Why? Because they're extremely profitable. Some companies report 80 percent profit on them. And why is that? Well, two reasons. One, people rarely take advantage of it. And so they pay form, but they don't get anything back from it. And to the fine print of the agreement frequently makes it more hassle and expensive than it's worth to actually use the coverage. And the sellers know this and laugh all the way to the bank.

[00:06:04] And I also asked the teller if I can have the extended warranty on my withdrawal when I go. The bank doesn't go through. Good.

[00:06:14] Now, don't get me wrong, some of these are good and come from odd places. I give you an example of harbor freight tools. This is a company that has, well, let's say, less than professional grade power tools. All right.

[00:06:29] Lawn and garden equipment, motors, welders, gloves and tons of other stuff, which is basically cheaper than you can get this stuff elsewhere. They know their stuff is crappy compared to professional grade stuff, and so do the buyers like me and millions of others. You know, they're do it yourselfers, kind of like me, use a tool once and it sits in their garage for eternity.

[00:06:53] I have a router, couple routers like that, you know, so I use the once like two years ago, and though I just don't have a normal need for it. But it was cheaper than buying the thing outright. I just made my own using a router. But here's an example. I bought an electric power washer from Harbor Freight and the regular price was ninety nine ninety five. But they always have sales so I got it for seventy nine ninety five.

[00:07:20] But then I bought the extended warranty for 20 bucks and it if it poops out any time within two years I'd take it back and get a new one. No questions asked.

[00:07:29] Well this might not seem like any big deal, but when you compare it to the three four hundred dollar gasoline power washers which have all burnt up over the 18 years I've lived here, it's a darn big deal. I could have had twelve of the harbor freight power washers and never had to worry if they quit.

[00:07:52] See, they're known for no hassel returns under their warranty. So, yes, absolutely. They are usually a good deal. Unfortunately, they're the exception, not the rule.

[00:08:04] So pretty much every major and well-respected financial adviser or investigative news report says most of the time these agreements are not a good deal.

[00:08:14] Some are out and out rip offs. And an example of an out and out rip off is an official looking letter. You get in the mail that says your warranty on your car is about to expire. So you call and then get pressured into spending from five hundred to three thousand bucks for God knows what you just bought. And the offer is, of course, only good for that day. See the Federal Trade Commission's crack down on that and issued refunds to people. But new rip off companies spring up overnight. So for car warranties, most reputable sources say you should buy it from the manufacturer. If you're going to buy one instead of third party, the third parties have to deal with the manufacturer. So things take longer. They've got to call them and ask questions. And the third party is more likely to give you substandard parts than the actual manufacturer.

[00:09:13] Plus, they may go out of business and then you got no warranty. That's what Dave Ramsey said. That's not uncommon. Dave Ramsey is that famous financial guy on TV. And he also said, just say no to extended warranties. So he says the smart move is to set aside half of what you would pay for the warranty and use that money to handle any car repairs that might come up. Now, it's not only is it more efficient, but you won't be out of luck if the serve his company goes bankrupt, which I just said. Now, ConsumerReports.org is where I learned about the fake letters about your car warranty. So just throw those away. CBS News concluded that it's not only the scam. That's bad.

[00:10:02] But that all extended auto warranties are a bad deal. And I'm going to have a linked in to that article and all the other stuff that I talk about today in the show notes. I've actually had good luck so far with an extended warranty I have on my Chevy Suburban, although I'm very good at about maintaining my vehicles. And it's still not sure that the two thousand nine hundred and fifty dollars I spent on this has been paid back in repairs. And we will see how the air conditioning does this summer, and I'll let you know. What about appliances and electronic stuff like that? Good luck with apple care. But I generally turn down all extended warranty info on relatively cheap stuff.

[00:10:49] And and they're really ridiculous on this. I bought something for four dollars and ninety five cents and they wanted to know if I wanted to spend two dollars for an extended warranty. I mean, that's just as ridiculous as my request for a warranty on my underwear.

[00:11:06] Ok.

[00:11:08] And you see it online too, especially on Amazon. I mean, they hit you up for a warranty on just about everything.

[00:11:14] Now, unless something is really expensive, I would avoid warrantees altogether, except for Harbor Freight. Like I said, which is the exception, not the rule. You also have to consider what is actually covered when you read the fine print. There can be so many exceptions that you could never collect on anything you thought was covered.

[00:11:37] Another scam is they send out their own inspectors to evaluate.

[00:11:42] Let's say your air conditioner, the service guy purposely breaks something that wasn't broken. And that's not and that's not under warranty and charges you a fortune if you want it fixed. And if you don't think this happens, just look at the horror, you know, horror stories online. I mean, here's an example right from my retreat center. This was especially hurtful because the daughter of the air-Conditioning guy worked here and I had done tons for her and her family. So one time the guy got away with selling me a four hundred and forty dollar thermostat where I only needed a fifty dollar one.

[00:12:23] And I guess that emboldened him thinking that I'm a ninny and don't know what I'm doing. Well, actually, it just made me watch more carefully.

[00:12:32] And I guess he didn't know my dad was an electrician for 50 years, so he pulled the main power switch on one of my air conditioning units. And for those of you that don't know you, you put it back in upside down this copper thing that makes the connection. And so it kind of looks like it's plugged in, but it's upside down and not generating any power. But if you personally didn't know, would think it looks like it's plugged in. So he told me the compressor was shot and it would be about six thousand dollars to put in a new system.

[00:13:07] And I said, you just put in this thing five years ago. Yeah. Tom. But, you know, they're not making them like they used to and just gave me this song and dance.

[00:13:16] Well, I sent him home. I said, let me think about it. I opened the electric box, flipped over the main switch and the thing fired right up and has been running for the last 10 years. And that was the last time he was ever hired by me.

[00:13:32] So, yes, there are people that will do and say anything for a buck and and believing everything you hear at face value can cost you a fortune.

[00:13:42] We have six air conditioning units here, so I tried another company this past week.

[00:13:48] And they advertise the fifty nine dollar and ninety five cent tuneup. So I called for the deal and I told her the thing wasn't calling her.

[00:13:57] Well she immediately raised the price to sixty nine ninety five for a quote, diagnostic.

[00:14:04] So the guy came over, put on his gauges. The thing was low on Freon. He never even suggested filling it up, which I would have rejected anyway, because.

[00:14:15] He never even hinted at why it might be low on Freon and that one hundred and twenty five dollars per pound of Freon, I could have spent six hundred dollars on Freon that could leak out again next week.

[00:14:28] No, thanks. I don't want that. So then he immediately tried to sell me a new unit and a maintenance contract, which would be five hundred dollars a year. So I declined. Got rid of them. Noting how he had no interest in diagnosing this well maintained unit. And do you think I would want this guy who did pretty much absolutely nothing to be in charge of maintaining my equipment and paying him 500 bucks a year to do it? No, he was just there to sell. So this prompted me to take my EPA or Environmental Protection Agency test, which I'm actually doing this afternoon when I get done recording this so I can legally do my own maintenance and save literally thousands of dollars per year. Now, I'm not recommending this for anyone that's listening.

[00:15:24] I'm just very capable with tools and learning how to maintain and fix equipment. And my dad was an electrician.

[00:15:31] And so I'm just wanting you to find trusted sources and learn as much as you can before you blow money on worthless maintenance agreements and extended warranties.

[00:15:43] Now, again, with regard to air conditioners, I was reading a ton of comments on Angie's List. She had they had an article on there about H.

[00:15:53] It's called H.V. AC heating something.

[00:15:56] I don't know. And it's notable that all the the H.V. AC guys that were working and had their own companies were in favor of maintenance agreements and most of the homeowners were not.

[00:16:10] Take what you want from that. But they're very high profit thing, especially if they just show up twice a year and do absolutely nothing or purposely break something that's not covered.

[00:16:22] The problem is that many of these people with specialized knowledge that most of you couldn't possibly have. They have no one watching them as they're up in your attic checking out a piece of equipment that you know nothing about. It's the same with your car being all electronic now and very hard to work on yourself. So with no third party supervision, it's very tempting for these people to sell you things you don't need. Now, two great examples are Jiffy Lube and Sears. Both were caught multiple times by undercover investigations, lying to people about what they need, selling them worthless, unneeded stuff, and in many cases with Jiffy Lube not doing anything at all.

[00:17:10] I mean, in one undercover investigation I saw on YouTube, they put a they the investigators put a smiley face on the oil filter with a marker.

[00:17:23] After the car was given back and the owner had spent a fortune on all this supposed worthless stuff. The same smiley filter was on the oil filter. They never even changed the oil filter a Jiffy Lube.

[00:17:38] Now, in many cases, they oversold a bunch of worthless and unneeded services and never even did them. So you can check out Jiffy Lube report called All the Ways Jiffy Lube ripped off people over the years in the show notes.

[00:17:52] And there's probably a hundred YouTube videos with the them being caught dead to rights, cheating people on the links in the show notes with it. And guess what Seares trusted Seares for my whole life was just as bad.

[00:18:06] No wonder they're out of business now.

[00:18:08] Include a an article from The Washington Post called Sears charged with auto repair fraud.

[00:18:17] And they did target. From what I remember when seeing this on TV, that they targeted women that didn't appear like they knew what was going on and just sold them and scared them to death and jacked the fees up. Now, I know this episode is supposed to be about extended warranties, but I just can't help reminding you about rip offs across the board. You know, I've got scambrigade.com, a TV show and develop in Hollywood and and very in tune with this. And I don't mean to be skeptical, but it's just like, who was it? Ronald Reagan said, trust but verify. All right. So I kind of seen so many bad things. I mistrust and verify. All right. So you are just trying to protect your money here. And by the way, these investigations happen multiple times with both Jiffy Lube and Sears, and they were caught with their pants down every time.

[00:19:12] All right. Now.

[00:19:14] Here's some other issues you may be buying duplicate coverage. Most things have a manufacturer warranty as part of the original purchase. Sometimes you're buying duplicate coverage because a third party policy may start as soon as you buy it. Not after the manufacturer warranty expires. You got to watch for that. Also, you might want to check with your credit card company. Sometimes using your credit card on major purchases can double or even add to the manufacturer's warranty. Check it out. Now, according to a survey by Consumer Reports, most products today are very reliable.

[00:19:56] You may not need a warranty at all. They did this thing after three years of use.

[00:20:01] The likelihood that a major appliance such as a refrigerator or a digital camera will need a repair is only eight percent.

[00:20:11] So you're kind of playing the odds that ninety two percent of the time you're going to be fine without.

[00:20:17] And the item most likely to break down is a desktop P.C. at 37 percent. So you might want to get it. Consumer Reports, I think, is about 25 bucks a year. And they do all these studies and they're mostly I mean, they're honest studies because they are not funded by the advertisers. So. So I would. And I that's the first place I go on major purposes to see what they say about it, which is the most reliable. Which totally failed the test. And, you know, but it might have a bunch of fancy advertising making it sound great, but it really sucks, you know. So you got to check this stuff out.

[00:20:54] Now, Consumer Reports also went on to say that warranties could make great sense for like treadmills, elliptical trainers, plasma and giant screen TV's and really expensive stuff because no one service call could cost more than the warranty would cost. So it's really worth a subscription to Consumer Reports.

[00:21:17] The bottom line is I want you to make informed decisions on extended warranties and maintenance agreements and only purchase them when it makes sense, not out of a false sense of security just because you plunk down your money.

[00:21:31] You could be in for a rude awakening when you need them.

[00:21:35] And the fine print says, sorry, too bad. So I got links to a bunch of these articles and you can always Google, you know, warranty scams, home more at these scams, auto warranty scams, and you'll just have tons of stuff to look for.

[00:21:50] So but still, I want you to figure out if it makes sense and spend the money. If it doesn't make sense, don't spend the money. There's lots other things in business you can be spending it on.

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[00:25:28] It doesn't have to be that way so get in touch with me. And I will catch everybody on the next episode. See ya later.

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