Instead of paying “warranty money” that may or may not be used for the intended purpose – set it aside in an interest bearing savings account and “pay yourself to insure yourself!”
I originally stumbled upon the concept of an extended warranty fund on FiveCentNickel.com. A short while later I saw that Flexo of ConsumerismCommentary.com was also writing about how extended warranties are almost always a bad deal.
When guys in their financial position talk… I listen.
The traditional Extended Warranty
The traditional mindset – the one stores want us to have – is to make your purchase, say “yes” to their offer of an extended warranty, pay them for that extended warranty, then hope that you never have to use it but feel good about the fact that it is there if you need it.
Sounds smart right? It may be, but there is a smarter way… one that involves you keeping your money and only using it if you have to! I love concepts that challenge me to think and live outside the box! This is no exception
The smart alternative to the traditional Extended Warranty
Wouldn’t it be nice if you didn’t have to pay extra for that extended warranty unless you had to? Good news friend… we can.
All we need to do is change the way we think a little – not always so easy to do right? Well… this one doesn’t hurt so bad, there is very little change involved.
Rather than agreeing to pay the store to protect our purchase, we are going to pay ourselves to protect our purchase!
It’s that simple really. When the salesperson offers the extended warranty purchase, gracefully decline but make sure you note the cost. Now take that amount of money and put it aside into an Extended Warranty Fund that you create and maintain, so that your money stays in your bank earning you interest and is there if you ever need it.
Brilliant right? I thought so too.
How I used Capital One 360 to create my Extended Warranty Fund
A few months ago we started banking with Capital One 360 and have never been happier. Because Capital One 360 does not have brick & mortar locations they have much lower overhead costs and thus need to charge MUCH less in fees in order to run their operations. In fact they are not fee based at all, but follow the old-school banking model of earning interest of loaned money. What a concept right?
Assuming you already have an Capital One 360 account… follow these simple steps to create a new savings fund:
- Click “Open an Account”
- Next to “Capital One 360 Savings Account” click “OPEN NOW”
- In the drop down list select the desired account type, I chose “Capital One 360 Savings Account – Joint”
- If opening a joint account, enter the joint owners security information
- Give your account a nickname (I used “Extended Warranty Fund”) and fund the account from the desired source.
- Check the necessary boxes and click “Open Account”
Don’t have an Capital One 360 account? I highly recommend getting one – they are the best bank I have ever dealt with… by far. Did I mention that I love banking with Capital One 360?
Why the concept may be hard for some to grasp
In America we are so used to paying other people for things that it is hard to break free and choose instead to pay ourselves.
The average American spends the majority of their lives in repayment on borrowed money. This thought process is a conditioned behavior that has been formed through years of marketing mastery. If we do something over and over and over and over and over, it will condition our response to similar stimuli. Paying ourselves to insure ourselves is a similar stimuli that, given a chance, will form within us a healthier financial mindset.
To the skeptical… consider this a challenge.
Start paying yourself to insure yourself today!
If you do not already have one, open an Capital One 360 savings account, create your own Extended Warranty Fund and prove that you are not a conditioned to pay others before paying yourself.
Betterment is one of my two favorite ways to earn interest on my savings! They have an awesome program for the Average Joe to save and invest simply and effectively. There are no minimum balance requirements and no transaction fees. Read my Betterment Review or open an account to get started earning now.