When things around the house break down, or are being held together with duct tape and chewing gum, a decision has to be made whether to incur the costs of fixing them or whether it is better to simply replace them. There are several criteria that must be considered when making the decision, including the age of the item, the cost of the repair, the likelihood that it will need to be repaired again in the near future, and the cost of a new one. In many cases, it makes financial sense to repair old items rather than spend money on new ones.

Sometimes though, pouring money into outdated, energy-inefficient assets is simply sending good money in after bad. Here are four common groups of personal and household items that will likely break down on you at some point in your life. (Big ticket purchases can put a strangle-hold on your finances, to help identify those dangers read 5 Horrific Things That Can Haunt Your Finances.)

TUTORIAL: Budgeting Basics

1. Vehicles
Whether to sell or junk your used car is one of the most difficult decisions you can make. New cars are expensive, but so are major repairs on old ones. There are times when the decision is easy, such as when it will cost $5,000 to put a new engine into a car that will only be worth $3,000 after the repair. Gas mileage is also an important consideration. If you are patching up an old clunker that gets 15 miles to the gallon, it may make more financial sense to buy a new or slightly used car that gets 30 miles to the gallon. As long as your old car is reasonably fuel-efficient and the repairs are less than 25% of the value of the car, and as long as the mechanic feels it is otherwise sound, it is worth repairing rather than buying a new car.

2. Household Appliances
Appliances like refrigerators, air conditioners, and dishwashers always seem to break down right after the warranty ends. Warranty periods are shrinking and the increasing complexity of the construction of these appliances boosts the odds that you will have to make the repair/replace decision more often. One of the main determinants is the age of the appliance.

Older appliances suck much more energy than newer ones on average. This is especially true of old refrigerators and freezers. If they are more than 10 years old, it is almost always better to buy new than to try to fix old compressors. With dishwashers and washing machines, it's both energy-efficiency and water usage that will help you make the right choice. New washers can use less than one-quarter of the hot water as old ones, which saves on both the water bill and the energy bill. It may also be difficult to obtain parts for older machines, raising the cost of the repair. In general, if a household appliance is more than five years old, give serious consideration to replacing it. (For tips on how to make shopping an easier experience on your wallet, see 5 Money-Saving Shopping Tips.)

3. Clothes
There was a time when clothes lasted a lot longer than they do now. Part of it was the fact that they were made to last, not made to be sold for a few dollars. Part of it was also that people mended, patched, and altered clothes until they were worn out. Today, people are more likely to throw out old clothes or send them off to charity. There is a financial benefit to buying high-quality clothes and fixing them when hems get dropped or tears appear. Low-end clothing is mass-produced and meant to be expendable at the end of the first season of wear. Good quality clothing can last years and are worth mending. Buy clothes that are simple and classic and can pair with many other pieces. This way, they won't go out of style long before they wear out. Clothing repairs and alterations at local seamstresses are often inexpensive ways to get another few years out of well-made piece of clothing.

4. Computers and Electronics
Computers break - frequently. So do the myriad of electronic devices we have around our homes, such as CD players, GPS units, televisions and alarm clocks. Electronic devices can be expensive to fix, and often, impossible to fix. As the price of most electronics continues to decrease while the features and capabilities increase, it is often not worth the cost to repair them. This applies doubly to computers.

As new programs and online applications grow in size and complexity, they take up more memory. Older computers often cannot keep up after three or four years. While new memory can be added and minor repairs and disc cleanups can be made, using a clunky four-year-old computer often takes more time than it is worth. If time equals money for you, buying a new computer is often the best choice if the existing one is more than a few years old.

The Bottom Line
Making the right decision about repairing or replacing your household goods can save you thousands of dollars over the years. Consider all of factors rather than just the cost of the repair before deciding if something is worth hanging on to. (Stores are constantly offering extended warranties, but to see if it is truly worth it, check out Extended Warranties: Should You Take The Bait?)

Related Articles
  1. Insurance

    Top 5 Car Insurance Companies in Texas

    Examine the five biggest automobile insurance companies operating in the state of Texas, ranked based on market share in the state.
  2. Insurance

    Top 8 Car Insurance Companies in New Jersey

    Read about the top personal auto insurers operating in New Jersey, and learn about recent trends in market share among these companies.
  3. Insurance

    5 Ways to Lower Life Insurance Premiums

    Learn several effective methods for lowering life insurance premiums. These include quitting smoking and considering term life insurance.
  4. Budgeting

    The 7 Best Ways to Get Out of Debt

    Obtain information on how to put together and execute a plan to get out of debt, including the various steps and methods people use to become debt-free.
  5. Economics

    Understanding Switching Costs

    Consumers incur switching costs when they receive a monetary or other type of penalty for changing a supplier, brand or product.
  6. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  7. Economics

    Explaining Market Penetration

    Market penetration is the measure of how much a good or service is being used within a total potential market.
  8. Economics

    Calculating the Marginal Rate of Substitution

    The marginal rate of substitution determines how much of one good a consumer will give up to obtain extra units of another good.
  9. Home & Auto

    4 Areas to Consider Roofing Material Types

    Roofing your home is very important, that’s why you should choose a roof specifically designed to handle your area’s climate.
  10. Home & Auto

    5 Cars That Will Save You Money in 2015

    Learn which cars will save you money in 2015, whether you are looking for a compact, mid-size or full-size car, or even a pickup truck.
RELATED TERMS
  1. Cost Accounting

    A type of accounting process that aims to capture a company's ...
  2. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability ...
  3. Duty Free

    Goods that international travelers can purchase without paying ...
  4. Fast-Moving Consumer Goods (FMCG)

    These are consumer goods products that sell quickly at relatively ...
  5. Debt Consolidation

    The act of combining several loans or liabilities into one loan. ...
  6. Personal Spending Plan

    Similar to a budget, a personal spending plan helps outline where ...
RELATED FAQS
  1. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  2. What are some common ways product differentiation is achieved?

    There are many ways to achieve product differentiation, some more common than others. Horizontal Differentiation Horizontal ... Read Full Answer >>
  3. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  4. What role does the OEM (original equipment manufacturer) play in the finished product?

    Original equipment manufacturers (OEMs) do not typically play much of direct role in determining the finished product. However, ... Read Full Answer >>
  5. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>
  6. Is the retail sector also affected by seasonal factors?

    Generally speaking, the retail sector is highly seasonal. Almost invariably, sales in the retail sector are highest in the ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!