2017 Tiffin Phaeton - Additional Warranty or No?

[MrsSquid]

Thank you Kirk and Barbara.  The planning tips on how to budget for yearly maintenance and how to stagger the costs of tires, etc. are helpful.

Once we determine our initial "yikes" amount for a repair fund, my husband was thinking of adding the cost of what an extended warranty would cost each year. He figured the house always wins, so whatever amount they would charge should at least be sufficient to keep us on track and hopefully prevent financial disaster. I like the 10% idea, but we'll have to see if we can do that. We may have to start out with less and budget more annually. 

We're still two to three years out from becoming full-timers. We're hoping my cousin's goal of becoming a Newmar dealer coincides with our purchase timing. In the mean time, we're learning what we can. 

[Kirk W]

20 hours ago, MrsSquid said:

Once we determine our initial "yikes" amount for a repair fund, my husband was thinking of adding the cost of what an extended warranty would cost each year. He figured the house always wins, so whatever amount they would charge should at least be sufficient to keep us on track and hopefully prevent financial disaster. I like the 10% idea, but we'll have to see if we can do that. We may have to start out with less and budget more annually. 

Not having the "yikes amount" to budget when we started is the reason that we bought the extended warranty at first. If you read the article, we did not renew that "warranty" at the time that it expired because we had then built up a cushion of funds sufficient to pay the cost of an engine or transmission if we should ever need one. Folks need to understand that the so-called extended warranty is actually a health insurance plan for the RV. I retired from the service business and those are not service contracts (which we did sell) as they do not pay for routine maintenance but are more like home owner's insurance which will pay for a storm-damaged roof but will not pay for one that has worn out from age. 

If you do fall short of the ability to set aside that 10% fund at the start, and so buy an extended warranty, be very careful in selecting one and don't buy the least costly one. I have long observed that the vast majority of satisfied customers for extended warranties are those who bought the more costly ones. That is because just as you can get really cheap health insurance which is difficult to get to pay anything and then doesn't pay much, that same thing is true for extended warranties. If you buy one get what is called an "inclusionary" one and not the "exclusionary" variety. The difference is that inclusionary covers all items on the RV except those specifically listed as not covered. The exclusionary type only cover the items that are listed on the contract and do not pay for anything not listed. It is a very important difference. 

The key to operating in the way that Barb advocates is self-discipline. Her plan would work for any and all RV people if they actually do as she suggests but far too often people fool themselves into believing that they will make up the money they don't set aside at a later time and because no major repairs have been needed, they stop setting aside the budgeted money. If you go with Barb's suggested plan you then must make sure that you actually do it every time, even if there have been no expensive repairs. Most people just do not have the discipline to keep putting the money aside. On the other hand, for those who do set aside 10% of the purchase price and add to that fund religiously each year, even though the fund keeps growing and is rarely ever used when the time comes that you need to replace or remodel the RV there is money there to do that. In our case, Pam began to have major health issues and we needed to leave the fulltime lifestyle for medical reasons. Between the money we set aside when we started our travels and the funds built up in the emergency reserve, we were able to buy our present home-base for cash, just as we would have done with an RV if we had stayed on the road. It is wise to always have some type of exit plan while living in an RV and the funds for that plan can easily be combined with the unused maintenance reserves in the event you are forced to change your lifestyle course. 

[Barbaraok]

Hadn't thought about the 'self-discipline' part of it until I saw Kirk line it out and then I remembered why we have always done that.  When Dave first started in higher ed, faculty were paid on 9 month contracts and if they wanted to, they could try and teach in the summer.  But summer positions were not guaranteed.  That meant that come June there would not be a paycheck.  So I learned to pay the 'summer fund' first, so that the bills would be paid if Dave didn't teach in the summer.   And if he did - then that was a bonus that went into savings.  Lots of banks in college towns made money on loans to first time faculty members to tied them over that first year of teaching.