Like many of you, my home is filled with different types of small appliances. When something major goes kaput in our homes like the air conditioning, the refrigerator, or the stove, we don’t really think twice about the cost of calling a repairperson. Many of us had some type of mini refrigerator in our college dorm rooms or possibly our first apartment, and many homes today carry lots of small appliances, whether in tricked out basements or in the master bedroom. This past week, we had a mini refrigerator die on us and became confronted with this very simple question. Should we get someone here to fix it or just buy a new one? What do mere mortals like us who can’t play Tim The Toolman, nor do they want to on a Saturday afternoon, do to fix the problem?
I haven’t written a blog post on this yet, but it has occurred to me that some serious analysis should be done on charting the hourly rate of both blue-collar and white-collar workers in the service industry. My instincts tell me that the yield curve would illustrate that the hourly rates for blue-collar workers have increased substantially comparative to the white-collar worker in the last decade. Service professionals will often charge by the hour and white-collar workers can be in the $100 to $200 range or even far north of $200 if they carry specialized experience in a given area of practice. Blue-collar workers that come to your house such as electricians, plumbers, and yes, even handymen can be in the range of $75 to $125 per hour. Most of them will charge you for the first hour no matter how much time they have spent at your house.
In our case, we had a mini fridge that goes for about $179 in several different superstores. By the time you pay tax, let’s call it $200 for a brand new refrigerator that carries a 1 year warranty on the motor, 5 years on the compression system, and realistically has a 5 to 10 year shelf life before it blows up and you need to buy a new one. If you call a handyman for a visit, I figure you are out $100 for the visit without knowing very much at all about the real problem with your small appliance. If they tell you that the motor is blown, your cost for the motor and the labor time is much more than it would be if you bought a new one. However, if the real problem is that you were too little of a braniac to figure out some switch that needed to be turned back on or there was some very small minor problem, you might be able to escape for just under $200.
Every financial decision you make life should carry a risk vs. reward analysis, even buying a small appliance like a mini-refrigerator. The guaranteed route in this scenario is to buy the new fridge, while the more risky route is to take your chances and hire the handyman and hope it’s not a big problem that needs fixing. The smart money move in most cases for the under $300 appliance is to just purchase a new one. However, our emotions often get in the way and this causes us to spend more money by making impetuous decisions even on the small items rather than thinking through what makes the most sense. The larger your home, the more you need to budget for these items or you’ll have to consider putting Mr. Handyman, and your wallet, on speed dial.
Written by:
Ted Jenkin
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