Repair or Replace? A Recurring Question in Tough Times

When should you repair and when should you replace?

With the economic downturn keeping people in their homes longer and money ever tighter, it is a choice being considered by more homeowners these days.

For example, with winter coming, and concerns about energy costs mounting, many cash-strapped homeowners are trying to figure out how to reduce the $1,900 per year that the Department of Energy says the typical family spends on utilities.

A new furnace or energy-efficient windows, although both very obvious ways to lower heating costs, may not be in the budget.

In the meantime, caulking around windows and doors doesn’t cost that much and can significantly reduce the flow of cold air into the house. Opening the curtains, shades, or blinds on a sunny winter’s day can add warmth to a room.

The Home Builders Institute of the National Association of Home Builders suggests a few other inexpensive ways, including applying weather stripping around windows and doors, changing the filter in the furnace, using draft dodgers inside exterior doors, and installing programmable thermostats to control when the furnace goes on and off.

After surveying thousands of its readers on the matter, Consumer Reports maintains that if your appliance is eight or more years old, usually it makes sense to buy a new one.

If you have a favorite high-end, older appliance, you may want to repair it. Consider replacing a newer model if it has been repair-prone. But skip any repair that costs more than half the price of a new product, the magazine staff recommends.

The magazine found that its readers sometimes began the repair process but stopped in midstream in frustration. That, too, can be a costly process, because a repair shop will still charge you even if you change your mind and decide to buy a new whatever.

AARP has millions of older members on fixed incomes. It recommends considering the “50 percent rule,” which financial experts have long advocated as a gauge when determining the cost-effectiveness of replacement versus repair.

Those experts say that if a repair was estimated to cost 50 percent or less than the amount you paid for the item, it was usually better to have it repaired.

AARP, however, suggests that the 50 percent rule should be based on replacement value, not original purchase price, since many consumer items have dropped in price over the years.

For major items such as automobiles, consumers should first calculate the estimated current market value or resale value instead of the original purchase price.

If your mechanic says the car will cost $6,500 to repair, and its trade-in value after that is $1,000, the choice is obvious. Take the cost of the repair and put it down on a new car.

Always check each and every product you own for a warranty. Conventional wisdom maintains that a product usually starts causing problems the day after the warranty expires, but just in case something is covered, you should know it in advance.

Consumer Reports also recommends that unless you’ve bought a pricey, high-end model, it might not pay to professionally repair many out-of-warranty products that are more than three years old.

Regular maintenance extends the life of just about anything. When dust and dirt clog furnace filters, the air flow is constricted and the furnace must work harder. A furnace that does not work efficiently will cost you more in energy, and its parts are more likely to wear out quickly.

One of the factors governing the decision to repair or replace is life expectancy of the product.

Most refrigerators last 15 to 19 years. Unless the fridge has been a lemon since the day it came into the house, the newer it is, the more consideration should be given to repairing it.

Freezers, which last 20 years or so, should be given the same consideration.

An important consideration is energy-efficiency, however. Energy Star-rated refrigerators produced after 2001 use 40 percent less energy than those manufactured before that date, and that might have a bearing on your decision.

Saving $100 a year might not be enough to justify spending the kind of money that you would spend for a refrigerator that would meet your family’s needs.

In addition, sometimes a new appliance will change the way the rest of the room looks, or alters the layout so much that you’ll need to change everything, increasing the expense beyond what you can afford.

It all comes down to what you can afford and what meets your needs, meaning both tests need to be satisfied, not one or the other.

The same applies to windows, which we’ve just caulked and weather-stripped to help reduce heating and cooling costs.

Leaky windows account for 25 percent of heating costs and 40 percent of cooling expenses, but if an older house has 30 windows, replacement is horribly expensive, even if there is an energy-tax credit at one time or another.

Adding insulation to the weight pockets and repairing the sash, as well as a storm window, can help without breaking the bank.

The experts seem to agree that it is probably wiser to replace electronics than to repair them.

Technology changes rapidly, and the DVD player you bought when they first came out may cost many times more than ones selling today, and parts and even repair people may no longer be readily be available.

When you do replace these electronic gizmos, just don’t throw them away. Recycle them.

©2011 The Philadelphia Inquirer