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Dave Says: Are Home Warranties a Waste of Money?

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Dear Dave,

I have a question about home warranties. Are they a waste of money if you already have a fully-funded emergency fund, with six months of expenses or more set aside?

Andy


Dear Andy,

In my opinion, they’re a waste of money even if you don’t have that much set aside for emergencies. I recommend an emergency fund of three to six months of expenses to cover the unexpected things that life will throw at you. This amount of cash, sitting in a good money market account with check writing privileges, will give you easy access in the event of a financial emergency. I don’t do extended warranties of any kind, Andy. They’re not a good deal. You’re better off to self-insure against things breaking down, and put what would have been profit and marketing dollars for the extended warranty company in your own pocket!

—Dave

*Dave Ramsey is America’s trusted voice on money and business. He has authored five New York Times best-selling books, including More Than Enough. The Dave Ramsey  Show  is heard by more than 8.5 million listeners each week on more than 550 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.