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Funny Money: Homeowner Money Traps To Avoid

Becoming a homeowner comes with a sense of pride and a lot of responsibility. It also marks you for marketers to sell you dozens of expensive products and services that you really don’t need. When it comes to your home, watch out for these common money traps.


Owning a home costs a lot of money -- here are several large expenses that you can hopefully avoid.When you manage to scrape together enough cash and responsibility to buy a house, you’re not just acquiring a place to live. You’re entering an exclusive club — one shared by those you no doubt admire and respect.

That club, though, is not so prestigious. It’s a list of people perceived by an entire industry to be easily exploitable stooges who are so paranoid they’ll give up everlasting gobtoppers of cash in exchange for weak reassurances that they’re protecting their property.

Homeowners may see themselves as pillars of society, but to businesses that offer a false sense of security in exchange for an annual fee, they also resemble bowling pins waiting to be toppled over.

Come, fellow bowling pins and prospective bowling pins, as we take a look-see at all the bowling balls looking to hammer you.

Extended warranties

One of the first things you discover when you move into your house is that it’s filled with about 10 million things that can and will break constantly. Some will need to be fixed immediately, and some you’ll be able to try to hide and ignore until you spot looks of pity in the faces of visitors. Your closing documents usually include a warranty that lets you take care of the major fixes with a magic phone call.

In the back of your mind, you start to fear how awful it will be to have to stop calling that magic phone number and start to have to fix stuff yourself. Then come offers by email and junk mail that let you extend your warranty, along with that magic phone number, if you’ll agree to shell out more money.

Remember the companies offering you extended warranties wouldn’t make their offers unless they planned on sitting back and collecting far more money than it will cost to fix whatever breaks. You’re best off ignoring them and saving the money for repairs as needed. Your 10 million things will still certainly break, but you’ll maybe have enough money to fix them or willpower to ignore them.

Pest control subscriptions

I can’t verify this, but I’m fairly certain pest control companies have secret meetings with queen ants and termite unions, cutting secret deals that compel the bugs to attack your home and yard. You call up a pest control place, and the bugs get a cut of the payout.

Once the job is finished, the exterminators — so named not only for what they do to pests, but for what they do to your wallet — sell you subscriptions that let you call them back whenever the bugs return. It makes more sense, though, to use bug killers as hitmen rather than protection rackets. Refuse subscriptions and take advantage of special introductory offers from competitors once the annoying little guys return.

Security systems

The myth is that you’ll install a bunch of surveillance equipment, attach loud alarms to your doorways, post an intimidating sign in your front yard and just wait for them to catch silly cat burglars red-handed when they try to make out with your precious collection of DVDs you liked back in 2003, back when you used to buy DVDs.

The reality is that you’ll forget your password, be the silly person caught by the system breaking into your own home an embarrassing amount of times and that nobody wants your DVDs. Save yourself the hassle by buying fake security signs to post in your yard.

Unnecessary insurance

Ever have a friend who sells insurance for a living? No doubt they’ve chatted you up out of the blue to “catch up,” only to inevitably steer the topic of conversation to your insurance needs. By some amazing coincidence, the evaluation of this “friend” is that you are woefully underinsured, and, luckily for you, he is just the guy to help make sure you’re covered.

Do your buddy a favor by stopping him cold mid-pitch and telling him that you will only become his client if he can save you money by selling you the absolute minimal coverage required by your lender — which is most likely just the cost to rebuild your home — and letting you get rid of all extraneous coverage. If the conversation continues past that point, he either actually is a real friend after all, or is so hard up for business that he’s willing to help bowling pins out rather than hammer them into the gutter by selling them needless policies.

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About Phil Villarreal

Phil Villarreal writes Funny Money weekly for Money Under 30. He lives in Tucson and works for the Arizona Daily Star. He's also an author, blogger and Twitterer.

Comments

  1. I agree with most of this except security. Depending on where you live, security can be a big concern. Many security systems aren’t very expensive. I know since this is a personal finance website someone is going to say well $20/month every month for 50 years is going to be $195,000 in Bernie Madoff’s funds, but what’s your, or your family’s security worth to you? If the alarm is triggered, and I have triggered mine by accident coming in through the basement, the police will be there in 5 minutes (again, depending on where you live). Someone who knows what he’s looking for will probably be out of there by then, but it will deter more thieves and intruders than not.

  2. Is a home warranty really a bad idea? I certainly agree that you need to ignore all the scammers cold calling your house all day, but I just bought my first home last year and thought that a home warranty was a good thing to sign up for. I’m not so worried about my $500 dryer kicking the bucket, but I am worried about my furnace dying on me at the cost of $10,000+. A $500/year home warranty sounded like a good insurance policy to me.

    • One of the selling points on the home I purchased several years ago was that it came with an Extended Home Warranty. It sounded great, and the sellers paid for it (although I’m sure they ultimately passed the cost along to me in the purchase price) and we rested easy knowing our home was protected from the “unexpected expenses that 65% of homeowners face in the first year.” Four months later, our supposedly-covered plumbing sprung a leak. The warranty people sent out an inspector, and deemed that it was due to accumulated damaging originating with frozen pipes, and the warranty doesn’t pay if it’s due to “neglect”. Didn’t matter that we had only been living there during the summer and it was a pre-existing condition. Three months after that, our AC went ka-put, and those clever warranty people found a way out of that one too. I can safely say I would much rather have had a $500+ discount on the house than all the useless headache that stupid warranty brought me.