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Extended warranties: Worth the money?
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An old adage holds that the multi-million dollar casinos in Las Vegas werent built on the profits of winning gamblers.

The same rationale, say consumer experts, may hold true with regard to buying extended product warranties.

If manufacturers were losing money with extended warranties, do you think they would be selling them? asked Tod Marks, senior projects editor at Consumer Reports.

For the most part, extended warranties remain an ill-advised purchase in most circumstances. But, like so many things financial, theres no one-size-fits-all answer. Here are some ideas to help you decide whether an extended warranty is, in fact, a sensible buy.

Warranties and profitability

Extended warranties, which can also go by the label of service contracts, are designed to provide maintenance or repair of products beyond whats addressed with warranties that are part of the purchase price. Merchants of all sorts have been dangling extended warranties for years, covering everything from a $100 cell phone to a $100,000 automobile.

While the length of extended warranties will differ significantly Marks said the average term is between three and four years one thing thats consistent across the board is their profitability. A recent report by the Institute for Operations Research and the Management Sciences found some extended warranties have profit margins in excess of 200 percent.

Keep in mind that warranties really make a profit for the retailer, said Michael Levin, associate professor of marketing at Otterbein University in Westerville, Ohio. Usually the retailer is selling the warranty and not the manufacturer, which also means you have to use that retailer and not that manufacturer.

Another issue is that extended warranties frequently go unused. A poll conducted several years ago by the consumers group Angie's List found that 61 percent of Angies List members had purchased some sort of an extended warranty, but half who did so said they never actually used it.

Youre betting that the item will break after the warranty thats included has expired and during the time period when the extended warranty is in place, said Marks. The likelihood of all that is incredibly narrow.

Another potential snafu is a warranty that doesnt make financial sense even though the coverage is fully in effect. A $150 repair on a broken clothes washer may seem a nice expense to avoid, but becomes a good deal less so when its covered by an extended warranty that carried a $200 price tag.

Do your homework

Whether an extended warranty is a good buy a rare occurrence, insist consumer advocates can boil down to as much advanced research as possible before making a decision. First on the list is a complete understanding of the length and terms of the warranty thats included with the purchase. In many cases, that may be solid enough to make an extended warranty moot or suggest further research to find a similar product with a better warranty.

Confirm the length of the manufacturer's warranty. Manufacturer warranties are designed to ensure your purchase functions as promised when you take it home and use it, said Roger Beahm of the Center for Retail Innovation at the Wake Forest University School of Business.

Next, research a products life expectancy. Search the Internet and see what other people have encountered with respect to the expected length of the product life.

Consider the brand itself. Different brands often mean different quality, added Beahm. Does the brand have a reputation of reliability? This is key when considering the need for an extended warranty; often buying a higher-quality brand without an extended warranty is better than buying a cheaper brand with an extended warranty.

Think about your own habits as well. Are you likely to keep and use a certain item for a lengthy period of time, or do you look to replace it every couple of years or so?

If you are looking for a $99 digital camera, you'll want to think about how long that item will be used, said Levin. If you think you'll really only use the item for six months or a year, buying a two-year extended warranty doesn't make sense."

If an extended warranty appeals for whatever reason, know precisely what it covers. For example, the manufacturer's warranty on a new car may last for several years or a certain amount of mileage and cover every working part of the vehicle. An extended warranty may extend the original warranty but offer much more limited parts and service coverage.

Extended warranty alternatives

The allure of an extended warranty is understandable the peace of mind of knowing that, if something breaks, someone or something has your back.

That said, its important to remember that there are options other than extended warranties that can afford that sort of protection. First is shopping for and selecting reliable products. Services such as Consumer Reports and other sites offer extensive information on product durability, so hedge your bets by buying something thats likely to last.

Another idea is to set up a rainy day fund. Here, you set money aside on a regular basis to cover any possible repairs or, if something is seriously out of whack, a replacement.

If you used a credit card to buy a product, investigate any applicable warranty coverage offered through the card. All four major cards Visa, MasterCard, Discover and American Express offer extended warranties for products purchased with their cards. In some cases, that can tack on an extra year of warranty protection at no additional charge.

Check with your state consumer affairs division about a law known as applied warrant of merchantability. While specifics will differ from one state to another, almost every consumer product you buy comes with an implied warranty of merchantability. This is a form of guarantee that a new item will work if you use it in a reasonable manner. You can ask the merchant who sold you the product for a replacement or refund; if that doesnt work, talk with a lawyer.

Finally, give some thought to the product itself. A car costing tens of thousands of dollars which you plan to drive for the next 10 years or more is a significant investment. A plastic-encased camera that ran you less than $100 is undeniably a more dispensable item, one where protection really isnt an issue at all: For some, the absolute price of the item may be so low that it may almost be considered a disposable item rather than a durable good, said Beahm. When that's the case, it may not be worth the hassle of exercising a warranty if and when the product stops working. Simply dispose of it and get a new one.
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How to avoid 'sharenting' and other paparazzi parenting habits
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A recent study revealed parents often spend up to two hours staging a single photo of his or her child to post online. - photo by Amy Iverson
Before having kids, some people just dont appreciate their friends baby posts. But after having a child of their own, three fourths of new parents jump right on the parental social media bandwagon. If you have become a member of this group, there are some rules to follow for posting responsibly.

Much of a parents worry is how to teach their children to use social media responsibly. We talk with our kids about privacy, oversharing, and setting restrictions on their devices to keep them safe. But parents themselves need to look in the digital mirror once in a while. Before having children, it doesnt take as much effort to think about what to post online. Its up to us to decide what we share about our own lives. But once you become a parent, there are many questions to think about regarding what is appropriate to post about your kids on social media.

In a recent survey, kids clothing subscription company Mac and Mia surveyed 2000 new parents to find out how they are documenting their kids lives on social media, and what concerns they may have.

First of all, people without children seem to feel a bit differently about the onslaught of baby pictures online than those who are parents. 18 percent of people say before they had kids, they were annoyed by their friends baby posts. But after having children of their own, 73 percent admit they post progress pictures of their little ones every single month.

Not only are new parents letting the world know each time their baby is a month older, but they are posting about their kids every few days or so. Men and women report they post 6-7 times per month about their baby.

And while 70 percent of new parents say the benefit of using social media is how easy it is to help family and friends feel involved, there are some downsides. Here are a few tips to avoid the pitfall of becoming paparazzi parents.

Dont miss the moment

In the Mac and Mia survey, some parents admitted to spending up to two hours to get the perfect shot of their baby. That seems a little extreme. New and old parents alike should be careful about spending so much time taking pictures and videos that they dont enjoy the moment. Years ago, I decided to never live an experience through my phone. A study by Linda Henkel, a psychology professor at Fairfield University in Connecticut, found that when people took pictures of objects in an art museum, they didnt remember the objects as well as if they simply observed them.

This photo-taking impairment effect can happen to parents as well. If we are so consumed by getting the perfect photo, we can miss out on the moment all together, and our memory of it will suffer.

Dont forget about privacy

60 percent of couples say they have discussed rules and boundaries for posting their babys photos, according to the Mac and Mia survey. Even so, men are 34 percent more likely to publish baby posts on public accounts. If parents are concerned about their childrens privacy, keeping photos off of public accounts is a given.

In the Washington Post, Stacey Steinberg, a legal skills professor at the University of Florida, and Bahareh Keith, a Portland pediatrician, wrote that sharing too much information about kids online puts them at risk. They write that all that sharenting can make it easier for data thieves to target out kids for identity theft. Check that your privacy settings are where they should be and never share identifying information like full names and birth dates.

Dont be paparazzi parents

36 percent of parents say they take issue when their childs photo is posted online by someone else. Responsible social media users will always ask permission before posting a photo of another child. But parents should also think about whether their own children will take issue with their own posted photos a few years down the road.

When parents are constantly snapping pictures and throwing them on social media, it can be easy to forget to pause and make sure the post is appropriate. I always use the billboard example with my kids. I ask them to picture whatever they are posting going up on a billboard in our neighborhood. If they are okay with that, then their post is probably fine. Parents should ask themselves this same question when posting about their children. But they should also ask themselves if their child would be OK with this post on a billboard in 15 years. If it would cause embarrassment or humiliation, it might be best to keep it private.

Once children reach an appropriate age, parents should include them in the process of deciding what pictures are OK to post. Researchers at the University of Michigan surveyed 10- to 17-year-olds and found children believe their parents should ask permission more than parents think they should. The kids in the survey said sharing happy family moments, or accomplishments in sports, school and hobbies is fine. But when the post is negative (like when a child is disciplined) or embarrassing (think naked baby pictures or messy hair), kids say to keep it off social media.
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