Managing Home Maintenance Costs

Would you buy or rent air conditioner equipment? The answer might surprise you and it really depends on the assumptions you make regarding the costs involved. The first step is to obtain several quotes for replacing your air conditioner through a purchase plan and also renting it if this program is available. Most people can do a straight line comparison of the total cost of the unit installed vs. paying monthly rental fees. There will be a break even amount at some point in the future, which could be around 10 years depending on the assumptions and the actual costs.

Don’t forget to factor in the cost of insurance for service and maintenance if you purchase your own AC unit.  If you plan to be in the home longer than this breakeven number of years, you may want to consider a further refinement of the numbers to do a proper comparison.

Buy or Rent Air Conditioner

For example, if your cost will be $5000 and you have the $5000 available, how much interest are you collecting on that $5000 today. If it is just sitting in a bank account collecting very little interest, then this next step will not be of much interest to you.

On the other hand if it is invested in something such as a stock paying 3 or 4% dividends, then you really have to factor in the lost income associated with cashing in the stock to pay for the new AC unit. Four percent will pay $200 a year for as long as you own the stock and possibly more from gains in the value of the stock as well as dividend increases.

This income will help to offset the rental cost of the air conditioning a considerable amount and move the breakeven number further out to where it might be interesting to rent instead of purchasing your air conditioning unit. Take a look at the previous post about rent vs. buying a furnace and air conditioning for a more direct example.

For more information about general repairs around your home, click here.

Save

Replacing aging air conditioners that are no longer working is a bit of a non decision. However what if it is still working and your furnace quits on you? This is the situation the writer is faced with. We decided to replace the AC at the same time that we are replacing the furnace. We wanted to have a new energy efficient model that will help to control our ongoing utility bills as well as increase the resale value of our home. A real estate friend of ours told us that if the furnace or the AC unit is more than 10 years old, they should set aside money to replace it. If we sell in the next 10 years, the units will still be under warranty!

Replace Aging Air Conditioners – Damage

There is another reason to replace the AC when you replace the furnace. If the coil begins to leak it could damage the new furnace. The coil sits on top of the furnace. Leaking water or coolant would damage the furnace causing it to rust, possibly short circuit the electric motor and other components.

We decided  to replace both our furnace and replace our aging air conditioner at the same time. After all it was 28 years old and really does not owe us anything. Because it is so old it is inefficient and so we will gain from some of the savings we will get from the new system.

Everyone is in a different situation. We could have taken a chance and just repaired our furnace. This would have cost $800 with no guarantees that there would not be other problems. Apparently our furnace is known for cracks in the heat ex changer as well which we do not want to deal with.

So a big expense, but hopefully the right one in the long term.