Never buy an extended warranty!

I get asked this all the time by friends. Should I buy the extended warranty on my computer, tv, etc. The answer is always no. These have a high profit margin for the sellers of the warranty as not many of it gets used. That is why you are always asked when you buy things.

Instead take the money you would have spent on the warranty and put it in your emergency fund if you are really that worried about it. It will earn interest, be there for other uses if the need arises, and can go towards buying a replacement if you end up actually needing it. If you end up not needing the "warranty" in your savings account then you just keep the money!

In my experience I have found that if I did buy the extended warranty it would have been wasted money about 90% (if not more) of the time. So a good practice would be to take 10% of the cost of each electronic item and put it in savings. It will be covered! No need to tie up your money in extended warranties and insurance. Do it yourself!