I was talking with my mom on Sunday about her financial situation. We’ve talked about it before and she’s pretty open about things. She was caring for my grandmother 24-7 the past ten years, up until Grandma passed away last September. Grandma had two pensions, one from working for the state for 25 years, and the other for working for the county for 25 years. She had a couple thousand coming in, and the way I always looked at it was a rest home would have taken Grandma’s money, so may as well be my mom getting that money for caring for her around the clock. But now that Grandma’s passed away, her pension no longer arrives every month like clockwork. My mom’s health is not the best and she’s not keen on getting a full time job. In fact, she’s real nervous about the whole idea. I told my mom she should figure out just how much money she’d need to make to just get by. Maybe it would be easier to think about, knowing it could be very part-time job, maybe she’s freaking herself out thinking she’ll have to get out there 40 hours a week, and that won’t be necessary. First off, her house is completely paid for, she managed that when she sold Grandma’s house ten years ago. My mom’s credit is non-existent, so there is little chance she’ll be mortgaging her place anytime soon. No credit card debt because she has no credit. In the end we figured she would need to bring in between $600 and $800 a month to make ends meet.
As she ran down the list of monthly expenses, she mentioned her washing machine. Which she rents. I remember she’d told me about this years ago; today I started wondering how much she paid each month for this used washing machine. I got the chance to talk to her on the way home from work and I asked her who she rented from, and how much. She told me the place, which I’m familiar with. My mom bought me a machine from them years ago, an old Maytag which had to have been 30 years old. It was in great condition and worked well for me for several years. Anyway, she said they charge $18.xx (can’t remember the exact change) each month to rent the machine.
I then asked her, “Haven’t you been renting from them about twenty years?” She confirmed that she had. She asked if I was interested in renting a machine from them. I told her I was just thinking how we’d been talking about whether she could eliminate any of her monthly bills and maybe she could take $200 of her savings (she has right around $6000 – no retirement at all – her husband has nothing either and can’t hold down a job), buy a new machine from Home Depot and then she wouldn’t have that $18/month payment to worry about.
She agreed that sounded like a good idea, but then she said the reason why she prefers to rent her machine is because she doesn’t have to worry when it breaks down. She doesn’t have to worry about her husband wanting to fix it – as he thinks he is a great handyman but well, he actually isn’t.
I told her that a new machine would probably last at LEAST five years without breaking down… but she doesn’t want to think about the possibility of having to worry about the repair issue. She says if her machine breaks down, she calls the rental place and they just bring out another used one. Very simple, and no worry.
At that point she changed the subject, and I didn’t pursue the topic any further.
But now that I’m home, I became curious how much she’s paying for that peace of mind.
Since I can’t remember the change, let’s just say $18/month. There are 12 months in a year, times 20 years, that comes to 240 months multiplied by $18 = $4320.
FOUR THOUSAND THREE HUNDRED AND TWENTY DOLLARS.
Now considering that she’s going to continue renting for at least the next ten years, we can tack on another $2160.
So $6480 for thirty years renting a washing machine.
Well, there’s nothing we can do about the past twenty years, but what about the next ten?
Let’s say she buys a brand new one from Home Depot for $200. There is only my mom and her husband and his uncle, so it’s not like they wash a lot of clothes… so maybe she buys a brand new one from Home Depot every five years so she won’t have to worry about it breaking down. Is that unreasonable? Do you think an inexpensive machine would last less than five years with minimal usage?
Anyway, let’s say it would last five years.
2008 $217.40 ($200 + tax)
2013 $244.57 ($225 + tax)
I added on $25 for inflation for the second one. That’s $461.97. As opposed to the $2160 she’s going to put out to rent a used one.
That is one heck of a lot of money to put out for peace of mind. I mean, it’s only EIGHTEEN DOLLARS a month, and anyone could afford it. But it’s one of those trap things that these places get you into. I am always amazed that people actually use these places. They have them for renting “wheels” for your car, computers, or an entire houseful of furniture. OH! It just makes my head spin to think about it.
Have you ever fallen into the rental trap?
This post was included in the Carnival of Money Stories, Edition #65! Thank you The Dividend Guy for the hard work of hosting this event, and including my post!
My DH insists that we rent our water softener. We pay about $30/month for the last 12+ years. He has the exact same response as to why we must rent. Go Figure. Instead of buying a water softener at Sears for a few hundred dollars and getting a service agreement we have paid thousands of dollars.
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Ohhhhhh, I can feel your pain. Have you ever presented the actual dollars to him on paper? I was thinking about doing that with my mom after I realized she was spending THOUSANDS on her washer. ACK!
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Oh, dear! That’s just terrible. Outrageous!
Maybe you could set her up in the appliance rental business: sounds like a mighty fine way to get rich on other people’s naivete!
She’s paying about 19 bucks a month, eh? Hm. Say she could get a washer at Sears or the Depot for $450 (unless I’m mistaken, $200 is a pipe dream). According to Quicken, at 8% she could pay that off in 24 months with $20/month payments. Then she’d be free of those payments and she’d have a brand-new washer, albeit the old-fashioned nonwater-saving top-loading variety.
Seems like she’d be an awful lot better off to buy a less efficient washer on time than to subject herself to the rental rip.
Sears will send a serviceman out to fix appliances, though I’ve heard under their new management that’s no longer working out well. But I think HD has service contracts–a rip-off, too, but lots less of a rip than the rental scheme.
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Funny, we were just looking at washers at Home Depot in May for a machine – and you’re right, it wasn’t $200, it was $275 after rebate. I actually posted about the washer and dryer my husband got for $25 for the pair. They work just great. The machines my mom is renting come from a used appliance repair shop in a poor business area of town. They are older machines – I would say at minimum 10 year old machines, top loaders and they don’t save anything on water. Yeah, I don’t get it either. Thanks for your comment. 🙂 I will definitely see if I can find the right moment to share with her just how many thousands of dollars that machine has cost her, and will continue to cost her.
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This reminds me of the woman whose son discovered she’d been “renting” her phone – an old black analog rotary style – from the phone company for $5 p/mo for almost 40 years from the telephone company. Pure REVENUE.
I don’t rent anything – unless it is for a “one time” special event.
It would make so much more sense for your mom to purchase an inexpensive machine – the least expensive washer home depot has is $319. Personally, I’d go for a model that is energy star compliant if you can – those come with tax breaks and refunds (depending upon where you live).
Oh – does your mom line dry everything, or has she been renting a dryer all these years too?
In the meantime, I’m very interested in your Mom’s situation, such as her age, if she worked when she was younger, and if she would qualify for social security retirement benefits if she’s reached her mid 60s. Or, since you said her “health is not the best” – if she worked when she was younger, would she qualify for social security disability payments?
If she didn’t qualify for a social security disability claim, how many years would it be until she would qualify for retirement benefits? Do you know if she worked enough when she was younger to qualify for worker benefits, or if she would qualify for benefits because she was married 10 years or more to someone who qualified for benefits and she would get the spousal benefit?
What was the type of work she did before she became your grandmother’s care provider?
Next, just to make sure your mom doesn’t suffer any problems with the IRS – you said she took care of paying for her house 10 years ago when she sold your grandmother’s house – was your grandmother of sound mind to do this? Was there paperwork regarding this transaction? I would hate to have your mom pay interest and penalties because there was no paper trail regading the transfer of funds that the money was intended to be a gift and was not subject to tax under IRS codes.
If your Mom has no debt, but at one point did have a mortgage, then it would appear she did have a credit history. I would almost advise she get a low balance low interest secured credit card (i.e. $500) that she uses very rarely to establish a credit history. Once she’s done that, then she use the equity in her home for a Reverse Mortgage to cover her living expenses. You (and your siblings) may not like this because it will reduce the value of the equity in her home at the time of her death, thereby reducing your inheritance – however, it would make her life in the home much more comfortable.
Another option (again, couldn’t really advise it without knowing your mom and the value of her home)would be to sell her home, depositing the proceeds into the highest yeild investment vehicles with lowest risk and living off the interest – which is what my parents did. With this, she could then move into an apartment or senior housing with services that make her life more comfortable and have things (like washers and dryers) provided.
So – those are a variety of ideas and options – good luck! Keep us updated and let us know what happens.
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do you have no interest loans from charities available? we have these in Australia, she could borrow the money for the washer and pay it back at $10 -$20a month with no interest, maybe ask a few charities.
also is the $6000 she has invested where she can get the highest interest? I found my parents would keep money in really low / no interest cash accounts,
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We stupidly rented a tv in London for two years. We could have bought top of the line for less than we paid.
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@MP – I thought I left a comment the day you posted yours… at any rate, thank you for all the suggestions. I’m still trying to find a way to work this discussion into our conversations as she doesn’t know about my personal finance blog, and doesn’t know I’ve broad casted the story of her washing machine all over the Internet. :-/
@Louise – another question I need to broach regarding the account she has her money in. I really don’t know if it’s high interest or not.
@Batya – the good thing is you realized the error of your ways. 🙂 Thanks for your comment!
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