Your broken stuff: repair or replace?

Jeff Yeager offers some rules for deciding whether to fix or replace that broken thingy of yours.

1. The 50 percent rule. The conventional wisdom was that if a repair was estimated to cost 50% or less than the amount you paid for an item, it was usually better to have it repaired. This is still a good guide to keep in mind, although many consumer products (e.g., electronics, furniture, appliances, even clothing) have continually dropped in price (in inflation adjusted dollars) in recent generations. So now, to be more accurate, the 50% rule should be based on replacement value, not original purchase price, or even on the estimated current market value or resale value of major items like automobiles. 

2. Appreciating appreciation. Before you decide to replace something instead of have it repaired, carefully consider whether the item you're thinking about trashing might appreciate in value over time. In the case of a well-made piece of furniture that is likely to become an antique, the choice to repair it is probably obvious. But it may not always be so apparent: When they needed repair, I wanted so badly to pitch those clunky old stereo speakers my dad passed along to me when I was a teen, and buy some trendy new (cheap) ones at Kmart. But Dad wouldn't let me; now those JBL speakers are classics and worth nearly as much as my 401k.

3. Calculate all costs. Well-made, older appliances may be worth the cost of repair (if you can still find parts and someone to do the work), but you need to factor in that most older appliances use considerably more energy than newer models, so in the end it's often more cost effective to replace them when they need repair. On the other hand, replacing older windows in your home with more energy efficient ones may not be a smart investment, taking a good many years in most instances to recoup the significant upfront investment. 

4. Rags or riches. When it comes to clothing, the priority should be on taking proper care of it to make it last rather than investing in repairing it. Because most non-designer clothing is relatively inexpensive, it's usually cheaper to buy something new once garments become threadbare. Even if you put on a few pounds, tailoring garments usually only makes financial sense with higher-end apparel items, unless you're a seamstress yourself.

5. Is it plugged in? A friend of mine who owns an electronic repair business once told me that nearly half of all the items people bring into his shop are simply suffering from a faulty electrical cord, plug, or other connection problem, or something else with a simple fix like cleaning out an air filter or replacing a worn-out belt. If that's the case, then repairing it will save you major currency. But, if it's something more major and requires special parts, even my friend admits that most new electronics are so inexpensive that it's probably not worth the fix.