Calculated Risk

Saving little bits of money here and there is essential, and all it needs is a question from a club member to keep money in your retirement bucket.

Do you own your hot water tank?

The water heater rental charge is a monthly line item on a gas or hydro bill. Along with that ten or fifteen dollar charge (before taxes) comes the feeling of well being that, if something ever goes wrong with the water heater, the gas or electric company are liable and will fix or replace it free.

Free.

A club member phoned the gas company and asked how much it would be to buy his existing hot water tank, he was warned it was a risk and that he would be responsible if anything went wrong with it and then told that, as the tank was seventeen years old, they would sell it to him for twenty five bucks.

Two months rental.

That was about three years ago and it's worked flawlessly. I calculate that one local phone call and five minutes of his valuable time saved this member a minimum of five hundred dollars.

Of course, if the tank fails tomorrow, he may have to spend that money for a new one, probably lasting another ten or fifteen years, potentially saving him thousands of bucks.

This is the concept of underwriting your own risk, even if three years ago the gas company refused to sell the tank to him, he could have installed his own and accepted the risk of tank failure. The break even point would be more like three years, not two months, but by now he'd be in a profit situation, with potential of a dozen more years of enjoying the savings from his own tank.

Something to think about as you relax in the bath.