Times are tough and a recent study by the Federal Reserve discovered that more than 50% of individuals surveyed could not afford a hypothetical emergency expense of $400 without selling belongings or borrowing money.

Homeowners work hard for their money and it’s no secret that the expense of owning a home adds up over time. In fact, the study by the Federal Reserve also revealed that “more than a third of all respondents said they were worse off financially than five years ago.” With credit hard to come by and many of those eligible for retirement unprepared, expensive repairs are just not in the budget.

When evaluating monthly expenses, such as a water or sewer line warranty program, it’s important for a homeowner to consider what they have in savings and what they can honestly spend each month for protection. For those homeowners living paycheck to paycheck, a few dollars a month to provide peace of mind could outweigh the risk of “if” a failure would ever occur, considering just over half of the survey respondents were putting some portion of their income away in savings and only 39% said they had a rainy day fund.

If you’re evaluating whether or not to purchase warranty protection, consider the following factors:

• Do you have savings to adequately cover a repair of potentially $2000 dollars?
• Could you sell belongings to help cover the cost of an expensive repair quickly?
• Could you apply for a loan in an emergency and know you would get approved? As more homeowners struggle to make payments, credit has become more difficult to obtain.
• Could you refinance your home and use the excess for repairs?