What\’s the Worst That Can Happen?

In what is already being heralded as the greatest HVAC-inspired personal finance series in the history of the internet, I’ve shared the lesson that if something seems too good to be true, it probably is.

And the lessons keep coming! I pay over $400 for annual HVAC maintenance (albeit for 3 units) and that may seem downright silly to the folks who have no maintenance plan at all. After all, you can just call an HVAC tech if something goes wrong, and a lot of the regular maintenance (like changing filters, cleaning outside condenser coils) can be done yourself.

I’ve seriously considered going with no maintenance plan for my HVAC. 400 bones is a lot of money. Also, in my gut, there seems to be an insurance-ish aspect (discounted service calls & repairs) to a service contract, and I love to self-insure for stuff whenever possible.

However, one of the key factors pushing me to sign an annual contract is thinking about the extreme downside, which brings us to our second lesson.

Lesson #2: Always ask, “What’s the worst that can happen?”

This is an excellent question for any situation, but it’s particularly valuable when you’ve got a wide range of outcomes and a lot of uncertainty.

So what is the worst that can happen by skipping on HVAC maintenance? Because the AC and heating bits are so different, it’s good to consider them individually.

Air Conditioners – How Low Can You Go?

I think the AC is the more complex system – there are more major components, more moving parts, and the whole puron gas-to-liquid-to-gas bit is quite tricky. An AC system also costs a good deal more than a furnace, which would seem to underscore that more could go wrong.

It’s good to remember, though, that in lesson #2 I’m not looking at base cases or expected values; I’m worried about the darkest scenario at the very edge of potential outcomes.

On that count, an AC system just isn’t that frightening.

If missing maintenance makes the AC die on the hottest day of the year – with something that would have been caught in a routine checkup – that’s still not that bad. A little discomfort and expense, and all is right again.

If skipped service hastens the demise of the whole system, that does get my attention, but the math doesn’t look too scary. While the “ounce of prevention is worth a pound of cure” argument holds for almost any machine or equipment, we’re actually talking about quite a few ounces of prevention given the service contract cost. I don’t want to get bogged down here with calculating the ROI on maintenance, but this is a shades-of-gray situation. Replacing my full system a little early, while painful, isn’t a financial disaster.

For really extreme downsides, the AC just isn’t cutting it. Let’s see what the furnace has to offer.

The Furnace Is Where the Action Is

To this non-engineer, the furnace seems quite a bit simpler than the AC. There’s just a fan, a burny thing that burns stuff, and of course the fuel it burns – in my case, natural gas.

The furnace costs a lot less and has fewer moving parts. Over time, the only furnace repairs I’ve had are for circuit boards that get fried somehow (this still feels made up, but whatever).

So what’s the worst that could happen?

Maybe the furnace will fail because of neglected maintenance? That’s not the end of the world.

Maybe my heating bill will run too high because of inefficiencies? Annoying, but no biggie.

Anything else? Anything at all? These aren’t that scary, and with the modest down scenarios for AC, I’m starting to think skipping HVAC maintenance altogether is a good idea.

Oh wait – sorry – there is one more scenario to consider. The furnace could kill my whole family.

Yeah, furnaces can actually kill people, and they don’t limit themselves to just one way. They can kill with fire, a natural gas explosion, or carbon monoxide poisoning. They can do it in the attic, your bedroom, or almost any other room in the house. It’s kinda like Clue.

The furnace definitely wins the limbo contest of bad scenarios. Granted, I do have smoke and carbon monoxide detectors in my house, but on things that can kill you, I’m more of a belt and braces kind of guy.

I’m not exactly sure how a furnace can go from working fine to starting a fire or spewing out carbon monoxide, but that’s probably because I’ve never trained as an HVAC tech. I do know this is not just an academic exercise or industry scaremongering – a former co-worker lost her house to fire, and they traced it to a faulty furnace that would have been fixed with routine maintenance.

The risk of being killed by a furnace is pretty low, but it’s one of those risks that I’d like – within reason – to lower further. I feel like my HVAC annual maintenance does exactly that.

Considering “What’s the worst that can happen?” should be part of any decision, financial or otherwise. It’s particularly important when there are extremely bad scenarios that are rare enough they’re easily overlooked.

For example, perhaps you’re considering buying a bit more house than you can afford. Your base case is comparing tighter finances and added stress against having a cooler house and more stuff. You’ll earn your way out of the hole and save yourself a move down the road, right? What’s the worst that could happen? Well, I’d put divorce – a financial and emotional armageddon – on that list, because money issues are a leading cause of it, and a fixed mortgage you can’t quite afford is a scary issue indeed. I don’t think analyzing how a home’s purchase price influences divorce risk is part of most buyer’s due diligence, but perhaps it should be.

You can’t plan your whole life around really bad outcomes, because in many cases they are quite rare. But you also can’t blithely ignore them. Ask yourself what’s the worst that can happen, and be sure to factor it in your decision.

For me, annual HVAC maintenance already makes sense as a pure financial play, but the lower risk of my family dying is a really nice bonus.

And there you have it – financial lesson #2 from my HVAC. More is on the way!

 

Do you have a good counter argument to doing annual HVAC maintenance? Do you have any HVAC horror stories? Have you ever been bitten by a surprise worst-case scenario (in any arena)? Please let me know in the comments.

Picture courtesy of Kasparas