This weekend I’m looking at a different kind of investments since we just got an evaluation for energy efficiency grants. There are some good options available. Unfortunately since we let ourselves get into a low-cash situation between various post-moving expenses and extra investments, it would take a bit of juggling to pull this off.
So far we can get attic insulation and exterior doors at a net cost of $100 (as long as we don’t go for fancier options), which would plug two noticeable holes. Overall that’s an easy decision and it doesn’t even take much cash to fund them until the grants come through. The big decisions are on potential utility bill reductions with a total of $2400 in grants for a high-efficiency furnace and tankless water heater.
A new furnace could give us annual utility bill savings equal to nearly 10% of the cost, which is a nice return. The general estimates may be a bit high since we do use heat and air conditioning consistently but mostly to take the edge and not create a tropical climate. But I did some calculations myself and the impact seems to be in that range. It might also have less effect when combined with better insulation. The lack of attic insulation is apparently increasing our air conditioning needs as well so that will provide a bill reduction beyond the near-zero cost. The water heater is less certain but I’ll collect information to see the cost and what we stand to gain.
Until recently we had a plan that would eliminate the only debt not directly related to financing the house next month (and beyond that we are strictly focused on increasing equity, not taking it out) and do the first annual mortgage payment increase that could ultimately lead to paying it off in 10 years. Just before learning about this choice we made a large extra payment on the debt. Now that will be on hold until we figure out what to do. In the next few months we will have some substantial side income that would have gone to other renovation projects next year, but unfortunately it may not be early enough to help carry this while waiting for the grants.
I’m not prepared to reduce the substantial level of monthly investments we do even if the return from this is close, but I don’t think we can squeeze this in on the cashflow that remains. With current interest rates the cost of borrowing could be small, and certainly less than delaying investments, but that’s still a very hard step to take even if the return is good. If we do borrow anything I would aim to pay it in full within 6-9 months which might even make one of the “no interest for a year” store cards work for us.
It’s hard to decide if these choices have enough value to go for it, especially if it involves borrowing. Even if they have a small numerical advantage it may not be worth the disruption to our plans.