Lazy Man and Money

Environmentally Friendly Money Saving: Make Your Home Energy Efficient

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Because I’ve contracted the flu that’s been passing around the family, we’re going to do a guest post. Hopefully, when PainBot is done eating my soul, I’ll have a new article. In the meantime, Kostas Chiotis is here to save the day. He is an economist and he shares the latest tips on how to save money and manage finances at FinanceBlogZone.com. Connect with him on Facebook and Twitter.

Every time we think about home improvements, the first question that comes to mind is, “ Will this save me money”? Your goal might be getting out of debt, or saving money or just keeping your budget in place, but did you know that you can save money while being kind to the planet? I will talk about how we can make our homes energy efficient without hurting the environment.

In recent years, many people have become sensitized of the need to conserve the environment and save money at the same time. The perception that eco-friendly homes must be newbuilds is misleading because you can start making small changes to your home with the few bucks that you have. Such improvements can be done with any budget, without breaking the bank. If you want to make a start, here are suggestions to reduce your energy bills and help the planet.

Top 10 Eco-friendly Home Improvements to Save you Money

1. Seal Leaks and Drafts

Sealing air leaks during winter and summer will help you save some dollars off your energy bill. Check your house for possible drafty doors and windows, that bring in cold or hot air, forcing your air HVAC system to work extra hard to maintain desirable temperatures. Overworking the air conditioners or furnace means that more energy will be used up, putting a strain on your wallet. Test for leakage in draft-prone areas such as window frames, doors, baseboards, pipes and chimney and use weather stripping or caulk to seal them.

2. Roof restoration

Investing in roof restoration will save you money in the long run, although the price for the restore services could be high. During the summer, roof restoration will prevent heated air from entering your house, thereby reducing strain on the cooling system. It also helps in keeping the house warm during winter. You can lower the cost of roof restoration by using green roofing products and hiring a local contractor.

3. Use wood-framed windows

solar-panels

Replacing your UPVC and metal windows with wood-framed windows will save you money and protect the environment. Wood-framed windows last a lifetime, are more insulating and less polluting than the popular UPVC windows which emit toxic compounds. Also, wood-framed windows are easy to repair.

4. Install a Programmable Thermostat

If you use an old air conditioner at home, you are likely to see inflated utility bills during the summer, since these systems have to do extra work to maintain the home temperatures. Ideally, you have to turn off the AC when there is no one at home or lower the temperatures when people are asleep. You can quickly forget such actions.

With the programmable thermostat, you can regulate your home’s temperatures depending on the settings you choose for specific times of the day. Plus, it is inexpensive to install, and it will shave off some bucks from your bill.

5. Buy Energy Efficient Electric Appliances

When purchasing new appliances or upgrading your home equipment, check if they have the Energy Star label. The label means that the devices have been certified by Energy Star and meet a high level of energy efficiency. They offer significant energy savings without compromising on the performance. Also, some electricity providers offer incentives for replacing old appliances with the energy star rated models.

6. Install Solar Energy

Solar energy power is a renewable source of energy that is provided naturally from the sun. Although solar panels are expensive to purchase and install, they can result in huge savings in the long term, making your home green.

To take advantage of solar power, make sure you locate it in a place where it can collect as much energy as possible. Hire a local contractor to advise you on the best location for the solar panels. Also, you can benefit from tax breaks, grants, and incentives from the government, as they continue to encourage the public to utilize the natural power around us and bring down electricity consumption. If you are in debt, getting advice on how to manage debt and taking advantage of such government grants and incentives is good for your wallet.

7. Use Sustainable Building Materials

Did you know that you can use eco-friendly materials when building every part of your home? Using materials such as recycled plastics, recycled glass, reclaimed lumber, bamboo, and cork will help reduce the impact of the construction on the surrounding. They can be used as building materials, roofing materials, floor insulation and sealing air leaks in your home.

In addition, insist that your contractor recycles old wood floors, doors, and windows instead of sending them to the landfill.

8. Eco-friendly Lighting

Replacing your old bulbs with compact fluorescents lamps (CFLs) and light emitting diodes (LEDs) will lower your electricity bills over time. CFLs and LEDs have a longer lifespan than the traditional bulbs, even though they are pricey. They are an ideal option for eco-friendly home improvements.

9. Add heavy curtains over windows and doors

Although they may seem cumbersome, heavy curtains or drapes will help conserve energy by trapping warm air inside during cold weather. Also, the curtains will keep the sun’s heat out during the summer, thus reducing an overwork on the air conditioner. This helps to reduce energy bills in the long term.

10. Water Saving Improvements

Moving from high flow to low flow faucets and showerheads will contribute to water conservation and cutting down your water bills. Also, you can help the environment by taking a shower rather than a bath that requires a lot of water.

Collect rain water by installing a water harvesting system and storing it in a tank. Use the rainwater for household activities such as watering your landscaping and flushing the toilet. Also, using tankless water heaters instead of hot water tanks will help save space and energy, since it heats only water that is passed through the electric coil. The extra space can be used for holding the rain barrels that store rainwater.

No matter how limited your budget is, you can make your home energy efficient and save the planet. The best part is, you do not have to make complete upgrades to be eco-friendly. Instead, start making small improvements, and your home will be green. In the course of the year, plan to make small improvements such as replacing your old bulbs with LEDs or CFLs, upgrading your electrical appliances to Energy Star rated models and sealing the air leaks around your window frames and doors.

Solar Panels: One Year Later

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Happy Earth Day, everyone!

Two years I underwent an adventure to Explore the Savings of Solar Power. We turned out to be perfect candidates and we moved forward. It took a few months to research. Then it took some time to find the right installer. After the winter was done, the installation could begin, and it was completed just around Earth Day last year.

I’ve written a number of posts on solar power overall. They may be worth reviewing if you think solar power might be right for you.

Conveniently this Earth Day gives me the perfect opportunity to write about what it’s like having solar panels for one year.

As a review, in Rhode Island there’s something called “net metering.” Rather than being off the grid or storing power in a battery, our electricity meter turns backwards as we produce power to give the grid and forward during the night (or cloudy days) as we use power. The plan is to move that meter backward. We can’t control the sunlight, but we can control how much energy we use.

Fortunately, there were really no significant surprises. The most eventful thing that occurred was a very little bit of snow where I thought, “Should I buy a telescoping broom to clean off the snow on the panels?” Fortunately, the weather turned better and it melted in a day or two.

The other big thing was that we actually produced more power in the summer than we used. That may sound like common sense since it’s the longest days of the year with the most powerful sunlight. However, air conditioning takes a lot of power, so usually the meter moves back the most in the spring and fall.

I was just looking at my National Grid bill and they do a good job of giving you an Electric Usage History over the last year. It’s particularly great if you happen to be a blogger writing about electric usage over the last year.

  • April 2015 – We used 387 kWh. I think that during this billing period we just starting to get online with the solar power.
  • May 2015 – November 2015 – We used 0 kWh. Unfortunately National Grid doesn’t report negatives here. However, this means that we paid $0 for electricity. In reality we were actually receiving credits that carry over to future months.
  • December 2015 – We used 59 kWh. The shorter days combined with the cold meant more heat and energy usage. This cut into our credit by a few dollars.
  • January 2016 – February 2016. Each month we used ~240 kWh. This is the first significant use that cut into credits by a good deal. I think they were like $20 or $30. So we didn’t need to send a check, we just watched the credits slip some.
  • March 2016 – April 2016 – We are back to using 0 kWh as we produce more power with the longer days. This last month, April, we built up $73 in credits as we were on vacation.

Our credit balance today is ~$270… and May should be another credit building month. It’s nice to not have an electric bill, but it’s worth remembering that we have a HELOC bill that replaces it. We won’t really break even on this for another 6 years and then we’ll start to see the financial benefits. I know that some think that’s too far in the future to plan, but we have no problem with planning for college or retirement, right?

If credits continue to build like they have, maybe we’ll look into getting an electric car someday. I’m putting that idea on the back-burner for now as I haven’t had a chance review electric SUVs with 4-wheel drive and other things that we want in a car. Also, our cars are just a couple years old, so I won’t mind if we drove them for another decade.

Nevada PUC Should Bloody Get Stuffed

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If the title wasn’t clear enough, I’m feeling surly today. A couple of years ago, I talked with a couple of British personal finance bloggers and I loved the way they casually would say sentences like in title and make it seem normal. This is a family blog, so for today, I’m going to borrow some British language to express how I feel.

[Yes, part of the reason why I’m surly is that Le-Vel is suing me for this review. I go out of my way to help consumers make informed choices and they through a frivolous lawsuit at me. That’s a topic for another day.]

I’ve been saving this article for a couple of months now.

There’s a battle going on in the world of solar energy. Even if you don’t have a dog in this fight, I think it is a very interesting debate. Let me set the table so we can get started.

When you have solar panels installed they produce power during the day when the sun is out and not at night. (Yes, this is really basic stuff.) People, however, use power round the clock. You can buy a battery to store the excess energy during the day to use at night. Unfortunately these are expensive and still not very efficient.

The solution to the problem has been something called “net metering.” This means that as your panels produce power it moves the electricity meter backwards as you “sell” power back to the grid. At night, the meter moves forward as you use electricity. So you only pay the electric company for the “net” amount that you use when the production is subtracted.

And this “net metering” solution made everyone happy… until it didn’t.

It turns out that the electric company can’t easily take this produced power and just move it to the next house. There’s a some grid infrastructure stuff that needs to happen. It wasn’t a big deal for a long time because few people had solar. Now that more and more people are getting solar power, include families like ours (read our solar journey), it becomes a big deal.

It’s become enough of a big deal in Nevada, that the Public Utilities Commission (PUC), changed the net metering rules. Instead of being able to “sell” back excess power at an equivalent rate, they’re only going to buy it back for 25 cents on the dollar.

The economics of going solar are fairly straight-forward. People put up an initial investment of tens of thousands of dollars based on analysis that it will save them money in the long run while helping the environment. When we bought our solar panels the math was pretty clear that they’d pay for themselves in year 7 or 8 and after that we’d be saving money.

The federal government encourages people to switch to solar by offering them a 30% tax credit. My state had grants to further lower the cost. The message that I was being sent by both levels of government was pretty clear, “We want consumers to adopt this technology so much we are going to cover half the cost ourselves.”

If my state were to institute the same net metering math of Nevada the panels we bought would break even probably sometime after their 25-year life expectancy passed. We, like most people, made the buying decision based on a hundred factors (such as location of roof, trees blocking the roof, typical sun, cost of local energy, etc.) none of which anticipated a net metering change.

In order to qualify for the state grant, the power company had to tour my home and make sure that we weren’t going to waste the power by using our energy inefficiently (old light bulbs, refrigerators, etc.). I don’t know if Nevada offers (or offered) state grants. At a minimum they should have had a similar process of meeting with the customer and telling them the risk of changing the net metering agreement. As best I can tell this never happened.

Maybe the power companies were blindsided by the problem, but now they are passing it onto consumers. As SolarCity said in the article above, “The Nevada government encouraged these people to go solar, and now the government is putting them at great financial risk.”

That article makes the point that, “The PUC staff has said customers generally understand that utility rates are subject to change, and the state never promised unchanging prices, even if solar companies did during the sales process.”

This is why the Nevada PUC should get stuffed. Everyone expects prices of electricity to change. That’s one of the main reasons why people choose solar. By producing electricity through solar, the cost is zero due to the initial outlay. When the cost of electricity goes up, the value of the power by the solar panels should go up too. This isn’t Nevada changing utility rates. This is changing a core policy. I wonder if the Nevada PUC highlighted this risk when the net metering was entered into. If it was, you’d think they would have said, “We informed all customers entering a net metering agreement that the rates at which you ‘sell’ energy back to us can change to whatever we see fit.”

Imagine if the government next year passes some kind of legislation that amounts to them saying, “We are going to tax all Roth IRA withdrawals at 75%. We don’t expect this to be an issue because the American public generally understands that tax rates change.”

Assuming that the typical Lazy Man and Money reader has been putting money in Roth IRAs for years, I think we’d be pretty upset. I think that’s probably what the solar customers of Nevada must be feeling right now.

And while this article has focused on Nevada, it isn’t just happening in Nevada. Many states have this issue of infrastructure expenses. The result of Nevada’s action has lead to a potential federal law to protect those who have already bought from such changes.

The other hope is that the batteries get better. Tesla has introduced a product it calls the Tesla Powerwall, which has a lot of potential.

I don’t know where all this is going to end up, but as Terrell Owens used to say, “Getcha popcorn, ready!”

My 2015 Finances Reviewed: Net Worth (and Everything Else)

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[This is the fourth and final part of My 2015 Financial Year in Review. (Yes, it feels like it might have stretched into 2017.) You can read the previous versions there (or just go to , , and .]

At this point, you should have a good view into my financial year. I’ve given details about my stock investments, my real estate “empire”, and my blogging/income. One pattern emerged as I was writing the articles… each area was greatly challenged in 2015. Fortunately, there were some good things that happened at the end that made it a positive year.

I wanted to start with our net worth. Some bloggers give out their net worth and blog anonymously so it doesn’t really matter to them. Since some scummy people created hate sites about me because I expose their pyramid scheme fraud, I’ve decided it really isn’t too important to give exact net worth numbers.

I do track our net worth fairly regularly (and it’s very easy thanks to Personal Capital). Here’s how it has grown the last few years:

  • In 2013, it grew 21.8%
  • In 2014, it grew 14.6%
  • In 2015, it grew 10.6%

The problem with reporting percentages is that growth of 10% means a lot more if you have a million dollar net worth than it does if you have a $10,000 net worth. We’re a lot closer to the former than the later.

If you read those previous reports you know about my terrible stock picking (Twitter and oil, you two seriously suck). You also know that my asset allocation which is heavy foreign stocks didn’t help. You know how real estate didn’t appreciate and instead cost us a good deal of cash in repairs.

I was shocked to read that we grew our net worth by 10.6%. It just didn’t seem possible. I double and triple checked for errors.

There were two main reasons for why it happened:

1. We paid down a lot of debt. By having our real estate in 15-year mortgages we (with the help of our tenants) are paying off a lot of principle. It wasn’t just real estate, but we paid off a lot of our cars that are on 1% interest rates over 5 years.

2. The purchase of our solar panels helped a little.

That second one requires a bit of a longer explanation. We got a $23,000 HELOC to finance them (we’ll get a $7000 tax credit this year). It didn’t seem right to add this to our debt, when we really purchased an asset of considerable value – estimated to be decades of free electricity. So for accounting purposes, I included the full price of the solar panels ($33,000 before state grants) and I will deprecate their value each month.

It was a financial decision more than typical home improvement, so I wanted to treat it as such.

Is that fair, readers? You tell me.

The other thing about our net worth is that it isn’t very accessible. I already mentioned the real estate and if you read my last annual retirement income outlook you’ll know that a vast portion of that net worth is in retirement accounts. I haven’t done the calculation in awhile, but it’s really hard to touch around 90% of our net worth. Some might want to be more liquid, but I think this prevents a lot of lifestyle inflation.

The biggest lesson I learned this year and the takeaway I want you to have is how powerful slow-and-steady real estate investing can be. It is a pain in the neck from time to time, but between the properties, it can be $40,000 in net worth each year by simply chugging along. It’s great to have assets that aren’t tied to the stock market and this past year was a great example of that.

Invest in Solar Now?

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Ever since we moved to solar power, I’ve been looking at solar stocks. I’m convinced that the future of energy is moving to solar. I look at it a little bit like buying Intel or Microsoft before every home had a computer… or multiple computers.

I don’t pretend to be knowledgeable enough about individual companies to pick winners and losers. There’s an ETF under the ticker NYSE:TAN that tracks a bunch of solar companies. If I’m going to invest in solar power, the TAN ETF is the best way to do it. It appears that I’m not alone in thinking this way.

There’s only one problem. I can’t pull the trigger. For every reason I can think of to buy it, I can think of another reason why I shouldn’t.

Why not create a time-tested pros and cons list?

Reasons to Invest in Solar (Pros)

  • The technology for solar has been getting better every year and it continues to get better and better. It’s kind of like CPUs, you know they aren’t going to get worse and improvements are continually coming down the pike.
  • Solar installations grow exponentially each year. Growing sales and a large untapped market seem to be a great combination.
  • Last week the TAN ETF fell off a cliff on Thursday. Okay, it might not have been the biggest cliff, but it lost over 6% which is a lot for an ETF in one day. (I love when stocks I don’t own drop, it means I can buy them on a discount.)
  • Last week the White House announced that they were going to put a lot of money to bring solar to low-income housing. No word if it asked for a new coat of paint (you know… being a talking house and all).

Reasons Not to Invest in Solar (Cons)

  • Solar power gets more efficient every year. That’s incentive for people to wait on the sidelines until next year.
  • The “old” inefficient product might be hard to sell without deep discounts. Discounted product may leave less profit for companies.
  • The current 30% US Federal tax credit for installing solar ends in 2016. That means solar panels will be effectively a lot more expensive for consumers 18 months from now. Improved efficiency should help ease the sting of that, but I expect a drop in installations. It simply would make less economic sense, as it would take longer for people to recoup their investment.
  • The President’s term expires in 2016, so his plan to get low-income housing using solar power may be curtailed by the next President. (Hat tip to LMaM writer Kosmo for bringing this one up.)
  • About that buying opportunity of the ETF dropping more than 6% in one day… the next day it went up 6%. The day after that, it went up 3%. That brief window of buying opportunity is gone, which leads me to…
  • Oil is cheap. When oil is cheap there’s less economic incentive to go with alternative sources of energy like solar.

… The ETF’s value itself is hard to gauge.

I’m not sure if this is either a pro or a con, so I’m putting it outside of each list. For a year around mid-2012 to mid-2013, it traded in the teens. In the next year it got to around $50, before it start to decent towards the mid-30s around mid-2014.

This is when I was getting interested in solar. I watched it soar up to $50. Since I like buying bargains, I cringed as it got more and more expensive. I don’t like to chase a stock or index as it reaches new highs, especially in a short time. The current drop brings it to the mid 30s again.

That kind of roller coaster is not exactly unexpected, but it seems to coincide with China’s stock market surge and subsequent drop of late. That is somewhat expected because nearly half of the components of the ETF are China stocks.

If you haven’t been following China of late, it surged something like ~100% for about a year and had a recent ~30% pullback. It’s almost in line with the ETF going from $30 to $50 and coming back down to mid $30s again. (In many ways, it feels like I’m buying into that China market… but that’s a much larger discussion for another day.)

It’s hard for me to put some kind valuation on something went so high only to crash. Was the high a bubble? Is this crash a bargain? The Guggenheim page seems to show that it the P/E was 13.9 when it traded around $40 in March. That seems like a reasonable valuation.

I am confident it is going in some direction… just not sure which. Any thoughts?