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Plan Well, Retire Well

Saving and investing your money

You Too Can Earn a High Rate of Return for Home Energy Improvements


For every dollar you spend or invest, there is an opportunity cost. For example, the dollar that you use to buy food cannot be used to invest for retirement. (Nor can the dollar you use to pay credit card interest charges, but that's another blog post!) Little kids up to senior citizens understand that a dollar can only be spent once. We may not like this but we live this everyday!

Some spending decisions require us to think beyond the immediate opportunity cost. Sometimes spending a dollar today, means that our dollar has the opportunity to earn a return -- make money for us -- in the future. When we purchase shares in a mutual fund, we do this with the expectation and hope that our dollars spent now will provide a return in dividends and/or increase in share price in the future.

Okay, obviously we invest in mutual funds with the expectation of a return on our dollars. What about when we make improvements in our home energy efficiency -- do we expect a return on our dollars? If you don't, maybe you should.

A recent article from University of Missouri Extension by Jeff Barber, Housing and Environmental Design Specialist, "Efficiency investments in home, appliances result in smart, tax-free savings," points out that the rate of return from making changes in your home can be quite significant. According to this article,

  • "Changing lights to new fluorescent lamps and fixtures averages a return of 41%.
  • Sealing heating and cooling ducts averages a return of 41% as well, and
  • Upgrading to Energy Star when replacing a clothes washer averages a 37% return."

Now is an excellent time to think about investing in home energy efficiency improvements so that you can both lower your immediate costs on your energy bill as well as make investments that will provide a long-term return on your money. For ideas on ways to save energy easily around your home, see the U of I Extension news article, "Save Energy and Lower Summer Cooling Costs."

If you're interested in further exploring home energy savings, there's an amazing calculator online that you can use, at http://hes.lbl.gov. At this website, you can input information about your own home and then see how changes to your home would save in energy costs. Save your session number and you can come back and add more information to your home profile, and calculate energy savings for different energy conservation improvements.

You have a choice about how much time you want to spend inputting specific information about your home's location, building design, and appliances and heating/cooling equipment. The more details you provide the more on target the information you're given will be in the final calculation.

I spent about 15-20 minutes inputting information about my home and found this gave me results that seemed very targeted. In the final recommendations, I had a checklist of home improvement suggestions to consider that included information for each suggestion about:

  • yearly savings,
  • estimated cost to implement,
  • payback time in years,
  • savings in carbon dioxide emissions), AND
  • estimated return on investment.

I love this calculator! Now I have quality information that allows me to make informed decisions about whether it's worth it or not to make specific home energy efficiency improvements. Try it for yourself and let me know what you think! Just click on my name below to send me your feedback; I'd really like to know what you think of this Home Energy Saver calculator.



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