Like most people, I make good financial and bad financial decisions. Opportunity missed: not buying Apple (APL) when it was $18 per share. Opportunity taken: spending $6K on a new gas heating system, and saving more than $1,000 each year on home heating. I’m not selling anything here. The point of this post is that spending money upfront on the right things at the right time makes it possible to save lots more money over time. This heating changeover is the best investment I ever made.
It all started when I inherited a house that needed help, and one of the problem areas was the 30+ year-old oil heating system. This was back in 2008, when home heating oil was selling for $2.77 a gallon. Cheap! But not so cheap when you need to buy hundreds of gallons at a time to fill up that enormous tank. That said, my first $500+ oil delivery bill delivered sticker shock.
My mother was loyal to the oil delivery company for decades, and year after year they came to the house to revive the old geezer oil burner. They also made the oil deliveries, and she got a “free” contract out of them.
Looking at this deal realistically, it was very profitable for them to offer free oil burner contracts, as wasteful old burners use a lot of oil. The crappier the oil burner, the better it is for them because they deliver oil. You do the math.
Change in home ownership means all cards are on the table. I put aside sentiment and fired the heating company with their expensive oil deliveries.
As the intrepid new homeowner, with very “green” tendencies, I decided not to be satisfied with the status quo. As the new boss around here, I would not let them bleed me for petro dollars every few weeks.
I had over $5K in an online bank account that I won in a sweepstakes (yes, Virginia, there really are big-cash sweepstakes that you can win). I decided to take all that money out and use it for a new-fangled gas heating system, as I had a feeling I could save mucho dineros.
It was the perfect time to go ahead with this project, as massive new natural gas reserves were suddenly on tap. In fact, there was and still is a natural gas glut. This led to a drop in commodity prices of over 60%. I timed the market perfectly, but didn’t know it at the time. Hindsight is always 20/20, as you know, and I was just lucky.
Once I made the decision to go ahead with it, a couple of local contractors came to the house with their product brochures and gave me their estimates. I was pre-sold, but determined not to be a sucker. As you know, salesmen can be pushy and they exaggerate, so you need to step back, weigh the offer and make the best decision for yourself.
Once I made a decision, the tab to remove the old burner, convert the home plumbing system from oil to gas, buy a water tank and a gas-fired heater, pump out the old oil in the tank and seal it was about $5k.
One of the salesman tried to talk me into spending an additional $900 to purchase a top of the line gas heater that has the highest efficiency ratings in the business. Sorry, no go. I figured it would take too long to retrieve the extra $900 with the tiny amount of extra efficiency. I still believe this was the correct decision, and I was already on track to saving a lot with the conversion.
The unlucky part: I have a house with no basement, so the heating system is behind doors in the kitchen. I had to buy and have installed two solid steel doors on both side of the heating system to bring it up to code. This added $1.5K to the final cost. In spite of this, I was determined to go ahead with it, and I did.
Now for the luckier part: I mentioned earlier that gas reserves skyrocketed, and the price fell more than 60%. Oil prices moved in the other direction, and my ghastly $2.77 a gallon oil bill would be about 35% higher now.
Doing the math, I save more than $1K every year on heating, and the system has paid for itself. It keeps on paying, year after year, and raises the value of the house.
Moral of the story: even a stopped clock (me) is right twice a day. And sometimes it’s really possible to save money by spending money. I’m also glad I didn’t spend the money on bling or a cruise, and made the correct decision to go ahead with this changeover.
Another couple of plusses: this burner uses no foreign petroleum and it’s far better for the environment. If you have a money saving home improvement story, feel free to comment here.
Update: There’s a giveaway to win years’ worth of energy-efficient CFL bulbs at another blog. Check out the Westway Bright Ideas contest page toenter.