As the Texas summer is fast approaching, one of the things I’m worried about in my home is my electricity bill. First of all, I have a 23 year old AC unit that isn’t nearly as efficient as newer models. Secondly, I have 23 year old aluminum frame windows that do very little to keep out the crazy Texas heat.
While I’m just hoping the AC units survive so I don’t have to replace them, I had a unique opportunity to do something about the windows.
I had a company knock on my door and offer discounted windows in exchange for my home being a “marketing home”. That means they are going to market their product in my neighborhood and tell people to go look at my house for an example.
I got a competitor’s quote and this program is legit; I’m definitely getting a great deal! I’d tell the price and specifics, except part of my participation in the “marketing home” deal is that I don’t disclose the price.
So how am I paying for brand new energy efficient windows when I’m trying to save up for a wedding?
I’m Using a Balance Transfer on a Credit Card
One of my credit cards that I don’t use (and haven’t used for years) offered me a balance transfer at a 0% interest rate until January 1, 2014. There is a 3% balance transfer fee and they send me a check directly.
Let’s pretend I’m spending $5,000 on new windows and will take a balance transfer for that amount. The 3% fee means I’ll owe $5,150 when I pay back the loan, and then I’ll pay 6.99% APR on any balance left over after January 1st of 2014.
I hope to have it paid off before I pay any interest, but 6.99% is a low enough rate that I’m not opposed to paying interest on a small balance, especially when you consider how much money I’m saving in energy costs (which will be way more than the interest at 6.99%).
How I’m Saving Money on This Transaction
The great thing about a balance transfer where it’s more like a cash advance (they send me a check) is that I can put the purchase on a credit card and get rewards, then just use the balance transfer to pay off my credit card. I have a card that gets 2% back on all purchases, so I’ll get $100 in rewards when I pay for these windows.
That effectively makes the balance transfer fee only 1%, or $50. So how am I going to save $50 over the next 9 months? Easy. According to a University of Minnesota study I will save at least 23% of my cooling costs with these new windows. Considering how expensive it is to cool homes in the Texas summer, I think we are talking about at least a few hundred dollars a year.
I can also get a $200 tax credit for installing new windows from the federal government according to the Energy Star government website.
Finally it’s important to consider the increase in my home’s value. Angie’s List says I should get at least a 70% return on investment for new energy efficient windows, but that’s for people who are paying full price. When you consider the fact that I’m paying much less than a non marketing home would have paid (remember I did comparison shop and this really is a killer deal), I could see a 100% or more ROI when I go to sell.
Spending Money Never Saved So Much
I’m getting 2% of the purchase price back in rewards, saving hundreds of dollars in energy every year I live in the house, getting a $200 tax credit, and raising the value of my home by about as much as the cost of the windows.
That’s what I call a darn good deal!
This definitely isn’t our forever home, so we will be looking to sell it in the next few years after all our renovations are complete. I do fully expect to get all this money back when I go to sell.
Now I just need to find someone who is willing to buy a house with a 25 year old AC unit!
The windows get installed next Monday, so I’ll post pictures when everything is finished.
Readers: Have you ever done home renovations that saved money on electricity and/or drastically increased the value of your home? How did you take out a loan to pay for them?
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
sounds like new windows arent just saving you money, they are making you money.
are there any rules about staying in the house for a certain period of time if you get a tax credit?
As far as I can tell there aren’t rules about that. I don’t think there should be because even if I sell the house, the energy savings will still be there for the next owner.
I’ve been considering installing solar panels myself. After having done some pretty exhaustive research, between tax credits, rebates, and cost savings they should pay for themselves in roughly 6 years. I am currently in a home that I plan on staying in indefinitely. After working out all the numbers I am getting a 400% return on my money over the entire life of the panels (30 years). I’ll take that all day every day.
If you are going to stay there forever then I don’t see why not. Sounds like you’ll save money and you’ll be using truly clean energy. I say go for it!
We just replaced some windows and insulation and it’s made a HUGE difference in our bills. it’s a big relief to not have to worry about that lack of efficiency. Plus, it’s great if you can save money by using your credit card.
That’s good to hear. I’m really banking on saving a lot in energy, so it’s nice to know it made a big difference for you.
I just received a quote to replace my kitchen window. One window 3′ x 4′. Just a plain old stinkin’ window. $1,121.00.
If is vinyl clad and includes installation and it also includes the 5% winter order discount and the 10% repeat customer discount.
I would have to work 7 days to pay for one stinkin’ window. I have’t decided what to do yet.
When I opened the quote email today stinkin’ was not the word I was using but I edited my language for your readers.