Highs of 87 degrees in Chicago. Ninety-eight in Atlanta. In Phoenix it’s 109! If it’s hot and humid where you live this summer, chances are you’re sweating your next air conditioning bill as much as the heat itself.
The good news is making your home more energy-efficient is a great way to discover new savings. Those of you in cooler climes should pay attention as well—you know you’ll be spending big to stay warm when winter comes.
An important point, though—it’s vital that your resolve to save doesn’t lead to bad financial decisions. The reality is that while many green actions—such as installing double-pane windows or an energy-efficient water heater—can save you money over time, the upfront costs are higher than the standard alternatives. Some guidelines:
1. Set goals. Conservation is the easiest way to trim your energy budget. Pull out your utility bills from the past year and set a goal to reduce costs by 10 percent compared with the same months a year earlier. You’ll want to turn off lights, shorten showers and live with the thermostat not being set to 72. Check out conservation tips from the U.S. Department of Energy at EnergySavers.gov.
2. Outline a project budget. You can make eco-upgrades with any amount of money—a few hundred dollars for an energy-saving TV and telephone, or more than $25,000 to line your roof with solar panels. Based on your financial health, set aside a reasonable sum to cover the projects. But first make sure your green initiatives dovetail with other important investment goals, like funding a Roth IRA or buying a life insurance policy.
Home equity lines of credit (HELOCs) and home equity loans (HELs) have been two popular ways to finance big-ticket home improvement projects in the past. But remember that your house is the collateral for these loans; fall behind in payments and you could put your home ownership in jeopardy.
3. Perform an energy audit and make changes for less. Your next job is to figure out the most cost-efficient green projects. To get a sense of how energy-efficient your home is and which projects are worthwhile investments, use the free online Home Energy Saver tool at HES.LBL.gov. You can also pay for a professional energy audit, but thorough checkups can cost $300 or more.
Even better, check your local utility to find out whether it offers subsidized energy audits. You should also contact your state’s energy department to see if the agency has programs to help defray costs.
In addition to rebates, you can also claim a credit on your federal tax return for energy-efficient home upgrades—to learn specific tax incentives for green projects, go to EnergyStar.gov/taxcredits.
