WWMMD-New Boiler

Xstatic3333 · October 2014

I've got a good MM predicament for you all that I could really use some perspectives on. This may get long, I apologize.

The Background:

We live in a "cold" state in New England. Lots of snow, ice, and winter heating bills. The house we just bought has oil heat. For the warm staters, oil heat is substantially more expensive than gas; as much as 3X more expensive in a given winter (electric is supposedly the worst, for the record). The boiler inspected fine, but is old-most likely from the 1970s. Our house is "gas ready" however. We have a gas stove and gas lines are already in the building.

Our state offers some great rebates for installing energy-efficient boilers and insulating your house. We love the idea of doing this; in addition to saving money on our heating bills, a new boiler adds home value in our state and we are also environmentalists who philosophically would love to lower our carbon footprint (I say that to explain where we're coming from, not to be holier than thou). Our state also offers 0% interest financing on energy-efficiency upgrades.

Our current financial status is that we have a 3 months e-fund, and we are okay with letting it ride at that level given our job situations and other goals. In addition, I have about 5000 in stocks that were gifted by my grandfather. We thought we might need to use those for closing costs when we bought our home, but didn't end up having to touch them. They are in a weak investment and I should probably decide to do something better with them soon. Goal wise, we're working on the baby bucket list items of paying off both of our cars (mine is around $2,500, his is around $7,500 left) and going on one last international trip that we pay for in cash at some point next year (need to save $4,700). We'd like those items checked off within a year, hopefully sooner for the cars.

The Situation:

We've now gotten two estimates, and though I was hoping the stocks would be enough to pay cash for the boiler, they are not. I'm not willing to touch the liquid e-fund for this, so to upgrade this year we would need to finance. Though I know many wouldn't hesitate to finance at 0%, I'm coming around to a perspective of really wanting to keep my cash flow liquid and available for goals. If I paid off my car with the stock, we'd just be replacing one $140 minimum payment with another. Math-wise the financing makes sense, but it doesn't sit right with me. I'm now also contemplating keeping the current boiler until it goes. I've never actually lived with oil heat before, so I'm not sure what exactly I'm in for, but I've heard it's horrible. I'm just not sure it's $140 a month plus the cost of gas horrible. Then there's also the fear that in a year the boiler dies, the incentive program is gone, and I need to pay MORE for a replacement.

Anyway, I'm going bonkers here. What would you do?

CuriousKiddosMama · October 2014

That is tough. I've never had a boiler in a house we've lived in before- only natural gas and wood- yes you read that right, a wood furnace in ND, and now electric.
How much longer do you forecast your cars to take you to pay off? If it's a short time (like this year or next) I would be tempted to deal with the old unit this year and try replacing it next year. You may still not have all the cash, but you will have 2 less payments so that would either allow you to save quicker, or pay it off quicker. If the old unit is still working fine I would have a hard time getting it do e unless it was cash, like you said.
Do any of the neighbors have the same system where you could ask them what their bills are like in the winter?

hoffse · October 2014

Yeah that's hard. I would either do it this year and finance the difference or else make a point to do it next year when some of your other goals are completed. I guess the real question is the difference in heat costs this winter if you did it now vs. waiting a year.

Could you handle the extra payment if you did it this winter? If so, I would be inclined to pull the trigger. But then, we're baby bucket-listing also, and there are things I just want done and over with before we start TTC. We have several house upgrades on that list while we have some extra disposable income. I figure now is the time to spend on us/the house while we aren't responsible for a LO.

Xstatic3333 · October 2014

Asking neighbors is a good idea, though haven't been particularly friendly or social. I'll also ask work friends with oil heat.

My thinking is that if we do finance, I'd still sell the stock. I'd use it to pay off my car, pay cash for the $1500 insulation upgrade (we have 3" and are supposed to have 14"!) and pay the capital gains. Then I'd be left with one slightly-smaller payment and once we got the tax credit I could apply it all to the boiler.

hoffse · October 2014

Xstatic3333 said:

Asking neighbors is a good idea, though haven't been particularly friendly or social. I'll also ask work friends with oil heat. My thinking is that if we do finance, I'd still sell the stock. I'd use it to pay off my car, pay cash for the $1500 insulation upgrade (we have 3" and are supposed to have 14"!) and pay the capital gains. Then I'd be left with one slightly-smaller payment and once we got the tax credit I could apply it all to the boiler.

Would the tax credit come in Jan/Feb after you file your 2014 taxes? If so, that seems like a good plan to me. It would put you in pretty much the same position you are in now from a cash flow perspective, and the tax credit could help reduce your debt when the time comes.

brij2006 · October 2014

I would cash out the stocks and pay off your car plus a little bit of his. Then focus on paying off the rest of his car. After that, I would continue living on a strict budget and putting money aside to pay cash for the new heating system.

This way you can have at least 1 year with the current system to get a feel for how bad it really is, but continue to keep your cash flow open for other goals.

FWIW Our house used to have oil heat in it up until a few years before we bought it. The previous owners said it cost $4k/year to heat it with the oil, and we pay $2k/year to heat it now with gas. However, had we bought the home with oil heat we would not have taken out a loan to switch it over (there were a lot of tax credits in our state at that time too). Just be conservative about your heat and figure out what it will be like for the first winter before making a big decision that cuts your cash flow. Install a programmable thermostat that you can set for a lower temp while you're gone, and put plastic over the windows if they're older and drafty. Also go around a install new seals on doors to help keep them air tight. You would be amazed at how much of a difference those little things make.

formerlyGDaisy09 · October 2014

Hello fellow cold-New-England-Stater!

what is the heating history on the house? what did previous owners spend heating the house?

We are fortunate that our heat and hot water are both propane (and whenever our 20 year old electric stove bites it I'm putting dual-fuel in). we heat a ~1600 sqft home (more like ~2000 when you account for the unfinished portion of the basement, I seal the forced hot air vents down there but there is some leakage) all year and fulfill all our hot water needs on about 2 500 gallon tanks of propane, for which we budget $150/month...you may find some of that information useful...or not.

our home was built in the late 1980's, however the large windows are less than ideal efficiency wise (they actually build up with condensation in the winter they are so inefficient).

How much would a new boiler cost you(net, accounting for all rebates)? how much savings in fuel might that result in?

Have you taken other steps to be more efficient? install programmable thermostats? lay down another layer of insulation in the attic? hang curtains?

some things H and I have found helpful; a 5-2 day thermostat for not too much, H and I drop the heat down to 60 degrees 30 minutes before I leve for work, back up to 68 when I get home and down to 64 overnight, on the weekends it stays at 64 all day, so helpful to not have to remember to turn down the heat. I am working on finishing curtains with thermal lining to keep the cold out at night, the key is remembering to open them when the sun is out to capitalize on warmth from the sun. this year we're going to use the 3M window insulator kits to insullate our windows from the inside...I'm figuring if it cuts down on the condensation we see it's probably saving us some heating fuel. We have forced hot air, so we also will close-up rooms we don't use all the time (guest room, guest bathroom, finished space in the basement) and seal off the vents so that we're not heating spaces we aren't using.

ab6704a · October 2014

Xstatic3333 said:

I've never actually lived with oil heat before, so I'm not sure what exactly I'm in for, but I've heard it's horrible. I'm just not sure it's $140 a month plus the cost of gas horrible. Then there's also the fear that in a year the boiler dies, the incentive program is gone, and I need to pay MORE for a replacement.

Make the switch. I'm in NH, we have oil in our new house. We moved in last November and we had to fill our oil tank twice to get through the brutal winter we had (and we keep our thermostats in the 65-68 degree range) and then a third time as soon as we hit spring. At two fill ups averaging $3.39 per gallon for a 275 gallon tank, that means we paid $1,864 just for the winter. Our water is also on oil, but when we aren't running the heat the consumption from heating the water is minimal in comparison.

They are predicting a colder winter than last year's so we spent the money to install a pellet stove which will drastically reduce our heating costs - $900 for the season vs $1800. I'd switch to gas now, but it's not available in our area.

Also, even if you don't make the change this year, I'd advise not pushing it off until the boiler goes. Because if it does, there's a very good chance it will go in the dead of winter when it's working the hardest and that is not a good situation to be in.

Xstatic3333 · October 2014

Good feedback! To answer some questions:

-The house already has new windows and a programmable thermostat.
-The insulation redo seems like a no-brainer, but I just remembered that we only get it for $1,500 if we switch to gas first, because it's subsidized by National Grid.
-All windows have cellular blinds
-I think we'll be looking at 1200-1800 in winter heating if we keep the oil boiler, 600-700 if we switch to gas.

I think this is one of those times where H and I will just need to make a judgement call, and either way will be expensive. Sigh.

formerlyGDaisy09 · October 2014

ab6704a said:

Xstatic3333 said:

I've never actually lived with oil heat before, so I'm not sure what exactly I'm in for, but I've heard it's horrible. I'm just not sure it's $140 a month plus the cost of gas horrible. Then there's also the fear that in a year the boiler dies, the incentive program is gone, and I need to pay MORE for a replacement.

Make the switch. I'm in NH, we have oil in our new house. We moved in last November and we had to fill our oil tank twice to get through the brutal winter we had (and we keep our thermostats in the 65-68 degree range) and then a third time as soon as we hit spring. At two fill ups averaging $3.39 per gallon for a 275 gallon tank, that means we paid $1,864 just for the winter. Our water is also on oil, but when we aren't running the heat the consumption from heating the water is minimal in comparison.
They are predicting a colder winter than last year's so we spent the money to install a pellet stove which will drastically reduce our heating costs - $900 for the season vs $1800. I'd switch to gas now, but it's not available in our area.
Also, even if you don't make the change this year, I'd advise not pushing it off until the boiler goes. Because if it does, there's a very good chance it will go in the dead of winter when it's working the hardest and that is not a good situation to be in.

This is a really good point too, we ran out of fuel once last year (the fuel company miscalculated when to deliver because temperatures outside were so far below normal). it did not take long (6 hours) for the house to drop from 68 degrees to 50 degrees, they ended up doing an emergency delivery at midnight (this was also the night of the superbowl) because the fuel company was concerned that if they waited 'til the next morning we might have bigger issues than no heat (frozen pipes).

Xstatic3333 · October 2014

Gdaisy09 said:

ab6704a said:

Xstatic3333 said:

I've never actually lived with oil heat before, so I'm not sure what exactly I'm in for, but I've heard it's horrible. I'm just not sure it's $140 a month plus the cost of gas horrible. Then there's also the fear that in a year the boiler dies, the incentive program is gone, and I need to pay MORE for a replacement.

Make the switch. I'm in NH, we have oil in our new house. We moved in last November and we had to fill our oil tank twice to get through the brutal winter we had (and we keep our thermostats in the 65-68 degree range) and then a third time as soon as we hit spring. At two fill ups averaging $3.39 per gallon for a 275 gallon tank, that means we paid $1,864 just for the winter. Our water is also on oil, but when we aren't running the heat the consumption from heating the water is minimal in comparison.
They are predicting a colder winter than last year's so we spent the money to install a pellet stove which will drastically reduce our heating costs - $900 for the season vs $1800. I'd switch to gas now, but it's not available in our area.
Also, even if you don't make the change this year, I'd advise not pushing it off until the boiler goes. Because if it does, there's a very good chance it will go in the dead of winter when it's working the hardest and that is not a good situation to be in.

This is a really good point too, we ran out of fuel once last year (the fuel company miscalculated when to deliver because temperatures outside were so far below normal). it did not take long (6 hours) for the house to drop from 68 degrees to 50 degrees, they ended up doing an emergency delivery at midnight (this was also the night of the superbowl) because the fuel company was concerned that if they waited 'til the next morning we might have bigger issues than no heat (frozen pipes).

That's definitely a consideration. I really feel like with a boiler this old, it's only a matter of time.

hoffse · October 2014

Xstatic3333 said:

Good feedback! To answer some questions: -The house already has new windows and a programmable thermostat. -The insulation redo seems like a no-brainer, but I just remembered that we only get it for $1,500 if we switch to gas first, because it's subsidized by National Grid. -All windows have cellular blinds -I think we'll be looking at 1200-1800 in winter heating if we keep the oil boiler, 600-700 if we switch to gas. I think this is one of those times where H and I will just need to make a judgement call, and either way will be expensive. Sigh.

How long would it take you pay off the gas installation if you apply your tax rebates to it?

Spending much over $1200 per year to heat a house for winter seems painful to me. I'm in a warm-weather state, so our summers are the expensive months. But still, our electric bill for August - hottest month of the year - was right around $300 to cool a horribly inefficient, 2900 sq ft house. Plus that also includes the other stuff that runs on electricity in the house. During a very hot year we might spend around $1200-$1400 on electric from May through September (but that would be unusual weather). We really don't have a choice, because electric is what you use for A/C and our house is not well-situated for solar (I checked). But if I had a choice to lower our costs through another energy source? I would absolutely jump on that.

How much will you be financing if you make the switch?

Sisugal · October 2014

I would use the 5K toward the new gas boiler and finance the remainder at 0%
I am debt averse, but this is is not an unreasonable choice.

Definitely insulate to the max as well.

These are wiser choices than prioritizing the vehicles (rememer you were planning to use the 5K toward the house initially)

I live in the cold UP of MI and have gas (forced air) and have never had a heat bill higher than 120 - usually is less than 100 - even in the middle of a bitter cold spell. (TOTAL gas bill for a year is around 700 - for gas heat, water heater and gas dryer). House is 1600 sq ft ranch and additional heated basement of same size.
High efficiency furnace, insulated to the max, triple pane windows and good quality thermal doors make a huge difference (all of which we installed in this house). We keep the temp 68-70 during the day and 66 at night..

Xstatic3333 · October 2014

@hoffse, I could finance up to all of it. I think I may like @Sisugal's idea, however, of financing only the remainder of what the stocks won't cover. That would be a very small and/or short term payment. I am pretty sure the upgrades would also add to our home value given the area as well.

hoffse · October 2014

Xstatic3333 said:

@hoffse, I could finance up to all of it. I think I may like @Sisugal's idea, however, of financing only the remainder of what the stocks won't cover. That would be a very small and/or short term payment. I am pretty sure the upgrades would also add to our home value given the area as well.

Then that seems like the way to go. It sure would be great if you could finish your baby bucket list and have this upgrade done and paid for before a LO comes along!

Xstatic3333 · October 2014

hoffse said:

Xstatic3333 said:

@hoffse, I could finance up to all of it. I think I may like @Sisugal's idea, however, of financing only the remainder of what the stocks won't cover. That would be a very small and/or short term payment. I am pretty sure the upgrades would also add to our home value given the area as well.

Then that seems like the way to go. It sure would be great if you could finish your baby bucket list and have this upgrade done and paid for before a LO comes along!

Agreed! Darn biological clock. I wish I could just hit pause on my ovaries for 5 years!

vlagrl29 · October 2014

Xstatic3333 said:

hoffse said:

Xstatic3333 said:

@hoffse, I could finance up to all of it. I think I may like @Sisugal's idea, however, of financing only the remainder of what the stocks won't cover. That would be a very small and/or short term payment. I am pretty sure the upgrades would also add to our home value given the area as well.

Then that seems like the way to go. It sure would be great if you could finish your baby bucket list and have this upgrade done and paid for before a LO comes along!

Agreed! Darn biological clock. I wish I could just hit pause on my ovaries for 5 years!

that would be nice

I will be 35 when we TTC #2 and I'm already worried it will take longer to conceive ….

Xstatic3333 · October 2014

vlagrl29 said:

Xstatic3333 said:

hoffse said:

Xstatic3333 said:

@hoffse, I could finance up to all of it. I think I may like @Sisugal's idea, however, of financing only the remainder of what the stocks won't cover. That would be a very small and/or short term payment. I am pretty sure the upgrades would also add to our home value given the area as well.

Then that seems like the way to go. It sure would be great if you could finish your baby bucket list and have this upgrade done and paid for before a LO comes along!

Agreed! Darn biological clock. I wish I could just hit pause on my ovaries for 5 years!

that would be nice I will be 35 when we TTC #2 and I'm already worried it will take longer to conceive ….

I hear you. I try not to borrow trouble because soooo many women have no trouble in their mid-30s, but it's tough not to worry. And lately I feel like my every financial and life decision has to be geared toward TTC in a year (at 31), but a little more time would be so helpful.

formerlyGDaisy09 · October 2014

hoffse said:

Xstatic3333 said:

@hoffse, I could finance up to all of it. I think I may like @Sisugal's idea, however, of financing only the remainder of what the stocks won't cover. That would be a very small and/or short term payment. I am pretty sure the upgrades would also add to our home value given the area as well.

Then that seems like the way to go. It sure would be great if you could finish your baby bucket list and have this upgrade done and paid for before a LO comes along!

not to mention what you'll save by using propane instead of oil!

vlagrl29 · October 2014

Xstatic3333 said:

vlagrl29 said:

Xstatic3333 said:

hoffse said:

Xstatic3333 said:

@hoffse, I could finance up to all of it. I think I may like @Sisugal's idea, however, of financing only the remainder of what the stocks won't cover. That would be a very small and/or short term payment. I am pretty sure the upgrades would also add to our home value given the area as well.

Then that seems like the way to go. It sure would be great if you could finish your baby bucket list and have this upgrade done and paid for before a LO comes along!

Agreed! Darn biological clock. I wish I could just hit pause on my ovaries for 5 years!

that would be nice I will be 35 when we TTC #2 and I'm already worried it will take longer to conceive ….

I hear you. I try not to borrow trouble because soooo many women have no trouble in their mid-30s, but it's tough not to worry. And lately I feel like my every financial and life decision has to be geared toward TTC in a year (at 31), but a little more time would be so helpful.

I had no problem conceiving DD at 30 - only 4 weeks. We want our kids 5 years apart which is the only way I think I can handle staying at home with them, I know that sounds horrible. We weren't at all in the best financial position to have DD so we are planning better for the next kid.

Xstatic3333 · October 2014

vlagrl29 said:

Xstatic3333 said:

vlagrl29 said:

Xstatic3333 said:

hoffse said:

Xstatic3333 said:

@hoffse, I could finance up to all of it. I think I may like @Sisugal's idea, however, of financing only the remainder of what the stocks won't cover. That would be a very small and/or short term payment. I am pretty sure the upgrades would also add to our home value given the area as well.

Then that seems like the way to go. It sure would be great if you could finish your baby bucket list and have this upgrade done and paid for before a LO comes along!

Agreed! Darn biological clock. I wish I could just hit pause on my ovaries for 5 years!

that would be nice I will be 35 when we TTC #2 and I'm already worried it will take longer to conceive ….

I hear you. I try not to borrow trouble because soooo many women have no trouble in their mid-30s, but it's tough not to worry. And lately I feel like my every financial and life decision has to be geared toward TTC in a year (at 31), but a little more time would be so helpful.

I had no problem conceiving DD at 30 - only 4 weeks. We want our kids 5 years apart which is the only way I think I can handle staying at home with them, I know that sounds horrible. We weren't at all in the best financial position to have DD so we are planning better for the next kid.

Not horrible at all! If we have two I'll need to have them pretty far apart as well, for the opposite reason. I want to keep working, and I don't think we could swing two in daycare.

Xstatic3333 · October 2014

*Thrilling Conclusion*

We got a slightly better estimate on a high-effiency system that includes a new hot water heater (our current one is from 2006) and have decided to go for it and pay cash. I started the process of selling most of the stocks (my mom can't find the original certificates which means we can only sell about $4000 worth right now) and we will pay the rest from our savings. We each committed to pay $100/paycheck to replenish the savings quickly (in less than a year). This will slow down car and vacation progress slightly, but at least our cars aren't underwater and each have a good 5ish years left in them. I know there is a good argument to be made for financing this sort of thing, but doing it this way feels "right" to me. I just can't bring myself to take on another payment; I think I may be catching debt aversion.

Erikan73 · October 2014

I would be concerned about the age of your current boiler. I don't know what the average life span is for one, but nothing lasts forever. Since between the stocks & financing, it would be affordable, if I were in your position I would do it now. Who know's if the incentives will be there a year or two down the road. I would rather go into the winter knowing you're safe & not having to deal with an emergency repair. Right now you can do it without touching your e-fund. Do you think in a year or two you would still be able to do it if there are no incentives & you have a baby without touching your e-fund?

Xstatic3333 · October 2014

Erikan73 said:
I would be concerned about the age of your current boiler. I don't know what the average life span is for one, but nothing lasts forever. Since between the stocks & financing, it would be affordable, if I were in your position I would do it now. Who know's if the incentives will be there a year or two down the road. I would rather go into the winter knowing you're safe & not having to deal with an emergency repair. Right now you can do it without touching your e-fund. Do you think in a year or two you would still be able to do it if there are no incentives & you have a baby without touching your e-fund?

I don't think we could. Our budget will be tight with a kid in daycare, which is why payment destruction has become a priority for me. The incentives thing is a big issue, too-they cut the rebate on the system we're getting from $1200 to $500 on July 31

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