What would MM do? (New HVAC)

AprilZ81 · April 2015

When we bought our house we knew the HVAC needed replaced, it is 22 years old (original to the house). It has made it through the first year of our ownership (minus 2 months) and we are trying to decide what to do.

The AWESOME news is that my brother-in-law owns his own HVAC company and has offered to put the new system in for us at cost and will be asking the manufacturer for a family discount on the unit itself (this is usually granted and should save us about 30% give or take). We don't have a quote, but if it is in the ballpark of what BIL says it will be it will be between $5-6k for a high efficiency unit, upgraded filtering system, whole home humidifier and possibly a UV light (cleans the air like in a hospital).

Since I'm currently out of work I did a huge favor for BIL and spent about 20 hours doing competitor intelligence (aka gathering quotes and evaluating the sales experience) for 7 of his competitors and the good companies all came in between $9-10k for the same thing so this is going to save us a TON of money!!!!!

The only stipulation for him doing the work at cost is that we can't do it in the summer or winter (busy season). If we don't do it before mid-May we would need to wait until October/November which is completely understandable. He is doing us a huge favor and I don't want this to be inconvenient for him and his crew.

We have a few options and I'm torn.

1) Do it now and pay cash (we have the cash on hand without touching our e-fund)

2) Do it now and pay mostly cash and do some 0% financing with BIL (not a personal loan, it would use the bank he offers all clients financing through)

3) Do it now and pay mostly cash and use some of our HELOC to pay the rest.

4) Put it off until fall and hope that the AC doesn't break down this summer.

I'm not currently working but all the unemployment I am receiving is going to be going into savings ($1,520/month after tax withholding). Our only debt is our mortgage and HELOC and we are able to meet all of our needs and some of our wants on DH's salary alone.

Going from our current system to a high efficiency system will save us between 35-40% of our heating and cooling costs so over time this will pay for itself.

ETA: We are not adverse to debt (especially no/low interest debt or a tax deductible interest payment like our HELOC) where it makes sense.

Xstatic3333 · April 2015

What an awesome BIL!

My answer on when really depends on your climate. In RI, if our AC went out, we could get by with fans and window units for a summer. In the south, that's clearly not an option.

We ended up paying cash for our recent boiler upgrade, and though I don't exactly regret it, it was one of those "Murphy's Law" situations where right after doing so we had to touch our e-fund to replace H's car. It sounds like you guys are doing fine during your job search, but I might be more tempted to wait if you're in a northern climate, and consider low-interest financing if not. It's really a judgement call and I'm not sure there's a right answer beyond doing what you and H feel comfortable with.

AprilZ81 · April 2015

We are in central Ohio, we could probably make do with fans until the end of June, but in a "normal" summer we get a fair number of high-humidity days (which is worse than the heat).

Last summer (our only summer in the house) was very mild and we still needed the air running the whole month of July and August with a good chunk of September.

formerlyGDaisy09 · April 2015

I'm in the camp of don't wait for it to break to fix it. given your current situation, I would opt for option #2, knowing that if you needed to free-up more space in your monthly budget that you have the cash on hand to pay it off (given #1), option 2 lets you keep a little more liquid.

we have a full home humidifyer on our HVAC unit, it's amazing! as soon as I start getting nose bleeds in the fall we turn it up! I would not go for the UV light, unless there is a member of your family who truely needs hospital-quality air. I am a firm believer that some germs are good, I do not use anti-bacterial soap at home, and I avoid any cleaner that advertises it kills 99.99% of germs. We (collective we) have created an environment where super germs are becoming more and more prevalent, and there is increasing research that kids who grow up in sterile, allergen free environments never develop immune systems that can handle "real life". I'd try to avoid making my home one of those sterile environments. a regular air-filter to filter out big particles (even an electronic air scrubber or hepa filter) will get your home air plenty clean and probably cost less.

I do think anti-bacterials have their place, I use them at work all the time (hospital), and we do keep one kitchen cleaner for cleaning-up after working with raw-meats, but for most things some vinegar, piping hot water, and plain old soap are more than enough.

bcarb · April 2015

Omg What I would give for a full house humidfier! I think you should do it now, but I would personally do option 1 or 2. I dont mind having loans(to an extent) when it comes to home upgrades, especially when it is necessary. I live in IL, so I totally get that you need it before the summer.

als1982 · April 2015

I'm pretty extreme about my aversion to debt, so personally I'd just hold out until you have a job and your HELOC is paid off. Yes, a new system will have energy savings but it takes years for that savings be justifyable. And sure, it's a crap shoot, but your current AC could last you the year and then some, you just don't know. I'd rather take that risk than add more debt or deplete my savings during a period of unemployment.

AprilZ81 · April 2015

als1982 said:
I'm pretty extreme about my aversion to debt, so personally I'd just hold out until you have a job and your HELOC is paid off. Yes, a new system will have energy savings but it takes years for that savings be justifyable. And sure, it's a crap shoot, but your current AC could last you the year and then some, you just don't know. I'd rather take that risk than add more debt or deplete my savings during a period of unemployment.

You have a valid point about depleting our savings but it will take us 3 years to pay off our HELOC and there is no way the current system is going to last that long and if it does the utility bills are likely to kill us.

We are not debt adverse when it makes sense (and this may not make sense, we are still evaluating).

Erikan73 · April 2015

I'm not sure which financing option is best but I would replace it now if you can. Reason being is then you don't have to worry about if the A/C will last the summer. I live in Cleveland so I know what type of weather you get. And the plus side when you do use the A/C this summer it will be more energy efficient so you'll have money on your utility. You should check with your local utility to see if they offer any rebates for installing new energy efficient units. I know up here the local utility offers rebates, there are rules the rebate, but doesn't hurt to check into as I know ours would be a few hundred dollars.

AprilZ81 · April 2015

@erikan73 yes, AEP Ohio and Columbia Gas (our providers) are currently offering rebates and those are already factored in to the price estimates.

Xstatic3333 · April 2015

AprilZ81 said:
@erikan73 yes, AEP Ohio and Columbia Gas (our providers) are currently offering rebates and those are already factored in to the price estimates.

This was a big factor for us replacing when we did. National Grid rebates are good, but fickle, and the amounts drop all the time. Also, we did our work in November and the rebate program temporarily ran out of money for the calendar year. We got our rebate in February, but yours may come quicker if you do spring work.

Wulfgar · April 2015

I lived in Columbus for 10 years from the late 70's to late 80's. I would get the work done now before the hot humid weather kicks in.

MW made the mistake not replacing our furnace when she bought our house. It decided to fail mid-January and we had to replace the complete system. I know a lot of other people that had the same thing happen. The last thing you want is to be in the middle of upper 90's low 100's and 100% humidity and have the AC go out.

vlagrl29 · April 2015

Personally I would do it now - it would totally suck for your unit to break during the July heat.

HoneyBee973 · April 2015

I would get the work done now if I were you. We had our unit break during 90-100 degree weather because we thought it would last us another season. What a miserable summer that was! And our cooling bill is half of what it used to be.

simplyelise · April 2015

I'd do it now (I live in MO, I know the heat) and pay in cash. You guys have a great e-fund, your budget has been adjusted for your current income, and you've got lot's a good job leads.

AprilZ81 · April 2015

formerlyGDaisy09 said:
I'm in the camp of don't wait for it to break to fix it. given your current situation, I would opt for option #2, knowing that if you needed to free-up more space in your monthly budget that you have the cash on hand to pay it off (given #1), option 2 lets you keep a little more liquid.

we have a full home humidifyer on our HVAC unit, it's amazing! as soon as I start getting nose bleeds in the fall we turn it up! I would not go for the UV light, unless there is a member of your family who truely needs hospital-quality air. I am a firm believer that some germs are good, I do not use anti-bacterial soap at home, and I avoid any cleaner that advertises it kills 99.99% of germs. We (collective we) have created an environment where super germs are becoming more and more prevalent, and there is increasing research that kids who grow up in sterile, allergen free environments never develop immune systems that can handle "real life". I'd try to avoid making my home one of those sterile environments. a regular air-filter to filter out big particles (even an electronic air scrubber or hepa filter) will get your home air plenty clean and probably cost less.

I do think anti-bacterials have their place, I use them at work all the time (hospital), and we do keep one kitchen cleaner for cleaning-up after working with raw-meats, but for most things some vinegar, piping hot water, and plain old soap are more than enough.

@formerlygdaisy09 The UV light isn't only for air quality, the UV light sits over the AC coil and burns off all of the lime/calcium/crud that accumulates over the course of the season. Without the UV light you lose about 10% of the efficiency in the first year.

JoanE2012 · April 2015

I tend to have more conservative money views. If I were unemployed, I would not take on a multi-thousand expenditure for something that wasn't a necessity at this moment. But that's me. I also grew up in a house that didn't have A/C for half my life and managed. (geez, that sounds like something parents would say!) Would it suck? Yeah. But I could make it through.

That said, I think it sounds like you're in a good place with money and I don't see any real issues with any of your options if it's within your comfort zone. You've had a little time to see how your cash inflows line up with your outflows. You're still saving money, even with unemployment. I'd probably just pay cash and be done with it. Actually, I'd charge it, get the miles, and then pay it right off!

FWIW, our AC was 25 years old when we bought the house a couple years ago. It worked the first year, died last year when we went to turn it on. It was almost 10k to replace (you're getting a good deal!). It was one of the hottest weeks of the summer. Between getting various quotes and getting the work done, we were without for two weeks. It sucked, but we borrowed a portable A/C unit to use in our bedroom and we often went to bed shivering under the covers!

short+sassy · April 2015

I'm also on the side of having the work done now. I realize things are tighter now that you are unemployed, but it sounds like there is a good handle on managing this expensive.

Another thought just to throw out there is, if you all decide to wait until Sept. and the A/C goes out in the middle of July, there are A/C window units as well as in-room A/C coolers that work really well. It would at least be a lower cost option to get through summer. You can get small ones for as cheap as $100 and decent sized ones that will cool multiple and/or large rooms for $400. Quite frankly, I live in NOLA and most people with the older 100-year-old+ houses (including myself) cool their homes with A/C window units.

On a different note, you all are making me a sad, sad panda.

I won a duplex in an auction earlier today (as an investment property), but have not been able to go inside the house yet. My DH and I suspect the main part of the HVACs have been stolen out of the house and we included that in our reno estimate...but at only $10K for a total replacement of both. Eeekk...I might have to double that.

I should hopefully be at the house with an inspector within the next couple days. I am going to be sending "rainbows and puppies" thoughts out to the cosmos that I will NOT be facing $20K, just for HVAC.

Alas, the house is in a newer part of NOLA where tenants will expect central a/c and heat.

als1982 · April 2015

short+sassy said:
I'm also on the side of having the work done now. I realize things are tighter now that you are unemployed, but it sounds like there is a good handle on managing this expensive.
Another thought just to throw out there is, if you all decide to wait until Sept. and the A/C goes out in the middle of July, there are A/C window units as well as in-room A/C coolers that work really well. It would at least be a lower cost option to get through summer. You can get small ones for as cheap as $100 and decent sized ones that will cool multiple and/or large rooms for $400. Quite frankly, I live in NOLA and most people with the older 100-year-old+ houses (including myself) cool their homes with A/C window units.
On a different note, you all are making me a sad, sad panda.
I won a duplex in an auction earlier today (as an investment property), but have not been able to go inside the house yet. My DH and I suspect the main part of the HVACs have been stolen out of the house and we included that in our reno estimate...but at only $10K for a total replacement of both. Eeekk...I might have to double that.
I should hopefully be at the house with an inspector within the next couple days. I am going to be sending "rainbows and puppies" thoughts out to the cosmos that I will NOT be facing $20K, just for HVAC.
Alas, the house is in a newer part of NOLA where tenants will expect central a/c and heat.

If it makes you feel any better we replaced both our central AC and furnace last year for less than $8,000. Both systems were Lennox brand and included a humidifier.

What would MM do? (New HVAC)

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