Last week, I finished our taxes. Unlike previous years, I didn’t use an accountant, so I was actually able to see how different choices we made affected our taxes. The biggest thing (apart from the Saver’s Credit, which I love) this year was buying a house. Thanks to the economic downturn, we’ll get a $7500 interest free loan, re-payable over 15 years. We don’t have the money yet, but we’re trying to decide what we should do with it.
The frugal thing to do would be to dump it all in CDs and collect the interest while we pay back the principal. Over 15 years, that would make us about $2,000 (assuming an average return of 3%). That’s about $130 extra dollars a year. That’s not bad, but I don’t think $130 a year is going to make us much happier. And besides, a CD ladder is pretty boring.
Maggie is pushing hard for a hot tub, but as fun as that would be, it’s expensive and would increase our water and power needs. On the other hand, if we got a solar water system, we could put the excess in a hot tub. Which brings us to…
A solar water system. We could get a PV system, but even with the 30% federal rebate, it’s just not cost effective. A simple solar hot water system is cheaper and simpler. We’d still have to do some serious plumbing and we might have to add support to the roof, but we’re definitely thinking hard about this option.
Instead of blowing the money all on one thing, we could split it among multiple projects. After the energy audit, the most obvious thing to do is improve the insulation in our attic and crawlspace. Insulating the attic would probably cost about $1500. To recoup that expense, we only have to save about $9 a month over the course of the loan, which is quite likely.
A more fun option would be an electric (or gas) scooter. The ones we’ve looked at cost between $800 (for a cheap gas scooter) and $2500 (for a good electric scooter). They could save us a lot of money if we got rid of the car, but I don’t think we can do that at the moment. Apart from the initial cost, I think they’d break even. The additional cost of insuring and licensing would be offset by the gas savings from using the car less. Unfortunately, there’s still that loan payback to consider…
Something that caught our eye during our shoemaking experience was Glen’s solar air heater. It was basically an inclined box about 6′ tall that was covered in glass and full of tin cans painted black. A tube at the bottom was connected to the house to get cool air into the box and a tube at the top allowed hot air back into the house. They’re relatively cheap to build and could reduce our winter heating costs considerably. This is another strong contender, although I’m not sure where we’ll put it. We might try it out on the shed or garage first just to make sure it’s a good idea.
A smaller project would be to set up beekeeping in the backyard. It’s not that expensive, although there won’t be huge savings either. Our biggest concern is that it would be a time sink, and we both feel pretty busy already.
We could also use it for house maintenance. The roof will need reshingling in the next year or two and our water heater desperately needs replacing. I’m sure that more things will go wrong as time goes on. Maybe it would be smartest to set all of it aside for household emergencies.
Are we forgetting anything? What would you do with a $7500 loan?