Was Replacing Our Home Insulation Worth It? It's Complicated.

Welcome to Saving Money with Andrew!

I find it incredibly satisfying to save money while reducing my environmental footprint.

In two years, I reduced our electricity usage by 48% by replacing all lightbulbs with LEDs and switching to a gas dryer. And we switched to a hybrid car in 2021 to further reduce our carbon footprint.[1]

In total, these moves reduced our carbon emissions by over 4 tons per year, while also offering attractive economics with payback periods ranging from weeks (LED bulbs) to a couple of years at today’s gas prices (the hybrid car). We are (literally) saving thousands of dollars per year.

And so, when I noticed significant heat loss and drafts in late 2021 and high home heating bills (despite having low-cost gas heating), I had high hopes that replacing our home insulation would be a similar success. All told, we spent $7400 (after a $1000 state rebate) on a top-to-bottom redo, including new foam insulation in our attic, crawl space, ceiling light fixtures, and brand new exhaust systems for our bathroom fans.

Three months later, we’ve noticed some savings:[2]

• Our monthly gas consumption has decreased by about 100 therms (about 35%)

• Our monthly electric consumption has decreased by about 200 kWh (about 15%)

Estimated across the winter months, this equates to about $350 in savings for the season. We also expect some savings in the summer when air conditioner usage typically doubles our electric bill. But even with generous assumptions, our total annual savings is likely to come out to about $600/yr, meaning it would take over 12 years to recoup our investment. Even assuming we stay in our home for decades, this is likely to yield at best a high-single digit rate of return.

Of course, there are non-monetary benefits. Our basement is slightly more comfortable (though still colder than the rest of the house) and the work the contractor did on our exhaust fans improves our home’s ventilation. And the reduced consumption lowers our carbon footprint by approximately one ton per year. But the initial returns are modest in relation to the cost.

What might move the needle significantly?

• Higher gas and electricity prices - Right now, we are still paying rates only slightly above mid-2021 levels despite the extreme spike in natural gas prices. If natural gas prices stay elevated and our utility raises rates significantly, the conclusion might change.

• A/C usage in the summer - I’ll watch our Summer 2022 electric bills closely. If the A/C savings are greater than expected, it could significantly improve the numbers.

I’ll be back later this year with updated numbers, but if you are considering similar work in your own home, carefully consider the cost of the work relative to the expected benefits. And first, make low-cost/high-return investments to save on your utility bills.

And now, Andrew’s pick(s) of the week:

Seinfeld and its Movie References

Where Do All The NYC Food Cart Donuts Come From? (a superb piece from Substack newcomer Anne Kadet)

YIMBY Movement Goes Mainstream in Response to High Housing Costs

With Inflation, Workers Are Facing Return-to-Office Sticker Shock

Finally, Bloomberg Tax has a devastating three-part series on the IRS, which has struggled with insufficient funding for decades. Did you know:

• In recent months, IRS entry-level salaries ($14.57/hr) lagged those of Waffle House ($15/hr)

• The IRS has lost 19,000 employees since 2011, with fewer than 75,000 employees today

• The IRS answered only 11% of the 282 million calls it received in 2021

I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.

[1] We also reduced our annual water consumption by over 10,000 gallons with a smart sprinkler controller.

[2] Note that all comparisons are either to the same month last year, or a month with similar average temperatures.