Solar Panels are Paid Off!

We managed to mostly cash-flow (we took the last 20% from savings) our way through the twelve-month, 0% interest loan and paid those babies off in a little over ten months!

We're back down to having no debt aside from our mortgage.

Time to start saving for a Tesla Model 3!

We're Going Solar!

IREA (our electric utility) has announced they will not be making changes to their net metering policy. However, they will be adding a "Load Factor Adjustment", which is essentially an extra fee aimed at customers with new residential solar systems, starting on January 1st, 2016.

Which means: we have 5.5 month window to install a solar system (which apparently will take about 3 months from signing the papers to flipping the switch) that can take advantage of net metering AND avoid the new Load Factor Adjustment fee.

The System:

We're looking at an 18-panel, 6kW system with a central inverter. This system should produce 95% of our yearly electric consumption. We're paying a little extra for high-efficiency SunPower panels so we can get all 6kW from one contiguous block of panels on a single plane of our roof. The quote includes rerouting four sewer vents away from where the panels will be installed, and upgrading and integrating our 100 amp main electric panel and subpanel into one 200 amp panel. The central inverter will allow us to purchase and integrate batteries when IREA inevitably changes their net metering policy in the future. And the 200 amp panel with future proof us for an electric vehicle down the road.

Finances:

The sticker price for the system is a smidge over $25,000. The federal Solar Investment Tax Credit is still good through the end of 2016, and will knock 30% off the sticker price (in a tax rebate), meaning we have to come up with $17,650 out of pocket.

It's not an ideal time for us: with the slowdown in the oil and gas industry, neither Brianna or I are working full time. And we're paying for child care for Lincoln. We did look into the financing options, but even the best long-term offer would ultimately tack on an additional 20% to the sticker price.

However, we were offered a short-term, same-as-cash loan. We would have twelve months during which the loan would not accumulate any interest. However, if the loan was not paid off within those twelves months, interest would accumulate retroactively at 17%.

The only reason we're considering this option is because of the 5.5 month time crunch and because we actually have the money to cover this purchase - it's just in accounts we really really don't want to touch except in case of emergency or retirement.

So, we're going to do our best to cash-flow these solar panels over the next twelve months, and dip into our savings if we need to at month 11. Renting out the basement bedroom should really help with this.

That means no new driveway or back patio, no air conditioning system, no remodeled bathroom in the basement, and definitely no new vehicles (unless insurance is paying for it) in the next twelve months. Sushi consumption might also have to be curtailed.

***

Brianna's 2 cents:  I REALLY want to follow the Dave Ramsey plan of no debt and I HATE paying interest... and I see how the "same-as-cash" is a high risk option.  The numbers for the other financing options really weren't much better. The 1.99% loan sounded really good until I understood that it had a $4k origination fee for an effective rate of 3.75% for the life of the loan (just over what the "same-as-cash" offer would charge in interest if we miss the 12 month deadline but paid it in 16 months).  A HELOC (Home Equity Line of Credit) seems like a very slippery slope and has a $20k minimum but is only at 4.6% now but would float with prime.  I do not want it to be easy to keep thinking that we could just keep upgrading the house and plopping it on the HELOC and then have prime make significant moves.

I do not want to have consumer debt.  I feel like solar panels fall into this category but I am finding all sorts of excuses as I am excited. I feel that with sacrifices, we can pay it off before the 12 months and interest kicks in without tapping into our emergency fund.  Solar panels are NOT an emergency...  So it will be a 12 month lifestyle adjustment to go solar.

***

Summary:

Net metering will remain in effect for the immediate future - probably several years. If we get a solar system installed before the end of the year, we will be grandfathered-in and avoid an additional fee that takes effect in 2016. We have twelve months to pay the system off in order to avoid interest, so we will have to keep a tight leash on our money for the next year.

Oh, yeah: We're excited about this!

Household Cogeneration

The news that net metering may be going away at our utility a lot sooner than we hoped had me think about how we could make solar work without net metering.

The obvious answer is something like the Tesla Powerwall - adding battery storage to our solar panels. That would solve the problem of time-shifting the energy from when it's generated during the day to when we consume it in the evening. However, it does nothing to help us time-shift the energy from the sunny summer months to the dark winter months.

Winter has other energy requirements: namely heating.

In the power generation industry, there is a technique called cogeneration (I had to study it in college). Basically, you burn a fuel in some sort of generator to produce electricity, then take what would normally be waste heat and use it for something productive, like heating the powerplant facilities.

It turns out Honda and a couple other companies are selling household cogeneration units. They replace your central furnace and dump power into your electrical system - sometimes using net metering with the electric utility, just like solar power generation.

So, if money was no object, we could theoretically go off-grid (electrically) using solar panels and batteries in the summer, and a cogeneration unit and batteries in the winter.

Money is an object, of course.

The quotes we got for solar panels indicate we would have to pay roughly $26,000 (before subsidies) for 6kW of solar panels, installation, and the necessary electrical work. Tesla's Powerwall batteries have just about the best kWh per dollar price, but won't even be available til next year, at the earliest. Even then, we would probably need about $15-20,000 in batteries. I haven't found a price for a cogeneration unit, but equivalent-sized generators run about $5-6,000.

Pricey.

Anyway, I like the thought of going off-grid. Can't afford it at our current electric consumption, though.

Solar City Quote

Brianna and I are going to install solar panels on our house - finding a house with a south-facing roof was actually one of the criteria we were looking for when we were house hunting. We want to get the solar panels installed before December 31st, 2016, when the Federal tax credit expires. This year (2015) our electric utility started allowing net metering on their grid. Unfortunately, with both Brianna and I only working four days a week right now, our discretionary income was cut pretty severely.

So, with that time frame and financial limitation in mind, we invited a sales rep from Solar City to come over and give us a quote. He came by yesterday, and spent two hours with us (and Megan and Jarred, who happened to be visiting us at the time). He made a pretty compelling sales pitch: No money down, Solar City would do all the work, and our monthly payment would be less than what we are currently paying our electric utility.

After going through his spiel, he wrapped up the main part of the presentation by having me fill out a comparison form between our current electric utility and Solar City with information he spoon-fed me.

The summary is, according to Solar City, they will install as many solar panels as our roof can hold (which would account for about 80% of our yearly electric consumption) with $0 money down, and over the course of the 30-year loan, we would have a lower monthly electric bill AND ultimately save over $17,000 compared to sticking with our current utility.

Today, when I had a little time, I researched some of the assumptions that lead to that "$17,000 saved over 30 years" figure. I came up with numbers that were a little less favorable to Solar City, but it looks like we would still be paying (slightly) less than our current electric bill.

Which is pretty amazing: Our electric utility is a co-op, and has pretty good rates. Despite that, there's a company that will install solar panels on our roof with no money down and still save us money compared to sticking with our electric utility.

On the other hand: it's a 30-year loan at 4.5% interest. Even worse, the payments are structured so they increase over time (supposedly mimicking how electric rates go up over time). During the first year of payments, only $25 would pay down the principle. The rest all goes towards interest. On Solar City's payment plan, we would ultimately buy the entire system (including installation, maintenance and warranty) TWICE.

Like any big purchase, we would be much better off paying for everything with cash rather than taking out a loan.

I'm going to get at least two more quotes, and maybe ask around at work a little.

One last thing before I wrap up this post: our roof.

We have a lot of vents on our roof. The Solar City guy just spaced the proposed solar panels around the vents, which probably makes for easy/cheap installation, but looked ugly as hell. I'm going to look into what it takes to move some of those vent so we have a nice big continuous area for panels to sit.

That's about all the time and energy I have for writing tonight. There's still a lot to get into, like our electricity consumption, pros and cons of different solar technologies, and how having solar would impact other future home improvements (like adding air conditioning). Maybe I'll get around to that in future blog posts.

Hospital Bill 2: Thy Son Shall Also Pay

So Lincoln received a hospital bill in the mail today, addressed to him and everything. Apparently the logic is: once Lincoln was born, he was a patient, using hospital facilities.

The sticker price was $5600 for Link's two-day stay in the hospital. The insurance company negotiated that down to $1800, and since we met our deductible with the previous bill, we pay nothing additional out-of-pocket.

So it doesn't affect us directly. Seems really weird, though.

Gas Prices

I'm tempted to bury a big tank in the back yard and stock up on gasoline while it's cheap. But I suspect prices will stay well under $3/gallon throughout 2015. Too many oil-producing countries are desperate enough for cash that they have to sell at any price, rather than slow production.

I don't know what the long-term effects of this will be. It's like a free cost-of-living decrease for everyone with a car, but these low prices are probably going to retard growth of renewable energy sources, and will definitely stop investment by oil companies.

Maybe it's the perfect time to impose a high gasoline tax? People have gotten accustomed to $3+/gallon prices at this point, and lord knows our road and bridge infrastructure could use a cash infusion.


***Update, a week later***

Hospital Bill

I think we have now seen all the insurance claims that are likely to result from Link's birth.

All told, having a natural-delivery baby at Sky Ridge hospital in Denver had a sticker price of $25,460.

The insurance claims were spectacularly lacking in detail. Every charge, ranging from $2 (not a typo) to $8291, was labeled either: "Medical service or office visit" or "Hospital/facility or outpatient service or visit".

Our insurance provider (apparently) negotiated the initial claims down to $15,577.

We had a little less than $5000 left on our deductible for the year, so that's all we have to pay out-of-pocket.

The hospital staff at Sky Ridge was amazing, and overall we had a really good experience there. But right now I'm feeling pretty grateful to have a good insurance plan through my employer. That hospital stay added up fast.

Car is Paid Off!

While Brianna and I have been distracted, our automatic payments have continued.

As of this morning, the Ford is paid off!

This was the last non-mortgage debt we had. We've been working toward being debt-free for two years now, and it feels great to be at this point.

Between paying off the car and refinancing the house, our monthly expenses have gone down nearly seven. hundred. dollars. It feels like a great place to be in, especially now that we have brought Lincoln home and Brianna will be taking some time off work.

Mortgage Refinance Signed

We signed the mortgage refinance today. It took a little over an hour to get through all the paperwork, and then we were done!

Now the title company will send things off to the two banks, who are supposed to settle things between them sometime next week. Then our current bank has thirty days to settle out our escrow account and cut us a check for the balance left over once they are all paid off. So we should be getting a pretty nice check in late December or early January, which we will apply back to the principle of the new loan.

Hazards of Trusting Software

Brianna and I use Mint.com to track our finances – it’s a great tool for when you have more than just a single checking and savings account. One of the budgets we track using Mint is the house budget – what I draw from for paint, tools, and IKEA as-is products. This month the budget seemed particularly tight, though.

Looking through it, I found a large purchase at Home Depot (which automatically falls under the “house” budget) that I couldn't remember. It took some back-and-forth with Brianna and some close reading of some computer-generated text, but I realized the transfer from our checking account to the Home Depot Credit Card (to pay off the card) was being counted as an expense, rather than a transfer. Effectively, anything purchased on the Home Depot Credit Card was being deducted from the House spending allowance twice!

Ultimately, it was a fairly easy problem to fix – much better than an actual fraudulent charge!

House Appraisal Results

Wow! We got the results from the house appraisal today. According to the appraiser, our house is worth nearly fifty thousand dollars more than we paid for it eight months ago!

That means we can proceed with the refinance, drop private mortgage insurance, and feel good about how much our house is worth on paper. Our mortgage broker kinda/sorta tried to tempt us into taking some cash out of the refinance, but that would have just increased the principle on the loan. We're sticking with a no-cash-out refinance.

The appraiser did specifically note new door handles (but not the new hinges), all new light fixtures (thanks to IKEA as-is!) and "some" fresh paint throughout the house. It's nice to be appreciated, but I kinda take exception to that "some fresh paint" comment - it's been a TON of fresh paint! Buckets of it! So many of my nights and weekends! :-)

(FIFTY THOUSAND DOLLARS!!!!)

House Appraisal

After a very busy two weeks (after the baby class yesterday, I went in to the office and did an afternoon of work) I was pretty exhausted. I slept in til 10AM this morning. I missed church, but man, I felt great when I woke up.

Once I was up, Brianna and I did a couple hours of cleaning before the appraiser for the refinance came by. Unfortunately, this included putting away all the painting supplies, so it's going to be even harder to get up motivation to finish painting now. But! The house looks pretty great after that much cleaning!

Attic Insulation

The central section of our attic was originally insulated with blown-in insulation. The areas above the nursery and guest bedroom, and along the sides of the house are insulated with 12-inch-thick batts. The loose insulation in the attic wasn't particularly thick to begin with - I don't think anything has been done up there between when the house was built and when I started mucking about up there. And me mucking about up there had the unintended side effect of flattening a lot of the loose insulation.

I want to blow in new insulation. After looking at my calendars, it seems like my best opportunity to blow insulation into the attic is November 1st, a week from this coming Saturday.

The home improvement group on Reddit has been pretty unanimous that cellulose based insulation is the best way to go with blown-in insulation. But when I stopped by Home Depot after work today, the workers there (well, the whole two of them I talked to) were adamant that fiberglass is the best method.

All the insulation in the attic is already fiberglass, and part of me is thinking I should mix like with like, and go with fiberglass. But I really don't know. Maybe it doesn't even matter all that much, except to the competing companies that sell fiberglass and cellulose insulation.

I did find out that if I buy 10 bales of insulation, the rental for the blowing machine is free. 10 bales would cost about $300, plus tax, minus a 5% discount for using a Home Depot credit card and letting Home Depot track all my purchases - so 10 bales will cost about $300.

I estimate I have about 600 square feet of attic I want to insulate. As long as I'm going through the hassle of borrowing a blowing machine and getting someone to help me, I might as well go whole hog on this thing: adding R49 insulation to the existing insulation in the attic ought to get me to about R60, and apparently going above R60 is rather pointless in residential settings. (Unless you're Passivhaus - then you can never have too much insulation). So, adding R49 to 600 square feet is about 15 bales of insulation, or $450, plus protective gear (tyvek suit, fresh respirator pads, goggles, gloves). Yikes. That's adding up.

...Brianna? What's my budget for this project, honey?

The worst part is, all of this is ignoring the vaulted area of the great room. I have no idea how much insulation is in that area, I only have a vague idea of how I would even access the attic space above that part of the house, and even less of an idea how I could evenly blow insulation in to the scissor trusses. Right now, I think that will have to be a project for next year, assuming I think it's a good idea at that point.

Mortgage Refinance

It's been a whole seven months since we started paying for our house, so we figured it was about time to do a refinance.

We weren't able to put down a full 20 percent down payment on the house when we purchased it, so we are currently paying for private mortgage insurance (PMI) every month. But, the housing prices in Denver have just been climbing and climbing since we bought the house, and estimates for our neighborhood made us think that we might be able to get the house re-appraised at a significantly higher value than our purchase price. This would automatically give us more equity (virtually for free) and probably push us over the 20 percent mark. (PMI is supposed to drop off automatically once you have 20 percent equity). It seemed worth a shot, anyway.

Brianna did a lot of emailing and phone calling this week, and it turns out there was no way to drop the PMI on our mortgage until we had been paying it for two full years, regardless of how much equity we have. But, we might be able to do a complete refinance with a new appraisal and never have PMI on the new mortgage in the first place. As a bonus, apparently the stock market tanked this week (I haven't followed the stock market since my free-spending days in Texas) and interest rates are at a record low - we can potentially drop 0.5% off our current interest rate, on top of ditching the PMI.

So, we spent the evening applying for a refinance. We had to dig out a lot of the same paperwork we presented for the first mortgage, but at least we knew where most of it was. I'm not sure what the exact timeline is for the appraisal. I should probably figure that out - it wouldn't hurt to get the painting done and everything cleaned up before the appraiser got here. Unlike last time, we're shooting for a high number this time around!

Financial Peace University

Our church started Financial Peace University today. Brianna and I went through FPU last year, and since we already paid for membership, we can attend classes at no additional charge.

There were a LOT of people attending the class this week - there were at least fifty people there. Glad there are so many people interested in getting out of debt! (He says, having just taken on a 15-year mortgage).

Moving Furniture Part II

I had intended to start prepping the upstairs hallway for painting this evening, maybe going so far as to actually paint the trim. However, I wound up staying at work past 6 PM in order to help get a project out the door before tomorrow morning. Traffic was really good on the way home, though!

The temperature got up to 90F today, and when I arrived at home, Brianna informed me it was time to set up a living space in the cool, pleasant basement. So while Brianna made dinner I moved the TV and its computer downstairs to the basement, and then set everything up again.

We sit much farther away from the TV with this set up - makes it a more difficult to use the TV for things other than watching TV.

After dinner, Brianna and I hashed out a written budget for the first time since we bought the house. Assuming we can maintain our discipline, there will be a lot fewer new items appearing around the house during the month of June...