Progress to Date

  • Original Loan Amount: $204,000.00
  • Balance at Beginning of 5-year Goal (1/1/08): $188,983.82 @ 6.00%
  • Balance at Refinance in February 2009: $148,000.00 @ 4.625%
  • Outstanding Balance: $0.00 (PAID IN FULL!!!)
  • Latest Payment Date: April 2011
  • Latest Additional Principal Amount: $17,623.22
  • Amount Ahead of Schedule (since refinance): $121,462
  • Time Ahead of Schedule (since refinance): 7 years 10 months
  • Interest Saved Last Month: $23,972.48
  • Total Interest Saved: $28,435.55 ($1,037.74 on original mortgage; $27,397.81 on current mortgage)
  • Months Remaining in 5-year Goal: 20
  • Average Monthly Principal Needed to Meet Goal: N/A (Goal achieved)
  • Progress List Explained

Sunday, January 11, 2009

Death of the Furnace

In this blog's first entry I described the demise of our dishwasher, and lamented our first setback of 2008. Not to be outdone, 2009 threw its own challenge at us: our furnace died.

To be completely honest, the furnace was not entirely dead. Rather, we put it out of its misery. Our home was built in 1985, and the furnace was still original equipment. When we bought this house in 2006, the home inspector told us that the furnace was in decent shape, but was past its life expectancy and would probably need to be replaced in the next several years. Heating technicians made similar comments during their annual maintenance visits. Of course, they wanted to sell us a nice new home heating system, and offer us all sorts of snappy financing deals (no interest for a year!) so that we could replace our furnace without delay. We politely declined their offers, and started saving for the future.

I know very little when it comes to home furnace operation, but I'd take a peek at the furnace when the technicians would do their maintenance work. To me, the furnace always looked OK, and I knew it still kept the house warm throughout the worst that a New England winter could throw at us, so I was never in a hurry to replace it. This year, however, was different. When the technician came to visit in late December 2008, I tagged along as usual. Unlike previous years, the technician and I discovered the furnace was sitting in a pool of some sort of condensation, with mineral deposits all around. Additionally, the amount of carbon monoxide in the air duct was higher than it had been before. Apparently a trace amount of CO is always present, but the level this year (although not yet high enough to cause any health issues) was trending in the wrong direction. So after hearing the technician's description of a likely problem with the secondary heat exchanger, and how the flue gases were slowly corroding the furnace from the inside out (the source of the condensation), I realized that this was going to be the end. Within a week and a half, our old furnace was gone, and a brand new system was sitting in our basement.

My wife and I decided to purchase the highest-efficiency model that was compatible with our existing duct work. In the end, we parted with over $7,000 of our savings. On one hand, it was tough separating with so much money all at once. However, we were both glad that we had saved for this occasion, and didn't have to incur any new debt to keep our house warm and (hopefully) carbon monoxide free. And fortunately, we didn't exhaust our entire reserve account on this purchase.

We'll continue to keep putting a set amount into our savings each month, as we have been doing for several years now. And while it may have an impact on how much extra principal we feel comfortable applying toward the mortgage over the next few months, we don't anticipate that this will be a significant setback. The contribution to the savings account is always a separate line item in the budget from our extra principal payments. Of course, another major home expense could change things. Right now we're hoping for the best and preparing for the worst. I suppose that's the best any of us can do, right?


JR Moreau said...

I bet yr. new furnace will pay dividends for a very long time. One of the reasons I'm thinking of buying a small single family, rather than a condo is because I can take out city specific (Worcester, MA) rehab loans and replace all inefficient parts of the home with great stuff that will save me money on utilities forever and also help the resale value when/if the market swings back up.

Plus, I don't know of many condo associations that let you put solar panels outside ;-)

Middle Way said...

Good for you for being prepared for the expense. Those aren't small numbers!

Are you eligible for any government energy rebates for putting in an energy efficient furnace?

The Executioner said...

JR: You're right about the condo associations. They usually have very restrictive covenants. Homeowner associations can be equally as bad, though. Some very practical things like clotheslines and vegetable gardens are often verboten.

Middle Way: I believe we can claim a $150 tax credit for installing an energy-efficient furnace when we file our 2009 taxes (a little over a year from now). We also applied for a $425 rebate from our natural gas supplier for installing a high-efficiency furnace and digital programmable thermostat. So the total is $575. That's real money, but it unfortunately pales in comparison to the total cost of the new furnace.

Middle Way said...

Wow, I expected the government to offer an incentive too. But some money is better than no money.

In Canada, we get rebates directly from the government. When we put in our furnace a year or so ago, the contractor applied for us to get $2500 back.

It was knowing that, which helped us decide to go with the best rated model energy wise.

The Executioner said...

I'll give it to you...your incentive is much better than our incentive. Still, it had to be done. The forecast low temperatures for our area are going to be around zero F for the next 3-4 nights.

Chris L said...

Sometimes knowledge helps!

I got a furnace for $950 and paid a gas fitter $100 to install it and a metal guy to build a plenum(sp?) extension and this is after he helped us here and there with problem solving the old furnace. I dissected the entire furnace and learn a lot! I actually diagnosed the problem to being a small plastic part that had melted causing the fire to shoot forward.

Not saying your 7k wasn't worth it, but I also go a high efficiency furnace valued at thousands installed.

People like to take advantage of people who don't know any better. I bet he made thousands himself with just a few hours of his time.

I save similar amounts by doing my own roof, some of my own car repairs, all my handy work, etc. and btw I'm more of an academic then a handyman.

Check the base cost of the furnace you got then cut that in half for the actual cost of the furnace. Next make friends with the dealer and get him to sell it for cost and learn how to get most of it installed yourself which means removing the old one, putting the new one below it and then connecting the ductwork, then the gas. It's actually pretty simple, but because we don't know, others think we'll pay big for it.

The Executioner said...

Chris L: I agree with everything you said. I don't have any sort of mechanical knowledge myself so I'm definitely one of those who doesn't know better. One of my hopes is that after our mortgage is paid off, I'll have more time available to learn how to do more things on my own.

Two guys spent about 10 hours at our house on installation day. Apparently because of the shape of our basement (it's finished) there wasn't a lot of extra wiggle room. They said it would have taken half as long if the basement was completely unfinished and empty. I'm sure a good chunk of the $7,000 was for the labor.

Chris L said...

Tell me about it. When I was learning it took me a week to dissect the whole thing. I had tenants in the unit at the time so I brought out the space heaters and kept them over for the time being.

Once I had it apart, I got it working again, but then it died again. As soon as I put the cover back on the flame shot forward.

My week is worth 500-1000 now depending on the job, but at the time I wasn't working.

I also had to remove a wall to get at the furnace which took only a few minutes and then I had to replace the wall, mud and paint it.

Things really are simple though, but we think experts know something mythical. Trust me, doing all of my own work, nothing is mythical and nothing can't be done on your own. It all has to do with the proper tools, common sense and some experience.

If it took the guy 10 hours figure out the value of the furnace. I bet he made a crap load in labour on that job. I know I can price out a full furnace install on a new house and that will include ALL the ductwork!

I know a good furnace might retail for 3k so you paid 4k in labour. He didn't need hardly any tools at all. Really you plunk the furnace down and connect the top of the opening to the top of the duct. At the bottom is another section you cut out to match up with the cold air intake. To do this you need a drill with a metal bit and tin snips. Hopefully everything lines up...mine didn't so I (over) paid a guy to make a piece custom and saved money buy doing the measurements myself.

You need an expert to hook up the you normally call your gas company to do this for you.

Go look at your furnace really is simple. Post a pic if you can.

It's also funny how having time is also a way to save money (a lot of money)!

Chris L. said...

What's the brand of your furnace, let's see if we can figure out a price.

Chris L said...

Okay, now I'm rambling lol


My roof...I was quoted 3 times, $2500 for a guy walking down the street (whom I didn't trust), $5,500 from a professional then $3,000 from another company.

The fist guy came back and later said $1000 but I still didn't trust him.

I ended up paying a guy $400 cash to help recommended by a friend. I didn't want to do the roof because it was steep. I paid $1400 for the materials and got a 40 YEAR shingle (the others would have been 25 year).

So with one days work, I saved thousands.

I also did my other roof...on my rental and it was 55 bundles but not steep at all. I traded labour with a friend and my brother. It cost me about the same but I put on a cheaper shingle.

It would have cost me at least $4,000 as well and took about 2 days to complete and also time in trade.

There is no way I could have earned that much money doing anything else. Just doing stuff for myself has saved me at least a years salary.

The Executioner said...

Chris L, your last few posts illustrated exactly why we're doing this project. By paying off the mortgage, we won't have to work so much to make monthly installment payments, freeing up more time for us to learn new skills, reducing further our need to generate cash to cover expenses, and so on. It's a nice positive feedback cycle.

Our new furnace is a Carrier 58MVC080, which runs on natural gas and advertises a 95% efficiency rating. In addition to supplying and installing the new furnace, I paid the contractor to haul out and dispose of the old one. They had to cut a new hole in the side of the house because we were no longer up to code (the furnace exhaust was too close to the hot water heater's exhaust). They also capped off the old exhaust hole. These are all tasks that I'm sure anyone could teach themselves given sufficient prerequisite skill. I just lacked the knowledge and the time to accomplish it at this stage in my life. Someday...

Chris L. said...

Yup, that's what I like about being self employed and also basically financially free. I have so much time to deal with my problems and sometimes that's just going to work at my leisure.

Regardless, I did find on a quick search that the average would be about $1500-2500 for a furnace most of which included the install. While yours sounded complicated it only took the guys 10 hours so that does tell you something.

A tip: Whenever you price something out via a contractor ask them how long it will take and how many guys they will use. You can then guess at the amount of tools they will need and if they are expensive. From there, figure out 15% of the equipment costs in wear and tear (eventually these have to be replaced, but could be rented for 15% easily) and then work out the hourly rate for the guys. If you pay more then $100 an hour, they are taking advantage of you.

If you plan on doing it yourself, plan to spend at least 3 times what a pro would take and count on getting some outside advice. However, if they are charging $100 and hr, you still get paid $33 (tax free) an hour and get the satisfaction of learning a new skill!

I think I've done it all by now, just having owned rentals for the last 8 years!

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Darryl Iorio said...

I’m guessing the model you bought is between 80-90 % efficient. I’m sure you’ve come to realize by now what a smart investment you made in buying the most efficient furnace. Aside from a much lower operating noise, you will also see a significant decrease in your energy consumption.