We like to watch old episodes of Grand Designs in bed. The program is highly entertaining, mildly educational, and somewhat addictive. Luckily our friend Tracy has all of the seasons on DVD and is happy to share them with us.
Over the course of watching the first two seasons I can recognize patterns that often form when couples tackle these types of building projects – particularly those that are renovations. Inevitably, the project goes over budget and over time, the couple gets stressed out, and the episode ends with host Kevin McCloud chatting with the couple by candle light in a drafty room because the house does not have electricity or windows yet.
Let me make it perfectly clear that we (now) have electricity and windows, and that our design is anything but grand. (When Kev wants to start ‘Humble Designs’ we’ll be first in line.) When we bought this property we inherited an existing consent for a renovation that included a large deck, verandah, and walk-in closets. We eliminated these but added solar hot water and insulation. That’s the way we roll.
Solar hot water and insulation are about as eco-thrifty as you can get. That is, you can save money and the planet simultaneously. Each one offers a return on investment greater than any term deposit in any bank. The point at which the savings from energy bills equals the purchase price is called the ‘payback period.’ After that, all of the additional savings are untaxed income: money in your pocket.
However, there is a caveat: you have to be able to afford them in the first place. If you can’t pay cash then you end up borrowing money, and the interest robs a part of your savings and extends the payback period. Although the US and NZ governments have schemes to help homeowners include energy efficiency measures, in most cases the result is more borrowing and more debt. (More on debt in a moment.)
In my opinion, the best approach governments could take would be providing zero-interest loans for insulation and solar hot water. These loans would act exactly like a cash purchase for the homeowner who could then repay the government through savings until the payback period is reached and then, as they say here, “Bob’s your uncle.”
While I have no idea why Kiwis use this phrase, I do have an uncle Bob. I do not, however, have a zero-interest loan. Therefore, I have dipped into my life savings to pay for insulation and solar hot water. This is an excellent investment because:
• Energy prices outpace the rate of inflation and there is every indication that this will only continue and even accelerate in the future. Any hedge against energy price rises is simply smart economically. The green benefits are a bonus.
• At the rate of quantitative easing (“printing money”) in the USA, my US dollars are becoming worth less and less everyday. Why leave them sitting in a bank losing value when they can be in my walls and on my roof adding value?
• New Zealand is not immune to debt either. This land of the long white cloud has significant debt issues on many levels that will come home to roost someday in the not-so-distant future. Whether that will look like Greece or Ireland I do not know. But something is bound to give.
• In a world that seems to be spinning out of control economically, environmentally and socially, it gives me peace of mind to have a tiny bit of control over a tiny property on a short street in a small city on a petite island in a big ocean.
We are not wealthy, but we have chosen to spend what money we do have on insulation and solar hot water for the reasons outlined above. We feel good about that decision, but it does not mean that we don’t stress out about going over budget and over time. After watching another uncompleted renovation on Grand Designs last night, I had terrible dreams that kept me tossing and turning in the summer heat.
I got up this morning, made myself a cup of coffee and started writing. I feel better now because I know we are doing this for all the right reasons. We are taking an abandoned house on a derelict section and turning into an urban homestead. We are sharing our story with anyone who wants to listen. And we are having fun doing it.