How would you like to invest $30 and be paid a $45 dividend on your investment every year thereafter? That’s essentially what you do when you make certain home improvements that lower your expenses.
If you take the steps suggested below, especially if you do the work yourself, you could have an annual rate of return of 40% to 200%. Even better, you won’t pay income taxes like you would with regular investment returns. When you invest in your home to lower your bills, every penny saved is yours to keep.
Ready to get started? Here are eight ways to save money by improving your house.
1. Insulate Your Water Heater
An insulating jacket for your hot water heater will cost $30 or so, and you can install it yourself in about an hour. According to the experts at the Department of Energy, insulating a hot water tank saves $20 to $45 annually.
In other words, you spend $30 and you have $20 to $45 more in your pocket each year, making your annual rate of return on this investment 67% to 225%.
2. Install a Programmable Thermostat
You don’t need as much heat when you’re in bed at night, and you don’t need as much heating or air conditioning when you are out of the house. But you don’t want to climb out of bed on a cold winter morning or come home to a hot house in the summer.
A programmable thermostat solves these problems by automatically adjusting the temperature settings for you. Ten minutes before you get up in winter the heat turns on. Ten minutes before you get home after a hot summer day at work, the air conditioning adjusts to cool the house. In other words, you use the heating and cooling only when you actually need them.
Consumer’s Reports says a programmable thermostat can save you $180 on heating and cooling costs each year. Many models are simple enough to install on your own. And since programmable thermostats start at around $30, and better ones are around $60, you can effectively get a 300% annual return on this investment.
3. Switch Out Your Light Bulbs
CFLs (compact fluorescent light bulbs) start at about $5 per bulb, but they save about $6 per year in electricity costs. LED bulbs are even more efficient, and the prices have been dropping.
The key to getting a great return on your investment in new bulbs is to replace the ones that are turned on the most hours daily, in order to get that full $6 annual savings per bulb. An added benefit is that fluorescents and LEDs do not heat up nearly as much as incandescent bulbs, making them safer.
4. Bundle Up Those Water Lines
Bare water lines leak heat, so you have to set the temperature of the hot water heater higher in order to still get a hot shower at the other end of the house. Solve this problem with a little pipe insulation: an inexpensive foam tube with a slit down the side. Just cut it to the required length with scissors and push it onto the pipes.
The Department of Energy says this project will take you about three hours for a small home and cost $10-15 total. Each year, you will spend $8-12 less to heat your water.
5. Buy a New Refrigerator
If your refrigerator is working fine there is normally no good reason to replace it, even if the new one is a bit more efficient. But if you have an old fridge in the garage or basement, it might be time to replace that one.
A new fridge uses about $100 less in electricity each year compared to one from 1980. So if you buy a basic unit for $400, you’ll recoup your investment in about four years, and save money every year after that. (Like this idea? Click to tweet it!).
6. Insulate Your Attic
If you run your heater or air conditioner on most days, you might save some serious money by adding new insulation to your attic. According to HouseLogic.com, upgrading attic insulation from R-11 to R-49 is something you can do by yourself in a day or two for about $750 (double that if you want professionals to install it).
You’ll save about $600 per year on heating and cooling costs depending on where you live and the type of heat you have. It also adds value to your home if you decide to sell in the future.
7. Seal Those Leaks
Check for cracks or spaces around door frames, windows, and entry points for pipes and cables. You lose heat from these gaps during the winter and cool air in the summer, adding to your heating and cooling costs. It takes about $20 in caulking and peel-and-paste insulating strips to seal these up all over the house.
The experts at Energy Star say that doing this will cut your energy usage by an average of 12% to 20% depending where you live. That’s potentially hundreds of dollars saved for an investment of an afternoon and $20 total. Not bad, right?
8. Replace That Toilet Flapper
If you hear your toilet running when it isn’t being used, you probably have a leaky flapper. On DIYlife.com,Carolyn Weber explains how her water bill went from the usual $45 to almost $700 one month, due to a leaky toilet flapper. She had been ignoring the noise she heard from the toilet, but even leaks that you don’t hear can easily add $10 to your monthly water bill.
Since a new flapper valve can be bought for under $10 and can save you $120 per year, this little investment might have the highest rate of return of any on our list.
Your Turn: How have you invested a little time and money around the house for a great return in savings?
Photo by Tom Adamson from Flickr under Creative Commons