Welcome to the another edition of “What Would You Do?”! If you have a question and would like to know what others would do please contact me and I’ll keep it in mind for future editions of “What Would You Do?”. To see previous versions, check out the What Would You Do? archives here.

Today I have a question I think many people run into at many points in their lives. Should I spend money to save money? I’m not talking about buying something I don’t need to save money. I’m not the type of person to buy a shirt because it is 50% off even though Ialready have 25 other shirts.

Instead, I’m talking about making a couple changes to our house that will save us money down the road. These aren’t phantom savings because no matter what, I’ll have to incur these costs as long as I own the home. Instead of continuing to incur these costs as I am now, if I make a couple changes, I can dramatically lower these costs over the coming years! So what improvements am I considering?

Should I Buy a Heat Pump Water Heater?

Your first question probably has something to do with what a heat pump water heater is. Valid question, as I hadn’t heard of them until my home inspector mentioned them when we bought our house. Basically, a heat pump water heater works like an air conditioner heat pump would to heat your house in the winter. It takes heat out of the air and puts it into the water (rather than heating your house).

They’re the same size as a regular water heater but they’re much more efficient (hint: they use much less electricity). Did you know that besides heating and cooling your home, your water heater is the second biggest user of electricity?

The only addition is a drain line to take the condensation the heat pump makes out of the water heater area, much like an air conditioner has a drain line. There is one awesome side effect that a heat pump water heater provides. It will air condition my garage for me. How sweet is an air conditioned garage in the hot Florida summers? Pretty sweet.

Until the end of May, Lowe’s has a sale on heat pump water heaters for $1,000 ($200 off normal price). Before you freak out and say I’ll never recoup the cost I have some awesome news! My power company will give me a $700 rebate if I have a heat pump water heater installed. In addition to that, the federal government will give me a $300 energy efficiency tax rebate! Basically, I only have to pay $60-70 dollars in sales tax and for someone to install the heat pump water heater, which costs about the same as a regular water heater install.

I will have to front the money for the water heater and pay for the sales tax and install, but the savings for the energy efficiency should pay for the costs in 1 to 2 years max. My home inspector also mentioned I’d likely have to replace the water heater in the next 5 or so years so I’d have to eventually pay to have it replaced. It would lose the rest of the water heater’s useful life, but I’ll gain energy efficiency to pay for that loss.

What would you do? Would you get the heat pump water heater if you were me?

Should I Pay For an Irrigation Water Meter?

The other issue I have has to deal with water as well, just in a different sense. Where I live I can’t get well water for my sprinkler system so I unfortunately have to use city water. Currently I only have one water meter for our house which means the city can’t tell the difference between water I use in my house and water I use for my lawn. Why does it matter?

My city charges us for both water and sewage. Their are no sewer meters so they assume any water we use goes in the sewer. The problem with this line of thought is that the water I use for my sprinkler system doesn’t go through the sewer and I’m paying for it as if it does. Now I haven’t had a water bill yet that has included a lot of sprinkler system use, but the summers get hot here and sprinkler systems use a TON of water.

The problem I’m facing is whether or not I should pay for the city to install a second water meter just for my sprinkler system. The city said it shouldn’t cost more than $400, but $400 isn’t chump change. It could be less, but they won’t know until they come out. I’ll definitely save enough money to cover the cost eventually, but I don’t know if it will be one summer more like 3 years. I just don’t have the data. My neighbors said theirs paid for it self very quickly and they have a yard that is similar to mine in size.

I should mention that watering the yard isn’t really an option. If it doesn’t rain a lot we have to water to keep our yard up. I live in a neighborhood with an homeowner’s association so we have to keep our yards to a certain standard. I used to be against homeowners associations, but after seeing some of the neighborhoods around my area, we definitely don’t mind paying a small amount quarterly to keep our neighborhood and house values nice.

Would you wait and see how much money you’d potentially save each month, or would you go ahead and get on the list for the city to install an irrigation water meter? I know I’ll recoup the cost eventually, but I don’t know how fast.

So there you have it! Two water related questions in one What Would You Do? Both have the potential to save me a lot of money over the many years we’ll be living in our new home! What would you do?

Welcome to the seventh edition of “What Would You Do?”! If you have a question and would like to know what others would do please contact me and I’ll keep it in mind for future editions of “What Would You Do?”. Recently I’ve asked Should I Buy a Smartphone, Should I Buy the NeatDesk or NeatReceipts Scanner, What Would You Do With $1,000,000, Should I Pay Off My Car Loan, Should I Pay Off Higher Interest Rate or Variable Rate Student Loans First and Should I Donate To Co-workers’ Kid’ Fundraisers? Now on to today’s What Would You Do…

Should I Refinance My Mortgage?

Recently Sam from Financial Samurai wrote about the best time to refinance a mortgage and it made me wonder if I should refinance my mortgage. I reached out to a mortgage banker I have dealt with in the past and asked for a quote. Below are the details of my mortgage situation along with the quotes I received. Do you think I should refinance my mortgage based on these circumstances?

The Necessary Background

The first thing anyone needs to know whenever they’re considering refinancing their mortgage is their future plans. Do you plan on staying in the house or do you plan on moving soon? If you move, will you sell or rent out your current house?

I bought my townhouse on a whim (kind of) a little over a year ago and we plan on living in it for at least the next 5 years and possibly as long as ten or more years. It is only a two bedroom so when we have a kid or two it might get a bit tight. Eventually we may buy a bigger house but we currently plan on keeping the townhouse. We’d like to rent it out which should be pretty easy in the area.

I personally believe current interest rates make mortgages a great deal. If inflation averages 3% over the next 30 years you’re essentially getting a very low real interest rate loan. On top of that, the dollars you pay your mortgage back with in 20+ years will be inflated dollars, not current year dollars.

My current loan payment is right around $325 a month (just for the mortgage part, this doesn’t include taxes/insurance) for a 30 year term mortgage with a fixed 4.625% interest rate. I have about 29 years left on the loan.

Option 1 – Refinance to a New 30 Year Mortgage

This option would allow me to refinance to a 30 year mortgage at 3.375%. These calculations assume I pay off my old mortgage in full and roll the closing costs into the new loan.

I’d have to pay a .125% origination fee ($81.50), other lender fees (underwriting, courier, etc) of $450, a credit report fee of $32, an appraisal fee of $400, a tax service fee of $61, a flood certification fee of $6.50, closing agent fees (including lender’s title insurance) of $500, state tax stamps of $227.50, city/county intangible tax of $130, and recording fees of $190 which brings my total closing costs of $2,078.25! Phew… that was a lot of fees!

My new mortgage payment would be $283 which is $42 less than my current mortgage payment. It would take 49.5 months, or a little over 4 years, to recoup my closing costs by using the difference in the new lower mortgage payment.

Option 2 – Refinance to a 15 Year Mortgage

This option would allow me to refinance to a 15 year mortgage at 2.75%. The calculations include the same fees as above. This would raise my mortgage part of my payment to $435 but my loan would be paid off 14 years sooner than my current 30 year mortgage. This would mean an increase in my mortgage payment of $110 a month.

Option 3 – Don’t Refinance at All

This is the easiest option to explain. I’ll continue paying $325 for the next 29ish years until my mortgage is paid off. No closing costs here, just the status quo.

What Would You Do?

Leave a comment below and let me know what you’d do in my situation!

Will You Buy My Popcorn?

I’ve worked in three different jobs since I’ve graduated from college and at every single one of them I’ve been asked to donate to a charity, PAC (political action committee) or a coworker’s kid’s fundraiser. These interactions always make me feel awkward and pressured to buy something or donate when I wouldn’t otherwise do so.

My Experience with These Requests

My first job had a couple charity events. Hardly anyone had kids so there were no Girl Scout Cookie fundraisers. There were, however, lots of charity fundraisers. They often asked you to come to an event or pay $5 to be able to wear jeans to work on a day other than Friday. I personally didn’t care to wear jeans for $5 so I never contributed.

We did have food drive and I was actually on the team for gathering the food. I could get behind it because I believed there plenty of people who needed food for the holidays and no food would be taken out by middlemen unlike the monetary contributions. We didn’t pressure people but had a large turn out because most people believed in the cause.

In my current job we have an annual charity drive for a charity that doles money out to many other charities. I don’t donate to it because if I want a charity to get my money I’ll donate it directly instead of going through a middle man.

More recently I had a coworker come around asking us to buy Boy Scouts popcorn. The cheapest popcorn was $10 for a pretty small box and it got up to $50 for a big tin. Popcorn is dirt cheap to make. I know it is a fundraiser but I won’t pay those prices. I said I didn’t have any cash and he continued on to the next person.

Why Do I Feel Awkward in These Situations?

It seems that coworkers almost expect you to buy something or donate like it is an unwritten rule. Was I not informed of this rule? I also feel a bit of pressure because I know I tried to sell these fundraisers when I was a kid. My dad would always take them to work and people would normally end up buying a few items so in a way I feel like I’m supposed to repay the favor. My other thought is maybe I should wait until I have a kid to purchase these items and then I won’t feel so bad for sending the sign up sheet around my office.

How Can I Get Out of These Situations?

How can I get out of these situations without feeling embarrassed or lying? I could flat out say I don’t support office fundraisers but that may turn my coworkers off. Another option would be to explain I’ve already made all of my charitable contributions for the year and I don’t have any more money in my budget. Other than those two idea my only other idea is to come up with some sort of story why I can’t which never seems to go over well.

So… What would you do in this situation if you didn’t want to support the organization, PAC, charity, kid’s fundraiser, etc.? Was I not informed of the unwritten rule that you have to support all of your coworkers’ causes?