I hope you had a great Labor Day Weekend!
The roommates are gone and I spent the better part of Saturday and today deep-cleaning the entire house. It turns out that one roommate had 3.5-foot fridge in his room, which explains why the energy bill was so high. The rent terms were $400/month and all bills (internet and utilities) paid by me, so he never had to pay for the cost to run his fridge. Note to self: if I ever choose to get roommates again, I should include a no-fridge clause or change the utility payment terms. The other roommate apparently didn’t use a coaster for his drinks or a place mat for his hot plates of food and consequently destroyed the finish of the dresser (my dresser) in his room. Besides those two issues, everything ended well. It felt weird to sleep with my bedroom door open for the first time in a year on Saturday night.
I took a break on Sunday to float down the Guadalupe with an old friend and new friends. Few things are better than tipping back a couple cold ones as you float down a lazy river for six hours and soak up the sun with pals. For the cost of fuel, the drinks, and tube rental, it was $30 well-spent.
Something comical just went down and I wanted to quickly blog about it before I head to the gym. I was sweeping out my garage when a guy walked up the driveway and asked, “Hey there, do you have a minute?” I replied in the affirmative, and he went into his pitch: “I’m with so-and-so and we make extremely high-efficiency windows that’ll reduce your heating and cooling costs significantly. I’m in your neighborhood today looking for model homes for our windows. I noticed you take really good care of your beautiful house, your landscaping looks great, and we’d really like to showcase our windows on your house. We can offer the windows and installation at 75% of our regular price.”
My paranoia shield went up double-time and my BS-detector started beeping so loudly I thought the salesman might hear it. However, everybody knows that flattery is a freshly paved drag strip roughly a quarter-mile long straight into a man’s heart, so I thanked him and asked, “How much would you charge to do my house?”
“Well, now, it’s tough to say.” Pointing towards my front window, he said, “That’s custom, and I haven’t seen how many windows you have on the sides and in the back, so I really can’t give you a price right now, but I can send somebody out to give you a formal quote this week if you like.”
“Well,” I replied, “I don’t think I can afford new windows right now, but can you give me a range?” I definitely don’t need new windows, but I was curious about how much it would cost if I were to have them replaced.
“Let’s put it this way.” The guy paused and looked off into the distance. Then he looked back at me and said, “I can probably get you down to $150 a month.”
I waited for him to say more. One beat passed. Then another. The silence was getting uncomfortable, so I asked, “Ok, $150 a month. For about how many months, would you say?”
The dude looked down at the ground then back up at me and replied somewhat sheepishly, “Uh, a lot, actually.” Wow, now there’s some refreshingly brutal honesty for ya.
And there you have it, folks! I give you Exhibit A: The reason so many people struggle to get out of debt! Monthly payments. One of my favorite quotes of all time is from a Mad Magazine cartoon: The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.
I told the guy no thanks and wished him luck as he went on his way.
Are monthly payments the only thing that people take into consideration when they’re faced with a big purchase decision? How many customers has this guy been able to hoodwink into buying his glass? Do most people not take the entire cost of the investment into consideration?
Of course, I used to be just as guilty of this as the next guy. “Okay, I’m making X dollars per month…hmm, monthly payment on an auto loan for this car comes to Y dollars which…” Quick mental math… “Mmhmm, okay, uh-huh, carry the one…yes, yes I do believe my monthly income does indeed allow me to afford this second car! Who needs to save? Saving is for losers. Okay, LET’S DO THIS! YEAH!”
Alternatively, maybe we do like to save money but think that the energy savings will pay for the new windows. Well, that’s just a simple math exercise. Yahoo! Answers says it costs roughly $500 to replace a window. Using that logic, it would cost me $7k to replace all 14 windows in my house. (Using the guy’s approach, that’s 46 monthly payments of $150 to get to $7k.) How long is it going to take me to save $7k on my heating and cooling bill which hardly ever gets above $100 in the first place? Let’s be aggressive and say my bill is $100 each month and these windows will reduce my costs by 25% for a $75 new monthly energy bill. $25 per month into the $7k investment = 280 months or 23 years. Even if the guy can get me the windows for 75% of the regular price, I’d be looking at a 17-year break-even period. Ouch.
(And that’s a double-ouch if you consider inflation. $7k today is worth well over the $25 savings per month (or whatever it inflation-adjusts to) 17 years from now. If I take the $7k today and invest it in something earning a 5% return each year, I get back $350 every year which more than covers the $25/month or $300/year I would have saved by buying new windows, and that’s before I compound the 5% interest each year.)
Lose-lose all around. I’m going to pass on the new windows and keep the $150/month.