What Would You Do?: Spend Money to Save Money?

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?

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. Both definitely seem worthwhile on their own, but I wouldn’t let someone’s statement that your water heater is likely to break be a deciding factor. Our water heater has been working in the garage for 28 years now. It “should” have broken many many years ago, but it keeps chugging away.

  2. Like Mrs. Pop said, I’d be leery of using the inspector’s thought be the deciding factor. That said, it does seem like a fairly good deal to replace it and get the rebates to basically cover it. How long is the rebate from the power company good for?

  3. The first question I would ask myself is how long I will live there? Then, if I left sooner will it add value to the home. I think the heat pump water is probably first since there is a deadline.

    • We’re planning on at least 10-15 years, but I do believe they would add a small amount of value to the house. At least it isn’t something they could nickel and dime us on for an offer.

  4. Please remember that federal government tax “rebate” isn’t going to be a cash rebate, as so many people think of rebates being. It will be a tax credit against any tax you may owe. If you don’t owe any tax, you won’t get any “rebate”. If you owe $5000 in taxes on your income next year, then the $300 will put a little dent in it 🙂

    So many elderly people have gotten caught up in the “rebate” hype since the Residential Energy Credits came out. My mother replaced her A/C with a heat pump system, and when she got ready to file her taxes the next year she told me “the salesman said I’d get $1500 back”. No, Mom, you aren’t going to get one cent “back” because that isn’t how tax credits work, and you owe no tax on your income, so any rebate or credit is null.

    I’d say go for it and replace the water heater and install the meter. You don’t want to be 3-5-10 years down the road and say, “If only”

    Also, for that price of $1000, have you looked at tankless or on-demand water heaters? Huge money savers, but they won’t air-condition your garage, LOL!

    • I pay taxes, so no worries there. I appreciate the warning to others though as I must admit, I just assume everyone pays taxes like I do.

      The $1,000 is fully covered by credits. Tankless water heaters wouldn’t be. Plus, an air conditioned garage seems too sweet to pass up!

  5. If you’re sure you are getting the entire thing covered with energy and sales tax credits, then it’s a no-brainer. Free upgrade!

    On the water meter, i’d check with a few other neighbors and get hard numbers from them, not just “Ours paid for itself quickly”. Well, how quickly? 1 year, 5 years? It makes a difference 🙂

    • Everything but sales tax and install costs!

      It is probably a year or two, but I might read my water meter, then run my system then read my meter again to find out.

  6. I would say spend the money on the water pump heater, but a tankless could be a better investment. The water meter is a different story. I am not sure how much you will save and neither do you. You might need some numbers before you do something with this one.

  7. eemusings says:

    That’s pretty smart technology! I would definitely go with the water heater and maybe take a ‘wait and see’ stance with the meter.

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