IMPROVING ENERGY EFFICIENCY IN OLDER HOMES

If you own an old home, you might feel frustrated with high utility bills due to inefficient systems and appliances. Although old homes have a lot of charm, they also lack many of the features that make newer homes more efficient. Fortunately, there are plenty of upgrades you can make to your house that will decrease its energy usage. Here are eight ways you can improve energy efficiency in your older home: 1. Get an Energy Assessment Before you invest in any upgrades, it can be helpful to know exactly where and how your home is underperforming. During an energy assessment or audit, a professional will inspect every room of your home, conduct tests, and review your past utility bills. Then, they’ll provide you with a report that includes recommendations to reduce your home’s energy usage while maintaining or improving your comfort. Some states and cities have programs that incentivize homeowners to make energy efficient upgrades, and these programs often include a free energy audit. The U.S. Department of Energy also provides energy audits through their Home Energy Score program. Another option is to search for certified energy assessors in your area with the Residential Energy Services Network. Your local weatherization office or utility company may be able to refer you to an energy assessor as well. 2. Switch to LED Lights Switching to LED lighting is one of the easiest and most cost-effective ways to save energy. LED light bulbs are more expensive than traditional bulbs, but they provide up to 50,000 hours of light. This can amount to a lifespan of longer than 10 years. LED lights consume less electricity, too, so they could save you hundreds per year on your power bill. Because LED lights have become so popular, you can find them in practically every color, style, and size, making it easy to replace any of your current light bulbs. 3. Seal Air Leaks One of the biggest issues with older homes is drafts. If your home is drafty, it may feel too warm in the summer and too cold in the winter while also running up a massive energy bill. Attics can be especially drafty, but the outside air can come in through any windows, doors, or floorboards. Hiring a contractor to professionally seal your home may provide the best results, especially if you have a lot of severe drafts throughout the house. However, sealing drafts can also be a DIY project. Use weatherstripping for movable components like your doors or windows, and use caulk to fill cracks in stationary components. If leaky floorboards let cold air into your home, consider covering them up with area rugs. 4. Add Insulation Most old homes lack insulation, causing air to rapidly leak outside. If you get an energy audit, your assessor will tell you which areas of your home are not properly insulated. You can also evaluate your home’s insulation yourself. In the attic, the insulation is usually visible. A fully insulated attic should have at least 12 inches of material. To see the insulation inside the walls, you can look through an electrical outlet after turning off the power. The walls should be filled to capacity. Insulating your hot water pipes is also a great way to reduce your energy usage. This will prevent heat from escaping the pipes, which puts less strain on your hot water heater. Insulating your house can be an expensive project, but the savings on your utility bill should offset the cost within a few years. 5. Upgrade Your Appliances and Systems Replacing your home’s HVAC system, water heater, and major appliances with modern, energy-efficient upgrades can make a major difference in your energy usage. It’s typically not cost-effective or worthwhile to replace these items earlier than necessary because they can be so expensive to purchase. However, if any of your house’s systems or appliances are nearing the end of their lifespan, you can start researching energy-efficient alternatives. Products with an Energy Star rating offer the most energy savings, but even new appliances without an Energy Star rating can be more efficient than products that were installed 10 or more years ago. 6. Replace the Shower Heads and Toilets When making an old home more energy efficient, most of the attention is usually placed on the HVAC and electrical systems. Excessive water usage can run up an electric bill, too, though. Hot water can account for 25% of your electricity usage, and wells and certain other water systems rely on electricity. Replacing your home’s shower heads and toilets with low flow alternatives can save thousands of gallons of water per year. Low flow products have improved a lot in recent years, allowing you to save on energy without sacrificing your comfort. You should also fix leaky faucets as quickly as possible to prevent unnecessary water and energy usage. 7. Install a Programmable Thermostat A smart thermostat is a fairly low-cost way to reduce your heating and cooling expenses, and it can make your older home feel more modern. Before installing a smart thermostat, check that the product is compatible with your current heating and cooling system. Some old homes have systems that can’t support a programmable thermostat. If you’re able to install a smart thermostat, you can use the device to fine-tune the temperature of each room to reduce your energy consumption. Programmable thermostats can be adjusted remotely from your phone, which makes them incredibly convenient. You can adjust your thermostat’s settings to heat or cool your house based on when you’re home or what time of day it is. For instance, you could set the temperature to drop a few degrees at night while you’re sleeping. Be careful not to change the temperature too dramatically when you leave the house, though. If you do, your HVAC system will have to work harder to restore your desired temperature when you arrive home, which will result in greater energy usage. 8. Invest in Solar Panels Solar panels are compatible with many older homes. Although they’re expensive upfront, they can cut your electric bill to a fraction of its current amount. The amount of money you can save with solar panels depends on the size and location of your home and how much energy your home uses. The average homeowner saves tens of thousands of dollars over the lifetime of the solar panels. You may also be able to take advantage of tax credits, grants, and other financial incentives to offset the installation costs. Old homes tend to be far less efficient than new houses, but there are a wide variety of upgrades you can invest in to cut down on energy consumption. Improving your home’s energy efficiency will lower your utility bills, reduce wear and tear on your HVAC system and appliances, and keep your home more comfortable. Some upgrades are costly projects, but others can be done quickly and easily while delivering great results

REAL ESTATE ESCALATION CLAUSE

Getting outbid on an offer is one of the most frustrating experiences for buyers. You don’t want to make a ridiculously high offer right away, but you also don’t want to be turned down as soon as a better offer comes along. If you’re struggling to make competitive offers in a hot real estate market, an escalation clause might be your secret to success. An escalation clause allows you to raise your offer in the event that the seller receives a higher bid. This strategy works well in some situations and can be unwise in others, so it’s important to weigh the pros and cons carefully. If you’re trying to purchase a home in a competitive market, you should understand what an escalation clause is, what it includes, and when you should use one. What Is an Escalation Clause? An escalation clause is an addendum to your offer that promises you’ll raise your price if the seller receives a higher offer. This allows you to stay in the running in a competitive real estate market without needing to make your highest bid right at the beginning of negotiations. The clause usually states exactly how much above the competing offer you’ll go. In many cases, the new bid will exceed the competing offer by $1,000 or $5,000. You and your agent can set any increment you want, though. The clause also includes a cap, which is the highest total amount you’re willing to pay. In most cases, the written escalation clause will specify that the competing offer must be a “bona fide offer,” which means it’s a genuine and provable bid. This prevents sellers from creating fake offers to drive up your offer. You and your agent might make an offer on a home for $400,000 with an escalation clause stating you’ll pay $5,000 over a competing offer up to $430,000. If the seller accepts your offer and another bid comes in at $410,000, your offer will automatically increase to $415,000. However, if an offer comes in at $440,000, your offer will not increase because it would bring you above your cap. When to Use an Escalation Clause Escalation clauses are most commonly used in seller’s markets. When sellers are receiving numerous offers, an escalation clause can make your bid more competitive. You won’t lose out on the home just because someone offered slightly more money. Escalation clauses can be risky, though, so you and your agent need to think through the decision carefully. You should only include an escalation clause in your offer if you’re truly able to pay the cap stated in the clause. You should also be ready to pay an appraisal gap. After bidding wars, homes often appraise for lower than their sale price, forcing the buyer to pay the difference out of pocket if they want to proceed with the deal. Sometimes, sellers don’t accept escalation clauses. Before drafting an escalation clause, your agent should consult with the listing agent on the matter. This will prevent you from wasting your time on an offer that will only be denied. Benefits of Using an Escalation Clause There are a number of benefits to including an escalation clause in your offer. Escalation clauses can give you a competitive edge in a hot market. Many buyers feel helpless in a competitive seller’s market because they make offer after offer only to be outbid every time. With an escalation clause, you can stay in the game for longer. The clause gives you more flexibility in your offer, too. You don’t have to start with an excessively high offer just to beat the competition. If the seller accepts your offer and no higher offers come in, you get to maintain your original price. Many buyers appreciate the peace of mind that they get from including an escalation clause in their offer. It’s frustrating to have your offers be outbid repeatedly, but the escalation clause gives you some leeway while allowing you to avoid the stress of a bidding war. When your counter offers are built into your original offer with the escalation clause, you don’t have to rethink and rewrite your offer over and over again. The cap in the escalation clause serves a valuable purpose when negotiating, too. Emotions can get heightened during a bidding war, and buyers sometimes make extremely high offers that they later regret. By setting a cap in your original offer, you avoid overpaying on impulse. An escalation clause can also make your offer more appealing because it shows the seller you’re serious about the purchase. Sellers don’t want to waste their time on an offer that will fall through. Including an escalation clause communicates that you really want the home and are willing to make a competitive offer. Drawbacks of Using an Escalation Clause There are a few downsides to using escalation clauses, which is why you and your agent must be strategic when using them. The biggest disadvantage to an escalation clause is that it reveals to the seller how much you’re willing to pay, which reduces your negotiating power. For example, you may offer $350,000 with an escalation clause that caps out at $400,000. Instead of accepting this offer, the seller could simply make you a counter offer for $400,000. An escalation clause may cause issues with the appraisal, too. In competitive markets, homes often appraise for lower than their sale prices, so the lender won’t finance the full value of the sale. In this case, you’ll have to make up the difference in cash. Are Escalation Clauses Good for Sellers? Escalation clauses have pros and cons for sellers as well. One advantage for sellers is that escalation clauses can help you identify which buyers are highly interested in your home. An offer with an escalation clause may be more reliable than an offer without one. An escalation clause can streamline the bidding process, too. When higher bids are built into the offer with an escalation clause, you’ll have less back-and-forth communication between yourself and the buyers. One downside of escalation clauses for sellers is that they reduce your ability to negotiate. If you accept an offer with an escalation clause, you can’t make a counter offer to that buyer. Then, if no higher offers come along, you’re locked into that original price. In some cases, instead of simplifying the process, escalation clauses can cause more confusion. If you’re in a highly competitive market, you might receive dozens of offers on your home at varying prices. Some may include escalation clauses, and some may not. Now, you and your agent have to figure out which offer is mathematically the best, which can become complicated and stressful. Should I Use an Escalation Clause? Including an escalation clause does not guarantee that your offer will be accepted. However, this strategy can be valuable if you’re in an extremely competitive real estate market. An escalation clause can give your offer a competitive edge that may be necessary when the seller is receiving dozens of other bids. If you do include an escalation clause in your offer, you must be able and willing to pay the cap. You and your agent should discuss whether you’re passionate enough about the home to justify the offer and whether you have enough cash to pay an appraisal gap. Like all real estate strategies, escalation clauses have their pros and cons. When used in the right situation, an escalation clause could help you secure your dream home.

SINKING FUNDS: WHY DO YOU NEED THEM

Budgeting is at the foundation of your financial success, but it can feel difficult to keep an organized budget when large expenses come up. You might have plenty of extra money one month but be faced with an expensive car repair or medical bill the next. If you’re struggling to manage the large, irregular expenses in your life, sinking funds may be the perfect solution. Sinking funds allow you to save up gradually for bills that you know will arrive in the future. Creating and managing sinking funds takes some careful planning, but this system offers many benefits. Here is everything you need to know about sinking funds: What Are Sinking Funds? Sinking funds are pots of money that are dedicated to large upcoming expenses. Instead of having to pay a big bill entirely up-front, you put money aside for several months or even years to cover the expense. For example, if your dog’s yearly veterinarian check-up and shots cost you $300, you could put $25 per month into a sinking fund for the whole year. Then, when the appointment comes around, you already have the funds saved. This prevents you from having to find $300 extra dollars in your budget. Ways to Use Sinking Funds You can use sinking funds for bills or expenses that you know will occur in the next year, or you can use them to save up for extra treats. The following are examples of expenses that you could create sinking funds for: Holiday spending Expected vehicle repairs Expected medical or veterinarian bills New vehicle purchase Vacations Home down payment Home remodeling or renovations Furniture School tuition Wedding expenses Everyone uses sinking funds differently, but you can set up a sinking fund for any large expense that you anticipate. Depending on the size of the purchase, you could contribute to a sinking fund for anywhere from a few months to multiple years. For instance, you might start contributing to a holiday sinking fund in July or August, but your sinking fund for a down payment may be in the works for several years before it’s complete. Sinking Funds vs Emergency Funds Sinking funds and emergency funds are both essential components of your overall financial well-being. However, they serve two different purposes. An emergency fund is a general savings fund that you can use in case an unexpected expense or situation comes up. For example, you might use your emergency fund if your car breaks down, your water heater breaks, or you have to go to the urgent care or emergency room. You can’t predict that these kinds of expenses will happen, so your emergency fund provides a safety net. Emergency funds can also help you cover your regular expenses if you lose your job. A sinking fund, on the other hand, is used to cover expenses that you know are going to happen at some point in the future. This could be planned events, such as a vacation or a wedding, or large bills that only come up once or twice per year. Sinking funds are also dedicated to specific bills or expenses, but your emergency fund exists to cover any type of emergency. Benefits of Sinking Funds Sinking funds offer a number of important benefits and can help you feel more in control of your finances. One of the key advantages of using sinking funds is that they allow you to keep a more consistent monthly budget. Instead of paying a huge bill one month and having lots of leftover funds in the next, you can split the expenses up evenly over the course of the year. This will prevent you from going over your budget and ensures that you’re putting any extra money in your budget to good use. Sinking funds also reduce the amount of surprise expenses you’ll encounter. For example, you can probably predict when your car will need new tires. However, if you don’t plan and save for the tires, you might be forced to come up with $1,000 all at once for the expense. This could result in you dipping into your emergency fund, putting the tires on a credit card, or failing to pay other bills because your budget falls short. Instead, you could start a sinking fund for your tires several months in advance. Then, when you need to replace your tires, you can rest easy knowing that you have the money already. This will greatly reduce your stress and can prevent you from making risky financial decisions out of desperation. Sinking funds can even save you money if you otherwise would take on debt or use a payment plan to cover a large bill. For instance, you could use a sinking fund to save for a new car instead of taking on a car payment. Sometimes, car insurance providers will also offer a discount if you pay for six months of your premium as a lump sum instead of splitting it up into monthly payments. Where to Keep Your Sinking Funds There are several ways you can set up your sinking funds, and the best option depends on your own preferences and habits. If you create multiple sinking funds for different expenses, you could keep them all in the same savings account and track the total for each individual fund with a spreadsheet. However, most people find it easier to create separate accounts for every sinking fund. If you have a habit of dipping into your savings account instead of leaving it for its intended purpose, consider setting up your sinking funds with a different bank than you use for your checking account. This will make it harder to access those funds for impulsive purchases. Online banks can be a great option for sinking funds because you can’t walk into a brick-and-mortar location on a whim to withdraw the funds. Additionally, many online banks allow you to create as many savings accounts as you want without charging extra fees. High-yield savings accounts are especially valuable for sinking funds. They won’t generate as much interest as an investment account, but you could generate a couple hundred dollars per year in extra funds with a high-yield savings account, which will help you reach your goals faster. Sinking funds are an excellent way to save for big purchases and gain control over your money. If you’re looking to improve your budgeting skills, consider setting up one or two sinking funds today. Whether you’re saving for a down payment, a renovation, a vacation, or any other major expense, a sinking fund can make your financial goals feel more achievable.