Wednesday, December 9, 2009, 11:15PM ET - U.S. Markets Closed.

David Bach The Automatic Millionaire

David Bach, The Automatic Millionaire

Fight Soaring Fuel Costs with an Energy Audit

by David Bach

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story
Very Good (125 Ratings)
3.447996/5
Posted on Monday, November 5, 2007, 12:00AM

It's hard to believe winter's almost here -- especially if you live in New York City like me, where we enjoyed summer-like temperatures all last month. But like it or not, colder weather is on the way, along with the sky-high bills we pay to keep our homes and families warm.

Reports say this year's winter will be colder than last, which by itself could mean higher energy bills. But the U.S. Energy Information Administration -- the research and statistics agency of the Department of Energy -- is projecting an overall increase in costs for home heating fuels as well, which means higher winter energy bills for sure.

I've discussed home energy audits before, but given the seriousness of this year's situation, I feel it's worthwhile to go into more detail.

The Big Heat

In 2006, the average American household paid $889 to heat their homes. This year, we'll see roughly a 10 percent increase, with home heating bills increasing to an average of $977 for the winter.

What's causing the increase? As I write this, crude oil prices are over $90 a barrel -- that's over a 50 percent increase since January of this year. The price of crude oil directly affects the price of your home heating oil, and because of the interrelation between fuel markets, it also affects the price of natural gas, propane, and even electricity, since electric power generators depend on fuel to operate.

That's a simplified explanation, I know. But rather than turn this into a political debate, I want to address what you can do today to decrease your home energy bill this winter -- and at the same time do the right thing for this amazing planet we live on.

An Audit You Won't Dread

You can't fix what you don't know is broken. A comprehensive home energy audit will evaluate how airtight your home is, as well as how efficient your home's heating and cooling systems are. It'll also recommend ways to conserve hot water and electricity.

By uncovering these trouble spots in your home, an audit will help you pinpoint costly problems you can correct now before you get hit with the first dreaded bill of the season. How much can you save? Well, that depends on the results of your audit, but you can figure on reducing your winter energy bill by anywhere from 10 to 30 percent, and maybe even more.

Many of the actual fixes -- like adding insulation and weather stripping and sealing ductwork -- you can do yourself as a weekend project. And you might be surprised by how effective these small modifications are. Other, more complicated improvements -- like replacing windows or an old furnace -- may require the help of a contractor. But without doing an audit first, you won't know which fixes make the most sense financially. So eliminate the guesswork; it'll save you time and money.

Tools of the Trade

For a professional home energy audit, you can expect to pay from $100 to $400, depending on where you live and the size of your house. The investment is well worth it, since it'll easily pay for itself with the money you'll save on your monthly bill.

The energy expert you hire will use certain tools and tests to evaluate your home -- like the blower door infiltration test. This identifies air leaks that allow heated air (which you're paying for) to escape outdoors. For most homes, air sealing is often the single most effective step you can take to stop energy loss and start saving money. Other equipment used in an audit includes infrared cameras that reveal missing insulation, cold air pathways, and moisture problems.

A good audit will provide a full report prioritizing recommendations for energy efficiency improvements. A really good audit will also indicate how long it will take you to recoup your investment.

Finding an Expert

You have several great options for finding an expert to do your home energy audit. Start by calling your local utility company, because some actually offer free audits to customers. If not, ask if they can provide a referral to a professional in your area.

Home Performance with Energy Star is a national program offered through the Environmental Protection Agency and Department of Energy that recommends auditors throughout the country by state.

As a last resort, check the Yellow Pages under "Energy." Just be sure to ask for references, and of course it doesn't hurt to look up any possible past complaints with the Better Business Bureau online.

Doing It Yourself

If you prefer to do your own energy audit, there are plenty of tools and "how to" guides to help you through. The Department of Energy's web site walks you through the entire process step by step, including how to do your own pressurization test. The site also offers additional tips for do-it-yourselfers.

If you prefer to get started on a smaller scale, try the Energy Star Home Energy Yardstick to compare your home's energy efficiency to similar homes across the country. You'll need your utility bills from the past 12 months, and once you answer a few questions about your home you'll receive a report of (somewhat) customized recommendations.

What a (Tax) Relief

Once you've completed your audit, you'll be making improvements to your home based on the report recommendations. Certain improvements -- like adding insulation, replacing windows, and installing high-efficiency heating equipment -- may be eligible for a tax credit of up to $500.

This maximum applies to improvements made to your primary residence over a two-year period from Jan. 1, 2006, to Dec. 31, 2007. There's a complete summary of what improvements are covered online.

Environmentally Speaking

Between heating, cooling, lighting, appliances, and various electronic luxuries, we all use an extraordinary amount of energy to power our homes -- not just in the winter, but all year long. All that energy use not only puts a strain on our bank accounts, but also on the planet. In fact, according to the Alliance to Save Energy, a typical house emits twice as much carbon dioxide as a typical car over the course of the year.

Scientists use the term "ecological footprint" to measure our use of resources against nature's capacity to regenerate what we've taken. It's estimated that the total human footprint worldwide currently exceeds the capacity of the planet to sustain us by 25 percent.

Our homes -- where and how we live -- are a big contributor to our ecological footprint. In addition to fossil fuels, they use up land, water, wood, metal, and minerals. They account for more than 20 percent of our national energy demand as well. So if we're smarter about how we use energy in our homes, we can save plenty of money -- and make a positive impact on the environment, too.

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story

Rate This story

Very Good (125 Ratings)
3.5/5
Sign-in to rate!

31 Comments

Showing comments 6-31 of 31<< Previous
Sort: first to last

  • Yahoo! Finance User - Wednesday, November 7, 2007, 10:30AM ET  Report Abuse

    • Overall: 4/5

    It may not add up if you are considering ONE year. Think about the big picture, and a good measure is five years. Something is worth considering if it pays it’s self in five years. "These numbers dont add up. If the average cost of heating is $900, you cant buy an energy audit, new insulation, windows, plus your time and expect to come out ahead."

  • Yahoo! Finance User - Wednesday, November 7, 2007, 8:36AM ET  Report Abuse

    • Overall: 1/5

    This notion that I, an AMERICAN citizen, a participant in the world's largest economy, should be forced to grovel and apologize for every last kilowatt-hour of energy I use is just totally and completely unacceptable. The fact is the so-called environmental lobby run us off into the ditch and when we were building gas and coal fired generation plants we should have been building nuclear plants instead. While the utilities can say they built what they could get permitted, there is no excuse the elected officials have to cover the eggregiousness of this mistake, and now we are paying the price not only in the form of lowered economic growth, but in our new fealty to scarcity and it's supposed joys and wonders.

  • Yahoo! Finance User - Wednesday, November 7, 2007, 5:03AM ET  Report Abuse

    • Overall: 1/5

    None of this amounts to anything when you have to make a choice between food on your dinner plate and heating your home. I suggest something that will get the job done: PHYSICAL, SMASH-MOUTH FOREIGN POLICY THAT ACQUIRES ASSETS FOR THIS COUNTRY. The simple facts are that we don't have enough readily useable crude reserves to meet demand, the key words being readily useable. Two-thirds of what comes out of Saudi Arabia is medium to heavy sour crude, which is more difficult to refine, not light sweet. Alternative sources like tar sands are expensive and produce low grade product. This country will have to conquer someone and acquire assets; we haven't gotten that job done in Iraq so possibly look to Iran or Venezuela as the next candidate, with the potential for a showdown with China (do you really believe that all those Chinese businesses in the Cape Verde Islands are owned by businessmen? They're owned by government operatives to check the U.S. in its own hemisphere and establish a foothold for protecting their oil assets in Angola. They even own the operating rights on the Panama Canal. James Monroe must be turning over in his grave!) This may be the only immediate way where we can also address the devalued dollar; commodity-backed currencies are gaining by the day. We may be seeing a new old era where in order to be a world power a country will have to have ownership of territory and assets to carry out effective foreign policy; in the "old" old era this was commonly called an empire. A missed point was the now fashionable monetization of crude holdings by oil companies. The theory is that crude prices are too high and driven by speculators who grab on every headline, therefore the oil company must grab that price to have more cash when prices ultimately fall. This is an exercise in stupidity because you are effectively shorting your own commodity. When it backfires you end up having to buy crude at even higher prices or even importing refined gasoline; this is a real possibility considering you have a Fed that is cutting interest rates and doing liquidity injections in the same timeframe. You can't be shorting a commodity when everyone wants it, demand outstrips supply, and your central bank is printing money like crazy; you don't want to be holding the bag on a devalued currency being left to die and trying to survive on it. War of empire and survival may be the only option.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 11:10PM ET  Report Abuse

    • Overall: 1/5

    These numbers dont add up. If the average cost of heating is $900, you cant buy an energy audit, new insulation, windows, plus your time and expect to come out ahead.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 10:37PM ET  Report Abuse

    • Overall: 4/5

    Readers can check their ecological footprint at www.myfootprint.org

  • Yahoo! Finance User - Tuesday, November 6, 2007, 7:58PM ET  Report Abuse

    • Overall: 3/5

    Good article about conservation. More articles should really be written aboutcredit card debt and mortgage debt. More people slip up there then in investing or conserving energy. Unfortunatly most the articles never are written by actual people that work with the public everyday like I do. They are written by people who right articles and smile real big and talk on CNBC. David Bach is at least on starting to hit the poor sound asleep American consumer a little bit. Most advise you need to hear they won,t tell you.. Chances are if you saw Bachs finances you would never let him give you advise. He just seems like the type that writes and spends all his money.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 5:39PM ET  Report Abuse

    • Overall: 5/5

    Better yet - instead of complaining about corporate America and them charging what the market will bear (short for continue to raise prices until demand falls off), why don't you invest in these compaines? I have. I have made insane amounts of money trading shares of Exxon Mobile and future call options!!!! GOGOGO BIG OIL!!! You may have missed the boat though, oil is getting quite high and may retreat soon. Earnings are down for XOM too.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 5:02PM ET  Report Abuse

    • Overall: 3/5

    To the user that stated : Instead of fighting fuel costs, I would prefer to fight the big oil companies that are sucking my wallet dry! The problem is NOT my consumption level, the problem is CORPORATE GREED! You my friend don't understand capitalism. If people used less, they wouldn't be able to charge as much. People seem to be happy to keep paying whatever they charge so they can keep raising the price. Supply and demand. Simple, plain, easy to understand. So ifyou hate it so much, find an alternative instead of complaining about it. Are you less greedy for wanting to hang onto your money???

  • Yahoo! Finance User - Tuesday, November 6, 2007, 4:33PM ET  Report Abuse

    • Overall: 1/5

    Instead of fighting fuel costs, I would prefer to fight the big oil companies that are sucking my wallet dry! The problem is NOT my consumption level, the problem is CORPORATE GREED!

  • Yahoo! Finance User - Tuesday, November 6, 2007, 2:44PM ET  Report Abuse

    • Overall: 1/5

    Lightweight.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 2:39PM ET  Report Abuse

    • Overall: 1/5

    So sick of these "Conserve Energy" articles...Why not use you column for something worthwhile, like pressuring elected officals to make some changes in this country. Why dont you write an artical about Stanley Meyer and his water powered car. There is a guy in the Phillipines that has been driving a hydrogen powered car around for 15 years. The only time I ever hear about these guys is when I stumble over some obscure article or video clip on youtube. Mainstream media won't touch stuff like this. All you guys write about is weather stripping and keeping your tires inflated. Pathetic.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 2:17PM ET  Report Abuse

    • Overall: 2/5

    Instead of posting a full-page ad for energy audits and leaving it at that, I think the "Automatic Millionaire" should have offered up some advice on what people can do to improve energy efficiency in their homes - like cost/benefit analyses of things like energy saving lightbulbs, various types and amounts of insulation and insulated windows. I don't mind that he wrote about energy audits, but to make that the entire focus of the article sort of makes it a lightweight article.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 1:46PM ET  Report Abuse

    • Overall: 3/5

    A home energy audit is a smart thing to do. However, performing the audit in November is a bit late in the game. Most good HVAC contractors are too busy to come do this type of job during this part of the season and if your require them to do any of the bigger jobs needed to make your home more energy efficient they will most likely not have room in their schedule to get the job done in a timely fashion. I have to give a second to the comment Yahoo! Finance User posted at 1:17pm. Now that housing values are not rocketing upward David does not seem to have any advice regarding protecting our real estate investments from greater depreciation. If this guy were truly a "guru" then he would have something to share on this subject.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 1:42PM ET  Report Abuse

    • Overall: 5/5

    Thanks for all the helpful links. You should also mention the ridiculous amount of garbage we produce and the costs of sustaining that (direct costs and indirect costs). 25% of our waste is organic (including fruit and veggies leftovers, dirt from vacuum cleaners, grass clips, leaves etc.) and can go towards compost. Building a compost bin in your back yard is very simple, and you get a Win-Win situation as you produce less garbage and you get THE best soil for vegetable garden, flower beds, trees etc. I’m doing it and enjoying myself every time when I see the great soil and thinking about what I’d put there…

  • Yahoo! Finance User - Tuesday, November 6, 2007, 1:17PM ET  Report Abuse

    • Overall: 1/5

    Boy, when the housing market slows his wisdom is limited to caulking around your windows as a way to become a millionaire? This really shows the depth of his plan.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 12:50PM ET  Report Abuse

    • Overall: 2/5

    Colder winter? Thats old news from the summer. Now they have done a 180 and say its going to be warmer. If you dont like the long range forecast, just wait a few months until they change it again. LOL! And these clown are claiming to know the weather 100 years from now? Yeah right. All these climate/weather predicters are spinning around like weather vanes in a hurricane. Yes, its a good idea to buy energy efficient things, plug up leaks in the house and it does save money. But no, its not going to save the earth or any of that other nonsense drom Al Gore and his Penguin Army of Socialist robots. Besides, any small reduction in CO2 output will be more than offset by the exploding economy of the Chinese Communists who have found religion with Capitalism. Theyve got over 1 billion Chinamen and they all want cars!

  • Yahoo! Finance User - Tuesday, November 6, 2007, 12:41PM ET  Report Abuse

    • Overall: 5/5

    Some very good information in the article and some very mislead comments left by others. Wake up guys, global warming does not mean where you are living will get warmer, just global averages. So chances are high that if you live in a cold area it could get colder. Regardless, this is the easiest way to reduce one's carbon footprint and reliance on foreign oil.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 12:27PM ET  Report Abuse

    • Overall: 1/5

    This guy knows little about money let a lone heating and housing issues!

  • Yahoo! Finance User - Tuesday, November 6, 2007, 11:32AM ET  Report Abuse

    • Overall: 3/5

    At least he did not suggest that you lower your thermostat a few degrees - it does work, but it sure gets cold ( get that sweater on! :-) ) BTW: be careful not to do too good a job sealing up your house. A structure needs to "breath" - it's good for you, in case your house has fumes from new carpeting, radon, etc, it's also good for the house - you don't get moisture buildup. All structures need some "give" - a house that leaks a little bit of air is a good thing,

  • Yahoo! Finance User - Tuesday, November 6, 2007, 9:55AM ET  Report Abuse

    • Overall: 1/5

    "Reports say this year's winter will be colder than last"...uh ohh someone from yahoo not drinking the global warming cool aide...shame on you! Be careful with the new heaters and AC systems that are being sold. Ask around to people that have put them in recently. I just put in a brand new AC system. Supposedly top of the line, with high efficiency (SER) ratings, tax break, kick back from my electric company, good warranty, etc...it saved me 3 dollars a month on my electric bill! More Nukes will solve the energy challenge we have. They provide low cost energy, clean, and no foreign dependency!

  • Yahoo! Finance User - Tuesday, November 6, 2007, 9:34AM ET  Report Abuse

    • Overall: 5/5

    A lot of good advice. He mainly focused on heating, but one other thing that deserves mention is refrigeration. Refrigerators are much more efficient than they were even 10 years ago, so an old fridge may be worth replacing. At least make sure that the heat exchange coils are free of dust to boost efficiency.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 9:08AM ET  Report Abuse

    • Overall: 5/5

    David, thanks for the environmental plug. Doing the right thing for the environment is just as important as saving a few bucks.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 9:05AM ET  Report Abuse

    • Overall: 3/5

    Is an energy audit the same as a home inspection? It certainly sounds more sexy. Gurus like David annoy me because he's basically advocating a cheapskate lifestyle, which is fine, but he somehow tries to make it sound sexy. He has us putting every spare cent in the bank or in the stock market. I'd rather enjoy a few simple pleasures now and then. Even worse, he doesn't have to live the life he's advocating because he's made his money selling books. Now he can sit back and spend his money while we're all living like tightwads.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 9:01AM ET  Report Abuse

    • Overall: 4/5

    As far as tax credits go, what happens after 2007? They're just not available after that? Why is that?

  • Yahoo! Finance User - Tuesday, November 6, 2007, 8:54AM ET  Report Abuse

    • Overall: 5/5

    Ok, ok I'm convinced. Calling my utility company for an audit today.

  • Yahoo! Finance User - Tuesday, November 6, 2007, 8:41AM ET  Report Abuse

    • Overall: 3/5

    Not much new here that can't be found on a gazillion website already. I'm curious as to where David got his $889 annual cost to heat a home. Is this statistic for all homes in the US (including those in southern California or Florida), or those homes that actually do have a heating season? The $889 seems to be an awfully low average heating cost, especially compared to cited statistics on related topic webpages.

Showing comments 6-31 of 31<< Previous

The Automatic Millionaire is the registered trademark of David Bach and FinishRich Media, LLC.

The columns, articles, message board posts and any other features provided on Yahoo! Finance are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author’s own and not necessarily those of Yahoo! and there is no implied endorsement by Yahoo! of any advice or trading strategy.

More from David Bach

Save the Earth and Get Rich Trying

Read David Bach's latest book, Go Green, Live Rich: 50 Simple Ways to Save the Earth and Get Rich Trying. Order today!

Finish Rich Coaching: Are you finally ready to stop worrying about money? Change your life with David Bach's new one-on-one coaching program.

The Automatic Money Manager: Track your spending so you can grow your savings -- automatically! Get your 30-day free trial.

More from Yahoo! Sources

  • CNN Money
  • Consumer Reports
  • Kiplinger
  • The Motley Fool
  • Business Week
  • Wall Street Journal

Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data and daily updates provided by Morningstar, Inc. Fundamental company data provided by Capital IQ. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.

Yahoo! Answers is provided for informational purposes only, and no Q&A is intended for trading or investing purposes. Yahoo! shall not be responsible or liable for the accuracy, usefulness or availability of any Q&A information, and shall not be responsible or liable for any trading or investment decisions based on such information. View Complete Answers Disclaimer.