Using Energy Tax Credits To Your Advantage #656

episodes that are going to help save you money. You know, I don't think many folks get too excited about spending money on their home when they don't get to see the results of that money that they spend, Right, Like, I don't think folks mind spending on paint, like having your house painted. My parents actually they're in the middle of getting quotes for painting the interior of their home. It's not cheap, which they haven't done in like thirty years.

It's gonna make a big difference, it is. I was shocked at the some of the numbers that Dad was telling me. But even still, I think that's something that folks can get behind. Or even like buying furniture or something like that, right, but they kind of up or a new rug which really ties the room together. That's right.

But what we are going to be discussing today are the things, the upgrades that you can make that are a little nerdier that that said that funny that are a little nerdier because they're going to save you money. That's what we're talking about today. Yeah, so we're talking about specifically things you can do to your house that most of them are unseen or and they're really all about kind of energy efficiency. And so there are new kind of rules in place, new some new incentive, new intended,

new perks for you to quiet these moves. Nerdy there we go. Yeah, it's good that time. Well, we normally when you like, we put these things off because we know that they might save us money. But we're like, it's just not as fun as like a new kitchen faucet or something like that, or new countertops or whatever it is there you go or ship lap like joint against like kitchen fawcett. That's that's you're reaching out of your own experience there, because you can make something you've got.

You've had that pass, I need to actually put it in. It looks very nice, I bought it. It'll look awesome having get installed it. So your plumbing situation is out of control. Though you're the same, it's hard to get too. Yeah, yeah, I mean we both got up under there, and you're like, what do you think. I was just like, dude, I have no idea how any human being would be able to You need like a house elf to get up in there to take care of that and see if

Dobby's available, so do that for him. But yeah, so we're gonna talk to all about that today. But I want to quickly mentioned before you get to that, Matt, that just there was this like a really sad situation in one of my kiddo's classes where one of her classmates parents passed, I know exactly, and they had just had what you're talking about, baby daughter. It was like

the saddest thing in the world to me. And so the class was taking donations and everybody was so generous and just giving money to this family and really like supporting them in a bunch of other ways too. It's nice to live in a community where people take care of each other, right, And I feel like we live in a place where that is true. And it just made me think too that one of the person of spending lesson you make of being diligent about savings is

that you can be like hyper generous in situations. Absolutely man so, and I've seen that be the case. Our family has been able to do that, but a lot of families around us too. Yeah, so yeah, it just

kind of wanted to put that out there. Make sure that you're using your means to, especially when it comes to supporting communities, not just like, hey, let me donate some money to the Red Cross, which is fine and dandy, and I have no problem with you, but make sure you set some aside too for just stuff like that, because it breaks my heart. Absolutely. Yeah. I mean we touched we actually touched on this a little bit last week.

But that is a great reason to be good with your money, to prepare in advance for these different opportunities that come up. But that's cool, man. Yeah, I'm glad that y'all are able to give. We our kids go to different schools, but even still, I had heard about that that heartbreaking store. My heart definitely goes out to that family. Maybe we'll reach out as well for sure. Yeah so all right, Sorry started to start a downer, but yeah, let's good job, buddy. Let's move on. Let's

get to the topic in hand. We're talking about using these new energy tax credits to here, and we still got to introduce the beer. Oh, we have a beer. That's right, So maybe I kind of forgot about it because it is a beer that we're having for the second time of the show, the first time we've ever repeated a beer. Yeah, we had nothing in the first Now you're drawing all the attention to it. I was like, do we kind of just skate by and just thought we forgot to stock the beer fridge. So we've been

we've been kind of busy lately. Party found and uh yeah next week next episode that we have a beer oun So I guess next Monday we will most definitely have something pressure a new an updated beer. Well, this one is pilsner. It's called b Boats by Creature Comforts. We'll give our thoughts on it at the end of the episode. Yes, even though we've had it before. But yeah, let's get to the let's do that topic. And even though it is a Pilsner, it is a craft pilsoner.

I don't want people thinking that we, you know, there's a good one that we're like grabbing just like a basic, mass produced macrologger pilsner off the show. If you taste test or something, if you take test this next to one of the macros. It's a very big difference. So good, very big gray beer. Yeah. So all right, but let's talk about tax credits and how to make sure you're getting the most bang for your buck, make sure you're you know what cysts, and then how to use them.

And it made me think, Matt, there was this article in the Free Press about folks that make money by trying new medications to test their efficacy. And like, they're they're getting injections, they're taking pills, and in some of the studies they can't even leave the building, but they're subject to under house arrest. Basically, basically they're subject to large amounts of blood being drawn and this can happen for weeks on end. And like, the question is why

would someone subject themselves to this? And the answer is to make money, right, And the most fundamental reality of economics is that incentives drive everything. Incentives matter. And I'm not planning on going back to let's say, like my pressure washing side hustle from twenty years ago, not a bad job, not my favorite job of all time. Though,

unless let's say it were to become massively lucrative. Let's say they were like we're going to start paying pressure washers like four hundred K year, I'd be like, boom, I'm done with podcasting. I'm all in on pressure washers of the new influencer, right, And if it was like everybody loved the pressure washer was like the cool job in town, maybe I'll consider it. I guarantee there are

TikTok accounts out there dedicated to pressure washing. I'm sure there are, and I'm sure they're like fun to watch because there's got to be that that was the best

part about it. After So I say that knowing that there Instagram knows you follow these people, knowing him, Well, there's this one account in this guy he's got like a long care business, and he sets up his phone and does it time lapse and he goes and pro bono cuts yards that haven't been touched that that are kind of like abandoned or the houses are sitting there empty and it is so satisfying while he gets in there with the edger and cuts along the sidewalk, blows

it into the yard, hits it with the mower. Oh man, I love that kind of stuff. I would be all about watching some pressure washing going neighborhoods. One long care time, right, Yeah, well yeah, so like not my favorite job, like I said, but it was. I will say it was satisfying to see the end result. But I'm just like, it's never

gonna happen. I'm never going back to that because the incentive just isn't there sure, And I think like making sure that your home is more efficient has never been a bad idea, right, but now it's a better one thanks to increased federal tax rebates. I think just the

incentive hasn't been there for a lot of people. Even though they know they're going to save a little bit of money when it comes to their energy bills, they're just like, I don't know, it's not so enticing that I'm going to make the leap and actually put insulation in my house or something like this, or start installing weather shripping. But if you're a homeowner, we would say it makes more sense to think a little bit more about which upgrades you make and when and how you

decide to make them. The incentives have changed, and I think they're going to be pushing you in the direction of doing some of these kind of behind the scenes changes to your house to save yourself some money. That's right, Yeah, so we're here to do some of that legwork to let you know which ones make a little more sense,

which ones maybe don't. And you know, thinking back to that article on human lab rats, a lot of it I think kind of depends on their personal situations, right, Like, so for some folks it might be just the best paying gig that they can find. But then that that article, they also have talked about how other folks who were involved in those studies, how they actually enjoyed the community that forms in some of these longer studies, and that

the participants they're actually sad when it's over. It's a fascinating part of it. Yeah, Yeah. And so similarly, whether these energy tax credits make sense, it partly depends on you whether going green, whether conserving energy, if if that's a high enough priority for you, whether that that cream kind of rises to the top, if that makes sense for you. But then of course there's the financial side of it as well, because you may have heard about

these energy tax credits. We've even talked about them here on the show, and we know that making our homes more energy efficient, that that it's going to save us money every single month, But how much money could we actually save and how much money will we be able to get in federal tax credits as well, and so crunching the numbers that's going to help us to see just how powerful or not perhaps that these incentives are. Yeah, by the way, listener Lauren is the one who yet, Yeah. Absolutely.

She wrote us an email and was like, hey, guys, can you do a deep dive on this? And normally we would say, hey, toss us a listener question, but we're like, wait a second, now, that's going to be there's a lot of information, there's lots of cover that would take the whole epit, so let's make it into a whole episode. So thank you Lauren for absolutely email and getting us started down this rabbit hole. But these

energy incentives, Matt. They were added to the Inflation Reduction Act, which passed at the end of last year, which was confusingly abbreviated to IRA right yes, which confuses anybody who likes to say I hated that there is that overlap, and I'm like, oh man, people are going to get confused.

I know, I know, but well it was also awkwardly named, not just for that reason, but also because it wasn't really doing much to reduce inflation, right, but it did have a bunch of stuff in there on the home improvement fronts and a lot of tax incentives to entire some owners to start saving money on utilities by by doing some of these things that we're talking about today. And so basically some of the things that you can save money on are like new installation in your home,

buying an electric vehicle new or used. Actually, interestingly enough, that was one of the biggest changes in this bill, Putting solar panels on your home, and more. And we'll go over a lot of the specific upgrades that you can make in this episode. You might be super interested

in some completely uninterested in others. That's fine. We're going to do our best to outline the specifics and in the broader strategy actually for how to approach this potentially free money or yeah, incentivize money to do something that might also be in your best interest over time. And the way these rules work, by the way, there's some hoops you're going to need to jump through in order to get the most out of these new government incentives.

So we're kind of discussed all like the specifics, Hey, here are the things that qualify, and then we'll kind of talk about just a general approach too for how you maximize your ability to get these tax incentives. That's right. Yeah, we're going to get into how to actually pull the trigger and make this happen, as well as just how

to think about some of these upgrades as well. And you know, it's important to note that many of these different incentives that they've been around for years, but this bill, it just sort of sweetened the pot. And so last year most of them only had a ten percent credit, oftentimes with severely limited maximum amounts. But now it's a

thirty percent tax credit pretty much across the board. There are still annual maximums, which we'll get into, but putting in new installation in twenty twenty three, that's going to come with all more perks than it did last year in twenty twenty two. And you know, this is just really another creative way to save money every single month.

It's not necessarily going to be sexy, like we're talking about at the beginning of I feel like maybe the sexiest thing is maybe solar in particular, these home energy upgrades, especially when we get them at a solid discount like this thirty percent off, it can decrease our energy usage and therefore our energy bills, saving us money. That's going to allow us to reach some of the different financial goals that we've set for ourselves. Yeah, and it's just nice.

I don't know, there's something really satisfying about knowing that when you're heating a room or cooling a house or something like that, like we're basically starting to do now in Atlanta, that those dollars aren't just dissipating through the ceiling, right and having something like more insulation, beefing your insulation up. Knowing that everything's just working more efficiently, that kind of

feels good. And maybe that's just like the adult in me and my twenty something self would have been like whatever, idiot, I don't even go buy beer. But there is something really nice about knowing that your air conditioner is not working as hard, that everything's just kind of a little more optimized, and that that you're saving money actually every month on your utility bills. And we will talk more than just about insulation. Yeah, there's more. There's a lot

more too. But and you just mentioned Matt getting these upgrades at a discount, so let's quickly touch on how these credits work. Tax credits and tax deductions. They might be on your brain right now because tax days next week, and if you forgot about that, well your friendly reminder to your taxes. But a tax deduction is basically a reduction deduction, reduction of how much of your income is subject to being taxed. And so let's say you have

an income of seventy five thousand dollars. Well, a ten thousand dollars deduction means that you're only going to get taxed on sixty five thousand dollars. That's what a deduction is. But a tax credit is a dollar for dollar reduction of the taxes that you owe, which makes this even more lucrative, even more significant. So in this hypothetical example, we're talking about a nearly eight thousand dollars difference in your tax liability between a ten thousand dollars deduction versus

a ten thousand dollar our tax credit. And today we're talking about tax credits, So don't get them confused. Know that these are even even better. And by the way, you don't have to itemize either in order to get these tax credits, as outlined in the IRA. So if you're like, but I don't itemize, I take the standard deduction,

you can still use these credits to your advantage. Yes, right, Yeah, and don't forget that in addition to these federal tax breaks that there might also be some incentives from your state government and possibly from local utility companies as well that can lead to additional savings. There's there's rebates available depending on your state that reduces the cost of certain new appliances. You can come almost like double dip. Really,

it's like a triple dip man. You've got you've got the federal level, you're getting a benefit of the state level from the with the rebates, but then you're saving every single month in perpetuity. Yeah. And by the way, we're gonna have a lot of links that we're gonna refuct. Oh, so there's gonna be a lot up in the show notes and how to money dot Com. But specifically when it comes to all these state rebates, we'll link. We've got a good resource in there that you can check

and very quickly see. Okay, I live in Massachusetts, where I live in Maine, what what is my state offering and what are my local utility companies offerings. There's a lot that's being offered out there, and these insense they're being offered to businesses, even other government agencies as well. But of course we're here to address the impact that it can have on us as homeowners, as residential customers.

And so we'll get to the best ways that you can use these different energy tax credits to your advantage right after this break. All right, Matt, let's keep rolling. Let's talk about the energy tax credits are available to all Americans, all American homeowners right nationwide, and they can make a big difference in how much taxuo come April of next year. But they can also make a big difference in how livable your home feels in kind of

how big your utility bills are. And there's a bunch of things across the spectrum that we want to touch on today. We're gonna get to all a bunch of the specific items that you can be looking to replace in your home, and then we'll kind of give you, like we said, kind of a way of thinking about when and how you go about doing these repairs. And there's a great chart from Energy dot gov that will include in the show notes for this episode they can

give you just like a quick breakdown. But I guess maybe it might make sense to talk about how much somebody would stand to save if they do some of these improvements. And this is going to vary widely by the size of your home, by the climate where you live in, and the number of holes in your walls, right, and just kind of by the which of these actually do you end up doing. Do you just replace your air conditioner or do you put on rooftop solars like

those are all going to make a big difference. But some estimates have said that the average American could save like two hundred dollars a year on utility bills alone if they implement a couple of these things, which again that's a double win, right, because you're improving your home and at the same time you're saving money. But some of these are going to pay off more than others, and there's a way to approach really how and when

you're making these improvements. But let's go ahead and Matt and dive into some of the different equipment upgrades that you can make in order to save money. Let's get to the details, right, Yeah, So we've already mentioned a couple times now. But let's just make sure we hammer the point home and folks know that we're all about insulating your home. It really is like the lowest hanging fruit when it comes to is, and it always has been,

but now the incentives make it richer. And what's so great about it too is that it really can be like this diy job. Like I've done blow in insulation before in my house. Ideally you've got a couple of folks, you know, you got somebody else there to help you out. They loaded in at the bottom, someone to cellulos. If you're going for the blow in style, you can see a little bit easier to do the bats that you

roll out. But there's a cap of twelve hundred dollars a year, and so we're really talking about hopefully not spending more than four thousand dollars in materials in a given year, which would be a significant amount of material But were you to hit that dollar amount, that will help you to minimize your out of pocket and then you would actually be fully maximizing the credit that's being

offered in this case. But how much we're putting in additional insulation save you well, like you said, Jill, every home is going to be different. But the Department of Energy they say that insulating your home home well that I can stay close to ten percent of the overall energy costs of a home or fifteen percent of the heating and cooling costs associated with keeping your home comfortable. So a lot of this depends on your current installation situation.

But this, on one hand, you might be thinking, dude, that's chump change, But just think about the compounding impact that that has over the years, as that is something that you're able to realize. That's the savings you're able to personally realize for years to come. Yeah, so if you're talking about saving twenty bucks a month, because you toss that in, that could be you know, almost two

hundred fifty bucks a year. In addition to the fact that, let's say, because of the federal tax rebait, really putting that insulation in might only cost you like fifteen hundred bucks. So you're talking about then a six year payback period. And we'll talk more about payback periods in just a bit.

But the reason we want to start with insulation is of course because it's one of the easiest things and there's a ton of homes across this country map where people just do not have an insulation, enough insulation, especially if you're in an older home in the neighborhood that

we just moved from. Some of the houses even near by us that were built in the thirties, forties, fifties, there are a lot of homes that just don't have very much and it's just costing you a ton of money over time because that one little thing that's not terribly difficult to put in and it's not terribly expensive either. It's missing, that's right. Yeah, And you know, earlier I was I was joking about having like holes in your walls.

I'm speaking from personal experience. At our old house, we could literally stand there at the window and look out through a hole between like the window panes and just see the ground like they're directly. That can't be good, No, it can't be good. Like literal cold air. I could stand there and feel the breeze on my face. Well, weather stripping counts right as part of this too, exactly. Yeah, yeah,

you could put some of that stuff in. We're not just talking about hiring a crew, yeah, to show up and you know, spray foam into that you're attic something truly. Something as simple as weather stripping, or there's like this special clock out there that's designed to like seal any gaps where air might be sneaking through. These all qualify as well, so I no longer have to take tilet paper and shove it down into into this, which Kate would be so mortified to hear me admitting that this

is something we actually did for a while there. And granted, you know the credit that you're going to snag on your taxes when you file next year, it's not going to be something to write home about when it comes to getting that thirty percent rebate that or not rebate

that tax credit on weather stripping. But every little bit helps, Yeah, it really does, and I think it can just be the kick in the pants to get this thing done and that kind of stuff like it seals up from the draftiness of a house and just makes your house more comfortable. It has a major impact, and it's saving money,

which we care about. All right, Let's talk about something else, Matt that's kind of on that was involved in that bill, and that is when you replace an HVAC unit so heating and cooling, replacing your ac or your furnace and getting a more efficient one. It's going to cost you less thanks to the federal government as well. Now they'll call for thirty percent of the cost up to six hundred dollars. You've got to meet the seer ratings by the way, though, and in most units that are sixteen

seer or higher I believe should qualify. But should you go out and replace your eight year old unit spending six thousand bucks in order to get a ten percent discount basically because the cap is six hundred bucks, probably not right. You probably don't want to replace something that is in perfectly good working order. And remember something we haven't mentioned yet, but these credits are actually going to be around for the next decade, so it's like there's

no need to rush because they're expiring anytime soon. I don't believe they expired till twenty thirty two, So you got a lot of time to kind of plan ahead and think through replacing some of these items, waiting until maybe they're a little bit longer in the tooth. But if you got to replace your unit anyway, or if it's really really old, like twenty years old or something that it's malfunctioning, it's inefficient. Being proactive I think can

make sense. So hvacts are included in this it's important to note if you're replacing one, just don't forget to get the tax credit that's owed to you, and don't forget to choose a unit that's going to actually qualify for the tax credit. Makes me think of heat pumps too, mat which you're gaining popularity. They were also included in the bill. Yeah, and you know you might be bummed to here there's a six hundred dollars cap on the new AC unit. Well, the thirty percent tax credit for

heat pumps comes the two thousand dollars cap. Oh yeah, wich means you can spend like sixty five hundred bucks on one and still not fully exhaust the credit available to you. So it's just important to know that those exist because that's that's more money than we're talking about with insulation even. Oh yeah, we're talking about a big chunk of change on on something like that. Yeah. Notice we're going up in the cost of some of these upgrades that you can make. But okay, next one is

even bigger. Yeah yeah, but this isn't permission to be like sweetie, we're gonna splurge on the nice heat pump because of course you still want You're still having to pay for this, and so make sure that you are

purchasing wisely. It's just like that. We don't want you get in the Black Friday mentality where it's like, oh, I guess I'll buy three TVs and I didn't need It's it's certainly not like that, but it is like, oh cool, Yeah, I was thinking about doing this anyway, I probably need to do this to my home or this unit does need to be replaced. Now it just makes it make more sense than it did before. Totally. Yeah, so AC units had that six hundred dollars CAP. Heat

pumps come about two thousand dollars CAP. Will guess what solar panels. The cool thing about the Perks and a solar install is that there is no cap on the disc. On the thirty percent discount that they're offering. My neighbors are gonna be shocked when I put solar across the whole backyard, and my kids are gonna be bummed because

then they won't get to play in anymore. They're like, why do we feel all that heat radiating didn't it like reflect and I think about the solar farms and there's always like, yeah, the story is about large numbers of birds coming down because they're getting like glazered. Really yeah, yeah, I don't know if that's Hey, we'll be able to power the whole neighborhood and laser a bunch of birds in the process. Yeah, well, we'll see who is actually in favor of that. But what this means, so there's

no cap. That means that you are going to get a tax credit for almost a third of your overall outlay on solar panels, and so that it doesn't matter if you put it in like a ten thousand dollars system or one that costs forty or fifty thousand dollars. Can't imagine that someone would spend that much, but I guess there's the possibility. And on the side of your home, I guess yeah, And maybe on the how nice of

a vehicle your contractors driving? Probably true, And you're still gonna want to consider what the paybacks land is going to be four installing solar before you go through with it, because the average cost of solar installs after tax credits is about twenty thousand dollars and that is not cheap. This is still a significant amount of money that we're

talking about spending. But you might get that twenty thousand dollars back into your life in the form of smaller energy bills and possibly even less than a decade energy stage. This is a great site to help you to research solar. They'll get you quotes from a bunch of different installers, will be emailing you and calling you, and takes you out of the blue. I know this from personally. You might not want to go that right because it can be kind of annoying, but but you will get all

the information. I'll promise you that. But based on that site, the average payback is eight point seven years, So that's a good starting point if this is something you are considering, if you're trying to decide if getting some panels on your roof, if that's going to make sense, And while you're at it, you might even throw in some battery storage as well, because you know suntn't shine at night and any electricity then too. But I love that he

said about taking that Black Friday mentality. I think the average battery system install for a house is something in the like the nine thousand dollars range. It's not cheap. They can be so expensive, so just make sure you're not getting too far out of your skis. You want to make sure that you're overall making a smart decision for you and your family and specifically with your finances in mind. Yeah, and I don't know if you said this, but the battery gets thirty percent tax credit as well,

which is sweet. So even though they're expensive, it's like boom, thirty percent off that that's helpful. It doesn't necessarily make it a slam donkey. Yeah, got to run the numbers. Basically, it's it's like thirty percent off everything. It's like everything's thirty percent of storewide sale for the next decade. And so but that actually the fact that it's around so long and is it going to impact how we talk about whether or not you should do it too. So

we'll get to that in just a second. But let's talk about electric vehicles as well, Matt. There were some big changes made to EV tax credits in the IRA the Inflation Production Act, and one of the biggest changes is that buying some used evs now qualifies you for a tax break. You can get thirty percent off the sale price up to four thousand dollars, which is sweets.

If you buy a twelve thousand dollars ish EV, which is probably going to be one of those cheaper Nissan Leaf models, it's a few years old, like you're you're basically getting it for eight grand, which is pretty sweet. And that's just never been the case before. There was never any sort of incentive for you to buy a used electric vehicle, but now there is, and that used EV now needs to be It basically needs to be at least two years old and cost twenty five thousand

dollars or less. That's what's going to make it meet the requirements, but also become harder to decipher which new vehicles qualify for this tax credit in which ones don't, So that's kind of tough. But there's this price cap of eighty thousand dollars on new trucks and SUV's and fifty five thousand dollar price cap on EV cars. And that's Matt kind of why we've seen Tesla lowering prices lately.

They want their cars to qualify for this rebate. That's right, they think you're going to sell a bunch more units right if their customers can get the double wammy of a lower price and a tax rebye a rebate. But it's important to mention too that this is like one of the only ones I think that there's like there's a cap on earnings in order to get this rebate,

that's right. Yeah, you only qualify if you are married filing jointly make three hundred thousand dollars or less, or if you're a single filer making one hundred and fifty thousand dollars or less. So make sure you know that if you're a high income earner, you are likely going to miss out on this tax rebate. And the cool thing though, is that you can actually use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less, which is a

nice little perk. So so if you're kind of having trouble figuring out how much am I going to make this year, well, if you made enough to qualify last year, you can still qualify for this rebate, that's right. But that being said, it is important to point out that this is a credit that is actually only good until tax day, so April eighteenth, bad news for folks out there,

at least for most EV's available. So because of the rules set forth by the government, they're incentivizing evy makers to get their battery materials from country is basically not

named China. There So forty percent of the battery minerals need to be mined or process process in the US or in countries with which the US has trade deals, like Japan, and so the requirement increases every single year until twenty twenty eight, when one hundred percent of the battery materials need to have battery parts from the US

or countries we like. So you know, this means that only unfortunately, only a few of the ninety one electric vehicle models currently for sale in the US are likely to qualify for that full seventy five hundred dollars credit starting April nineteen. Yeah, and a lot of the manufacturers

are like actually saying that on their website. You can go to Tesla and they say, hey, the amount of tax credit is set to be cut in half in just a week or so, And so for many seventy five hundred dollars is the difference between buying a new EV or not, like, especially when the average price of a new electric vehicle is somewhere close to sixty thousand dollars. That is a big tax cut, and if it no longer exists, it's going to influence whether people decide to

purchase a new car or not. And so if you're not quite ready to pull the trigger in the next few days, because really that's how much time you have to get the full tax credit exactly. Yeah, you might want to wait a few years actually, because it's going to take a little bit for car manufacturers like GM and some of these other other car electric car producers to change their battery production locations. And many of these companies they think they're going to be compliant by twenty

twenty five or twenty twenty six. But if you're planning on purchasing an EV sometime this spring or even the summer, anyways, either pounce immediately or maybe hold off for a little while, yes, right, yeah. And in addition to electric vehicles, the actual chargers that you can purchase and install, right like it's at level two chargers. This is what folks can do that allow

you to charge up faster at home. So depending on if you're driving a whole lot, that could make a lot of sense, although you just you just plugged it into the side of your house. Yes, so you didn't have an actual charger. Less the thing, I think a lot of these level two chargers are in the five to six hundred dollar range. And yeah, thirty percent off

is great, but do you actually need it. It depends on how much how much range you have on this car, and yeah, how much you're driving, how much you're using it. I had to leave with like eighty miles range, so it wasn't great. But even still, I just by the end of it was more like fifty. It gone down a little bit over the six years of ownership, but like it's it still was. I don't realize you had

it that long six years. Yeah, that's a chuck of time. Yeah, and so it's better for the battery when you trickle charge. And so if you don't actually need to get the level two charger, save yourself, you know, three four hundred bucks even with that thirty percent credit, and just trickle charge every night, because yeah, if your lifestyle, if it makes sense for your lifestyle and how you drive, I don't think people need a level two charge. I think people assume buying an ev it has to come with

that added expense, but I don't think it does. Yeah, you just plug it into the USB port. You're good to go, right, do that real slow trickle charge. It's you know, if you do any of these improvements this year, in the year of our Lord twenty twenty three, you can claim these tax credits when you file your taxes next year, of course, but again, don't let the tax

tail wag the dog here. And so if your insulation situation is already on point, don't rip out perfectly good blow in insulation, that cellulose and from insulation just so that you can get that fancy spray foam installed, just to get that thirty percent discount. Yeah, because that's I mean, what do you think about? Spray from is really expensive too. It can be like six or seven or eight grand or whatever, and so you're getting thirty percent of only

a portion of that too, because of exactly. Yeah. So all that being said, we kind of covered some of the biggest ways in order for you to save on you know, when it comes to heating and cooling your home, just the different energy expenses associated with it. There might be some different options that we didn't mention and again will link to a full list of some of the different equipment upgrades that you can make. Are the most

enticing things? Yeah, yeah, but it might be overwhelming, right, And so if you're at a loss for what to do, right, maybe you're not sure which energy efficient upgrades to prioritize. It could actually make sense to hire someone to perform a home energy audits. Good news on that front too.

There's a thirty percent tax credit also applies to getting an energy audits up to one hundred and fifty dollars, which will help maybe get you pointed in the right direction so that you know what steps to take get the pro to base. I think they usually hook up one of those fans or something. They can see where the league just leagages are happening in your home, and they might say, hey, if you do these this, this and that, oh for like the air Yeah, for the airflow,

they see, yeah, where it's where it's escaping. And so I don't know, I've never done one, But they don't walk around with a lit cigarette and see where. That's all they did that like seventies from the seventies with the mustaches, that's how they did it. But no that's not how they do it anymore. I don't think so. Yeah, it's it's nice. You might want to hire the person to come in and and I think some local power

companies and stuff like that. Matt too, they offer a rebate on home energy audits, so you might be able to get it for even less than that and kind of get that professional insight into what's going on with your home energy wise and what upgrades are going to be the most effective and impactful. Totally. Yeah, they show up with those those infrared heat that's our whole monitor things. Yeah, so they'll get you fixed up where you can kind

of see like Predator from a remember of Predator. I don't think ever saw you never saw any of the Predator movies either from the eighties Schwarzenegger or like the Sigourney Weaver or was she an alien? That's alien? Okay, I didn't see those either. Well there's the new ones too, like Alien versus Predator. That's what you're thinking of alien because of I haven't seen those either. A VP. Oh sorry, I like movies, but not those. You're off playing and

maybe I would like playing basketball. No, you probably wouldn't like I wouldn't like him today. Either, Okay, well, let's let's keep going, Matt. Let's we got to talk about kind of timeline and like which of these energy saving maneuvers to tackle first, and then just kind of a few other things you need to think through from a financial perspective before you start start like calling contractors, going to home depot. So we'll discuss a lot of those

considerations that you need to make. We'll get to that right after this. All right, we are back from the break and Joel, you know, now that we've covered some of the more popular upgrades that we can all make to our homes in order to save money, Let's run through some questions that we think will be able to help us to decide whether or not make sense to make those purchases. And the first question is what is the overall payoff timeline? And Dude, I think this is

likely the biggest question that we all need to ask ourselves. So, for instance, like we were talking about the average payback period for solar earlier being eight point seven years, and so depending on the price of solar installs where you live, a lot of that has to do with competition, how many different installers there are buying for your business. It could be plus or minus a few years on that

eight point seven years. Yeah. Plus. It depends on the environment where you live too, Like you're like, oh, I live in such and such a place Tucson where the sun is bright and shiny, and you might pay off a lot quicker than let's say you live in rural Oklahoma or something like that you see in Oklahoma is not sunny. I don't know, is it. I'm just making it again like Portland or I don't know, somewhere where

it's like sunny is tuson super cloudy. But it's just important to figure out the number for your specific situation if you're going to drop potentially over twenty thousand dollars. But yeah, like if you live out in the desert, you love your home, and you're planning to be there for years to come, this could be a really smart upgrade. It would allow you to save a decent chunk of

money over the years. But dude, I wouldn't go through the hassle of doing this if I was just planning to be there for like another couple of years or you know, like a year from now. So as you're calculating the payoff timeline. Yes, you crunch the numbers and figure out what the savings are going to be where it's like theoretical savings right, like you're looking at it on paper. But you also need to make sure that you're considering how likely it is that you are going

to stay in that particular home. It needs to not just makes sense from a utility standpoint, but it needs to make sense for you and how long you are

planning to own that home. Just because there's a thirty percent discount, if you can only use that item for six months, then it's probably not going to make sense to go ahead and buy that item, even if you're getting the sweet discount on your taxes, right, even when you go to solar stage and they're like, oh, your roof is perfectly situated, like you get a like out of one hundred, you get ninety nine, Like there are very few homes that are as well situated for solar.

It doesn't really matter if you're not planning to stay there for the long haul, yep, exactly. So you want to take those things into account, but then you got also take here your personal situation, that personal payoff timeline into account simultaneously, and you also have to take into account the perceived value of the upgrades, because while we're talking about solar, it's also important to note that you might be able to recoup some of your costs when

the time comes to sell. So that's a fact that it's true to consider. I think homeowners value a solar installation or home buyers value that solar install decently well. But then other things that you might do they might not value in nearly the same way. And so yeah, depending on the buyer, an upgrade like insulation, it might not net you any price increase when you're selling, but solar is going to net you something. It might not

net you the full price. You know that you're paid out of pocket, but it's at least going to it's at least going to make a difference than the sales price. But basically, if you do unexpectedly have to move before you've had a chance to reap the financial benefit, you're likely going to get some dollars back in the form of a higher sales price with solar. But you want to think about, okay, cool, which of these upgrades is going to make is going to actually make a difference

in the value of this home. A lot of these upgrades are not going to make a meaningful difference in the value of the home. So you've got to really think about it from more of like a personal standpoint, thinking of it less than like, well, how much is this going to improve the value of my home? And more like how much is this going to improve the energy efficiency lower my bills? And how much of that

savings am I actually going to benefit from? Because honestly, I think it can be tough to forecast what buyers are going to prioritize when it comes to buy in certain homes, because I do think that when there's a listing and you can see those nice panels facing south like they're on the roof like, it has an impact on the curb appeal, whereas something like installation, like nobody sees that in the listening, like there you know, there hardly is ever a picture of the attic. Right occasionally

that is the case. And I knew, like, not this past house that we bought, but the one before that I knew walking in there there was there was foam insulation in the attica and under the floor. We had a picture of it. Yeshn't there are in an actual picture of it in the listing. I don't remember, but all I feel like I remember I remember valuing that

highly as an individual, but as a homeowner absolutely. But I know most people who are buying a home, they don't see that they're looking at, like the color of the walls. They're looking at, and they are noticing, Okay, guess what the solar For some reason, it makes sense for people that they're going to save money on bills every month, but the insulation not nearly as much, and so people just don't value it in the same way. Well, essentially you're talking about here is focusing on like more

of the passive upgrades that we can make. And I think the more passive, simple strategies make them a sense because I mean, if if it's simpler, if there's less

technology involved, that less likely it is to break. Right, Like, I'm not saying that solar panels break a lot, but I guarantee that they break more often than foam insulation to one they need be cleaned once a year, and yes, it's required exactly, And so I think for that reason it makes sense to kind of go with the lowest hanging fruit first, Like These are the home modifications I think that are going to provide the biggest bang for your buck because though it may not be sexy, it's

also not as expensive insulation specifically, right, I guess I'm still thinking about spray foam. It's not going to be as expensive as like an electric vehicle or a brand new AC unit, or like installing some skylight. So why not get the most substantial savings first where you can immediately see a return on your investment, and then you

can do some of those other upgrades in future years. Again, these credits are going to be around for basically a decade, so there is no rush, and these are different upgrades that you can make strategically over time. Yeah. I think one other consideration map because you just mentioned that, Yeah, these credits are going to be around for a while, is that waiting could mean you are able to buy better technology at an even bigger discount. Yeah, that's another

another benefit. That's another pro to waiting is that installation it's not gonna improve much from the technology side. But guess what solar panels, battery technology, all of these things are electric vehicles statistically improved. Yeah, so think about the electric vehicles on the used car market that are going to be available three, four or five years from now, or the technology and solar panels, you might get solar panels that just are better, perform a whole lot better

than the ones that like, you could currently buy. So if you want to install solar, yes, you are missing out on potentially years of the sun lowering those energy bills month in and month out, But you might get a superior system in a few years time for fewer dollars. Overall, that's important to mention, and I really do think the same thing is going to be true with electric vehicles.

Like battery technology continues to progress, continues to move forward, and so yeah, so maybe even today's Rivian's matt might be like discarded, It might be a whole lot cheaper five years from now. We just don't know. So much depends on what comes down the pike and how quickly some of this new tech gets implemented into cars in the near future. So yeah, just know that the technology

could change. And because these tax credits are going to be around for basically a decade, there's no need to rush into it and get something up on your roof or get that new car in your garage immediately, totally. Yeah, today's Rivians could be tomorrow's Leafs, depending on the technology.

I mean, I remember when those leaves came out and people were in awe and eighty mile range even was like nobody cared because it was this brand new thing, and pretty quickly they were basically resigned to the junkie and most people to lead. Yeah, because no car comes with less than like a two hundred mile range now. Yeah. So another maybe argument for just waiting a little bit or at least not rushing things is if you don't have the cash on hand in order to actually make

those purchases without incurring any debt. And for some of these energy efficient upgrades, it's going to take a decent amount of cash in the bank in order to make this happen. Even with these healthy tax credits, do you have the funds to dedicate towards these energy efficient upgrades. We want to make sure that you just have, you know, a solid savings and that they're healthy enough for you

to take on some of these expenses. Joe, we talked about the money gears last week, and I don't know, for you know, if we're going to say that there's a hard line, like a hard point or a specific money gear that you need to be in in order to start thinking about some of these upgrades. But I'll say if it was me, I would at least want to be out of money gear number four, where you've got that solid three to six months worth of living

expenses set aside. Like ideally, ideally you'd be in money You're five, where you're investing a large percentage of your income towards hirement before you're looking at some of these more fun and interesting ways to get creative on the home front in order to reduce your expenses. Yeah, it's going to be different for everybody, because again it kind of depends on how much you value having an energy

efficient home. But there are are there are some basics that we want to make sure that folks are paying attention to before they're looking at some of these more creative ways to reduce their footprint. But then again, some of them at print can be really really cheap, right, and so exactly we're talking about some of that talking about weather's dripping, go for it. Yeah, it's like you can probably incorporate that into your budget now, even if

you're not kind of running on all cylinders. When it comes to those money gears, if you haven't made as much progress as you like, you could probably still prioritize some of these. You probably don't want to necessarily plug down for the brand new electric vehicle. You might want to offer the used electric vehicle that you can pay cash for or whatever. But these are the kind of things where yet some of them are more expensive than others.

And how much money do you have on hand that is going to impact whether or not or and when you should actually be doing some of these things and making some of these changes to your home in order to hopefully save you money. And I do want to also say, Matt, it doesn't always take money to save money. I think sometimes we get to thinking that we got

to make these upgrades in order to save money. But some just changing the setting on your thermostat you don't even need necessarily the news sweet obviously coolness thermostat, you don't necessarily have to have that. Yes, it can save you money over time, but also your own actions can save you money. And so I think sometimes we look to replacing items or adding in new insulation, it's not that Yeah, there's a lot of benefits now with these

additional tax credits that make them make more sense. But there are other things we can do, like putting on a sweater in the winter right to prevent turning on these. But on those thermals, Yeah, it doesn't have to be making actually proactive moves and spending more money in order to save money. Those those marino wool thermals, I've never tried. You probably have something, don't you. It actually does. I don't like, I'm not out. Yeah that sounds like some

of you. This is a tangent that we don't necessarily need to go down. Well, let's mention too annual caps on these, because yeah, assuming you're good to go after running through all the factors that we've just laid out that you need to consider, you're still need to keep in mind that there are annual caps on the amount of deductions that you can take. So staggering upgrades across multiple years it could be a good idea because it might not take long before you hit the limit in

a single given year. And the goal is not to maximize the tax savings in any singular year, but it's really to maximize tax savings over the long haul, and so the overall total limit for an efficiency tax credit

in one year is three thousand, two hundred dollars. So the limit includes a maximum credit of twelve hundred dollars for any combo of home energy improvements including windows, doors, skylights, insulation, and electrical By the way, we didn't talk about some of those specifics just because they really do get into the weeds, but will link to that Department of Energy graph in the shout up so you can see kind of everything else that's included in this bill. But yeah, furnace, boilers,

central air conditioners, they're included in that too. The remaining two thousand dollars credit is available with any combo of electric or natural gas, heat pumps, heat pump water heaters, and biomass stoves and boilers. So yeah, there's a lot to dissect, but you really, when we're talking about saving money on taxes, you want to make sure you're not just like trying to match it out in twenty twenty

three do everything at once. You might want to do some things in twenty twenty three, some in twenty four, some in twenty five, and kind of pace yourself when it comes to the improvements you're making. Yeah, yeah, I like that idea pacing yourself, and so Form fifty six ninety five that is the IRIS form that you're going to need in order to take advantage and claim these different tax credits. So just yeah, Form fifty six ninety five.

Store that on a way to your memory because you're not going to be This isn't something you're necessarily going to be doing now. You'll be doing this next spring as you're filing your twenty twenty three taxes next year in twenty twenty four, But just make sure you tell your tax preparer you will want to enter it into your online tax prep service, whichever one you use. And on the note of mentioning tax forms before you start freaking out in Joel, you know, we kind of suched

on this. You can take these energy tax credits while also taking the standard deduction, which is pretty sweet that you can get these incentives, take advantage of these. I don't want to call them rewards, but these these these tax credits or something tax credits, yeah, or something that you can be a part of without complicating your taxes. If you don't need to atomize your taxes, you can

just take that standard deduction. And by the way, if you're looking for sort of like a one stop shop, that can be really helpful when it comes to figuring out which upgrades will kind of net you a tax credit, go check out Rewiring America will link to that in

the show notes. But they've got this awesome calculator there that allows you to see what tax credits that you're going to be eligible for based on your specific situation, based on your income, based on your zip code where of dependence, Yeah, where it is that you live, and so we will most definitely link to that in the

show notes. Yeah, that's really cool if you don't want to kind of dig through all of the Department of Energy stuff or i RS dot gov like, you could spend a lot of time on those websites trying to figure everything out, and Rewiring America has put put it all into a pretty helpful calculator that's definitely worth checking out. All right, So we talked about what's up with these

different energy tax credits, Matt. We mentioned a lot of them, not all of them, but there are there are more that you can check out that all the fun ones that people are most likely to do, right, and we dove into some of the specific upgrades that people can make. We talked through some of the different questions that we can all ask ourselves to determine whether or not it's going to make sense for us as individuals to take the plunge and think some of that money into our homes.

Banking on a comfort your house, but also the house. It's going to save us some money house. It's going to actually like give us some tax credits back at the same time. So hopefully this was informative and you can use some of the incentives that now exists that previously we're greatly diminished. Now they've gotten so much better, and just kind of the fact that we have a long horizon, a long outlook on how long these things are going to last. You can start to make plans right.

There's no rush to do anything today, get on the phone with a contractor tomorrow, but you can start to use this timeline and plan out your home upgrades not only to make them more comfortable, but also to save us money. Wants you to kind of at least think through.

Now that we know we know the timeline, we got basically a decade to think through when how where we make these We make these moves to our homes, and hopefully you can get the best bang for your buck over the long haul when it comes to these energy efficient upgrades that you're looking to make. Yeah. Yeah, And

another quick thing too, I just thought of. I think it's just helpful to put these on a radar because I think there's a good chance that for all the homeowners out there, you might be in your home longer

than you think this. We're not going to turn this into a real estate episode, but Joel, you know, you and I we've been talking recently how because of the higher interest rates, folks are likely going to stay put in the homes that they already have, And so what makes sense to be thinking ahead because the longer you stay in your home, the more some of these upgrades makes sense. Yeah, so that's another reason that maybe you

should consider some of these different upgrades. But Joel, let's quickly talk about the beer you and I enjoyed, a Biebo Pills Nerve. This is a beer by Creature Comforts Brewing Company out of Athens, Georgia, home of my alma mater, and Creature Comvers specifically make some fantastic beers. Honestly, I really want to have more of their beers here on the show. But what were your thoughts on this one? All right, this one was clean, it was crisp, It

was just like I remember it. Man, It's it's just like light and tasty, but without being without having too much flavor, Like a pilsner is really just kind of like beer that your uncle drank. But this is a much improved version. Yeah, it's had some nice biscuity flavors, but it drank like a clean biscuit. Yeah, and drink like a biscuit that's been like on a juice cleanse

or something. But yeah, this is just again a craft pilsner, and so it's going to taste a lot better than the mass produced pilsners that you're going to find at your standard grocery store. But we would recommend you check out Creature Comforts because they really do make some amazing, world class beers. Plus, it's always fun to hit up a brewery in a college town as well, So if you're ever in Nathan's, you can swing by there and drink some of those beers there in person. Joel, that's

going to be it for the specific episode. Listeners can find our show notes up on the website at howamoney dot com. We'll link to the many different resources that we mentioned during this episode and until next time. Best Friends Out, Best Friends Out,