A while back, I mentioned that I’d traded in my clunky old furnace for a new-fangled, super-efficient model. Not without some trepidation, though, since I took out a home equity loan to pay for it. For me, debt = yikes!!!

But despite my aversion to living on borrowed money, I reasoned that—provided that things played out as I expected—the furnace would start paying for itself from day one. It was a risk, sure, but one I was willing to take.

Without a loan, an efficiency upgrade like this can take a while to pay for itself. With up front costs of $3,500, more or less (really, more, since I went for the most super-efficient model), it could be 7 years or longer before the gas savings would pay off the cost of the furnace. And while that’s a rate of return that patient investors would leap at, I’m just not that patient!

However—and despite the greed and farcically bad judgment on display in the ongoing mortgage market meltdown—financial instiutions do tend to be more patient than consumers. Banks are willing to lend now, in the hope of making a profit a decade down the road.

So I figured I could take advantage of their farsightedness, by letting them pay for my furnace now, and paying back the loan gradually, using whatever money I saved on fuel to pay interest and, eventually, principal. That way, I’d use less gas right away—with obvious climate benefits—and I wouldn’t pay a cent more for heating (combining fuel and financing) than I did before the upgrade.

But it was a bit of a leap of faith, sinceI didn’t know in advance how much fuel I’d save! If I gambled wrong—and it turned out that the old furnace was actually pretty efficient—the new furnace might turn out to have been a dud of an investment.

So how have things turned out?

In a word: AWESOME!! (Thankfully.)

  • In November and December—the real beginning of the Seattle heating season—I saved a combined $150 on my gas bills—more than enough to pay for the monthly finance charges, and even pay back a chunk of the principal on the loan.

    November was a weird case, since we had some work done on our house that kept a hole open from the living space upstairs into our attic. Still, our gas bills went down by 42 percent, compared with a year earlier—despite slightly colder temperatures.

    But December’s bill was a much better comparison, since the hole was sealed and the temperatures were about the same as previous year. And for the month, our gas consumption fell by 53 percent compared with a year ago, saving us over $100. Yowza!

    If these savings keep going, I’ll be able to pay off the loan early—and after that, the gas savings will be like free money! And if I’m wise and patient, I’ll plow the money I save on my gas bills right back into another efficiency upgrade: hopefully, the first step in a long, virtuous cycle.