How to Save Money With Energy-Efficient Home Upgrades

Energy-efficient updates can help homeowners keep some cash.

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When the weather outside is extreme enough to make you shiver or sweat, your home is a retreat into cozy or cool comfort, unless your windows and walls let outdoor air seep in. But your heat or air conditioning isn't the only thing going out the window. Your money, too, will be wasted in the pursuit of warming or cooling the rapidly escaping air.

That was architect Doug Farr's problem with his drafty, 30-year-old home. A Chicagoan, Farr was no stranger to blustery winters, but he has found that an energy-efficient retrofit of his home has brought satisfaction with more than just the money he's saving on utilities. "It makes a difference on cold days, being able to sit in those rooms comfortably," Farr says. "More of our house is occupiable. The heat added to that room stays in the room, and so do we."

Old, drafty houses may keep the makers of the Snuggie in business, but they're also why so many Americans pay more for their utilities than they should. All of the air that they pay to heat and cool can go right out the windows, doors, and seams of an improperly insulated home. But it doesn't have to be that way. By making energy-efficient improvements to your house, you can lower your monthly bill and also do something for the environment. Any house is a good candidate for some tweaks, whether it's a total retrofit or an afternoon with a can of spray foam."If you're going to stay in your house a long time, it's for you," says Farr. "If you're going to hand your house off to your kids, it's for you. If your property values are increasing or holding steady, it's for you. If you want to make an investment that has a better return on it than retail investments—you can get a seven-year cash payback—it's for you."

Energy audit. The first step toward a more efficient home is an energy audit, a test to see where your home is wasting the most. To really seal up your home's envelope, as it's called, experts recommend calling in the pros. Through the Energy Star online directory, a local auditor can be found who will bring in some diagnostic equipment to test your home for places where heat or air conditioning might escape. Your auditor will probably do what's known as a blower door test, which lowers the air pressure in your home and reveals leaks. He or she may also take a photo of your house with a thermographic camera, with the red areas of the photo indicating where better insulation and sealing are needed.

If you don't want to shell out money for an energy auditor, you can perform a casual energy audit yourself. Efficiency experts recommend feeling around baseboards, windows, doors, light switches, and electrical sockets for air leaks. Air can escape or enter from anywhere two different building materials meet. Farr says another trick is to look at your roof on days when snow is falling to see how long the snow stays put compared with the snow on the ground. The faster it melts, the more warmth you're losing through your attic because of poor insulation. If the snow is melting as soon as it touches your roof, that's a bad sign.

While closing up leaks is one thing, there are several other ways that homeowners on a budget can improve their home's energy efficiency with just a trip to the hardware store. One that is universally recommended: switching out your old light bulbs for energy-efficient, compact fluorescent bulbs. A large portion of your electricity bill is from lighting, and according to the Department of Energy, using the new bulbs can cut your lighting costs by as much as 75 percent. They pay for themselves within six months.

There are also other home improvements that don't require technical expertise. One is to wrap your water heater in a custom blanket, reducing heat loss by up to 45 percent. The blankets can be found at your local hardware store and typically cost less than $20. Another is low-flow shower heads, which are easy to install and are a win-win for both power and water bills. If you use less hot water, you'll also be spending less to heat it. A programmable thermostat allows you to set the temperature warmer or cooler for times when you'll be asleep or out of the house. You can also seal leaks in the ducts of your HVAC system—ironically, not with duct tape. Several other tapes will work. Ask at your local hardware store.