To Buy Or Not To Buy (A New Furnace)
An Unpleasant Surprise…
My alarm clock went off and I hopped out of bed. For some reason it felt cold… VERY COLD.
Yes, it was the middle of winter in the Pacific Northwest and I’ll embarrassingly admit that I have numerous holes & rips in my pajamas, but it never felt quite like this. Not expecting anything positive, I quickly brushed my teeth and went downstairs to check the thermostat. To my consternation the display read: “E74 Error – No power to the Rh wire”. Translated into simple terms what this really meant was: “Something is wrong with your furnace and that’s why your house hasn’t had any heat for the last 10 hours.”
Yikes! This was the very last thing I wanted to deal with on a Monday morning, especially after spending the entire day prior at my daughter’s volleyball tournament.
Still a little groggy, I started researching how to remedy this type of error. After about an hour and multiple attempts at fixing it, the furnace suddenly came alive and we had heat again! Hooray! I had no idea exactly what I did, but of course I gave myself full credit anyways and proclaimed to everyone in the house that I was a hero.
… Followed by Some Unpleasant Information
Everything was fine for almost a week until the furnace stopped working again the following Sunday. Once again I woke up feeling colder than normal, but this time I immediately knew something was wrong.
Although the furnace eventually started working again, I scheduled an appointment to have someone take a look at it. I honestly had no idea what to expect, but my guess was that a technician would perform some troubleshooting, quickly identify the issue, replace a part or two, then have us back up & running with heat within a couple hours maximum – all for a price of ~$300-$500.
Well… I was just a little bit off… or should I say, I was just a LOT off.
First, the technician couldn’t definitively diagnose the issue which was frustrating in itself. But the more startling statement was that he recommended a new furnace altogether instead of just a repair!
Get Off My Lawn!
Being the naturally frugal guy that I am, my instincts kicked-in and in my head I immediately dismissed this suggestion. I’ve encountered so many people throughout my life that want to sell me something, so I disregarded the advice of this person thinking he was just giving me a sales pitch.
To his credit though, he did provide a couple compelling statements:
- My furnace was approaching 20 years old, which is near end-of-life for the average furnace. So even if the furnace could be repaired, it might only provide an interim band-aid before requiring additional repairs or having the unit fail completely.
- A typical repair would cost ~¼ – ½ the cost of a new furnace. Since the furnace would inevitably die and need to be replaced, the repair cost could just go towards purchasing a new one instead.
I thanked the technician for his time then sent him on his way. Both my wife and I agreed that without a doubt we were going to stick with our current furnace until it completely died, squeezing every last drop of life out of it along the way. (This is the same practice we employ with most of our possessions from small things like kitchen appliances all the way up to big-ticket items like our cars).
Same Price as a New Car
Now, we may be frugal and total optimizers, but we do also like to plan ahead for any “what if” scenarios.
So for “fun” we decided to get multiple estimates to find out what a new furnace would cost, along with estimates for a new air conditioner unit and water heater since those too were getting old. Although each estimate was slightly different, we quickly realized that we were looking at a minimum of ~$20K to replace all three items concurrently!
Still grappling with sticker shock, it felt like the original decision to stick with the current furnace was justified. Since the furnace was running again at the moment, it felt like the easiest thing to do was to do nothing. Less effort and no money spent = sure-fire win, right? Not exactly.
The Battle Between Logic & Emotions
After the initial surprise started to wear off, we wondered if we were doing the right thing. Were we making a logical decision or were we letting emotions get the best of us, all in an effort to avoid spending money?
The facts staring us right in the face were:
- All of our equipment was old. The furnace, AC unit, and water heater were all original to the house, meaning they were approaching 20 years old. Estimated lifespans for furnaces & AC units are roughly 15-20 years while water heaters have a life of 8-12 years. So we were right in the ballpark for replacing the furnace/AC and way overdue for a new water heater.
- The furnace stopped working twice already. We were left without heat in the middle of winter two times within a week, so this was not a fluke. There was definitely something wrong that needed to be addressed via repair or replacement that couldn’t simply be ignored.
On the other hand, we were without a doubt wrestling with our emotions. Similar to all big purchases, my wife and I both felt a strong sense of fear & anxiety about spending so much money all at once. Our negative feelings were compounded by how quickly the situation had escalated. Just a few weeks earlier life was great – there was no indication that anything was even wrong, and of course we had absolutely no plans to spend $20K all at once in the near term.
Looking at just the numbers themselves, we knew analytically that we could afford this, but our minds fought back and kept impulsively trying to make up excuses for not buying a new furnace: “The problem will resolve itself”, “I bet you can still squeeze 5 more years of life out of it”, and my favorite… “Heat is overrated anyways”.
Stepping Outside of Ourselves
After going back and forth so much, we thought it might make sense to look at the circumstances from an outside perspective in an effort to escape our own feelings and biases. We asked the question “If one of our friends or a family member was dealing with this situation, how would we advise them?” Of course we would tell them how foolish they were acting and that they should buy a new furnace, especially if they could afford it.
But did we believe this ourselves? Could we acknowledge that WE were the ones acting foolish and irrational this time around?
Living a Rich Life
Another thought that came to mind was something that Ramit Sethi discusses frequently, living a rich life; once someone figures out the financial basics and money is no longer a driving factor, they can start designing a life around things that are truly important to them. This could mean more memorable vacations, spending time with family, or purchasing an expensive item… which in our case happened to be a new furnace.
Ramit goes on to say that there is no virtue in living a smaller life than needed. The point of money is not to hoard it, but instead to use it to live a rich life.
Having heat in the winter, air conditioning in the summer, and hot water year-round may seem mundane, but the ability to access all of these comforts on-demand is a privilege and part of the life we want for ourselves. It would actually be absurd to even contemplate foregoing any of these features due only to some strange propensity for saving money.
Put another way, yes we could save money by not replacing the furnace, but we’d still be dealing with ongoing heating issues. What’s the point of living in discomfort, especially when we know we have the financial means to fix the issue? As Ramit may ask, were we living a smaller life than needed?
The Decision
After all of the deliberation and looking at both sides, my wife and I decided to go ahead and replace the furnace, AC unit, and water heater. The emotional weight of the purchase was still heavy, but logically we knew we were making the right decision.
So after weeks of hassle, worry, and stress, we signed the contract to put everything in motion. Later that evening after everything was said & done, I surprisingly felt a huge sense of relief and calmness. It felt like I had won a huge internal battle over my emotions and I was proud of myself for regaining some control over my money.
I celebrated this monumental win by immediately switching back into frugal mode though, making myself a delicious dinner consisting of whatever miscellaneous/leftover items I could scrounge from around the house (which just so happened to be salmon burger patties on toasted sandwich bread with a bowl of chicken dumpling soup).
What better way to help pay for a new furnace than by saving money on food! After all, everyone knows that saving a couple dollars here & there on groceries will go a long way towards recouping that $20K!!!
Links/Resources
Reader Questions
- Have you ever struggled to make a (needed) purchase in an effort to save money? If so, are you still happy with that decision or do you have any regrets?
- Are you living a rich life or are you living a smaller life than needed?
- What are your thoughts on salmon burgers (on toasted wheat bread)?
Leave your answers or comments below – or email us directly at info@epicfinancialjourney.com