By John Steinbach

An Essential Double-Green Concept: First Costs vs. Life-cycle Costs

The price tag on that doggie in the window is a first-cost question. How much that pup will cost you over its lifetime is another question entirely — a question we sometimes forget to ask.

Anyone who’s owned a dog knows that buying a puppy is just the start of your expenses. She’ll grow to 100 pounds, consume tons of food, soil some carpet and eat some furniture before reaching adulthood. Over the years, she could cost you the equivalent of a good hybrid car in vet bills. Those costs, the ones that keep on coming after you get the dog, are life-cycle costs.

So how much is that doggie in the window? More than you think! Which is the same answer you’ll get when you apply a similar question to home expenses.

How much is that cute “McMansion” in the corn field? Well, that too is a first-cost question. Improperly answered, it can trap homeowners into buying a home based on initial costs per square foot. Remember that doggie chewing on the sofa and think of the cheap-per-square-foot house chewing up your bank account with utility bills and maintenance each month. Cheaper-per-square-foot homes usually mean low-end, inefficient appliances, less insulation, mid-to-low-level windows, a furnace and air-conditioning unit at the bottom end of code and many other small savings for the builder that will make you, the homeowner, pay month after month in increased energy bills.

There is something you can do right away, though, to get a handle on the life-cycle costs of a home you plan to build or remodel. You can push the builder by asking for design solutions that permit the most efficient energy consumption, and you can ask for estimates of energy savings. If the builder won’t work to provide the info, find another builder. If you’ve shopped for most anything, you’ve heard the old saw, “pay me now or pay me later.” That’s one way to describe first cost and life-cycle cost. When it comes to saving energy, the pay-later side of the equation is a utility or petroleum company. Let a builder or heating and air-conditioning professional know you’re willing to pay them more now so you can pay less to the fuel and energy providers later.

There is a point, however, when additional investment just isn’t worth the cost. Maybe you buy the next-to-the-top-of-the-line furnace or windows instead of the top. They’re still big improvements over the choices that bump along the bottom, just above code.

We talked to many large builders in our research, and they often complained about being caught in the first-cost game. Some want to break out and offer better, more efficient homes that might cost more up front, but they don’t seem to think consumers are interested or smart enough to care. Prove them wrong. Do your research. Make suggestions. Push for efficiency and don’t start to build that home until you find a builder who understands what you want and is willing to work with you.

The Rising Energy Cost Factor

The changing nature of energy costs makes it hard to calculate life-cycle costs. Here’s the crux of it: While energy prices go up and down, in the long run, they always go up. Take the price of gas, for instance. It might go up 15 cents, then drop 10 cents, then go up another 15. Ultimately, the ups and downs keep creeping up, leaving the price of gas higher. Estimates on energy savings with Energy Star appliances, compact fluorescent lamps and other such devices are probably very low, because the savings won’t actually start showing up until later in their life spans.

How to Qualify for Big Tax Credits ...

Choose energy-efficient stuff up front, and your monthly mortgage payment, unlike your monthly utility bill, is tax deductible.

WARNING FOR INDIANA RESIDENTS ...

Indiana is one of only six states whose building code is below federal mandated requirements, so a builder in our state can construct to Indiana codes and still give you an extremely inefficient home.
See www.bcap-energy.org/map_page.php.