The Economics of Air Conditioning
Towards the end of last summer, Mr. Sense and I noticed a disturbing upward trajectory in our electric bill. Yes, we have central air conditioning, but we’ve always used it conservatively, generally not switching it on until the mercury hits the high 80s and never setting the thermostat below 78℉. Our home was built in 1870 and we like the aesthetics of the original windows, but we’re aware that energy efficiency and insulation aren’t strong points. But still, our electric bill was triple what we’d paid for the same time of year in the past. Fortunately, summer was winding down, so Mr. Sense flipped off the breaker to the air conditioning and made a mental note to have our heating and air guy come out this spring to check how the system was running.
It turns out our central air is an older system and the type of refrigerant it uses isn’t produced anymore for environmental reasons. The system was using lots of electricity because it was low on refrigerant and having to work extra hard to get the house down to the temperature we set. Apparently, you can still purchase this old type of refrigerant from some sellers online, but it’s unreliable and the machine itself is on its last legs anyway. Better to replace the whole system with something more modern and efficient.
My sensible husband called to warn me before I clicked open the quote that the AC people emailed us, because I was in for a shock– $8,225! We got a second opinion from another well reviewed local business which provided a couple different options, ranging from a little over $12,000 to an eye-popping $16,766. Just in case any readers are starting to wonder what kind of mansion our family lives in, I want to assure you that we live in a pretty typical sized single family home for our smallish city, fewer than 2,500 square feet. We feel beyond blessed to have such a beautiful home in a safe and walkable neighborhood, but we aren’t living in an enormous palace– that wouldn’t be a good fit for our frugal leanings anyway.
Mr. Sense and I were immediately in agreement that we would not be moving forward with any of these quotes anytime soon. While I’m not very sensitive to heat and would be perfectly fine forgoing air conditioning altogether, I love my husband and kids too much to make them suffer through summers without any cooling. Luckily, there’s an obvious solution: window units.
According to my quick online research, the two major arguments against window units are 1) they’re somewhat less efficient for cooling a whole house versus central air, and 2) they’re kind of ugly (Forbes has a concise breakdown of pros and cons for window units, central air, and fans).
After we finished laughing at the idea of spending months worth of our family’s total average expenditure on making our house a few degrees colder, Mr. Sense went on Craigslist and Facebook Marketplace to find some window units. (If you don’t happen to have an old window unit or two sitting in your basement or garage already, there are plenty of cheap ones available. If you’re just too busy or wealthy already to negotiate with online resellers, you can also pick up a brand new unit from Walmart for around $150). Anyway, Mr. Sense picked up this lightly used GE model from a local seller for $100. Our plan is to gather three of these bad boys for our bedrooms and the kids’ rooms. The downstairs at our house already stays relatively cool, and we have plenty of fans to move around as needed.
The box says the unit we got uses 5000 BTU/hr. According to a recent article from Angi.com, a unit like this costs an average of $15.60/month to run, assuming it runs eight hours each day. I expect our cost to be somewhat less, because we really don’t need the units every day here and I don’t like to keep our room very chilly anyway. But let’s use this number to run some quick calculations.
Three units all using $15.60/month for three months is $140.40 for a summer’s worth of bedroom cooling. Even if we estimate the central air would cost half as much to operate once installed (though it would be cooling more total area and rooms we don’t really need cooled, so it could definitely be more), it would take more than 117 summers before the cost to run the window units would approach the installed price and estimated running cost of the lowest quote we got for a new central air system! Sure, we’d need to replace the window units multiple times before then… but the central air system would need replacement as well– even the priciest ones aren’t designed to last for decades.
While I can’t pretend that window units are visually attractive, I think I’ll still smile every time I look at them when I remember how many thousands of dollars aren’t being siphoned off for central air. Plus, the giant central air units outside aren’t exactly art either.
This post wouldn’t feel complete to me without a compound interest calculation, so let’s see… if we took the lowest quoted central air unit ($8,225) minus six window units ($100 each, figuring conservatively we’ll have to replace them every five years) and invested the difference ($7,625), withdrawing $70.20 per year ($5.25/month) to account for additional energy costs during the three months annually that the units would be in use, we can figure around $14,200 in the first decade alone, assuming a reasonable 7% investment return. And of course by then, there are probably some expensive repairs (or even replacement!) coming up for the central air system.
Piecing together a few choices like this can make the difference between retiring at 55 (or much earlier) and being forced to keep working in your seventies. It adds up to exciting options in the long term– paying for kids’ college, fancy international travel, extravagant generosity, whatever else you value. The key is slowing down and running the numbers before committing to big costs just because, “well, our [fill in the blank] broke, so I guess we need a new one.” You can pick the costs that are worth it to you and skip the rest. In our household, we forgo significant income because Mr. Sense stays home with the kids, and this cost is well worth it for our family. On the other hand, we share one small hybrid car, use lots of cool tricks to keep our grocery budget low, and will happily ignore ugly window units in order to keep us on track for the goals that really matter to us.
