The Cost of a Guilty Pleasure

I know that taking a bath uses more water than taking a shower. I know this for a fact. Put the plug in while you're having a shower and note the water level when you're done, almost guaranteed the tub isn't even half full. From a green standpoint it's abhorrent that I prefer baths to showers, I know. However when I come inside after walking home from the bus stop in -35, a 5 minute lukewarm shower just doesn't get rid of the chill. It really doesn't. Enter long hot bath. I've been wondering for a little while what my baths are costing me though, seeing as during the middle of winter they happen much more frequently.

Excuse me while I geek out for a bit, I've been wanting to do this calculation for a while.

If you're looking for an easy metric unit reference sheet, I'd recommend using this: http://xkcd.com/526/ Geeky, somewhat tongue in cheek, and not necessarily 100% accurate. Perfect.

The temperature of cold tap water here is close to 10 degrees celsius. I wouldn't be surprised if it's colder than that right now, but I'm going to use this as my starting point. I like my baths somewhere around 43 degrees to start, which means the water has to be heated 33 degrees.

My tub, very crudely measured to bath water level, is approximately 40cm x 60cm x 135cm. I'm not going to take my body volume out of there, we'll just assume that I'm going to warm up the water at some point. This gives us a volume of approximately 0.32m3.

It takes 4.184 Joules of energy to warm up 1 gram of water by 1 degree celsius. 1 gram of water is approximately 1cm3. So, in order to warm up my bath water, I'm going to require: 

(0.32m3) x (1,000,000cm3/1m3) x (33C) x (4.184J) = 44,183,040J or 44.18 MJ

So now I know how much energy this is going to take. Kinda. This is assuming everything goes absolutely perfectly, and that every last bit of energy is converted into heat and goes directly into the water. As nice as that would be, it doesn't happen this way. My hot water tank is heated by natural gas, which isn't overly efficient. Lets assume my tank is 65% efficient.

44MJ / 0.65 = 67.69MJ

That's probably a little closer to what is actually being used to heat the water. My gas bill charges by the Gigajoule of energy. Not that they know the exact amount of energy I'm getting, they've just applied an average conversion factor to the volume of gas provided. Anyway, from my last set of utility bills:

$3.97/GJ for the gas itself
$0.53/GJ for the gas delivery
$0.23/GJ for the GST on the gas
$4.73/GJ for heat

$1.59/m3 for the water itself
$1.18/m3 to drain the water
$2.77/m3 for water

Apparently GST is charged on gas and electricity, but not water? Oh well. I'm only taking the variable charges on this, because I have to pay the fixed charges regardless of whether or not I take a bath. I'm also not taking the electricity for the bathroom fan into account, because I don't really feel like looking for the motor rating. That would mean actually finding the label! lol.

So my guilty pleasure is currently costing me:

(0.06769GJ x $4.73/GJ) + (0.32m3 x $2.77/m3) = $1.21

That's better than I was expecting. Cheaper than Starbucks, that's for sure. However, I can see how this would add up over time. Having a hot bath every day of the month rather than a quick shower? That's almost $40!

It's enough to make me think "I'll just have a shower tonight". Tomorrow, maybe not so much ;)

Reduce Reuse Recycle

I know what you're thinking, and no, this isn't about cans and bottles. It's about money. I've been trying to employ the 3R's into my financial life as well as with items at home. Hopefully I can keep both of them out of the trash? Here's how it works:

Reduce - Your Expenses

Reuse - Your Expenses

Recycle - Your Expenses

Okay, so they all say the same thing, but it's actually two different types of expense I'm talking about. I'll explain.

Reducing expenses is fairly self explanitory, almost everyone reading this blog is trying to do the same thing. In my grandfathers words:

If your outgo exceeds your income, your upkeep will be your downfall.

I like that saying; it's catchy and it gets the point across. If you want to keep more of what you bring in, you have to figure out how to spend less of it. Sometimes it's as easy as keeping track of where it's going, sometimes it requires painful cuts and changes in lifestyle and expectations. Mine required both: I needed to track where my money was going to see that I needed to adjust my lifestyle and expectations. I don't use any fancy accounting programs or online software, I use plain old Excel. Or on my home computer, Numbers. Pencil and paper works fantastic here too.

Reusing expenses is one that I've actually been doing a fair bit now that I think about it. The most recent example of this was this semester's university tuition. School is expensive, and I didn't have $2000 sitting around waiting to be used on courses and books until work reimbursed me in May. So, we got work to reimburse me as I was paying out of pocket, rather than at the end of the semester. My first expense was $250. When I got that money back I added a little more to it and paid $300. Then $400. Then $450. I snowballed the same money onto my university tuition until it was completely paid for with minimal pain. Same with my medical expenses; as I pay out the money and get reimbursed for it, the money will be put back in the medical envelope to be reused the next time I need medication.

I've done the same thing with a $25 microloan I made while I was in university. I had been reading about microloans and how they were giving a hand to people that the banks wouldn't lend to due to the size of the loan or not enough credit history. I signed up with Kiva, who seemed reasonably reputable, and donated $25 to a young woman in Tajikistan to start a business. When that money was paid back, I donated it again to a young woman in Ukraine. It will be paid back again soon, so I'll be able to lend it to someone else. It's like the charitable donation that keeps giving.

Recycling is easy; once something has outlived it's usefulness, turn it into something else! My last tuition expense reimbursement should be sitting in my account tomorrow. Rather than saying "Yay, free money!", it's going towards my internet set up costs and a big credit card payment. It's going to feel so good watching that sucker get knocked down another notch! The hard part here is avoiding the "Oh perfect! Now I have money and I can buy ________." or "Now I have money for Starbucks this week!"

No. I. Don't.

I have money that can be used towards my goals, not instant gratification. Isn't that what got me into trouble in the first place? Right, avoiding that. Onwards and Upwards.

The Acid Test

I've been wondering what would happen to my mortgage if my interest rate was to jump when I have to refinance with a new interest rate in 4 years. I locked my rate in for 5 years, unfortunately I don't keep if for the life of my mortgage (though that would be awesome!) The mortgage calculations are slightly different in the different countries, so I'd recommend finding a local calculator rather than using this link if you're outside of Canada.

http://www.cmhc-schl.gc.ca/en/co/buho/buho_005.cfm

I found a calculator claiming to be Canadian that talked about PMI and based it's tax rate on Massachusetts. Do I think it's calculations are accurate? Not likely. If you don't know interest rates from insurance, I'd suggest really wandering around the CMHC website. Do this before you even go into a bank! A mortgage is the largest loan most of us will take out in our lives, make sure you know what the bankers (or even better, mortgage brokers) are talking about before you sign anything! Even better, check out this site:

http://www.yourfirsthomecanada.ca/

Their website is under reconstruction, so it doesn't look that great, but it is chock full of resources for people looking to buy their first (or second, or third) home.

Anyway, back to what I started rambling on about. My mortgage was ~$242,000 when I started a year ago. I pay on an accelerated biweekly schedule, so instead of making 12 months worth of payments I make 13 months worth per year (1/2 month payment every 2 weeks = 26 1/2 month payments = 13 months worth of payments)

Not counting taxes, my mortgage is ~$533 every 2 weeks on the accelerated schedule. This averages out to ~$1154 a month, and the lifetime interest cost of the mortgage is ~ $169,546. On a regular monthly payment schedule I'd pay ~$1065, and the lifetime interest cost of the mortgage would be ~$205,433. It's a small extra payment every month for a decent savings in interest.

But like I mentioned before, my interest rate will (most likely) be increasing when I renew my mortgage in 4 years. How is this going to affect my ability to pay for the house?

At the end of the first 5 years, at the rate I'm going, my balance will be ~$228,000. Not considerably less than what it is now, thanks to the wonder of interest payments (so much better when it's working for me, not against me).

Interest Rate: 5%    Monthly Payment: $1217    Interest Cost: $210,053
Interest Rate: 6%    Monthly Payment: $1356    Interest Cost: $260,231
Interest Rate: 7%    Monthly Payment: $1502    Interest Cost: $312,582

If the interest rate goes up a percentage, my monthly payment would only go up ~$63 from my biweekly accelerated monthly payment, not too bad. If it goes up 2 percentage points, the monthly payment increases ~$202 a month. Huh... If it goes up 3 percentage points, the monthly payment increases ~$348 a month. Ouch.

But what if I pay off the insurance costs? Then I'd only have ~$220,000 left owing on the mortgage. That should help, eh?

Interest Rate: 5%    Monthly Payment: $1174    Interest Cost: $202,683

Interest Rate: 6%    Monthly Payment: $1309    Interest Cost: $251,100

Interest Rate: 7%    Monthly Payment: $1449    Interest Cost: $301,614

That didn't really seem to help much. The monthly payment at 5% is close to what I'm currently paying on the accelerated biweekly rate, but the other two still kinda hurt. Lets say I really focus my efforts and chip away at this sucker after I dig myself out of the other debts. What would I be looking at if I can get it down to ~$200,000?

Interest Rate: 5%    Monthly Payment: $1067    Interest Cost: $184,257

Interest Rate: 6%    Monthly Payment: $1190    Interest Cost: $228,273

Interest Rate: 7%    Monthly Payment: $1317    Interest Cost: $274,194

That's looking a little more reasonable. What this tells me is that once I've finished taking care of the other debts, I need to really focus on chipping my mortgage down. That way once the economy stabilizes, and mortgage rates go up again, I'll be able to continue paying for it comfortably without needing a huge salary hike. I'm glad I looked at this now rather than 3 and a half years from now; time is still on my side.


Home Buying For Dummies, 4th Edition
100 Questions Every First-Time Home Buyer Should Ask: With Answers from Top Brokers from Around the Country
The First-Time Homeowner's Handbook: A Complete Guide and Workbook for the First-Time Home Buyer (Book & CD-ROM)