NOW or LATER? When to Spend & When to Save

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Deciding whether to purchase new heating and air conditioning equipment now or later , where to purchase it, and how much to spend are regular questions homeowners ponder regularly. And through these questions we’ve been hearing a common theme lately from customers, both returning and new.

This common theme is cost. Customers want to know, sometimes right off the bat, what the numbers are.

How much is this going to cost?

What’s your lowest price?

How much cheaper are you than the competition?

Can you beat the price I got from John Doe Heating & Cooling?

We certainly do understand that it can be overwhelming when you hear how much a reliable, professionally installed system can cost. But after the initial shock passes you really only have two options when deciding how much to spend.

Save money now, spend money later.

OR

Spend money now, save money later.

Let’s look at each of these a little more thoroughly. (Yes, I suppose there is a third option to not spend any money on a new system right now, but let’s assume you’re at the point where you have to)

Save Money Now, Spend Money Later

In retail saving money at the time of purchase usually means we keep more money in our pocket and can spend it somewhere else. In heating and cooling you can keep that money in your pocket from going with a cheaper price, but often, from our experience, customers usually have to spend that money on a repair down the line.

Benefits of Purchasing the Cheapest System

  • You keep more of your money to spend on other needs or wants.
  • You keep more of your money to save for future use.
  • You could purchase additional equipment, like a whole house humidifier, with the savings.
  • You may be able to pay for the new system in cash, avoiding credit cards, financing, an incurring more debt
  • You feel good because you know you got the lowest price (sometimes people substitute deal for lowest price, which is not true. Lowest price does not always equal best deal.

 Disadvantages of Purchasing the Cheapest System

  • The system will not be as energy efficient, costing you more money over the course of its life.
  • The system may have lower quality parts resulting in more frequent and costly repairs over the course of its life.
  • They system may not come with an adequate warranty meaning you will be responsible for the full cost of repairs.
  • The service, craftsmanship, and quality of work may be sub-par because of the low price you paid.
  • The money you saved at time of purchase probably was not put away or saved for an unplanned repair meaning you’ll have to find other ways to pay for the repair.

Spend Money Now, Save Money Later

Financial advisors’ goal is to help you find ways to make your money work harder for you. Investing, in it’s simplest sense, is the act of putting money aside now with the goal that there will be more later on. You’re paying up front for a benefit you’ll receive later. This concept is almost always true for people who invest in a higher quality system up front. But first, let’s look at some of the drawbacks of spending more money at the time of purchase.

Disadvantages of Purchasing the More Expensive System

  • You have less money after purchase to put towards other needs or wants.
  • You have less money after purchase to put towards saving for future expenses.
  • Purchasing additional equipment, like a smart thermostat, may not be an option.

Benefits of Purchasing the More Expensive System

  • The system will be more energy efficient than the cheaper system and significantly more efficient (some are twice as efficient) than what you currently have.
  • The system will have high quality parts and should result in a longer life span and less repairs needed.
  • The system may come with an extended warranty, like 10 years parts & labor, not available on the cheaper system. This means little to no money out of your pocket when your system breaks down.

Related: See the difference between warranties and guarantees

  • The service, craftsmanship, and quality of work should be premium (aka something you rave about to your friends) because of the premium price you’re paying.
  • You don’t have to worry or think about saving for or thinking about future repairs.