# How to pay for solar?



## Jeepman401 (Feb 18, 2015)

People spend big bucks to add another room or remodel a room, would any of you consider a loan (not a withdraw) from your 401k plan to pay for solar? Why or why not?


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## peakbagger (Feb 18, 2015)

IMHO, borrowing from a 401K for any reason other than an absolute emergency is bad idea. Absolute emergency is life or death after you have already raided your emergency fund. Folks forget that a loan from a 401K has to be paid back if the voluntarily or involuntarily leave the company. If you don't, its regarded as withdrawal and you have to pay a penalty. Many folks who borrowed from their 401Ks to add rooms during the real estate boom ended up losing the house and their 401 K. The right day to do this is build up an emergency fund, the save up the cash and install solar once you done all the low cost conservation upgrades. If you really want solar now you could permit a microinverter based system and buy one panel at a time, you risk obsolescence on the panels but it would get you on solar without borrowing.


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## tmarch (Feb 18, 2015)

I agree with peakbagger to a point.  A lot depends on the interest rate you are getting on the 401K.  With solar prices where they are you can buy a typical system installed for roughly $4 a KW installed and if it's a well designed system the return on investment (ROI) will be more than most loans (my current system is 10% ROI) after the 30% tax credit.  IF the government does away with the tax credit you've made a wise investment, if not still worth researching.  There's LOTS of things to study ( I researched for 3 years) but my system has been a very good investment even tho it's only 3 years old.


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## Seasoned Oak (Feb 18, 2015)

Why not, you cant get any decent interest these days on cash investments , if you can get 10% ROI with a solar array that 9.5 % better than your portfolio is doing.


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## Where2 (Feb 18, 2015)

Based on the returns I've been getting in my 401k, I wouldn't pull a loan from mine. There are too many other cheap available funding sources right now. You also have to ask yourself if you're going to be in the house long enough to start getting real ROI and/or be able to get your investment back if you sell. If your house is already valued toward the upper end of your market segment and you don't intend to stay more than 5 years, you may have a difficult time getting "whole" again when you sell. I'm not convinced real estate appraisers know how to determine the value a PV system provides to a home.

I never intend to sell either of the deeds my name is on, so it's a given that a PV system is going to provide plenty of ROI for me. My first PV system is ~18 months old. I've collected around $900 total return (sunshine) over the last 18 months in addition to the tax implications. If you're doing a PV system, 2015 is the year to do it. The PV system tax incentive is a credit toward your tax liability, not a guaranteed refund. If your household income isn't high enough, you will have to roll some of the PV value forward, and there's no guarantee 2017 will offer any credit if you couldn't collect it all in 2016. I get to see how that all works in doing my 2014 taxes, because 2013 wasn't a high point of my working career, despite affording me the opportunity and time to install a PV system on my roof.

My second PV system is being financed using the same methodology I used to finance my first PV system. I'm brown bagging my lunch, and watching what I spend in every other area of my household finances. The guys I work with who "can't afford solar" go out to lunch every day, and drive cars less than 2 years old. I'm driving an 11 year old VW that gets 40mpg (City) with no payments.


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## sesmith (Feb 18, 2015)

My 2 cents...never touch the 401k.  I'd lease the solar first, if I had to.


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## Wisneaky (Feb 18, 2015)

An old feller told me a story one time about how all his friends put a lot of money into their 401k and were hoping to use it for retirement. He said some of them didn't live to retirement age and the ones who did either passed shortly after or were so bad off that they didn't get to use the money for much. He said he decided against putting any away for retirement and had a great life being able to buy what he wanted when he wanted. Since he told me that story 10 years ago I haven't saved a penny in 401k. When I left my previous job I pulled my 401k out and paid for my house in cash and no longer have to worry about any house payments or rent.


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## jdogg (Feb 19, 2015)

Well I put money in my 401k and retired at 59 so its not all bad, better than working ha ha.
 Anyways borrowing from a 401k to finance solar is OK by me, you just repay the loan to yourself with interest.
If you lose your job during the repayment period the outstanding balance is paid, which is great.
But at the end of the year you will owe taxes on the extra income along with a 10% early withdrawal penalty.
So def don't do if you feel like you will soon leave your job or your company may soon downsize etc.


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## jebatty (Feb 19, 2015)

In addition to the caveats mentioned, the interest rate on the 401k loan that you would pay yourself might make the deal attractive, depending on your financial situation. I would consider the loan only if my financial situation was such that I could easily pay off the loan and if the interest rate return was attractive. Another alternative would be a very low interest home equity loan, but again only if you could easily pay off the loan. I am waiting for a quote on adding 5kw of additional PV, and may consider a draw on my home equity line of credit to pay for the system, and then use the net metering utility payment to pay off the LOC. The rate of return on the PV is greater than the interest rate on the LOC.

In general I don't like to borrow (neither a borrower nor a lender be), and am a strong advocate of only buying with cash
and if the cash isn't there, save it up and then buy.


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## peakbagger (Feb 19, 2015)

Wisneaky said:


> An old feller told me a story one time about how all his friends put a lot of money into their 401k and were hoping to use it for retirement. He said some of them didn't live to retirement age and the ones who did either passed shortly after or were so bad off that they didn't get to use the money for much. He said he decided against putting any away for retirement and had a great life being able to buy what he wanted when he wanted. Since he told me that story 10 years ago I haven't saved a penny in 401k. When I left my previous job I pulled my 401k out and paid for my house in cash and no longer have to worry about any house payments or rent.



Sounds like you are not a fan of the fable of the ant and grasshopper?

Its sad when folks are totally oblivious to reality, SS is welfare and anyone who thinks that they are going to retire on it alone are going to be really disappointed. Statistically folks are living longer and are retired longer. Pensions are long gone for the majority of the population and the only alternative is 401Ks.  Sure folks can be self disciplined and save up on their own, but the majority of the population are not. 401Ks also are not typically accessible if someone gets sued. Cash in the bank is. Someone slips on your front porch and you lose your retirement savings. No one plans for it but it happens.


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## Jeepman401 (Feb 19, 2015)

peakbagger said:


> Sounds like you are not a fan of the fable of the ant and grasshopper?
> 
> Its sad when folks are totally oblivious to reality, SS is welfare and anyone who thinks that they are going to retire on it alone are going to be really disappointed. Statistically folks are living longer and are retired longer. Pensions are long gone for the majority of the population and the only alternative is 401Ks.  Sure folks can be self disciplined and save up on their own, but the majority of the population are not. 401Ks also are not typically accessible if someone gets sued. Cash in the bank is. Someone slips on your front porch and you lose your retirement savings. No one plans for it but it happens.



I must disagree with SS being welfare, it is one of the biggest deductions out of my paycheck, how is that welfare?

Now that being said I would look at a 401k loan just as any other loan, you are screwed if you lose your job with a line of credit, home equity loan or outright loan. Like jdogg said, at least with a 401k loan its paid off then, tax implications yes, but no payments...plus you have at least the lights on in the meantime.
I would also agree that depending on SS alone is going to be hard also if we aren't robbed of it by then. But wouldn't it be a plus to at least have your home paid off and no light bill come retirement time? We all know the price of power will go up and not down. If you do save and save in the 401k it seems the insurance industry will get the loins share and the rest will go to bills anyway...isn't that what the 401k is for? But if you could eliminate one more bill with a 5 year loan for 25+ years...why not?
It would seem that the solar credit is going to be done soon and if you don't have the money now, the price just gets more expensive, so it would be a 'now or never' deal the way I see it...baring some huge advance in technlogy within the next year...which I can't see happening right now.


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## peakbagger (Feb 19, 2015)

I will qualify my statement, SS is not entirely welfare, but if you look at the formulas, the high income payers (up to the current SS Max) subsidize the low income payers. SS admits this and barring major reform I dont see it changing for the better and expect means testing is next.  I guess I should modify it to retiring on only SS is like living on welfare for many. I don't follow the insurance company tie into 401 Ks so I guess that one I cant respond to. My house was paid off while I made contributions to my 401K.I generally run my cars 8 to 10 years until they become unreliable and I don't spend a lot of bucks on expensive vacations so I can do both.  I have one old 401K that was rolled into a IRA that I have left alone. I wasn't with the company long and it had less than 5 K in it when I left. It has been in the same very conservatively rated balanced fund since then and its now worth $56K. Had I realized that when I funded that plan I would have put in a lot more. Granted inflation eats up some of the value but that's still significant appreciation. I figure that's about 2 years of expenses the way I live so that's two years less I need to work. I don't want to jeopardize that by taking a loan. Folks forget that when you take a loan you are out of the market for the amount of the loan. Generally the volatility of the market averages out over five years but any trading less than a 5 year window and the participant is taking a chance that they sell  low and now get to buy back high. Sure they get a piddling interest rate but overall if the money is in reasonably diversified fund, they 5 year market appreciation is going be far higher than any interest they pay themselves.  

Prices have changed drastically on solar, I have three arrays built over a 12 year span. Each time I built one solar cells were at a record low that wouldn't last, the first set were at a record low at $6.60 per watt, the subsequent panels were a record low at $0.98 and the last set were a record low at $0.93. My inverters had a similar price drop. Despite predictions to the contrary I expect the price will continue to drop but at a slower rate. There is some very radical technology in the pipeline.  Even though it feels good to get a tax credit even without one solar is far cheaper than it was 5 years ago and it will be cheaper 2 years from now even if the tax credit expires, which is highly doubtful as its politically popular program.

Feel free to justify taking a loan on your 401 K plan, plenty of folks will gladly encourage you as they want your money now, but I still advocate waiting a year and saving up cash and then putting in a basic expandable system. All you need is the envoy trunk cable a new breaker on your electrical panel, a solar panel, racking from a known manufacturer and a microinverter and you are in business. From then on all you have to buy is one more panel and microinverter and plug it into the trunk cable.  Eventually you run out of racking and have to buy a couple of more lengths. Then add panels when you can pay cash. That's what I did, I started small and added small additions when I had the cash. I did it in big steps but with microinverters I don't even have to worry about panel incompatibility (expect for the looks )  I am now generating net electric power and haven't paid a power large power bill for 11 years and have paid for zero power for 4 plus I am  heating my house in Northern NH with my surplus anytime its over about 20 degrees.


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## mass_burner (Feb 19, 2015)

Wisneaky said:


> An old feller told me a story one time about how all his friends put a lot of money into their 401k and were hoping to use it for retirement. He said some of them didn't live to retirement age and the ones who did either passed shortly after or were so bad off that they didn't get to use the money for much. He said he decided against putting any away for retirement and had a great life being able to buy what he wanted when he wanted. Since he told me that story 10 years ago I haven't saved a penny in 401k. When I left my previous job I pulled my 401k out and paid for my house in cash and no longer have to worry about any house payments or rent.



A lot of missing info here. All that said, it sucks to be old and poor.


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## mass_burner (Feb 19, 2015)

sesmith said:


> My 2 cents...never touch the 401k.  I'd lease the solar first, if I had to.


I know folks here are using 401k as a catch-all, but you should transfer your 401k out to a self managed IRA asap.  The mutual fund fees incurred can really add up.


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## Seasoned Oak (Feb 19, 2015)

35% of the population have little or no retirement savings , who will finance their life ? YOU WILL  Another third dont have nearly enough to last them any length of time.


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## woodgeek (Feb 19, 2015)

interest rates on a second mortgage are a lot lower than the expected returns on your 401k.


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## Grisu (Feb 19, 2015)

Jeepman401 said:


> People spend big bucks to add another room or remodel a room, would any of you consider a loan (not a withdraw) from your 401k plan to pay for solar? Why or why not?



It certainly makes more sense to borrow money for solar installation than to just renovate some rooms. The former can be seen as an investment where you recoup the cost through lower electricity bills. The latter may work the same way but only once you sell the house and the return is much less guaranteed. I would compare the potential loan payments with the kWh-sensitive portion of your electric bill. The difference is the amount of additional expense you will have each month. If that is a reasonable amount I would suggest go for it. You could also calculate your total return. For that you would need to assume an average service life of the solar (e. g. 25 years) and by how much that reduces your electric bill. Don't forget to add in a steady inflation rate of at least 1% to 2% for your bill each year. That will tell you if it is a worthwhile investment. 

As for the 401k loan, I would also compare that with the rates for a home equity loan. If you haven't (re)financed lately, with current interest rates you will get additional savings even when upping the principal to accommodate the solar.


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## SXIPro (Feb 19, 2015)

Wisneaky said:


> An old feller told me a story one time about how all his friends put a lot of money into their 401k and were hoping to use it for retirement. He said some of them didn't live to retirement age and the ones who did either passed shortly after or were so bad off that they didn't get to use the money for much. He said he decided against putting any away for retirement and had a great life being able to buy what he wanted when he wanted. Since he told me that story 10 years ago I haven't saved a penny in 401k. When I left my previous job I pulled my 401k out and paid for my house in cash and no longer have to worry about any house payments or rent.


 
This old feller's friends are the minority. The majority of people that go thru life just buying whatever they want end up in a world of hurt in their senior years. You also need to consider how long people live nowadays. You retire at 65 without any real retirement savings and you could be eating ramen noodles and living in poverty for 30 years. No thank you. I feel that as a man it is my duty to provide well for my family for as long as I live and beyond that. So, I'll keep loading up the 401K with as much $$ as possible for as long as possible.


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## Wisneaky (Feb 19, 2015)

When I retire my social security check that I paid into my whole working life will be more than enough to pay the little bit of bills I have each month. I'm going to enjoy my life before I get too old to do anything. The moral of the story was some people don't live to use that money that is put away or are so bad off that they don't get to enjoy it and miss out on a lot of things they could of had in life.


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## SXIPro (Feb 19, 2015)

I have ZERO confidence SS will exist when I retire, that's why I am taking care of my own security and my own health. I hear you though, Any one of us could get hit by a beer truck tomorrow, and it sucks to say "I should have gone here or done this...."


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## Seasoned Oak (Feb 19, 2015)

SXIPro said:


> . So, I'll keep loading up the 401K with as much $$ as possible for as long as possible.


I wouldnt put all my eggs in one basket. 401ks are not the end all, be all in retirement.  Ank link in the system fails and all you have is numbers on papers.
Buy land ,they aint makin it anymore.


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## peakbagger (Feb 19, 2015)

I heard that social security wouldn't exist when I retire 25 years ago. It wouldn't take much to tweak it so its works for the long term but politicians would rather use it as blunt weapon then fix it.

My plan for 25 years is to set myself so I don't need it and be pleasantly surprised if its still here.


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## SXIPro (Feb 19, 2015)

Seasoned Oak said:


> I wouldnt put all my eggs in one basket. 401ks are not the end all, be all in retirement.  Ank link in the system fails and all you have is numbers on papers.
> Buy land ,they aint makin it anymore.


 
True, that is why you must continually adjust your 401K as you get older and move more of the $$ into safer investments as you close in on retirement age.


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## SXIPro (Feb 19, 2015)

peakbagger said:


> I heard that social security wouldn't exist when I retire 25 years ago. It wouldn't take much to tweak it so its works for the long term but politicians would rather use it as blunt weapon then fix it.
> 
> My plan for 25 years is to set myself so I don't need it and be pleasantly surprised if its still here.


 
That is my plan as well, If it's there it'll be beer money.


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## Seasoned Oak (Feb 19, 2015)

SXIPro said:


> True, that is why you must continually adjust your 401K as you get older and move more of the $$ into safer investments as you close in on retirement age.


THe 401K itself is the one basket. THere are many other ways to save for retirement.


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## Highbeam (Feb 19, 2015)

I'm the opposite. I have 100% confidence that SS will be around when I retire. There are too many voters that depend on it and no politician willing to starve an old lady. I am not certain what it will look like and I am certainly not going to depend on it but SS will be there.


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## Babaganoosh (Feb 19, 2015)

Do you like being taxed twice on your money? If the answer is yes than take a 401k loan. Everyone justifies it by saying "Im paying interest to myself" or something to that effect. 

Let's look at it this way. When you put in your money the first time is goes in without taxes being taken. Ok great. Pre tax dollars. However when you are paying back the loan you are paying it back in post tax dollars. Your repayment aren't paying the loan dollar for dollar. So for every dollar you pay back you have to make somewhere around 1.35$ give or take. 

To me that loses its appeal right there. But wait! There's more. You just had to make a third more money to pay yourself back. Which is bad enough, but eventually the time comes where you have to get taxes taken out of your withdrawals. Now they are going to tax you again. On the same money. Who knows what the rate will be by then. Do taxes ever seen to go down? Rarely.

Now let's add in the loan fee. There's more lost money. Not to mention that most people reduce their contributions to their 401k when they are actively paying back their loans. More lost money there. On top of it all you lose all the possible gains on the sum of the money that you have out of the fund. 

Bad idea. Home equity loans are bad ideas too. 

Get a part time job for 6 months to a year or use a credit card. Default on a credit card and you will get sued if the balance is over about 1500. It will suck but you always have the option of making a deal with the lender and end up not having to pay the full balance. Default on your home equity loan and lose your house and your solar panels.


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## Seasoned Oak (Feb 19, 2015)

Highbeam said:


> I'm the opposite. I have 100% confidence that SS will be around when I retire. There are too many voters that depend on it and no politician willing to starve an old lady. I am not certain what it will look like and I am certainly not going to depend on it but SS will be there.


Sure it will be around but that dont mean you can live on it.


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## valuman (Feb 19, 2015)

Grisu said:


> It certainly makes more sense to borrow money for solar installation than to just renovate some rooms. The former can be seen as an investment where you recoup the cost through lower electricity bills. The latter may work the same way but only once you sell the house and the return is much less guaranteed. I would compare the potential loan payments with the kWh-sensitive portion of your electric bill. The difference is the amount of additional expense you will have each month. If that is a reasonable amount I would suggest go for it. You could also calculate your total return. For that you would need to assume an average service life of the solar (e. g. 25 years) and by how much that reduces your electric bill. Don't forget to add in a steady inflation rate of at least 1% to 2% for your bill each year. That will tell you if it is a worthwhile investment.
> 
> As for the 401k loan, I would also compare that with the rates for a home equity loan. If you haven't (re)financed lately, with current interest rates you will get additional savings even when upping the principal to accommodate the solar.


This is pretty much spot on, IMO. Our company has negotiated with lenders to provide low interest rates on unsecured loans for our customers to purchase solar and cold climate heat pumps. The typical loan is 2.99% for twelve years with a same as cash loan option for those who are able to take advantage of the 30% federal tax credit. That combination generally provides a $20- $40 per month delta between loan payment and savings on the current electric rate. By factoring in a 3% average annual increase in electric rates, which would appear to be conservative in the current time period, the decision to purchase solar, assuming a good site, is a pretty easy.


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## Ashful (Feb 19, 2015)

tmarch said:


> ...the return on investment (ROI) will be more than most loans (my current system is 10% ROI) after the 30% tax credit...


If you're not getting a LOT higher out of your 401k the last few years, then please let someone else manage it.  I think I could have beat that with a blindfold and a dart board, in the last 3 years.


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## tmarch (Feb 19, 2015)

If you're not getting a LOT higher out of your 401k the last few years, then please let someone else manage it I think I could have beat that with a blindfold and a dart board, in the last 3 years
My situation is no longer with a 401K, I rolled that into a IRA so that's where the funds came from to buy my system.


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## iamlucky13 (Feb 19, 2015)

401k loan, no, for two reasons. (1) As another poster pointed out, there's other loan sources a homeowner can draw upon. (2) As a separate poster pointed out, you face a double-taxation scenario on 401k loans. Plus, because 401k's are intended for retirement, to discourage other use except in emergencies, there is only a 5 year payback period, and if you don't start paying back within 90 days, it will be treated as a distribution, subject to tax then, plus a 10% early distribution penalty if you aren't retirement age.

In other words, we don't even need to debate realistic rate of return on a 401k to see that taking a loan out for this is not a good idea.

Home equity loan, maybe, mainly if you're looking really long term, or place a high value on renewable energy. Here's some calculations behind my conclusion:

NREL says Minnesota averages 4.5 kWh per day per kW of capacity on a year-round basis for an optimally tilted solar panel:
http://www.nrel.gov/gis/images/eere_pv/national_photovoltaic_2012-01.jpg

Assuming a $4/Watt cost, minus the 30% tax credit, plus interest at 4.5% on the loan, your 20 year cost would be $4.25 per Watt of capacity (A 6 kW array would cost $25,500 including interest).

At a current price of electricity of $0.12/kWh and 2.7% inflation rate, over 20 years, you'd generate $5.14 of electricity per Watt of capacity (A 6 kW array would generate $30,825).

The average rate of return would be 0.95%. You're better off buying I-bonds.

On the plus side, the panels probably have quite a few years life left in them at that point and are paid for, so now your investment finally starts to pay off meaningfully. By year 30, assuming continued inflation in power prices, your total return is $8.93 per W of capacity. That works out to 3.7% rate of return. So at this point, it's starting to look like a halfway decent investment over a very long time period.

Also, the perceived cost to you is low, because even during the first year before inflation has driven power prices up, your power savings will on average offset 90% of your loan payment.

I should probably factor in the cost of an inverter replacement at some point in the interim, plus reduced power production over time (usually rated at 80% after 25 years, but quality panels seem to trend closer to 90%), but that's detail to flesh out later.


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## Jeepman401 (Feb 20, 2015)

A lot of good points and views. One has to wonder if you took a little out when the market is high and it has another drop like 2008-2009? 
Estimating a 4000watt at around $11k installed before credit. Including around $3500 in upgrades that need done anyway, but with solar it qualifies for the credit.


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## jebatty (Feb 20, 2015)

I did a calculation on the ROI for my system as compared to a CD investment, something which would be typical for many people vs the stock or bond market. ROI First year rate of return is 4.5% tax free.

I tend to look at PV as similar to the purchase of a tax free, inflation hedged municipal bond. The PV is a hard asset, not an expense. People willingly fork down a much greater price on an average to luxury motor vehicle, think little of it, and have acquired something which costs money to use and which rapidly depreciates. PV costs virtually nothing to use, provides a near guaranteed return, and retains substantial real value. Plus, it provides the planet, you and me and every living thing, with a breath of fresh air and a bit of stability in a rapidly destabilizing world.

In answer to the question of how to pay for it, the answer is easy: spend one's money more wisely.


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## BrotherBart (Feb 20, 2015)

Meanwhile back at solar...


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## john193 (Feb 21, 2015)

Wisneaky said:


> An old feller told me a story one time about how all his friends put a lot of money into their 401k and were hoping to use it for retirement. He said some of them didn't live to retirement age and the ones who did either passed shortly after or were so bad off that they didn't get to use the money for much. He said he decided against putting any away for retirement and had a great life being able to buy what he wanted when he wanted. Since he told me that story 10 years ago I haven't saved a penny in 401k. When I left my previous job I pulled my 401k out and paid for my house in cash and no longer have to worry about any house payments or rent.




You can add beneficiaries to your 401k, so your spouse, next of kin, or other beneficiary can have your funds after you.  Putting away 5% to 10% of your gross income is attainable.  Plus most companies offer 401k matches, which is free money.  My company matches 6%, and I cringe when people tell me they don't contribute to their plan.  I guess some people can really turn away free money.


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## Dune (Feb 22, 2015)

john193 said:


> You can add beneficiaries to your 401k, so your spouse, next of kin, or other beneficiary can have your funds after you.  Putting away 5% to 10% of your gross income is attainable.  Plus most companies offer 401k matches, which is free money.  My company matches 6%, and I cringe when people tell me they don't contribute to their plan.  I guess some people can really turn away free money.


Almost no companies offer matching funds any longer. If you are getting 6% match you are doing very well.


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## Ashful (Feb 22, 2015)

Dune said:


> Almost no companies offer matching funds any longer.


My limited experience disagrees with this statement.  In fact, in half a dozen companies over the last 10 years between my wife and I, there has only been one case in which a match was not standard, and that's because that company substituted a profit sharing plan for their 401k match.  Smart companies want to keep their top talent and experienced employees.  The best way to do this is to incentivize thru investment growth.


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## Dune (Feb 22, 2015)

Joful said:


> My limited experience disagrees with this statement.  In fact, in half a dozen companies over the last 10 years between my wife and I, there has only been one case in which a match was not standard, and that's because that company substituted a profit sharing plan for their 401k match.  Smart companies want to keep their top talent and experienced employees.  The best way to do this is to incentivize thru investment growth.


In the last couple years? 5 years ago, yes, these days, not so much.


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## iamlucky13 (Feb 24, 2015)

BrotherBart said:


> Meanwhile back at solar...



Good idea.



> 4 posts on 401k's later...



Never mind.


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## jebatty (Feb 25, 2015)

A little side-tracked here on SS, since the discussion started on how to pay for solar. Just got a $23,782 quote for adding 5.4kW DC rating, microinverter, ground mount, to tie into my existing 6.5kW ground mount array. This will max out the underground wiring to the house. $4300 is for the ground mounts and footings. After the federal tax credit, cost will be $16,647, or $3.08/watt, and it should produce about a 4.6% return, inflation hedged against future rate increases. 

How to pay for it? Being retired, 68 years old, and believe that I should be prepared for another long downturn in the markets, I keep sufficient cash equivalents in my retirement account to cover several years, and I will use some of that money which gets a very low rate of return. The income equivalent from the added solar will be a reasonable use of those funds.


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## drz1050 (Feb 25, 2015)

Solar is going to do big things in the next 10 years... the current efficiency of these panels is pretty low. The semiconductor industry is beginning to get more interested. 

Remember when 256Mb was a big chip?


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## jebatty (Feb 25, 2015)

Lots of memories of "high" prices paid for early computers, hard drives, laser printers. But each one of those purchases was a good investment. For PV, each year delay results in "loss" of about $1000 on my existing PV system. The PV modules themselves are only about 25% of the installed system cost. The rest is hardware and labor, and I doubt those costs are going down, even if PV module cost/watt goes down.


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## wildcatbb (Feb 25, 2015)

Seasoned Oak said:


> 35% of the population have little or no retirement savings , who will finance their life ? YOU WILL  Another third dont have nearly enough to last them any length of time.


My wife and I discuss this all the time....we are both 34 and put a bunch In retirement each month and question whether it's worth it, then hear some elderly person complaining about having no money. Id say it's worth it to pack it away, I dont want to work till I'm dead!


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## valuman (Feb 25, 2015)

jebatty said:


> Lots of memories of "high" prices paid for early computers, hard drives, laser printers. But each one of those purchases was a good investment. For PV, each year delay results in "loss" of about $1000 on my existing PV system. The PV modules themselves are only about 25% of the installed system cost. The rest is hardware and labor, and I doubt those costs are going down, even if PV module cost/watt goes down.


And... unlike computer hardware, solar panels will never be obsolete. They make electricity and we will be using electricity as far into the future as anyone I know is able to see.


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## jebatty (Feb 25, 2015)

> ... retirement savings are worth it ...


Wildcatbb, you are making a great decision. Also never a question between my wife and I. My wife, now retired, was a nurse, and her work also provided health insurance and a defined benefit pension. I was always self-employed with a highly variable income. We and our three children lived on her income plus the minimum amount I likely would make in a year. And then we saved all of my income above that minimum amount. I retired at 59-1/2, she at 63. House fully paid, two rental properties fully paid, a couple of hundred acres of woodlands, and worst case scenario, absent a major illness, is the ability to live on our two social security checks plus her pension. And of course, we have good retirement savings which fund travel, the PV systems, a new used car when needed, and a lot of other extras. Savings pays, and pays.



> ... solar panels will never be obsolete ...


 excellent point. What piece of electronics likely still will be 75% or more productive 30 years into the future after being used 8-16 hours a day, consume no energy, and payback just by sitting there?


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## Where2 (Feb 25, 2015)

wildcatbb said:


> I'd say it's worth it to pack it away, I dont want to work till I'm dead!


I'm with you there. I spent 14 years doubled down on my retirement investments in my youngest working years at the advice of my parents and because I looked around at all the folks I worked with who hadn't saved enough over the years. They were 10-15 years closer to retirement than I was, and most were fretting about how to ever "afford" to retire?

I find it ironic that most people consider a PV system as an expense. My PV system generated over $50 for me last month without lifting a finger. Conservation measures will only get my wife and I so far in a climate that requires A/C to keep my wife happy. I can either live with the status quo giving a substantial portion of my paycheck to the power company, move my wife to a climate that requires heating, or install a PV system. 

Honestly, I haven't seen PV prices drop much since I bought my panels for $0.78/W, or my enphase inverters for $140 each back in 2011/2012. Every ~3MWh I collect pays for a panel and an inverter. The 4.4kW system on my roof generates right around 3MWh every ~6 months. The federal tax incentive roughly paid for my mounting hardware. What I spent for wire, electrical boxes, breakers, and permits, I would have spent on frivolous amusements anyway.



jebatty said:


> What piece of electronics likely still will be 75% or more productive 30 years into the future after being used 8-16 hours a day, consume no energy, and payback just by sitting there?



Nothing else I've ever bought. The properties I've bought appreciate, but don't spit out monthly dividends like PV systems.


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## Seasoned Oak (Feb 26, 2015)

Seems a no -brainer to have solar in florida  after all it is the "sunshine" state.


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## valuman (Feb 27, 2015)

Seasoned Oak said:


> Seems a no -brainer to have solar in florida  after all it is the "sunshine" state.


You would think, but the truth is that Florida has relatively poor incentives for solar PV.

Here's a good resource for exploring incentive programs for energy efficiency and renewable energy installations by state and utility. http://www.dsireusa.org/


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## iamlucky13 (Feb 27, 2015)

I'd think the 30% federal tax credit and the state average of $0.12 per kWh would be enough to make solar generally worthwhile in Florida, especially as a cooling climate region, unless net metering is only paid at wholesale.

Also, looking on the DSIRE site, it seems some utilities have significantly different incentives than others. Florida Power and Light seems to list a $2/W purchase incentive, which is a massive subsidy.


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## Where2 (Feb 27, 2015)

Seasoned Oak said:


> Seems a no -brainer to have solar in Florida, after all it is the "sunshine" state.


"Sunshine State" in nickname alone, we have no state rebates for installing solar, nor do we have an SREC trading market. FL used to have some rebates funneled through the utilities if you installed solar, but you could only get into the queue in a 3 minute window open every 6 months. The rebate also required using an electrical contractor. The last time the queue was open, my utility botched the whole deal by opening the window 5 minutes early. The list was filled two minutes before the window was ever supposed to open to take names. After they corrected that botched "give away", I believe the utilities convinced the PSC that rebates are not cost-effective, because "the money (up to $15.5 million annually) benefits too few customers at the expense of all ratepayers".

Valuman hit it on the head:


valuman said:


> You would think, but the truth is that Florida has relatively poor incentives for solar PV.



Net Metering with FPL works as 1kW out = 1kW in at $0. Base metering fee is presently $7.57/mo.


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## valuman (Feb 28, 2015)

Valuman hit it on the head:


Net Metering with FPL works as 1kW out = 1kW in at $0. Base metering fee is presently $7.57/mo.[/quote]

FP&L runs the Sunshine State when it comes to these kinds of policy decisions.


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## billjustbill (Mar 1, 2015)

Jeepman401 said:


> People spend big bucks to add another room or remodel a room, would any of you consider a loan (not a withdraw) from your 401k plan to pay for solar? Why or why not?



Before going into your 401k, consider getting solar with other ways first.  I'm about to start building my ground array for a 5kw system.  Over the last three years I've purchased solar panels, inverters, controllers, square tubing for the ground array, and large gauge copper wire. I've paid for 90% or more of it with "other people's money".....

I learned that going to garage sales can be quite an adventure while learning a money making skill.  I looked for low priced items that I knew I could double my money.  Some things get much more than that.  Two garage sales a year is what Uncle Sam says each adult can have without reporting it as income, but it was just too slow.

When silver hit $25 an ounce three years ago, I sold what I'd been gathering from, of all places, garage sales.  You can't sell precious metals to those "We Buy Gold" or Pawn places without getting maybe 1/3 to 1/2 of the market price.  I found a refiner; there are many.  They buy and process silver at 80% of market price and gold at 98%.  I sent them what I had been finding.  I had $250 in what I'd collected of gold and silver, and got a check back for $2,003.00.

Solar panels have come down, a lot! since I began, but so has precious metal prices.  So it's an even wash if I were to start anew in 2015.... I find silver and gold every month, and sometimes, twice a month.  I find 10 times more at garage sales and owner ran estate sales that I find in my metal detecting hobby!

While at those same garage and "owner run" estate sales, I buy brass decorations for little to nothing.  Brass was selling for $2.00 a pound, and I could easily double my money by taking yellow brass as well as more expensive red brass (valves and faucets) to the local scrapyard and sell it.  Here in Texas, most imported brass decorations popular and expensive in the 1970's and 80's won't sell at garage sales.  Something like an original ship's brass porthole will !!  You just have to learn what the market wants.....

White gold is the easiest to get mixed up with sterling silver, but buying garage sale jewelry in $2 Ziploc baggies, or by the piece is both an adrenalin rush as much as it is a great fundraiser. I bought a $3 necklace with the ugliest pendant on it.  The pendant was trash; the necklace was stamped 18kt.  With the dollars from gold, silver, and garage sales,  I've paid for two 3500 watt inverters, three 80 amp solar controllers, eight L-16 six volt batteries, and about 50 panels from all those fundraisers.  At garage sales, you will be surprise to find copper wire for sale.  I bought 90 feet of 4/0 copper wire for $45.  At the big box stores, it sells for over $3 a foot.  I don't need that much wire that size, but for the price, there will be zero line losses between the house and the inverters!

To get out of debt before the economy hits the skids, I did take $24,000 out of my retirement IRA to pay off  a 2012 Ford F-150 with $19,000 of it.  The rest went for the IRA taxes.... but the 30% I'll get back from a working solar system cost will repay the IRA tax loss plus leave me with a $1,000 profit and debt free.

  I'll most likely still have to have grid power for anything that runs on 220v like the clothes dryer, cook stove, deep water well, and shop welder.  But for now, I will be able to run anything on the 1 acre place that uses 120 volts.  That should cut my power bill by 1/2 to 2/3's of my current bill.

The one thing you need to remember is that you are buying your future's electricity at today's cost. Electricity cost have to go up, but yours won't.  As electric appliances get more efficient and L.E.D. bulbs come down in price, you'll use less power to do the same things.  

 Living efficiently in a home today is really a blend of ways you save money to keep your lifestyle home comfort the same.  With a Lopi Freedom Bay fireplace insert, and always on the lookout for a fallen tree, we have cut our Propane bill.  We use Propane for a 40 gallon hot water heater and the Central furnace.  Two years ago, the Lopi kept us to one fill-up of a 500 gallon tank (400 gallons) for 13 months.  Propane was higher than what I paid in January of 2015, but the full year and a month cost us $650.00. Some people were spending that much on their utilities in one month that winter!!  From 2014 to 2015, the Winter has started rather late, so for this past 12 months, I paid $364.00 to fill the same tank in January. 

Now, I'm reading where 750 watts of solar panels, are wired directly to a 40 gallon electric water heater's original elements will "pre heat" the water, it's never wired into your home's electrical circuits. With its heated water going into the cold side of current water heater, your electric or gas home water heater runs little to not at all on any day the sun shines.

Get your solar started with a little hustle and side income as soon as you can.  If grid power goes down, a battery system could provide you with lights and enough to run your fridge/freezer or TV/cable box/DVD player and make some bad times a lot better!  March is one of the best months for Texas to have a garage sale.  People have been stuck in their houses and like to come out and find bargains!

Hope this give you some ways to blend dollars to get your solar electric project going!

Bill


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