Rant #7 – You Can’t Force a Horse to Drink




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People never fail to amaze me in this world. It is quite amazing how illogical people can be.

As you all may recall, I recently wrote about the analysis and decision I made to go solar…it was a no brainer.

Well, anytime I get excited about something, I naturally share that excitement with others. I pretty much become an evangelist.

My wife and I were having dinner one night a few weeks back catching up with her parents. They had just returned from a month long road trip.

I had brought up the fact that we had decided to go Solar while they were gone. They were immediately interested, so I proceeded to tell them everything I had learned over the past 6 weeks of research before I finally signed the dotted line.

Of course I also shared how fabulous the numbers penciled out.

My in-laws were shocked at how cheap it actually was. This was mostly because my wife’s grandfather had installed solar way before it had gone mainstream, and it put him back about $100K ($60K after the tax credit). But that was years ago.

A long story short they said they were interested in getting a quote to see how it would pencil out for them.

While still at dinner, I did the back of the napkin math, and told them that since my system was about $15K (before the tax credit), that their system would need to be about 3X the size. Their house is 2X the size of ours, plus they have a 3,000 sqft workshop and a pool.

Knowing that there were some price breaks for bigger systems, I estimated the cost of their system at $40K (or about $28K after the federal tax credit).

I Set Them Up With the Solar Rep to Get a Quote

The rep came out and collected the information he needed in order to give my in-laws a quote to go solar. The numbers I had given them were in the ball park. The cost of their system would be $42K before the tax credit and $29K after the tax credit.

They really didn’t want to outlay the cash up front to purchase the system (but they did want to own it), and I actually encouraged them to hold onto the cash and consider the financing option that I did (20 years at 5.645%). At the time they said they were open to it if it was cheaper than what they were currently paying to the Electric Company. I explained to them the NPV and IRR of my deal for an outright purchase vs. financing. They nodded their head, but I am still not convinced they understand it.

Anyways, Chris (the solar rep) set up an appointment to meet with them and got their last 12 months of usage and bills to design the right system for them. At the end of it all, it was determined that their average monthly bill landed at $320/month (or about $3,840 year).

Since Chris knew they did not want to outlay the money upfront for Solar he presented the 3 options they had:

  • Option 1 SCE – pay $320 per month plus rate increases forever to the electric company
  • Option 2 purchase system (with 20 year financing) pay $273 fixed for 20 years and keep $11,680 (from Federal tax credit)
  • Option 3 purchase system pay (with 20 year financing) $191 fixed for 20 years if you use the tax credit of $11,680 toward the purchase.

You will notice that option 1 is to not go solar and stick with the electric company. With options 2 & 3 it assumes going solar with no upfront out of pocket expense and 20 year financing. And they would be saving money from day 1 (with either option 2 or 3). In option 3 they would pass their tax credit on to the solar company and it would be applied towards the purchase price, thus lowering their monthly electrical cost.

We went over the analysis after Chris left and at the time they confirmed that they were ready to move forward with option #2. This would allow them to save about 15% a month on their current electrical bill, and they would pocket the tax credit for other projects they are working on.

But then they changed their minds…

All of a sudden I get an email from Chris saying that they had changed their mind.

What could have happened between last week and today?

I spoke with them recently to find out why they had changed their mind. They explained to me that they did want another financial obligation that was taking money out of their pocket. And at their age it didn’t make sense to finance it for 20 years.


I then proceeded to explain to them that it was essentially a FREE lunch, and those don’t come around too often. By going the financing route they were able to secure a productive asset that immediately saved them 15% a year based on their current usage (more money stays in their pocket). Then I thought maybe they were confused and thought they would pay the $273/month on top of their average $320/month to the electric company. But they said they understood that with solar their electricity bill would go away.

Instead of risking coming across as condescending, I just calmly said that they had to do what they felt was best for them. And if they were not comfortable making the decision to go solar with financing that I wasn’t going to talk them into anything they didn’t want to do.

But in my head all I could think is WTF!!!

What I wanted to say but didn’t

So, your telling me that you have no interest in saving 15% a year on electricity costs (more if/when rates go up), and a FREE $12K from the government???

Are you nuts?

They said they don’t want to be committed to the monthly payment of $273 for 20 years (effectively $224, when you account for tax credit, with option #2), especially at their age.

Good…I am not the only one confused…so instead they would rather pay $320/month plus whatever rates increase.

Do they not understand the simple math? Last time I checked $320 is greater than $273. And as long as they want electricity they will still need to pay the electric company.

My head hurts thinking about this.

I even went as far as explaining to them that they don’t have to finance it over 20 years. There was no pre-payment penalty. They could even apply the tax credit towards the purchase and finance a lessor amount with option #3, and they would be paying $191/month (almost half of what they currently pay).

After that I just dropped it. Sometimes people make absolutely no sense.

Am I missing something? Does their logic make sense to you? There are some mysteries in this universe that may never be solved. What’s funny is that they were more than okay carrying a credit card balance and paying 19% interest…but they were not open to paying interest on something effectively put more money in their pockets.

– Gen Y Finance Guy


Gen Y Finance Guy

Hey, I’m Dom - the man behind the cartoon. You’ll notice that I sign off as "Gen Y Finance Guy" on all my posts, due to the fact that I write this blog anonymously (at least for now). I like to think of myself as the Chief Freedom Officer here of my little corner of the internet. In the real world, I’m a former 30-something C-Suite executive turned entrepreneur turned capital allocator. I am trying to humanize finance by sharing my own journey to Financial Freedom. I believe in total honesty and transparency. That is why before I ever started blogging, I decided that I would share all of my own financial stats. I do this not to brag, but instead to inspire motivate, and also to hold myself accountable. My goal is to be a beacon of hope, motivation, and inspiration, for you, the reader, by living life by example and sharing it all here on the blog. My sincere hope is that you will be able to learn from me - both from my successes and my failures! Read More



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17 Responses

  1. Maybe they’re got an inside tip that household fusion generators are about to become a thing. I’m longing for my “Mr Fusion” installation.
    I think its the long term thing, a lot can change in 20 years. Maybe its just fear of the future? If it were me I’d just add the cost to my mortgage, nice low interest rate there and I’m sure a solar system adds value! You’d recoup costs if/when you sell the property.
    Actually we’re in a good spot for solar, I should look into it!

    1. QWFL – I totally forgot about fusion generators. That must be it!

      A solar system definitely adds value to the house. We just got an appraisal for a refinance we are doing and the appraiser confirmed that it does add value.

  2. Interesting! So I gather that it wasn’t the “lower payment” that they objected to. Rather, it was the *length of the payment* that they were setting themselves up for. Do they have any intention of moving in the near future? Have they ever expressed any interest in downsizing? Maybe there’s something else behind the scenes that they aren’t divulging. I can only assume that they feel like tying themselves to 20 years of utility payments (even if they happen to be lower than what they are paying right now) decreases their flexibility to move or make other changes to their lives.

    That’s my only guess.

    1. Hey Steve – You ask very rational questions. But they actually have no intention of moving. They built this house 25 years ago and are making improvements and are even building a rental on the property. We have asked them many times about downsizing, but they just are not interested. They built on 5 acres a 6,000 sqft Spanish style villa with a detached 3,000 sqft shop. The only downsizing they have ever considered is one day moving into the rental they are building on the property and renting out the big house. They are out in the middle of wine country and the big house could fetch a hefty monthly income.

      They have their reasons, but they just haven’t articulated them very well. I think what frustrates me the most is that I have done many exercises like this (spending lots of time and effort) only to see them do nothing. I guess that is my bad…

  3. It makes perfect sense to me. I would prefer they say “this isn’t the right time for us, let’s reconsider in a year”. That is more reasonable, even if they do miss out on this year’s benefits.

    1. They say they are eventually going to do solar someday. The problem with that response is someday doesn’t exist on the calendar…there is only Monday through Sunday!

      I just have a hard time understanding why they would pass up something will take nothing out of their pocket upfront, will save them 15% a year on their current energy costs, and will actually put an extra $11,000 in their pocket from the federal tax credit.

  4. I hear where you’re coming from. But from what I’ve learned, numbers aren’t enough for a lot of people. Just because we’re very analytical, doesn’t mean others are. I run into these issues as well with others. For some people going by feel is everything. They might not want a big solar structure on their roof for appearance. Or they might worry about the maintenance of it. Maybe they don’t trust the company doing the installation. Maybe they just hate change. There are a million reasons why they might not want to, and I doubt the numbers have anything to do with it.

    1. FF – you are totally right. Most people make decisions based on emotion. I prefer to make fact based decision!

      What’s funny is they were the ones that talked about installing solar far before I did. I just took the initiative to look into it and do the math to see if it made economical sense. There are people who talk about doing things and those that take action.

      There are many reasons why they could have changed their mind. I guess I was just hoping for a logical and rational explanation.

    2. Yep, I agree. People are emotional with things hence why some people are cool with financing a beautiful sports car and blinging it while living in a basement suite with roommates and can’t afford to buy a place on their own.

      Sounds like there are higher priorities like updating a home so that reigns supreme. Their big house in wine country with that much land suggests that they are more about ‘pretty’ things and what looks good rather than saving money and figuring out numbers in the long run…maybe too much hassle and fear of unknown.

  5. What FF tells makes sense. Not all people are straight analytical people and look at the math.
    I can understand that a 20 year commitment looks really big to them. Maybe they fear that something happens to them and that the loan is reducing their flexibility. Or what if they want to sell the house and the buyer does not like solar?
    Maybe they are naturally reluctant towards free lunches. There are no free lunches. There is always someone paying.
    Maybe it is not mainstream to do this. It looks to be mainstream to carry 19% credit card debt. Maybe they need some of their peers to confirm all of this, or to do it first…

    Good luck with the solar

    1. AmberTree –

      You make some good points. However, they have 20X the cash needed to pay for the system if they wanted to. The financing option was just the preferred method due to the fact that once could increase the IRR and get a producing asset for Zero out of pocket. Actually, the government would pay you 30% of the total cost of the system up front in the form of a tax credit.

      Some things I may just never understand.


  6. My wife & I are in a sorta similar situation with our house construction. We want to install ductless HVAC in our house compared to the traditional Central Heat/Air that is in 99.9% of homes. They can be more energy efficient as you need smaller outdoor units & only heat/cool the rooms you want to.

    Our trouble in our part of the country, is that traditional HVAC companies install these & apply the same math to estimating how large of a system we need. It’s all they know.

    Sometimes it’s hard to give up old habits & change from what people know.

  7. GYFG, you are a GREAT S-I-L! You presented an option, and now they are saying ‘no’.

    Here is the hardest lesson I have had to learn over the (far too many) years….logic doesn’t matter. Forgive me, but I am associating you with E/P/C old-school construction projects in your worklife. As a Financial Analyst, you see the hard numbers all the time, and you ALSO see the decisions made based upon year-end bonuses, stock performance, political winds, available government funding, comparative opportunity cost, etc. it goes on, and on, and on.

    You did a nice thing, and the hardest thing is to watch your hard work go up in smoke while the smart-money decision is rejected. There may be some things going on that you do not know about, fwiw. Bottom line, I admire the lengths you went to, in order to do your In-Laws a solid; believe me, they know what you did and appreciate it. No need to ponder it further, not everything needs to be (or will ever be) completely understood in these situations. You are a good man!

    1. Thanks JayCeezy!

      I know they appreciate it, but I am always bummed that they along with most people only ever talk about taking action, never actually acting.

  8. I struggle with this occasionally, as well. I am the youngest adult in my immediate family and it’s hard for me to balance giving my personal thoughts/financial advice when asked by my elders, but also remember in the back of my mind that they probably won’t listen to my advice. Love my sister, but there is no way that her husband and her are taking financial advice from me EVER – even if I came across as passive. He is simply too stubborn to listen to ideas unless they are his own.

    I would agree with the sentiment that most others of friends and family that I ever talk with – they may ask a 401K question or my thoughts on something, but never actually act on improving their situation. Guess that’s why we all need the internet as an outlet!


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