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The Energy Sucker In Your House
You might have an energy sucker in your house that is costing you thousands of dollars from reaching financial independence faster.
Exactly how much money? I estimated it to be $17,433.34.
According to the U.S. Department of Energy, they estimate that the average household pays about one month’s worth of electricity costs each year just in phantom energy costs alone.
Phantom energy is the electricity that your devices use when they’re resting idle.
Think: microwave, toaster, phone charger, coffee maker, tv, etc.
I understand you have to keep the refrigerator on to keep your food cold 24/7. And maybe the wifi router as well to run your smart home.
But other than that, just about everything in your house that runs on electricity can be unplugged when you’re not using it.
The writer in this NY Times article tested different devices to see how much energy they sucked.
“My cable box drew 28 watts when it was on and recording a show, and 26W when it was off and not recording anything. Even if I never watched TV, I would still consume about 227 kilowatt-hours annually. To put it in context, that’s more than the average person uses in an entire year in some developing countries, including Kenya and Cambodia, according to World Bank estimates.”
How Much Money Would You Have?
To see how much money you’d have if you invest your savings from phantom energy in the long run if you unplug your devices when you’re not using them, I input the average annual cost that households spend on phantom energy, $100, into a compound interest calculator on Money Chimp.
I input that each year, you’re adding in the $100 that you saved from unplugging your devices when not in use, and set the interest rate for 6% (around the historical average of the U.S. Stock market over the past couple of decades) to mimic the growth you could have gotten if you invested that $100 you saved into, say, a Vanguard S&P 500 Index Fund. *Cough*Admiral Shares Fund # 0540*Cough*
I set it for 40 years, assuming you start this habit when you’re 25 years old and retire at 65 years old.
Here are the numbers:
Mind you, this doesn’t factor in taxes and inflation, etc. or rising/falling costs of electricity over time.
But $17,433 isn’t small money in “today’s” dollars.
In “40 years from now” dollars it might equate to something like $1,700 etc.
Like how 40+ years ago in the 70’s, a quick google search showed that the average annual salary ranged from $7,000-$10,000. Now the average annual salary is $40,000-$60,000.
But that’s a topic for another blog post.
Your Costs Will Differ By State
This article by NPR gives different prices of electricity by state.
So while I used $17,334.34 as the example of how much you could save and invest over 40 years, that was based on an average of $100 saved annually, compounded over 40 years at 6%.
If you lived in New York where it’s 18.1 cents per kilo-watt hour (kWh), and the average household uses 908 kWh/month, then:
18.1 cents X 908 kWh = 16,434.8 seconds divided by 100 cents/dollar = $164.35/month
And if the U.S. Department of Energy says that on average people lose about one month’s worth of electricity costs to phantom energy, then that’s $164 a year that you could be investing instead.
For a New Yorker, the amount of money invested over 40 years might be even more, for example:
Imagine trying to get $1,000,000 to FIRE. Wouldn’t $30,000 help? Even a little bit?
Any-who, saving money on electricity can help you reach financial independence faster because the money you saved can be put toward investments or paying down debt.
For the past couple of months, I have been unplugging my entire bedroom everyday when I leave for work. No phantom energy here.
When I am not using the microwave, I unplug it and instructed my family to do the same.
Little by little, we will keep working on our “unplugging” muscles to beat phantom energy and make it a habit until we do it subconsciously.
In Conclusion: What Should You Do To Start Saving Money Now?
This has easy enough actionable steps in that you literally just unplug your coffee machine, microwave, and toaster when not using them.
Then you set up your TV, cable box, maybe wifi router, etc. to one power strip and turn it off or unplug it every time you’re not using it.
This will save you time from having to unplug everything one by one.
One cool thing…
While a google search on this topic comes up with articles that recommended connecting appliances to one power strip that you can easily turn on and off, this article by First For Women was the first I saw that also mentioned a WIFI enabled power strip on Amazon that you can easily turn on and off from your phone!
If you leave your house and forgot to turn off all the appliances or unplug etc., you can just go to your app and turn everything off while away from home! I love the 21st century lol.
It even works with Alexa and Google voice! Like WHAT?! #mindblown
I’m most likely going to look into the wifi enabled power strips on Amazon and get several for my family. Please let me know if you get it too or if you already have it and if it’s working out for you?
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