Profit in 2008: Your spending

(Money Magazine) -- Higher energy prices and a weak dollar are boosting the cost of everything from milk to heating your home to your annual family vacation. But you don't have to feel beaten down.

The dollar is expected to remain a wimp against the euro, pound and Canadian loonie. But if you have your heart set on an overseas vacation in 2008, there are still plenty of destinations where the dollar is a good value.

Latin America in general is inexpensive because many local currencies are tied to the U.S. dollar formally and informally, says Tim Leffel, author of "The World's Cheapest Destinations: 21 Countries Where Your Money Is Worth a Fortune."

Leffel says Argentina and Peru are the best values for tourists, as are many parts of Asia.

Have your heart set on Europe? Spain and Portugal are relatively cheap compared with other Western European countries.

You know you should replace your 20-year-old water heater and insulate your attic. But there are plenty of other cheap ways to save some bucks on your energy bills next year.

Install a programmable thermostat so your home is warm only when you're actually in it (up to $100 a year).

Use a fan in conjunction with your air conditioner to more effectively cool your home ($40 to $60).

Seal major air leaks around doors and windows ($45 or so) and put in a couple of low-flow showerheads (around $65).

For more tips, go to the Energy Department's consumer guide at eere.energy.gov.

The number of manufacturers rolling out hybrids is increasing rapidly. To offset the cost of buying a hybrid vehicle, take advantage of tax credits of up to $3,000 offered on some vehicles.

Typically, the newest entries in the hybrid game - the Ford Escape and Mercury Mariner, for instance - provide the biggest credits.

Go to irs.gov and search for "qualified hybrid vehicles" to get an up-to-date list of the credits available on various cars.

Prices continue to tumble on virtually anything electronic. You'll see the biggest drops - more than 30% - in the price of flat-screen TVs.

According to iSuppli, a 42-inch flat-screen TV that cost $1,478 in 2007 will drop to $978 in 2008.

You can expect to pay about 8% less for a digital camera, with even bigger discounts on higher-resolution models. The Consumer Electronics Association says you'll pay $491 next year for a camera with 10 megapixels, down from $629 this year. MP3 players and GPS devices will also come down noticeably in price.

Profit in 2008: Your home