KEEP YOUR HOME WARM THIS WINTER WITHOUT BURNING UP A LOT OF CASH
By AMANDA WALMAC

(MONEY Magazine) – Before most people put away their shorts for the season, the ad blitz will begin. You'll hear radio commercials like: "Switch from oil to gas and save a bundle!" and "Oil heat: Trust us. It's just better." And with the U.S. Department of Energy predicting a 2.7% rise in the cost of home heating oil and an 8.8% hike in gas prices this winter, you may be wondering how to keep down your coming fuel bills. Consider these three measures:

--Button up your home. You can save a bundle by plugging up the places around the house where your heated air is leaking out into the cold. Spend $50 or so to hire an energy-conservation company like the Draft Detective in Putney, Vt. (owned by Dick Cartelli, shown at right) or a heating contractor. He or she can tell you how much it will cost to start plugging away and what you'll save on your bills as a result. "You'll probably want to stop the worst leaks first," says Cartelli. "If your windows are in bad shape, they can be responsible for a third of your heat loss."

Fortunately, they don't make windows like they used to. Highly efficient, double-paned models are now standard offerings from major manufacturers like Andersen and Pella. But they ain't cheap. "These windows can run as much as $300 each plus installation," says Cartelli. Still, replacing the worst offenders could reduce your monthly costs by 5%, allowing you to recoup your expenses in five years or so.

The next most notorious heat bandit is usually your attic. If you have only the usual six inches of fiberglass, Cartelli suggests adding six more of cellulose insulation because it seals best. Cost: around $600. Estimated savings: 10%.

--Replace a furnace or boiler that's older than 10 years with a more efficient model. During the past decade, furnaces and boilers have been redesigned to burn far less fuel. In 1986 the average efficiency rating was a low 60% AFUE (for annual fuel utilization efficiency, which measures how effectively fuel is converted into heat). Today you can buy a gas furnace with a 96% AFUE rating and an oil furnace at 86%; boilers go from 86% (oil) to 89% (gas).

Trading in your 60% AFUE gas furnace for a 90% model could run $2,000, but you'd cut your fuel costs 33%. So if your winter bills total $1,400, you'd save $462 this year; your new furnace would pay for itself in five years. And "just as you no longer need a V-8 engine to power your car, you can probably replace a large furnace with a cheaper but more efficient mid-size model," says John Morrill, director of operations for the nonprofit American Council for an Energy-Efficient Economy, in Washington, D.C.

If you'd rather not spring for the cost of a new furnace or boiler, consider replacing just your burner, which is what fires up your fuel to heat the water or air in your system. A new model costs around $400 and can cut your monthly heating bill as much as 20%.

--Finally, if you heat with electricity, look into installing an underground heat pump. These inground pumps have become more available in the past year and replace the old aboveground models. Since it's warmer underground, your pump doesn't have to work as hard to heat things up. Translation: The new pump could slash your heat costs in half. But you'll probably need to spend a cool $2,000 or so to dig a trench in your backyard. Still, this is one investment certain to be a hot performer.