Watch CBSN Live

Slash Your Home Heating Costs This Winter

When temperatures start to plunge, many people find themselves turning their thermostats up. But that could cost big bucks this year. According to the Energy Information Administration (EIA), the average household will pay 15 percent more for heat this winter than they did last year.

So to keep the heat flowing without paying exorbitantly for it, Jason Cochran, editor at large at AOL's, shared some simple steps consumers should take toward winterizing their homes to save some serious cash.

Winterize Your Home
Homeowners feel the pinch in their pocketbooks from rising energy bills. Heating and cooling account for 56 percent of the energy use in a typical American home, according to the Department of Energy. The Department of Energy estimates that 20 percent to 40 percent of an average American family's energy bill is actually wasted through uncontrolled leakage, insufficient insulation, and failing ductwork. Proper weatherization could save that average family about $218 a year.

Winterize Your Home: $50 to $350 for Do-It-Yourself versus $1,500 or more for professional work

Save on Heating Oil: Fuel Co-op Can Save Up to 30 Cents a Gallon
More than eight million households (mostly in the Northeast) will be hit hard by home heating oil costs this winter, according to the EIA. The price of home heating oil is expected to increase 17.4 percent, from $3.31 a gallon last winter, to $3.89 this winter.

One way to keep costs down is to join a fuel co-op, which is a nonprofit that buys heating oil in bulk and sells it at a discount to its members. On average, you'll save 15 to 30 cents per gallon below the average fuel price, says Mark Wolfe, executive director of Energy Programs Consortium. These co-ops tend to be locally run and can be found by doing a simple search online.

Fuel co-ops don't operate in every neighborhood, however. Residents in areas where no fuel co-op exists shop around for low-price suppliers. The Yellow Pages, some county-run web sites, and Consumer Affairs State Offices usually offer lists of heating providers.

Proper Insulation Shaves Off 20 to 30 Percent Off Bills
Insulation is your home's all-purpose force field against high energy bills.

Feel a draft in the attic or a cool breeze when you walk by the front door? Chances are your home's heat -- and your money -- are flowing out of the house while the cold air is flowing in.

First thing you should ask yourself is do you have enough insulation. This will keep your home hot in the winter and cool in the summer. The Department of Energy says only about 20 percent of homes built before 1980 are properly insulated. Checking the attic, garage, and basement for insulation can be easy- those usually have exposed walls where you can see the insulation.

The effectiveness of a piece of insulation is measured by its R-value, which designates its resistance to heat flow. The higher the R-value, the greater the insulating ability, so generally speaking, if you double the R-value of your insulation, you cut your conduction heat loss in half.

After all, drafts suck hot air out of the home, leading to bigger heating bills as residents raise the thermostat to keep warm. To plug open areas in attics (the most common place for drafts), install fiberglass Batt Insulation (about $15 per roll at Home Depot) between the ceiling rafters and around windows. By doing so, you can lower your annual heating and cooling costs by 10 percent, according to Consumer Reports.

Lower Bills Up to 30 Percent By Fixing Air Leaks
An important next step: Fixing leaks can save you between five and 30 percent a year on your energy bill. That's where weather stripping, caulk and plastic for your windows can come in handy.

Many homes lose costly heat the old-fashioned way: through outdated windows.

Double-pane thermal windows arrest the heat transfer by inserting dead-air space, a poor conductor, between two panes. Unlike single-pane windows, which can lose more heat in winter than they let in, energy-efficient windows enable homes to take advantage of free solar heating during chilly weather.

As a make-do plan, create your own energy-saving dead-air space by affixing clear plastic sheeting over the interior opening of unused windows.

Dialing Back Hot Water Setting Saves Six to 10 Percent
The Department of Energy estimates that water heaters account for 14 percent to 25 percent of our monthly energy bill. Little wonder, since most water heaters are on 24 hours a day, seven days a week.

Water heaters are often factory-set at 140 degrees Fahrenheit -- hot enough to scald. The Department of Energy says most of us can live comfortably with 120-degree water. You can save three percent to five percent on your water heating costs for every 10 degrees of setback.

To save even more, you can reduce hot water use with low-flow showerheads and faucet aerators, jacket the heater and wrap hot water pipes to minimize stand-by heat loss, and install a timer to take advantage of cheaper, off-peak power.

The quickest remedy is to set back your water temperature, but a tank insulator sleeve really helps a lot.

For greater savings, ditch the tank entirely and invest in an energy-saving, on-demand tankless water heater.

Control Temperature with a Programmable Thermostat
It's hard to remember to turn down the heat before leaving for work or heading for bed.

A programmable thermostat eliminates that headache by automatically lowering the heat when it's least needed. The trick, of course, is to actually program the thermostat. Someone who's at the office from 9 a.m. to 5 p.m., for example, should set the thermostat to lower the temperature before they leave home and raise it before they return from work.

The easiest-to-use and most efficient programmable thermostats are Energy-Star labeled, and range in price from $40 to $350. For each degree they lower the temperature (from a default of 70 degrees) over an eight-hour period, consumers can expect to cut their bills by one percent to two percent, according to Energy Star at the Environmental Protection Agency.