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Suze Orman Money Matters

Suze Orman, Money Matters

A Cold, Hard Fact: Prepare for Higher Heating Costs Now

by Suze Orman

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Posted on Thursday, August 7, 2008, 12:00AM

There's another big housing bill in your future. No, I'm not talking about your potential taxpayer share of the recently passed federal housing bill if we ultimately get stuck with the tab for bailing out Fannie Mae and Freddie Mac.

Prices Heat Up

What's on my radar right now -- and should be on yours -- is what it's going to cost to stay warm this winter. I realize it's probably sweltering where you live right now, but, as with all financial matters, you need to look down the road to see what might be coming up. And the news is not good, my friends: The same pain at the gas pump you've been dealing with for months is going to play out in your home heating bills.

According to the Energy Information Administration (EIA), a gallon of heating oil this winter could be 40 percent more expensive than it was last winter. And it's not as if last winter's heating bill was cheap; if the EIA forecast plays out as expected, a gallon of heating oil will be about 85 percent higher this coming February than it was two years ago.

Not worried because you use natural gas? The news is just as bleak, as prices are forecast to be about 45 percent higher this coming winter. Those of you relying on propane could face an even steeper increase. Electricity? Well, it's going to be a relative deal: The forecast is for retail electricity to be just 10 percent higher this winter compared to last. But let's face it, that's still a steep climb.

Clearly, it's time to get serious about a strategy for managing this winter's higher heating costs. Here are some steps to take:

• Get On a Manageable Payment Plan

Check in with your utility company now to see if there are any special payment plans available to avoid bill shock in the depth of winter. You may be able to switch to a plan that spreads out your payments across the entire year rather than having a big hike in the winter.

Of course, that means a higher average monthly bill in the temperate months. But the idea is that your budget can handle that easier than a huge hike in the winter.

• Winter-Proof Your House

Spend a day getting your home ready for winter to trim a few hundred dollars off your energy bills. I'm not going to suggest big-ticket projects such as re-insulating the roof; that's a great cost-saver over time that makes tremendous sense if you have the money to do it, of course, but your budget is probably already pretty stressed right now. I'm talking about small outlays that can net you big savings.

Start with the programmable thermostat. If you get strategic about lowering the temperature in the day when you're not around and late at night when you're tucked under the comforter, you may be able to cut your heating costs by 20 percent. That can go a long way toward offsetting this year's higher utility bills. You can pick up a programmable thermostat at any home-improvement store for $50 or so.

While you're at the store, pick up some caulking and weather-stripping supplies. Spend a few hours plugging up any gaps in your heating ducts and blocking out window and door drafts. These steps will save some serious money.

• Look for Hidden Savings Opportunities

I'm not a big fan of penny-by-penny budget-watching -- life is too short and free time too fleeting to spend it poring over a spreadsheet. But I do think everyone should take a serious look at their spending patterns at least once or twice a year and reevaluate their position, especially right now, when living costs are through the roof.

You know where I'm going with this: A cell phone plan or cable plan that may have been affordable a year or two ago could be a great place to find some hidden savings to deal with today's budget crunch. I bet many of you could easily reduce these bills by a combined $100 a month if you shifted to a less-inclusive plan. So no more inertia, no more excuses: Go online or brace yourself for an annoying call to customer service and get the switch done today.

If you have an emergency savings account to handle any unexpected costs, I'd also recommend you look into raising the deductibles on all your insurance coverage. It's a great way to reduce your premium costs by at least 10 percent. Again, it takes one call to lock in permanent savings.

• Give Yourself a Break for the Holidays

Talking about winter gets me thinking about the holidays and the gift trap I see so many of you fall into. Invariably, in January and February I'm inundated with calls and emails from people with an expensive gift-giving hangover: They're staring at big credit card bills they have no way of paying off.

If you wait until December to start thinking about holiday gifts, chances are you'll just whip out the card and make plenty of last-minute purchases. An alternative is to rope your family (and friends) into a conversation now about how you can all come up with a more manageable gift-giving plan.

Having a talk now, months before the holiday frenzy, makes for an easier conversation. Don't be shy or apologetic -- living within your means is something to be proud of. One obvious move is for all adults to agree that they don't need to exchange gifts. Keep the focus on the kids. But really, does every aunt, uncle, and grandparent have to shower every kid with a gift? I don't think so. How about one special group gift to each child instead?

Don't worry about what the kids will think. Spending more money than you can afford on gifts for them isn't a sign of love. Besides, instituting a new family-wide tradition that takes planning and thought and involves everyone is the sort of positive energy that should define the holidays. To say nothing of the financial benefit it will produce this winter, when energy costs are sky high.

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96 Comments

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  • Barney - Friday, August 15, 2008, 10:40AM ET  Report Abuse

    • Overall: 1/5

    Its all about "Women & Money" ads and selling. Get a life, not everything is consumerism. Aren't you people sick of this crap.

  • tradertob - Friday, August 15, 2008, 1:04AM ET  Report Abuse

    • Overall: 3/5

    Hey HCIR, the next time you want to hurl an insult at the author of this article, can you please learn how to correctly spell INSIGHT? Not insite.

  • jm - Thursday, August 14, 2008, 12:53PM ET  Report Abuse

    • Overall: 3/5

    Most houses built before the 1970s were not insulated. Even some of those that were are not insulated enough. If you have rolled insulation in your attic, you can roll one up to see what the factor of it is. Then, you can google online and see what factor you need for your area. If you don't have enough you can blow insulation on top of the batts. Most lumberyards will loan you the machine to blow it in with if you buy your insulation from them. It would not cost over $300 to blow in more insulation for most attics of average houses, but it has been a while since we did ours so you need to check prices at the lumberyard.

  • Yahoo! Finance User - Thursday, August 14, 2008, 12:34PM ET  Report Abuse

    • Overall: 1/5

    No $&!% sherlock.......yenta. BABABOOIE to y'all

  • Cade - Thursday, August 14, 2008, 12:30PM ET  Report Abuse

    • Overall: 3/5

    CHRISTMAS! I buy Christmas gifts in December. I do not buy holiday gifts.

  • Yahoo! Finance User - Thursday, August 14, 2008, 11:27AM ET  Report Abuse

    • Overall: 1/5

    Yahoo is one of the best financial sites, and it's sad they publish useless columns like this one (and the equally vacuous Rich Dad, Poor Dad guy). Also, "Prepare for higher heating costs now" is not actually a fact, cold or otherwise, but is advice based on a prediction.

  • Yahoo! Finance User - Thursday, August 14, 2008, 12:41AM ET  Report Abuse

    • Overall: 5/5

    I think Suze Orman makes several great points. Just by doing several small things, you can cut costs in several areas of your life.

  • Yahoo! Finance User - Wednesday, August 13, 2008, 12:19PM ET  Report Abuse

    • Overall: 5/5

    good advice.

  • USA P - Tuesday, August 12, 2008, 7:17PM ET  Report Abuse

    • Overall: 3/5

    Gave the writer a "good", preparing her readers for the near future. I challenge to readers is see between the lines and ponder why are we getting poorer and our wealth is transferring out from YOU and to THEM. It's time we realize that it's not WE that should adjust and be more poor, but realize that the ESTABLISHMENT is CORRUPT, stealing our wealth and nation dead south. Folks, these people have names and faces, the only problem is We are too IGNORANT to face the TRUTH. True free markets will solve ALL of our economic issues, however, free markets require a intellectual, spiritual, and rule of law society. America is bankrupt in every category. History proves that elite bankers have used subversive methods to control all of us. In my final analysis, WE, from the time of birth, have been fed on big LIE. It's time realize about the currency war, maritime law vs civil law, secret societies, and REAL reason for the federal reserve bank.

  • Yahoo! Finance User - Tuesday, August 12, 2008, 7:17PM ET  Report Abuse

    • Overall: 1/5

    Just read all the comments – all but a couple address the real problem. This is embarrassing people. Can’t you see what the real problem is??? Or all of you are just zombies programmed to repeat the same ridiculous arguments that the politicians and Suzi telling you to repeat. I am surprised she didn’t bring up Jimmy Carter’s additional sweater idea. Sounds much better than lowering deductible and bankrupting your family in case of a serious accident. What a great idea! Or you think the federal gov-t will step in to bail you out? For the zombies: The real problem is the combination of limited domestic oil drilling, no refining capacity, no new nuclear plants, no alternatives to oil. Build the new infrastructure for any (or better all) of the above and oil and electricity prices will drop like a rock. This is a simple function of supply and demand and Suze or Obama will never change that. Are you all blind to that? Suze and all of you should be lobbying the politicians to allow for that or better throw these bums out all together. Elect the government that will have people’s interest in mind and then you will have your standard of living back. Until then – pay up and shut up.

  • Yahoo! Finance User - Tuesday, August 12, 2008, 5:17PM ET  Report Abuse

    • Overall: 2/5

    This is only an example of the real problem - the massive shift of wealth from the middle and upper-middle classes to th erich and ultra-rich. The poor unfortunately will likely always remain poor although the ability to donate is being sapped from the middle classes and the rich and ultra-rich seem to obsessed with greed and playing and winning the game to care. Learn to tolerate a lifestyle of less - whether it be heating or groceries or a multitude of other things - is the mantra being preached by the mouthpieces of the rich. A multimillion $ bonus for losing or almost losing the ship (ie., many financial co. execs) goes a long way to paying heating cost increases. While America - this is pointed at the socalled average American needs to revamp their lifestyle - it's not heating costs, it's overconsumption of electronic toys, of too big houses and too expensive cars. We have been baited into believing the recoveryis right around the corner by Paulson and others who should know better or who are spreading the garbage statements to keep the hooks in the mouthes of the average while they can squeeze another round of greedy profit taking. Wall St, the government and it's quasi-govt agencies have sold us down the river to pad their pockets and preserve the bureaucracy and rich guy's club that is sucking the lifeblood out of the American economy and the average American. They have sold our manufacturing base overseas and now are letting our office based economy go to - and faster and faster. What will America be left with- can we become a tourist trap for India and China to view the decline and fall of what was a great country. When America became the pre-eminent country in the world after WWII, we spent a great deal propping up Western Europe - idealized in our mindset to protect us from communism but alos because we shared acommon background. Do you think China and India and the other developing countries give 1 hoot about us other than a market for their less than 2nd rate goods. But we still feel we need to be the protector and the saviour of the world. Wake up America and learn that we have to take care of ourselves first and foremost. We can't afford to police Europe and the Middle East - they have to pay to protect themselves. We need to rebuild infrastructure at home with American's, not H1B visa holders, and make AMerica once again the land of opportunity for it's people - not everyone that can get through our soft borders that we can't police because we have to much manpower in Iraq and Germany and other countries that can and should take care of themselves. Global economy has not been good to American - the word isolationism is snickered at but it might be our only hope. Cut off China and India and make every country a trading partner not us as their prime pasty. We need to clean up our own act as much - make government work for the people not the other way around and make it - no, make the people running govt - responsible to the American people. The chances of recovering our country from the greedy schemers within and the hanger ons in the rest of the world are small and have probably slipped away more in the last 2-3 yrs than ever before but it's the only chance we've and we better take it sooner than later. Whether it's economical or polictal, it's teh American way of life at stake and it's fading fast - let's save it.

  • Yahoo! Finance User - Tuesday, August 12, 2008, 4:27PM ET  Report Abuse

    • Overall: 5/5

    It's sad, but it's true. The only thing that's going to save people from the catastrophic tsunami of inflation about to arrive on our shores is to cut costs, reduce/eliminate debt and live below our means. The days of borrowing from tomorrow for consumption today are basically at an end. The people that will get slaughtered are the ones that don't understand and start living that concept as soon as possible. Heating costs are just one of hundreds of items/areas that will increase in price substantially over the number 5-10 years. The sooner people embrace this the sooner they'll be able to protect their themselves and their family.

  • Yahoo! Finance User - Tuesday, August 12, 2008, 3:52PM ET  Report Abuse

    • Overall: 1/5

    A good way to save energy..........shut of the heat and move Costa Rica for the winter.

  • Yahoo! Finance User - Tuesday, August 12, 2008, 3:39PM ET  Report Abuse

    • Overall: 2/5

    I find it comical when energy companies encourage people to conserve. They try to convince us that if we conserve, our bills will be lower. They basically want us to pay the same amount of money but use less energy so the energy companies make even more profit.

  • Wei - Tuesday, August 12, 2008, 2:34PM ET  Report Abuse

    • Overall: 1/5

    1) Payment plan doesn't save any money, it just avoid sticker shocks. Why bother? 2) No big project like insulation? That's big investment with big return in the long run. A programmable T-Stat instead? Who doesn't have it now a days? Why not both? 3) This is an independent subject, they should have done it regardless of what the heating bill is. 4) Same as above, buy what you can afford and a reasonable gift, regardless of heating bill cost. What is this woman thinking? If she is a professional, I am Albert Einstein.

  • Rick - Tuesday, August 12, 2008, 1:47PM ET  Report Abuse

    • Overall: 1/5

    YOUR REALLY OUT OF TOUCH WITH THE REAL WORLD. A THIRD GRADER WOULD HAVE MORE INSITE.

  • Kenneth - Tuesday, August 12, 2008, 1:38PM ET  Report Abuse

    • Overall: 2/5

    I'm somewhat bothered by this article and the others that are posted on Yahoo today. It seems like they're the same stories that were posted last week and the week before. What bothers me the most is that I really could care less about the heating cost in my house. I've been noticing that these stories being written are the tip of the iceberg when it comes to the real issues plaguing our economy. This is a very stupid story to run when the there are so many bigger issues including the meltdown of investment banks, the economy, inflation....etc. Heating costs are a micro issue in MACRO world. Give me a break woman!!! This is a story that should be written for Readers Digest....not a Financial Investment page like Yahoo Finance.

  • Da Big Guy - Tuesday, August 12, 2008, 1:05PM ET  Report Abuse

    • Overall: 1/5

    Oh how I love football season! SUZE is just another Monday Morning Quarterback!

  • Terry - Tuesday, August 12, 2008, 12:17PM ET  Report Abuse

    • Overall: 1/5

    Energy costs higher this winter? Why waste our time with this drivel. I swear, I think she is losing it. If you don't already know this, you wouldn't be reading the financial page. Suze is just filling space.

  • Ben - Tuesday, August 12, 2008, 11:39AM ET  Report Abuse

    • Overall: 1/5

    I still remember all the the advice to 'invest in the stock market for the long term'. Then, after the bubble, it was 'you should have taken money off the table'. Suze should be a politician.

  • Yahoo! Finance User - Tuesday, August 12, 2008, 11:13AM ET  Report Abuse

    • Overall: 2/5

    Rob Black on Kron4 in the San Fran Bay area has taken his share of cheap shots at Suze. She would bury him with her financial knowledge, or his lack of said, yet this article is sooo lacking...given her knowledge. I think she has too much on her plate and simply decided to do an article on the fly. An article that is talking down to 95% of her readers. Suze has helped a lot of people, but perhaps she has too much going on and needs to let the Yahoo! venue go. Plus, Carmen on CNBC has a new, fast paced program addressing money issues that is similar to Suze, yet answers questions in half the time with a team of experts. While I like Suze, Carmen gets to the question and provides answers in half the time. The advantage is that if you already know the answer, you know a new question will be up shortly. Suze is also slipping in her math, and again I think it is because she has too much on her plate. A couple of weeks ago Suze stated that if you buy a front-loaded mutual that costs you 5%, you will have to gain 5% the next year to break-even. No, you will have to gain even more to break-even, and this is one of the questions that often tricks High School students on the financial quiz some take. The question on the Quiz has a person losing 50% on a $1,000 investment and gaining back 80% the next year vs a person who has $1,000 invested in a savings account that earns say 3.5%. Who comes out ahead? The person who earned the 3.5%. Yet Suze blew the question when she told someone who pays a front-load of 5% that they would need to earn 5% the next year to break-even...wrong, wrong, wrong. They would need to earn more and I know she knows this, yet I do believe she has too much on her plate. Without change, she will be losing her cable show to Carmen.

  • Yahoo! Finance User - Tuesday, August 12, 2008, 10:48AM ET  Report Abuse

    • Overall: 3/5

    Thanks, Suze -we actually shopped around and are filling up our 700 gallon tank now....saved lots of $ (over $1.40/gallon by paying COD).

  • Yahoo! Finance User - Tuesday, August 12, 2008, 9:51AM ET  Report Abuse

    • Overall: 1/5

    you are so full of yourself....money isnt everything...you dwell on other peoples financial discomforts and profit from them

  • Yahoo! Finance User - Tuesday, August 12, 2008, 6:46AM ET  Report Abuse

    • Overall: 1/5

    Terrible advice. Jerry Yang needs to fire this shill.

  • Kosich - Monday, August 11, 2008, 11:11PM ET  Report Abuse

    • Overall: 3/5

    Everyone should load up on firewood. It's clean (if you have an efficent burning wood stove), a renewable energy, and costs much less. Everyone buy as much firewood as possible.

  • Gary - Monday, August 11, 2008, 11:01PM ET  Report Abuse

    • Overall: 1/5

    Thanks for that worldly advice. And this is from a financial guru who considers the stock market too risky, yet admits that she will risk "only" a million dollars in the market because THAT IS WHAT SHE CAN AFFORD TO LOSE !! Take that - girlfriend.

  • pbuchta - Monday, August 11, 2008, 10:46PM ET  Report Abuse

    • Overall: 1/5

    Lame at best. Poor little Suzi...

  • Slugabug - Monday, August 11, 2008, 9:01PM ET  Report Abuse

    • Overall: 5/5

    Here's the good news: If you have a wood burning stove or fireplace, you'll be able to heat your home with dollar bills. By this winter they will be very cheap. The Federal Reserve is printing them up as you read this, demonstrating unheard-of foresight.

  • DAVID - Monday, August 11, 2008, 7:45PM ET  Report Abuse

    • Overall: 3/5

    They will only get my woodstove when they pry it from my cold dead fingers. Fueled by oak deadfalls on my property that I cut and split myself. But I am betting that they will soon be outlawed in the interest of 'saving the planet'. Even still my electric bill runs over $400 in peak summer and winter for several years now thanks to Gov Gray Davis and his deft handling of the CA deregulation fiasco, he took temporary high rates and locked them in for 10 years. It will take a lot more than caulking to overcome that result.

  • Daniel - Monday, August 11, 2008, 7:34PM ET  Report Abuse

    • Overall: 1/5

    She has the most obnoxious personality and smile since Barney.

Showing comments 6-35 of 96<< PreviousNext >>
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