1.  Heat on the rooms of the house that you are using.  By using space heaters  and ceiling fans instead of your whole-house, forced air system, you can dramatically reduce your ongoing heating bill.

2.  Insulate well. Use weather stripping around doors and windows and put plastic sheeting over the windows.  Don’t forget, you can get a tax credit for making some energy saving home modifications.  Check out http://www.energystar.gov/index.cfm?c=tax_credits.tx_index for more details.

1.  If it has been a few years since you last had your fireplace chimney cleaned, have it done by a professional chimney sweep. 

2. Turn off the water to your outside faucets and drain any remaining water from the pipes.  The outside pipes and faucets are the most prone to freezing, which can eventually cause cracks and leaks.

3. Install weatherstripping around any doors or windows that may be letting in cold air.

1.  Do an energy audit.  If your utility company offers it, get a free check for energy leaks in and around your home.  You can also go to energystar.gov for a guide to do it yourself.

2.  Lower your thermostat in the winter.  You can cut your heating bill by 1-2% for each degree you lower the temperature.  If you get a little chilly in the evening, put on a comfy sweater or sweatshirt or cuddle up with your significant other under a blanket.

             Under the proposed measures to reduce carbon dioxide emissions by our current Congress, called cap and trade agreements, everyone should expect utilities and gasoline expenses to increase.  This increase will primarily impact the low to middle income families as we expect substantial increases in utility bills.  In addition, this will impact heavy users of electricity, primarily in manufacturing, resulting in either the costs to comply with the regulations being passed on to consumers or the transfer of these operations to countries where the cap and trade rules do not apply.  This of course will cause more job losses in this country. 

It is obvious the goal is not to reduce emissions.  The United States has had more reduction of emissions without these agreements than have European countries, which already put these agreements in place.  So what is the point?  The real goal is to introduce a socialist agenda and to create another profit center for energy producing companies.  Ken Lay, former CEO of the now defunct Enron, was a strong proponent of this plan because of the business opportunities and the profits it creates at the consumer’s expense. 

As consumers, we should begin rethinking of ways to reduce utility bills.  Those with low incomes may find there can be help through the Home Energy Assistance Program (HEAP).  Additionally, newer appliances tend to be more efficient than older appliances.   An eighteen year old air conditioner can use as much as twice the energy as a newer model. 

For those in older homes, window replacement may have long-term savings, but measure how long you plan to stay in the home first.  Another great value is to identify energy loss in remote places in the home including crawl spaces, under sinks, and though openings in the basement.  Insulating in and around these areas and caulking around doors and windows offer great benefits in reducing heat and cooling loss.

Attic insulation will yield a high value because it reduces heat loss in the winter and cooling loss in the summer.  It is also important to know that insulation settles over time reducing the R-factor, or energy loss resistance, and should be replaced.  Insulating hot water pipes, changing filters on furnaces, adding hot water heater blankets, and using florescent bulbs rather than incandescent bulbs will also help.  My books Saving Without Sacrifice and Saving Without Sacrifice In Action cover over forty more ways to reduce utility bills.

            Energy cost should double in the next five years because of inflation and the new cap and trade agreements.  As mentioned earlier, fraud is expected to be rampant based on Europe’s experience with these regulations.  The environmental effect is considered so remote that it will not be measurable.  The economic impact could be devastating.  Preparation for what is coming is always the best cure.

            Robert Ostrander, CFP®

            SWS Advisors, Inc.

To help lower that amount, try using fluorescent bulbs instead of incandescent. While the upfront cost may be more, they last 8-10 times as long and use 75% less energy, according to Energy Star®.

Another way to save is to adjust your thermostat. Every degree you raise your thermostat in the summer shaves 2 percent off of your energy bill. And for every degree you lower the heat in the winter, you can save as much as 3 percent.

HOPE FOR TOMORROW

The United States will soon face an economic storm of immense proportions created by a Congress, who for decades have made promises that they cannot fulfill. They have engaged in a process of buying votes in the present while postponing future financial needs.  The baby boom population (78 million people) is approaching 65 and will be asking for Social Security benefits and Medicare benefits that are underfunded.  In addition, the states have the responsibility to provide nursing care for the elderly who are impoverished.  This system is called Medicaid.  It too is largely underfunded. 

On top of this, the government is engaged in a process of selectively bailing out businesses who have mismanaged their assets primarily in the financial sectors and more specifically banks.  Banks are required to have 5% in reserve and before the crisis the average bank had less than .7%.  When the bailout occurred it is my belief that the funds were used to bring the reserves back to 5% leaving no money for new loans.  The economy needs credit to work efficiently for commercial loans, car loans, mortgages and the like.

The government has only three solutions for the need for money.  They can borrow, tax, or inflate the currency.  Borrowing comes in the form of treasury notes, bonds or bills.  We have been borrowing from the Chinese and the effective rate is higher because unlike the U.S. citizens the Chinese pay none of the interest back in the form of taxes. 

Taxing is the second alternative but raising taxes does not necessarily generate more revenue for the government.  Income taxes can cause people to cheat or look for legal ways to avoid them.  The rich set up sophisticated entities offshore and the poor trade services.  Corporate taxes can reduce the ability of companies to compete in a global economy and are really a tax on the consumer who buys the goods and services.

This then leads to the most likely scenario which is to inflate the currency.  I have in my possession currency issued by a bank in 1860.  It says on the currency that this receipt can be exchanged for one bushel of wheat, barley, rye, corn etc. Let’s assume you put on reserve a bushel of wheat and I, as the banker, issue you a receipt. The next day someone comes into my bank requesting money for services to the bank, and I issue them a receipt against your bushel and likewise the day after I issue another receipt against the same bushel.  In business we call that fraud; when the government does it, we call it inflation.  Inflation raises taxes because of our graduated tax scale without a vote by Congress and steals purchasing power.

  So what are the solutions to these problems facing each of us?

1.      We need to look for ways to live within our means.  Saving Without Sacrifice is a book and workbook (Saving Without Sacrifice in Action) that can help you achieve this goal.

2.      All debt, particularly variable rate debt, needs to be eliminated. 

3.      Homes on bus lines, with low square footage, and close to commerce will have higher value than homes that are not.

4.      Assets should be purchased that will protect you from inflation.

5.      Everyone needs a plan B that will create income in the event of loss of employment.  For those seeking to start a business as their income source, begin planning and strategizing before loss of employment and use Saving Without Sacrifice for Small Business to help you.   For those desiring employment through a business or government, begin building your network of people who can help you find work, if you lose your job.  Remember, you need to be a friend to have a friend.

6.      We anticipate a short term recovery for you to prepare for the next economic challenge.

Robert Ostrander CFP®

            President SWS Advisors, Inc.