We show you how to slash utility bills and make fewer trips to the gas pump. By Magazine Editors May 5, 2011 Add together all of your energy costs -- for natural gas, electricity and gasoline -- and you're likely spending $7,000 a year. The average U.S. household pays $1,900 annually in utility bills, according to the Department of Energy. And the typical two-car family pays nearly $5,000 a year at the gas pump -- after factoring in price spikes over the past year that have added about $800 to the annual tab.You can't do much about the price of energy, but you can control how much of it you use by making your vehicle fleet more fuel-efficient and adding energy-saving improvements to your home. One place to start is with a home energy audit. Do-it-yourselfers can try Energy Star's Home Energy Yardstick or, for a more in-depth look, the Home Energy Saver, developed by the Lawrence Berkeley National Laboratory. Sponsored Content For a more rigorous evaluation, you can hire an energy auditor. A typical audit takes three to four hours and costs $250 to $600. The auditor will size up your home inside and out, basement to attic, and run tests to measure the efficiency of your heating equipment and the leakiness of your home's exterior. The resulting report will serve as a road map to improve your home's energy efficiency. (To find an auditor, visit www.energystar.gov. Or try the Residential Energy Services Network. Need more motivation? Invest in TED ($120), a home energy monitor that continuously displays your electricity usage in kilowatt-hours. Place TED on your kitchen counter, and make a family game of figuring out how you can cut consumption. Advertisement The graphic at right highlights ten energy savers for your home and car that require an initial investment but could eventually save you a total of $1,786 a year. For more ideas, keep reading. Some of your projects could garner a tax credit from Uncle Sam. Your home The biggest slices of a typical household's energy budget are heating and cooling (about 40%) and water heating and lighting (each about 10%). With a few no-sweat moves, you can reduce your annual costs by $250 to $300. Start by attacking your heating and cooling bills, by using a programmable thermostat. Set the temperature as high as you can tolerate it in the summer and as low as possible in winter, and program the thermostat for greater energy savings when you're sleeping or away from the house. In summer, for example, every degree you set your air conditioning above 72 degrees will save you 3% to 5% on your energy bill. You'll make an even bigger dent if you reduce "solar gain" from sun-drenched windows by closing curtains or shades during the day. If you haven't replaced incandescent bulbs with compact fluorescents, target your home's five most-used or hardest-to-reach fixtures -- say, in your kitchen or family room. Use your dishwasher's air-dry option, or turn it off and crack the door after the final rinse. To save on hot water, keep your showers short, and switch from the hot wash/warm rinse setting on your washing machine to warm/cold or cold/cold. Advertisement If you need to replace or add an appliance, big or small, buy an Energy Star model. One-fourth of all American homes have an energy-sucking second refrigerator, usually retired from the kitchen to the garage or basement. Your utility may offer an incentive if you remove it; it might even take it away for you. And stop the drain of "vampire" appliances and electronics that use energy even when they're turned off (see Tools and Tricks to Slay Your Home's Energy Vampires). Power from the sun. Even if you don't live in one of the nation's sunnier climes, investing in a solar electric system for your home could pay for itself in five to seven years. Your state's tax incentives, beyond the federal government's 30% credit, may be the deciding factor (visit www.dsireusa.org to see what's available in your state). In some places, installing a system could cost $10,000 or less after incentives. Check your electricity usage over the past year. Reducing your usage -- by sealing and insulating your home, for example -- could allow you to buy a smaller solar electric system. Find certified contractors, who will help you determine the appropriate-size system and give cost estimates. Bonus: Many states offer net metering, which allows homes producing excess energy to send it to the grid and get credit from the utility. Two other solar projects cost much less and pay back much more quickly. The more ambitious is a solar hot-water system. Basically, a flat black box on your roof (60 to 120 square feet, depending on the amount of hot water used) taps the sun's energy to heat fluid that is piped into your home to heat water. These systems either have their own hot-water tank or supply heated water to your existing tank. Advertisement The math gets a little complicated, but here are a few rules of thumb: First, if you heat your water with natural gas, which is currently cheap, you won't see much payback. However, solar can be an attractive option if you heat water with electricity, which can cost two and a half times as much as natural gas. You'll also save if you heat water with propane, although it's not as expensive as electricity. If you live in a northern climate, your system will be more expensive because it will require special fluid to prevent the system from freezing. If you want to explore the idea, have your local utility estimate your hot-water energy costs, and read up on the pros and cons from the U.S. Department of Energy. Then contact contractors for cost estimates and state and local incentives. A solar-powered attic fan is more of a slam-dunk. It helps keep your attic cool in the summer, cutting your air-conditioning bill. Electric-powered attic fans may be a better choice for large attics, but for about $500 to $600 you can buy a solar-powered attic fan that can reduce your air-conditioning costs by 25%. These are also eligible for the 30% federal tax credit, so figure that you'll pay roughly $420 after the tax credit and bank an energy savings of $100 per year. Savings from underground. Here's an eye-catching come-on: Heat and cool a typical 2,000-square-foot home for $1 a day. That's a real possibility with a geothermal heat pump. In winter, a heat pump (also known as a geoexchange or ground-source heat pump) moves heat from the warmer ground of your yard to your home, and in summer it uses the colder temperature of the ground to cool your home. It can typically cut your annual energy bill by 30% to 60%, according to the Department of Energy. Advertisement A geothermal heat pump will work almost anywhere in the U.S., but the best type of system for your home and the cost to install it will depend on the area and layout of your land and its soil composition. The California Energy Commission says that, as a rule of thumb, a system will cost about $2,500 per ton of capacity (or $7,500 for a three-ton system for a typical-size home), plus $10,000 to $30,000 or more for drilling and burying pipes. Even so, payback is relatively quick -- two to ten years, depending on the system you choose, the financing you get and incentives for which you qualify. Geothermal heat pumps that meet efficiency requirements (all Energy Star-labeled models do) qualify for a federal tax credit of 30% of the cost, including installation. To find a qualified installer, check with your local utility provider or the International Ground Source Heat Pump Association. While solar systems and heat pumps can be used by millions of homes, a home wind turbine is likely to be a green loser. To begin with, you'll likely need at least an acre and a half of land to meet zoning requirements for the 100-foot-tall tower (it needs that height to catch the wind consistently). And that wind needs to be 10 mph, on average. Plus, if your electric rate is 10 cents per kilowatt-hour or less (the national average is about 11 cents), it's not worth your while. Your car Buying a super-fuel-efficient car may cut your fuel bill, but it won't always save you green in the long run. We compared several popular green cars with their closest gasoline-engine counterparts, using five-year ownership costs from Vincentric, an automotive-data firm. Among that group, only two green cars cost less to own than the gasoline model: the Toyota Prius II ($23,810) and the clean-diesel BMW 335d ($44,825). Two of the biggest automotive news sensations of the past year -- the electric Nissan Leaf ($33,350) and the Chevrolet Volt ($41,000) -- are simply too expensive to come out ahead of their closest gas-powered matches, even after you factor in a $7,500 federal tax credit. If you're thinking of replacing your tires, go with ones that offer low rolling resistance. Goodyear's Assurance Fuel Max tires ($624 for a set of four for a midsize car) are made with a new compound that limits the tire's deforming as it touches the ground -- giving you 4% better fuel economy. Some ways to save gas just require a little behavior modification. Instead of heading to the closest gas station, see if there's one along your commute that's cheaper. Download GasBuddy, a free app for iPhone, Droid and Windows smart phones, to find the cheapest gas. Also make sure your tires are properly inflated -- it'll improve your mileage by more than 3%. And lose the junk in your trunk -- an extra 100 pounds reduces your miles per gallon by up to 2%. The biggest savings come when you adjust your driving habits. Speeding and quick acceleration guzzle gas. So aim for moderation in everything from acceleration and braking to speed. Follow Kiplinger on Twitter.