I think Speedy Jim's advice is prudent. Cutting your heat loss and
taking an incremental approach to replacing the heater sounds like good
advice. Maybe you can ask one or two HVAC vendors if they can install
one furnace now and then add a second twin later? Might let you
stretch out the cost over a longer period.

In any case, be careful if you decide to do insulation in your walls.
I live in a 1941 house on the other side of the bay from you in Menlo
Park. We have knob-and-tube wiring in the walls which by itself is
not bad (unless the insulation is coming off). But when I had
insulation blown in to our exterior walls, nobody told me that you are
not supposed to do that with K&T wiring. The insulation can apparently
cause the wiring to overheat. We haven't had any problems so far, but
I wish someone had mentioned that *before* the insulation was blown in.

I also am in the process of replacing our old single-pane steel
windows. If you want to consider replacing your windows at some point
I would be happy to pass along what I have learned about vendors, etc.


-csw