Side wall insulation is only part of the picture. Attic insulation and energy efficient door and window openings are also a big part. The whole house needs to be at the same level of efficiency to save the most energy dollars.
I would think you should save 20% on the heating bill, post insulation. Get a company that does thermal scans before and after the job. This way you and the contractor can see the level of completion of the job. Any missed cavities can be filled while they're still there.
Payback time period will depend on your heating bills. At $1000.00 a year for heat it would take you 9 years to recoup. The time will shorten as fuel prices go up.
Ron

I'm going to assume that you mean $18,000 not $1,800 for your neighbor's expenditures, I'll give you some other options. Like Ron, I'll agree that you can look at the rest of the house to make improvements in your insulation without cutting holes in the exterior walls. Most of heat loss is though the ceiling, and you should be able to have another 8" to 10" (about a 20 R-factor) of insulation blown into the attic for less than $2,000. Then take a good look at your windows..!

If you house is that old, then it most likely has single pane glass in the windows. It's common that the typical house of that age has enough cracks (free airspace) in the windows and doors to equate to a 3'x3' open hole in an exterior wall. WOW! Consider replacement windows, and not just any old cheap replacement window. Not only will you add energy efficiency to your home, but this will add VALUE when it's time to resell. Order your window with Low E and Argon. The Low E is a glazing and Argon is a gas between the double panes of glass. They block out both UV A and B rays. A qualified installer will leave your home with functioning windows (I'll bet most of yours are painted shut.) that are a tremendous added value to the resell value. Here is S.C. my price for installed Anderson windows are usually in the $225 to $250 range per.

Ha ha why would you just assume he meant 18k and not $1,800? There is no way that blowing cellulose would cost that much for walls. Foam maybe just maybe for a enormous house but not cellulose. Spoken like a true salesmen though. No offense but window guys tend to make some pretty wild claims and justifications. No doubt new windows have a benefit but more often than not complete upgrading of windows is hard to justify from a pure energy saving perspective. A way cheaper alternative (and better ROI) would be to install storms if not present, and concentrate on other things like thermal bypasses.
At any rate if the person is handy blown in wall insulation isnt that difficult to do and can be done with a little work for way under $1000.

I would start in the atic first, with insulation. You can roll more in your self or hire it done.

Also look at the heating and cooling system for efficency and delivery pipe leaks.

I had a 95.5% furnace and 16 seer air installed, cut the bills about 35% - 40%. I will insulate in the spring.

Scott

we bought this house 3 yrs ago, has lots of insulation in the attic and has replacement windows, one thing I noticed with the windows is the draft around the outside of the trim on inside of the house, taking the trim off would be quite the job, is old style with metal brackets at the corners, been thinking of adding clear caulk, any suggestions?

If there is a leak and it wont look too unsightly for you I would use clear caulk to seal up the leak. Caulk every leak you can find. A big leak there means that either someone didnt flash the window correctly when installed and/or your walls are not properly insulated so air is getting around the insulation and rendering it worthless. One thing though is that usually when you have a large leak in the house with cold air streaming in means that an equal amount of heated air is leaving the house as well.
You say that your attic is insulated but has it been properly air sealed? If not I bet you have one or more of the large thermal bypasses like open duct/plumbing chases, chimney chases,gable end walls open to the attic, kneewall/floor joist open, etc. If you have fiberglass batts they wont do anything to stop air leaking from there. Loose cellulose is better but still just slows it down.

Return on investment (ROI) is the key, as the OP says he plans to live there no more than five years.

In that case, doobzz is on the right track. A dozen tubes of caulking, some cans of urethane spray foam, building tape and Styrofoam will give a quick payback. Ditto storms. A new high-efficiency furnace won't payback, but will be a great selling point.

Not just any styrofoam. Check the R rating - some is much better, and correspondingly, more expensive.

Repair your windows. Putty, paint, good locks, caulk, will help a lot. The insulating value of storms is equal to the insulating value of thermo-pane windows. (And you won't be sending anything to the dump! Better ecology, healthier planet.) You can get a storm/screen combination and have a nice summer as well.
Most of this is stuff you can do yourself over time.

The blown-in insulation I have seen when we're remodeling has settled. It's probably better than nothing. Right now we're stripping siding, adding solid insulation over the sheathing, and then residing with the original vinyl. We are repairing rot because the original contractor, 15 years ago, didn't flash properly.

On the high effency furnace...............you have to get a LOT OF QUOTES... My quotes ranged from 8,500 down to the 4,600 for 95.5% furnace. and 18 seer air. The gas bill from the OLD 50% eff furnace would make your eyes water. 500 bucks and it wasn't even very cold out. It was nuts. Now with that bill cut inhalf I can look at an insulation plan in the spring.

Scott

ps if I saved $200 a month for 5 months.. thats 1000 bucks a year, pay back for me is 4 to 5 years on the furnace and air. AND I will tell you the new systen is very nice with the soft start fan DC so I also save on the electric bill also.

oh ya don't forget the 250 tax credit this year.

doobzz, thanks for pointing out, lot in, lot out,, reminded me that the fireplace is right across from that big window. Thats another subject, but yes I will break out the caulk gun