I know the cost is more then anything else... but the other options is leaving the basement uninsulated and I wonder what that will do to the heating costs over time!

I WOULD NOT insulate the stone foundation with something that protects from moisture (on the inside). I would be afraid of water getting in and then getting stuck inbetween the rocks in the little spaces and instead of finding a way out freezing and causing damage.
Now, I am not saying this theory is correct, but I always think, if the moisture is getting in (from the outside walls) then it is most likely best it has a way to get out (maybe the inside walls)
If you want a moisture barrier maybe seal the outside and not the inside and prevent the moisture from getting in, in the first place.

The first insulation task in an old house is getting attic insulation down. Then the next step is to do a heroic effort to seal up small infiltrating leaks around windows, doors, trim, etc. Depending on your plans for the walls, the next step is to consider what if any wall insulation you can install.

Finally, you might want to consider some under floor insulation between the first floor joists. However at this stage you need to think about whether reducing heat lost through the floor would result in your water pipes, drains, etc., freezing. These installations cana be protected but sometimes you have to make a compromise.

Now if you are mostly concerned about air infiltration through the exposed (and leaky) stones you might consider putting an infiltration barrier under the first floor joists. But for complete blocking of infiltration you also need to think bout sealing off air getting into your walls at the sills, this is more difficult (just picky, fussy work mostly) to do than the floors.

For the parts of the cellar that are subsurface and below the frost line, the earth keeps your cellar walls warm naturally as the earth pretty much stays at 55F, year round.

I have read about some concerns about direct sealing (ie with foam products) exposed field stone foundations because of the risk of damage to stones due to frost.

HTH,

MOlly~

If you eventually want to insulate, the proper place for this insulation is outside. The spray foam is excellent, as it also protects from air infiltration. It does need to be covered with something, such as stucco, to protect it from sun deterioration.

Right now, your airy foundation is also keeping a lot of moisture from rising into your house, by blowing it away. Only seal and insulate your basement in combination with concreting the basement floor, to seal out moisture that rises from the dirt.

Molly has given good advice. Your best and first heat-keeping $ are spent in insulating the attic and in sealing all the cracks that allow cold drafts into your house. Fortunately both procedures are relatively cheap, as is laying plastic over the dirt in your cellar.

I was pretty skeptical. But the site I was reading was talking about protecting from water as well so I thought I would ask.

Attic is well on it's way to being insulated and the main floor is actually pretty draft free. The biggest cold factor we notice is on the floor on the first floor. I think we will try vapour barriering the floor and insulating the pipes and work at the sills.

Sort of an aside.... we noticed there are old 'windows' covered in with brick (not mortered and below grade on the outside)... woudl it help in the summer to attempt to dig them out and let some air flow?

I would encourage anyone to spend some time researching. You'll find lots of conflicting advice, but in my experience the information available at http://www.buildingscience.com/ is superior and backed up by actual scientific theory and research.

Here's how Building Science Corp.'s Dr. Lstiburek treated the rubble foundation on his own home.

I've used that method too. I grit my teeth every time I got the electric bill. I don't consider it a long-term solution.

If you have water infiltration issues use Worthy's link.

The temperature of the earth outside may be increased a few degrees by the unheated uninsulated basement but the only part of the earth that must be protected from freezing is directly below the bottom of the foundation wall but the wall should be deep enough to be protected.

Worthy is right about opinions.