I'm in PA too. Lots of people around here are in a similar situation. You would certainly save on a month to month basis after outlaying $400 for an electric water heater. You already did that math.
Before outlaying the cash I would, as suggested, look into an on demand water heater. There are electric and gas models. I would do gas if you could.
As for space heaters. They will help cut costs if you are willing to keep the furnace off and only heat one room at a time. We did this when I was a kid in the 70s and we used a portable kerosene heater.
I recently finished my basement. I decided to not extend the central heat into the space (I didn't want to heat it 100% of the time). I put in a natural gas fireplace. The model I chose is a direct vent style, 28000 BTU. It has a thermostat, timer, variable flame and variable blower. It can heat the 1400sq ft basement in no time flat. See here http://www.handyguyspodcast.com/94/episode-16-diy-basement