It has been quite some time since I have posted here, and I thought I would finally write about the reason why. My summer wasn't spent on vacation or at the beach. I spent the summer being homeless.

It wasn't because I could no longer afford my mortgage, I got fired from my job or got caught up in the housing market bust. No, it started with something that seemed initially to be a very minor problem: a leaky pipe.

It started with a small wet spot on the living room floor. At first, I thought maybe one of my dog's had an accident on the carpet. By the next morning, the wet spot had grown much larger, covering about one-fourth of the living room. I knew then that there was a leak. We called in the plumber, and he confirmed that suspicion and gave us even worse news: a pipe had burst under the foundation of the house. The water would need to be shut off to the entire house immediately.

Within a day or so, the house took on the smell of mold and mildew. We could no longer stay in the house. I immediately called my insurance company and they made arrangements for my family to stay in a hotel. Little did we know that a weekend in the hotel would turn into a four month ordeal.

The house is actually owned by my father-in-law. My family and I just live in it until he retires. We found out the foundation of the house would need to be cracked open so the plumbing could be fixed. All of the furniture, which now reeked of mildew, would need to be removed from the house and put in storage. We would not be going back to the house anytime soon.

After two months we got more bad news: my father-in-law and his wife wanted to put new hardwood floors into the house, and since we had pets, we would not be able to move back into the house. We had to find a new place to live.

After cashing in a portion of my retirement funds, we found a house to rent. Living in a hotel with a pool and a hot tub may sound like fun, but it isn't home. It was a very trying experience for the whole family, and there were times we took out our frustrations on each other. No, we weren't on the street or living in a box, but we had no home for one third of the year.

My experience this summer was a good learning experience, which I will share with you now.

1. If you could not live in your house due to an emergency, where would you live? Do you have a "Plan B" if something happens to your house? Do you have emergency funds you can use to tide you over, or an insurance plan that will cover your costs if you are the victim of fire, flooding or natural disaster? If not, the time to think of one is BEFORE you need it.

2. Are you fully insured? Thank God I was smart enough to buy renters insurance several years ago. Not only does it cover up to $50,000 worth of damage to my belongings, but it gives me up to $10,000 for living expenses if I am displaced (which I maxed out this summer). Make sure your renters or homeowners insurance gives you this kind of protection.

3. Do you have emergency savings? I did, but this ordeal wiped out my funds. Thankfully, I had the funds to spend. Before we got a hotel room with a full kitchen, my family and I had to eat out every meal. That becomes very expensive, even if you are eating fast food and try to eat "cheap."

4. Don't touch your retirement funds unless....you are going to be homeless. Yes, I did dip into my retirement account, but I used that money to pay security deposit and the first month's rent on my new home. I know the common wisdom is you don't touch retirement funds no matter what, but if the choice is retirement money or homelessness, put a roof over your head. I'll replace my retirement money now that I have a place to live.

5. Don't think it can't happen to you. It can happen to ANYBODY, and as I learned, it can be something as simple as a leaky pipe that puts you out of your home. Plan for a worst-case scenario now, and you will save yourself a lot of stress during an emergency situation later.

I spent some time tonight watching the movie "The Pursuit of Happyness". It's the true-life story of Chris Gardner, and it's a true hard-luck story. Gardner's wife left him with their young son, he became homeless and he had no job. He had one shot at success: a non-paying internship at Dean Whitter, which might or might not lead to a paying job as a stock broker.

Gardner and his son endured many hardships, including eating in soup kitchens, sleeping in homeless shelters (when there was room) and even an overnight jail stay for Gardner (for non-payment of parking tickets).

Eventually, Gardner was offered a paying job as a stock broker. He went on to found his own investment firm, and he sold a minority stake in it in a multi-million dollar deal. It's a very inspiring story, and if you haven't seen the movie (which stars Will Smith), I highly recommend it.

As I watched the movie, I thought of my own "Pursuit of Happyness". It's similar, though not as extreme as Chris Gardner's story.

Homeless

I will never forget the day my wife and I came home to our apartment after a weekend out of town with my in-laws. There was a piece of yellow paper taped to the front door. It was an eviction notice. Due to an error at our bank, our checks kept bouncing, so we had stopped paying the rent with checks, and paid with money orders instead. We paid each month, on time. However, those money orders never made it to where they were supposed to go. Did somebody pocket them and say we didn't pay our rent? It's possible, but we couldn't prove it. We had not kept our money order receipts.

As far as the apartment complex was concerned, we had not paid rent for six months. They wanted more than $3,000....money we did not have. We had no emergency fund. We had no savings account at all, actually. We lived paycheck to paycheck.

My wife later had to have emergency surgery, and I spent the whole day in the hospital, waiting to see if she would be alright. The doctor told us there was the possibility she could have died. After I got home I played my answering machine messages. One of the messages was from the manager of a company had taken over the company I worked for. He informed me I was fired. Now I had no job, and soon, I would have no home.

Taking a Chance

I applied for jobs in other states, since there were no openings in our local area for what I was doing at the time. I received two offers: one in Philadelphia, in an area which had a high cost of living; the other, in Oklahoma, which has a low cost of living. I chose Oklahoma.

I cashed in my 401k and collected an unemployment check to stay afloat until the whole family could move to Oklahoma. The 401k money would be used for moving expenses. My new employer would not move me. I left home with little more than $400 in my pocket, and that had to pay for gas to drive halfway across the country, food and somehow, a down payment on an apartment.

It took me two days to drive to Oklahoma. I spent the first night sleeping in my car. My new employer put me up in a hotel for one day after I arrived in Oklahoma. That left me one day to find a place to live. I found an apartment, but it was not in a good area of town, and we had certainly lived in better places. I didn't have the full amount of the security deposit. Thankfully, the apartment manager said I could pay $110 down and pay the rest once I got paid by at my new job. That night, I slept in our new apartment, with nothing more than a sleeping bag, a small TV, a few changes of clothes and many, many cockroaches.

Survival

While my wife, still recovering from surgery, packed our house with our two children, I started working and anxiously waited for pay day. I couldn't afford to buy groceries and I had nothing to cook them even if I could. I lived on burritos I bought at 7/11 for 79 cents, and I bought buckets of chicken from a restaurant for $8, which was enough chicken for me to eat for two or three nights. My food budget was about $30 a week.

Pay day came, and I did not get a check. I was informed that it takes two pay periods for payroll to get a new employee into the system. I had to wait two more weeks to get paid. I was quickly running out of money.

One day, my wife called me. She informed me she had packed as much as she could, but could not do any more. We had a moving truck coming to pick up our things, and they would have to finish packing for us. Our original plan to have her take a bus to Oklahoma fell through. It was just too expensive. I had to drive all the way back cross-country to get her and the kids, turn around, and come back again to be back at work the next week.

Pursuit of Happyness

After I got my family moved to Oklahoma, my wife eventually got a job. Between the two of us, we paid down our debt, put money in a savings account for emergencies, and actually had money left over from one payday to the next. I had taken a 20 percent cut in pay in the move to Oklahoma, but we had more money than ever. Things were looking up.

After a couple of years of our financial recovery, we were hit with another setback: my wife became disabled, and she could no longer work. Our income was cut in half. To top it off, her medications cost hundreds of dollars a month, and we had no health insurance.

To make ends meet, I took on extra freelance work, got a part-time job at a retailer that offered health benefits to part-time employees and worked seven days a week. I did this for a year.

Happyness

I now have health insurance. My income has doubled in the past two years, and I earn more money now than I ever have at any other point in my life. In fact, I have replaced the income we lost when my wife became disabled. We are paying down the extra debt we accrued when she could no longer work, and once again we have an emergency fund.

I have high hopes for our future. I'm pursuing a college education part-time while I continue to work full-time. My wife and I plan to purchase a home in a couple of years, so we are paying down debt and saving money for a down-payment at the same time. I jump at every chance to earn extra bonus money at work. You could say I'm extremely motivated to not return to the situation my family was in five years ago. It was those experiences that led me and my family to adopt a lifestyle of Savvy Frugality.


Avoid the mistakes I made in the past:

1. Pay your rent with a check. Your bank will have a record of the payments. Never overdraw your account. Balance your account daily. Yes, daily.

2. If you are being hassled by bill collectors, remember that you have rights under the Fair Debt Collection Practices Act. Learn what they are, and you will buy yourself some breathing room.

3. Save at least ten percent of every paycheck, bonus or gift. Sock it away in an emergency fund. As you go through life, you will eventually have an emergency.

4. Have a game plan. If you do have an emergency (lose your job, illness in the family, bank account wiped out), don't panic. It's easy to sit and feel sorry for yourself, but that's not going to fix things. Come up with a game plan for HOW you will fix it.

5. Do what it takes. Before moving to Oklahoma, I had never even flown over the state. I knew nothing about it, but I knew it was my one chance to start my life over again. My family and I gambled that we would do well here, and overall, we have. We like it here, and it has truly become home. Don't get tied down to one area. If you have to move to improve your situation, do it. If you have to sell everything you own to make it happen, remember they are just things. Things can be replaced.

Everybody knows when times are tight at home. There seems to be "too much month at the end of the money". There isn't enough cash to go out and do things that are "fun" without worrying about how bills are going to get paid. In effect, you're "robbing Peter to pay Paul." But how do you know if it's just a temporary setback, or if you're in deep, deep money trouble?

Looking back at a time in my life when money problems were a constant worry, I can remember five distinct signs that I had to take drastic action immediately, or my family and I were going to end up living in my sister-in-law's basement:

1. You frequently have overdraft notices from the bank. If your financial life is in harmony, you should never have overdraft notices from your bank. If you are constantly finding yourself with more going out of your checking count than coming in, you've got big problems.

2. You avoid answering the phone because you're afraid a creditor is calling. This is just another sign that you owe somebody money -- money you can't afford to pay.

3. You avoid going to the doctor because you can't afford the bill. If you don't have adequate insurance through your job, it's time to find another job. There is nothing more important than your health.

4. You have no "extra" money. If all of your money is going to household bills, and you have nothing left over, you need to start paying your most important creditor first: you. Everybody, notice I said "everybody", should have something in a savings account.

5. You are constantly behind on basic necessities like rent and utilities. You either can't afford the home you have, or you are spending too much money on things that aren't really necessities.

A few years ago, I had all of the financial symptoms listed above. At the time, I really didn't know how to pull myself out of this situation. After all, there was only so much money to go around. After finding myself practically homeless, I finally took a good, long, hard look at how I was managing my money, and I realized that I wasn't really managing my money at all. I just paid what I could when I could. That is no way to live. Here is what I did to finally get my financial house in order:

1. I became obsessive-compulsive about my checking account. I opened a checking account in my name only (my wife was not pleased, but she made her own money and she opened her own account). All household bills are paid from this account, and nothing gets spent without it being noted in the check book register. I balance this account DAILY. The overdrafts stopped.

2. I contacted my creditors. I didn't wait for them to call me. I worked out payment plans with all of them. Some of the creditors wouldn't leave me alone, so I wrote them a letter telling them to stop calling me. You are allowed to do this under the Fair Debt Collect Practices Act. This doesn't let you off the hook for your debt, but creditors cannot harass you by phone if you tell them to stop.

3. I got a different job with adequate health insurance. Sure, I liked my previous job, but I've got to look out for number one. A job is no good to you if you are too unhealthy to work.

4. I made saving a higher priority than spending. My savings account gets paid before any of my creditors. Period. Nobody is going to take care of me in an emergency except me.

5. I downsized my life. I came to realize how many of my "needs" were really "wants". You may "want" a nice TV, a gym membership and a subscription to Netflix, but you don't really "need" it. It's a matter of priorities. What is more important: providing your household with its basic necessities, or spending money on a bunch of things that won't matter five years from now? Once you have that figured out, the rest of your financial life will fall into place.

My house looks like a war zone. I'm in the process of packing for a move, and it's taking longer than I would like because of all of the papers I have to go through while packing my moving boxes. I'm not talking about newspapers. I'm talking about the boxes of financial files, unopened bills and assorted other crap that I apparently packed the last time I moved, and then never looked at again. Until now.

I found bills and unopened mail and other paperwork that was almost seven years old. Seven years! Shameful. No wonder my financial life was a shambles back then, something I detailed during a previous post about why I chose a life of Savvy Frugality.

As I looked through the boxes of papers, I also realized how much money all of this clutter has cost me over the years...in late fees, negative entries on my credit report, higher interest rates, etc. If I had tackled things head-on before I had even packed those papers (something I did start doing about five years ago), not only would my finances have been a lot different, but I wouldn't have all of these papers making my shredder work overtime tonight.

Some people choose to deal with their problems by ignoring them, hoping that someday things will work out. However, "someday" never comes, and things never just "work out". I know, because I used to live that life, as evidenced by the boxes of papers currently stacked in my living room. I had to take an active role in digging myself out of a bad situation. It wasn't pretty, and it wasn't fun, but in the end it was totally worth it. I was recently able to get an auto loan, and today I received a pre-approved offer for a platinum card...something that seemed impossible five years ago when I was staring homelessness in the face.

If you were like me, if you have "boxes of clutter" hiding in your house, it's time to dig them out, develop a plan and take a good, long, hard look at what your finances are REALLY like. I know, it's scary...but not as scary as what could happen if you continue to ignore the clutter in your life.

Clutter costs money.

I started my journey to frugal living about five years ago, when my family's finances were about as bad as they could get. We narrowly escaped homelessness, and bill collectors were calling and harassing us during all hours of the day and night. I knew that if I was going to improve our situation, we needed to do two things: increase our income and drastically reduce our spending. One of the books that helped set us on the right path was The Tightwad Gazette.

The Tightwad Gazette is actually a collection of newsletter entries written by Amy Dacyczyn, who no longer writes the newsletter, nor has she written any other books beyond the three Tightwad Gazette editions. In fact, I Googled her name and couldn't find any updated information about her at all. She seems to have stepped out of the spotlight. However, the books contain sage advice that is still good today (plus some ideas that are so stingy I never bothered to try them). Here are a few ideas from the first edition of the book that I found especially helpful:

10 Painless Ways to Save $100 this Year:

1. Purchase 10 article of clothing from thrift shops instead of department stores
2. Hang 4 loads of laundry per week instead of using the dryer
3. Once a month make pizza from scratch instead of having it delivered
4. Write a good letter instead of making a monthly long distance phone call (obviously, this was written before email became common and cell phone providers started offering free nights and weekends)
5. Reduce your soda consumption by four cans per week
6. Bake two loaves of bread per week
7. Make your children's birthday cakes and decorations instead of buying
8. Reduce your smoking by three cigarettes per day (or quit altogether and save even more).
9. Reduce your milk consumption by using powdered milk for baking and cooking
10. Pack 4 inexpensive school lunches per week

Keep a Price Book of the items you commonly buy at the supermarket, and list the prices you find at different stores in your area. By keeping track of the prices of these items, you will know when a sale is truly a bargain, and which store has the best prices.

Three ways to save money:

1. Buy it cheaper
2. Make it last longer
3. Use it less

Store brands are almost always cheaper than name brands, even if you use coupons.

For your pets:

1. Stick with name-brand foods. It's usually healthier.
2. Do not overfeed your pet. Use the feeding guidelines on the package.
3. Dry food is just as healthy as canned food, and is cheaper.
4. Don't buy dry pet foods in bulk. The vitamins degrade over time.
5. Avoid switching your pet's food. They really don't need variety in their diet.
and I'll add this one of my own:
6. Always keep up on your pet's vaccinations. It's cheaper than your pet getting sick and running up vet bills.

Don't forget, we are still looking for YOUR frugal tips. The person with the best tip will win a copy of The Tightwad Gazette.