By Barbara O’Neill, Ph.D., CFP®, AFC® [email protected]
The official dates for hurricane season are the six months from June 1 through November 30 of each year. At this same time, other natural disasters, such as tornadoes, floods, and wildfires, also occur frequently. After a natural disaster, someone’s life is turned upside down. There are forms to complete, offices to call or visit, and long waits for service. Many people experience a deep sense of loss or fear and confusion about what to do.
Personal Finance Managers (PFMs) are often consulted to help their clients prepare for natural disasters or to cope with damage afterward. Below are eight action steps to share with military families:
Preparing for Natural Disasters
- Establish an Emergency Fund- Set aside savings for emergency expenses. Fund it with at least three to six months of living expenses, if possible, or whatever amount gives you peace of mind. Whenever you withdraw money from the emergency fund, pay yourself back as soon as you are able.
- Inventory Your Assets– Make a list of personal possessions and take photographs of them or make a video. For expensive items, such as electronic equipment, make a list of the brands with serial numbers. Store this documentation on a flash drive in a safe deposit box and/or on a cloud-based server.
- Prepare a “Grab and Go Box”- Place the following in your box: a small amount of cash; non-perishable snacks, a list of emergency contacts, doctors, and financial advisors; copies of important prescriptions and immunization records; copies of auto and homeowner’s policies and insurance company telephone numbers; backups of computerized financial records saved on a flash drive; and a bank safe deposit box key.
- Review Your Insurance Policy- Check the adequacy of your homeowner’s insurance. The most important figure is dwelling coverage because other property loss limits are usually stated as a percentage of it. Most insurers require that a home be insured for at least 80 percent of its replacement value for full coverage.
Coping with Natural Disasters
- Contact Creditors Immediately– Make them aware of your changed financial circumstances by explaining your situation. After talking to creditors, write each one a letter stating your understanding of your conversation and any negotiated leniency arrangements. Keep a copy of the letter(s) for your files.
- Get Help if Needed– Consider using a non-profit credit counseling agency as an intermediary between you and your creditors and to arrange for creditors to accept reduced monthly payments on your accounts. Some creditors will also lower interest rates and/or waive late fees when a counseling agency contacts them.
- Find Resources– Get in touch with organizations that assist disaster victims. The American Red Cross provides emergency shelter, meals, clothing, and medical assistance. Churches and interfaith coalitions may also be able to assist with food, hygiene items, cleaning supplies, and counseling services. Another resource is the Federal Emergency Management Agency (FEMA), especially in federally declared disaster areas. Grants and loans may be available depending on factors such as financial need.
- Report a Loss ASAP– Call your insurance agent and find out what information is required to process a claim. Separate damaged and undamaged property but do not destroy damaged items until a claims adjuster inspects them. Protect your property from further damage with temporary repairs and save receipts for reimbursement. If your home is uninhabitable, save all receipts related to temporary lodging and meals.
For additional information about the financial aspects of dealing with a natural disaster, download Recovery After Disaster: The Family Financial Toolkit from the University of Minnesota.
Make plans to attend the MFRA Disaster and Hazard Readiness Series that begins Sept. 16.
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