Even beyond the swath of destruction left by
Hurricane Sandy
, the storm was a reminder of how the unexpected can completely
wipe away homes and possessions. Managing finances is one of the
key challenges people face in the aftermath of such a disaster.
Handling the financial aspects of an emergency starts with
preparation, and continues with a few common sense steps to be
taken as soon as possible after the crisis.
Emergency financial preparations
Here are some steps to take before a disaster strikes:
-
Prepare an emergency fund.
Have a
savings or money market account
set up to cover the potential for unexpected expenses and/or loss
of income during an emergency. A good savings target to shoot for
is six month's worth of your ordinary expenses.
-
Set up automatic payments where possible.
One benefit of automatic bill payments is that they can help keep
you up-to-date on your financial obligations even when your
normal routine has been completely disrupted.
-
Make copies of key records.
A fireproof safe is a good place to keep photocopies of your
credit cards, driver's license and automobile titles, as well as
records of savings accounts, checking accounts and other deposits
or investments you own. If you can keep an extra set of records
off site, it can be a good idea as long as the location is secure
-- remember, this is highly sensitive information you don't want
falling into the wrong hands. Cloud computing raises other
storage possibilities, as long as you can work through the
security concerns.
-
Keep insurance contact information numbers on your
person.
People often keep car insurance information handy, but you should
make sure you have access to home insurance information if your
house becomes inaccessible. Also, it's good to have contact info
for both your local agent and a national claims number. After
all, in the event of a natural disaster, your local agent's
office may be in as much of a mess as your home.
When a disaster strikes
Once a disaster occurs, here are some steps to take:
-
Contact your insurance company promptly.
Claims take time to process, so you want to get the clock started
as soon as possible.
-
Get your mail forwarded.
You need to make sure you have a means of receiving important
financial information that may be coming in the mail.
-
Manage your payments.
Some of those automatic payments may not be relevant if you are
deprived of your home for a while. Conserve your resources by
changing your instructions at the bank to make only the payments
you are still obligated to make.
-
Contact your creditors if necessary.
If you are unable to pay some bills, contact those creditors
immediately with an explanation of the situation. This can earn
you more latitude than simply defaulting on your
obligations.
After things settle down a little, you need to go back to the
start of the list -- that is, starting to
save for another emergency
. Even in the wake of a disaster, you never know what will happen
next.