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.
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