Disaster preparedness should include financial readiness

The Haitian earthquake tragedy serves as a reminder for each of us to review how prepared we are for a disaster. Historically, flooding is the nation’s single most common natural disaster. While earthquakes are often thought of as a West Coast phenomenon, 45 states are at a moderate to high risk of quakes. Some disasters, such as hurricanes or tornadoes, can provide us with a degree of advance warning, while others happen in the blink of an eye.

A disaster plan should include financial readiness because, in an emergency, the last thing a person needs to worry about is finances. No one has ever regretted being prepared in advance when they had to vacate their home and make split-second decisions, sometimes life or death ones. To be safe, consider the following financial tips when formulating a financial disaster plan:

  • Have an overall checklist in place before the emergency strikes, and if possible, review it before leaving your home.
  • Gather all financial records in one spot at home and one off-site. Consider a fireproof safe for home which contains copies of documents, with the originals stored in a safe deposit box. Everyone who lives in your home may not be there when the disaster strikes. Therefore, it is necessary to inform all family members of your plan, where your “go-box” or safe is located, and instruct them that they are to bring it with them when evacuating.
  • Inform a trusted friend or family member where documents are located. Someone outside of your residence should be aware of the off-site location where your documents are housed.
  • Copy the front and back of all credit cards, debit cards and ATM cards. You will need this information for ease in contacting the issuers.
  • After the event, call the credit card companies and alert them to expect purchases outside of your normal charging pattern. You do not want to have the use of your credit cards compromised due to purchases being made in a different city or state.
  • Include a spare set of checks in your go-box. You want to be able to access money from your bank, and not totally rely upon credit cards or your ATM.
  • Keep an amount of cash on hand to sustain you short-term. If electrical power is lost, ATMs will not be working, thus having cash is critical.
  • Make a list of all financial institutions with which you do business, including brokerage houses. Be sure to include contact information and account numbers.
  • Have the contact information of your insurance agent as well as the policy in hand. This will be immensely helpful when making a claim, and put you near the front of the line. To avoid any unpleasant surprises, have an annual insurance check-up to confirm that you fully understand your coverage and deductibles. An emergency is no time to find out about unforeseen gaps in your coverage.
  • Have a complete household inventory in an offsite location. Pictures or videos will make claims much easier, and the last thing you want to do under stress is rely on your memory.
  • Have utility company information available in case you want to stop some bills. If your residence is uninhabitable or totally destroyed, notify utility companies and other service companies, such as the phone company, so they can stop billing immediately. Often times a utility company will transfer service to a new address and waive initial connection charges.
  • Protect your identity. Notify the three credit bureaus (Equifax, Experian, TransUnion) that you have been affected by a man-made or natural disaster. By placing a fraud alert on your accounts, creditors must contact you before opening any new accounts or making changes to existing accounts. This also will help to avoid becoming a victim of identity theft, as crooks seems to thrive on distressed individuals. With mail interrupted, it could be months before you even knew that charges were being added to your accounts.

If you are displaced for a period of time, your income may be interrupted. Review your financial situation and develop a realistic budget to cover the time it will take to recover. Determine what obligations can be regularly paid until the financial picture improves. If all known expenses cannot be covered, contact creditors and try to negotiate a payment plan. While many will be willing to accommodate the request, starting the conversation is the first step. A certified credit counselor also can help contact creditors and negotiate an appropriate payment plan on your behalf.

This content was provided by The National Foundation for Credit Counseling (NFCC) . Money Management International is a member of the NFCC.

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.