Batten Down Your Financial Hatcheshttp://www.fool.com/personal-finance/general/2007/06/01/batten-down-your-financial-hatches.aspx Motley Fool Staff
June 1, 2007
Check your flashlights and stock up on bottled water: Hurricane season is again upon us.
Weather experts are calling for another active hurricane season, which officially begins today, June 1. Even though last year gave most of the U.S. a breather compared to 2005's monster storms, meteorologists are projecting as many as 17 named tropical storms and 10 hurricanes this year. Bear in mind that just one storm can knock the wind out of your financial sails.
Yikes! Many of us are still waterlogged from past seasons. We've learned a few things, though. We only want to see a tree in our house at holiday time, for one thing, and the extra-heavy outdoor furniture we splurged on seems like less of a good idea when we're lugging it inside as those cruel winds begin to blow. We've also become a bit wiser about how not to get soaked financially.
There's one good thing about hurricanes: You usually have enough advance notice to prepare yourself. Other disasters, such as earthquakes and tornadoes, strike with little warning. That's why it's a good idea for all Fools to be prepared. We'll leave it to others to teach you how to shore up your roof and suggest how much water to stockpile, and you can decide whether you'd prefer to dine on canned tuna or cold cereal while the power is out. For our part, we've come up with seven Foolish steps you should take now to prepare yourself financially to weather a natural disaster:
1. Protect your property. Make sure your home and business are up to current safety codes. Consider having your home evaluated by a building inspector to find out whether any structural improvements could prevent or reduce major damage from disasters. Save your contracts and receipts from any completed work, because you might be able to use these to lower your insurance premium or claim tax deductions.
3. Hoard cash. Cash is king -- never more so than during an emergency. Instead of facing long lines and potential shortages, go to the bank now. Withdraw at least $500, in small denominations, or a larger amount if possible, since you might need to cover expenses like food, shelter (you may need to evacuate), and gas for at least a week. Even though a storm may be over in a day, its effects often last far longer, with electricity and telephone outages downing both ATMs and computerized bank networks.
This cash should be in addition to the emergency funds you should have already Foolishly siphoned away. Check out our Short-Term Savings Center to learn more about emergency funds. You may need to call on those funds if your job or business suffers from the immediate or long-term impact of a disaster.
4. Go shopping. If you don't already have shutters, go now and purchase plywood for boarding up windows and doors. It won't be there at the same price (if at all) when you really need it. Buy extra flashlights, batteries, and tarps. Some states offer tax-free shopping periods for storm-preparedness items.
5. Inventory and document your possessions. Haul out that camera and visually document your belongings, including any outdoor furnishings. Then comes the hard part: Write a description of each item, as fully as possible, including where you bought it, how much it cost, and its model and serial number. Also, locate any purchasing records. Obtain updated professional appraisals for significant assets. These records may be vital to helping substantiate losses later with your insurance company -- or to claim tax deductions.
6. Put together an evacuation box. Buy a lockable "evacuation box" to grab in the event of an emergency. Keep this box with you at all times -- do not leave it in your car when you stop for a bathroom break or overnight at a motel. Remember that your car will be stuffed with other supplies (and your family), and space will be tight. The following important papers and items should be placed in the box, preferably in sealed, waterproof bags:
7. Protect your credit and portfolio. Keep those credit cards paid off so you'll be able to draw on them if needed. Make sure your other bills are paid off on time, and anticipate any that may come due while you might be away. (We were assessed late charges from one creditor for a bill we never received because our mailbox had blown away.) Review your investment portfolio, and place any stop-losses necessary to prevent you from having additional worries.
One final note: Should you incur damage, make sure you check out the business credentials of repair workers before hiring. Affected areas are often flooded with unlicensed and uninsured contractors, and you know what happens if problems arise then: You get hosed again!
Whew! Now that you've done all that, your house may still be left twisting in the wind, but at least you won't be blown out financially. You may consider whether you want