Here at the Fool, we often get sent press releases and other information by folks who want to publicize something they're promoting. Many of these get sent to the recycling bin. But the nice folks at NACHA (The Electronic Payments Association), though they do have an agenda -- to promote electronic payments -- also offered six useful components of financial disaster preparedness plans. Permit us to share some of their advice, along with our own commentary:
- "Make a copy of everything in your wallet. Put it on a disk and/or in a bank vault or with trusted family members in another city." This can also serve you very well if your wallet is ever stolen. Just remember to photocopy the front and back of each card, so that you'll have the phone numbers you need to call. And update this at least once a year, as your wallet's contents often change.
- "Sign up for electronic payment (direct payment) for critical bills such as health insurance, mortgage, etc. Talk with your employer about using direct deposit for payroll." The NACHA agenda rears its head. Still, having your paycheck direct-deposited is generally a great convenience, and it can even earn you better terms and rates from your bank. If you're not good about paying important bills on time, arranging for automatic payments can help.
- "Sign up for online banking and online access of your investment accounts -- IRA, stocks, mutual funds, CDs. Very important if quarantined due to Bird Flu." Even if you don't succumb to avian flu, online banking and investment management can be very convenient. Our Broker Center can help you find the best brokerage for yourself. (Many major brokerages sport commissions lower than $5 or $10 these days!)
- "Make sure family partners have access to all accounts in case something happens to one member." This is hard to argue with. It doesn't mean that Cousin Ralphie needs your ATM password -- but make sure that those who need to know where your money is can find it, and that you've assigned durable power of attorney to someone.
- "Prepare a 'to-go' waterproof and fireproof box that you can grab and go in case of an emergency. Include all family and friend contact info and addresses, recent account statements, a financial contact list, mortgage and insurance statements, and a small supply of cash." In fact, you might want to keep more than a small supply of cash on hand -- imagine not being able to get to the bank for a while.
- "Get an ATM card, even if you never use it, so that you can access money if you are displaced in another city without access to your local bank branch." And have a way to remember how to use it and what your personal identification number for it is.
Interestingly, NACHA sent out another email asserting that families can save a "minimum of $150 annually" by using direct electronic payments for "reoccurring bills, such as mortgages, insurance, gym memberships and so much more." And even one person can easily pay about 12 to 15 bills per month, in which case direct electronic payments would add up to a savings of between $50 and $70 per year in postage.
Learn much more about preparing for and preventing disasters in these articles (really, this is vital stuff -- just ask someone whose house burned down):
While you prepare for the kind of disaster that might have you seeking a temporary roof over your head, also be sure you've got a plan in place to avoid another kind of financial disaster that looms in front of too many people: a gruesome retirement. Begin planning now.
Finally, be prepared for investment disasters, such as when your stock falls in price by 50%. It can happen. Tim Hanson and Brian Richards recently reviewed the 10 worst stocks of the past decade -- such as Viragen
Foolish research associate Katrina Chan has updated this article, which was originally published by Selena Maranjian on June 20, 2006. Katrina does not own shares of any companies mentioned in this article. The Motley Fool's disclosure policy is three feet high and risin'.
