Lesson from the California Wildfires: Be Financially Prepared

Dear Friends:

The images and news from the devastating Southern California fires have riveted the country. Reactions have been a mix of horror, awe -- at the tremendous power of nature and the bravery of the firefighters doing battle -- and anger, as we learn that at least one of the fires was likely due to arson.

If you’re following the news from afar and you’re human, you’re probably thinking, “Thank God I don’t live in an area like that.” If you’re caring, you might dig into your wallet and make a donation to the American Red Cross.

But if you stop there – that’s a big mistake. Just because the current disaster isn’t happening in your backyard, don’t think it can’t happen to you.

As we know, natural disasters occur in every part of the country. While this has been a surprisingly benign year for hurricanes, earlier this month tropical storm Erin slammed into Texas. In fact, since January, President Bush has declared 57 regions “disaster areas,” predominantly because of severe storms and flooding.

While they’ve always been prevalent in the Midwest, tornadoes seem to be getting more common in the Northeast. And, as we head into the winter, we should remind ourselves that in the first quarter of 2007 nine areas were declared “disasters” due to severe snowstorms.

All of these weather-related conditions knocked out power, closed roads, shut down stores and businesses, and seriously disrupted people’s lives. In some cases, they took them.

In case you didn’t notice, last month was “National Preparedness Month.” The Red Cross and other emergency and governmental organizations ran a major campaign urging us to “Be Red Cross Ready” just in case.

This isn’t complicated or expensive. It involves 1) assembling a disaster supplies kit, 2) making a plan, and 3) being informed. Details can be found on the American Red Cross Web site at http://www.redcross.org/services/prepare/0,1082,0_239_,00.html.

You’d think after 9/11 all of us would have rushed to do this, but a recent poll conducted by the American Red Cross found that only 28% of us have put together a disaster supplies kit. Yet, among families that have done so, 90% feel prepared.

Your “kit” can be as simple as a backpack, and should include food and water for your family and pets for at least three days. You’ll also want to include first aid supplies and any medications that need to be taken daily. Toss in a flashlight, batteries and radio.

CPA Michael Eisenberg, who lives in the Los Angeles area, tells every client to have “a couple of hundred dollars” in their disaster kit because if the power goes down, ATMs won’t be working and banks might be closed. If you’re displaced form your home, you’ll need cash to pay for a hotel, food, and possibly clothing. If you find yourself without adequate cash, Eisenberg suggests contacting your employer and asking for an advance on your salary.

Coping with the immediate effects of a disaster or emergency is just the beginning. When the fire trucks drive away or the rescue teams pack it in, the reality of what’s been taken from you can be overwhelming.

Eisenberg recommends your disaster kit include passports for all family members, copies of birth certificates and a list of your credit card and bank accounts. The American Red Cross Web site offers a comprehensive list of financial and other documents you should have ready in the event you need to evacuate, such as copies of health insurance cards, immunization records, child custody and divorce papers, and retirement account statements. Go to www.redcross.org and type “Protecting Your Records” into the search box. You’ll also find suggestions as to what should be stored in a safe deposit box.

“Making a plan” simply involves coming up with a way to communicate with loved ones if you are separated by a disaster. As Eisenberg says, “Houses can be replaced.” Come up with a phone “tree” so that others can spread the word that you are OK, or not. Decide where family members will meet up if you are not together when an emergency occurs. Don’t forget to let your employer know you’re OK.

“Being informed” essentially means not thinking: “A disaster can’t happen to me.” Whether it’s torrential rain, a tornado, a massive snowstorm, ocean or river flooding, or terrorists who despise our freedoms and our lifestyle, no place is immune.

Come to think of it, the Boy & Girl Scouts have it right: “Be Prepared.”

Hope this helps,
Gail

If you have a question for Gail Buckner and the Your $ Matters column, send them to: yourmoneymatters@gmail.com , along with your name and phone number.