We apologize for forgetting to put “giant hurricane at high tide with storm surge” in our list of reasons you need an emergency fund. Our bad.
This week, as Sandy hit the East Coast hard, hundreds of thousands of people learned firsthand what it’s like to live through a natural disaster, financially and emotionally. We sincerely hope, that like us at the LearnVest office, you emerged from the storm unscathed.
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But with inclement weather seemingly on the rise—and politicians strangely mum about climate change—we not only walk you through the three steps you need to take to prepare before disaster strikes, we’ve got true tales from two survivors who relate the most poignant money lesson Sandy taught them.
Read and learn …
“Always read the fine print.” – Gail Lowenstein
My husband and I live on Long Island, which was really hard-hit by tropical storm Sandy.
I got home around 4:30 p.m., and within a half hour of being home, a tree fell on a part of the house that, luckily, we’re not using; it used to be my son’s room, but he’s grown up and has moved out. The first thing I heard was the house alarm going off. Luckily, my husband was home too, or I would have been more scared.
Basically, we looked up at the sky and saw a tree coming straight toward us.
It seemed like slow motion, and my husband and I watched in awe and fascination as it happened—you never think something like this is going to happen to you.
Suddenly, the tree was in middle of the room, and the bathroom next to my son’s room had caved in, too. Now it was raining in our house—just water pouring in. We went and got every garbage pail we could find and put it under where the rain was falling. And of course we had no power … no one did, so we had to do all of this in the dark.
We tried to just take it in stride. In fact, I actually feel lucky, for a few different reasons: No one was hurt, we were able to sleep in our bedroom that night, and I feel, in a spiritual way, that we somehow took the fall for our son. The tree fell on what had been his room. He lives in Long Island, too, not far from us, and he’s working and going to school. If his house were impacted, instead, it would have been a tremendous strain on him.
The damage from the storm—physically and financially—was significant. That wasn’t the only tree that fell, there were eight others from our property down. I called our handyman and said: “Could you somehow get a tarp up so we don’t drown the house?”
He said, “The wind is blowing so hard, I’ll get blown off the roof.” So we kept emptying the pails as they filled up with water. By then, the water damage had extended into the next room.
Hopefully insurance will pay for a lot of this. We do have homeowner’s insurance, and when I called the insurance company, I realized we’d had a real stroke of luck: Because the storm had been downgraded to a tropical storm, our deductible was only $2,500. If it had been classified as an actual hurricane, it would have been $25,000.
RELATED: How Much Home Insurance Is Enough?
Removing the tree on our house alone is going to cost $17,000, plus another $10,000 for the additional ones that fell on our property. I’ll also need a new roof on that part of the house. All that compared to the few hundred dollars a month we pay for the coverage.
Like I said, you never think it’s going to happen to you, so I don’t know that you can exactly plan for these things—but I would suggest reading the fine print in your policies. In my case, I just followed what the insurance company told me to do, and luckily, this time, it worked out.
“I wish I had saved a full emergency fund—because this is one.” – Amanda Veinott
When I graduated from college two and a half years ago, I had $50,000 in student loans. I moved home with my family in South Plainfield, New Jersey, and created a spreadsheet that I taped to the wall with a timeline for when I would pay off my $25,000 in federal loans. My goal was October 2012.
I steadily chipped away at them, and I sent in my final payment on October 22nd for $1,200. It felt fantastic! But it was at the expense of my emergency fund, which only had $3,500 in it to begin with. I took $1,000 out of it to pay off the loan, justifying it by telling myself I’m fortunate I don’t have a large chunk of my income going to rent, so I’d be OK without it. Now I’m kicking myself in the butt.
When Hurricane Sandy was bearing down on us, we anticipated being without power for at least 72 hours, but I didn’t anticipate the full extent of the damage. I was definitely nervous during the storm. With 85-mile-per-hour wind gusts, the house was shaking. Trees and power lines were coming down all through our neighborhood.
After the hurricane, I found out that NJ Transit to Manhattan is down from flooding, which means I have no way to get to my job. Because I just transitioned to PTOC (part time on call) two days before the storm hit, I’m feeling a little lost right now. I didn’t make the move expecting something like this to happen! Now I don’t get paid when I don’t work.
We and other people in our neighborhood have started siphoning gas from our cars to fuel our generators, and all the gas stations in this area are either out of gas or they don’t have electricity to pump it, and the ones that are open have a mile to two-mile lines. So I can’t drive into the city either. They don’t even know when the train will be back up–it will take at least a week.
And now I have just $2,500 in my savings account. I am beginning to think I shouldn’t have worried so much about paying off my loans and instead saved six months of my living expenses so I’d have a true emergency fund. This is one—it just didn’t figure into my plans.
Just last month, when I went to LearnVest LIVE, Alexa introduced Becca Wildsmith, whose emergency fund allowed her to deal with getting a cancer diagnosis. When this happened to me, just weeks later, I thought of her, because this hurricane drove home that you really don’t ever know what to expect.
Image Credit: Flickr.com/kate.gardiner