After the devastating Superstorm Sandy rocked the east coast, many people are first feeling the financial effects of such a horrific natural disaster like never before.
The destruction of property and the loss of power all lead people to spend more money than initially in their budgets. If not properly prepared for a storm or predicted disaster, being unprepared can lead a person straight onto a path to serious financial struggles.
With around 900,000 people on Long Island still without power, many are starting to feel the financial effects of Hurricane Sandy on their pocketbooks. In hindsight, many people realize, that although it may be costly, being prepared for a storm pays off. The financial exposure to prepare with food, water and a generator in case of a natural disaster can help you avoid many additional expenses after the storm is long gone.
If not prepared you may find that without power and limited stores open for food, and no gas that the cost of lodging, food, gas and even entertainment is beyond what you expected and what you pay. Because of the scarcity of these things and the high demand, you may find yourself paying top dollar for simple things such as water, coffee and gasoline with the added requirement of cash only. Both the pre-planning and post measures of a storm can hurt one’s wallet if the person has not been preparing with an emergency fund.
So here is what we advise our clients to do not only to prepare for natural disasters but to cope through the rebuilding process:
Prepare with an emergency fund. This is cash put away for that rainy day. Just a few bucks a week over the course of time can build up to a nice amount which can hold you over until things get back on track. Cash on hand may be necessary and having some available to get through the days after the storm is a necessity.
Review your homeowner's or renters policies once a year with your agent to insure that you have coverage for your house or property if damaged in a storm. This is one area you do not want to skimp on. If you are not adequately covered by insurance, you may find yourself paying out of pocket for the damages and repairs that must be made at the time of loss. Even if you have insurance you may find that you need to pay out of pocket and then get reimbursed which can take some time. It is advisable not only to have that emergency fund for these circumstances but ask your agent how long the insurance co generally takes to pay out claims. There may be delays for federal relief too so do not rely on the fact that a governmental agency will pay for damages at the moment repairs need to be made.
Cash on hand and an emergency fund can cover you during these difficult recovery days. If you work an hourly position or your business is closed you may find yourself out of work for a few days while towns restore power and order. This may put your income below what you planned for the month and leave you short to pay regular bills let alone new bills from damage to property. This easily can lead you deeper into debt, after spending more than you planned (before and after the storm) as well as taking in less than you expected for your pay period. Budget ahead of time and be prepared.
Talk to your creditors and ask for extensions of time to pay and waivers of fees for late payments. Don't ignore your creditors during recovery times. Many people avoid preparing because they think the news media is hyping up the disaster. This can be an unwise move if those predictions pan out or are off as in the case of Sandy. Review disaster plans like on FEMA.org or American Red Cross for planning preparedness. This is no different than ignoring evacuations warnings and those who did are learning the hard way by waiting now in long lines for gas and dealing with the frenzy caused by short supplies on necessities.
Always remember that there are shelters and resources for people to use who have been affected by the storm. These shelters are free and open to the public and should be utilized if you house was affected by the storm. Going to a shelter for a few days is a much more financially responsible decision than buying hotel rooms for your family for a few days. Reach out to family and friends and make a plan on where you might go should you lose power or need to leave your home.