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Advice & More December 2015

Dollar Sense

Prepare Your Finances for Disaster with an Emergency Kit

By Teresa Ambord

Let’s say a flood hit your town. Don’t count on being able to get to your bank or ATM for cash or vital documents you may have in your safe deposit box. The bank may not be in any better shape than you are. If stores are able to open, they may not be able to take anything but cash. So have some cash on hand, but don’t overdo it.


In a time when one natural disaster (and some manmade) seems to follow close on the heels of the last one, most of us have learned to be prepared for emergencies. You might have some bottled water, a flashlight with extra batteries, some thermal blankets and nonperishable food put away. But one area most people do not think of is, getting their financial ducks in a row. Of course, it’s always good to cross every T when it comes to finances, but as winter weather rolls in and the chance of aggressive storms and other disasters increasing, it may be even more important than ever to create an emergency kit for your finances. Here are some things to consider.


Cash and Important Documents

Let’s say a flood hit your town. Don’t count on being able to get to your bank or ATM for cash or vital documents you may have in your safe deposit box. The bank may not be in any better shape than you are. If stores are able to open, they may not be able to take anything but cash. So have some cash on hand, but don’t overdo it. After all, if cash is destroyed in a fire or flood, it’s just plain gone. Have enough that you could stay in a motel for a few days if necessary, and to buy food, gas, and other essentials.

Where to Stash It? That’s something only you can answer, but experts do say where you should NOT keep it. Don’t bury it in a can in the backyard, like Grandpa did. If the elements get to it, it can deteriorate and be worthless. Don’t hide it in your freezer. Even well-disguised as a pound of ground beef, thieves know to go right to the fridge to hunt for treasure. But perhaps the worst place to hide money is in your master bedroom, especially your dresser drawers. That’s most likely the first place a thief will look.

Find a place that you can access quickly if you had to grab it and run. How about a portable fireproof box? This is a great place to store documents that are important, which you might need in a hurry. The Federal Deposit Insurance Corporation (FDIC) recommends having one, for items such as insurance policies, powers of attorney forms, your passport. And some emergency cash. You can buy a small one at Walmart for about $30. Make sure to find a hiding place that is not a natural place for thieves to look, but a place where you can grab it quickly. What you should not do is look online for recommendations of a safe place to hide your box. After all, thieves can and do look online to find out safe places so they can enhance their robbery techniques.


Emergency Fund

Open an emergency fund at your bank, with enough money to cover your critical needs for a few months if necessary. This should not be an investment account. An investment account isn’t always liquid, and is probably subject to the whims of the stock market. Even if your damages are covered by insurance or federal aid, history has shown it can take time to get those funds. Meanwhile, your life and expenses continue.

Overuse of credit cards is never advisable, but do have some breathing room on a credit card which you reserve for emergencies.


Safe Deposit Box

A safe deposit box at your bank may also be useful, for documents which are difficult or impossible to replace. For example, original property deeds, military records, birth certificates. Also, expensive jewelry that you rarely wear is more secure in a safe deposit box (and be sure to include it on your insurance). And, it’s a good idea to include in your safe deposit box an inventory of your major household items, in case you need to file an insurance claim. However, don’t put cash in there. Your bank accounts are covered (up to a point) by the FDIC, if your bank goes under. But the contents of your safe deposit box are not. And don’t put anything in there that you might need at a time when the bank is closed. Better to put those items in your portable fireproof box.


Insurance Tune-up

With a new year beginning, it’s a good time to review your insurance policies. Do you know what your deductibles are? What’s covered and what isn’t? If your home was destroyed, is your coverage enough to replace it, or just enough to reimburse you for the original purchase price? If you bought the house decades ago, chances are the original purchase price wouldn’t compare to what it would take to build a new home. Are recent purchases covered, such as artwork or valuable jewelry and expensive electronics? Don’t find out the hard way. Better to talk to your agent now about adjusting your coverage.


Scammers Love a Good Disaster

On one coast, South Carolina and surrounding areas have been pounded by floods recently. At the same time, drought-stricken California was set ablaze, with wildfires dotting the state. In between, there have been more than enough woes to go around, whether courtesy of Mother Nature or humans. Whatever the cause, the unscrupulous among us love a good disaster. That’s why the Federal Trade Commission is warning consumers to be alert.

Here are some ways the FTC says to arm yourself:

  • Be skeptical of anyone who shows up or calls, offering immediate clean-up of a mess (such as the aftermath of a flood or fire). Hiring someone without skills, a license, and the proper insurance won’t save you time or money. If fact, hiring an unqualified person may leave you in worse shape than you already are.

  • Don’t permit anyone to enter your home or business without showing you proper ID. Check them out with your state and local consumer protection officials. Take a look at the vehicle these people arrive in. Does the vehicle have signage on it with local contact numbers? Possibly a contractor’s license number? Speaking of signs, be aware that anybody can have a magnetic sign made and slap it on a van

    Don’t rely on a sign like that to vouch for the validity of someone who knocks on your door. If you suspect fraud, don’t hesitate to call the police.

  • Even if you have reason to believe a worker is a licensed contractor, ask to see his/her current license and certificate of insurance. If the person tells you the work will be covered by your insurance, call your insurance agent to confirm this before making an agreement.

  • Pay with a credit card or check. If the contractor asks for a deposit or full payment in cash, refuse. Even if the person claims to need the money to buy materials, if you pay upfront, there’s a good chance you’ll never see him or her again.

Also be aware that disasters cause fraudulent charities to pop up. Fraudsters may call, asking you to donate to a cause, such as to help victims of a well-publicized flood. The disaster might have been halfway across the world, or in your own town. Ask the caller to send you written material and inform him or her that if you like what you read and you are so inclined, you will send a check. Then check out the charity yourself.

Finally, when a flood happens, such as the ones that plagued South Carolina, or the vast mudslides in southern California in October, many cars are seriously damaged. Fraudsters have been known to buy those cars for pennies on the dollar, clean them up, and sell them to unsuspecting buyers. If you’re offered a too-good-to-be-true car deal, don’t make a move until your trusted mechanic has thoroughly checked it out.


Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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