Lesson 1: Preparation
It isn't good enough to just have an insurance policy to protect against disaster. Much of the devastation can be mitigated by some good advanced planning. While we know about common preparations like food, and water and knowing evacuation routes, here are some financial tips to help you in advance of a disaster:
A. Know your coverage: Take time to review your insurance policy coverage so that you know what you are covered for. Does your insurance policy include flooding? Will your policy cover the replacement value (value of comparable item new) of lost items or fair market value (current value of used items)?
B. Documentation: Do you have photos of your items to document their condition for an insurance claim? You may want to consider uploading these photos to the cloud or other internet storage location to access after an event.
C. Organization: If you should need to evacuate, do you have important papers with you? Beyond your insurance documents, you may want to organize your birth certificates, Social Security cards, and other vital records to go with you. Bank On Hampton Roads has a checklist that might be a great tool to get started.
D. Communication: Discuss with family members where you plan to evacuate to in the event of a disaster and identify a key point of contact that does not live in your local area. You may have a family member or good friend who could serve as a key contact in the event that people need to know where to find you or update friends and family after an evacuation. Communication with one person will minimize the drain to cell batteries and communications may be spotty after a disaster. Your friends and family will want to know you are safe and secure after an event.
E. Protect your stuff: Think about how you might store your valued items that can't evacuate with you to protect them from damage. If flooding is a potential, you may want to move items to a second floor to protect them. You may also wrap items with plastic to minimize water damage. Ahead of a disaster, it may be difficult to anticipate what will impact you most (wind, trees, loss of utilities, or water) but better to protect as much as possible.
F. Have an emergency fund: This is a great reason to have a stash of cash. Not only will you need funds during an evacuation, but the recovery process may mean time away from work and extra expenditures you may not have anticipated. Even with a fantastic insurance policy, there will be deductibles to cover if you need to file a claim. Also, in the aftermath of a storm, you may find that ATM's may be unavailable and some services may go to a cash only system if power is interrupted.
Lesson 2: Getting out of harm's way
A. Know when to leave: If your city management is giving you an evacuation recommendation, it is better to heed that evacuation and find out you were safe than to not leave and life through the devastation. No one can replace you; your stuff is secondary.
B. Communicate your plans: Let your neighbors, family and friends know you are leaving and where they may be able to reach you. If you have a disaster point of contact established let them know who is the primary contact.
C. Plan for a period away: Once evacuated it may be several days or a week or more before you may be able to safely return. Plan to take items you need for a period of time. This will include medicines, food supplies, bedding, children's activities and pet supplies. Your emergency fund will be a great help if you need to stay in a hotel and eat in restaurants for a few days.
Lesson 3: Return to normal
Returning to normal may be more of a process than an immediate action. Depending on the damage encountered, recovery can take from a day or two to a year or two. You may be living with an altered normal state for an extended period of time as you get back on your feet.
A. Inventory damage: As you return to your home after a disaster, you will want to begin to inventory the damage and file insurance claims. Your photos will be a help for you. You want to develop as complete a list as possible as you file your insurance claim. If your damage is less than the deductible, you may need to bear that cost alone.
B. FEMA: If the area is declared a disaster area, FEMA funds may be released to help restore normalcy. There will be FEMA stations set up; check your news or FEMA website to learn where you can speak to a FEMA representative to explore your options.
C. IRS: There may be some losses may reduce your tax liability with the IRS and the IRS may offer extensions for filing taxes for certain disasters. IRS has a Disaster Assistance page to give you general information about help you may receive.
C. Other resources: During the recovery phase of a disaster is where the community really comes together. Neighbors offer assistance to neighbors, but additional resources from non-profits, churches and public resources may be needed to get back on your feet. Bank On Hampton Roads' Resource Guide is a great place to start as you search for community resources to help you recover.
We never want to see our fellow Americans suffer disaster, but when disaster strikes we can learn lessons from people who have been there and avoid losses in future disasters. In the meantime, if you would like to help victims of Hurricane Harvey, consider making a financial contribution to American Red Cross' fund for relief for people in the wake of this devastating storm.
Over the last few years we have heard reports of many companies being hacked. Here is just a short list of a few that might have touched your life:
- Cox Communications
- JP Morgan Chase
- TD Ameritrade
- US Department of Veterans Affairs
- Virginia Department of Health
These hacks make us more and more vulnerable to identity theft.
If you want to have greater protection for your identity, here is some good news: on May 24, 2018, President Trump signed the Economic Growth, Regulatory Relief and Consumer Protection Act into law. This law enables you to request a free credit freeze for anyone requesting one after September 21, 2018.
Credit freezes protect identity thieves from opening up an account in your name. Credit freezes prevent a credit reporting bureau from releasing your credit information to a third party, so new accounts cannot be opened without you taking a positive action to release the freeze. Currently, state laws govern the establishment of a credit freeze and it can cost up to $10 for each credit reporting bureau to. This new law makes freezing and unfreezing your credit free.
To learn more about these new protection visit www.ftc.gov and search for "credit freeze". Protecting your good name will soon be free!
Do you spend weeks eagerly anticipating your tax refund? When the money finally comes in, is it gone tomorrow? Many people view tax refunds as unplanned bonuses, using for splurges or treats. A tax refund provides the opportunity to improve your financial situation. Use these tips to get the most value from your refund check.
• Pursue financial goals. Saving for a house or car down payment? Apply your tax refund toward these goals. With Bank On Hampton Roads, you can establish SMART goals to speed your progress. Bank On has monthly classes to help you with your financial makeover. 10-Month class series begins January, April or September. Learn more at www.bankonhr.org
• Pay down your debt. Use your refund for some much needed debt relief. Pay down credit card balances. Your refund paired with a debt snowball can knock years off your indebtedness. To get started on a debt snowball, you can visit www.powerpay.org.
• Save for a rainy day. Put your refund into a savings account or emergency fund to prepare for big expenses. Savings helps you with a major car repair bill, medical emergency or other unexpected expenses. Virginia Saves offers a variety of savings and debt reduction strategies. Join today at www.virginiasaves.org
• Build retirement. Tax time is a great time to establish or increase your retirement funds. Starting early and letting your investment grow can provide you a secure future in your older years. Find out how much you need to save each month, check out the Ballpark Estimate at www.choosetosave.org/ballpark
• Enjoy. Apply your refund to pay for your vacation, back to school or holiday expenses to take the stress out of those irregular expenses that can throw your budget off course. We all have things we enjoy. Use Virginia Saves’ 30-40-30 plan to earmark a portion for pleasure while still saving and reducing debt. Learn more at www.virginiasaves.org.
• Upgrade your life. Your refund check provides the opportunity to improve your life. Spruce up your home (replace the siding, stain the deck, etc.). Repair or replace your car to increase your transportation reliability. Improve your career opportunities by taking a class or training course.
• Train your children. Use your refund to teach your older children to handle money. Allow them to manage a portion of the refund, teaching them to budget for school, clothing and entertainment expenses as well as the importance of savings. Our children depend on our instruction to prepare them for life’s choices. Begin now.
• Leave a legacy. Use your refund to offer hope and encouragement to others by making a charitable contribution to a non-profit. Investing in the lives of others can offer them a helping hand at a crucial moment in their lives and can also provide you a charitable deduction to reduce your taxes next year.