Sep 7, 201712:38 PMFinancial Perspectives
with Michael Dubis, CFP
Prepping doesn’t mean ‘end of world’; it means being prepared for Harvey-like events
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The clean up from Hurricane Harvey has just begun. In addition to the tragic loss of life (35 known dead), initial estimates suggest it could be one of if not the costliest natural disaster in U.S. history.
The hurricane and following rainstorms displaced thousands of people. CNN Money reported that 70% of damaged homes are not covered by insurance. Warren Buffett recently said that there would be a lot of uninsured losses, meaning real loss of wealth. (As an aside, ignore the Neanderthal economists that talk about how this hurricane will be good for the economy. Disaster is never good for anything, including the economy.)
This will have wide scale lasting impacts for years, and likely for many victims a lifetime of trying to recover as individuals. If you wish to donate to relief efforts, be smart about where you give your money and be wary of scams.
Here are some direct options to donate:
JJ Watt Houston Flood Relief Fund: https://www.youcaring.com/victimsofhurricaneharvey-915053
The United Way of Greater Houston: www.unitedwayhouston.org
The New York Times also produced this article to help you know where to go with donations: https://www.nytimes.com/2017/08/28/us/donate-harvey-charities-scams.html?mcubz=0
If you want to consider tax deduction options on donations, consult with your tax advisor before making a donation.
Planning is a good discipline. In financial planning, we traditionally plan for such things as cash flow, insurance, taxes, estate, retirement, and investments. Harvey reminds us that planning probably shouldn’t stop there. There are lessons we can learn, if we haven’t already, from such disasters.
For example, take the idea of “prepping” seriously. Prepping often comes with the stereotype of “ground-level chaos” or someone living in the backwoods expecting the world to come to an end. Pragmatic prepping, though, is not preparing for the end of the world. It’s pragmatically thinking through what you would do in the lower probability but very high impact event of something like a natural disaster.
Here are some suggestions that make pragmatic sense, especially in Wisconsin.
- Write out a game plan of where you would go, who you would rely on, and how you would access information for the event of the following (and make sure everyone in the family understands the plan):
- A flood. Rivers flood here all the time.
- A tornado.
- An ice or rainstorm knocking out power for a few days — or a week or more.
- Store enough dry food and transportable water in seven gallon or smaller containers to cover at least two to three days of no power if you’re staying home. If you need to move beyond two to three days you should probably leave your home and go elsewhere.
- Keep a back-up power supply for your phone. Phone service could be out — even wireless — so also consider a NOAA solar powered or crank weather radio.
- You can never have enough flashlights. Don’t forget to tape the batteries next to or attached to the flashlight. You can never have enough spare batteries. Always have one flashlight with batteries in it. However, keeping batteries in all flashlights is simply going to result in a bunch of dead battery holders.
- Always keep your gas tanks at least half full. Keep a five to 10 gallon gas tank at home, as well.
- Regularly back up your computer or use cloud-based storage.
- Put together a bug-out bag. In prepper language, that might mean an emergency pack to take with you to the woods in the event a hasty escape is necessary because of ground-level combat. That’s not what I’m saying! If an emergency is so bad you have to head for the hills, well, that requires a different training and mindset beyond the point of this article and way beyond my pay grade. A pragmatic bug-out bag is probably not a bag at all. Instead it’s a transportable storage container for each person in your household that you can easily throw in your car or store somewhere in the house where you can readily get access to it. If you actually had to traverse on foot, then you would want a large backpack, but make sure the important stuff in the bag or box is sealed in a waterproof container.
- Kids food and water for a day or two to get you where you need to go.
- Your food and water for a day or two.
- Your back-up power for your phones.
- A camping water filter system.
- Extra clothes.
- Blankets. Wool is ideal. Jackets and raingear. Winter gear during winter.
- Copies of your most important documents like license, passport, estate plan, ownership, insurance policies, password access to back-up drives (or use a password vault and memorize your one password).
- Spare set of keys.
- First aid kit.
- Hand sanitizer.
- Flashlights with extra batteries.
- Crank power charger.
- Emergency radio. Keep the NOAA radio you bought above in here.
- Cash, in small bills.
- Paper and pens.
- In the event of a chemical or air-quality emergency, if you’re in proximity to such a place, carry N95 facemasks for the family, as well.
- Hard copy contact and emergency list. If your phone is dead, your information is dead. Print out a copy of maps and key contacts and emergency information.
- Keep it in a dry area (preferably sealed container) in the basement in the event a tornado hits and you need to access the bag following the tornado, but also have it ready to go out the door quickly if needed.
- Put copies of all your important documents online to a secure vault like Dropbox, Box, or LastPass, among others. You could also password protect email it to yourself.
- Generator. Now things are starting to get a little expensive. Generators run from as low as a few hundred dollars for gasoline-powered models that will offer limited power, to thousands for a full home model. A lower cost gas-powered generator makes the minimal sense for one to two days. If you have a long-term outage, buying the more expensive home generator would have been a good use of money and possibly paid for itself in just one disaster considering loss of food, possible loss of water, loss of power power, or in the winter, keeping the home warm to avoid bursting pipes, not to mention peace of mind.
- Make sure you have proper insurance for the event of a natural disaster. If you’re a small business owner, what’s your insurance plan for a disaster to your business? Talk to your agent about the benefits of this coverage. For example, most people do not have flood insurance. The National Flood Insurance Program historically does not pay out 100% of replacement costs for homeowners while premiums are very high. Build up the emergency fund to gap where your insurance may not cover you.
This is not an exhaustive list. There are numerous websites out there to add to this list. Many of them are end-of-the-world focused and they are beyond my capacities, but there are a lot of good sources out there that are pragmatic and helpful.
For example, this website seems practical and from credible writers: http://thesweethome.com/reviews/emergency-preparedness/.
(Disclaimer: This and any referenced site is not an endorsement. Michael A. Dubis Financial Planning LLC does not guarantee the relevancy, appropriateness, or accuracy of any outside information or links. The information in this blog is based on data gathered from what are believed to be reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended as the primary basis for investment or financial planning decisions.)
In the event you are interested in learning about a large-scale worldwide disaster, such as an EMP, pick up Ted Koppel’s credible and well researched book Lights Out to better understand the “worst case” scenarios society might face.
Life happens. Emergencies happen with little or no notice. Like all planning, being pragmatic and mindful that these things can and do happen will make these low probability but high impact events a lot more bearable and manageable.