Wake Up Before A Shake-up
Jun 1, 2021
HOW TO PREVENT FINANCIAL RUIN WHEN A NATURAL DISASTER STRIKES
Now all too common, natural disasters have been wreaking financial havoc around the world. Just one catastrophe could wipe out everything you own, including your dreams. The COVID-19 pandemic of 2020 was a natural disaster that disrupted our entire economy, derailed careers and caused financial ruin. When a disaster strikes, it is critical that you be in a position to mitigate the damage. Advance preparation can protect your possessions, accounts and plans from whatever might happen next.
REVIEW ALL YOUR INSURANCE POLICIES
Reviewing your insurance coverages should be part of your annual financial checkup. If you've missed it, or some recent life changes have affected your insurance needs, the time to update each policy is now. Check that you've covered new children, a new home, a new car or even new personal property such as jewelry or an electric bike. You may need to update your life insurance coverage to reflect changes in income. Honda FCU has partnered with CUNA Mutual Group, a trusted advisor, to offer services that help you review your life, accidental death, auto and home policies. Now, more than ever, it’s time to protect what's yours.
A STRONG DEFENSE: EMERGENCY SAVINGS
Your emergency account should be separate from regular accounts so it will be there when you need it. However, keep it liquid so that you can withdraw the funds easily when you do need them. While some savings certificates offer higher interest rates, when it comes to emergency savings, you should be able to access the money without incurring a fee or loss. A regular savings account is the wise choice for many people To start and then transition into a money market account which earns a higher interest rate. The minimum balance for a regular savings is only $5, and Honda FCU does not charge any monthly fees.
Honda FCU's automated Payroll Deduction Program lets you deposit part of each paycheck directly into an emergency account. Don't get caught cash-strapped in an emergency. The time to prepare is before the earth starts shaking. Make it easier to stretch your pay by reducing a few regular expenses.
STRENGTHEN YOUR HOME AGAINST DISASTERS
Smart homeowners budget year-round for disaster preparation, which could mean a fire-retardant roof or anchored bookcases, depending on your location. Along the Atlantic and Southern Coast states, June marks the start of hurricane season. It's best to prepare early for hurricanes with some simple steps to strengthen your home against extreme weather damage. Make sure your home is maintained to local hurricane building codes, which is available online. Your garage door is especially vulnerable to high winds, so get it inspected and retrofitted. The costs involved in retrofitting your home are more manageable when spread out as part of your monthly budget throughout the year. For many, adding to a tight budget is a challenge, but it’s definitely less expensive to retrofit than to repair damage later. So every year, inspect your home for hazards, assess your vulnerability and proximity to known danger zones, create a plan and budget, and then work on eliminating all hazards, according to your budget. The National Safety Council offers additional tips for preparing your home before a disaster strikes.
BUILD A NEST EGG
The day may arrive when you can’t access your bank accounts, perhaps due to a local or large-scale event. Whatever the reason, prepare for that day by hiding away a cash fund at home for emergency expenses. Keep this money in addition to your emergency savings in a bank. Bank savings help with job losses and unexpected expenses. Cash stored at home is to be used only when you need survival funds. You’ll be relieved you have funds for food, clothing, medicine and shelter when you need them.
Tuck funds away in a file drawer, hidden fireproof safe or some other safe and secure location. Keep this information private. Depending on your family size, location and needs, you should store somewhere between $1,000 and $2,000—enough to cover emergency expenses for a few days. Make it painless by starting small—a few hundred dollars will suffice.
PREPARE YOUR "VIPS"
Save yourself some headaches if you must leave home by storing all your "VIPs" (Very Important Papers) in a single ready-to-go location. Proof of insurance, passports, birth and adoption certificates, marriage and divorce certificates, homeownership documents and more—all are Important. It also helps to keep a list of important phone numbers in case you lose your phone. Some people also store copies of these documents in another secure location, such as a safe deposit box. Honda FCU offers inexpensive rentals on safe deposit boxes in some locations. If boxes aren't available, consider purchasing a fireproof home safe. NOTE: Your keys to the safe deposit box or your home safe should be kept in a separate place for security, yet easily accessible in case of fire.
PAY OFF DEBTS. KEEP DEBTS LOW
The pandemic brought to light how perilously close many Americans are to financial ruin. The work treadmill might stop, but for many, debts continue to mount. Even if you're not using a card, overdue fees, late fees, interest—they all add up. Avoid this situation in the future by lowering debts as much as possible before a crisis. During an emergency, you may not be able to secure a loan if you are furloughed or laid off, as banks look at your debt-to-income ratio. During a crisis, limit using your credit card or taking on a loan. Both could haunt you later.
CONSIDER THE IMPACT OF A NATURAL DISASTER ON YOUR JOB AND INCOME
The year 2020 taught a harsh lesson to workers across the nation. Job losses and furloughs resulting from the pandemic were all too common. Families unprepared for job fluctuations suffered the most and risked losing everything, including their homes. When setting up your savings and insurance needs, a good idea is to plan for the best but remember the worst. Don't allow a natural disaster to threaten the results of all of your hard work and dreams. So while saving, set aside a little more each paycheck for a disaster fund. Talk with your insurance advisor about adequate coverage for various situations. And talk with your family about a "Plan B" to lessen panic if your job does go away. The IRS can provide some disaster relief and helpful information.