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In the Face of Disaster - Financial Considerations before Disaster Strikes · Talking FACS

• 0:01
  Welcome to Talking Facts.
• 0:03
  What you need to know about family food finance and fitness.
• 0:07
  This nationally recognized award winning podcast is hosted by the University of Kentucky Family and Consumer Sciences Extension Program.
• 0:16
  Our educators share research knowledge with individuals,
• 0:19
  families and communities to improve quality of life.
• 0:24
  Hello and welcome to Talking Facts.
• 0:26
  What you need to know about family food finance and fitness.
• 0:30
  I am your host,
• 0:31
  Mindy mcculley Extension Specialist for instructional support at the University of Kentucky.
• 0:37
  When natural disaster strikes,
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  it not only impacts our own family but often entire neighborhoods or communities in the face of disaster.
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  A disaster preparedness and response program presented by Family and Consumer Sciences Extension at the University of Kentucky seeks to give families the resources they need to prepare for a natural disaster before it occurs and rebound in the aftermath.
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  My guest today is Kelly May Extension Associate for family finance and resource management.
• 1:09
  Welcome,
• 1:10
  Kelly.
• 1:11
  Thanks for having me nay.
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  Before a natural disaster occurs.
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  If we have made financial preparations,
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  we are gonna be in a better situation to deal with that disaster than if we have not made those financial plans.
• 1:28
  So your topic today is financial considerations before a natural disaster.
• 1:35
  That's right.
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  I know a lot of times when we prepare for a natural disaster in our minds,
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  we think emergency kit and planning exit routes and locating flashlights and those things are,
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  are very important too,
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  but we often don't think about our money and how we're going to access our money if that situation arises.
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  So,
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  what do we really need to think about?
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  First of all,
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  you know,
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  we,
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  as you mentioned,
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  we need to think about,
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  of course,
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  those emergency kits and we are gonna talk about on this series,
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  the water and the food and thinking about our mental health,
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  we really want to talk about that emergency savings fund.
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  So what do we need to have in our emergency savings fund to ensure that we are ready?
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  Should a disaster strike?
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  Right.
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  Ideally,
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  you want to have 3 to 6 months worth of your living expenses and it can be anywhere in that range.
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  So that gives you an idea of how much you need.
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  And if that sounds like a lot,
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  just say what you can,
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  any amount would be helpful if,
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  if the need arises.
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  Uh but your living expenses are your critical needs.
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  This is your housing,
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  your food,
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  your monthly bills,
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  your medicine and health care costs,
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  the things you have to have to live,
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  the things you cannot live without.
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  Now.
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  You can not include your noncritical expenses in your emergency fund.
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  So like,
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  you know,
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  if the power is out,
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  you don't need to have a Netflix bill,
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  you can cancel that one.
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  So there's entertainment vacations,
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  non-essential shopping,
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  those sorts of things you don't have to include.
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  However,
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  the more you save,
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  the better prepared you'll be if you need that saving.
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  So think about a month's worth of those critical needs and multiply that by either three or six or something in between and that's your savings goal and you want to put that in a separate account and one that you can access in a hurry.
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  So ideally,
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  it'll be some account with interest.
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  So maybe a high yield savings and look for no monthly fees and no minimum balance and no extra deposit requirements.
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  So you just want it to be an account that can sit there.
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  Hopefully you never need it.
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  Uh,
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  but it'll be there for you if you do and you don't want to have a lot of fees on that account.
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  So definitely not a certificate of deposit that has a penalty if you have to take it out early because you don't know when that right,
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  natural disaster might occur.
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  And with regard to those entertainment accounts,
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  if you don't have access to your online services,
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  you might need to have phone numbers available that you can go to,
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  to cancel those.
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  So just keep a list of those.
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  Right.
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  Right.
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  That's it.
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  We'll come back to that in a minute when we talk about documents,
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  but when we prepare our savings,
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  it can help to have a budget.
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  So uh a monthly budget will help you determine how much income you have and how many expenses you have.
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  And of course,
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  when your income outweighs your expenses,
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  you have the opportunity to control your money.
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  Um so you can uh help yourself to save that money by doing what we call paying yourself first.
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  So if you send an automatic payment to go into that emergency savings account,
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  either as part of your payroll deduction or through your bank or credit union,
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  you will be well on your way to having that savings when you need it.
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  And one more thing I wanna mention about money is cash.
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  I know it's a digital age we live in and we don't think about having cash on hand.
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  But if that emergency situation strikes,
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  you may need to access actual bills.
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  You might not be able to have an online network.
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  If uh the power is out in,
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  in uh gas stations or stores cannot accept credit or debit cards,
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  uh,
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  cash would be important.
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  So have enough on hand to cover transportation,
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  food and lodging.
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  Uh,
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  you know,
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  for a day or two if you have to evacuate quickly and make sure you store that somewhere that is secure.
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  I remember a coworker who always kept a $50 bill folded in his wallet in a place that he didn't see it every day.
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  And he said his grandfather told him to do that.
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  Now,
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  $50 isn't gonna take,
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  take you very far these days.
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  And maybe that inside your wallet is not the most secure spot.
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  But if you do have a place in your home,
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  like a lockbox or,
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  or at some place that you can keep that money,
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  that's a great way to make sure that you have access to cash because that is something people just don't keep on hand anymore.
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  Exactly.
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  In preparation for a financial disaster.
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  We really are just talking about having some really good money management skills and so one of those skills is to pay down debt.
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  So what are some tips that you have for our listeners on paying down debt?
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  Well,
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  you know,
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  debt is always a hindrance.
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  Um It's something we always have to worry about paying.
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  So if you're able to pay down your debt,
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  now,
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  you won't have to worry about paying those bills.
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  Uh When the disaster happens,
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  anything you can do to pay down debt will help you have more income at the ready and be able to contribute more to your emergency fund.
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  But another thing to think about is making sure you don't carry high balances on your credit cards.
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  Because what that will do for you is that way you will have access to credit on that revolving line.
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  If you should feel the need to have that in the case of an emergency.
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  So if you keep your credit card balances low,
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  it's gonna do several things for you.
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  It's going to improve your credit score.
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  Uh It's going to have less of an impact on your monthly budget because you won't have as much to pay off,
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  but it'll make sure you have credit available if you need it.
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  And in the case of uh you know,
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  an emergency,
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  you don't want to go first to debt you.
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  You would rather,
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  you know,
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  have that emergency fund and pay for it,
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  but it's good to have a backup plan just in case it's needed.
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  Uh I think that's a great tip.
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  And then of course,
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  we've talked about the budget creating that monthly budget.
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  Keeping a,
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  a list of all of your accounts is really important to understanding your financial situation and when a disaster occurs,
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  it is really important that you have access to those documents.
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  So what tips do you have for our listeners on making sure that they are prepared with all of their documents,
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  right?
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  So you,
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  you mentioned accounts that you might need to cancel services or,
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  or your bank account.
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  You may need to access your emergency fund or any number of other accounts that we have on a regular basis.
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  It would be good to have those listed somewhere so that if you need to call and stop service or to ask for a delay on the payment or something like that you have ready information for that.
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  And the Federal Emergency Management Agency actually offers something they call the emergency financial first aid kit.
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  And it is a booklet that is available online in a fillable PDF option where you can list those things and then you can either um save it your hard drive or print it for your records and we'll have a link to that in the show notes.
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  So it's a great way to help you organize what documents you might need need as far as your accounts.
• 9:01
  Now,
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  there are other documents you might need if a disaster happens and it's good to get those gathered up ahead of time as well.
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  And these are the documents that help you prove your identity.
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  So if you need to apply for fema assistance or to file an insurance claim or just to prove that you're you to open a new account or start a new service,
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  you're gonna need your photo ID and your social security card and your insurance policy and your banking information and all these different documents that help you prove that you are yourself.
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  And you may need your health care records also for um doctor services or medicines.
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  So those are documents you may want to gather up in advance.
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  And this is a good idea,
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  not just for emergencies,
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  but also for estate planning or anything that could happen.
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  If he's had to get a driver's license recently,
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  you need these documents.
• 9:56
  Yes.
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  Yes.
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  So it's good to have those all in one place.
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  And then it's important to make sure that place that you put them is secure.
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  So you want it to be someplace that is waterproof or fireproof.
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  So,
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  um,
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  a lock box or a safe or they make waterproof folders.
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  Now,
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  um,
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  that you can keep these documents together,
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  so they're easy to find,
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  easy to grab.
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  But in a way that they will be protected from the elements.
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  If something happens,
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  uh for digital copies,
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  you can put a flash drive in one of those secure locations or if it's on your computer,
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  if it's in the cloud,
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  make sure you have very good strong passwords to keep it secure from theft and uh hackers and other people who would like to access that information.
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  So we,
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  we want to keep it all together,
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  but we want to make sure that it's safe.
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  Yes,
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  definitely.
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  And then of course,
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  we need to talk about insurance because insurance is our umbrella protection to make sure that we are covered in the event of a,
• 11:00
  of a disaster.
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  So what do we need to do to ensure that our insurance coverage is adequate to cover us in the event that uh a disaster occurs?
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  Right.
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  So,
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  review your policy and that's something we don't think to do.
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  If we've been in our home for a while,
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  we just may not have thought about it.
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  Uh I've been in my house for more than 15 years now.
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  And,
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  and as I was working on this information,
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  I thought,
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  you know,
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  I really need to review that policy because,
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  you know,
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  if you've noticed your taxes have increased,
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  that means your property value has probably increased as well as it has in many parts of the state.
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  And we all know the costs for many things,
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  including construction supplies have gone up as well.
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  And so you need to make sure your home is insured for at least 80% of the replacement cost.
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  And that means the cost to build a similar house to yours new today.
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  So you want to make sure that your property insurance hasn't fallen behind.
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  If you have an old policy,
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  you may be under,
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  under insured.
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  Uh So check your policy,
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  make sure you're covered at at least 80% of the replacement cost and understand everything that's in there.
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  So if there's any wording or disclaimers or fine print,
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  you don't understand,
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  contact your agent,
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  that's what they're there for and ask for clarification.
• 12:28
  Often flood or earthquake insurance is sold separately and is not covered under a standard home policy.
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  So if you're in an area that's prone to either of those flood or earthquake,
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  you may need an additional rider or additional policy coverage.
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  You want to make sure any detached structures are also insured.
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  So if you've added a shed or you've built on a garage or you've you know,
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  you've got some very expensive items such as jewelry or electronics you have purchased in more recent years.
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  They may not be reflected in that policy.
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  So just make sure it covers everything and then finally inventory your home,
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  you want to document everything,
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  especially those things of value are important so that if you ever have to file a claim,
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  it's already written down and you can say yes,
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  this is what I need,
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  replace this,
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  this and this.
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  So tour your house and record the value of those major items inside.
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  Now,
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  it doesn't have to be every single thing,
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  but definitely the major items.
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  And you can do this either room by room or by category.
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  So you could list all your appliances together,
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  you could list your electronics together,
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  you know.
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  So however you want to do it is fine,
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  it could be handwritten,
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  it could be digital,
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  it could be a spreadsheet,
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  it could be an app.
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  Uh The Kentucky Department of Insurance offers an inventory worksheet if you'd like to use that,
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  but there are many others as well.
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  Just you know,
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  all the details you can put in if you have uh when you purchased it or a serial number,
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  photos and videos are a great way to record this information.
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  So you can just walk through your home by taking a video and then you'll have um a good reflection of of what was in each room uh Before that disaster happens.
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  So if,
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  as long as you update it every now and then you should be good to go.
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  And these are so important to have in the event of fire flood,
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  whatever happens.
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  Um Because if you don't have any way to prove what you had,
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  it's very hard to prove what you need to be reimbursed for.
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  And then also,
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  I will note if you've made any uh major repairs or major additions to your home,
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  make sure to let your insurance company know that I know we've replaced our roof recently.
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  And so that's something you need to let your insurance company know because that does change what they would replace.
• 14:47
  Uh That is a very good point and we've talked a lot about home owners,
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  but renters can have insurance too and certainly what renter insurance would cover all of your things.
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  So,
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  if you know,
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  if there were to be flooding or,
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  or fire or something like that,
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  um,
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  it would still be a policy that would cover all the items you have.
• 15:05
  So it would cover that whole inventory and those things and it's a very small expense when you think about replacing all of those items if you were to lose everything.
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  So it's worth,
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  worth the risk.
• 15:17
  Right.
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  Right.
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  Good to be prepared.
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  Exactly.
• 15:21
  Kelly.
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  Thank you so much for sharing with us today about what you need to be prepared for in the event that a disaster occurs and we certainly hope that one does not,
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  but should it occur?
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  We will be prepared in the face of disaster with all of the information that people might need with regard to finances,
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  food and water,
• 15:44
  trauma events or other needs that might need to be addressed when disasters occur.
• 15:51
  Thank you for joining me today.
• 15:53
  If you are just tuning in,
• 15:54
  you are listening to Talking Facts and you can find us on your favorite podcast provider.
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