Preserving Financial Health in Natural Disasters
ALEX CHADWICK, host:
Here's one thing Hurricane Katrina taught people living on the Gulf Coast if they didn't know already: putting the pieces back together is a whole lot easier if you protect your finances beforehand. Here with us now, Michelle Singletary, regular DAY TO DAY contributor on personal finance. Michelle, is there some sort of emergency kit people should have in case of a major storm or disaster, and how much would something like that cost to put together? Do you know?
MICHELLE SINGLETARY reporting:
You know, I wouldn't spend a whole lot of money. Many of these items you can put together and assemble yourself. If you go to the Red Cross, the American Red Cross Web site, they've got some recommendations on what should be in the kit. You want to be sure you have lots of water: a gallon of water a day per person. So just go to the grocery store and get some discount, you know, a big jug of water. You want to have some dry food. You want to have some first-aid kit and a source of light, like a flashlight. Make sure the batteries are there. And you can probably put all of this together for about $20 or $30.
So you can put one together on your own or buy one of these kits. Many of the kits come with a backpack that has everything prepared. You can get one for as low as $12 and as much as $200.
CHADWICK: What about financial documents that you might need? What would you put aside?
SINGLETARY: You know, you want to make copies of everything. The one thing that happened when Katrina hit, you know people rushed out of their homes, didn't have any of their most important documents. You should have a fire-proof safe with a copy of your driver's license, a copy of your bank statements, your birth certificate, all the key things that you need to prove who you are. You may want to have an extra ATM card. You need to have this anyway, whether you are in an area that is always hit by a hurricane or not. If there's a fire, you want to be able to quickly grab these very important documents.
CHADWICK: All right, well I am living in earthquake country, so I will go look at your list, and I promise to go to the Xerox machine and copy what I need. But here's the thing. Isn't the handiest thing to have cash? And at the same time, I'm just uncomfortable keeping a lot of cash at home.
SINGLETARY: You don't want to keep several hundred dollars in your house, but enough so that you could get gas, so that you can get some food, that you can get some water. And if you can't cook, the lights are out, that you may be able to go out to eat to get some food.
CHADWICK: You know, it's not just three or four or five days. There's also kind of the long-term consequences of a real disaster. I'm thinking of all the jobs that left New Orleans. How do you plan for something like that?
SINGLETARY: You know, I sound like I'm beating a drum, and you and I have been talking about this as long as I've been on DAY TO DAY. You've got to have an emergency fund, folks. And this is not just for when your car breaks down or your water-heater breaks down. This is so that if you are displaced through a fire or a hurricane or an earthquake, you can go to a hotel and live for five or 10 days if you have to, which many of the victims - or victors I like to call them - of Katrina had to do. Even if you have insurance coverage, it takes days for those payments to be processed. What are you going to live on? So your emergency fund in this case really is a true emergency fund.
CHADWICK: Michelle Singletary writes the syndicated column The Color of Money. She's a regular guest on DAY TO DAY for discussions of personal finance. Michelle, thank you.
SINGLETARY: You're so welcome.
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