Preparing for a Financial Disaster
MICHEL MARTIN, host:
And now it's time for the Money Coach. We check in with personal finance guru Alvin Hall. Today, as we continue our special 9/11 coverage, we thought it important to address how to prepare financially for emergencies. Here to talk about all of that is Alvin Hall, and he joins us from our New York bureau.
Mr. ALVIN HALL (Financial Expert): Hello, Michel.
MARTIN: Do you mind if I ask you where you were on September 11th, six years ago?
Mr. HALL: I was actually supposed to be teaching in Number Three World Financial Center. And I would have been, normally, walking between those two buildings about the time the first plane hit. I had decided - I was in London working - I just didn't want to rush to get to the airport. So I actually delayed coming back to the states so that I could go and get a good night sleep. So I was in a plane.
MARTIN: Oh, dear.
Mr. HALL: Yeah. It was quite chilling. The person who was teaching my class saw the plane go into the first building. They thought it was an accident. And then when they saw the plane go into the second building, the class got up and had to run down the stairway to get out of the building, and they ran and got on a boat and went across to Jersey City. She was quite traumatized by it, and eventually left the New York City area because memories of it were just too overwhelming.
MARTIN: Oh, dear.
Mr. HALL: Yeah.
MARTIN: But everyone in that class survived?
Mr. HALL: Everyone survived. And much to my surprise, most of my clients survived. I design training programs about the financial markets and teach for many people. And many of my clients were in that building. When I had left to go to London in August, I'd already shipped out all the materials. I had signed the contracts. Everything was sitting down there in that area, waiting for me to come back to teach. And when those buildings came down, 90 percent of all the business I had booked disappeared.
MARTIN: Oh, wow.
Mr. HALL: You can't call up clients in a situation like that as say, well, I've already shipped you the books. Can you pay me for the books? So I simply wrote off every single penny of business that I had on the books.
MARTIN: Wow. Well, I think that leads to the subject of our conversation today.
Mr. HALL: Oh, yeah.
MARTIN: Because that's certainly not something you would ever have anticipated.
Mr. HALL: No.
MARTIN: Do you have insurance for something of that sort?
Mr. HALL: You can't have insurance for something that that's big. I have business insurance. And I have disability insurance. And I have all the insurances that one would require. But this is where I tell everybody - this is why you have cash in the bank. If I had not squirreled away the equivalent of one year's of my living expenses in a saving account, then I would have been in trouble.
MARTIN: So you were out of - you really suffered a big financial loss.
Mr. HALL: And that's why I'm a firm believer that the way you protect yourself is by having cash in the bank. A lot of my friends rely upon their home equity line of credit. But what if your house is damaged? Right? Oh, I have credit cards, and I can always get a loan against my credit cards. What if your bank gets damaged, or what if the credit company decides they don't want to extend your credit because the circumstances are so horrific? Cash protects you. You should always have savings in the bank. And then other types of insurance can step up to help you.
MARTIN: Let's say you've done the big thing that you've talked about, is have some cash. But what documents should you have? And where should you keep them?
Mr. HALL: You should keep them in a safe place in your house. I actually do this. I have a little Ziploc plastic bag squirreled away in one drawer of my house. And in that I have my passport, my insurance policies, my birth certificate, my social security card - any key papers that, in an emergency, I would need to prove that I'm a U.S. citizen, one, that I have actual insurance, and that I could receive certain benefits if they were paying out those benefits.
MARTIN: And you think they should stay in your house, as opposed to a safe deposit box at a bank or something of that sort?
Mr. HALL: Well, I have the real documents at the safety deposit box. But in the house, I keep copies of everything, just in case. I also keep copies of my bank statements and my brokerage statements also in here, but only the front copies to show that I have these accounts, their numbers and what's in the account, that's about all. I do not show the whole thing.
MARTIN: And that's always - it's a tricky question, because some people argue you shouldn't keep those kinds of personal identifying information in the house in case of burglary. But then I'm thinking about Hurricane Katrina…
Mr. HALL: Thank you.
MARTIN: …where, you know, the banks were underwater, also.
Mr. HALL: Absolutely. You need to keep copies at your home. You can't live in anticipation of total fear, but you need to be practical. You may not have time to get to the bank to get those documents out. And, you know, Michel, there's something else I strongly recommend to people, and I do this myself. And some of my friends actually laugh at me because of this. But I think, once a year, maybe for a month - or maybe once every two years - I look at all my expenses. And I said, if something terrible happen and I had to live on only the money I had in the house at the moment, what is the least amount of money I could live on to buy food, to cover expenses, if I had to buy a plane ticket to get somewhere? See where you are overspending, and then know that in an emergency, those are the first things you can let go, just in case something catastrophic happen.
It lets me pre-think, if you will. And so I'm not out there with everybody else flailing around like Shelley Winters in the "Poseidon Adventure" trying to find a hole out of their sinking ship, right? I've at least pre-thought something so I can at least act somewhat rationally.
MARTIN: Well, Alvin, can I borrow a couple of books? And I'm just kidding.
(Soundbite of laughter)
MARTIN: Well, thank you for that.
Mr. HALL: Thank you. I just think emergencies can happen. You're not being negative. You're not looking at the dark side or being pessimistic. You're being practical.
MARTIN: All right. And practical is your middle name, or it should be.
Mr. HALL: It should be.
MARTIN: All right. Alvin Hall is a financial expert. He joined us from our bureau in New York. We will also post Alvin's tips for financial planning around a disaster on our Web site, npr.org/tellmemore.
Alvin, thank you so much.
Mr. HALL: Thank you, Michel.
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