Time to prepare
I just read a book called, One Second After by William Forstchen. It isn’t a new book, but I found it to be very thought provoking—especially in my role as a financial planner. I’ll warn you up front: it’s the kind of book that might give you nightmares, but in a good way—especially if it gets you thinking about how to prepare for catastrophes.
The book is the fictional account of a small town in western North Carolina as it deals with the aftermath of an electromagnetic pulse (EMP) attack on the United States. Without going into details, an EMP attack consists of detonating a nuclear warhead high above the earth’s surface. The resulting electromagnetic pulse would be devastating. In a split second, an EMP would wipe out all electronic circuitry and render useless almost every electrical device we rely on. We would literally be thrown back into the dark ages. It isn’t pleasant to think about.
We don’t have to experience something as extreme as an EMP attack to have our lives up-ended by forces beyond our control. The potential for catastrophic events is with us every day. For example, wild fires and earthquakes are serious threats. Careful preparation now can help us remain clear-headed and able to act when disasters strike. Here are a few simple things you can do to protect yourself, your family and your financial life should you face a worst-case scenario.
First, know what to do in an evacuation. Create an evacuation checklist that includes a list of what items you wish to take and where they are located. You should also have an evacuation plan detailing where your family is to meet and how you will try to communicate if you get separated. You might also put together a “go bag” of items you may need, such as a change of clothes, a jacket, a flashlight with batteries, water and energy bars. Keep your go bag accessible and up to date. Stale or corroded batteries and moldy energy bars won’t do you much good in a disaster situation.
Second, create an emergency file containing the information you would need if you were forced to leave your home. Include copies of your vital records as well as proof of medical insurance, financial information, medical information and contact information for friends, family, doctors, financial institutions, and employers.
Vital records include copies of birth certificates, adoption records, marriage certificates, passports, driver’s licenses, property deeds, leases, titles, and insurance policies.
Financial information includes a list of bank account numbers, investment account numbers, copies of the front and back of credit cards, and retirement account information. You should also include information about liabilities, such as mortgages and outstanding credit card balances.
Your best bet to keep this information secure, yet accessible, is to get a small fire-proof safe. Look for one that is UL rated “350-1 hour” or better, meaning it is rated to keep the internal temperature below 350 degrees for at least one hour.
In addition to the physical documents, it is a good idea to scan these documents and store them securely in cloud-based storage like DropBox or an electronic vault. Check with your financial advisor to see if they provide an electronic vault service. If that isn’t an option for you, a small thumb drive will work, though security could be an issue. If you use a thumb drive, make sure to password protect your documents.
Finally, take a close look at your homeowner’s insurance policy. Home values have increased dramatically over the past few years. If your insured amount does not reflect the increased market values in your neighborhood, you may be under insured. Many homeowner policies are now written for “extra replacement cost” meaning the policy will pay up to 120% of the insured value of the home. Check with a contractor to see what it would cost to rebuild your home and, if necessary, increase your coverage to that amount.
Steven C. Merrell MBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey. He welcomes questions that you may have concerning investments, taxes, retirement, or estate planning. Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA 93940 or email them to firstname.lastname@example.org.