Money Rehab with Nicole Lapin - How to Budget for a Natural Disaster

Episode Date: September 13, 2021

We never want to have to think about worst case scenarios, but we need to, or we could land in some deep financial trouble later on. Protect yourself and listen to Nicole’s advice on financially preparing for a natural disaster.  Resources to help those affected by Hurricane Ida: https://www.nytimes.com/2021/08/30/us/hurricane-ida-how-to-help.html FEMA Disaster History Site: https://www.fema.gov/data-visualization/disaster-declarations-states-and-counties Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. I can't even imagine what it feels like for people who have spent their whole lives living

in New Orleans to first go through Hurricane Katrina and now through Hurricane Ida. At the time I'm recording this, over 1 million homes have lost power, and many people have lost their homes. It is truly heartbreaking, and I encourage anyone who is feeling that heartache as well to do something to help. If your spending plan is tight and can't donate money, don't count yourself out of the relief effort. You can still help. There are many ways that you can get involved without even opening your wallet. People in New Orleans need things. Trucks, clothes, food, services, council, volunteers.

Check out the link in the show notes for resources if you're interested in helping people who have been affected by Hurricane Ida. This hurricane is on the heels of several other natural disasters, or perhaps we should call them semi-natural disasters because there's nothing natural about climate change. Before Ida, there was an earthquake in Haiti, wildfires in California and Minnesota. This year alone, the federal government recognized over 83 events as disasters deserving of federal aid. To be honest with you, these natural disasters will likely only get worse and more frequent as we feel the effects of climate change. And I know that is the last thing you want to hear. Trust me, I never want to spend my day thinking about worst case scenarios.

Trust me, I never want to spend my day thinking about worst case scenarios. If you're listening to Money Rehab in your car on the way to work, I'm sure you don't want to think about natural disasters either. But you need to face the music now or you could be in some deep financial trouble later on. In 2019, natural disasters cost $24.4 billion of insured losses. I wish the financial world was rainbows and butterflies and free money all the time, making it rain. But it isn't, and it's my job to tell it like it is, so you can tackle any challenge thrown your way. Having your house collapse is tragic enough without also needing to face an insurmountable pile of bills. I don't wish that future on anybody. But even

though you do need to face the music, you don't need to face the music alone. I'll be right there with you the entire way, plus the encore. To help get you started, I'm going to tell you five things you should do today to make sure you're protected. Number one, ask yourself, does your insurance have your back? I am going to say this one more time for the people who are turning the volume down. Check your insurance plan now. If you're a homeowner, it's extremely likely that your current homeowner's insurance plan doesn't cover you for the full range of natural disasters the world will see in the next 10 or even five years. Typically, disasters the world will see in the next 10 or even five years. Typically, homeowners insurance plans don't cover flooding or earthquakes. If you're in an area that's at risk of a particular

type of natural disaster, make sure you have the proper coverage. If you don't, you need to switch. I know that's annoying, but there is no other solution. It is a headache now for sure to switch insurance providers, but I promise you that the inconvenience of switching an insurance plan is magnitudes better than the stomach-dropping realization that your insurance plan won't help you when you need it most. Number two, get your emergency funds in check. With each day the headlines broadcast gloom and doom, I consider adding more into my emergency fund. I typically recommend that you keep at least six months of your bare bones budget on hand for an emergency. If you don't have that yet, you need, need,

need to make sure that is financial priority numero uno. Seriously, ditch all of your other financial plans right now before you contribute to retirement, before you index fund and chill. You need to get your emergency fund in good shape. Number three, make sure you know how to freeze your utilities. This is a great suggestion from RBC Wealth Management. If you think that your electric company will stop service for you automatically if, God forbid, your house collapses, think again. Your utility company will actually keep charging you until you call them to end your service. Not only is that an important step to stop more bills from rolling in, but active utilities

could also make damage in a natural disaster much, much worse. I don't want to be an alarmist. That is not my jam. But just think about it. If a gas line is still running during a wildfire, a gas leak can be catastrophic. Number four, do a personal inventory. If something happens to your belongings and you need to file an insurance claim, you'll need to have records of everything you own and how much it costs. It's time for one of my most favorite activities, making a super organized mega spreadsheet. This is a Sunday afternoon activity that your future self will thank you for. In this spreadsheet, at the very least, you should include pictures of your things,

but you get bonus points if you can include the receipts and serial numbers. To hold you over until you have time to go full lapin organization label making mode, take a video of yourself walking through your house and take some verbal notes about how much your items are worth. You might feel a little weird talking to yourself about your stuff like you're leading a museum tour through your life, but it's a start to get you the proof you'll need to have any productive conversation with an insurance company. Number five, get your documents in order. If you lose your home in a natural disaster, you can apply for aid through organizations like FEMA, Federal Emergency Management Agency.

However, in order to do that, you'll need to fill out some paperwork and confirm your identity many, many times over. Also, if you're evacuated out of a high-risk area, you'll need your documents for travel, like your ID, driver's license, maybe even your passport. Are you starting to get the picture? After a disaster, you'll need a lot of docs. And if those docs are lost in the damage, well, that's disaster number two. Keep backups of all your important pieces of paperwork in a fireproof safe box and in digital records. At the very least, you'll need copies of your passport, driver's license, birth certificates for yourself and

your family, social security cards, health insurance card, the title and registration of your car, and the aforementioned inventory of your household items. For today's tip, you can take straight to the bank, take a deep breath, and do some research on the risk factors of where you live. It's as simple as this. In order to know what your insurance should cover, you should have an understanding of the risks in your area. I know that this is a bummer, but I highly, highly recommend you do this.

FEMA has a website on your state's disaster history, which I also linked in the show notes. By planning for the worst now, you'll be three steps ahead in case anything happens. Hopefully you'll never need to use your insurance, but when it comes to insurance, it's better to be safe than sorry. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin.

Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.