Thursday, May 26, 2011

Be Prepared

The Boy Scouts' motto is "Be Prepared". Once, Baden Powell, the founder of Boy Scouts, was asked the question, "Be prepared for what?"

He answered, "Be prepared for any old thing".

Tornados are not old things, though I am guilty of often treating them with the ho-hum attitude of a seasoned Midwesterner. Since Sunday's tornado in Joplin, MO, however, many of us have a new respect for these twisted natural events that can ruin a well-lived life in a matter of minutes. Indeed, I just returned to my office from the basement of our building – with several dozen University day-care children, from toddler to five-years old - where we waited out the latest in the series of storms that have menaced Missouri over the past few days.
With a focus on financial success, how do we financially prepare for cataclysmic events? With all due respect to the author of an educational guide sheet on the subject ( which can be found here<>), a summary of ideas follows.

1) Household inventory – For insurance claims you must have proof of your loss. It is easy to take a digital recording of the contents of your house, while narrating descriptions about the contents. (Try to stay focused on the contents and not the life history of the items, though that might be interesting to your grandchildren.) Keep a list of what you own and keep it in a safety deposit box. If you have antiques, jewelry, or artwork, it is a good idea to have an appraisal of their actual value. Useful tools may be found at<>.

2) Insurance - Make sure you have the right amount of insurance on your home and your personal possessions. (Step 1 will help with determining the value of your possessions.) Make sure you understand the difference between standard coverage and replacement coverage. The former values your items at their current, used value, while the latter values your items at what it would cost to replace the possession. When you remodel, review your insurance coverage. Consider earthquake and flood insurance if you find these to be necessary and cost effective. Flood insurance must be purchased from the Federal Emergency Management Administration, although your insurance agent can provide access to FEMA coverage.

3) Emergency fund - I don't want to be too redundant but make sure you have three to six months living expenses in your emergency fund. Cash is king during a disaster and electronic access to sources cash may not be available. Some people keep an open line of credit on a credit card, just in case of an emergency – if they cannot learn to save money!

4) Documents – If something is not able to be replaced, keep it in your safety deposit box – with your household inventory. All stocks, bonds, birth certificates, discharge papers, wills, deeds of trust, trusts documents, special photos, passports, marriage certificates, and whatever you deem to be irreplaceable should be kept secure. (My son was at the bank this afternoon, when the storm hit. They put the customers in the bank vault. That is what I call protecting my valuables!)

5) Of course, keep your smoke and carbon monoxide detectors in good working order. Keep dead limbs trimmed from your trees. Keep dried grasses from your home. Know where you are going to meet your family outside, in case of a fire, and where you need to take shelter, in case of a storm or earthquake. Practice these steps with your children. Do NOT just talk about it – do it with them. Then, when the siren blows or the earth shakes, you will all know what to do. Make sure your family knows how to turn off the gas line, water line, and electrical service.

6) Disaster Kit – At a minimum, your disaster kit should contain:

a. A supply of water that is less than six months old. Old, clean unbreakable containers can be recycled for this purpose.

b. Non-perishable food, such as canned goods or freeze-dried backcountry foods. If you use canned goods, please keep a non-electric can opener in your pantry.

c. Clothing, particularly rain gear and layers to keep warm.

d. Sleeping bags and blankets. If you camp, your tent could be quite handy, as well as cozy and warm.

e. A first aid kit with essential first aid items, mostly to prevent infections and treat mild sprains – including prescription medicines. Know enough first aid (e.g., Boy Scout training!) to be a resource to others.

f. A battery powered radio, flashlight with plenty of extra batteries.

g. Cash and credit cards.

h. Keys to your cars, house, garage, sheds, or other structures or vehicles.

i. Special items that might exist in your family for special people, such as mobility aids, feeding aids, and other items.
Finally, nothing can prepare us for the aftermath of a disaster the caliber of the tornado that hit Joplin, New Orleans and Katrina, or Japan's recent earthquake and tsunami. I, however, do know something about the human spirit. If we are faced with disaster, we will be challenged but we will prevail. It is what we do. We survive to grow and to love, yet again. Being prepared just makes it easier for that human spirit to blossom anew.

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