The recent paralyzing winter storm experienced across most of the United States brought to mind a quote I read years before originated by the American oil magnate, John D. Rockefeller. He said, “I always tried to turn every disaster into an opportunity”. I am pretty certain, based on reading his biography, that Mr. Rockefeller meant his statement for business disasters but it is just as applicable for snow storms.
Many families were caught in difficult positions of financial disaster during the recent storms. A January 22, 2020, CNBC article on financial preparedness reported “41% of Americans would be able to cover a $1,000 emergency with savings."
This is a startling statistic that 59% of our country’s citizens lack any savings. To alleviate the stress of being unprepared, perhaps the following simple actions will facilitate a more positive outcome.
First, strive to save a sum of funds that will help your family pay its necessary living expenses for a period of at least ninety days. The purpose of this sum of money is not for investment or to achieve any type of yield. Rather the sole purpose is to serve as a lifesaver when the winds of disaster blow your way.
Second, consider discussing your insurance coverage with your agent. Mention such items as roof damage from the weight of snow, pipes frozen due to arctic temperatures, replacement of flooring and furniture caused by pipes bursting from the extreme cold. These risk areas are the result of such intolerable environmental conditions that are unpredictable and infrequent. While meeting with your insurance agent, ask about the liability coverage on your property.
What happens if you, or someone else, is injured on your property while helping you clear the snow from your sidewalks? Liabilities arise from many different perils faced in our day-to-day lives.
Most property and casualty policyholders don’t understand two important facts about their contracts: 1) coverage amounts and limits; and 2) the deductible. Review your current policy and look for anything in the contract that states those acts or items not covered, these are typically in the exclusion clauses of the contract. You may also be subject to different deductibles for certain parts of your home, such as your roof, than you do other damaged areas. These are important provisions that you must understand fully when a disaster strikes.
When our children were very young, we held periodic meetings to review our family’s safety plan should a disaster strike our home. For example, we purchased rope ladders for each daughter’s room that could be used to escape a fire by climbing down them and meeting up at a certain location on our property. We purchased fire extinguishers and maintained them at appropriate locations within our home. Thankfully we never used them but the confidence and peace of mind these simple tools of safety provided us is immeasurable.
Lastly, we take many resources for granted in our world. Simply test yourself by not utilizing water from your faucets or warmth from your electric-powered, thermostat-controlled heat pump. How did you feel when these items didn’t function during a disaster? For me, the loss of water is far more devastating than the loss of heat because we have a fireplace as an alternative heat source. But I digress.
Consider a small inventory of basic life items that will make your daily living activities more pleasant. For example, we maintain fifty gallons of potable drinking water for use in case our city’s water system suffers damage. We keep canned foods that won’t spoil as quickly as fresh fruit and other frozen foods. Think about your medical needs. What do you do if you depend on electric-powered medical devices? It may be helpful for your family to purchase a small generator, powered by gasoline, to keep these critical devices running. Your life during a disaster may depend on a little planning when the weather is nice.
Once the storm has passed, reflect on the areas of potential hazards for your family and property. Make a checklist of the items you may wish to store for the next life disruption. One area of planning that can’t be overstated is the area of life-sustaining shelter, food and water. We may live without our cable TV, internet and cellphones but we can’t survive for an extended period of time without food, water and shelter.
Share your plan with other members of your extended family. Look in your local community and find a shelter that may need supplies to help those in our city who are less fortunate. Successful survival of natural disasters is not limited to one person or one family. As a community of people, we owe a duty to our fellow man to help in times of need. Take a look around our city, call an elderly neighbor and deliver food, water, blankets, whatever the need may be. This is the type of city we all wish to live in. Stay warm and safe!
Registered Principal Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Jimmy J. Williams is an Investment Advisor Representative of Compass Capital Management, LLC, a Registered Investment Advisor. Cambridge and Compass Capital Management, LLC are not affiliated. 321 S. 3rd, Ste. 4, McAlester, OK 74501. Cambridge does not offer legal and tax advice. Please consult your legal and tax advisor for specific estate and income tax planning strategies.