Tag Archives: financial preparedness

  • Are You Prepared for Financial Crisis?

    Greece's Central Bank As Investors Face Wipeout Huffington Post

    As I watch the financial crisis unfold in Greece, which has been going through its Great Depression for the last five years, and in China, which is facing a stock market crash suspiciously like the 1929 Wall Street one, I am thankful for a slightly more robust economy here in the United States.

    “It’s unlikely we’re going to have a big crisis like [the Great Depression] again if we heed what’s going on and do some tweaking,” said Ann House, coordinator of the Personal Money Management Center at the University of Utah.

    Not that it matters that much from my family’s perspective. We’re going through a micro version of an economic collapse. Two weeks ago, my husband lost his job. We have tried for years to prepare for economic emergencies. Here are some things we did well – and not so well.

    We built up a short term and long term savings and emergency fund.

    House recommends taking savings out first, via direct deposit, rather than putting away what’s left at the end of the month.

    “I know if I keep extra money in my checking account, I will spend it until it’s gone,” she joked.

    My husband’s office automatically deposited part of his paycheck into a retirement fund.

    In addition, we owned a short term savings to prepare for things like holidays. Then we created a third savings account for emergencies – especially medical bills.

    Hooray for us. Only 29 percent of Americans have an emergency savings, according to a survey from Bankrate, so that puts us ahead, right?

    We didn’t save enough. Our emergency fund was gone by June. We thought it was plentiful because we didn’t realize this year would be the Year of the Instacare (not to be confused with the Year of Soils). My husband needed surgery, I endured dental work, a son had chronic ear infections and a daughter caught pneumonia. We’ve spent more time in doctor’s offices than some doctors.

    When my husband lost his job we had enough in short term savings for two months’ expenses if nothing went wrong.

    Money Flies AwayUnfortunately, just before he lost his job his car wheezed its last wheeze, necessitating its replacement. Since then we’ve needed to replace four tires in the family car; part of our sprinkler system broke; my income decreased and more medical expenses popped up. Yes, this was our last two weeks. We’re readjusting our expectations.

    Most financial planners recommend saving enough for six months’ worth of expenses. We should have done more to get to that level.

    House also recommends organizing important paperwork.

    The Federal Emergency Management Agency’s “Emergency Financial First Aid Kit” is a great resource to organize important papers, House said.

    The 44-page booklet includes four sections that identify what information to collect and keep, like social security cards, insurance policies, prescriptions and emergency contact information.

    We keep our important documents – birth certificates, loan paperwork, insurance information, etc., protected and handy. Some is in a fireproof, waterproof safe. More is in an independent hard drive and in cloud-based storage.

    Hooray for us, right?

    Important advice: If you put stuff in a safe, don’t lose the key.

    House suggests keeping up to $1,000 in cash with a 72-hour kit. After all, a coronal mass ejection can knock out an ATM almost as easily as a Greek government order.

    We keep an emergency storage with food, water, clothing, shelter and money.

    Hooray for us, right?

    Not necessarily. The cash is all in larger bills.

    “If you were out of water, and somebody came by with a water selling wagon, you might be giving the person a $100 bill for water. It’s one-dollar bills that are going to come in handy for emergencies,” she said.

    Our family could keep emergency kits better updated. The last time I checked one daughter’s emergency bag I found diapers. She was six.

    Finally, House encouraged reducing debt and improving credit scores.

    House said more than 60 percent of prospective employers check credit scores, so a good score can mean the difference between getting and missing out on a job. It takes time and effort to improve a credit score: remembering to pay all bills on schedule, keeping oldest credit cards and paying off other debt, and painstakingly searching credit reports for inevitable mistakes. All three credit bureaus must give one free credit report per year.

    We improved our credit scores and eliminated credit card debt.

    Hooray for us, right?

    Well, yeah. Hooray for us. We’ve got to do something right.

    Oh, and if you hear of any positions in emergency management, law enforcement or writing and editing, please let us know.

     

    - Melissa

     

    Sources:

    http://fivethirtyeight.com/datalab/the-extreme-economic-outlier-that-is-greece-in-7-charts/

    http://www.nytimes.com/2015/07/09/business/international/stock-sell-off-unabated-in-china.html

    http://www.bankrate.com/finance/consumer-index/americans-still-lack-savings-despite-wage-growth.aspx

    http://www.timeanddate.com/year/2015/soils.html

    http://startingout.tiaa-cref.org/how-much-of-my-income-should-i-save-every-month/

    http://www.ready.gov/financialpreparedness

    http://science.howstuffworks.com/solar-flare-electronics2.htm

    http://www.consumer.ftc.gov/articles/0155-free-credit-reports

    Interview with Ann House: July 7, 2015

    Posted In: Budgeting Tagged With: financial planning, debt, Greece, financial preparedness

  • Investing in Food Storage

    Money on the mindHappy Tax Day, everybody! Whether you’re frantically finishing up some complicated math before you file at the last minute, or relaxing while you wait for that refund check to roll in, April 15th is a day when money is on our mind. How much have we made? How much have we saved? What have we done with what we have, and how can we get more?

     

    I especially love checking on my interest and investments at this point in the year and watching those baby percentage points grow up. However, there’s one important investment that doesn’t show up on my 1040. That’s my food storage.

     

    Never thought about food storage as an investment? Let me offer two points that may change your mind. And who knows? It might even inspire you to invest that tax return.

     

    1. Investing in food storage Investing in food storage brings peace of mind

      Security. For many of us, the purpose of a financial investment is some sort of protection against an unpredictable or unexpectedly lean future. We invest in insurance in case something happens to our home or our car, or in our retirement knowing we won’t have a regular paycheck after a certain point. Food storage works along the same lines. Any number of unforeseen events could interrupt our ability to purchase food for a time, and comestibles previously purchased and stored for future use protects and preserves normalcy during those interruptions.

     

    And if you’re waiting for something big, like an earthquake or tornado, to knock out power lines and close grocery stores, think again. A few years ago, CNN reported that somewhere close to 50 million Americans experienced “low food security” in 2011 as a result of layoffs, unemployment, and underemployment.

     

    1. Appreciation of the DollarAppreciation. The hope with any investment is that your return will be greater than your initial buy. So, how does that work with food storage? It’s not like you buy three bags of rice and in five years you magically have four bags. And besides, food—unlike gold or real estate—eventually goes bad. Isn’t that depreciation?

     

    Nope! Here’s how Stanford economist Russ Roberts explained it to an NPR reporter:

     

    "Inflation is low these days, running at a 1.7 percent annual rate. Still, it outpaces the return on a savings account. Roberts says if inflation starts rising, to say, 5 percent, the argument for bulk buying becomes more powerful. 'Do you have an investment now that pays 5 percent? The answer is: not easily,' he says.

    "He explains that a mutual fund might achieve a 5 percent return — but that's only if the stock market is doing well. Savings accounts and money market funds don't pay anything close to that. 'So it's certainly true that cash, if you can spare it to convert your cash into real goods whose price is rising, [buying in bulk] is not a bad idea,' Roberts says."

     

    In other words, because of inevitable inflation, you will get more food for the same amount today than you will in the future. Buy those three bags of rice now for $15, because that same $15 will only buy one or two bags down the road. Make sense?

     

    Not only does food go up in value, but assuming you store it properly and rotate it regularly, it’s also a low- to no-risk prospect; the only way you’re going to lose that investment is if your teenagers raid it frequently.

     

    So, in the spirit of smart investments, check out our monthly sales and food storage specials. And tell us what you’re doing with your tax return this year!

    Posted In: Budgeting, Insight, Planning Tagged With: tax, emergency food storage, financial preparedness

  • Hurricane Sandy: One Year Later, Thousands Still Displaced

    Flooded house after heavy rain in the evening sunlight.

    “For Kathryn Fitzgerald and her young daughter, Megan, home was a modest three-bedroom house…on a tightly packed segment of Delaware Avenue two blocks from the Atlantic Ocean. That was the only home that Megan had ever known, until Hurricane Sandy hit and a rank mixture of floodwater and untreated sewage rose to chest-high in the lower level of the house.

    “Since then, they have lived in rental apartments and Megan, now 9, attended an unfamiliar school in another town for a while as her mother appealed for enough aid to rebuild the life they had…

    “More than a year after one of the country’s largest-ever disaster recovery efforts began, Ms. Fitzgerald is among the more than 30,000 residents of New York and New Jersey who remain displaced by the storm, mired in a bureaucratic and financial limbo.”

     

    Every year, big storms capture national attention with images of wild weather and large-scale destruction. But when the skies calm and the cameramen pack up and leave town, residents are left to the long, lonely process of returning to normal. Hurricane Sandy may be fading from popular consciousness; but for the victims, fourteen months into the recovery, the disaster is ongoing.

    Kathryn Fitzgerald is just one of a handful of displaced homeowners in the American Northeast interviewed recently by the New York Times—and her story is a representative and cautionary one. Victim after victim reports the difficulty of securing funds to rebuild, whether from government aid agencies or by other means.

    While we talk a lot about the immediate, life-sustaining preparations needed to weather extreme situations, sometimes the most important emergency preparation is financial. Read the full NYT article here to see what a tangled mess of red tape is holding up these people’s efforts to rebuild their lives. Then check out the links below to learn more about financial preparation for disasters. Finally, take another look at our blog post on flood preparedness to learn more about insurance options. Whether it's another storm like Hurricane Sandy, a sudden downpour that causes flooding like that in Colorado earlier this year, or another scenario altogether, you'll be so glad you've prepared in advance.

     

    New York Times article originally found via Instapundit.

    Posted In: Uncategorized Tagged With: financial preparedness, flood preparedness, flood, hurricanes, insurance

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