Disaster-Proof Your Personal, Business Information

I was in the process of preparing an article about what we can do to protect ourselves and our businesses in the wake of a disaster, when I found this, prepared by Douglas Charney, senior vice president-Investments of Wachovia Securities in Harrisburg, PA. Wachovia Securities, LLC, Member NYSE & SIPC, is a separate nonbank affiliate of Wachovia Corporation. It’s so well-done I received permission to reprint it here, along with my comments, which are in italics.

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Hurricanes, floods, fires, terrorist attacks — the list of possible disasters is endless. Should something catastrophic and unforeseen happen to your home, are your financial records and personal information safe? For most people, the answer is “no.”

Think about all the things you could lose in something as common as a house fire: your tax returns, passport, birth certificate, computer, check book, bank statements, credit cards, insurance paperwork, and even cash. Without all these things, how would you pay your bills, buy food and clothing, or even rebuild your finances and your life?

While no one wants to believe that disaster will happen to them, your odds are actually higher than you think. According to the National Safety Council, the average person has a 1 in 1,167 chance of being involved in a fire, and a 1 in 3,421 chance of being involved in some sort of natural disaster, such as an earthquake, flood, hurricane, etc. Therefore, if you’ve always believed that something bad will never happen to you, it’s time to think again.

So how do you protect your personal and financial information? You need to disaster-proof your personal finances before a tragedy strikes. We will look at 10 ways to keep your financial and personal information safe.

Purchase A Home Safe

Every household needs a home safe that can withstand temperatures up to 1700 degrees. Keep the safe bolted to the floor in your basement or on the ground floor level so it doesn’t fall through the floor during a fire or get carried off by burglars.

Open A Safety Deposit Box At An Out-Of-Town Bank

Many people who have a safety deposit box simply use one at their local neighborhood bank. A better approach is to use a bank that’s out-of-town. This way if a disaster strikes that affects your entire town or city, such as a flood, your safety deposit box has a lower chance of being affected. Since many banks offer free or reduced fees on safety deposit boxes for their current customers, you can use the same bank that holds your accounts, just a different out-of-town branch. Note: Floods can happen anywhere. Remember Cedar Rapids, Iowa in 2007? Banks and their safety deposit boxes were under water.

Create A Financial Disaster Kit

Gather all the documents you keep in your home safe, wallet, and safety deposit box and make two photocopies of everything. Include all the account numbers of your credit cards, bank accounts, retirement accounts, insurance policies, and brokerage accounts. Also include any work-related items, such as pay stubs and employee benefit information. Keep one copy of these papers in your home safe, and keep the other copy in your safety deposit box. By having this information in multiple safe places, you can have quick access to it no matter what happens.

Have An Emergency Cash Fund

Save at least three months’ worth of income for emergencies. Realize that you don’t have to save this amount of money overnight. It will take some time for you to accumulate three months’ worth of income.

Start small, with perhaps $50 a week, and build the account slowly. Should a disaster happen before you have a full three months’ worth of income saved, remember that some money is better than no money.

Make sure you have quick access to these funds via an ATM or debit card, or with checks that are separate from your regular checking account. Keep this ATM card or check book in your financial disaster kit.

Keep Cash Or Traveler’s Checks On Hand

Many people no longer keep cash in their wallet or in their home because of debit and credit cards, which they view as safer. However, should a disaster strike that wipes out electricity and closes the banks, how will you purchase basic necessities? At the very least, have $100 per person in your household available as cash or in the form of traveler’s checks. Keep this money in your home safe. This way you have some immediate funds to hold you over until the power is back on or the banks re-open.

Have An Emergency Credit Card

Keep one credit card account empty and save it just for emergency use. Get the bank to issue two credit cards for this account, one in your name and one in your spouse’s name or another family member. Keep one card in your home safe and the other in your safety deposit box. Do not store this card in your wallet. If you do, you may be tempted to use it and won’t have the credit available should you need it during a disaster.

Back-Up Your Computer And Your Phone Regularly

Since many people claim that they store their entire life on their computer, make sure you back-up your computer every day. You have a number of options for data back-up. Some people prefer to use a CD, USB data stick, or tape drive. In this case, you have to remember to keep the back-up with you or in a safe place. Note “safe place.” Not a good idea to keep the back-up media in your work area or in your desk drawer. But if you keep it in your safe and you have important daily data you need to protect, it’s cumbersome to retrieve it from your safe every day. That’s why in addition to you doing the back-up, the suggestion in the next paragraph is the safest way to go.

Another option is to use one of the many internet-based data back-up systems that are available for a monthly fee. This way you don’t have to physically store anything or remember to grab any files. They will be waiting for you online should you ever need them. Whatever back-up method you choose, practice restoring your back-up so you know what to do should the need arise. Note: There are actually some free back-up services available, maybe with some programs or services you already have.  I’m researching that now and will report in a future post.

The same goes for your phone. With today’s superfast smartphones we can do just about everything, text, bank online, surf the web, not to mention keep track of appointments, contacts and much more. What would happen if it got lost, stolen or damaged? So, like your computer, make sure you back it up. Check with your carrier to see what’s provided. And, soon, for absent-minded folks, you’ll be able to attach an alarm to help you keep track of its whereabouts.

Make An Inventory Of Your Home Furnishings And Valuables

This inventory should be in photo or video format. Keep a physical copy of the photos or videos, put a copy on your computer’s hard drive, and keep a back-up copy on CD or DVD and store it either in your home safe or in your safety deposit box. Include copies of purchase receipts for large items, such as televisions, computers, expensive jewelry or artwork, and furniture suites.

This is so important I’m making a special note on this one. In fact in the future I’ll post a complete article on this. In the event of an insurance claim, an adjuster is equipped and trained to handle the building portion of your loss, but when it comes to “contents” it gets sticky. If you submit a huge list of lost, damaged or destroyed contents with no supporting photos or documentation, a red flag is raised and your claim will take much longer than you want. After Hurricane Ivan I had a woman who claimed she lost 125 pairs of shoes. But, you know what? She listed them by brand and color and gave me copies of receipts for all of them! Many of them were the pricey kind and had she not submitted what she did, we would have had to negotiate the number lost and an average price for the shoes.

Review Your Insurance Policies

Pull out your home and auto insurance policies and see if they need any updating. Make sure that your replacement values for your home or cars are not too low. This is also a good time to consider purchasing disability insurance, which will protect you and enable you to generate income should you become disabled during a disaster. Note: READ YOUR POLICY! Know what’s covered and what’s not. Remember, homeowners policies do NOT cover flood. For flood coverage you need a flood policy issued by FEMA. If you have any questions on coverage, check with your agent.

Back-Up Your Back-Ups

Make a copy of all your financial records, documents, deeds, and your financial disaster kit. Then send this packet of information to a trusted relative or friend who lives in another part of the country. Instruct this person to keep your packet in a safe place, such as a home safe or safety deposit box. This is your final layer of protection, as even if a disaster affects a large geographic area, your information is still safe somewhere else in the country.

Final Note: In the aftermath of Katrina I had a business owner in Mississippi whose business was gone and his home was gone. Most commercial policies cover business interruption, which requires profit and loss statements to calculate how much profit the business lost while being shut down. This insured had no records so we decided to check with his accountant. Guess what? His accountant’s business was gone and so was his home . . . and so were all of the accountant’s records for all of his clients. The only thing left was for the insured to request copies of his federal tax returns from the IRS, and you can guess how long that took.

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