Hurricane Katrina is considered the worst natural disaster in U.S. history. Although the death toll, which now stands at about 1,200, is certainly significant, we are very lucky to say that most of our losses were financial. After all, compared to the Indian Ocean tsunami of 2004, which killed 250,000, or the Kashmir earthquake of 2005, which killed 75,000, we got off pretty easy.
But the financial effects are a different story. Probably close to 2 million people suffered significant financial loss from Katrina. I, for instance, lost my home and my medical practice . Every one of the 70,000 people in St. Bernard Parish, LA lost their homes too, as well as the 14,000 or so residents of the nearby (and better publicized) Lower 9th Ward of New Orleans. I learned a lot in my financial travails after the storm. In some ways, my story was different from most because I am a doctor. But many of the lessons I learned apply to just about anyone, and I would like to share some of them with you.
- Always keep a few hundred dollars in cash around. In an emergency, you may lose access to bank accounts. There may be regional problems with computers, so your credit cards could be worthless. But cash is accepted everywhere. Despite what American Express says, cash is the thing you should not leave home without.
- Keep enough money for 6 months of expenses in easily accessible accounts for emergencies. This was one of the financial goals my wife and I agreed on shortly after we got married, and it was a very good thing. The reserve cash took a lot of pressure off us, since we never had to worry about running out of food or not having a place to live. It was the best insurance plan we had.
- A good insurance company is worth its weight in gold. Our insurance carrier was State Farm. Though State Farm was not the cheapest insurance carrier available to us, we picked it because it had a good reputation for paying off claims and a sound financial record. Though I did not dwell on this issue, it turned out to be one of the best financial decisions I have ever made. Unlike other insurance companies (whom I will not name), State Farm rapidly paid on its claims and gave us no problems whatsover. It settled on our house and car for what I thought was a very fair price and in a short period of time. My claim was in by the end of September and we had our money by the early Novemeber. This freed us up financially to start looking for a new home. Despite what the commercials on TV say about saving money, a good insurance company is worth the price.
- Try to keep all of your insurance plans with one carrier. One of the problems many Katrina victims had was that they had fire and dwelling insurance with one carrier, flood with another, and car with a third. Besides the fact that this triples the paperwork, multiple carriers make final settlements more difficult. The dwelling carrier says the damage is from flood and the flood carrier says the damage is from wind. They play a game of passing responsibility back and forth, each refusing to pay until the other has paid. This has created serious problems for many on the Gulf Coast. We, however, had everything with one company. This meant that the total settlement would be the same dollar amount, regardless of how much was flood or how much was wind. The insurance company understood that, and so went rapidly towards finalizing the claim, since it was a no-win situation for them.
- Don’t save stuff for special occasions. I get pangs of regret every time I think of all the stuff we lost that we were saving for special occasions. We had unopened bottles of wine, fine china, silverware, crystal, and many other things that we never used because the time never seemed right. Now all that brand new stuff is gone, and we wish we had used it. Life is short, and you never know what will happen. I wish we had enjoyed that things we had more. Sometimes we forget when we break a plate or stain our best sofa with wine that at least we are getting use out of them. Try losing something that you never used at all.
- Keep all your financial and vital records together in a container that you can take with you easily. We got out with all our credit card numbers, our bank and tax records. And we took things I am now very thankful we have, like our birth certificates and Social Security cards, my medical license, and the deed to our house. The only thing I lost that I really need are my diplomas. Electronic records are the best. Anything you can put on a CD-ROM is easy to take in an emergency. I wish we had had everything on electronic record. That will be my future goal.
- Education is king. The one thing you can’t lose in a disaster is your skills. No matter what, if you have a solid education and good work skills you can always get back on your feet. The people who are suffering the most are the ones without education, who live paycheck to paycheck on minimum wages. For them, rebuilding is going to be very difficult, because they have no educational foundation to build a new career on. The best way to prepare for life’s worst events is to go to school. Of course I understand that, and I will make certain that my children do also.