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On January 10, 2005 Marc Baily Fox 6 News interviewed
Barbara Williams. The topic of their discussion was planning for a
disaster. The following is the text of this interview.
Marc –
When you look at the pictures of the tsunami disaster we know the folks in
that part of the world will be working for years to recover from that
disaster. But then, think back, here in San Diego it was just over a year
ago that we had the devastating fires and folks are working to recover from
that disaster right here in our own community. This morning, Barbara
Williams from Financial Focus joins us to talk about how to minimize the
effects of this in the short term and in the long term. We’re talking about
financial survival here. The biggest mistake people make financially in a
natural disaster is what?
Barbara
– Not being prepared by having cushion in their life. So we need financial
cushion all the time. Because every now and then Mother Nature does show us
her power and if we haven’t prepared for it it can devastate all the other
financial plans we have set up for ourselves.
Marc –
Well certainly here ins San Diego, as you and I were talking just a moment
ago, people are stretched pretty thin because of the high cost of housing
here. So it’s easy to say we should have a financial cushion, but a lot of
folks are just living paycheck to paycheck trying to make that mortgage
payment.
Barbara
– And that’s the real key, not to live to the edge. If we give ourselves
cushion in life then we have a lot more power to have staying power when
something bad financially happens. So the first key is to have a reserve.
We need to have three to six months of living expenses set aside. This
doesn’t include the balance on your credit card.
Marc –
Ah, see now that’s the first think I would think is that I could use it
that way. Let me just interrupt you for just a second. Take a look at the
screen here, we’ve go so many tips up here I want to try to get to some of
them of these. Be adequately insured. Certainly we saw problems with that
during the fires.
Barbara
– We sure did. So you want to be sure that you have replacement cost
coverage. You want to be sure that you have housing allowance. You want to
be sure that you have flood coverage so that you don’t devastate completely
everything you’ve planned. That you have the ability to rebuild.
Marc –
And when we say replacement cost on the insurance you really need to talk
to your insurer about what that really means.
Barbara
– You do.
Marc –
Because a lot of people think they have replacement insurance and they
don’t.
Barbara
– It’s a different definition company by company.
Marc –
Emergency fund – you talked about that. Keeping the credit card balances
down. You know we talk about that in the big financial picture all the
time. Not maxing out on your credit cards. But if you do need them the time
you really need them is in an emergency.
Barbara
– Right.
Marc –
So it’s one more reason not to max out on all those.
Barbara
– Right. You want to keep them paid off as much as you can every month, but
if something bad happens then you’ve got the ability to use them. And then
you want to be careful that you don’t get sucked into lots of offers for
new credit cards.
Marc –
Ok now, I’m the perfect example of that. 1994, Los Angeles after the
earthquake up there we were adequately insured but I responded to all these
ads offering you free credit cards because I thought; "If there is
another disaster or something else happens I’m really going to need
these." And I got myself in a lot of trouble with credit cards at that
point.
Barbara
– Yea.
Marc –
Just with thinking I needed them just in case.
Barbara
– Right, you just want to keep yourself to one to two credit cards no more
than that and a reasonable balance that you know that you can pay off.
Marc –
Having too many lowers your credit score too, just by having them in your
wallet whether you have balances on them or not. The notion of having a
good inventory again is really high on your list of priorities.
Barbara
– That’s very important. I have a friend who’s home recently burned down
and she needed to have copies of everything in her house for the insurance
company to believe that she had it. She did not have those photographs. So
it’s a great time to take digital photographs of everything in your home
and scan all your important documents and keep those stored somewhere else
so its not in the home.
Marc –
Ok, very good. If folks want more information they can contact you at
Financial Focus. It’s fifo one? Fifo one dot com. Barbara, thank you so
much. Great to have you in this morning.
Barbara
– OK thank you.
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