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Monday, Oct. 19, 2009

Claudia Buck: Preplanning can ease financial pain of Auburn fire or other disaster

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Every natural disaster sears us with the same images: Forlorn families sifting through ashes for treasured heirlooms and possessions. Business owners peeling open the charred remnants of payroll records and money bags.

As last month's Auburn and Los Angeles fires vividly remind, fires, floods, earthquakes and other natural disasters can wreak havoc not only physically and emo- tionally – but also financially.

And it doesn't even require a natural disaster. Something as mundane as a burst water pipe can flood a basement or garage, reducing all your financial paperwork to a soggy, unsalvageable mess.

The recent 49 Fire that destroyed 63 homes and three businesses in Auburn is the kind of unsettling news that drives homeowners like Joe and Donna Freeno to think about protecting their valuables.

"We just decided with the fires and (neighborhood) break-ins, it'd be a good time to get a safe," said Joe, peering Wednesday into a refrigerator-sized model at Liberty Safes in West Sacramento.

The Sacramento couple spent about $1,500 on a 5-foot safe that's equipped with carpeted shelving, gun racks and zippered pouches for small valuables. It'll store his hunting rifle collection, as well as the couple's important documents, such as their property deed and marriage certificate.

"We always see an increase after a tragedy like the Auburn or Angora (Lake Tahoe) fires. They have an immediate impact on sales," said Liberty Safes owner Dan Engstrom, who keeps several fire-blackened safes on the premises.

When disaster strikes, there's usually limited time to decide what to take with you, not only personal items but your vulnerable paperwork.

"People never think it'll happen to them," said Ted Beck, a financial education expert whose family survived the devastating Oakland Hills fire of 1991. The experience taught him that "no matter where you live, there's a potential for a natural disaster: hurricanes, tornadoes, fire. Don't assume it can't happen to you. Be prepared."

With memories of recent fires still smoldering, now's a good time to disaster-proof your financial life. Here are some starting points:

Saving family treasures

Whether it's heirloom jewelry or your baseball card collection, take photos. Walk through the house with a camera, snapping photos or shooting video of your most valuable possessions. Make prints, a CD or a DVD and place in a secure location, such as a bank's safe deposit box, a fireproof home safe or with a designated friend or family member. Be sure to have one copy that's not at your home or office.

Back it up

Imagine how you'd cope if your computer melted into a puddle of plastic during a fire. Or was drenched by a burst water pipe or flooding.

How would you replace e-mail addresses, retrieve business accounts, rebuild your correspondence trail? Because so much of our financial and personal life is stored on computers, it's essential to back up files.

Copy your important personal files onto a CD, DVD or external hard drive "and then ship them to a trusted friend or family member," suggests Jeff Kyle, consumer product manager with Symantec Corp., the Cupertino-based security software company.

If you don't want the burden of remembering to manually corral your computer files, Kyle recommends purchasing software that does the backup automatically and sends the files to a secured, off-site data storage center.

Have a grab-and-go plan

Don't wait until an emergency strikes to gather what you'll need if forced to leave your home or business.

Assemble an emergency kit designed to get you and family members through at least three days. (For details on what to include, see "Disaster Tips.")

Keep everything in a duffel bag or box that's easy to grab in a hurry.

Do the same with financial documents.

Beck, a former Oakland Hills resident who's now president and CEO of the Denver-based National Endowment for Financial Education, has basic advice:

"Make a checklist. Ask yourself: If we had to leave quickly, what do we want proof of? That's everything from passports to home insurance, bank records, credit card information. Anything that would be necessary to rebuild your financial life."

You also need proof of who you are: copies of your driver's license or passport, for instance, said Beck, recalling fire victims who left home so quickly they carried no personal ID with them.

If you're a business owner, keep copies of key records, such as site maps, insurance policies, employee contacts, bank account records and computer files.

All that paperwork – the "financial DNA of your life" – should fit into a small box or folder that can be quickly retrieved, says California Society of CPA spokesman David Colgren.

"If you put it all together in advance, you don't have to run around the house when you have to evacuate in five minutes," he said.

Where to store it? Try the freezer or refrigerator, says Colgren. "It sounds kind of weird but if something catastrophic happens, your refrigerator or freezer is likely to survive."

Create a list of emergency contact info for important family members, friends, co-workers and your doctor, banker and insurance company, among others. Write down names, addresses and phone/cell phones for each person. Send copies to family members. Keep a copy at work.

Know where your family will meet, both outside your home and at another location away from the immediate area. Designate someone outside the area – say, your Aunt Rose in Chicago – to be the family's contact person during emergencies.

"Let them act as (communications) coordinator for the family," said CalCPA's Colgren.

A little preplanning can buy you some peace of mind. Without it, you could spend months reconstructing the financial part of your life, chasing down tax returns, insurance documentation and other time-consuming details.

"(It) can save a lot of time, trouble and money in the long run," said IRS spokesman Jesse Weller, who has assisted victims of the Loma Prieta earthquake and the Oakland Hills fire. "Finding time to document assets and reconstruct records after a disaster strikes makes the recovery process far more stressful."

In the end, perhaps the best advice is from someone who's been there.

Beck, who escaped the Oakland Hills fire with his wife, four children, a dog and a minivan, says: "Ultimately, there's only one thing you worry about: Is everyone OK? Once you have that, your possessions are less of an issue. Ultimately, it's all 'stuff.' "