How to Prepare for the Unpredictable (S3E12)

Tuesday, October 3rd

Kris & Sheri talk about how to plan for catastrophes like fires, hurricanes, and flooding. What does that mean for your wallet and how do you prepare financially. 


Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

It's easy to watch a catastrophe on the news like I hurricane. Fire flawed to think. Know at least it's not how. But catastrophes are unpredictable. Maybe the only thing that you can predict is that it's going to hate you financially it's gonna hit you hard on Sherry lynch and Chris Carroll and we're talking about what catastrophes have to do with your finances and how you can be prepared. On this episode of her money to podcast her money is sponsored by Carol financial. Hi this is handling that close financial advisor with Carol financial retirement may seem like a long way down the red but Cassini start the better off you'll be in the long run. But you're starting a family buying your first hand or simply want some help figuring out where to start join us for our new simply saving series this fall at a Mecklenburg prairie on Tuesday October 24 at 530 we'll walking three easy ways to say and thinks you should be doing to ensure you're on track for retirement. To register for complementary workshop please visit our website at Carol financial that it's Carol finance it's retirement simple. Lately due news has been terrifying the west is on fire the east dean pounded by her keys. Harvey stomping all over Houston. Weather is unpredictable. But there's one certainty combat when you're facing a weather catastrophe. It's gonna hit you harder in the wallet thing you've ever dreamed. That's we're gonna talk about on this episode of her money to Pakistan Sherry lynch I'm Chris Carroll. Where do we even begin with the impact on financial stuff it's when he's weather events less hardy. Even comprehend for a lot of people when you get the numbers this big break is some. I have heard the number on Harvey's gonna be a hundred billion dollars in damn I can't say I can't wrap my nose Scioscia most of us can't even wrap our heads around what's that what's worth 700 either we're a hundred billion coming from ranked. I'm usually that's that's like that's all the combined losses across everything right so there are you about. The help the government gives them hope corporations. Give they're talking about the cost to rebuild right so some of that money's coming from insurance companies summoned some of them money's coming from local and state governments. In a lot of cases so big chunk of that money's. Coming from the federal government which means ultimately is coming from our tax dollar great brain. You know I do I do think. Do you think that these numbers are big I do think it hits everybody but if your car we're the ones actually affected by the storm. If if fall or you know surrounding area it's something that you're never really gonna feel whole. In in your tax money. But here's what I wonder and I you know looking at her key Harvey as a first example. No matter where you live. How are you not affected because. She stand is like ground zero for petroleum. Processing gasoline is it not there. It is that's the next up writes under your secondary effects or nobody came to you and said okay well you're gonna have to pay an excerpt. 300 dollars in taxes this year because of all the money to governments and to help Houston but what happened when you went to the gas pump. Well yeah one prices were higher but not only that there was scarcely around here dude I had to befriend a mag as we're all like he armor six different gas station just looking for gas. Switches. And I'm sorry I did people panic people overreact that is human nature okay we all panic we we all have to react but. You know. Filling up the gas because you might not be able to fill your gas later because my wife says. Well you are full gas tank because the hurricanes doing it so you can do weird. Yeah once it hits if he hasn't what is. I have no more you know you're not going January Knauss who are being beautiful thank you gas through both my wife and I were joking reduced. Our friend told us that we've gone to five gas stations and I thought. I'm pretty sure Europe to full tanks of gas in the garage right now. Because I didn't realize I had to go get gas sure hey it's gonna happen that way. I'm like we're where we couldn't go once she gets I don't know much. But I'm not going to be able to fill up my car fire ward too and there's no water or bread it there's teacher so. All talked about leaked the big picture impact of hurricane. So the government will spend a hundred billion dollars. So overall economy will slow a little bit in the short term. Think we're this good for this hundred billion come from what I know what a high payroll and I know he's taught me not to think about money is being in separate pockets and put a fifth fifth pick me. Yell what bucket we get high or million Al. Remember you know that the federal government is kind of magical thing that. They don't have to actually have a bucket of money to spend a bucket of money sprayed it solves his jurors morons it's all electronic grade so. They can basically just create money and then put it. In the doesn't and that creates inflation Newton are not really need not mean eventually they're going to get the money from other sources and there's going to be an accounting for what they stand out what to put them. But if they need to create a bunch of money tomorrow for an emergency it's very if you get a they can do that. Absolutely so what we talk about the cost of rebuilding we've had we had two powerful recent examples of catastrophic storms with CNV. And Katrina and move on have we paid the bills that sandy Katrina rained down upon the folks that are affected there. Yeah you know of course there individual families that you can't fix what happens to them right. But for the most part there there's elements long term economic walk shot on these big bet so. Katrina is a great examples are Katrina comes it destroys industries it's a huge hit to the the economy wanna say total cost. Of Katrina was a 130 billion dollars but is very similar kind of numbers right. To what we're talking about before. That hits the overall economy ended the overall economy slows down there a lot of goods and services that would have been sold the war sold because of what happened in that region known of the US. But then after the hurricane passes you've got to rebuild the region right. So that's actually stimulating the economy when jobs are surely have battled all those houses some of these got to rebuild. Corporate and public. Buildings laying down there there's there's there's a ton that happens the busy little bees come in India and you know it's it's creative destruction. I guess is the term so in the long term it all ends up kind of washing out. But that doesn't do anything for the families are helped to do there factor in the short term and you know for people like. You were tied who lose hundreds of miles away getting hit with higher gas prices mean it doesn't do us a whole lot of good to say. Oh well we gathered there for the next four years you're gonna see a slight uptick in the economy as we rebuild all that stuff. And may be some stock prices are a lot for its version on an event horizon that's exactly right and it happens in such weird it's jerks right like it's it's a short term jerk. That makes is bad in the long term maybe there's a little upward momentum is just not something we feel. Nobody shows up her door and says okay give me 300 dollars and then I'm gonna start. Giving you were a few dollars here and there and for five years from now it'll be fun. Plus thinking about individual families and how they were effective brings me to question and I haven't done insurance and I know that we're about to askew sounds like so naive let's just take my rainbows kittens and and go to a field of daisies or they're great but. It seems to me you know that all of us were paying homeowners insurance and he. And the I it's it's something catastrophic happens to your home seemed fairly small I don't know what they are about fairly small spray it. So you've been paying homeowners insurance for his early years and I have been most people listening and we pay we pay we pay your calms the catastrophic event and seems to me that yelled that's what the insurance is for her hand and the insurance company now should open the doors to Dick castle of mine the you take the money back out and fix everything that's broken and and and not have this attitude of all of our rates are gonna go up in Florida or Texas or Louisiana. Because everybody filed a claim on their homeowners. Wasn't that what it was 4 and am I do I need to just grow up and. I'm to the capitalist. Now I mean and a part of what you're saying is right here's here's the problem that you know. Big never build that big a castle of money heat with all the money that we give them right because. They have expenses the insurance company has expenses every year there running an ongoing business. Yes they reserve a good bit of the money for potential problems but you do insurance. And this is a try to extremists to students. Insurance is actually really bad. To protect your gives her case because the idea of insurance. From a business perspective there's there's a little tiny risk of this thing happening. And I'm spread that risk out of everybody's gonna pay and that spreads the risk out. What will hurricane hits it doesn't just hit one person writing it generally gets everybody in so. I can I tried to spread this risk outlets and everyone comes in claims at the same time so. It's it's really. Hurricane insurance would would be good product. If I sold it to everyone all over the world. Not the people aren't you don't occur hurricanes are right but if I live in South Dakota. Are you assuming hurricane insurance. Guys it. God and so so so really it's it's just difficult insurance wasn't designed to help with things like this it just wasn't. Now that doesn't mean he can't help. But it it's it's a little more complicated because now what you have is Jeff people have to opinion over the years. And insurance company has she helped hold back this big reserve. Year after year feared totally need it right well. That's all well and good but are they really gonna sit on it for five years waiting for her to him the last thing 2011. Was the last time we had a really bad hurricane season. We were like a couple of different ones on the same year right. So you groups so were they supposed to do you waiting for the last six years. And saving and that's kind of the best is yet to happen so. It's it's a little it's a little complicated but I don't think your idea is wrong it's just you know and in practice. How do you get a company to do that. One of the things I know that I wonder rom when I think of insurance companies. I think most yourself fortress on the business right this is LA Johns taco truck boom where she if something goes wrong we're out of business very well. And ensure this never goes out of style it's not a trendy product you know insurance companies seem to me like impregnable. Business fortresses. Who who make money but it's kind about the greater good and which I realize as my yeah. You can now we're going into a fairy tale yeah. But now look at her keen Harvey here herky Irma hurricane Jose the fires in Oregon and Montana California. There are not an unlimited number of insurance companies here finite number of insurance companies. And every insurance company in now home insurance gained. Is being hit right now from a lot of different directions can't do insurance companies ever. I don't I'm an I'm asking amateurs can't wait to ensure companies ever go oh forget this work. Own belly up yeah young hero again actually it actually does and they had does there were. There were a number of insurance companies in florid. That are smaller insurance college students kind of popped off in the last. Five or ten years there were sewing flood insurance are well below with a major insurers for selling it for. And no they still get regulated it doesn't look at this point like in your in the mall go under that doesn't mean they won't. But a few weeks ago when we were first. Kind of talking about hurricane season and stuff. That was certainly something I heard people talking now with this idea that some of the smaller insurance companies to actually go under because of the big event. Now twenty or thirty years ago that was actually really common first smaller insurers to come and go wonder if he actually back in the eighties so gosh seriously so something would happen and then they would get over. Well yes so so and so think about this is a business okay. You and I go out we start sharing Cruces hurricane insurance. Company right. And we we only work in Florida because that's where the hurricane learn more trade. And so we wouldn't start until after a bigger hurt came like this when so we would certainly can January next year. All the universe hurricane seasons ever everybody knows how important insurance as. We go around me sir some hurricane insurance rates are we sought to every Tom Dick and Harry to come along and guess what you know we're gonna sell it to you. For 40% less. Then you can buy out ever there doesn't that sound great okay well yeah but you and I just kind of take whatever money they pay yes we split 5050 we use. Buy things just force cars and boats and you know it. Do you mentions in whatever rate and and we can go get away with this until the next hurricane hit. And as soon as hurricane hit we just file for bankruptcy close the doors and run. And then go to Harold and you know how many. But this is this really did used to happen in this really got the industry was not really regulating. And that's why regulation got a lot stricter off on the insurers and that's why today there is a much bigger. So when you started this she said theater don't they just open the vault you have this big cash flow of money like well did we kind of do because the regulators make them. But if I'm an insurance company I probably keep exactly as much as regulators make me keep. Does that make sense right so if I'm this big insurance company and they look at everything we look in my books Marie earlier says well. It's okay as long as you have three billion dollars in cash. You know recovering case of this amount. I'm not gonna have 3000000000 and one dollars. You can have exactly what he has actually what they just told me I have a morale of the three billion ranked OK Bruce there's my three billion. And then I'm gonna spend the other money on. My employees might CEO I'm gonna pay it out to our shareholders. Are gonna buy a nice company. A Smart good but I mean. You know look that's that's cholera world works and so the regulators definitely serve a purpose they stopped their being a lot of little insurance companies that would basically be a scam right. Some blood they carry can only take it's so far. And I think that there's they've got to. Find this balance between. What the regulators are comfortable with and we'll keep you insurers and business and make them profitable so they stay in business but still help people when they needed. You know as always when we're talking about my knees on on this podcasts it really so often comes right back around to. What's basic human nature. What are we likely to do it in the same way that the insurance company is gonna have exactly what they have to. So much aid to homeowners like I don't have flood insurance on my house up I don't live in a flood plain in May June you would have it if I may be I would have Vietnam and I I know some places you have to have flood insurance or you have to earthquake insurance. I don't have flood insurance if we had one of those like 100 year events. And then my house got flooded it's kind of like I'm in Vegas some playing in the eyes half so I think that as people. We do all may be only up to the line and even looking every building. Florida and I thank you know we go to the Florida Keys a lot my husband loves it was a camping down there. In some ways you look at the Florida Keys you go jeepers I'm not sure people should live here and cuts seem to cause. You know Hoosier technically speaking this is really not where people should live and there are click there and then how on development has encroached on the Everglades in the Miami area. Folks this is our alligators. I'm thinking maybe no Condo but what are we doing we're pushing into were building in places where maybe. We shouldn't be done there letting us we. Knowing that we've been doing that forever human nature doing that forever means as far as I'm concerned. Nobody should live in Canada. Very believed. The nice they keep they are the nicest people but that the climate is not hospitable. Human habitation hurricane that is. He knows who the silly when she hit me the worst of you know about really about Maryland nurse it's just too cold air yell just your cold there you know I hear about people or so those who live there you know. Personal opinion on this. I know telling me be it is because it's so cold have you noticed that while Canadians themselves of the nicest people. There's serial killers aren't the most off the teen ever. I don't know that there are not many Canadians as a side note on her mind Republicans turn not many famous Canadian Sarah kill Hearst. But the ones they have go big. I mean they go way big and maybe it's because they've those long winners. In which to just easing might affect disorder or we'll see digress but can't I don't know if you if you look at the weather patterns over the past couple years. And I know the words climate and change when their bond together make some people crazy. I'm setting aside what the causes are we are having an uptick in an increase in the Israeli severe creases star how it's. My explain me the you moved in Buffalo, New York in the had been having tornadoes also. In buffalo in the Buffalo, New York restaurant capital of the world yes there's not exposed to be torn me Newsom and here's the thing. We don't have to argue as to why climate change curse to say. Climate changes over time of course it's you know the system it's an actual that's exactly right and and so climate does change over time. But whether it's cause. But one thing or another is a totally different argument right but it. You know. Does it mean that there will be more hurricanes in the future I'm a real hard time buying that people know of course. We don't know I mean we often don't know until it starts swirling not a great actor right and so his people. And in this assistance people we always have to we always have to be ready for an emergency. Trained and I think that's the thing that drives them to meet from all that's been going on the hurricanes the fires either you name it. He is is my family is ready for an emergency as they ought to be. So when you talk with a client who's looking at the whole financial picture and insurance like we've discussed in earlier episodes is a huge part of that half. Come if someone has the option. To do flood insurance or hurricane or earthquake insurance how do you advice them well depends. Know what it costs you know. I think it's amazingly clear there are some insurance because it is so rare for something happened that's very cheap. So if if you can ensure some thing that's very rare but you can envision it actually happening to you. Then I don't think it's wrong to spend a little bit of money to get insurance through out. Hulu things one of the insurance questions we have an I don't know if we've talked about this before but. I think people really forget about personal umbrella insurance policies. These are personal liability it's based upon some amount. I don't yeah it's very inexpensive insurance and a protection against basically you do something wrong get sued for a huge amount of money. Right so few people happening and it's often just a couple hundred dollars a year. Force something that could totally change your life so when you talk about flood insurance if somebody offers you flood insurance can say well not enough flood plain. But adding flood insurance on my policies only 95 dollars a year. You know aren't actually mine in I might be okay with that even if it's the even if you're insuring yourself against a pretty dramatic stranger about. I know we have this floods in Colombia are a few years Columbia, South Carolina I was to have this PM because nobody had flood insurance there right nobody ever imagined and they'll be doing it and basically the whole town flooded you know it's in the sit down who valley but. Nobody really thought what if the whole valley filled up with water. When I was looking for house's when did this one neighbor not too far from where we're sitting right now. And the real estate agent said said no the only this is a great house now the only issue is assists in a 100 years. Flood clean pub ordered DI it's you know wasn't good a year later that every on the first floor in that neighborhood have water and it felt because. The nature doesn't it doesn't matter really calendar you you don't know which hundred years sure yeah hundred years your. I want you to stand out the Argo excuse hey are your 22 league so that. Peak and we talked about this a common not a case where insurance is concerned some were a year yet and a spender when you're spender and don't worry here you have to have it she. You Taft who knows what kind of insurance you can. So if you could let's say you could give one piece of really simple. Palatable. Advice in terms of thinking ahead to an emergency. You may not Livan hurricane zone you may not be in Oregon and where everything seems to be on fire. The chances are good sound being unpredictable could come anyway yeah what would that advice be. I just just think. Through and be prepared have an emergency bag in your house make sure your kids know with the emergency plan is. You know I'm a big believer that I should have some cash on hand in my in my house somewhere. You know just in case. That I should have an emergency fund Novak can be at the bank you know I'm not saying that need to keep me in I'm glad I'm very telling that aren't. Situation have emergency fund that can last you for a few months. If you needed it too because if you were in for right now who would be really nice to know that you could jump in the car. Take the kids to have. Kansas where there's no chance it's wonderful I shouldn't say that here is Soviet. So tomorrow. For ourselves but but you could run away virtually from the storm you could stay in. You could find somewhere to stay and know that you had a cash reserve to help you you pay for that. I think he just need to think through and be prepared for emergencies that's that's all you really can do and don't be either crazy person that says you're gonna wait it out. That dryer were that folksy I did I was so worried should people in Key West that word. Here I saw video on Twitter of one guy he was on the balcony of a second floor apartment. And he couldn't get to the door because the wind was pushing him away from man like it was gonna carry him what that's crazy I think I. And that's not so. You know you just worry about people's safety I mean to. People were people were much more important things. Right. Get yourself to safety and and be prepared to teach sought safety and don't ever take her her cane or a blizzard planning advice from my youngest starter. Who saw me making a cursory list and said but he just went to the store percent I know but there's a chance that we can have some hurricane action here. And we need to get you know only peanut butter and bottled water and there's a long pause and then she flipped her hair back and said. But we have a six pack of Lacroix. How long it. Hey Mariah Carey Price for her you should write a storm with a six that you sparkling water RT crazy yeah. So particular herd can play any. From Chris enough for my youngest child. Welcome the next episode. Of her mind the podcast. It's time for our update on film market and what that means to you that's next time on her mind you the podcast. Hey if you want more information about what we talked on today's show or if you just have other questions about money. Is our website it's WWW Doug Carol financial dot com for you can only should mean email whether it's through the podcast or through my website. I'd be happy to help if I can't. Her money is sponsored by Carol financial. Hi this is in financial financial advisor with Carol financial retirement may seem like a long way down the red but Cassini start the better off you'll be in the long run. But you're starting a family. Buying your first ten or simply want some help figuring out where to start join us for our new simply saving series this fall and of Mecklenburg prairie on Tuesday October 24 at 530 Slovakia three easy ways to faith in the things you should be doing to ensure you're on track for retirement. To register for complementary workshop please visit our website at Carol financial dot com it's Carol finance up its retirement simple. They're her weight my guess is hosted by me Sherry lynch and meet Chris Carroll. Our executive producers or new trial broke. Jonathan Mooney and Carol Poteat our producers Heather fur and our technical director and editor is Billy black special thanks Emily Nestle and Miriam has roots confirmation from this episode ornaments and other episodes and subscribe to this podcast visit. Her money podcasts dot com. To her money podcasts is now on Twitter. Follow us tweet us at her money podcast email us your questions at questions at her money podcast dot com. You can even use your phone's voice memo out to record your questions and email it to questions at her money podcast dot com and listen we might even played on the show. The Herman podcasts is a production of intercom Charlotte and Carol financial. 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