With the first anniversary of The Marshall Fire* on our minds, it’s a good time to reevaluate our own individual readiness for the unexpected. Are you ready? Could you find your documents and your kids and be out of your home on short notice? Or if you were sequestered in your home for an extended period of time, do you have basic provisions to last?
I suggest that we all take time this week to make sure we have the basics of disaster preparedness covered. A great resource that will help you get ready for any eventuality can be found at www.ready.gov.
While we’re at it, let’s also apply emergency preparedness lessons to our individual financial situations. After all, disaster can strike in forms other than those at the hands of Mother Nature.
Pay attention and heed warnings. When it comes to your money, you will find plenty of warnings. Here’s one: You need at least three months’ income safely tucked away where you can get your hands on it in a hurry. We call this a contingency (or emergency) fund.
Know what you have. You need an up-to-date understanding of your bank accounts, insurance policies, retirement accounts, investments and other financial assets. You also need to know what you owe: mortgages, credit card accounts, home equity loans, student debt -- all of it. When you subtract what you owe from what you own, you come up with your net worth. Knowing the amount of your net worth will empower you, even if at first it shocks you. Let the light of truth move you to action!
Know the way out. Debt enslaves you and limits your options. Knowing how to get out is key to regaining your financial freedom. Secured debts, when lenders have collateral in the form of physical assets, are safe debts. If you need to get out quickly, you can sell the collateral to pay off the debt. If you are a slave to unsecured debt, breaking free will be more challenging. You won’t have collateral to sell, but you'll have the knowledge to create a get-out-of-debt plan that works. (Visit the Rapid Debt-Repayment Plan in my book, “Debt-Proof Living.”) Knowing how to get out is half the battle.
Don’t panic. After learning that you have just lost your job, that your mortgage rate has just reset, or any other kind of a financial crisis you can think of, staying calm is the key to riding out the storm. Panic is never the right response. Keeping a cool head and seeking the best advisers possible are the ways to get through any kind of financial challenge.
Take charge of your own situation. Whether you think your situation is fair or not, don’t waste a moment blaming others or waiting for someone else to rescue you. Instead, pick yourself up, figure out the best way to fight back, and then get busy. It’s a lot easier to keep going once you have started to move forward. Tough times don’t last, but tough people do!
*On Dec. 30, 2021, The Marshall Fire outside Boulder, Colorado, in a matter of a few hours ripped through 6,000 acres, taking with it two precious lives and 1,084 homes and structures, at a cost of $513,212,589. It came within about 10 miles or our home.
