Debt management begins with preparation for that rainy day...or worse

The recent devastation of New Orleans and the entire Gulf Coast region from Hurricane Katrina has most Americans concerned about what might happen in the case of a disaster where they live. It has become pretty apparent that we cannot count on the Federal government to be there should some man-made or natural disaster occur. That means that we need to take care of the situation ourselves and be prepared for what may come.

Many of those who live in New Orleans and elsewhere have discovered the hard way how serious their finances can be affected by a natural disaster. Not only have these people lost their homes, but they’ve also lost their jobs, their sources of income, and probably all paperwork associated with their financial histories. The loss of all of these items will probably force many victims of the storm to encounter home foreclosure or even personal bankruptcy. Others will have to undergo credit counseling in order to establish some form of debt management, as their debts will continue to pile up even though their sources of income are gone.

There are a number of things that everyone should do to prepare for such an emergency:

• Keep important documents in a safe deposit box at a bank. If you can’t do that, then keep your important documents in an accessible place that you can take with you should you need to evacuate. This box should include important legal documents such as birth certificates, marriage licenses, titles to cars and homes, bank account information and insurance policies at the very minimum. It wouldn’t hurt to keep an inventory of your home’s contents in there as well. A compact disc containing photographs of the contents of your house is a good idea. That way you’ll have photos of everything should you suffer a loss.
• Make sure your insurance is current and adequate. If you’ve recently remodeled or built an addition to your home, your insurance may be insufficient. You should check your policy at least once per year to make sure that it is sufficient to cover your needs.
• Examine your financial situation before disaster strikes. Now would be a great time to consider a home equity line of credit, or HELOC. They have low fees and can be used, like a checking acount or credit card, at any time you like for most any purpose. And the interest is tax deductible. This would be a great source of emergency funds, but you can’t take out a home loan after your home has been destroyed. Do it now.

These are but a few things the average homeowner can do to make sure that they aren’t overly burdened by debt or financial hardship in the case of disaster. Make your plans now.

Copyright © 2005-2007 by Retro Marketing. All rights reserved.