What will you do if you have an emergency?

 

Over the fourth of July celebrations this week my neighbor set his house on fire.

My understanding of the circumstance is that he put used legal fireworks into a garbage can and left the garbage can in his garage. I didn’t get the story first hand, so I wasn’t able to ask him why he didn’t douse the fireworks with water before putting them into the garbage, or why he didn’t wait until morning to clean up, or why he didn’t leave the garbage can outside over night. But I’m sure he’s asking himself all these questions and more.

The fire completely destroyed his house as well it burned two other houses, one immediately next door and one behind his home. No one was injured.

I started thinking about how difficult it will be for him and his wife to carry on over the next few months.

Their cars are totaled. How will they get to work? Will his home insurance pay for rental cars?

From what I can tell all their personal belongings are destroyed. What will they wear to work? Do they have to buy a whole new wardrobe? Will insurance cover that?

How much time will they have to miss from work?

Can they rent an apartment while their home is rebuilt?

Will the cost to rebuild the home exceed the value of their insurance policy?

How will their marriage tolerate this unfortunate event?

If they live like most Americans they have substantial credit card debt. Likely most of the items they bought on credit are destroyed, but they will still have to pay for those items even though they have no access or use for them any longer. Just like their mortgage.

How much of their insurance policy will have to go to the neighbors whose homes were damaged? Will that reduce the amount they will get to rebuild their home?

So many questions.

When I think about the hardship this mistake will impose on their life I feel really bad for them. No doubt right now they are thinking about how lucky they are to be alive and how fortunate they are that no one got hurt, like the neighbors or the fire fighters who helped them. But soon they will be hit with the reality of their future, which will be difficult, at least for a while.

When I was a young manager at a hotel I had a co-worker who needed to take time off to help his mother who got e coli. She became seriously ill and was hospitalized for a time. He was a service level employee and his immediate supervisor was not understanding of his need to help his mother. He didn’t like it that this person was calling off work often. Eventually he was let go for some trumped up reason. I felt bad for him, one thing happened which snowballed into another thing happening. Sometimes people just can’t get a break.

When I was thinking about what I would do if my home burned down I admit I don’t have a good answer. I write about frugal living, I write about good strategies to maintain what you have over time by making good financial choices. But a burned down home isn’t like choosing to buy take out for lunch. It’s having your foundation destroyed.

So the question is what will you do if you have an emergency? Most of us won’t have a huge emergency like our house burning down, thank goodness. More likely we will suffer a catastrophic medical emergency, and because we live in America, we will have a massive medical bill. In 2022 Americans collectively had 195 billion dollars in medical debt. 16 million of us have $1,000.00 in medical debt, and 3 million of us have over $10,000.00 in medical debt.

The reality is that we are a very unhealthy society. 37 million of us have diabetes. 16 million Americans have heart disease. Almost half of us, 137 million, have chronic disease. With the few stats I’ve listed you can see why I think your emergency will likely be medical in nature versus firey. The average number of house fires is 385,000 annually.

How can you be as prepared as possible for an emergency? Well if you read the paragraph above, getting healthy is a good way to prevent a medical emergency. No good can come from unhealthy habits like lack of exercise and poor diet.

• You can do simple things like wear a seat belt.

• Don’t drink and drive or ride with drunk/drugged drivers.

• Take good care of your teeth, there is a connection between dental health and heart disease.

• Pay attention. Most accidents can be avoided with good common sense.

• Look both ways before crossing the street.

• Don’t take selfies in National Parks with bears in the background.

• Practice good sleep hygiene.

• Cook your chicken well.

• Manage any health issues you have well with the help of your doctor.

• Don’t climb over safety rails at the zoo, on steep hiking trails, or anywhere else rails are in place for your safety.

Obviously there are hundreds of ways to become ill or have an accident, so what can you do to be prepared if something happens?

• Get out of debt, no car payments, no credit card debt.

• Build an emergency account with enough money to cover 3-6 months of expenses. Make sure your emergency fund is in an investment account that earns income.

• Live below your means. That means getting a used car, owning a home that is affordable for you, or renting a home that is affordable. You’re not Oprah, you don’t need a Bentley or a mansion.

• Have a little back up plan in your pocket just in case. That means thinking about what you would do if your house burns down, or you get ill, or your partner or parents, kid or someone who needs you gets ill. You don’t have to know everything you’ll do, but I find having a plan leads to peace of mind.

I hope you never have your house burn down, or that you become sick, but being even a little prepared can make a huge difference. Often we don’t need all the money in the world to get back up on our feet, sometimes a little hand up is enough. This is especially true when you are in a stressful situation when making any decision will be hard.

Finally make sure you have a document that includes all your accounts so you can easily update your garbage collector, your power, and internet and water supply companies if your house does burn down. No need to pay for services you won’t be using.