A superstorm leaves a long-lasting impact on affected areas. Well after the news cycle slows and business begins to normalize, remnants of an event like Hurricane Sandy continue to reverberate in households and businesses.
According to the Chicago Tribune, the East Coast hurricane is estimated to be the fourth most expensive catastrophe in the U.S. behind Hurricane Katrina, the September 11th attacks and Hurricane Andrew. Totaling a predicted $70 billion in losses, Sandy will not soon be forgotten.
But as politically and economically charged as this weather phenomenon has been, few have begun to measure the personal cost. In terms of individual finances, the struggle that follows a storm of this magnitude can be incalculable in a time of grief and loss. However, the decisions made in the first few days following the crisis can determine whether survivors experience a swift recovery or a sluggish climb to stability.
From insurance claims, to purchasing the basic essentials for survival, costs can escalate quickly. In an ideal situation, Rob Wilson of RobWilson.tv recommends having three to six months of take-home pay to “lessen the blow of an event like this,” but admits that this isn’t always the reality of people’s savings balances.
For those who lack substantial cash reserves that are looking to provide for their family in the here and now, financial decisions can frequently become scattered and reckless.
Forcing Organization and Clarity
According to Holly Johnson, Club Thrifty blogger, it’s natural to be in an anxious state.
“When an emergency occurs, people go into panic mode. [And that’s when] people often make financial decisions out of fear instead of logic,” says Johnson.
With 4.5 million homes and businesses across 15 states still without power on Friday, the opportunity for panic-driven purchasing spreads far and wide. The Huffington Post recently reported massive sales of gas cans and generators on Amazon in response to the utility shortages.
And as the winter cold creeps up on stranded victims and the basic need for food, water and proper lodging demand attention, the urge to swipe a credit card can be compelling. Johnson admits the option is handy and even necessary in many situations, but cautions consumers about how they pay for their post-Sandy supplies.
“In an emergency, having a credit card is convenient and can be a great tool to keep a family afloat until long term arrangements have been made. However, don’t use it as an excuse to charge all of your expenses and ‘pay for it later.’ Only put on the card what is an absolute “need” and not a “want,” and make sure that you will have the funds to pay it back as soon as possible.”
While calm financial decision making may not be at the top of most Sandy survivors’ priorities – especially when there are four-hour waits at the gas pumps and rivers running through living rooms – there has to be some long-term thinking involved.
The Calm after the Storm
Once the rain has ceased and the winds have quieted, there are three major factors that can put families out financially for months, and even years, to come:
- Temporary living costs
- Miscommunication with insurance companies
- Scams and con artists
Though there are a lot of factors involved when putting the pieces back together, these three areas are the easiest to slip up on.
Whether the hurricane caused severe structural damage or a lack of utilities, like gas and electricity, have rendered the home unlivable, the scramble to provide can be extremely expensive.
Greg Meyer, a Community Relations Manager at Meriwest Credit Union, admits credit cards can be an option when it comes to obtaining the basic items.
“Those things we need to survive are the first things I would be concerned with and what I would consider putting on a card if I had to. Use your card to purchase your food and water and anything else you may need to survive such as clothes, shoes, gas, and generator rentals,” says Meyer.
In the absence of a savings account, credit can sometimes be the only choice to keep a family afloat. Regardless, it should always be used with caution and strict spending limits must be applied.
For most, the instinct to begin sorting details with insurers will kick in quickly, but maximizing the policies coverage is crucial to keeping spending to a minimum.
Meyer suggests that many expenses outside of home and vehicle repair could be covered in the case of natural disasters. Day-to-day provisions and lodging could possibly be included in many policies, though none should assume this to be the case.
Staying in contact and being inescapably clear about what insurers will take responsibility for can keep many victims from submersing themselves in debt for the sake of survival.
Scams and Con Artists
Where there is tragedy, trickery often follows. Fraud and opportunistic schemes can run rampant after catastrophes and Meyer expressed concerns regarding two common types of scams.
Credit Cards and Mobile Devices
With electricity down, companies may resort to mobile technology in order to charge customers for the essentials. Meyer warns that consumers should be weary of this exchange. The connection has the potential to be compromised by skilled hackers and in a moment of need, customers could find their accounts drained and cards maxed.
“Hackers don’t take a day off in these situations. Hackers and criminals thrive on confusion and panic. I would take great care where my card is used.”
Meyer goes on to warn of a further threat to finances in the Hurricane Sandy recovery period. Scammers who seek to capitalize on desperation will often pose as relief personnel. One report of looters dressing as Con-Ed workers has already surfaced and more disguised thieves could possibly follow.
Understanding what a relief organization will and will not do, can be crucial to dodging cunning con artists.
“There is not a government agency in the U.S. that would make you put up money to get services after a disaster. FEMA does not require deposits or payment for the help they provide,” says Meyer.
While there may not be a way to escape financial issues entirely in the midst of Hurricane Sandy, the 17 million people in FEMA’s disaster area can curb catastrophe by avoiding major pitfalls. Balancing insurance coverage, credit use, spending restrictions and caution towards fraud can seem like a lot to manage during crises, but it can pay off in the long run.