3 Steps for Financial Recovery After a Disaster
I swung my legs off of the bed where my wife and I had started to settle down for the night, and put my feet on the floor. Squish. My first thought was where is that dog, I'm going to shoot her!!! I took another step. Squish. This can't be good. I flipped on the light, and saw a puddle of water next to my bed! Wide awake now, I realized that our bedroom was gradually filling up with water. I looked outside and saw some standing water next to the bedroom. Thinking quickly, I had my wife grab a bunch of towels to start mopping up the water while I grabbed a shovel and headed outside. I dug a trench in the middle of the night from the corner of our bedroom down the hill, and water started pouring out. Safe! For now…
The rain continued to pour down over the next few days, but my temporary fix held, the foot deep trench I had dug looked like a small stream. The little bit of water that came into the bedroom we mopped, and the dehumidifier I purchased churned out lots of water, leading me to believe that maybe we caught this in time for this to not turn into mold. Then our chimney started leaking. Buckets set, I decided it was time to call in the big guns. I called a contractor I had worked with in the past.
|Calling for Help – Photo by Adrianna Calvo from Pexels|
Ronnie came out the next morning and got a tarp over the chimney. The fix? A new chimney cap and repainting inside, a pretty decent chunk of money, but not horrible. Ronnie asked, “Do you want us to pull up the floor and get some shop vacs going?” “No.” I replied, “I think we got a handle on it.” Somewhat proud of my efforts, I explained, “I dug a trench away from the house and it seems to be draining now, plus my wife just got off work and needs to sleep.” Cocking his head to the side, he replied, “OK, whatever you want, let me know if anything changes.” Was that a bit of a condescending tone? I probably imagined it…
Six hours later, I got a panicked call from my wife. “There's water everywhere!!!” She had woken up to a pool in our bedroom! Crap!!! I headed home and called Ronnie. A few hours later, a team of guys was in our house, helping rip up the floors, pulling stuff out, and vacuuming out the water. Luckily, our furniture seemed to be reasonably intact since the water didn't really have a lot of time to sit. I thought well at least it isn't worse, this probably won't be too bad to fix.
We poked a hole in the drywall close to where the water seemed to be coming from, and moldy water rushed in. I had a sinking feeling, and a short conversation with Ronnie confirmed my fears, all of the walls in the bedroom have to come down to waterproof the walls and get the mold out. I called the insurance company, only to be told that we did not have flood insurance, although we had some coverage available for backed up drains.
Flashing forward a bit in time, we settled with the insurance company for about $8,000 and had a bill in hand for $23,000. That left me roughly $15,000 short. I had also just had some medical issues for my kids come up, and my emergency savings were all but gone. Murphy strikes again!
So how did I deal with this, and how can you recover from a financial disaster like this?
3 Steps For Recovering Financially From a Disaster.
- Put on a Band-Aid
- Go to “The Doctor”
- Let it Heal
1. Put On a Band-Aid
The first step in a disaster is to deal with the immediate need. Put a band-aid on it. What do you have to do for your family to be safe? Do that. My guess is if you are reading this article, you've probably gotten past the life-threatening parts of a disaster, and have a place to stay. If not, then call your local authorities, I can't help with that!!! If you don't have shelter, I'd recommend calling your insurance company or the Red Cross to get some options, they have specialized teams and may be able to help or at least point you in the right direction.
The second part of the band-aid portion is to make enough repairs for your family to be able to live in your house. That means getting estimates and beginning work. How can you fund it? Insurance is always the first and best option, but barring that you might consider a quick fix like a 0% interest balance transfer from your credit card, which is what I personally did as a band-aid. That can buy you some time while you look for better funding sources.
2. Go to “The Doctor”
The second step is to go to “The Doctor”. These are the professionals that can help you out. If you haven't already talked to whoever handles disaster recovery in your town, you should figure out who that is and make sure you aren't missing out on financial assistance through those groups.
The other doctor in financial terms may very well be your local banker. They can discuss your situation and give you a few options for funding based on what you can afford to pay back each month. How I did this was to lay out all of my current loans and assets and asked my banker to give me some options on consolidating things. A few days later, I had a few options. They had found several ways for me to save large chunks of interest and work within my budget! I reviewed everything with my wife and got the process going.
3. Let it Heal
By this point, you've taken care of the immediate need, and gotten some professional help. Now you need to let the financial wound heal. That means being careful with your money so that you are not creating any more debt, and are paying down your existing debt. Financial wounds often take years to heal, so be patient, and follow your financial plan. As long as you are heading in the right direction, it will be OK! If you don't have a financial plan yet or have struggled financially, then I recommend reading my article on wealth creation: 10 Steps to Creating Wealth
Update: This article was written a few years ago. I've written an updated guide to personal finances which is included with our membership plans, “How I added more than $100,000 to my net worth over the last few years while raising five kids: Keys to your financial success”. Click here to sign up and get access.