Prepare for the Unexpected

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Building an emergency fund is one of the single most important financial decisions you can make. It is typically a Savings account that contains between 3-12 months worth of expenses. If you lose your job or have some large, unexpected expenses, you dip into your emergency fund. Preparing for financial hardship is a great way to give yourself some peace of mind just “in case” something happens. However, how many people prepare for natural disasters or other situations that can arise? This year, 188,000 people have been evacuated in California because of a potential catastrophic dam failure. In 2012, Hurricane Sandy left my parents without power for a week, and they had to wait on 8+ hour gas lines. In 2005, Hurricane Katrina displaced over 1 million people. The blackout of 2003 left people without power for days, and in some cases, without drinkable water (without boiling) for several days.

It doesn’t matter how much money you have in your emergency fund, if you’re one of the 188,000 who had to evacuate, you had to leave immediately or face several hours of traffic leading to gas stations that ran out of fuel and stores that were out of food. The people who were prepared knew exactly what to take and could leave ASAP. Those people got first dibs on gasoline and temporary housing. You need to apply the same type of logic as an emergency fund to emergency preparedness.

In addition, many people are willing to deploy potentially tens of thousands of dollars into an emergency fund to protect against a potential job loss or other large expenses. Therefore, they should feel comfortable deploying at least a few hundred dollars to maintain emergency supplies and plans in case of a regular, “old fashioned” emergency.

What Are You Preparing For?

We build our emergency funds based on our situation and risk tolerance. For example, if you have an in-demand job and can get another one relatively quickly, you probably only need a 3-month emergency fund. However, if you are a 1099 contractor and it might take 6+ months to land a new gig, you should have at least a 12-month emergency fund. You must apply the same logic to planning for emergencies. First, you need to determine what type of emergency you are susceptible to. Are you on the coast and could be hit by a tsunami, hurricane or flood? Is your area prone to earthquakes or tornadoes? Do you have a basic plan for a fire evacuation?

Great, you’ve figured out what type of disaster can affect you. Now you must figure out what the effects of that disaster would be. Do you need to seek shelter, or will staying put work? How long will you feel the effects? What hardships will you need to face? Will you need to evacuate (“bug out”), or “bug in?” Once you know what you might realistically face, you can figure out how to prepare.

East Coast Concrete Jungle

I live in Washington, DC. The only major natural disasters that might hit is a hurricane or a snow storm. We’ve been hit by a few hurricanes since I’ve lived here. Luckily Sandy was a near miss. I was also studying at Johns Hopkins University in Baltimore during Snowpocalypse, where we got about 70 inches of snow over the course of 2 weeks. Businesses shut down and there was no public transportation. Luckily, I lived on campus and the staff worked very hard to keep the dining halls open, otherwise I wouldn’t have been able to eat. Finally, I lived through the blackout of 2003 so I understand the impact that losing power can have. The effects have only worsened as our society increasingly embraces more electronics. Therefore, I’ve narrowed down the situations that I need to prepare for: hurricanes, snow storms, and blackouts.

All of these scenarios share one thing in common: I should be able to hangout (“bug in”) in my apartment and let it pass. A hurricane might stay overhead for a few hours and I might feel the effects for a week. A snow storm could cripple travel for up to a week (Washington, DC and Maryland are terribly equipped to deal with inclement weather). A power outage probably won’t have a large impact because I live in a major metropolitan area. However, it might not be safe to drink tap water for some time.

This means that I need plans to deal with these threats, and also the proper supplies. My supplies fit into the following categories:

  1. Shelter
    1. two 5′ x 7′ waterproof tarps
    2. 50′ 550 paracord
    3. Bungee cords + non-locking carabiners
  2. Water
    1. 3L hydration bladder
    2. two 2L foldable, standing plastic water pouches
    3. Sawyer mini water filter
    4. 20 water purification tablets
    5. 24-pack 16 oz water bottles
  3. Food
    1. 8 dehydrated meals (Mountain House)
    2. 12 Cliff Bars
    3. 7 days canned food
    4. Solo stove (wood burning stove)
  4. Power
    1. 20,000 mAh portable USB batter
    2. 15 watt solar panel
  5. Tools
    1. Fixed-blade camping knife
  6. Miscellaneous
    1. USB Powered flashlight
    2. Mini tactical flashlight (AA)
    3. Extra AA batteries
    4. Storm-proof matches
    5. Bic lighters
    6. Dryer Lint (good for starting a fire)
    7. Solar-powered inflatable light
    8. Glow sticks

I also bought a very durable backpack (5.11 Rush 72) to put the majority of my gear in. The backpack holds all of the gear except for the 24-pack of water and the 7 days of canned food. It weighs 40 pounds fully loaded. Every weekend, I’m taking my backpack out on walks of increasing length so I get used to carrying it. Its also great exercise. If for some reason, I needed to quickly evacuate my house, I can pick up my backpack and be out in a minute. Realistically, if I had to evacuate, I would toss my bag in my car and drive to my office which is 20 miles north of here. It is extremely safe. In a worst case scenario, I can walk the distance if conditions allowed it, and I had enough early warning, but that would be an absolute last resort.

Peace of Mind is Cheap

You’ll see that my spending significantly went up for February. That’s because I spent about $600 on all of my new gear. At least I think its about $600, I’ll know for sure when I do my February 2017 spending review. The thing is, that $600 buys peace of mind. I know that I’ve prepared for a variety of situations that could have a negative impact. In fact, $600 is a real bargain! I’ve had to save more than $10,000 for my emergency fund to give me peace of mind. Compared to that, this is not only a no-brainer, but extremely “cheap.”

Spending a couple hundred dollars to prepare for emergency situations is a necessity.

Are you prepared for an emergency? Do you have a plan to weather the situation? Are you looking for additional resources? Let me know in the comments!

Good Hunting,

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4 Responses

  1. Comparing your $600 expense to $10,000 is interesting logic! Good post that definitely goes beyond the scope of most emergency planning.

    • David says:

      Thanks! My father is going a little crazy, preparing for the apocalypse. But he brings up some good points. You need some basic emergency preparedness. If we’re willing to save thousands for a job loss, we should be willing to spend a couple hundred so we can survive losing power for a few days

  2. Amy White says:

    Love the concept of a Bug In Bag. I never thought of it that way, but realistically speaking, that is what will happen to most of us urbanites who live in cities like DC and Phoenix (where I live). I totally agree that spending a few hundred dollars is well worth the price when compared to my regular emergency fund. Great Post!

    • David says:

      Thank you! It’s a relatively cheap way to protect yourself from 90% of the emergencies that can happen to you. Plus, us personal finance people love preparing! Best case scenario is you now have some decent camping gear. Worst case scenario, you need to evacuate (like those folks South of the Dam in California) and you’re already set to go.

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