Foolish Four Portfolio
By
When Disaster Strikes
WOODSTOCK, NY (Sept. 28, 1999) -- It's something that happens somewhere else, something heartbreaking we watch on TV -- homes being destroyed, folks canoeing down public streets, and rescue workers searching for lost puppies. But what happens when that somewhere else becomes right where you live?
On September 16, Hurricane Floyd walloped the East Coast, making an unscheduled visit to my state and casually spinning off a set of "tornado-like conditions" along a two-mile-wide swath that intercepted my house. My husband and I huddled in bed, victims of yet-unknown destruction, trembling to the spine-chilling cracks of trees, which minutes later became thunderous, house-shaking thuds.
The next morning, we climbed over the trees blocking our driveway and cried with neighbors while surveying unimaginable damage: hundreds of trees fallen near or on our homes; downed power, phone, and cable lines created a spaghetti marinara with fallen treetops; a neighbor's new car was squashed beneath a tree. When had Mother Nature become so vicious?
Woodstock was in a state of emergency. Residents competed for limited quantities of dry ice; dipped buckets into swimming pools to fill toilet tanks; and cherished the soon-to-be distant memory of good hygiene.
The cleanup began and staggering bills followed. People with chain saws became a hotter commodity than the latest IPO. If you were lucky enough to get workers to your property, it was going to take a deep and merciless bite into your savings account -- if such an account indeed existed.
When folks first enter our forum, we stress two things. Number one: Get out of debt. And number two: Before you relinquish any of your hard-earned cash to the risk of stock market mayhem, get your financial house in order. You should only be investing money that you are reasonably sure you won't need for at least three years. That means money that you might need for a new car, a new house, and emergencies needs to be sitting in the bank.
Many beginning investors, unable to control an energetic desire to start, skip these two basic steps. Wrong, wrong, wrong! It's essential for peace of mind that these two pre-investing steps are taken for financial and emotional security.
Don't get involved in the self-deception of believing that money in the market equals instant cash. I needed workers to cut down dangerously menacing half-fallen trees; the workers needed cash. My Foolish Four stock certificates would not have paid the men carrying chain saws. Plus, with no telephone or electricity, I was going to be hard-pressed to execute a stock trade. Nor, in my traumatized state, was I in a position to make those kinds of decisions. I was too busy trying to hustle up my next meal.
The damage to my property equaled about one month of our living expenses. Had my husband and I not been investors who followed the Foolish credo, circumstances may have become desperate. We were hoping that our insurance companies and the Federal Emergency Management Agency (FEMA) would be there to help defray our expenses and lighten our burden.
Wrong again. Most standard insurance policies cover only $500 worth of tree damage and removal, and that's including the deductible. After Floyd, most of the chain saw gang was charging close to $500 for a single tree! One family in my neighborhood spent $30,000 in tree removal. FEMA might possibly help, but only if a structure was damaged, and only if my town was declared a disaster area. There was no way to be lucky in this mess.
But because we had six months of living expenses liquid in a money market account, we were able to afford handling the disaster's debris. We were Foolishly prepared for the most unFoolish of events.
We were without power for five-and-a-half days, without phone for eight, and without cable for 12 (oh, horror!). But things are somewhat back to normal now. My property still looks like a war zone, but we have a massive crew of buddies coming on Saturday to attempt rural renewal.
As always, there were Foolish lessons to be learned. Make sure you have that three to six months of living expenses set aside in case disaster -- of the natural or unemployment variety -- strikes. And always follow the wisdom of Carl Crandell, a Red Cross volunteer from Arnold, Maryland who was vacationing here when the hurricane hit. He immediately volunteered to help, simply because help was needed.
Use Carl's words to guide your actions, whether you are helping a devastated community recover or giving friendly advice to a newbie in Fooldom: "If everyone helped, no one would need help."
P.S. Victims of Hurricane Floyd can receive help through the American Red Cross.