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CONFIDENTIAL - FOR INTERNAL USE ONLY
THERE’S MORE TO CLEAN UP AFTER A NATURAL DISASTER OR HURRICANE THAN JUST DEBRIS.
RESOURCES COMPILED BY Pete the Planner® Financial Wellness in cooperation with Arthur J. Gallagher & Co. Some text is taken directly from FEMA.org in order to guarantee its accuracy.
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FINANCIAL SELF-CHECK You’ve been through a great deal of stress and turmoil because of the storm, and while the waters have receded, the chaos remains. Just as you’re likely taking inventory of which possessions and surroundings you’ll need to fix or replace, you must also take inventory of your financial resources to fund those fixes and replacements. In other words, what tools can you use to deal with the financial realities of finding normalcy once again? It’s quite possible your insurance company won’t pay for all the repairs. This means you need to evaluate both what truly needs to be replaced and how you’re going to pay for items not covered by insurance. Your employer, Pete the Planner and Arthur J. Gallagher & Co. have prepared this guide to help you put the financial pieces back together.
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Table of contents FINANCIAL RECOVERY TO-DO LIST
04
PAYDAY LOANS
08
WORST-CASE SCENARIOS
09
ALL ABOUT FEMA
10
FILING INSURANCE CLAIMS
13
INCOME ASSISTANCE
14
AUTO ASSISTANCE
16
BORROWING AGAINST RETIREMENT
17
HELPING YOUR PETS
18
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Your Financial Recovery To-Do List: 01 CONTACT YOUR MORTGAGE BANK
Let the bank know about any damage to your home. If you’re going to have trouble making future mortgage payments because of a disruption to your income, it’s important to make them aware of this. Many banks have already committed to leniency policies due to the hurricane. If your bank has a special program, sign up for it if you need to.
02 CONTACT YOUR OTHER CREDITORS
03 MIND YOUR CREDIT
Whether it’s a car loan, a credit card, student loan or a medical bill, an unexplained late payment can complicate your life even more. You can find a list of all your creditors on your credit report, which you can get for free at AnnualCreditReport.com
If you need to borrow money to rebuild, your bills MUST be paid on time or you risk interest rate increases. Additionally, if you’re securing multiple credit cards, whether they’re major credit cards like Visa or MasterCard, or simply store credit cards, be sure to stay organized. Credit card balances can add up fast, especially when you’re distracted by the stress of your current situation. Make purchasing and borrowing decisions in relation to your total financial reality and not just your immediate situation.
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04 IDENTIFY SOURCES OF CASH
05 WATCH OUT FOR SCAMS
Unless your bank account is flush with cash, you’ll need to find a source of money. You are in the midst of the biggest financial emergency you’re likely to ever face. You can’t be afraid to make difficult decisions you otherwise wouldn’t make. For instance, while your company-sponsored retirement plan is meant to provide for your future, after you achieve the age of 59 1/2, you may need to look at it as a source of immediate cash. You can accomplish this via hardship withdrawal or loan. Take the time to familiarize yourself with your employer’s loan policy because some plans permit a participant to have only one loan. This is important because if you complete an initial assessment of cash needs, take a loan, and then later figure out that the initial loan wasn’t enough, you may not be able to go back to get more cash. Keep in mind that your paycheck will be reduced to repay the loan until the loan is repaid. Cash value life insurance policies are another good source for emergency cash. You can simply borrow from the cash value of the policy and then repay the loan over time.
Sadly, criminals often target the most vulnerable. That means the person who appears to be helping you rebuild could likely be looking to take advantage of you. This is undoubtedly frustrating because it can compromise the much-needed trust you place in others, but you must remain vigilant. Only hire from registered businesses through the appropriate state government and be wary of contractors asking for cash payments only.
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Your Financial Recovery To-Do List: 06 GET A CARFAX
When purchasing a car over the next several years, insist on getting the title history of the car you’re purchasing. There will be an extraordinary number of automobiles that should have been permanently destroyed, but instead will be sold to unsuspecting buyers.
07 RE-EVALUATE YOUR LIFESTYLE
08 MAKE A PRIORITY LIST
The hurricane brought much pain and suffering, but it also brought the opportunity to re-evaluate your relationship with your worldly possessions. If prior to the flooding you were living an unsustainable lifestyle, consider adopting a fresh new perspective. The idea of resetting your standard of living can be especially practical if you’re going to have to go into debt to recreate your former lifestyle. For example, you shouldn’t feel obligated to spend the same amount on a car that you did prior to the hurricane. This is the perfect opportunity to reset your spending habits.
Together with your family, you should determine which areas of your life should receive money and attention first. It’s possible you’ll be forced to give tasks attention as they happen in real time, but with some planning you may be able to make more calculated and prudent decisions. The amount of money you have access to, both cash and borrowed funds, should help guide your prioritization during the rebuild.
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09 SEEK OUT ADDITIONAL INCOME OPPORTUNITIES
There will be plenty of opportunities to volunteer as your community rebuilds, but there may also be opportunities to put in overtime at your primary employer or take on additional employment to help rebuild your community.
10 GET ON THE SAME PAGE WITH YOUR SIGNIFICANT OTHER
11 SHUT OFF SERVICES YOU AREN’T USING
If you share finances with someone, make sure you have a cooperative game plan. The hurricane was an incredibly emotional experience, and you and your significant other may have different thoughts on how to proceed from here. Don’t assume you agree on all aspects of the rebuild. Set aside a specific time to work though this guide and to create your priority list together.
Whether it’s video streaming services or any other subscriptionstyle service such as cable or internet, call the company and shut it down if you aren’t using it. It’s possible to waste hundreds, if not thousands, of dollars on services you aren’t even able to use while you’re rebuilding.
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SHOULD I TAKE OUT A PAYDAY LOAN?
PAYDAY LOANS ARE ALMOST ALWAYS A BAD IDEA.
Payday loans are designed to hook the borrower on for multiple loans, and interest rates can exceed 1000 percent on some loans. Based on what you’ve been through during the hurricane, you may feel compelled to get quick money at a payday loan store— don’t do it. Exhaust every other possibility, and if you absolutely must take out a payday loan, know the terms and pay it back as soon as possible.
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What do I do if I can’t make a current debt payment? In the event that you can’t make a payment on a credit card, medical bill, or any other debt, call your creditor immediately and let them know you were affected by the hurricane. Ideally, the institution will have a plan in place for people affected by the storm. Even if they don’t, your call to them will let them know that you aren’t in a position to pay. Communicating openly with your creditors is better than leaving them in the dark, especially when you’re unable to make a payment.
SHOULD I FILE BANKRUPTCY IF I OWE TOO MUCH MONEY DUE TO THE STORM? Bankruptcy is a very serious decision, and should be considered as a last step, not a first step. A good rule of thumb is if you can’t grind your way out of consumer debt within five years, then you should begin to consider bankruptcy protection. Additionally, if you haven’t been making payments on your debts for quite some time, bankruptcy won’t provide much cash flow help at all. The goal of bankruptcy is to provide relief by eliminating or reducing regular monthly payments. If you aren’t improving your cash flow (because you currently aren’t making payments), then bankruptcy might not be the solution you’re seeking.
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WHAT DOES THE FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA) DO?
FEMA IS THE NATION’S LEAD EMERGENCY MANAGEMENT AND PREPAREDNESS AGENCY If you are a renter or homeowner, you may qualify for assistance. By law, FEMA assistance cannot duplicate the assistance you receive from your insurance company, but you may receive assistance for items not covered by insurance. If your home was impacted by a major disaster, we recommend that you apply for assistance.
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What does individual assistance through FEMA cover? THE FOLLOWING CAN BE PROVIDED THROUGH THE INDIVIDUALS AND HOUSEHOLDS PROGRAM: HOUSING NEEDS TEMPORARY HOUSING (a place to live for a limited period of time): Financial assistance may be available to homeowners or renters to rent a temporary place to live. If no rental properties are available, a government housing unit may be provided, but only as a last resort. LODGING EXPENSES REIMBURSEMENT: Reimbursement of hotel expenses for homeowners or renters may be available for short periods of time due to inaccessibility or utility outage if not covered by insurance or any other program.
OTHER NEEDS REPLACEMENT: Financial assistance may be available to homeowners to replace their home destroyed in the disaster that is not covered by insurance. The goal is to help the homeowner with the cost of replacing their destroyed home. PERMANENT OR SEMIPERMANENT HOUSING CONSTRUCTION: Direct assistance or money for the construction of a home. This type of help occurs only in limited areas or other locations specified by FEMA, where no other type of housing assistance is possible.
Assistance is available for necessary expenses and serious needs caused by the disaster. This includes: • • • •
• • • •
REPAIR: Financial assistance may be available to homeowners to repair disaster-caused damage to their primary residence that is not covered by insurance. The goal is to make the damaged home safe, sanitary or fit to occupy.
•
•
Child care expenses Medical and dental expenses F ● uneral and burial expenses Damages to essential household items (room furnishings, appliances); clothing; tools required for your job (specialized or protective clothing and equipment); necessary educational materials (computers, school books, supplies) Fuel for the primary heat source (heating oil, gas) Cleanup items (wet/dry vacuum, dehumidifier) Damage to an essential vehicle Moving and storage expenses (moving and storage of personal property while repairs are being made to the primary residence, and returning property to the primary address) Other necessary expenses or serious needs as determined by FEMA Other expenses that are authorized by law
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WILL FEMA ASSIST ME IF MY INSURANCE ALREADY COVERED THE LOSS?
YOU WILL HAVE UP TO 12 MONTHS FROM THE DATE YOU REGISTERED WITH FEMA TO SUBMIT INSURANCE INFORMATION FOR REVIEW. FEMA cannot provide money to individuals or households for losses already covered by insurance.
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If you have not already contacted your insurance agent to file a claim, do this as soon as possible. FAILURE TO FILE A CLAIM WITH YOUR INSURANCE COMPANY MAY AFFECT YOUR ELIGIBILITY FOR ASSISTANCE. AFTER FILING A CLAIM, IF ANY OF THE FOLLOWING SITUATIONS OCCUR, FEMA MAY BE ABLE TO PROVIDE SOME ASSISTANCE:
01
02
Your insurance settlement is delayed. Delayed means a decision on your insurance settlement has been delayed longer than 30 days from the time you filed the claim. If a decision on your insurance settlement has been delayed, you will need to write a letter to FEMA explaining the circumstance. You should include documentation from the insurance company proving that you filed the claim. If you filed your claim over the telephone, you should include the claim number, the date when you applied, and the estimated time it will take to receive your settlement. Any help awarded to you by FEMA would be considered an advance and must be repaid to FEMA once an insurance settlement is received.
Your insurance settlement is insufficient to meet your disastercaused needs. If you have received the maximum settlement from your insurance and still have an unmet disaster-caused need, you will need to write a letter to FEMA indicating your unmet need. You will also need to send in the claim settlement documentation from your insurance company for review.
03 You have exhausted the Additional Living Expenses provided by your insurance company. If you have received the maximum settlement from your insurance for Additional Living Expenses (Loss of Use) and still need help with your disastercaused temporary housing need,
write a letter to FEMA indicating why you continue to have a temporary housing need. You will also need to provide documentation to prove use of Additional Living Expenses from insurance, and a permanent housing plan. â—?
04 You are unable to locate rental resources in your area. The FEMA Helpline (1-800-621-3362 / TTY 1-800-462-7585) can assist you in finding rental resources in the disaster area by searching online with you. If no resources are available in your county, then the helpline agent can help you search for resources in an adjacent county.
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WHAT IF I LOST WAGES BECAUSE OF THE HURRICANE?
IF YOU LOST WORK DUE TO A FEDERALLYDECLARED DISASTER, YOU MAY QUALIFY FOR DISASTER UNEMPLOYMENT ASSISTANCE (DUA). Contact the local office of your state’s Unemployment Commission for further information regarding DUA benefits.
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What are some ways I can increase the amount of money coming into my household via my paycheck? YOU MAY BENEFIT FROM INCREASING YOUR MONTHLY INCOME NOW IN ORDER TO HELP YOU COVER YOUR INCREASED EXPENSES. THERE ARE A FEW DIFFERENT WAYS TO ACCOMPLISH THIS:
01
02
If you generally receive a tax refund, consider adjusting your tax withholding for the time being. This will increase your take-home pay and essentially provides your tax refund in small increments now, as opposed to in a lump sum later. It’s vitally important to put this extra monthly income to good use because you likely won’t receive as big of a tax refund at tax time.
Consider temporarily reducing retirement plan contributions. There are some dangers in doing this, such as simply forgetting to start the contributions back up. But if you need as much as cash on hand as possible, you can accomplish this by reducing your plan contributions. Try to at least hit the match and think twice about reducing your contributions below the match.
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Can I get assistance to repair my car that was damaged by the storm? AUTO INSURANCE AND THE SMALL BUSINESS ADMINISTRATION (SBA) ARE THE TWO PRIMARY RESOURCES AVAILABLE TO THOSE WHO HAVE DAMAGE TO A VEHICLE AS A RESULT OF A DISASTER.
01
02
If you are not able to secure assistance through either of these organizations, FEMA may be able to assist with the cost of repairing and/or replacing your vehicle that is no longer usable because of disaster-related damage. Verification may be required to show the vehicle is:
An estimate may be required stating that the damage to the vehicle was a direct result of a Presidentially-declared disaster. Transportation repair and replacement award amounts are set by the state on a yearly basis and FEMA cannot exceed the amount of transportation assistance established by the state.
•
•
registered in the applicant’s name or in the applicant’s dependent’s name, and ●insured and conforms to applicable State laws.
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Would the IRS allow me to borrow against my retirement plan? EVEN IF YOUR EMPLOYER DOESN’T ALLOW LOANS FROM YOUR COMPANY-SPONSORED RETIREMENT PLAN, THE INTERNAL REVENUE SERVICE (IRS) IS ALLOWING THOSE DIRECTLY AFFECTED BY THE STORM TO BORROW AGAINST THEIR RETIREMENT PLANS. To qualify for these special distributions, the distribution needs to have been made after August 23, 2017, and no later than January 31, 2018. To learn more about this onetime exception, click here. The IRS has also liberalized hardship distribution rules. Eligible retirement plan participants will be able to access their money more quickly with a minimum of red tape. The plan can ignore the
reasons that normally apply to hardship distributions, allowing them, for example, to be used for food and shelter. The six-month ban on 401(k) and 403(b) contributions that normally affects employees who take hardship distributions will not apply. A person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived
or worked in the disaster area. The tax treatment of loans and distributions remains unchanged. Ordinarily, retirement plan loan proceeds are tax-free if they are repaid over a period of five years or less. Under current law, hardship distributions are generally taxable and subject to a 10-percent early-withdrawal tax.
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SPEAKING OF RAINING CATS AND DOGS...
OVER 1/3 OF PET OWNERS DON’T HAVE A DISASTER PLAN IN PLACE FOR THEIR ANIMALS. SIGN UP FOR SAVE OUR PETS.
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SHE STOOD IN THE STORM, AND WHEN THE WIND DID NOT BLOW HER WAY, SHE ADJUSTED HER SAILS. —EL IZ A B ETH EDWA R DS
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Well, now what? You can do it. Onward. Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc., a non-investment firm and subsidiary of Arthur J. Gallagher & Co., is a licensed insurance agency that does business in California as “Gallagher Benefit Services of California Insurance Services” and in Massachusetts as “Gallagher Benefit Insurance Services.” Investment advisory services and corresponding named fiduciary services may be offered through Gallagher Fiduciary Advisors, LLC, a Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Certain appropriately licensed individuals of Arthur J. Gallagher & Co. subsidiaries or affiliates, excluding Gallagher Fiduciary Advisors, LLC, offer securities through Kestra Investment Services (Kestra IS), member FINRA/SIPC and or investment advisory services through Kestra Advisory Services (Kestra AS), an affiliate of Kestra IS. Neither Kestra IS nor Kestra AS is affiliated with Arthur J. Gallagher & Co., Gallagher Benefit Services, Inc. or Gallagher Fiduciary Advisors, LLC. Neither Kestra AS, Kestra IS, Arthur J. Gallagher & Co., nor their affiliates provide accounting, legal, or tax advice. This material was created to provide accurate and reliable information on the subjects covered, but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation.
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