This is the time where I am thankful for two things:
1. Its the beginning of the month and since “Hurricane supplies” is not a line item in our monthly budget, I will have to make adjustments accordingly.
2. We have an Emergency Fund.
This is Hurricane Irma. Since the storm starts with “I”, that means its the NINTH named storm of the 2017 Hurricane Season. There are two other storms happening at the same time, which means there are 11 named storms so far and the season doesn’t end until November 1st.
PHOTO: National Weather Service Hurricane Center
Hurricane Irma will have a direct impact on the United States. Today, the state of Florida will take the first hit as the storm goes up the coast and is predicted to maintain a northwest track – although, that could change throughout the day. We live in the Southeast corner of NC which means we have also been making preparations.
Many of us have spent that last week preparing – making evacuation plans, checking the supplies and re-familiarizing ourselves with all the weather terms. For many, its a very stressful time.
For me, the last week has been spend creating an evacuation plan, checking our supply list, purchasing supplies and keeping everyone informed by sharing storm information on social media.
One thing I did not stress about is the amount of money we were spending on updating the Hurricane Box and adding supplies. We also made plans to evacuate if needed which meant extra gas money and hotel money. We are fortunate to have the money on hand to do what we need to do in the event of a storm because seven years ago we made the decision to get our finances in order and this month, we will celebrate four years of being debt free.
A storm is a great reminder of WHY we made that decision. However, it doesn’t always have to be a weather related storm to be the turning point of making better financial situation. It could be a personal storm – the death of a family member, loss of a job or some other catastrophic event that impact your financial situation.
THIS is exactly the reason why its important to take control of your finances. You need to have a budget and an emergency savings account. You need a plan and the actionable steps to follow that plan. What if this storm happened at the END of the month and you lived paycheck to paycheck? Where would you get the money to buy supplies or pay the insurance deductible?
Being proactive is the difference between a crisis and an inconvenience.
In the spirit of the five categories of a Hurricane, I developed this scale from my own personal experience as well as that of a financial coach.
Just like the Hurricane, you know what category your fiances fit in to. You know what category you could fall into given a change in course, so to speak. Just like we knew 10 days ago that Irma was coming, you can asses your finances and know your situation.
Which of these sound like your financial situation?
Category 1: Earned income, all the bills are paid, completely debt free (mortgage included). There’s a lot of money left over at the end of each month and you just need a plan.
If you are in this category, you need to start looking into long-term financial planning. Make sure the emergency fund is fully funded and you have a five and ten year plan in place.
Category 2: Earned income, all the bills are paid, NOT debt free. There’s a lot of money leftover at the end of each month and you need a plan to become debt free, including the mortgage.
If you are in this category, you need a plan to pay off that mortgage as soon as possible so you can start long term financial planning.
Category 3: Earned income, all the bills are paid, NOT debt free. There’s little to no money leftover at the end of each month and you need a plan to manage the money you do have AND begin to pay down the debt. However, any minor financial event will quickly place you in a Category 4 or 5.
A financial situation in this category needs serious help and fast! It will not just “get better”. Stop managing a financial crisis and start coming up with a plan to stabilize the situation.
Category 4: Earned income, behind on some bills, NOT debt free. There is NO money leftover at the end of the month and you find yourself literally living below paycheck to paycheck. Maybe you are supplementing income through credit cards or loans. You are super stressed the last few days before you get paid again that nothing “major” happens where you will need money because there’s nothing there until payday.
It’s time to leave this situation. If we had to evacuate because of a storm, this is the time you gather up all things that are necessary and leave everything else behind. Same is true with this financial situation. It’s time to buckle down on the necessities and leave everything else behind.
Category 5: In weather terms, a Cat 5 Hurricane leaves “Catastrophic Damage” . This is the worst of all the storms. The highest Category a hurricane can receive. In this category, you have little to no income, you are behind on your bills, collection agencies are calling, you have debt and you are barely able to get by day to day in terms of money.
This is the worst financial situation to be in, no doubt! However, there is hope for recovery and rebuilding of the budget. You may need a lot of people to help you, that’s ok. In time, you will recover from this.
Just like a Hurricane, financial situations can change in a hurry. You NEED to be prepared.
Do you need help getting through your financial storm? I have all the “supplies” that are needed and the knowledge to use them in a way that best fits your situation. Over the last five years of coaching, I have attained the knowledge and created a list of resources that will help you. Remember, being proactive is the difference between a crisis and an inconvenience. Regardless of whether you just need a review of your finances or your are in or heading toward the “Cat 5” description, I’m here to help.
Click HERE for more information.