By SUSAN CALLAHAN, Associate Editor and Featured Columnist
With my sister's permisson, I want to share her story. As I write today, Hurricane Harvey is bearing down on Houston. The news channels have announced, no, shouted the warnings: this is "The Big One", "Get Out", "Don't Make the Mistake of Playing with this Storm", "Harvey Will Be a Monster". I sit in the dry comfort of my home in California but my thoughts are with my sister in Houston. I call her daily, checking on her progress in getting ready to evacuate.
For days, she seems to be taking my advice to leave, now. Then, with Harvey due to land in two days, her tune suddenly changes. "Uh, Suze, Dan and I think we're going to ride it out. You know, my subdiviiosn is on hgh ground. And besides, the Mayor is telling everyone to stay put".
After I hang up the phone, I sit back in my chair dumbfounded. My sister is a smart woman. Her husband is a retired doctor. How can they make such a "dumb" decision?
I call her back and I don't mince words. "Sis, get out. Get out today. Just drive out of there while the roads are still passable. Dry up to Austin. Dry toward Arizona. Just get out of there."
The Shame of the Middle Class Meets the Hurricanes
But just as I'm starting to raise my voice in a panic, a thought suddenly comes to me. This thought would not have occurred to me had I not watched a PBS special called "The Shame of the Middle Class". The special said that about half of us can't raise $400 in an emergency. Certainly, Hurricane Harvey qualified as an "emergency". Maybe this is why my sister wouldn't just go to the nearest dry safe town and check into a hotel.
But, but, but I stammer mentally, this can't possible apply to my sister? Her husband was a doctor, for goodness sakes!"
Then, it hits me. Yes, they are --- were --- upper middle class. But Dan had cancer 5 years ago. Then, my head cleared up more. I remembered that they had stopped taking those twice a year vacations to someplace special. It had also been years since she had mentioned any functions they attended. She had explained to me that they no longer wanted to travel as much. Had I been so blind that I failed to see that my sister was struggling financially?
Everything Alright Moneywise?
I decided to confront her. "Are you and Dan ok? Everything alright moneywise?"
The tears started from a long way away, somewhere deep down. When the trickles came, they broke like a flood through a dam. Out poured the hidden story of medical bills that the insurance company refused to pay until Dan hired a lawyer to go after them and then the lawyer's fees drained them even more.
I was suddenly filled with guilt. I had missed all the signs. My sister had lived through a nightmare and reached out to no one out of shame. I took out my checkbook and wrote her a check for her next month's mortgage. I then told her that I am sorry that somehow I failed to see that my own sister was flailing in the water for so long, needing a little help.
Sometimes, the flood waters, when they recede, they reveal more than they destroy.
Emergency Savings Have to Include More Emergencies These Days
These days, it's not just the "normal" emergencies that the emergency funds must cover. Hurricane Harvey has now passed. My sister made it through. No water touched the house. Everybody is fine. Even if her house had been flooded, it was covered by flood insurance. But that puts her in a special club. For about 80% of homes which were damaged by the flood in Houston were not covered by flood insurance.
But here's the thing. Even if you are covered by flood insurance, the real question is , will the insurance company pay when the time comes? Remember, my sister and brother-in-law actually had medical insurance when he got cancer. That didn't protect them from having to pay through the nose because the insurance company refused to pay for all the expenses my sister and brother in law had to bear. As is often the case, real insurance is not what the policy says, it's what the insurance company says the policy says.
This is where the emergency fund comes in. The general rule of thumb is to keep 6 months of living expenses as an emergency fund. This amount should be kept in a money market fund or cash.
If you can't scrape up 6 months of living expenses, you better try to pay for catastrophic insurance. I know, I know, there goes that "insurance" word again.
Ask your friends and family about their experiences with different insurance companies. Fish around on blogs and forums for real-life experiences with a company whose policy you are considering purchasing.
Failing that, make arrangements with several friends before a flood or storm to stay with them if you have to evacuate. Share details with each other about where you are as a storm approaches.
You can become each others emergency resources.