Are Your Prepared for a Financial Hurricane

As I returned back from a family trip to San Juan, Puerto Rico, I was astounded by the beautiful landscape and beaches and enjoyed the friendliness of the people. It’s shocking to think that less than two years ago the the island was hit hard by Hurricane Maria. The latest report from Puerto Rico’s planning board paints a grim picture, estimating the impact of Hurricane Maria on the island’s economy at $43 billion.

“A lot remains to be done,’’ said island-based economist Jose Caraballo, adding that federal aid and insurance payments have covered just 24 percent of the losses. “The economic impact of the reconstruction has not been felt.’’

It’s hard to imagine the devastating impact this has had on the people living there who need to rebuild their lives with an uncertain future.

I’ve spoken to many recently who are nervous about an impending correction in the stock market and are frustrated with the insignifcant interest earned at banks, so they are turning to paying down their mortgage even faster. It’s not a bad thing to be in the position to have your house paid off, but doing it in a way that gives up liquidity, use, and control of your money may not be optimal. Having the money to write the check to payoff your mortgage if you desired is a good spot to be in.

Imagine if you lost “everything” in something as horrible as Hurricane Maria. If you had your home paid off with limited funds to access, you’d be in the hands of insurance adjusters and may be required to take a loss just to move on with you life.

On the other hand, if you had access to cash, your situation could be much different. You could utilize the money to provide a faster opportunity to get your life back on track. You could secure down payments on a new home as you wait for your insurance settlements on your damaged home. If your employment was impacted, you could use the money to start a new or side business to generate additional revenue.

I know this seems extreme; however, having access to money when a crises hits can be the difference from you struggling to return to your life versus being able to thrive and prosper. Whether losing a job or having a serious health issue, having liquidity can provide the needed resources to handle the storm.

Knowing where to store your emergency and opportunity funds is a different issue. Imagine storing them where it is safe, earns competitive returns, is tax-advantaged, is easily accessible, and comes with a host of other health and life benefits. It exists, it just requires thinking a little differently.