Are you prepared for financial disaster?

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Are you prepared for financial disaster?
9
Mon, 09-15-2008 - 10:40am

I live in an area where many people work in financial services, and the events with Lehman Brothers and Merrill Lynch are causing great anxiety if not outright pain. My colleague's cousin lost his high-level financial job over the weekend. He and his wife live in an enormous house in a very expensive town and have three kids in private school. His wife is in real estate, which is going to fall dramatically because of all the turmoil.

Although DH and I have nothing to do with the financial services industry, I can't help but wonder how this will affect our home value and the economy in our area. It also got me thinking more concretely about what we could afford if there were a similar downturn in my industry.

What kind of financial emergencies are you prepared for? Could you survive a job loss due to your company going under? What if the entire industry falters? Does your insurance cover medical emergencies? If you or your spouse were disabled, would your family have to cut back their standard of living? What do you need to do to be better prepared?

Kelly

iVillage Member
Registered: 08-22-2008
Mon, 09-15-2008 - 11:10am

Believe me, I think about it.

iVillage Member
Registered: 06-18-2004
Mon, 09-15-2008 - 11:43am

We aren't as prepared as I would like, but unless there is suddenly No need for National Security, I think DH and I will be fine.

iVillage Member
Registered: 04-12-2007
Mon, 09-15-2008 - 6:51pm

Kellie,


The CNN news report that I saw addressed your question.

iVillage Member
Registered: 09-22-1999
Mon, 09-15-2008 - 11:31pm

What kind of financial emergencies are you prepared for?

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Tue, 09-16-2008 - 9:14am

I'm definitely a little anxious about what's going on in the financial services industry. I'm afraid I'll lose the money I've saved if the bank it's with goes under (which is not realistic because my savings don't exceed FDIC coverage of $100,000, but what if multiple banks fail?), and that the value of my 401k will dwindle to nothing. I'm not planning on moving for another 20 years, so I can ride out a downturn in housing prices, so I'm not terribly concerned about that.

To answer my own questions about "What kind of financial emergencies are you prepared for?"

Could you survive a job loss due to your company going under? ~ I have enough savings to get through maybe a year of no income. But towards the end of that, I'd start to panic.

What if the entire industry falters? ~ This has happened to me. At the time, I didn't recognize it as being a permanent correction, and it took me far too long to respond by altering our standard of living. I could survive if the entire industry falters, and I'm alert for signs of it now. If it happens, I'll start a new company with one of my colleagues, and I think we'd be fine.

Does your insurance cover medical emergencies? ~ Yes, I have very good health insurance.

If you or your spouse were disabled, would your family have to cut back their standard of living? ~ Yes. I should look at my disability coverage, because I suspect it wouldn't cover anything close to our current standard of living. Since DH is a SAHD, he can't get disability insurance.

What do you need to do to be better prepared? ~ Review my insurance coverage (disability and property - I know I've got plenty of life insurance). Build a bigger cushion. Invest more, and better.

And I have no emergency escape plan. We don't live in an area subject to hurricanes, tornadoes, floods, or fire, but any one of those could happen. And I do live close to a nuclear power plant. I need to put together a plan for escape.

Kelly

iVillage Member
Registered: 01-25-2006
Tue, 09-16-2008 - 5:53pm

What kind of financial emergencies are you prepared for?

iVillage Member
Registered: 04-10-2003
Wed, 09-17-2008 - 10:53am

Hmm good questions. Here are my thoughts:


What kind of financial emergencies are you prepared for? At the moment only little ones, lol. I have $2000 in savings: $1000 is in an efund for emergencies, and the other is spread over various accounts (car maintenance, home maintenance, pet fund, prescription coverage etc). I could pull money out of these if I had to, but I would prefer not.


Could you survive a job loss due to your company going under? Well I work for the government and am permanent, so unless I do something REALLY stupid, I don't have to worry about this one. Having said that, If I were to suddenly be unemployed, I would be in BIG trouble!


What if the entire industry falters? Again, I am government so this is unlikely. Having said that, several of my friends in Alberta are in trouble because the province just merged all the health regions (my background is Health Care). All the CEO's were fired and many people are losing their jobs. So maybe I'm not as immune as I thought . . .


Does your insurance cover medical emergencies? Universal health care covers medical emergencies. I have prescription drug coverage through work that would kick in if needed.


If you or your spouse were disabled, would your family have to cut back their standard of living? You bet I would. I'm a 27 year old single homeowner, so I would have to cut back to whatever my disability insurance would cover!



Bex -

Avatar for cl_beckymk
iVillage Member
Registered: 03-19-2003
Fri, 09-19-2008 - 8:44am
Unfortunately....we are one of those that would be in a horrible bind.
iVillage Member
Registered: 09-25-2003
Sun, 09-21-2008 - 2:54am

We are not prepared. And we live in an earthquake zone - they've been predicting the Big One for years, now, and it still hasn't happened but the little ones haven't alleviated the pressure, so I should still be worried.

If one of us lost his or her job, we would be okay - right now, half of Dh's income and 2/3 of mine is going toward debt repayment. We are on a very aggressive plan. We could pay our bills and make minimums on our debts on just one income.

If we both lost our jobs, it would be bad. Very bad. We have a little bit in a savings account, but not even a thousand. Dh has trouble with the idea of an emergency fund: he thinks we could just use our credit cards if something happened.