How to Protect Yourself: Lessons from Harvey, Irma and Equifax

The vision of Carver Financial Services Inc. has always been making people’s lives better. A big part of this vision is protecting and enhancing your lifestyle. We cannot always be prepared for the unforeseen, but we can take steps to protect the quality of our lives and our future when disaster strikes. We never know when we could be impacted by a natural disaster, a financial crisis or a man-made issue. This month we experienced two major hurricanes and a huge hack of personal data.

You could face a local problem, such as being stuck in your car in a snowstorm, or you could be affected by something as widespread as a weather event like Hurricanes Harvey or Irma. All kinds of natural, and financial, disasters can occur. The key is to be prepared for whatever may happen.

As always, please contact us with questions, and let us know if we can be of service in any other way.

Here are 10 tips for getting yourself and your family prepared for various types of disasters.

Ensure Your Personal Comfort and Safety

  • If there is a warning of a hurricane, tornado, earthquake or other natural disasters, get your cars, pets and personal property out of the expected path well ahead of the storm.
  • Keep a three- to five-day supply of water in your home. A gallon of fresh water per family member per day is a rule of thumb. Keep nonperishable food in your home. If there is a power outage, your refrigerator won’t work unless you have a generator at home. Nuts, dried fruit, energy bars and canned goods are good choices. Make sure you have a manual can opener!
  • If you live in an area where there are power outages or where the loss of power (such as a very cold climate) can be dangerous, consider buying a whole-house generator.
  • Keep a small amount of cash at home, not a large sum, but enough for a couple of days in case credit cards and ATMs are not working because of a power outage.
  • Buy a spare power source for your cell phone and/or a hand-crank light charger.
  • Buy a manually powered or battery-operated radio so you can listen to developments in your area concerning evacuations.
  • Tools to use in case you need to turn off utilities, such as pliers or a wrench.
  • Sanitary wipes and trash bags with ties. If you lose all your utilities, you need to handle your family’s bathroom needs in a sanitary way so no one gets sick.
  • Put together a survival kit that includes first-aid supplies, dust masks, a flashlight with extra batteries and heat-reflective blankets.
  • Utilize a credit monitoring service to alert you to potential identity theft and credit issues.

Protect Your Stuff

Robert Hunter, director of insurance at the Consumer Federation of America, estimates that only 2 in 10 homeowners whose homes were damaged by Hurricane Harvey have flood insurance coverage. Those who now have flooded basements, soaked furniture, water-damaged walls, and collapsed roofs will have significant out-of-pocket expenses.[1]

Don’t let this happen to you! If you haven’t done so already, do a full insurance review and make sure you have proper insurance coverage for your home, jewelry, and other valuables so you can be reimbursed in case of theft or a natural disaster. Also get flood and/or earthquake insurance if you live in areas that experience these types of disasters.

Work closely with your insurance agent or financial advisor to make sure your insurance coverage fits your needs. Many people make costly assumptions. For example, you cannot assume that a standard policy will protect you if your house develops mold or sewage-backup problems. Many homeowners’ policies do not cover this type of damage. Another costly assumption is that if you live outside California, you don’t need earthquake coverage. The truth is that Alaska, Hawaii, Nevada, and Washington all have more earthquakes than California.[2]

We recommend that you take a video of your home and all the furniture and other items in it. This can be very helpful in remembering what you had and in documenting the contents of your home for insurance purposes in the event of a complete loss. Upload this list to cloud-based storage.

Equip Your Vehicle

Even if there is not a widespread disaster, you could be stranded in your car. If you live in a very cold climate, keep a blanket, some water, and a jump-start kit in your car.

Here are some items you will need if you get stranded in your car: a spare tire in good condition, a tire inflator and sealer, jumper cables, a tire-pressure gauge, your car’s operating manual, duct tape, WD-40, a first-aid kit, a flashlight with good batteries, a multi-tool, matches, a candle in a can for winter emergencies, energy bars, bottled water, a weather radio, a seat-belt cutter and window breaker, flares or a reflective triangle, printed maps, an ice scraper, a Mylar space blanket and a carpet remnant you can put under your tires to gain traction in the snow.[3]

Protect Your Identity and Personal Information

In early September, credit-monitoring service Equifax announced that 143 million Americans’ personal information had been compromised five weeks earlier. This massive data breach of consumers’ personal information is one of the worst data breaches in history.  One way to protect yourself after this latest breach is to place a credit freeze on your security file with Equifax at https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp and also with the other credit bureaus’ Transunion and Experion. While a deterrent, credit freezes do not prevent thieves from gaining access to existing accounts.

We strongly recommend that you use a credit-monitoring service such as Lifelock or Identity Guard. You can see a list of such services at:

http://www.nextadvisor.com/credit_report_monitoring/compare.php

In addition, to make it more difficult for criminals to hack into your accounts, we recommend using two-factor authentication (2FA) where available. This adds a second level of authentication to an account login. Raymond James Investor access offers this service, as do widely used companies such as Google, Apple, and Microsoft. When you enter only your username and one password, that is considered single-factor authentication. In contrast, 2FA requires you to use two out of three types of credentials before you can access an account. This can include the following:

  • Something you know, such as a personal identification number (PIN), password or a pattern
  • Something you have, such as an ATM card, phone or vehicle key fob
  • Something you are, such as a biometric like a fingerprint or voice print
  • Something that is texted to your phone

According to the website SecurityIntelligence, public adoption of 2FA has been slow. For example, a Dropbox official recently reported that less than 1 percent of the company’s customers had taken advantage of its 2FA option. Online services are often reluctant to introduce any inconvenience into the login process. But attitudes are beginning to change because of recent, well-publicized thefts of large password files.[4]

Please note that two-factor authentication is not the same as two-form authentication. The latter technique uses a second login gate, such as a challenge question, to validate a user’s identity. It is the least effective form of two-factor security, although it’s better than nothing.

Prevent a Financial Crisis

Finally, let’s talk about how to protect yourself from a future financial crisis.

Markets can and do fluctuate sometimes to extremes. It is important to have enough cash and cash equivalents on hand for near-term needs while having a portfolio that is allocated in a way that meets both your long-term goals and your risk tolerance.

We are not referring to cash in the home but rather in a money market or bank account. In this regard, we recommend a six-month reserve plus any funds you anticipate taking out for larger purchases. Your portfolio should be proactively reviewed and updated with an eye to the future, rather than the past. Your planning should take a holistic approach that looks at your tax status, estate planning goals, insurance, and income needs now and in the future. As we are often told, past performance does not guarantee future results.

Moreover, it is not how much you make that is important, but how much you keep after taxes, fees, and expenses. We are always focused on your net return and meeting your needs, not on beating a random index.

We are happy to discuss your personal vision and review your portfolio to make sure it aligns with your goals and objectives. We also have a very powerful planning tool that will analyze the probability that your current portfolio will achieve your stated goals, and more importantly, provide a guide for making adjustments.

There is neither a cost nor any obligation for us to review your situation. Please contact us at (440) 974-0808 or me at randy.carver@raymondjames.com.

 

[1]. Bernard Condon and Ken Sweet, USA Today, “About 80% of Hurricane Harvey Victims Do Not Have Flood Insurance, Face Big Bills,” August 29, 2017, https://www.usatoday.com/story/money/2017/08/29/hurricane-harvey-houston-flood-insurance-damages-claims/611910001/.

[2]. Bryan Ochalla, “16 Common Homeowners’ Insurance Mistakes,” June 4, 2017. QuoteWizard, https://quotewizard.com/home-insurance/homeowners-insurance-mistakes.

[3]. Melanie Pinola, “30 Essential Things You Should Keep in Your Car,” Lifehacker, September 6, 2013, http://lifehacker.com/30-essential-things-you-should-keep-in-your-car-1263514115.

[4]. Paul Gillin, “Two-Factor Authentication: A Little Goes a Long Way,” SecurityIntelligence, January 30, 2017, https://securityintelligence.com/two-factor-authentication-a-little-goes-a-long-way/.

The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Randy Carver and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.  Investing involves risk and you may incur a profit or loss regardless of strategy selected. Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.