Natural disasters like tornados and wildfires are becoming more frequent and intense, creating both emotional and financial strain. The Marshall Fire is a perfect example of the horrors of an unexpected and unbelievable traumatic event. Here are key steps to regain your financial footing and avoid additional trauma:
1. Get Government Help
The Federal Emergency Management Agency (FEMA) offers aid to residents in declared disaster areas. You may be eligible for up to $700 in immediate assistance, plus funds for repairs or temporary housing. Apply at DisasterAssistance.gov or call 800-621-3362. Also, check with your state to see if emergency food assistance is available through programs such as D-SNAP.
2. File Insurance Claims Quickly
File claims promptly—especially after large-scale disasters—to get ahead of delays. If your home is uninhabitable, ask about coverage for additional living expenses. Even better, know what your policy covers before you need to use it. Also, make sure that you have adequate coverage. A few dollars saved on the front end could result in financial ruin on the back end.
3. Pause Loan and Utility Payments
Contact lenders and utility companies about forbearance or flexible repayment plans to avoid fees and free up funds during recovery. While there’s no guarantee that you’ll get it, there’s also no guarantee that you won’t!
4. You Don’t Need To Be a Business Owner.
Homeowners can borrow up to $500,000 for repairs, and both renters and owners can apply for up to $100,000 for personal property losses.
5. Use Retirement Funds as a Last Resort
You may be able to withdraw up to $22,000 from your retirement account without penalty IF you’re in a disaster zone. You’ll owe taxes but may be able to spread those tax payments over an extended period or repay the account to avoid taxes entirely.
6. Claim Tax Relief
The IRS may extend your tax deadlines and allow you to deduct disaster-related losses. Consider amending the previous year’s return to get a faster refund. Also, request a reassessment of your property value to reduce real estate taxes.
7. Maximize Insurance Payouts
If you disagree with your insurer, consider hiring a public adjuster to negotiate on your behalf for a percentage of the settlement.
8. Rebalance Your Portfolio Cautiously
If you had to dip into investments, avoid high-risk “catch-up” strategies. Consider safer, diversified funds and explore tax-smart strategies with your financial planner.
