Would a Robust Emergency Fund Have Prevented You From Suffering After the Derecho?

I don’t think Dorothy is in there.

On June 25, 2012, a rare, freak storm passed through the mid-Atlantic region. The storm is called a derecho because of the severe, tornado-like winds that are associated with it. Over two million people were left without power, some for over a week after the storm ripped through West Virginia, Virginia, DC, and Maryland. Immediately afterwards, a searing heat wave hit the area, leaving those without power sweltering and suffering. At least 13 fatalities were blamed on the storm and the subsequent power outages.

Could Sufficiently Funded Emergency Funds Have Prevented Deaths?


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While there were a few people who had their homes damaged, by far, the vast majority of people who were affected by the power outages did not have damage to their homes. The aboveground power grid failed, and crews were forced to work night and day to try to repair the lines. While the crews raced against time to restore power, those without electricity were forced to go to cooling shelters or to sweat it out.

If you’ve been to a Bikram yoga class, you know what it’s like to sit in a room that’s 100 degrees with a high level of humidity. Imagine being in a Bikram class for a week, with little respite.

If you have sufficient emergency funds, don’t suffer during a power outage. – Click to Tweet

Wouldn’t you try to leave? Go somewhere?

The typical rule of thumb is that you want to have 3-6 months of expenses saved up in an emergency fund. I argue that you should have even more than a six month emergency fund in cash for other purchases.

I personally would classify facing a week or more without power as an emergency. It seems like a perfectly justifiable reason to, if necessary, tap into the emergency fund. The objective? Find a place to stay where there is power.

Here are some places to look:

  • Hotels. This is the obvious one. Try to find a hotel which isn’t full that can keep you while you ride out the power outage. Use Priceline or Hotwire if you can to get a price less than rack rate.
  • VRBO. This is the Vacation Rentals By Owner website where people put up their vacation or second houses for rent. Contact the owners first to see if they indeed have power.
  • Bed and Breakfast Online. You may be able to find a bed and breakfast nearby which still has the power on. You’d even get breakfast included! You might get used to the pampering.
  • AirBNB. One of the latest lodging crazes to sweep the internet is a website where people are renting out bedrooms, or even couches, for others to stay. Any air conditioning in a power outage…

If you are faced with a situation where Mother Nature has defeated your power company and is looking to either leave you sweltering or in a deep freeze while you await the return of electricity, think about some of these alternatives for temporarily escaping your situation.

Were you affected by the derecho or by another weather event which took your power for several days? Did you leave to stay somewhere else or not? Tell us your story in the comments below!

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About Jason Hull

Jason Hull is a Fort Worth financial advisor. Before becoming a Fort Worth financial planner, Jason co-founded, built, and sold a software development company. He is a CFP candidate, has a MBA from the University of Virginia, and a BS from the United States Military Academy at West Point. He is the owner of Fort Worth financial advisor Hull Financial Planning.

Comments

  1. Nick Barron says:

    I’d hotel it, if I could find a hotel that still had power. Luckily where we live in DC has below-ground power, so we’ve yet to ever lose electricity. (I joke, as we’re a few blocks from the White House, that if we lose power there’s a bigger problem than just a power outage.)

    The emergencies I worry about most are not necessarily natural, but man-made, particularly as someone still employed by someone else. An emergency fund is essential, as is living without debt as much as possible.

    • I mentally group emergencies into two categories – temporary and long-term. Temporary emergencies are ones which cost a lot but only disrupt you for a short time period. Examples include a sudden death in the family, the transmission goes out in your car, and a derecho. The longer-term ones include unemployment, disability, or a health issue which takes time to recover from.

      We were lucky that our lines are underground, so we didn’t lose power either. Being very close to a hospital is a benefit! I’d rather, I believe, be close to a hospital than close to the White House! :-)

      Whether you’re an entrepreneur or an employee, there’s always risk. I am personally a fan of entrepreneurship, but it’s not for everyone. If it was, then the entrepreneurs would have nobody to hire when they grew their businesses.

      I believe the number one risk mitigation strategy in either instance is to always be creating value. Be the idea machine. Provide so many ideas that people can’t live without you. If you come up with all of the great ideas and make your boss look like a genius, he or she will take you along all the way to the top. If you come up with great ideas which make the lives of your clients better, then they’ll not only come back to you for more, they’ll tell all of their friends about how much you improved their lives, and all of the friends will want some of that mojo.

      How do you come up with those ideas? For that, I refer you to the brilliant James Altucher.

  2. Gail Gardner says:

    Most people – especially in cities – are far too dependent on the aging power grid that sometimes has outages that last weeks. In north Texas electricity was off for about two weeks once during a snow storm in an area where most homes were all electric. There was a boom in propane tanks and heaters right after that because those people knew what it was like to suffer bitter cold.

    Few know that if the grid goes down it isn’t just lights that will go out. Eventually sewage won’t work and neither will running water! Some believe that the weird storms unlike any we have ever seen in our lifetimes before are man-made using H.A.A.R.P. and those who believe in Bible prophesy believe we are in the end times when “natural” catastophes will become increasingly more common – as they already are.

    Even in rural areas many formerly self-sufficient landowners rushed to hook to the electric grid and abandoned perfectly good wells when they signed up for city water. They really should be looking into reversing that and putting in windmills and other off-grid power sources.

    There is a growing movement to create self-sufficient homesteads and communities that do not rely on the public grid. Those who feel they must stay in the cities may want to make arrangements for a place to go in the country – but remember that you may not be able to get out.

    When they tried to evacuate Houston because of Katrina there was gridlock on every freeway and it took hours to get anywhere – and that was without a storm actually downing any trees or any damage to bridges or highways.

    So if you plan to try to get out of a city become familiar with back roads and actually drive them so you know where they go and where your turns are! (Just in case some think they will rely on GPS systems THOSE MAY BE DOWN TOO and cell phones as well so you can’t call for directions.)

    There was a PBS? documentary on what would happen if there was no one to keep the power grid up. Worth watching for insights into things you never thought about. In it, sewage stopped working before running water. (If you have a septic tank you can flush a toilet with buckets of water – so fill up your bathtub, sinks, buckets, drinking water if a storm is coming in that may take power down.)

    Personally, I would prefer to live AT LEAST two hours from any major city and have wood-burning cooking and heating at least for backup, have a well and ponds with windmills and solar for water and power, and be totally disconnected from the grid.

    I would choose a property with healthy soil, lots of trees to replenish the minerals in the soil, mesquite trees for the beans for flour and to feed livestock, prickley pear for the fruit, at least one pond full of fish and chickens for eggs.

    Ideally I would locate near others of like mind or be in a community who shared the work and what they knew including how to raise and dress out meat, or hunt and dress wild game and birds, and had advanced gardening skills including farming with horses. If fuel is too high in cost or unattainable, horses or oxen are the obvious solution because you can raise their “fuel” and recycle their waste to grow food.

    Our infrastructure is old and in disrepair. The dollar is inevitably going to buy less and less. The economy is NOT in a recovery and can NOT recover because of the failing dollar.

    People are renting out couches and rooms and even floor space to sleep on because they need the money and can’t make ends meet by working any more. Large numbers of formerly employed, formerly middle class people are living in their cars, or in tents, or crashing on friends’ couches – but they are ashamed so they tell almost no one.

    Those who are prepared will fare better. Many of the issues I have linked to SMBcontest.com/causes for those who want to know what is REALLY going on in America and around the world. See the links about charities setting up fenced parking lots for women living in their cars and cities making it illegal to feed the homeless – because they don’t want us to SEE them.

    What is important changes when you don’t have food, water or shelter. How much money you need depends on the rate of inflation – and whether money has value or not. Now would be a good time to consider THE most important question of all: what DO you believe?

    • Gail–

      Thanks for the very thoughtful response!

      I went to a military academy; yet, I am woefully ignorant about true survival basics.

      I personally believe that you’re writing about a true black swan, but I also agree that our infrastructure is aging and the once remote possibility of such a black swan is becoming less remote.

      You have an excellent point about knowing of multiple routes of egress. I have friends who were stuck trying to escape 9/11 attack areas, and knowledge of back routes and alternate escape routes would have served them well.

      Your concerns about fiat currency seem reminiscent of Ludwig von Mises. While I don’t expect us to be carrying buckets of trillion dollar bills a la Zimbabwe, there is no doubt that our economic policies cannot continue as is if we expect positive change.

      I personally am not preparing to the extent that you are, but I certainly respect your position, and if people come to the conclusion that we’re closer to the brink than I believe we are, then your advice certainly seems sound and appropriate.

      Thanks again for the thoughtful comment and have a great weekend!

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