Imagine receiving notice that a Catagory 4 or 5 was going to make a direct hit on your community and the authorities issued an evacuation. What would you do? Would you stay or would you go? The thought of escaping imminent danger is necessary, but at the same time how would you pay for it? As I was sitting with my sister trying to frantically look for $700-$1,000 flights (before the airline companies were shamed into reducing the cost), looking up pet policies for the airlines, and evaluating highway evacuation routes for which roads had the least amount of traffic, I started to wonder “How can people afford to leave when they cannot stay?”
These questions that ran through my mind grew more intense as I saw the media coverage of Hurricane Harvey and Hurricane Irma, watched the images of people fleeing their homes, saw the updates on social media, and thought about my own sister’s need to evacuate.
- What do people do if they don’t have the cash or can’t afford to leave their homes?
- How do they pay the evacuation costs?
Even if they arrive home to no damage they first need to have the money to get out especially if they are in a mandatory evacuation zone. It’s great and foundational to have an emergency savings account, but sometimes you need more, and this reminded me of just how important having an emergency credit card is.
I used to be a fan of emergency credit cards and in the past, I have even taught about the importance of them. However, given my historical struggles with credit card debt (in full transparency: it is very difficult for me to pay the card off in full, therefore it is easier for me to avoid using credit cards), over time I drifted away from talking about responsible uses of credit cards. However, talking to my sister as she was trying to figure out how to leave town, it reminded me of just how important having an emergency credit card is to help cover those expenses and offer additional travel protections. For example, just to evacuate their homes they would need to pay for:
Transportation to get out of town.
This can be in the form of fuel to gas up their cars to get out of town, train tickets, plane tickets, or something else. If someone is driving this assumes that they even have a reliable enough car that will allow them to safely get out of harm’s way.
For example, my sister was able to evacuate to a city where she knew someone which allowed her to save the cost of a hotel until the city that she fled to was issued evacuation orders and then she and her friend had to leave. For the 7-days that she had to evacuate, she only had to pay for 2 days at the hotel, which saved her a lot of money. However, not everyone is this fortunate. I know someone else who had to evacuate in a hurricane and had to pay for 10 days in a hotel. This is extremely expensive!
One of the tragic things about the storm was the decision that pet owners had to face if they had a pet and there were no shelters that took pets. They had to either decide to stay home, try to flee the storm with their pets or leave their pets behind. If someone was successfully able to flee the storm then they would have to pay pet fees at the hotel or pet fees for a plane ride which costs even more money.
Missed time from work.
If someone is an hourly worker then those are hours that they will not be receiving compensation. Alternately, if they are a salaried worker, these days may be counted against sick time or vacation time. When my sister evacuated, her job made it clear to her that she would not be getting paid for the missed time from work. Sadly, I was talking to a friend of mine who said that people complained during Hurricane Katrina that they would get fired if they didn’t show up to work even though they were advised to evacuate.
Additional groceries and supplies.
During hurricanes cities generally lose power and sometimes even water. Therefore, in the days leading up to the hurricane, many people are stocking up on bottled water, canned goods, safety equipment, gas cans, flashlights, etc. That stuff is expensive. Think about it this way, the increase in groceries and the cost of evacuation is enough to totally blow someone’s budget and savings account. If their homes sustain damage or they lose personal possessions, then the cost could be even worse.
Food cost while traveling.
Depending on how much time you had to evacuate and the inventory at the grocery store, it may not be possible to stock up on things like canned goods with a pop top, peanut butter and jelly, or other non-perishable items that you and your family can eat while traveling. Therefore while you are on the road and once you arrive at the new destination, you may have to pay additional costs for take out because most likely you won’t have access to a kitchen to cook food.
There are so many costs associated with evacuation, and I’m sure that the ones listed above are just the tip of the iceberg. While you can’t control nature, you can put yourself in a position to be able to evacuate with less financial stress if you were faced with a situation where you needed to leave. Think of it as something similar to what an old school relative would call, “___ you money” (you can fill in the blank lol).
Some of the benefits of having an emergency credit card in the times of trouble are that it:
Avoids freezing your cash.
When you travel most hotels place a hold on your account for the amount of the stay plus an amount for incidentals. Car rental agencies and some gas stations place holds on your account as well. This means that this money is unavailable to spend because the hold will freeze the funds in your account, which will reduce the amount you have available to spend. Therefore, it’s better to have that hold placed on your credit card instead of your debit card because you won’t have access to those cash funds until the bank releases the hold which could be anywhere between 1 day to a week or more depending on the banking institution. Even if you use a credit card, the hold will be there and would impact you more if you are close to your credit limit, but at least it won’t impact your cash which could even cause you to overdraw your account if your balance got low. Please note that the policy for debit/credit card holds varies by hotel and by location.
Better terms for car rentals.
If you use a debit card for renting a car, you may have to pay a larger hold, provide multiple forms of identification, and some places will even run a credit check to rent with a debit card. That is, if they even allow you to rent as some car rental companies may not even allow you to rent a car without a credit card. Additionally, a credit card may help you to avoid purchasing separate car rental insurance. Many credit cards offer the benefit of providing insurance when you rent a car, which allows you to decline the additional daily insurance cost. Check with your credit card company first to ensure if they offer this and the terms of the offer.
Faster access to money.
If you placed your emergency savings in an account that doesn’t have a debit card attached to it, and that it is in a separate account that takes a couple of days to transfer then you may not have access to that cash in enough time to make plans and purchase the supplies that you need to evacuate.
Better manage your cash.
Although using an emergency savings account is ideal, it may not always be possible for a number of reasons. For example, if you have a basic emergency savings account of $1,000 which many financial professionals will teach is the minimum that should be in your emergency savings account, if you stay at a hotel that is $150/night for 5-6 nights ($750 – 900) and then add on the cost of transportation and food you will be out of your emergency savings and without money while out of town. Additionally, if you are subjected to an additional hold, then it could take another few days to a week for the hold to be released. Therefore, you need something extra.
Although this may buck the traditional financial advice, I just want to be realistic about the fact that although it is best to be prepared in a storm, it is challenging to build that emergency cash savings and many people just don’t have it and therefore need other options. The good thing about the credit cards is, although it is best to pay it off in full, if you cannot pay it off in full because of an emergency, you will be able to develop your own repayment plan and contribute even more towards repayment once you become more stable. This means that you can hold onto your cash until you make it out of the storm
If you do choose to obtain an emergency credit card, consider the following:
Keep that card for emergencies.
It may be tempting to think of the emergency credit card as extra money, however, resist the temptation and don’t charge it up. If the card is maxed out then you won’t be able to use it if an emergency does pop up. Conversely, you also cannot let it sit idle, because if it goes unused for an extended period of time, your credit card company may cancel it. That has happened to me on a number of occasions. Therefore, a good strategy is to charge something periodically and pay it off immediately to keep it active. For example, if you have a small recurring bill (i.e. Netflix) charged to that account, then you can set up a recurring payment to that credit account so you don’t have to think about it.
Get a rewards card.
Although, the last thing you would probably think about in an emergency is if you will receive rewards for your purchases. However, if you have a no annual fee rewards card, it can be very beneficial with earning perks for money that you would have paid anyway. Depending on the card you have (i.e. a travel rewards card), you may even be able to have better access to limited hotel inventory.
Develop a repayment plan.
The goal is to repay your credit card in full. However, sometimes there are practical and realistic reasons why that can’t occur. Therefore, if you must carry a balance after using the card in an emergency, then develop a plan to pay it off as fast as possible. This will help to minimize the amount of interest that you will have to pay. Also, be sure that you pay the bill on time because if you make a late payment, then not only will you incur a late fee, but you will lower your credit score. To get started, evaluate your spending over the last 3 months and then calculate how much you are spending on things like take out, dining out, luxury spending (manicures, pedicures, hair, gym memberships) and other non-essential spending. Once you understand these costs, look for opportunities to scale back your spending. If you are looking for more ideas on how to cut back and still have a life, then check out the 5+5 book. Once you know where you are spending and ways that you can cut back, add the amount of the savings to your existing credit card payment and then create an automatic payment for your credit card. This will help you to aggressively repay the credit card and also reduce the temptation to pay less towards your debt in order to maintain current spending levels.
Get prepared in advance.
The best thing that you can do is to put yourself in a position where you are financially secure and that you can weather the storm. To do that please ensure that you:
- Pay your bills on time which positions you to make progress in other areas of your finances like keeping debt low and being able to contribute to savings.
- Keep your credit card balances low
- Make regular contributions to your savings account which helps you to have emergency cash
- Have a disaster plan, which means that you have an emergency kit, a household evacuation plan, knowing evacuation routes, etc. This plan will be based on what types of natural disasters are possible for your area or for other emergencies that could occur.
- Have copies/backups of your important files and documents. If you live in a flood-prone area, then these should be kept in waterproof bags.
- Are fully insured (i.e. medical, car, homeowners/rental, etc.). Being fully insured will help to minimize the cost that you are responsible for if your property sustained damage during the storm.
Being prepared helps you so you won’t be in a position where you have to ask yourself if you have to stay and weather the storm or if you can evacuate.
You can’t predict natural disasters and emergencies, but you can be better prepared for them. Although the stress levels and worry will still be high because you are dealing with the unknown, my hope is that with these tips you will be able to reduce that financial anxiety that so often comes during these challenging times. If you need to work on reducing financial anxiety, then check out this 21-day devotional.
If you want more tips and resources, then check out this FREE grocery reduction challenge to help you to cut your grocery and takeout bill so you can have more money for the things you love! Click here to join the challenge!
Aisha Taylor is a single mom of twins, personal financial coach, work from home entrepreneur, and #1 Amazon Best Selling Author of the book “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle.” Aisha has been featured in ESSENCE, Jet Magazine, and Black Enterprise. She is also the Founder of FNPhenomenal (Frugal –n- Phenomenal), a movement designed to help single moms create a vision for their lives, craft a financial strategy to support that vision, and show them that phenomenal living is possible. It’s time for you to be Financially Phenomenal!
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