Protect yourself before Disaster Strikes
I feel terrible about the tragedy in Japan. I worked for two Japanese companies in my career and have met a lot of wonderful people from the Land of the Rising Sun. I love their culture and respect their work ethic. True to their nature, the Japanese are taking a proactive approach to solving their own problems. There will be many valuable lessons learned from this tsunami to help the people of Japan prepare for the next one.
Some Disasters are Predictable
The Japanese have been plagued by earthquakes and tsunamis for thousands of years. And, they have done everything possible to prepare for these expected disasters. But, the wrath of nature always seems to overwhelm civil services.
I remember watching the Discovery Channel before hurricane Katrina. And, they were talking about how New Orleans could be the next big disaster site, because much of the city is under sea level. When the hurricane was still offshore, it was obvious the Category 5 storm was going to hit New Orleans. Yet, many people chose not to evacuate and they drown.
Saving money helps to avoid financial disaster from a loss of income.
People Take Unnecessary Risks
One unfortunate thing about living in San Clemente, CA is that I live right next to a nuclear power plant. And, it’s a crusty old relic at that. For the 28 years I have lived here, it’s never been a problem. But, there is always the haunting potential for nuclear disaster. San Clemente residents ignore the possibility, because we are unwilling to move away from our seaside villa.
Most of the world’s population lives in close proximity to high-risk sites for a natural disaster. The lure of beaches, mountains and rivers, places the bulk of civilization in harm’s way. I remember watching footage of the tsunami in the Indian Ocean and people were staring out at the ocean, transfixed by what was happening. Most of these people were never seen again.
Financial risk can be greatly reduced just by avoiding debt.
Confusion can be Deadly
Despite some amazing advances in science and communications, we still can’t seem to avoid the tragic loss of life from natural disasters. All of the sirens and beacons are worthless, unless the people take the proper actions to avoid the disaster. There is something about a disaster that draws people like moths to a flame. And, they are seldom prepared for the sheer magnitude.
There are many studies of tornado deaths in the U.S. They all show people are more likely to survive with no warning, then with a very short warning. There is something about an impending disaster that confuses those who are unprepared. And, they seem to make the worst possible choices, which often cost them their lives.
Creating a financial plan can greatly reduce confusion and suffering.
Protect your Assets at all Times
I was chatting with the cashier at Trader Joe’s and he was convinced that global warming was responsible for all of the huge snow storms. I’m not sure how or why global warming has now become climate change in the winter, but that’s a whole new debate. Whether pollution is affecting the climate or this is part of a natural cycle, disasters are a big part of our future.
My understanding is the last 100 years have been historically quiet for natural disasters and the future occurrence and magnitude are likely to increase. This combined with a huge population growth in some of the riskiest areas means disasters will continue to grow deadlier and more expensive.
Insurance can be the difference between disaster and inconvenience.
The Bottom Line
The bottom line is that disasters are inevitable. They are going to continue to strike and there is no way to stop them. The only thing we have any control over is whether or not we are prepared when it happens.
“The minute you think you’ve got it made, disaster is just around the corner.”
Joe Paterno – College Football Coach
Recommended Reading
The Digerati Life – Earthquake Survival Tips & Nuclear Disaster Insurance
DINKs Finance – Japan Needs our Help
Invest it Wisely – Helping Japan: What Canadians can Do
This post was featured on the Carnival of Personal Finance over at Fiscal Fizzle. The CoPF contains posts from the best and brightest finance bloggers on the net. Check it out.
Thanks for the mention, Bret. In the grand scheme of things, the impact of disasters has been declining over time — the death toll from earthquakes and tsunamis used to be much greater than it is today, and then you have other “disasters” such as smallpox which have pretty much been lain to rest.
However, not everyone has the same preparedness or high living standards as Japan and other wealthy nations, and the magnitude for disasters has the potential to be that much worse. These people will be the most at risk, and maybe a good way to help them is to help them immigrate to where they have more opportunity and where the land and climate are safer, too.
P.S. What happened to Einstein. 😉
I guess it’s human nature for us to try to gain superiority over these disasters. But, it doesn’t seem like that’s happening.
I ditched Einstein for this picture of the San Clemente pier. It seemed like a much better representation of my goals and lifestyle. Plus, I didn’t want people to think I was a know-it-all.
Hi Bret,
You make a lot of good points. There are many places in the world that are going to have disasters on the same scale as Fukushima in the near future. Most notably, the coast of California and Tokyo. These places are located right above some of the most destructive fault lines in the world.
As you pointed out, even though we “know” that a disaster will occur, most people choose to ignore it. Then they are surprised when they happen. I think it comes down to human nature. We have to work hard to overcome our natural ways of thinking!
I was thinking about our own nuclear power plants. The Three Mile Island incident put an end to creating nuclear power plants in America, at least for now. The problem is that just because they are designed with every safety feature in mind does not make they perfectly safe. It will only take one natural or man-made act (like terrorism) for people in America to understand the risks of nuclear power.
George
George,
Here in California, we are way overdue for a big earthquake. My aunt and uncle live in the foothills of San Bernardino and it looks like the San Andreas fault is right in their back yard. It is literally towering above their house and it seems crazy for them to live so close. But, as you said, it’s human nature to ignore those things.
As for nuclear power, the problem is obvious. Most of the technology is 50 years old and it never gets updated. The GE design used in Fukushima has been known to be problematic for years. And, we have 23 of those type of reactors here in the U.S. You would think they would force a recall or a retro-fit. The new cell-type reactors are much safer than the old rod type. How hard is it to swap out the core?
We can’t always blame nature when disaster strikes. Why do we build cities in areas that are prone for earth quakes for example? It’s not like we don’t know ,we have the knowledge and we know that one day it will happen yet people choose to ignore because they can’t imagine a bad thing happening to them on this scale…
I think it has a lot to do with the frequency of the events. For example, we know the caldera in Yellowstone blows every 600,000 years and wipes out most of the western states. And, we know the San Andreas fault has a major earthquake every 150 years. But, that’s a long time and humans have a short memory. I guess that’s one reason history keeps repeating itself.
I once visited my grandmother’s best friend who lived off the coast of Washington. They took me on a driving tour of a nearby neighborhood that had Tsunami warning signs posted everywhere.
Her partner commented about how she would never risk living in this neighborhood. To which my grandmother’s friend replied, “life is a risk.”
It’s true that being prepared is key, it’s just so hard to get out of the mental state that nothing bad can happen to us. At least, for the optimist. 🙂
Lindy,
Thanks for stopping by.
The coast of Washington and Oregon are right off the Cascade fault and there will be very little time to evacuate for a tsunami. Plus, a lot of the evacuation gathering sites aren’t high enough above sea level to be safe from the water. This could be a big problem for residents in the future.
I live at the beach myself. So, I know exactly how it feels to rationalize away the dangers. I hope I’m not evacuating from a nuclear melt-down one day.
What happened in Japan is really hurting. For us, we much be prepared. In case, there is any disaster strikes us. Stock can goods, flash light, radio, whistle and any things that is useful i times of disaster.
I understand the general theme of this post. The only problem is that it’s difficult for us to put things into perspective. When something happens so far away we keep on thinking that it won’t happen to me. When something happens to a stranger we think that they’re simply careless.
Last year I got into a minor car accident. No big deal. I still had to fork over $300 for repairs though. Fortunately, I had an emergency fund in place. Now I must admit, I never saw the purpose of an emergency fund, until that day.