In this month’s edition of “Money Matters,” Scott Oeth talks about how to plan for emergencies—both in your pocketbook and your pantry. Learn more about how you can prepare early and help set your mind at ease if times get tough.

Emergency Planning Resources:

Money Matters: Planning for Emergencies Transcript

0:00:00.2 CJ: WTIP is pleased to bring you another edition of Money Matters, a monthly feature intended to help us understand more about managing our finances. Scott Oeth is a certified financial planner and adjunct professor. He's taught retirement planning and wealth management strategies to hundreds of financial professionals, and he's joining us now by phone. Welcome, Scott.

0:00:22.1 Scott Oeth: Good morning, CJ.

0:00:23.3 CJ: Good morning to you. So we wanna talk today about planning for emergencies.

0:00:29.8 SO: Yes, investing in household goods and supplies that you use and this time, I'm talking about the actual items themselves, not just the stocks or the companies that make them.

0:00:39.7 CJ: Ah, okay.

0:00:42.1 SO: Fielding questions on things like, "How much to have in emergency savings, what type of insurance coverage to have, how to protect your portfolio from market crashes and recessions," those are all pretty standard for certified financial planners. And talking about building an inventory of supply items or your pantry at home might seem unusual, but I'm in a bit of a unique spot. Some of your sharped-ear listeners might notice I actually come on WTIP twice a month, once as a financial advisor, my primary occupation, and then I also come on as a wilderness guide on our Pack & Paddle episode, which is a lifelong passion pursuit. And as part of my work with that, with Bull Moose Patrol, I've had significant emergency training as a wilderness first responder and a survival instructor, and I think that really informs my mindset on some of these things. If I'm 100 miles out in the wilderness, I'm concerned about how much food is left in my pack, not how much money is in my bank account. [chuckle] Where my next meal is coming from?

0:01:39.9 SO: And I gotta tell you, CJ, over the last year, I've gotten calls from the media for comments and advice on many of these types of issues. I was talking to folks from Washington, DC last year during winter storm, I had a couple of calls from media people from Texas during their terrible power outage and winter storm last year. Just about a month or two ago, I was on a radio station in Detroit where they had a power outage during a terrible heat wave. And closer to home, forest fires, I, along with a lot of other people, had our boundary waters trip aborted due to the fires, a lot of people had to evacuate. And we had riots in the Twin Cities, I had a few of my financial advisory clients who had to flee their homes because of that. And sadly, for the first time in my career in the last year, I had two clients who had their homes broken into and car stolen while they were home and asleep upstairs.

0:02:33.5 SO: Nothing is safe, of course, we all dealt with COVID-19 and the pandemic, we're still dealing with that, and there's the terrible financial shock, there was shortages on shelves, no meat, there's a lot of jokes about toilet paper shortages, not to mention the health crisis. But people don't like to think about bad things happening, but they do. And I don't want people to be stressed out or paranoid, but I really try to encourage folks to be prepared and along with that, hopefully, develop a bit more peace of mind and confidence that comes with thinking ahead and being prepared.

0:03:09.4 SO: And there's another side to it, too. The emergency savings and insurance that are commonly talked about can provide the dollars to buy food, shelter, clothing, the necessities of life but in true times of crisis, we might not be able to easily convert those dollars into the needed items. The supply system might be down, we might not have the time needed to acquire the items. And now in the news, we're hearing a lot of talk about supply chain issues. I was on the phone with an investment analyst who's out of Newport Beach, California, last week, and he said from their office, they can see 25 ships sitting in the harbor that couldn't load or get loaded or unloaded, they're sitting there. He said, "That's highly unusual." We're hearing more about cyber attacks and the threat of that, and all those things could end up leaving the store shelves bare.

0:04:00.7 SO: So prices have been rising with inflation. CJ, you and I talked about that a couple of months ago, inflation. We touched on this exact concept and issue, but if there's continued issues with supply chain and inflation, to tie this all together, there could be a real financial benefit, actually, just thinking about emergency preparedness, investing in your reserve items of household goods.

0:04:23.7 CJ: Okay, so let's get into some tips for weathering these emergencies. When you're talking about investing in household goods, what are they, and you kind of covered why we would do it, but what are you talking about specifically?

0:04:38.9 SO: Well, specifically, I think just even looking around your home and thinking about what are the things that you use, and if you keep your eye out and you see a good sale, well, it could be a big financial win. If you're buying whatever it is, laundry detergent, extra cans of tuna, bathroom tissues, we're talking things like that that you know you'll be using, and that aren't gonna go out of style, they aren't gonna expire in the near term, they're not gonna become obsolete. Well, if you can see those on sale, buying those ahead of time can make a lot of sense, it can save you money, it can save you time by buying in bulk. We often get a bulk discount as well, if you're thinking ahead two years and buying once instead of buying those things every other week, you might get a better price, and you might save yourself a lot of time on your shopping.

0:05:28.4 SO: And with inflation as it is, and interest rates, that's gonna be the other side of it, you're very lucky if you get a half a percent earnings here in 2021 on your bank savings, and you're paying tax on that. Well, cost of living, consumer price index went up over 5% over the last year, so buying some of those items and having them just sitting there on hand, ready to go when you need them, you're effectively earning potentially, if inflation increases at the same rate, it's like getting a 5% return that you're not taxed on. So it could be a financial win, but I think looking at the normal things you use in day-to-day life, buying ahead can make a lot of sense. But in that true emergency sense really encourage people as a baseline, think about a three-day emergency, three days is a very quick starting point of fast, easy food and water supplies that you can eat, you can consume and get to without electricity, without a stove, things like that.

0:06:28.8 SO: And so make sure you have those and really tied in with that, think about what you need to have, what would you grab if you had to leave your house very quickly because of a forest fire, because of a train derailment, because of something like that. A lot of people use the term "my go bag", and I think that's a very good first step, have something that you can quickly grab, whether it's a bin, a backpack, an old suitcase with some food and your basic essentials in there, and really, maybe that should live in your vehicle or maybe you should have a duplicate set in your vehicle in case you're away from home, and there's an issue with transportation or a storm, or a vehicle breakdown, or who knows what, and you can't get back and you need to... You're stuck in your vehicle for a few days.

0:07:13.5 SO: So I think that's the first step, and then building up to like three weeks worth of supplies would be a great goal for most Americans. And funds are tight. Hey, I understand, but you can get there with low cost basics, it doesn't have to be a stock pile of gourmet foods. It can be rice and beans. On Pack & Paddle a year ago, we talked about Bannock, which is a classic staple trail bread of the North Woods, and all you need is a bag of flour, five pound bag costs less than two bucks, a little bit of oil, salt, that could keep you full for a week.

0:07:45.7 CJ: Okay, so what resources are available for people who wanna get started on this? Is there like a website that has some good suggestions on the basics and that sort of thing?

0:08:01.6 SO: Yeah, there's a lot of them. So WTIP you do a great job of recording these episodes and you put them on your site, I'll put it into my blog, scottoeth.com, and I'll add some extra resources there as well, I already have some. But a couple of good starting points. The Red Cross has some nice materials, they have an emergency preparedness checklist. There's a site called ready.gov that has emergency checklists and some ideas on water, first aid supplies, food storage. A number of governmental agencies, one that I saw looked pretty extensive is the Washington State Department of Health has an emergency resource guide. So there's quite a few out there along with different independent bloggers and sources and some good books and I'll link a number of those. But encourage people to take a look at it and like I said, not be... Minimalism has become popular, a lot of folks kind of run their life off app and touch screen relying on just in-time inventory and things being delivered right to their door. That's a wonderful convenience of modern life, but it could make sense to think maybe a little bit more like our pioneer in homesteading ancestors and be prepared to be a little bit more self-reliant as well, and make good financial sense.

0:09:21.1 CJ: Well, you said you were talking about the go bag and definitely with the fire that was happening earlier in August, nearby, I talked to a lot of people who actually did that for the first time. Had things ready to go and ready to throw in the car. So it's a real issue for us who live up here in the woods and with fires becoming more prevalent. So that is great. So if you were to suggest like implements or things to put in a go bag that would help you, do you have a few things that you could just pass out there quickly?

0:10:00.9 SO: Well, one thing I think about is, I love camping. I love wilderness trips. Okay, I like it because I love the wilderness, so I love getting out there, but that is fantastic. Preparedness for an emergency. When I was talking to the folks in Texas, I thought, Geez, if they had basic camping supplies, a camping stove, sleeping bag, quality clothing, headlamps, those types of things, if you're able to live in the wild and you practice that a little bit, hopefully you have some fun doing it, but you can certainly camp inside your house or in a friend's garage or in the emergency shelter. And so I'm a big advocate of, I think camping is also the ultimate travel hack, a lot of my clients are preparing for retirement. One of the things they like to say they wanna do is travel, and it can be very expensive. If you're a well-equipped camper, geez, you can live for peanuts and go all over the place, but it's just wonderful sense for emergency preparedness as well, and you can keep your backpacking kit or your Boundary Waters kit in your car and there you go. You can use that to supplement life inside your house if the power goes out, if you don't have heat or if you're on the road and out and about.

0:11:16.1 CJ: Alright, well, these are excellent suggestions, I look forward to seeing them on your website and we will put this interview up on our website as well. We're talking with Scott Oeth. We're talking finances and emergency preparedness.