Personal finance

From Joplin, Mo., lessons on preparing for the worst

Tess Vigeland / New York Times News Service /

JOPLIN, Mo. — If you didn’t live through Hurricane Sandy and its aftermath, it’s hard to fathom the extent of the destruction. Photos and videos go only so far. You simply cannot understand it if you haven’t been through it.

Unfortunately, plenty of Americans have been through it, in one form or another. And their empathy about the length of the recovery runs deep.

“I hope they don’t get discouraged, because it does take a long time,” said Raye Frerer, of Joplin, where a tornado left a 14-mile scar last year. “Here we are, 18 months later, and we’re still not back in our home.”

Even today, you can stand on what passes for a hill in Joplin’s midsection, at 23rd Street and Pennsylvania Avenue, look east and look west and see empty space. The trees are still gone. Apartment complexes are gone. The hospital is gone. The high school is gone.

That’s what happens when an EF-5 tornado touches down, eviscerating everything in its path, as it did here on Sunday, May 22, 2011.

Winds reaching 250 mph tore homes and other buildings from their foundations and sent debris flying for miles, and 161 people died.

As Joplin’s residents make their way through the stages of grief, they are eager to talk about it. They want to share how they survived and how they’re preparing for the next one, because they now understand that this kind of disaster can happen to anyone, anywhere, at any time. We all know the risks, and we promptly learn to ignore them. After all, you can’t function very well if you live in daily fear of disaster.

But you can prepare yourself for the possibility, however remote, that something like what happened to the people of Joplin — or New Orleans, or Northridge, Calif., or New York City and the surrounding areas last month — will happen to you. And one of the easiest steps you can take is to disaster-proof your finances.

The tornado here caused nearly $3 billion in damage. Some 61,000 insurance claims were filed, with a total payout of more than $2 billion. Of that, 31 percent went to homeowners and 5 percent to people who lost their cars and trucks.

But many people did not get as much relief as they had expected. The long road back to financial wellness has been more difficult than it perhaps had to be. And those lessons have stayed with them.

An approaching storm

Frerer, 58, was at her mother’s home south of Joplin that Sunday afternoon. They were celebrating Mother’s Day a week late, and her mother, who is close to 80, looked out the window from a small breakfast nook and said, “That’s the blackest cloud I’ve ever seen!”

Frerer turned to her husband, Fred, and told him she didn’t want to get her hair wet, so maybe it was time to head home.

Fred Frerer, 60, is retired, and Raye Frerer is a teacher. When they got to their house in Joplin, Fred Frerer stood in the road to check the sky. When he came back in, he grabbed a twin mattress from one of the beds, and the two of them settled onto the floor of their small bathroom with the mattress on their heads.

The house shook, objects pummeled the walls outside the bathroom, and then, as suddenly as it had arrived, the storm ended.

They stood up from under the mattress and opened the bathroom door. Raye Frerer could see that the nearby middle school had been destroyed, and she wondered whether there would be school tomorrow. Then she realized she shouldn’t be able to see outside.

“I stepped into the hall, and the only part of that house still standing was the bathroom that we were in,” she said.

Money issues take an obvious back seat to the imminent possibility of death at moments like this. But they surface fairly soon after.

The Frerers were more prepared than many people are, and for that they credit Financial Peace University, the biblically tinged educational enterprise of Dave Ramsey, a nationally syndicated talk-radio financial adviser. One of the so-called baby steps Ramsey recommends is to set aside $1,000 where it is easily accessible. The Frerers had some of that amount stashed in a small safe in their bedroom closet. The closet wasn’t there after the tornado, but the safe was.

They kept another portion of the money in an envelope that ended up embedded in a vent.

Disaster preparedness experts say cash is an important element of any emergency planning, because you don’t know if banks will still be standing or if ATMs will be operational. But a common question is how much you should have on hand. Ted Beck, president of the National Endowment for Financial Education, suggests the same amount as emergency officials recommend for food and water: three days’ worth.

Insurance payouts

The Frerers spent the first few days staying with friends and family, trying to figure out what kind of financial assistance they would get from their homeowners’ insurance and the Federal Emergency Management Agency.

When the insurance adjuster arrived two days later, she gave the Frerers a check for about $1,000. Several weeks later, another adjuster told them they were about $30,000 short of what they needed to rebuild their home to what it had been. That was in large part because the cost of supplies and materials skyrocketed in the Joplin area after the storm. The couple looked into buying an existing house, but prices for those also went up because of high demand and diminished supply — the tornado had destroyed 7,000 homes.

The Frerers are now living in a small rental while they build a new, large house less than a mile from the one that blew apart. Because of the insurance shortfall, they are dipping into their savings and retirement funds. They say their financial recovery was helped by the fact that they had paid off their mortgage and had no debt. But Frerer’s voice still catches when she thinks about how much worse it could have been.

“It makes us thankful for things that aren’t financial,” she said. “I’m not going to dwell or think about what I’ve lost. We come from pioneer stock, so that’s the way we want to live. We’re just going to pull up our bootstraps and thank God for what he provides and get on with living.”

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