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Financial Contingency Plan Series

I’m sure you’ll agree – the best time to plan for a disaster is before it strikes. That’s why, during the Cold War, people built bomb shelters before the bombs actually struck. It’s why people save up emergency funds [3] and keep a home inventory [4], you want to be prepared so that you won’t be left scrambling in the event of an actual emergency.

How many of your put as much thought into your financial contingency plans as you do for other contingency plans? With a house fire plan, you know that your job is to get out of the building and rally at an external location. What are you supposed to do when you lose your wallet? Call up the credit cards and cancel. Replace your driver’s license. Then what? Have you mapped it out? Chances are you haven’t and that’s why you need to write a step by step plan for what you’ll do if you lose your wallet. Or if there’s a house fire. Or if your car is stolen. Or if your bank account is broken into. Or if one or both of your parents die. Or if your spouse dies.

I know it’s morbid. I know it sucks to think about it but unless you plan for it now, when things are sunny and splendid, you will screw it up when the situation turns sour.

Over the next few weeks, I’ll be writing a series of posts for the Financial Contingency Plan Series addressing what I think are the crucial financial contingency plans you’ll need. The posts will include what you need to do to prepare, what you’ll need to do afterwards, and how often you need to revisit your plan.

Thinking about it won’t make it happen but not thinking about it guarantees you’ll make some bad, emotionally charged, mistakes. It’s unpleasant but it’s necessary.

(Photo: specialkrb [5])