"Dealing With Disaster" - Part 1: Financial Planning For The Worst
Tuesday, March 22, 2005SUSIE GHARIB: It isn`t easy to predict the future, but it`s important to prepare for it. Tonight, we begin a series called "Dealing With Disaster:" Ways you can prepare your business and your life for the unexpected. One way to reduce a disaster`s toll is to plan ahead. And as Suzanne Pratt reports, there are some things you can do to keep your finances intact.
SUZANNE PRATT, NBR CORRESPONDENT: Last year, a fire broke out in the attic of Katharine Bond and John Wallin`s Northern Virginia home. Although the house sustained $40,000 in damages, they consider themselves fortunate. That`s primarily because their homeowner`s insurance covered most of the damage, but also their financial records were untouched, and reconstructing them would have been a difficult task.
JOHN WALLIN: Our financial records were, in terms of being destroyed, they were untouched by it. Primarily, it was smoke damage throughout the house. There was no damage or destruction to our records at all.
PRATT: Bond and Wallin were lucky, because even though they didn`t expect a fire, they were still prepared. But each year, thousands of other Americans fall victim to the effects of disasters, from acts of nature and other causes, and find themselves unprepared. Had they taken some basic actions in advance, many of them would have saved a lot of time and money. Experts say to minimize the financial impact of a disaster, the first step is to make a personal plan for dealing with a worst-case scenario, even when nothing out of the ordinary is on the horizon.
DAVID HEIM, CONSUMER REPORTS: You can sometimes plan ahead for a hurricane, but it`s hard to plan ahead for tornadoes, and mudslides, and other kinds of natural disasters. It`s why it pays to do this kind of financial planning periodically, at least once a year.
PRATT: Along with being sure that you have adequate homeowner`s insurance, one of the first things to do is take an inventory of important household possessions. The best way to do this is with a camera or videotaping equipment. Not only does an inventory help you prove the value of what you own, but it makes it more likely you`ll receive fast payment from your insurance company. A copy of the inventory should be stored in a safety deposit box, or keep one with relatives or friends. Experts also recommend putting originals of important financial papers in a safety deposit box, including deeds and titles to your home and car, birth certificates, marriage licenses, divorce papers, child custody agreements, appraisals of jewelry and artwork, and copies of insurance policies. In addition, financial experts suggest creating an evacuation box to grab in the event of emergency. The box should be big enough to hold some cash, copies of insurance policies, copies of the previous year`s income tax returns, a list of numbers for bank accounts, credit cards, mortgages and investment accounts, and backups of any computerized financial records. And now that personal computers have become such a key part of our lives, it`s important to back up certain files from your home computer on a CD, diskette or zip drive.
BARBARA O`NEILL: For many people, it`s what they have saved on their computer that`s probably even more valuable than the computer itself. You know, all the hours that went into creating documents, and, perhaps, if it`s photographs, you know, digital photographs they have got on their computer.
PRATT: Beyond safeguarding your financial information, experts recommend keeping at least six months of living expenses as an emergency fund in a bank or money-market account.
UNIDENTIFIED FEMALE: What a perfect place for a family to assemble.
PRATT: The New York chapter of the American Red Cross recently held a training session designed to help New Yorkers be better prepared for emergencies. Included in the discussion were pointers on the importance of financial preparedness.
UNIDENTIFIED FEMALE: What we find all too often is that because people haven`t taken the steps in advance of being prepared, the process of rebuilding their lives, financially and otherwise, is extraordinarily difficult.
PRATT: For most people, the chances of being hit by a disaster are fairly remote. But by preparing properly, you can protect yourself financially and make the recovery process much easier. Suzanne Pratt, Nightly Business Report, New York.
To learn more about this topic, click here.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2005 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
03/22/05: "Commentary"-It's Time To Raise The Flag of Surrender on Bankruptcy Laws
PAUL KANGAS: Tonight`s commentator says lawmakers should throw in the towel when it comes to rewriting bankruptcy laws. Here`s Mark Zandi, chief economist of Economy.com.
MARK ZANDI, CHIEF ECONOMIST, ECONOMY.COM: The nation`s bankruptcy law appears set to significantly change. While lawmakers are well- intentioned, the change is bad for borrowers, lenders and the economy. The principal change is to force filers who are deemed financially able to eventually repay at least some of their debts. This sounds reasonable. Why shouldn`t those that have the means be required to make good on their obligations? Unfortunately, forcing more filers into debt repayment plans will not significantly reduce lenders` bankruptcy costs. Why? Because fierce competition among lenders will induce them to lower their lending standards. Lenders will get more back from bankrupt households, but there will be more bankrupt households. Bankruptcy serves a vital economic purpose. Most filings are prompted by a catastrophic event -- unemployment, divorce, accident or illness. Filers generally have lower and more volatile incomes. Some are surely able to repay part of their debts, but for most it would entail a tremendous hardship. It will also be a burden on the entire economy. Forcing more households on debt repayment plans will constrain the economy`s ability to recover from recessions. As unemployment rises and incomes weaken during a downturn, bankruptcy provides households, and thus the economy, with a fresh start. Lenders should also consider who will suffer the political ire of all those households on debt repayment plans in the middle of a recession. Everyone would be better served if creditors and policymakers focused on how to better underwrite, manage and regulate current lending practices, rather than on changing the bankruptcy law. This is Mark Zandi.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2005 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
03/22/05: "Paul Kangas' Stocks In The News"
PAUL KANGAS: Higher is how stocks opened thanks to lower oil prices and those producer prices. Strong earnings from Lennar and K.B. Home boosted the home building sector nicely. So, at noon time, the Dow was up 27 points; Nasdaq up 4 points. The market held at that level until the Fed`s rate hike. But that signal that it was growing more concerned about inflation triggered a steep late sell-off. The Dow Industrial Average came with a loss of nearly 95 points, at 10,470.51. The Nasdaq composite down 18.17 points, at 1,989.34. Standard & Poor`s 500 fell 12 points, to 1,171.71. Over in the bond market, the 10-year note tumbled 28/32 to 94 31/32, lifting the yield to 4.64 percent.
Big Board volume leader, on 32.3 million shares, Citigroup, losing $1.32 on a weak financial sector. Then, American International Group down $1.70. The company has fired two top executives, including the CFO, Howard Smith, for not cooperating in a federal investigator, saying they would invoke the Fifth Amendment.
General Motors was down 15 cents, but contrary to a "Financial Times" report, General Electric said it had not withdrawn a $2 billion loan facility from GM.
Lucent down 7 cents. Pfizer, a 29-cent loss. That was fifth in Big Board volume.
Sungard Data Systems moving up 68 cents, on more takeover talk, and that overshadowed an A.G. Edwards downgrade on the stock from hold to sell, and a Bear downgrade from overweighed to just neutral.
Wal-Mart stores fell 27 cents. Motorola edging up 8 cents. Bank of America upgraded it from neutral to buy, and boosted its target price for Motorola from $18 to $20 a share.
GE was down 51 cents. Time Warner, a 37-cent loss, 10th in Big Board volume.
Lennar, the strong home building group, up 73 cents. It traded as high as $58.05 earlier today after its first-quarter earnings were reported to be up 39 percent, $1.17 versus last year`s 84 cents. And 16 cents ahead of the Wall Street estimate. The company also boosted full-year earnings estimate.
Another strong home builder, KB Home. Traded as high as $121.70 today, after reporting a 65-percent jump in its first-quarter earnings, to $2.82, versus $1.75, and that was 25 cents above the Street estimate. It also boosted full-year earnings estimates.
Wyeth, the big pharmaceutical, up $1.49. The company sees first- quarter earnings well above the 67-cent-per-share Wall Street estimate. Company sees something on the high 70s per share range. It cited strong sales of its arthritis drug, Enbrel. Nice move there.
And we see Zapata up $4.84, although it traded as high as $81.75 today after the holding company set an eight-for-one stock split. You don`t hear about that very often.
Quicksilver, down $3.46. The surfing apparel maker will buy French ski maker Rossignol, for $318 million.
McCormick, the spice company, down $2.55. Lower first-quarter earnings, 26 cents down from 27 a year ago, and that was 3 cents below the Wall Street estimate.
Union Pacific moved up $3.28. The company boosted its first-quarter earnings estimate from the range of 25 to 35 cents all the way up to 43 to 48 cents a share.
Microsoft topped the active list on Nasdaq, down 21 cents.
Electronic Arts tumbling $11.20, a 17-percent drop, after the close yesterday. The company cut its 2005 earnings estimate from about $1.85 down to $1.63.
Intel, 48-cent loss. Google fell $2.28. Cisco, a 2-cent loss there, fifth in dollar volume.
Research in Motion down $4.79, on news that rival wireless e-mail device maker Symbian is in a licensing deal with Microsoft.
Ebay down 25 cents. Apple Computer, 87-cent loss. Yahoo fell 63 cents. And Oracle down 16 cents. After the close, the company reported third-quarter earnings of 10 cents, down from 12 cents a year ago. But excluding the PeopleSoft acquisition charges, the company earned 16 cents, a penny above the Street estimate.
And incidentally, Retek has decided to be acquired by Oracle, for $11.25 a share.
And those are the stocks in the news tonight.
