KOTA Territory NewsFinancial Fire Drill: Facing a financial crisis

Financial Fire Drill: Facing a financial crisis

It's hard to plan for a sudden set back. So what do you do if you lose your job or your health deteriorates? How do you cope financially?

A recent report by the Corporation for Enterprise Development reveals a trend that's sweeping the nation: a growing number of Americans have almost no savings or other assets.

In South Dakota, one in five people fit into that category.

So, when the bread winner for a Rapid City family faced an unexpected medical crisis, he discovered the fiscal failure that can happen without a financial fire drill.

"As you can see we opened the front door and everything in the house goes until we meet the bills," says Tom Reasor.

The Reasor family is selling everything they own, along with donated items from friends and neighbors.

"You can have a TV and a couch. You can have a fridge and a stove, but it doesn't do you any good unless you got the roof," says Reasor.

The reason for the large yard sale, he's facing foreclosure after he was hurt on the job.

"The surgery was supposed to fuse two discs together and it didn't heal correctly," adds Reasor.

Putting Reasor out of work indefinitely and on disability.

After a late payment, the mortgage company required the entire late balance, more than $9,000 to reinstate the mortgage.

"The only people who are at fault are of course myself. But we had a lot going on that month and over the years we had tough times, so the mortgage company was just done with us basically," says Reasor.

"We take it for granted that we'll always have our health- it's something that every one of us has to face the fact that we are human and we are frail and we need to prepare to protect ourselves against the things we hope and think will never happen to us," says Rick Kahler, a financial advisor.

Kahler says everyone needs a plan to prepare for the worst. It starts with the right insurance.

"More important than life insurance, is disability insurance. What happens if you become disabled and cannot earn an income - having some good long term disability insurance is a good idea," says Kahler.

Another way to prepare- start saving. Kahler says the 2008 -2009 stock market crash proved everyone needs a reserve fund.

"Typically a person should have 6 -12 months of operating cash, basically what you need to survive in that emergency fund," says Kahler.

Reasor plans to start his emergency fund after the check is in the mail to save his home.

"In the future, we're going to try and stay one month to 2 months ahead in our mortgage. Or at least keep that amount available at all times," adds Reasor.

A lesson Reasor is learning the hard way. Along with preparing financially, he's says he'll never be afraid to ask for help again.

"Without all these people, we would be in really bad shape. And this whole situation has brought the reality back, that there are still a ton of good people out there. Paying it forward is a must," says Reasor.

With the help of friends and neighbors, the Reasor family has earned enough money to keep their home.

And more good news for Tom, the doctor says now that the disc's in his back started moving, there's a chance a surgery could get him back on the job within a few months.

Here are a few web sites that could prove critical to avoid a crisis.

www.mymoney.gov

www.mymoneymanagement.net