“Nobody says you must laugh, but a sense of humor can help you overlook the unattractive, tolerate the unpleasant, cope with the unexpected, and smile through the day” — Ann Landers

The rains hitting the Northeast stressed out more than a few friends last week. One in particular suggested that I write a post about the stress of money when the unexpected happens. I’m sure that many people in the Northeast are facing enormous home repairs that aren’t covered by insurance.

So how do you plan for the unexpected? It’s hard enough for me to keep a week’s supply of bottled water on hand and I should know better living in the heart of earthquake land. This prompted me to some research and cover the basics. God knows even I need a refresher course when it comes to disaster preparedness and finances.

Jane Levine at WiserAdvisor.com suggests that people create a financial evacuation box as a first step. She writes, “What can be done to be financially prepared if the unexpected happens? Start by organizing a lockable evacuation box or suitcase containing important records, legal documents and identification.”

“The box – light enough to carry if you were forced to flee your home due to an emergency, and preferably fireproof – should contain copies of such documents as your birth certificate, marriage license, Social Security card, will, insurance policies, property deed and power of attorney (originals of vital documents should be stored in a separate, fireproof safe or safe deposit box).”

“The box should also have a list of current financial accounts and contact information for your insurance agent, attorney, bank, financial advisor, family, friends and any other key people you may need to reach in an emergency. Also it may be a good idea to include sufficient cash for two or three days in case automated teller machines are unavailable.”

“Other items to put in the evacuation box include photos or videos of your home and personal property. These can be a big help in speeding up any insurance claims. If you keep financial records or photos on a computer, copy them to a disk and add it to your box. Alternatively, you could also use an Internet storage service.”

Okay… so you’ve got the magic box ready. Where are we going? And how are we going to get there? You need money. Cash or access to cash is always king in emergencies. Here are a few pointers from Chase:

“Too many people don’t prepare themselves for unexpected expenses even as minor as a repair to their home or car. Minimize the stress of financial emergencies by planning ahead.”

1. Insurance is one of the best defenses against emergencies. Check to see if you have adequate coverage for Life, Disability, Property, and Long-Term Care insurance.

2. Prepare an emergency budget to determine the minimum amount of income and expenses you would need in the event of a financial crisis.

3. Set up an emergency savings fund so that you have easily accessible savings to get you through an emergency.

4. Be aware of or establish potential loan sources, such as home equity or a personal line of credit.

5. Remember that neither good times nor bad times last forever. Solid investments can reduce the need for a large emergency fund.

6. Plan your estate to ensure that your family remains financially secure in the event of your death.

Levine adds this advice when it comes to the emergency fund; “Financial planners advise maintaining an emergency savings account equal to three or more months of expenses. Establishing a line of credit that could be drawn on in an emergency may also be worth considering.”

I believe that keeping a HELOC readily available is the best insurance policy and have written about it in the past. The HELOC is a back-up plan when the emergency fund runs empty. In a disaster or illness this can buy you time. And time is money.