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I’ve been reading a few blogs over the past week and have come upon an interesting phenomenon amongst many financial bloggers. The phenomenon is that many people in the financial blog world have implicit trust of financial institutions and operate on the continued assumptions that things will always be as they are today or things will only get better.

This week I’ll be focusing on Financial Disaster Preparedness and I will try to speak beyond the typical “you should have $1000 in an emergency fund” basic suggestions offered by many and whether the implicit trust is truly warranted or whether you should have a truly alternative financial backup plan.

The first step is to identify some key potential scenarios, the effects, and the theoretical solutions to the issues. In my mind there are three types of disaster scenarios that need to be addressed:

  • Scenario 1 - Localized disaster that impact you directly and personally (e.g. Hurricanes, Earthquakes, Tornados, Terrorist attack)
  • Scenario 2 -National disaster that impact the overall economy (e.g. 9/11, avian flu, grid blackouts, global war)
  • Scenario 3 -Synthetic/Systemic disasters that have the potential to create havoc on your personal financial life (e.g. retiring baby boomers, geriatric-fication of society, de-gentrification of states, government default on debt)

Tomorrow, I’ll start with Scenario 1 and while I don’t have all the answers, I hope it will offer everyone a good start. I also look forward to hearing some feedback and suggestions on how to make it better.