January 2025
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Ep. 118 Inherited an IRA? What to Know for 2025
Ep. 117 Hidden Gems in Real Estate Investing
Hello, everyone, and thank you for joining us for another episode of THE FINANCIAL COMMUTE. I'm your host, Chris Galeski, joined by chief operating officer and chief marketing officer Stacey McKinnon. Stacey, this is a heavy episode for us to start with because it's just the pure devastation that's going on here in Los Angeles recently with the fires and we're here to be a resource for people in terms of if you've been affected by the fire damage, if you've had to be evacuated and some tips and tricks and things that people should know to how to best prepare themselves and then also navigate the future.
Thank you so much for joining the conversation today.
Chris, it's been such a hard week for so many people, so many of our own and our clients just really impacted by these fires. And so, you know, it's hard to do this type of an episode in this type of week, but hopefully we can bring people some peace and comfort and maybe some things that they should be thinking about going forward.
But yeah, we're just devastated by this.
Yeah, it's it's really tough. And, you know, one of our advisors, Bruce, lost everything in the Palisades Fire and he had sent over a list of things that some friends of his him had sent him that were affected by the Woolsey Fire, saying, hey, if you lost your home, during this horrible event, like, here are some next action steps and things that people can do, going forward.
And, you know, I thought we should start there in terms of going through that list of really important things. So that way people can get organized and stay on track with with next steps if they if they lost everything. So why don't we just talk about that? I mean, the first one that really stood up was, was soak up the love from the community.
Obviously it's it's incredible what we've seen from support from so many, stepping up to be there for, for everyone. I thought that that was a great, great place to start.
And Bruce, shared with all of us on our team call this morning what he's been going through with the loss of his home and going and seeing it and feeling a sense of regret of what he could have grabbed and what what was left. But then he also mentioned that all of his neighbors are on the text chain together, and they're coming together and they're like giving each other advice, and they're providing that support and that comfort and some of the silver linings that came through it all.
It's really incredible to see how community comes together, especially in these times. And so I love that first point that he made of to soak up the love, because this is where we get to see some of humanity's beauty really shine through.
Yeah, it really is. I mean, we have a client who lost everything in the Palisades Fire as well, and their son was with some friends, and they started a GoFundMe page to clean up, Pacific Palisades. And I think it's raised almost $100,000 so far. Just, you know, be earmarked towards cleaning up their community. And it's incredible how people have stepped up.
So amazing. And the few other things that he mentioned just turn like, make sure that you have your ducks in order if this happened to you, if you did lose your home, calling your mortgage company to find out if you can get, basically 3 to 6 months of the forbearance. That way you can connect with insurance, arrange everything you need, but just not having that expense in that cost, especially in such an emergency.
I thought that was a really good point. He also mentioned, forwarding your mail to a P.O. box or maybe a friend or a family, wherever you're saying, getting that address updated. I thought that was good as well. What are some other things that stood out to you on the list?
Yeah, I mean, obviously you're going to need to call your insurance broker, contact your car insurance. Any specialty insurance for unique items? Jewelry. I love the P.O box. A couple things that really stood out was, you know, call your utilities, gas, landline, cell phone, obviously cancel any of those services that you don't need, but then update those addresses to, update those addresses to the new P.O. box was really important.
Call homeowners and rental insurance to to trigger the loss of use. So that way you can hopefully access those funds in the loss of use policy to help you kind of find a longer term rental. There's some other points here, like registering with the shelters in Red cross and any other agency, FEMA, etc. we're going to compile a list that's going to go out with this episode to give people those resources.
So that way they have access to them. Those are some of the things that that kind of really stood out. But that's not the whole list here. I mean, there's some more, searching for a long term rental is going to take some time. I think you mentioned Airbnb is a resource, earlier that people can you want to talk through some of that.
On the FEMA one just really quick. It's really important that you register because aid could be provided by FEMA. So making sure that you register there, I think it's key. And then that way you'll be notified. Another thing about FEMA, one of the bad things that's happening is people are impersonating FEMA and contacting people who lost their homes.
So just making sure that you are speaking with a FEMA representative and that actually is a team, a representative, that's something that's really important. And then to your point on Airbnb, Airbnb actually has a service right now where if you were in the evacuation zone zone and you lost your home, you can essentially apply to be notified of rentals that are coming up.
One of the biggest challenges that I think people are facing right now is just so many homes were lost in all of the fires in Los Angeles that it's become very hard to find rentals, and so Airbnb is trying to provide some temporary housing where the either lower cost or no cost. And then also you notifying people of rentals are coming available.
You know, there was one of the harder ones for, for me to look through was the itemized list of belongings. I know that this can probably get pretty emotional. You know, try to organize a list of things, by each room I thought was good with the actual replacement cost. Now, this replacement cost is not the cost using a 50% discount or the 20% discount at Bed Bath and Beyond, it would be actually the replacement cost to buy something new at full price. That's going to be hard, but very important for people to kind of go through. I really like that one as well.
Yeah. And then just something else to be maybe thinking about is your taxes. So there's a few things that, if you did lose your home or your home was damaged in any of the fires, you want to essentially make sure you have a list of everything so you can potentially get some write offs on the taxes.
It's going to be the difference of what your insurance company pays out and then what you lost. There's potential for that. But work with your CPA. They can confirm what you're actually eligible for. You can reassess your property for property tax purposes and essentially potentially get, either a reimbursement or forbearance on that. And then something to note is L.A. County residents, business owners, the tax filing deadline has been extended till October 15th.
And so you don't have to worry about paying taxes for another nine months. You can invest that money, put it in a money market, but at least hold on that. And just one less thing to think about. And I think that's really important as well.
Yeah, I mean that includes this January payment, the April payment that that would normally be due the June payment and even technically the September 15th estimated payment as well, can all be delayed until October 15th. But you want to work with your CPA and, and go through that.
So I know that you also reached out to an insurance broker that we work with, Tim Gaspar, and he gave you some helpful information in terms of how people should be thinking about working with their insurance company. Can you just share a few of the things that he had shared with you?
Yeah, Tim's a great resource. And, you know, he he said to make sure that you have your home policy information. So that way when you contact your, your insurance, you've got that home policy information, including your policy number and phone number, to file a claim. Many carriers also allow you to file a claim online, but you'll need that important information.
Another few things from the list. That he had here was the list of damaged or lost items. So again, we covered this, a little bit earlier in terms of the actual fair market value of the replacement cost. The insurance carrier will also make you want to have a list of those personal items. It helps if you maybe had a video recording of your house.
And so you might want to look back in your phone to see if you have any pictures or videos of stuff that was in your house. So that way you can use that as evidence. Any temporary list of expenses for living expenses. So you want any expenses that you're incurring while you're displaced. You want to keep track of that?
The try to contact the fire department and get a report, from them and a copy of the fire department's report, which can confirm the cause and the scope of the wildfire, evacuation notices, like official documentation that that confirms that you were in an evacuation zone. And then please document everything. Take notes of all of your calls and conversations with everyone, including names, times, dates.
That's extremely important. As you mentioned earlier, there's a lot of fraud and scams that tend to go around during this time. And so going to an evacuation, shelter to then register with the Red cross and with FEMA directly in person can be a really important way to, to best protect yourself.
And I think that he also mentioned just thinking through forward looking. How do we think about making sure we have all of the these things, taken care of in advance, right. It can be so scary. I think in this moment, watching all of the devastation and then also just the realization that fires can start in an instant.
And so we all have to kind of reflect and say, okay, what do we have these things prepared? Would we be able to do the lists that you just shared if something happened to us, and then what's in our go bag? And so I think that you also got a few resources related to go bags. And maybe we could just share a few things that people should be preparing for now, just so they have that.
And some of these stresses can be maybe alleviated if we're prepared in advance.
Yeah, I think that's good. Obviously. I pulled a list from Cal Fire and everybody's situation is very different and unique. And sometimes you have time in order to properly gather the list of things that you need in order to, to evacuate. But some key things from this list was like a three day supply of perishable food.
A few gallons of water. It could be crucial, to be able to have food and water during this time of being displaced, having a map with, a couple, routes that you can use to evacuate. So, you know, typically in times of these wildfires, we can lose cell reception, we can lose service. And we're we're in a hurry.
And so knowing where you're at and having a couple routes that can allow you to evacuate is important. Necessary medication. I felt like this one was very important. Sometimes, you know, we leave in a hurry and we forget to grab things, but any medication that you have an extra resources to kind of allow you time in case you're displaced or you lose everything.
A change of clothes, maybe extra set of eyeglasses and keys, credit cards, cash. Have a first aid kit on handy, flashlight, battery powered radio and extra batteries. This one, we actually had, in a box that we took with us when we got evacuated. I remember Brianna getting it and that being really important.
Also, copies of important documents such as passports, birth certificates, social security card, maybe any CDs or flash drives with important pictures. Your neighbors' phone numbers. I think you added that one of the list. It's extremely important to be able to, to be in touch with your community and come together during this time. And then lastly, if you have pets, obviously pet food and water, for your pets to be able to, you know, take care of them while you're displaced.
That's just a small list of very important things that people can gather, in a hurry to, to best protect themselves and have the things with them in case they need to leave.
And having everything in advance in one bag. Whether something's going to happen or not, I think is important. The number of phone numbers I thought was really important, just in case, you're not home or your family's not home. Or maybe you have a pet at home and you need somebody to grab your pet. Having that information far in advance, I think is really, really important.
The other thing that I'd recommend doing is every call it 3 to 6 months. I do a little video tour of your home on your phone, just and it might sound silly, but just making sure that you have documented all, everything that's inside your home because, it can be very expensive to replace everything. And having that proof for your insurance carrier, I think could be really important.
So although that doesn't fit in a go bag, I think it's still valuable to just even as a reminder, whenever your insurance policy comes up for renewal, maybe that's that reminder to you of, okay, let me do a quick video tour of my home to.
Yeah, I thought that that was really that really stood out to me when I heard, the importance of doing that and how easy it is, because how many of us really carry along those receipts for, you know, here's beyond, purchase, but being able to have video evidence of what you had in your home is, is, is really key.
My one of my wife's favorite stores is the Container Store. And so we've got a plastic container that's sort of like a filing cabinet with all of our important documents. So it was relatively easy for us to kind of just grab that container and throw it in the back of the car. It was an easy place to where we know that that's all of our important documents passport, Social security card, birth certificates, marriage certificates.
A lot of this stuff can be replaced, and a lot of our lives are online. But that that takes me back to an important thing that people can use now that a lot of their lives lived digitally and being able to grab your computer, or even maybe leverage a software like one password or keeper to store all your usernames and passwords.
So that way, if you were to lose everything or be displaced, you have access to those important informations, websites, usernames, passwords. It could be really key in a time like this.
Yeah, that's really important.
You know Stacy, obviously with the devastation and all of the news reports that are kind of going on with regards to fire insurance, there was a stat that I think over 85% or 89% of the homes in, Pacific Palisades kind of there was an increase of 85 to 89% of policies that I had. Had it be transitioned to the fair plan, would you share with us, some important things for people to be aware of as we reevaluate insurance here in California and protect ourselves going forward on what the fair plan is and how people can kind of navigate that?
Well, I think California prepare plan, and there are some private insurers left, and they'll provide you with coverage for some things, but they exclude and other important aspects like loss of use and covering rentals in the time it takes to rebuild your property. So when you're looking at these insurance policies, I think, number one, we should all be thinking about our budget.
So whereas a homeowner's policy, you know, maybe for a standard 20 500 square foot home could have cost 2000 or 2500 a year, those prices are now in the tens and $20,000 per year. So that's something that we all need to be aware of and budget for. And unfortunately, there's not a lot we can do about that pricing increase.
And so that's something that I would encourage everybody as they even if it's January, if you're doing your annual budget now, be thoughtful to the pricing increase that might happen in terms of the California Fair plan. Some things to note about it is it only really covers up to around 3 million in property. So unfortunately, a lot of the homes in Altadena and in the Pacific Palisades, their homes were worth more than that.
And so if they may have had a private insurer or they might just be right on the edge, some other aspects of the California Fair plan are important to note is that it covers fire, but it doesn't cover a lot of other things. So in addition to getting a fire plan through California Fair, you also need to get a liability coverage policy elsewhere that might cover things like theft or water damage or pipes or things like that.
So you kind of have to budget for both. The California pension plan is not an all in one solution. And then something that's also important to note is that deductibles can be up to 20,000. So sometimes what people do to get their annual cost down is they might, increase their deductibles, which is an amount you have to pay out of pocket before insurance covers, to kind of get the annual premium down.
That's something that there's not a ton of flexibility with the California Fair plan on that. So you have to be aware of some of these things. The other piece of advice that I would give on this is that you want to make sure that your fire policy has replacement cost coverage, meaning it will actually cover what your home is worth.
Years ago, it used to be a tactic that people used to get their premiums down where they wouldn't tell the insurance company when their home went up in value so that they could not have to pay more. And that is not a wise tactic. I think we're seeing so many homes just full destruction, and you want to make sure your insurance policy covers your home at the value that you could sell it for today.
Like that's my best recommendation is think about how much can I sell this home for today? Let me get insurance coverage for that. Because what happens in these times is the cost of everything skyrockets. Your cost of construction, how long it takes? Like the subcontractors. Maybe they've had some losses. Maybe there's some supply chain issues. So you really want to make sure that you're not putting yourself in a position where you can't actually replace your home?
And there was a statistic done in 2023 that said all insurance payouts were about 35% shy of what they actually needed to be 30. It's a third shy of what they needed to be. And so just for the extra few thousand dollars a year that you'll have to pay in premiums to make sure that you actually have the full coverage you need, I think that that's probably worth it and something that you could make into your budget.
And so that's those are some things that I've been kind of paying attention to and thinking about. And actually, the last one, personal property in all of the things inside your home can be really expensive to replace. If you think about the cost of dining tables and couches and bed frames and everything has gone up over the last few years to really make sure that that personal property number is accurate.
And so as you're looking at your insurance policy planning for the future, I think these are some really important things to work with your insurance broker on.
Yeah, I agree, the only thing that I would add to that list is the loss of use coverage to be able to make sure that you have something in there. I mean, I think from the Woolsey Fire, it took, you know, close to 2 or 3 years for people to kind of get get back in their homes.
And so having loss of use coverage. So that way you have access to money that can cover a rental for a couple of years. Is is extremely important as well.
Yeah, yeah. I recently got a bed for California for plan. And the default loss of use was $50,000. So if you think about $50,000 over two years of having to rebuild, that would give me $2,000 a month. I can't find a place to live for $2,000 a month. Very unlikely where we are. So making sure that you have at least two years of coverage.
I think that's a great point, Chris. We really want to make sure that that that's included. So I'll go ahead.
No, I mean the the no. What do you read at that? Oh, okay.
So Chris, one more thing I wanted to make people aware of is some of the scams that are happening. And unfortunately, we have to talk about this because we want to make sure that both the people that lost were protected, but also the people who want to get the people who are interested in just making sure that they can support those who lost.
Can you share a little bit more with the audience on the scams you're seeing, and maybe some things to look out for as people are trying to either give or just take care of themselves?
Yeah. I mean, it starts with using a reputable insurance broker to help you. We have multiple contacts people can use. You have to watch out for people offering to help you get claims. They're trying to take a percentage of your payout, and you only want to use people that, are vetted. That's a that's a big one is, you know, hey, I'm here to help you, you know, sign this contract.
I mean, there's just a lot of scams out there. Obviously, in times of need like this, there's a lot of people that are saying, hey, donate to this cause, but you really only want to donate, to verified sources. There are a lot of people trying to take advantage of gofund me and charitable sites, and so use Charity navigator there to, to verify.
Obviously, we talked about it earlier. You want to change your mailing address to appeal box or a friend or a family's house and then be careful of price gouging and price increases for rentals. Airbnb is a resource for temporary housing or even special credits. But just be on the lookout to best protect yourself. And, you know, it starts back to protecting your usernames, your passwords and, and vetted resources and, trying as much as possible to get registered in person versus being susceptible to those scams that come through via email or phone, some random person calling you, just be careful.
And I agree with all of that. And, I would want to say, as we kind of wrap things up, that please feel free to use us as a resource, whether that you're a client of ours or you're not a client of ours or you have friends or family that you just need them to talk to someone. We are here.
Our team is here. We want to be that resource. We want to support the community in this time. And if we can help make things a little bit easier, like please, please, please reach out to us.
You know, Stacy, thank you so much for your time today. And we're going to include a few pieces of critical information that are available to people. Obviously, resources, if you've been affected and lost your home in this fire, but also that checklist that we kind of talked through as well. If you've got to evacuate from your home, here are some key things that you might want to do, prior to evacuating to to best protect yourself.
I would offer I'd offer one more piece of advice to Chris. Actually, one of the things that we don't talk about during this type of scenario, we talk about the logistics, the insurance, the go bag. We often don't talk about mental health and the challenges that people are facing with stress and anxiety and being addicted to looking at what's happening.
And I think especially with some of the circumstances around the fires, it can feel really, really scary out there. So I would always recommend that people just, like, don't be alone in that. Reach out to people like, surround yourself with community. If you're feeling yourself, get back to that place of anxiety. Please de-escalate the stress. If you're a business owner, give people a break for the next few weeks.
Like, take some deep breaths, even at more. In all of our team is working remotely this week or wherever. They feel safe and comfortable to work, because the loss that people have experienced, whether they personally were impacted or they watched others, I think it can cause a lot of stress, across everyone. And so whatever you can do to de-escalate the stress is my best recommendation as well.
Take care of one another.
I love that. Thank you so much, Stacey.
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