By Jason Alderman

Natural disasters are inevitable, unpreventable and often come without warning. No part of the world seems to be spared, whether it's a hurricane, earthquake, tornado, drought or flood. Even though such catastrophes can't always be predicted, their likely aftermaths often can, including property loss, power or water service disruption, scarcity of food and supplies or overtaxed relief organizations.

Superstorm Sandy was a powerful reminder of why it's vital to develop a family disaster plan. By planning ahead and knowing what you might need under dire circumstances, you can save yourselves a lot of time, money and grief.

The Federal Emergency Management Agency (FEMA) offers great suggestions for developing a family emergency plan, building an emergency supply kit, and learning what to do before, during and after emergencies - even a plan for family pets (www.fema.gov).

Once your physical safety has been assured, you'll inevitably need to access important financial and legal records, whether to file insurance claims, apply for loans or simply withdraw cash. Taking these few steps now will make accessing such information much easier when the time comes:

Create a log of all account numbers, toll-free emergency numbers, contact information and passwords for your bank and credit card accounts, loans, insurance policies, utilities and other important accounts. Update it regularly and save copies in secure, offsite locations such as a safety deposit box or with a trusted friend living in another area. You can also email the list to yourself in an encrypted, password-protected file, save it on a CD or USB drive, or use a cloud-based storage service like Dropbox that will let you access it from any Internet connection.

Make PDF copies of tax returns, insurance policies and legal documents and save offsite in the same manner as above, in case your files or computer are destroyed by fire or flood. Also make digital copies of invaluable family photos, documents and memorabilia that money can't replace.

Document your possessions. If you should ever need to file an insurance claim or claim a tax deduction for lost, stolen or damaged property, it'll be much easier if you have an inventory of everything you own - photos or videotape are even better. A few available tools:

• The IRS' Casualty, Theft and Loss Workbook (IRS Publication 584) includes a worksheet for cataloging and estimating the value of your possessions.
• The Insurance Information Institute maintains a free, secure online home inventory software application that lets you access your home inventory, anywhere, anytime (www.iii.org).
• Your insurance company's website likely contains a downloadable inventory form.

Make sure you fully understand what is and isn't covered by your insurance policies for natural disasters. You may need additional coverage for damage associated with hurricanes, tornados, earthquakes and other weather conditions. Also:

• Document any damage with photos or video before you start cleanup or repairs.
• Keep track of expenses you incur to prevent further damage, for temporary housing or to move your possessions for safekeeping, as they may be reimbursable under your insurance claim.
• Don't delay submitting your claim, since insurers often settle claims in the order filed.

FEMA provides information on how you might be able to get government assistance before, during and after a disaster at www.disasterassistance.gov.

Bottom line: Develop a family emergency plan now and make sure everyone knows what to do when disaster strikes.

By Jason Alderman

Many people adopt a "penny wise, pound foolish" mentality when it comes to buying insurance. When trying to lower expenses, some will drop or reduce needed coverage, gambling that they won't become seriously ill, suffer a car accident or fall victim to a fire or other catastrophe. But all it takes is one serious uncovered (or under-covered) incident to potentially wipe you out financially.

Here are insurance policies no household should be without:

Medical. This is the most critical - and unfortunately, the most expensive - coverage you need. When comparing plans, consider:

• Are your doctors in their provider networks? If not, can you afford out-of-network charges - or are you willing to find new doctors?
• Are your medications covered under the plan's drug formularies?
• Do they restrict specialized services you might need like maternity, mental health or weight reduction treatments?
• If you choose catastrophic coverage to lower premiums, can you afford the high deductible in case of an accident or major illness?

Homeowner/renter. Faulty plumbing, theft and home-accident lawsuits are only a few catastrophes that could leave you without possessions or homeless. A few tips:

• "Actual cash value" coverage repairs or replaces belongings, minus the deductible and depreciation, whereas "replacement cost" coverage replaces items in today's dollars. Depreciation can significantly lower values, so replacement coverage is probably worth the extra expense.
• Jewelry, art, computers and luxury items usually require additional coverage.
• Review coverage periodically to adjust for inflation, home improvements, new possessions, change in marital/family status, etc.
• The market is competitive, so compare your rate with other insurance carriers. Get "apples to apples" quotes since policies may have varying provisions.

Vehicle. You probably can't even get a driver's license without demonstrating proof of insurance. Consider these coverage options:

• "Liability" pays if you cause an accident that injures others or damages their car or property.
• "Uninsured motorist" pays for damage caused to you or your car by an uninsured motorist.
• "Collision" pays for damage to your car resulting from a collision and "comprehensive" pays for damage caused by things like theft, vandalism and fire. However, they only pay up to the actual cash value (ACV) minus deductibles. Because the ACV for older cars is low, repairs often cost more than the car is worth.
• Common ways to lower premiums include : Raising deductibles; discounts for good drivers, exceeding age 55 or installing security systems; comparison shopping; and buying homeowner and car insurance from the same carrier.

Life insurance. If you're single with no dependents, you may get by with minimal or no life insurance. But if your family depends on your income, experts recommend buying coverage worth at least five to 10 times annual pay. Other considerations:

• Many employers offer life insurance, but if you're young and healthy you may be able to get a better deal on your own.
• After your kids are grown you may be able to lower your coverage; although carefully consider your spouse's retirement needs.
• You probably don't need life insurance on your children, but you might want spousal coverage if you depend on each other's income.
• If your divorce settlement includes alimony and/or child support, buy life insurance on the person paying it, naming the receiving ex-spouse as beneficiary.

Don't gamble your future financial stability by passing on vital insurance coverage - the odds aren't in your favor.

By Jason Alderman

Ever wonder why Mom and Pop stores sell wildly unrelated products side by side, like umbrellas and sunglasses, or Halloween candy and screwdrivers? Customers probably would never buy these items on the same shopping trip, right?

That's exactly the point. By diversifying their product offerings, vendors reduce the risk of losing sales on any given day, since people don't usually buy umbrellas on sunny days or sunglasses when it rains.

The same diversification principle also applies in the investment world, where it's referred to as asset allocation. By spreading your assets across different investment classes (stock mutual funds, bonds, money market securities, real estate, cash, etc.), if one category tanks temporarily you may be at least partially protected by others.

You must weigh several factors when determining how best to allocate your assets:

Risk tolerance. This refers to your appetite for risking the loss of some or all of your original investment in exchange for greater potential rewards. Although higher-risk investments (like stocks) are potentially more profitable over the long haul, they're also at greater risk for short-term losses. Ask yourself, would you lose sleep investing in funds that might lose money or fluctuate wildly in value for several years; or will you comfortably risk temporary losses in exchange for potentially greater returns?

Time horizon. This is the expected length of time you'll be investing for a particular financial goal. If you are decades away from retirement, you may be comfortable with riskier, more volatile investments. But if your retirement looms, or you'll soon need to tap college savings, you might not want to risk sudden downturns that could gut your balance in the short term.

Diversification within risk categories is also important. From a diversification standpoint it's not prudent to invest in only a few stocks. That's why mutual funds are so popular: They pool money from many investors and buy a broad spectrum of securities. Thus, if one company in the fund does poorly, the overall impact on your account is lessened.

Many people don't have the expertise - or time - to build a diversified investment portfolio with the proper asset mix. That's why most 401(k) plans and brokerages offer portfolios with varying risk profiles, from extremely conservative (e.g., mostly treasury bills or money market funds) to very aggressive (stock in smaller businesses or in developing countries).

Typically, each portfolio is comprised of various investments that combined reach the appropriate risk level. For example, one moderately conservative portfolio offered by Schwab consists of 50 percent interest-bearing bond funds, 40 percent stocks and 10 percent cash equivalents. Usually, the more aggressive the portfolio, the higher percentage of stocks it contains (i.e., higher risk/higher reward).

Another possibility is the so-called "targeted maturity" or lifecycle funds offered by many 401(k) plans and brokerages. With these, you choose the fund closest to your planned retirement date and the fund manager picks an appropriate investment mixture. As retirement approaches the fund is continually "rebalanced" to become more conservative.

Although convenient, this one-size-fits-all approach may not suit your individual needs; for example, you may want to invest more - or less - aggressively, or may not like some of the funds included.

These may seem like complicated concepts, but the Security and Exchange Commission's publication, "Beginner's Guide to Asset Allocation, Diversification and Rebalancing," does a good job explaining them (www.sec.gov).

By Jason Alderman

Now that the housing market has finally begun to stabilize and interest rates remain at historically low levels, more and more homebuyers and sellers are dipping their toes back in the water.

If you're planning to sell your home, you need to understand the tax implications of selling a home as well as be aware of structural and cosmetic flaws in your home and neighborhood that could undermine your asking price or keep the property languishing on the market for months.

First, the tax tips:

• In general, if you make money on the sale, you can exclude the gain from your taxable income (as outlined below) if you've owned and used the home as your residence for two out of the past five years.
• You may be able to exclude up to $250,000 of the gain from your income ($500,000 on most joint returns).
• If you can exclude all of the gain, you don't need to report the sale on your tax return.
• Gains that cannot be excluded are taxable. You must report them on Form 1040, Schedule D.
• You cannot deduct a loss from the sale of your main home.
• For more information, see IRS Publication 523, Selling Your Home (at www.irs.gov).

Many factors can negatively impact your being able to attract buyers and ultimately get the price you want. Sometimes there's not much you can do:

• If you're located on a busy street or the local school district is subpar, you probably won't fetch as much as for the same house in a better neighborhood.
• If your house is the only contemporary model in a sea of colonials or if your remodeled McMansion is surrounded by two bedroom/one bathroom cottages, many buyers might be turned off. Not everyone wants to stand out from the crowd.
• If you started remodeling and didn't complete the job, many people won't want to take that on, even with a significant reduction in price.

However, there are many relatively minor changes that may boost your home's marketability. For example:

• If your interior or exterior walls are painted with bold colors or textures, it might be worth toning it down with a more neutral palette.
• If you can afford it, have your home professionally staged, since they know how to maximize space and show off a home's strong points (while hiding its defects.) But if you're using your own furnishings, thin them out.
• Mismatched appliances, cabinetry and plumbing fixtures stand out like sore thumbs. The same goes for worn floors or carpeting. Discuss with your realtor which improvements might be worth the investment.
• Make sure your yard is well-tended and has at least basic landscaping. Overgrown weeds and abandoned junk don't help your curb appeal. The same principle applies for common areas if you live in a condominium.

If there are foreclosed homes in the neighborhood, chances are they aren't being well-maintained. Make contacts with the lenders taking over these properties so you can report problems such as vandalism, trash or overgrown yards. If they're unresponsive, ask your city's building department whether they can charge fines or penalties.

Also, work with your neighbors to keep an eye on empty homes. Take turns mowing the lawn, picking up trash and removing graffiti. Anything you can do to bring up the quality of the neighborhood will improve your chance of selling.