Dollar Bill Y'all

By way of Facing South, exactly the sort of financial fallout to which I was referring some posts back:

Jerry and Deborah Alciatore fled New Orleans with nothing but a couple of overnight bags, an ice chest and their credit cards. The bags emptied quickly, but two weeks after Hurricane Katrina hit, the balance on the credit cards is mounting fast.

Their first week on the road, they charged $1,600 in food and hotel bills in Houston, about $400 worth of clothing, mostly from discount stores, and a couple hundred more on gasoline.

Jerry Alciatore splurged $1,200 on a laptop to keep in touch with employees of his small architectural firm, pushing the credit card bill to about $5,000. They'll soon have to make another mortgage payment on their house in Metarie, which was damaged but not destroyed by 3 feet of floodwater.

It should be noted that many homeowners' insurance policies do not include flood damage in their umbrella coverage. In Mississippi, for example, State Attorney General Jim Hood has brought suit against insurance companies claiming damage from Katrina was flood damage and therefore not covered:

Hood filed a lawsuit Thursday in Hinds County Chancery Court seeking a temporary restraining order against all insurance companies with policies that insure against property loss and damage from storms and hurricanes, but exclude loss or damage from water.

"They are taking advantage of people in dire strait," Hood said of the insurance companies. "Some are trying to do the right thing, but you have some trying to use the exclusion."

Insurance industry officials said if the lawsuit is successful, it will destroy the viability of every insurance policy in the state and undermine every legal contract in the nation.

"The flood loss exclusion in homeowners' policies is clearly worded, has existed for decades and has withstood previous legal and political challenges," Property Casualty Insurers Association President Ernie Csiszar said in a statement. "We're outraged by this attempt to retroactively rewrite policies so that every risk will be covered, regardless of the cost to millions of American consumers."

Hood's lawsuit comes as an insurance company is lobbying Congress to create a fund that would allow the federal government to help cover natural disaster-related claims.

Back to the unfortunate story of the Alciatores. Though it matters little, the article fails to mention whether or not they have insurance....

"I'm worried. We have about a one-month gap where my income will be cut off and so will my wife's," he said. "I have to see if my business is still going to be OK. We're going to be out of our house for maybe three months, but I have a mortgage payment every month, and now we have to rent an apartment."

The Alciatores are quick to say they are lucky compared to others who suffered so much more. They consider themselves middle class, maybe upper middle class.

Still, financial experts say the couple is right to be worried. The Alciatores and other Katrina victims who thought they were financially secure must keep their debt in check while facing huge relocation costs and uncertainty about their income. It's not easy.

"People in a crisis are not thinking clearly. Their emotions take over, and that's not a good place to be when it comes to your finances," said Deb Outlaw, a CPA and financial planner in Dallas. "Sometimes they feel like they have to get back to what they had before the disaster, but they need to be patient."

Like much else surrounding Katrina, the financial aftermath is a story of haves and have-nots.

Again, as many Americans think themselves more affluent they they actually are, many more poeple think they can afford to finance their recovery this way than actually can. Pile on the bankruptcy law restricitions and the inability of even disaster victims to find some repireve and you begin laying the foundations for some horrible, horrible economic realities...for the have nots, of course.