Normal weather you can plan for, but there are outlier events that can still wipe you out that's basically impossible to predict or prepare for.

Sandy in NYC flooded a great deal of infrastructure and left buildings without power or communications for a long time. Large parts of downtown were completely depopulated for weeks on end - that sort of event takes out independent business owners, and you can't effectively plan for it.

For the most part food vending isn't so profitable that you can build up a thick cushion for longer-term outages.

We commonly say that hackers should save up 3-6 months of floating money, especially if they are in the self-employed or contracting/consulting world. You never know when the next job is, you never know what could happen.

I don't see how being a small business operator of something like this is different. The source of income is different, the wisdom is the same.

Hopefully they were able to set aside months worth of floating money, and even weeks due to a natural disaster wouldn't wreck them.

>We commonly say that hackers should save up 3-6 months of floating money

It's not hackers, it's adults. This is called an "emergency fund". 3 to 6 months cash that's easy to access in the event of a genuine emergency, including loss of work. Personal Finance 101.

Exactly, and if your monetary stream is inconsistent, then 3-6 months should really be considered insufficient. You're shouldn't be regularly be eating into your emergency fund.

Totally agree. I would say closer to a year, but some would disagree. Less than 6 months is not enough, especially for freelance/consulting types.

Hell, make it at least a year. If you can't plan this far ahead, either your expenses are too high or you're doing something that is not sustainable. At least a year should be a long-term goal if you're doing something which is at all exposed to random acts of God.

> At least a year should be a long-term goal if you're doing something which is at all exposed to random acts of God.

You mean like being a human being who is currently alive on the planet Earth?

I tend to forget the number (is it 6 months? 9?) and just say, oh hell, make it 18 months.

It won't kill you to have more dry powder rather than less. But then, I tend to be a bit conservative and paranoid about money. :)

I co-own a restaurant as a side job. Saving 3-6 months or more worth of emergency funds for my personal use is the trivial part. The real problem is covering everything that the insurance policies won't cover to a sufficient extent: everything from building damage (maybe the landlord takes forever to rebuild/repair) to replacing equipment and any fees to go through processes and get all kinds of permits all over again. That's if there aren't external factors in play that causes problems (like maybe everyone else in the neighborhood got fucked by a major earthquake too).

This is totally different from my freelancing mindset since I have to start thinking about tens if not hundreds of thousands of dollars just for floating a brick and mortar business for even a couple months, whereas my biggest investment for my main line of work is...mostly a nice computer. All this after insurance, so then it's time to start thinking about FEMA and bank loans (as if the stingy as fuck banks will give out loans).

All of this is on top of other hassles (SF, Alameda and LA counties are ....nuts for restaurant owners, to say the least) and it just sucks to think about. Maybe food trucks get more leeway or whatever in a lot of areas due to flexibility and size, but if I'm having these thoughts about a pretty profitable decent volume restaurant I shudder to think about the smaller fish out there.

Actually, after a disaster, if you have losses that aren't covered by insurance, businesses don't initially get assistance from FEMA, they apply for a low-interest loan from Small Business Administration (see: http://www.sba.gov/category/navigation-structure/loans-grant...) instead.

Yeah, I took a shortcut when I said FEMA loans, it's not directly from FEMA but they'll help you with the SBA to get a disaster loan.

Pretty nice to have a safety net, but the government can be picky too. Many people I know got rejected for loans after the Northridge earthquake 20 years ago for trying to make a quick buck selling batteries etc. way above the regular price. FEMA people commented to my parents (they owned a small biz at the time) that they were one of the handful of businesses that didn't price gouge anyone within the area. I had no idea the government could pay so much attention to what people were doing in such a big area.

Yup! That's why there are more squirrels than humans!

Unexpected health issues? That's a little more tricky.

And what does an American employee do about unexpected (long term) health issues?

(For short term issues there is insurance, whether in the form of savings or actual insurance.)

Long-term disability coverage has been part of all the insurance plans I've had over the years in the US. I assume that it's pretty common across US insurance plans, at least for full-time employees.

Such coverage pays some percentage of your salary for many years from the beginning of a long-term disability. I think that both of those numbers vary widely from plan to plan.

Provided you have insurance in the first place. (The rest of this post is seemingly invalid in California:) Contractor? No, you don't get insurance. Don't you have COBRA? You can't afford that? Well, golly, better hope that you don't get sick.

If you're a contractor w/o insurance, you're doing it wrong. You should be setting rates so that you can afford insurance.

Health insurance, business insurance, vacation time, holiday time, sick time, equipment, etc. All of these things go into the calculations for your rates.

I did that when I was a contractor. The CEO wouldn't sign my contract because I would end up "making" more than he did in salary.

So I had to cut my hours. I took the 10 free hours/week as an opportunity to hunt for additional work.

Indeed. The GP's question was about "American employees", which I interpreted as "full-time employees at a company in the USA".

Contractors are subject to the health care plans of the company they work for (or whatever they buy on the individual market, if they are self-employed). Part-time employees (less than 30 hours per week, IIRC, although that's probably state-by-state) also receive different treatment. Some companies have started to manage hours to have more part-time workers instead of fewer full-time workers as a means to game the heath care laws: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/06/w...

Long term care insurance.

Long term disability is more appropriate. Long term care is more appropriate for the elderly. To your point, however, insurance products exist to assist when a long term health issue arises.

Oh absolutely.

I just point out that many people are programmed to be risk-averse. A shitty job with a steady paycheck is perceived as lower risk than a potentially more lucrative job with a big company.

When I was in college, I sold extended warranties with computers. People would buy a PC for $2,000, and 80% of them would buy an extended warranty for $400. They felt like they were winning, because their liability was now limited.

I should do what squirrels do.