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 Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com. |
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Sell the stock and keep your emergency fund liquid. Stability matters more than market risk. Then, resume 401(k) contributions to secure your future. Safe and Easily Accessible Dear Dave, I stopped contributing to my 401(k) temporarily to help us build an emergency fund a little faster. Things are going slowly, though, and I’m getting worried. My wife and I are both 46, have no debt except our home and we have a combined household income of $100,000 a year. We have $20,000 in a single stock, and I was wondering if we should cash out that stock and use the money for our emergency fund. Doug Dear Doug, That’s exactly what I’d do. I’d cash out that stock as soon as possible, and put the cash in a simple money market account with check writing privileges and no penalties for early withdrawals. Basically, your emergency fund is in stock right now, and that’s a bad place to keep it. You never know when life will throw unexpected expenses your way, or when the stock market will go down. You always want your emergency fund to be safe and easily accessible. Remember, your emergency fund is insurance—not an investment. After that, make sure you keep pushing forward and jump back into Baby Step 4. That means start pouring money into your 401(k) again. Great question, Doug! - Dave |
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