Stocks with debt?

[cherryblossom]

My husband and I have a total of around $40k debt (credit card, car loans & student loans). I had purchased some stocks at the bottom of the market worth about $5500. We are paying off debt fairly aggressively now and I am wondering if we should cash this in or keep it.

Our interest rates for all our loans are all fairly low---we have only $1200 left on a credit card with the highest APR. Our other two cards are at 0%, one car is at 0%, second car is at 4% with $7500 left, student loan is at 1%. We have never missed a payment and I guess because of our low interest rates, I am wondering if it would make sense to sell the stocks and put the $5500 to debt. This would then leave us with only $1000 of an emergency fund for security! Our household income is around $75-80k if that helps any.

[MakeAStash]

Loans at rates less than inflation (currently 3% to 4%) are like free money because you pay them back with devalued dollars. Paying such low-interest loans early actually costs you more in real dollar terms. If the $1200 card is at a rate higher than inflation, it might be worth selling just enough stock to pay off that one.

[bjl584]

What is the purpose of the stock? Is it for retirement? If so, I wouldn't cash it out. If not, then I may take some profits and use it to pay off the cc.

You have a fairly high income. I bet you can pay off these debts without cashing in any of the stocks. Post up the rest of your budget so we can take a look and look for some ways for you to trim costs and increase cash flow.

[JustBill]

This would then leave us with only $1000 of an emergency fund for security! Our household income is around $75-80k if that helps any.

Are you saying that you presently consider the $5500 in stock as an emergency fund? Also, this represents holding of individual securities?

[cherryblossom]

Thanks for all the replies. Unfortunately, I did not get any email letting me know there were replies until just today! I really liked the post about inflation

We have decided to sell one of the cars in the spring and get a free car from my parents. The stocks serve as an emergency/retirement fund and so I have decided to leave them alone. They are now at $6200. We are hoping to be out of debt in 1.5-2 years depending as well on whether my husband goes back to school or not and/or gets a full-time job. Right now he only works part-time.

[kv968]

When do the 0% cards start charging interest and will you have them paid off before then?