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    Stocks with debt?

    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.

    #2
    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.

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      #3
      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.
      Brian

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        #4
        Originally posted by cherryblossom View Post
        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?

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          #5
          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.

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            #6
            When do the 0% cards start charging interest and will you have them paid off before then?
            The easiest thing of all is to deceive one's self; for what a man wishes, he generally believes to be true.
            - Demosthenes

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