Should I tap my home equity or sell stocks to build a $100,000 emergency fund?

Dear Quentin,

I'm 57 and my hubby is 61. We're some semi-retired and presently moving portion time. Over the past 3 years, we've depleted a important information of our currency reserves owed to a caller roof, assorted location repairs, 2 utilized cars and immoderate unexpected veterinary bills. 

We mostly effort to support affirmative currency flow, but we've had a batch of expenses deed successful a comparatively abbreviated play of time. We presently person astir $1.7 cardinal invested but lone astir $20,000 successful cash. Ideally, we'd similar to rebuild our exigency reserves to astir $100,000.

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My question is whether it would marque consciousness to usage a HELOC arsenic a impermanent span portion we rebuild our currency reserves, alternatively than selling investments. We're trying to debar withdrawing $100,000 from our portfolio if there's a tenable alternative.

My hubby would similar to merchantability immoderate communal funds, instrumentality the resulting taxation hit, and replenish our currency reserves that way. I'd alternatively debar realizing superior gains if we tin reasonably usage a HELOC temporarily instead.

My hubby and I are astatine likelihood implicit this. For immoderate of your readers who whitethorn person been successful a akin concern to us, would you see utilizing a HELOC arsenic a short-term bridge, oregon would you wound the slug and merchantability the investments to reconstruct the currency reserve? 

Facing Unexpected Costs

Related: My woman and I are some retired': Do we dip into our $2.3 cardinal money to wage disconnected our $300,000 owe astatine 2.9%?

Dear Facing,

You are some barking up the incorrect tree.

Selling investments oregon taking retired a HELOC — secured indebtedness — to physique up your exigency money is the fiscal equivalent of the process wagging the dog. It should beryllium the different mode around: Your exigency money should beryllium paying disconnected the HELOC.

After all, an exigency money exists to forestall you from having to marque a extremist determination astatine an inconvenient time. It's depleted aft paying for each of these expenses, but that's wherefore it's determination — to beryllium depleted successful a clip of need.

You person 3 options: instrumentality wealth from your status funds, instrumentality retired a HELOC, oregon (my favorite) dilatory physique up your exigency money the old-fashioned way, by cutting your expenses.