Dear Dave,
I’m debt-free except for my house. I make about $120,000 a year, and I have a truck that’s worth around $33,000 and a car that’s worth $28,000. I don’t have an emergency fund, so I was wondering if I should sell the truck to establish my emergency savings.
Eric
Dear Eric,
A good rule of thumb is to never have more than half of your annual income tied up in things that go down in value. You’re not quite there, but you’re close. And I love your idea of wanting to immediately establish an emergency fund. You never know what life is going to unexpectedly throw at you, and an emergency fund is great insurance against that sort of thing.
Here’s how I look at it. Nothing you’ve told me indicates that this truck represents anything being out of control. It’s an expensive truck, but it’s not like you make $30,000 a year and have a $33,000 truck. That kind of thing would be just plain stupid. But if you don’t need or want the truck — and you’re that passionate about having a big, instant emergency fund in place — then sell it!
—Dave
* Dave Ramsey is America’s trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.
