Answer for how you actually do it

Hi Jason,
Very good question! Well, my decision to sell stocks does not depend whether i need money or not, since the market does not know when i need the money. And while i do have stocks that pays dividends, but i don’t mind owning a stock that doesn’t pay dividends too (like Berkshire). Besides, I’m more interested in the company’s profits rather than dividends, since dividend is only a part of the total returns of the company.
And no, i don’t keep a portion of my funds “idling” too, since it loses opportunity cost. Imagine you’re an employer with 100 workers to feed every month. Do you leave 20 of them “idling” just in case got jobs for them later? I hope not. 🙂
I did it by utilising the bank’s margin facility for my stocks. Say you have RM 1 Million in stocks. With that amount in stock, you are able to cash out (to your bank account) up to RM 600k without selling your stocks. Knowing this, i allocate my margin accordingly. 
If i know i have a major expenses coming, i keep my stock margin low so that i can withdraw that cash to my bank account when i need it. This way, i don’t need to sell my stocks at a depressed price, or just limit my stock selection to dividend paying stocks, and don’t need to leave my capital idling for “just in case”.
This “just in case” capital comes from the bank, and interest is charged only on the amount used (multipled by the number of days used). The same effect can also be achieved by OD from housing loans.
Some might say they don’t like paying interest, thus they don’t like my method. Well, to is not comparing “apple” to “apple” actually. Let me explain further.
Suppose you have RM 1 Million networth. And you set aside RM 100k for “just in case”. This way, you invest RM 900k. For me, i would invest say RM 1.2 Million from my RM 1 Million capital, and since i’m using margin facility, the bank gives me a “just in case” credit facility of RM 520k standby (which is calculated by 60% of RM 1.2 Mil less 200k which i’ve used to buy stocks).
Incase a huge unexpected emergency, i had RM 520k instead of RM 100k.
If that emergency came when the market is low priced (say market dropped 20%), the person who don’t use margin facility would have no choice but to sell at a low price, or perhaps loss. As for me, although the margin facility reduced (since my collateral value dropped), but i would still have RM 376k of “facility” to cash out without the need to sell my stocks at a depressed price.
And lastly, if there’s no “emergencies” i would have stock portfolio of RM 1.2 Mil for appreciation compared to just RM 900k. Though i would need to pay interest for it, but with value investing, i’m confident that my stock investments would earn more than the interest charged by the bank. 
Lastly, this method can only be used if you’re sure of your stock selection. If you’re speculating, this is a faster way to lose money.