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Old 06-17-2009, 10:41 PM   #21
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I keep going back and forth on the Roth vs. Traditional debate. I know there are a million threads on the issue, but it just goes to show how hard the "right" answer is to find.
Since there is no way to know the right answer, why not diversify and do both? No reason to put all your eggs in only one type of IRA.
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On another note, I've been tempted to cut the emergency fund (1 year's expenses currently) to 6 months, and put the rest in the Roth IRA/401k or maybe put some of it down on a house if we move. My job seems stable for now. Crazy?
I don't think it's crazy, but I wouldn't do it if it were me. Lots of unemployed people thought their job was stable a few months ago. In this economy, best to err on the side of caution.
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Old 06-18-2009, 12:19 AM   #22
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Hmmm...maybe consider a second job on the weekends or evenings, and add that to savings?

On the e-fund, I would be ok with putting it in a Roth in some conservative investment - I believe you can withdraw your contributions at any time with the Roth. I wouldn't put it down on a house though - too illiquid at a time where cash is king.
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Old 06-18-2009, 08:13 AM   #23
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Maybe for some people, the traditional vs Roth debate still makes sense. For me, I'm comfortable with the belief that my tax rate on my current $140k-ish income is going to be more than the rate on the very roughly $40-45k/year in taxable income from SEPP IRA payments and taxable dividends and the like.
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Old 06-18-2009, 09:17 AM   #24
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On another note, I've been tempted to cut the emergency fund (1 year's expenses currently) to 6 months, and put the rest in the Roth IRA/401k or maybe put some of it down on a house if we move. My job seems stable for now. Crazy?
I wouldn't do it in this economy. Especially if you don't have very good reason to think your current income stream is extremely secure.

We've recently decided to start cutting back on our emergency fund, but that's only because (a) my wife just found what will probably be a pretty secure job with the local school district, AND (b) we already had an emergency fund which, when combined with likely severance and unemployment, would have allowed us to tread water itself for more than 2 years (even accounting for health insurance). But before we added another fairly secure income stream into our future, almost all of our excess cash flow (after maxing a 401K and two Roths) was going into building a nuclear-proof emergency fund.
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Old 06-18-2009, 09:36 AM   #25
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I wouldn't do it in this economy. Especially if you don't have very good reason to think your current income stream is extremely secure.
I agree completely with ziggy29. Until the economy is a little more settled down, I would want to keep a hefty emergency fund.

I would be even more cautious than ziggy29, since his wife hasn't actually started working yet and you never know what could happen. I guess that is a little negative but there you have it. At least he is just paring down a 2-year emergency fund. I would want to keep 12-18 months.
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Old 06-18-2009, 09:37 AM   #26
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I would be even more cautious than ziggy29, since his wife hasn't actually started working yet and you never know what could happen. I guess that is a little negative but there you have it.
Haven't actually started drawing it down yet -- not until she is working. But we already have the plans in place to do so.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 06-18-2009, 09:40 AM   #27
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Haven't actually started drawing it down yet -- not until she is working. But we already have the plans in place to do so.
I am so glad to read that! Very smart. This economic decline has been so severe that I think we are living in unusual times.
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Old 06-18-2009, 11:11 AM   #28
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Thanks for all your insight, I appreciate your input.
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