CompoundInterestFan
Recycles dryer sheets
- Joined
- Jan 20, 2007
- Messages
- 222
I've come across this idea before (I think from a poster on this board), and at first it sounded suspect, but after thinking about it I kinda like it. I already have about 3-4 months worth of expenses in my emergency fund (money market), but savings are tight right now, so it will take a while (at least a few more years) to get it to 6 months. During that time, if I'm dumping anything extra into the EF, nothing's getting put in the Roth, and I'm missing out on compounding. So, why not kill two birds with one stone? If I'm not mistaken, you can withdraw the principal from your Roth tax-free (since you've already paid taxes on it) and penalty-free (since it's only the principal). I know it's not ideal, but it will allow me to be contributing to my Roth rather than waiting until I have the full 6 months EF. Then, when savings aren't as tight as they are now, I'll start putting more into the EF.
What do you think?
What do you think?