Thanks again for all of your responses. My wife and I discussed my ideas and she is ok with reducing the ING account to 3 months of expenses. She is also ok with either using the funds to max out our Roths or pay down the mortgage. I know contributing to the Roths is the safer of the two options, but I am going to go with paying down the mortgage.

Some of the things that factored into my decision are below.

If the reason to dip into our EF is due to job loss, then my monthly expense calculation is high. We currently pay $200 additional principal that we could stop paying. We also would save $400 in daycare expenses. If job loss is not the reason, we could reduce our 401k contributions in the short term to free up some cash. We both contribute around 20% to our 401k, so there is plenty of room to reduce that (in an emergency) and still make sure we get the company match.

Unless my wife and I quit or get terminated, we will get a severence package. My severence would include 40 weeks of salary, and my wife's would be 38 weeks. If either of us get laid off, we will not have to dip into the EF immediately.

At the end of the day, I just don't view this decision as a huge risk.

Once you don't put them in during a year, you also can never put those funds in. Using a Roth for the e-fund simply means you're putting your e-fund money into a tax free account instead of a taxable account. You're not robbing your future of anything.


Cool. It's a reasonable choice in my opinion. Good luck to you!

Thanks. It was pretty cool today logging into Mint.com today and seeing my mortgage debt lower than my car loan.

If we continue with the $200 monthly additional principal, our mortgage will be paid off by December 2014. I am optimistic that we will be able to knock several months from the payoff date.

Your regular bank account is a better option to keep your emergency fund separate. By keeping your EF in your bank account you will have the access of your money whenever you need it.