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Posted: 9/21/2015 4:34:13 PM EDT
I'm typically on a good track financially, but I seem to be coming to a crossroads and want some outside input. I'm 25 y.o. and want to get out from debt as soon as possible.

Background:
Student loan payment at 5.625% interest (refi'd through SoFi), and I have about 110 payments left, but I'm paying 170% of the minimum payment each month.
Truck loan payment at 1.99% interest, which I consider almost free money, and I have 70 payments left.
I contribute 5% of my gross pay to my TSP (401k equiv.), and my employer matches 100%, for an effective 10% of my gross pay.
I contribute 11.2% of my net pay to my Roth IRA, and that maxes it out each year. In fact, I have gotten it so that I deposit the max on Jan. 2 each year and then start saving all year for the following year's contribution.
I contribute 15.7% of my net pay to my emergency savings fund. I currently have 2.8 months worth of expenses saved up.
I own my own home and put a 20% downpayment (to avoid PMI) on it with a 15 year conventional mortgage at 3.000%. I have roommates that cover 70% of the mortgage and utilities.

I know I ultimately want to reach 6 months worth of expenses in my emergency fund. I am expecting an inheritance from my grandpa within the next month that will put me up to about 4 months of expenses in my emergency savings.

At this point, it feels like I should let the emergency savings fund ride where it is (3 - 4 months expenses) since my job is relatively stable. I could divert the money that I was depositing to savings and knock out my student loans in just under 2 years. Once the student loans are knocked out, I could return to building the emergency savings up to a full 6 months. After those two goals are accomplished, I would contribute to a general savings fund for a wedding, engagement ring, home improvements, next car, or whatever else I need to.

Am I looking at this right, or is there a better way to reach financial freedom?
Link Posted: 9/22/2015 8:48:22 AM EDT
[#1]
Sounds pretty good to me but if it were me I'd build up that emergency savings reserve first. Your own job isn't the only thing you need to worry about if you have roommates covering 70% of mortgage and utilities. If one/both of them loses a job or moves out then you are stuck with much higher expenses than you are used to. Having debt sucks but I tend to favor having that emergency reserve above paying off debt faster.

You can rely on your principal contributions to your ROTH IRA in a pinch but it is not ideal and you don't want to wind up in a situation where you've put in $5k and have to draw on it in a down market when it has shifted down to $4k in value due to market conditions. This happened to a lot of people in 2008 that were unemployed and didn't have enough savings. They had to cash out 401ks and withdraw from IRAs when their investments were worth about 60% of what they had put in.
Link Posted: 9/24/2015 2:03:57 PM EDT
[#2]
Link Posted: 9/27/2015 8:50:58 AM EDT
[#3]
You can't get ahead if you are behind. It sounds like you are doing great but I would build up the emergency fund and then knock out the student loan.
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