How would you allocate this 30k (personal situation advice)

[LurkingMustache]

Hi friends, here for more advice.  Here's my scenario - I am trying to find the best way to go about putting my dollars to work, and have 30k sitting across savings accounts.  I currently max my 401k, Roth IRA, and HSA annually.

I purchased a home last year and had to use a 401k loan for a portion of the purchase.  The remaining balance on that is 24k.

The home I purchased was built in the 1960s, and I worry that some things could fail within the next couple of years (specifically the roof or A/C system) that could require significant cash outlays.  I also like the general rule of thumb of 6 months savings set aside - I put that around $15k.  And in addition to that, if I wanted to save additional funds for any potential home repairs (maybe $10k) - I am sitting at $25k just not doing anything.

I can't really decide what to do.  I feel as though I have the following options:
1.  Immediately pay 401k loan of $24k - while leaving myself with $6k, that feels like a low amount in the event anything happens to my job (not likely - just received a promotion), or I get sick, or something happens to the house, etc.
2.  Pay a portion back to the 401k loan ($5k) and keep $25k sitting around.
3.  Pay none of the 401k loan back - invest in a taxable account that could be accessed in case of emergency (not sure how much I would want to do)
4.  Maybe do some type of CD ladder that would at least get it above a small savings account rate so that inflation stops eating away at it.

I just thought I'd ask for feedback here.  I tend to overanalyze and am also risk adverse, so not sure if there is another option I am just missing.  I've also thought about just investing all of it and accessing my Roth IRA principal if needed - but HATE the idea of losing years of principal because of an emergency.

Anyways, thanks for any insight you can give!

[nemesis]

Pay back the 401k loan immediately. Then proceed to build your emergency fund again.

[jlcnuke]

Pay back the 401k loan immediately. Then proceed to build your emergency fund again.

This is what I'd do as well.

[swampwiz]

The good thing about a 401K loan is that not only are you the borrower, but you are the lender as well.  In fact, in a low investment-return market, having a 401K loan could be a great way to build that up.  That said, something to think about is that if you separated from your employer, you would need to pay back the 401K loan in full, or take whatever you have outstanding as basically a TIRA distribution, with the tax effects and early-distribution penalty that would entail.

I would never have so much cash in a savings account, and would invest in a "widows & orphans" mutual fund before that.  (BTW, I think the USA stock market is very high now compared to the rest of the world.)

[LurkingMustache]

The good thing about a 401K loan is that not only are you the borrower, but you are the lender as well.  In fact, in a low investment-return market, having a 401K loan could be a great way to build that up.  That said, something to think about is that if you separated from your employer, you would need to pay back the 401K loan in full, or take whatever you have outstanding as basically a TIRA distribution, with the tax effects and early-distribution penalty that would entail.

I would never have so much cash in a savings account, and would invest in a "widows & orphans" mutual fund before that.  (BTW, I think the USA stock market is very high now compared to the rest of the world.)

That's another thought I had but didn't want to make my already lengthy post any longer.  I know and accept the wisdom of never market timing, *but* with the way the market has been, and with new volatility...  I'm hesitant to want to sink it all back in now.  Part of me was happy about doing the loan because of that - because I took it out August of last year and was sitting pretty for my yearly return.  That is a good point about employer separation, really even if I did separate, it isn't really serving as any buffer for me as an emergency fund if I have to give it back or face heavy penalties.

I guess what it really serves then is a fund for medical or other unforeseen expenses (especially the house).  Not sure if there's an answer there in my rambling, but thank you for the insight.

[LurkingMustache]

Pay back the 401k loan immediately. Then proceed to build your emergency fund again.

This is what I'd do as well.

Thank you both!

[Catbert]

I'd probably build up your emergency/maintenance fund another 5K or so and then pay off the 401k loan.

Double check your 401k loan rules.  Some (not most but a few) allow you to keep the loan even if you separate from their employment.