I will keep this short and sweet. Steadily employed at 55 hours a week, 25 years old. I have $8,000 at a local bank, split 50/50 checking/savings acc. $1,500 cash on hand incase of quickie emergencys. The cash at home idea came from Dave Ramseys' books and has actually gave me a lot of respect/discipline for not using it. I already have been saving into 2 IRA type accounts through fidelity(with company match) and vanguard for 7 years. My only debt is $55,000 on a mortgage. I want more gains than just paying an extra $500/mo torwards the house(%2.79 apr) or adding to a savings account getting 1%.
I have decided to get an index fund through vanguard(VTSMX). The minimum is $3,000 to start, but my interest gains should be greater than a saving acc. I feel that my emergency fund(Roughly $10,000) isnt enough, and it would be even less if i use $3,000 torwards an investment. Monthly expenses are right at $2250 without the extra principal payments on the mortgage. That is a solid 4 months emergency fund. If i invest with vanguard, i will be cutting my emergency fund by a large amount. I also feel cheated for not investing it and taking the chance at gains. I do not plan on taking the money out of the fund until i am FI.
Option #1 Keep stacking my savings account till i have 6mo emergency fund then start saving an additional $3000 to invest. (could take a year to save $2250+$2250+$3000)
Option #2 Use the money out of the saving acc and get the vanguard fund NOW, because it can always be taken back out if need be. After the fund is started, equally put extra money torwards the 6mo emergency fund, into the (VTSMX), and +mortgage principal. Probably $250 a month torwards each
What do you suggest!? Thanks, -Jon