Where to stash cash I'll need within a year

[peachyb]

I'm saving lots of money right now, but I want to move to a very expensive city to be near loved ones. I know, I know. Anyhow, I anticipate needing up to 4-6k in cash (3 months rent) when I move, probably in a year but maybe less or more than a year.

Normally my savings priorities, in order, are: maximize HSA/IRA/401k contributions, pay off car loan (4.5% and not underwater), pay off student loans (~5% now, soon to be refi lower I hope). I read the "springy debt" posts (https://www.mrmoneymustache.com/2011/04/06/meet-mr-money-mustache/ https://www.mrmoneymustache.com/2011/06/07/where-should-i-invest-my-short-term-stash/) and I'm into the idea of not keeping a cash emergency fund, since I have two resilient income streams and I'm not a worrier. I can't get a HELOC for emergencies, but I can use credit cards, borrow from my 401k, or borrow from relatives.

But I can't put rent or rental deposits on a credit card. I'm thinking my IRA for this year should be a Roth invested in something safe like Vanguard Prime Money Market. Then if the stock market crashes before I move, my Roth contribution will be there to pay rent with; and if I don't end up needing it (because I use normal ongoing savings + loans to cover the rent) I can move it into my stock index fund for the long term.

Check my logic, mustachians? Am I missing anything?

[peachyb]

On second thought, I can probably halve the moving fund to 3k because I would only need the rent suddenly if I found a really good deal through the grapevine. Otherwise I'll be preparing and moving more slowly, and staying with friends as I get settled.

Does anyone have experience withdrawing Roth contributions for misc. expenses? Does it get weird at all if I have my Roth money spread across different investment funds?

[Linea_Norway]

Disclaimer, I don't know about American tax/Roth/retirement systems.

We will probably be in a similar situation next year, receiving a shitload of money from selling our home and keeping half of it safe for future house purchase, maybe a year later. We plan to put it into something as safe as a bank account, even though that generates only 2,2% growth which is slightly below our 2,5% general inflation rate.

In your case, paying off your debts would generate 4% to 5% profit and paying down debt is as safe an investment as you can get it. It should give the landlord a better impression if you don't own debt. But I suppose you still need to save up your 3 months rent in cash to hand over as a deposit. I would just put that amount in a bank account.

My general rule is: don't invest in stocks with money that you need within 1-3 years. You need to be able to sit out a market crash before you will have to sell it.

[Rob_bob]

I'm not quite sure what you are trying to accomplish with the Roth?  If you likely will need the cash soon why not just keep it in a high yield bank account or CD?

I took a contribution distribution from my Roth once of about $35 and had to fill out lines on the federal tax form to prove it wasn't from capital gains/dividends and I was exempt from penalty.

I guess you would save paying taxes on any earned interest in the Roth but it wouldn't be worth the tax form hassle to me.