Okay, Kulshan PM'd me and convinced me, she knows what she's doing. :D
:D Was it not you who kindly facepunched me a while back because I wouldn't entertain the option of letting that money grow, staying liquid that way, and then paying off the mortgage in a big chunk, thus reaching the same goal at the same time or sooner, thanks to the mighty market? Hehe. I do like very much that you keep me thinking.
Indeed! That's the thing about the advice we give around here: it's quite specific to each individual (their situation, risk tolerance, etc.). So my only goal is to get people thinking critically about their options, so they can make the best decision for them. Thus my earlier thoughts were to make you think critically about your (then current) plan, and thoughts in this thread to think critically about if you had to radically change it, or merely alter the old plan a little - simply because you have a new situation, that means the advice (specific to the situation) may change, and is worth rethinking over. Like I mentioned in the PM, sounds like investing is most likely the right play going forward, but you'll probably want to dig a little deeper once the situation finalizes a little more.
In any case, contributing to a 2012 Roth right now is a great idea (you have two months left to do so) because you can always withdraw the principal penalty free if your plan does change again.
Do you think that having VTSMX in both a Roth and a taxable at the same time is good?
Perfectly fine. Sometimes you want to hold different assets in different accounts based on their tax advantages, but only if it's in first alignment with your AA. If you're going for a more aggressive AA at this point (which you probably should, if you're relatively young and relatively far off from FIRE), holding just VTSMX is fine. I assume you've read through JLCollins' stuff? (If you haven't go read it right now! If you have, go read it again. ;) It's my favorite investing advice out there.)
Since it's an index fund, the eggs are already spread out into many baskets, right?
Absolutely. As Krieg mentioned, you may want to diversify into other assets at some point (say, international markets, precious metals, real estate, bonds, whatever -- you'll want to figure out an appropriate asset allocation for yourself and your goals), but I don't think there's anything wrong with going 100% stocks via a diversified index fund for right now during the accumulation phase. Just don't check your balance daily, and when the stock market does go down be HAPPY because you can buy more companies cheap. :)
Best of luck!