[MonkeyMama]

I am about in the same boat. I want to grow the emergency fund, but at the same time I am not sure if it is the smartest to forego our entire ROTH contributions. For now I am just plain uncomfortable not having as much cash as we used to - we ran through it last year - well needed. I plan this year to put all our money in Cash, but I am getting an extremely large employer contribution - $13k or so, so this is how I justfiy it - still getting a big bump in retirement funds.

BUT what I do plan to do is set aside all I Can in savings and re-evaulate at the end of the year. IF we have a really good year and save a lot, and no big unforeseen financial outflows - we have until April 2008 to make our 2007 IRA contribution. At that point I would not be surprised if we decide to make a full IRA contribution, or nothing because looking back we had some financial emergency or a really bad year. You can use hindsight to make your decision. THat is the beauty of IRAs.

I believe a ROTH contribution you can withdraw penalty-free and tax-free. There may be a holding period to take it out penalty-free, been meaning to double check. But I think overall it is a good way to go. If you regret putting too much in a ROTH down the road, and have a cash emergency - it will be pretty accessible. Vs. 401ks and such with penalties and taxes. To me, I would not touch my retirement with a 10-foot pole, and there are other downfalls of premature withdrawals, BUT it makes me a little more comfortable foregoing the e-fund in the meantime and maxing out my retirement contributions. Knowing a safety net is there for a bad scenario. My chances of unemployment are about nil right now so affects my decision - there are a lot of individual factors to consider. I have 1 months pay saved in cash and feel that is more than sufficient as a bare minimum. I hope to get it to 3 months pay though before I max out retirement again.