Debt free, what next?

[elessar78]

1. I wouldn't suggest depleting too much of the EF, even to pay cash for the car. You don't want to be raising your monthly expenses with the new car and simultaneously losing your safety net. The lower limit should reflect your personal comfort level, but I'd say never let the EF run under 3 months if at all possible.

Yeah, I see where you're coming from. God forbid that the emergency does hit right after I buy a car. I think I will tack on that car fund on top of the emergency fund.

2. I really think you should stop contributing to the 401k. Everything should go to a Roth IRA.

I just did this past wednesday. I talked to some people in this forum about the logic behind it, as well as my accountant and all were in favor of switching to a Roth.

You'll have better investment choices (likely with lower expense ratios), and there is no worry about dealing with a rollover should you find yourself leaving your job for some reason. Also, if your 401(k) contributions were being made before-tax, then you're missing out on the wonderful benefits of a Roth. ***ONE STIPULATION: you have to actually make the Roth contributions. The popularity of 401k plans without matches comes from the convenience of having your employer manage all of the contributions automatically. You can easily setup automatic transfers to the Roth IRA from any brokerage website. Just don't stop the 401k while you're "getting around" to setting up the IRA and then never set it up. If you're not disciplined enough to keep contributing to the IRA, go back to the convenience of the 401k. Same thing goes for your wife if she's not getting a match.

I think I'm disciplined enough to handle the Roth contributions. I'll have it automatically deducted from my check like I do my savings*.
(*not really savings because I'm using that money to pay off debt, but I accumulate it and pay off debt.)