Save, or invest and save

Hi Jeremy!

I recently became consumer debt free, and am getting out of the living paycheck to paycheck cycle. My only debt now now is my car lease payment each month. After paying all of my bills and monthly expenses, I have $500 leftover. I have $1,000 in savings, so nowhere near an emergency fund. I’ve also recently opened a Roth IRA since I finally have extra money each month, and would like to start investing and funding it. (I already have a 401k where I contribute to the employer match)

I need help deciding on if I should wait a few months and build up my savings before contributing to my Roth IRA, or if I should contribute to both my IRA and Savings account each month. What would you do with the extra $500 in my case? What percentage of it would you invest in the Roth IRA, if any, and what percentage into savings? And at what point would you chance that percentage?

Thank you!

Hey @Swood!

I’d focus on one thing at a time, It’s awesome you’re excited to fill up that Roth IRA, but let’s focus on getting that emergency fund built up. And probably started on a car fund so that when your lease is up you can buy a used car in cash, and get that car payment out of your life forever. When you have an emergency fund and no car payment, I bet you’ll be able to put $1,000+/month into investing! That will put you well on the path to millionaire status! All while, living with less stress about getting into a cash crunch since you have your emergency fund.

This post walks through the reasoning behind focusing on each phase!