Project Maximize

After speaking with my boyfriend, reading through your comments, and thinking about my future goals and objectives, I’ve finally made a decision and put together a master plan to make my money work for me and I'm calling it Project Maximize. 

My major goals are to pay as much as possible towards my student loans, keep some cash for emergencies, save for retirement, and have some cash for a down payment on a property. I know it seems like a lot, but I’m the type of person who tries to do everything simultaneously and just generally push myself to the limit. Sadly I haven’t been pushing myself financially since I’ve accumulated student loan debt this past fall, and I want to change that. 

Currently my money is sitting in that lame savings account. I’m not complaining though, I do get paid out for the measly almost 1% interest each month. From there, I researched 2-year CDs and other vehicles for saving cash. Ideally, I’d like to put the money in stocks (greater the risk, greater the reward?) but since I can’t predict the future, I won’t be doing that with my cash. At first I was going to just use the $25k cash to pay off my 7.9% interest student loan, however since I’m unsure of the future (job prospects, studying for the bar, etc.) I wanted to be able to hold onto some of the cash for emergencies and also have cash for a down payment for a property (I’m sure you all remember my condo journey pre-law school and it’s still a dream of mine to buy). 


I decided to leave $5,000 in savings for emergencies, pay $10,500 towards my student loan, and then put the rest into my roth IRA. Since I only want the cash for a down payment, I feel comfortable putting money into my roth since I can withdraw up to $10,000 penalty and tax-free.

Rules for Withdrawing Early From Roth IRA to Buy a Home

  • Max of $10,000 withdrawal;
  • The withdrawal must be contributions and not earnings;
  • The account has to have been open for 5 years; 
  • One must be a “first-time home buyer”;
  • Funds must be used directly towards home acquisition;
  • Funds must be used within 120 days of receipt;
  • $10k is a lifetime limit (can only do this once).
Since I meet all of these requirements, I will be putting the rest of my cash into the roth. The only problem is that there is a maximum amount I can contribute ($5,500) this year, and I already put in $1,500. I decided I’ll put in $4,000 this year to meet the maximum, and then in January 2014, put in $5,500. Then when I’m ready to withdraw the $10,000 from my roth in late 2015 or early 2016 (or whenever we’re approved), it will at least earn some money through investments and it will be tax-free and penalty-free. According to my calculations, in the future, I should have $10k from my roth plus $5k from my emergency fund, and then I will just have to save up another $5k, equaling $20k down payment. 

I would be more comfortable with this situation rather than not having the option to access cash IF we get approved that soon for a property. In the mean time, I will be throwing other money at my loans, including money that I earn through this summer job and next summer's job, and any other jobs I take on during the school year.

Did I miss anything...any suggestions are welcome!


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