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So here's my situation: I am currently sitting on ~$11k in cash and I'm trying to decide what to do with it. When I purchased my house last August I took out a loan against my 401(k) ($8k) to put towards my down payment. That loan essentially takes $150 out of my paycheck each month and will continue to do so for another 53 months. The loan is at 5% interest, but all of that interest is just reinvested into my 401(k). I live below my means and have no other debt aside from that loan and my mortgage. I do also earmark a portion of this money for college funds for my nephew (nephews as of next Tuesday ), so realistically I have about $9.5k that I can play with. I have two options I am considering, but maybe you guys will have better ideas of what I can do with the money.
Option 1: Repay my 401(k) loan in full ($7.2k as of right now). This will free up some extra money each month that could be put back into savings/IRAs. Also, in the off-chance that I separate from my company I will be forced to pay the money back, in full, within 90 days anyways. Paying back this loan would ensure that what is in my bank account is actually what I would have in the case of job loss.
Option 2: Do nothing. Just hold on to the excess cash and keep it in case something big happens. This would mean something other than a job change, because then the loan would be forcibly paid back making all of this moot. Going bare bones with my expenses, this money could last me 6 months.
So H/A, what's your advice? What do I do with this money?