Unless the mortgage is at an abnormally high interest rate, it is the last debt I pay off. That pretty much fits with the Dave Ramsey approach. I can hear the crunch of credit cards as they are being cut or otherwise decimated. The Ramesy yell... I'M FREE-EEE. Wish I was. The mortgage is usually one of the larger debts and financed at a much more competitive interest rate. From experience, the 6-month emergency fund is critical to peace of mind, a more stable marriage and home situation.
Reducing the principal to remove the PMI insurance was a most excellent choice!
A Roth IRA can serve double-duty as an emergency fund and a retirement account, because there is no penalty for withdrawing your principal. However, if you try to put the money back you'll run into the $5000 or $6000 per year limit on contributions.
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My main metric for money management is Cash Flow. It needs to be positive (just a little bit positive is OK) every month. If it goes negative because of an unforeseen big expense, was that expense *really* unforeseen or was it something I was ignoring and I should have been saving towards it.
I've been living below my means for a long time; about 10% or 15% after taxes goes to charity and almost all the surplus after meager living expenses goes to savings or investments. (consequently my daughter's college is eating me alive and all that financial aid they promised her never appeared) Anyway, if I lose my job, I don't *have* to give that money to charity or save or invest anymore -- so the money I need to draw from my savings to maintain my current standard of living is very low. It's taken a long time to get here but I don't have any debt. That's not true; except for a 2.9% car loan that'll be paid off in about 3 months. (I could have paid cash for it, but that interest rate was too good and I'd rather had the cash in the bank)
