I am an unmarried 25 year old that makes $65K a year and will receive a financial gift of $15K this year. I have no credit card debt, $29K in student loans (I pay an extra $100/mo on these), I max out my IRA, match my 401K at work, and recently bought a house through an FHA new home buyer program. I am diligent with savings and have a 2.5 month emergency fund that I add to every month.
I want to put $10K on the principal of my second mortgage of $50K at 5.25%, $5K towards my largest federal loan that’s currently $5.9K at 6.55%, and pay off two of my smallest federal loans that total to $3.5K that are both 6.55% by the end of the year but I know that I should have at least a 6 month emergency fund and would love to have at least $20K in savings.
Should I use the $15K to max out my emergency savings or should I slowly grow my emergency fund and pay down debts?