Does Pulling Out Work?

When I graduated from college last May, my very generous grandparents gave me a nice lump of money that I put into a CD in July.  At the time, I wanted to keep this money separate from retirement accounts and student loan payments so that I could eventually use it for a house or another larger purchase.

I’m now wondering if that’s the best decision.  I’m a ways off of purchasing a home or even figuring out where I want to be more permanently living.  I know that I won’t be buying anything until my loans are paid off, so that money is just sitting in the CD earning far less than my loans are accruing in interest.

Since July, the CD on $5,000 initial investment has earned a whopping total of $3.14.  Bummer.  I double checked and I would essentially have to pay 3 months’ interest as a fee to get out early which would be about $1.85.  However, the initial $5K is safe from fees.

If I pull out now, I can use that money to finish out my Roth IRA for 2013 ($3,907 left to contribute) and put the remainder ($1,093) into my e-fund which, as always, makes me nervous that I’ve kept it so low.

What would you do?  Is it better to take that cash and budget it out or would you keep it in savings for a bigger purchase even though it’s earning less than loans, IRA are costing you?