Where to park $20k for upcoming student loan payments

[cellostache]

Hi folks -
First post on here. A little about me:
Wife and I are self-employed musicians and I've been (slowly) getting us over to the mustachian way...financially stable except for some student loans we're trying hard to get rid of. We have about $30k left to go on our loans, all federally consolidated and not accruing interest or payments for the time being.

Before the pandemic hit we planned to have these paid by early 2022, and since the payment pause we've been putting that $$ into a high-yield savings. Given that forgiveness isn't so likely but not totally off the table, we're going to pay the minimum for a while while we wait that out. We have about $20k right now earning next-to-nothing in a high-yield savings, and I'm wondering if anyone has a suggestion for somewhere else to put that money to good use for 12-18 months while we wait to see what happens with Biden's loan forgiveness.

I've learned a ton from reading this forum over the years, thanks for the advice past and future.

[wageslave23]

I'd keep it right there.  CDs are another option but I'm sure they aren't paying out much either.   If you're the gambling type then invest in an index fund.  Stocks go up more often then they go down.  Play the odds.

[Zamboni]

^^I agree. For a 12-18 month timeframe I'd go with a CD. Shop around at your local credit unions to see who has the highest rates, but that are all pretty abysmal now.

[Gas-man]

I put $10,000 into I series bonds that are paying 3.54% at the moment.  I think the rate adjusts again in November and is dependent on inflation so I bet it'll increase given that inflation is still high.  You'll forfeit all the interest if you pull the money out before 12 months and will lose a few months of interest pulling out before 5 years but it's still better than any savings or CD that I can find.  There's a $10k limit per year per SS number but both you and your wife could buy the bonds to buy $20k worth.  ~$700 interest give or take for you if you keep it in for 12-18 months.

[HPstache]

Personally, I would try to get a checking / savings bonus or two with it in that time.  I recently did the Citi Priority checking bonus for $700, looks like you could pull off the $400 one... it works out to something like 8% APR ($400 bonus for $10K in 6 months)

https://www.doctorofcredit.com/best-bank-account-bonuses/#Citi_300700_Checking_Bonus_8211_No_Direct_Deposit_Required

[Zamboni]

As inflation continues to increase, the I series bonds are indeed looking better and better. It was the investing advice in the original version of the book Your Money or Your Life back when Treasury bond rates were enough to retire on.

[Ron Scott]

Personally, I would try to get a checking / savings bonus or two with it in that time.  I recently did the Citi Priority checking bonus for $700, looks like you could pull off the $400 one... it works out to something like 8% APR ($400 bonus for $10K in 6 months)

As inflation continues to increase, the I series bonds are indeed looking better and better.

Pick one of the above or mix and match. And good luck…musicians are worth their weight in gold as far as I’m concerned.

[cellostache]

Thanks for the advice. wife and I are going to do $7500 each in I bonds and a new account with BMO Harris which will give us a $500 bonus each...as much as I love the returns of VTI these days I can't stomach it for such a short investment period...