{ "media_type": "text", "post_content": "Just got my $6k severance check. I don’t need the money right now since I’ve got a bit of a cushion in my checking. Do I:\n\n1) put it all down towards my student loan (it’ll cover half of the balance remaining).\n2) open a HYSA and put it all there (currently don’t have a savings account for an emergency fund)\n3) Combination of 1 & 2\n4) Other?", "post_id": "6013aad28681c9002422b36b", "reply_count": 18, "vote_count": 2, "bowl_id": "59064a3cb12379001006592c", "bowl_name": "Personal Investment Chatter", "feed_type": "bowl" }

Just got my $6k severance check. I don’t need the money right now since I’ve got a bit of a cushion in my checking. Do I:

1) put it all down towards my student loan (it’ll cover half of the balance remaining).
2) open a HYSA and put it all there (currently don’t have a savings account for an emergency fund)
3) Combination of 1 & 2
4) Other?

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Are you kidding? Buy GME

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Was considering getting into Bitcoin actually. Maybe I’ll get in with ~2k and save the rest?

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Pay down debt as long as you have $1000ish starter emergency fund

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Marcus is offering $100 cash on a $10k deposit, if thats of interest

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Don’t need the severance check b/c you have a new job lined up?

Is your student loan federal or private?

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Gotcha, I see. Congrats on the new role!

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Don’t pay down the student debt it’s not accruing interest and who knows what this administration will continue to do

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Combination of 2 and 4. Put half in emergency fund, invest the other half. Agree with above comment to not pay down student debt because it’s interest free for the foreseeable future.

Is it a federal student loan? If so, cross off number 1. There is zero reason for a financially conservative person (someone who's not just going to blow their cash on hand) to pay off a federal student loan right now. If you were to use it for (1) put it in a savings account, or up to maybe 6 mo CD. Pick up some interest, hold it for a rainy day.

Interest is not accruing until at least September. No payments are due until at least September. There is a chance, though probably not high, that at least some portion of federal student loans will be forgiven.

If you're current student loan balance is 12k, you pay off 6k today, your student loan balance in September is 6k. If you hold onto the cash, and pay 6k on the student loan in August, your student loan balance in September is 6k.

What does "bit of a cushion" mean?

Yes it’s a federal student loan.

Cushion is about 5-6k just sitting in my checking, which is technically enough to cover a couple months of expenses but since I don’t technically “need” this severance that’s why I was considering just putting this all as my rainy day fund and having an even greater cushion.

Based on what your said and the options, I would go #4 and invest it off you don't need it in the next 2+ years. If that's not realistic or you aren't comfortable with it, put it all on student loans. Interest rates are crap right now, so don't keep money in a HYSA if you don't have to.

Does the interest rate really matter though?

A 0.5% (compared to, say 2%) is a negligible difference if there’s not that much money in there to begin with? Plus wouldn’t I just be able to close out and move to to a different account with a better rate at a later point? Or am I misinterpreting?

I’m more risk averse, but assuming you’re unemployed for now (hence the severance), I would put it all into a.man HYSA until you find a new gig. A few months out of the market is not going to kill you, but much better to have the funds available if your job search takes longer than expected

I beg to differ but don’t you want to start the new chapter debt free ?
I say keep the refund in a liquid account (brokerage invested a market fund) and pay off the debt as soon as loans start accruing interest again.
Pay it off aggressively thereafter then start building a bigger emergency fund.

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