Help me spend my singing bonus!

Apologies for the misleading title, this is more of a personal finance question.

I'm a 2Y MBA student at a good school, blah blah. I'm financing bschool & associated living/drinking/traveling expenses through student loans. This is the only debt I have. Most is with private lenders, although some is through federal loans. The federal loans do not currently accrue interest so I don't intend to repay them in the near future. I was fortunate to secure a full time offer which came with a meaningful signing bonus. Curious how others navigated similar situations. My primary concerns are (i) personal cash needs for "life events" and (ii) delay of start date given uncertain markets. Here are the options I see:

  • Keep it all, stash into a HYS account or something safe-ish. Frankly I (hope) I would not be able to spend much of it during school, since my semester is currently covered by a loan. Effectively, I will be losing the spread on (avg loan interest - savings interest). Start repaying loans when I start getting consistent cash flow, accelerate loan repayment depending on other life expenses and cash needs. 
  • Pay off a chunk of higher-interest loan, keep some cash in the bank. Start accelerating repayment when big boy job starts.
  • Pay off as much of the loans as I can, accounting for life needs through the next year. My networth wouldn't change, but my ultimate "total interest paid" would be reduced significantly. The downside is that it would wipe out any emergency funds I think I have. 

Interested to hear how others spent/saved their signing bonuses. 

Comments (18)

Most Helpful
Sep 16, 2020 - 5:14pm
Isaiah_53_5 💎🙌💎🙌💎, what's your opinion? Comment below:

Use the bonus to pay off high interest loans.

If you have dwindling emergency funds, hopefully your max limits are going up on your credit cards to $20K or $30K or higher to pay off emergencies if they come up if you don't have the cash at that moment.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

  • 4
Sep 16, 2020 - 7:00pm
Whatever1984, what's your opinion? Comment below:

Singing lessons maybe?

In all seriousness, without knowing the specifics of your situation, clearing all credit card debt that you're not already paying off monthly is probably priority #1 (the interest rates can be a killer, and you can almost always run them back up if the need arises)  After that is an emergency fund: Generally 3-6mo of expenses.  You could be a one-and-done guy at the job. Good luck finding another in this environment.  High rate loans after that, as I expect them to be significantly lower than the CC debt. (if you have any) Beyond that, it's an Expected IRR calculation between the other loans and the appreciation of your investments.

The only difference between Asset Management and Investment Research is assets. I generally see somebody I know on TV on Bloomberg/CNBC etc. once or twice a week. This sounds cool, until I remind myself that I see somebody I know on ESPN five days a week.
  • 3
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Sep 16, 2020 - 7:03pm
differentialequations12, what's your opinion? Comment below:

Wallstreetbets theta gang. Sell premium with it to get cash to spend on bullshit.

Array
  • 1
Sep 16, 2020 - 7:07pm
Nightman Cometh, what's your opinion? Comment below:

Find a pretty cheap singular item, lets just call them XYZs, and use your entire signing bonus to buy as many of them as possible, ideally thousands. This way, people will always know you as the guy/girl that owns a ton of XYZs.

Dayman?
  • 1
Sep 16, 2020 - 8:40pm
Isaiah_53_5 💎🙌💎🙌💎, what's your opinion? Comment below:
Nightman Cometh

Find a pretty cheap singular item, lets just call them XYZs, and use your entire signing bonus to buy as many of them as possible, ideally thousands. This way, people will always know you as the guy/girl that owns a ton of XYZs.

So basically rice? lol

"Rice is great if you're really hungry and want to eat two thousand of something."  -Mitch Hedberg

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

  • 2
Sep 17, 2020 - 12:23am
Nightman Cometh, what's your opinion? Comment below:

You could get a lot of rice but it would be difficult to count. Another good alternative would be to buy a ton of inexpensive stuff all with the same theme. Like lets say you are in a different city for the week (idk, Phoenix). At the airport, literally buy every piece of Phoenix merch they have. Then you are the guy with like way too much Phoenix stuff. It will freak people out and they'll never be able to move past it.

Dayman?
  • 1
  • Intern in PE - Other
Sep 16, 2020 - 8:41pm

I've been clickbaited

  • Intern in PE - Other
Sep 16, 2020 - 8:45pm

Pay off a chunk of high interest loan, but save enough for an emergency fund. If you don't have an emergency fund and something comes up it'll put you in more debt. So I think it's worth it to make the emergency fund instead of dumping it all into a payment towards the high interest loan.

Or you could buy a Rolex...but that's just me...

  • Business School in PE - LBOs
Sep 17, 2020 - 11:08am

Yeah, that seems to align with the ~middle road approach.

On the Rolex point – I've been gunning to buy a nice watch ever since I joined the industry out of undergrad. First it was a Rolex, then an Omega, and lately an IWC (wanna be sailor). While I've found that wanting and working towards a nice splurge has helped drive my motivation, everytime I've been in a position to splurge with ~minimal impact to my net worth (pre-MBA) the desire wore off and I was on to wanting something else.

  • 3
  • Intern in IB - Gen
Sep 17, 2020 - 2:23pm

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