Student Loan - Loans and Debt Consolidation

USE WINDFALL TO PAY DOWN STEEP STUDENT LOANS AUSTIN AMERICAN STATESMAN

Use windfall to pay down steep student loans

Scott Burns, Commentary

I am about to receive a $100,000 bonus for work I did several years ago. I need help deciding what to do with the money.

I am 31 years old, single, female and a lawyer. My salary is $70,000. I usually get about a $12,000 bonus. I have a private student loan of $76,000 with a variable rate currently at 4.2 percent. I also have a $10,500 variable rate private loan currently at 6.7 percent. My federal student loan for $58,000 is fixed at 5.25 percent. I pay about $1,000 a month on the student loans and $1,450 a month for my mortgage and HOA fees. I have no car payment and no credit card debt. I have $3,000 in a Roth IRA, which is my only retirement. I also have about $4,000 in savings.

What should I do?

Im tempted to pay off a lot of the variable rate student loans even though they are at such low interest rates just to make them go away. Ive heard that if a debt costs less than 6 percent interest, you should invest the money and just pay the minimum on the debt. Does that logic apply to variable rate loans if the rate goes up?

I want to max out my Roth IRA for 2009 assuming my bonus comes in before April and 2010. And I want to put some money in savings I was thinking $12,000, but not sure. And should I put it in CDs so I can access it when/if I need it? I work for my stepfather, so I dont foresee being laid off. Thats also why I dont plan on having a super big rainy day ...[more]