September 2020 CPI-U numbers released: November 2020 I Bonds are a buy

The U.S. Bureau of Labor Statistics released the September 2020 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.139% over the past month.

As always, now is one of the best times to consider purchasing I Bonds. The reason for this is that we now know what the rate of return for October 2020 I Bonds will be for both the first and second six month periods, which is important since I Bonds must be held for 12 months before they can be redeemed.

Using the CPI-U data from March 2020 (258.115) and September 2020 (260.280) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2020 issue I Bonds.

That means these bonds would earn the current rate of 1.06% (using 0% fixed & 0.53% variable) for the first 6 months and 1.68% (combined 0% fixed & 0.84% variable) for the second 6 months. Based on the unprecedented decline in deposit rates since the COVID-19 pandemic hit, I believe an October I Bond purchase is pretty compelling when compared to something like the 12 month CD @ 1.05% APY special currently being offered at USALLIANCE Financial.

Since I didn't see rates dropping as quickly as they have, I didn't follow my own advice and decided not to max out my 2020 I Bond purchase limit in April. I intend to remedy that next week, which will cost me the 0.2% fixed interest rate portion I would have if I had been more proactive.

October 2020 Financial Asset Roundup

Here are my current financial assets as of the market close on October 12th, 2020:

Asset	Sep 2020	Oct 2020	Change
Checking	6,927	1,517	-5,410
Money Market	97,556	71,658	-25,898
Savings Bonds	163,679	163,935	256
Treasury Bills	0	0	0
CDs	65,968	66,158	190
Brokerage	191,091	203,879	12,788
401k	270,350	287,330	16,980
Roth IRA	189,107	198,548	9,441
SEP IRA	928,891	975,437	46,546
529 Savings	182,285	183,258	973
Total Assets	$2,095,854	$2,151,720	$55,866
			2.67%

Despite more terrible COVID-19 news like a superspreader event at the White House and a pause in a vaccine trial, the S&P 500 continues to perform, rising a strong 5.84% since the last update:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for September fell to 7.9%, with 661,000 new jobs created. While that sounds like a strong number, we're still down 10+ million jobs since February. Oil prices are up a bit to the $40 level, which translates to a local regular unleaded gasoline price of $1.97 at my last fill-up.

On the financial front, my assets have once again hit an all-time high, surpassing the previous high from August 2020. I also took a distribution from my S Corp and added that to the funds Mrs. Frugalson and I funneled toward our remaining mortgage and auto loan debt. With that cash we were able to pay off our outstanding loans and are now debt free! We have no mortgage, no car loans, no student loans, no nothing. Nada, zip, zilch! While our remaining debt was modest, it is certainly a nice milestone on our path to retirement.

I'd also like to note that the September 2020 CPI-U numbers came out today, so I'd like to add a follow-up post of the impact on Series I savings bond purchases. Yet one more thing to do in a busy week...