Ask Money

Safe savings

Chris Farrell Jul 28, 2009

Question: I am a newly divorced mom who has just sold her home as part of a divorce settlement–at a big loss. I have 60K as my share. I was unable to negotiate a mortgage because I have not worked full time since my special needs child (now teen) was born. I am seeking full time work (bank says they need 12 months work history) and have rented a small house for 1 year. (My rent will be more than my mortgage would have been if I had been able to buy the house I just sold.) Where should I put my 60K until I can purchase a home? Preferably somewhere where I earn a return, without risking the principal. Would your answer be different if I decide not to buy a home for 2 or more years? Karin, Scarborough, ME

Answer: You right to want to park the money in a safe place. I would put the money into a FDIC insured bank or a federally insured credit union. You could put some of the money into a savings account and some into short-term CDs. The other alternative is to buy short-term Treasury bills from the U.S. government at www.treasurydirect.gov. In all these examples the money will be there when you need it.

My answer would be the same whether you buy a home in two years or not. Here’s why: You’re going through a lot of tumultuous changes. You’ve gotten divorced. You’re looking for full-time work. And you’re raising child with special needs. So, I would avoid making any dramatic investments–and that includes a home–until you have a better sense of your new work and home life. You’ll figure it out, but it takes time. Meanwhile, keep your savings safe.

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