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 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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