Age 47 married female (mortgage underwriter) 3 kids 6, 7 & 9, and husband-unemployed. Neither of us have degree; husband in poor health.

From what I hear, economy will worsen. Interest rates may rise, housing will fall - oops, there goes my job.

I have been saving for a bigger house, but can only afford payments on the interest-only plan, which is an A.R.M. tied to the Libor. I have $18,000 and the only other assets are for college.

I'm feeling really shaky about the future. Since I have a house now, although too small, is it wiser to stay put and invest my money? What is the best way to make it grow?

Thanks for any words of wisdom.

The best way depends on what your goals and time scale are.

Stocks are generally riskier, but potentially more profitable than bonds, and a simple savings acount has virtually no risk but low profit. Within the categories, there are riskier and less-risky choices.

As you draw closer to needing the money, (e.g. retirement or college), you should shift more and more of it into more stable forms so that you don't lose it to a sudden shift in the markets just before you need it. Long-term, however, the riskier investments are more likely to give you the most reward.

All of my investments are in stocks (mutual funds, specifically, which tend to be less risky but vary depending on the particular fund), but that is because I have around 40 years to retirement, and won't have any college expenses for at least 2 decades since I don't have any children yet. Your situation sounds like one that requires a bit more of a safety net.

This article has some details, but there are others our there, many of which can be found by typing something like investment risk stocks bonds into a search engine.

From what I understand (although, not being in the market for a house, I'm not well-informed on the subject), you're unlikely to find a better time to purchase a house than now, as far as the larger economic picture is concerned. That, of course, needs to be balanced with your own economic situation.


Two last things:
You didn't mention any credit card debt, but since so many Americans carry one its worth mentioning that putting money toward paying off a credit card debt now will usually leave you with more money than investing now and paying it off later.
I think the economy in general will improve, but interest rates will certainly rise (and have already begun to) so the effect on your personal economy may not be positive.

There are two ways to improve your finances - remove debt or invest. Removing debt gets rid of the direct losses you take on when you get charged for financing. Depending on your debt profile it might be a good idea to cut some of your debt rather than investing. You might consider purchasing your cars and getting rid of the monthly payment. This option is especially good because you can reduce your insurance payment by taking on a liability only policy... this is good if you are a safe driver and your car is not terribly valuable.

The best thing to do is to put yourself in a house that will appreciate over the next few years. If you are already maxed out as far as what you can afford then the only question to ask is whether you can get more for your money in another neighborhood or if the property that you have is going to gain value at a faster rate than anything you could move into. A 10% appreciation of a home over 2 years would pay much better than any investment you could make with a small amount of money. Even though you can only pay the interest, the value gained would be your money. And you would take that money on to the next purchase.

I am not sure what quantity of money you have left over to invest but a good option for investment is a Roth IRA. This plan pays out at retirement age without being taxed so all your earnings will not be taxed when you withdraw them. It is a great deal if you are eligible and I believe the max yearly contribution is $2000. You do not have access to this money without penalty until retirement.

There are a lot of questions that you would have to answer to get closer to helping you with your specifics, but hopefully something here is helpful.

A bigger house would only be valuable if you know that you can afford the monthly payments every month. Losing a house in bankruptcy or foreclosure is total destruction to your financial future. You can not afford to go close to that if you think your job is not 100% stable.

I also think that you should look into taking classes to broaden your experience. Or ask for training opportunities within your company. Complimentary arenas include Real Estate, Property Insurance, Foreclosures, Credit counseling, Appraisals for banks, real estate closings... many other options, but you get the idea. A college degree is not required for most of the above.

I think you are right to be concerned about your job with a mortgage company because there has been a huge boom and now that interest rates are going up, it will be much less of a need for mortgage brokers. The idea is that you need to start to broaden you capabilities immediately to make the transition with your company... Good to be friends with capable people within your company in the hopes that if there is a change coming that you can be part of it rather than on the outside of it.