Q. Recently, my husband decided he wanted to separate. Our assets have been split and I ended up with the following: a house which will become my residence (5 years to pay off a remaining $60,000 mortgage on the $200,000 house), a river lot in a prestigious area, value $125,000, two new cars, value $70,000, no loans), and $300,000 in cash with another $150,000 due me if we complete our divorce.

I teach and have a $40,000 annual salary. I have $10,000 invested in a 403b account with USAA and have $30,000 invested in a retirement account with TIAA CREF. I contribute 3 percent of my salary and my school matches such funds. I will receive $1,700 monthly in child support.

At present I have the cash invested in 90 day CDs. Their maturity date is approaching fast. I hope my husband will recover from his mid-life crisis; however, I want to take care of what I have as best as possible. What would you recommend? I am presently using $25,000 to renovate the home I am moving back to after it has been used as a rental property for three years. I am 46 years old.

---D.R., by e-mail


A. The most difficult thing to do in divorce is to regain your identity as a separate person instead of living a spouse-contingent life. One consequence is that financial security can be lost because assets are dissipated while waiting.

My suggestion: having made your list of assets, start reorganizing so that it is appropriate to your new, and sustainable, personal standard of living. This is equal to your $40,000 earned income, less retirement savings, plus what you can withdraw from your investment portfolio. Your investment portfolio is the $575,000 value of cash, promised cash, and building lot. At 4 percent a year, that would be just under $2,000 a month, before taxes.

So your new standard of living is around $60,000 a year, before taxes, assuming you increase your retirement savings in the 403b plan. The greatest mistake you can make is to try to live at a higher standard of living. If you start to feel sorry for yourself just remember that millions of single moms out there don't have assets, child support, or alimony.

Asset. You should also sell at least one of the luxury cars so you can invest the cash. Cash, not cars or diamonds, is a girl's best friend. Keep one of the cars only if you have great confidence in its durability and low maintenance costs.

Start to invest the cash as your courage permits. I suggest that you select a monthly amount and start feeding it into a low cost, tax-efficient investment such as Vanguard Tax Managed Growth and Income. Commit the money so that you are fully invested within a year with a maximum of 75 percent equity. This will not be easy but your real horizon is 20 years, not events in the next year.


Q. I am a 24-year-old law student with no income. However, I have $80,000 invested in stocks and it is decreasing. I want to invest $50,000 and use the other $30,000 for school. What do I do?

---J.W., Dallas, TX


A. I'd divide the money into three parcels: the money you need to complete your education; a buffer fund for making the transition from student to worker; and your long-term investment portfolio.

The first parcel, about $30,000, should be invested in a money market mutual fund. It won't earn much but it's important that your principal be safe and accessible.

The second parcel, $10,000 to $30,000, should be invested in iSavings Bonds. These will get you a good inflation protected return with no risk of principal and they can be redeemed in relatively small amounts. Better still, your actual return will be better than most instruments that involve some level of risk.

The third parcel should be invested in a low cost equity index fund or Exchange Traded Fund. It can serve are your "core" portfolio investment.