What to do with severance?

[elcjet]

I'm a lurker who came over originally, but stopped posting when I had my baby....so my apologies for coming out of the woodwork.

My company is being liquidated. I have a job through March 1st, and then I will receive a lump sum severance equal to 5 1/2 months of pay.

I am the primary breadwinner in my household, and we cannot live on DH's salary alone, so I will be running a deficit every month of $1-2K, depending on whether I keep my son in preschool or not. If I keep him in preschool, our "slush" savings account can keep us afloat for 9 months.....a little over a year when I factor in unemployment. (This all doubles if I take him out of school -- hard for me to do to him since he loves it so much and is thriving) I have a second savings account that is my e-Fund, and I would hope to never touch that -- I'd rather access the severance first.

I expect to be employed within a year -- I'm a mid-level professional so it might take some time to land somewhere, but I think I could always get a job as an analyst as a fallback and stop the hemmorraghing.

At any rate, that leaves me with the severance question. What do I do with this sum of money?? I'd hate to plop it into my Ally account and just let it sit there earning minimal interest, but I definitely don't want to risk losing a ton of it, either, by making aggressive investments.

I'm not as MM as I should be on alternate forms of investments. Any suggestions?

[cjeanette]

There are short term bond funds that you could put a portion of it into. Won't earn a crazy amount but could help it grow for right now.

[arch01]

I'd keep it safe in a low interest account. There's no way I'd invest it.

I would not pull him out of preschool; I think it gives him an opportunity for things to continue on as "normal" and gives you dedicated time each day to job hunt.

Worst case scenario if it's getting down to it, I'd pull him out to stretch things out a bit, but I'd wait to make that call until it's getting a little more dire.