SAVING FOR A HOME.

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Author: Scott, Matthew S.

[MONEY MATTERS]

Q I'm a 35-year-old married sales rep with a 7-year-old. My ultimate goal is to buy a house or condo. I have a substantial amount invested in my 401(k) from a previous employer, and I have saved about $10,000. I want to put aside even more. What's the best way?

A While you have saved $10,000 toward your goal, it may take more than a year to save up an adequate down payment. You should consider reducing your 401(k) contributions at your current job and instead channel as much after-tax income as you can into a high-yield savings account. Interest rates on savings accounts from Internet banks have increased recently, so you may be able to get a good rate.

In January, ING offered 3.8% Interest on its Orange savings account (www.ingdirect.com), HSBC offered 4.25% for its online savings account (www.us.hsbc.com/1/2/3/personal/savings) and Capital One's high-yield savings account (www.capital.com) offered 4% interest. All of these options can be linked to your current checking account to make automatic deposits. These accounts have no fees and low minimum balance requirements.

If your time horizon is a bit longer, you could purchase two-year treasury bonds for $1,000 each at TreasuryDirect (www.treasurydirect.gov). In January, the two-year U.S. Treasury bond delivered a 4.37% interest rate.

Mail your money management questions to Money Matters, BLACKENTERPRISE 130 Fifth Ave., New York, NW 10011 or send an e-mail to scottm@blackenterprise.com.

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By Matthew S. Scott