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General loan against TSP
- Thread starter luv2surf
- Start date
2moryrs
TSP Strategist
- Reaction score
- 6
Hello, I don't usually put in my 2 cents worth; but here you are:
NEVER NEVER EVER, borrow against your TSP account! I read this somewhere, very sorry I can't remember where. Your income advancement will cease when you borrow against your TSP. (It has something to do with the return on what you have invested.) If you are a FERS retirement person, this is a major part of your retirement picture. You get matching funds from the Gov't (until they desire to change that due to economic situation) which the CSRS retirement system doesn't get.
So just tighten up the belt, freeze the credit cards, and you will get through the crisis. It only hurts for a little while and you will be glad of the discipline that you exercise of not (ab)using credit card debt, or any debt for that matter. Most americans need to learn to live with what they bring in, the gravey train stopped a long time ago.
I'm glad I own my home, now all I have to be able to do each year is pay the taxes and utilities.
I pray you make it intact through your crisis.
NEVER NEVER EVER, borrow against your TSP account! I read this somewhere, very sorry I can't remember where. Your income advancement will cease when you borrow against your TSP. (It has something to do with the return on what you have invested.) If you are a FERS retirement person, this is a major part of your retirement picture. You get matching funds from the Gov't (until they desire to change that due to economic situation) which the CSRS retirement system doesn't get.
So just tighten up the belt, freeze the credit cards, and you will get through the crisis. It only hurts for a little while and you will be glad of the discipline that you exercise of not (ab)using credit card debt, or any debt for that matter. Most americans need to learn to live with what they bring in, the gravey train stopped a long time ago.
I'm glad I own my home, now all I have to be able to do each year is pay the taxes and utilities.
I pray you make it intact through your crisis.
Show-me
TSP Legend
- Reaction score
- 104
Your income advancement would only cease if the markets were in positive territory and was beating the G fund return rate.
If the market is down 30% and I'm in the G fund making 3% and a personal loan at a bank is 6%, I am saving 3% plus I'm paying myself the other 3% on the loan. Nobody is makes money off of me (except the $50 loan fee) and I am in the G fund because of the market anyways.
If the market is down 30% and I'm in the G fund making 3% and a personal loan at a bank is 6%, I am saving 3% plus I'm paying myself the other 3% on the loan. Nobody is makes money off of me (except the $50 loan fee) and I am in the G fund because of the market anyways.
I was the original to post this question about borrowing money from my TSP to pay off debt from my credit cards. Yes, the damage is already done with 10s of thousands to pay off in credit card debt. there is not a sensible way at this time to pay off the huge debt, except to borrow from family members, which i don't want to do. keep in mind interest on a couple of these credit cards, is about $100-$225/month, so how can one make any head way paying off a card with that high interest debt. I already have enough credit cards (at least 6) and don't want to open another one to just have a teaser rate for a year or less.
Frixxxx
Moderator
- Reaction score
- 131
If you are paying that much, get rid of all but one credit card. YOU have to make the decision to take the loan out and pay back the loan. If this is what will help you sleep at night, then do it. If you risk your health over this matter then those med bills will pile up.
Please get something to help you budget after you consolidate your debt. If you don't change your habits, the results will always be the same. Take it from a smoker!!!!
Good luck and I hope you feel better after you are debt free!
Love2Surf,
Originally Posted by luv2surf
"I was the original to post this question about borrowing money from my TSP to pay off debt from my credit cards. Yes, the damage is already done with 10s of thousands to pay off in credit card debt. there is not a sensible way at this time to pay off the huge debt, except to borrow from family members, which i don't want to do. keep in mind interest on a couple of these credit cards, is about $100-$225/month, so how can one make any head way paying off a card with that high interest debt. I already have enough credit cards (at least 6) and don't want to open another one to just have a teaser rate for a year or less."
Just a thought, You might contact the credit card company you have the longest relationship with and ask if they have any balance transfer offers with zero or low interest rates and roll all of your other card balances into one. Assuming you're not maxed out on that card and have a high enough limit. Then grit your teeth, get a second job, cut spending, whatever you have to do to get it paid off. Good luck! I know its not easy but when its over you will really be proud of yourself!
Originally Posted by luv2surf
"I was the original to post this question about borrowing money from my TSP to pay off debt from my credit cards. Yes, the damage is already done with 10s of thousands to pay off in credit card debt. there is not a sensible way at this time to pay off the huge debt, except to borrow from family members, which i don't want to do. keep in mind interest on a couple of these credit cards, is about $100-$225/month, so how can one make any head way paying off a card with that high interest debt. I already have enough credit cards (at least 6) and don't want to open another one to just have a teaser rate for a year or less."
Just a thought, You might contact the credit card company you have the longest relationship with and ask if they have any balance transfer offers with zero or low interest rates and roll all of your other card balances into one. Assuming you're not maxed out on that card and have a high enough limit. Then grit your teeth, get a second job, cut spending, whatever you have to do to get it paid off. Good luck! I know its not easy but when its over you will really be proud of yourself!
Elgallo
TSP Strategist
- Reaction score
- 11
Re: General loan against TSP some food for thought.
And another take on the matter, and it's all in how you look at the situation.
When you borrow an amount of your TSP money it is no longer at RISK in the market. Now a days that's a good thing!
If it were in the G fund your making a measly 2-3% of late. Using those TSP funds to pay off high interest rate Credit cards at say 20% effectively earns you that amount of return. That's a good thing!
With the market down like it is stocks are on sale at a 40-50% discount. So paying back your loan even with post tax dollars allows you to buy even more shares PPP than would be the case with only your biweekly contributions. It's a way to do the over 50 catchup without being over 50 assuming you are contributing the max 10% bi weekly. Again this is a good thing.
The real kicer in all of this is what you DO with the money borrowed.
I know I'm gonna get flamed on this one!
And another take on the matter, and it's all in how you look at the situation.
When you borrow an amount of your TSP money it is no longer at RISK in the market. Now a days that's a good thing!
If it were in the G fund your making a measly 2-3% of late. Using those TSP funds to pay off high interest rate Credit cards at say 20% effectively earns you that amount of return. That's a good thing!
With the market down like it is stocks are on sale at a 40-50% discount. So paying back your loan even with post tax dollars allows you to buy even more shares PPP than would be the case with only your biweekly contributions. It's a way to do the over 50 catchup without being over 50 assuming you are contributing the max 10% bi weekly. Again this is a good thing.
The real kicer in all of this is what you DO with the money borrowed.
I know I'm gonna get flamed on this one!
Re: General loan against TSP some food for thought.
Try To Be Open-minded Friend,
You may want that money to take care of some ankle biter that hurts, right now. Why not say "Let's just pretend that TSP really isn't there and that I've got what I got and I've got to deal with it". I was there before and it's not worth ever taking money out of your TSP Account. Once you do that once, you'll keep going back to it over and over again, guaranteed. Get another job, develop a ponzi scheme, do whatever but this money you need in the future. The most critical time in getting a healthy balance is when you are just starting up. I think that if you just tighten your belt, give up some extra's that aren't needed, you'll be amazed at how things take care of themselves. I'm guilty of that too.
I'M GETTIN OFF THE SOAPBOX.
Elgallo, congrats on your TSP starter tag since 2004!!
Now, you may have some real fun with those funds,the markets are bad, but you are setting yourself up for lower balances in the future through the markets and future deals. But it is your bling-bling and remember you can't take out another TSP loan until the first TSP loan is fully paid off. Dannyboy
Try To Be Open-minded Friend,
You may want that money to take care of some ankle biter that hurts, right now. Why not say "Let's just pretend that TSP really isn't there and that I've got what I got and I've got to deal with it". I was there before and it's not worth ever taking money out of your TSP Account. Once you do that once, you'll keep going back to it over and over again, guaranteed. Get another job, develop a ponzi scheme, do whatever but this money you need in the future. The most critical time in getting a healthy balance is when you are just starting up. I think that if you just tighten your belt, give up some extra's that aren't needed, you'll be amazed at how things take care of themselves. I'm guilty of that too.
I'M GETTIN OFF THE SOAPBOX.
Elgallo, congrats on your TSP starter tag since 2004!!
Now, you may have some real fun with those funds,the markets are bad, but you are setting yourself up for lower balances in the future through the markets and future deals. But it is your bling-bling and remember you can't take out another TSP loan until the first TSP loan is fully paid off. Dannyboy
Elgallo
TSP Strategist
- Reaction score
- 11
I have borrowed and completed paying back a loan just this year. I relieved a modest credit card balance and purchased a fully depreciated asset easily worth more now than what total amount I borrowed.
My lower tsp balance (C,S and I) now has more to do with market conditions than my borrowing form it. Even after the 5 year loan and the recent debacle in the market my balance is still 5 times the national average for a 401Ks. BTW I'm 62 and would like to retire at the end of 09, but with the market like it is I MAY delay that a year or so. Also, I have been doing the TSP since 1986/7
Will I borrow against it again? It depends. If I can squeeze into some local real estate at what are big time bargain basement prices in my area (zip 9394X) I may borrow part of the down payment, who knows. Knowing the area like I do I will be smiling 5-10 years down the road.
Like I said in my earlier post; it's what you do with the borrowed money. Waste it YOU LOOSE. Invest it wisely you may win in the long run.
There is a saying I have predominately posted in my office:
Courage is not the absence of fear, but it is the judgment of what is more important than fear. The brave do not live forever, but the cautious do not live at all.
Yes, I am a risk taker, and feel I have benifited greatly by being one.
My lower tsp balance (C,S and I) now has more to do with market conditions than my borrowing form it. Even after the 5 year loan and the recent debacle in the market my balance is still 5 times the national average for a 401Ks. BTW I'm 62 and would like to retire at the end of 09, but with the market like it is I MAY delay that a year or so. Also, I have been doing the TSP since 1986/7
Will I borrow against it again? It depends. If I can squeeze into some local real estate at what are big time bargain basement prices in my area (zip 9394X) I may borrow part of the down payment, who knows. Knowing the area like I do I will be smiling 5-10 years down the road.
Like I said in my earlier post; it's what you do with the borrowed money. Waste it YOU LOOSE. Invest it wisely you may win in the long run.
There is a saying I have predominately posted in my office:
Courage is not the absence of fear, but it is the judgment of what is more important than fear. The brave do not live forever, but the cautious do not live at all.
Yes, I am a risk taker, and feel I have benifited greatly by being one.
Elgallo
TSP Strategist
- Reaction score
- 11
Great minds always have!
On a related but a bit different note:
http://www.govexec.com/story_page.cfm?articleid=41970&dcn=todaysnews
FWIW The statistics in this article are interesting, and sort of explain why folks like ChemEng and I apparently stand out of the avg. govt. crowd and this MB.
On a related but a bit different note:
http://www.govexec.com/story_page.cfm?articleid=41970&dcn=todaysnews
FWIW The statistics in this article are interesting, and sort of explain why folks like ChemEng and I apparently stand out of the avg. govt. crowd and this MB.
thomas1215
First Allocation
- Reaction score
- 0
Stupid question: are shares sold when a loan is taken out, or is just the balance reduced by the loan amount?
McDuck
Market Veteran
- Reaction score
- 50
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