Help, newbie seeking advice

[TallSoyMocha]

Hi everyone

I've been in Federal Service for about 2 years and have recently started paying attention to my TSP account. I'm relatively young, 29, so I hope I can learn a lot here and have a positive impact on my TSP investments.

Questions:
1. Considering the limited options for diversification under the TSP, do I have a good mix for someone in my age group who has at least 30 years before considering retirement?

2. I am considering taking out a loan from my TSP to pay off my credit card debt. Is this a risk worth taking?

Here is my financial profile. Any other advice is welcome as well.

Tax Filing Status: Single
Income: GS-13 Step 2
Fed Tax 28%, State tax about 7%
State of Residence: District of Columbia
Age:29

Emergency funds:
- Zero emergency funds

Debt:
-Student Loan debt: Approximately $140,000 in federal student loans @ 6.75% interest rate. Currently enrolled in the Income Based Repayment program, and planning to use Public Service Loan Forgiveness to pay my loans after making 120 consecutive payments.
- Credit Card Debt: About $14,000 in more that one card at various interest rates ranging between 10% and 24%
- No car loans, no mortgage.

Current Retirement Asset allocation: 100% Thrift Savings Plan. TSP allocation breakdown:
- L 2050: 44%
- C Fund Common Stock Index: 27%
- S Fund Small Cap Stock Index: 19%
- I Fund International Stock Index: 10%

Current portfolio size: low - mid five figures.

Contributions: 1% Automatic by agency 4% Agency matching 10% Employee contribution = 15% overall contribution

Again, my questions are:
1. Considering the limited options for diversification under the TSP, do I have a good mix for someone in my age group?

2. I am considering taking out a loan from my TSP to pay off my credit card debt. Is this a risk worth taking?

Thanks in advance for your help.

 

[tsmmadmax]

Mocha,

I had some student loans myself (not 140,000 worth) and some credit card dept around the same interest rate and I paid it off as fast as possible before I really did anything else. As you know that interest rate adds up over time which would off set your savings because in the end you are having to pay more. I personally don't know awhole lot about TSP Loans but I would not take out a loan to pay off another loan. A good alertative (Correct me if Im wrong) would be maybe get another credit card with 0% APR for x-months on credit transfers and transfer as much dept from your current credit card on to that 0% credit card. This way you aren't paying any interested for x-months, but only if you can pay that debt off in the allocated time given.

As far as the TSP Allocation I am also pretty new to TSP but I have all of my money in the 2050 fund until I feel comfortable in managing my own funds. Bottom line up front what I've learned is pay off the debt with the highest interest rate first. I know alot of this may be common sense stuff but maybe hearing it from others may give you some insight.

 

[James48843]

Again, my questions are:
1. Considering the limited options for diversification under the TSP, do I have a good mix for someone in my age group?

Only you can answer if you are comfortable with that mix. If it were me, I would be very comfortable with that mix. I won't comment on the choice of an L fund AND three stock funds. That's not what L was designed for, but that is fine to use it that way. If you are comfortable with it I see nothing wrong there.

2. I am considering taking out a loan from my TSP to pay off my credit card debt. Is this a risk worth taking?

Probably not. Time out of the TSP with a loan for any purpose has to be carefully evaluated- you'll miss the opportunity to grow your retirement investment. Remember- the TSP is your retirement. It's not intended to be a cash register. Buying a house is one thing- but simply paying off a credit card probably isn't worthwhile for you.

Only you can decide what is best for you- but again, I'd be very careful and wary of taking out a TSP loan simply to pay down a credit card. Look carefully before your leap.

Good luck.