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TSP loan vs Credit Card Debt
Posted on 8/5/16 at 6:11 am
Posted on 8/5/16 at 6:11 am
This seems smart but I know the money board is smarter...
SO i've been contemplating taking out a tsp loan to pay off credit card debt and for some home remodeling.
It makes sense to me to borrow from my tsp as the payments will go back into my account and the interest right now is only 1.5% rather than pay the interest on the credit card balance. The payments for the loan would be equivalent as making payments on the credit only i'm paying myself rather than a bank. Whats the board say?
SO i've been contemplating taking out a tsp loan to pay off credit card debt and for some home remodeling.
It makes sense to me to borrow from my tsp as the payments will go back into my account and the interest right now is only 1.5% rather than pay the interest on the credit card balance. The payments for the loan would be equivalent as making payments on the credit only i'm paying myself rather than a bank. Whats the board say?
2
Posted on 8/5/16 at 7:52 am to Matador
1- Did you factor in the returns you'd be getting on your TSP money if you didn't take out?
2- Are you going to pull back a little on your regular contributions to pay off the loan on your TSP?
2- Are you going to pull back a little on your regular contributions to pay off the loan on your TSP?
Posted on 8/5/16 at 8:25 am to castorinho
1.) yes. it's very early in the game so I dont think i would miss out on much and/or can catch up later
2.) I was going to keep my contributions the same in addition to the extra to pay off the loan in 2-3 years...I also figured after the loan is complete, to just dump the extra money on top of my regular contributions.
2.) I was going to keep my contributions the same in addition to the extra to pay off the loan in 2-3 years...I also figured after the loan is complete, to just dump the extra money on top of my regular contributions.
Posted on 8/5/16 at 9:04 am to Matador
I wouldn't do it, keep your retirement for your retirement. Its not worth the risk and a bad habit to start doing IMO. If you never touch it, it will be there. If you do touch it, you risk not paying it back.
As said, you are risking way more than the 1.5% or whatever you have to pay back. If it takes 2 years to pay back then you are most likely risking 7-10% of earnings.
Why not get a 0% apr for 12 month credit card to pay it off for the next 12 months, those are offered all over the place?
As said, you are risking way more than the 1.5% or whatever you have to pay back. If it takes 2 years to pay back then you are most likely risking 7-10% of earnings.
Why not get a 0% apr for 12 month credit card to pay it off for the next 12 months, those are offered all over the place?
Posted on 8/5/16 at 9:36 am to baldona
well considering the past 2 years i've only gained like 2% :(
Posted on 8/5/16 at 11:50 am to Matador
quote:
well considering the past 2 years i've only gained like 2%
What fund are you invested in? The G fund?
Posted on 8/5/16 at 3:13 pm to TheChosenOne
quote:
What fund are you invested in? The G fund?
Chosen, you use TSP? I'm always interested on others people thoughts on the best way to invest with TSP.
Posted on 8/5/16 at 3:46 pm to Linkovich
I don't have the exact breakdown, but I'm roughly 50/20/30 in C/S/I Funds. I'm 31, so my retirement horizon is still 25-30 years from now which makes my breakdown a bit more aggressive than most I would assume. Over time I will get a bit more conservative and work some G or F funds in there.
I think my breakdown is pretty similar to the 2050 lifecycle fund, except that fund has 10-15% in G fund, which just seems too conservative for me.
I think my breakdown is pretty similar to the 2050 lifecycle fund, except that fund has 10-15% in G fund, which just seems too conservative for me.
Posted on 8/5/16 at 8:29 pm to TheChosenOne
Interesting. I see lots of people chasing the c and s funds, constantly changing the funds they have and future contributions. When you change your percentages do you also a change with your holding as well as future contributions? Or do you just change future contributions and let your current holdings stay?
Posted on 8/5/16 at 8:56 pm to Linkovich
That's a great question and something I've had internal debates about. I started this plan 2 years ago and I've only made a change once. I basically pooled what I had and distributed it based on that 50/20/30 split. At the same time I changed my future contributions to 50/20/30. When I started 2 years ago it was 50/30/20. Not sure why I had faith in the I fund last year, but that's a different discussion.
At the end of this year I plan to make another change. I'm debating doing it differently this time and just changing my future allocations. Though since the I fund has been underperforming relative to the C and S funds recently so I'm really tempted to move some money out of there.
I swore I would only make changes to my allocations once a year and so far I've stuck to it. with the ease of moving money between funds, it's really hard to stay true to that.
How are you tackling it?
At the end of this year I plan to make another change. I'm debating doing it differently this time and just changing my future allocations. Though since the I fund has been underperforming relative to the C and S funds recently so I'm really tempted to move some money out of there.
I swore I would only make changes to my allocations once a year and so far I've stuck to it. with the ease of moving money between funds, it's really hard to stay true to that.
How are you tackling it?
Posted on 8/6/16 at 7:53 am to TheChosenOne
I'm heavy in the c and s now maybe 70/30. I've been keeping past contributions and future aligned but I'm not sure if that is the best option. I'm considering moving back to the long term approach. Some sites I look at for tsp investing are moving way too often for my taste and feel like it is really a crap shoot with them. I'm thinking of going to a 60/30/10 and just letting it ride for a while. I have another 18 years with it.
Posted on 8/6/16 at 8:18 am to Matador
Citi Diamond preferred has a 21 month 0% APR on purchases and balance transfers.
There are a few others with 18 months as well. I wouldn't touch my retirement unless it Was an extreme emergency.
There are a few others with 18 months as well. I wouldn't touch my retirement unless it Was an extreme emergency.
Posted on 8/6/16 at 9:04 am to Linkovich
60/30/10 is probably my next split as well.
I know a guy that follows the 200 day moving average of the C,S,I fund and buys/sells/reallocates based on the indicator at the end of every month. He gave me his spreadsheet that he uses to track it and show how well he's performed against the set it and forget folks. I've kept it up just for interests sake, but don't think I'll use it unless all three are sells and I want to jump in to the G fund to ride out a storm.
I know a guy that follows the 200 day moving average of the C,S,I fund and buys/sells/reallocates based on the indicator at the end of every month. He gave me his spreadsheet that he uses to track it and show how well he's performed against the set it and forget folks. I've kept it up just for interests sake, but don't think I'll use it unless all three are sells and I want to jump in to the G fund to ride out a storm.
Posted on 8/6/16 at 12:46 pm to TheChosenOne
If you think about it, let's check in this thread every now and then. I like to read tspallocation.com and fedtrader.com. Good Luck!
Posted on 8/6/16 at 2:44 pm to Linkovich
My TSP allocation is 50/40/10 C/S/I.
Contemplated upping I contribution after Brexit, given that it mostly follows European equities.
Contemplated upping I contribution after Brexit, given that it mostly follows European equities.
Posted on 8/6/16 at 2:57 pm to UltimaParadox
quote:
My TSP allocation is 50/40/10 C/S/I. Contemplated upping I contribution after Brexit, given that it mostly follows European equities.
Do you maintain this ratio throughout the year or are adjusting often? I love hearing different strategies in the TSP because it's hard to find good conversation about it.
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