Author Topic: TSP loan effect on net worth?  (Read 205 times)

DeniseNJ

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TSP loan effect on net worth?
« on: July 11, 2019, 03:24:00 PM »
A while back I had about 30K in high interest cc debt.  I kept trying to pay it down but the fam kept using the cards and also the interest payment every month was ridiculous.  I put the cards away and unlinked everything, paypal, amazon, etc., from the cards so they saw no action at all (the 5% cash back from Amazon was not worth the 15% interest we were paying plus clearly we cannot be trusted with credit cards).  I also found MMM and stopped buying stuff!

I took out at TSP loan and paid off the cards and made the loan payments from my pay about $2,500 per month.  (Also now maxing the TSP and Roths on the outside instead of blowing it). The way it works out, I should have the loan paid before my youngest starts college next year.

The thing is that if I list the loan on my spreadsheets, my net worth increases by double, the reduction in the debt and the increase in my TSP balance.  That can't be right.  So should I just not count the loan on the spreadsheet and just consider that I'm contributing an extra $2500 per month to the tsp on top of the 19K?  I guess that makes sense but not sure where I should keep track of the loan. ( I really love watching the number drop.)  I mean it's a liability but how do you account for money you owe yourself, or is that just on another sheet entirely? I'm just using excel for a very simple spreadsheet.

Would you consider this type of debt repayment in a percent of your savings rate?

MDM

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Re: TSP loan effect on net worth?
« Reply #1 on: July 12, 2019, 10:42:36 AM »
Correct, this is not a liability as one usually understands the term.

What you did is similar to taking money from a savings account emergency fund to pay the credit card debt.  You may then wish to replenish the current e-fund balance gradually to its original balance (and could track progress toward that goal), but you wouldn't call the balance difference a loan.