Poll

Your opinion?

None
2 (18.2%)
1%
2 (18.2%)
3%
4 (36.4%)
10.5%
3 (27.3%)

Total Members Voted: 11

Author Topic: How much am I 'saving'?  (Read 2400 times)

adam

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  • Age: 39
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How much am I 'saving'?
« on: May 07, 2013, 02:32:58 PM »
Some of you may remember I took out a TSP loan to pay off some higher interest debt.  Because it was a 'loan' I don't pay any taxes or penalties on it, but I have to pay it back (to myself), plus interest (the interest was like 1.15% at the time I took it out).  I was just looking at my contributions again because of 2 things:  1) It looks like the wife has found full time employment and 2) It looks like the impact of the government furlough is going to be minimal, if it even still happens at this point.  So in other words, the precautions I took in lowering my contributions when I thought the sky was falling and we were already living on one salary are no longer necessary.

But I'm getting off track.  I want to increase my contributions again, but I was looking at what is currently put into my TSP after every paycheck and thought I'd ask somewhat of a philosophical question.

Voluntary Contribution: 1%
Agency Matching: 2% (1%+1%)
TSP Loan Repayment: 7.5%

If someone were to ask the question 'How much is Adam putting into his retirement fund right now?', what would you say? 1% for my voluntary contribution? 3% for my contribution plus the matching contributions? or 10.5% for the whole thing?

For what its worth I'm about to bump my voluntary back to 5% in order to get the full match.

marty998

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Re: How much am I 'saving'?
« Reply #1 on: May 07, 2013, 03:46:30 PM »
how about none of the above.

You are putting in the contribution + the match + the interest being charged on the loan?

Repaying the o/s balance is just swapping assets within your fund (loan receivable for cash), so it isn't actually growing your fund in the way contributions are.

adam

  • Bristles
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  • Age: 39
  • Location: SC
Re: How much am I 'saving'?
« Reply #2 on: May 08, 2013, 06:19:43 AM »
The 7.5% is the payment + the interest charged to myself (instead of the dollar value I used the % because I was curious).  It all goes to the same place.  I had a picture that actually shows the loan payment getting split among the TSP funds just like the contributions.

daverobev

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Re: How much am I 'saving'?
« Reply #3 on: May 08, 2013, 06:49:56 AM »
Where does the 1.15% go?

So you had x, you took some away from x, so then you had y - your net worth was (all your other stuff) + y. So now you are adding back to y to eventually return it to x. The amount you are adding to y is increasing your net worth so.. yeah... it must be saving.

Just not sure about the 1.15% - if it is 'lost'. Not sure what a TSP is sorry, but if it's stocks are you losing out on market movement in the meantime?

matchewed

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Re: How much am I 'saving'?
« Reply #4 on: May 08, 2013, 07:08:22 AM »
You are saving your normal contribution + match + interest on loan if what I see is correct. The principal repayment should not be counted as it is a debt payment to yourself.