9:35 pm, July 13, 2014

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  • But WHY are they taking out the money?
    Lisa Lisa
    I can think of a few reasons why: Recently, I went to a mid-term retirement class. It was there that I realized the ever so not reliable HR missed an important process upon hire (not at one agency, but at 3) and that has to do with my buy-back. After being in the fed gov for over 10 yrs, I have to pay back over $4K. While I decided not to withdrawal from my TSP, I would gather, that many do. Here is the other thing that I think people are pulling from their TSP for: To pay off credit cards. Credit cards in the last year went from fixed to variable. Even my beloved Navy Federal joined the ranks. I used to have 7.9 percent fixed-now it has gone up to 10 percent. Talk about OUCH! If you have a few credit cards, that starts to add up. I still wont touch my TSP but the fact is, it is cheaper to pull money from your TSP to pay off that now bad credit card and just pay back TSP at a lower interest than it is to pay that monthly credit card. It is very tempting and I actually am considering it, not because I am desperate, but because it makes more sense to save all of that interest from that credit card and use that money I was paying to it and recover back to my TSP.
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  • Thanks!
    contrarian
    On Mike Causey's site yesterday I asked for someone to specify the percentages of withdrawals vs loans, because of the trumpeting of the money movement as a bad thing. Lisa's question follows up on mine too. The trumpeters assert that people are withdrawing to buy food or living expenses. I think we can agree that's bunk! When the market went up for a brief while, it was only logical to pull money out for other uses, even paying off other more expensive debt. Plus, loans have to be paid back, but borrowers will be buying back in a lower prices, for a nice arbitrage gain! I know the subject of market timing is sensitive, but for those of us who rode the market down and back up, this year's earlier 1200 S&P gave a chance to diversify. I just wish we had the opportunity to buy individual stocks rather than these decades long loser indexes!
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