TSP: financial hardship withdrawal
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Anonymous
| When you retire you lose your salary - income goes down (usually). Less taxes... |
Anonymous
| You need to start budgeting. You should not be putting childcare costs on your credit card. There are many helpful threads here on how to cut costs. |
Anonymous
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OP, I have substantial debt too (20K on one income). I have almost 3 times that in retirement. While its tempting to bail myself out, its just robbing my future when I'll have less ability to earn money.
I'm going to rent my place out and stay with family so that I can pay off the debt. FYI- Alot of my debt is financing childcare too. That bill is gone now! |
Anonymous
| Meant to say almost 4 times |
Anonymous
I can't speak for the OP, but my child support stopped abruptly due to the ex being laid off. Also, thousands of it is just interest from being rate jacked. I was able to save some by moving DC to another daycare when there was an opening. |
Anonymous
| You can borrow against your tsp. then you don't pay penalties.... |
Anonymous
|
OP I hope you've been convinced this is a terrible idea. You will really set yourself up for failure later. Take it from me, getting disciplined and paying off your debt is really hard but you'll come out a much better person for it.
Plus if you do borrow against your TSP, it will take you over four years to pay it back since the max is $17.5k/year. That's four years you can't lose or quit your job bc if you do you have to pay the balance within 90 days or the IRS considers it taxable income. Also, you may have not considered this: When you borrow your pre-tax dollars from your TSP, you have to pay yourself back with after-tax dollars. This means to pay back $100, you may actually have to earn $128 or so. |
Anonymous
| OP here. We've decided against it.....unless there are gov't furloughs and we're without two salaries for an extended period of time. We'll have little choice then. |
Anonymous
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I have been reading this and agree with all the reasons for not doing it but here's my situation. I've been with the DOJ for 31 years and plan to be there another 15. 10 years ago I got married and we had our first kid we wanted my wife to stay home with her the first few years and then we had another child, once again we want to my wife stay home with her for the first few years. During that time, we built up a bit of debt, well that snowballed over the last five years. We find ourselves in about $50,000 in debt as well.
The positives we have going for us is and we have our own home and I make fairly good money. When I crunch the numbers I'm upside down every month, anywhere from 500 to 1000 dollars. My wife currently goes to a job that she can't stand, she gets physically ill some days just getting ready for work. it also causes huge fights between the two of us. I have 180,000 in my TSP, 80 of it is my contributions. If I take enough money to pay off all my debts and cover the penalties, my wife can quit her job and stay home with the kids. We talked this over and if we do it, we agreed to set all the credit cards to pay off each month. 20 K of my debt is a 401(k) loan, So that will bring in another $450 a month, this will help offset my wife not working. My plan is, to take equity out of the house in a few years and put that back into the 401(k) to make up for the money we took out. Right now we only have about 35,000 in equity. I know this is also going to sound morbid but my dad just turned 83 and I am hoping he lived to be hundred, when he does pass he will leave us more than the amount will be taking out of Our thrift. My wife makes very little where she works, but she stays there because we get a discount at the school our kids go to and that's not because were being snobs. The public schools, while rated hi, I have an extremely high amount of bullying and we don't want to subject her kids to that. I don't need any lectures, I've beat myself up about this every day. I wish we had never had my wife stay home those five years, why was great for our kids and put us in a hole we never been able to get out of. I get sick to my stomach every year when I fill out my financial disclosure. So that's why am leaning towards pulling some money and paying off all these bills, self get our life back. We don't travel, we don't buy expensive things, I just made some bad decisions financially and that put us in a deeper hole. |
Anonymous
this. |
Anonymous
| Why did you post to a five year old thread? I wonder if OP took a loan? A five year TSP loan would have been paid off now. |
Anonymous
don't do it OP. you will never make enough money, never pull enough money out of any magic hats to make your wife happy. she wants to quit her job, then the kids go to public school. that's it. you and your wife are a team, you are not a white knight rescuing a damsel in distress. you cannot borrow your way out of these marital fights. invest in marital counseling. if you live in nice area with nice schools, then you need to downsize, or send the kids to public. you can't have both. your wife needs to work. that is life. you cannot set yourself up to have everything fall on you. i know you want to be a good provider. this is not the way to do it. it will never be enough. i'm a wife and a mom, i get it, you want to give your family everything in the world. what you give your family is your mental health, your energy, your strength, not just your salary. |
Anonymous
| Looked into this a while back to pay for last year of childcare and the definition of hardship is really strict. Can’t just withdraw by of cc debt. |
Anonymous
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The loan won't work, because I still owe 14k to my tsp loan that we used for home improvements. U only can do 50k - what has been paid off. So I borrow 14k foe 60 dats to pay it off. I can only borrow 36k. That's 22 after I pay off the loan. Pay my loan off, my wife still has to work, and our situation is the same. I also left out my job is operational. I work odd shifts that change weekly and travel as well. Therefore, this is the only job she can have because of the schedule and the discount. Otherwise, we lose money and the kids probably have to stay in extended day. I know this is extreme but I believe it is my only option.
It's not just the cc debt that makes it a hardship. When you factor the schedule issues and any other job I take would mean a significant drop in pay and then two of us would hate our jobs. The reason I choose this old post is because it seemed the closest to my situation. I am not doing this like a get out of jail card...I am going to have to work an additional 10 years because of this. When we move, we will downsize and save additional money. We don't live extravagant lives. One car, i commute to live further out where we can afford our home, and I couldn't even give my wife a wedding. Right now, we just get by...I want to lower the stress and this seems to be the only way. I mad a mistake...me...and I will have to pay by working longer. My wife and kids shouldn't suffer because I screwed up and have been digging a deeper hole ever since. |
Anonymous
| You can't borrow your way out of debt. You spend more than you make. Translation - you are living beyond your means. You may not live extravagant lives, but that's not the point. You can't even afford the lifestyle you have. Look at every cent you spend and figure out how to spend half that. |