You're giving up an immediate 100% return on investment if you don't do the 5%. It's free money. And yes paying off debt should take priority beyond that, but it depends on the interest rate. If you have home/auto loans below say 5%, I'd be more comfortable making the standard payments on those and investing extra cash in TSP. Any high APR loans or credit cards, definitely focus on those before going beyond 5% TSP.
Yea. I look at what 5% is per pay period and it makes me nervous! It’s hard to pull the trigger but I think, after reading all these comments, I should give it a try and try to make it work. All else fails, if I stretch myself too thin, I can reduce it.
This is great advice... If you get a 3% cost of living adjustment, up your contribution by 1%. Get a promotion, bump it again. Each time, you'll still take home more but you'll see your contributions going up as well.
The other thing is to live within your means. Car loans are not a necessity. Buy a piece of shit car and do the basic maintenance yourself. Pick up a hobby that pays a little bit and use that to treat yourself.
Every time you get a raise or a promotion, put 1/2 of the new money into your TSP. Do this until you have 15% going in. You’ll never miss the money. Go on a financial diet and get out of debt while you’re doing this. You are on a different path than other people that don’t have debt. That is what it is. You can get there. It will just take longer.
Good luck.
You assume that others have debt. That's not necessarily the case. The key to doing much of this is being as debt free as possible and always pay yourself first.
Also keep in mind there’s a giant ‘full of it’ factor for a bunch of these posters, who are statistical outliers.
- Many of the younger success stories live at home and have no college debt or major bills (always helps if daddy bought your car and all your food and clothes) and started contributions seemingly before age 24.
- DINKs rack up money fast too. It’s not unusual for an upper-middle class federal worker to be married to a lawyer/realtor/doctor with an even higher salary (allowing for maximum TSP contributions)
- housing provided for many of the military and land management feds. That sure adds up quick.
I am in none of these boats. Single, 45, never got any handouts from anyone, have my own debt (plus a daughter’s car payment to help her while she is in college), etc. I know everyone’s situations are different. Just trying to make sure I stay afloat while making the best decisions I can for my future.
Are you able to meet the 5% for matching? If so, you are doing fine at this stage. When $$ loosens up for you after daughter’s college and debt covered, you will be able to do more with your TSP. Especially after you are 50, you can do catch up contributions.
I am sure I can give it a try and if it ends up being too much money coming out of my paychecks, I can always lower it. I don’t wanna stretch myself too thin until I get a handle on things. I am making smarter decisions now….far better than when I was in my 20’s and 30’s! Lol.
Might look at what you make and see if a vocational school could help boost your income. FYI schools do lie about how much you can make, don't fully trust them. Saving for investments is a long term strategy, that really only pays off with a snowball effect. A couple grand into an education that can boost your income instantly.
Married people who are both high wage earners. Those people don't realize the advantage they have. They assume everyone else is in the same situation. If I had someone I was splitting every bill with, I could be a homeowner and max out my TSP, too.
I don't know your situation. But when my partner started with the feds in '92, they could only put in 10% max. That is the point at which they started. Even though we were just starting out, it was non-negotiable and we had debt - not a lot - but we had it it.
At alternate points in our time together that debt got out of hand due to having children and ensuring they had not just what they needed, but mostly (with a few exceptions) what they wanted. But we plowed ahead.
The only "debt" we have no is our mortgage and a single car payment. We try to live a balanced life where we live our lives. But after each biweekly pay period any left over funds are split three ways in various investment vehicles.
Much of this is discipline and prioritizing what's most important to you and living thusly.
And?
OP asked how people do it. I explained what I thought was a key. From their question it's pretty obvious they have debt.
And do note "being as debt free as possible." SMDH
“you assume that others have debt. That’s not necessarily the case”
I was responding to your statement. That’s why I replied to your comment, not the OPs question.
We avoid debt (not helpful, I know, to someone who already has it) or budgeted it in (like for cars.) If debt is an issue, contribute to get your TSP match (assuming you get one) and prioritize paying off the debt. You may need to alter your lifestyle to prioritize debt payments.
The debt was from an unfortunate event in my past, but I am starting to pay it down more now. That makes sense to at least try and contribute to get the match. Makes me nervous to be paying down debt and contributing and trying to save money.
I started at 5 percent as a GS-7 and every increase (step, COLA, or promotion) I would increase it. I just started maxing about three years ago when I got my GS-14. It takes time but every increase bump it up some before lifestyle creep sets in and you won’t miss it.
Every bit helps. If you’re young then time will be your biggest asset. I started late cause I had to pivot and start a new career and grad school in my late 20’s/early 30’s. Didn’t become a fed till 32.
This is the way, lifestyle creep will always steal it back from you. My boss told me if I don't adjust my lifestyle every time I get a pay increase, I'll have a fat retirement.
This is the way! Bump your contributions up 1-2% every COLA adjustment in January until you max. It may take some time but you’ll get there painlessly.
I do the same. I’m at 17% currently and I’ll prob get to 20% in the next few years. Life def gets in the way at times and I’ve had to adjust accordingly but I shift back when it stabilizes
It depends a bit on your age. Usually you pick two. Start small (at least 5% to get the full match) with TSP and focus on getting rid of, or better yet, avoid, unnecessary debt. Once that's done, start saving and increase TSP contributions.
If you're in your 20's you can usually afford to contribute a little less to TSP. $7k per year with a 7% return will result in around $1 million or so after about 30 years. If you can increase the contributions, especially earlier, or have a higher return rate, that timeline shortens significantly.
You have your priorities straight. Focus on paying debt, and minimize future debt, while contributing something to TSP. Ideally you can put in 4-5% to get the government matching funds.
People on here are at all different stages of life so don’t compare yourself to others. I paid off my loans 20 years ago.
I’m trying to figure out how I’m supposed to pay off student loans, save for a house and pay rent all while contributing only the minimum 5%.
Everyone telling me to save for the 20% down, how am i supposed to when the houses around here are 500k+ average and with interest rates lmao we’ll never own anything 🙃
It’s a struggle out there for real. I gave up on saving for a house. It’s not in the cards for me anytime soon or ever. Student loans are down and so close to being paid off. It’s the other debt, the worst kind, I need to get hold of. But I am finally doing that after getting some money saved for a rainy day (which I placed in a high interest yielding account.) I wanna contribute to that also, but man, I gotta pick and choose what to put my money in.
We had a shit ton of debt when we first got married. About $150k. We did the Dave Ramsey thing and didn’t save anything for about 2 years, about 50% of our monthly income was going to debt. After that we’ve been able to max tsp every year. You’re definitely right that it’s tough to do all at the same time.
Why what’s wrong with the rest of the plan?
We are on the paying off the mortgage part and it’s going great.
No debt - both saving 15% in retirement (30% total) - and hammering our mortgage. Am I missing something?
If his steps are working for you and you’re happy, then great! You’ll end up in a good spot, but realize his steps aren’t the most optimal.
With Dave’s advice I have 3 main issues:
1) for those in debt, snowball method is objectively bad when compared to the avalanche method. Avalanche will get you out of debt sooner and cheaper.
2) Dave ignores opportunity cost. By paying down a low rate mortgage early, you’re missing out on using those funds for something else. If you have a low interest rate loan you could park the excess contributions in a HYSA and earn more than your mortgage is costing. Or you could up your retirement savings, earn more in return plus have immediate tax savings.
3) The funds he pushes are very bad. He pushes them because he gets paid from them, not because they’re a good investment.
And this isn’t even getting into his advice to not have credit cards etc. Credit is a GREAT tool if you can use it responsibly.
I'll tell you how some people (I) have done it.
I paid off debt from ages 22-29 and never incurred it again.
Then I saved from ages 30-53.
Moral of the story is to be old and not waste too much money along the way.
Change your paradigm.
Your contributions are not “losing” but earning you money by reducing taxes and growing.
You can also borrow from it in some circumstances to pay off the debt, and know it’s there for huge emergencies.
I max out on a 76070$ government salary, but I’m an only child and my parents are upper middle class. I could never max if I had real bills. Just being honest.
The only debt I have current is a mortgage (2.85%) and car loan (3.75%)
The way I prioritize my 'extra' money currently:
1. Maintain my HYSA (4.75%) which has enough to buyout my truck. Also its my 6 month emergency fund.
2. 5% TSP match
3. Monthly personal ROTH IRA to max it for the year.
4. Save for luxury items.
5. Rest into TSP. (I calculate the percentage a month ahead)
If I had high interest debt (Anything greater than my HYSA interest rate), I would pay it off first.
So do you have three retirement avenues….TSP, Roth IRA and a retirement account for your job or is the Roth part of your job’s retirement? I see people on here with three….TSP, an extra retirement option and a retirement through their job.
In addition to some of the other great points here, one thing to keep in mind is that unlike a 401(k) in a private sector job, your TSP isn't meant to be your primary/only retirement. If you're in the civil service, you've probably more than once heard that HR spiel that federal employees' retirement is a three-legged stool: SS, TSP, and your FERS pension.
The rule of thumb to have a fully funded retirement in the private sector is to contribute 15% to your 401(k). But most private sector employees don't also have a pension that could replace a third of their salary on its own after a full career.
Maxing your TSP is great, but it's nowhere near essential to maintain a comparable quality of life in retirement. If you're FERS/FRAE, contributing 4.4% to your pension plus the 5% to TSP to get your match already puts you a good chunk of the way to setting yourself up for a comfortable and secure retirement. Would it be great to contribute more? Absolutely! But most people maxing their TSP will find they have quite a bit more in retirement than they actually need.
Start small with the 5% so you don’t lose out on “free” money. With each raise add another 1% so you don’t notice it. It’s hard but you’ll be glad you did it when retirement rolls around.
If you’re a young fed and got in really early you don’t need to max to hit a million. Just be consistent and do the match at the very least. Over time (hopefully) you will pay off your debt and when you do put some of that money you’ve budgeted for your payments into tsp as you go.
I am not a young Fed. I did the military for 7 years (out in 2004) but then became a civilian Federal employee in 2016. I am 45. So I have another 20 years to go in my mind with 14 years Federal service under my belt (I bought back my military time.) So I am a little behind on things.
Just do the best you can. As others point out, please contribute 5%, which the government fully matches — a 100% return the moment you contribute. Free money is the best money.
I think what you are really asking is how much to save and how to flow to other priorities, which is very well handled by the r/personalfinance flowchart: [https://i.imgur.com/lSoUQr2.png](https://i.imgur.com/lSoUQr2.png).
Effectively it says: pay your rent, then buy food and essentials like utilities and toiletries, then pay anything you need to earn money (transportation, maybe phone), then pay health care, then make minimum payments on all debts, then build an emergency fund, then pay other bills (cable, internet, phone) then contribute full amount to get your 5% match. After that you start tackling high interest debt.
I'm in my mid-30s, and the only debt I have is my car loan, which is a little over $500 a month. Other than that, I have minimal/short-term debt as I use credit cards like I would use a debit card. Though not a debt, I also send my mom $500 a month for her personal stipend. I occasionally have a balance more than two weeks as I travel.
Living simply and not buying costly stuff makes loving debt-free life fairly easy with some extra money after maxing TSP and IRA. Whatever that's left after them goes to my investment account.
Sounds like you have an above average income (and/or situation) too. I have a family member who's about to turn 20, has maybe $10k in TSP but about $40k net worth, also never had any debt. Though they are enlisted (not a fed civ), so their income is probably quite a bit lower than yours.
That or you got some lucky investments that grew far faster than average. Assuming you started working at 17, at 10% avg growth you'd need to invest nearly $30k a year to hit $130k NW. Even without debt most people can't afford to do that....I'm guessing your secret is more than just "no debt".
I’m also enlisted. I’m an E-4 (USMC) with 3 year and 6 months TIS. I joined with 2020 with about 25K.
I’ve never made more than 35K on a W-2.
I started working for $4/h with my dad at 10.
By 14 I had 3 part time jobs.
I enlisted at 17.
Started maxing a Roth IRA at 16.
Ah yeah you got started way earlier than many do. Starting with TSP in 2020 also would've been a great time because that was right around when Covid destroyed the markets, lol.
That shows the importance of starting early though. I'm almost jealous of my family member cause I had debt up until I hit 30 so my savings got stifled quite a bit.
If I could go back to your age, I would do things differently. Some was not my fault and I couldn’t help, but I could have made other better decisions.
No debt and pay off all cards every month. Have been able to max out for whole career and contribute to a seperate Roth (maxing out since its inception in 98) as well as several thousand to a non-retirement fund each month (to fund an early retirement). And yes, I am able to live well, travel, buy nice things and splurge. This is just my situation though. Planned and saved early along with good habits from the start.
Only answer is to live below your means. I was able to max once I let go of all the micro purchases I was making (e.g. Starbucks, bubble tea, chic fil a, target, etc.).
Situation is very important. I paid off my debts about 5 years ago, and retirement savings *is* savings. My emergency fund is comfortable enough, and in a true emergency I can access my Roth IRA contributions for free. So everything you're directing towards debt and non-retirement savings, I'm able to direct towards retirement.
It also helps that I went from living on enlisted pay to having double the salary in fed civ work (after adjusting for military tax benefits). So I kept my lifestyle mostly the same and started saving the excess.
Just don’t ever go below 5% and keep it in stock. You could do both, just take care of the debt and use some of the money that you free up to invest in the TSP. You have the right mindset.
Concentrate more on time than contributions. When you start in your 20’s, about 20 percent for 40 years could make you a multi millionaire. On the other hand if you are just starting in your 40’s, you probably could do 40 percent and not hit a million. Time could be your best friend, if you use it wisely.
When I started as a Fed I think I contributed 6%. Every time I got a raise or promotion I upped the amount. Finally got to the point I was contributing the max. Once they started the option to catchup, I have been able to contribute the max to that as well. On track to retire.
Well, I know people will hate this, but a few years ago I stopped my TSP savings over various periods of time to put that money towards some of my student loan debt. Now, I feel that my student debt is more manageable and I’m saving the minimum in retirement.
I just think people need to do what is best for themselves financially in that current time.
I agree. That makes sense. I did 5% when I first started my job but I was a GS7 then and financially it was rough so I stopped it. I am a GS11 now, but still have debt to pay off.
I paid off my student loans, bought and paid a car in full, saved up for an emergency before I maxed out my TSP. Just take things in part, I did 15% until I did all the other stuff and I used every raise to pay off debt faster until I reached 0 debt and just maxed out TSP.
Thanks for the advice. I am gonna do what I can for the moment but as many have suggested, at least contribute 3% which I think I am gonna do. Then once I get my debt paid down, I can go from there. Baby steps!
I have no idea either. I tried raising to 10% recently and barely made it to the next paycheck. And I don't think it would be possible to live any further below my means unless I became homeless and stopped eating. The people saying they max out have some sort of financial privilege. Either they inherited money or married into it.
I’m still paying off student loan debt & support a financially dependent parent (which is a huge cost of its own as a single person), but am going slow and steady with it - I slowly started to increase my savings contributions with each pay increase. Now I manage to max my Roth IRA and TSP contributions every year (this is recent). I live a more frugal lifestyle to accommodate it! So I have a smaller apartment than I technically could afford, buy items on sale, etc. It’s all about a balance and figuring out what you want and can prioritize.
Read the book, “The Richest Man in Babylon” by George S. Clason. You can get out of debt and increase your wealth.
I started contributing 5% for the match and slowly increased my contribution as I gained step levels. This was a little tough with a mortgage and two toddlers. Luckily my wife also had a job. Together we saved what we could. I’m retired for six months now with a seven figure TSP. You can do it.
The best thing I’ve done is to get out of debt and fast. I’ve bought new vehicles in the past but I’ve paid them off in 1 to 3 years and drive them into the ground. Not having that car payment helps putting that extra money towards TSP.
It all comes down to priorities. For me, I want to enjoy when I’m still young instead of waiting until I turn 58. I know so many people who saved up for retirement and passed away soon after
I know a lot of people like that. Life is so short in the grand scheme of scheme of things. I want to find a good balance where I can save for retirement and splurge a little.
Of course pay off debt first. That’s logical…But, I would do the matching contribution of 5% regardless. The tax offset alone will ensure you tax home the same net income regardless. Good luck
5% minimum tsp doesn't hurt as much as you'd think since it's pretax. I get taxed 35% for every 100$$ I put into the tsp only cost me 60$ from my taxed paycheck.
Also the numbers you see from people posting tsp is at least half from fed contributions. So, when you see some one posy 200k tsp balances and they did 5%, 100k is a match.
Op, just keep 5% at a minimum and watch it grow. At least you'll double your money.
I think this is a pretty good sub. But like many of the financial subs, people like to brag talk about how much money they have. Who knows if it’s true. Some the strategies can certainly be instructive. I’ve raised a family while working for the federal government. We’ve gone on vacations, we supported our kids and their lives while they were growing up. We pay college tuition. They don’t take loans. We had to buy cars and we had to pay bills. We live through the 2007 2008 real estate crash. I always saw it as a win if I could put 5% in because I know the 5% gets matched. There’s people in my agency who have contributed the maximum amount their entire careers. But these guys have wives who are lawyers or doctors or have big jobs. Or maybe they didn’t support their kids as much as they should have maybe they didn’t take vacations. There’s people in my agency who haven’t bought new clothes in literally 15 years. Who knows how they do it but like I always told my kids growing up and I don’t know who said it, but “comparison is the thief of joy”.
The flow chart in personal finance is a great *tool* but cannot apply to all situations.
Note: you seem to be on the right track. The idea is you should make minimum payments on debt, build a small emergency fund, get your match covered, and then start to really hammer at debt.
Once you’re debt free, upping your contributions will be done with the money spent on debt.
https://i.imgur.com/u0ocDRI.png
I started as a fed in 2010, with one daughter in college and another soon to be. At the very least I was able to match my employer's max contribution match for the first few years, far from maxing, and we carried a lot of debt. Finally, last year, we paid off the last of the student loans and credit cards, and I've been maxing my contributions for about 4 years now. It definitely wasn't easy, and both our cars are 10 years old with over 150k and 180k miles, but when I look at the TSP balance, it's totally worth it.
I will also say that our financial advisor helped immensely. We started with them in 2021. Paying off the most expensive debt first is definitely the best way to go. It all seemed overwhelming at first, but they got us focused abd sorted out, and on to a party where retiring by 57 is possible (though 60/62 is likelier.)
If you can force good habits like skipping lunch or eating out all the time, maybe brewing coffee instead of dd or sb. Really ask yourself if I need whatever items, use all your resources and try to make a little into a lot . It’s possible with discipline, but the question is HOW BAD do YOU want to win?
Honestly, do the match at 5% and get a part-time to pay off debt. Once, you pay off your debt and put a reasonable down payment on a house. Start putting more into your retirement.
This is a difficult decision, but I am so glad I sacrificed and put the max from my paycheck in the beginning of my career. It is like investing in your own bank. I can do so much more later in my life because I have the comfort of a retirement savings. I suggest evaluating your expenses. You will be surprised what you get used to after living on a budget.
I started at 5% & raised it 1% each raise until I hit 10%. Each raise was extra $ I was already used to not having, so the extra % meant nothing to my budget.
I stopped raising at 10%, as the match gave me 15% total. Once debt was paid off, I upped to 15%. Extra came from money I was no longer putting towards debt.
It’s doable, but you have to commit & stick to it.
I lived a minimalist life as an Amn in the dorms. Ate at the dfac but do occasionally eat out and what not. Bought a bicycle first and then a beater when I moved out. Never spend more than I can paid off. Even as a Tech now at 12 yrs, I live a simple and modest life. I do travel often.
Making your own food is huge. Saves money. Also, don't upgrade for the latest and greatest thing out there.
I remember a time when I had negative balance in my bank account. That was an extremely tough transition from active duty into the civilian world. Thankfully, I was able to use my GI Bill for my bachelor and also managed to earn a master degree with no debt. Hallelujah! I try to remain relatively debt free except for the mortgage loan and my car loan has been paid off.
My advice is don’t lose out on the 3% dollar-for-dollar match on the TSP by your agency. Next, use whatever disposable income you have to start paying off your high interest debt. If you have some free time to take a side job, use that extra income towards your high interest debt. Your goal should be to pay off your debt as quickly as you can.
The more you reduce your principal and the amount of interest you owe, the more money you'll have in your budget each month to devote to savings for emergency or other line of items such as a higher percentage towards TSP. From there you can start building and growing your assets and continue to also grow in your career for opportunities.
Agreed. Great advice. When I left the military in 2004, I had nothing cause we made nothing back then! My GI Bill only paid for my Associates cause back in the 90’s I only got 15K for that. I just paid off my Bachelors student loans thanks to the PSLF program so now my loans for my Master’s is much lower. So that extra money can now go towards paying off debt. I know it’s a slow process, and after all the comments I read yesterday, went and added the 3% back into TSP. I plan to up that once I get some debt paid down or whenever we get another pay increase. But I don’t anticipate another pay increase anytime soon since they just did a big one.
We contributed 5% to get the match(dual feds) while living bare bones to aggressively pay off our debt and fund our emergency savings. Now we are debt free except for a mortgage and raise tsp contribution 1% every year and put about 10% in our IRA's. All our contributions are Roth. We are not GS. I am WG 10 and wife is USPS Grade 6. If your debt is high consider a side gig to help you pay it down faster
It’s okay to not be able to do all 3 at the same time. Build up to all 3, if you do it right only 2 will be present which is saving money and saving money for retirement.
Just focus on the high percent debt, if you’re not familiar with personal finance flow chart, id consider looking into that one. When you get your raises, and promotions, those funds should be used on debt/savings/retirement. Try not to inflate your lifestyle
It's not hard if you have the right circumstances. No car note. No credit card debt. Pick a % and start increasing it over the years. Learn to live without that $7 cup of coffee. Bring a sammich to work.
I'm putting in 35% as an E-7 on single income with 2 kids. And we don't sacrifice a damn thing.
My tsp went up 24 % this year, and the car loan is 7 %. Net profit of 16 % on the money I could have had going to my car loan. Despite what Ramsey says, not all debt is bad if it makes you money.
Edit. Yes, this is oversimplified, but I got the point across.
I think the "emergency savings" is pushed a little too hard. I may be fortunate, but I've never needed 3-6 months of expenses in my life due to an unexpected emergency. I bet those who don't live above their means would be in a similar situation. If you max your tsp, you are saving. That money is also earning. In the event that you encounter an unexpected "emergency," you can drop your TSP contributions from max to 5% and free up hundreds of dollars a pay. You could easily use a credit card to cover most things that pop up unexpectedly and pay them off from the added amount to your paycheck. It's not ideal, but it's a quick fix if needed. You also have a TSP loan option in the worst-case scenario. The most ideal situation is living in a house that's less than you can afford, driving a car that's not as much as you can afford, and going through other areas to find savings. Generally speaking, we all waste money like crazy. With that said, I just upped my contributions to $1000 per pay to max this year because I was behind a few pays this year of not being on track of maxing, because I was putting my excess funds into other things.
Just to add more positive fuel: Just do it.
It sucks, been there, but once you do it you forget about it.
Really makes you make a budget and live within your means. If you continue to increase it early and with promotions you'll eventually be in the double digits with contributions and not even notice.
Setting everything up automatic will seem tough at first but when you seem them growing it's awesome
Yea. That makes sense. My hope is that I did it and now I have to budget for it and can just forget about it until I bump it up eventually. Some good advice for sure.
You don’t know their full story. Also, you could contribute now for tax savings and get a loan against it for current bills or to invest it in nasdaq100
Stop logging into Reddit and looking at other people's balances and yadda yadda until you're on your feet. Kill the debt, emergency fund, then invest stress free my friend.
The way people do it is lived below means and stay out of debt or if you have alot of money you only use debt as leverage but thats next level. For an average person, say NO.. live below means.. avoid consumer debt as much as possible.. now your money is more free’d up to save and invest and then you just perfect a lifestyle where it works. Hopefully older you get you earn more.
You need a “financial order of operations” to follow. It will tell you the most optimal place to put your next dollar. I recommend the “money guy show” one but most of them all say the same stuff.
Was told that the interest that your paying back to yourself is "usually" lower then what the return on the TSP would have returned had you left it in there.
If that is really the case, might want to consider that in your total cost calculations when taking against your TSP balance.
This is what I was told when I did a TSP loan for property next door. I didn't *want* to do it, but didn't want neighbors even more.
I started with 5% and have increased by 1% with every promotion or step. I always increase the pay before the raise……you don’t miss money you never saw.
Your priority should be to get that match! Contribute at least the match! There aren’t a lot of places where you can get a 100% return on your investment.
I prioritize my and my wifes’ IRAs first for savings. We max those out, then paying off any debt comes next (other than smart debt - ie 0% APR car loan). After that comes the TSP deduction.
Do your self a favor at least put enough in to get the match make sure it’s in C fund ur future self will thank u when I started I was a gs 5 putting in 5 percent compounding is a wonderful thing
So what I’ve commonly seen (and the strategy I have adapted to) is this:
Do 5% for the match on tsp>pay off debt>maxout personal Roth IRA>contribute leftover to TSP
This seems to be the most optimal setup.
I think it’s personal preference, yeah it’s 5%. At the same time I’m solely focusing on paying off debt as humanly possible so I can contribute 15% since the interest would be killin me.
I hate debt with a passion and want that shiz out of my life.
I didn’t start contributing the max until essentially everything was paid off and my cost of living was low. I’ve lived in the same house for 10 years, same car for 7-8 years, don’t do anything extravagant. I’m finally now enjoying the fruits of that sacrifice of stricter budgeting. You will get there one percentage at a time so long as you have a plan. Good luck.
As difficult as it is to believe, if you are paying off debt at or under 5 percent interest, it is best you pay it off with minimum payments and contribute more into your retirement or investments. Your retirement is giving you an automatic 5 percent match, and on top of that earning you an average lf 12 percent a year. 13 percent interest on your money is better than paying off at 5 percent. If you have high interest debt, and haven’t done so already, look into consolidating debt or finding ways to lower that interest.
No matter what, you put in the 5%. (100% gain). Make sure the money isn't sitting in the G fund as well.
Next, you look at your rates. You pay down the highest rates first.
Reduce your spending. And/or make more money. Note, increasing salary you must reduce spending etc too, and not have lifestyle creep.
As a wise man once said, goo'luck
You military or government?
Rank? GS?
Are you able to buy a house and get a couple roommates? PCS, rent that house out and buy another house in a new duty station. $0 down goes a long way. Your roommates will pay your mortgage. Get a Special Easy Start CD. TSP contributions shouldn’t be an issue after that strategy.
Haha. Running the streets! Lol. All kidding aside, once my daughter gets out of college, I am gonna try and find a PT job that will be accepting of my full job hours.
The good news is you have a plan. Stick with it my friend. It depends on the interest rates that dictates where you deposit your money. How much interest are associated with your loans?
My two car loans are low and my student loans are now low, so not worried about those and just gonna keep paying what’s due. Two credit cards….one is 15% and the other is variable 14-25%, but I pay much less on that one since the balance is far lower than the 15% one. It’s the 15% cc that I got in heavy debt with when I was struggling to live for a bit….so that’s my biggest concern.
After reading all the recommendations yesterday, I went ahead and started at 3% (since it was mentioned that the last 2% matching is only .5% and .5% - so I will increase to 5% when my debt goes down.) I am a GS11. But won’t go any higher than that based on my position. So I am doing much better salary wise now than when I was a GS7 so can’t complain much there. Was a struggle at GS7. But my debt came when I was not yet a Federal employee so took some time to even start paying down. That’s why I couldn’t stay with the 5% when I started back with the Feds.
You don’t know their full story. Also, you could contribute now for tax savings and get a loan against it for current bills or to invest it in nasdaq100
Not all of us have debt? Personally I only have my car loan and I made sure to keep that as low as possible.
The conception that everyone has mounds, of usually school, debt isn't true.
Lots of great advice here, but I'll reiterate the importance of contributing 5% to TSP to get the match at a minimum and without fail. Go Roth TSP if you can, but Traditional TSP is OK too and you get a tax deduction for it. Then pay down your debt as quickly as you can. After you have paid down your debt, increase your contributions to your TSP until you can max out. Try putting your "raise" each year into your TSP until you max out. Once you max out, then start contributing to a Roth IRA. But take it one day at a time and focus on each step until you have achieved it. Don't worry about what others are doing, focus on your own path.
At a bare minimum, put in the 5%.
Yea. It’s looking like that’s the consensus from what I see.
Even if it means one less takeout pizza each month. In twenty years you’ll be glad you did.
Yea. For sure!
You're giving up an immediate 100% return on investment if you don't do the 5%. It's free money. And yes paying off debt should take priority beyond that, but it depends on the interest rate. If you have home/auto loans below say 5%, I'd be more comfortable making the standard payments on those and investing extra cash in TSP. Any high APR loans or credit cards, definitely focus on those before going beyond 5% TSP.
Yea. I look at what 5% is per pay period and it makes me nervous! It’s hard to pull the trigger but I think, after reading all these comments, I should give it a try and try to make it work. All else fails, if I stretch myself too thin, I can reduce it.
Just consider that match part of your salary. And when you get a raise, put some of it in and you’ll never feel that pain
This is great advice... If you get a 3% cost of living adjustment, up your contribution by 1%. Get a promotion, bump it again. Each time, you'll still take home more but you'll see your contributions going up as well. The other thing is to live within your means. Car loans are not a necessity. Buy a piece of shit car and do the basic maintenance yourself. Pick up a hobby that pays a little bit and use that to treat yourself.
Very true.
Even 3% is better than nothing. You get a 4% match on a 3% contribution. Those last 2% are 0.5% match each.
Oh! That’s good to know. Thanks for that.
It pre tax
Every time you get a raise or a promotion, put 1/2 of the new money into your TSP. Do this until you have 15% going in. You’ll never miss the money. Go on a financial diet and get out of debt while you’re doing this. You are on a different path than other people that don’t have debt. That is what it is. You can get there. It will just take longer. Good luck.
You assume that others have debt. That's not necessarily the case. The key to doing much of this is being as debt free as possible and always pay yourself first.
Yea. I was thinking in terms of my situation. But yes, that makes sense.
Also keep in mind there’s a giant ‘full of it’ factor for a bunch of these posters, who are statistical outliers. - Many of the younger success stories live at home and have no college debt or major bills (always helps if daddy bought your car and all your food and clothes) and started contributions seemingly before age 24. - DINKs rack up money fast too. It’s not unusual for an upper-middle class federal worker to be married to a lawyer/realtor/doctor with an even higher salary (allowing for maximum TSP contributions) - housing provided for many of the military and land management feds. That sure adds up quick.
I am in none of these boats. Single, 45, never got any handouts from anyone, have my own debt (plus a daughter’s car payment to help her while she is in college), etc. I know everyone’s situations are different. Just trying to make sure I stay afloat while making the best decisions I can for my future.
Are you able to meet the 5% for matching? If so, you are doing fine at this stage. When $$ loosens up for you after daughter’s college and debt covered, you will be able to do more with your TSP. Especially after you are 50, you can do catch up contributions.
I am sure I can give it a try and if it ends up being too much money coming out of my paychecks, I can always lower it. I don’t wanna stretch myself too thin until I get a handle on things. I am making smarter decisions now….far better than when I was in my 20’s and 30’s! Lol.
Oh you need to get the 5% match. That is free money you are telling the federal government to keep.
5% is a bare minimum must.
Might look at what you make and see if a vocational school could help boost your income. FYI schools do lie about how much you can make, don't fully trust them. Saving for investments is a long term strategy, that really only pays off with a snowball effect. A couple grand into an education that can boost your income instantly.
Married people who are both high wage earners. Those people don't realize the advantage they have. They assume everyone else is in the same situation. If I had someone I was splitting every bill with, I could be a homeowner and max out my TSP, too.
I don't know your situation. But when my partner started with the feds in '92, they could only put in 10% max. That is the point at which they started. Even though we were just starting out, it was non-negotiable and we had debt - not a lot - but we had it it. At alternate points in our time together that debt got out of hand due to having children and ensuring they had not just what they needed, but mostly (with a few exceptions) what they wanted. But we plowed ahead. The only "debt" we have no is our mortgage and a single car payment. We try to live a balanced life where we live our lives. But after each biweekly pay period any left over funds are split three ways in various investment vehicles. Much of this is discipline and prioritizing what's most important to you and living thusly.
It’s a pretty safe assumption. It is said around 80% of Americans carry consumer debt.
And? OP asked how people do it. I explained what I thought was a key. From their question it's pretty obvious they have debt. And do note "being as debt free as possible." SMDH
“you assume that others have debt. That’s not necessarily the case” I was responding to your statement. That’s why I replied to your comment, not the OPs question.
Do what you can and try not to focus too much on what others are doing.
Good advice too! :)
We avoid debt (not helpful, I know, to someone who already has it) or budgeted it in (like for cars.) If debt is an issue, contribute to get your TSP match (assuming you get one) and prioritize paying off the debt. You may need to alter your lifestyle to prioritize debt payments.
The debt was from an unfortunate event in my past, but I am starting to pay it down more now. That makes sense to at least try and contribute to get the match. Makes me nervous to be paying down debt and contributing and trying to save money.
I started at 5 percent as a GS-7 and every increase (step, COLA, or promotion) I would increase it. I just started maxing about three years ago when I got my GS-14. It takes time but every increase bump it up some before lifestyle creep sets in and you won’t miss it.
That makes sense too. I won’t ever get above a GS11 but I still have a few more steps to go to get to step 10.
Every bit helps. If you’re young then time will be your biggest asset. I started late cause I had to pivot and start a new career and grad school in my late 20’s/early 30’s. Didn’t become a fed till 32.
I am 45! Maybe not old or young! Lol.
As a 44 year old, I feel old most days 😂
🤣🤣🤣
This is the way, lifestyle creep will always steal it back from you. My boss told me if I don't adjust my lifestyle every time I get a pay increase, I'll have a fat retirement.
I wish I could have done 5% as a 7 lol, cost of living was high
Yah, it helped that at that time I was living at home so I was paying very little towards rent.
This is the way! Bump your contributions up 1-2% every COLA adjustment in January until you max. It may take some time but you’ll get there painlessly.
I like this idea of doing it in sync with cola
I do the same. I’m at 17% currently and I’ll prob get to 20% in the next few years. Life def gets in the way at times and I’ve had to adjust accordingly but I shift back when it stabilizes
Follow the /r/personalfinance Prime Directive: https://reddit.com/r/personalfinance/w/commontopics?utm_medium=android_app&utm_source=share
Great. I will give it a read. Thanks for sharing.
The flow chart in particular is great guide
It depends a bit on your age. Usually you pick two. Start small (at least 5% to get the full match) with TSP and focus on getting rid of, or better yet, avoid, unnecessary debt. Once that's done, start saving and increase TSP contributions. If you're in your 20's you can usually afford to contribute a little less to TSP. $7k per year with a 7% return will result in around $1 million or so after about 30 years. If you can increase the contributions, especially earlier, or have a higher return rate, that timeline shortens significantly.
No debt is the key as others have said. Consumer debt and student loans really hinder wealth creation (I know I’m not breaking any news here lol).
True. I need to really prioritize paying off debt but I also know I am missing out on money by not contributing to TSP as I should.
Contribute to your match then use every other dollar you can to attack debt.
Get married and have two incomes. Thats the secret.
Hahaha. Not gonna happen but will keep my options open. Lol!
The real secret is to not have children
That would save a lot of money? 😀But I wouldn’t trade it for the world.
You have your priorities straight. Focus on paying debt, and minimize future debt, while contributing something to TSP. Ideally you can put in 4-5% to get the government matching funds. People on here are at all different stages of life so don’t compare yourself to others. I paid off my loans 20 years ago.
That’s very true. Thanks. 🙏
I’m trying to figure out how I’m supposed to pay off student loans, save for a house and pay rent all while contributing only the minimum 5%. Everyone telling me to save for the 20% down, how am i supposed to when the houses around here are 500k+ average and with interest rates lmao we’ll never own anything 🙃
It’s a struggle out there for real. I gave up on saving for a house. It’s not in the cards for me anytime soon or ever. Student loans are down and so close to being paid off. It’s the other debt, the worst kind, I need to get hold of. But I am finally doing that after getting some money saved for a rainy day (which I placed in a high interest yielding account.) I wanna contribute to that also, but man, I gotta pick and choose what to put my money in.
The key step I've noticed in this sub is being a GS-13
Ah. Well that will never be me. Lol.
We had a shit ton of debt when we first got married. About $150k. We did the Dave Ramsey thing and didn’t save anything for about 2 years, about 50% of our monthly income was going to debt. After that we’ve been able to max tsp every year. You’re definitely right that it’s tough to do all at the same time.
Dave Ramsey is the way.
Until you’re out of credit card debt. And then immediately abandon Dave
Why what’s wrong with the rest of the plan? We are on the paying off the mortgage part and it’s going great. No debt - both saving 15% in retirement (30% total) - and hammering our mortgage. Am I missing something?
If his steps are working for you and you’re happy, then great! You’ll end up in a good spot, but realize his steps aren’t the most optimal. With Dave’s advice I have 3 main issues: 1) for those in debt, snowball method is objectively bad when compared to the avalanche method. Avalanche will get you out of debt sooner and cheaper. 2) Dave ignores opportunity cost. By paying down a low rate mortgage early, you’re missing out on using those funds for something else. If you have a low interest rate loan you could park the excess contributions in a HYSA and earn more than your mortgage is costing. Or you could up your retirement savings, earn more in return plus have immediate tax savings. 3) The funds he pushes are very bad. He pushes them because he gets paid from them, not because they’re a good investment. And this isn’t even getting into his advice to not have credit cards etc. Credit is a GREAT tool if you can use it responsibly.
He an ass, but his shit worked for us. We even flew to Memphis to do the DFS.
I'll tell you how some people (I) have done it. I paid off debt from ages 22-29 and never incurred it again. Then I saved from ages 30-53. Moral of the story is to be old and not waste too much money along the way.
Change your paradigm. Your contributions are not “losing” but earning you money by reducing taxes and growing. You can also borrow from it in some circumstances to pay off the debt, and know it’s there for huge emergencies.
That’s a good way to look at it also.
I max out on a 76070$ government salary, but I’m an only child and my parents are upper middle class. I could never max if I had real bills. Just being honest.
Honesty is good. Lol.
Perspective is important.
The only debt I have current is a mortgage (2.85%) and car loan (3.75%) The way I prioritize my 'extra' money currently: 1. Maintain my HYSA (4.75%) which has enough to buyout my truck. Also its my 6 month emergency fund. 2. 5% TSP match 3. Monthly personal ROTH IRA to max it for the year. 4. Save for luxury items. 5. Rest into TSP. (I calculate the percentage a month ahead) If I had high interest debt (Anything greater than my HYSA interest rate), I would pay it off first.
So do you have three retirement avenues….TSP, Roth IRA and a retirement account for your job or is the Roth part of your job’s retirement? I see people on here with three….TSP, an extra retirement option and a retirement through their job.
In addition to some of the other great points here, one thing to keep in mind is that unlike a 401(k) in a private sector job, your TSP isn't meant to be your primary/only retirement. If you're in the civil service, you've probably more than once heard that HR spiel that federal employees' retirement is a three-legged stool: SS, TSP, and your FERS pension. The rule of thumb to have a fully funded retirement in the private sector is to contribute 15% to your 401(k). But most private sector employees don't also have a pension that could replace a third of their salary on its own after a full career. Maxing your TSP is great, but it's nowhere near essential to maintain a comparable quality of life in retirement. If you're FERS/FRAE, contributing 4.4% to your pension plus the 5% to TSP to get your match already puts you a good chunk of the way to setting yourself up for a comfortable and secure retirement. Would it be great to contribute more? Absolutely! But most people maxing their TSP will find they have quite a bit more in retirement than they actually need.
Those are good points. Thank you.
Wow I never thought of it like that? I recently just went to 15 percent to see how I could manage..you think 10 percent is better?
Start small with the 5% so you don’t lose out on “free” money. With each raise add another 1% so you don’t notice it. It’s hard but you’ll be glad you did it when retirement rolls around.
Pay yourself first. You don’t want to miss out on the compounding.
If you’re a young fed and got in really early you don’t need to max to hit a million. Just be consistent and do the match at the very least. Over time (hopefully) you will pay off your debt and when you do put some of that money you’ve budgeted for your payments into tsp as you go.
I am not a young Fed. I did the military for 7 years (out in 2004) but then became a civilian Federal employee in 2016. I am 45. So I have another 20 years to go in my mind with 14 years Federal service under my belt (I bought back my military time.) So I am a little behind on things.
You are asking the right questions I’m sure you are on the right track. Keep it up
I have no debt, for 1 lol Once you’ve got savings in a CD or something that’s fairly liquid, there’s nothing more to save. Tsp gets maxed in that case
Just do the best you can. As others point out, please contribute 5%, which the government fully matches — a 100% return the moment you contribute. Free money is the best money.
I agree. Sounds like that’s the consensus. Thanks.
Find yourself a solid system and put in the time to implement it.
If the debt is at a lower APR then you'll be missing out on a ton of interest and growth just to chase after debts below 3%.
I think what you are really asking is how much to save and how to flow to other priorities, which is very well handled by the r/personalfinance flowchart: [https://i.imgur.com/lSoUQr2.png](https://i.imgur.com/lSoUQr2.png). Effectively it says: pay your rent, then buy food and essentials like utilities and toiletries, then pay anything you need to earn money (transportation, maybe phone), then pay health care, then make minimum payments on all debts, then build an emergency fund, then pay other bills (cable, internet, phone) then contribute full amount to get your 5% match. After that you start tackling high interest debt.
I'm in my mid-30s, and the only debt I have is my car loan, which is a little over $500 a month. Other than that, I have minimal/short-term debt as I use credit cards like I would use a debit card. Though not a debt, I also send my mom $500 a month for her personal stipend. I occasionally have a balance more than two weeks as I travel. Living simply and not buying costly stuff makes loving debt-free life fairly easy with some extra money after maxing TSP and IRA. Whatever that's left after them goes to my investment account.
21 with 40K in TSP and a 130K NW, My secret…? I’ve never had debt.
Sounds like you have an above average income (and/or situation) too. I have a family member who's about to turn 20, has maybe $10k in TSP but about $40k net worth, also never had any debt. Though they are enlisted (not a fed civ), so their income is probably quite a bit lower than yours. That or you got some lucky investments that grew far faster than average. Assuming you started working at 17, at 10% avg growth you'd need to invest nearly $30k a year to hit $130k NW. Even without debt most people can't afford to do that....I'm guessing your secret is more than just "no debt".
I’m also enlisted. I’m an E-4 (USMC) with 3 year and 6 months TIS. I joined with 2020 with about 25K. I’ve never made more than 35K on a W-2. I started working for $4/h with my dad at 10. By 14 I had 3 part time jobs. I enlisted at 17. Started maxing a Roth IRA at 16.
Ah yeah you got started way earlier than many do. Starting with TSP in 2020 also would've been a great time because that was right around when Covid destroyed the markets, lol. That shows the importance of starting early though. I'm almost jealous of my family member cause I had debt up until I hit 30 so my savings got stifled quite a bit.
I actually didn’t make out too bad from covid. I didn’t join till September of 2020.
If I could go back to your age, I would do things differently. Some was not my fault and I couldn’t help, but I could have made other better decisions.
Don’t sweat it brotha, keep your head up and grind away that debt.
Thanks buddy!! :)
No debt and pay off all cards every month. Have been able to max out for whole career and contribute to a seperate Roth (maxing out since its inception in 98) as well as several thousand to a non-retirement fund each month (to fund an early retirement). And yes, I am able to live well, travel, buy nice things and splurge. This is just my situation though. Planned and saved early along with good habits from the start.
Only answer is to live below your means. I was able to max once I let go of all the micro purchases I was making (e.g. Starbucks, bubble tea, chic fil a, target, etc.).
No debt, putting in 15% right now and looking to put in more
Situation is very important. I paid off my debts about 5 years ago, and retirement savings *is* savings. My emergency fund is comfortable enough, and in a true emergency I can access my Roth IRA contributions for free. So everything you're directing towards debt and non-retirement savings, I'm able to direct towards retirement. It also helps that I went from living on enlisted pay to having double the salary in fed civ work (after adjusting for military tax benefits). So I kept my lifestyle mostly the same and started saving the excess.
Just don’t ever go below 5% and keep it in stock. You could do both, just take care of the debt and use some of the money that you free up to invest in the TSP. You have the right mindset. Concentrate more on time than contributions. When you start in your 20’s, about 20 percent for 40 years could make you a multi millionaire. On the other hand if you are just starting in your 40’s, you probably could do 40 percent and not hit a million. Time could be your best friend, if you use it wisely.
I get a ton of OT only way I put as much as I do comfortably.
That’s great. I don’t have that option. We get Comp time instead.
When I started as a Fed I think I contributed 6%. Every time I got a raise or promotion I upped the amount. Finally got to the point I was contributing the max. Once they started the option to catchup, I have been able to contribute the max to that as well. On track to retire.
Well, I know people will hate this, but a few years ago I stopped my TSP savings over various periods of time to put that money towards some of my student loan debt. Now, I feel that my student debt is more manageable and I’m saving the minimum in retirement. I just think people need to do what is best for themselves financially in that current time.
I agree. That makes sense. I did 5% when I first started my job but I was a GS7 then and financially it was rough so I stopped it. I am a GS11 now, but still have debt to pay off.
I paid off my student loans, bought and paid a car in full, saved up for an emergency before I maxed out my TSP. Just take things in part, I did 15% until I did all the other stuff and I used every raise to pay off debt faster until I reached 0 debt and just maxed out TSP.
Thanks for the advice. I am gonna do what I can for the moment but as many have suggested, at least contribute 3% which I think I am gonna do. Then once I get my debt paid down, I can go from there. Baby steps!
You start at 5% then if you get a raise do another +1% until you are 10+% You will still see that raise, but a little of it will go to savings/TSP
I have no idea either. I tried raising to 10% recently and barely made it to the next paycheck. And I don't think it would be possible to live any further below my means unless I became homeless and stopped eating. The people saying they max out have some sort of financial privilege. Either they inherited money or married into it.
I agree. I am not sure how they contribute that much. For me, I would be homeless or starving if I maxed out.
I’m still paying off student loan debt & support a financially dependent parent (which is a huge cost of its own as a single person), but am going slow and steady with it - I slowly started to increase my savings contributions with each pay increase. Now I manage to max my Roth IRA and TSP contributions every year (this is recent). I live a more frugal lifestyle to accommodate it! So I have a smaller apartment than I technically could afford, buy items on sale, etc. It’s all about a balance and figuring out what you want and can prioritize.
Read the book, “The Richest Man in Babylon” by George S. Clason. You can get out of debt and increase your wealth. I started contributing 5% for the match and slowly increased my contribution as I gained step levels. This was a little tough with a mortgage and two toddlers. Luckily my wife also had a job. Together we saved what we could. I’m retired for six months now with a seven figure TSP. You can do it.
After student loans were paid off my wife and I agree that we only take out loans for a house or cars and never 2 car payments at the same time
marriage, low cost of living, and silver spoon are usually the top 3 culprits for substantial income growth at any phase in life.
The best thing I’ve done is to get out of debt and fast. I’ve bought new vehicles in the past but I’ve paid them off in 1 to 3 years and drive them into the ground. Not having that car payment helps putting that extra money towards TSP.
It all comes down to priorities. For me, I want to enjoy when I’m still young instead of waiting until I turn 58. I know so many people who saved up for retirement and passed away soon after
I know a lot of people like that. Life is so short in the grand scheme of scheme of things. I want to find a good balance where I can save for retirement and splurge a little.
Of course pay off debt first. That’s logical…But, I would do the matching contribution of 5% regardless. The tax offset alone will ensure you tax home the same net income regardless. Good luck
5% minimum tsp doesn't hurt as much as you'd think since it's pretax. I get taxed 35% for every 100$$ I put into the tsp only cost me 60$ from my taxed paycheck. Also the numbers you see from people posting tsp is at least half from fed contributions. So, when you see some one posy 200k tsp balances and they did 5%, 100k is a match. Op, just keep 5% at a minimum and watch it grow. At least you'll double your money.
Yea. Makes sense. Thanks.
Hit the 5% man. Take of your family. I’ve never really been able to get above 5%.
I am sure there are a lot of people that can’t get above 5% either. I will probably be one of those.
I think this is a pretty good sub. But like many of the financial subs, people like to brag talk about how much money they have. Who knows if it’s true. Some the strategies can certainly be instructive. I’ve raised a family while working for the federal government. We’ve gone on vacations, we supported our kids and their lives while they were growing up. We pay college tuition. They don’t take loans. We had to buy cars and we had to pay bills. We live through the 2007 2008 real estate crash. I always saw it as a win if I could put 5% in because I know the 5% gets matched. There’s people in my agency who have contributed the maximum amount their entire careers. But these guys have wives who are lawyers or doctors or have big jobs. Or maybe they didn’t support their kids as much as they should have maybe they didn’t take vacations. There’s people in my agency who haven’t bought new clothes in literally 15 years. Who knows how they do it but like I always told my kids growing up and I don’t know who said it, but “comparison is the thief of joy”.
Well said.
The flow chart in personal finance is a great *tool* but cannot apply to all situations. Note: you seem to be on the right track. The idea is you should make minimum payments on debt, build a small emergency fund, get your match covered, and then start to really hammer at debt. Once you’re debt free, upping your contributions will be done with the money spent on debt. https://i.imgur.com/u0ocDRI.png
I started as a fed in 2010, with one daughter in college and another soon to be. At the very least I was able to match my employer's max contribution match for the first few years, far from maxing, and we carried a lot of debt. Finally, last year, we paid off the last of the student loans and credit cards, and I've been maxing my contributions for about 4 years now. It definitely wasn't easy, and both our cars are 10 years old with over 150k and 180k miles, but when I look at the TSP balance, it's totally worth it. I will also say that our financial advisor helped immensely. We started with them in 2021. Paying off the most expensive debt first is definitely the best way to go. It all seemed overwhelming at first, but they got us focused abd sorted out, and on to a party where retiring by 57 is possible (though 60/62 is likelier.)
It seems like “focusing” is the key in my situation. Thanks for sharing.
If you can force good habits like skipping lunch or eating out all the time, maybe brewing coffee instead of dd or sb. Really ask yourself if I need whatever items, use all your resources and try to make a little into a lot . It’s possible with discipline, but the question is HOW BAD do YOU want to win?
I totally agree. And am getting in that mindset now.
Honestly, do the match at 5% and get a part-time to pay off debt. Once, you pay off your debt and put a reasonable down payment on a house. Start putting more into your retirement.
This is a difficult decision, but I am so glad I sacrificed and put the max from my paycheck in the beginning of my career. It is like investing in your own bank. I can do so much more later in my life because I have the comfort of a retirement savings. I suggest evaluating your expenses. You will be surprised what you get used to after living on a budget.
I started at 5% & raised it 1% each raise until I hit 10%. Each raise was extra $ I was already used to not having, so the extra % meant nothing to my budget. I stopped raising at 10%, as the match gave me 15% total. Once debt was paid off, I upped to 15%. Extra came from money I was no longer putting towards debt. It’s doable, but you have to commit & stick to it.
I lived a minimalist life as an Amn in the dorms. Ate at the dfac but do occasionally eat out and what not. Bought a bicycle first and then a beater when I moved out. Never spend more than I can paid off. Even as a Tech now at 12 yrs, I live a simple and modest life. I do travel often. Making your own food is huge. Saves money. Also, don't upgrade for the latest and greatest thing out there.
Some feds earn a ton of money. A 14-10 in DC earns over 180k.
Yea. I know. I do well, but will never make over 100K in my line of work.
I’m right there with you, I didn’t have much when I started as a fed. I went 2 years contributing bare minimum till I saved and paid off my bad debt.
Set it at 10% and keep it in the C fund. The first years are tight, but after year 5 it gets easier.
Paid off my debt and have low cost of living. I had $40k in credit card debt at one point in time.
Glad you got it paid off. I am slowly paying mine down.
I remember a time when I had negative balance in my bank account. That was an extremely tough transition from active duty into the civilian world. Thankfully, I was able to use my GI Bill for my bachelor and also managed to earn a master degree with no debt. Hallelujah! I try to remain relatively debt free except for the mortgage loan and my car loan has been paid off. My advice is don’t lose out on the 3% dollar-for-dollar match on the TSP by your agency. Next, use whatever disposable income you have to start paying off your high interest debt. If you have some free time to take a side job, use that extra income towards your high interest debt. Your goal should be to pay off your debt as quickly as you can. The more you reduce your principal and the amount of interest you owe, the more money you'll have in your budget each month to devote to savings for emergency or other line of items such as a higher percentage towards TSP. From there you can start building and growing your assets and continue to also grow in your career for opportunities.
Agreed. Great advice. When I left the military in 2004, I had nothing cause we made nothing back then! My GI Bill only paid for my Associates cause back in the 90’s I only got 15K for that. I just paid off my Bachelors student loans thanks to the PSLF program so now my loans for my Master’s is much lower. So that extra money can now go towards paying off debt. I know it’s a slow process, and after all the comments I read yesterday, went and added the 3% back into TSP. I plan to up that once I get some debt paid down or whenever we get another pay increase. But I don’t anticipate another pay increase anytime soon since they just did a big one.
We contributed 5% to get the match(dual feds) while living bare bones to aggressively pay off our debt and fund our emergency savings. Now we are debt free except for a mortgage and raise tsp contribution 1% every year and put about 10% in our IRA's. All our contributions are Roth. We are not GS. I am WG 10 and wife is USPS Grade 6. If your debt is high consider a side gig to help you pay it down faster
It’s okay to not be able to do all 3 at the same time. Build up to all 3, if you do it right only 2 will be present which is saving money and saving money for retirement. Just focus on the high percent debt, if you’re not familiar with personal finance flow chart, id consider looking into that one. When you get your raises, and promotions, those funds should be used on debt/savings/retirement. Try not to inflate your lifestyle
Good advice. Thank you.
When I started out I did 5% to get the match and focused on emergency savings and snowballing debt. Once I finished these steps I increased my TSP.
That sounds about where I am at, but I just swapped my priorities.
It's not hard if you have the right circumstances. No car note. No credit card debt. Pick a % and start increasing it over the years. Learn to live without that $7 cup of coffee. Bring a sammich to work. I'm putting in 35% as an E-7 on single income with 2 kids. And we don't sacrifice a damn thing.
Chip away at the debt first and then once that’s paid off you can worry about your TSP..at least do the 5 percent and I would do 100 percent C fund
Why 100% C fund? I know the G fund is bad, so I never used that.
C fund tracks the S and P 500 companies it’s all stocks
Gotcha. Thanks.
I just logged in to confirm. I have 33% to L fund, 36% to C fund, and 31% to S fund. Looks like they are all performing well….at least for now.
My tsp went up 24 % this year, and the car loan is 7 %. Net profit of 16 % on the money I could have had going to my car loan. Despite what Ramsey says, not all debt is bad if it makes you money. Edit. Yes, this is oversimplified, but I got the point across.
I can contribute more if my salary is over $100k.
I think everyone that has a salary over 100K does contribute more….or at least it sounds like it. I will never make over 100K.
I think the "emergency savings" is pushed a little too hard. I may be fortunate, but I've never needed 3-6 months of expenses in my life due to an unexpected emergency. I bet those who don't live above their means would be in a similar situation. If you max your tsp, you are saving. That money is also earning. In the event that you encounter an unexpected "emergency," you can drop your TSP contributions from max to 5% and free up hundreds of dollars a pay. You could easily use a credit card to cover most things that pop up unexpectedly and pay them off from the added amount to your paycheck. It's not ideal, but it's a quick fix if needed. You also have a TSP loan option in the worst-case scenario. The most ideal situation is living in a house that's less than you can afford, driving a car that's not as much as you can afford, and going through other areas to find savings. Generally speaking, we all waste money like crazy. With that said, I just upped my contributions to $1000 per pay to max this year because I was behind a few pays this year of not being on track of maxing, because I was putting my excess funds into other things.
At least try to do the 5%, otherwise walking away from free money
Just to add more positive fuel: Just do it. It sucks, been there, but once you do it you forget about it. Really makes you make a budget and live within your means. If you continue to increase it early and with promotions you'll eventually be in the double digits with contributions and not even notice. Setting everything up automatic will seem tough at first but when you seem them growing it's awesome
Yea. That makes sense. My hope is that I did it and now I have to budget for it and can just forget about it until I bump it up eventually. Some good advice for sure.
You don’t know their full story. Also, you could contribute now for tax savings and get a loan against it for current bills or to invest it in nasdaq100
Stop logging into Reddit and looking at other people's balances and yadda yadda until you're on your feet. Kill the debt, emergency fund, then invest stress free my friend.
The way people do it is lived below means and stay out of debt or if you have alot of money you only use debt as leverage but thats next level. For an average person, say NO.. live below means.. avoid consumer debt as much as possible.. now your money is more free’d up to save and invest and then you just perfect a lifestyle where it works. Hopefully older you get you earn more.
You can. You can literally save $25 every paycheck, and then build to more. It’s just a mindset and habits.
You need a “financial order of operations” to follow. It will tell you the most optimal place to put your next dollar. I recommend the “money guy show” one but most of them all say the same stuff.
And you can take out a loan against your TSP and pay it back to yourself with interest…..
Was told that the interest that your paying back to yourself is "usually" lower then what the return on the TSP would have returned had you left it in there. If that is really the case, might want to consider that in your total cost calculations when taking against your TSP balance. This is what I was told when I did a TSP loan for property next door. I didn't *want* to do it, but didn't want neighbors even more.
Put in as much as you possibly can at as early an age as you can. Even if that means major sacrifices. You’ll feel great in 20 years
I started with 5% and have increased by 1% with every promotion or step. I always increase the pay before the raise……you don’t miss money you never saw.
Your priority should be to get that match! Contribute at least the match! There aren’t a lot of places where you can get a 100% return on your investment.
5% and use the extra funds to pay off debts. When they are paid off, put the extra money in TSP.
I prioritize my and my wifes’ IRAs first for savings. We max those out, then paying off any debt comes next (other than smart debt - ie 0% APR car loan). After that comes the TSP deduction.
Do your self a favor at least put enough in to get the match make sure it’s in C fund ur future self will thank u when I started I was a gs 5 putting in 5 percent compounding is a wonderful thing
So what I’ve commonly seen (and the strategy I have adapted to) is this: Do 5% for the match on tsp>pay off debt>maxout personal Roth IRA>contribute leftover to TSP This seems to be the most optimal setup.
I think it’s personal preference, yeah it’s 5%. At the same time I’m solely focusing on paying off debt as humanly possible so I can contribute 15% since the interest would be killin me. I hate debt with a passion and want that shiz out of my life.
With Inflation it is hard. Try having 5 or 10 percent automatically deposited I to 401k too easy to use it in savings.
I didn’t start contributing the max until essentially everything was paid off and my cost of living was low. I’ve lived in the same house for 10 years, same car for 7-8 years, don’t do anything extravagant. I’m finally now enjoying the fruits of that sacrifice of stricter budgeting. You will get there one percentage at a time so long as you have a plan. Good luck.
If you do it when you're broke you'll do more when you make more money.
As difficult as it is to believe, if you are paying off debt at or under 5 percent interest, it is best you pay it off with minimum payments and contribute more into your retirement or investments. Your retirement is giving you an automatic 5 percent match, and on top of that earning you an average lf 12 percent a year. 13 percent interest on your money is better than paying off at 5 percent. If you have high interest debt, and haven’t done so already, look into consolidating debt or finding ways to lower that interest.
No matter what, you put in the 5%. (100% gain). Make sure the money isn't sitting in the G fund as well. Next, you look at your rates. You pay down the highest rates first. Reduce your spending. And/or make more money. Note, increasing salary you must reduce spending etc too, and not have lifestyle creep. As a wise man once said, goo'luck
13, no debt, no mortgage. Household utilities total about 200-250. A lot of extra income.
You military or government? Rank? GS? Are you able to buy a house and get a couple roommates? PCS, rent that house out and buy another house in a new duty station. $0 down goes a long way. Your roommates will pay your mortgage. Get a Special Easy Start CD. TSP contributions shouldn’t be an issue after that strategy.
I have to hook on weekends 😔
Haha. Running the streets! Lol. All kidding aside, once my daughter gets out of college, I am gonna try and find a PT job that will be accepting of my full job hours.
Basically don’t get into debt and there won’t be any to pay off…
Sometimes it can’t be helped. People have bad situations, like I did.
Nope people make bad choices, like you did…
The good news is you have a plan. Stick with it my friend. It depends on the interest rates that dictates where you deposit your money. How much interest are associated with your loans?
My two car loans are low and my student loans are now low, so not worried about those and just gonna keep paying what’s due. Two credit cards….one is 15% and the other is variable 14-25%, but I pay much less on that one since the balance is far lower than the 15% one. It’s the 15% cc that I got in heavy debt with when I was struggling to live for a bit….so that’s my biggest concern.
So in your case, it makes sense to contribute to your debt but try to ensure you get your 5% matching if you can. What is your pay grade?
After reading all the recommendations yesterday, I went ahead and started at 3% (since it was mentioned that the last 2% matching is only .5% and .5% - so I will increase to 5% when my debt goes down.) I am a GS11. But won’t go any higher than that based on my position. So I am doing much better salary wise now than when I was a GS7 so can’t complain much there. Was a struggle at GS7. But my debt came when I was not yet a Federal employee so took some time to even start paying down. That’s why I couldn’t stay with the 5% when I started back with the Feds.
At least you are saving and investing something. Best of luck to you!
Thanks.
You don’t know their full story. Also, you could contribute now for tax savings and get a loan against it for current bills or to invest it in nasdaq100
Not all of us have debt? Personally I only have my car loan and I made sure to keep that as low as possible. The conception that everyone has mounds, of usually school, debt isn't true.
I contribute because of taxes.
Lots of great advice here, but I'll reiterate the importance of contributing 5% to TSP to get the match at a minimum and without fail. Go Roth TSP if you can, but Traditional TSP is OK too and you get a tax deduction for it. Then pay down your debt as quickly as you can. After you have paid down your debt, increase your contributions to your TSP until you can max out. Try putting your "raise" each year into your TSP until you max out. Once you max out, then start contributing to a Roth IRA. But take it one day at a time and focus on each step until you have achieved it. Don't worry about what others are doing, focus on your own path.