Woohoo! I finally paid off the tsp loan I took out back in March. The last transaction cleared the tsp website at yesterday's closing prices and are back in my account. For some background on my ?logic? behind the move and other interesting tidbits see boghies thread:
http://www.tsptalk.com/mb/showthread.php?t=4474
Here's the skinny: I suppose my tsp loan falls into the "scenario #1" option. I didn't buy a brand new car with it, instead paying off high-rate credit cards, but did it because that move had a higher personal value to me than to watch my contributions (potentially) continue to lose money while drowning in consumer debt.
As it turns out, I would have done better by leaving the money in tsp and enjoying 100% of the rally vs. only having half of it in for the last 5-6 months, and would have paid the cards off at about the same time by being more patient.
Here's another unintended consequence: when i took the loan out about 55% of my balance was available to borrow due to previous contributions before i became eligible for the employer 5% match. Now that it is all paid back only 51% of my balance can be borrowed against. While 'my money' was out the 'free money' was enjoying a great run + compounding. Loan repayments only got the 2.875% interest gain i was paying. So that will always have a negative effect on lifetime returns, lost both the current and future opportunities of getting a big run-up and leaving those increased gains in for another 20 years to work their magic. Not a very high powered mathmatical calculation there, but the effects are real and something to be aware of if you are considering tsp loans.
Now that debt is down and i have more disposable income, I increased my payroll contributions to 10% + 5% match so that should help some with my retirement goals. I think birchtree pointed that out to me when i first joined this board: it's all about aquiring lots of shares over a long time horizon, the payoff is way down the road.
Now let's hope i can increase those future returns by smart and timely trades a couple of times a month.
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