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Question Headline:

Should I borrow from my thrift savings plan (TSP) to pay off $45,000 of credit card debt?

Question Body:

I am 58 years old and would like to think about retiring in the near future. I have $45,000 worth of credit card debt that I am only able to make minimum payments on at this point. Should I borrow from my thrift savings plan (TSP) to pay off this debt? I also understand that at age 59.5 I can make a one time withdrawal of 50,000 which would pay it off. I have no money put away for emergencies.

Answer:

Yes! Yes you should. If you can knock out all your credit card debt in one move you should do it. It is so incredibly important that once the debt is gone you reform your habits and budget, budget, budget, and start saving and living within your means or you will simply rack up credit card debt again and be back in the same position down the road. Based on the little bit of detail you provided you should probably cut up all your credit cards after you pay them off, and certainly you should stop using them completely. You should budget out how much you will save and spend monthly and make the savings automatic. Example: say you bring home $5,000 per month and you have determined that you have $1,200 in fixed living expenses and have budgetted out that you will spend another $1,000 a month in additional expenditures, and $3,000 in savings/investment. Have the $3,000 in savings/investment immediately/automatically electronically go to the appropriate accounts so that you are forced to stay within your planned budget.

– Wyatt Swartz

– 9/7/2018