Future TSP Millionaires: Pay Yourself First
Today, about 20,000 federal and postal workers have Thrift savings plan accounts that are worth $1 million dollars (or more). Most people got this far by investing in the stock indexed C and S funds regularly during both good times and times of the Great Recession, which gave them the value of compounding. This is a long term process and most of these TSP millionaires have been working toward this for at least 29 years or more. The 5% match implemented by the government has been helpful, but paying yourself first is the most important thing.
Abraham Grungold’s career first started in 1985 as a GS-9. It took him 20 years to reach GS-14. All through the process he has made sure to pay himself first. He began contributing 15 percent of his salary in the catch-up program to the Thrift Savings Plan. His approach to the C and S markets have remained aggressive, and when the market fell, he never slowed down. Even before his career he paid himself first by contributing to a personal IRA.
Although it’s not usually recommended to borrow against your TSP, Grungold did so anyway in order to finance his primary residence along with his investment properties. He chose to do this in order to pay himself back, and it was equal to the G-Fund. He personal strategy was to pay himself back the interest instead of giving it to the financial institution directly.
By the time he reached his 32nd year as a FERS employee, had had reached all of his financial goals. At this time he is living debt free and his IRA and TSP are higher than he could have imagined. It may be difficult for others to understand how this could all be possible. On top of paying himself first, he had always lived within a budget and didn’t spend more than he had in his bank account. Many people don’t consider the benefits of living on a budget and consistently monitoring expenses.
Financial success is not impossible. In fact, it can be achieved pretty easily. It just takes a little work and a constant mindset of Paying Yourself First.
We recommend reaching out to a financial professional if you have questions on your personal Thrift Savings Plan or need assistance with financial planning in any way.