1. Airman & Family Readiness Center

2. Workshop Overview Budgeting Credit Management
Saving: what for and how much?
TSP
Financial Resources

3. Budget 70-20-10 Ratio Emergency savings Balance income –vs- expenses
Make budgeting a family affair
Track your spending
Review and adjust as needed

4. Discretionary Spending Expenses Total Summary Monthly Balance Summary
Create a 12-Month Budget
Personal 12 Month Budget Plan
Current
Projected
Estimated
Actual
Difference
Net Income
$2,200 $0
2,200.00
$3,400
Extra Income
0.00
Total Income
Expenses
Item
Estimated Cost
Actual Cost
Savings
$300
$400
Mortgage/Rent
$700
Electric
$100
Gas
$50
Water/Sewer/Garbage
$70
Cell Phone
Car Payment
$250
Credit Card 1
Credit Card 2
Insurance
$120
Cable/Internet
Subtotals
$870
$1,890
Discretionary Spending
Groceries
$200
Dining Out
Entertainment
Misc. Spending Money
$1,100
Expenses Total Summary
Totals
$1,570
$2,990
Monthly Balance Summary
Remaining Balance
$630
($1,570)
$410
($2,990)

5. Cash Flow How bad does your neck hurt? What is cash flow?
When are your bills due?
What is your baseline?
Budgeting is a plan for your money, Cash Flow is what you see in your check register.

6. Credit Why do we need credit? DDIR Consolidation Paying the minimum
Check your credit report
Security Clearance

7. What’s your Vision?

8. What’s Your Number?

9. Thrift Savings Plan Administrative Costs of TSP No cost to enroll
No TSP fee to withdraw or transfer account
Allowed 2 interfund transfers per month within the funds. After the first two, your interfund transfers can only move money into the G Fund
Low management fees

10. TSP Funds There are SIX investment options
G Fund (U.S. Treasury Security )
F Fund (Barclays Capital U.S. Aggregate Bond Index)
C Fund (S&P 500 Index)
S Fund (Dow Jones U.S. Completion Total Stock Market Index)
I Fund [MSCI EAFE (Europe, Australasia, Far East) Index]
The “L” Funds (lifecycle funds)
All are participant directed

11. Evaluate the Cost Retail Mutual Funds 401(k) Plans TSP
$0.29 per $1,000 1
$4.10 per $1,000 2
$7.40 per $1,000 3
Retail Mutual Funds
401(k) Plans
TSP
For TSP participants, the expenses are far lower than any other comparable plans
This slide shows us a comparison between the TSP, the average of over (k) type plans in the private sector, and the average retail mutual fund in which might invest inside an IRA
If your account balance is $1,000, it’s a difference 29 cents vs. $4.10 vs. $7.40 over one year
If your account balance is $100,000, it’d be $29 vs. $410 vs. $740
The real difference becomes apparent when we look at the effect of compounding
1 Net cost to TSP participants, averaged across all funds
2 All-in, participant-weighted cost of large 401(k) plans. Source: Deloitte, Inside the Structure of Defined Contribution/401(k) Plan Fees, 2013
3 Asset-weighted average expense ratio for equity mutual funds. Source: Investment Company Institute, 2014 Investment Company Factbook

12. (Assuming 7% annual rate of return)
How About Cost of Time?
$377,425
.029%
$336,477
401k .41%
$307,361
Mutual .74%
Assuming:
Balance of $50,000
7% average annual rate of growth
30 year period
Applying the expense ratio of the TSP, the average 401(k) type plan and the typical retail mutual fund
The expenses of a plan can have a lot of negative impact on one’s account balance
This is one of primary benefits of being able to participate in the TSP
(Assuming 7% annual rate of return)
Years 30

13. Roth vs. Traditional Contributions
May have two types of balances in your TSP account
Money already in your account when you begin making Roth contributions will remain part of your traditional balance
The Treatment of…
Traditional TSP
Roth TSP
Contributions
Pre-tax
After-tax1
Your Paycheck
Taxes are deferred, so less money is taken out of your paycheck.
Taxes are paid up front, so more money comes out of your paycheck.
Transfers In
Transfers allowed from eligible employer plans and traditional IRAs
Transfers allowed from Roth 401(k)s, Roth 403(b)s, and Roth 457(b)s
Transfers Out
Transfers allowed to eligible employer plans, traditional IRAs, and Roth IRAs2
Transfers allowed to Roth 401(k)s, Roth 403(b)s, Roth 457(b)s, and Roth IRAs3
Withdrawals
Taxable when withdrawn
Tax-free earnings if five years have passed since January 1 of the year you made your first Roth contribution, AND you are age 59½ or older, permanently disabled, or deceased

14. Required Minimum Distributions
Roth TSP vs. Roth IRA
All Roths are not created equal
TSPs and IRAs are subject to different federal codes
Roth Employer Plans
(e.g. Roth TSP)
Roth IRA
Income Limits
Available to all participants regardless of income
Not available to tax-payers with income above certain limits:
MFJ - $186,000 to $196,000
MFS - $0 to $10,000
All others - $118,000 to $133,000
Contribution Limits
$18,000
(plus an additional $6,000 if at least 50 years of age)
$5,500
($6,500 if at least 50 years of age)
Required Minimum Distributions
RMDs apply to both Roth and traditional balances
Not subject to RMDs until the IRA owner dies
Rollover Rules
Can be rolled into another Roth 401(k) OR a Roth IRA
May NOT be rolled into a Roth 401(k); a Roth IRA can only be rolled into another Roth IRA
MFJ – married filing jointly
MFS – married filing separately

15. Factors that affect TSP Balance
FERS: contribute enough to get full agency match
Allocate contributions to investment funds based on appropriate balance of risk to return
Periodically:
•Review account performance and long-term strategy
•Rebalance and reallocate based on review
Or, choose a Lifecycle Fund – rebalancing and reallocations occur automatically
MFJ – married filing jointly
MFS – married filing separately
Helpful

16. Factors that affect TSP Balance
Frequent Interfund Transfers
• Short-term, tactical moves using index funds is an unsuccessful long-term Investment strategy
Using TSP for other savings
• Loans
-Temporary depletion
• Financial Hardship In-Service Withdrawals
-Permanent depletion
MFJ – married filing jointly
MFS – married filing separately
×Harmful

17. Maximizing Your Match MFJ – married filing jointly
MFS – married filing separately

18. A&FRC Financial Resources
One-on-One Financial Assistance
Spending Plans
Debt Management
Extended Absence Financial Plan
Power Pay
Monthly Workshops
MyFICO Service
Emergency Assistance
Air Force Aid Society (AFAS)
Army Emergency Relief (AER)
Navy Marine Core Relief Society (NMCRS)
Coast Guard Mutual Assistance (CGMA)
Interest free loans, repaid through direct allotment to cover basic living expenses, emergency travel and vehicle expenses.
Falcon Loans: $750.00

19. Questions? Website: Facebook: Volunteer Facebook: Eglinvolunteer App:
502 W. Van Matre Ave., Eglin AFB, FL, 32542
Mon-Fri
Website:
Facebook:
Eglin
Airman & Family
Readiness Center
Volunteer Facebook: Eglinvolunteer
App:
MyMC2