All we had this week was a sea of red. Every single index ended in the red except for the G-fund. Is this the beginning of the down turn that I have been talking about for a couple of weeks? It could be, but as of right now we have no sell signals to talk about. If the current trend of lower prices continue next week, then we will begin firing sell signals on the daily charts.
I made this statement inside my October 29th post: For all you working TSP’ers, the maximum amount you can save went up $500 for 2018. So, your new maximum bi-weekly deduction should be $711.53. Well last Tuesday I got a question about my numbers from Scott Zittle. He basically asked if I was sure about the 26 Bi-weekly pay periods in 2018 or if there was 27. I spent 2 days researching this question and almost gave up. I even emailed OPM and got a half hearted answer, but I finally found the answer. Below is the 2017 Pay and Holiday schedule.
What I want you to look at is the month of December. The 26th pay period for 2017 ends December 9th. There is no logic to this so you just have to roll with it. They could have made the next two week period in 2016, 2017, or 2018 the 27th pay period and it would almost look identical. So before I give you the answer and timing, let’s look at 2018.
So above is the 2018 calendar. First let’s look at January and you can plainly see the pay period ending januray 6th is pay period 2. Now let’s look at the last month December 2018 and you will definitely see pay period 27. December 2017, Sunday is the last day of the month and in 2018 it is Monday. So where is the logic? Eh! who cares, they just decided to go ahead and call it the 27th this time around because that’s the only thing that makes since. So for all you working pukes out there, sometime between November 26th and December 9th you need to change your allotment to $18500 / 27 = $685.18. If you are 50 or older, you can also add the catchup funds $6000 / 26 = $222.22.
So here is a question for you. Let’s just say because you have the ability to put more than $685.18 into your TSP every two weeks, should you? I mean, why not? That means in the end you will have more money being invested. Well that’s true but you will be losing matching funds from the TSP. If you can’t put in $685.18 every two weeks, that’s ok, but if you go over, that’s bad. It is so much easier to show inside a spreadsheet, so I will show you a screen shot below.
SO above we have two different calculations. The one on the left is 15% of someone making $185,000 a year. Now scan down the first column and read line 19. Notice no matching funds from the TSP. Why? They only match $18500 and you have already met that number. Each week they will pay you no more than $346.15 in a pay period. Now look at the next set of numbers. This individual choose to divide $18500 / 27 for equal deductions of $685.19 and they did not met the $18500 limit until the 27th pay period. They got every single payment of $346.15 which equals $9346.14. The first person only got 18 payments for $6230.77. That person lost $3115.18. Damn!! So, just make sure that you do not deposit anymore than $685.19 for 27 periods and you will be ok. Never select the percentage of pay to with hold, select a dollar value.
Once again, Thanks to Scott Zittle for making sure that I had my information correct. Well done!
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