'I'm A Federal Worker Overseas In Fear Of Losing My Job – Should I Stop Paying Into My TSP And Pay Off Debt?' Suze Orman Weighs In

Facing financial uncertainty can be overwhelming, especially when your job security is in question and you have significant debt. That's exactly the situation a federal worker named Gillian described in a recent episode of the "Women & Money" podcast with Suze Orman.

Gillian, a federal employee stationed overseas, wrote in to ask for advice. She supports her spouse and child and is the sole earner in the household. Though she once felt secure in her government position, she now fears being laid off — a concern that's become more common among federal workers this year. Amid federal downsizing and budget cuts under the Trump administration, workers — especially those based overseas — have grown increasingly worried about job stability.

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With a considerable amount of debt on her shoulders, Gillian wondered if she should stop contributing to her thrift savings plan and instead use that money — along with her emergency fund — to reduce what she owes.

Orman didn't hesitate to weigh in.

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What Is the TSP, and Why Does It Matter?

Before diving into the advice, Orman clarified what the TSP is. It's the federal government's version of a 401(k), helping employees save for retirement through tax-advantaged contributions.

The question at hand was whether it made sense for Gillian to stop these contributions in order to focus entirely on debt repayment. KT, Orman's co-host, said, "I don’t think she should stop paying into the TSP, and I definitely would not use that emergency fund money." 

Orman agreed — but added several important financial insights.

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Debt Repayment vs. Long-Term Security

Orman emphasized that in Gillian's case, redirecting funds from her TSP and emergency savings still wouldn't make a significant dent in her total debt. In Gillan's own words, "Doing this won't even cover half of my debt," making the decision even clearer. 

Orman shared a general rule of thumb: "When you owe more money than you are worth, you are essentially bankrupt." However, that doesn't mean liquidating all available funds is the best approach.

In fact, retirement accounts like the TSP, Roth IRA, and 401(k) are legally protected in the event of bankruptcy. That means even if the worst-case scenario happens — like losing a job or filing for bankruptcy — these funds would remain intact. 

"Do not stop putting money in a place that's safe and sound," Orman advised.

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Emergency Funds Are for Emergencies

As for tapping into the emergency fund, Orman was just as clear: Don't do it. The purpose of an emergency fund is to cover essential expenses in the case of income loss or other true emergencies — like, for instance, a layoff. Using it to chip away at debt, especially when it won't eliminate that debt, could leave Gillian exposed if her job situation worsens.

Final Takeaway

In short, Orman's advice to Gillian was to stay the course with retirement contributions and preserve her emergency fund. The debt remains a concern, but the protections and potential growth offered by the TSP are too valuable to give up — especially during uncertain times.

If you’re in a similar situation, it may be worth talking to a trusted financial advisor about how to balance debt repayment with long-term financial security.

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