Author Topic: Payoff TSP loan or car loan ?  (Read 1104 times)

Troutbum73

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Payoff TSP loan or car loan ?
« on: April 05, 2017, 02:09:22 PM »
New to MMM, but really like what I have read so far. However, most of this is all over my head. I am a wildlandfire fighter and spend all my time in woods and have lil to no experience in investing/mmm lifestyle. So my question to you all is probably fairly simple, but want to make sure I'm making right decision. So I bought a house a year ago and took out a 15k of my TSP to help with the down payment. My repayment plan right now is paying around $100 a month for I believe 15years, with a little interest that goes back to me. I also bought  a newer truck  for the new family with a loan for 12k at 2.89 % for 5 yrs. which comes to around $200 a month. So... I have a tax return coming and want to put it to good use.  The question is what should I pay off first? Thank you for your help, really appreciate your feedback.

TheAnonOne

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Re: Payoff TSP loan or car loan ?
« Reply #1 on: April 05, 2017, 02:15:09 PM »
Realistically, the TSP is probably better as you're getting that money back into working for you.

TSP loans, like 401k loans are pretty bad deals for you because you lose out on any gains. This of course assumes you have it invested in stocks at low expense ratios.

The truck loan is a low enough rate that mathematically you could get away with investing instead of paying it off.


You really need to do a case study to get the full picture.

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Catbert

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Re: Payoff TSP loan or car loan ?
« Reply #2 on: April 05, 2017, 02:17:11 PM »
I would pay off/down the tsp loan.  If you leave federal service (voluntarily or involuntarily) you'd have to pay the loan off or pay taxes and penalties.  15 years is a long time.

TheAnonOne

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Re: Payoff TSP loan or car loan ?
« Reply #3 on: April 05, 2017, 02:23:48 PM »
I would pay off/down the tsp loan.  If you leave federal service (voluntarily or involuntarily) you'd have to pay the loan off or pay taxes and penalties.  15 years is a long time.
Indeed, I didn't even think about that big asterisk.

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Troutbum73

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Re: Payoff TSP loan or car loan ?
« Reply #4 on: April 05, 2017, 02:46:51 PM »
Thank you that all makes sense especially what you said Mary. However, I thought one option would be to pay off truck asap so I can use that extra $200 or $100 and use it to pay off the TSP. And that way I'm not spending a total of 300 a month towards my debt. Thoughts?