Author Topic: Payoff TSP or car loan?  (Read 1597 times)

Troutbum73

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Payoff TSP or car loan?
« on: April 05, 2017, 02:00:15 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.

Mother Fussbudget

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Re: Payoff TSP or car loan?
« Reply #1 on: April 05, 2017, 09:13:51 PM »
Depends.  If your TSP loan is ~4% interest, that's 4% you're paying yourself - think of it like a 4% savings bond.  Your car note is going toward transportation, and at 2.9% is still low enough that you probably don't want to pay it off early.  Have you considered putting your refund into a Roth IRA?

Better yet, read the advice in the "Investing Order" post.  It's probably the most referenced item in the forums because once read, people find themselves answering their own questions. 
Welcome, Good luck, and read, read, read.

chasesfish

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Re: Payoff TSP or car loan?
« Reply #2 on: April 05, 2017, 10:10:53 PM »
I would payoff the TSP loan.

You can't get back the retirement contributions and penalty if you can't pay that loan back.  You can always sell the truck

Troutbum73

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Re: Payoff TSP or car loan?
« Reply #3 on: April 06, 2017, 10:02:35 AM »
Depends.  If your TSP loan is ~4% interest, that's 4% you're paying yourself - think of it like a 4% savings bond.  Your car note is going toward transportation, and at 2.9% is still low enough that you probably don't want to pay it off early.  Have you considered putting your refund into a Roth IRA?

Better yet, read the advice in the "Investing Order" post.  It's probably the most referenced item in the forums because once read, people find themselves answering their own questions. 
Welcome, Good luck, and read, read, read.

Thank you. Great link, your right I  have a lot of reading ahead. I'm curious on your thoughts on the following, is it a good idea to pay off truck loan and then use the money I would spend on the truck and put it all or some of it towards the tsp, thus reducing monthly expenses and, or freeing up money for other investments or bills.

Mother Fussbudget

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Re: Payoff TSP or car loan?
« Reply #4 on: April 07, 2017, 12:03:30 PM »
So what would *I* do in this situation? 
1. Pay off the truck.
2. Add $100/month to your TSP payment.
3. Add $100 to my monthly investment amount.
4. Automate these using 'auto-pay' for the TSP loan, and setup automatic deposit into your retirement account.
« Last Edit: April 12, 2017, 10:13:44 AM by Mother Fussbudget »

Fomerly known as something

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Re: Payoff TSP or car loan?
« Reply #5 on: April 07, 2017, 05:23:47 PM »
TSP,

The car loan is leverage, the TSP took tax advantaged money out of the market.