Re: TSP Loan vs Deduction reduction ?
Originally Posted by RoldanFam
You really haven't left us much to chew on, but...
1. If you are a civilian NEVER go below 5% contributions to TSP. NEVER lose the TSP match. Losing the match means losing an ever increasing part of your salary. I would even go so far as to say that you should increase your contributions to 5% if you are below that point. If you are military than you have NO match – so this point (the major one) is mute.
2. I would probably reduce my contributions to the 5% match to pay down the credit card debt. I actually did so. Works pretty well. That way you could save the single TSP loan you are eligible for to cover either the credit cards (at a later date) or some other unexpected mess.
3. TSP loans are beneficial if absolutely needed. They work best if you have enough of a balance that the hole you put in your assets doesn't hammer your growth. But remember, you fill that hole with after tax income and you fill it with after tax interest. Yeah, you pay yourself back with interest - but you do so with more expensive dollars and you pay it back. And, if you leave government work before the loan is paid you will pay the remainder back in a lump payment. Yuk...
4. While the interest you will pay into a TSP loan is always a market low I don't know if it is variable. It might go up over time.
So, me not like TSP loans to pay credit card debt. Another way of thinking of it is penance. Yuk, yuk. Also, it is a bad habit to get in the habit of refinancing debt. You might think you are the Federal government or something.
Lookin' up at the 'G Fund'!!!