quick question, I know TSP loan is a no-no but when is it OK to get one? just curiousity.
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quick question, I know TSP loan is a no-no but when is it OK to get one? just curiousity.
When credit counseling and budgeting fail. There are a ton of non-profit counselors to work with you. If you feel the need to take a loan after all of the mess leading up to/including that, then the answer is whenever you fill out the paperwork. The rate changes at the first of the month ( I try to post it regularly) so if you think it's a good rate, go for it.Quote:
Originally Posted by law87
But please, use the EAP first, and other non-profit credit counselors. PLEASE!
Another use that is a valid use of a TSP loan might be...if you are purchasing a home, and need the money to increase the down payment enough to get either a lower rate, or to avoid the extra expense of Private Mortgage Insurance (PMI).Quote:
Originally Posted by law87
Only you can figure out if the cost of missed future retirement earnings is worth taking out a TSP loan. The general rule is...if you can afford to live without taking out a TSP loan, then do so.
If you have an unforseen financial emergency and no other cushion, then you can consider a TSP loan as a possibility, or if you are better off financially on a home loan that makes the numbers work, then it is worthwhile calculating and seeing if it is right for you.
Only you can answer that question.
(Yes, I did a 15-year TSP loan when I bought a home, and it was worthwhile to me. I managed to pay it off in 7 years, too).
Good luck.
Emergencies are definitely budget failures (we can't budget for the really expensive things)....They are what they are.....But buying a house, I'd have to reasearch the monies lost (money outside of TSP) versus the gains (money saved) using it elsewhere. But to save a quarter of a % on PMI might be enough to want to do it, or save up the difference before you buy to have a healthier down payment.Quote:
Originally Posted by James48843
When selling one house and buying another the TSP loan makes a good "bridge loan" for part of your down payment for two or three months while the first house is closing. I.E. use the 15 year term to keep your monthly TSP repayment low. Repay it as soon as you close on the first house. If I remember correctly you don't get a mortgage interest deduction for the interest on the TSP loan. The interest you pay goes into your TSP account so you are actually paying yourself. Lots of quirks so read up before you do it. JMHOQuote:
Originally Posted by law87
Thanks all, you guys are like the Money Guru for me. please visit my next thread for a different questions.
Your TSP account is just another liquid asset cache... Use it when the numbers and the rational make sense. It will be unique and different for all of us. It is no different than the justifications for dispersing it in retirement. Never use your resources without reasonable and substantial justification. If need be, get some pro financial advice.