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|Author:||sonofnthng [ Wed Apr 12, 2017 11:54 pm ]|
|Post subject:||TSP loan|
I currently have 2,800 left on a loan I took out 3 years ago. I'm not in any way implying that I will ever take another loan from my TSP, but I have a question regarding this comment on a Q/A site.
In the 3rd answer, by Michael Mez, he states that you will pay a tax penalty on income as a result of taking the loan out. Am I missing something, or is he foolish? We contribute pre-tax dollars, just as we would pay back a loan with pre tax dollars..... So, loan or no, (besides ROTH obviously) you'll have to pay taxes on the money you withdraw, just the same, right?
I think the answer to her question is How much time do you have to recover the hit to your TSP. I understand this is a game of compounding, so the higher the balance, the more you can earn.
So, just so I don't do anything foolish, myself, please reenforce me with your wisdom/advice.
I have 50k in my TSP. 25 years till retirement. I have saved up ~4k for an eventual down payment on a house. Is it smart to wait till I have the 20% in the bank (which may take 5 more years) or if I found the perfect place, take out TSP $ (~10k) for the down.
My thinking is, if I can lower my cost of living (rent is 1100) by a few hundred, I can put that right back toward the loan, and also be investing in my own property. But also, that I'd be setting myself back, ruining my chances of seeing a big balance, provided I don't die.
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