A lot of it depends on the interest rate of the things you’re considering paying off. What’s the interest on your debt?
Ok-Republic-8098 on
It’s a good idea as long as you can comfortably pay it off before you get out. If you separate, the loan has to be paid back immediately
Otherwise-Pirate6839 on
Do a trade off. That’s money that’s not growing so you’re missing out on it. The current interest rate is 4.5% so if you don’t think funds will grow by that much through the life of the loan, then it makes sense (the interest payment also goes to your account so you’re sorta making up for lost growth).
In addition, understand that you’d be paying back with post-tax money so if your TSP is mostly funded with pre-tax money, that’s a portion of money that will have been taxed twice when withdrawn.
If these things don’t daunt you and you’re able to keep up with payments, then go for it.
3 Comments
A lot of it depends on the interest rate of the things you’re considering paying off. What’s the interest on your debt?
It’s a good idea as long as you can comfortably pay it off before you get out. If you separate, the loan has to be paid back immediately
Do a trade off. That’s money that’s not growing so you’re missing out on it. The current interest rate is 4.5% so if you don’t think funds will grow by that much through the life of the loan, then it makes sense (the interest payment also goes to your account so you’re sorta making up for lost growth).
In addition, understand that you’d be paying back with post-tax money so if your TSP is mostly funded with pre-tax money, that’s a portion of money that will have been taxed twice when withdrawn.
If these things don’t daunt you and you’re able to keep up with payments, then go for it.