Ask The Experts: Money Matters

By Mike Miles

TSP loan

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Q. I recently took out a $40,000 Thrift Savings Plan loan so I could refinance my house. I had a first 4.875 percent and a second 8.5 percent. This lowered my monthly house payment by $1,000. I am paying it back over five years at $309 per payment. Would it be better to lower the amount I contribute from 10 percent to 5 percent and put that amount toward the loan? I did a quick calculation, and the taxes would be an additional $1,250 a year (approximately) since I would lose the pretax exclusion on the $5,000.

A. I think I’d stick with the loan repayment and maximum TSP deferrals.

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