I know what you are probably thinking, are you crazy!!!??? You are going to ask for a piece of financial advice on a message board where any loon can tell you anything. Well for many of us who have been on this board for over 10-15 years can attest, there are a lot of great people on here who have lend their expertise to almost any topic imaginable. So I say, why not find out/ask.
My basic question is paying off debt vs paying the maximum into my 401 K (it's the TSP with the Federal Government)
Here's my current situation $20,000 in CC debt ( really stupid decisions/a little bad luck). However, I secured a personal loan with my bank for loan at 9.8% to pay that off-60 month term (Approx $425 a month) starting next month. I currently put 16% of my pay into my 401 K ( I get paid 2x per week so I put in Approx-$500 per check/$1000 a month into a fund that mirrors the S&P 500). The 401k balance is a little over $300,000. I am 46 years old. My salary is approx-$85,000. I have no mortgage. However, where I live, rent is insane and budgeting a significant amount every month is difficult. I currently have 36 months left on my car loan ($10,500 at 2%) Should I reduce my TSP/401K contributions down to 5% (Agency matches up to 5%) and use that "extra money" to pay off the loan at basically 10% as fast as possible or Try and put maybe $50-75 a month extra on top of the loan and maybe get that paid off in 3.5-4.5 years. I guess I get confused over the ROI on the 401 K and compounding interest but if the S&P continues at (I hope) at about 10% per year and the loan is 10%, what's the better option? I can also make catch up contributions to my TSP after 50 years old. Oh yeah, don't yell at me too much over my finances being a wreck but I can take "some" criticism. I also know that nothing works unless you have discipline with your money which trust me, I've learned after this.
My basic question is paying off debt vs paying the maximum into my 401 K (it's the TSP with the Federal Government)
Here's my current situation $20,000 in CC debt ( really stupid decisions/a little bad luck). However, I secured a personal loan with my bank for loan at 9.8% to pay that off-60 month term (Approx $425 a month) starting next month. I currently put 16% of my pay into my 401 K ( I get paid 2x per week so I put in Approx-$500 per check/$1000 a month into a fund that mirrors the S&P 500). The 401k balance is a little over $300,000. I am 46 years old. My salary is approx-$85,000. I have no mortgage. However, where I live, rent is insane and budgeting a significant amount every month is difficult. I currently have 36 months left on my car loan ($10,500 at 2%) Should I reduce my TSP/401K contributions down to 5% (Agency matches up to 5%) and use that "extra money" to pay off the loan at basically 10% as fast as possible or Try and put maybe $50-75 a month extra on top of the loan and maybe get that paid off in 3.5-4.5 years. I guess I get confused over the ROI on the 401 K and compounding interest but if the S&P continues at (I hope) at about 10% per year and the loan is 10%, what's the better option? I can also make catch up contributions to my TSP after 50 years old. Oh yeah, don't yell at me too much over my finances being a wreck but I can take "some" criticism. I also know that nothing works unless you have discipline with your money which trust me, I've learned after this.
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