Conventional wisdom says that you should never, ever borrow from your 401(K). Financial gurus tell us that we should not take money out of our 410(K) for tax reasons and that many people do not have the self-control to pay back the loan.
With a Thrift Savings Plan (TSP), the government’s version of a 401(K) it is a little bit different. Like the 401(K), you can take out a loan for 50% of your balance. The differences are that you have 2 different types of loans to choose from and you are forced to pay it back.
The two different types of loans are either personal or for a primary residence. The personal loan has to be paid back within 5 years and the loan for your primary residence has to be paid within 15 years. It must be the primary residence.
There are a couple of things I like about this. I can take out the personal loan and still use it for a residence that is not my primary. And, all I have to do is fill out a one-page form and send it online or fax it, and I will have a check in 10-14 days. I looked into taking out a home equity line of credit (HELOC) and the amount of forms was ridiculous, credit checks, and about $8,000 in...
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