Scripting commands are processed in the order they are encountered. You're echoing the value before you set it, so in the first line TMOUT has a null value, and in the second line it has 120.
BTW, QUOTE ALL OF YOUR VARIABLE SUBSTITUTIONS
. You should never leave the quotes off a parameter expansion unless you explicitly want the resulting string to be word-split by the shell (globbing patterns are also expanded). This is a vitally important concept in scripting, so train yourself to do it correctly now. You can learn about the exceptions later.
Also, environment variables are generally all upper-case. So while not absolutely necessary, it's good practice to keep your own user variables in lower-case or mixed-case, to help differentiate them.