Canadian Personal Finance Blog

OK, so one of the questions I hear people talk about is that if I can scrounge up an extra $1000 a year, which should I do:

1. Pay down the mortgage (assuming you can make extra payments on your mortgage)
2. Put Money in the RRSP
3. Both

This is a good question, I think, and something I’d like to do in a bit of detail, so over the next couple of days, let’s crunch the numbers and show what this might look like.

So, let’s lay down the ground rules, assuming the following:
1) A 25 year mortgage with 20 years still remaining on it at 6.0%
2) A single income to the family of $84,000 per year (vanilla tax return as well, no fancy trusts)
3) An extra $1000 found somewhere each year
4) RRSP growth of 5% per year (very conservative)
5) Savings growth rate of 1%

We’ll crunch the numbers in the three scenarios and then figure out what might be the best course of action here.

This should be fun –C8j