Canadian Personal Finance Blog

Yesterday I revealed that carrying debt is making me sick (no not figuratively, but physically). I think people who know me aren’t surprised, but I am impressed that I confessed this truth about me.

In my situation it is better to be paying off my Mortgage and debt in a faster fashion, than worry about my retirement savings. My statement (as has many of my commenters) is that this choice is a personal choice and you should choose what makes you comfortable.

What other reasons makes paying my debt or Mortgage off a better choice for me, let’s run through a few points.

Investing in RRSP is Better Started Early

While this is true, it also assumes you know how to invest, and where to put your money. For my regular readers you realize my early endeavors in the area of investment have been at best mediocre and at time disastrous (remember my top 5 investment regrets). If I had put the money I had “invested” on my debt I might well be much closer to being out of debt, than I am towards being able to retire.

If you are confident in your abilities to invest, or have a system you think you can rely on, starting your retirement savings at an early age is a good thing (if you don’t carry debt already).

Early Retirement is an Option

For me, I think this is not likely, unless I came into a very large amount of money, and even then, I think retired would be a relative statement, since I would do volunteer work full time instead. I have a very young son (almost a second generation in our family) and by the time I will be 65 he will be 21, so my guess is I will need to keep an income of some kind (other than retirement income) for a lot longer than I thought I would 10 years ago.

Debt Reduction as an Investment Vehicle

The best investment I know I can make right now is on my debt, since I can figure out exactly how much money I will save by paying it down, whereas, I couldn’t tell you what the price of any stock might be in 6 months.  Given I am paying about 5% on my debt vehicles, I know I am getting at least that much money in savings on the money I am paying into it (i.e. I am paying that much more on my principle).

Personal Conclusions

As I have been saying all along, debt repayment is a much better thing for me to be doing at this moment in my life.  I have some equity invested in my retirement (not nearly enough I know, but some), however the ill effects of carrying debt and my aversion to that fact points me towards a more aggressive payback schedule for these debts.  Whether this plan of attack can be fully implemented remains to be seen, as the only way to tell if a plan was successful is to look back after it’s implementation.

I am always open to hearing about personal achievement stories in these areas, so please feel free to leave a comment about your successes (or failures) in this area.