The Canadian Capitalist has been running some very interesting discussions about whether it is better to pay down debt or put money away in your RRSPs. I am on the fence on that argument, I think personally I should be paying down debt, but it also does feel good having some money put away for your retirement, or for a rainy day. I think you need to maybe start with what your hierarchy of debt is and figure out from there:
- Credit Card debt, Debt to Family members and debt to non-bank loan companies. I would pay off debt here before even thinking of an RRSP plan. You are saving so much in interest charges it is a no-brainer, and it will help you sleep better at night. The family and friends are important too, pay them back FIRST.
- Car Financing, Low Interest Credit Card Debt, and the like it depends on the rate of interest you are paying I guess. If your interest rate is below 8% then maybe think about RRSPs? Pay the debt off mind you, only look at RRSPs with found money?
- Mortgage , Secured Line of Credit here you are getting as low a rate of interest so maybe if you are locked in at a very low rate, think more about RRSPs, but again you have to do the math and figure out how much money you make putting $1000 on your Mortgage and $1000 on your RRSP and then decide.
Yes, kind of vague (as usual), but hopefully it causes you to think about things a little more