Comments on: Reader Question: Debt or RRSP? http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm Building Wealth through Saving and Investing Thu, 11 Mar 2010 18:50:52 -0500 http://wordpress.org/?v=abc hourly 1 By: Henry http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-19497 Henry Mon, 10 Dec 2007 16:30:16 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-19497 Sounds good to me. Sounds good to me.

]]> By: Smith Manoeuvre Mortgage Comparison II - Top Pick! | Million Dollar Journey http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-11971 Smith Manoeuvre Mortgage Comparison II - Top Pick! | Million Dollar Journey Tue, 11 Sep 2007 07:31:45 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-11971 [...] Refer to this article to see how you can get a credit report for free from Equifax.  [...]

[...] Refer to this article to see how you can get a credit report for free from Equifax.  [...]

]]> By: FinancialJungle http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-4485 FinancialJungle Wed, 16 May 2007 02:14:43 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-4485 Q wrote: "My reason is that it keeps the discipline of the forced savings in place while you deal with your debt reduction. This forced savings can be used towards a home purchase later on through the HBP." Debt reduction is a form of forced saving. Since paying down the credit line is equivelant to a guaranteed return of 13%, I'd still pay off the credit line first. I'm not sure how safe is it to investing in the stock market, since TSX had a pretty good run over the past 5 years. Q wrote: “My reason is that it keeps the discipline of the forced savings in place while you deal with your debt reduction. This forced savings can be used towards a home purchase later on through the HBP.”

Debt reduction is a form of forced saving. Since paying down the credit line is equivelant to a guaranteed return of 13%, I’d still pay off the credit line first. I’m not sure how safe is it to investing in the stock market, since TSX had a pretty good run over the past 5 years.

]]> By: FrugalTrader http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-4468 FrugalTrader Tue, 15 May 2007 19:06:08 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-4468 The beacon score will show what a lender would see. Basically, the higher the score, the better the rates that you're going to qualify for. The report itself simply shows all the credit lines that you have (minus mortgage) and the status of the accounts. The beacon score will show what a lender would see. Basically, the higher the score, the better the rates that you’re going to qualify for.

The report itself simply shows all the credit lines that you have (minus mortgage) and the status of the accounts.

]]> By: Warren http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-4467 Warren Tue, 15 May 2007 19:02:44 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-4467 Good advice all. What is the advantage of getting the report vs. the beacon score. Does the $24 provide a more detailed version of the report as well? In otherwords, is it worth it? :) Good advice all.

What is the advantage of getting the report vs. the beacon score. Does the $24 provide a more detailed version of the report as well?

In otherwords, is it worth it? :)

]]> By: Q Cash http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-4460 Q Cash Tue, 15 May 2007 17:28:01 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-4460 FT Sound advice as always. My only comment to Greg would be if you can manage it, keep up with the RRSPs. My reason is that it keeps the discipline of the forced savings in place while you deal with your debt reduction. This forced savings can be used towards a home purchase later on through the HBP. If you can manage it, the full amount of your raise should be put against the credit line (9.6% is high and FTs comment about an automatic 13% return equivalent by paying it off is valid.) As soon as it is paid off, I would increase the RRSP payment by half the Credit line payment and increase your student loan by the other half. As soon as that is paid off, increase your RRSP contribution to the full amount. Once you are maxing out your RRSPs, you can then look at dividend producing investments outside the RRSP. Just my few cents worth. The other option is to go on a strict spending diet for 6 months and pay off the full amount ASAP, but that may require sacrifices you don't want to or have to make. Finally, go easy on yourself. If you only have $15,000 in debt with a $45000 a year salary, you are not starting off with too bad a situation AND you are already making the RRSP contribution. Well done. Q PS If you want to have that emergency account, might I suggest a PC Financial or ING high interest savings account. Throw $50 a pay through an automated savings plan and you will be in good shape in a year or two. FT

Sound advice as always.

My only comment to Greg would be if you can manage it, keep up with the RRSPs. My reason is that it keeps the discipline of the forced savings in place while you deal with your debt reduction. This forced savings can be used towards a home purchase later on through the HBP.

If you can manage it, the full amount of your raise should be put against the credit line (9.6% is high and FTs comment about an automatic 13% return equivalent by paying it off is valid.)

As soon as it is paid off, I would increase the RRSP payment by half the Credit line payment and increase your student loan by the other half. As soon as that is paid off, increase your RRSP contribution to the full amount.

Once you are maxing out your RRSPs, you can then look at dividend producing investments outside the RRSP.

Just my few cents worth.

The other option is to go on a strict spending diet for 6 months and pay off the full amount ASAP, but that may require sacrifices you don’t want to or have to make.

Finally, go easy on yourself. If you only have $15,000 in debt with a $45000 a year salary, you are not starting off with too bad a situation AND you are already making the RRSP contribution. Well done.

Q

PS If you want to have that emergency account, might I suggest a PC Financial or ING high interest savings account. Throw $50 a pay through an automated savings plan and you will be in good shape in a year or two.

]]> By: FrugalTrader http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-4457 FrugalTrader Tue, 15 May 2007 15:41:25 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-4457 Greg, since your credit line is ~10%, paying it down is equivalent to a <strong>guaranteed </strong>pre-tax gain of around 13%. There is nothing out there that has a guaranteed return of 13%. Greg, since your credit line is ~10%, paying it down is equivalent to a guaranteed pre-tax gain of around 13%. There is nothing out there that has a guaranteed return of 13%.

]]> By: Soultrance (Greg) http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-4456 Soultrance (Greg) Tue, 15 May 2007 15:37:06 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-4456 Thank you very much for all the suggestions, they are greatly appreciated. I think my mind just changed from wanting to invest my extra cash to putting it on my debt instead. Thanks again! Greg Thank you very much for all the suggestions, they are greatly appreciated. I think my mind just changed from wanting to invest my extra cash to putting it on my debt instead.

Thanks again!
Greg

]]> By: ThickenMyWallet http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-4437 ThickenMyWallet Tue, 15 May 2007 14:11:36 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-4437 Very prudent suggestions. In terms of investing, I would suggest that Greg go to the library and read some books before buying anything and model himself after a strategy/investor he is comfortable with and which is successful. Very prudent suggestions. In terms of investing, I would suggest that Greg go to the library and read some books before buying anything and model himself after a strategy/investor he is comfortable with and which is successful.

]]> By: Financial Blogger http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm/comment-page-1#comment-4425 Financial Blogger Tue, 15 May 2007 10:59:02 +0000 http://www.milliondollarjourney.com/reader-question-debt-or-rrsp.htm#comment-4425 I totally agree with your comments. In the process of debt elimination, you must concentrate all your monthly cash flow on the highest interest debts in order to get rid of it ASAP. I previously did some calculations showing the impact of this process. You can look it up: http://www.thefinancialblogger.com/?p=26 I totally agree with your comments. In the process of debt elimination, you must concentrate all your monthly cash flow on the highest interest debts in order to get rid of it ASAP. I previously did some calculations showing the impact of this process. You can look it up: http://www.thefinancialblogger.com/?p=26

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