Tax refund/ savings/debt question

**KenLynn** · 01-27-2009, 06:14 PM

I have a question. If my calculations are right I should be getting a nice refund of about $300 ( let say) last year it was only $60. We have just a little over $7000 in debts. Should I apply this money to debt or to my savings account? Here in Canada we have a new Tax free saving account that gives you 3% interest for the year and you can contribute to the max of $5000 a year. I was always told to roll over the money into investments( in this case its an RRSP) or pay down debt? I have about 3 months to think and decide what to do. My EF will be close to $2000 by then, with our original goal of $1000 for now. I have a small amount on 2 cards of the average of $500 each. I am aching to lower my Visa down the highest one for next year's trip home. We get aeromiles on it when we use it.

Any thoughts?

Thanks again,

Lynn

**Gardengal18** · 01-27-2009, 06:30 PM

Pay down the debt with it. Congrats!

**guest002** · 01-27-2009, 07:07 PM

I would put $100 in savings and $200 towards paying down debt.

**homesteadmamma** · 01-27-2009, 08:12 PM

Pay down debt with all of it.

**changed4life** · 01-27-2009, 08:19 PM

I don't think $300 is going to make or break you either way, but I'd put it in savings since you don't have that much yet. (I have a sensitive security gland!!)

**shortstack** · 01-27-2009, 08:22 PM

I would put it towards the debt that has the highest interest rate. Think how much that $300 will save you in compund interest.
Andrea

**Wendy99** · 01-27-2009, 08:46 PM

I agree put it on debt, you already have $2000 in your EF, one of those credit cards would be more than half paid for with that money.

**dcompton** · 01-27-2009, 09:07 PM

I'm guessing you are probably paying more in interest on the debt than you would make on the $300, even factoring in the tax break. I would aggressively pay down the debt.

**Michelle** · 01-27-2009, 09:40 PM

Originally Posted by dcompton

I'm guessing you are probably paying more in interest on the debt than you would make on the $300, even factoring in the tax break. I would aggressively pay down the debt.

:yes:

Definitely toss it toward debt--especially since you already have a decent EF.

**KenLynn** · 01-27-2009, 09:42 PM

thanks for the advice. I really like Donna's, which makes alot of sense. The interest on the card are quite high.

**Laura2** · 01-28-2009, 12:06 AM

I would put it all toward debt. Most finance charges for credit cards are much higher than 3%.

**phoeny_moonstar** · 01-28-2009, 12:40 AM

Put it on your debt!

**rachelMcK** · 01-28-2009, 06:12 AM

Pay the debt!

**Momto2Boyz** · 01-28-2009, 07:05 AM

I would not only put it towards the debt, I would pay it down on the principal of the debt! Send in your regular payment to cover interest due on the card, then send in the additional $300 as payment toward the principle!