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So you know that the Financial Blog world is getting crowded when guys like John Chow start putting up articles about tricks to play with your RRSP money.

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:

Bottom Rung

• 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.

Step up

• 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?

Main Street

• 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 --C8j

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