Tax Return Finished

Finally got the tax return all done. We will get a refund of $4,772.46 total for my wife and me combined thanks to RRSP deductions and tuition credits. It would have been even more had we not reduced the amount of tax deducted on my wife’s paycheques for part of last year. We are planning on applying the entire tax refund to the student line of credit. It is a good investment as it will save us not only over $200 in interest over the coming year, but over $200 every year going forward until the line of credit is completely paid off.

We have actually decided that rather than keep our payments to our line of credit constant (ie. after paying down $4,772 having less go towards interest and more towards principal, hence paying off the loan sooner) we will only pay just the interest every month (which is what we have been doing up until now) and allow the interest payments to decrease. This will be a motivating factor, motivating us to apply the entire tax refund to it. If, after applying the entire refund to the line of credit, there were no change in our monthly payments (only a change in the length of time until it is paid off), I think we would be less motivated to apply the refund to it. I think the bank is going to force us into an amortization schedule eventually but even then we’ll still apply our tax refund to it every year (assuming we have maximized our RRSP contributions, which we have so far).

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