Paying Down Your Mortgage
This article will explore some of the common financial options available to those looking to plan their financial future, such as RRSPs (Registered Retirement Savings Plan), TFSAs, and debt management. At Ostic Financial, we understand that there are hundreds of options for individuals and families to invest in to save their money. This article is focusing on some of the most common situations we see everyday.
As a homeowner, many people believe that paying down their mortgage is their number one priority. Unfortunately, by doing this homeowners may be missing the boat on some valuable planning opportunities, such as tax saving strategies or retirement savings.
We always suggest that our clients explore the best financial options available as young as possible. While it may seem odd for a 22 year old to be looking at RRSPs, TFSAs. and debt management, the earlier you begin the better position you will be in when it’s actually time to use your money. For instance, the earlier you can start saving, the more time that money will have to grow, putting you in a better financial position. A common rule of thumb is that you put 10% of your earnings towards savings, making sure that you are reviewing and increasing your contribution yearly.
But what does this have to do with paying down your mortgage? Everything! As an example, when you are contributing to your an RRSP, your contributions are tax deductible within prescribed limits. The amount you put into your RRSP each year is deducted from your overall taxable income. This tax relief could leave you with some additional money which can be used to pay down your mortgage.
For instance if you were in an approximate 31% tax bracket, earned $60,000 and contributed $5,000 to your RRSP, you’ll generate approximately $1,550 in tax savings. In essence, this is found money which you can use to pay down your mortgage.
Saving for your retirement can help you pay down your mortgage. Now that’s the best of both worlds!
To learn more about how to find money with financial planning, contact us. It’s our job to make your money work for you.