# Best way to use 20k



## clovis8 (Dec 7, 2010)

I just won a poker tournament and have an extra 20k to use. 

I am single, make 120k/year and 40 years old. Debt is 190k mortgage (2.8%) and 30k student loan (5.5%). I have 53k room in rrsp for 2013. 

My plan before the 20k was to put 15k in rrsp this month and reinvest my refund. 

Best option for new 20k?

Rrsp and refund more rrsp
Rrsp 35k and use refund to pay down student loan
Pay down student loan
Pay down mortgage 
Other?

Thanks.


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## heyjude (May 16, 2009)

I vote for option 2 because you are in a high tax bracket and the RRSP tax break will be meaningful. At the same time, getting rid of some of the student debt would be a good idea since it is your highest interest rate.

My second choice would be to put it all against the student debt. Another $10k and that would be out of your hair for good. Assuming you continue to earn a high income, you can still benefit by investing in your RRSP next year. However, you lose one year of compounding.


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## blin10 (Jun 27, 2011)

kill that 5.5% for sure


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## lightcycle (Mar 24, 2012)

By the numbers, you get the most bang out your buck by contributing to your RSP and using the refund to pay the student loan.

However, I vote pay down student loan because of psychology.

a) cutting your loan from $30K to $10K should motivate you to wipe the debt completely off the books. If you're like most people, the higher the debt, the deeper you hide the statements. So you'll hammer away at $10K faster than you'll chip away at $30K. 

b) you won't get the refund back till end of April at the earliest. Lots of time to accrue more debt because you're feeling rich at the moment. You mention you play poker. Is it possible that refund money will make its way to the tables instead of an RSP in April? If present-day-you is thinking about paying debt now, don't put it off and potentially let future-you sabotage your plans.

c) you still have to decide what vehicle to put your funds into in the RSP. Paying down the student loan is a guaranteed 5.5% savings of interest. It's either going to be less of a return than 5.5% in safe investments (ISA, GICs, etc) or you run the risk of losing capital in higher risk equities.

You'll have to calculate the effective rate of return based on your tax refund and figure out if the numbers game trumps the psychology for you personally. I don't want to be pessimistic, but theory and practice rarely intersect when money is involved.


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## clovis8 (Dec 7, 2010)

I see your point about the psychology but luckily that is not a huge factor for me. I am very good with money and don't take on debt lightly. As for poker, I played for a living for a few years but now play for fun. It's net +ev for me. I don't gamble on anything else as I don't spend money without an expected profit.


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## marina628 (Dec 14, 2010)

Wsop


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## none (Jan 15, 2013)

Other: Booze and hookers.


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## wendi1 (Oct 2, 2013)

One more vote for 35K to RRSP, then kill the student loan to the extent possible.


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## lightcycle (Mar 24, 2012)

none said:


> Other: Booze and hookers.


I've spent 90% of my money on women and drink. The rest I wasted.


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## james4beach (Nov 15, 2012)

Congrats, wow these forums seem full of good news stories lately.

Pay off the student loan. Simple.


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## PatInTheHat (May 7, 2012)

lightcycle said:


> I've spent 90% of my money on women and drink. The rest I wasted.


hah going to remember this one


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## Charlie (May 20, 2011)

It's a George Best quote (british soccer player):



> I spent a lot of money on booze, birds and fast cars. The rest I just squandered.


others:



> I've stopped drinking, but only while I'm asleep.





> I used to go missing a lot... Miss Canada, Miss United Kingdom, Miss World.


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## RBull (Jan 20, 2013)

ditch the debt.


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## underemployedactor (Oct 22, 2011)

Don't you need to hold some of that 20k win as a grubstake for the next big tourney?
The rest put towards your student loan. Or go to Vegas....


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## Guban (Jul 5, 2011)

Save some of it. You'll need to pay the tax on the winnings!


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## Spudd (Oct 11, 2011)

Charlie said:


> It's a George Best quote (british soccer player):


Although I believe he adapted his from WC Fields. 

http://www.goodreads.com/quotes/678820-i-spent-half-my-money-on-gambling-alcohol-and-wild


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## NorthKC (Apr 1, 2013)

Personally, I would use that to pay down the student loan purely for psychological satisfaction. However, you are definitely in a high tax bracket and would definitely benefit from the big RRSP deduction. Use the refund to make a good dent in your student loan. Based on your comments of being careful with your money, this seems to be the better option for you.

Congrats on such a big win!  Why not take out $1,000 out of that winning and treat yourself while you're at it?


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## clovis8 (Dec 7, 2010)

Guban said:


> Save some of it. You'll need to pay the tax on the winnings!


We don't pay tax on gambling winnings in Canada if it's not our only source of income.


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## My Own Advisor (Sep 24, 2012)

Student loan all the way. Highest interest debt. Your nice salary is servicing it every month.


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## Longwinston (Oct 20, 2013)

All into RRSP and resultant refund on the student loan, of course.


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## indexxx (Oct 31, 2011)

Buy some guitars and amps! And camera gear...


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## Gimme the Green (Feb 4, 2014)

Take your two stacks of high society, find Worm and start ripping off cop games........ Sorry, couldn't resist.....


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