Well since taking on a second job starting in Nov. I’m facing the fact that my original savings goal to pay off the mortgage in about five years could be a bit faster now. Yet at the same time I’m not entirely comfortable about getting shoved into a higher tax bracket, so should I use some of the new cash to use up some of my unused RRSP contribution room to keep myself out of that tax bracket?
On the surface it does seem like a good idea, but there are some are issues. The first and more obvious one is perhaps I should save that unused contribution room until after the mortgage is paid off. After all I’m likely going to be making more money towards the end of my career so that contribution room could be used to save me potentially more tax later on. Or do you make the contribution and use the refund to further pay down the mortgage? That’s another classic option.
What is also complicating matters is I’m into reading the fine print on my mortgage agreement to determine if I can actually shove this much cash onto my mortgage in a given year. I have to confirm with my bank but I suspect I might be limited to about $25,000 in extra payments. If that is the case then the RRSP starts to become an attractive option once I max out my mortgage pre-payment options.
Sigh, just when things are going along nicely something has to come up and mess it all up again.