What do you mean “tax-deductable?”

For anyone who may have read my old blog, you will know that I have a love/hate relationship with my debt. And you will know that I make new financial plans every pay day.  And you will know that a few months ago I tried to track what I spent in a two week and then 1 month period.  What I didn’t share was I made it through 2 weeks, but I didn’t actually do anything with that information. Oops.

Recently I asked the boy if he thought we needed a financial plan – you know like adults.  He said, “We don’t have any money, so no we don’t need a financial plan.  Just save as  much as you can.” I figured, fair.

Well the tax man came after a little confusion I ended up with a lovely cheque and I thought, since I’m an adult now, I should be responsible with this money.  Miraculously I was. I put a fraction of it into our Puppy fund, (more on that plan in a post to come) I paid off my credit card COMPLETELY, (this would have actually been done sooner, but living on one low income this winter made it take a little longer than I had anticipated) and I wanted to put the rest of it toward my debt.  But which one should I choose?

I may not have shared this but not only do I have a Line of Credit, that I paid for school for, I have a (comparatively smaller) OSAP loan.  Originally I was thinking I should put this chunk of money on the smaller amount, you know fight the molehill and then the mountain.   So I asked my dad to look up my account number in my file – our apartment is small and all such important documents reside with him.

Good thing I did, I learned something that I thought I’d share here, since even though I don’t really know what it means, it was useful for me and might be to you!

Dear old dad told me that as far as he could tell the interest on both of my loans is about equal, but that the government one is “tax deductable” and the bank loan is not.  So it actually makes sense to tackle the mountain before the molehill.  Huh!  While I really have no idea what tax deductable  means, I do know that it’s a good thing so I took that to mean that my efforts should go to my bank loan first.  Thanks dad!  This was brand new information to me.

So still no financial plan, but a slightly better understanding of how to attack paying things off.

I feel so financially responsible!

Must be time to go shopping.

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One response

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