So it looks like I'll have a second roommate as of this weekend. This works just fine for me, as it means I'll have 2 people helping out with housing costs, and I won't have to worry about finding people to keep an eye on my house if I go out of town for a while.
Unfortunately that means I'll also have to pay taxes on that money. Bugger.
So, I've been trying to decide what the best way to handle that money is. I could use it to pay off debt and reduce my interest load, but then I'll have to pay taxes on it next spring and may not have the money handy. I could put it directly into RRSPs, which would negate the whole tax issue, but then the money is locked up until retirement. I could put it into my emergency savings account, but it will eventually hit a point where I'd have more in there than really necessary (I don't have anything against savings, I just have other pressing issues that need attention as well). I could invest it, but again I'd be taking a risk of it shrinking and not having the money available to pay taxes.
I could use more dilemmas like this more often. There really is no purely bad outcome here.
I honestly think I'm going to end up splitting the income. Half of the money will go into savings, and half of it will go onto my highest interest debt (the credit card). I'm going to double check, but I don't believe I have to pay 50% tax on rental income, so putting half in the savings account should more than cover me there. I'll probably bump the savings account goal up to $6000 so that I have both emergency savings and tax money. Once that target has been hit I'll divert the excess payments back to debt. Once the credit card is payed off, I'm going to put the money towards the line of credit.
I don't think I'll be able to pay off everything in a year, but hey, what's the harm in trying? ;)
We'll see where my life is sitting at that point. I'd like to pay back the new homebuyer's plan RRSP loan well before my 15 years is up, and I'd love to use up my unused contribution room on my RRSPs as well. At the same time, I want to take a good solid chunk out of my mortgage; I'd like the balance owing to be under $200,000 when it comes time to renew in little under 4 years.
Or maybe I'll sell my house and use the proceeds to start a tea shoppe :)
Realistically, planning this far in advance is a bit of a pipe dream, but it's a fun one. For all I know I could be back to no roommates next month trudging away at my little *cough* pile of debt.
Only time will tell.
In the mean time, I'm going to scope out some sources of side income to help tackle the pile. I'm thinking I might see if there is a need for math tutors here in town.
What do you all do for side/secondary income?