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If you are overburdened with multiple debts, then you should try to repay them as fast as you can. Even if you do not owe big amount, it is advisable that you pay off debt sooner rather than repaying it later.

Reasons to pay off debt as fast as you can

You should try paying off debt quickly for a number of reasons, which are discussed in the following lines.

• One of the major components of your credit score is determined by the amount you owe. Therefore, you should pay off debt quickly in order to raise your score. It will help you to obtain better interest rates on your loan.

• If you have cash in your hand, then it will give you the power to negotiate. Cash is much more desirable than any credit. Therefore, the sooner you pay off debt, the quicker you will have cash in your hand; which in turn, can help you to have total control on your finances.

• Debt limits your available money and time, which you should utilize to save for your future expenses. Therefore, you should try to repay your debt as fast as you can, so that, you can save money for your future.

Self help options to pay off debt quickly

You can try the following 3 self help options to pay off debt quickly.

1. Repay your high interest debts first – You can get rid off additional interest charges if you pay back your high interest debts first.

1. Pay more than minimum monthly payments – Increase the monthly amount you pay towards your debts; it will be really effective to save money in the long run.

1. Transfer your debts to a low interest card – With the approval of your creditor, transfer your high interest debts to a low interest credit card. It is an effective way to get rid off debt quickly.

Apart from these self help options, you can also seek professional help if you think that a paid service will be able to give you better results. However, you can save money if you can pay off debt, all by yourself.

I know this is probably too late for the 2008 tax year, but keep this post in mind when you’re ready to help your kids with next year’s tax return.

There are a number of tax breaks that students can claim on their tax return, so make sure they file one and consider these tips when doing so:

Tuition.  Students are entitled to claim 15% of the tuition paid during the tax year in question.  For example, if you’ve paid $5000 in tuition, you can expect to get $750 back.  Books, parking, meals and residence can also be claimed, but you’ll need a T2202A tax form from the school in order to do so.

Education expenses.  Aside from the tax break on tuition, you are also eligible to claim $400 per month you are in school for full-time students and $120 a month for part-time

Textbooks.  If you are eligible to claim the education expenses tax break, then you are also eligible to claim the tax break for textbooks.  It doesn’t matter the exact amount for each text books because this is paid as $65 per month for full-time students and $20 for part-time.

Moving Expenses.  If you’ve moved over 40 kms away to attend full-time studies, you can claim your moving expenses against the income earned at a job during the tax year in question.

Transit.  If you purchased a transit pass while attending school you can claim that….and remember to hold on to the receipts!

Employment.  If you had a summer job you can claim a $1019 for expenses related to work.

Student Loans.   If you’ve started to pay back your student loans, you are allowed to claim the interest that you are being charged on your loan.

Unless you’ve been in hibernation for the last year you have most likely heard of the new Tax Free Savings Account (or TFSA).  A TFSA is registered savings plan to help you suppliment your investments or save for a rainy day.  All interest gained on money in the account or money withdrew from the account is tax free.  Since earnings are tax free, TFSA’s are non tax deductible  Currently, you can contribute a maximum of $5000 per year to your TFSA, but this limit will be subject to inflation and rounded to the nearest $500.  Another great thing about a TFSA is that most of the investing options allow you full access to your money anytime with a simple phone call.

There are many different types of investment opportunities that you can capitalize on with a TFSA which include: GICs, Mutual Funds, Stocks and Bonds, and cash deposits.  One investment option that looks particularly inviting is the Escalating Rate TFSA GIC (non-redeemable).  With the market as volitile as it is, I think a GIC is the safest way to go.  This GIC goes from 1.5% interest in the first year up to 7% in the 5th and final year.  The only thing to remember with this type of investment is that it is locked in for 5 years.  If you can afford to have the money sit in the GIC for a long period of time, this investment will automatically put the principle and interest earned in a new 5 year GIC after the previous term has expired.  If you would like access to the GIC funds after 5 years you have to instruct the bank not to renew.

CIBC has a calculator that will show you how much you can save with a TFSA instead of a taxible account.  Click here to try it out