DIANNE MALEY | Globe and Mail | Published 

We asked Jason Heath, a consultant and financial planner at E.E.S. Financial Services Ltd. in Markham, Ont., to look at the couple’s situation. E.E.S. is a fee-only financial planning firm that does not sell investment products.

What the expert says

If Pam and Albert wait too long to buy a cottage, “they could miss the ‘sweet spot’ from a lifestyle perspective,” Mr. Heath said. Teenagers are not as interested in spending time with mom and dad up north.

“So it’s a fine balance, timing the lifestyle and financial implications of a cottage purchase.”

First, the line of credit. If Pam and Albert want to pay it off quickly, they might consider using the money they have in their savings accounts, tax-free savings account and even their non-registered mutual funds, he said. As well, they could divert the money they are contributing to their TFSAs to paying down their credit line.

“They’ll cut their line of credit in half right off the bat and it will be gone in less than one year instead of two.”

Mr. Heath figures they are earning less in interest in their savings accounts and TFSA than they are paying for the loan. “Why not use these funds to pay down debt? Sometimes debt repayment is the best investment you can make.” read full article