Tax Refund – What to do with it?

If you’re one of the lucky people whom end up getting a tax refund year after year, I’ve a question for you.. what do you do with it?

I filed my taxes last week via Netfile, and generally the turnaround for the cheque to come in the mail is around 2 weeks (if I remember well). Originally, and up until today.. I was thinking that the best way thing to do would be to put it on my line of credit, now.. I’m not so sure.

It’s a sizable amount which would definitely put a dent in my line of credit – but I have to think longer term here, and I have to think realistically. You see, I’m really good at paying off my line of credit lately when I get a chance. Every spare few dollars I have is going on there, I’m living fairly frugally in hopes that I’ll get it paid off sooner than later. That said.. the whole point of the Smith Maneuver is to pay off the mortgage with the tax refunds , as well as build up a portfolio of equities and investments in order to have a great head start when it’s time to retire. So now I’m stuck.

One one hand, I think the sooner that I get the LOC paid off the more I’ll be able to put down on the mortgage and get it paid off faster – on the other hand, I’m thinking that as soon as I DO get the LOC paid off, I’ll likely end up driving it up a bit again taking a trip or something and being back at square one.. but will I do that after having paid all of that debt off?

I think I’m going to need some assistance in this decision – hopefully I get some quality comments to aid in my decision as I search the net for answers.

Pay down debt vs Pay down mortgage… which to choose?