As per my shareholder agreement, the company has up to six months from my departure to sell and issue a refund to me. I've confirmed that I will receive the money in USD in a cheque. So, sometime between now and the middle of February we'll get a cheque and need to have a plan for the money.
I've always considered the money invested in shares part of my retirement plan, but now that the funds are being paid back, I'm feeling a bit torn. Jordan and I chatted about it over the weekend some and he's also a bit conflicted.
Here's the options that we're thinking on:
- Keep the money fluid in my TSFA
- Pay off the Kia
- Pay off half off the LOC debt
- Move the money to RRSP
Keeping the money fluid does have it's advantages. Certainly it would fully fund our emergency fund and then some. We don't know what type of job I'll find next year, so it might be good to have this as cash to remain flexible. This also opens us up to spending the money even if we don't really need to.
Paying off the Kia is a super attractive option. The interest rate is 0%, and as of today we owe just over $15,000 on it - so it would be so so close to being paid off with the share money. We pay a little more than $250/month on the car and not having that payment would give us a different type of month-to-month flexibility. That money could be redirected to paying off the LOC - going from $500/month to $750/month, or directed to savings that we've had to pull back on because of going on EI. Putting the money towards this debt has the advantage that it can't be 're-spent' unlike the LOC.
Paying a big chunk on the LOC would make tackling the rest of it feel actually achievable. Since using it to build the garage and fence on our Alberta house, the balance has gone up and down from $19K to about $25K. Currently it's sitting at $23,500 - so the share money would get this down to a manageable $10,000. The interest rate on the LOC is 5.73%, so from a financing charge perspective it makes more sense to lower this debt than the Kia as well. The minimum payment would reduce by about half which would give us equal month-to-month flexibility that paying off the Kia would give us (reducing the required paying by about $250).
Last option would be to just move the money into RRSPs. This wouldn't impact our cash flexibility in anyway, but would lock in the money to long term savings which was the original intent of it.
So, what do you think? Keep the money as cash, pay off debt, or move the money to long term retirement savings. We could really use your thoughts on this one.