I finally managed to file our tax returns and since we used Netfile, we can expect our refund within the next two weeks. It is always nice to have a lot of money in the bank account and wonder what to do with it. This year, that decision is pretty easy for us: we are going to use the refund to pay off an auto loan that we took out last year to buy a mini van. It will be nice to (again) have no consumer debt other than a small mortgage outstanding.

Here are some ideas for your refund (in decreasing order of preference) other than spending it:

  1. Pay off credit card debt.
  2. Pay off consumer loans like car loans or lines of credit.
  3. Get a head start by contributing to your RRSP now (or) Make a pre-payment against your mortgage principal.
  4. Invest in a diversified portfolio in your taxable account.