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Q: My husband and I are recently graduated medical professionals. We owe more than $185,000 in student loans and credit cards, and our combined income is $95,000. Should we pay off our debt, contribute to an RRSP or both?

Diana says...
Some debt, such as student loans and mortgages, can be considered good debt because it can boost your income and real estate investments. But credit card debt can badly chew up your hard-earned dollars. So, while you’re paying off your student loans, concentrate on getting rid of your credit card debt in one of three ways: 1) If you have multiple credit card balances, put most of your payments toward the credit card with the highest interest rate first; 2) stick to only one credit card—preferably one with a low interest rate; and 3) kick the too-easy credit card swipe by using cash or your debit card for purchases wherever possible. Also, because your combined income is substantial, you could reduce your debt and save for your future by investing a small amount of money—say, five percent of every paycheque—in a pre-authorized RRSP. You’ll be reducing your income taxes and building wealth at the same time!

Diana Cawfield is an award-winning financial writer with more than 10 years experience. Send her your questions here.