There’s rarely a truly ‘right’ answer to our financial quandries. My hope for my clients (and Kat is not currently a client, for the record) is that over time they obtain an increasing detachment from their finances, ie., not operating out of fear or compulsion, but instead with an element of zen.

By that I mean, making grounded, savvy, thoughtful decisions.

Sometimes the journey can take us on circuitous routes.

If I understand Kat’s finances correctly, her investments have been outgrowing her debt. Because of that, I wish Kat could take only the bare minimum out of her investments — in a few years, her investments may have far outpaced her debt level. Withdrawing is diminishing the goose that is laying the golden eggs.
Could options include:
1. Simply taking out the amount needed for education and shrugging off the debt for now, knowing that in three years or even less will be the time to deal more aggressively with the debt?
OR
2. Taking out enough both for the education and enough to cover the minimum monthly debt-interest payments, so that the cash flow eases up a little?
OR
3. taking out some investments from the rrsp, and reinvesting in … don’t faint … an income trust for a year or two? NOTE: I am NOT a financial planner so this is not official advice, simply kicking around an idea. Income trusts have plummeted so significantly that many offer yields that totally outstrip debt interest rates. Since we have 4 years before the axe falls, and Kat just needs a year or two, she could then sell them way before the 4 year deadline, and presumably get nearly as much as she paid for them, and put the money back in the RRSP. Again, I’m tossing this out there just to get the creative juices going. Any readers out there have other suggestions? (note, a second job is not an option. Kat has a fulltime career plus evening classes plus a couple small extra income gigs already)

Back to the heart of the matter. At the end of the day, if paying off the debt using RRSP savings is going to give Kat the breathing space and clear mind to focus on her studies, and engage with her money from a sense of freedom, that is, for Kat, in this situation, the right thing to do.

Forget the number crunching.

Sometimes it’s about doing what you gotta do.