I went in and checked my Transaction log the other day and it was something crazy like 15GB. I ran the following code:
USE mydb
GO
BACKUP LOG mydb WITH TRUNCATE
If you file grows every night at 500 MB there is only one correct action: pre-grow the file to 500MB and leave it there. Shrinking the log file is damaging. Having the log file auto-grow is also damaging.
You don't have to take my word for it, you can read on some of the MVP blogs what they have to say about the practice of log and file shrinkage on a regular basis:
There are more, I just got tired of linking them.
Every time you shrink a log file, a fairy loses her wings.