Debt Ratio In Canada

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Merriam-Webster defines debt as “an amount of money that you owe to a person, bank, company, etc.” According to Statistics Canada, our Canadian household debt load was $1.6 trillion. Lack of financial understanding and incorrect choice of one’s decisions are to be blamed for high debt ratio. Most of us with high debt are not financially educated and disciplined until they run into the pitfall. The most common reasons for the high household debt ratio are financial mismanagement, separation or divorce, income reductions, job loss, medical conflicts, and unexpected disasters.
The majority of the Canadians walk into debt by the most common and widespread reason which is overspending and consumerism. An excess use of credit, spending more than what you are able to pay back is often the most case and cause of heavy debt among …show more content…

Not all of the costs are covered by our Canadian health care system or insurance. Without insurance and benefits, most of us use credit to pay medical costs and day-to-day living expenses for a while and financial benefits from the government are sometimes insufficient to pay off your outstanding debts.
A survey done by Michalos & Associates in 2014 found that 14% of all the bankruptcies were due to separation and relationship complications. The financial cost of divorce is quite high in Canada. Paying the legal cost, former spouse and the cost of two households instead of one all on the same income is another reason for high debt. Sometimes, emotional stress brings down their earning potentials causing a high debt ratio.
With uncertain world economy and past financial meltdowns cost a lot of jobs around the world, and Canadians were not spared. Many individuals found it difficult to stay on top of their debt payments due to laid off or cut back in their usual hours worked. Most of them relied on their credits during the transition

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