How much debt is too much debt


I have a mortgage, car payments, and a few credit cards on the go right now. I try to stay on top of my debts and I also try to use my credit cards sparingly. I thought I had everything under control but keeping up with the bills is starting to get tough. It’s really feeling like there is no end to my monthly payments. I’m starting to get concerned… how much debt is too much debt?

Mallory A.
Lethbridge, Alberta

Hi Mallory,

Let me start by saying you’re not alone. Household debt is on the rise in Canada. The most recent statistics show that the debt load of Canadians rose by 7.2 percent since last year. Even scarier: for every $1 that Canadians earn, they owe an average of $1.69. There are many factors that play into this, the main one being high housing costs.

The bottom line – lots of us are in deep debt.

But don’t get me wrong. Debt, in itself, is not evil. There is such a thing as “good debt,” spent on investments such as education or real estate. Credit cards, on the other hand, lead to one of the worst forms of “bad debt,” with sky-high interest rates and payment schedules designed to minimize payments and balloon total costs for the consumer.

If your debt starts spiraling out of control, you may need to seek help from a financial professional. Here is a list of five signs that you might have too much debt:

  • Too much going to debt – Many experts agree that you should be spending no more than 10 to 15 percent of your take-home income, after deductions, on credit card debt.
  • Paying others before paying yourself – Sometimes it feels like your paycheque is spoken for before you even get paid. If you’re putting off bills until payday and then feeling strapped for cash shortly afterward, you may need help with your debt.
  • Dipping into savings – If you are raiding your savings account or retirement funds to pay monthly bills or make ends meet, you’re in trouble. Savings accounts are most effective when you refrain from making regular withdrawals; you need to make some changes because you’re only delaying the inevitable.
  • Minimum Payments – Maybe you’re making payments on time, but they are only the minimum payments. This can lead to a downward spiral because it will extend your pay period for a painfully long time and the interest that you pay may double or almost triple the cost of your purchase.
  • The limits are in reach – If you have almost reached the credit limits on your cards, it’s not time to get another card. It’s time to get help!

Mallory, if you find yourself in any or all of these situations, you might want to call us at and speak to a credit counsellor. These are issues that will only snowball into bigger problems that will get harder and harder to solve.

And don’t forget about your own wellbeing. If you find yourself losing sleep, getting into household arguments about money, or sacrificing things you truly need, seek debt relief.

I hope this answers your question. Reassess your budget, or create one if you don’t already have one. This can be done on our website. Getting control of your finances will help you nip your debt in the bud.

Jeffrey Schwartz
Former President

Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT).

If you have a question about your credit or just about finance in general, Jeff is here to help. Send us an email with your question to [email protected]. You’ll get the expert advice you need and your question may be featured here on our website.