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Canadians Now Owe $1.85 for Every $1 They Earn

Feeling like your paycheck disappears the second it hits your account? You’re not alone.

According to new data from Statistics Canada, Canadians now owe $1.85 in debt for every $1 of disposable income. That number reflects how fast household debt is rising across the country compared to how slowly incomes are growing.

Debt Growth Is Outpacing Wages

Mortgage payments, credit card balances, and lines of credit continue to rise. At the same time, wage growth isn’t keeping up. The cost of living has gone up, and many people are relying on borrowed money just to stay afloat. For a lot of households, “living within your means” now looks like constantly being in overdraft or carrying a balance month to month.

What’s Causing the Gap?

Several key factors are contributing to the increasing debt-to-income ratio:

  • Housing: Mortgage debt is still the biggest driver, especially with higher interest rates.
  • Inflation: Everyday essentials like groceries and gas are costing more, leaving less room in the budget.
  • Wages: Income isn’t rising fast enough to match expenses.
  • Credit dependence: More people are leaning on credit cards, buy-now-pay-later options, and loans to fill the gap.

Why This Matters for Canadians

A high debt-to-income ratio means more Canadians are financially stretched. Any unexpected cost or economic change, like a job loss or a rate hike, can hit harder and take longer to recover from. It also means more income is going toward paying off interest rather than saving, investing, or planning for the future.

What You Can Do

If your personal finances are feeling tight, here are a few steps that may help:

  • Review your spending and make a realistic budget
  • Focus on paying off high-interest debt first (like credit cards)
  • Avoid taking on new unnecessary debt if possible
  • Look into consolidation options or speak with a credit counselor
  • Set aside whatever you can, even a small emergency fund

Bottom Line

Debt levels in Canada are high, and income growth hasn’t kept pace. Many households are feeling the pressure. Keeping track of your financial situation and making small adjustments now can help you stay in control, especially as interest rates and costs remain elevated.

References

Kaleylangille

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