How Much Debt Is Too Much Debt?

5 min. readbyVexxit StaffonOctober 20, 2020
The stress of financial burdens amid a pandemic

Let’s start with the good news, shall we? Over the past few months, Canadians have turned into super savers. Between scuttled travel plans and shuttered restaurants, there have been far fewer temptations for credit card spending and as a result, overall household savings have risen nicely.

Ksenia Bushmeneva, an economist at Toronto-Dominion Bank “noticed that the household savings rate — the percentage of disposable income that households manage to save — soared from 3.9 per cent at the end of 2019 to 28.2 per cent in June 2020, a level she described as ‘eye popping,’” according to CBC.

Meanwhile, over the summer, the household debt-service ratio of Canadians – the share of disposable income that goes toward paying principal and interest – fell to 12.4 per cent from 14.5 per cent. As noted by BNN Bloomberg, that’s the largest decline on record. Not a bad accomplishment during what has undoubtedly been one of the most challenging years in generations.

Now, here’s the catch. The average Canadian household still owes $1.58 in debt for every $1 they’ve got in disposable income. A healthy drop from earlier in the year, but still high enough to keep Canadians ranking among the top 10 of highest household debt levels, worldwide.

So where you do you sit on the debt spectrum? The simplest way to calculate your own position is with an online debt calculator, such as this one from ( Here you can measure your personal debt-to-income (DTI) ratio and see if it falls into the category of ‘good’ (36% or less), ‘manageable’ (37 to 42%), ‘cause for concern’ (43-49%) or ‘dangerous’ (50% or more).

If you’re feeling a little ‘dangerous’, rest assured you’re not alone. New data from BDO Canada and the Angus Reid Group reveals that while one-in-five (18%) Canadians are financially better off since the pandemic hit, nearly two-in-five (39%) are worse off.

“Canadians are more likely to have had their personal finances worsen this year if they are self-employed (60%), employed part-time (44%), have experienced layoffs or reduced salary during the pandemic (67%) or have an income under $50,000 (42%),” according to BDO’s release.

Furthermore, BDO found that “debt is not going anywhere for some Canadians this year. Among those with increasing debt, almost three-in-four (73%) say it increased more this year than in 2019, suggesting some Canadians’ debt is accelerating due to the pandemic.“

As 2020 draws to a close, you may be wondering how you’ll fare in 2021. If your debt feels overwhelming, a sure way to relieve some of that stress is by reaching out to a credit counsellor – someone who can take a professional and objective look at your situation, reassure you that they’ve seen worse, and help you sort out a plan for the year ahead.

Work with a Debt Counsellor

Get your debt under control with the help of a credit and debt counsellor. Find the counsellor best suited to your needs on Vexxit.

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It only takes 15 minutes to get started.

If you’re an individual or business owner in need of legal, accounting, financial, or other specialized services, we’ll help you find the best providers for you.