what are the main causes of debt

According to Statistics Canada, household debt was 178.5 percent of disposable income at the end of 2018. In other words, for every $1 of disposable income available to a typical Canadian family, they owed nearly $1.79.

Clearly, Canadian families are borrowing a lot of money, but what are the main causes of debt? Let’s take a look at how people get into debt.


For most Canadians, buying a home is the single largest expense they’ll face in their lifetime. And with the state of the housing market, especially in Vancouver and Toronto, the cost of buying a house has far outpaced the rise in salaries for most people.

Anyone who wants to own their home will likely have to borrow money to do so. That leaves them with mortgage debt that could take a good part of their adult life to pay off.

Student Loans

Student loans are another common type of debt that adds up fast. Students can finish a 4-year college or university program with tens of thousands of dollars in student debt. If they go on to complete a master’s degree or doctorate, those numbers can skyrocket much higher.

Going to school full-time makes it challenging to maintain a job as well so it can be a catch-22. Students can end up going into debt to be successful with their schooling or they can work to earn a better income at the expense of their marks.

Medical Expenses

Canada has fewer people in debt due to medical expenses than our neighbors to the south, but even Canadians can face these costs. Prescription costs can be high for people without extended medical plans as can certain types of medical equipment.

And if you’re suffering from a serious illness and want to try alternate treatments, they’re not always covered by the government medical plans.

Loss of Income

Loss of income isn’t a cause of debt in itself, but it can lead to other forms of debt.

Over 50 percent of Canadians have less than $10,000 saved for emergencies. When faced with an unexpected job loss, that often means they only have enough money to support themselves for a month or two.

After that, they end up going into debt for everyday living expenses.

Finding a new job takes more than a month or two for many people, so they’re left with no choice but to borrow. And things like the coronavirus pandemic can make the situation worse, with some people facing several months of unemployment.

Unexpected Emergencies

Job loss is one type of unexpected emergency, but there are plenty of other emergencies that can leave you facing debt, even if you’re still making a decent full-time wage. Some of the common surprises include:

  • Expensive car repairs
  • Large-scale home repairs
  • Medical costs
  • Helping friends or family members in tight spots
  • Travel to help family in other parts of the world

One of the challenges of these kinds of situations is that they are emergencies. You don’t typically have a lot of time to look for the cheapest way to finance the costs and end up using expensive debt like credit cards.

You might be able to consolidate that debt so you pay less interest down the road, but with the higher interest costs in the meantime, you’ll end up consolidating more and more.


There are lots of unfortunate things about getting divorced, debt being one of them. One spouse could wind up with debt as a result of the settlement or both could end up leaving the marriage in debt.

When you’re getting divorced, you’re usually anxious to get out of the situation. You may have to sell your home or other possessions for less than you could get if you had more time.

If you bought your home when the market was high and are getting divorced in a downturn, you could wind up still owing money after it sells.


Some people end up going into debt as a result of a gambling problem. This could be as “innocent” as buying too many lottery tickets or it could be more serious.

Gamblers often believe in the fallacy that if they just make a few more bets, they can win back all the money they’ve lost and even come out ahead. They think that if they’ve lost more than they’ve won up to now, the odds are in their favor going forward.

That’s not true and it can lead to going deeper and deeper into the hole. Borrowing money to make more bets is more likely to leave you with nothing than it is to help you erase your losses. And while it might not be from a mobster that’s going to send someone to “collect,” it’s usually a high-interest source of debt.

Living Beyond Your Means

One of the most common causes of debt for Canadians is overspending. People want to “keep up with the Joneses” and end up going into debt for things like new cars, boats, gadgets, and other unnecessary expenses.

In a lot of cases, these things get financed with expensive types of debt like credit cards and high-interest loans. That means more of your disposable income is going towards the interest piece of the payment, so it takes a lot longer to pay off the balance.

And if you miss payments any payments, the interest rates can go even higher, leading to a never-ending cycle of debt.

What Are the Main Causes of Debt for You?

It doesn’t really matter what are the main causes of debt. The important thing is what are you going to do about it? Making minimum payments and continuing the behavior that got you into debt in the first place means you’ll never get ahead.

If you want to pay off that debt so you can get a fresh start, Captain Cash can help. We offer cash loans that will let you get ahead of some of those other payments or cover unexpected emergencies when they pop up.

Claim your cash now and you could have an answer before the end of the day.