Skip to content
Download Consolidated Credit's Free Debt Relief Guide

What are the causes of your debt?

When you’ve got debt and you are keen to pay it down, you’ve got to do more than develop a debt repayment strategy.

Consider the amount of money you owe and how you accrued so much credit card debt. With credit card companies offering various incentives, consumer debt is rampant. The costs of living, health insurance, and medical expenses all factor into your debt load.

“There are a few common reasons that people end up carrying debt. In order to keep your debt problems from re-occurring, you need to determine what caused your debt and how you can avoid repeating the same mistakes,” says Jeff Schwartz, executive director, Consolidated Credit Canada.

Simply adjust some poor money management behaviours to see results almost instantly. Good money habits, including budgeting and focusing on savings, will help you to pay down debt and avoid accumulating debt in the future. To learn more about your options, call one of our trained credit counsellors at (844)-402-3073 or check out our free online debt analysis.

Here are some common causes of debt and some suggestions on how to minimize your risk.


One of the biggest reasons that people end up carrying debt is that they use credit as a way to stretch their household budget. When you spend beyond your means, it is only a matter of time before your living expenses are unmanageable.

The solution to this is to set a household budget that details your available spending each month. Take control of your spending habits with a budget. Separate your expenses into needs and wants. If you are stretched too thin, you may have to slice and dice some of the expenses from the wants list.

Use cash only, or use your credit card for planned purchases within your budget that you’ll pay off in full every month. The benefit of spending in cash is that once it is gone, it is gone so you won’t be able to spend more than you can afford.

Interest Charges and Late Fees

Would you willingly pay significantly more than an item costs in the store? That is effectively what you are doing when you carry a balance on your credit cards. As interest rates rise and as the balance of your debt increases, the cost of carrying that debt becomes even more substantial. It’s not long before handling your monthly payments becomes unaffordable.

Proper debt management requires discipline. For example, avoid late fees and interest charges by avoiding carrying a balance on your cards. If you are carrying a balance, ensure that you pay on time every month to avoid late fees.

Fraud/Identity Theft

At any given moment, there are all kinds of fraudsters standing by, waiting for the opportunity to steal your identity and take out debt in your name. In some cases, you are able to dispute the fraudulent debt and are not financially responsible. In many cases though, innocent people see their credit and finances in shambles as they struggle to pay down huge debt taken out fraudulently.

Avoid being a victim by being vigilant with your financial and personal information. Don’t give out PIN numbers or account numbers. Don’t do banking or other personal transactions in areas where internet connections are not secure.

Purchase from websites that you trust and that are secure. Don’t click on suspicious email links.

If something seems suspicious, err on the side of caution. For instance, if someone calls from your financial institution, asking you questions that make you a little uneasy, hang up and call your financial institution directly to confirm the query.


Even if you are on a hot streak, the house always wins eventually, which means that problem gamblers end up with crushing debt loads. Problem gambling is an addiction like alcohol or drug abuse that requires professional help to overcome.

Signs of a gambling problem include lying to family and friends about gambling, hiding debts and racking up debt on the heels of a loss. If this sounds like you or someone that you love, seek professional support today.

Job Loss

Job loss is one of the most significant causes of debt amongst Canadian families. When your income is reduced or interrupted, it can be very hard to make ends meet. If you are without work (or without enough work), it is common to turn to debt to cover your expenses. It can be difficult to pay that extra debt down.

To avoid this problem, keep your debt load low on an ongoing basis and make sure that you’ve got money put aside to cover expenses in the event of an emergency. If you are already stretched thin because of high debt, you are that much more vulnerable to falling into debt trouble.

Insufficient Insurance

It’s not uncommon for people to underestimate life, disability, or medical insurance through their employers, which means that they end up with a hefty price tag, because their expected cash flow falls short.

To remedy this, double-check what your coverage is with your employer and make sure that you are adequately covered. Make sure to top up against any shortfall. As causes of debt go, lack of sufficient insurance can be the most life-threatening causes of death.

Too Much Student Debt

The high cost of post-secondary education today means that students are routinely piling on more and more debt. However, graduating with substantial debt means that you’ll likely be playing catch-up during the earning years that you should be growing your wealth. The end result is that you’ll end up delaying your financial milestones or worse – damaging your credit right from the start because you can’t keep up with your debt obligations.

“Reduce the amount of debt that you need to take out by living at home and working part-time during school,” says Schwartz.

Keeping Up With The Joneses

When people start living a lifestyle that they can’t afford, simply because they feel pressured to “keep up with the Joneses”, debt trouble isn’t too far behind.

While your home or car may not be as flashy as your friend or family member’s, but there is a reward in living a lifestyle that you can afford. For one thing, you will avoid debt trouble.

Lack of Financial Literacy

People end up with debt sometimes because they don’t fully understand basic personal finance principles. Take the time to learn about financial products and what your responsibilities are. Also, take time to make sure that you’ve got the right credit product for your needs.

Final Thoughts

What the causes of debt unique to your situation? Regardless, there are ways to become debt-free and back on track. All you have to do is speak to a trained credit counsellor. Learn how to pay your debt down and adapt a debt-free lifestyle. Call us at (844)-402-3073 or visit our free online debt analysis.

Speak with a trained credit counsellor today!

What is your total credit card debt amount?

Provide a few details about yourself.

##first_name##, here are your next steps...

Get a clear picture of your spending vs. your income. Begin your online budget and financial analysis now by clicking the button above.

Our experts are here to help you understand your options and reach your goals. After you complete the easy-to-use online budget, one of our trained counsellors will reach out to you and provide recommendations.

Everything shared is 100% confidential and secure.

I understand and agree that by choosing “Start your online budget now”, I am voluntarily providing certain personal financial information in order to educate myself as to my current financial position. I understand that this budget tool is educational in nature, and that none of the information received in the form of a budget constitutes financial advice, nor does it constitute a counselling session. I understand and agree that the budget depends on the information I input into the fields, and that Company does not represent or guarantee the accuracy of the budget. I understand that this tool may collect information and should I choose not to provide such information, I am not to proceed further. If I choose to abandon the tool midway through the process, I understand that the information will not be maintained and I would be required to start providing the information from the beginning. Company disclaims all warranties associated with the budget tool herein. I understand and agree that Company may use the contact information provided herein to contact me through various means of communications, including automated messages, and that I expressly consent to receive these messages.

Consolidated Credit Counseling Services of Canada Inc BBB accredited business profile