Canadian Personal Finance Blog

A household’s debt as a percentage of it’s net worth keeps dropping. What does this mean? It means we are worth more and/or our debt is worth less as a percentage of what we own and what our total net worth is. Who cares, I hear you ask? I do, for one, because it means I am worth more, my debt load is not dropping but the things I own and my worth is increasing as well. In my case my net worth mostly is increasing because the house I am living in, is increasing in it’s value, and to a smaller extent the investments I have are also appreciating.

The caveat to keep in mind is:

Households continued to build up mortgage and consumer credit debt. Household debt continued to outpace growth in personal disposable income. However, the gains in both financial and non-financial assets in the first quarter reduced the ratio of household debt to net worth to 17.5%, down from 17.6% in the fourth.

Which means on average most Canadian households debt load is INCREASING, but the value of our assets is outstripping this. Our debt load increase is, however, out running our personal disposable income (how much money we have left to spend). This is something to keep in mind, debt is a dangerous mistress (or master), and the sooner you dispose of their demands, the better!