The increase in key rates announced yesterday by the Fed in the United States, inflation, the rise in gas prices directly affect the wallets of Quebecers.
The Canadian household debt ratio is at record highs, Statistics Canada reported last March.
Should we worry even more about the current economic situation if we accumulate several debts? To take stock, you have to calculate your debt ratio.
“In order to determine if we are close to over-indebtedness, there is the debt ratio that exists which makes it possible to determine if we are over-indebted,” explains Sophie Desautels, licensed insolvency trustee at Raymond Chabot.
However, it is reassuring: some debts are not worrying.
“A mortgage is good debt. The problem is when our debts are greater than our ability to repay. So the debt ratio makes it possible to calculate disposable income and our debts, ”she explains in an interview with TVA Midi.
This percentage gives a clear picture of your personal finances.
“The percentage we have to identify with is 40% debt ratio. If we are beyond that, it means that our budget is very very very tight. Our situation will depend on whether we have a family, whether we are alone, single parent…”
Thus several factors must be taken into account in the calculation.
To calculate this ratio, we must take all the monthly payments, add them and divide them by our gross monthly income, that is, before taxes.
“We take our annual gross income and divide by twelve. Family allowances are also added. We then take the amount of our debts, and we divide that by our monthly income.
If you can no longer make your essential expenses without using your credit cards, this is a harbinger of over-indebtedness.
“Pharmacy or food expenses are a big sign if you put that on the credit card and you’re not able to pay it back before the end of the month. It is a clear sign. If you reimburse a credit card by paying a credit card, you have to see that there, things are not going well, ”she insists.
“If you start getting calls from a creditor, don’t wait. There are solutions, there are people for it and there is life after a financial recovery,” she concludes.
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