You know you have a debt problem when your country’s household debt moves beyond the debt held by households in the United States.

Unfortunately, according to the Globe and Mail, that’s what has happened in Canada. Canadians have set a new record for household debt levels, and the current levels surpass what is seen right now in the U.S., as well as what is seen right now in the U.K. (Canada, however, has not reached the peak level of U.S. household debt as seen in 2007.)

Are You Vulnerable to a Financial Disaster?

One of the problems with having such high debt is that it makes citizens vulnerable to financial disaster. The Globe and Mail reports on the current household debt situation in Canada:

The ratio of debt to personal disposable income hit a high of 152.98 per cent in the third quarter from 150.57 per cent in the prior three months, Statscan said Tuesday. The report comes as Bank of Canada Governor Mark Carney is again sounding the alarm over swelling household debt. “Our greatest domestic risk relates to household finances,” the central banker said in a CBC radio interview.

According to the article, about one in 10 Canadians is in a financial position that can be considered “vulnerable.” Are you one of those? When you have a high amount of debt, you are one step away from financial ruin if an unexpected situation arises. If you lose your job, or if you have a major accident, or need to make repairs on your home or car, your financial situation could become even worse, since you are already in debt. It looks as though the number of Canadians on the verge of catastrophe is growing.

Shore Up Your Finances

Now is the time to shore up your finances. These numbers should serve as a wake up call to every Canadian: It’s time to take steps to avoid the fate many Americans have suffered. Canada’s economy didn’t take the same hit that the U.S. economy did during the recent global recession, and that means we are already in a better position. But individuals need to improve.

Take smart steps to improve your finances. Some things you can do right now include:

• Make a plan to pay down credit card debt – and then follow it.
• Build up your emergency fund.
• Cut out unnecessary expenses so that you are living within your means.
• Save up for larger purchases, rather than using your credit cards for items you can’t really afford.

Does this mean you have to get rid of your credit cards and never swipe your plastic again? Of course not. Credit cards can be great tools when used properly. Savvy credit card use can help you earn cash back and rewards. However, you have to be careful and integrate your credit card use into your regular budget. Using credit cards to build up debt, and buy things you can’t actually afford, is one of the reasons that Canadian household debt is rising so precipitously.

You can stem the tide, though. Be careful about how you use your Canadian credit cards, and live within your means. You don’t want debt to make you financially vulnerable.