While their family and friends were shopping for Christmas gifts last December, John and Rosemarie were busy buying a house. With a bank mortgage of $213,000 and $72,000 in cash — cobbled together from their savings accounts and a money gift from John’s parents - the twenty-something Toronto couple bought an 1,800-square-foot house that they plan to move into after their wedding this summer.

Because the house is a fixer-upper, which they gutted down to the brick after buying it, John and Rosemarie took out a joint line of credit for $40,000 to cover part of their renovation costs, which they expect to climb to $60,000. They also plan to tap into other credit sources to buy furniture and appliances.

By the time they move into the house in July, John and Rosemarie, who have a combined annual salary of about $86,000, say they will likely owe close to $260,000.

“We know we’re going to be stretched and [money] will be tight,” says John, an elementary school teacher. “We’re each going to have to make some sacrifices.”

John and Rosemarie (who preferred to not have their surnames published) are among the growing group of young Canadian couples who are building a life together on a heap of debt.

A recent Statistics Canada study found young families (defined by StatsCan as those whose household heads are younger than 35) carry the heaviest debt load among Canadians.

Compared to the national median debt of $13.52 for every $100 in assets, Canada’s young families owe $39.40 for every $100 they own in assets, a 17-per-cent increase from 1999. At the same time, this group is also the poorest, with a median net worth in 2005 of about $18,750, compared with the national median of about $150,000. And unlike older Canadians, who had a higher net worth in 2005 than their demographic counterparts six years earlier, today’s under-35 crowd have a slightly lower median net worth than the $20,460 reported for the same age group in 1999.

“There is a societal phenomenon going on that is stacking the odds against these families,” says Armine Yalnizyan, an economist and research associate at the Canadian Centre for Policy Alternatives, a socio-economic think tank based in Toronto. “You’re looking at families just starting out that are hocked up to the eyeballs in mortgages, credit cards and student loans, and it’s getting very tough for them to get by, let alone save for their retirement and the kids’ education.”

What’s behind this high-debt, low-net-worth double whammy? The StatsCan study links net worth to incomes, and young Canadians today just don’t have enough earning power, says Ms. Yalnizyan. “Their incomes are stagnant. Young men today, in particular, are earning less than young men of the previous generation.”

Stanley Kershman, an Ottawa-based bankruptcy lawyer and author of Put Your Debt on a Diet, blames much of this young generation’s heavy debt loads on higher university tuition fees and soaring house prices. It doesn’t help either that credit has become so readily available to young people, he says. By the time they leave university, many young Canadians are saddled with more than their student loans; they’re carrying balances on credit cards. The financial strain only gets worse when these young, debt-saddled couples have children, says Mr. Kershman. “Suddenly, their income is reduced because one parent has to stay home to look after the kids,” he says. “Or if both parents continue to work, often one partner’s income is just enough to cover the cost of child care.”

Scott Hannah, president and chief executive officer of the Vancouver-based Credit Counselling Society (a member of Credit Counselling Canada), says he’s seeing more young Canadians getting into financial difficulties because of high debt loads. Last year, Mr. Hannah’s agency held close to 2,000 counselling sessions for young adults and couples age 20 to 34, an increase of about 40 per centÖ from the 1,400 sessions held in 2002.

Nationally, the numbers paint a similar picture, says Laurie Campbell, executive director at Toronto-based Credit Canada, which, like the Credit Counselling Society, is a regional member of the national agency Credit Counselling Canada. Of the roughly 113,000 Canadians who sought help last year at Credit Counselling Canada, about 30 per cent were between the ages of 20 to 34, says Ms. Campbell. Fifteen years before, this group accounted for only about 15 per cent of the agency’s clients. “We are seeing a growth in this younger age group,” says Mr. Hannah, “which tells us that young adults have become more comfortable with taking on debt at an earlier stage in their lives.”

But not all debt is bad, the money experts say. Young couples who borrow money to buy a house are using this debt to build financial equity as the value of their home increases, notes Mr. Kershman.

What about dipping into credit to pay for a home renovation project, as John and Rosemarie are doing? “If it’s a home-improvement debt that’s increasing the value of your home, then generally it would appear to be a good debt,” says Mr. Kershman. “But there are some caveats with that, such as don’t be putting in 24-karat gold faucets and turning your home into the most expensive house on the street. Because if you move in five years, you won’t get back all the money you spent on the renovation.”

Lillian Lupuliak, a financial planner with Assante Financial Management Ltd. in Calgary, says borrowing money to make a wise, controlled investment can also pay off in the long run as long as the return on investment is higher than the cost of borrowing. “But this is not for everybody,” she says. “For someone with employment stability, who has RRSPs and other savings, this could be good strategy — but not for someone who’s already in a lot of debt or doesn’t have job stability.”

Whatever strategy they choose to follow, young couples who want to get a handle on their finances need to start with the No. 1 Golden Rule: talk about it. That’s what John and Rosemarie have learned to do. “It was a bit awkward in the beginning, when we first sat down to talk about money,” says Rosemarie. “But at the end of the day, it’s about compromising and communication and learning to be accountable to another person.”