Many Canadian households unknowingly face a debt spiral -- an ever-accelerating cycle in which borrowers struggle to make interest payments while their debts expand.

According to the Certified General Accountants Association of Canada's latest report, household debt in Canada hit an all-time high of $1.5 trillion during the first quarter of 2011. That overall figure translates to an average deficit of $176,461 per family with two children.

Experts say that these consumers either have to smarten up in time to get their finances in order or they could face devastating debt, and even bankruptcy. Here are six of the most common debt spirals that trap average Canadians -- and how you can avoid being blindsided by them: 

Debt Spiral Trap No. 1: Borrowing to spend
In the first three months of 2011, Canadians borrowed $0.49 for each dollar spent. This compares with only $0.26 of consumer credit per dollar of personal spending in 2002.

Fifty-seven per cent of Canucks used credit to pay for daily living expenses, including food, housing and transportation. In March 2011, Canadians borrowed $0.92 of each dollar spent to buy new and used vehicles -- up 163 per cent from $0.35 in mid-2008.

While no one would recommend going without necessities, many Canadians should try inexpensive alternatives instead and eliminate luxuries.

Tip: Develop an expense-cutting household budget and creatively experiment with cost-saving ideas.

Debt Spiral Trap No. 2: Revolving credit
Revolving credit requires minimum payments that mostly cover interest and only postpone repayment of the expanding debt principal.

Lines of credit and credit cards are examples of revolving credit. By early 2011, personal lines of credit dominated 60.1 per cent of Canada's personal lending market. Credit cards were the fastest-growing type of personal debt in the first quarter of 2011, up an annual 5.8 per cent.

Tip: Always prioritize revolving credit as money to be repaid, not as cash to which you are entitled.

Debt Spiral Trap No. 3: Insufficient income
Overall, 48 per cent of Canadians named lower-than-anticipated income as the main cause for their debt problems. Borrowers must match realistic expectations about income with their credit and borrowing levels.

Canadian households with annual earnings of $50,000 or under are six times more likely to experience financial troubles. Their average debt-to-income ratio is 62 per cent greater than families whose annual earnings fall between $50,000 and $79,999.

Tip: Live within your means while you research opportunities for sustainable full-time or part-time income opportunities.

Debt Spiral Trap No. 4: Shrinking savings
Unlike past economic downturns, Canadians failed to increase their savings during the 2008 to 2009 recession. Motivated by low interest rates and eased credit requirements, people borrowed more but saved less during the most recent financial crisis.

Today, 46 per cent of Canadians whose annual earnings are under $35,000 lack enough savings to handle an unforeseen $5,000 expense without borrowing. Similarly, 23 per cent would have to use credit for an unexpected $500 charge.

Tip: Start an automatic savings plan, however modest, to build a financial cushion against unexpected expenses.

Debt Spiral Trap No. 5: Declining home equity
By the end of 2010, the value of residential real estate assets that Canadian owners could use as borrowing collateral had declined to 34.3 per cent, a 20-year low.

Should housing prices in the Great White North fall, the value of those collateral assets will drop further.

Canadians rely on real estate assets to not only qualify for mortgages, but also for home-equity lines of credit (HELOC) to fund consumer purchases. From cars to clothing, most consumable items depreciate in value.

Tip: To increase the value of household assets, focus on paying down mortgage and home-equity debt.

Debt Spiral Trap No. 6: Financial stress denial
Some Canucks fool themselves about their perilous financial situations. The Certified General Accountants Association of Canada survey revealed that respondents concerned about higher debt shrank by 10.3 per cent to 78 per cent in 2011, down from 86 per cent in 2010.

Another 82 per cent were confident that they could manage owed amounts or borrow more. Yet 54 per cent of those surveyed felt less wealthy today compared to three years ago.

Face it. After interest rates go up, many Canadians will no longer be able to carry their debt loads. If the economy double-dips into another recession, job losses will drive housing prices down while profit-minded banks tighten credit requirements.

Tip: Document your debt totals, then take positive action to contain your household liabilities before they spiral out of control.

See related: Q&A: Credit card tips from author Jonathan Chevreau; How to find a qualified financial planner