Germany is one of the richest countries in Europe and occupies top places all over the world. Despite the wealth, almost one in ten people in this country is over-indebted and can no longer meet their payment obligations.
The increasing over-indebtedness knows no age limits, people in a precarious financial situation we find in all age groups. One could say that over-indebtedness is clearly linked to poverty, as households living below or very close to the poverty line usually have no ability to cope with unexpected expenses. For years, the number of over-indebted 18-25 year olds has increased and here we can only conditionally call poverty the cause.
Overindebtedness: Those who are over-indebted are no longer able to meet their payment obligations and if there is no longer any prospect of doing so in the future. In other words, over-indebtedness is when we spend more than what we actually take on a monthly basis.
What are the most common causes of over-indebtedness?
In the basic education of young people, the handling of money is little or not addressed. So we can not be surprised that young people easily lose track of their finances.
The most common causes of over-indebtedness:
With perpetual debt, we mean above all mobile phone contracts, it often happens that the consumer at the same time conclude two or more contracts. The obsession to always own the latest smartphone is great and the top models of the popular manufacturers are not affordable for many young people without a contract. Due to the accumulation of many initially small amounts, the monthly burden increases. Sometimes only an unexpected issue is enough and the debt trap has caught on. If we assume that long-term debt will continue to be paid in addition to the mobile phone contracts, the disaster is planned ahead of time.
Excessive consumption on credit:
The retail industry attracts its customers with evidently cheap financing offers. A new kitchen, a TV, a game console for Christmas or a holiday trip that we can literally get with just one signature. Frequently several things are financed at the same time, the small amounts add up to a large sum. Many people easily lose track and live beyond their means.
Disposition credit – tolerated overdraft:
One of the most expensive ways to get money from a bank is to take out discretionary loans. Many banks offer their customers after a tolerated overdraft, a discretionary credit. With an average interest rate of 15%, discretionary credit is one of the most expensive types of loans. Once the current account is overdrawn, it will be very difficult for most people to get back to black zero.
A disposition credit has no term of payment and no installment payment is agreed, which makes repayment more difficult. Until the monthly income offsets the debt, the loan can be used. The cost of a persistent overdraft is very high, and if the amount of seduction is exceeded, the bank can simply terminate the discretionary credit from one day to the next. In such a case, the entire sum owed is immediately demanded and the debt spiral has snapped again.
Causes of over-indebtedness in percent: unemployment 17.9% Illness, accident, addiction 12.4% Divorce, separation, death of the partner 12.2% uneconomicalness 11.5% Failure of independence 7.9% Average personal debt – 2014
How can I prevent over-indebtedness?
If over-indebtedness threatens, we should act as soon as possible. We must not let our debts grow over our heads. Debts generally arise when we spend more than we take. If we notice that we still have open accounts at the end of the month, it is an indication that we are clearly spending more than we can afford.
You should always keep an eye on your finances
Avoid unnecessary expenses
In order to avoid unnecessary overspending, we should keep an eye on our incomes. Even if a decent income is transferred to our checking account, the money can quickly disappear from there. Be sure to avoid EC and credit card payments. Due to the frequent use of the bank deposit, we quickly lose the relation to the value of the money. Paying with a card may be convenient, but it is proven that people who pay by card spend much more than a cash payer. If we use a credit card, we have to reckon with additional costs. As soon as we do not settle the amount within a certain period, the card provider charges interest.
Rescheduling also possible despite credit bureau
If you are using an expensive prepaid credit or your credit card is overdue, you should quickly repost. With a rescheduling can save annually several hundred euros. The interest rates are significantly lower for a installment loan or the loan despite credit bureau, you also receive a payment term and can pay off the loan completely within a certain time. Please note that a bankruptcy loan can be terminated by the bank without giving reasons. Such a termination is registered in the credit bureau, as a negative feature and may have consequences in the future.
Sample rescheduling of 8.000,00 EUR
|Credit card:||3,500 EUR|
|Interest rate:||14.5% pa|
|Interest per year:||507,50 EUR|
|Flexible credit:||4,500 EUR|
|Interest rate:||11.5% pa|
|Interest per year:||517.50 EUR|
|Total interest:||1,025 EUR|
|Installment loan:||8,000 EUR|
|Interest rate:||5.5% pa|
|Interest per year:||440.00 EUR|
|Savings in the year:||585,50 EUR|
Debt trap disposition loan
Fingerweg of the disposition credit, if there is no other way, there are cheaper ways to borrow money. It sometimes happens that we have to make unexpected purchases and our salary is no longer enough. Let’s assume that our vehicle has to be replaced. After all, we need a functioning vehicle to maintain our employment. In such a situation, we’d better address our bank to finance the new acquisition with a cheap loan. We can schedule a installment loan in our expenses and we get a fixed date on which the loan is repaid.
Keep track of everything with a revenue and expense account
Run a revenue and expenditure account in your household, where you can see each month, how much you can afford and which purchases you have to give up. Avoid unnecessary spending, just think about the value of the things you already own. We do not need a new smartphone every year. Most of the time we buy stuff we do not need, the money we do not have to impress people we might not even like. In the month we have several Festausgaben, which must necessarily be considered. If there is anything left over from our salary at the end of the month, we should invest some cash.
With the savings, primarily serve the liabilities
Loans always have priority and should always be served before saving. If you hide money in the proverbial sock, they should pay the debt first. It is simply about the fact that we can earn with our savings, never as much interest as us, for example, for a discretionary credit is accepted.
Our tip: Instead of spending new consumer spending, you should invest in your education. A well-trained employee finds a new job faster than an assistant.
Debt counseling and personal bankruptcy
If you think that you are already over-indebted, you are not afraid of debt counseling. You should not hesitate to pull the emergency brake, with proper advice and professional support you can still change the course.