Many people know the phenomenon all too well: at the end of the month, money gets tight and at some point, the only way to cover current expenses is to use the overdraft facility. Even if one denies oneself all not absolutely necessary expenditures, one can only watch the increase of the credit and its costs idly for days, until finally the long-awaited salary arrives.
But already the bank settles the credit as well as the accrued interest with the incoming wage or salary and it is missing again the few hundred euro, which must be caught up at the end of the month by the overdraft facility. Thus, you are stuck in a cycle of debt that lowers your monthly disposable income, even though you are not actually living beyond your means.
Because many end up missing exactly the amount that was missing the month before, so that income and expenses are actually in balance. A careless or unforeseen expense can thus ruin the budget for months or years to come. This guide gives three tips on how to escape the debt trap.
Tip #1: Eliminate interest costs immediately
A not insignificant part of the debt spiral carries the horrendous loan interest in the dispo area, in particular, if also the granted framework is exceeded. Eliminating these interest costs should therefore be a priority. One way to get out of these costs immediately is to use the free credit line that some credit card providers offer their customers.
Such a possibility opens z. B. a credit card from Bank Norwegian, which allows you to use your credit line for up to 45 days, free of charge and without interest. Thus the overdraft interest of approximately 10 to 15 per cent can be set to zero and the saved amount can be used monthly for the debt relief.
Tip #2: Reschedule
If the first option is closed to you due to a lack of creditworthiness, you should still arrange for a debt restructuring, because the overdraft facility is one of the most expensive forms of credit. It costs significantly more than normal consumer, small or express loans. One option is therefore to reschedule the monthly shortfall by taking out one of these forms of credit. However, it must then also be ensured that the repayment installments due as well as the interest costs incurred here can be met from the monthly income.
You can find lenders with better terms even with a bad Schufa score if you can plausibly demonstrate to the lender that your demands can be met from your current income. Foreign banks that do not collect a Schufa information are a possible address for this. However, it is important to beware of fraudulent loan brokers and dubious offers here. A foreign bank based in an EU country or a comparably strong country with the rule of law, such as the United Kingdom or the USA, usually promises sufficient security.
Tip #3: Reduce expenses, increase income
Of course, this sounds easier than it is in reality, but in many households there is enormous potential for saving money. For all those who have to get by on a tight income, it is a good idea to use a spending app to keep a record of all expenses. This not only provides an overview that probably did not exist before, but also has a direct disciplinary effect.
Because every expense that you record there is at least unconsciously checked to see whether it was really necessary or justified. Even thrifty families can still find a euro or two here. It would be much more pleasant not to have to look twice at every euro before spending it. This usually requires an increase in income. In a difficult economic situation, one should definitely dare to ask for a salary increase as well.
If in doubt, don't risk more than a rejection, but don't underestimate your own ability to work. Especially in times of a shortage of skilled workers, which will become even worse in the future for demographic reasons, many bosses will be inclined to pay their employees and workers more in order to keep them (this does not mean that you should threaten to quit in salary negotiations).
What many poor households and low-income earners also overlook or avoid for fear of social stigma or the red tape involved are social benefits beyond unemployment benefits I or II. The housing allowance, in particular, is intended especially for these people, and its assessment limits were raised generously at the turn of the year. On these and other social benefits you should definitely seek advice from the social associations or corresponding municipal offers and not give up money, which you are entitled to according to law and order.