Analysis: Households get richer than debt

What is the property situation of Czech households? Are we getting rich or are we borrowing more and more money? Where and where are our assets stored? These and other questions are answered by a study “The Financial Behavior of Households in the Czech Republic in Theory and Practice” prepared for the Czech Banking Association by experts from the University of Economics.

“The increase in the amount of funds that households have held in current and savings accounts over the past decade is also related to a decline in interest rates on time deposits to record low levels,” explains Associate Professor Penry Ronly from the Faculty of Finance and Accounting, University of Economics.

However, the favorable development of the total volume of deposits with banks obscures the differences between households. It can be assumed that one group of households saves and creates deposits in banks, while the other group of families borrows money in banks. “From the structural point of view, the indicator that some are saving and others borrowing may be stable, but in reality a certain group of households may be over-indebted,” says co-author of the study, Professor Rick Cendel from the Faculty of Finance and Accounting, University of Economics. 

 

Overall, the debt burden of households is increasing

debt loan

At the same time, the analysis shows that the debt burden of households – ie the status of consumer and housing loans in relation to wages and salaries – is increasing. “Growth in this ratio indicates that indebtedness has helped stimulate economic growth, but the room for its further growth is gradually depleting,” says associate professor Penry Ronly.

The argument that household indebtedness is much higher in many developed countries than in the Czech Republic is not acceptable, according to experts. “In an international comparison, indebtedness of Czech households is smaller or even significantly smaller than that of some advanced economies, but the economic maturity of the country is only one of the criteria for assessing the adequacy of this indebtedness,” notes Penry Ronly.

According to the authors of the study, other factors also play a role, such as the tradition of rental or property housing, economic policy and the associated level of indebtedness of other sectors, the country rating and the resulting high interest rate on consumer credit.

 

Overall, we are getting richer, not afraid to invest anymore

debt loan

A look at the overall wealth situation of Czech households shows that we are getting richer as a whole. While in 2008 Czech households owned property worth USD 9.1 trillion, in 2017 it reached USD 12.5 trillion. The total equity of Czech households thus increased by 37.5 percent over the next ten years.

With the advent of the crisis ten years ago, some households began shifting their funds to safer assets such as real estate, land and valuables. “In the last decade, households have learned to look for ways to better capitalize on their funds through profitable investments. They are no longer afraid to save their savings in financial assets, ”explains Mira Pamecnik, economic analyst at the Czech Banking Association.

In the financial assets of households, the fastest growth of holdings of long-term securities rose from USD 17 billion to USD 152 billion, which is almost nine times. “This growth is evidence of the rapidly growing interest of households in institutional bonds of domestic and multinational companies,” concludes Mira Pamecnik.

The 5 biggest debt traps for young people

The annual report from the directory inquiry firm Creditreform has shown a clear trend in terms of debts among young people for years. The number of debtors under the age of 20 has more than quadrupled since 2004, according to the debtor atlas. Today, every eighth person in the age group between 18 and 20 is no longer able to cover running costs or at least not to spend more than the income. It doesn’t look much better for the age group between 20 and 30 years. Since 2004, the number of debtors in this group has grown by around 60 percent. But what are the main causes of this frightening development?

The main reason for the trend is the attitude of young people who no longer think about how much they can really afford when buying. More and more young adults are taking advantage of offers with apparently low installment loans, which often have to be serviced over a period of 24 months. In addition, many banks make targeted use of young people’s mood to consume by offering overdrafts to trainees and creating the illusion that you can afford anything without money.

For many young people, the joy of consumption is soon followed by the fear of the creditors. Quite a few young adults are in debt to a whole range of donors and have long been unable to service the monthly installments. The five largest debt traps are presented below to give an overview of the dangers for young people and to offer a way out.

The cell phone

The cell phone

The cell phone or the cell phone contract is the debt trap that most young people fall into. Anyone who does not have a mobile phone with an Internet flat rate these days is not one of them and cannot be online around the clock on social networks. The need for constant availability means that many young people take over when buying a smartphone and also choose a tariff that is far too expensive. In addition, the cell phone is a status symbol in the circles of many young people, which influences the position in the group.

The tricky thing about cell phone contracts is that not only are the contract fees debited monthly, but mostly the smartphone is also paid in monthly installments. As a result, many young people only pay 40 to 60 USD per month to pay the installments. In addition, there are also usage-dependent costs in many cases.

If you are interested in a new cell phone or a new contract, you should consider some important points before buying so that the bad awakening does not come in the end:

  • The monthly installments due should be added up to a total amount. This is the only way to decide whether you can really afford a new smartphone.
  • If in doubt, you should rather choose a cheaper smartphone and not be tempted by group constraints or your friends’ models.
  • There are numerous comparison portals for mobile phone contracts on the Internet where you can find the cheapest tariff.

The car

The car

The car is not only one of the biggest debt traps for young people. Similar to the cell phone, it is viewed as a status symbol in many circles. Above all, many young people cannot estimate the running costs of a car. These include:

  • Gasoline costs
  • repair costs
  • Insurance

If you add these three items, you easily get three-digit monthly amounts that teenagers pay for the maintenance of a car alone. With the salary of a trainee, this financial burden is usually not manageable. As with the mobile phone, the possibility of paying in installments when buying a car is another problem. Cars can even be ordered as a leasing car, so that no down payment is due at all.

dress

dress

The clothing debt trap is particularly important for young women and in many cases leads to overindebtedness at a young age. The advertising, which is completely focused on consumption, fools us into believing that you have to wear trendy, seasonal fashion in all seasons to look good.

Many young people nowadays even use clothing to pay in installments or use credit cards that only need to be serviced a month later. These circumstances mean that the purchase of a new coat brings joy at first, but after a while it causes the bad awakening.

Internet subscriptions

Internet subscriptions

The internet is full of dangers. The most serious are subscriptions that are not recognizable as such at first glance and oblige users to make monthly payments over a long period of time.

Young people often enter into contracts online without even being aware of them. In the case of a number of offers, such as streaming pages or the downloading of software products, the small print only indicates that the user is subscribed and has to make installment payments for a period of 12 or 24 months.

In many cases, such subscriptions are invalid and the user is not required to pay. It is therefore advisable to always consult a lawyer for reminders and have the relevant contract checked. If only the small print refers to the conclusion of a contract, this is usually invalid and no payment is to be made.

The apartment

The apartment

Young people want to move out earlier and build their own lives. In many cases, however, the trainee salary is not even enough for a shared apartment. Many young adults therefore take out expensive loans to finance chic apartments in good locations and to become independent of their parents.

The five biggest debt traps for young people together mean that more and more young people in their early twenties are in a vicious cycle from which they can no longer find their own way. In most cases, it is advisable to consult a professional advisor. Many institutions offer free help and show ways out of the debt trap.

Repetitive indebtedness, when the loan does not pay?

The indebtedness of Czech households is constantly increasing. The largest percentage are housing loans and consumer loans. What do we borrow most often? It leads consumer electronics, then buying a car or motorbike, third place is the furniture for home and last but not least, the money is used for reconstruction. Other surveys show that every third Czech who borrows does so at risk. Where is the buried dog and how to prevent these problems?

 

Short-term loans, a good servant, but a bad master

Short-term loans, a good servant, but a bad master

Many people reach for a loan without a register almost wisely, even when a small problem occurs. On the other hand, there is no wonder, because it is the easiest solution, but it may not always be right. The stumbling block is often a tight budget.

Soon we will be surprised by a broken washing machine or dishwasher and there is a fire on the roof. No one in the neighborhood can help because family and friends have problems over their heads. What with this? Well, what you can do, so you borrow a few thousand before pay. The disadvantage of such loans is that they are only short-term, so they do not solve the problem in the long run, but only deepen it. What if the next month we are surprised by another unexpected expense and the maturity of the loan. Yes, we can extend it, but it will cost us more money.

 

Hammering the wedge with a wedge

There is nothing worse than borrowing to repay the previous debt. Think about it and don’t make it worse. Wouldn’t it be better to apply for bank consolidation? Simply put, you combine all disadvantageous financial liabilities into one. Not only will you pay a lower installment each month, but you will also save.

Nowhere are loans borrowed? Contact organizations that help people get out of difficult financial situations. As a last resort, consider personal bankruptcy.

 

Loan for uselessness

Loan for uselessness

Avoid repurchase goods such as mobile phones and other electronics. Our grandmothers were already saying “Buy only what you can afford”. A simple rule that works great in practice. Be aware that any loan in your life should take you forward and not lower you even lower.

 

Poor financial habits

Poor financial habits

How to prevent financial difficulties? First of all, one needs to be financially literate and able to use common sense. It sounds absurd, but a large percentage of us have significant problems with it, and it may be people whose income exceeds 50,000 USD per month. Knowing how to manage money is the very foundation that life cannot do without. Unfortunately, the school system will not teach us to save and treat them so that we do not get lost in today’s world.

Build a financial reserve every month to use for unexpected expenses and do without any loan. Reduce bad habits like smoking, drinking alcohol or expensive dinners in restaurants.

 

Loan? Only advantageously!

Loan? Only advantageously!

Even a short-term loan does not have to cost you a dollar. When looking for the right provider, take the time to choose a bid that suits you 100%. Sign the loan agreement only if you understand and agree to it.

Credit Card Debt Configuration News

In this article, we wanted to discuss the latest developments related to Credit Card Debt Configuration, which we frequently encounter in newspaper and television news. This time, due to the difficulty of individuals to pay their credit card debts with the statement made by Caroliner Bank; A new application has been launched that can meet short-term cash needs. We request you to evaluate the article.

The public bank to make disclosures for loan structuring.

mone loan

In this article, we wanted to discuss the latest developments related to Credit Card Debt Configuration, which we frequently encounter in newspaper and television news. “Building Credit Card Debt” briefly means the collection of credit card debts that are scattered among various banks in a single bank.

In fact, such practices were found in almost all banks under the name of “credit card debt installment” and were used by individuals. The individual was able to pay the total credit card debt according to the new interest rate and duration to be determined by signing a new contract with the conditions determined by the bank by applying to the bank where the debt was held. There may be differences in the practices of banks depending on their lending procedures.

This time, due to the difficulty of individuals to pay their credit card debts with the statement made by Caroliner Bank; A new application has been launched that can meet short-term cash needs.

Individuals will be able to collect their credit card debts in both Caroliner Bank and other banks under the name of ” Combining Consumer Loan ” within the body of Caroliner Bank with a payment plan to be created in accordance with their income. With this Credit Card Debt Configuration process to be carried out within Caroliner Bank, individuals will have the chance to collect their credit card debts in all other banks under more favorable terms with a payment plan that is in line with their income.

According to the statement made by Caroliner Bank, “Merger Requirement Loan” interest rates were determined as 1.10% monthly up to 24 months and 1.20% monthly up to 60 months.

Loan will be used for the payment of personal credit card debts

Loan will be used for the payment of personal credit card debts

Caroliner Bank and other banks by accepting upper limits. As of the same date, the loan amount will be limited to credit card debts to banks. It is obligatory for the credit needers who wish to benefit from the Combining Consumer Loan to cancel their credit card, which is paid within the scope of the loan. It is necessary to apply to Caroliner Bank branches for loan application. It should be kept in mind that 0.05% loan allocation fee will be charged while calculating the loan cost.

Lite Lender became the second public bank to make disclosures for loan structuring.

When the statement made by the bank is analyzed, it is understood that the announced loan configuration package is quite comprehensive. Good news for those who have difficulties in payment from Lite Lender:

The most striking feature of the loan support package announced by the bank is that it provides ease of payment to individual credit cards, as well as the structuring of personal and commercial loans in disruption and the resetting of commercial loan interest rates under follow-up. For the retail credit card payment convenience campaign, customers with urgent credit needs will be able to apply for December 2018 debts both in Lite Lender and other banks. In order to benefit from the credit support campaign, credit card limits and debts at other banks must be closed.

The interest rate to be applied up to 24 months is 1.10% and the interest rate to be applied up to 60 months is 1.20%.

money loan

Lite Lender has not forgotten the follow-up loan borrowers. In case of application until 30 April, if the customers with a loan under 100.000.- USD before the end of 2018 have been paid for follow-up, they will reset all their interest after the follow-up.As of December 31, 2018, Lite Lender organizes a 36-month, 3-month free payment campaign for individuals, and a 60-month free payment for 6 months for commercial customers. The interest rate to be applied in the campaign is USD. 0,98% for 100.000.- and below, USD. 100.001.- – USD. 1,25% for the 750,000.- range, USD. 750,001.- – USD. Within the range of 3.000.000.- 1.50% will be applied.

Credit Card Debt Structuring News In this article,

money loan

We wanted to discuss the latest developments related to Credit Card Debt Structuring, which we frequently encounter in newspaper and television news. “Building Credit Card Debt”, in short, means collecting credit card debts that are scattered among various banks in a single bank. In fact, such practices were found in almost all banks under the name of “credit card debt installment” and were used by individuals. The individual was able to pay the total credit card debt according to the new interest rate and duration to be determined by signing a new contract with the conditions determined by the bank by applying to the bank where the debt was held. There may be differences in the practices of banks depending on their lending procedures.

How to get out of debt and heal your cash budget

Do you feel like a beast of prey, trying to take a large amount of their loans, which always run on you with inexorable maturities? Find out how to get out of debt and start living free again.

27% of Czech citizens have some type of consumer loan, with more than a third of them borrowing two or more loans. It results from a survey of the Czech Banking Association. If you keep watching your due dates on your loans make life uncomfortable, maybe it’s time to make their repayment easier or get rid of the debt altogether.

Consolidating loans will save you money

Consolidating loans

It is a merger of all your loans into one. With this step, you no longer have to keep an eye on the due dates of all your loans – you only pay one installment for all your loans each month. This not only reduces the risk of forgetting one of them and counting on penalties, but also gives you the chance to save considerable money. Loan consolidation can help you lower interest. By making only one loan of all loans, you also save on the fees associated with managing individual loans.

What other benefits (in addition to greater convenience and money saved) through consolidation?

  • Possibility to spread the repayment over a longer period and reduce your monthly payment
  • Choose a due date that suits you better
  • Possibility to increase the loan and raise extra funds

It is possible to merge not only current loans, but also credit card loans or overdrafts on an overdraft account. Did you know that you can merge loans within your family? If other family members also borrow, you can combine everything into one loan and save even more money.

Numerous banks and non-banking companies offer a single loan.

Most of them offer a combination of loans up to several hundred thousand USD, some of them in the order of millions (eg Komerční banka or Acema). Not sure which bank or non-bank company will offer you more favorable terms? Compare the individual offers and reach for the best deals.

Get money to pay off your loans

Of course, the best option for your mental comfort is to get rid of the debts and stop worrying about the amounts owed. How to get out of debt through early repayment of loans and where, however, to take the money?

It is best to use the funds you already have (for example, in a savings account or in a life insurance contract, which can be withdrawn for some insurance companies through extraordinary withdrawals). However, not everyone has the extra funds available.

What are the other ways to get money?

money loan

  • Sale of unnecessary things. Maybe at home you stumble over objects you didn’t use or remember. For example, you can easily monetize them through the Letgo app, where you take pictures and offer them to buy. You can sell them through various thematic groups on Facebook (for example, Apartment equipment Brno, Elektro bazar, etc.). Keep in mind, however, that you may be able to monetize your goods for a much lower amount than you purchased. Therefore, only sell things that you lightly heart.
  • Rental of premises or areas. Do you have a room at home that you do not use? If you live in a larger city or in an attractive tourist area, you can make good money by renting accommodation via Airbnb. Also, if you drive frequently by car, offer the area for advertising. Thanks to this you can come to a considerable extra income – try for example page BigInDebt.com.
  • Deposit from the employer. Some companies offer a wage deposit among their benefits. So if you have a smaller loan that you would like to get rid of as soon as possible, try to ask your supervisor or payroll office to “set up you.”
  • Přivýdělek. Nowadays, when job portals abound in countless offers, it will certainly not be a problem to find some form of brigade. But who would like to be slaved at the bar or in the supermarket in the evenings? The solution may be some extra earnings online that you can do when you take a bus from work or watch your favorite show at home. On the Debtnomore.com website, you will enter an offer of your services (for example, transcription of texts into electronic form, writing reviews on the web or online shop, or any service that you can provide quality). If you are a creative type, you can offer your handmade products at Liedebt.com.
  • Temporary relocation for better earnings. Is your debt much higher than in the order of tens or thousands and at the same time you live in a region with higher unemployment, where decent paid work is difficult to find? In that case, consider seasonal work in one of the richer countries. Did you know that, for example, in Switzerland, the minimum wage is about 80,000 USD? You can find a job abroad at the Lite Lender portal (just enter the name of the country in which you would like to work in the left search box).

Debt trap: divorce settlement

The extrajudicial divorce settlement agreement

The extrajudicial divorce settlement agreement

Most of these experts recommend an out-of-court divorce agreement prior to the final divorce. This means that questions about joint home ownership and assets will be clarified before the divorce is due to go to trial. The court date is then only a matter of form, since all important issues have already been settled. The negative financial consequences of divorce cannot be avoided by the divorce agreement, but at least mitigated. They guarantee planning security and, above all, legal security, and rash actions such as the emergency sale of a house can thus be avoided.

What are the financial consequences of a divorce?

What are the financial consequences of a divorce?

The costs for lawyer and court

The fees for the lawyer and the court in divorce proceedings depend on the so-called value in dispute or the procedural value. This depends on the spouse’s income and assets. The value is calculated from the triple monthly net income of both spouses.

simple calculation example :
Net income of the wife 1,500 USD
Net income of the husband 3,500 USD
A total of 5,000 USD

5000 x 3 = 15,000 USD process value

Once the total procedural value has been determined, the court and attorney fees are calculated in accordance with the legal requirements. With a procedural value of 3,000 USD, this is approximately 840 USD, with a procedural value of 40,000 USD, almost 4,000 USD.

Cost of moving and running two households.

As a rule, at least one of the partners leaves the shared house or apartment and will have to run a second household in the future. If both partners have to move out of the common house because one spouse can no longer maintain a larger property alone after the divorce, two moves are due and two new households are established, while the original property is often sold in a hurry and often below value.

Payment of maintenance costs

Maintenance costs for the children and possibly the spouse become due with the divorce.
The “Düsseldorfer table” is used to calculate maintenance, especially child maintenance. It is graded according to the child’s net income and the age of the child. Maintenance payments after a divorce can severely affect your prospects financially over a long period of time.

Common property

Large financial losses can occur if the spouses have acquired common property and both are registered in the land register. In the event of a separation, the property can then be auctioned if no amicable settlement can be reached. This debt trap can be avoided by agreeing the separation of goods. Otherwise, the statutory property regime of the profit community applies. Anyone who signs a marriage contract can record the division of assets such as houses or land in writing.

Common debts

In the case of jointly concluded loan agreements and rental agreements, the creditors, in this case the bank or the landlord, can stick to one of the spouses and demand the total amount from him / her. This is the external legal situation. In the “internal relationship” of the partners, both partners have the obligation to pay the obligations proportionately. If one spouse paid alone, he can demand half of the amount from the other.

What to do if one of the spouses is in debt?

What to do if one of the spouses is in debt?

If one of the spouses is already in debt during the marriage, the other partner should take appropriate measures to protect themselves from over-indebtedness. Because both spouses are only liable for joint debts. For contracts that only one partner has signed, the other partner cannot be held responsible. Incidentally, this also applies if no separation of goods has been agreed.

The following are the most important tips for protecting yourself from obligations in connection with your partner’s debt:

  1. Separate accounts
    If one of the spouses is in debt, it is advisable to keep two separate accounts.
  2. Joint purchases
    The partner who is not to blame should make new purchases and keep the receipts as evidence so that he does not lose his property in the event of foreclosure at the partner.
  3. Be careful with guarantees
    Anyone who guarantees the partner must continue to guarantee and pay after a divorce if the former partner is unable to pay.

Debt help – take out a loan or to finance purchases directly from the dealer

 

We live in a consumer society. More and more people can afford more and more. Not least because we consumers now have the opportunity to take out a loan or to finance purchases directly from the dealer almost “on every corner”. This of course brings great financial freedom for our citizens.

Responsible management of important

However, greater financial freedom also entails dangers. According to Statista, almost seven percent of all private individuals in Germany are considered overindebted. This means that the value has been at a consistently high level since 2004. The reasons for over-indebtedness can be varied. Separation and unemployment are just two of the most common causes. Also lack of responsibility is quite in order to be found in practice as a reason for excessive loan burdens and indebtedness. In many cases, those affected only benefit from the services of a debt counseling center.

What are debt counseling centers?

What are debt counseling centers?

Debt counseling agencies offer you professional advice if you financially unable to solve as a consumer. Often sufferers are overindebted and see in the services of counseling centers a “last resort”. Most of the local debt counseling centers are sponsored by the independent welfare service, the consumer counseling centers or the cities, municipalities or districts.

The responsibility for enabling debtor advice lies with the municipalities. This regulates the provisions of social law (Section 11 (5) SGB XII, Section 16 (2) SGB II). In addition to the positions of the institutions mentioned, there are also commercial providers who, unlike other debt advice centers, often charge fees for their advice.

How a debt counseling center works

How a debt counseling center works

If you use the services of a debt counseling center, it first gets an overview of your financial situation. To do this, fill out a detailed self-disclosure that enables a comparison of income and financial burdens. After the necessary discussions, it is the goal to arrange your financial situation with you again – if this seems achievable. Drawing up a so-called budget can help you do this.

If the financial situation is complicated or even hopeless, the debt counseling center will try to compare it with your creditors. If this succeeds, you will at least partially pay off the debts incurred. In return, the creditors grant debt relief for the rest of the claim. Of course, all of your creditors must agree to such a comparison. Then this step succeeds, which is also referred to as so-called out-of-court settlement in bankruptcy law. If at least one of your creditors disagrees, trying to compare them is also a prerequisite for entering private bankruptcy.

How you can distinguish dubious from reputable advice centers

How you can distinguish dubious from reputable advice centers

Experience shows that not all debt counseling centers work properly. If you use the help of a counseling center of a public body, you can be sure of fair and competent advice as a rule. However, commercial providers should take a closer look and be more critical. Based on various features, you can (probably) identify dubious offers.

home visits

Debt counseling typically does not take place as part of a home visit. From reputable places they are at least very unusual. Be critical when you are offered a home visit – especially for an initial interview.

Big promises

You should generally be skeptical about promises that are too great. Because as a person seeking help in a debt counseling center, you are usually in a first situation. Your expectations should remain realistic. The majority of those affected go into insolvency proceedings, which last a total of six to eight years.

High costs

If you use the services of commercial debt advice centers, there are costs. Inquire about the amount before the first consultation begins. If the advisor requests information about how much you can pay each month, you should be critical. Advice centers of public agencies generally advise free of charge.

time pressure

Dubious advice centers are often noticed with unnecessary time pressure. You request a signature in the first meeting and insist on a quick start of the cooperation. If you are unsure, do not sign the contract with the commercial advice center immediately.

More contracts

If it is dubious advice centers, further contracts may be offered – in addition to the purely contractual agreement for your representation. Savings contracts, or (supposedly cheaper) insurance for example, have no place in a reputable debt advice. In practice, for example, affected debtors should already sign declarations of membership to clubs that are subject to a fee. Such measures are certainly not purposeful for you.