Living in debt is generally frowned upon in Switzerland – almost 90 percent of Swiss consider taking on debt to be a negative thing according to the Federal Statistical Office. But in this age of 24-hour shopping and endless spending opportunities, a lot more residents carry debt than you might think. Almost 40 percent of Swiss households carry at least one form of debt, while around 8 percent carry 3 (or more) different kinds of debt. A 2019 loan survey conducted by moneyland.ch found that 85% of adults in Switzerland have gotten a loan at least once in their life.
Paying back money is seldom as simple as we think it will be when we take on debt, and multiple factors (including interest compounding) make carrying debt more expensive than many borrowers expect. Still, repaying debt is possible and even simple, but it usually requires some drastic changes to your lifestyle.
Here moneyland.ch lists hardcore lifestyle hacks that can help you get out of debt fast – if you have what it takes to pull them off:
1. Refinance your loans
As long as you are meeting your debt repayment obligations, your ZEK credit history should not have negative entries. That means that you may be able to get a new loan to refinance your current loans. There may very well be more affordable loans out there which you are eligible for, and refinancing your loans with the lowest-interest offer you can get is a necessary first step. The comprehensive moneyland.ch personal loan comparison makes it easy to find lenders which offer refinancing, compare your rates with other loan options and request free quotes. You can find more information in the moneyland.ch guide to refinancing loans.
2. Sell your car
Most of Switzerland is well serviced by public transport and unless you live far off the beaten path or need a vehicle for work, owning a car is more of a liability than an asset. Car leases and personal loans for cars are both expensive wastes of money, and new cars lose value faster than they drive. Add to that the combined cost of road taxes (around 250 francs per year for a small car), annual highway sticker tax (40 francs per year), compulsory car liability insurance (anywhere from around 200 to 1400 francs a year depending on your age, location and your car’s engine size), comprehensive and collision car insurance if needed, gas and maintenance, and you are losing a lot of money which could be busy repaying your debts. Getting a monthly or annual public transportation ticket to work or school and back will usually work out a lot cheaper than owning a car.
3. Ditch your subscriptions
Netflix, cable TV, gaming services and magazine subscriptions may seem very important, but if you are serious about getting out of debt then these should be the first thing to go. While individual subscriptions may not be expensive in themselves, combined subscriptions can add up to a lot of money which you could be putting towards erasing your debt. If you cannot get by without subscriptions, go for the cheapest (the moneyland.ch TV plan comparison and video streaming comparison make it easy to compare).
4. Get professional help from debt counselors
If the causes of debt are more complex (taxes, bankruptcy, alimony, health problems), making basic changes to your lifestyle and financial habits may not go far enough. Laws regulating debt and debt forgiveness vary between cantons and municipalities, as do taxes and laws governing bankruptcy and alimony, so getting help from regional debt counselors is important. While municipalities generally offer debt counseling through their social service offices, debt counseling (German: Schuldenberatung, French: Dettes conseils) is also provided by regional debt counseling associations and some charitable associations.
5. Put memberships on hold
Club memberships are very much a part of the Swiss lifestyle, with Federal Statistical Office data showing that at least 16 percent of the population enrolled in gym clubs while more than 43 percent are actively involved in clubs or associations (another 30 percent holding passive memberships). A gym membership can easily cost 1000 francs every year, while club memberships cost anywhere from ten francs to thousands of francs per year. Only you can decide which memberships bring more value than they cost. If you have memberships which you rarely use or can easily do without, putting them on hold will free up cash for debt repayments.
6. Find a cheaper home
Housing is a major expense in Switzerland, and if you are desperate to get out of debt, cutting down on living space is one of the surest ways to save money. The price difference between a 5-room and a 3-room apartment, for example, can easily be as large as 1000 francs a month. Think of how quickly you could repay your debt with that extra money. If moving is not an option, consider subletting part of your home to ease the rental burden. If you own your own home and selling it is not a profitable option, consider letting out rooms for extra income.
7. Stick to cash
Credit cards, debit cards, wearable payments and digital wallets (like paypal or Apple Pay) are designed to make spending money a whole lot easier – just the opposite of what you need when paying off debt. Around 7 percent of Swiss households overdraw their bank accounts while around 4 percent have failed to meet their credit card payments, according to Federal Statistical Office reports. Aside from helping you avoid debt and payment card fees (like annual fees and foreign transaction fees), canceling your credit cards and debit cards will also make impulse online shopping nearly impossible. Drawing cash for unplanned spending, overdrawing your account and spending money which you do not have are other habits you can lose by ditching your debit and credit cards.
8. Avoid eating out
Whether you are grabbing fast food to go, picking up a sandwich at a convenience store or dining in a proper restaurant, satisfying your stomach is costing you dearly. According to The Economist’s “Big Mac Index”, Swiss diners pay 27.2% more for the popular hamburger than it is actually worth. Planning your meals and taking food, coffee and drinks with you from home whenever possible can easily save you a three-digit sum every month.
9. Vacation at home
Even a “cheap” vacation abroad can set you back by 1000 francs (much more than that if you aren’t stingy with yourself). If you try to keep up with the Swiss average of around 3 trips involving paid accomodation every year, you will find yourself digging yourself deeper into the minus. The result is more stress, which is just the opposite of what vacations are about. Consider cheap alternatives like camping, day trips, visiting friends or pursuing hobbies. If you must stay at a hotel, follow this guide to cutting the cost of hotel stays.
10. Get a second job
Saving can go a long way towards digging you out of the hole, but if you have major debts, saving alone may not be enough. Considering the fact that Swiss labor law provides for generous holidays (4 weeks paid leave compared to the U.S. average of 2 weeks) and many businesses close for the entire weekend, taking on a part-time job or some freelance work without suffering from burnout is quite feasible. Many weekend and evening jobs are available in the retail and leisure sectors, and freelance work is readily available online. Less outstanding debt means lower interest charges, so being able to repay an extra couple hundred francs per month can radically reduce the time it takes to pay off your debts.
11. Compare health insurance premiums
The insurance policy, deductible and insurance model you use all affect how much you spend on health insurance. Because health insurance is compulsory and expensive, optimizing your insurance spending is one of the easiest ways to free up money for debt repayments. Opting for a low-cost family doctor, telemedicine or HMO model instead of the standard model can easily save up to 50 to 100 francs per month. If you don’t use a lot of healthcare services, switching from a 300-franc deductible to a 2500-franc deductible can knock another 100 francs or more off your monthly premiums. The moneyland.ch health insurance comparison makes it easy find the most affordable coverage.
12. Slash your telecom expenses
Do you really need high-speed internet, unlimited roaming or a new phone every year? Unless those services are earning you more money than they cost you, they are nothing more than liabilities. Chances are, you hardly ever use your fixed-line phone or internet, and you could likely do the things you do on your mobile phone just as well using a budget phone. Terminating unused telecom services, sticking to a single, affordable phone and migrating to the most affordable mobile plan that matches your needs can easily free up as much as 100 francs per month towards repaying your debts. The moneyland.ch mobile plan comparison makes finding the cheapest plan or prepaid offer for your needs easy.
13. Make repaying your debt a priority
Swiss consumer protection laws give you the right to repay your debt as quickly as you like. Don’t fall for lenders’ offers to extend your loan term to make it “easier” for you to pay – a longer term just means more interest charges for you and more profit for them. Interest is levied based on the amount of time it takes you to repay your debts, and the longer you carry debt, the more you pay. Although going all out to get rid of your debt may require sacrifices, in the long run you will end up with more money to spend on the things you enjoy.
14. Create a budget
Sticking to a budget is imperative to getting out of debt. Once you have cut out all unnecessary spending, create a realistic budget which accurately accounts for both your regular expenses and possible unexpected expenses. Whether you make use of the abundant free budgeting software and apps available or a simple filing system, the important thing is that you stick to your budget. Always pay important bills like loan repayments, rent, utilities and taxes first – in advance if possible – to avoid the temptation of using that money for other expenses.
15. Upgrade yourself
Cutting down your expenses is essential to getting rid of debt. But saving alone is not a long-term solution. If your expenses have consistently exceeded your income, it is important that you work towards earning more income. One of the best ways to do this is to learn new skills which can lead to better-paying jobs or successful business or investment ventures. While paying off your debt should take precedence over paying for continuing education, it is entirely possible to learn new skills at little or no cost to you other than your time and interest. Check out the moneyland.ch guide to MOOCs to get you started on the road to free continuing education.