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.
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 14 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 compare your rates with other loan options and request free quotes. More information on refinancing.
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 auto loans 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 240 francs per year for a small car), highway stickers (40 francs per year), car insurance (typically between 1000 and 3000 francs a year depending on your age and location), gas and maintenance, and you are losing a lot of money which could be busy repaying your debt. 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.
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 difference between a 5 room and a 4 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 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. Aside from helping you avoid debt and payment card fees (like annual fees and foreign transaction fees), canceling your credit and debit cards will also make impulse online shopping nearly impossible. Drawing cash for unplanned spending, overdrawing your account and spending on credit 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 tight with money). If you try to keep up with the Swiss average of around 3 trips involving overnight stays 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. Remmber that less outstanding debt means less interest chargeBeing able to repay an extra couple hundred francs per month can radically reduce the time it takes to pay off a large debt.
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 to compare policies and find the most affordable coverage.
12. Get a cheaper phone contract.
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 whatever it is you do on your mobile phone just as well with a budget phone. You probably don’t need to keep paying 40 or 50 francs per month for a fixed line if you use your mobile phone for all your calls and online activity. Replacing an expensive unlimited roaming mobile contract with one that gives you similar services – but within Switzerland only and not necessarily unlimited – can cut your monthly phone bill by up to 100 francs. That’s another 100 francs per month you can use to pay off your debts.
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 higher 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. So although going all out to get rid of your debt may require sacrifices, 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.