Debt reduction: The best and easiest way out of debt


Making debts has been a trend for years – what father state creates, the small citizen can long. Not least due to the constantly high buying mood, the number of over-indebted citizens is rising steadily in this country. From spontaneous online orders over outdated loan agreements to overpriced mobile tariffs, there is no shortage of causes to slip into the lousy. Everywhere in everyday life lurk traps in which you can easily get it. But reducing debt is not that easy. A natural law, so to speak. The reasons for indebtedness do not always have to be in unreasonable economies. A single financial mistake can lead to over-indebtedness in unfavorable circumstances. We will show you how to successfully and sustainably tackle your debt reduction with some discipline. After all, it is never too early for such a step.

the essentials in brief

the essentials in brief

  • Keep a budget book on revenue and expenditure
  • In case of payment shortages, contact creditors in good time
  • Take the support of debt counseling true
  • Consider the possibility of rescheduling
  • Look for additional sources of income

How it comes to over-indebtedness

How it comes to over-indebtedness

Over-indebtedness is mentioned when the monthly income in the long run is no longer sufficient to cover ongoing basic costs such as rent, internet or insurance. For shopping trips, repairs and living conditions are constantly incurred everyday costs that are not always easy to keep in mind. Then, washing machine, TV and car in a row give up the ghost, tearing the holes in the household budget that may exceed the reserves. Debt traps are also often lurking in financing such as loans, leasing or credit installments. The overestimation of financial conditions or a chain of unfortunate circumstances can lead you into a vicious circle that favors a growing debt mountain. It is important for you not to blow your mind away, but to address the issue of “reducing debt” in good time.

How to reduce debt

How to reduce debt

If you experience financial difficulties, you must keep a clear head and control your financial position. How you can reduce existing debt, we show you below.

Put your finances to the test

The easiest way to get out of debt is to first get a precise overview of your current finances. These three questions are fundamental to you:

❶ Where do my debts come from?
❷ What is driving up my debt?
❸ Where can I find savings potential?

Where do my debts come from?

For a better overview, a household book will help you. From now on, every little issue as well as all income will end up in this booklet. Carry it out carefully and also note down cashless transactions that take place in your bank account. So you overlook payments for online orders as well as standing orders for the insurance, which like to fall into oblivion. For annual payments, such as ancillary rental costs, convert the amount to the monthly share and enter it in the budget. That sounds meticulous at first, but you will realize after a month, what you have what expenses. You then compare this amount with your monthly income. It makes it easy for you to see if you’ve lived beyond your means or where you might be able to put on the red pencil in the next few weeks.

By the way: You can also conveniently load a household book as a free app on your mobile phone, then always carry it with you. The best budget book apps in comparison can be found here.

What is driving up my debt?

With the budget book method you have taken the first step towards debt reduction. After the first month, find out that the expenses exceed your earnings, you must act. A “continue like this” would only increase your debt further, for example, through the overdraft interest that is incurred for the overdraft of your account. This option usually earns more than 10% interest and is therefore extremely expensive. Here you can already save money, with which you can reduce your debt, without practicing complete resignation.

Where can I find savings potential?

Examine your expenses carefully and think about where savings can be made in a meaningful way. This is not always pleasant and requires discipline, but your ultimate goal is freedom from debt. The renunciation of everyday trifles helps. Even if it is only temporary: regular visits to the cinema, the daily lunch in the canteen or the unused subscription for the gym are now under scrutiny. In addition, inquire whether there are no cheaper alternatives to your current insurance, energy costs or your mobile phone tariff. Comparison portals like Credithae can help you save on running costs. A possible change is quick, risk-free and can bring you savings in the future.

An attentive consumer behavior basically helps you to manage your finances. In everyday life, for example, this includes the sparing use of resources or the fact that you are accessing private labels at the discounter. Reducing debt through saving money is always the most obvious solution. An accurate list of your monthly costs is the cornerstone to bring order to financial chaos. This will tell you if you live above your circumstances. Possibly the existing income will suffice for the continuous reduction of your liabilities. If this succeeds on its own, you can even save money after repaying your debts. You will also find useful tips and information on debt reduction in this video.

Reduce practical tips on debt

  • Create a household book
  • Get a precise overview of your finances
  • Put your consumer behavior to the test
  • Refrain from spontaneous purchases or installment payments
  • Cancel unnecessary contracts or subscriptions
  • Compare current offers (energy provider, insurance, mobile phone tariff, etc.)
  • Create shopping lists
  • Buy at the discounter own brands
  • Cook yourself instead of going to the restaurant
  • Avoid overdrawing your account
  • Save on energy guzzlers in the household
  • Pay bills before dunning costs are incurred

Go to creditors

What can you do if you are in the credits of creditors? Start the escape to the front. Contact your creditors and inform them about your current financial problems. By actively seeking the conversation and getting ready to compromise, you will in most cases encounter understanding. Your goal is still to reduce your debt. Together, they come closer to this project, if you agree on a solution that uses both sides.

Offer creditors a deposit or ask for installment payments. This will save you time and save you further debts, which accumulate for example through reminder fees and administrative costs. Whether it’s about craftsmanship costs or the creditor is an electric discounter: the other side will recognize your good will and will probably meet you a bit. On the one hand, with this step you can not only reduce your existing debt in a controlled manner. On the other hand, they save themselves additional inconvenience, such as an order of execution, a garnishment or, in the worst case, insolvency.

Plan the debt reduction

Based on your budget book you have compiled the documentation of your costs. Optimize it in the short term so that, if possible, some of your earnings are left over monthly. This “surplus” is now to be invested in your debt reduction. Do not take on the calculation of installments to your creditors, but plan ahead and realistic. Make a list that summarizes all debts and possible deadlines of the creditors that apply to you. Where possible, distribute the repayments so that you sensibly reduce debt and bypass new ones at all costs. This means that with their plan you avoid financial bottlenecks and always keep an eye on payment terms. Ideally, you should expect that, after all the costs, you will still have a small amount left over that will allow you to react flexibly to smaller bills.

Contact a debt counseling service

In addition to the measures budget book, savings measures and expenditure optimization, there are other ways to reduce debt. At any time you are open to a debt counseling service. This will support you competently in dealing with your creditors and debts, by working with you together to find a solution. Although it is never too late, you should consider this idea as early as possible. Your way out of debt can be more complicated than it looks, for example, due to legal intricacies. If you are over-indebted, do not wait with this step until you have a garnishment in your house.

In order not to fall for rip-offs among the debt counselors, recommend posts of public carriers such as Red Cross or Caritas. The offers of your municipality or the consumer protection centers are serious. Fewer reputable consultants will certainly help you to reduce debt, but this can sometimes result in horrendous costs for you. Keep in mind that credible debt counseling usually offers your services for free, but incurs longer delays (here you will find debt counseling in your area). Call, let us inform you in advance about your situation individually and secure yourself if necessary a waiting list place for a detailed consultation.

How to help part-time job or rescheduling

How to help part-time job or rescheduling

If you own older loans, you usually pay relatively high interest rates. You may want to consider using the current low interest rate environment. Currently, interest rates are lower than ever. A 10,000 euro loan with a 6-year term can be obtained from an interest rate of just 0.69%, as our self-test at Credithae revealed. Even if your credit rating is not optimal and you have a higher interest charge, a loan is currently relatively cheap.

Breaking down debt can accommodate you in many ways. If you have older loans, rescheduling may bring financial benefits to you. Old loans will cost you more in interest earning than a current one, so replace the outdated loans with a new loan. What sounds so simple, of course, can also bring chargeable disadvantages.

Example prepayment penalty:

  • Your old loan is still running 5 years with a relatively high interest rate at “Bank A”
  • They take out a loan with currently low interest rates at “Bank B”
  • With the money of this loan, you pay off the old loan in one fell swoop
  • With “Bank A” you are debt free, but you escape high interest rates for 5 years
  • Bank A demands a prepayment penalty for this loss

The debt restructuring can still be worthwhile if it pays off due to the interest savings. However, factors such as the additional costs for the new loan, the amount of the prepayment (s), the real savings due to the new interest and not least your creditworthiness (in the case of “Bank B”) must be clarified in advance.

Do not overdo it

You can use this variant to service multiple obsolete loans or even outstanding invoices. The model of rescheduling is advantageous, because in the future the new low-interest loan will combine many “construction sites” into a single one. As a result, costs and deadlines that are due have a better eye on you and at the same time take another step out of your debts.

Reduce debt with sideline

You can improve your household budget and reduce your debt through smaller secondary jobs. Opportunities can be found, for example, by accepting a waitress job, delivering newspapers or pizzas at weekends. Although this brings no wealth, but contributes to the financial relief of your situation. If this idea is suitable for you, you should first check this with your job center or employer, so as not to regret it afterwards. Your company may also offer the option of paying off overtime. You should then only use the additional income you have earned to pay off your debts.

To participate in online surveys you do not even need to leave home. Various market research portals offer you a small amount of pocket money if you give them details about your consumption or lifestyle habits. Again, the following applies: Small cattle makes a mess and the deserved serves only to reduce your debt. Last but not least, your old junk from the loft can bring you cash. Go to flea markets or use online sales platforms to get rid of used and unused items. This will give you space and is worth a further contribution, with which you can pay off your debts.

To ensure that a rescheduling is profitable in your case, an independent analysis of your financial position and loan agreements is recommended. It is better not to have them checked by a bank or self-appointed online specialists. For an independent analysis, better go to a reputable debt counseling service.


Debt reduction is a project that depends heavily on planning and discipline. Therefore, handle the matter wisely and avoid premature action. Depending on the size, manageable negative amounts can be regulated at short notice by simply making a statement with a note and pen (or app). You will already notice on the basis of such a budget book, where one or the other issue eats holes in your purse. The best way to do this is immediately and permanently! On the other hand, more extensive liabilities can become a real problem, which extends to the existence of a threat. Never ignore requests for payment or do not take reminders lightly. Do not wait too long until you face reality soberly, but be promptly active. The same is true for debts that are over your head. Do not delay unnecessarily and seek out a (reputable) debt counseling service, where you can expect professional help. Understand this step as a reboot rather than a capitulation. You will not find a better partner to deal with creditors, reschedule or optimize your expenses.

Most importantly, avoid any kind of mess about your finances! Chaos in your documents and lack of transparency are the ideal breeding ground for breeding debts.

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