What do consumers spend on?

Corona aid package and other options: When money is running out

Next, clarify: Which payments have priority?

When you run out of money to make all your payments, you need to think carefully about which bills you are going to pay. Make a list of the outstanding payments and select from them those that are necessary to secure your existential needs. Do not allow yourself to be influenced by creditors who are particularly pushing, but decide according to objective criteria what is absolutely important to you at the moment.

The following are existentially important:

  1. Rental fee,
  2. Energy costs,
  3. Telephone and internet
  4. as well as food and necessary medication,
  5. but also maintenance payments.

What can I do if I can no longer pay my rent?

The following applies to rents deferred from April to June due to Corona: They only have to be paid by June 2022 at the latest - in contrast to deferred bills for electricity, water, telephone or internet, which are due in full immediately after June 30th.

Rent is the biggest expense for many. Even if the landlord continues to defer your rent voluntarily: Don't be tempted to stop paying the rent completely in order to have financial freedom. Because postponed is not canceled - the rent payments are only deferred. Since July, tenants can be given notice again if they do not pay. This is possible, for example, if you are in arrears with the full rent or a substantial part of it in two consecutive months or if you accumulate rental debts of at least two full monthly rents over time.

In the end, you still have to pay, only with a time lag. This means that in a few months, in addition to the full rent, you will also have to pay the arrears to your landlord. In many cases, such a burden will hardly be manageable. You may be able to make at least partial payments so as not to let the arrears get dizzying. Important: The Federal Ministry of Consumers advises that landlords are allowed to charge you interest on arrears. "These currently amount to around 4%."

If you cannot pay the rent in full, you should always contact the landlord and not just stop paying the rent.

The creditor's situation can also be an additional criterion: If your landlord is a large company, it will be easier to cope with outstanding debts than a private landlord who rents out a single property to improve his pension and has to continue to bear its costs.

Also, check with your local community to see if you can Housing benefit can apply.

You can find more information and FAQs at the Federal Ministry of Justice and Consumer Protection (BMJV).

Will electricity, gas, water, telephone or internet be turned off if I can no longer pay?

No one should be cut off from basic services because of the corona pandemic. These include electricity, gas, water and telephone or internet connections. Therefore, from April to June, many utilities did not threaten or carry out any lockdowns. However, the statutory right to defer payment expired at the end of June. If you have used this right, the following applies: After June 30th, the amounts deferred up to then become due immediately in one sum. It is best to talk to your provider or energy supplier as soon as possible about the time and type of additional payment, perhaps installment payments are possible. Also speak to the supplier if you cannot pay bills after July.

You can find more information and FAQs at the Federal Ministry of Justice and Consumer Protection (BMJV).

We give basic tips in the event of a power cut in a separate article, regardless of Corona.

Do not rush to terminate important old-age provision contracts

If you suddenly have less money to spend, you may be wondering if it's time to review some long-term contracts designed for retirement planning.

But be careful: For Riester contracts, the employer-funded pension, Rürup contracts or private contracts, for example in the form of classic capital-forming life insurance, it may be advisable to check regularly whether your own goals have changed and whether the originally concluded contracts are still appropriate. But you shouldn't part with it in a rash and hasty way! The situation is all the more delicate Insurance against occupational disabilitybecause many people can no longer take out such a policy at an advanced age, often with increasing illnesses.

Even if there are good reasons not to rely on traditional life insurance policies to build up capital, you should not prematurely cancel it - provided it has been taken out once. The closing costs are usually paid in full after five years anyway. Old contracts now have an attractive guaranteed interest rate of - depending on the date of conclusion - up to four percent on the savings portion. And you may have taken out additional insurance that you no longer get today (e.g. occupational disability insurance).

Criteria for the fact that a capital-forming life insurance no longer fits your own goals and that you can change something about them:

  • the closing costs have not yet been paid in full
  • the guaranteed interest rate on the savings component is low
  • and the unattractive contract would run for many more decades.

If you would still like to part with a life insurance policy, please also note: It may be possible and significantly better for you not to terminate the contract, but rather to revoke it. You can read more about this in our separate article. In addition to a termination, you can also consider selling on the secondary market.

In the case of Riester or Rürup contracts, there are other reasons to continue these - as far as possible:

  1. Ideally, these contracts should help to spend a financially carefree retirement. Those who do not continue these contracts create liquidity today, but have to accept financial losses in the retirement phase. Therefore, such a step must be carefully considered.
  2. Such contracts are funded by the state and provide an additional return.
  3. Many contracts offer collateral. In the case of Riester contracts, for example, the sum of the contributions paid and allowances received is guaranteed at the start of retirement.

In the case of Riester contracts, termination is legally possible. However, this should be calculated well in advance. Because you have to repay all grants received - that is, allowances and tax savings - and also pay withholding tax on income. If you don't want to experience a nasty surprise, you should therefore work out beforehand what will end up in the account.

Instead of dismissal: What exemption from contributions, hours and dormant mean

When it comes to having to service rent, electricity and the basic cost of living due to current losses, life today is more important than life in 30 years. But even then, in case of doubt, a deferral or a dormant contract are the lesser evil than an exemption from contributions or a termination. If up to now 2100 euros have flowed into the Riester contract annually and you stop it for a year, you will forego the basic allowance of 175 euros for the year, but - provided there are no further allowances - you will have just under 160 euros more per month during the period available for other things.

With Rürup contracts, a termination is not possible, these contracts can only be made free of charge.

However, all three processes, exempting, taking hours and putting a contract inactive, also have consequences:

  1. The Exemption from contributions is only possible with (classic) capital-forming and unit-linked life and pension insurance. Once a contract has been made exempt from contributions, it cannot be canceled unless the terms and conditions stipulate something else or the insurer agrees. You will then no longer pay in, the payout after the contract has expired will be lower and additional insurance will be dispensed with or offer lower benefits. Even if a return is possible, this can have tax disadvantages. Therefore, an exemption from contributions should also be carefully considered.
     
  2. In the event of payment problems, you can adjust the insurance premiums in coordination with the insurer hours. This means that you now continue to have insurance cover and pay the premiums later. This may also be possible for a longer period of time - depending on the regulation and agreement with the insurer.
     
  3. There is also the option of the contract temporarily dormant, i.e. to conclude a suspension agreement with the insurer. Attention: This leads to the interruption of the insurance cover for the period of the suspension agreement. In addition, a lower premium payment may still be due despite a dormant contract.

    However, after the rest period has expired, the insurance cover will be continued under the old conditions. This is still better than terminating the contract, especially if you have disability insurance that you may otherwise no longer be able to take out at all, e.g. B. because of previous illnesses or because of your age.
     
  4. An agreement is also possible instead of the originally planned annual contributions in the future monthly or quarterly rates to pay. We basically advise against this, as it is associated with the payment of surcharges. However, in the event of a bottleneck, this could be a temporary way to make ends meet. However, it would be best to switch back to annual contributions later.