Up to 54.6 per cent of the Slovak population has a poor estimate of their ability to pay at the onset unmanaged debts. This is according to a survey conducted by AKO for EOS KSI Slovakia. What to do so that the bailiff does not come after Baby Jesus?

Poor estimation of solvency when incurring unmanageable debts is more often reported by men; university graduates educated; with an income above EUR 1,001; in the municipal regions of Bratislava, Trnava and Žilina; independently living in the region; those who currently have loans; those who have had no problem paying their debts on time. 

"The generous gifts that are bought during the Christmas holidays for loved ones bring joy, but they are also a source of financial stress. It is not difficult to prepare a lavish gift under the tree in an effort to succumb to the temptation to buy gifts on credit. And so it is not difficult nowadays to make problematic debt by recklessly borrowing for things we can do without in life." points out Andrea Slezáková, dedicated to financial literacy at EOS KSI Slovensko.

This is confirmed by the AKO survey for EOS KSI Slovensko, where, when asked what the main reason of debt repayment problems is, answered by a representative sample of 1,000 adults’ respondents as follows: 

• 45.4% Irresponsible financial behaviour 
• 44.2% Incorrect prioritisation
• 43% Low financial literacy

Borrowing to buy unnecessary Christmas presents may therefore not always be a good idea. 

"If it's a long-term investment in housing, for example to buy kitchen units or photovoltaic panels or to buy an appliance that you really need in the home, if it's an investment in health or education, such as buying a laptop, or buying a useful item with a long durability, in such cases it makes sense to borrow," says Andrea Slezáková, adding that in this case, it is the so-called good debt. 

Paying for a luxury holiday on debt or the latest type of mobile phone are bad debts and do not make sense - points out Peter Dvornák, Executive Director of EOS KSI Slovensko. "The pressure on the general pre-Christmas spending is more a result of social expectation, not the need for festive survival. The golden rule of financial literacy says that the repayment period should not exceed the lifetime of the item you are buying," he concludes.

When buying (not just a Christmas present) on debt, it's important to be good at calculating whether the family budget will be sufficient to meet the repayments over the life of the loan, and what the total cost of the loan will be. However, if by changing life situation causes problems in meeting the repayment terms, it is important to discuss the debt communicate with the competent authority, institution, individual and make arrangements for both parties an acceptable to comfortable change of the repayment schedule or rules.

^{The AKO survey for EOS KSI Slovakia was carried out on a representative sample of 1,000 adult respondents using the method CAWI (online panel) data collection, 2023.}

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