Money Attitudes

Not everyone has the necessary amount in their savings account to pay for that dream vacation, a new kitchen or the latest flat-screen television. While many Americans may simply whip out a credit card to cover the costs, Germans have traditionally been more reserved when it comes to incurring debt for consumer goods.

Fabian Christandl from the Institute for Economic and Social Psychology at the University of Cologne says Germans are far from having the levels of debt that many Americans carry around. But studies showed that there has been a shift in the German mentality towards money and debt, he said.

"In the past few years, we've observed a development away from the puritanical ethos of the postwar generation to one marked by hedonistic values," Christandl said. The mentality of saving money is changing to one that accepts having debt, he added.

Debt in and of itself is not necessarily negative -- if a person has the financial means to handle it. But the opposite is increasingly becoming the case, official statistics show, said Helga Springeneer from the Federation of German Consumer Organizations in Berlin.

"The number of heavily indebted consumers has risen significantly and steadily in the last 10 years," Springeneer said. According to government figures, 3.1 million households in Germany are too far into debt to manage it, she said.

"And there is no sign of a significant easing of this situation," Springeneer added.

Getting out of debt in time

Various factors can lead a person into debt: losing a job, illness, a divorce or a failed attempt at self-employment. The rise in personal debt in Germany, however, is also due to the fact that it has become easier for people to get loans -- often at unfavorable conditions.

According to Springeneer, many households lack the necessary foresight when borrowing money.

"Most people take out a loan when they're doing well financially," Springeneer said. "But they need to also consider their futures when making their risk assessments."

When times turn bad, people tend to get in over their heads, often taking out new loans to cover existing debt, she said. The terms of those new loans are frequently poor, she said.

"It doesn't do any good to shut the stable door once the horse has bolted," Springeneer said, adding that it is important for people to seek external help beforehand from consumer protection agencies, local authorities or charity groups.

Education about finances

Young people were particularly affected by debt problems in Germany, experts said.

"The latest studies show that German youth are more in debt than young people in the United States," Christandl said. This was due to the fact that young Americans were taught entrepreneurial thinking already at a young age. This socialization impacted their dealings with money, he said.

A lot still needs to be done in Germany to educate youth about money, Springeneer said.

"Young people need to be taught how to rationally deal with money," she said. "Our children are being crammed with theoretical knowledge that is completely removed from reality. They might learn how a social market economy functions, but can't even understand their own bank statement."

Stefan Horst, spokesman for Germany's official credit rating agency Schufa, said that the number of loans people can't pay back has increased over the past few years. This was especially the case with young people.

"People in their 20s are the highest risk group when it comes to loans," Horst said.

No danger for the German mortgage market

According to Christandl, the amount of installment purchases and credit card use was continuously rising in Germany -- though a credit card culture like the one in the United States has not yet developed. However, in the long term, Germany could develop American attitudes toward debt, he said.

"It is becoming increasingly easy to take out loans, especially with the Internet," Christandl said. "Borrowing money has simply become a matter of a few clicks."

The German Federation of Savings and Loan Banks (DSGV) said it had seen a strong rise in often dubious lenders.

"We have noticed a significant increase in the past few years of aggressive competition in this market geared towards financing pure consumption through credit," said DSGV spokeswoman Michaela Roth.

However, Roth said a sub-prime mortgage market crisis such as the US is currently experiencing would not occur in Germany.

"These policies are simply not practiced here, with very few exceptions," Roth said. "After all, we loan people money in order to get it back."