In this solo episode of the How to Live in Denmark podcast, host Kay Xander Mellish explains why Denmark has one of the world’s highest household‑debt levels and why getting out of debt can feel like a hamster wheel. He breaks down the main categories of Danish debt – mortgage debt, credit‑card and overdraft balances, quick‑no‑money‑down loans, and especially tax‑related debt and other state obligations such as student‑loan, daycare and fine arrears – noting that Danes owe more than 123 billion kroner to the state, a figure that has doubled since 2005. Mellish describes the strict Danish debt‑collection system: late‑fee penalties, Inkasso agencies, and the RKI national register that can block access to housing, jobs, and services. He then shifts to practical budgeting advice for internationals, urging listeners to check take‑home pay with the tax department, evaluate lifestyle choices (housing size, transport, phone contracts, food, alcohol, travel) and understand the minimum cost of living even for a frugal lifestyle. A vivid anecdote about a family trying to survive on 2,500 kroner a month illustrates how quickly expenses add up. The episode closes with a plug for a free live talk at Copenhagen City Hall on February 4 2020, sponsored by International House, and a reminder to follow the podcast’s website and social channels.
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Hello and welcome to the How to Live in Denmark podcast. I'm Kay Xander Mellish. January, February, and March are some of the dreariest months in Denmark. It's dark with no Christmas lights to pep it up, and many people are dealing with a heavy load of year-end debt from traveling, parties, dining out, and gifts. Along with religion, personal finances is a topic that is rarely discussed in Denmark. But Denmark has one of the highest rates of household debt in the world. And once you get into debt in Denmark, it can be very difficult to get out. Much of the debt in Denmark is mortgage debt. Buying a home has tax advantages, and prices in the big cities are 6 times what they were 20 years ago. But there is also credit card debt and bank overdrafts. Plus no-money-down quick loans. They seem to be directed at young men with low impulse control. Just send us a text and get that electric guitar and new gaming system right away! Don't wait! But the very worst debt, in my opinion, is tax debt. Tax debt is what you get if you get a raise during the year and forget to tell the tax department to start deducting more. If you don't, you'll get a big bill in March of the following year, as I found out in a panic one year when I had to empty my savings to pay it. Tax debt is part of the bigger category of debt to the state, which also includes student loan debt. Tuition is tax-financed in Denmark, but a lot of people take out loans for living expenses while they study. Debt to the state also includes outstanding daycare bills or unpaid fines for not having the right ticket on the train. Danes owe more than 123 billion kroner to the state, a number that's doubled since 2005. What all these debts have in common is that you will have to pay with after-tax kroner. That means if you put your nose to the grindstone and dedicate yourself to earning more money to pay off the debt, You will also accumulate more taxes owed. It's a hamster wheel of misery. As an international, you may have a different approach to paying bills than is common in Denmark. In many cultures, the first bill is just a suggestion, and the second 30 days later is a reminder, and you don't really have to pay until you get that one with the big pink line across the top saying Final notification. Not in Denmark. If you don't pay a bill the first time you receive it, it will be back within 10 days with a hefty late fee on top. After another couple of weeks, there will be another demand and another late fee. Then finally, there will be Inkasso, a debt collection service that is supposedly not run by Danish mobsters, but might be depending on whom you owe your debt to. You might also be listed in RKI, the national database of people who owe money. Every big company in Denmark subscribes to RKI, which means that if you're listed in the database, you'll have trouble getting an apartment, a job, a gasoline card, or a mobile phone contract. That's a lot of headaches for an unpaid electricity bill. Running into debt in Denmark is understandable. It's an expensive place to live. I frequently get mails from internationals who have been offered jobs in Denmark and want to know, on this salary, how much will I be able to save? To start with, I tell them to contact the tax department to find out how much take-home pay they'll have once their Danish taxes kick in. Then it's a matter of lifestyle. Do you need to drive a car or How long will you be able to survive with just a bike? How big a home do you need? How new a phone do you need? Are cigarettes, pharmaceuticals, alcohol, and takeout meals among your expenses? Do you like to travel or dine in restaurants? Even if you live like a monk or a nun, there are some levels that are difficult to go below. One fellow wanted to know if he'd be able to support his spouse and 3 kids on 2,500 kronor a month after rent. He was, unsurprisingly, from a country that did not experience Northern European winters. 5 all-year wardrobes, including 5 winter coats, gloves, and hats, plus 5 pairs of winter boots, 3 of which will have to be constantly replaced as the children grow. 5 bicycles with tires that puncture at precisely the wrong moment. At least 2 phone contracts, at least 3 birthday parties, plus gifts for all their fellow students' birthday parties. Yeah, good luck, sir. Welcome to debt. And that's the How to Live in Denmark podcast for this week. If you are in Copenhagen on Tuesday, February 4th, 2020, you can see me speak at Copenhagen City Hall. Entry is free. They're even going to make free pancakes afterwards. This is sponsored by International House in Copenhagen. The time is about 5:00 p.m., maybe 5:15. I'll start speaking, which is great because if you're at work during the day, you can still make the event. I will not be making the pancakes. Someone else will be making the pancakes for me, uh, but I will be speaking, and I would love to see you. If that doesn't fit your schedule, come visit us on howtoliveindenmark.com, on Facebook at How to Live in Denmark, on Twitter and Instagram at How to Live in DK— the 2 is a number— or you can read our books that are available on Amazon, Google Play, Saxo, and iBooks. Thanks for listening. See you next time.
