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The first and most obvious group that faces devastation during a recession is overspenders. These individuals have a habit of upgrading their lifestyle whenever they receive a pay raise, often spending money they don’t have. For instance, a software engineer may splurge on fancy apartments, luxury cars, and high-end clothing.
When the economy collapses and layoffs ensue, these overspenders quickly find their luxurious expenses turn into liabilities. The reality hits hard: rent, car payments, and other fixed expenses don’t get smaller just because income disappears. To avoid this pitfall, it's essential to follow the golden rule of personal finance: spend less than you earn. There’s no need to eliminate all luxuries, but maintaining a financial cushion is vital.