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Another major group affected during economic downturns is individuals reckless with debt. Debt can initially appear to be a shortcut to wealth, enabling individuals to make significant purchases and invest in opportunities. However, when a recession hits and income ceases, these financial obligations can quickly become overwhelming.
Historical events, such as the 2008 financial crisis, underline the dangers of over-leverage. In such cases, people found themselves unable to handle increased payments on loans while asset values decreased. To avoid this trap, individuals should limit their debt and prioritize paying off high-interest loans, ensuring they only borrow what they can manage even in challenging times.