Overextension in Personal Finance

Overextension in personal finance occurs when an individual takes on more debt or financial commitments than they can comfortably manage, often leading to stress or financial instability. This can happen through excessive borrowing, overspending, or committing to expensive lifestyles without sufficient income or savings. It reduces financial flexibility and increases the risk of missed payments, damage to credit scores, and difficulty meeting future financial goals. Essentially, overextension stretches your finances too thin, making it harder to cover basic expenses and prepare for emergencies. Staying within your means and maintaining a budget helps prevent overextension.