What is the impact of borrowing beyond your means?

The impact of borrowing beyond your means is best represented by debt accumulation. When individuals or households take on loans or credit that they cannot afford to repay, they find themselves accumulating debt. This occurs because every borrowed amount adds to the total obligation, often leading to a cycle of borrowing more to pay off existing debts. This can significantly strain personal finances, leading to potential financial insecurity.

In contrast, options such as financial stability, less debt, and increased savings are attainable only when borrowing is managed within one's financial limits. Excessive borrowing undermines these positive outcomes and creates a challenging financial environment that can result in stress and decreased overall wellbeing. Understanding this relationship emphasizes the importance of living within one's means to maintain financial health.