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Overleverage
Explanation:
Having borrowed more than one can afford to repay.
This term is used primarily in the context of business to describe a company that can no longer pay the interest on what it owes, but it can apply to personal finance as well. Consumers are said to be overleveraging themselves when they are using credit and/or loans to spend more than they bring in each month.
Our Thoughts:
Widespread consumer overleveraging was one of the Great Recession's primary causes. Risky borrowing practices such as taking out interest-only loans that people could barely afford in the best of times and out-of-control credit card spending made it impossible for people to meet the monthly financial obligations when the housing market collapsed. In other words, it complicated an already volatile situation and made the ultimate downturn much worse.