If you had 10K in savings earning 5% interest, 2K in credit card debt at 23%, and a 200K mortgage at 4% what should you do? You should take 2K of your savings and use it to pay the credit card off because the interest on the credit card reduces your overall earnings*. As the interest rate is higher on your savings than your mortgage you should keep the money in savings. This is not financial advice! I’m just setting the scene.

With technical debt we don’t have a nice simple number we decided on when we incurred the debt, or known regular payments with some end date when it will be paid off. Different debt has different “interest rates” in terms of cost to the business but what these are can be hard to work out. You can start by figuring out if the interest rate is high, low, or zero.

It’s high if by not doing anything the cost of addressing the debt will get worse. An example of this could be you if you frequently add new models to a legacy system causing more work to migrate to the new system later.

It’s low if addressing the debt will not cost more later, but it’s causing a drag on overall productivity. This could be a slow CI system you could update to use more or faster worker machines.

It’s zero if the debt will eventually go away on its own. Perhaps you are going to drop a feature and can remove the code.

The high interest debt is usually the hardest to get rid of but the same principle applies. You should try to pay it off first and remove the drag on productivity so you have more to work with to pay off the other debt, or deal with surprise work.

What are the interest rates on your technical debt?

* The math for this is 2,000 @ 23% in a year is 2460. 10,000 @ 5% in a year is 10,500 so you earned 500 in interest but owe 460 more so you’re only 40 up. If you pay the credit card off you have 8,000 @ 5% which is 8,400 in a year so you’re up 400, ten times better. The mortgage calculation would actually be a bit more involved depending on the term left etc. but I’m outlining some principles here, not giving financial advice!