What is a Debt Budget?
Debt Budget: A management tool for Conscious Debt. It is a pre-defined limit (measured in Debt Units) on how much new synthetic debt can be accepted in a sprint. If the team exceeds the budget, they must stop adding new features and focus on paying down debt.
Why You Need a Budget
AI makes generation free, which tempts teams to take infinite debt for "Infinite Speed." A budget forces the team to treat technical debt as a Financial Liability with a real cost. It ensures that velocity remains sustainable.
How It Works
- Set the Limit: e.g., "Max 10 new Debt Units per sprint."
- Track the Accumulation: Record every AI-generated shortcut in the Debt Ledger.
- The "Pay-to-Play" Rule: If you want to take a 5-unit shortcut but you're already at the limit, you must refactor 5 units of existing debt first.
The ROI of Budgeting
Sustainable
Project Velocity over 12 months
Negative
Net Debt Trend
Source: Ch 17
In Chapter 17: Living With Debt, we show that teams with a debt budget maintain a steady velocity, while teams without one experience a "Velocity Collapse" after month four.
Related Terms
- Debt Unit: The currency of the budget.
- Debt Ledger: Where the budget is tracked.
- Living With Debt: The management strategy.
Book Reference
- Chapter 17: Living With Debt — the complete framework for debt budgeting.
- Appendix A: How to calculate debt units for your budget.