The Debt Efficiency Ratio Calculator
Not every dollar of debt costs you the same in monthly liquidity. The DER tells you which obligations are quietly suffocating your cash flow, and which ones are working harder than they appear.
Enter your liabilities
List every fixed monthly obligation: mortgages, vehicle loans, lines of credit, student debt, business notes. The first thing to identify for each is its structure — whether it's amortized (principal plus interest) or interest-only — because the two read very differently through this lens.
Add another position
DER = balance ÷ monthly payment. Higher numbers signal efficient debt; lower numbers signal cash-flow drag.
The landscape of your debts
Before any sequencing, look at the shape of what you owe. The visualization below maps each position by balance and monthly drag, so you can see the architecture before you analyze the parts.
High drag · Mid drag · Low drag · Special structure
Priority sequence, by type
Each position interpreted on its own terms, grouped by similar type, ordered by where retiring it would free the most monthly cash flow first.
Not all debts are the same
This calculator is a liquidity and cash-flow lens, applied separately to amortized and interest-only debt. It tells you which positions consume the most monthly margin per dollar owed, and which ones are quietly efficient by that single measure.
What it does not tell you:
- Net worth growth. Optimizing for monthly liquidity does not necessarily build family equity faster. A position that scores well on DER may still be costing you tens of thousands in cumulative interest.
- Total interest cost. A long-amortising mortgage looks "efficient" here. It can also quietly cost more in interest over its life than the original principal.
- Tax treatment. Interest on investment loans or business-purpose debt may be deductible. The DER doesn't see deductibility.
- Asset-backed leverage. Debt against an income-producing or appreciating asset isn't equivalent to debt against a depreciating one, even at identical scores.
- Interest-only structures. When a position is interest-only, the DER as written breaks down — there is no principal in the monthly payment. We separate them in the analysis above and read them by purpose, rate, and exit plan instead.
- Readvanceable structures. Where principal paid converts to redeployable credit, the DER lens materially undersells the position.
Use this output to start a conversation about sequencing, not to end one about strategy. The full picture requires a structural lens, not a single ratio.
The Wealth Structurist's Note
A reading of what your specific landscape suggests, written as if I were sitting across from you.
Decide with a liquidity lens
- Is monthly margin currently more valuable to you than nominal interest savings?
- Are the rates close enough that sequencing can be cash-flow-driven rather than rate-driven?
- If one payment disappeared this month, where would that capital go next?
- Could the freed cash unlock a better tax position, an investment window, or a buffer you've been short on?
Questions worth bringing to me
- Given my DER distribution, which obligation should we restructure this calendar year?
- How does refinancing this position alter my overall liquidity efficiency?
- Does excess cash belong against low-DER debt or inside a tax-advantaged vehicle right now?
- How does the debt sitting inside my entities compare to what's in my personal name?
Ready to look at the rest of the structure?
The DER is one lens. Most members of the network come to me because the lens is showing them something they didn't expect, and they want a second pair of eyes on the full picture.
Assumptions and limitations
- DER is calculated as Balance ÷ Monthly Payment. Higher is more efficient.
- Scores above 100 generally indicate efficient debt; below 50 typically signals priority for restructure.
- This tool does not factor in interest rate or total interest cost over the life of the obligation.
- It does not account for tax deductibility on positions like investment loans or some mortgages.
- Readvanceable structures (HELOCs, Smith Manoeuvre setups) require separate analysis. The DER alone undersells them.
- Calculations assume fixed monthly payments, not variable-rate projections.
- Directional, not prescriptive. Use it to start a conversation, not to end one.
- Results are not stored. Nothing is transmitted off your device.
Most households don't have a debt problem. They have a sequencing problem.
From the Wealth Structurist's notebook