The Debt Domino Effect
No single instalment knocks a household over. They stand in a row, each one fine, each one leaning slightly on the month. This is a way to see the row.
The Solankis of Vadodara are invented. They have a scooter loan and 7 instalment plans of ₹999 a month, and they have never paid anything late. Out of ₹48,000 of take-home pay, ₹10,143 is spoken for before the month begins. That is 21.1%: unremarkable.
What the percentage hides is the cushion. They have ₹12,000 put by. When a hospital bill of ₹26,000 arrived in the second month, they paid it, and had ₹2,714 left until payday. With one more plan at ₹999, it would have been ₹716.
Their numbers are loaded below. Change them, or clear them and enter your own.
Change any figure. Nothing you enter leaves this page.
Known calculation: plain addition
An ordinary month
- Take-home pay
- ₹48,000
- Essentials
- ₹29,500
- All commitments (8)
- ₹10,143
- Left over
- ₹8,357
- Commitments as a share of pay
- 21.1%
- Still to pay on dated commitments
- ₹1,43,001
- Cash put by covers
- 0.3 months of outgoings
There is no safe or unsafe percentage here. Lenders use their own caps, and what is comfortable depends on how steady the income is.
Now push one
Everything is paid on time, and the cash you have put by never falls below ₹12,000.
- M1 Thin ₹20,357
- M2 Thin ₹28,714
- M3 Thin ₹37,071
- M4 Covered ₹45,428
- M5 Covered ₹53,785
- M6 Covered ₹62,142
- M7 Covered ₹71,498
- M8 Covered ₹80,854
- M9 Covered ₹90,210
- M10 Covered ₹1,00,565
- M11 Covered ₹1,11,919
- M12 Covered ₹1,23,273
Covered: everything paid, with at least a month of outgoings still put by. Thin: everything paid, less than a month put by. Short: income and savings together did not cover what was due. Amounts are cash put by at month end, or the gap.
Show the twelve months as a table
| Month | Income | Essentials | Commitments | One-off | Put by | Short |
|---|---|---|---|---|---|---|
| 1 | ₹48,000 | ₹29,500 | ₹10,143 | ₹0 | ₹20,357 | |
| 2 | ₹48,000 | ₹29,500 | ₹10,143 | ₹0 | ₹28,714 | |
| 3 | ₹48,000 | ₹29,500 | ₹10,143 | ₹0 | ₹37,071 | |
| 4 | ₹48,000 | ₹29,500 | ₹10,143 | ₹0 | ₹45,428 | |
| 5 | ₹48,000 | ₹29,500 | ₹10,143 | ₹0 | ₹53,785 | |
| 6 | ₹48,000 | ₹29,500 | ₹10,143 | ₹0 | ₹62,142 | |
| 7 | ₹48,000 | ₹29,500 | ₹9,144 | ₹0 | ₹71,498 | |
| 8 | ₹48,000 | ₹29,500 | ₹9,144 | ₹0 | ₹80,854 | |
| 9 | ₹48,000 | ₹29,500 | ₹9,144 | ₹0 | ₹90,210 | |
| 10 | ₹48,000 | ₹29,500 | ₹8,145 | ₹0 | ₹1,00,565 | |
| 11 | ₹48,000 | ₹29,500 | ₹7,146 | ₹0 | ₹1,11,919 | |
| 12 | ₹48,000 | ₹29,500 | ₹7,146 | ₹0 | ₹1,23,273 |
What this is
Arithmetic on the figures above: what comes in, what is due, what is put by. It is exact for those inputs and assumes any money left over each month is kept.
What this cannot tell you
What a lender does when a payment is short: penal charges, bounce charges, calls, reporting to a credit bureau, or an agreed new schedule. Those depend on the loan agreement and the lender, so nothing here predicts them. What the rules require is set out in missed payments and penal charges and collections conduct.