The debt spiral

When you talk with product managers or business owners, most of them understand the concept of technical debt; however, most managers or business owners I've encountered also tend to overestimate the short-term returns and underestimate the long-term consequences. They believe that technical debt works like personal loans issued by banks, with an interest rate of around 3% Annual Percentage Rate (APR); in reality, it works more like payday loans that charge you 1500% APR.

In fact, the debt metaphor isn't completely accurate. This is because, unlike a formalized loan, when you incur technical debt, you don't actually know the interest rate or repayment period beforehand.

The debt may require one week of refactoring time that you can delay indefinitely, or it may cost you a few months' time just a few days down the line. It is very hard to predict and quantify the effect of technical debt.

Furthermore, there's no guarantee that by incurring the debt, the current set of features are actually going to be finished earlier. Often, the consequences of technical debt are close to immediate; therefore, by rushing, it may actually slow you down within the same development cycle. It is very hard to predict and quantify the short-term benefits of incurring technical debt. In that sense, incurring technical debt resembles more of a gamble than a loan.