Have you ever wondered, how much debt is too much? The Debt Affordability Model is a long-term financial planning model that helps answer that question.
Debt affordability is more than paying back the principal and interest on debt. It also takes into consideration the municipality’s future revenue and expenditure growth, as well as:
In 2004, the NSMFC developed a Debt Affordability Model to help councils determine the appropriate level of debt for their municipality. This is achieved through the use of trend analysis, projections of economic and revenue growth and capital improvement need in the future.