Why we simplify debts by default

On our Hunza trip, five of us paid for different things across five days. By the last night the group owed each other in eleven different directions, some of it in dollars. Nobody could hold it in their head.

Eleven debts, four payments

The arithmetic is simple: work out each person's net position, then match the biggest debtor to the biggest creditor until everyone is at zero. Simplifying turns those eleven debts into four transfers — Daniel pays Rs 8,620, Zoya pays Rs 8,620, Sara pays Rs 1,840, and one $24.00 payment goes the other way.

Simplifying never changes what anyone owes in total. It only reduces how many times money has to move.

Two rules keep it honest. Currencies never mix, so the dollar debt settles separately from the rupee ones. And you can switch it off — some groups prefer paying the person they actually borrowed from.