Here’s a new term (to me at least): maximum prudent leverage, or MPL.

I found it in the August edition of Portfolio, a publication produced by JPMorgan Private Bank for its rich clients.

Basically, maximum prudent leverage means the largest amount a person, family or business can borrow without taking on too much risk. That’s not the same as the maximum a lender will give you, it’s less.

A mortgage company might figure it’s just fine for you to use a third of your gross income for debt payments. But it cares only that you can make the payments, it doesn’t care about your standard of living.

Borrowing, of course, is big these days. Americans owe enormous amounts on credit cards and car loans, and millions of us have refinanced mortgages to free up cash for second homes, exotic vacations, college expenses. …

Without borrowing, most of us wouldn’t get our first homes until we’re 60. But with interest rates rising, the stock market in the doldrums, home prices perhaps in a bubble, incomes languishing and job security often shaky, we should know at what point borrowing is too high — MPL.

If you face a financial setback such as a lost job, would debt force you into a financial tailspin or psychological depression? Borrowing, for most people, should be kept comfortably below MPL.

Unfortunately, there’s no simple formula for figuring this limit, since some factors, such as your job security and comfort with risk, are hard to pin down. Still, you can get a better feel for your limit by asking some questions many people don’t bother with.

Many are thrilled to discover how much lenders will let them have. And they mistakenly focus on just one factor — whether they can afford the monthly payments, JPMorgan says.

To figure your MPL, start with those payments. If the interest rate floats (changes from time to time), as with credit-card debt and adjustable-rate mortgages, how high could the payment get? Could you handle it?

Financial software such as Quicken and online sites such as www.bankrate.com have calculators for figuring loan payments. Play around. It’s sobering to see that a 2 percentage-point increase on an adjustable-rate mortgage can boost the monthly payment by 25 percent.

In assessing your borrowing limit, look at the collateral you’re using to get the loan.

This is obviously an issue if you’re using a margin loan with a broker to borrow against the value of your investments. If they fall in value, the broker may sell some to get the debt down to an acceptable level.

Borrowing against investments is especially hazardous if they are concentrated and volatile — if your main holding is a single stock that tends to rise and fall sharply, for example.

During the past five years, 23 of the 30 blue-chip stocks that make up the Dow Jones industrial average have dropped in price by more than 50 percent at least once. If you’d borrowed against one of those stocks, you might have faced a catastrophe.

Perhaps you’ve borrowed to buy a new car. Keep in mind it will quickly depreciate, or fall in value. Then, if you get into a pinch, selling the car might not raise enough to pay off the loan. Would you have other money to make up the difference?

The same goes for borrowing against your house with a mortgage or home-equity loan. Home prices can fall, and the house might not sell for as much as you owe.

What if your income shrinks? Do you have enough saved to make all your loan payments and meet other living costs during a period of unemployment? The shakier your income, the less you should borrow.

Even if you figure you can survive a setback without bankruptcy, look at how life would change. If the prospect fills you with dread, don’t borrow so much.

Sure, things we buy with borrowed money can bring happiness.

But there are other forms of happiness — such as the secure feeling of living within your means.