Debt creates fixed obligations against variable income. Learn the complete strategy for becoming debt-free as a self-employed person.
Debt has fixed monthly obligations. Freelance income is variable. When a slow month hits with significant debt, the combination creates serious financial stress.
List every debt: balance, minimum payment, interest rate, payoff date at current payment.
Total minimum payments = your debt floor. You must earn at least this above living expenses.
For maximum savings: highest interest rate first (debt avalanche).
For maximum motivation: smallest balance first (debt snowball).
For freelancers specifically: pay variable-rate debt first (credit cards, variable loans). Variable-rate becomes more expensive when rates rise.
Every time a large project completes, allocate 30-50% of the payment to debt beyond your monthly plan. Large irregular payments are the freelancer superpower for debt elimination.
Every dollar that was going to minimum payments becomes available for savings and investment immediately.
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