Do you want to know the safest and fastest way to entrepreneurs become debt free? And I don’t mean getting rid of all loans, which can be put to use for good, but rather the quickest way to ensure that your assets are greater than your liabilities?

There’s a lot of advice out there, but it’s not always good for the business owner. Because becoming debt-free isn’t about lowering your interest rates, paying off high-interest loans first, or cutting lifestyle expenses so you can reduce your debt.

Instead, it’s about strategically managing risk and cash flow by systematically paying down debt without guilt or sacrifice.

Unfortunately, in an effort to get out of debt, too many business owners make critical mistakes that increase their risk and slow the process down.

Here’s the fastest, safest and most sustainable way to get out of debt:

1. Save first

It makes no sense to start paying additional loans until you have at least three months of income, and ideally six months, in a liquid savings account. It creates security.

If you don’t have cash reserves, what happens when you repay your loans but then experience an unexpected cash crunch? You simply increase your loan balances again or, even worse, you miss payments and hurt your credit score, causing you to pay more for future loans.

If you’re wondering where that money might be coming from, don’t worry. Details will follow.

2. Restructure your loans

You can restructure your loans by turning short-term, high-interest loans into long-term, low-interest, tax-deductible loans.

The goal here is to minimize your payments and maximize your cash flow.

For example, if you have enough home equity, you can refinance your mortgage – which is a tax-deductible loan – and roll in as many of your non-deductible loans (credit cards, car, etc.) as possible.

This will generally reduce your minimum monthly debt payment, and the tax deduction will also increase your cash flow. Then you can strategically tackle your remaining debt, using your increased cash flow to eliminate one loan at a time.

3. The secret sauce: cash flow index

Here’s where the rubber hits the road. After minimizing your payments and maximizing your cash flow, you are now ready to focus on one loan at a time until you are completely debt free.

Most financial advisors and experts will tell you to pay off your loans with the highest interest rates first. My advice is to ignore the interest rate and use our cash flow index to determine which debt to pay off first.

To determine your cash flow index for each loan, divide the loan balance by the minimum payment. The loan with the lowest number is the one you must repay first.

For example:

Home loan balance: $228,000

Interest rate: 7%

Monthly payment: $1,665

Cash flow index: 137 ($228,000 ÷ $1,665)

Car loan balance: $16,500

Interest rate: 8%

Monthly payment: $450

Cash flow index: 37

Credit card balance: $13,000

Interest rate: 12%

Monthly payment: $260

Cash flow index: 50

In this example, it seems logical to pay off the credit card first because it has the highest interest rate. But the cash flow index shows that the auto loan should be paid off first. By paying off the auto loan first, you free up more monthly cash, which can then be applied to the credit card balance. And then you can pay off both loans faster than if you started with the credit card.

The trick is to pay off the debt that gives you the greatest cash flow with the least investment.

4. Be careful when locking up money in an asset

Paying extra money for your mortgage can sometimes make sense when you’re financially stable, but other times it’s just locking up money in the asset.

Remember that this strategy is not only about paying off your debts faster and saving money on interest, but also about reducing your risk.

A good rule here is to only put extra money into loans where your minimum payment decreases as your balance decreases. Otherwise, you’re making your cash flow index worse with every payment. This does not provide you with immediate benefits and increases your risk by reducing your liquidity.

A better solution is to save the money you would have paid on the loan balance in a separate account. Then let it accumulate and earn interest until you have enough to repay the loan in full.

5. Get to the roots

Without a fundamental shift in debt awareness, none of these strategies will work in the long run.

For lasting results, identify and address the root causes of debt, rather than pirating the byproducts (interest and bondage).

Before using the techniques above, ask yourself the following questions:

• Why did I contract each of my debts? What was the goal? Was my desire to consume or to produce?
• When I incurred a debt, how did I justify it?
• Do I seek solace in material things? If so, what could replace the feelings I get from borrowing to buy material things?
• Was my debt caused by investments that were more like gambling, i.e. investing money in things I didn’t understand and couldn’t control? If so, what can I learn from this and how can I be wiser in the future?

Get–and stay–Getting out of debt requires fundamental change.

A simple guide to moving forward: Don’t borrow to consume. Use money for luxuries and only borrow for productive assets and resources or necessities.

To recap, eliminating debt isn’t just a matter of prioritizing the order in which you should repay loans. It’s not just about saving money on interest.

The wise and sustainable way to become debt free is to reduce your risk and create more security while minimizing payments and maximizing cash flow. Not only will you get out of debt faster, but you’ll also enjoy peace of mind.