The Cash Flow Index (CFI) is a financial metric used to evaluate the efficiency of debt repayment. It measures how effectively an individual or business can manage and pay off their debts relative to their cash flow. The CFI is calculated by dividing the total outstanding debt balance by the monthly cash flow (income minus expenses). A lower CFI indicates that less debt is being carried relative to cash flow, suggesting better financial health and efficiency in debt management.

For example, if someone has a debt of $10,000 and a monthly cash flow of $2,000, their CFI would be 5 ($10,000 ÷ $2,000). A CFI of 1 or below is considered ideal, meaning the debt could be paid off in one month with available cash flow. Conversely, a higher CFI indicates a heavier debt burden relative to income, which may signal financial stress.

The CFI is particularly useful for prioritizing which debts to pay off first. Individuals or businesses can reduce their overall financial strain more efficiently by focusing on debts with higher CFIs. It is a practical tool for budgeting, debt repayment strategies, and improving financial stability over time.

The Cash Flow Index (CFI) is a financial tool used to assess the efficiency of debt repayment. It is calculated by dividing the outstanding loan balance by the monthly payment amount (CFI = Loan Balance / Monthly Payment). A higher CFI indicates that a loan is relatively inexpensive to maintain, while a lower CFI suggests a more burdensome debt.

CFI helps individuals prioritize which debts to pay off first, focusing on those with lower indexes to free up cash flow more quickly. It is particularly useful for debt management, enabling borrowers to make informed decisions about repayment strategies. By optimizing debt payments using CFI, individuals can reduce financial stress, improve cash flow, and achieve financial freedom faster. This metric provides a clear, quantitative approach to managing and eliminating debt effectively.