Debt-free FI means reaching financial independence without outstanding loans—or with a clear plan to eliminate debt before or early in retirement. High-interest debt (credit cards, personal loans) erodes your FIRE number and increases sequence-of-returns risk.

Why Debt Matters for FI

• Interest drag — Paying 12–18% on credit cards or personal loans often outweighs investment returns.
• Lower effective corpus — EMI obligations reduce how much you can withdraw from your portfolio.
• Peace of mind — Entering early retirement without debt reduces stress and withdrawal pressure.

Strategy

Prioritise paying off high-interest debt before aggressively investing. For home loans, many FIRE adherents prefer to clear them before retiring, though some keep low-rate mortgages if the math favours investing. See credit card strategy for disciplined use of credit.