While we always think about saving and growing our money, it is equally important to assess one’s debts or loans. The 40% EMI rule is to safeguard your wealth against such liabilities.
You may have taken loans for buying your dream house, car or it could be your mounting credit card bills. The thumb rule under this mantra is that the total EMI that you pay for all your loans should not exceed 40% of your income.
In short if your income is 1 lakh monthly, your total EMI or equated monthly instalment, which is the method most people opt for repaying loans or any debts, should not be more than Rs. 40,000.
By following this simple rule, you will ensure your liabilities don’t exceed your asset or income and that you are still comfortable in your position to repay the loans or debts along with the interest on the same.
Be a prudent investor and manage your debts just like you manage your assets.