We are continuing Financial planning - Basic rules - 4 i.e. the Loans , how it can be used for optimization of Cashflows.
For new people just get a reference .
The Debt income ratio we had seen Now it is EMI servicing ratio. This ratio will tell you about how much maximum EMI you can service .
Including all types of loans the EMI should not be more than 45% of take home salary. Means if you are earning Rs.100000/- per month after tax then you can service EMI maximum of Rs. 45000/- if it is more then you should think of prepayment. IF it is less............No don't go for loan it is Good ! but yes if you are in need of loan & your EMI servicing ratio is less you can take other loan for that maximum limit .
Many of the times question comes from clients why this limit is there ? it is with simple reason
Your household & life style expenses is 35% of income + 45% income is goes towards EMI then what remains is only 20% . This should be minimum percentage of income you should save for your Future expenses which in Financial planning we call as Financial goals if you can't save today you may not be in position to spend tomorrow.
We will continue it in next post.
For new people just get a reference .
The Debt income ratio we had seen Now it is EMI servicing ratio. This ratio will tell you about how much maximum EMI you can service .
Many of the times question comes from clients why this limit is there ? it is with simple reason
Your household & life style expenses is 35% of income + 45% income is goes towards EMI then what remains is only 20% . This should be minimum percentage of income you should save for your Future expenses which in Financial planning we call as Financial goals if you can't save today you may not be in position to spend tomorrow.
We will continue it in next post.
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