how much should your loans be ?

financial experts agree that the loan / borrowing payments ( car , home etc ) from your net take home salary should NOT be more than 30 % of your NET take home salary ( gross income minus taxes )

you should have three years of emergency fund reserves

we recommend paying off the credit cards as soon as possible – because they have the highest interest rate.

so the order is

• build three years of emergency fund reserves
• pay off the credit cards
• all the borrowing / loan payments should NOT be more than 30 % of your net take home salary / income
• invest at least 30 % to 50 % of your income in long term investments – stocks , bonds , index funds , exchange traded funds ( ETF ) – consult your financial planner for the exact percentage – it will vary from person to person depending on the risk taking ability
• start early and deposit every month – the longer your money stays in the market , the bigger the value at the end of retirement
• don’t worry about stock market volatility – ups and downs – over a period of 10 years or more , it all evens out.