Debt is not a monster as many people believe it to be. In fact, it can be considered good for your finances if it’s helping you build wealth. For example, taking a loan to buy a house with a sound financial plan could be a good debt as it will be an asset value and would help you build wealth in the long term. However, other kinds of debt, such as high-interest credit card debt, excessive borrowing, and unmet EMI dues are not so healthy for your finances. “Two thumb rules serve as a financial indicator of a debt trap: First is EMI exceeding 50 per cent of income and the other being fixed expenses (i.e., obligations towards rent, maintenance expenses, fees towards education, etc. as well as EMIs) being more than 70 per cent of income,” says S Ravi former chairman of BSE and Founder, Ravi Rajan & Co.