Half my salary goes to EMIs. How do I get out?

When half your take-home pay leaves the account as EMIs within the first ten days, the rest of the month feels like a squeeze no matter how carefully you spend. Many people in this spot are doing nothing wrong. A home loan, a car loan, a personal loan for a family event and a card balance that never quite clears can add up quietly over a few years.

The good news is that you rarely need a higher salary to get out. You need a clear order: which loan to close first, what money to use, and what to keep aside so you do not slide back.

Why does a 50 percent EMI load feel so heavy?

Once EMIs cross about half of take-home pay, the other half has to carry groceries, school fees, bills, parents, insurance and every surprise. There is no room left for a buffer, so the first unplanned expense goes on the credit card. That card balance then becomes one more expensive debt.

Our guide on how much EMI is too much for your salary explains the comfort bands in more detail. The short version: below about 30 percent is comfortable, and above 50 percent is the zone where something has to change.

Step 1: List every loan by interest rate, not by size

Write down each loan with four details: the outstanding balance, the interest rate, the EMI and the months left. Then sort the list by interest rate, highest first.

This usually reveals something surprising. The biggest loan, the home loan, is often the cheapest. The small ones are where the money leaks. As of October 2026, home loans at large banks start from about 7.5 percent a year. Personal loans start from about 10 percent and are often much higher depending on your profile. Some credit cards charge as much as 3.75 percent a month on a rolling balance, which is about 45 percent a year.

A useful way to see the cost is interest per month: the balance times the yearly rate, divided by 12.

Step 2: Find money that has no job

Before cutting anything, look for money that is sitting idle: an FD opened years ago and forgotten, a savings account balance far above what you need, a maturing policy, or a bonus. An FD earning around 6 to 6.5 percent a year (as of October 2026, before tax) is worth far less to you than the same amount used to close a loan charging 14 percent or 40 percent.

Do not empty everything. Keep a buffer of at least one to two months of expenses in the bank, so that the next surprise does not go on the card again. A proper emergency fund can be rebuilt later from the EMIs you free up.

Step 3: Close the costliest loan first

Use the idle money on the most expensive debt first. In most households that order is:

1. Credit card balances that are rolling over
2. Personal loans and consumer-durable loans
3. Car or two-wheeler loans
4. The home loan, last

When one loan closes, do not let its EMI be absorbed back into spending. Send it straight to the next loan on the list. This is how the momentum builds: each closed loan makes the next one close faster.

Illustration: A household takes home ₹1,10,000 a month. The home loan EMI is ₹29,542 (about ₹30 lakh left at 8.5%), the car loan EMI is ₹12,813 (₹4 lakh left at 9.5%), and a personal loan EMI is ₹10,253 (₹3 lakh left at 14%). A credit card carries ₹80,000, on which they pay about ₹4,000 a month. Total monthly outgo on debt: about ₹56,600, or 51% of take-home pay. They also have an FD of ₹5 lakh earning 6.5%. (Illustrative numbers, not a real client; rates are assumptions for the example.)

Here is what each debt costs them in interest every month right now:

The home loan has the biggest interest figure only because it is the biggest balance. Rupee for rupee, the card costs about five times as much as the home loan.

In the illustration, the household uses ₹3.8 lakh of the FD: ₹80,000 clears the card and ₹3 lakh closes the personal loan. ₹1.2 lakh stays in the FD as a buffer. The interest they stop paying is about ₹6,300 a month (₹2,800 + ₹3,500). The interest they give up on the FD money is about ₹2,058 a month before tax, and less after tax. They come out ahead by more than ₹4,000 a month in interest alone.

More important is the cash flow. The ₹10,253 personal loan EMI and the ₹4,000 card payment disappear. Debt outgo falls from about ₹56,600 to ₹42,355, which is about 38.5% of take-home pay instead of 51%.

Before closing a personal loan, check your sanction letter for foreclosure charges. If you have an FD to spare, our guide on breaking an FD to close a personal loan walks through the details.

Step 4: Give the freed-up money a job straight away

The roughly ₹14,250 a month that has been freed up should be split on purpose, on salary day:

• First, top the buffer back up for a few months until it covers two to three months of expenses.
• Then, send the rest as extra payments to the car loan, the next costliest debt.
• Once the car loan is gone, restart or raise SIPs at a level the month can carry.

The home loan can simply continue at its normal EMI. At around 8.5 percent, it is usually the last debt worth prepaying, and often the right one to leave alone while you build savings. Our guide on prepaying a home loan versus investing covers that choice.

This sequence, costliest debt first with a buffer kept on purpose, is exactly what we map in a first conversation.

What if there is no idle money to use?

Then the same order still applies, just more slowly. A few levers help:

• Stop new borrowing first. Put the credit card away until its balance is cleared. Clearing a balance while new spending lands on top of it rarely works.
• Find a fixed amount each month for the costliest debt, even ₹5,000, by pausing SIPs for a few months or trimming one fixed cost.
• Use the bonus or any lump sum on the top loan in the list, not on the home loan.
• Ask about tenure extension only as a temporary measure on a cheaper loan, to free cash for a costlier one. It lowers the EMI but raises the total interest.

When is it time for bigger moves?

If EMIs are still above half your take-home pay after this, or if you are missing payments, the fix may need to be structural: selling an asset you do not need, such as a second vehicle, or speaking to your lender early about restructuring before any default. Talking to the lender before a missed payment keeps far more options open than talking after.

For most families, though, the way out is not dramatic. It is one page with every loan sorted by rate, idle money given a job, a small buffer protected, and the costliest loan closed first, then the next one.