Chapter 01 The Weight of Three Loans

Like millions of Indians in their thirties, Prasad had arrived at a perfectly ordinary financial situation: a home loan on his apartment, a car loan in his name, and — because the apartment needed to be livable — a top-up loan taken for interiors. Three loans. Three EMIs. Three interest rates quietly compounding every single day.

The car loan was the sharpest knife. Interest rates on vehicle loans in India routinely sit between 9% and 12% per annum, and Prasad’s was no exception. The top-up loan on his home loan — borrowed for tiles, modular kitchen, wardrobes, and that false ceiling his family had always wanted — came next in the interest hierarchy. And then there was the home loan itself, the granddaddy of them all, the one with the longest tenure and the biggest outstanding principal.

Collectively, these three loans felt less like financial instruments and more like gravity. Not painful enough to paralyse, but heavy enough to be felt with every salary credit notification.

Most people in Prasad’s position would do one of two things: aggressively redirect all savings toward loan repayment (starving their investment portfolio), or ignore the loans entirely and let compound interest do its slow, expensive work. Prasad did neither. He did something quieter, and ultimately more powerful.

Chapter 02 The Leftover Principle — A System Born from Simplicity

Every month, Prasad’s salary would arrive. Bills were paid. Grocery expenses settled. His SIPs — Systematic Investment Plans across multiple mutual fund schemes — were automated, so they left his account like clockwork before he could think about spending them. Insurance premiums, utility bills, school fees — all of it went out.

And then there was a remainder. Some months it was thin. Some months, when an expense had been avoided or a reimbursement had come in, it was a little fatter. But there was always something.

That remainder — that financial residue at the bottom of the month — is where most families bleed money. It disappears into dining out, impulse Amazon orders, a weekend getaway, or simply evaporates into a savings account earning 3.5% interest. Prasad made a different choice.

He transferred that remainder — whatever it was, ₹2,000 or ₹18,000 — into a separate account. Or more specifically, into a debt mutual fund.

The choice of a debt mutual fund was deliberate. Fixed deposits at Indian banks, while safe, were — and largely remain — taxed at slab rates and rarely offer meaningful returns above 6–7%. Debt mutual funds, particularly short-duration and corporate bond funds, could comfortably deliver more. More importantly, the money in a debt fund was liquid — redeemable within a day or two when a repayment moment arrived — and it was mentally sequestered from his daily life. Prasad couldn’t “accidentally” spend it.

Chapter 03 First to Fall: The Car Loan

Prasad’s first target was the car loan — not because it was smallest, but because it was most expensive. This is a principle known in personal finance circles as the Avalanche Method: prioritise the loan with the highest interest rate first, regardless of outstanding principal. By doing so, you minimise the total interest paid over the life of your debts.

Every month, the leftover amount accumulated in the debt fund. Months passed. The corpus grew. Prasad did not touch it for holidays. He did not touch it when the car needed a new set of tyres. He did not touch it when a tempting gadget appeared. The emergency fund handled genuine emergencies — and there were a couple — but the debt-payoff corpus was untouched.

Then one day, the mutual fund balance crossed a threshold that made a meaningful car loan part-payment possible. Prasad redeemed, sent the bank a payment well above the scheduled EMI, and watched the outstanding principal drop sharply. He did this again. And then again.

The car loan fell. It did not go out with a fanfare. There was no celebratory dinner. Prasad simply noted that one EMI had left his life, and redirected that freed-up cash — combined with the continuing leftovers — into the debt fund, now aimed at the next target.

Chapter 04 Act Two: The Top-Up Loan

The top-up loan had funded the life that now surrounded Prasad and his family — the warm-toned tiles in the living room, the sleek modular kitchen, the storage that made a compact apartment breathe. But it came with interest, and that interest ranked higher than the home loan.

With the car EMI now absorbed back into his accumulation engine, the pace quickened slightly. More money flowed each month into the debt fund. The corpus built up faster. And the same quiet ritual continued: accumulate, wait, redeem, part-pay, repeat.

The top-up loan’s outstanding balance shrank. Month after month. Slowly — and then suddenly, the way all debts eventually yield to patient persistence — it was gone.

Two loans down. One to go. The biggest one.

Chapter 05 The Home Loan — The Final Boss

The home loan was different. Home loans in India are long-duration instruments — typically 15 to 25 years — and their part-payment rules often come with constraints. Many lenders require a minimum part-payment amount (sometimes equivalent to one or more EMIs) before they process a principal reduction.

This meant Prasad had to be more patient. The small, frequent transfers into the debt fund continued — but now he had to wait longer for the corpus to cross the threshold his bank required for a part-payment. He couldn’t pay ₹5,000 here and ₹8,000 there. He needed to cross a minimum bar before each payment counted.

So he waited. Accumulated more. And when the balance finally exceeded one EMI’s worth — and then some — he made the part-payment. The outstanding principal dropped. The tenure shortened. He did not ask the bank to reduce his EMI amount; he asked them to reduce the tenure. This is the smarter move. A shorter tenure means fewer months of interest, which means the total interest outflow drops dramatically.

Then he began the cycle again. Transfer leftover. Watch the debt fund grow. Cross the threshold. Part-pay. Repeat.

Chapter 06 When the Market Fell — and Prasad Did Not Flinch

In the years that Prasad was executing this plan, the market did not cooperate with a steady upward glide. It never does. There were sharp corrections. There were moments when headlines screamed about portfolio losses, global uncertainty, economic slowdowns. There were months when Prasad opened his mutual fund app and saw portfolios in the red — sometimes significantly.

And his SIPs kept investing.

Not because he was numb to the falls. Not because he didn’t feel that familiar clutch of anxiety when NAVs dipped. But because he had built a system where the SIP was automated, non-negotiable, invisible. It left his account before he could second-guess it. Month after month, his SIPs bought more units — at lower prices during crashes, at higher prices during rallies.

This is the compounding paradox that takes years to truly understand: market crashes are a gift to long-term SIP investors. When prices fall, your fixed SIP amount buys more units. When the recovery comes — and it always has, historically — those extra units are now worth considerably more. The investor who pauses SIPs during a crash and restarts them after the recovery has unknowingly sold low and bought high in the worst possible sequence.

Prasad’s equity mutual fund corpus grew — not linearly, but with the jagged, upward-drifting pattern that characterises long-term equity investing. The debt fund where he parked his loan-repayment accumulations was less volatile by design, quietly compounding at a rate better than fixed deposits while remaining liquid for whenever a part-payment moment arrived.

Chapter 07 The Rules That Made It All Work

Behind Prasad’s success were not strokes of genius but a set of quiet, inflexible rules. Rules he followed even when the logic seemed questionable, even when a shortcut whispered from somewhere tempting.

Rule 1: Never Touch the Emergency Fund

Prasad maintained a separate emergency fund — typically 6 months of household expenses — in a liquid fund or high-yield savings account. This was not part of the loan-repayment corpus. This was not invested in equity. This was the financial equivalent of a fire extinguisher: sitting there, hopefully never needed, absolutely irreplaceable in a crisis.

When a medical expense arrived, the emergency fund covered it. When a job transition created temporary income uncertainty, the emergency fund held steady. The loan-repayment corpus and the investment portfolio were never disturbed. This discipline prevented the financial death spiral that hits so many families: raid investments → lose compounding → need to borrow again → deeper in debt than before.

Rule 2: Never Stop Investments to Accelerate Loan Repayment

This one is counterintuitive, and many personal finance advisors would debate it. But Prasad’s philosophy was firm: the loans would be paid off using only the surplus, never by cannibalising investments.

The logic is sound when examined carefully. A home loan at, say, 8.5% interest, while high in absolute terms, is a known, finite liability. An equity mutual fund portfolio, given a 10-15 year horizon, has historically delivered significantly higher compounded returns in India. Selling investments to pay off a relatively lower-rate loan destroys long-term wealth creation for a short-term emotional payoff.

Prasad chose the long game. The SIPs ran. The investments grew. And the loans were handled separately, on their own timeline, using only what was left after all financial commitments were honoured.

Rule 3: Target the Highest Interest Rate First — Always

The avalanche method is mathematically optimal. Pay off the costliest loan first, regardless of the principal size or how emotionally satisfying it might feel to clear a smaller loan. Every rupee of principal on a 12% loan costs more than every rupee of principal on an 8% loan. Eliminate the expensive money first.

Rule 4: Freed EMIs Go Back Into the Engine

When the car loan EMI disappeared from his life, Prasad did not “upgrade his lifestyle” to absorb that freed-up cash. It went directly into the debt fund accumulation, accelerating the attack on the top-up loan. When the top-up loan cleared, that freed EMI did the same. The compounding effect of stacking freed EMIs onto the repayment engine meant each successive loan fell faster than the one before.

Chapter 08 The Day It Was Over

There was no single triumphant moment. The home loan didn’t end with a ceremony. There was no banker handing over a congratulatory cheque. The last part-payment went through on a Tuesday. The outstanding balance read zero. The bank sent a No Objection Certificate (NOC) in the mail a few weeks later.

Prasad filed it. Noted it. Moved on.

Except now, for the first time in over a decade, every rupee of his salary was truly his. No EMIs. No interest accruing. No lender holding a lien on anything. His SIPs — now larger, because the freed EMI amounts had been added into investments — were building a future portfolio at an accelerated pace. The debt fund that had served as his repayment engine was now redirected toward other financial goals.

The freedom was quiet. Mundane, even. But it was absolute.

Final Word What Prasad’s Story Teaches Us

Prasad Govenkar is not a story of extraordinary income, perfect market timing, or financial genius. He is a story of a system, maintained patiently over years, in the face of market crashes, personal expenses, and the thousand daily temptations to spend what was meant to be saved.

The lesson is not complicated. But it is rare — because executing it requires something harder than intelligence. It requires consistency. It requires the discipline to leave the emergency fund alone when life gets expensive. It requires keeping the SIPs running when markets are terrifying. It requires transferring that leftover every month, even when it feels too small to matter.

It always matters. Small amounts, compounded over time, against high-interest debt, with patience — they win. They always win.

The only question is whether you’ll give them enough time.

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