Case Study – Maya and Abhishek

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At the opening of their story, Maya and Abhishek were in their mid-forties and they had two children set to start college in the next four years.

On the outside, they looked like any prosperous family. They had a nice home with two new cars. Abhishek had a good job – better than any job anyone in his family had ever had. He was a manager who supervised a workforce of thirty. But below the surface bubbled a problem that threatened everything.

Abhishek was an employee. He worried about his financial situation every time he looked at the balance due on his credit card statements. He worried about it whenever he thought of college tuition and retirement, for which he had nothing saved. He worried about it every time his company closed a division on a seeming whim.

In a panic, he began working himself harder and indulging in the lifestyle of the rich on weekends. He had his family’s best interest in min. He spent his leisure time either golfing with prospective clients or taking his superiors out. During these outings, Abhishek got lots of hot tips on the stock market.

The people he spent time with looked prosperous, so they had to know what they were talking about. Abhishek had already gambled on a few tips and lost more than he had made. His panic grew. In one bold move, he took out a third mortgage on his house to invest in a pre-IPO. The offering failed and he lost everything.


Maya and Abhishek had the worst-case cash flow pattern of the middle class: no true assets and liabilities added to cover expenses.

Abhishek wanted very badly to be rich.

Maya wanted security and comfort.

After looking at their financial story, they agreed they were neither rich, comfortable nor secure. In fact, they were steamrolling down the road to financial ruin.


How much did Maya and Abhishek keep?

Total monthly income

Rs. 1,75,000

Less: Total monthly expense

Rs. 1,82,600

The difference is how much they kept:

Rs. -7,600

Percentage of income kept:


Did their money work for her?

Total monthly income

Rs. 1,75,000

Total earned income

Rs. 1,75,000

Total passive and portfolio income

Rs. 0

Percentage passive and portfolio income


What was their income after taxes?                            

Total income per month

Rs. 1,75,000

Taxes paid per month

Rs. 32,500

Net income per month

Rs. 1,42,500

Percentage of gross income paid in taxes


How much did they spend on housing?                       

Total housing cost

Rs. 79,000

Percentage of net income


How much did they spend on non-performing assets?     

Total luxuries

Rs. 1,02,50,000

Total assets (as per banker)

Rs. 1,05,00,000

Non-performing assets


What was their return on assets?                                

They had no assets and no passive income, so there was no return on assets.

How wealthy were they?                                             

Total assets

Rs. 2,50,000

Total expenses

Rs. 1,82,600

Maya and Abhishek were 1 month rich. If they quit their jobs, they could survive for one month only


Abhishek had always been his own financial advisor and tax preparer. He was smarter than anyone else he knew, and he trusted himself more than he trusted his CA.

After reviewing their finances, they decided to review the following five-year goals:

  1. Establish a five-year debt reduction plan
  2. Find a CA to review their tax records and prepare their tax returns if necessary
  3. Build an asset reserve, conservatively invested so that eventually, if needed, they would have three months-worth of expenses put aside.


Having agreed to cut expenses wherever possible, Maya and Abhishek were successful in designing and following their debt-reduction plan.

The going was slow, but eventually, they eliminated all their consumer debt and by the middle of the fifth year they had begun to build their security fund.

Finally realizing that he didn’t have all the answers, Abhishek made an appointment with a local CA for tax advice.

The CA discovered several deductions related to past investment expenses that Abhishek had not taken. He filed an amended tax return. Maya and Abhishek didn’t get immediate tax relief, but now they had some carryover expenses to be used when they began making portfolio income. Moreover, Abhishek hadn’t correctly reported a large carryover capital loss and bad investments. The loss, reported in an amended return, would reduce his taxable income by Rs 3,00,000 per year until it was completely used.

Meanwhile, having almost completed the five years of debt reduction, Abhishek felt the need to play catch up.

There was a rumour flying through the bank where his friend worked,  that a local company trading as a penny stock was being courted by a company on the Bombay Stock Exchange.

If the smaller company was bought up, a share of its stock trading at just pennies might suddenly become worth thousands of rupees. Abhishek and his friend reasoned that a banker would surely know what was going on. Here finally was a good financial advisor, thought Abhishek.

The hoped-for deal never came, and Abhishek’s 10 lakh investment became less than 1 lakh.


Total Assets

Rs. 3,00,000

Total expenses

Rs. 1,38,501

Maya and Abhishek were 2 months wealthy. That means they could quit their jobs and survive for only 2 months.


Maya and Abhishek have finally had an honest discussion regarding their long-term financial future.

Abhishek still wants to be rich, but he has listened to Maya’s concerns and acknowledged her need for security.

They know they can eliminate the new debt one step at a time, just as before. They’ve lost a lot of ground, but Maya is much more comfortable knowing where they stand.

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