Man pays off home loan and car loan to be debt-free. But CA calls it a huge financial mistake

For most people, being debt-free is the ultimate financial dream. No EMIs, no stress, just peace of mind. That’s exactly what one man in his late 30s thought he had achieved when he cleared his home and car loans. He proudly walked into his CA’s office, smiling ear to ear, declaring himself “finally free.” But what looked like a smart move on the surface turned out to be a hidden trap.

CA Abhishek Walia shared the story on LinkedIn, breaking down why the decision was actually a huge mistake. To clear his loans, the man had liquidated all his mutual funds, drained his emergency fund, and put off retirement planning for “a few years.” In the process of killing his EMIs, he killed his financial safety net too.

Walia explained that one medical emergency, job loss, or family crisis would now push the man back into debt — only this time without investments to back him up. The real shocker? Debt-free doesn’t automatically mean financially free. Sometimes the smart play isn’t wiping out loans at any cost, but balancing them with liquidity, growth, and future security. Money, as Walia put it, isn’t just about peace of mind today — it’s about having a shield for tomorrow.

How can middle class make wealth like the rich?
In one of the tweets shared by CA Nitin Kaushik, he said that most middle-class families focus only on earning and saving. Salary comes in, bills go out, and whatever’s left is parked in the same account. One job loss, medical emergency, or loan default can wipe it all out — because everything sits in one vulnerable basket.

The rich, on the other hand, don’t just earn, they structure. Their homes sit under trusts or companies, not personal names. Their businesses are layered through holding firms, so if one unit collapses, family wealth remains safe. They borrow through companies instead of personally, separating liability from lifestyle. Insurance cushions every big risk, and assets are spread across entities, spouses, or trusts, creating invisible shields.

The real wealth hack isn’t just higher income, it’s learning to protect what you’ve already built. For the middle class, adopting even a fraction of these strategies — diversifying ownership, insuring risks, and separating personal from business finances — is the first step to lasting financial security.