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Build up the defenses in your capitals and forts as soon as they are available to upgrade. At level 1 defense building you can hold a capital early in the game (until around turn 50) and a level 2 fort should be able to hold anything coming from the Bretonnian side of the mountains, freeing up your stacks to take regions. Even though its a minor city, you can also build walls in Helmgart so there is another bastion they can't take. You may lose a wall less town or two but you wont lose much if they are just generating money. You can then take them back a turn or 2 later.
Oh, and dont worry about electors dying, try to save them or give them land back that you took.
basically fall back to a defensive position where you no longer need to dedicate an army to defense an d can defend with just a garrison and push in another direction until you border a friendly faction that can secure your flank. post a screen shot of your campaign map if you want more help
Your first instinct will also be to hold/occupy as much land as possible in the empire, but don't do that. You will basically want to get Reikland up and running by sacking enemy lands to fuel its upgrading, even if those lands are technically empire soil. Attempting to instead occupy all the land you come across will result in you being spread too thin. Alternatively you can occupy the land, and then immediately sell it to the elector count nearby, which leads to the next issue:
Don't worry about fealty too much for anyone but Elspeth, they will all be dead before it matters anyway.
Also, when given the option to pay mercenaries to defend your fellow elector counts don't be afraid to shell out the 1000 gold if you don't want to spend prestige, you will pretty much get it back in full (maybe with a slight profit) if you win the battle and sell the captives off.
First comment is you don't put too many details into your story, so its hard to identify what you are doing wrong.
That said, I'll tell you what I did.
Prestige Spending: I used my first 7500 prestige to upgrade the emperor actions to the upgraded version in the tech tree. After that, I started spending prestige to confederate the other legendary lords. 1 LL every 5 turns (you will need to send characters to go visit Volkmar, Markus, and Gelt so that you can confederate them). After confederations, the other priorities for prestige spending are: +2 pop for a settlement, +5k xp for a lord, and replenish all the state troops.
How do you get lots of prestige so you can afford all these prestige expenses? Fight and win lots of battles.
In another thread, I posted my example start, but the main point is win every battle with Karl Franz and some accompanying armies. Upgrade and Build garrison buildings in all the main settlements, don't worry about minor settlements (i.e. don't upgrade minor settlements).
Once you have the 13 elector count settlements (and 13 lords on the map), you have a 39% discount on state troops upkeep, 13 different lord bonuses, and lots of rune swords.