First off if you don't want to save scum endlessly you'll have to either put this into console
effect every_province = { remove_province_modifier = durins_bane_modifier }
or use one of the balrog/balin submods that either remove or increases your chances of defeating it.

After that is done or you've decided to take your 1% chance against the balrog make sure to station your maa, get a marriage as early as possible to get gold and produce an heir. At the sametime start a learn language scheme against Elrond while befriending him and once both of those succeed negotiate a alliance with him. Try to build economy buildings first and whenever you are in war offensive or defensive always call Elrond. Before you go on offensive wars though I would highly recommend that you make sure hes not in a war himself and that he has full army strength. I would also recommend befriending Ori cause sometimes Dain will yoink him away to land him or one of his siblings/father which will make him go over there even though Dain is out of his diplomatic range. You should be able to figure out the rest for yourself, I'd highly recommend going for the great mine county it has mithril and will give you a decent income boost.