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Investing & Retirement

From $101,000 in Debt to Baby Step 4: Phillip’s Story

From $101,000 in Debt to Baby Step 4: Phillip’s Story

6 Minute Read

On a road trip to visit his daughter and her family, Phillip P. filled his car with gas and paid for the full tank the way he usually did—with his credit card. 

Every time Phillip, a single father in his late 50s, stopped at a gas station or charged something to his credit card, he thought he would get ahead of the debt someday. Instead, little by little, he kept falling further behind. Phillip was playing a dangerous game—and he was losing.

From credit cards and 401(k) loans to a HELOC and student loans to help pay for his daughter’s college education, Phillip had dug himself into a huge hole over time with more than $100,000 in debt.

When he arrived at his daughter’s place, Phillip was sitting in her living room when a thought crossed his mind. If only I had a million dollars, I could solve all my debt problems. But then a new realization quickly popped to the surface.

“I thought to myself, Wait a minute. Over the next 10 years, I’ll earn a million dollars,” said Phillip, who makes a little more than $100,000 a year as a software developer manager. He knew something had to change, but he wasn’t sure where to start.

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Losing Debt . . . and 35 Pounds!

Sometime after that trip, one of the elders at Phillip’s church announced he was putting together a Financial Peace University class. Phillip, who casually listened to Dave on the radio for years, signed up for the class just to be supportive. But as he went through the class, everything started to click.

The first thing Phillip realized was that he’d been going about budgeting the wrong way. He would budget for his bills and debt payments, but not for any expenses beyond that—like groceries or entertainment.

Once he gave every dollar an assignment with a zero-based budget, he saw a clear path forward. In the process, he saw opportunities to cut down on his lifestyle and help him start working through the Baby Steps.

“By making a budget that showed everything I was spending money on, I was able to see there was a lot of stuff I did not have to have,” Phillip said. “I can live without cable, I don’t need these junk insurance policies, and I don’t really need that landline phone—although it was kind of hard to give up the phone number I had for 30 years!”

“By making a budget that showed everything I was spending money on, I was able to see there was a lot of stuff I did not have to have. I can live without cable, I don’t need these junk insurance policies, and I don’t really need that landline phone."

—Phillip

And Phillip wasn’t only working on losing his debt. He was also on a weight-loss journey, too. He started packing his own lunches and planning meals in advance, and he lost 35 pounds while getting out of debt. It turns out what’s good for the wallet can also good for the waistline!

Murphy Turns Into A Blessing in Disguise

But while Phillip was trying to save a starter emergency fund of $1,000 for Baby Step 1, Murphy decided to make a dramatic entrance.  Not only was his salary cut due to a recent downturn, but his pickup truck (which was only worth $2,500) needed $3,000 worth of repairs. Shortly after that, Phillip’s luck seemed to worsen when he hit a four-point buck with his truck while driving at night.

Phillip didn’t realize it at the time, but his fortunes were about to change for the better.

The insurance company declared his truck a total loss and wrote Phillip a check for $1,500. His son-in-law offered to fix the truck if Phillip could get him the parts he needed, and he used some of that money to do just that. Then he was able to finish his starter emergency fund with everything left over and he started his debt snowball that week.

That blessing in disguise sparked Phillip’s debt-free journey and he knocked out $101,000 worth of debt in just under three years. He made the last payment on his HELOC loan in April 2018 to become debt-free!

And that truck? He’s still driving it three-and-a-half years later with 338,000 miles on it and counting!

“That should have been a disaster, but it ended up being a blessing,” Phillip said.

He stayed gazelle intense and quickly built up a fully funded emergency fund in only three months. Around that the time, his daughter was going through a divorce and Phillip was able to help her buy a used car and provide her with the financial support she needed.

“It’s been a blessing to be able to be there when she needed me more than ever,” he said. “I was able to help her without getting into any financial problems and give her a chance to heal and recover.”  

Phillip was ready to begin tackling his next big financial goal: investing for retirement.

Working With an Investing Pro

To help him get started, Phillip turned to the SmartVestor program to find an investing professional in his area. That’s how he got connected with Tyler C., who sat down with Phillip to go over what he’d already saved, discuss his options, and create a plan for retirement saving.

“I really liked Tyler and we really clicked,” Phillip said. “I had a good idea what I needed to do from listening to Dave, but Tyler really helped me understand a lot of the nuances around Roth IRAs and the fee structures and how it all worked. I’ve definitely recommended him and SmartVestor to some other people I know!”

“I had a good idea what I needed to do from listening to Dave, but Tyler really helped me understand a lot of the nuances around Roth IRAs and the fee structures and how it all worked."

—Phillip

One year after becoming debt-free, Phillip now has his mind set on reaching the millionaire mark. He’s contributing 15% of his income into his company 401(k) and his Roth IRA, throwing everything else he can at his mortgage. He hopes to have it completely paid off in the next couple years so he can ratchet up his investing.

Using Chris Hogan’s R:IQ tool and working with his SmartVestor Pro, Phillip hopes to have $1 million in his retirement accounts in the next 10 years or so.

Work Toward Your Retirement Dream

Are you ready to start investing? We’ve vetted hundreds of investing professionals across the country who are ready to help you reach your retirement dreams. Our SmartVestor Pros are committed to answering all your questions about investing and equipping you to start building wealth.

What are you waiting for? If you’re like Phillip and want to jump-start your retirement dream, find a SmartVestor Pro today! 

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