By Lisa Fischer
Ashley Chandler and Scott Philbrick were expecting nothing but connubial bliss when they married in 1990. She had earned a degree from Harding University while he was still working on his at the University of Arkansas at Little Rock. They were ready to take on the world. But a small thing with a big dollar sign got in the way. It was debt. Credit cards and student loans immediately put a dark cloud over their dreams for a sunny marriage. Mr. and Mrs. Philbrick had to find a way to get out of it. And it took them almost 17 years to find a solution.
J.C. Penney made it so easy, along with two different Visa cards with their very names on them! And a credit card to the late Colony Shop, a boutique in the state that offered a charge account to just about anyone who applied. I mean, how could any red-blooded female turn that down?
Ashley remembers their financial strategy during those lean years. The years when they were a two-income family down to a one-income family because three young children warranted a life change for them. “I would pay the people first who might turn something off. Then whatever was left was left. Some months we were already spending next month’s paychecks.”
The debt was nearing $70,000. But it wasn’t something she was completely honest about with her husband until that fateful day in 2007.
“One night I had to sit down and tell Scott everything,” she recalls. “I told him, ‘I have this much in credit card debt among other things.’ He said to me, ‘That’s on me because I should have been involved and helped you.’” Then the hard work began.
Ashley admits, “My brother was teaching the Dave Ramsey [financial methods] course at our church. I liked the idea of getting out of debt; I just didn’t like the idea of not getting what I wanted and being told what to do. I didn’t want to be told what I couldn’t spend.” The days of paying credit card minimums and student loan deferments were over. So was living paycheck to paycheck.
The Dave Ramsey course teaches the principles of debt reduction and gives attendees a plan. Scott, who was in sales at the time, recalls their budgetary mindset during those years.
“We didn’t have a philosophy around money: We spent what we didn’t have,” he says.
“When we were young parents, our church was piloting a program to help young couples get out of debt. They chose us and helped us get debt-free. We were so grateful that we celebrated by getting back into debt over time. It was shameful, really. Sinful. When we truly committed to getting out of debt, the Dave Ramsey way, it was exciting to reach the next step, to accomplish the next goal, to truly become debt-free. I used to think we couldn’t live without a credit card. Now I realize it’s dangerous to live with one or [even] three.”
So in the time the Philbricks completed the course, which can vary from 6-9 weeks, they finally had the plan they always needed. “One of the first ‘baby steps,’ as Dave calls them, is to put $1b000 in the bank. Then we went to work on the debt,” Ashley remembers. That’s where the creative math began. They paid off $34,000 in debt in nine months. Without a pay increase.
Ramsey recommends paying off the smallest debt first for the feeling of accomplishment. Ashley, who’s a personal trainer and endurance athlete, says, “It’s like losing those first 5 pounds. It gets you on a roll.” Then they tackled the third “baby step.” It is to fully provide for an emergency fund. That’s what Ramsey calls your expenses for 3-6 months. You have to consider what your family would do if you were out of work or had a health issue and couldn’t provide financially.
Ashley says, “Every month we would do what we could. We had garage sales. I clipped coupons.” They cut back on dinners out. No more charge card purchases. “Our philosophy has completely changed. We pay cash for everything. Even cars. And one of those is $800.” She says it’s reliable and gets one of their children to his job everyday. Their kids started earning money as teenagers. They had to find creative ways to pay for their private college education. The Philbricks had budgeted what they could afford; the kids had to take up the slack. While Ashley is creative with her side hustles (she would sew, monogram and pick up shifts as a personal trainer), it was her kids who had to find ways to make money to pay their tuition. They even earned enough that allowed them to travel abroad.
Some mantras Ashley walked away with after taking the financial course: “When you’re not telling your money what to do, your money (debt) is telling you what to do.” Another is, “Guess what you have when you don’t have debt? MONEY!”
So after all this hard work, have they rewarded themselves? Yes. But a credit card is never a part of the mix. “We saved up enough money to take all five of us to Colorado to go skiing; we stayed in the ski-in/ski-out condos, and we paid cash for everything.” But get this. This is where the real reward was. “We got a soft drink and dessert at every meal if we wanted” while on vacation.
You can tempt Ashley with a myriad of things but a credit card isn’t one of them. The Philbrick’s next goal is to pay off their mortgage. She adds, “The great thing about this lifestyle is you get to give away a lot of money. That brings us so much joy.”
The Multi-Millionaires Next Door
Sarah Kingston never thought her family was well off, nor did she think they were poor. But she did know this: They did things differently when it came to finances. And the payoff is a family trust estimated at ten million dollars. Pretty good for a man and woman who never earned more than $80,000 in a year between the two of them. And they have no intention of slowing down. Both of her parents are in good health and working today. Mom is nearly 80, and dad is 82.
The Kingstons were a modest family who attended the United Pentecostal Church in Kansas in the ‘70s. They went to church “every time the doors were open,” she remembers. Her parents tithed faithfully and even gave beyond that to the church. Sarah was the baby of the family. Her father worked as an assembly line engineer at a factory in America’s heartland; her mother had stayed home to raise her four children. But things changed when Walmart opened a store in their hometown. Her mother went to work in the garden center and took advantage of stock options. Walmart matched some of her earnings. That’s probably the root of the large trust. Her father did the same thing with his employer and even contributed to the local credit union. She recalls, “We never saw the money, so we didn’t miss it.” He retired at age 45 from his job and headed south to the Natural State.
“We never paid full price for anything,” Kingston remembers. And they were patient. Kingston says they would wait for the right time to make purchases. She remembers the family buying the scratch and dent appliances that garnered them a high-end Viking stove. If the family wanted a pool in the backyard, her dad built it. If they wanted beautiful rock for the exterior of the home, they took it from an old fence on the land they owned. She says, “My dad took his savings and invested in real estate in north Arkansas.”
But it wasn’t the high falutin’ gated neighborhood; it was mobile home parks. “We landscaped it ourselves, painted what we could, increased the property values and then sold it. They started buying and investing in real estate for more subdivisions.” They were very intentional with their financial decisions.
“We had a garden and ate from it every night because that was free food,” Kingston recalls. “We always had plenty to do and plenty to eat. We would snap the green beans from the garden and eat the potatoes we picked that day. There was always a direct correlation between the garden and what we ate. Then after we ate, we all cleaned the kitchen, and then we played cards together [as a family.] We really didn’t even watch TV.”
How do frugal people spend money for vacations? Prudently, of course. She says, “Every year we would spend two to three weeks in the family camper and pitch tents,” and they all had a grand time. “We went all over. We were the Griswolds! We went to see the world’s largest ball of twine. Really.” She says they would have picnics to enjoy their vacation meals. And what is crazy is that her parents still live that way today.
“They still take vacations. But they aren’t flying to Paris. They paid cash for a motor home with no bells and whistles, which they finished out themselves, and they drive to wherever they want. Staying in Walmart parking lots for free some nights,” she says. “What they enjoy the most about life is each other. They are thankful for every day they have with one another.”
A deep financial need of one of their grandchildren dipped into their fortune a few years ago. The child is fine now but needed almost a million dollars in care as a newborn, never coming home from the hospital for the first year of life. Of course, the Kingstons were there to write a check. Her parents paid for everything including hotel stays and travel for the child’s parents, their son and daughter-in-law. “It’s a huge [financial] burden when a child is sick,” Kingston says. But when you’ve saved all your life, it is easier to help with that burden.
Though her parents are still earning an income as real estate developers, they live off their social security benefits. Kingston says her parents still put several thousand of dollars a month into savings and investments.
Kingston and her siblings will equally split the inheritance including all real estate and possessions when their parents pass away. She says they are all aware of the sacrifices that were made for them. But are they cost-conscious like her parents? She says, “We aren’t as frugal as Mom and Dad, but we are frugal. We just pay for more comforts and conveniences than they ever would.”
If the thought of talking about money makes you run into the kitchen for a package of Oreos or a bottle of chardonnay, you’re not alone. According to a Federal Reserve survey from 2019, the average person does not have $400 in an emergency fund. NerdWallet estimates that the average U.S. household carries credit card debt month to month, paying $1,162 in interest every year. Do you fall into either of those categories? If not, don’t turn that channel just yet. There are still a couple of things we need to discuss.
Our expert on the matter is Little Rock native Sarah-Catherine Gutierrez, the co-founder of SAVE10, a campaign to get women in Arkansas to save for life and retirement, and a partner at Aptus Financial. Her debut book, But First Save 10: How One Simple Money Move Will Change Your Life, will be available May 4 from Et Alia Press. She says, “It is a roadmap to avoiding financial pain.” Part of avoiding that pain, she adds, is adopting a JOMO philosophy.
We know FOMO is the “fear of missing out.” Therefore the opposite is the “joy of missing out” on what she calls “the consumption train … consume is what we are taught to do. We don’t know how to save. We spend first; we save what’s left.”
How do we start righting the ship? Gutierrez says, “Pay yourself first.” That means you put aside money for retirement no matter what age you are along with saving for maybe your Christmas gifts or a new lawnmower. But she repeats, “Pay yourself first.” And do it every time you get paid. She says to begin today with paying yourself at least 10 percent of every paycheck.
She says there are three types of people:
Savers (small part of the population).
Break Eveners (bulk of our population).
Debtors (barely hanging on). These are the ones trying to mix saving and paying off debt at the same time.
For attacking the ravenous monster that is credit card debt, Gutierrez echoes the Dave Ramsey philosophy. Ramsey is the best-selling financial author and radio host who suggests paying the smallest credit card debt first, even if there are higher-interest balances in the books. It’s known as the “debt snowball method.” Ramsey’s website says, “It is where you pay off debt in order of smallest to largest, gaining momentum as you knock out each balance.”
We featured a couple who was highly successful in their debt repayment in this feature using the Dave Ramsey method (see Ashley and Scott Philbrick’s story). Gutierrez says, “The good thing about those people is that they will work hard to get out of debt, and it’s a teachable time. [They] will completely rethink money now. [They] went through the pain and sickness of debt and now feel better after paying it off. They will never get in debt again.”
Surprisingly, she adds, “60 percent of us don’t have debt, but a lot of people walk around spending everything they make.” These are the people she likes to mentor. She wants them to start rethinking their finances and start prioritizing retirement. Their lives can be changed by saving at least 10 percent. That percentage goes up the older you are, but 10 percent is a start. She says, “We should treat retirement like we treat taxes. I actually think there should be a penalty for people who don’t plan for retirement.”
The Break Eveners, she says, pay everyone else but themselves. This means they pay the car lender, the mortgage lender, health insurance, etc. But they don’t often contribute to a 401(k). They don’t have an emergency fund. This goes back to the “paying yourself first” philosophy. She says a good discipline is auto deduct 1-1.5 percent of your home’s value and divide by 12 and put that much every month into a savings account for your home repairs. For example, a home worth $150,000 divided by 1 percent is $1,500; now divide that by 12, and you will put back $125 a month. She says you can use these principles for gift giving as well. Make your list of what’s important and start by saving for those things. If you don’t see the money you paid yourself, you won’t miss it.
One final message from Gutierrez, “If your company offers any type of matching retirement, do it. As much as you can.”
How Much to Save for Retirement
We recommend saving at least 10 percent of your gross annual pay. These figures are rudimentary, but in general if people are just getting started, here are the percentages by age group we recommend: