Phillip Christenson married his fiance, he didn’t
expect to discover she had $93,000 in student loan debt.
didn’t know how much she had borrowed,"
Christenson said. "I had assumed the balance was
somewhere around $15,000, something more typical."
Then, statements starting trickling in, and the couple
learned just how big of a financial hole they were in at
a time when they were just starting their lives
how the couple tackled their debt and came out on top a
few years later.
WHAT HE PREACHED AS A FINANCIAL ADVISER: When
Christenson discovered his wife’s student loan debt,
the timing could not have been worse. He had recently
launched a new business, which temporarily reduced his
take-home pay by half.
I known about the debt, I probably would have delayed
the business launch," he said. "My income
dropped by half and, at the same time, my debt payments
went up by $1,200. The timing was auspicious, but it
made me work harder and want to build my business."
on, Christenson held positions at a hedge fund and
wealth management firm, which prepared and inspired him
to launch a financial planning firm, Phillip James
Financial, which he did through a partnership with a
childhood friend. Though he was suddenly buried in his
wife’s student loan debt, he aspired to overcome the
financial obstacle using what he knew about money
wanted to live what I was recommending to clients within
my practice," he said. "I don’t like to have
debt myself. I wanted to make sure my own finances are
couple started by cutting extraneous expenses. They
scaled back from going out to eat a few times a week to
not at all. They stopped going on vacations. But while
they lived on a shoestring budget, it wasn’t enough to
move the needle the way Christenson desired. That’s
when he started to look into real estate.
A LANDLORD TO MAKE MONEY: Christenson found a four-unit
building on the east side of St. Paul, Minn. "It
was in rough shape. It needed work, but I knew I could
do it," he said. Unfortunately, his wife,
Christine, was far from pleased. "She said she’d
never live in it," he said.
for him, he had some time to fix it up. Christine had
just left for a one-year dietitian internship in
Michigan, and he used that time to spring into action.
the time of the purchase, his monthly mortgage payment
for the building was $1,200. Christenson rented out
three of the units for $900 a month and moved into the
fourth unit. His mortgage payment was covered by the
rental income. He then used the rest of the money to
renovate the unit where he lived.
TO RENOVATE A RENTAL PROPERTY: When he finished
renovating his unit, he moved to an unfinished unit and
started all over again. "I lived in three of the
four units while we lived in the building. I did a lot
of extra work to them," he said. "It was nice
when I finished. My wife ended up liking the
grew up remodeling homes with his grandfather, and it’s
a skill that has served him well as an adult. "I
did 80 percent of the work myself," he said. He
hired contractors to complete the plumbing and
electrical work and to install a new furnace. Everything
else he either knew how to do or he researched on
YouTube. "YouTube is an amazing resource for anyone
who wants to learn to do something new," he said.
each unit was completed, Christenson raised the rent
substantially — to $1,895. "The monthly income
was nice and that helped repay our debt, but I knew
there was a lot of equity in the building," he
said. "There was $100,000 left in the property
because of the work I’d done. We definitely got some
THE RENTAL PROPERTY: At the completion of her
internship, Christine moved into one of the units with
her husband, and they lived there for quite some time.
"But we were married and starting our lives, and I
knew she wanted something different than the four-unit
building," he said. "Plus, we wanted to be
closer to our families, who were on the west side of St.
the couple sold the property and netted a $120,000 gain.
"It took three to four months to sell. We
definitely benefited from an upswing in the housing
market," Christenson said.
then rolled a large portion of those earnings into
Christine’s student loan bill, paying off all but
$15,000. "That was by design. It’s a 3 percent
interest rate, which is super low. Now we have more
freedom to do more stuff that we wanted to do before. We’re
not worried about everything we spend."
LIFE HAS CHANGED FOR THE CHRISTENSON FAMILY: Today,
Phillip and Christine have a lot more cash flow than
they used to. They’ve paid off a good deal of
Christine’s student loan debt and their incomes have
gone up. Phillip’s business has taken off and
Christine has landed steady work. Even so, they’ve
chosen not to live the high life.
trying to not increase our standard of living,"
said Phillip. "We’re not going to travel around
the world." They increased how often they go out to
eat but still generally choose savings over luxury.
"We’re trying to get back on track with our IRAs
and we’re building up our cash reserve," he said.
"We don’t want to get back into a bad cash flow
situation in the future."
time around, they have a little extra motivation. Three
months ago, the couple welcomed their first child into
the world. Phillip and Christine want to make sure they
can fund a happy life for their budding family.
FOR OTHERS IN DEBT: Even though he had great success
with the four-unit property he bought, Christenson isn’t
sure the same strategy would work out today. "The
market has gone up since then. The property I bought may
not be available in today’s market. Before you make a
move to purchase anything, make sure the numbers make
sense," he said.
those who do want to dip their toe in the real estate
market, Christenson suggested the site BiggerPockets.
"Within the site is a forum for real estate
investors. Many are open and willing to share
info," he said. "If you need help running the
numbers or finding a contractor, just post on that forum
and you’ll get some good answers."
though he admits it’s risky to purchase multiunit
rental properties, he admits he’s not sure why more
people don’t do it. "Your mortgage is one of the
biggest expenses you’ll have in life. If you can get
someone else to pay that, it makes life so much
easier," he said.