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An Entrepreneur Hoping to Make It

Via The Wall Street Journal : For founder of North Fork Smoked Fish, fish burgers are nice, but a financial planner recommends an IRA

Phil Karlin is pouring nearly everything he has into his business.

The 54-year-old, lifelong fisherman and founder of North Fork Smoked Fish Co. has taken on debt and spent almost all of his savings on the business that he started some six years ago in Greenport, N.Y.

Mr. Karlin, who is married with three children, joined the Coast Guard after high school. He then spent several years as a commercial lobster fisherman. When that industry collapsed, he worked as a tugboat captain and then as a supply-boat captain. He later worked in his father’s fishing business, then decided to start his own company.

“These are products worth taking a risk for,” Mr. Karlin says of the varieties of smoked fish and fish patés he sells, including salmon, scallops and bluefish.

Some 17 years ago he was well on his way to saving for retirement, with about $150,000 in stock- and bond-mutual funds. Then he and his wife at the time divorced, which cost him nearly $50,000 in legal fees.

He remarried about 10 years ago, and he and his wife, Jackie, bought a house for about $600,000. The couple still owes about $400,000 in mortgage payments, which Jackie makes from her salary as a title examiner. Jackie also has a 401(k) with a current value of about $80,000.

Over the past six years, Mr. Karlin has put nearly all of his remaining retirement savings, about $100,000, and about $50,000 in personal loans into his business.

The business broke even in 2015, but he’s hoping for a record year this year, thanks to a relatively new product—frozen fish burgers, which he says are selling well. To further scale that product line, he needs to buy a large freezer, which costs about $10,000.

Meanwhile, he wants to help his college-age daughter pay her tuition. So, any vacations will have to wait. “I believe in paying my bills on time,” he says.

Mr. Karlin is counting on the business to one day fund his retirement and hopes that his wife’s 401(k) will help the couple.

ADVICE FROM THE PRO: “Mr. Karlin is doing a great job staying on top of credit-card and other bill payments,” says Lori Dietzler, a fee-only financial planner in New York City.

If the business has net income this year, it should be used for three things, she says: to fund an emergency savings account, to start a retirement account for Mr. Karlin, and to pay down his outstanding personal loan of $50,000.

Funding their retirement needs to be the highest priority, Ms. Dietzler says, then helping his daughter pay for college.

Ms. Dietzler advises against any big business expenses. She recommends leasing a freezer rather than buying a new one for $10,000.

Mr. Karlin also should get a term life-insurance policy as a basic safeguard for a family with loans, college and business expenses. As a self-employed business owner, he also needs long-term disability insurance, the planner says.

Ms. Dagher is a reporter for The Wall Street Journal in New York and host of the “Watching Your Wealth” podcast.

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