Little is known about Rachel Phillips’ early life. It is believed she came to America as an indentured servant; legend will have to stand in for fact in this case. A story is told that Rachel was sitting on a doorstep in Philadelphia, crying, when Aaron Levy stopped her and asked what was wrong. She explained that she was a Jewish indentured servant, and that her master was making her work on the Sabbath. At that, Aaron purchased her indenture and the couple was married.

Aaron had acquired a sizable plot of land in Pennsylvania on the hopes that the town of Aaronburg, his town, would become the state capital. The couple lived in Aaronsburg for several years, but when nothing became of this land speculation, they moved to Philadelphia.

Childless, they took Simon Gratz, son of Michael and Miriam Simon Gratz, as something of an adopted son.