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Five Ways the Tax Code Disadvantages Fellowship Income

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In this episode, Emily details five ways the federal income tax code disadvantages fellowship income, sometimes resulting in a higher tax rate and sometimes just causing a bit of a headache for fellows. Additionally, she covers two ways that the tax code advantages fellowship income and one more difference that has both pluses and minuses. This episode is for current fellows and future fellows as advance tax planning and action can mitigate some of these negative effects. At the end of the episode, Emily also shares how you can advocate for change at the federal level.

Links Mentioned in this Episode

 

 

Intro

Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance.

I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others.

This is Season 14, Episode 1, and today is a solo episode for me on fellowships and federal income tax. Specifically, I am going to detail for you five ways the tax code disadvantages fellowship income, sometimes resulting in a higher tax rate and sometimes just causing a bit of a headache for fellows. Additionally, I’ll cover two ways that the tax code advantages fellowship income and one more difference that has both pluses and minuses. Keep listening to this episode if you are currently on fellowship or expect to be in the future. Advance tax planning and action can mitigate some of these negative effects. I will also tell you at the end of the episode how you can advocate for change at the federal level.

Speaking of the disadvantages of fellowship income, it’s unfortunately quite common for fellows to have a tough time getting a mortgage. Sometimes they will be preliminarily approved based on their income numbers alone, but once under contract on a home they are dropped by their lender because of their income type and documentation! However, there is one lender who works with PhDs and particularly fellows very regularly.

Sam Hogan is a mortgage originator specializing in grad students and PhDs, an advertiser with Personal Finance for PhDs, and my brother. Years ago, I told him about the issue I just outlined, and he set to work figuring out how to use fellowship income to qualify for a mortgage. While I won’t say it’s as straightforward as using W-2 income, Sam has a great success rate in presenting grad students and PhDs to the underwriters working with his employer, Movement Mortgage, and getting them approved for mortgages. Sam can readily tell you if your fellowship income is likely to be approved or not based on the specifics of your circumstances, and if not what options you still have.

I am hosting an Ask Me Anything with Sam today, Monday, January 9, 2023 at 5:30 PM PT. Come with any question you like about the home-buying process and we will do our best to help you. You can register for the AMA at PFforPhDs.com/mortgage/.

If you’re listening to this later on, you can still check that link for the next AMA date as we hold them periodically, or you can contact Sam directly at 540-478-5803 or sam.hogan@movement.com to discuss your situation.

I wish you all success with your homebuying aspirations in 2023 and following!

You can find the show notes for this episode at PFforPhDs.com/s14e1/.

Disclaimers

Disclaimer #1: This episode is going into production in early January 2023. I rely on IRS forms, instructions, and publications for this material, and at the time of this recording most of these documents have been updated for tax year 2022, but not all of them. In those cases I’m going off the 2021 material. If any content in this episode turns out to be inaccurate for tax year 2022, I will update the show notes page with the corrections, so I suggest visiting PFforPhDs.com/s14e1/ before relying on any of the information. For tax year 2023 and later, please visit PFforPhDs.com/tax/ for my most updated tax content.

Disclaimer #2: The target audience for this episode is postbacs, graduate students, and postdocs at US universities and institutes who are US citizens, permanent residents, or residents for tax purposes. Unless otherwise specified, when I say tax I mean federal income tax.

Disclaimer #3: The content in this episode is for educational purposes only and should not be considered advice for tax, legal, or financial purposes for any individual.

Without further ado, here’s my solo episode on how the tax code disadvantages fellowship income.

Motivation

You might be surprised by the topic of this episode, because striving to obtain funding via a fellowship is a super common if not universal practice in academia. Fellowships are seen as a superior form of funding because of their prestige and that they normally excuse the recipient from teaching responsibilities or similar. In many cases, winning a fellowship results in a raise as well.

I’m not making any kind of argument in this episode that you should stop applying for fellowships or reject a fellowship that you’ve won—doubly so if you will be making more money with the fellowship than without it.

What I am doing is:

  1. Pointing out the tax issues and pitfalls that can or might come with fellowship income. There are certain groups of people who are at risk of actually paying more in income tax with a fellowship, which are people under age 24, parents, and non-students. Even if you don’t end up paying more in income tax, there are certain complexities of fellowship income that you can prepare for or even avoid if you know about them. This is to help you with taking personal responsibility for your tax situation.
  2. Suggesting changes to the tax code that would resolve these disadvantages. This is to help our community know in what ways advocacy for our workforce is needed.

Outline

Here’s where we’re going with this episode. I’m going to define some terms and tell you what I am comparing the tax treatment of fellowship income to when I say that it is disadvantaged by the tax code. I have five points to cover on how the tax code disadvantages fellowship income. The first couple points apply to most fellows but don’t result in a higher tax rate when handled properly. The next couple of points are about when having fellowship income actually results in paying more income tax. The final point is about a tax benefit that is not available to fellows. Then we’re going to switch gears and discuss two ways the tax code advantages fellowship income and one difference that I see as having both pros and cons.

By the way, I am trying to keep this episode focused on how the tax code disadvantages and advantages fellowship income. I could do an entire other episode, and perhaps I will, on the ways universities disadvantage and advantage fellowship recipients through their policies. But for today, we’re sticking with the topic of the federal income tax code.

Terms

I have to establish some definitions of terms here at the start. The subject of this episode is fellowships, but academia doesn’t necessarily use that term exactly the same way the IRS does. Therefore, I have created my own framework to explain the two types of higher education income.

The most common way the word fellowship is used in academia is to describe an amount of money that is awarded to an individual, as IRS Publication 970 states, “to aid in the pursuit of study or research.” Usually these are awarded for merit via a competitive process, such as a unique application for a specific fellowship program or your application to a postbac, graduate, or postdoc program. I call this income ‘awarded income’ in my framework.

The other type of income in my framework is ‘employee income.’ This is payment for services such as teaching or research, and the postbac, grad student, or postdoc is an employee of the university or institute. Employee income is reported on a Form W-2 at tax time. It’s unusual for programs to use the word fellowship to describe employee income, but it does happen occasionally.

For the purposes of this episode, we are only discussing awarded income, which is to say fellowship income that is not reported on a Form W-2. I will continue to use the word fellowship throughout the episode, but please understand that we’re only discussing that particular variation of the term, which is the most common in academia. If you’re unsure whether your fellowship is awarded income or employee income, reference the type of tax form or forms you receive during tax season. More on that in a moment.

Income Tax Basics

Another point I need to get out of the way at the start here is to clarify that fellowship income is subject to income tax. There are nuances and special scenarios that we’ll get into later in the episode, but very generally speaking, your stipend or salary is going to be taxed at the same rate whether it is awarded income or employee income.

When I speak about fellowship income being disadvantaged by the tax code, what I am pointing out are the ways that fellowship income ends up being treated differently or ultimately taxed at a higher rate than how employee income is treated and taxed. Conversely, in some ways fellowship income has an advantage, and again that is relative to employee income. 

If you’ve heard that fellowship income is tax-free, that is either a false rumor, a misunderstanding, or a statement that requires a lot more caveats. Fellowship income used to be exempt from income tax, but that changed with the Tax Reform Act of 1986. I’ll tell you more about why these rumors and such persist throughout this episode, but for now just know that you should expect to pay income tax on your stipend or salary, unless your gross income for the year is quite low or you can take lots of deductions and/or credits. That is true whether your stipend or salary comes from a fellowship or an employee position. You can learn more about that in Season 2 Bonus Episode 1 of this podcast, which you can find at PFforPhDs.com/s2be1/.

Now we’ll get into the meat of this episode: my list of five tax-related disadvantages of receiving fellowship income, two advantages, and 1 neutral difference.

Disadvantages

Disadvantage #1: There is no single correct way that fellowship income is required to be reported to the postbac, grad student, or postdoc recipient. This is in contrast to employee income, which must be reported on a Form W-2.

Because there is no single correct way to report fellowship income, universities, institutes, and funding agencies take a variety of approaches. The most common form issued is a Form 1098-T, but sometimes Form 1099 is used, such as Form 1099-MISC, Form 1099-NEC, or Form 1099-G. Sometimes a courtesy letter is sent in lieu of an official tax form. Many organizations choose to not communicate at all with the fellowship recipient. When fellowship income goes unreported entirely, it contributes to the rumor mill that it is not taxable income.

These approaches can mislead fellows into not reporting their income, resulting in underpayment of tax, or misreporting it, which often results in overpayment of tax.

To put fellowship income on even footing with employee income, the IRS could require that a tax form be used to report fellowship income, whether one that currently exists or a new or adjusted one. This would greatly reduce the confusion among taxpayers and tax preparers about whether and how to account for this income on tax returns.

Disadvantage #2: The issuers of fellowships are not required to withhold income tax on behalf of the recipients, and they almost never take the responsibility to do so.

Employers virtually always withhold income tax on behalf of their employees. This is the situation that most Americans experience and are familiar with. Your employer sends in income tax payments on your behalf throughout the year, and then after you file your tax return, you receive a refund or owe some additional tax.

However, for fellowship income, the issuing organizations have no such withholding requirement. With very few exceptions, they leave paying income tax entirely up to the fellowship recipient, which is typically a very unfamiliar arrangement.

This lack of withholding also contributes to the rumors that fellowship income is not subject to income tax. I have even seen university administrators label fellowship income “tax-free.” What they mean is that it is not subject to income tax withholding; they are speaking from their own perspective. But when a fellow sees that label, they read it from their own perspective, and it is highly misleading.

By default, the IRS expects to receive income tax payments throughout the year. In the absence of employer withholding, the taxpayer is supposed to make quarterly payments through the estimated tax system, unless an exception applies to them.

This typically goes one of two ways: 1) The fellow learns about the estimated tax requirement close to the start of their fellowship, sets aside money for their future tax payments as their paychecks come in, and makes their estimated tax payments if required. This is the ideal and something I am constantly beating a drum about. 2) The fellow does not realize that they are responsible for their own income tax payments until they are hit with a large tax bill and possibly a penalty upon filing their tax return. This is at minimum extraordinarily unpleasant and in some cases dangerous to the financial, physical, or mental well-being of the fellow. I further discuss this scenario of a large, unexpected tax bill in the videos titled “Why Is My Fellowship Tax Bill So High?!” and “What to Do When Facing a Huge Fellowship Tax Bill,” which you can find on my YouTube channel, Personal Finance for PhDs.

A rare few universities and institutes do offer income tax withholding on fellowship income. My alma mater, Duke University, did so when I was a graduate student there. This relieves the fellow from calculating and making estimated tax payments and prevents large, unexpected tax bills.

To put fellowship income on even footing with employee income, the IRS could require that universities and institutes at least offer income tax withholding on fellowship income. To go along with the previous disadvantage, a specifically designed fellowship reporting form could explicitly list federal, state, and local income tax withheld.

Until such reform comes about, I recommend that fellows take my workshop, Quarterly Estimated Tax for Fellowship Recipients, which you can find linked from PFforPhDs.com/tax/.

Disadvantage #3 and this is the big one: Fellowship income is not usually considered “earned income,” and without that designation many postbacs, grad students, and postdocs pay more in income tax than they would if it were considered earned income.

The term “earned income” is actually used all over the tax code and publications, and you have to be really careful because its definition can change depending on which benefit is being discussed. For example, for the purpose of calculating the standard deduction, taxable fellowship income is included in the definition of earned income. But for the Kiddie Tax, the Earned Income Tax Credit, and the Child and Dependent Care Tax Credit, fellowship income is not considered earned income.

Let’s discuss each of these scenarios briefly in turn.

  1. The Kiddie Tax, which is a colloquial name, is when the unearned income, above a certain threshold, of a person under age 24 is taxed at their parents’ marginal tax rate. There’s a whole history behind the Kiddie Tax that I won’t go into now, but you can read my article about it linked from PFforPhDs.com/tax/. What is both perplexing and infuriating to me is that fellowship income is included in the definition of unearned income. So if you are a student under age 24 on fellowship, even if you are not claimed as a dependent on your parents’ tax return, you could be hit with the Kiddie Tax. I’m not saying you definitely will because there are calculations that go into this, but it can happen. If it does, your income is taxed at your parents’ marginal tax rate. If your parents have a low to moderate adjusted gross income, the Kiddie Tax either won’t apply or won’t increase your tax liability by much. But if your parents’ top marginal tax bracket is 22% or higher, your tax liability will be much higher than it would have been without the Kiddie Tax. And, again, it does not matter if you’re financially independent from your parents, this tax can still apply. Ugh!
  2. The Earned Income Tax Credit is a super valuable credit for people who are low-income, especially if they have children. For example, if you are single with one child and qualify for the credit, you’ll receive a benefit from the Earned Income Tax Credit if your income is below $43,492 in 2022. The lower your income is under that threshold, the more of the benefit you’ll receive, up to a maximum of, again for example, $3,733 for one child in 2022. This credit is refundable, which means that if it wipes out your entire tax liability, the IRS can end up paying you money. Again, just an incredibly valuable credit for low-income individuals and families, which you know many postbacs, grad students, and postdocs would be considered. However, as the name implies, your household has to have earned income during the calendar year to qualify, and fellowship income isn’t earned income. I will never forget a heartbreaking comment I received on my website years ago from a grad student who was married with two children and supporting the entire household on his grad student stipend. He was devastated when his tax return showed that because he switched onto fellowship and didn’t have any earned income for a calendar year, that his family lost out on thousands of dollars of a benefit they had received in prior years when he had employee grad student income. Can you imagine? Why would the IRS, Congress, we the people, exclude vulnerable families like that one from this benefit?
  3. The Child and Dependent Care Tax Credit is a tax credit that helps parents, among others, pay for daycare, preschool, after school care, etc. so that they can work or look for work. The benefit inversely scales with your income, like the Earned Income Tax Credit, but for example if you had one child in care and your income was low enough that you received the maximum benefit, this credit would reduce your tax liability by $1,050 in 2022. Pretty good benefit. However, here’s that catch again, you and your spouse if you’re married must both have earned income to qualify. There is an exception for students, so grad students will still qualify for the credit for all the months in which they are students, but postbacs and postdocs won’t. This issue was brought to my attention by a married couple with a baby, both postdocs on fellowship, who were taken aback that they weren’t able to claim this credit. And why? Does being on fellowship mean that they don’t need childcare? Or do they not deserve a similar carve-out to the one that students get?

I have to stop here because I’m getting really worked up about these issues. Pretty simple change here, IRS. Include fellowship income in the definitions of earned income everywhere. Or make exceptions for fellowship income in all of the above benefits and any other relevant ones.

I haven’t even covered how fellowship income relates to the definition of “support” for determining if someone is a dependent or subject to the Kiddie Tax, and I won’t take the time to illustrate it now. It’s a similar problem that the IRS could solve by saying that fellowship income counts as support… anyway. See my tax return workshops for further discussions of that rat’s nest. Let’s move on.

Commercial

Emily here for a brief interlude!

Tax season is about to start heating up, and the best place to go for information tailored to you as a grad student, postdoc, or postbac is PFforPhDs.com/tax/. From that page I have linked to all of my tax resources, many of which I have updated for tax year 2022.

On that page you will find free podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with.

The absolute most comprehensive and highest quality resources, however, are my asynchronous tax workshops. I’m offering three tax return preparation workshops for tax year 2022, one for grad students who are US citizens or residents, one for postdocs who are US citizens or residents, and one for grad students and postdocs who are nonresidents. Those tax return preparation workshops are in addition to my estimated tax workshop for grad student, postdoc, and postbac fellows who are US citizens or residents.

My preferred method for enrolling you in one of these workshops is to find a sponsor at your university or institute. Typically that sponsor is a graduate school, graduate student association, postdoc office, postdoc association, or an individual school or department. I would very much appreciate you recommending one or more of these workshops to a potential sponsor. If that doesn’t work out, I do sell these workshops to individuals, but I think it’s always worth trying to get it into your hands for free or a subsidized cost.

Again, you can find all of these free and paid resources, including a page you can send to a potential workshop sponsor, linked from PFforPhDs.com/tax/.

Now back to my expert discourse.

Disadvantages Continued

Disadvantage #4: There is no mechanism for making fellowship money that pays your health insurance premium tax-free unless you are a student.

This disadvantage requires a bit of background.

Think of a regular employment situation, not related to academia. Unfortunately in the US, health insurance is tightly tied to your employer partly because of a tax benefit afforded to them. When your employer provides your health insurance plan, the cost of the premium is tax-deductible for both you and the employer. That means that you don’t pay income tax on the portion of your income that goes toward that particular purpose. It’s as if you earned less money than you actually did. This is accounted for automatically for you on your Form W-2. The income listed in Box 1 is your gross income less your pre-tax payroll deductions such as your health insurance premium. Easy peasy. If you’re self-employed, there is also a mechanism to deduct your health insurance premium.

But if you’re not employed or self-employed, the only way you can perhaps deduct your health insurance premiums is if you itemize your deductions. Even in that case you can only deduct the portion of your medical expenses that exceeds 7.5% of your adjusted gross income. If you are a relatively healthy single person who wouldn’t otherwise itemize your deductions, I doubt itemizing will help you overall. Most people in this situation effectively cannot deduct their health insurance premiums or at best can only deduct a portion of them.

I need to back up now and talk about the situation with health insurance provided by universities. If you receive your health insurance through your parents, the following is not relevant to you. If you’re an employee of the university and receive health insurance because of that status, that’s a normal straightforward deduction as I just discussed. Let’s set that aside and discuss what happens when fellowship or scholarship income pays your health insurance premium, either automatically before you receive your paycheck or out of your own pocket.

If you are a grad student, there is a mechanism to make that fellowship income tax-free. We’re actually going to discuss that in the upcoming section on the tax advantages of fellowship income. However, if you’re a postbac or postdoc, this mechanism isn’t available to you. There is no way that I know of, short of itemizing their deductions, for postbacs and postdocs to make the fellowship money that pays their health insurance premiums tax-free. And that sucks.

This conundrum has been highlighted by many postdocs and postdoc associations. If a university or institute pays postdoc employees and postdoc fellows the same amount, the postdoc fellows effectively receive a pay cut because they have to pay income tax on the portion of their fellowship income that pays their health insurance premiums while postdoc employees do not.

The general solution to this whole issue is universal healthcare, but even without going that far, Congress could change the tax code so that all health insurance premiums are tax-deductible even without having to itemize deductions. I don’t know, maybe that would have disastrous effects somehow. Another way to fix this would be to expand the benefit that students use to non-student trainees as well.

Disadvantage #5: Fellowship recipients cannot contribute to their university or institute’s 403(b) or 457 plans. These are employer-sponsored tax-advantaged retirement accounts, and they are only available to employees.

Similar to the health insurance situation, the tax code has incentivized saving and investing for retirement primarily through employer-sponsored plans. These plans are exclusively offered to employees. That goes for 401(k)s as well as 403(b)s and 457s.

Looking at the situation for postdocs again, it’s typical for postdoc employees to be able to contribute to the university or institute’s 403(b) or 457, albeit usually without a match. However, postdoc fellows do not enjoy this benefit. While the universities administer these plans, again this is a policy issue at the federal level that excludes non-employees. Side note: If you’re wondering why grad student employees don’t usually have access to their university’s 403(b)s or 457s, that is a university-level policy issue as far as I can tell.

Not exactly the same but as a related issue, there is a type of tax-advantaged retirement account that is available to everyone with “taxable compensation,” which is an Individual Retirement Arrangement or IRA. You do not have to be an employee to contribute to an IRA. Up until 2019, the definition of “taxable compensation” excluded fellowship income, but the SECURE Act changed that definition starting in 2020. Taxable fellowship income for graduate students and postdocs is now considered taxable compensation for the purpose of contributing to an IRA. We know from this example that change is possible when it comes to fellowship income and federal tax benefits. You can learn more about this issue in Season 4 Bonus Episode 1 of this podcast, which you can find at PFforPhDs.com/s4be1/.

I think the most accessible solution to this particular disadvantage is actually not to somehow extend the employee-only workplace-based retirement benefit to fellows but rather to increase the contribution limit for IRAs to solve this for everyone. The contribution limits in 2023 for someone under age 50 are $6,500 for an IRA and $22,500 for a 403(b), 457, or 401(k). Why should there be such a big advantage for employees?

Advantages

Alright, it’s time for a dose of positivity. There are two advantages to fellowship income that I have come across.

Advantage #1: Students can make fellowship income tax-free by pairing it with qualified education expenses or QEEs. Basically, if your awarded income paid for a QEE, that amount of awarded income is tax-free. You essentially get to deduct the QEEs from your awarded income before you even report it on your tax return. This federal income tax benefit is found in Publication 970 Chapter 1, and I call it Tax-Free Scholarships and Fellowships or TFSF. Again, this benefit is only available to students.

How does this work differently for grad students with awarded vs. employee income for their stipends? This comes into play when you use your stipend to pay for an education expense rather than having it paid on your behalf via a scholarship or waiver.

Let’s take as a very simple example a grad student who has only two education expenses, tuition and a student health fee. The tuition is paid on their behalf by a scholarship, and they pay the student health fee out of pocket.

The scholarship that pays their tuition is awarded income, but it is made tax-free via TFSF because it pays for tuition, which is a QEE. So that awarded income doesn’t become part of the grad student’s taxable income.

The student health fee is a QEE under TFSF, so if the grad student’s stipend is from a fellowship, the student health fee makes that amount of fellowship income tax-free. It’s like taking a deduction. However, if the grad student’s stipend is employee income, no part of it can be made tax-free by the student health fee. Furthermore, student health fees are not qualified education expenses under the other two available higher education tax benefits, the Lifetime Learning Credit and the American Opportunity Tax Credit. So in this particular example, there is no tax benefit available to a grad student employee for their student health fee, whereas a grad student fellow can use the student health fee to reduce their taxable income.

That was a very simple and contrived scenario, but it turns out that this benefit can be uniquely applied, under specific circumstances, to lots of other common education expenses, such as textbooks, computers, software, and health insurance premiums.

If you are a grad student on fellowship, I highly recommend taking my tax workshop How to Complete Your Grad Student Tax Return (and Understand It, Too!) to understand TFSF and the other higher education tax benefits fully. This goes double if you did pay out of your fellowship stipend for the kinds of education expenses I just mentioned. You will learn under what circumstances you can use them to make your fellowship income tax-free and under what circumstances you cannot. Go to PFforPhDs.com/tax/ for the link to the workshop.

Advantage #2: Fellowship income is not considered taxable income in some states. For this advantage only we are leaving the realm of federal income tax. I won’t say too much about this except that I’ve run across it in two states, Pennsylvania and Alabama, and there may be others. But this is a truly fantastic benefit that puts fellowship income at a great advantage over employee income in those states.

Neutral Difference

Finally, we have a difference with fellowship income that has both pros and cons. For this one we’re also not discussing federal income tax but rather FICA tax, which pays into the Social Security and Medicare systems.

Fellowship income is not wages, so it is not subject to FICA tax. Postdoc and postbac fellows do not pay FICA tax, but postdoc and postbac employees do. Grad students by and large qualify for a FICA tax exemption, so they usually don’t pay it whether their stipends or salaries are fellowship or employee income.

When I was a grad student, I thought these exemptions were great. I was not interested in losing 7.65% of my paycheck toward a dubious far-future benefit. I still think keeping an extra 7.65% of your paycheck is super valuable for grad students, postbacs, and postdocs. However, now that I’m older and I’ve learned more about Social Security and Medicare, I think forgoing all those quarters of credits during grad school plus any postbac or postdoc fellowship years might be a little foolhardy. For example, if you become disabled as a young adult before paying into the system for the required number of quarters, you are at risk of not qualifying for the disability benefit. That’s a pretty remote possibility, but it’s scary that people could be left unprotected by this supposed last resort insurance plan because of these exemptions. And I really don’t think Social Security is going to disappear entirely. Ideally, I’d like to have both the money in my pocket and the insurance coverage, please and thank you.

At the beginning of this episode, I told you there were two purposes: First to help you with tax planning and second to direct your attention to issues about which you can advocate for change.

On that first point, the best place to go to learn more or take one of my tax workshops is PFforPhDs.com/tax/.

On the second point, I have three ideas for you if you would like to advocate for change to one of the federal tax policies I’ve mentioned:

  1. You can write to your representative in the House and/or your senators and ask your peers to do the same explaining how the tax law negatively affects your life and in what way it could change. The component of the SECURE Act that updated the definition of taxable compensation started as a bill called the Graduate Student Savings Act, which was sponsored by a bipartisan group of members of the House and Senate for several years before it was finally included in the SECURE Act.
  2. You can submit an explanation of your issue through the IRS’s Systemic Advocacy Management System. Just search for IRS SAMS and it will be the first result. The IRS will evaluate these issues and decide which to move forward with trying to correct.
  3. You can get involved with organizations that advocate for the workforce in your field or for PhD trainees generally, such as the National Association of Graduate-Professional Students and the National Postdoctoral Association. You can make them aware of these tax problems, if they aren’t already, and partner with them to advocate at the federal level.

It’s been lovely to have you with me for this wonky episode. One final time: I offer educational tax workshops both on preparing your annual tax return and calculating and paying estimated tax. I would really appreciate you recommending my workshops to a potential sponsor at your university. If that doesn’t work out, you can purchase the appropriate one for you as an individual. You can find the links to take either one of those actions at PFforPhDs.com/tax/.

Outro

Listeners, thank you for joining me for this episode!

I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/.

Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/.

See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps!

The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC.

Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

Catching Up with Prior Guests: 2022 Edition

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Emily published the first episode of this podcast in July 2018. This is the 176th episode, and over the last four and a half years, the podcast has featured 156 unique voices in addition to Emily’s. This last episode of 2022 catches up with the guests from Seasons 1 through 9. The guests were invited to submit short audio updates on how their lives and careers have evolved since the time of their interview. They also included their best financial advice for an early-career PhD if their answer has changed since the initial interview.

Links Mentioned in this Episode

Teaser

00:00 Sarah: I wasn’t ready to think about my finances until my forties <laugh>. And it’s not too late as it turns out. So, trust yourself, you’ll get there. Do it in your own way.

Introduction

00:19 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance.

00:26 Emily: I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

00:36 Emily: This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others.

00:49 Emily: This is Season 13, Episode 9, and today I am featuring many guest voices! I published the first episode of this podcast in July 2018. This is the 176th episode, and over the last four and a half years, the podcast has featured 156 unique voices in addition to my own.

01:12 Emily: For our last episode in 2022, I thought it would be fun to catch up with the guests from Seasons 6 through 9, and a few from earlier seasons as well. I invited them to submit short audio clips to update us on how their lives and careers have evolved since the time of our interview, as well as to provide their best financial advice if that has changed since our initial interview. We have some very big and very exciting updates this year, and I’m confident you are going to appreciate the perspectives that these guests bring.

01:45 Emily: The audio clips in this episode are ordered by when the original episode was published. If you’d like to circle back and listen to any of the previous interviews, you can do so in your podcatcher app or at my website, PFforPhDs.com/podcast. To keep up with future episodes, please hit subscribe on that podcatcher and/or join my mailing list at PFforPhDs.com/advice.

02:14 Emily: You’ll hear an update from me first, followed by the rest of the guests.

02:18 Emily: You can find the show notes for this episode at PFforPhDs.com/s13e9/.

02:25 Emily: Happy listening, happy holidays and happy New Year! See you in 2023!

Dr. Emily Roberts

02:35 Emily: This is Emily Roberts from Personal Finance for PhDs. I am of course the host of this podcast and you hear from me every week.

02:44 Emily: On the personal side, nothing can really top the update I gave you last year about finally becoming a homeowner. My family has been in our house in north San Diego county for about a year and a half now, and life is very sweet here. We have really integrated into our neighborhood and community. This year, I rediscovered a pastime from my youth, which is reading—voraciously. Through college, grad school, and early parenthood, reading fell by the wayside for me, but I picked it up again after tax season ended. I haven’t kept close track, but I think I’ve read a few dozen books in the last 8 months, almost all from the library, of course! One that really made an impression on me was Die with Zero by Bill Perkins. I recommend it to anyone who is inclined toward over-saving and expects to have a good income for your career, even if you’re still in grad school or your postdoc. Relatedly, I’ve been inspired to have more adventures and vacations and such with my family, and I’ve gotten back into the credit card rewards game to help fund that.

03:52 Emily: As for my business, Personal Finance for PhDs, 2022 was another awesome year with strong growth. I’ve gained a lot of clarity on how I want to spend my time, and I’m implementing more productivity and time management strategies. In 2022, I attended two in-person conferences and delivered several in-person speaking engagements, which was so so rewarding. I didn’t realize how intense my Zoom fatigue was! Going forward, I’m promoting my live in-person seminars and workshops and my pre-recorded workshops and demoting my live remote webinars. If you want me to teach you and your peers about taxes, investing, increasing income, student loans, frugality, home ownership, etc. etc., please connect me with a potential host at your university. I appreciate these recommendations so much.

04:50 Emily: Thanks for listening to my update! If you want to get in touch, you can visit my website at PFforPhDs.com or email me at emily@PFforPhDs.com.

Dr. Caitlin Faas

05:07 Caitlin: Caitlin Faas here, helping experts get off the hamster wheel for good, as a master certified life coach. I was on season one, episode number seven way back in 2018, and I also gave an update last year where I was a tenured faculty member, became a department chair, and then left in 2020 to coach full-time and paid off all my debts with my husband, and you can hear those updates.

05:27 Caitlin: But in the past year, I’ve had some huge life transitions that I also want to give you an update on. So my husband and I decided to get divorced in January of 2022, and in April, he died unexpectedly before paperwork was filed, so I became a legal widow. And of course, the grief is devastating and it was something I never wanted to happen, and yet I also prepared for it with him financially. We had created our wills together; the idea of death and either one of us being a widow had been on my mind because I’m a developmental psychologist by training, and it was something I listened to, people who were widows, what they wish people had known, and I’m so grateful I listened, even though the statistics were never gonna happen, that one of us was gonna die before we grew old together, right? And yet it did.

06:42 Caitlin: And so taking the time now, my advice for you, take the time to write down your passwords for someone else. Check in about your financial status and showing it to somebody else that’s important in your life so that they know, I wasn’t prepared with all of those things, we hadn’t taken those steps, but, you know, some of the next financial steps are the legal will. What happens if you do lose someone important to you, will you have the capacity to work? Can you put yourself in a position of you’d be able to take off time if you needed to, if you wanted to? And taking a few minutes now will pay off if it ever does happen. I hope it doesn’t. And yet having awareness and not being afraid of it, not pushing it away, or thinking it would be like the worst thing ever can be so beneficial for your financial health. I’d really like to not have huge updates in the next year, and we’ll see what happens as I prepare for it and ride the waves of life coming at me. Best of luck as your life unfolds this year, too!

Dr. Sam Zelenka

08:05 Sam: Hi, this is Sam Zelenka from Government Worker FI. I talked with Emily in season three, episodes eight and nine about the FIRE movement, financial independence, and retire early. And I wanted to give everybody a big update about how we’re doing on our financial independence journey. About a year ago, I decided to work part-time, and this was possible because we were saving up a ton of money and preparing for full financial independence or leaving the workforce entirely. But, we decided that actually it would be really great if I could keep doing my job, just do less of it. I was able to negotiate working part-time with my employer, and I now still am a PhD, pretty academic type person, doing research, but I only do that part of the time and I have a lot more time to spend with my family and my pets and just enjoy life at a little bit slower pace.

Dr. Zach Taylor

09:15 Zach: Hey everybody, this is Zach Taylor. I’m currently an assistant professor at the University of Southern Mississippi, and I was on the Personal Finance for PhD’s podcast on [season 5] episodes 10 and 11. I can give a couple of personal updates after bouncing around to a few jobs during the pandemic. I finally was able to earn a job that is really a great fit for me at the University of Southern Mississippi, so I’m very happy about that.

09:42 Zach: Something that is just something interesting financially is that relocation assistance provided by institutions. My institution did provide relocation assistance, but when I asked about it, they said that very few people ask about it, and even fewer people actually keep receipts and document their expenses. One suggestion I would give to really early career PhDs who are either on the job market or are looking to relocate, is be very clear with your hiring manager about any relocation costs that they will reimburse you for and keep all of your receipts. I had to actually submit original paper receipts from gas stations and the moving company, and when I bought cardboard boxes, I needed to keep those paper receipts. They would not take electronic receipts. I had to have them printed off in paper from the original source. And so be very, very clear with your hiring manager, about that.

10:47 Zach: But a lot of the advice that I gave about sniping great grocery prices using coupons, I still do that all the time. I actually just discovered that the Walmart near where I live in Hattiesburg, they discount meat every Thursday. And so I usually go and check on Thursday afternoons to see what grocery items have been discounted. Then I buy those and I freeze them, and it’s as good as if it were fresh to me at least. So that is something that I continue to do in a habit that I continue to kind of implement in my everyday life. If you have any questions or want  to get in touch with me, my email address is zt@utexas.edu. That’s the letter U texas.edu, and I wish to everyone the best.

Dr. Sean Sanders

11:34 Sean S.: Hi, Emily. I was delighted to join you back in June, 2020, which I believe was episode eight of season six for a fun conversation about my financial journey and especially my desire to retire early. I wanted to send a quick update on what’s happened since we spoke. And my exciting news is that as of early next year, that’s 2023, I’ll be leaving my current job at AAAS and semi retiring. I’m still a little stunned that I managed to get to this point, but here I am. I’ll still lightly be doing some consulting work in my field, but I’m also taking a sharp turn away from editing to become a dog trainer. This has been a goal of mine for many years, and I feel like it brings together my love for dogs with my scientific curiosity. I want to understand how dogs think and perceive their world as a pathway to improving our communication with them.

12:40 Sean S.: I’m also planning to do some volunteering with some local organizations, particularly to help people with some of their basic personal finances. I’ve been thinking about early retirement or semi-retirement for a few years now, as we talked about in my 2020 interview. And I’ve been working hard to save since my first postdoc, really, and wanted to be able to enjoy the benefits of all of that effort before I was too old to do things like traveling and volunteer work and, you know, pursue some other passions. There were really two precipitating events that led me to pulling the trigger and finally making this, this decision. The first was that I felt really burnt out at my job, which I’ve been at for 15 years, and really felt that a change was needed. The second is the long bull market that we’ve enjoyed for the last 10 years or more that has grown my investments to the point that I could feel comfortable making a move to part-time work.

13:44 Sean S.: To be honest, I’m still a little nervous with all the talk of the impending recession, but I’m staying the course and have put some safeguards in place to mitigate any risk of a recession, like having a bit more cash available to get me through the next two years. This is a big move, so wish me luck. I’m excited about the prospect of still staying in touch with my science roots, but also branching out into some new and exciting areas. If I were to offer any advice to early career graduates, I’d say do your best to focus on your long-term financial goals and remember that as the saying goes, time in the market is better than timing the market. So start investing early and try not to get caught up in the daily news cycle. Thanks so much for this opportunity and stay well!

Dr. Sean Bittner

14:41 Sean B.: Hey there, this is Sean Bitner. I was interviewed by Emily on Personal Finance for PhD’s season six, episode 12 and season 10, episode 14. In the most recent episode, Emily and I discussed comparing job offers after defending my thesis, the main components of a non-academic job offer, and how to prepare for the job hunt. Since our interview aired, I’ve been able to complete my accelerator’s first cohort, and I had an opportunity to work with a group of really incredible medical device company founders. I’ve also continued my coaching work and I’ve begun leadership education at the undergraduate level. Here, I’m teaching students about important leadership and communication skills that they can use, not only while they’re in college, but also as they move out into their first jobs. On a personal note, I still love to travel, which you’ll remember from season six, episode 12. Since last year, my wife and I have taken an incredible trip to South Africa, and by the time this recap episode comes out, we’ll be gearing up for a trip to Japan.

15:39 Sean B.: To add on to my advice from previous episodes, I want to again, encourage listeners to be looking for how they can fit their PhD work or their new job into their broader life and goals, rather than trying to squish their broader life and goals into their studies. If you’d like to connect with me, you can find me on Twitter @lifescicoach, on Instagram @seanwithoutanh S E A N or on LinkedIn. I’m also taking new coaching clients, so if you’re curious about leadership coaching and want to learn more, feel free to reach out to me. Thank you again to Emily and her team for having me on the podcast and thank y’all for listening and I hope you have a great holiday season. Bye!

Dr. Travis Seifman

16:25 Travis: Hi Emily and listeners, my name is Travis Seifman and I was featured in season seven, episode four, where I talked about the pros and cons of university housing. At that time, I had just finished my PhD in history at the University of California, Santa Barbara, and was preparing to move to Japan to take up a postdoc position where I remained today as a project researcher at the University of Tokyo’s Historic Graphical Institute. Life here in Tokyo is good. I feel extremely fortunate, just so lucky to have landed the position that I did and to be able to be living the life that I am now. In contrast to paying a thousand dollars a month for a poorly maintained basic amenities housing in a middle of nowhere California town, I’m now paying 92,000 yen a month, that’s about $650 with the current exchange rate, or closer to 800 and more normal times, for a nice apartment right in Central Tokyo. Excellent, basic amenities, excellent location in one of the greatest cities in the world. I’ve been fortunate too in that I’ve been able to save a considerable amount of money from being on this postdoc. So fingers crossed, depending on what job or lack of a job I may have after this, the academic job market being what it is, I’ll at least have a sizable savings to fall back on, in case my financial situation becomes tight again.

17:46 Travis: I would offer two points of advice to current grad students regarding housing. One, do what you can to investigate research institutes in the area that might offer housing or other alternative housing options. When I first arrived at the University of Hawaii for my masters, East West Center was a mystery to me – a research institute that I had no connection with, no idea about, no sense that I could potentially move in there, and yet I di and I found in the East West Center a wonderful community in a building where I paid $400 a month to live right off campus instead of a thousand dollars a month to live alone, a long walk or bus right away, somewhere out in town. It can be difficult to know what’s hiding in plain sight sometimes right on our campuses or in our city, so do what you can to find these possibilities.

18:32 Travis: Second, organize and agitate. As I record this in mid-November 2022. As you may well know, nearly 50,000 grad students and the like across the University of California are on strike, striking for better pay and better working conditions. When our institutions won’t act on their own to create affordable, pleasant, supportive environments for students and faculty, but instead put other priorities ahead of that, they need to be held to account and to be pressured to change and to do better. I hope that these strikes lead to positive change at the UC and across the country. Good luck to you all and solidarity.

Commercial

19:10 Emily: Emily here for a brief interlude!

I’m hard at work behind the scenes updating my suite of tax return preparation workshops for tax year 2022. These pre-recorded educational workshops explain how to identify, calculate, and report your higher education-related income and expenses on your federal tax return.

For the 2022 tax season starting in January 2023, I’m offering three versions of this workshop, one each for US citizen/resident graduate students, US citizen/resident postdocs, and non-resident graduate students and postdocs. That third workshop is brand-new this year, and I’m very excited about it.

While I do sell these workshops to individuals, I prefer to license them to universities so that the end users, graduate students and postdocs, can access them for free.

Please reach out to your graduate school, graduate student government, postdoc office, international house, etc. to request that they sponsor one of my tax preparation workshops for you and your peers. I’d love to receive a warm introduction to a potential sponsor this month so we can hit the ground running in January serving those early bird filers.

You can find more information about licensing these workshops at PFforPhDs.com/tax-workshops.

Now back to our interview.

Diandra from That Science Couple

20:52 Diandra: Hi there, this is Diandra from That Science Couple and I was on the PFforPhDs podcast season seven, episode 10. I was talking about working before starting a PhD and the financial and career advantages that go along with that. Emily asked me if I could provide you an update with what I’ve been doing in the last year and so in 2022, I completed my preliminary exam and became a dissertator. My research is on diet and lifestyle factors and on the impact that they play in the risk of developing vascular dementia and white matter hyperintensities, and I’m set to graduate in spring of 2023.

21:29 Diandra: On the personal side, this past year, I took a once in a lifetime trip with my husband and parents to Italy and I overcame a major health crisis. Both of these things directly relate to what I talked about in my episode that by having a financial cushion before I entered my PhD program, it was much easier for me to handle an overseas trip and also to afford the healthcare related expenses because I had an HSA and investments to fall back on from my previous employer.

21:57 Diandra: This year, I also launched That Science Coaching and my program is evidence-based nutrition coaching in which I help others to identify food allergies, create a healthy lifestyle, and prevent or manage chronic illness through diet and lifestyle changes. When I was on the PFforPhDs podcast, my best financial advice for early career PhDs was to fight lifestyle inflation. And while I still believe that this is very important, I think you should also keep investing in yourself and in your health. While I was going through this major health crisis, I realized that it’s easier to maintain your health than to regain it, so if there are small things that you can do on a weekly basis, such as yoga or working out for self care, it’s gonna help your mental health and also your physical health. While we work really hard in the lab, I think it’s important to actually unplug and take the time to relax when you’re on vacation.

22:53 Diandra: If you’d like to contact me or follow our blog, we are online at thatsciencecouple.com. We’re also active on Twitter @science_couple and Facebook @thatsciencecouple. I’m currently accepting new clients, so if you’re interested in my program, please don’t hesitate to contact me. To wrap things up, I’d like to thank Emily for asking me to do this update. I hope everyone has a great end of their year, and please keep listening to the PFforPhDs podcast.

Dr. Samantha McDonald

23:25 Samantha: Hi, My name is Samantha McDonald. I was on season eight, episode three and I was discussing in particular in this episode, knowing your worth in an environment that devalues you work, and looking especially at someone who made more money than a lot of people in the the department at that time. Life has changed a lot. <laugh> I got my PhD woo-hoo about a year and a half ago in, I believe it was either March or May of 2021. After doing so, I took a three month break after my PhD as almost like my mini wellness sabbatical. I took a sailing class for two weeks in the Catalina Island to learn how to sail catamaran. I worked on a farm in a seek community in New Mexico for a few weeks, which was amazing. And I backpacked the High Sierra Trail in the Sierra Nevada of California, which is also amazing. It was a great break! I recommend to anyone after their PhD take a few months off. Even my partner spoke to a Nobel laureate who said that one of his biggest regrets was not taking some time off between his PhD and post-doc. It made all the difference in the world.

24:46 Samantha: After that was over, I started working full-time in industry actually at Meta, which was at the time Facebook when I joined the company. I still work for Meta, and I have for the past year and around I’d say three to five months, which has definitely been an insightful experience. Financially I am in a position I’ve never been before with making more money than I ever have or probably ever will in my life, so my finances are doing great. I save 50% of my paycheck still because I’m still in this super save mode. And luckily Meta provides a financial planner, who has been super helpful in making sure I’m making the right investment opportunities when I’m still young, still can take risks, but also figuring out some other plans.

25:33 Samantha: Personally, and the reason why I say Meta is as much money as I’m gonna make ever is I’m actually quitting my job in a few months, starting in January. Not because in particular I didn’t like my job or didn’t like industry, but mostly because I made a promise to my partner that when he finished his PhD, which is gonna be happening soon, we’d take a year off and live on a sailboat that we bought together. That’s happening very soon. It’s very different than what I thought I’d be doing, but we’ve saved up enough money, especially with my tech job that it’s a very cheap way to live financially and have an adventure for a year with his one year sabbatical after his PhD. After that, we’re going to New Mexico for a postdoc for him, and I’ll figure it out. I don’t know what I’m gonna do yet, but there’s something exciting about that, of taking a year off and just taking some time to breathe.

26:23 Samantha: My financial advice is still the same. Keep saving as much as possible, but taking as much time off and really understanding your worth and your value, it’s super important. And just understanding how much you’re worth and knowing that sometimes in industry, you’re overqualified for jobs in ways that you don’t realize that you’re there. So I’ve learned a lot in the past year and a half working in industry and I can’t wait to learn more. Contact info – my email is still the same. You can still contact me. Also, if you’re just interested, Michael and I, my partner, have started a YouTube channel for our sailing adventures, just for us to remember for ourselves and for our family to see. It’s called Sailing Ambrosia, A M B R O S I A, Ambrosia. It’s named after Michael’s grandmother. So if you’re just interested to see our adventures after PhD, it’s there too.

Dr. Jacqueline Kory-Westlund

27:14 Jacqueline: Hello, I’m Jacqueline Kory-Westlund. I was interviewed in season eight, episode eight. In that episode, I talked about how my husband and I managed our work and finances while I was in grad school so that we were able to start a family. Yes, I had my first baby as a fourth year PhD student, and then when I graduated we bought our own home in cash. We’ve continued to choose flexible work arrangements and prioritize our family. And now I’m excited to share that I have a book forthcoming from Columbia University Press, tentatively titled “#PhDone: How to Get Through Grad School Without Leaving the Rest of Your Life behind”. It’s the book I wish I’d been able to read as a student, a pragmatic how to guide on flourishing in grad school, both personally and professionally. And alongside all the life balance tips, you’ll find a whole chapter about grad school finances. You can find me on Twitter @JacquelineKory or on my website www.jakory.com.

Elana Gloger

28:25 Elana: Hi, I’m Elana Gloger, host of Dear Grad Student, and I’ve been on the Personal Finance for PhDs podcast twice. I was on season eight, episode nine where Emily and I did a financial coaching session; season 10, episode 17, where we talked all about me doing a side hustle while in grad school; and I’ve had Emily on my podcast, Dear Grad Student, she was on for episode 27 with another graduate student where we talked generally about grad school finances and episode 56 where we talked more in depth about surviving tax season.

28:59 Elana: Since you last heard from me on this podcast, I have become a PhD candidate. I’ve submitted a really exciting grant and I’m only a year and a half away from graduation. In terms of finances, I have finally almost finished saving up my emergency fund. I’m still throwing a little bit of money in that Roth IRA even though Emily told me not to. It’s just a little bit, and honestly, I’m still fighting a little bit with debt, but I know that that’s what comes along with making $20,000 a year, so mostly I’m trying to make sure that I’m setting up patterns for myself so that when I make a little bit more money, it, you know, it’ll all work out.

29:36 Elana: The best financial advice that I have for an early career PhD is don’t be afraid to budget for things that you enjoy. That way you won’t overspend if you know that you’re allotted a little bit, even with a small budget to start with. If you wanna hear more from me or Dear Grad Student, you can find the podcast Dear Grad Student anywhere on any podcast app. You can check out the website deargradstudent.com for literally everything related to the podcast, including ways to contact me, to support the podcast, and even merch, lots and lots and lots of merch! You can also find the podcast on social media. You can look up deargradstudent on Facebook. We’re @deargradstudent on Twitter @deargradstudentpod on Instagram and now on TikTok, @deargradstudent. Thanks again to Emily for having me twice on the personal Finance for PhD’s podcast. Hopefully you’re all hearing my voice again soon and have a good holiday season.

Dr. Sarah Birken

30:34 Sarah: Hey everyone, this is Sarah Birken. I am an associate professor in the Department of Implementation Science at Wake Forest University School of Medicine. And Emily interviewed me in episode 12 of season eight, and we talked about my early financial decisions in that episode. I’ve always been pretty assertive when it comes to negotiating salary and startup, but I’ve also been very passive with my personal finances. That all had to change when my partner, who is a personal financial planner, and I separated. Since then I’ve gotten very serious about managing my finances and my sister has been helping me since April really get my finances in order using YNAB, the You Need a Budget App, which Whitney Robinson, my co-host from AcaDames has always advocated for.

31:31 Sarah: Since I have been very scrupulously managing my finances, I’ve noticed a couple of things. One is that it’s unbelievably empowering <laugh>. I get to decide what I spend my money on and kind of just accept full responsibility for it. And I don’t have to answer to anyone for my decisions, which is lovely. And also I do have to answer to myself, so it’s caused me to be a lot more thoughtful and dare I say philosophical about what money is for in my life. The other thing I’ve noticed is that I’m focusing much more on managing my startup budget from my position. It’s something I’ve been starting to track as carefully as I do my personal finances and again, kind of bringing in this philosophy of what do I care enough to spend this money on that my institution has provided to me so that I can be an asset to them. I think the only additional advice I would give to early career folks is trust yourself. I wasn’t ready to think about my finances until my forties <laugh>. And it’s not too late as it turns out. So, trust yourself, you will get there. Do it in your own way. You can reach me on Twitter @BirkinSarah. Thanks everybody!

Dr. Lindy Ledohowski

33:22 Lindy: Hi everyone, this is Dr. Lindy Ledohowski. I spoke with Emily in season eight, episode 15, and she titled our conversation “How a Boom and Bust Money Mindset from Grad School Serves this Startup Founder Well”, and what we chatted about was the ways in which being a graduate student prepared me for some of the ups and downs of my post professorial life as a startup founder. I left my tenure track job as an English professor and I co-founded and then led academic writing startup, Essay Jack since I last chatted with Emily, Essay Jack has been acquired and I joined the acquiring company so I can add driving a startup through an acquisition to my resume. And I would say that that boom and bust money mindset that I carried over from graduate school into the ups and downs of startup life for five years into the acquisition and now I am Chief Operating Officer at Wise Prep, the company that acquired Essay Jack, that boom and bust Money Mindset has served me well all along the way. And luckily now I’m at a boom phase in life post-acquisition and we continue with the adventure as Essay Jack is reborn as Wize Writer part of the Wize Prep family of educational resources. So that is my little update since I last chatted with Emily about my post academic life and the way that I thought about finances as a graduate student and how that carried over into the very different world of entrepreneurship and startup life.

Rutendo Chabikwa

35:19 Rutendo: My name Rutendo Chabikwa of the So You Got a Scholarship podcast as well as the Taking Into Account podcast. I was on season nine, episode one of the Personal Finance for PhDs podcast. I’m now in my third year of my PhD at the University of Oxford. Financially, I ran into a bit of a hurdle where my tuition was unexpectedly cut and the rug taken from beneath my feet unexpectedly. However, I was able to connect with people in the university who became my allies and advocated for me and ensured that my tuition agreement would remain. And then the second thing that I have done professionally is that I have now reached a stage where I’ve done enough reflection and exercises and enough research for me to figure out that I want to be in industry at the end of my PhD. I do not want to stay in academia. And so as a result, I am now able to put my energies more into doing that, into making those connections, into getting internships, or contract positions that are more aligned with where I see myself. As a result, this has also actually helped my finances because industry positions do pay a little bit more, even if you’re working part-time.

36:39 Rutendo: And so my advice for early career PhDs, it has not fully changed since my interview, but I think with these new experiences that I’ve had, there are two things that I would say. And the first is, within your institution, do find people who are your advocates. Do find people who are your allies, especially if you’re someone who comes from an underprivileged background or from a different country and you are new to this system. Things like getting your funding pulled from you, as I have learned through my own experience, are that these things do happen to people and for others, this can mean that they do not get to finish out of no fault of their own. And so it is unfortunate that institutions do function in this way still, but it is really useful that you find the people around you who can make sure that the agreements that were made for you do stay in place.

37:29 Rutendo: And then the second thing also is that if you’re thinking about splitting your energies between part-time work and doing your project, I would advise that after at least your first year, you start to consider seriously where you want to be in terms of industry versus academia. That way you’re putting your energy into something that actually then helps you with where your next step is and it’s not just something you’re doing because it is useful for the money. I wish you all the best! My contact info, you can find me on Twitter, I am @tedoex. That is T E D O E X and all my information is available there.

Outtro

38:13 Emily: Listeners, thank you for joining me for this episode!

I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/.

Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/.

See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps!

The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC.

Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

Catching Up with Prior Guests: 2021 Edition

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Emily published the first episode of this podcast in July 2018. This is the one hundred and fiftieth episode, and over the last three and a half years, the podcast has featured 134 unique voices in addition to Emily’s. The last episode in 2021 catches up with the guests from Seasons 4 through 6. The guests were invited to submit short audio updates on how their lives and careers have evolved since the time of their interview. They also included their best financial advice for an early-career PhD if their answer has changed since the initial interview.

Link Mentioned in this Episode

Episode image of Dr. Emily Roberts with the title "Catching Up with Prior Guests: 2021 Edition" and the subtitle "Money Stories with Various Contributors"

Teaser

00:00 John: You know, life doesn’t wait and you can still be financially sound while in graduate school.

Introduction

00:10 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts.

00:19 Emily: This is Season 10, Episode 20, and today I am featuring many guest voices! I published the first episode of this podcast in July 2018. This is the one hundred and fiftieth episode, and over the last three and a half years, the podcast has featured 134 unique voices in addition to my own.

00:41 Emily: For our last episode in 2021, I thought it would be fun to catch up with the guests from Seasons 4 through 6, and a couple from earlier seasons as well. I invited them to submit short audio clips to update us on how their lives and careers have evolved since the time of our interview, as well as to provide their best financial advice if that has changed since our initial interview.

01:03 Emily: The audio clips in this episode are ordered by when the original episode was published. If you’d like to circle back and listen to any of the previous interviews, you can do so in your podcatcher app or at my website, PFforPhDs.com/podcast. To keep up with future episodes, please hit subscribe on that podcatcher and/or join my mailing list at PFforPhDs.com/subscribe.

01:28 Emily: You’ll hear an update from me first, followed by the rest of the guests. Happy listening, and I am wishing all good things for you in 2022!

Dr. Emily Roberts

01:43 Emily: Hi! This is Emily Roberts from Personal Finance for PhDs. I am of course the host of this podcast and you hear from me every week!

01:52 Emily: It seems strange to say, but 2021 was a banner year for me and my family.

01:59 Emily: On the personal side, my husband and I bought our first home, which I discussed in great detail in Season 8 Episode 18. We now live in the San Diego area, which has been our dream for over a decade. Our children are in kindergarten and preschool, and after being out of school for over a year due to the pandemic, it’s really wonderful for our family to be in a routine and for them to be around their peers. We are loving playing tourist in San Diego and enjoying the incredible weather and wealth of outdoor activities.

02:32 Emily: As for my business, Personal Finance for PhDs, I am so grateful that it has grown quite a lot in the last year. I’ve simplified my paid offerings so that I can focus on what seems to be in highest demand: 1) my personal finance seminars, both live and pre-recorded, which are hosted by universities; 2) my tax workshops, which can be purchased by individuals or in bulk by universities; and 3) the Personal Finance for PhDs Community, which individuals can join. To each of you who have joined the Community or one of my workshops in 2021 or recommended me within your university, you have my sincere thanks. The reason I can continue to create this podcast and all of my free resources is the revenue that I generate in these other areas.

03:20 Emily: I’m really looking forward to starting 2022 off strong with tax season and admissions season. If you know any PhDs-to-be who need help in either of those areas, please send them my way!

03:32 Emily: Thanks for listening to my update! If you want to get in touch, you can visit my website at PFforPhDs.com or find me on Twitter @PFforPhDs.

John Vsetecka

03:49 John: Hi everyone. It’s John Vsetecka from Season 2, Episode 2 on the personal finance for PhDs podcast. Several years ago, I got to talk with Dr. Emily Roberts about negotiating PhD offers and I wanted to just offer a quick update on how I think that has benefited me up until this day. So since that time, many things have happened. I got married during this time. I’ve moved and now I’m actually living outside of the US. I am currently in Kiev, Ukraine working on the last stages of my research for my dissertation, so I am now at the tail end of my graduate career.

04:29 John: When I last spoke to Dr. Roberts, we discussed how to go about negotiating PhD offers and I want to offer an update now about why I still think you should this. When I was applying to programs prior to 2017, I was able to successfully negotiate offers at several universities. This has really, I think benefited me to this day because I was able to choose the school, not only with a great funding package, but also great benefits that I’ll talk about in just to second. I know things have changed since the pandemic and many programs last year halted admissions, and this has made many programs and departments more competitive, and so you might be a little hesitant to negotiate an offer if you receive one, but I still think you should. If you receive a funded offer and you should absolutely make sure that any offer you receive is funded, this is really important, I think you should still ask if there’s anything else that that department or program can do for you.

05:29 John: Now, this can mean more money. This can mean insurance benefits. This can mean grant money, travel money, or any other resources that they have. See if there’s anything else that they can tack onto your package to help you be more successful in your program. And if you’re fortunate enough to have multiple offers, you should still negotiate these and see which one is the best one for you. And this might not be the one with the most money, but I think the ones that tend to offer the most money and the most incentives tend to be the best bet for your graduate career because life doesn’t wait and you can still be financially sound while in graduate school, if you can start by looking at what your department can offer you so you can plan ahead and make the best of your earning while you’re in graduate school.

06:18 John: So my advice remains the same. Again, if you receive multiple offers, don’t be afraid to ask. In some ways this is just like a job offer. It’s okay to negotiate. It’s okay to ask what else they can do for you. You’re going to do a lot for them. Don’t be afraid to reach out to the director of graduate studies or whoever’s in charge in your department and see what else they can do for you, if your package sort of insinuates that maybe there’s more that is available. I’ll leave you with that and of course, if you have any other questions about graduate school or negotiating offers, you can always get in touch with me on Twitter. My handle is @JohnVsetecka, or you can feel free to email me, it’s vsetecka@msu.edu. Best of luck to those of you who are applying and I hope you have successful negotiations.

Dr. Lourdes Bobbio Smith

07:22 Lourdes: Hi listeners. My name is Dr. Lourdes Bobbio Smith and I’ve been on a few episodes of the podcast. I was first on Season 3, Episode 11, where I gave a budget breakdown as an NDSEG fellowship recipient at Penn State University. I was also on Season 5, Bonus Episode 1, where I discussed my life as we entered social distancing in early 2020, and on Season 6, Episode 18, where I discussed some best practices as a side-hustling graduate school. Since those episodes, I have defended my PhD, started a business and gotten married.

07:55 Lourdes: In my first episode I spoke about how I use targeted savings accounts to save for various mid- and long-term financial savings goals, which hasn’t changed. My husband and I were able to fund our wedding with a combination of the wedding targeted savings fund I discussed in the episode, as well as savings my now husband had, and some generous gifts from our parents.

08:15 Lourdes: Since getting married and joining finances with my husband, we still use the target savings accounts, but we’ve modified what those different savings buckets are. Buying a house, which was previously a long term goal, has now become a more short to mid-term goal as we are looking to settle down in a house of our own. We also recently adopted a cat and my husband’s car is on the older side, so we are making sure to keep a pet fund and a car fund well funded as part of our monthly targeted savings. Investing is also a big priority in our household, and we’ve been able to max out our Roth IRA for 2021 and invest outside of the Roth in taxable brokerage accounts.

08:52 Lourdes: Post-PhD I’m working on a few different things. I have a job as a research associate at Penn State, I continue to work with Emily on this podcast, and I’ve also started a wedding stationery business this year. It’s been a fun adventure to learn both the management and financial sides of owning a business. I initially invested some of my own money, but it’s been self-sustaining for the last few months and I will even be turning a profit in my first year in business. 

09:17 Lourdes: I was asked to give my best financial advice for early-career PhDs and I would say, invest as early as you can, even if it doesn’t seem like you can contribute a lot. When I was first on the podcast, I was early in my own investing journey, only able to contribute a little each month, and it seemed like the progress was slow growing. But even in the two years since then, I’ve been able to see how powerful compound interest can be when it comes to growing your money.

09:44 Lourdes: If you’d like to connect online, you can find me on Twitter @lourdesb1012, that’s l o u r d e s b 1 0 1 2. You can also find my business on Instagram @cardsmithdesignstudio. Thanks for listening and have a good new year!

Jane CoomberSewell

10:08 Jane: Hi Emily! It’s Jane CoomberSewell of CoomberSewell Enterprises here, and we last chatted back in Season 2 (editors note: this should be Season 4), Episode 8, and we talked a lot about working on a budget, and self-sufficiency when you have a family and you’re doing a PhD and you’re also running a business. We talked a lot about menus, budgeting, gardening, both for practical reasons and for your mental health. And in terms of early career financial advice, none of that’s really changed except remember to have some fun. So occasionally after you’ve obviously dealt with all the bills, go and have a drink with friends, or have a meal out, or go and do what we did at the weekend, which was go and have a game of bowling, but only with adults, no children in tow. It was lovely.

11:03 Jane: Thanks so much for the timing of this as well. I finally got to my graduation yesterday. Within the business, Joyce, my other half has very much rebranded herself as an autism advocate and that’s going really well. And for me, I’m concentrating on research, but not in the academic sense. So at the moment I have two family biographies that I’m writing that people are paying me, have commissioned me to write, as well as attempting to turn my thesis into something slightly less theoretical for the commercial market. That’s my update. Everybody take good care and if you want to get in touch, it’s Jane@CoomberSewell.co.uk.

Abigail Dove

11:53 Abigail: My name Is Abigail Dove, and I was on Season 4, Episode 9, where Emily and I discussed the graduate Student Savings Act of 2019. I spearheaded the endorsement of this bill by the Federation of American Societies for the Advancement of Science, also known as FASAS, as part of a science policy fellowship. The graduate student savings act is a bi-partisan bill that allows graduate students and postdocs to be able to contribute income from a fellowship stipend to an individual retirement account or IRA. Previous IRS wording prevented contributions from fellowships as they were considered unearned income.

12:27 Abigail: Since we recorded that episode, I have a few big updates on the personal side. I have a daughter who is 18 months old, and I will be defending my PhD in a couple weeks and looking forward to the post-graduate student life.

12:40 Abigail: The big update in relation to the episode where I appeared on is that trainees can now contribute to IRAs while receiving fellowship stipends. The language from the Graduate Student Savings Act was added to an omnibus spending bill HR 1865, and was passed into law at the end of 2019. Emily did touch on this update after our interview to share the good news with everyone in a bonus episode in season four, for more information, be sure to check out that episode. But this is really fantastic news for anyone on fellowship stipends and wants a say for retirement.

13:11 Abigail: My updated financial advice has thus changed a result of the new laws. Since everyone is now allowed to contribute to an IRA, I highly recommend that if you have the financial ability to do so, do it. There’s a maximum contribution cap for IRA accounts and right now that cap is set at $6,000 for anyone under the age of 50. Additionally, there are income caps, but graduate student stipends are unfortunately well below those income caps so not something that we often have to worry about. That $6,000 cap may sound intimidating, so contribute what you can or put aside a fraction of your paycheck towards an IRA contribution. It’s never too early to start contributing to a retirement account, and it’s a good spending habit to start. And no amount is too little.

Commercial

13:57 Emily: Emily here for a brief interlude! Are you a graduate student, postdoc, or early-career PhD considering buying your first home in the foreseeable future? If so, I invite you to join the Personal Finance for PhDs Community for a Book Club discussion of First-Time Home Buyer: The Complete Playbook to Avoiding Rookie Mistakes by Scott Trench and Mindy Jensen of BiggerPockets. I and all the Book Club participants will read the book and come together for a one-time live discussion in January 2022. This is perfect timing for anyone with an eye on the spring or summer 2022 peak buying season. Since it might be hard to find this book in a public library, I will give you a copy of the book after you join the Community. If you want to join the Book Club for First-Time Home Buyer, please fill out the survey, including your availability for the discussion, at PFforPhDs.com/BookClub/. That’s P F f o r P h D s dot com slash B o o k C l u b. Now back to our interview.

Patrice French

15:03 Patrice: Hi my name is Patrice French, I was interviewed on Personal Finance for PhDs on November 25th, 2019 Season 4, Episode 15. I am still a full-time employee and am near the end of my doctoral program. I will defend and graduate in spring 2022. Since then I have made some major financial changes. I’ve sold my house, given the strong seller’s market. I have paid off all of my debt except for my student loans and will be eligible for a student loan forgiveness in March of 2022. I plan to transition to a career outside of higher education, in industry, and will likely relocate. As far as the best financial advice I can give for early career PhD is really create some clear goals in mind and create a plan from which to meet those goals. But don’t put a lot of pressure on yourself if things come up. Save, save, save! I have multiple savings accounts for things so that it doesn’t really dip into my income. So if I have car repairs, I have a car repair savings account and things of that nature. And definitely don’t pay for an educational program if you don’t have to. I can be reach on Twitter at @FrenchieMSW. And that’s it.

Dr. Zach Taylor

16:44 Zach: Hey everyone. This is Zach Taylor. I was on Season 5, Episodes 10 and 11. I’d like to give a little bit of an update. I’ve taken a new position. I’m now the assistant director of admissions for communication at Texas State University. It’s the first institutional position that I’ve had after having my PhD because I graduated into the pandemic and that was a very tough job field. But I wanted to give a few updates about how I think a little bit of my advice has changed since COVID 19 has happened and has really changed the landscape, especially of graduate education in the social sciences.

17:27 Zach: I know a lot of the harder sciences like your chemistry or engineering requires graduate students to be in a lab, working with physical materials, but a lot of social sciences PhDs, things like higher education where I came from, sociology, psychology at times, does not require you to be physically in a classroom. And I think people aspiring to earn a PhD, people in graduate school right now need to think how important is the on campus, in the classroom environment? How important is that physicality? And can you save money by taking online classes or taking hybrid classes. Think to yourselves about how much time and money is spent on commuting, especially in urban areas, coming from an Austin perspective. If I was still going to school living where I live now, I would have at least an hour long commute, including a car ride, a bus ride, and a walk. And that hour could be used to make money, could be used to do academic work.

18:29 Zach: So I think that might really change my perspective on the advice that I would give for an early career PhD is really considering online options, in addition to everything else I spoke about — the cost of living in your area, what you’re willing to go without and how you can side hustle to make a little bit extra cash. If anyone has anything that they want to reach out to me, please do so. My email is ZT@UTexas.edu, just my initial ZT at U Texas dot edu. Thanks everyone.

Dr. Rachel Blackburn

19:08 Rachel: Hi, this is Rachel Blackburn and here is my update. So since I last recorded the episode of personal finance for PhDs (Season 5, Episode 12), I actually got thinking about finance quite a bit. I was in a tenure track position, teaching as a professor, but I decided that the thought of not getting tenure, and that forthcoming potential instability was a little bit much for me. And I also considered what if I do get tenure and then I’m committing to this place for the long term and is that what I really want? And the thought hit me, when’s the last time I got to choose where I lived? I also took a look at the finances because I was teaching at a public university, I was able to take a look at salaries and I could see that even by the time I might get full professor, if that was what was in the cards for me, that my salary would not go up by a whole lot. It occurred to me that I really wouldn’t reach my financial goals. So I decided to leave academia.

20:18 Rachel: I’m still researching and publishing and writing, but I have left teaching and I’m now a learning consultant for a public company. In leaving my position as a professor and moving on to this company, I gave myself a 70% raise. I’m now making more than I would be if I were a full professor at my previous university. Now I’m learning all kinds of things about employee stock purchase plans and things like that. So that’s actually where I’m at now. I’m saving more money than I ever thought I would. And I feel like I’m meeting my goals a lot faster, so it’s great. And I’m still teaching, I just do it now on behalf of developing training material for a company. That’s where I’m at and thank you again. Good luck everyone! Bye!

Courtney Danyel

21:19 Courtney: Hi! This is Courtney Danyel. I was on (Season 6) Episode 17 of Personal Finance for PhDs, and my topic was how freelancing can take your career from academia to affluence. And that’s my brand AcademiaToAffluence.com, where I teach other people with an academic background how they can learn to freelance and grow their online income like I did. We talked about how I actually only work maybe 15 or 20 hours a week, but I earn full-time income as a freelance writer. And the reason I’m able to do that is because I find writing gigs that are highly specialized in my niche and so I’m able to earn higher income for work that takes me less time to do.

22:04 Courtney: We also talked about how freelancing gave me the freedom to travel around the world and live wherever I want and so I’ve been spending the past seven years actually living in Africa, in Ethiopia. Since that episode, which was back in August, 2020, I’ve actually immigrated back to the United States, where I continue to freelance and I continue to work maybe 15 or 20 hours a week on that, but now actually have another part-time job here in the United States also. Another great thing about freelancing is that it gives you the flexibility if you wanna have multiple careers you can have them, and you can earn full-time wage as a part-time influencer and pursue a career in academia or elsewhere, which is really nice. That’s something that’s changed in life since I was first on the podcast.

22:53 Courtney: My best financial advice for any early career PhD is to diversify your income. Give yourself options. Be a freelancer, be an academic, have your own business, do something on the side, but never put all your eggs in one basket and always have options for yourself so that when life changes or you want to make a change, like I have recently, you can do that. If anyone has questions about applying your skills from academia to a freelance career like I have done, please do shoot me an email. You can contact me at courtney@academiatoaffluence.com. Thank you!

Meryem Ok

23:36 Meryem: Hi everyone, this is Meryem Ok recording on Friday, November 26, 2021. While I typically work behind the scenes as an editor for the podcast, I was featured in Season 6, Episode 18, along with fellow Virtual Assistant Lourdes Bobbio, for an episode about Best Practices in Side Hustling During Graduate School. As I mentioned in that episode, one of the reasons that I’m grateful for my side hustle is that the extra income provides me with a cushion for those occasional purchases that might happen outside of my usual spending habits. This really comes in handy especially around this time of year when there are a lot of birthdays in my family, in addition to the holiday season, so my spending on gifts and eating out tends to spike up a bit.

24:24 Meryem: This past semester, one of the financial adjustments that I made was when my university moved from paying fellowship recipients on a monthly basis to a once-per-term model. At first, I was pretty uneasy about the change, but after talking to Emily and sitting in on some town halls, I felt more prepared and ready to strategize. When that first lump sum arrived in August, I immediately contributed part of it to my Roth IRA and moved most of the remainder into a high-yield savings account. If you want to learn more strategies, check out Emily’s blog post, “How to Financially Manage a Once-Per-Term Fellowship Paycheck.”

25:06 Meryem: As a personal and professional update, I recently changed my Twitter username, so it’s now @Meryem_T_Ok, if anyone is curious to learn more about my MD-PhD journey and intestinal stem cell research. Shoutout to all my fellow grad students on the research grind – I’m rooting for you and hope you have some time to recharge in the coming weeks. 

Outtro

25:37 Emily: Listeners, thank you for joining me for this episode! pfforphds.com/podcast/ is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes’ show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast. I’d love for you to check it out and get more involved!

Emily: If you’ve been enjoying the podcast, here are 4 ways you can help it grow: (1) Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. (2) Share an episode you found particularly valuable on social media, with an email list-serv, or as a link from your website. (3) Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license pre-recorded workshops on taxes. (4) Subscribe to my mailing list at PFforPhDs.com/subscribe/. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps!

Emily: The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

How This JD/PhD Overcame Money Terror and Avoidance

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In this episode, Emily interviews Dr. Michelle Thompson, who has had multiple careers as a lawyer, an adjunct, and now a coach and business owner. Michelle observed her mother’s terror and her father’s avoidance regarding money and combined the two in her own adulthood. Emily and Michelle discuss the financial struggle of earning a low stipend as a graduate student in NYC and taking on student debt for summer research and daycare/preschool. It wasn’t until Michelle started her business that she proactively changed her relationship with money through a book and coaching. Michelle speaks to the merits of facing the dark side of your relationship with money; she is now in the best financial shape of her life.

Links Mentioned in this Episode

money mindset PhD

Teaser

00:00 Michelle: Whatever bedevils you about money, you have to look at because whatever bedevils you will sabotage your relationship with money. Take time to do that work and I promise you whatever is screwing with you with money will screw with you about actually getting the doctorate done.

Introduction

00:23 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts.

00:32 Emily: This is Season 9, Episode 6, and today my guest is Dr. Michelle Thompson, who has had multiple careers as a lawyer, an adjunct, and now a coach and business owner. Michelle observed her mother’s terror and her father’s avoidance regarding money and combined the two in her own adulthood. Michelle and I discuss the financial struggle of earning a low stipend as a graduate student in New York City and taking on student debt for summer research and daycare and preschool. It wasn’t until Michelle started her business that she proactively changed her relationship with money through a book and coaching. Michelle speaks to the merits of facing the dark side of your relationship with money; she is now in the best financial shape of her life. Quick content warning. There is a brief mention of suicidal ideation in the interview.

01:24 Emily: It’s the end of July, and I know that taxes are probably the furthest thing from your mind at the moment. However, I do have a special request for every one of you who is going to be on fellowship in the upcoming academic year, whether as a new fellow or continuing fellow. If your university does not offer automatic income tax withholding on non-W-2 fellowship income: Would you please request that my workshop, Quarterly Estimated Tax for Fellowship Recipients, be purchased on behalf of those who want to take it? You could make this request of your graduate school, postdoc office, department, graduate student association, etc.

01:57 Emily: The workshop assists graduate student and postdoc fellowship recipients who are not having income tax withheld from their stipends or salaries figure out whether they are required to pay estimated tax and if so how much and when. The workshop consists of numerous short videos, a spreadsheet, and a live Q&A call just prior to the next quarterly deadline. You can find more details at PF for PhDs dot com slash q e tax. That’s q for quarterly e for estimated T A X.

02:28 Emily: I’ve been enrolling individuals in this workshop for several years, and in the last year have branched out to bulk purchases for university offices and groups. Purchasing this workshop on behalf of students and postdocs is incredibly helpful because it can reach people who aren’t even clued in about the possibility of having to pay quarterly estimated tax or who are unable to pay for the workshop.

02:51 Emily: I’m making this request now because the next quarterly deadline is September 15, 2021, and the office or group you approach may need some time to arrange the purchase. If they are interested, they can get in touch with me at emily at PF for PhDs dot com. The start of the academic year is the perfect time to learn about estimated tax because you can start saving for your eventual payment from your very first fellowship paycheck.

03:18 Emily: Thank you for helping me spread the word about this workshop and prevent financial hardship next tax season!

Book Giveaway

03:31 Emily: Now onto the book giveaway contest!

03:36 Emily: In July 2021 I’m giving away one copy of Get Good with Money: Ten Simple Steps to Becoming Financially Whole by Tiffany ‘The Budgetnista’ Aliche, which is the Personal Finance for PhDs Community Book Club selection for September 2021. Everyone who enters the contest during July will have a chance to win a copy of this book.

03:56 Emily: Not only will Get Good with Money be our Book Club selection for September, but we will also devote our monthly Challenge to assessing and working through the ten aspects of financial wholeness as individuals.

04:09 Emily: If you would like to enter the giveaway contest, please rate AND REVIEW this podcast on Apple Podcasts, take a screenshot of your review, and email it to me at emily at PFforPhDs dot com. I’ll choose a winner at the end of July from all the entries. You can find full instructions at PFforPhDs.com/podcast.

04:31 Emily: Without further ado, here’s my interview with Dr. Michelle Thompson.

Will You Please Introduce Yourself Further?

04:41 Emily: I’m delighted to have joining me on the podcast today, Dr. Michelle Thompson. She’s had quite a career. She is a JD and a PhD, actually. She’s now self-employed, although she’s had many other jobs in the meantime, and what we’re going to talk through today is kind of her life in stages and also what she’s learned at each stage, the kind of money mindset that she developed at each stage. She has some very interesting things to say to us about academia. I’m really looking forward to this conversation. Michelle, thank you so much for joining me and would you please introduce yourself to the audience a little bit further?

05:14 Michelle: Absolutely! It’s my pleasure to be here. Thank you for having me. I am the founder of a boutique coaching firm called Michelle Dionne Thompson Coaching and Consulting. I work with clients to marry their purpose with their expertise in communities. In addition to that, I do teach part time. I love to teach. I love being with college students. I teach in the black studies department at City College of New York. And I am currently a publishing scholar as well. I’m turning my dissertation into a monograph. It’s called Resistant Vision: The post-emancipation realities of Jamaican’s Accompong Maroons from 1842 to 1901. Because I’m a glutton for punishment, my first career rodeo was as a lawyer. I was a member of the inaugural class of what is now Equal Justice Works fellows. And I used that fellowship to deliver legal services to people living with AIDS in Anacostia, in Washington, DC. And after that, I negotiated collective bargaining agreements with service employees international union district 1199, EDC in Baltimore, Maryland, and Washington DC.

06:20 Emily: Wow. I wish that we were going to talk more about your career specifically today. It sounds fascinating. But where you are going to focus on the finances through a few of those stages.

Money Mindset Developed in Early Childhood

06:30 Emily: Let’s start where all good therapy sessions do in your childhood. What money mindsets did you observe in your parents and also develop during your childhood?

06:43 Michelle: My parents were raised poor people from Jamaica and my mom immigrated from Jamaica to England to become a nurse. It was her goal in life and it probably opened up more than she ever thought. She was shrewd about money, but she was absolutely terrified about handling money. My mom died of dementia and at the one of the few last times that she could really comprehend her money, this I use lightly because dementia, her money situation, she actually had an estate worth over a million dollars, way more than she ever, ever thought she would ever, ever have in her natural life.

07:38 Michelle: But to get there, she was shrewd. She knew how to save. For a girl who didn’t have much food, she was blown away with how much food she could acquire with so little money in the United States. And every single time she got paid, she was absolutely terrified — “I have to pay the bills!” She’d take out her checkbook. She would balance her checkbook. She would make sure all of the transactions were recorded in the check register. She was flawless about it, but she was absolutely terrified every single time it happened. She worked at University of Chicago, hospitals and clinics for many, many years, and that allowed her to send my sister and I to those schools for many years, because we got half off of the tuition. Every single time the tuition bill came, she would be like, “Oh my gosh, I have to pay the tuition!” She would work overtime. It’s a hard life in some ways. She would have to work overtime for a few shifts and the money was there. If you think about it in the more woo-woo world, she could manifest money. That wasn’t the problem, but the energy of fear, always behind that. And I think that actually very much shaped my relationship with money as a young person and actually shaped this as a new thought. It shaped an attitude of avoidance of money.

09:10 Emily: Yeah. Wow. Thank you so much for that. That really, it passed down to you. It rubbed off on you in a way that you were treating money, thinking about money similarly. It wasn’t like you went the opposite direction. You were sort of more a little bit in line with what your mom was thinking.

09:25 Michelle: Well, the fear was totally intact. I think as an adult, that’s what I grappled with the fear of not having money. But instead of being on top of it, I would avoid handling it. And my dad apparently was more of the avoidance end of things. My mom would get mad because they would get the mail and he would just set them aside. She’s like, you have to open that. She would move towards it, he would move away from it. I took his move away from it and the fear.

09:56 Emily: I see, I see. Actually I’m remembering there are these there’s this framework, I’ve actually talked about it on the podcast before — we’ll link the episode in the show notes — but there’s a framework around it’s called money scripts. There’s four personality types around money and I remember one of them is money vigilance. So sort of what your mom was doing, being really on top of it. And then another one is money avoidance.

10:18 Michelle: I didn’t know these scripts, but here we go.

10:21 Emily: You’re falling very neatly into those boxes sound like, but in both cases it’s motivated by fear, which is very interesting.

10:26 Michelle: Absolutely, absolutely.

10:27 Emily: Did that actually, this fear part of it, did that play into your first career choice as a lawyer? Was that like a stable thing for you financially or that you perceived it would be?

10:38 Michelle: I remember being 12 and writing down in a journal, I want to be a lawyer. And I think I wanted to be a lawyer because I knew it was a way to make sure I earned the money I needed and not have to worry about it. Earned enough money so I could avoid it, now that I think about it. Right. I do think that because I was doing public interest work, I wasn’t making that kind of money. It didn’t manifest that way, but I think that was part of the intentionality behind becoming a lawyer.

11:11 Emily: Yeah and that’s part of the public perception of lawyers, maybe, especially at that time. I think now we have maybe a better understanding, post-recession, what law careers are, but before then it’s like, oh, you know, doctor, lawyer engineer, like great salary.

Money Mindset During Law School

11:27 Emily: Let’s talk about your money mindset, money situation during law school and then as you were working as a lawyer.

11:33 Michelle: With my fellowship came up a component that was loan forgiveness, but it wasn’t mashed in the same check. They would give me two separate payments, so I would get my paycheck and then I would get the loan forgiveness. And it was the first time I’d been held that accountable for money, so every single time I got that check — again, everything was about fear — I couldn’t figure out how to save money really during that time. I think if I had the tools I have now, then I probably could have, but I couldn’t actually figure it out at the time. I was really scared of handling checking accounts. There was all of this stuff. I had actually lost a checking account. And so I was unable to open one. I can have a savings account. I was paying everything cash and I was holding onto things through a savings account or cash. My whole money systems were really very, very janky and it was spending money to pay bills. I was good about making sure I paid the rent, generally about paying my student loans, paying the utilities, but again, every single pay period, I was absolutely terrified of doing it.

12:51 Michelle: By the time I got to working at the union, it was enough time that I could reopen a checking account. And I needed a car. That was the first like huge purchase I had to make. And, oh my gosh! I did research. I’m like, okay, this is the car I want. What really, really scared me was car insurance. I started to do it and I was in my early thirties and I was like, I can’t afford to have a car. And I just stopped the process. Avoidance. I just stopped the process. I can’t do this. When I worked for a couple more months, I’m like, okay, this clearly is not going to work. I need a car. And so it was like, okay, you have to look into other insurance companies. Then I finally found All State. I’ll say it actually gave me a rate that I was like, “okay, that I can do.” But I was absolutely terrified to actually make that purchase. I was terrified to do the insurance. I would shake is I handed them the check to actually do the down payment on the car. Complete the fear that my parents brought to handling money.

14:02 Emily: So that terror was specifically that you could not actually afford the car, that you would not be able to make the payments on the loan and the payments on the insurance?

14:12 Michelle: I think going into it, that was certainly the fear. Although, clearly I had budgeted and saw, “oh, I could do this,” but I was scared about it anyway, the way that my mom was scared about tuition.

14:28 Emily: Yeah. And I guess her solution was working more with that also a solution for you, or was earning more through overtime not a possibility?

14:37 Michelle: That wasn’t a possibility but I budgeted it. I could see the budget and how it would work. I don’t think, I believed the budget, which is funny, right? But I don’t think I believed the budget. And then shortly after that, there was an opportunity. I was thinking about buying a piece of real estate and I could do it because my employer had a 401k set aside for me that I could actually use to apply to a first-time home purchase. I saw cute place. I was like, oh, wow, this would be good. Actually, it wasn’t that expensive, especially given Washington DC. I was too scared to do it. I’m like, I can’t afford this responsibility. Oh my gosh, I’d have to tear up the floors. You know what I mean? The whole, “I can’t afford it. I can’t do it. I can’t afford it. I can’t do it.” That was the recording, if you will. That was the greatest hits that I played and I backed out of it until later.

Money Mindset During the PhD

15:31 Emily: Wow. Yeah. Let’s talk about you moving towards your PhD then. Maybe a little bit about why you did that.

15:39 Michelle: Sure. So a couple of things. On my mother’s side, we’re the descendants of a community of runaway slaves called Maroons. And those were some of the earliest historical narratives I heard. I had met my partner, my current partner in Washington, DC, when I was practicing law, who was a full professor at a major public institution in the Midwest and had gotten an offer to come to a school in New York city. And she said, you could get a doctorate. And I was like, what? Because I assumed that that process was only open to people who like went from undergrad and they got like A’s and whatever. She’s like, “no, no, no, you could totally do it.” And that’s what inspired me to do it. But also having a partner who earned a lot more than I did actually provided me with a level of financial security that actually made this easier. Like it made it look like a possibility. I didn’t have to be in New York city, paying York rents, trying to cobble a life together for myself. There’s a different kind of security for the first time in my life. And as a feminist, it’s like really, really hard for me to say that, but to be real about my money story, actually being partnered did provide a level of financial security that I had never experienced before.

17:02 Emily: Yeah. I mean, of course your finances naturally always change in some degree when you partner up, but I’m wondering, were you still feeling terror? Were you still feeling avoidance? Did you ask your partner to take over not only some of the financial, like literal paying for things, but also maybe the management? How did that work out?

17:25 Michelle: I did the management, she did the paying. We actually had split it up so we would pay for things according to percentage. Like if we put our income together, if we added it all up together, my income would come to a percentage of her income, so I was responsible for that percentage of what we were doing in the household. And that’s how we set it up. I found that I was a lot less scared to handle money with a partner. There’s something about being on your own and handling it that was far more terrifying to me than doing it with somebody else.

18:01 Emily: Yeah, I think along those lines of like your relationship with money, I think does change a bit when you, when you are partnered. I really enjoyed the, um, having like sort of the team aspect, like we are working together towards these goals and I had someone to bounce ideas off of and sort of talk over decisions. And when you’re the only one responsible for your money, it’s all on you. Because it is such a taboo topic, most people don’t have an accountability partner, they talk to, or like a friend that they’re comfortable talking to about this. It’s really like you just finally have someone who you can really share and be open about these things.

18:34 Michelle: I wouldn’t go that crazy with it. I don’t feel like we ever did that. But at least I knew that, I mean, for me, it was important to know that I wasn’t going to be homeless and that I would be able to eat, which is very tight again, it’s very tied to my parents own fears because they were raised poor. So I knew that part would be covered.

18:57 Emily: And this is specifically during your PhD program, right? Salary as a lawyer, you’re doing okay. But as a PhD student, it’s a very different situation. Can you talk about what your stipend was? And you mentioned you were living in New York, can you tell us about what the finances on your side of things were?

19:13 Michelle: Sure. I was earning, I want to say $20,000 a year and nothing over the summer.

19:19 Emily: And what year was that in?

19:23 Michelle: This was 2001. I started my doctorate in 2003. I did a master’s in 2001. Yeah, I think it was something like that. Then I gave birth to my son in 2004. So I actually borrowed because you can’t have a little, little one and write anything. Like you can’t, you can’t be doing the full-time childcare. The first year I worked, I didn’t really borrow. I was a teaching assistant and that actually worked for that year, but the following year I needed to do research in Jamaica. I actually think things worked out. There was a fellowship I got, um, that was part of New York university, so that worked out that year. But the following year, when we returned to the states, that’s when I needed him to be a preschool. It’s the years between when they’re three and five, when they’re — New York city now has public preschool, but there was very little of that at the time. I couldn’t afford in terms of getting my work done to have an hour and a half of childcare. That was useless. By the time you get to an hour and a half, you could write for 15 minutes and then you’re up and you have to get the child’s again. I actually borrowed a lot to make sure that he was in preschool. That’s what I assumed on my end during graduate school and I would also borrow to get through the summers because I never could get summer funding, which is, I think that’s a really hard part of being a doctoral student, summer funding. I never could get summer funding, so I borrowed, so I could go into the field in Jamaica. Although it was cheaper to live in Jamaica, I would borrow it to go there. And, I would borrow to do my research and I would borrow to do childcare so I could do my research.

21:30 Emily: Yeah, absolutely. This is bringing another element to the conversation, which is being the parent of a child who needs full-time attention, and how to balance that with doing your dissertation. I have talked to some people who try to work and do the childcare and trade off with their partners and such, and that’s often motivated by a philosophy around like what child-rearing should be and they try to make it work. I know it’s challenging, but it’s also on the other challenging —

21:58 Michelle: I found that the person who earns the most money will do the least childcare. That’s how it worked out in my relationship. And I’m not going to negotiate about whether I need the childcare, the childcare has to happen. So that was the deal with the devil I made. Fine.

22:17 Emily: Yeah. I have another episode that I don’t know if it’ll be published before or after this one, so this might be a preview of coming events for the listener, about another story of a parent who actually became a single parent at some point during graduate school and the same kind of thing of how much student debt had to be taken out to finance the daycare and so forth for the child. And it’s another huge layer of financial pressure that can happen for PhD students who parents during that time, or already were parents before starting graduate school.

22:46 Michelle: Exactly.

Commercial

22:49 Emily: Emily here for a brief interlude!

Emily: This announcement is for prospective and first-year graduate students.

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Emily: I contributed a very comprehensive webinar to the course, titled “Set Yourself Up for Financial Success in Graduate School.” It explores the financial norms of grad school and the financial secrets of grad school. I also give you a plan for what to focus on in your finances in each season of the year that you apply to and into your first year of grad school.

Emily: If this all sounds great to you, please register at theacademicsociety.com/emily for Toyin’s free masterclass on what to expect in your first semester of grad school and the three big mistakes that keep grad students stuck in a cycle of anxiety, overwhelm, and procrastination. You’ll also learn more about how to join Grad School Prep if you’d like to go a step further. Again, that’s the academic society dot com slash e m i l y for my affiliate link for the course.

Emily: Now back to our interview.

Financial Stress during the PhD

24:16 Emily: So what does it do to a developing scholar to be under financial stress, like $20K per year in New York City, kind of financial stress?

24:26 Michelle: You know, again like this is where my spouse or partner at the time really provided. I can’t imagine what it’s like having to come up with rent in New York City on $20,000 a year. I just can’t. Actually, if I had to do that, I think I definitely would’ve practiced law part-time. I would’ve by hook or crook figured out how to do it and it would have taken me a lot more time to finish my doctorate. It’s just because they’re two huge things. I didn’t have to do that. My partner, we were in university housing, so we were paying far less rent. It was actually embarrassing. I had colleagues who lived in my building who were doctoral students. They paid more for rent than we did. We had a lot more space in our apartment. That was actually something that was in place. For me, you house me, you feed me, I’m good. I could cover the food, the housing was covered and it was okay for me.

Michelle: What was stressful was how am I going to fund the summers? It was always like, I guess I’m going to borrow. That was what was hard for me. For me, I just have to know there’s a pot of money I can go to, to make it work. I actually did a good job of saying, I have this much for the summer, this is how I’m going to handle that. Or, okay, good. This is the, this is the pot of money for childcare. Got it. I think at another point in my life, because I felt less secure, I might’ve dipped into that for other things and then would always be scrambling to make it up. That actually didn’t happen. Childcare always got paid. I could always make my summer bills. I could always pay for the flights. That actually worked out. And so I think in some ways I wasn’t as pressed, but I was borrowing out of my ears to actually make it happen.

26:19 Emily: And did financing your PhD feel different than financing your JD?

26:24 Michelle: No. Because I borrowed to get my JD. But for the JD, I went to a state school and they actually gave me, I wasn’t an Iowa resident, but they actually gave me in-state tuition, so it was so little money. It was ridiculous.

26:40 Emily: I guess I’m just thinking about like the norms in fields, like it’s normal to borrow for your JD. It’s fantastic if you get a discount or get a scholarship or whatever. For the PhD, it’s much more, well, it’s kind of field dependent, whether or not it’s normal to borrow. And I’m sure it’s city dependent. I mean, in places like New York, it’s gonna be more likely.

27:00 Michelle: I find in the humanities it also depends on where your advisor’s willing to go to bat for you. And my advisor, wasn’t super thrilled to go to bat for me. If they’re willing to go to bat for you, they’ll find money, they’ll help you find money, but that wasn’t the case for me. And I’m determined. I’m like, “oh, I’m here, I’m gonna finish this, I see this through to its completion.” For me, it’s just raw determination that has me doing things. I’ll just do what it takes.

Finances as Gatekeeper for Academia

27:42 Emily: How do finances serve as a gatekeeper for academia? I mean, you’re obviously tenacious, but maybe to someone else, would it have been more of an impediment or even maybe for you at a different time of life, if you weren’t partnered, like you said, you may have been doing it part time. What’s the gatekeeping aspect of this?

27:59 Michelle: There’s so many things. If you don’t come from a family who has an academic background in this particular way. Okay, it’s great. Like it’s a fully funded program, they’re covering your tuition and they’ve given you a stipend. That’s what I received. And that is great, I’m not knocking that. And there are things that you don’t know about. The cost of research is high. There’s a reason why faculty have research accounts. Just saying. If you have to travel to do any of your research and most of us have to travel to do our research, even if it’s domestic or international, you don’t have a handle on…I think what really turns the screws on people, if you’re not clear about it, is that you really have to pay to do the research to make this happen. And that’s where the the rubber hits the road. We act like we don’t have to talk about people having families in academia, but people have families in academia and you can’t raise a child full-time and do any meaningful research and write up that research. You can’t square, you can’t square the circle. It doesn’t work.

29:33 Emily: Yeah, academia might be flexible, but that doesn’t mean it’s not hours and hours and hours of work that have to be done with a degree of concentration.

29:41 Michelle: Exactly. If you’re going to sleep at any rate. I’m a fan of sleep. I think that’s the gatekeeping part of it. If you’re male and you’re married to a female, it’s expected that that spouse is going to pick that up for you. It’s expected that you’re doing the thing that’s going to make you the breadwinner of the family. That’s not expected the other way around. Programs don’t feel any obligation to make that happen for you. And then again, who’s going to bat for you to actually find funding for summers, etc. That’s a whole other whole other.

30:15 Emily: Yeah, and I think we’ve seen this thrown into super sharp relief during COVID. It’s a recession that’s largely women are losing or leaving their jobs at much higher rates than men are. Lot of that has to do with caregiving responsibility.

30:29 Michelle: Exactly. Women are publishing substantially less during COVID. For academic women it’s just dropped precipitously because Junior’s on zoom over here.

30:39 Emily: Yeah. These stresses have been there for many, many decades, but they’re much more obvious in the current crisis and things have sped up and become much more acute right now.

Finances and Money Mindset Post-PhD

30:50 Emily: Let’s talk about your story a little bit more. Once you did finish the PhD, where did your career go after that and where did your relationship with your finances go after that?

30:58 Michelle: I finished and it was like number one, “Oh, I’m not, I’m not getting institutional support from New York University anymore.” I was an adjunct at three different schools. I live in Manhattan. I was commuting to New Jersey and I was commuting to Staten island, which can take just as long as commuting to New Jersey. I was working these jobs, exhausted and I couldn’t make my credit card bills. I put my loans on forbearance but I couldn’t make my credit card bills. All of that fear about money was popping up again. And actually got to a point where I was getting suicidal and I would look at my eight year old and I go, you can’t do that to him.

31:52 Michelle: I think if I give my mind a solution for a problem, I can focus on the solution and not the problem. I decided I’m not going to pay the credit card bills for now, which is actually probably a good decision. It wasn’t great for my credit history, but it was a good decision. I was like, okay, maybe I could do journalism. Turns out journalism is in the same free fall that academia is in, pro-tip. I had been part of this peer counseling organization for years, and I knew that I had skills of listening to people and helping them shift their lives. I was thinking, I wish I could make money doing that. I come to my computer and there’s an email that says giving away scholarships to learn how to become a coach and I was like, that would be, thank you. I applied for the scholarship and I got it and I hadn’t looked back, but it turns out, just because there’s a possibility of how you could like build something so that you can support yourself doesn’t mean that you don’t have all the same money dredge that you had. And actually it’s been being a business owner that has put in sharp relief that I cannot carry this abject terror about handling my money with me the rest of my life, because I’m going to be handling a business side of finances and my own personal finances.

33:14 Emily: Yeah, I hadn’t thought about that, but you really… being an employee is vastly different financially from being a business owner and I can see how that would really bleed over and affect your entire relationship with money and not just handling the business finances.

A Shift in Money Mindset

33:28 Michelle: Exactly, exactly. I noticed that once clients paid me, it would be this absolute fear. Like, “oh my gosh, they paid me.” I’m here to be paid by clients! I mean, I’m here to help people, I’m here to serve, but people pay me to serve them. That’s the arrangement. This is not, this is not an energetic moment here. I hired a coach in part to help me sort this out. There’s a book that I use to actually help me deal with this constant worry about finances and to actually look at the emotional bedrocks connected to me and my money story. I actually started to incorporate a series of tools to help me manage the money and it got me to a point where I could call the credit card company to go, “okay, look, I know I owe you money, what’s the arrangement we’re going to make? Money wasn’t doing things to me. I was starting to shape the narrative I wanted to about money.

34:37 Emily: Wow what a shift, what an incredible shift!

34:37 Michelle: That’s been a huge, huge shift.

34:42 Emily: I’m going to get that title from you after the interview and I’ll put it in the shownotes.

34:47 Michelle: That’s what it is, Overcoming Underearning by Barbara Stanny.

34:52 Emily: Yes! I have read a different one of her books, but yes, I’m familiar with that author.

34:55 Michelle: This is the foundational book that actually helped me turn things around with money.

35:03 Emily: Wow what a recommendation!

35:03 Michelle: Again, it was all of the overcome your money fears and earn what you deserve. That was what I needed to do. Amazing.

35:12 Emily: That you still have this at your fingertips. Literally did not have to get up out of your chair to get it.

35:16 Michelle: I know, it’s like right there. I’ve worked through it twice. And if I find I’m up against another something, I’m going to pull it back out again and I’m going to work the exercises again. This book has been absolutely foundational for me. Working with a coach about my business and part of why — my coach was Britt Bolnick with In Arms Coaching is so amazing is that she understands that to run a business, you have to tackle all of these inner demons that like show up and try to sabotage you, otherwise you can’t build a business, you can’t serve people. That’s really the bottom line — you can’t serve people if you’re afraid of the money.

35:57 Michelle: She brought in other people who helped you think about what is your personality with money? I’m an investor, apparently. Who knew? I got to assess that. This man ran a workshop that we did. It was like, oh, I could save. You know, it’s not a lot, but for the first time in my life, I actually have saved in a regular savings account, a little over a thousand dollars. It’s not much, but considering that I could not figure this out at all, it’s huge! I paid off a line of credit. I paid down, I finally had room on my credit card. If I needed to rent a car, I could do it. These things have changed. A friend of mine told me about You Need A Budget. Game changer. This is a work in progress, but it’s actually been a point where it’s like, oh, I need to set up regular times with my money and we need to have hot and heavy dates. It’s set up a set of habits that I don’t worry about having money.

37:06 Michelle: Last year my mother died. God bless her. She did enough work with her estate that there was actually, after actually her care for having dementia, there was an estate. Not the biggest estate in the world. I don’t need the biggest estate. It’s a modest estate. I already got some of that. I got the apartment in DC. I sold it some years ago and I got the profit from it and I just handed half of it to my partner because I was afraid of what I was going to do with the money. This time, I was like, hmm, excellent. I’m a member of business networking international. There was someone in my chapter who does financial advising. I was like, hi, I’m on the phone with you. I need you to help me handle this money. I didn’t blink. I wasn’t freaked out by it. I replaced my hardware. This is a very different…I don’t have to be an abject fear every single time I’m dealing with money. That it’s like, wow. That has been a big shift.

38:04 Emily: Yeah! This is an incredible, incredible shift. And especially because your initial relationship with your money, the avoidance and the fear and so forth was in place for decades. Starting your childhood, for decades in your adulthood as well, and this leveling up. Well, I don’t know if it’s up, but getting to the level of being a business owner forced you to totally work on this and really master it. I’m so glad to hear those examples. I think during our initial phone call, you mentioned You Need A Budget, but you said that you couldn’t have used it prior to this transformation. It’s a great tool, but you have to be ready to use the tool.

38:45 Michelle: If you’re terrified of looking at your money and I’m not saying I’ve conquered it. You don’t like, it shows up in different ways. But if I don’t understand that, oh right, I can be really scared when I handle my money, I would have just avoided using the tools. Like that’s great. And not use it. But now I’m like, okay, do you know you’re scared. Let’s just get into it. Let’s get into it and do it.

39:12 Emily: Yeah. Wow. What a fantastic shift!

Money Mindset as a Business Owner

39:13 Emily: Is there anything else that you’d like to tell us about your money mindset now, or your relationship with money as a business owner?

39:22 Michelle: I really firmly believe that…I’m a big follower of Carolyn L. Elliott who wrote the book, Existential Kink. One of my coach for coaches, her approach to coaching is about looking at shadow sides. It’s the very Yung-ian and approach both of them have very Yung-ian approaches to the world. And I really firmly believe that if you do not turn and face the shadow, if you will, the dark side of yourself, when it comes to money and actually just really bring that dark side to life. It’s not just about money. It’s about pretty much anything you’re doing about writing, about building your career — if you do not turn and face the places that might scare the bejesus out of you, whatever it is, you’re not going to get a handle on your money, on your love, your sex, whatever it is, your career options, anything that means anything to you, you’re not going to be able to handle it. You’ve got to be able to walk and spend time in those dark places, because once you actually really clear about what the peanut gallery is doing, you can actually go, okay, I understand that’s a peanut gallery. We’re going to do this.

40:41 Emily: I see. And I’m so glad that you mentioned the different tools that you use, the book, the coaching, and so forth, to get to this point, to be facing that aspect of your personality or that side of yourself. Thank you so much for sharing this story with us and I know, again, it’s not something we talk about a whole lot, and I’m sure there’s people in the audience. Well, I’m not sure. I don’t know if someone experiencing money avoidance will be listening to a podcast about money, but maybe someone knows someone and they can send this episode and say, you know, we grew up this way with money. You want to listen to what Michelle has to say about this, because maybe what she experienced can help you.

41:17 Michelle: I’ll say this. I know that I’ve listened to all sorts of resources about money before I actually did anything about it. So I know you money avoiders. You actually would like to not avoid money and you’ll acquire resources. The next step is to actually turn and use them.

41:33 Emily: Yeah. And I think for you, part of your money avoidance, and part of your solution to this was the book Overcoming Underearning. There might be a different book that’s appropriate for different people, depending on because that’s really like an entrepreneurial type. That’s for entrepreneurs.

41:48 Michelle: There’s Jen Cincero, You’re a Badass at Handling Money, which is funny, but also really concrete tools. You see, I’ve read them all. But that’s a really lovely starting point to actually manage money as well.

42:04 Emily: I’ve read that one too. It’s a lot about money mindset stuff, so it’s a wonderful one if you want to start learning about that and start to change your mental relationship with money.

Best Financial Advice for an Early Career PhD

42:15 Emily: Michelle, thank you so much for this interview and standard question that I ask all of my guests to wrap up is what financial advice do you have for an early career PhD? What’s your best financial advice? And that could be something that we touched on in the interview, or it could be something completely other.

42:33 Michelle: Number one, you may need to do the research necessary to find funding for those times where your academic institution isn’t going to fund you. And they may not be super supportive in doing it, but do it anyway. That’s number one. Number two, it’s never too early — All right, I have three pieces of lights. So that’s number one: do the research. Start in September, to look for money for the spring. I mean, for the summer.

43:06 Michelle: Number two, whatever bedevils you about money, you have to look at because whatever bedevils, you will sabotage your relationship with money in a time where you actually are going to need to budget and be really on top of your finances, because I assume I’m presuming that you’re single and you don’t have a lot of the fundamental support that you need. So take time to do that work and I promise you, whatever is screwing with you with money will screw with you about actually getting the doctorate done.

43:39 Michelle: And number three, once you start to clarify what the, what those devils are, find the tools to help you make it work. YNAB is, I think it’s $90 a year. It is worth every dime, as a way of actually managing what you have and sticking with it. Those would be my three pieces of advice.

44:05 Emily: Yeah. Thank you so much. I think that’s a wonderful quick summary of kind of the journey that we’ve gone through during the interview. Thank you again, Michelle. Thank you so much for this interview and for joining me.

44:13 Michelle: You’re welcome! Thank you for having me.

Outtro

44:20 Emily: Listeners, thank you for joining me for this episode!

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Emily: See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps!

Emily: The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC.

Emily: Podcast editing and show notes creation by Lourdes Bobbio.

Where PhD Candidates Are Full-Time Employees with Benefits

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In this episode, Emily interviews Dr. Veronika Cheplygina about the differences between how universities in the Netherlands and the US financially support their PhD students. In the Netherlands, PhD candidates (beyond the master’s level) are full-time employees under a 4-year contract that specifies their pay and benefits. It’s a secure position with only slightly lower pay than other types of positions. Veronika explains the financial and psychological benefits of this system and describes her lifestyle while she completed her PhD, which included purchasing a home. Prospective PhD students who are interested in doing their PhDs in the Netherlands should listen through to the end of the episode for application advice.

Links Mentioned in this Episode

phd candidate employees

Teaser

00:00 Veronika: You know, when I was doing my PhD and I saw this PhD Comics for the first time, I didn’t recognize the whole situation of like people hunting for free sandwiches. It’s not a lot compared to industry, but it’s also decent. And you can sort of take care of your basic needs.

Introduction

00:24 Emily: Welcome to the personal finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This Is season nine, episode two and today my guest is Dr. Veronika Cheplygina who holds a PhD in computer science from Delft University of Technology in the Netherlands. Veronika and I explore the differences between how universities in the Netherlands and in the US financially support their PhD students. In the Netherlands PhD candidates beyond the master’s level are full-time employees under a four year contract that specifies their pay and benefits. Veronika explains the financial and psychological benefits of the system and describes her lifestyle while she completed her PhD, which included purchasing a home. This is the perfect time of year for prospective PhD students in the US to consider broadening their search to include universities in the Netherlands and other countries with similar funding models.

01:24 Emily: On June 6, 2021 at 4:00 PM Pacific, I’m conducting an interactive workshop on choosing the optimal financial goal for you to work on right now, whether to save up cash, invest or pay down debt. I’m a firm believer that you should work on only one or a minimal number of financial goals at any given time, especially when you have a limited income like while in graduate school or a post-doc. Prior to the workshop, you’ll prepare your balance sheet, which is a record of all of your assets and all of your liabilities.

01:56 Emily: During the workshop, I’ll present my eight step financial framework, which I developed specifically for early career PhDs. I’ll show you how to break down your balance sheet to determine which step in the framework you’re currently on and what financial goal I suggest that you work on next. This workshop is for PhDs at all career stages, from rising graduate students through to PhDs with real jobs who are members of the Personal Finance for PhDs Community. If you’re not yet a member, you can easily join the community at PFforPhDs.community, and find details about the event under the course title, the Wealthy PhD workshops. If I get a good response from this first workshop on my financial framework, I’ll plan more of these live workshops for community members, which will be deep dives into money mindset, investing, debt, repayment, cash savings, and cashflow management. Sign up for the community today pfforphds.community, for access to the workshop on June 6th and much, much more great content.

Book Giveaway

03:05 Emily: Now onto the book giveaway contest. In May, 2021, I’m giving away one copy of “Bad With Money: The Imperfect Art of Getting Your Financial Sh*t Together” by Gaby Dunn, which is the Personal Finance for PhDs Community book club selection for July, 2021. Everyone who enters the contest during may will have a chance to win a copy of this book. Today is the last day to enter. The Bad with Money podcast was first recommended to me by one of the participants in my program, The Wealthy PhD. I think it’s going to generate a lot of great discussion in the book club. So please consider joining us pfforphds.community. If you would like to enter the giveaway contest, please rate and review this podcast on apple podcasts, take a screenshot of your review and email it to me emily@tpfforphds.com. I’ll choose a winner at the end of may, from all the entries you can find full instructions pfforphds.com/podcast. Without further ado, here’s my interview with Dr. Veronika Cheplygina.

Will You Please Introduce Yourself Further?

04:09 Emily: I have joining me on the podcast today, Dr. Veronika Cheplygina. She’s currently an assistant professor in the Netherlands, and she’s actually going to teach us today how the path to the PhD in the Netherlands compares to the path to the PhD in the United States, which of course I can represent that position. I think this will be really interesting to our American listeners, listeners in other countries, to compare these two paths, especially for anyone who has not yet embarked on the PhD. But I also think it’s going to have value for people who are already in graduate school in the United States, because there’s a very different view of graduate students there that we could really benefit from adopting, to a degree. We’ll see where the conversation goes. Veronika, thank you so much for joining me and will you please tell the listeners a little bit more about yourself?

05:01 Veronika: Thank you so much for having me it’s a pleasure to be here. As you said, I’m currently an assistant professor at Eindhoven University of Technology. My background is in computer science. I did all of my degrees in Delft, which is a different university of technology, also in the Netherlands. This was followed by, I got my PhD in 2015, followed by a two year postdoc and then, the tenure track, which I’m currently doing now. I am however, also leaving my tenure track in favor of a tenured associate professorship in Denmark, in Copenhagen, where I’m starting in February, 2021. I think that sums it up.

Overview of the Path to the PhD in the Netherlands

05:49 Emily: Congratulations on the new position and the upcoming move. We’re recording this in December, 2020, so I think you’ll have completed that by the time this is out so wonderful. Let’s get an, a quick overview of the educational path to the PhD in the Netherlands. Let’s start at the bachelor’s level: how much time does it take, how is it funded? Would you please answer that?

06:15 Veronika: Sure. Usually for the university level, there’s a three year bachelor program. It is formally separated from the master’s programs, which can be one or two years, but I think in practice, usually universities offer matching masters for different bachelor programs. I think most students end up doing the matching masters. It’s rather usually that the bachelor’s and the master’s are done together in five years or so, then that the master’s is as part of graduate school as in the US.

06:52 Veronika: And then after master’s, some students may go on to do a PhD, which would be typically a four year full-time trajectory. I think it’s different from the US in that you don’t really have a lot of courses anymore, as you would have had the research component in your master’s. Perhaps you might do some career development courses and such, or like an in depth summer school. From the time you’re, well at PhD researcher, I should say you were actually a university employee, and I think that makes a big difference for the experience.

07:36 Emily: Yes, absolutely and we’ll get into that quite a bit more. Then what about the funding? So you just said at the PhD level for the PhD training, you’re a full-time employee. What’s going on with the bachelor’s and master’s equivalent earlier than that? Is that funded by the student? Is it funded by the state? How’s that?

07:56 Veronika: The bachelors and the masters is a combination of the student and the state. I think the current tuition fees are around, for a domestic, and by domestic, I mean European union plus people with an eligible residents permit, that would be about 2000 euros a year in tuition. And the government contributes to this for the universities. So universities get funded centrally depending on the number of students there. I think the fee for non-EU students is quite a bit higher, but still, probably not at the level of many US schools. Then for the PhD, it’s an employment position which needs to be funded beforehand. As professor, you would need to acquire some kind of grant from a funding agency. And if you have that guarantee that you have this financing, then you can advertise a position. As a starting assistant professor, if you don’t have any kind of startup package from the university or already a grant on your own, you cannot say I’m recruiting grad students. Yu might have a master’s students will, of course need, will need to do a research project, but the PhD students, PhD researchers rather, you would need to finance yourself.

09:37 Emily: So to draw a contrast with the system in the US, it seems like for you all at the bachelor’s and master’s level, that’s where people are really viewed as students, right? You’re a learner you’re there to consume the product of the university and develop yourself, as a scholar. And it’s relatively inexpensive compared to here. There’s a big, big, big distinction between the master’s level and the PhD training level before you’ve actually completed your PhD in that it’s treated as a full-time job for your position and you’re going to finish in that time, it sounds like. Does anybody ever go over that amount of time or is it very firm? You’ve got four years you’re going to finish.

10:21 Veronika: Well, you get your salary for four years, unless there have been some special circumstances. For example, if you would take a 80% full-time working hours, you probably would have a longer time. Your salary will stop after that. It doesn’t mean you will necessarily defend your thesis in that time, but most people do aim to submit within then. Of course, this doesn’t always happen depending on your personal circumstances, et cetera, but I think it is doable in four years, given that you don’t have lots of courses and teaching, you would be required to help out a little bit in the department, but that’s not your main occupation. I do have to of course say that this is based on my model of how I experienced things, and I’m sure there are also departments that try to deviate from this, but this is how it should be and how I’ve seen it work in several places.

11:23 Emily: I see. Yeah, it seems like the contrast here, I guess, is that you have the opportunity to be paid at the master’s level. If you’re already, typically, if you’re already enrolled in a PhD program, you’re going through, what would be your master’s. You have the opportunity to receive a stipend usually during that time, but it’s not much. I’m curious about how much in the Netherlands, the PhD students or trainees, you know, PhD employees, PhD researchers are being paid compared to what’s enough to get by on, because definitely here, it’s a question mark, whether you’re going to be above or below that line as still a graduate student. How is the pay compared to if you had a full-time job that wasn’t PhD training?

12:11 Veronika: I think it’s a little bit less than, so for example, for, for me in computer science, industry jobs would be paid a little bit more. I think, compared to some other jobs, maybe straight after master’s, it’s not that much of a difference. I looked up, there are salary scales for these PhD positions, I looked it up just before, and it’s about 2,400 euros, before tax for the first year of the PhD. And it’ll go up to like 3000 to the last year. Of course the amount of after tax will depend on several other issues, like if you own property, et cetera. I think it should be, definitely if you’re sharing a living space with somebody else, it should definitely be okay. When I was doing my PhD and I saw this, PhD Comics for the first time, I really didn’t recognize myself…I didn’t recognize the whole situation of people hunting for free sandwiches everywhere. It’s not a lot compared to industry, but it’s also decent and you can sort of take care of your basic needs.

13:39 Emily: Yeah, I think that’s maybe the most impactful statement you could make in terms of to the credit of the system that you have there, is that it does not feel like what’s going on in PhD Comics. That’s wonderful.

Psychological Benefits to Being Treated as an Employee during the PhD

13:51 Emily: Okay, so you’ve said that once you get to the PhD candidacy stage, you’re a full-time employee of the university. What do you think is the psychological benefit of being viewed and legally treated as an employee versus as a student, like in the earlier stages? Let’s leave aside the financial for now, but just the psychological,

14:15 Veronika: I think it’s a good thing that you are in the same kind of position as your supervisors. I mean, you have, even though they will, of course be in the higher salary scale, you kind of have the same rights and I think that makes for a more equal playing field. Also several things you would not really necessarily need your supervisor’s permission for. Of course, it’s good if you inform them if you are ill or so, but actually that kind of thing would be arranged centrally by a party outside of the university. It just feels like you’re less dependent on your supervisor in personal matters. There’s just a bit less things to worry about. You can concentrate more on doing your job, your research and your life outside it.

15:16 Emily: Yeah. I’ve actually been reflecting on this recently. I had another podcast interview within the last few weeks and I believe it will be published recently before this one. It was with Laura Frater and she said something in that interview that’s really stuck with me since then, which is to not view yourself as a student while you’re pursuing your PhD. Because, and this is my interpretation of what she was saying, if you view yourself as a student, you sort of have an out for doing normal, like adulting things, like taking care of your finances and maintaining your relationships and keeping your body and mind healthy and so forth. Because we think of this, in the US we think of being a student, like being an undergraduate student as this just like magical period, when all you have to focus on is your education and no time passes and you stay healthy and everything’s wonderful, which is realistically not at all the case, especially when you do this for five, 10, whatever years into your twenties and thirties. I think that merely that switch alone of like, no, I literally am a full-time employee of this university – I’m receiving benefits, I have decent pay, would be a massive sort of, it’s like a graduation out of adolescence, when you’re not being considered a student anymore. That’s how I’m thinking about it. Does that strike a chord with you at all?

16:41 Veronika: That’s very true. I think generally, I tried to limit my hours also during my master’s, but it would definitely be the case I would study in the evenings and weekends, whenever. I think once I started this job, I would just come to the office between 8:30 and 5, which is when my supervisors were there. I just assumed that that was normal. I didn’t have like homework in the weekend and because I was in a small lab and I didn’t really have other PhD students to compare to, I didn’t really realize that people were maybe working on their projects the whole time. For me, there was no expectation to do this. This is definitely something that gets deviated from in some labs. But indeed I think just the realization you’re getting paid to do research for 40 hours a week, it’s also in your contract, that that helps with drawing a boundary there.

17:50 Emily: That actually reminds me of, I did a post-bac fellowship, so a year between when I finished undergrad and when I started graduate school, I did a post-bac fellowship at the National Institutes of Health. And it was a very different feel of an environment than a university feel, at least in my corner of that. People did work, I don’t know if it was 40 hours, but it was daytime office kinds of hours, maybe a little bit longer, that I could see. And I didn’t feel pressure to be staying super late. I would come in for eight or so hours a day, do my work, go home. Really, I was able to have some pretty good work-life balance during that time, which was not at all what I experienced during graduate school, where there was much more pressure to be working longer and just be doing a lot more. It sounds like more of a kind of professional environment rather than an environment that’s focused on the training or the trainee situation. Does that make sense?

18:48 Veronika: Yeah, that sounds that’s consistent with my experience

Commercial

18:54 Emily: Emily here for a brief interlude. This announcement is for prospective and first year graduate students. My colleague, Dr. Toyin Alli of The Academic Society offers a fantastic course just for you called Grad School Prep. The course teaches you Toyin’s four step Grad Boss method, which is to uncover grad school secrets, transform your mindset, up-level your productivity, and master time management. I contributed a very comprehensive webinar to the course titled “Set yourself up for financial success in graduate school”. It explores the financial norms of grad school and the financial secrets of grad school. I also give you a plan for what to focus on in your finances each season of the year that you apply to and into your first year of grad school. If this all sounds great to you, please register theacademicsociety.com/Emily for Toyin’s free masterclass on what to expect in your first semester of grad school and the three big mistakes that keep grad students stuck in a cycle of anxiety, overwhelm, and procrastination. You’ll also learn more about how to join grad school prep, if you’d like to go a step further again, that’s theacademicsociety.com/Emily for my affiliate link for the course. Now back to our interview.

Labor Contracts for PhDs

20:21 Emily: You mentioned earlier that there there’s a contract, like there’s a labor agreement for people pursuing PhDs. What are some of the elements of that contract?

General Benefits

20:31 Veronika: It’s the same labor agreements basically for all people in academic research. There’s a salary scale that corresponds to the kind of level you’re working at. That’s a different scale for PhDs. In comparison, so I told you that last year a PhD would get 3000 before tax per month, as an assistant professor, who’s just starting and you would get, I think 3,700. So it’s quite a flat ladder. There’s also a pension buildup. I have to confess that I haven’t really looked into how it’s done because I kind of trust that it’s done well, so it’s not something I haven’t had to worry about.

21:23 Veronika: The number of hours that you work and the number of vacation hours, you can take are fixed in there. You can also trade some vacation hours for some other benefits, like for example, extra pension. And then you get sort of like a tax advantage. There’s maternity and paternity leave, 16 weeks for maternity leave. And for paternity, I think it’s five days at full pay and then you can take a number of weeks off at lowered pay. There’s also a sick leave. So I think you can be something like 40 weeks at full pay if you need to, and then also longer at a lower pay. Lots of things like this. Basically life things that can come up, there’s usually a provision for.

22:29 Emily: Yeah. I think that must sound like a dream to a lot of PhD students and maybe even postdoc fellows right now who are in the US who are not treated as employees, or at least not as full-time employees of the university and just to have those benefits spelled out explicitly. It’s very patchwork here. In some places, maybe especially if you’re covered by a contract that’s been negotiated by a union, it can be very clear. I don’t think the benefits would be as high as that because just in the US we don’t get as much leave and so forth, but they would at least be clear.

23:03 Emily: But in many, many, many places, it’s not at all clear what your benefits would be, and it’s not until as an individual you come on to, okay, well, I’m pregnant, so I need to figure out what the maternity leave is going to be, or, okay, I need to take a leave of absence because I’m ill — I have no idea am I going to be paid? Unless you’re covered by probably a union contract, you probably wouldn’t know that until you actually encounter the situation, what the benefits might be. I think that clarity is just so, so helpful. And even on the vacation, like that’s even as a smaller issue, but something everyone encounters every year. That often has to be just negotiated one-on-one with your advisor and sort of oftentimes completely up to that person, whether or not they’re going to grant it or what you have to trade off for it. It sounds wonderful just to have the transparency.

23:56 Veronika: Yeah. I imagine that creates inequalities if you have to do it on a case by case basis, and also depending on how rich the field and the PI is. Here, there’s no difference between social sciences and technology and another thing. The agreement is the same for all academic institutions.

24:20 Emily: Yeah, I just left out something that would be super, super important. It wasn’t part of my personal experience during graduate school, but many, many PhD students here experience funding insecurity. They, they might have funding for a year, but they didn’t know what’s going to happen after that. Maybe they have funding every academic year, but in the summers, they have to scramble to find a certain grant or something. You can feel very precarious when you’re sort of careening from term to term, not really sure where the next paycheck is coming from in the upcoming term.

Funding Guarantee as a PhD Employee

24:48 Emily: You mentioned earlier that a PI couldn’t even advertise a position until the funding has been secured for all four years and so that is a massive difference. Actually in that way, it sounds even better than regular employment, like at-will employment, because I would imagine it’s unusual for a PhD student to be let go from that position, a PhD candidate to be let go, unless something has really gone off the rails with their performance.

25:15 Veronika: Usually you would have an evaluation after a year, and if you show progress in the project, then usually it’s fine and you can continue for the other three. It’s actually more secure, it’s a more secure contract that you won’t get right out of university, because you would maybe have a series of temporary contracts for industry.

25:39 Emily: Anything else you wanted to add on that question?

25:42 Veronika: Oh, yeah. About the financial insecurity. So it is possible here that if you are a student and so often students from China, and there are also some from Brazil, I believe, but they get like a scholarship from the government to come here and their salary is paid through that scholarship. This is possible, but then they, they come to the professor with their scholarship. And then they would be paid, the conditions there would probably be different than for most PhD positions. It’s less common and it wouldn’t be advertised as a PhD position because the person comes with it themselves.

Cost of Living Adjustments

26: 31 Emily: I see. In our prep for this episode, you mentioned to me something about cost of living. So earlier you said that, you know, there’s this agreement that’s been negotiated. I don’t know if it’s between universities and the government or who the parties are, but it’s a set schedule. It’s a set contract that all employees, PhD employees are under. Does the pay vary by city or is it the same everywhere?

26:57 Veronika: It’s the same everywhere.

26:59 Emily: Okay, so there is a consideration for cost of living in terms of how your lifestyle is going to be while you’re pursuing the PhD.

27:07 Veronika: So in the pay that you get there, so consideration for it, but of course, if you live in Amsterdam, it will be much more expensive than if you live in Colonian.

27:19 Emily: Yeah. Gotcha. That’s a little bit interesting, I guess, that there wouldn’t be any adjustments for cost of living.

27:27 Veronika: Yeah. Perhaps I’m not sure if that’s the case. So I know like in the UK, there’s a London allowance because London is just so much more expensive than the rest of the country. I’m not sure we have that here. I also imagine that the differences in the bigger cities are not as big. Like if you would go out more into like a more rural area, then the prices go down very quickly, but then you’d have to commute much more as well.

Veronika’s Personal Finances During Her PhD

28:04 Emily: We’ve talked very generally about the system country-wide and what you observed in your experience during your PhD. Can you tell me how your finances kind of went during your PhD? Were you able to live comfortably? Were you able to save?

28:20 Veronika: Yeah, I think it was quite okay. It was definitely an upgrade from my master’s. Then, I had a part-time job, but I had also the stipend from the government. It was enough to cover my expenses, but with the PhD things went better straight away, especially after the first year, because that’s, when you make the largest jump in your salary. I did also move out from a more student-like apartment to a more adult-like place. So my costs went up then, but I think I was still able to save a little bit.

29:03 Veronika: And actually, in the last year of my PhD, I was able to apply for a mortgage, which was very surprising to me at the time. This is because, after three years in the Netherlands, if you have…Normally for a mortgage, you would need a permanent contract, which you, of course don’t have as a PhD student. But after three years of temporary contracts, you can be seen as a kind of freelancer and the bank averages your salary. At that point in time, my PhD student salary average over three years was sufficient to get a small mortgage for an apartment. In current days this would not be possible because of how the prices have increased recently and I think you also need to have a much larger down payment now then rules used to be. I got very lucky. I definitely don’t want to say everybody in any place anytime can do this, but this was of course a combination of several favorable circumstances after which my living costs actually went down back to like the student apartment level, but for an adult-like place. So that’s been very good.

30:35 Emily: Yeah. That’s a wonderful accomplishment. As you said, circumstances had to come together to make it happen, but it did! Wonderful!

Can a US Citizen Do Their PhD in the Netherlands?

30:43 Emily: If there is a listener, let’s say in the US not in the EU, who’s thinking “This sounds amazing! Why would I deal with the system we have here in the US when I could go there?” Is it possible for an American to complete their PhD in the Netherlands?

30:59 Veronika: I don’t see why not because the vacancies are open to everybody in the world. Sometimes there are some EU specific grants, so if the EU gave you a grant, they want you to employ European citizens, but other vacancies do not have this restriction. I’ve been in groups where there were also people from the US doing PhDs, so I don’t see why that’s a problem. I guess you need to find out first about more specifically about the master’s requirements. It seems to be fairly standard, but I don’t think it’s a hard rule. So I do know of somebody from the US who didn’t have a master’s, but he had some additional research assistant experience, which sort of was sufficient. But this was of course also a couple of years ago.

31:52 Veronika: All the open positions they are listed on academictransfer.com, that’s an aggregator from all of the universities. I guess about the master’s thing, there’s always an administrative contact and the professor, so you could always contact the administrative one to check. Outside of these positions, of course you could always contact a PI if they have any upcoming vacancies, because they might be interested in writing a proposal together with you about something, or they already know something is coming up, but they have not gotten the official documents yet, so they cannot advertise it yet. It’s always worth approaching people want to work with, I think.

32:40 Emily: Yeah, that sounds amazing. And actually just the simple fact of there being a central database of all open positions is incredible. Again, in favor of like transparency and wow, making things so much easier for the applicant, so that sounds great. And I should mention, we’ll link in the show notes, because I’ve done a couple other interviews with Americans who have done their PhDs in the EU. I think they’re both in Sweden actually. But anyway, some similarities, so I’ll link to those from the show notes as well.

33:10 Veronika: For sure Sweden should be similar.

Best Advice for an Early Career PhD

33:13 Emily: Veronika, I like to end all my interviews by asking my guests, what is your best financial advice for another early career PhD?

33:22 Veronika: I would say it’s good to look at examples. Of course you need to get over some kind of hurdle of talking about finances, but it would be great to see what are other people spending on different things and how it works, or what kind of insurances and pension schemes and investment things people have. Yeah, I think you can learn a lot from that and it shouldn’t be such a difficult topic to discuss

33:55 Emily: Yeah. Another vote in favor of openness and transparency around these issues. Veronika, thank you so much for joining me on the podcast. It was so interesting to me to learn more about the system that you went through and congratulations again on your new position.

34:10 Veronika: Thank you very much.

Outtro

34:17 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email list serve, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt, repayment and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe through that list. You’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. Music is Stages of Awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC podcast, editing and show notes creation by Lourdes Bobbio.

Insights from a Financial Planner Who Works with Academics

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In this episode, Emily interviews Andy Baxley, a Certified Financial Planner who specializes in working with academics and PhDs. Andy pursued graduate school in psychology immediately after undergrad, but quickly realized the career path wasn’t right for him and the financial pressures were too great. He eventually started practicing financial planning, realizing that it is psychology ‘out in the wild’, and decided to serve the academic community he so closely identified with. Andy shares his insights from working with PhD clients nearing retirement about what they are glad they did when they were younger and what they wish they did. At the end of the interview, Andy explains how his career plans have brought him back to graduate school again. Andy brings deep insights to the interview from his years of study and practice in this space—ones you won’t want to miss!

Links Mentioned in this Episode

Teaser

00:00 Andy: It was sort of that long-term existential financial dread mixed in with just the day to day, “I don’t have enough money for anything.” I was living in a big, fairly expensive city and just was very, very much living like the proverbial graduate student. I didn’t mind that, but it was that in tandem with feeling like everyone else was just taking like leaps and bounds beyond where I was in their financial journeys, that confluence of things added a lot of anxiety.

Introduction

00:34 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season eight, episode 17 and today my guest is Andy Baxley, a certified financial planner who specializes in working with academics and PhDs. Andy pursued graduate school in psychology immediately after undergrad, but quickly realized the career path wasn’t right for him, and the financial pressures were too great. He eventually started practicing financial planning, realizing that it is psychology out in the wild and decided to serve the academic community he so closely identified with. Andy shares his insights from working with PhD clients nearing retirement, about what they are glad they did when they were young and what they wish they had done. At the end of the interview and explains how his career plans have brought him back to graduate school. Again, don’t miss Andy’s deep insights from his years of study and practice in this space.

01:36 Emily: I have my own insights that I will provide to you next week, specifically regarding the home buying process. My husband and I closed on our very first home a week ago. My podcast episode next week is going to be all about our journey to home-ownership. Like many other PhDs and millennials generally, we put off buying our first home for quite a while. I’ve been open on the podcast about my regret that we did not buy our first home back when we were in grad school and I’m pretty bullish on grad students and PhDs buying homes if it’s financially feasible.

02:10 Emily: To that end, I’m publishing the episode next week on our personal home-ownership journey, which I hope you’ll listen to. I’ve also scheduled a special event with my brother, Sam Hogan, who is a mortgage originator specializing in grad students and PhDs. You’ve heard Sam on the podcast previously in season eight, episode four; season five, episode 17; and season two, episode five. We are going to do an AMA style live call over zoom on Thursday, May 6th, 2021 at 5:00 PM PDT 8:00 PM EDT. We will do our best to answer any question you have about buying a home, especially as a grad student or PhD. You can register for the event and my mailing list at pfforphds.com/mortgage. I hope you will join us.

Book Giveaway

02:56 Emily: Now it’s time for the book giveaway contest. In April, 2021, I’m giving away one copy of Walden on Wheels by Ken Ilgunas, which is the Personal Finance for PhDs Community book club selection for June, 2021. Everyone who enters the contest during April will have a chance to win a copy of this book. Walden on Wheels made a splash when it was published, because the author wrote about how while he was a graduate student at Duke, he lived in a van on campus instead of renting a home so that he could avoid taking out student loans. This was an even more counter-cultural move than it appears to be now because it was before the rise of hashtag van life. I’m looking forward to learning more about the author’s motivation to make such an extreme choice and discussing it with the members of the Personal Finance for PhDs community. If you would like to enter the giveaway contest, please rate and review this podcast on Apple podcasts, take a screenshot of your review and email it to me@emilyatpfforphds.com. I’ll choose a winner at the end of April from all the entries. You can find full instructions at pfforphds.com/podcast. Without further ado, here’s my interview with Andy Baxley.

First Go at Grad School

05:12 Emily: Yeah. And we’re going to get ton of that insight later on. I’m so excited for it. But first we want to go back in your own history back to when you were pursuing your own PhD the first time, so could you please tell us about the graduate program that you entered and what you were studying?

05:30 Andy: Yeah, absolutely. It’s funny, when I look back on my own personal history, I would have been really surprised 10 years ago, if I could have gotten in a time machine and seen where I am today, I don’t think I ever would have guessed that I ended up exactly where I am, but I also wouldn’t have guessed that I’d be as professionally fulfilled as I am either. It turned out well, but definitely a number of unexpected turns along the way. To go way back, I think the best place to start this story is probably in high school. I was a really sort of uninspired student in high schoo,l to say the least, and my parents always said, you have to get a 3.0 at minimum, so I always got like exactly a 3.0, I just didn’t really have much direction or passion.

06:15 Andy: All that kind of changed when I got about halfway through college and I just got very inspired by a couple of professors and started doing research assistantships and teaching assistantships in my undergraduate work and ultimately decided to pursue becoming a professor myself in psychology. The second half of my academic career, I think I was an excellent student and that was the first time I’d ever been excellent at anything. I really was just very excited to be good at something. I started thinking about life after undergraduate work and ultimately went to a master’s program, that was well-known for being a feeder into really good PhD programs, and so I thought that was the path. It didn’t end up working out that way, and I can tell you more about that story certainly.

What Drove the Decision to Leave Grad School

07:07 Emily: Yes, please do. I mean, I think we all know the beginning of this path, but where your story gets interesting is when you start to deviate from it. So why did you end up leaving that master’s program?

07:17 Andy: It was a mix of things, it was definitely a confluence of things. First and foremost, I think I got there and I realized that while I was fully funded in the program and I had a stipend, I sort of looked around and I realized that I didn’t have the same sense of purpose or direction that a lot of the other students in the program did. At first it didn’t seem like that big of a deal, but the more I thought about it, the more I realized that the further on I got in that journey, the competition was only going to get fiercer and fiercer. I sort of had this mindset that as long as I can do the next thing, that’s where I’ll find happiness. If I can just get into this master’s program, then my path is paved and I’ll find happiness and all will be well.

08:05 Andy: Then I was like, well, that’s obviously not true and I was thinking, okay, well maybe if I get into a great PhD program, once I do that, all will be well and my life will be pretty much set at that point. And I kept talking to people who were either one step or two steps or three steps along in the journey and realizing that some of them are happy, but a lot of them were under a tremendous amount of pressure financially. They just had a lot of stress in their lives that I wouldn’t have expected, and that wasn’t just true. One or two steps beyond. The more people I talked to, I realized that even all the way up to tenured faculty, those folks were under a lot of pressure as well. Some folks were extremely happy with their lives, but not all of them were and I just realized that I wasn’t on a path to sure happiness or professional fulfillment.

08:52 Andy: Also, I was going up against people who were really super passionate about the research topics that they were focused on and I just didn’t have that. All I had was that I was really excited to be good at something and excited to be a good student, but I just didn’t have that passion and didn’t have that drive. Those were sort of the personal reasons. And then there were certain financial ones as well, which I’m certainly happy to go into.

09:15 Emily: Let’s do that in a moment. I am really impressed with you as a, whatever you were 22, 23 year old person, really being able to kind of take a step back from the day-to-day rush and rigor of the program and evaluate “is this really where I want to go” and to do that, looking ahead to your older people ahead of you in the program and older mentors and so forth and asking yourself if you really want that out of your life. And to do that so early on, right within the first, it sounds like about a year of that program doing that evaluation. I really encourage the listeners to periodically step back and reevaluate and see if the path that you’re on is really the one you went to beyond because bailing out like you did earlier is much, much less sunk cost, than getting to the end of the PhD and realizing that you don’t want the career that’s on the other side of that PhD, the one that you thought you wanted. I really commend you for that. Can you talk a little bit more please about the financial pressures that you were experiencing and observing?

10:13 Andy: Absolutely. And one thing I’ll add to what you just said as well, is that that was the hardest decision I’ve ever made to leave that program. It felt like it felt like my world was crumbling down. So much of my identity was wrapped up in that path that I had chosen for myself. At the time it was truly like crushing at a personal level to make that decision, but looking back, it truly is the best decision that I’ve ever made. That’s not to say of course, that everyone should leave their PhD programs or that everyone should leave graduate school, but it is to say that if you have that hunch, that maybe that’s something worth considering. It may feel like the end of the world in that moment, but it will get better later on as you find your path, it just doesn’t seem like it in the moment.

10:57 Andy: To circle back around to the financial side of things, I think I had this experience that a lot of folks probably do, which is that I was seeing a lot of my peers from college who hadn’t chosen the same path, start to experience some degree of financial success. I always had assumed like, “Oh, financial success isn’t for me like that that’s for other people, that’s, that’s not really a thing for me”. But then I had this weird experience where I started to see other people get jobs and decently paying jobs and I felt a little bit of jealousy there. Also I just felt, my stipend was generous, but it wasn’t quite enough to live on, so I was accumulating more student loan debt on top of what I already had for my undergraduate work.

11:42 Andy: I was by no means into personal finance yet at that point, but I was just doing some very simple math and thinking about when am I actually going to make enough money to start to dig out of this hole? I started playing around with compound interest calculators and realizing how delayed I was going to be, not only in paying off my debt, but also in starting to accumulate assets long-term. It was that long-term existential financial dread mixed in with just the day-to-day “I don’t have enough money for anything”. I was living in a big, fairly expensive city and just was very much living like the proverbial graduate student. I didn’t mind that, but it was that in tandem with feeling like everyone else was just taking like leaps and bounds beyond where I was in their financial journeys, that confluence of things added a lot of anxiety, I think.

12:32 Emily: Yeah. I think what you’re expressing is, again, common enough if people take the moment to think about it. And certainly when you’re actively taking out student loan debt it’s really in your face that this it’s not a long-term sustainable thing to be doing. I think it’s a little harder when you have the stipend and it’s enough to live on, but you don’t quite realize, like when you were playing around the compound interest calculators, you don’t quite realize the long-term effects of not being able to save, not being able to invest, so you can make it day to day, but it’s easier to not think about the long-term. You had the pressure of both the day-to-day and the long-term bearing down on you. I really appreciate those observations.

Life after Leaving Grad School

13:12 Emily: Can you tell us what you did next — after you left your program, after you world crumbled around you? And on that path, how you fell in love with personal finance?

13:22 Andy: Yeah, absolutely. After the program, I spent a couple of months just sort of wallowing in uncertainty and not knowing what I would do. Ultimately what I landed on — I love to travel, so I moved to South Korea and taught English as a second language. I intended to do that for one year, just to sort of get my financial house in order and also have a really neat, unique experience. I actually ended up staying for four just because I really loved it. And I knew that I didn’t want to be — I was teaching anywhere from kindergarten to middle school, depending on which year I was there. I knew I didn’t want to do that forever and I also knew I didn’t want to be a teacher forever necessarily, but I just found the experience kept getting more and more interesting and so it kept me there longer than I thought.

14:07 Andy: Somewhere about halfway through that journey, I picked up a book called Millionaire Teacher by a guy named Andrew Hallam. And first of all, the term “millionaire teacher” seemed like an oxymoron to me, which I think is kind of the point of the title. And again, like I said earlier, building wealth, and certainly becoming a millionaire, never felt like something that was for me. It just always felt like that’s that’s for rich people and I just don’t know anything about that. I sort of always buried my head in the sand and was never a great saver, never even thought about investing. I don’t remember why exactly I read this book, but I started to read this book and realized that actually, if you start early enough and you save even just a bit, and as your earnings increase, if you can save a bit more, there’s a pretty clear path to wealth for a lot of folks. I don’t want to make it seem like it’s, it’s available to everyone because I think we have systemic structural issues that do make it really hard to build wealth. But I think it’s, it’s available to a lot more people than most people think. If you can be prudent, especially in your younger years, that there is a path to wealth and, and that wealth isn’t, we can talk more about this certainly, but wealth isn’t just about, how big your accounts are getting, but it’s also about what does that allow you to do. What sorts of freedom does that allow you to pursue? Once I realized number one, that wealth isn’t just for rich people, you know, building wealth isn’t just for people with trust funds, I think I just started reading every book I could possibly find on personal finance and just became sort of obsessed. So that’s how the interest was born in personal finance and then the career part came later.

15:41 Emily: That’s a fantastic entry point into the subject matter. Finding that perfect book that you could see yourself in — The Millionaire Teacher. And I love that you said it’s a provocative title, it’s an oxymoron. I also have a program called the Wealthy PhD, which is similarly designed to be provocative and “What a PhD can be wealthy? How could that possibly be?” Of course, we’ll talk about that in a moment.

Transitioning into a Career as a Financial Planner

16:05 Emily: You’re falling love the subject of personal finance. How did you make it into your career?

16:10 Andy: The first part was the realization that building wealth isn’t just for rich people, but the most important thing was the second realization, which was that personal finances is not just about finance. It’s not just about the numbers. There’s kind of a corny saying that I’ve heard, but I actually like. It’s that personal finance is more personal than it is finance. I started to make this connection. I was also really deeply immersed in the positive psychology movement at that time. I was reading a lot of work by Marty Seligman and other folks who were really just making the statement that it’s not just about fixing our deficiencies, it’s about how do we get from our baseline and transcend beyond that and live a life that is maybe even better than we ever could have expected.

Andy: I started to make this connection that like, “Oh my God, if building wealth is available to everyone, maybe that can also be a tool for helping people, to use another cliche, live their best life.” How can wealth become a tool to live in accordance with our values and live a life filled with joy and fulfillment? And once I made that connection, that personal finance is the best applied psychology there is, it just clicked for me. I was like, Oh my God, I can do this thing professionally that I’ve become really interested in and sort of honor my love of psychology and that original career trajectory I had set for myself. It was like psychology out in the wild. And that was really exciting for me. I didn’t have to just become, I shouldn’t say just, I didn’t have to become a professor. There were other ways to do that. That was really exciting for me. I was hooked at that point and I haven’t really looked back even a single day since then.

17:49 Emily: That’s such a beautiful expression. I’m completely on board with you, but I hope the audience is hearing this as well, the insights that you just gave, because I think it can maybe explain a lot to them about why they haven’t been successful with personal finance in the past. Even if they’re obviously super smart if they’re PhDs or whatever. But like you said, it’s psychology. It’s personal.

Insights into Personal Finance for PhDs

18:09 Emily: So, you get into this as your career, and I know you’ve had a couple of jobs, but what I want to focus on now is what you have learned from and observed in the academic clients you’ve been working with since you did switch to having a focus on that population in your practice. What does the future look like for someone who is maybe currently in graduate school or otherwise early on in their PhD career? What happens a few decades from now, if they are intentional now with their money?

18:40 Andy: Yeah. That’s such a good question because the answers are very different about when you think about the person who’s intentional versus the person who isn’t. To talk about the people who are intentional, there’s this quote I really love by a guy named Morgan Housel, he just came out with a book called the psychology of money and he says “the ability to do what you want when you want with who you want for as long as you want is priceless. It’s the highest dividend money pays.” And so what comes later down the road for folks who are really intentional and diligent about their personal finances early on is freedom. I guess that’s just the best way to put it. And that can be intellectual freedom, it can be creative freedom, it can be — the one thing I would add to Morgan’s quote is the ability to be wherever you want to.

19:25 Andy: I think when people are investing and saving, it can feel abstract, but the way I think about it is they’re just saving little units of freedom and flexibility and how they end up using those units of freedom and flexibility later on, we don’t necessarily know that on the front end, but when they get there, they’re so happy to have them. I’ve had clients who spend half of the year abroad in South America. I’ve had clients who retired and started a little boutique motel. I’ve had clients who were able to afford to do sort of part-time work very early on, like in their fifties and do a half retirement, half working thing for a period of time. So truly the limits are non-existent. The possibilities are as big as your creativity. What comes later on, I can’t say specifically what comes for each individual person without knowing them, but I can say that everyone I’ve ever talked to who did a good job saving early on was really glad they did. I’ve never once heard somebody say that they regret it.

20:24 Emily: I really love the way you phrased that of, saving up units of freedom and flexibility for the future. I’ve expressed that before as money gives you options. Whatever you want to do, having money is going to make it easier to accomplish that. But I really like the way you phrase it, because I know that for me earlier on when I was in graduate school and so forth, and I still don’t to a degree, didn’t have a clear picture of what my retirement or my long-term future would really look like. I wasn’t really sure what kind of career I would have. I wasn’t really sure where I’d want to live or. I have children now, but when I didn’t, I didn’t know how big my family would be. There was a lot of uncertainty and I think that’s really common for PhDs because if you stay on that track, like you may end up moving many times, it’s very difficult to tell what your life is going to look like many decades from now. That can make it a little more difficult to save for and get motivated about because if you think about the vision board technique, for example, you are supposed to have like a really crystal clear vision of like what you’re going for. When you’re facing reality about what your career might look like as a PhD, it might be difficult to have that clear vision, but I love the way you phrase that of just whatever it ends up looking like, saving up for your freedom and flexibility now we’ll give you your options later on for living wherever, doing whatever with whoever, everything you just listed from Morgan Housel. I really love the way you phrased that.

Commercial

21:51 Emily: Emily here for a brief interlude. Taxes are weirdly, unexpectedly difficult for funded grad students and fellowship recipients at any level of PhD training. Your university might send you strange tax forms or no tax forms at all. They might not withhold your income tax from your paychecks, even though you owe it. It’s a mess. I’ve created a ton of free resources to assist you with understanding and preparing your 2020 tax return, which are available pfforphds.com/tax. I hope you’ll check them out to ease much of the stress of tax season. If you want to go deeper with the, or have a question for me. Please join one of my tax workshops, which you can find links to from pfforphds.com/tax. It would be my pleasure to help you save time and potentially money this tax season. So don’t hesitate to reach out. Now back to our interview.

Pitfalls to Avoid as an Early-Career PhD, According to a Financial Planner

22:57 Emily: Do you want to talk about the converse side about mistakes that you’ve seen your clients make or pitfalls that younger people earlier on in their career should avoid?

23:08 Andy: Yeah, absolutely. The number one mistake is a pretty obvious one and it’s just not saving. It doesn’t have to be, Oh, I didn’t have a super high savings rate, it’s people who just decided, I’m going to wait until much later to start saving. And the thing about investing and saving is that time is your best friend. A lot of people think Warren Buffet’s secret is that he’s this fantastic investor, but the truth is Warren Buffet’s secret is that he’s a fantastic investor and he’s been investing now for like 80 years or something like that, so he’s had that time for, for compound interest to take effect. I think starting really late is one thing that a lot of folks end up regretting. When I meet clients who are 60 and maybe they didn’t start saving until they were 45 seriously and they’re a bit behind or a lot behind, I think what really rings true for me is that it makes it very clear in meeting with these folks is that money doesn’t buy happiness, certainly, but it does pave the way for you to build happiness and joy and fulfillment over the time.

24:13 Andy: Conversely, a lack of money can make it really hard to achieve those things. When you’re 60 starting to think about retirement, but knowing you don’t have enough money to fund a decent lifestyle in retirement that you can enjoy, that’s a really tough place to be. And that stress really weighs on people, in my experience. I think a piece of advice I would give to younger people sort of like cautionary advice is just we’ve all probably experienced some version of resource scarcity at some point in our life, especially folks who’ve gone through graduate programs where you just feel like it’s really hard to make ends meet. And we know how stressful that is. I guess the pieces of advice I would give to a lot of folks is that that stress is amplified by 50 to a hundred times, if you’re at the end of your career, because you no longer have three or four decades of earning potential in front of you. It can be really scary for folks. That’s one of the things I’m most passionate about when I work with younger clients is these small changes we can make on the front end, end up making these tremendous differences on the back-end.

25:15 Emily: Compound interest truly amplifies your actions from early on, given that timeline that you were talking about. I’m thinking about someone in the audience who — you mentioned earlier, systemic barriers to building wealth that many people experience. Of course, we have a student loan crisis now that did not exist for the people who you’re working with who are nearing their retirement years. I’m thinking about someone in the audience who is really struggling, or maybe they were really struggling until recently and only in their thirties or forties, they’ve finally gotten to a point where they feel like they have a career and they have the paycheck and they can start saving. What can someone who is struggling or has been struggling do to — I know that time is your best friend, but like what can we do to make up if the time has already passed?

26:04 Andy: What I often tell clients who come to me with that question, because I do get clients who are like, honestly, it’s too late for me. What I tell them is certainly the best time to start building wealth is the first paycheck you get. That’s the best time to start doing it. Knowing that the vast majority of people don’t start then, the second best time is just today. Just start today, wherever you are, whether you’re 30, 35, 45, 55. And I think the best advice I can give people is just start really small. If you don’t have a lot to save, if you don’t have huge amounts that you can put towards paying off your debt, start very small and build up from there. Even if say you’re almost done paying your student loans off and you’re starting to think about saving for retirement, even if you can start saving 1% of your pay and then commit to moving it up by a percentage point, say every three or four months, programs like that eventually will get you on track.

26:58 Andy: And I think taking those baby steps is important because the idea of saving for retirement, it’s one of the biggest financial burdens we’ll ever have to face and it can be really overwhelming. I think for a lot of people, when they hear numbers like, Oh, you need to save 15 or 20% of your income, they think of it in this very binary way. They’re like, well, can’t do that, so I guess I just won’t do it at all. I think what I would really emphasize is just start small and just build up incrementally and you will get there and no matter how much you’re ultimately able to save, you’ll be really glad you did it.

27:32 Emily: Yeah, I completely agree, especially about people being turned off by the big numbers of savings percentages. I remember when I was in graduate school and reading the advice of like have a three to six month emergency fund, I was just like, no way, there’s no way I can save up whatever that would have been at the time, $6,000 or something like that. I saw that as totally out of reach and so I really just didn’t even try. I fell prey to the same kind of psychology that you just said there. But like you said, just saving as much as you can or putting as much as you can towards debt — could be $5, could be $10 — I think one of the most transformational things about that is not necessarily the amount of money that you’re putting towards savings, but just the fact that you have changed your identity to “I am a saver, I am repaying my debt and I am a person who invests” and that alone can be super powerful and is a great building block on this path towards wealth, even if the numbers are not that big yet.

28:31 Andy: Absolutely. I couldn’t agree more. I think that identity piece is as important or more important than those initial dollars that you’re able to save. I hope people take heart and realize that when you’re just starting on the journey, it’s a little bit like when you watch a rocket ship take off, like watching a space X launch or something. It starts super slow at first. It’s really hard. There’s a gravitational pull that you have to get past, but the momentum builds over time. And once you start to build that momentum, it gets easier and easier. The hardest dollar to save is that very first dollar and every dollar will just get a little easier beyond that. Then eventually once you’ve started to invest as well when you’re at that stage, those dollars will be making more dollars for you while you sleep. That’s the idea of compound interest. Just know that it will never be harder than it is right now and that it does get easier progressively over time.

29:26 Emily: Yeah. Thank you so much for adding that insight. I totally agree. You hear it in the personal finance community: the first hundred thousand is the hardest to get to in terms of your investments and then getting to the $200,000, $300,000 is so much easier, it takes so much less time. But if we’re talking to grad students, let’s lower that scale — the first $10,000, the first $1,000, the first $100 — every order of magnitude that you go down, it is the hardest at that stage. Once you get that compound interest working in your favor, it happens while you sleep, as you said. I know I’ve experienced this in my own life from grad student years, scrimping to save even $5 more per month was like a big accomplishment and now things look very different 10, 15 years later, in terms of the compound interests working in my favor. I can kind of personally attest that yeah, that first hundred thousand, which I’ve well-documented in the first podcast episode that I published actually, was definitely the hardest. It’s been a lot easier since then.

Going Back to Grad School After a Career Shift

30:25 Emily: Andy, I want to get back to your own story because that’s taken another twist. You’re a CFP, you’re working with clients, but you’ve also recently decided to go back to graduate school. Tell us about that decision

30:40 Andy: There’s still that part of me that identifies as a great student and a person who loves school and I’m actually really grateful to have held onto that identity and so a couple of years ago, I started thinking about going back to school and I ended up signing on for the Masters in Financial Planning Program at Kansas State. I did a dual concentration. Half of the degree was really focused on advanced financial planning, so kind of the numbers side of things — taxes, estate planning, that kind of stuff. The other half was focused on financial therapy, so really taking a very deep dive into the psychology of money.

31:18 Andy: I’m finishing that degree actually in March, so I’ll be done in March and my next juncture is to decide if I want to do the PhD, which it’s so funny to me to think that I might yet again, be considering a PhD, but I think I’m doing so with a different head on my shoulders than before. If I decide to do the PhD program, which I think I will at this point, it’ll really be to further what’s been done with regards to academic research around the field of financial planning because not a ton has been done. It’s a very under-researched field.

31:52 Andy: I wouldn’t want to stop being a financial planner. The way a lot of folks do it in the industry is they get the PhD and then they sort of spend 70% of their time in practice and then the other 30% of their time doing research and publishing and doing some teaching. That for me seems like a pretty good balance, kind of having my foot in one door and the other as well, right now. We’ll see! Hopefully we can check in again in a couple of years and I’ll tell you what I decided.

32:17 Emily: Yeah, that would be excellent!

Best Advice for an Early Career PhD

32:18 Emily: Andy, I wrap up all my interviews by asking my guest, what is your best financial advice for an early career PhD? We’ve obviously already said a lot of advice throughout the course of the interview, but did you have something that you wanted to underline for us or maybe something new that you wanted to throw in?

32:34 Andy: Absolutely. I don’t know if it’s new, but I would definitely say that if it isn’t new deserves to be reemphasized and that is to me, the best investment you can make at any age, if you haven’t already made the investment is in your own financial education. Before you even start thinking about index funds and long-term savings and 401ks and things like that, just investing in your own knowledge and establishing a baseline understanding of personal finance, I think is the best possible thing anyone can do.

33:05 Andy: One critique I have the financial services industry is that I think a lot of the messaging has been set up to tell people this is too complicated or too time consuming or whatever “too this” or “too that”. It’s not for you to do, it’s for you to hire us to do. I think in some cases that’s true. When things do get complicated, it is really helpful to have a professional. I believe that obviously as a financial planner. But the basics are not complicated. It’s not to say it’s easy to master them because you know, saving money is never easy, but the principles are not complicated. I always just recommend folks, if you can take 10 or 12 hours, you will basically have mastered the fundamentals of personal finance.

33:49 Andy: A couple of books that I always recommend to people — one is The Index Card by Helaine Olen and Harold Pollack, which is rooted in this idea that basically everything you need to know about personal finance can fit on one five by seven index card. I love that idea and I tend to agree. A second one I’ve already mentioned is The Psychology of Money by Morgan Housel. If The Index Card tells you how to do it, The Psychology of Money is like a user’s guide to your money brain, which is a pretty interesting part of your brain as it turns out. And then the third is The Millionaire Next Door by Thomas Stanley. That’s probably my all time favorite because it really shows that the type of people who become millionaires actually aren’t the ones who you would think become millionaires. It’s not the people driving Mercedes and BMWs and living in fancy neighborhoods. It’s the people who have high savings rates. You don’t see their wealth because it’s all stowed away in investment accounts. I find that book just to be very empowering. Invest in your education, that would be my advice.

34:51 Emily: Yeah. I completely, completely agree. And also starting with books, I really love that idea. It’s kind of old school, but it’s how I started my journey into personal finance as well was reading some well curated material. Actually since you mentioned books, inside the Personal Finance Community, we are currently as of December, 2020 reading The Millionaire Next Door in our book club. Morgan Housel’s book is on the slate for January, 2021. And then The Index Card is one I have not read before, but it’s actually been on my list as another book to consider for that. I’m not sure when this will be published, but when it is, if you’re interested in reading these kinds of books along with some of your other peers, check out the Personal Finance for PhDs community, pfforphds.community, you can see what the current book is we’re reading, the next one on page. If that’s your thing, please come and join us and have some discussions around these books because I love taking these sort of general personal finance texts and bringing it into, okay, well, how does this apply to graduate students and post-docs and early career PhDs? What is this really saying to our population with our particular psychology and career path and so forth. I totally agree with your advice about investing in your education. That’s one way people can do it if they want to do it with me and with others in our community.

36:03 Emily: Andy, last, last question here is where can people find you if they have really connected with you during this interview? Or maybe they want to recommend you to someone in their life?

36:13 Andy: Yeah, absolutely. ThePlanningCenter.com, you can find me there. You can find my email there as well, which is andy@theplanningcenter.com. I’m on LinkedIn, very active on LinkedIn for a time. Tried to get active on Twitter so you can find me on Twitter, but I will say I’ve neglected my Twitter page and find the whole thing to be a bit overwhelming. So probably email or website or LinkedIn would be the best.

36:36 Emily: Thank you so much for joining me today and for giving us your insight

Listener Q&A: Are Fellowships Taxable

Question

36:47 Emily: Now on to listener question and answer segment. Today’s question was asked in advance of one of the live Q and A calls I host as part of my workshop, “How to complete your grad student tax return and understand it too.” Here is the question. “Is the NSF GRFP fellowship taxable? It’s not listed on the 1098-T form. I have no tax documents relating to it.”

Answer

37:12 Emily: Yes, the NSF GRFP is, generally speaking, taxable income, even if it’s not reported on any tax forms, I’ll quote from publication 970, page five: “A fellowship grant is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research.” Fellowships can be tax-free under certain conditions, which implies that they are not tax-free if they don’t meet those conditions. Publication 970 page five further states: “A scholarship or fellowship grant is tax-free only to the extent it doesn’t exceed your qualified education expenses.”

37:52 Emily: There are two additional points that further limit the conditions under which fellowships are tax-free but just going off of that first one, if your fellowship exceed your qualified education expenses, it is not tax-free. The NSF GRFP is composed of two parts, a $34,000 stipend and $12,000 for a cost of education allowance. If the $12,000 to the institution goes entirely to qualified education expenses, for example, tuition and required fees, that portion would be tax-free. To whatever extent the $34,000 stipend goes toward qualified education expenses, it would also be tax-free, but I suspect that little to none of it does, perhaps just some required course related expenses at most. You probably use the stipend for your personal living expenses and savings and that means that it’s not tax-free. Strangely enough, the IRS does not require universities and funding agencies to report fellowship income in any way. Some universities do report the NSF GRFP award on the form 1098-T, but others do not. It’s completely up to their discretion.

39:03 Emily: If you would like to learn more about the taxability of fellowships, please listen to season two, bonus episode one. To go even deeper into how to calculate your taxable income and higher education tax benefits as a grad student, whether you have a fellowship or not, please join “How to complete your grad student tax return and understand it too” at pfforphds.com/taxworkshop. If you’d like to submit a question to be answered in a future episode, please go to pfforphds.com/podcast and follow the instructions you find there. I love answering questions, so please submit yours.

Outtro

39:41 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest, and submitting a question for the Q&A segment. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email list serve, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt, repayment and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe through that list. You’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. Music is Stages of Awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC podcast, editing and show notes creation by Lourdes Bobbio.