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budget breakdown

How This Outdoorsy Graduate Student Budgets Her Money and Time for Hobbies

October 24, 2022 by Meryem Ok 2 Comments

In this episode, Emily interviews Selena Cho, a second-year graduate student at the University of Utah who receives the NSF Graduate Research Fellowship. Selena shares her budget breakdown, through which her values and the joy she experiences in using her money in this way shine. Selena has right-sized her housing, transportation, and food spending so that they are fairly low but still meet both her needs and wants. By intentionally choosing a university in a medium cost-of-living city and maintaining moderate expenses, Selena has plenty of room in her budget for investing, eating out, and entertainment, which in her case means biking, skiing, camping, and other outdoor pursuits. Don’t miss Selena’s final advice about cultivating happiness during graduate school.

Links Mentioned in This Episode

  • Selena’s LinkedIn
  • PF for PhDs S13E5 Show Notes
  • Emily’s E-mail
  • PF for PhDs: Speaking (Seminars/Workshops)
  • PF for PhDs Subscribe to Mailing List (Access Advice Document)
  • PF for PhDs Podcast Hub (Show Notes)
S13E5 Image for How This Outdoorsy Graduate Student Budgets Her Money and Time for Hobbies

Teaser

00:00 Selena: We recently discussed the stipends at Utah in the department, and I would say the rough estimate for the stipend is around $22 to $24K for other students. And like having that in my head, I also made sure to like kind of live within those means as well because like, you know, the GRFP is only for three years. So, therefore, like if you know my PhD takes, you know, four or five years, I have to probably live on that stipend so I made sure to live within those means.

Introduction

00:40 Emily: 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 the 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 13, Episode 5, and today my guest is Selena Cho, a second-year graduate student at the University of Utah who receives the NSF Graduate Research Fellowship. Selena shares her budget breakdown, through which her values and the joy she experiences in using her money in this way shine. Selena has right-sized her housing, transportation, and food spending so that they are fairly low but still meet both her needs and wants. By intentionally choosing a university in a medium-cost-of-living city and maintaining moderate expenses, Selena has plenty of room in her budget for investing, eating out, and entertainment, which in her case means biking, skiing, camping, and other outdoor pursuits. Don’t miss Selena’s final advice about cultivating happiness during graduate school.

02:02 Emily: I’d like to give you an update on how things are going for Personal Finance for PhDs and myself as the owner and sole employee. This year, I’ve had some aha moments about how I want to spend my time in the business, and I’ve taken steps to restructure so that I’m spending more time doing things that really energize and inspire me and less time doing things that are not so fun or draining. First, I decided to continue shifting how I deliver my financial education. This shift started a few years ago as an experiment, but I’m now confident that it is the right direction for me. Pre-pandemic I was doing mostly live in-person seminars, which then switched in 2020 to live remote webinars. I realized that what I find most fun and rewarding in the business is interacting with you all, the PhDs and PhDs-to-be, through answering questions and facilitating discussions and the like. That’s why I do this interview-based podcast as opposed to another form of content. I also love creating educational materials, for example my slide decks and scripts, but in terms of actually presenting them, I only like it. Overall, I really enjoy giving live seminars and webinars, but it’s because of the interaction component, not the presenting component.

02:09 Emily: So, the shift is that I’m offering much of my content now in a pre-recorded format paired with live Q&A and discussion sessions. My experiment years ago was with a pre-recorded tax workshop, and I now offer my two tax workshops exclusively in this format, which I believe serves both me and the participants really well. In 2021, I also created a series of four deep-dive pre-recorded workshops for graduate students and postdocs on financial goal-setting, increasing cash flow, investing, and repaying debt. This year, I’m creating a year-long workshop series for prospective PhD students. Through this format, I get to spend my time largely on creating and updating the materials and interacting with the people who have already viewed or read through them, and I get to skip the middle part of presenting. I find this super enjoyable and am either nudging or requiring my university clients to move in this direction with me, depending on the content.

04:21 Emily: Second, I decided I want to return to working in person—selectively. I didn’t do any in-person work from the start of the pandemic through spring 2022, but in the past several months, I attended two conferences in person and facilitated two in-person discussion and Q&A sessions for the aforementioned deep-dive workshops. I had the best, best time at every single one of those events. They were so life-giving. It sounds cheesy but it’s true! I love my work, and I did not realize how much I had missed talking with people face-to-face for work. I now see that I’m definitely experiencing Zoom fatigue, specifically when it comes to giving webinars. On the other hand, I like not traveling and being at home with my family. So, I don’t want to return to the kind of travel I did pre-pandemic, and I don’t need to sustain or grow the business because I have all these pre-recorded offerings like I just discussed. So, my conclusion is that I would like to start back up with in-person seminars and workshops, but I’m going to be selective about the kinds of events I agree to and make sure that it’s going to be really fun for me to participate in. Conferences would definitely qualify. Ideally, like I had a chance to do with the discussion and Q&A sessions I just mentioned and will again next month with my workshop Hack Your Budget, the events would involve more interaction and less presenting.

05:47 Emily: I’ll wrap this up now with a heartfelt thank you to all of you who have recommended me as a speaker or recommended my tax workshops to your graduate schools, postdoc offices, grad student associations, etc. Finding the appropriate sponsors for this educational content and convincing them that it’s an in-demand topic is something that I could never do on my own. Thank you so much for planting those seeds. It’s the work that I do with universities, etc. that funds the whole business, including this podcast and the other free content I make available. If you would like to see it continue, and I hope you do, please consider making such a recommendation today. Thank you again, and that’s it for this update. You can find the show notes for this episode at PFforPhDs.com/s13e5/. Without further ado, here’s my interview with Selena Cho.

Will You Please Introduce Yourself Further?

06:50 Emily: I am delighted to have joining us on the Personal Finance for PhDs Podcast today Selena Cho. We are doing a budget breakdown today. So, we are going to hear how Selena manages her budget as a second-year graduate student at the University of Utah in Salt Lake City. So, Selena, welcome to the podcast. Will you please introduce yourself a little further for the listeners?

07:09 Selena: Thanks for having me, Emily. Well, hello everyone. I’m Selena Cho. I’m currently a second-year PhD student studying mechanical engineering at the University of Utah. I did my undergrad at UMass Amherst in mechanical engineering, and I’m actually in a transition phase where I’m switching labs.

Income and Household

07:27 Emily: We’re here to talk about your finances in Salt Lake City. So, please tell us more about your income and who’s in your household and those kinds of details.

07:38 Selena: So, I currently live in Salt Lake City. I’m originally from Boston. I grew up there all my life. And currently, I’m funded by the NSF GRFP. So, that’s $34K a year. And right now I live with my boyfriend and two other roommates in a four-bed, two-bath. The total rent is $2,500, and Sam and I are paying $600 each because we’re sharing a room.

08:06 Emily: Okay. Sorry, let me get this straight. You have four bedrooms and four people, but you are sharing a room.

08:12 Selena: Yes.

08:12 Emily: So, who has the extra bedroom? What’s going on there?

08:14 Selena: So the extra room is our gear room <laugh>.

08:18 Emily: Okay.

08:19 Selena: So, I guess I explain my hobbies yet. So, the household here we ski, we rock climb, we mountain bike, we cycle, we play tennis. Anything you can name, we do it. So, we also camp a lot too, meaning we have a lot of gear, which we have our fourth room dedicated to all of our gear. Yeah, <laugh>.

08:45 Emily: So, it sounds like you and your boyfriend and these other two roommates all share this like certain kind of lifestyle that apparently requires a lot of equipment that fills an extra bedroom and the garage in the house and so forth, all the storage. But in any case, your share of all this rent comes down to $600 per month. So, that’s what’s going into your budget, which seems like a pretty manageable amount of money, right? On that $34K GRFP stipend, right?

09:10 Selena: For sure. It’s actually the most expensive place I lived so far in Salt Lake City. But I would say the average rent in Salt Lake is around six to $800. I think that’s pretty fair, especially if you have roommates and stuff. Previous places I lived in were like $525 and like $435, and I think those were kind of like outliers in terms of rent because they were quite low. And originally, this place was listed for $2100, meaning it was going to be like $525 per tenant. But the landlord increased it actually to $2,800 and then we’re like wow, that’s a $700 increase. And we talked it down to $2,500, which was more manageable, especially on a graduate stipend.

Furniture Flipping Side Hustle

10:03 Emily: Wow. It’s good to know actually that negotiation is still possible even in an era of rapidly rising rents. Okay. So that is great. Is there anything else you want to add about, you know, your income or anything like that?

10:18 Selena: Sam and I like to pick up random furniture off the streets or wherever we find on KSL or Marketplace, and then we like to just sand it down and like make it pretty and then list it and resell it for, I don’t know, whatever price. So recently, we found a free teak table with eight chairs, an outdoor table setting, and we just like sanded it down, put some teak oil on it, and then we like resold it for $250, which was fun. <Laugh>.

10:52 Emily: Alright. So you have a little sort of monetized hobby, side hustle kind of situation. How much would you say that brings in on average on like a monthly basis?

11:02 Selena: Safe to say like around like $200, I think, a month at least. Because we also just like find random things and sell random things. And I guess that like really fluctuates. But the thing is we don’t really depend on it at all. It’s just more of like, oh now we have a little extra money to, I don’t know, go out to eat or something like that.

Financial Goals

11:22 Emily: Yeah, that sounds great. Well, let’s dive into your financial goals. So, we’ll talk about your expenses in a moment, but right now I want to know more like yeah, what are you doing overall to improve your personal financial situation? What kind of goals do you have going on?

11:37 Selena: So, I contribute to a Roth. So, I max it out. I think this year is $6,000, and I’ve been doing that for the past three years I think. So, I started in my undergrad, and my parents also started a life insurance for me. And so, I contribute that every month like a hundred dollars for a total of $1,200 a year. So, those are like my financial goals right now. I wish I had access to like a 401(k) where I can contribute but I don’t.

12:09 Emily: Well, I mean the $500 per month that’s going into the Roth IRA is already an awesome goal, awesome investing rate. So congratulations on your commitment to that. Do you do that regularly? $500 per month?

12:22 Selena: Pretty regularly. I think like if I can put in more that month, I will. Like I think early on in the year I just wasn’t spending that much money, therefore I was just like, guess I’ll just contribute to my Roth IRA this year. Because like I have, you know, a rainy day fund where I have enough in my savings where I can probably live off for a year. And then I also have like my checking account that has more than enough for me to live on with a year. And honestly I think I’m just like saving a little bit too much, and I should probably just contribute more to more of my investment accounts. Because I do have like your regular individual taxable accounts too.

13:04 Emily: Yeah, I was just going to say that would be a great next step if you wanted to invest beyond, you know, the amount in the Roth IRA, that a taxable brokerage account would be perfect. And you’re already there. So that’s great, it’s there if you ever want to to use it. Yeah, that’s one of the things that I teach in this framework that I use. I have like an eight-step financial framework that I teach, especially during my seminars. And one of the reasons I give ranges around like how much cash to have on hand is kind of for what you just mentioned, like sometimes it’s possible even as a graduate student to have too much cash on hand. Too much in the sense that it could then, you know, be used toward another purpose like repaying debt or used towards investments or something like that. And so, some people, because they don’t have a defined goal around that, they just keep accumulating and then it’s like well at some point it’s not really serving you to have that much cash. So, it sounds like you’re kind of at that like tipping point right there.

13:52 Selena: Yeah, I also recently paid off my car. So, after graduating, one of my quote graduation gifts that I got was a car where I supposedly share 50/50 with my parents, but it turned out to be 75 me, 25 my parents. So I recently was like, I have so much cash on hand right now. Literally why am I not paying it off? So I did, which is fun because I’m planning on selling that car to get another car that fits my lifestyle. So, like right now, the car that I bought was $18K, and right now even by a dealer’s party or whatever I can at least get $20-21K. So, Private Party on Kelley Blue Book right now is between 23 to 26. And my car is really low miles right now and I’m just planning on reselling it because I can make a lot of money off of it and planning on getting a vehicle that’s currently costing around $12-14K. So, that’s like my current, I guess financial goal is me selling off this car and buying a vehicle that suits my life better.

Income Tax

15:12 Emily: Yeah, I mean I love that on all fronts. Like, you know, tailoring the possessions that you have to the life that you actually want and of course selling a car in this like weird market where it happens to be that you can sell it for more than you bought it for. Wow. Who would’ve ever expected that? But that’s awesome all around. Okay, I know you have one other, what I would call kind of a financial goal, which is to handle your income tax because you’re on the GRF stipend. So, can you talk about how you do that?

15:40 Selena: Oh, so I think you had like a free Excel sheet that calculated your income tax. So I just used that and I just trusted it and hoped it worked. And the IRA isn’t coming after me right now, so I guess I did it right. So I think based on the sheet I believe it’s like around, I say set aside about $200 a month for the income tax. And that’s something I just automatically do. I didn’t set up like a new checking account just for that because I personally don’t need it because I know that $200 is there and I know I’m not going to touch it. And that’s just me, personally.

16:23 Emily: So, it sounds like it goes in with your other sort of general savings that you mentioned earlier. Yeah. But you’re just sure to put aside an additional $200 every time you get paid.

16:32 Selena: Yep.

16:32 Emily: Awesome. Well, we will link to that spreadsheet and the email series actually that it comes in in the show notes. So, if anyone else is interested in grabbing it, I’m glad it seems to have worked for you for last year. Hopefully, it was pretty accurate. Yeah. Okay, so we’ll link to that.

#1 Largest Expense: Rent & Utilities

16:48 Emily: Okay, let’s dive into your expenses, and we’ll just go one by one. So, starting with your largest monthly expense, what is that?

16:57 Selena: Largest is usually rent and utilities. So, currently, right now my rent is $600 and my utilities, which is just gas, electricity, and Wi-Fi is about $30 to $40 I think per month. So, let’s say right now my rent and utility is $650, so that’s my largest expense normally.

17:24 Emily: Now, you mentioned earlier that this is the most expensive place you’ve lived so far in Salt Lake City. Can you talk about that decision to spend more on rent than like you absolutely had to?

17:35 Selena: Yeah, so I think I wanted to live in a place that had, you know, more sunlight and just had more room for all my stuff and also living with friends. So, the people that live in my house right now, I ski with them and I bike with them and I climb with them. And basically, it was a place where we had more than enough space for everyone’s stuff and also have room for like a little workshop. So like for the little side hobby of like flipping furniture. So you know, we have like a whole garage where we have like a workbench and like all our tools and stuff. And for me like doing that makes me happy. Like doing all like the climbing, all the outdoor activities and hanging out with my friends makes me happy and flipping furniture makes me happy.

18:29 Selena: So, for me, I can justify paying slightly more because I think my quality of life increased. Compared to like when I was paying $435 for rent and I had like a window, but the thing is it was like under like a loft, therefore there’s no direct sunlight. So my room was dark all the time, therefore I didn’t really want to spend time in my room and I just like was over at my boyfriend’s house more, and basically I was just like paying money, paying rent for a space that I didn’t even live in, which was like in my eyes like a waste of money because I didn’t even use it.

19:08 Emily: Yeah. So, another kind of lifestyle decision, definitely this one takes a little bit more, but overall your rent is only just over 20% of your gross income. Of course that’s not taking into consideration your taxes, but that’s nowhere near, you know, the kinds of rent percentages that we see for graduate students in, you know, higher cost-of-living areas. So like yeah, even spending a little bit more, you’re still like well under the, you know, maximums that you sort of theoretically should be under to have a balanced budget. So, you’re totally free to spend more than that if you want to. It sounds great.

19:39 Selena: Yeah.

Commercial

19:42 Emily: Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as goal-setting, investing, frugality, increasing income, or student loans, each tailored specifically for graduate students and postdocs? I offer seminars and workshops on these topics and more in a variety of formats, and I’m now booking for the 2022-2023 academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker to your university, graduate school, graduate student association, or postdoc office? My seminars are usually slated as professional development or personal wellness. Ask the potential host to go to PFforPhDs.com/speaking/ or simply email me at emily@PFforPhDs.com to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.

#2 Largest Expense: Groceries

21:05 Selena: I think like, I guess like moving on to my next expense, which is groceries. So, I cook all the time. I am a huge cook. I love cooking, and I love food because it was just like part of my family. We always ate well no matter what. And I was very, very like I only buy, you know, fresh produce. I never buy processed food. Because I just thought that I can make it myself. It’s so much more expensive to buy the box even though it’s more convenient. And I was like basically still saving a lot of money where I think my grocery bill per week was like, like $30 to $50 because I just knew how to buy groceries. Because like a lot of grocery stores, they would have like reduced bags of produce which was like a whole like, I don’t know, I would say like a five-pound bag of vegetables for like $1.25.

22:03 Selena: So, like I would buy that. And I have learned to spend a little bit more because that’s where I spend basically the most amount of money, next to my rent. And I’ve learned to, you know, like I go splurge at Costco a lot now because of it where I’m like, I deserve it because like I don’t spend money on anything else. So like why don’t I like eat better? Where I can, you know, like yeah I’ll buy salmon, I’ll buy a pack of salmon type of deal. And I used to like not even do that because I was like, oh you know, $20 is a bit too expensive for this. So like now I’ve just learned to spend a little bit more because I know I can afford it. Because previously I was just really like tight budgeting everything and I think, I wouldn’t say like I was like, you know, like sad about it but I think I wasn’t living my life as much.

23:06 Emily: I love another example of an area that you are, you know, you’ve sort of modulated how much you want to spend and found like a good balance for you right now. So, you mentioned I think that you were spending $30 to $50 a week on your like lower spending end. So like how much would you say you’re spending now?

23:21 Selena: I would say about $75. So, it’s not that big of an increase. So, $75 to like $100. The thing is I now split my groceries with my boyfriend. So, I would say normally groceries is between $300-400 per month.

23:43 Emily: Per person. Yeah.

23:44 Selena: No, no, no. Between the two of us.

23:46 Emily: Okay. Okay. So, your part is $150-200.

23:50 Selena: Yeah exactly. And I think because there’s like two of us, I feel like I’m like I can go buy more because there are two people, but the same time I’m really not expending, like it’s not a linear trend where like therefore you know, a second person means double the money. It really wasn’t. If anything, in some ways I save money because I’m able to like afford like expensive cuts of meats that I normally wouldn’t buy if it was myself.

Cooking and Meal Prepping

24:20 Emily: Interesting. I’m actually wondering how you fit in all this like cooking that you love to do with, you know, the work schedule obviously and then all the extracurriculars as well. How do you manage your time in that sense?

24:32 Selena: Well, I cook every night <laugh>. I don’t think I normally like schedule it, it’s just like a natural thing for me to do. It’s like it’s dinner time, therefore I’ll cook. So, when I go grocery shopping, I already have an idea of what I want to eat that week. And then usually all the ingredients that I get, I don’t like getting ingredients specifically for a recipe. I dislike doing that. I feel like you spend a lot more money when you do that. And I’ve learned to just work with what I have, because it’s not going to drastically change the taste of the dish at all. So, I’ve just like learned to get an idea on like what I want to eat. So let’s say like the week is like “Mexican week,” then like I know that I’m getting tomatoes, I’m getting avocados, I’m getting onions and stuff and all that stuff I can cut myself.

25:28 Selena: And that’s like stuff I can make a big bulk of, because I can make a whole big batch of beans, a whole big batch of pico. And then maybe at Costco, I buy the $4.99 rotisserie chicken, which is a steal. And I would get that and I would just basically break down the chicken myself and just like have it in the Tupperware all week. So then throughout the entire week, all I really need to do is just put my burrito bowl or my salad together, because I already have it pre-prepped. Or like, I like finding recipes I can make big bulk of, like Mediterranean. I can make a lot of chickpeas. I can roast chickpeas really fast. I can make all these like yogurt sauces like in you know, mason jars and stuff. And that’s stuff I can eat the entire week. So, I think it’s a lot of like buying stuff that you can easily maintain through the week. Like I would spend like an hour or two maybe on like a Sunday or whenever I buy groceries and break it down and then really all I need to do is just heat up stuff or maybe like make an additional salad where it just still feels fresh to eat.

26:46 Emily: I’m so glad I asked this question because when you were describing how you were eating earlier, I definitely was not picturing this. But it sounds like you are doing batch cooking, bulk prep and then your, you know, cooking or meal assembly each night is really just drawing on some of those ingredients you had prepped earlier in the week. So, it’s like a pretty fairly fast and easy like assembly at that point, which I think is great for coming home from work or whatever you’ve been doing that evening. So, that makes a ton of sense to me. Is there anything else you want to say about your grocery budget?

27:17 Selena: Don’t hardcore meal prep. I think my definition of meal prepping is making individual things that can be paired with other things. For instance, my chipotle yogurt sauce that I make. I can use it on a salad, I can use it as sauce on a burger, I can use it in a sandwich or anything. I like to make items that are very versatile and that I can change up what I’m eating so that it doesn’t feel like the same meal every dinner or lunch. I would say that’s my tip for people for meal prepping. It’s not have chicken, broccoli, and rice every single meal. It’s making stuff that can be used with other items is my advice.

28:11 Emily: Yeah, when I was sort of studying up on meal prepping a couple of years ago, that was a real insight that I got at that time, what you just articulated. I had first imagined meal prep as being what you just said, like actually assembling the same meal you’d eat like every day for a week. But instead, you can do the shift that you did, which is just assemble the components and then use the components in different ways. Like you said, salads or sandwiches or wraps or bowls or you know, whatever it might be. Yeah, that makes a ton of sense. Thank you.

#3 Largest Expense: Eating Out

28:40 Emily: So what is your third largest expense?

28:43 Selena: I would say eating out. So, I like to try different restaurants, and I keep that to like once a week type of deal. And I have a budget of probably I would say like $100-200 a month for eating out. Because I just grew up trying different restaurants, so that’s something I continue. And my partner and I, you know, enjoy doing it and exploring restaurants. And we didn’t want to be like hindered by the fact, you know, like, oh you shouldn’t eat out because it’s expensive. It’s like, I think the idea is that since we budget for it, we can spend money for this thing because we care. We, you know, enjoy it and that’s what we do. So, we budget about, you know, $100-200 a month to just eat out, try different restaurants, and not feel guilty about spending that money.

29:41 Emily: Yeah, I mean look at, you know, the elements we’ve mentioned so far. Like your income being what it is on the GRFP, your rent being reasonable, you have, you know, your car paid off, you cook almost all of your meals. So, spending, that’s only like $25 to $50 per person per meal if you’re only eating out once a week, which is like, yeah you’re trying like a pretty decent restaurant. Like that’s not convenience eating, that’s like a good like dining experience, right? So, I love this that, I don’t know, I’m just, every item I’m just like, oh wow, you’re really thoughtful about this and you really like tried to, you know, figure out what you want your lifestyle to be. This is great.

#4 Largest Expense: Gear

30:14 Emily: Okay, fourth expense then.

30:17 Selena: Gear. Gear like camping, ski passes, bike. So, I would say more these are kind of more one-time expenses. So, let’s say like, I think the most expensive thing I ever purchased was my bike, which was like $850. And you know, that’s a large amount of money to be spending on one item. But, you know, I’ve used that bike a lot to justify the purchase of that bike because it’s, you know, part of my lifestyle now that every weekend we go biking during the summer, or during the week we go for morning rides before work. And then in the winter it’s skiing season or snowboarding. I do both. So, a ski pass last year on the student discount from the U is $450 for the base icon pass and I’ve skied 25 days on it, so that’s like $18 a day for skiing, which is worth it in my head because I enjoy it very, very much.

31:23 Selena: And then coming out here I got, you know, a new pair of used skis for me. So I think, and I got a pair of good ski boots. I would say ski boots are probably the first purchase you should make that’s big for yourself, especially if you’re skiing because that’s the most important thing is ski boots, how comfortable they are. And it was like, should I buy like a cheap pair or should I buy a relatively good pair that fits me very well? And I decided on the latter, where I think I spent I think like $250 on it. But this pair of boots is going to last me for at least five to 10 years. So, that’s how I justified that cost. And then my skis, I got them for a hundred dollars used, and I can wax it myself and sharpen it myself.

32:17 Selena: So, I save another 50 to a hundred dollars there for tuning. This year, I think the ski pass I’m planning to get is like $750, which is very expensive for just, I know it’s only one mountain which is Alta. And it’s a lot of money, but we enjoyed skiing at Alta the most. So, why don’t we just only go to Alta compared to all the other places that we already visited and went for a few days? So, we decided to spend a little bit more so we can ski the place that we actually want to ski.

32:51 Emily: So, how much would you say that average like monthly/year category comes out to?

32:58 Selena: I would say about like $100-200 if it’s like spread out throughout the whole year. Because these purchases are kind of random at random times, because they’re not common occurrences.

Handling Irregular Expenses

33:11 Emily: Yeah. You mentioned when we were chatting before the interview started that you don’t use a system of targeted savings accounts, which is something I suggest for like a budgeting way to handle these like irregular expenses. So, why don’t you tell us how you do handle these irregular expenses?

33:28 Selena: I don’t think I personally plan for it. It’s more of like, because I already set aside money for my Roth and then like my savings, I’m good with my savings right now where I don’t feel like I need to contribute more. Because I already like set aside money for rent, groceries, Roth, and everything else. I know that I have this budget already that I can just spend money on. Because like I have the savings where I don’t touch it. That’s like my rain day fund. And then I have my checking account where it’s like more than enough for like really big purchases. And the checking account is the only account that I really touch throughout the whole month. And basically whatever is in that account, I can use because I already did everything beforehand.

34:23 Emily: I see. So, if I can express that in my own words, you know, you have your investing goals going on, you have your savings set, you have a need to draw down from savings that’s more like sort of emergency or like longer-term savings. And then you have your checking account, and just by glancing at your checking account, you can see how much money is sort of built up there. Because it sounds like you know, you’re living beneath your means in a sense of every single month you’re probably building up some buffer, more buffer in that checking account. And then occasionally you’ll have like these larger drawdowns if you have like a big purchase to make. But just by looking at the balance, you can see whether or not you have money available for a larger purchase. And you, it seems like, sort of naturally think about the course of a year.

35:03 Emily: You know, you mentioned earlier, oh you do these activities in summer, you do skiing and snowboarding in the winter, so you know you’re going to have some larger expenditures, maybe at the beginning of those seasons, but it’s something you can see coming. It sounds like a lot of this is coming intuitively to you or it’s something you’ve practiced very naturally for years. Whereas like I get very like analytical and like spreadsheety about this because I’m not like naturally that way. Like I would just spend money if it was available to me. So, I have to like hide it from myself to make sure I don’t spend it, right? Until the time comes when I do.

35:36 Selena: Mm-Hmm <Affirmative> that’s fair. And also, because I spend like the extra money for nicer items for my gear, these are one-time purchases for the next five to 10 years. So, like I would say last year was quite an expensive year for me because I bought a lot of new gear. I bought a bike, I bought skis, I bought boots and then like all the equipment, all the clothing that comes with it. But the thing is, I did not need to spend any of that this year because I already made that purchase. So like yeah, like sure I already saved on money, and the only thing I need to really buy now is just like ski passes, which are very expensive but it’s the only thing I need to buy. I don’t need to buy anything else.

36:21 Emily: Yeah. So really, that like, we called it a gear category earlier. I would actually just, leveling that up, it’s basically just entertainment. It’s just your flavor of entertainment, which is going to be buying ski passes and stuff like that. Because you really did the gear purchasing, you know, in the past as you just said. And going forward it’s just going to be like access to the, you know, places you want access to.

Note About Transportation

36:40 Emily: Well, this just sounds fantastic. Do you want to add a fifth expense this list, or do you want to stop there?

36:48 Selena: I don’t have any other expenses, maybe gas but <laugh>.

36:53 Emily: Well yeah, I was going to say we didn’t have any transportation expenses in this top, you know, four. So, would you put that at five, gas? Or like car insurance?

37:01 Selena: Not really, because I bike to work. So, and also, University of Utah, all the students and faculty have free access to the public transportation. So, whether it’s the bus or the TRAX system, which is like a train. And so, that’s free for all the students. And at all the places I lived in, I made sure that it was near public transportation. So, whether like I can walk to it or I can bike to a bus, which all the buses also have a bike rack on them, so I can just bike to the bus and then ride the bus to school and then I bike back home. So, because of that I don’t need to spend much money on gas besides like on weekend trips. And I would say like right now gas is like, what, $4.20 right here, I think? So, usually a tank is between like $40 to $60 for me. And I do that according to like my, you know, spreadsheets and stuff. I only do that once or twice a month. I have to say, I bike to school regardless of the rain or storm. Last year, I biked every single day to school or to work, whether it was snowing or not. Because I can always get to a bus at least.

38:25 Emily: So, it sounds like, I now see what you meant earlier when you said you were thinking of, you know, exchanging your car for one that better fits your lifestyle, because this is not a daily commute car, right? Or it is a daily commute car, but you don’t have a daily commute so you don’t need it for that purpose. You really want a car that’s going to fit your, as we were talking about earlier, the camping and the going up the mountains and so forth, all of that stuff. So actually, like the gas spending is almost really under that category that we talked about before under entertainment, because you’re using it for those weekend trips and everything and so, it’s access to the places you want access to for your entertainment purposes. Yeah.

38:58 Emily: Well, that sounds so great. Okay. Any other comments you want to make about your expenses?

39:05 Selena: So, we recently discussed the, like stipends at Utah in the department. And I would say like the rough estimate for the stipend is around $22-24K for other students. And like having that in my head, I also made sure to like kind of live within those means as well, because like, you know, the GRFP is only for three years, so therefore like if my PhD takes, you know, four or five years, I have to probably live on that stipend. So, I made sure to live within those means.

39:43 Emily: Yeah, that’s a great idea to make your fixed and larger expenses like your rent to fit within that lower stipend amount.

Best Financial Advice for Another Early-Career PhD

39:51 Emily: Let’s go to the question that I conclude all of my interviews with, which is, what is your best financial advice for another early-career PhD? And it could be something that we’ve touched on already in the interview or it could be something completely new.

40:07 Selena: I think when you’re applying to schools, know your lifestyle. So for me, I, you know, got into schools that are, you know, in big cities, you know, like Washington, the Bay Area, Boston, and Philly. And all of those cities were just very high-cost living, rent-burdened, you know, places. And they didn’t have the outdoor access that I wanted. Because I know that I’m going to be, you know, going somewhere on the weekends I know that I will be. And I wanted the access to be there, whether it’s, you know, climbing or biking. And I didn’t, you know, want to live in a rent-burdened city. I wanted a city that, you know, fit my outdoor lifestyle. And Salt Lake was that city for me. Where, it’s getting pretty expensive, but it’s not nearly as expensive as, you know, Boston where I grew up in. And for Boston, like I needed to drive two hours up to New Hampshire if I wanted to go climb outside.

41:13 Selena: And then like, you know, all the ski mountains are, you know, New Hampshire, Vermont, and Maine, which are all at least a two-hour drive. And then in Salt Lake it’s a 30 to 40-minute drive with traffic up the mountains, and I have four resorts near me right now that are less than one hour away. So, there was that for me. And I think while like the lab and the project is very important, the most you spend your time on is you know, your life outside of the lab. And I think it’s very important to be happy outside. Because I know that I need to be active for me to be happy. And I think people need to take that into consideration when picking grad schools. Because I’ve seen many of my friends that are, you know, very sad in the cities because they can’t really do anything, or things that they want to like back in undergrad going outside and stuff. So, that’s what I recommend.

42:11 Emily: Obviously, you know that I love this advice so much of really as you said, knowing yourself, knowing your values. I think your, like joy in your lifestyle has come across so clearly as we’ve been talking through how you break down your budget. Because your budget does reflect what your values are and what you want to be spending your time and your energy on. Of course, work is part of that and you chose a great university to go to. But as you said, work is actually a relatively small <laugh> fraction of how we spend our time. And so, what you’re doing outside of that is going to have a huge impact on your quality of life. And so, I’m just so pleased to hear this advice from you, and I I hope that a lot of, you know, whoever is listening to this who’s a prospective graduate student will really take that to heart and think critically to themselves about what they want their life to look like in graduate school, and hopefully apply to some places that are going to be able to, you know, offer them that lifestyle.

43:06 Emily: And in your case, you’ve paired it of course with also having a fantastic fellowship that pays you, I’m assuming above, you know, what the base stipend would be in your department, and so forth. And so, you really got kind of the best of both worlds of having like a decently high stipend in an okay cost-of-living area and getting to do all these other fantastic things with your time. So, I’ve just been so pleased to hear about your lifestyle. So, thank you so much for volunteering to come on the podcast, and it’s really been just a joy to talk to you!

43:36 Selena: Thank you for having me! I enjoyed my time here.

Outtro

43:43 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.

How This Grad Student Saves Nearly 40% of Her Stipend in a High Cost of Living Area

September 26, 2022 by Meryem Ok Leave a Comment

In this episode, Emily interviews Janelle Coleen Dela Cueva, a rising second year graduate student in structural engineering at UCSD. Janelle breaks down her budget, including her largest four expenses and aggressive investing goals. Janelle’s gross stipend is approximately $2,500 per month, and she is able to save almost 40% of it due to subsidized university housing and strong habits that minimize her variable expenses. She still lives a comfortable life with weekly eating out, frequent international travel, and car ownership.

Links Mentioned in this Episode

  • Set Yourself Up for Financial Success in Graduate School (PF for PhDs Workshop)
  • PF for PhDs S13E3 Show Notes
  • PF for PhDs S11E1: This Grad Student’s Defensive Financial Planning Paid Off During the Pandemic (Money Story with Maya Gosztyla)
  • PF for PhDs Speaking Engagements
  • Emily’s E-mail
  • PF for PhDs S2E9: How to Make Money without Working: Credit Card Rewards and 529s (Money Story with Seonwoo Lee)
  • PF for PhDs S7E8: This Grad Student Travels for Free by Churning Credit Cards (Money Story with Julie Chang)
  • Skyscanner
  • Skiplagged
  • Momondo
  • PF for PhDs Subscribe to Mailing List (Access Advice Document)
  • PF for PhDs Podcast Hub (Show Notes)
Image for S13E3: How This Grad Student Saves Nearly 40% of Her Stipend in a High Cost of Living Area

Teaser

00:00 Janelle: I have a week off this summer. So, I want to spend that in Costa Rica around August. And then in December, I hope to visit family in the Philippines and Thailand. So, I will be traveling there for December.

Introduction

00:26 Emily: 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 13, Episode 3, and today my guest is Janelle Coleen Dela Cueva, a rising second-year graduate student in structural engineering at UCSD. Janelle breaks down her budget, including her largest four expenses and aggressive investing goals. Janelle’s gross stipend is approximately $2,500 per month, and she is able to save almost 40% of it due to subsidized university housing and strong habits that minimize her variable expenses. She still lives a comfortable life with weekly eating out, frequent international travel, and car ownership.

01:35 Emily: I have a new workshop available exclusively for prospective graduate students! It’s called Set Yourself Up for Financial Success in Graduate School, and it comprises twelve modules that I will release throughout the 2023 application and admissions season. The modules that are available to join right now are:

  • Funding Models for Graduate School
  • Why and How to Apply for Fellowships
  • Your Financial Vision for Graduate School, and
  • Stipends vs. Cost of Living

Each module comes with a video on the subject matter, a private homework exercise to further explore the material, a reflection exercise that you share with me, and invitations to upcoming live discussion and Q&A calls with me. To read more about and purchase any of the currently available Set Yourself Up for Financial Success in Graduate School modules, go to PFforPhDs.com/setyourselfup/. I know that this material is invaluable for prospective graduate students, so if you are in contact with any, please share the link with them! You can find the show notes for this episode at PFforPhDs.com/s13e3/. Without further ado, here’s my interview with Janelle Coleen Dela Cueva.

Will You Please Introduce Yourself Further?

03:02 Emily: I am delighted to have joining me on the podcast today. Janelle Coleen Dela Cueva. She is a rising second-year graduate student in structural engineering at the University of California in San Diego. I also live in the San Diego area, North County. So, this is a local conversation for me. And today we are doing a Budget Breakdown, which we have not done in a while. So, Janelle will share with us her top five expenses as well as her financial goals and so forth. So, I’m really going to enjoy this conversation. Janelle, will you please introduce yourself a little bit further for the audience?

03:31 Janelle: Okay. So again, you know, my name is Janelle. I’m a rising second-year PhD student. I’m going to be doing that in the fall. Currently, my major is structural engineering with a focus on aerospace structures. I live in the San Diego La Jolla area in grad housing, and I have a roommate in my household. My income on a monthly basis is $2,510. And my position would be a GSR, so graduate student researcher.

Investment Goals

04:11 Emily: I was so impressed when you wrote in that you have major investment goals going on, as well as just managing your expenses, you know, in a high cost of living area on not the biggest stipend. Tell us about these investment goals that you have.

04:27 Janelle: Yes. Okay. So, for my investment goals, I have multiple goals, one of which is retirement. And that, you know, includes a Roth IRA and contributions to that monthly. And then a second goal would be to buy a house or maybe start a business. And so, I keep a separate investment fund for that specific goal.

04:51 Emily: Okay. So, you sort of have two locations for your assets. One is inside a Roth IRA, and one is in a taxable type investment account, just a normal investment account.

04:59 Janelle: Yes. A brokerage.

05:01 Emily: Yes. Let’s talk more about both of those. How much money are you putting towards that Roth IRA on a monthly or yearly basis?

05:08 Janelle: I am maxing out my Roth IRA at a $500 contribution every month.

05:14 Emily: Wow. So impressive. Something I never managed to do when I was in graduate school, even though the maximum was lower at that time, I was never able to max out. So, that is awesome. What inspired you to reach for that goal so early in life?

05:28 Janelle: I don’t know. I think I felt that everybody was working, and outside of a PhD, everybody was working in industry and I just felt this need to catch up as like a little bit of pressure to catch up with everybody. And so, I started saving a lot more money.

05:47 Emily: Okay. So, you’re kind of looking at your peers who didn’t take the grad school route and saying to yourself, okay, what can I do to sort of keep on track with what they’re doing?

05:56 Janelle: Yes.

05:56 Emily: Okay. That makes sense. And what about this other brokerage account? How much money are you contributing there? What are you investing in?

06:04 Janelle: For this other brokerage account, I invest around $423. It’s a very specific number, and the brokerage includes you know, dividend stocks and crypto.

06:19 Emily: Alright. What’s with the specific number? Is that just based on what you had in your budget, or is that tied to some other larger goal?

06:27 Janelle: This number is just what works in the budget. I just had some extra cash when I, you know, subtracted everything out.

Short-Term Financial Goals

06:35 Emily: Yeah. Well, that’s incredible. I mean, investing, going on, you know, close to a thousand dollars a month on a grad student stipend. Wow. We are going to find out in a moment how you’re doing that. Are there any other financial goals that you’re working on right now, or maybe financial goals that you’re not working on so that you can do these investment goals?

06:52 Janelle: I have two other financial goals that are short-term. So, I have an emergency fund, and I also have a vacation fund. And the vacation fund is about $200 a month. And the emergency fund, I stopped contributing because I reached my goal, but it was about three month’s worth of living expenses.

07:19 Emily: Yeah. Perfect. I know you’ve had some exposure in the past to my like eight-step like financial plan. It sounds like you’re working at least a few of those steps. I don’t know if you had that idea beforehand or you got it from me, but either way, I’m really happy that you are working that plan. So yeah, for now your emergency fund is full. If you have an emergency and have to deplete it a bit, that’ll become a goal again, it sounds like to, you know, contribute until it’s back up to that three-month level.

07:43 Janelle: Yes. And then once that occurs, it will eat away at the vacation fund. So, it’s either/or.

#1 Largest Expense: Rent

07:50 Emily: Gotcha. Okay. Well, I think we’re ready to talk about your top five largest expenses every month. So, let’s start with the largest one, the number one largest expense. What is that?

08:01 Janelle: My largest expense is rent.

08:03 Emily: Yeah, no surprise there.

08:05 Janelle: It’s really high <Laugh>.

08:06 Emily: How much are you spending on rent?

08:09 Janelle: The rent bill for my apartment is $1380, but I pay half of that at $690, because I found a roommate.

08:23 Emily: So, when you say roommate, like how big is your apartment? Is it a one-bedroom studio? Is it two bedrooms? How large are we talking?

08:30 Janelle: It’s a two-bedroom apartment with one restroom, but the restroom is in two rooms. So, one for showering and one for using the restroom.

08:40 Emily: Gotcha. Okay. So like a two-bedroom, one-bath situation. So, a pretty normal kind of thing to share with a single roommate. So, the way you phrased that, it sounded like this apartment is yours, but you have found someone to share it with, is that right?

08:55 Janelle: Yes. So, the entire lease is under my name and I got a two-bedroom because it had a lot of space, but I really looked for a roommate to cover the second or like half the rent.

09:10 Emily: Yeah, absolutely. And is your roommate another graduate student or someone else?

09:15 Janelle: My roommate is somebody else. She went to undergrad with me, so I knew her, but she doesn’t go to UCSD.

09:23 Emily: I always find it like, sort of interesting to investigate for me, like how graduate student housing works. Like who’s allowed to live there and so forth. It sounds like you, as the graduate student, then the lease is under your name, but you can, you know, sublease to whoever you like. Is that right?

09:38 Janelle: Yes.

60% Rent Hike at UCSD

09:38 Emily: Okay. Well, honestly though, a two-bedroom place for, I think you said $1380 a month is really not that bad. Like, I mean, how do you feel about that price?

09:50 Janelle: I feel that it’s not bad given the rising cost of rent in the area and just in California in general. I got really lucky with this rent because I signed up for it before UCSD got the 60% hike in rent.

10:12 Emily: Yes. We heard about this actually back in season 11, episode one with Maya Gosztyla, who is another UCSD graduate student. She also was saying that she had graduate student housing at a relatively low price, but she sort of told us as part of that interview, actually, I think, as a follow-up from the interview that this price hike was coming. So, can you give us an update on that? It sounds like you said you got in before the price hike, but what’s going on for other students?

10:38 Janelle: For other students, the price hiked a month after I signed my lease. So, I signed the lease for August, and the month after, September, the price hiked 50%. And it was because San Diego passed a rent control law, and that law went into effect this year in 2022. So, UCSD increased the rent by 60% just in time before this law went into effect.

11:08 Emily: I see. So, kind of on their side as the landlord, they’re seeing that in the future, their rent hikes are going to be limited. So they got all the rents up to market rate or closer to market rate in advance of that. So, sort of a perverse effect of that law, I would imagine.

11:23 Janelle: Yes. I wouldn’t say it was market rate for the apartments that they’re renting out, but on top of that, they are also increasing the rent to 3% every year, which is the maximum that they can increase rent every year from now on. And for my rent, it’s not into effect yet, but next month it will be going up to $1450, I think.

11:51 Emily: Gotcha. But you expect your rent, it sounds like is locked in with that 3% annual increase for as long as you stay in this current lease, right? As long as you stay with the apartment.

12:01 Janelle: Yes.

12:02 Emily: Okay. And do you have any plans? Like, do you, as of now plan to stay there for the rest of your PhD?

12:07 Janelle: Yes. I plan to stay here for the rest of my PhD, because the apartments outside of UCSD are much more expensive.

12:16 Emily: Yeah. So, I understand you have experience with this, right? Because you also went to undergrad at UCSD and you were not living in graduate housing as an undergraduate student. So, can you talk about what you were paying even, you know, a year or so ago?

12:28 Janelle: Yes. It’s less than, but the living situation is better. I paid $400 a month for my last apartment as an undergrad, but I shared the room with two other people, so it was a triple and then there was another room in that apartment with one person. So four of us lived in that apartment. One room was a triple, one was a single.

12:55 Emily: Wow. Okay. So, inexpensive, but definitely a trade-off there in terms of privacy and ability to concentrate and all of that stuff. So, yes. A better living situation for you now. Alright. So, it doesn’t sound like the strategy of getting in before price hike is replicable at this point. Unless you find, like your roommate has with you, a roommate who is locked in under this lower, like prior agreement. Other than that, all these new leases are going to be quite a bit more expensive.

13:23 Janelle: Yes. It was incredibly lucky.

#2 Largest Expense: Food

13:26 Emily: Yeah. Alright. What is your number two expense?

13:31 Janelle: My number two expense would be food. I aim to do $200 a month on food, groceries, and meal prepping, but I always go over that from eating out.

13:46 Emily: Okay. So $200 per month is like approximately your grocery cost. And then you have some additional costs for eating out on top of that.

13:54 Janelle: Yes.

13:54 Emily: Well, still, you know, that’s not terribly a lot of money for a single person. Can you tell us some of the strategies that you’re using around keeping that cost down?

14:05 Janelle: Yes. So, on a, you know, 2000 adult calorie diet, I try to shop, you know, as healthy as possible. So, produce is actually not that expensive. And then on Sundays, I meal prep enough meals for the entire week, and that level of like planning obviously helps me save a lot of money.

Meal Prepping Helps Save Money

14:34 Emily: Mm-Hmm <Affirmative>. How does it do that?

14:37 Janelle: So, when I meal prep ahead of time, it stops me from eating out all of a sudden, and eating out because I’m hungry and I don’t have food. So, it takes the convenience out of eating out. Or, you know, post-meeting or, you know, going to a restaurant near me. And this also helps with, you know, nutrition goals.

15:04 Emily: Yeah. Tell us a little bit more about like what you’re eating when you do these meal preps.

15:08 Janelle: I eat pasta and, you know, side of vegetables with some sort of protein, sometimes beef or chicken that I prepared in bulk.

15:23 Emily: Yeah. So, that’s like a lunch or a dinner. Do you take this food, I presume, you take this food to campus for lunches? What’s your like sort of rhythm of eating?

15:34 Janelle: Yeah. So, in the morning, I eat a bagel, so that’s breakfast, and I take a packed lunch to school and that’s lunch. And then in the evening, I do another packed meal prep at home. So, I can eat three meals a day. But this level of planning, it gets old when you eat the same thing over and over again. But what helps is that I try to plan out three different types of recipes on a Sunday and then just cook them all in bulk and then eat them throughout the week.

16:12 Emily: I see. So, like, even for instance, for your dinners, you have like, like three different dinners that you’re sort of rotating through? Or are you saying three different meals, like breakfast, lunch, and dinner?

16:22 Janelle: Yeah, for dinner, I have three different types of food that I cycle through. And then for lunch, I do the same thing just based on what I’m feeling. I have three different meals to choose from.

16:33 Emily: Gotcha. I’m always fascinated by this like meal prep process, which I’ve never like, sort of examined it, but I’ve never like fully devoted myself to it. So, I’m always really curious when other people are doing it successfully. So, thanks for those details.

Commercial

16:49 Emily: Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as goal-setting, investing, frugality, increasing income, or student loans, each tailored specifically for graduate students and postdocs? I offer seminars and workshops on these topics and more in a variety of formats, and I’m now booking for the 2022-2023 academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker to your university, graduate school, graduate student association, or postdoc office? My seminars are usually slated as professional development or personal wellness. Ask the potential host to go to PFforPhDs.com/speaking/ or simply email me at emily@PFforPhDs.com to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.

#3 Largest Expense: Car

18:11 Emily: Okay. What is your number three expense?

18:15 Janelle: My third expense would probably be gas.

18:19 Emily: Yeah. So, let’s talk about your transportation situation. So, it sounds like you own a car.

18:23 Janelle: Yes.

18:24 Emily: Is it paid off?

18:25 Janelle: The car is paid off, so paying off the car is no longer an issue. So, this gas expense is $150 a month, or I guess not just gas, but car expenses is $150 a month. $70 goes towards the insurance, and the rest of it goes towards gas, but gas prices have been increasing a lot. So, I’ve been opting for you know, walking and taking the bus.

Why Own a Car?

19:00 Emily: Okay. But you do own a car. So like, let’s talk about that decision, like in the first place. Is it an option for you at all to not own a car, like maybe some of your peers do? Or like, why do you own a car?

19:13 Janelle: I own a car because my family lives in Los Angeles, and I think it’s really important for me to visit them, you know once every two weeks. Genuinely, I don’t need a car. And over time, I’ve really reflected on, maybe this is not a good expense to have because I can take the bus everywhere here in San Diego, and I can walk to school.

19:43 Emily: Hmm. Okay. So, it’s really just those trips to LA that are like the reason that you still own the car.

19:49 Janelle: Yes.

19:49 Emily: And the gas price, like the gas cost is like all for those trips.

19:53 Janelle: Yes. Yes. It’s all from those trips.

19:56 Emily: Yeah. I’m very familiar with this as well, because as I said, we live in North San Diego County and we have relatives in Orange County who we go to visit with some frequency. And we use our car for other things, but that’s one of the major reasons why we choose to have one. But like you, ours is paid off. The insurance cost is not very high. And so it’s like, oh, okay, well, yeah, you could, in your case, trade off the $150 per month car expense for maybe some increased costs of like public transit or however you’re going to be getting up to LA instead. Maybe that’s also public transit. But yeah, I don’t know. It seems like a small line item to me in the first place.

20:33 Janelle: Yes.

Alternatives to Car Ownership

20:33 Emily: Yeah. So, you feel good about the car ownership?

20:37 Janelle: Not necessarily. I think I could find a way to go to LA without the car. There’s a UCSD ride share Facebook group that I used to use in undergrad where it’s $20 a seat to LA and back to San Diego. And, you know, I feel that the car was a very frivolous expense.

21:00 Emily: Hmm. So, when did you acquire the car?

21:03 Janelle: I acquired it last year, around April.

21:10 Emily: So, April, 2021. So like, just before your graduation from college?

21:14 Janelle: Yes.

21:15 Emily: Okay. Interesting. Okay. Well, I’m glad it’s at least on your mind of like a debate, and good for other UCSD students or maybe other students in the San Diego area to know like, Hey, like you can set up your life. It’s okay to let go of a car if you really don’t need it. So, cool. Give us an update on whether you decide to keep it, or if you decide to sell it. I guess it’s a good time to be selling if you decide do that.

21:35 Janelle: It is. It is really good for a used car.

#4 Expense: Miscellaneous

21:37 Emily: Yeah. Okay. Well, what’s your number four expense?

21:42 Janelle: Yeah. My number four expense is just general necessities, clothing, and you know, recreation stuff. I put them all in the same line item, so clothing and going out to do activities are under the same item, which is $200.

22:04 Emily: So, that sort of general like spending money kind of line item, like as long as you keep, it’s all sort of discretionary in a sense that like you could spend it this month, you could spend it next month, but as long as you keep it within 200, like you’re good. You’re meeting your budget goals.

22:19 Janelle: Yes. That $200 encompasses like a lot of random things. As long as it’s like an item or it’s for recreation, for example, buying clothes or buying random medication at CVS. And it also includes, you know, let’s say I want to do a fun rec, going to the park to go rock climbing would probably also be in there.

22:46 Emily: Okay. Yeah. So, like pocket money sort of thing.

22:50 Janelle: Yes.

22:50 Emily: Yeah. That sounds great. And good on you for, you know, limiting yourself to this certain, I sort of think of it as like guilt-free money. Like as long as I stay within this boundary, I can spend it however I want. I don’t want to feel guilty about it at all. I like that, like budgeting sort of in that sense, when I first started doing that, giving myself permission to spend and not like overanalyze. Like, does this, you know, help me meet my goals or not, or whatever, whatever. I knew as long as I stayed within this boundary, I could like, feel good about any purchase that I wanted to make. So, I really like that kind of line item.

23:20 Janelle: Yes.

23:21 Emily: Alright. And your number five line item. What’s that?

23:24 Janelle: My number five line item, I think that’s it. I think it just goes savings, rent, vacation, groceries, transport, and recreation. There’s not a lot to fit in a $2,500 paycheck.

Vacation/Emergency Fund

23:38 Emily: True. Because we already got down to the miscellaneous spending. Well, let’s talk a little bit more about like that vacation fund. I think you said it was $200 a month, is that right?

23:47 Janelle: Yes. Yes. It’s $200 a month. And in a given year, it goes to like $2,500, honestly. Sometimes, it eats away at the emergency fund, which is a trade-off, but that vacation fund has let me travel to 10-plus countries by myself. It doesn’t seem like a lot, the $200 a month, but it can buy so much outside of California.

24:14 Emily: Yeah. So, going to 10 countries. Over how many years did you do that?

24:20 Janelle: Okay. So, I started at the end of my sophomore year. So, I guess from now maybe three, three and a half years.

24:29 Emily: Yeah. Okay. So, over three years, has the budget line item stayed at about $200 that whole time?

24:36 Janelle: Yes.

24:37 Emily: Okay, so we’re talking $7200, $7500 total, and you visited 10 countries.

24:44 Janelle: Yes.

24:45 Emily: How did you do that?

24:48 Janelle: Yeah, this is very difficult to say. I guess I plan it ahead of time with like a cost analysis, very comprehensive and all of the, you know, food every day, accommodation every night, and then plane tickets. But the cost of living outside of California, everywhere else in the world is a lot cheaper. So, if you think about it, if you’re spending $400 a month, you know, feeding yourself here in California. That goes a long way somewhere else. Where, for example, I stayed in Vietnam for I think two weeks, and per night, I stayed at a hostel. And even private rooms would be $10 a night, but a hostel where I shared the dorm with other people would be $3 a night. And then food every day was less than 10 bucks a day.

Travel Hacking

25:48 Emily: Yeah. Well, you still have the expense of getting there though. So like, are you doing travel hacking or are you paying cash for flights? How does that work?

25:56 Janelle: Oh, okay. I just started doing travel hacking. So, there’s this thing called credit training. If you keep up a good credit score, you can sign up for credit cards that give you cash rewards for traveling. And then once you obtain those rewards, you can cancel your credit card at the expense of your credit score. So, if you have any long-term goals like buying a house, obviously don’t credit churn your credit score. But given that credit churning that I started doing just this year to obtain a new credit card for traveling, after the period passed where the score deducted, I think around 20 to 30 points, I was still able to bring it up to 780 by keeping up monthly payments and being very responsible with that credit card and not, you know, spending credit that I don’t have in cash.

26:57 Emily: I love the strategy of travel hacking. We’ve had a couple of previous guests on the podcast, Seonwoo Lee and Julie Chang, and we’ll have those links in the show notes, who have talked about their systems in detail. Now, those were both pre-pandemic interviews, I think. Or I think Julie’s was like in the pandemic, but she was talking about like pre-pandemic strategies. I’m just like getting back into this myself, because we took a big pause from travel hacking. One, because the pandemic, and two, because we were buying a house and so we didn’t want to be messing around with our credit scores, but like since closing on the house, we’ve sort of been dipping our toe back into it. And it’s so fun. And I’m trying to think about like our, you know, 2023 and what trips we want to do then. Like, what’s coming up for you? Do you have any trips planned right now?

27:39 Janelle: Yes, I actually have, hopefully, I haven’t asked my boss yet <laugh> but my PI, I want to. I have a week off this summer, so I want to spend that in Costa Rica around August and then in December, I hope to visit family in the Philippines and Thailand. So, I will be traveling there for December. Another travel hack that I would like to add in. If you open Google incognito mode and then search up the flights through Skyscanner or the Skiplagged website or the Momondo website and compare all three, you can find generally the cheapest ticket. And so, the cheapest day to fly is Tuesday. It’s hundreds of dollars cheaper to fly on Tuesday than any other day. And then the cheapest day to buy the tickets are between 6:00 AM on Saturday to noon on Saturday.

28:42 Emily: Alright. I will be noting that and using that for my travel hacking endeavors going forward. It sounds like most of your travel is international, right? Because if your family is in like the LA area, it sounds like you’re probably not doing that much U.S. like travel, right?

28:57 Janelle: Oh yeah. It’s expensive to travel in the U.S. Whether it’s gas from driving to a road trip or whether it’s flying, the accommodation here is a hundred plus a night. It’s very difficult. I think it would be a lot cheaper to just go international.

Taxes and I Bonds

29:18 Emily: Hmm. Alright. Good to know. Yes. Okay. So, we’ve kind of come to the end of our like budget breakdown. It sounds like we covered your entire budget actually just with those top five plus the goals and so forth. But I wanted to ask you about one other thing, which was taxes. Because I think you mentioned when you said your income earlier, that’s like your gross income, like before taxes are taken out. So, how do you handle taxes on your stipend?

29:42 Janelle: For taxes on my stipend, I take out $127 every month and I put it aside and do my taxes when it’s due, I think this April and then, so I have a cash fund for the taxes ready. And so, you could put that cash fund in a high-interest account, so you can earn interest on it. And it’s not just sitting and getting eaten away by inflation. But another thing is that I put it on Gemini, GUSD stablecoin, which is a crypto that is one-to-one with the U.S. dollar, but it’s a 6.9% APR. So, I earn interest on all of my funds from taxes, vacation, stuff like that.

30:31 Emily: Hmm. Interesting. Yeah, I’ve been hearing more and more about the strategy, not something I have started doing myself, but obviously very enticing with that kind of interest rate. Not guaranteed though.

30:42 Janelle: Oh, another thing I could add is there are also I bonds for the U.S. government. Right now, between I think April to July, I’m not sure about those months. Don’t quote me on that, but there is a 9.6% APR for putting in like cash deposits on I bonds at a $10,000 maximum. But the issue with that is that you have to keep it there at least five years or get a three-month penalty removed. Yes.

31:14 Emily: Exactly. One of the reasons I’ve been hearing about I bonds for, I don’t know, half a year or so now at least, but yeah, but I haven’t done it because I’m a little nervous about the like, ah, well, all this, you know, saving is saving to spend for me. Like my cash is because I intend to spend it. So, how comfortable am I, you know, tying it up somewhere else. So, anyway, it’s a good question for each individual when you’re thinking about where to house your savings and how to get it to work for you a little bit.

Best Financial Advice for Another Early-Career PhD

31:41 Emily: Alright, Janelle, thank you so much for this budget breakdown! It’s been really fascinating for me, especially being sort of close by. I want to conclude our interview with the same question that I ask of all my guests, which is what is your best financial advice for another early-career PhD? And it could be something that we’ve already talked about in the interview, or it could be something completely new.

32:00 Janelle: Yes. My biggest advice would be to save whatever you can, and to put those savings somewhere where the money works for you. Where it’s not just getting eaten away by inflation, whether that be stocks or crypto or, you know, bonds, but definitely save what you can because that money is going to be useful, whether it’s for an emergency or if you want to, you know, change your life.

32:32 Emily: I love it. And the other sort of flip side of like having saved money, like having savings is great for what you just mentioned. You want to make a change or, you know, you have an emergency, whatever. It’s awesome to draw on that money. But the other side of it is the act of saving forces you to create margin in your life, like you’ve done, right? So like, you’re saving almost a thousand dollars a month for the sort of more long-term things. And you also have some short-term savings going on. So like, if you needed to pivot in the short-term and something happened, like you have some margin there to be able to eat into if necessary, if something came up. And so that, like, I just love, just like we need like time margin in our life. We also need financial margin in our life and energy margin and all the rest of it, which is so hard to maintain, but you’re doing a great job with your budget and it’s been really fascinating to chat with you about it and just congratulations on all the success. And I hope that, you know, you have it continued going forward as well.

33:27 Janelle: Okay. Thank you! It’s been really nice talking to you and getting to meet you in person and I, you know, listen to you in the car, driving back here, driving to LA.

33:39 Emily: That’s good to hear. I <laugh>, I love to talk with people who have listened to the podcast before. It’s kind of a kick for me to know that we already have a relationship that’s been established a little bit. So like, we can have conversations like this, which is really fun. So, thank you so much for volunteering!

33:54 Janelle: Thank you!

Outtro

33:59 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.

How This Graduate Student Financially Manages Daycare Costs, Debt Repayment, Saving, and Side Hustling

December 16, 2019 by Meryem Ok

In this episode, Emily interviews Aubrey Jones, a PhD candidate in social work who lives in Tennessee. Aubrey is married and has a 3-year-old and a 1-year-old, which means childcare is their household’s largest expense. They discuss how Aubrey’s family found a great deal on their housing and how to minimize food waste with littles. Aubrey and her husband both have variable incomes, which play into their savings and debt repayment strategy; Aubrey’s main side hustle is a very popular and accessible one for graduate students. Aubrey and her husband have set their debt repayment and savings goals so that they can buy a home about a year after moving for Aubrey’s first post-PhD job.

Links Mentioned in the Episode

  • VIPKid Website
  • Qkids Website
  • Personal Finance for PhDs: Personal Finance Coaching Sign-Up
  • Personal Finance for PhDs: The Wealthy PhDs Group Program Sign-Up
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to Mailing List

grad student daycare cost

Teaser

00:00 Aubrey: You’ll find the money for things that you prioritize, and I think that’s so true. In the past, we didn’t necessarily prioritize our savings, and so it was hard to find money for that. And now suddenly, we’re prioritizing it and prioritizing extra payments, and it’s because we figured out where we can cut and what we don’t need to do.

Intro

00:26 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 four, episode 18, and today my guest for this budget breakdown episode is Aubrey Jones, a PhD candidate in social work who lives in Tennessee. Aubrey is married and has two small children, which means childcare is their household’s largest expense. We discuss how their family found a great deal on their housing and how to minimize food waste with littles. Aubrey and her husband both have variable incomes which play into their savings and debt repayment strategy, and Aubrey’s main side hustle is a very popular and accessible one for graduate students. Aubrey and her husband have set their debt repayment and savings goals so they can buy a home about a year after moving for Aubrey’s first post-PhD job. Don’t miss Aubrey’s spot-on financial advice at the end of the episode. Without further ado, here’s my interview with Aubrey Jones.

Will You Please Introduce Yourself Further?

01:25 Emily: I am delighted to welcome to the podcast today Aubrey Jones who is going to be doing a budget breakdown episode for us and she’s got some really interesting elements in here. So, I’m really looking forward to this conversation. Aubrey, will you please introduce yourself, your career, and your family?

01:43 Aubrey: Sure. So, My name’s Aubrey Jones, and I have a husband, Josh. And then we have two little kids. We’ve got a three-year-old and a one-year-old, Madison and Simon. And basically, I started the PhD program with a seven-month-old, and when I finished my PhD program, I will have a four-year-old and a two-year-old. And I am getting my PhD in hopes to become a research professor, hopefully in R1, in the near future.

02:17 Emily: And what is your field?

02:18 Aubrey: My field is social work.

02:22 Emily: It sounded like you’re about a year away from finishing, hopefully?

02:27 Aubrey: Yes, I am a year away from finishing. I was able to take an extra year because I was awarded an extra GRA position for the fourth year. So, I was able to do that, which was nice.

Aubrey’s Household Income

02:41 Emily: All right, well we are actually in a very similar spot. My two children are the same ages, roughly, as your two. So, I’m sure many of your expenses will sound very similar to me. So, please tell me about your household income, your income as a doctoral student, and other sources of income in your household.

02:58 Aubrey: Sure. So, as a doctoral student, I received a stipend throughout my entire program, and it’s fluctuated from year to year, but it’s on average about $15,000 a year. And then it’s covered my health insurance also. And then my husband works in a job in which sometimes he will get additional money. So he’s a recruiter and he works on a draw system, and once he’s caught up, then any additional money that he gets goes straight to him. So, our household income fluctuates as well. So, usually anywhere from about $55,000 on the low end to $75,000 on the high end is where we fluctuate. And then, I recently just started teaching with VIPKid. I had been hearing about it, I have friends who’ve done it, and I finally jumped in to do it just to supplement some costs in our household because the hours are so flexible. And then as a doctoral student, I’ve also just picked up other side work with professors who had funding and were able to pay me to do stuff like that during the summer or in addition to get the extra experience and also the extra income.

04:18 Emily: So, the $15K stipend that you mentioned, is that just during the academic year or is that 12 months?

04:26 Aubrey: It is 12 months. So, you’re required to do about 10 hours of graduate research assistantship work, and then they break it out throughout the year as your payments.

04:40 Emily: Okay. So the additional work you’ve taken on within your academic role or to the side of it–you said during the summer, but that’s not because you’re not being paid during the summer–it’s just because you have some different time allocations or something?

04:52 Aubrey: Yes, correct.

Side Hustle: What is VIPKid?

04:54 Emily: Gotcha. So, I want to hear a little bit more about VIPKid because, similarly to you, I have been hearing that name a lot and I don’t know how new it is, but it feels new to me. So, can you say–maybe for someone else who’s interested in this kind of side hustle–what you’re doing exactly and what kind of the advantages are that you see?

05:13 Aubrey: Sure. So, I really love it. I actually just started this month, and there’s a fluctuation in pay. It ranges from $14 an hour to, I believe, $22 an hour. And the way that they do it is you teach a 25-minute class to kids in China and you’re teaching them English. So, you don’t have to know any Chinese. You just have to take some TESOL certificates that the company actually offers you for free and go through some mock interviews so they can see that you’re using props in your classroom that you’re using, it’s shortened TPR [Total Physical Response], but basically they want to see lots of hand gestures and pointing at your mouth and telling the kids, you know, listen. So, the 25-minute class is what you teach, and they pay you by 25 minutes. So, most people start out at about $8 per 25-minute class.

06:25 Aubrey: And then, assuming you get another class, that’s where it turns into that hourly pay of $14 to $22. But essentially you teach a 25-minute class, you get half of that $14 to $22 an hour. And you open up the schedule and you choose when you’re available. So, they tell you what the peak times are and you’re running on Beijing time. So, for people who are in Eastern Standard Time, I almost think that they’ve got it the best because the peak times are between 7:00 AM and 9:00 AM and then in the evenings on Friday and Saturdays from about 8:00 PM to 11:00 PM. You can teach all through the night, and I know some people do. I do not. So, I teach in the mornings from about 6:00 to 7:00 AM. Mostly because my kids are still sleeping, and sometimes I get the full time booked. Sometimes I don’t.

07:26 Aubrey: So, like I said, this is my first month doing it and I’ve made–well it’s not even the whole month yet. So just in the month of July, I’ll make about at least a hundred dollars, assuming I get no others classes booked.

VIPKid: Teaching English to Kids in China

07:40 Emily: I was a little bit confused about this. So, you said that you’re teaching in English. Are you teaching English or what is the subject matter that you’re teaching?

07:50 Aubrey: Yeah. So, the goal of VIPKid, the reason that parents in China sign their kids up for it is to help their kids learn how to be more comfortable talking to native English speakers. So, you are teaching English, but the whole class is also in English. And so, by proxy, you’re having a conversation in English, you’re trying to teach them certain things in English, and so you might be teaching them different vocabulary words that day.

08:18 Aubrey: So, this week I was teaching a kid “stamp,” so I had an envelope and I had some stamps and we talked about the word stamp and you say “stamp” and you make them repeat it twice so that they’re learning the word and then they’re learning in context. I teach primarily older kids who are already fluent in English. So, it’s more of making them comfortable having that conversation as opposed to teaching them new things. Now, some people teach younger kids–like three, four years old. So, they really are teaching them English words and what that means. And so, they might say “happy, sad” and have them repeat it back. So, it just depends. But VIPKid already has the lessons prepared for you. So, you go through it with the student and the older kids read most of it. The goal is to have them talking about 75% of the time.

09:14 Emily: Gotcha. And I think I’m picking up that this is a one-on-one interaction?

VIPKid versus Qkids

09:18 Aubrey: It is a one-on-one interaction. Yes. And there’s another company called Qkids which is similar, and they do anywhere from one to four kids in the classroom. And they actually schedule for you. Whereas VIPKid, the parents choose you as a teacher. So, it’s a lot more competitive to make a savvy profile that parents want to choose you.

09:44 Emily: I see. Well yeah, I can definitely see why this is an attractive, exploding side hustle. At any rate, as of July, 2019. So, thanks for telling us about your experience with that. Do you like doing this so far? Do you imagine continuing? And how many hours are you devoting to it per week?

10:04 Aubrey: Okay. Yeah, so I do, I really like it. It’s a lot of fun. It’s different than anything I’ve done in the past, and I will definitely keep doing it for the foreseeable future. Right now, the summer months are kind of slow so I’ve been able to just open up more slots knowing that I wasn’t going to see as many kids. But in the future, primarily in the fall, I will be finishing my dissertation so I won’t be devoting nearly as much time to it. But after I’m done dissertating, probably five to 10 hours a week.

10:41 Emily: I’m really glad that you brought this up because I can see how, for someone who wants a side hustle, this is a really, really accessible one. It sounds like you’re able to get started pretty fast too.

10:52 Aubrey: Yeah, it took me about two weeks to go through the whole process.

10:57 Emily: Yeah. Excellent. Okay, so let’s dive into the budget breakdown, right? So, we’re going to talk through your top five expenses. And I don’t remember if you mentioned, but where do you live?

11:09 Aubrey: We live in Tennessee.

Budget Breakdown: Top Expense = Daycare

11:11 Emily: Okay, great. So, top expense.

11:15 Aubrey: Our top expense is daycare.

11:18 Emily: Ah, new and different because usually this is rent, but I am not surprised that daycare is at the top of your list with two children. So, how much are you spending?

11:27 Aubrey: Yes. So, daycare is about $1,000 a month for both kids to be in daycare full-time. And so, our youngest kid was not in daycare the whole time. He actually just started going to daycare more recently. And that’s because, as a graduate student, I was really lucky to have such a flexible schedule where he could essentially just home with me. I wasn’t taking classes, I was working on my dissertation, and when I had to work on my dissertation or do extra work for my GRA position, I was able to do so in the evenings or on the weekends when my husband was home. But now that I’m in the final stretch of my dissertation, I need the distractions out of the house so that I can work all the time. So again, that’s new. When it was just our daughter, it was closer to like $600 a month, I want to say, for her. So, obviously not greater than our rent at that point.

12:27 Emily: Yeah. I’ve had a similar approach. I am the primary caregiver for our children and so we mix in childcare maybe as needed and it kind of fluctuates. It really changes a lot with how old your children are and kind of what type of kids they are. Whether or not they give you time that you can be doing other things or whether they require a lot of hands-on attention, and that changes with age. So yeah, I definitely feel you on what you were trying to do in the past and also your decision to put them both in daycare full-time now. Is there anything else, any other comments you want to make on that daycare expense?

13:05 Aubrey: So another way that we reduced the cost of daycare too was our daughter was in daycare full-time when we first started, and I was a full-time student. And then once my classes started slowing down and they were online, I was able to transition her to a “Mother’s Day Out” program, which is just a part-time daycare, essentially. And so that drastically reduced our cost. It was like $80 a week to have her in that three days a week and they fed her and everything. So that was great. And then in the summers we’re able to take them both out and just pay about half the cost to keep their spots if we need to or if we want to so they can go part-time and full-time in the summer for a reduced rate, essentially.

Does Your University Aid with Childcare Expenses?

13:58 Emily: And does your university help at all with childcare expenses?

14:03 Aubrey: They do not. I will say that my professors and department have been incredibly supportive of me having kids and just understanding that. There was one time I had to bring my daughter to class with me because there was like a nasty flu outbreak happening at her school and I wasn’t about to let her get it, let alone really let myself get it. So, one of my professors let me bring her, and I was so thankful. And she just hung out and loved it. So they’re like emotionally supportive of that. But financially, no.

14:44 Emily: Yeah. They help you to a degree, but not as much as maybe we would like. Okay. Number one expense: childcare. What’s that second expense?

Budget Breakdown: 2nd Expense = Rent

14:55 Aubrey: Rent. So, we pay just a little over $907 a month, so I rounded it up to $908. And we actually pay below market value for where we live. We have a two-bedroom condo, we’ve got a garage, we’ve got a backyard, two bath. And I think our neighbors rent for about $1200 a month. When we first moved here, we actually only paid $875 a month and we were living across the street. And then our landlords decided to sell. And so we already knew the neighborhood. We really loved the neighborhood. This might sound silly, but we knew our mailman and to us, that was just so great. Like, we really know this place. And we had some friends who lived across the street and they happened to be moving out and going somewhere else. And we told them, “Hey, our landlords are selling, can we rent from you because we know you’re not ready to sell yet?” And they said, “Yeah, sure you can just cover our mortgage and our HOA fees.” And so that’s how it bumped up to $908, but still below market value for this area. So we’ve been really fortunate in that.

16:17 Emily: That is an amazing deal. I have to say, not the best financial decision for them, but really great for you.

16:27 Aubrey: Yeah.

16:28 Emily: Yeah. And of course, you know, I actually talked about this with another episode I did in season three. I interviewed a landlord who was renting to people he knew from his program. You know, they were his roommates at first. Then when he moved out it was people he had known from that graduate program, and he just talked about what like peace of mind it gave him to know his tenants and trust them. And so, yeah. Maybe they’re giving you a good deal on this rent, but they probably also have a lot less stress.

16:58 Aubrey: Yeah, absolutely. Yeah. And some of it too, like we do have to take care of some things on our own just because they weren’t really prepared to be landlords. So, like we have to pay to have someone come out and fix our dishwasher, which isn’t a big deal to us, but there are just a couple of trade-offs to it. But again, it’s better than having to go out and move all of our stuff and pay. I mean, that would be a large amount of money to increase that we just weren’t prepared for or ready for.

17:34 Emily: Yeah. Well, yeah, it sounds like a really good situation that you’re in. And I guess the tip that may be applicable to other people is get to know some homeowners who are ahead of you. Yeah. I actually also rented a private residence from a former graduate student who was then in a postdoc somewhere else when I was in graduate school, I did not know her personally so I don’t think we got any rental discount, but yeah, you know it happens. People buy, and then they move on.

Commercial

18:03 Emily: Emily here for a brief interlude. As a listener of this podcast, every week you hear strategies that another PhD has used to improve their financial picture. But listening and learning does not automatically translate into action in your own financial life. If you are ready to change how you think about and handle your money but need some help getting started, I can be of service. There are two main ways you can work with me to create and implement a financial plan tailored for you. First, I offer one-on-one financial coaching, either as a single session or a series as you make changes over the longterm. You can find out more at pfforphds.com/coaching. Second, I offer a group program called The Wealthy PhD that is part-coaching, part-course, and part-community. You can find out more and join the waitlist for the next time I open the program at pfforphds.com/wealthyPhD. I believe it’s possible to succeed with your finances at every stage of PhD training and throughout your career. Let’s figure out together how to make that happen for you. Now, back to the interview.

Budget Breakdown: 3rd Expense = Food

19:18 Emily: Okay. So, really good deal on rent. Excellent job on that. What’s that third expense?

19:23 Aubrey: This would be food. So, we are not super great at keeping our food costs down. That ranges anywhere from $800 to $1,000 dollars a month right now. And $1,000 is pretty rare. But, I was going through prepping for this and I felt like, “Well, let’s be honest, we’ve hit $1,000 before.” So, it doesn’t normally happen. We keep it closer to $800, and we’re pretty strict on that. So, we are feeding two kids. Our one-year-old, I swear, is just a garbage disposal. He just consumes everything and anything right now. And I was nursing him for about eight months, and then his appetite exploded. So, we switched him over to formula. So, we’re weaning off formula. So, that should start decreasing.

20:22 Aubrey: And then it also has a lot of our household stuff too, like diapers and pull-ups. We potty trained our oldest before our second was born because there was no way we were paying for two kids in diapers, and that was the best thing we ever did. She took to it really easily. I’m a little nervous the second time around that it may not go quite as well. And then we keep tons and tons of fresh produce in the house. But other ways that I do try to reduce the cost, things that we’ve been thinking about a lot more lately, especially once we started keeping track of our expenses, is food waste. And so that always seemed to really obvious to me. I would hear people talk about that and I would think, well, I don’t waste food. What are you talking about?

Strategies to Avoid Food Waste with Littles

21:09 Aubrey: And now I’m so much more cognizant of it. And my three-year-old will take two bites of something and say, “I’m done.” And in the past I used to think, “Okay, whatever.” And I would just toss it. And now, “What are you doing?” So, I just put it in the fridge and when she gets hungry later I put it back out on the table and say, “You can finish this if you’re that hungry.” And most of the time she doesn’t want to finish it because she’s not actually hungry. She’s just fishing around to see what I’ll give her. And then we’re really big on right now food exposure and trying to make sure that they’re constantly being exposed to vegetables. So, I’ve been buying a lot of frozen vegetables, which is really helping, so I’m not wasting the fresh vegetables. But I’m still able to make sure that they’re at least, even if they’re not eating it, they’re seeing it on their plate. So, that’s how we’ve decreased it. We don’t eat out. We cook almost all of our meals at home. My husband gets to eat out a little more for work. But yeah, I don’t see it going down much more, to be honest.

22:23 Emily: Yeah. I have to say, there’s again a lot of similarities in spending patterns between the two of us in this area because our one-year-old is also like eating everything in sight right now. She’s going through some kind of crazy growth spurt, which is actually great because that means that food that other people don’t want to finish, we can give to her, and she’ll finish it. So, that’s working out well. I also do the same thing. If my three-year-old doesn’t finish something, I may pack it back into the fridge because, like you, when it was just me and my husband, I was like, “Yeah, we don’t really waste that much food. Like we’re pretty on top of food consumption. But then you have a child who throws food on the floor, and like there’s a lot more waste that happens. So, we try to reduce it where we’re able to.

23:05 Aubrey: Yes, exactly.

23:05 Emily: And yeah, same thing about formula, which I hope is not a forever expense for us, but it’s pretty expensive in the meantime. So, yeah. Thank you for that insight. Oh, and the diaper situation. Yes. We also potty trained before our second was born so that we would not have two in diapers at the same time. Although we cloth diaper. So, for us it was more about not having to buy more cloth diapers to add to the stash. Right? Which is kind of the most expensive part of that whole process. So, yeah. All right. Thank you for your insight into that category. So what is your fourth largest expense?

Budget Breakdown: 4th Expense = Car Debt

23:39 Aubrey: So, that would be my husband’s car payment, which is $300 a month. And then we usually throw extra money at that. And that is one of the fewer pieces of debt that we have. And we plan to have that paid off by the end of the year, actually. Because he does do recruiting and he sometimes gets those bonus paychecks, we have just been able to throw that at debt. So, like last month we were able to throw an extra $1,000 at his car that wasn’t in the budget. So, that is always really nice. But we actually just had to get him a car because he had a 2000 Subaru and it finally just died while he was driving one day with our three-year-old. And so, it was time for him to get a car.

24:33 Emily: So, you’ve really taken that drive-it-into-the-ground advice to heart. You know, mostly when I talk to people about cars or I think about cars, it’s like we think about that long period, the almost two-decade period when you’re driving that single car. I don’t know when he bought it exactly, but the many years. And people are a little nervous about the endpoint. So, can you talk to me about when it broke down with your three-year-old in the car and how you handled that? It seems that it was okay, right?

24:59 Aubrey: It was a traumatizing week for her because my car, which is actually only three years old, broke down two days before, and she was in the car and we had to call my classmate to come pick us up. And then she was driving with dad and they were actually stopping to get her a treat because she had been such a good big sister. So, they stopped at Starbucks and they were in the drive-through and it just died in the drive-through line. And he had to push it. And so, twice in one week, this poor kid was in a car that broke down. So, that was a little traumatic. And she still talks about it. And this was three months ago, maybe. So, he had to get out and just push it by himself. And she did this cute little reenactment of him doing it. And I had to come pick them up, so I had to get the baby woken up from his nap and then go get them. And his car sat at Starbucks for three days until we could get a tow truck out there. And our insurance luckily covers the tow truck expenses. And so, he tried to put it on Facebook Marketplace to see if anyone was good at fixing cars or needed parts, and he didn’t get any bites. And so finally he just went to I think like an impound lot or something. But yeah, we had one car for like a month, so I was driving him to work and that’s across town. And so we had to really navigate our schedules. And then I tried to convince him to just have one car because we were making it work, but he wasn’t going for it. So, that’s how we ended up with a car payment.

26:51 Emily: Yeah, thanks for that story because we are also currently driving a car into the ground. And I do think about when that final end-point is going to be and what exactly is going to happen. But usually it’s okay. It’s a little difficult in the short-term, but it’s kind of worth it, right? To keep a car for a long time.

27:09 Aubrey: Absolutely.

27:10 Emily: So, what is the fifth expense on your list?

Budget Breakdown: 5th Expense = Husband’s Student Loan

27:12 Aubrey: That fifth one is my husband’s student loan. And that is $219 a month. And that should hopefully be paid off by the end of the year also.

27:22 Emily: Yeah. Let’s talk about that next and sort of under the category of financial goals. So, you’ve mentioned two types of debt so far. And so, what is your strategy with repaying debt?

27:35 Aubrey: Yes. So, the car and his student loan and my student loans are the only debt that we have. And so, right now, his student loan is bigger than his car payment. So, the car is our first thing that we’re trying to prioritize. So, any of the VIPKid money that I get is going to the car. Basically, we’re doing that snowball [method].

28:00 Emily: Yeah, I think it’s that snowball method. I was just going to say, you live in Tennessee, so this is Dave Country. [Do you follow Dave Ramsey?]

28:07 Aubrey: It is Dave Country. I don’t, but I do follow a lot of debt-free, financial independence people who have done Dave Ramsey. So, that’s where I’ve picked up some of our ideas and stuff. So, we’re really just attacking that car payment, putting anything extra that he gets to it. We’ve got a lot of financial goals, and this is why we’re not exactly Dave Ramsey because we’re also trying to save for a house at the same time. And so, our goal is to be debt-free from car payments and his student loans by the time we’re ready to purchase a house. And then my student loans are just kind of this whole other thing that right now we’re just unfortunately avoiding because I’m still in school. And we’ve limited using any student loans while I’ve been in my program except for one year when the baby was born and we just wanted to have that extra cushion just in case we knew that he would probably go to daycare. And we just weren’t sure, because my husband’s income fluctuates so much, if we’d be able to afford it every month or not.

29:18 Aubrey: So, the months that he gets a bonus check, we pay daycare out-of-pocket. And we pay most of daycare out-of-pocket and then supplement with those student loans. And then everything else goes to debt that’s not covering daycare. And then like I said, the VIPKid or any babysitting that I do or like I adjunct sometimes also, so that money goes straight to the car. So yeah, that’s our goal. Again, we think we’ll have that tackled by the end of this year just with where his business is at.

Importance of Prioritizing Your Financial Goals

29:52 Emily: I really love the strategy that you’re using. And I’ll make it explicit again. So, you’ve decided what your priorities are–car, husband student loan, your student loan–and you’re making whatever minimum payments are necessary on those and throwing all your money that you come up within a given month to that top-priority debt. That includes side hustle money. And this is very “Dave” like to have this clear prioritization and to throw everything you can at your top priority. And the reason that it works really well–and then I’m really glad you’re using this–is because it does keep you motivated to earn extra money in whatever ways you can fit into your schedule. As opposed to just like, “Oh, I think I should be side hustling in general. My budget could use some more padding.”

30:43 Emily: It’s much better to tie it to a specific goal. In your case, it’s debt repayment. And so, it really keeps your motivation high for pushing yourself because it is hard to be a parent and be in a PhD program and have the work associated with that. So, you’re doing a lot obviously, but it’s clear that you know exactly why, right? And you know, it’s a limited-term thing. As Dave says, “Live like no one else. So later you can live like no one else.” Which means, live like no one else right now. You’re hustling. You’re throwing everything you can at the debt. And then later, living like no one else is when you are wealthy and comfortable and the picture is rosy. So, it’s like a short-term period of sacrifice to really turbocharge and get ahead. I wanted to ask about your house downpayment goal. So, am I right in assuming that you guys will be moving wherever you get a job?

31:37 Aubrey: Yes, we will be moving wherever I get a job. So, our goal is to hopefully purchase a house about a year after. Just so we can get a feel for that area first before just showing up and buying a house and then realizing we chose the worst area to be. So, we do have money in our budget dedicated to savings. Which was something that we hadn’t always done. We used to kind of just, “Oh, okay, we have $10 left over this month, let’s put that in savings.” Where now we dedicate at least $200 goes to savings every month. So, that is obviously for emergencies or for this house if we can. And then, once his car and student loan get paid off, then the rest of his paychecks and stuff will start going to that down payment. And again, we hope that we’ll have probably $10,000 to $15,000 by the time we’re ready to move, is kind of our goal.

32:38 Emily: Yeah, that sounds really good. I think you’re really, again, on the right track by planning on renting for a year, wherever you move to. Because I totally agree. It’s really difficult to make such an important decision like where you’re going to live, especially in your case. You guys already have kids, so you know your kids are going to be in school, and like there’s just a lot of considerations there–to take that time to really get to know the area. And of course, continue to save up more money, for the down payment or whatever, before jumping into that purchase. So, final question here. What is your best financial advice for one of your peers? Maybe another parent in a graduate program?

Best Financial Advice for One of Your Peers?

33:17 Aubrey: Yeah, so I think my best advice would be to just remember why you’re doing it. Because we have tried many times to live like this and it’s always just become, “Ah, whatever we don’t want to.” And now we’re very motivated, I think, because of our children. Like we want to give them a house and like a nice life. So that’s my “why” of why we’re doing it. Why am I waking up at 5:00 AM to teach kids in Beijing English? It’s so that we can have this hopefully financial independence and teach our kids what to do with money. And then my husband has a good saying that he’s told his friends who are just starting out having kids and they’re freaking out about not being able to afford things. And he tells them, “You’ll find the money for things that you prioritize.” And I think that’s so true. In the past, we didn’t necessarily prioritize our savings and so it was hard to find money for that. And now suddenly we’re prioritizing it, and we’re prioritizing extra payments. And it’s because we figured out where we can cut and what we don’t need to do.

34:35 Emily: I think you are so exactly right with those comments, and they’re so insightful. I totally agree that you have to establish the “why” for why you care about personal finance at all, why you should care about your own finances. And then, once you know the “why,” that tells you your priorities, right? Top, second, et cetera. So like, it does make it so much easier when you know clearly what your motivation is, I think. Yeah. You and your husband–I think you guys are doing great. Really. Like, yeah, it sounds really good. I mean, I’m so glad you’re on a clear plan and there’s like a timeline on it, and yeah. It seems like it’ll all coalesce within the next one to two years with, you know. Hopefully, you’ll have the job you want and be in an okay place to live. Not much choice on that necessarily, but hopefully you’ll enjoy it, and the debt will be done, and you’ll be taking out a mortgage, and that’ll be a whole other ball game, and yeah. Sounds delightful, actually.

35:29 Aubrey: Yeah. And I will say, we’re very fortunate with his job that allows him to get bonuses and stuff that lets us pay things off, which is why it’s kind of variable and all over the place. But it wouldn’t be possible without his job, so we’re super thankful for that.

35:48 Emily: Yeah, of course. Well, best of luck to you and your family. And thank you so much for joining me today.

35:54 Aubrey: Yeah, thank you for having me.

Outtro

35:56 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. 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 podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. 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. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

This PhD Student in Texas Side Hustles to Overcome Her Unique Financial Challenges

August 26, 2019 by Lourdes Bobbio

In this episode, Emily interviews Allie Judge, a second-year PhD student at Baylor College of Medicine. Allie outlines her top five expenses in Houston, TX as well as her financial goals. Allie receives a good stipend, but her pet sitting side hustle enables her to supercharge her financial progress. She uses her stipend for her living expenses and Roth IRA contributions and her side hustle income to pay down her student loans and medical debt and fund her travel to see her long-distance partner. She concludes with excellent budgeting advice for other graduate students.

Links Mentioned in the Episode

  • Whether You Save During Grad School Can Have a $1,000,000 Effect on Your Retirement
  • Personal Finance for PhDs: Schedule a Seminar
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Help Out

grad student unique financial challenges

Teaser

00:00 Allie: Now during a slow month, I usually net about $300-400 a month. Right now during the literal hot months, also when people are taking a lot of vacation and wanting to get out of the Houston heat, I’ll usually net $700-800. so it’s going well.

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 four, episode two and today my budget breakdown guest is Allie Judge, a PhD student at Baylor College of Medicine in Houston, Texas. Allie details her income from her stipend and lucrative side hustle and her top five monthly expenses. Two of Allie’s unique financial challenges are high medical bills and her long distance relationship and her ongoing financial goals are to max out her Roth IRA and repay her non-deferred student loans. You won’t want to miss the budgeting advice she shares at the end of the interview. Without further ado, here’s my interview with Allie Judge.

Will You Please Introduce Yourself Further?

01:16 Emily: I have joining me on the podcast today Allie Judge, who is going to share with us her budget breakdown — her top expenses and financial goals for her recent months. Allie, it’s a real pleasure to have you here and I’m looking forward to all the interesting subjects we’ll be covering in this episode. Will you please tell the audience a little bit more about yourself?

01:26 Allie: Thanks. I am a second year PhD student at Baylor College of Medicine in the Biochem department living in Houston, Texas right now.

01:46 Emily: Excellent. Is it just you in your household?

01:51 Allie: I have a roommate and a cat, but other than that, just me.

01:56 Emily: Great. How much money do you make?

01:59 Allie: Our stipend actually recently went up. It was $32,000/year coming in and went up to $33,500 starting this month, I think.

Pet-sitting Side Hustle

02:10 Emily: Very nice. Decent raise year over year. I understand you have a side hustle as well.

02:16 Allie: I do. I am a dog sitter on Rover. I started when I was a research tech and was paid even less than I am now, and have continued through grad school.

02:27 Emily: I’m sure a lot of people will be interested in that side hustle, so can you tell us about what it entails a bit, how much money you’re making, maybe hourly, if you know that, and that kind of stuff?

02:39 Allie: Getting started was pretty easy. You just have to do a background check that costs $10, which was nice. Of course, I had to earn reviews on the site and that took a little while. I didn’t make a whole lot of money at first, but now during a slow month, I usually net about $300-400 a month. Right now, during the literal hot months, also when people are taking a lot of vacation and wanting to get out of the Houston heat, I’ll usually net $700-800, so it’s going well.

03:13 Emily: That is very nice. What kind of time commitment is that?

03:18 Allie: I primarily do house-sitting, just because the other services tend to be requests that come in the middle of the day and I don’t like to take time in the middle of the day from lab. When I house-sit, I usually just stay at their house overnight and it’ll be maybe an hour or two a day of taking a walk with a dog or feeding, and cumulative attention time that I can usually multitask a little bit during.

03:47 Emily: That’s really interesting. I didn’t know anything about this service. Although I’ve heard of it before, I did not realize that hous-sitting was a component. That definitely seems like a pretty lucrative way to do this. I’m really glad you found a way to be able to stay at work all day and not be walking dogs in the high heat of the day. And presumably you love animals. Is this a fun thing for you to do?

04:11 Allie: Yeah, definitely. I’ve always grown up with dogs and cats and I had pet-sat for neighbors and such, so it was pretty easy to get testimonials on my little profile, but you can have friends and family do it too to get you started.

04:25 Emily: Thank you so much for telling us about that side hustle because if anyone is interested, loves animals, and wants a side hustle, that seems like a really, really good one to be doing. Why did you choose to go through Rover instead of striking out on your own?

04:45 Allie: As opposed to just independently pet-sitting? They do take 20% of your profit, so that’s a huge chunk, but the exposure that you get is so much better. I’ve lived in major metropolitan areas, and I just would not be able to network. Even with the 20%, I feel like it’s for sure worth the advertising.

05:12 Emily: Do you end up getting any repeat clients?

05:18 Allie: Absolutely. I think right now, this summer, it’s almost been entirely repeat clients just because now they’re going on longer vacations and want someone they’ve had before. A few of them will kind of go off platform, or some of them will try to suggest that at first I say, “No, we should stay on the platform because I don’t know you and you don’t know me.”.

05:44 Emily: Thanks again for that detail. You’re making what sounds like pretty decent stipend income, especially for Houston, I would imagine, plus you have this very significant side hustle.

#1 Expense

Emily: I’m really curious now to dive into your top five budget line items for each month. You said you’re going to be doing your most recent months in this summery, right?

06:07 Allie: Yeah.

06:08 Emily: Let’s dive into it. What is that top expense?

06:10 Allie: My top five would be my rent, some recent medical bills, student loans and groceries, in addition to travel, which I try to contribute to monthly, but doesn’t always happen.

06:25 Emily: Yeah, that sounds great. So top one, rent, of course, unsurprising there. What are you paying and what are you getting for it?

06:32 Allie: Thankfully I have a roommate that shares my two bedroom, two bath in Houston. We each pay $600 right now.

06:40 Emily: Sounds very decent. What’s the proximity to campus?

06:45 Allie: It’s about a 15 minute bus ride

06:48 Emily: And that’s how you typically commute?

06:50 Allie: Yeah. Gigantic medical center with very expensive parking.

06:55 Emily: How do you like using the buses? Is it a decent system?

07:01 Allie: I would say that given Houston traffic, I’d much rather take an extra five minutes on the bus, then have to deal with people on the road in the morning and in the evening.

07:12 Emily: And do you own a car at all?

07:15 Allie: I do. That’s pretty necessary in Houston. I am fortunately not paying my car insurance yet because it’s still in my parents’ name. That is not crucial but helpful.

07:30 Emily: So, fifteen minute bus ride — how do you like the location where you live other than that? Are we talking city, is it walkable to a lot of stuff, how is it?

07:42 Allie: It’s an area called “”condo land” so there’s a lot of condos, and it’s a lot of families, that type of thing. It is not the safest place if you go a block this way or a block that way, but generally where we are is pretty quiet.

08:01 Emily: That sounds good. Is your roommate another graduate student, or someone you found outside of the university?

08:07 Allie: I moved into the two bedroom by myself because I didn’t want to just find a roommate on Craigslist. Then, after about six months, my roommate was looking for a place to live too and moved on in.

08:22 Emily: That’s a nice way to be able to vet the person you live with before you commit to that relationship.

08:29 Allie: She is a grad student. I don’t know if I said that.

#2 Expense

08:32 Emily: Yeah, it sounds great. Okay. Expense number two?

08:36 Allie: Expense number two would be these medical bills I have coming up. It’s about $450 a month and then this month I had to make a quick trip to the emergency room and it was about $350 extra. So if you can go to urgent care, this is my big takeaway from that.

08:56 Emily: How is your health insurance?

09:03 Allie: We do have free health insurance through our graduate program, like a lot of biomedical students do. It’s generally pretty good for the most routine stuff. Hopefully I’ll be meeting the maximum out of pocket expense soon.

09:22 Emily: There are probably some people in my audience who have never really dealt with health insurance that much. What we’re talking about is usually you’re used to paying a copay and maybe co-insurance, a percentage of the bill above a certain amount. Maybe there a deductible to meet. But at some point, hopefully the plan will have a not crazy-high maximum amount of money you will pay out of pocket, after which everything should be 100% covered, usually in network, right?

09:51 Allie: Yes.

09:53 Emily: You’ll may be meeting that at some point. And it’s hard, it’s tough to pay until you get to that point. But you can kind of look forward to say at least after that point for the rest of the calendar year, I’m not going to have any more out of pocket expenses should things go as they usually will. For those of you who are thinking about creating an emergency fund, having the amount of money to meet that whole out of pocket yearly expense in an emergency fund is a pretty good number to take a look at. It may be a few thousand dollars, or may be lower or may be higher depending on the type of plan that you have.

#3 Expense

10:29 Emily: Thanks for telling us about that. Hopefully this will not be a large expense in your budget forever. So your third expense?

10:37 Allie: So my third expense is my student loans. Right now with the medical expenses, I’m paying the minimum payment, which is $204, I think, but prior to those expenses I was throwing more like $500 or $700 a month, whatever my Rover income allowed.

10:57 Emily: Why are you paying student loans right now as a grad student?

11:04 Allie: As an undergrad I went to my small liberal arts college and took out plenty of student loans for it.

11:11 Emily: I guess what I mean is you have the option to defer your student loans, but you’ve sounds like you’ve chosen not to. Talk me through that decision.

11:20 Allie: My student loans are through the government, they’re public student loans and they granted discount of 2.5% interest if you set it to auto pay. I not only wanted to get my loans paid down, but there is actually a benefit to having them not deferred and being able to set them to auto pay.

11:40 Emily: Are any of these loans subsidized or are they all unsubsidized? Is there any calculation you’ve done there?

11:49 Allie: They’re unsubsidized. I believe that if you have subsidized loans, they don’t collect interest during deferment. So that 0.25% would be irrelevant.

11:59 Emily: It’s an unusual decision, I think. Some graduate students I talk to pay on their student loans, but you’re the first person I’ve talked with who has chosen not to defer at all, but it sounds like based on your totally decent stipend income, plus all your side hustle income, that minimum payment of $200 a month is totally manageable. Plus, you usually are able to pay much more than that, so I definitely think this can be a very, very smart decision. It’s just an unusual one, but I think it potentially is a really good one in your situation. It must feel good to be working on paying down that debt at whatever interest rate it’s at since it’s unsubsidized. You know, many, many people in our community will, during graduate school be watching that interest accrue if they’re not able to make payments, and that’s a painful thing to do, right? I’m glad to hear that you are being proactive about paying these down.

12:57 Allie: And it helps to know that I could defer them if expenses really were tight.

#4 Expense

13:03 Emily: All right, fourth expense?

13:07 Allie: So my fourth expense would be groceries. I spend about $200 a month on groceries. I probably could bring it down, but I’m trying to prevent myself from going to restaurants more and more.

13:21 Emily: There’s, of course, an interplay there, between grocery spending and eating out spending, so you’ve chosen to maybe spend a little bit more on groceries but not eat out very much, sounds like.

13:33 Allie: Yeah, I keep my restaurant budget to $50 a month or less.

13:38 Emily: Do you have any guidelines for yourself around when you do choose to eat out?

13:46 Allie: I’m in a long distance relationship, so when my partner, who lives in a small town in New York, comes to Houston where there’s an array of restaurants, that’s when we tend to eat out.

13:58 Emily: $200 a month on groceries sounds pretty low to me, actually, for one person. Are there any particular strategies that you use around grocery shopping, or around cooking, that you’d like to share?

14:11 Allie: It helps that I do live in a major urban area, so I’ll usually check out the mailer on Aldi deals and I’ll go shop at Aldi and then I’ll check out the same for Kroger and I’ll make a trip there and they’re within 10 minutes, which is convenient.

14:28 Emily: Love that your using Aldi. I used to shop at Aldi when I lived in Durham. I don’t have one close to me now, but if anyone in the audience is near an Aldi and has not checked it out, you really owe it to yourself. You won’t necessarily get all your grocery shopping done there, but you can get a lot of your staples and the prices are amazing. It’s a different kind of shopping experience. I prefer it to the standard grocery store. And Allie, how do you manage cooking as a graduate student and also as someone who’s doing all this house-sitting. If you’re not in your home a lot of the time, how do you manage that?

15:03 Allie: I do usually meal prep. Not to an extreme where my freezer is stocked full, but I’ll usually have at least half of the meals I need for the week done on Sunday. So that for the rest of the meals I can take a little more time or enjoy cooking a little more. Or sometimes it’s just a very quick canned soup kind of night.

15:28 Emily: I presume you bring your lunch with you virtually every day and then you would also be packing food when you’re going on job somewhere?

15:39 Allie: A lot of my friends do buy food almost every day in the cafeteria. I can’t imagine how much more that would cost.

15:50 Emily: Do you eat lunch with other people or do you eat by yourself?

15:54 Allie: I’m not in the immunology program, but the first year immunology students have adopted me into their friend-circle, so I usually try to catch up and eat lunch with them now that we don’t have classes together.

16:06 Emily: I think that’s one of the wonderful things about being on a campus is that it’s totally fine to bring your lunch into cafeterias or whatnot, public-ish eating spaces, and it’s not a weird thing to do. It’s not like you’re paying to have access to that space with the food that you buy. It’s great that you can be social and bring your lunch every day. I wanted hear a tiny bit more about meal prep, maybe just the resources that you use to learn about that?

16:35 Allie: I’m subscribed to a lot of subreddits that have recipes, Eat Cheap and Healthy and Meal Prep Sunday and that give some loose inspiration for recipes that all then go search for myself.

Commercial

16:53 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs and other early career PhDs, for universities, institutes and conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions and frugality. If you’re interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at PFforPhDs.com/speaking. That’s p f f o r p h d s.com/speaking. Now back to the interview.

#5 Expense

17:41 Emily: All right then, your fifth expense in your budget?

17:44 Allie: That last expense that has not gotten much love recently is typically travel. That’s a secondary savings account where I throw whatever extra I have that I have decided not to put toward my student loans that month into a designated savings account for travel. That way when I find a cheap flight, I can go ahead and book it and I don’t have worry about whether I can afford it that month.

18:12 Emily: It sounds like it varies, but what would you say average you’re putting into that savings account?

18:19 Allie: On average it’s about $200.

18:23 Emily: Tell me a little bit more about how you’re managing the long distance relationship with respect to the money and the travel components of it beause I know this is a really common thing in the PhD population. How does it work for you?

18:36 Allie: What we do is we split our flights 50/50 pretty much every time and those tend to be between $300 and $500 because it is a pretty small airport that I’m flying into. Unfortunately, he is in law school and collecting student loans at 9% interest, so while we do split 50/50, kind of as the agreement because we’re not married yet, I try to be mindful and foot some of the bill if I can and have a lot of extra.

19:18 Emily: Do you find that you are traveling about at the same frequency to see one another or does one of you travel more?

19:24 Allie: It’s varied, just on convenience for whichever one of us has the time. At Baylor, we have a week break between terms in the first year that we take classes, so it made more sense for me to go see him for a couple of those breaks. Then of course he had a fall break and spring break, so he came to see me for that. It was more circumstantial than it was just trying to keep it even on who had to travel.

20:00 Emily: I almost forgot that classes were involved with being a PhD student because that will not be the case for much of your degree, but presumably he’ll have classes that he has to attend the entire time. Do you see that changing up at all once you’re free from that aspect of your scheduling?

20:20 Allie: Good point. We finish classes in a year at Baylor so I’m done, which means I will probably be taking more time to go see him. He tends not to have classes on Fridays in law school, so it’s more likely that I make a Thursday night trip to go see him.

20:38 Emily: Are you able to work remotely when you travel or are you still considering one of those days a work day?

20:45 Allie: I have not talked depth with my PI about any kind of specific arrangement, but I do have a pretty heavy computational component to my research, so that would probably make it easier.

20:58 Emily: Yeah, it’s really nice to have that flexibility. I remember much of my PhD having to go in and feed cells on weekends and that it makes travel a little bit difficult. You have to really plan long-term to be able to be away from more than a couple of days. Have you started using any kinds of travel hacking strategies or travel rewards strategies since you are taking the same kinds of flights pretty frequently?

Travel Hacking and Strategies

21:25 Allie: First of all, your best friend is Google Flights. It’ll help you track prices so you can decide when is the best time to buy your tickets and it’ll send you email notifications and it’s been really helpful. We tend to just fly the cheapest airlines that will fly between us, which includes three different airlines, so I have not gotten a co-branded credit card, but I have used points and cash back from credit cards. Right now, I have a Chase card that gives me 2% back on all travel and the points can be redeemed usually at a higher value than just simple cashback. That’s what we’ve been using to book flights, when we can, through their travel portal. The signup bonuses have also been really helpful in getting us a couple free flights back and forth.

22:22 Emily: That’s excellent. The Chase card that you’re using, or maybe in general, do you use cards that have an annual fee or always ones that don’t?

22:31 Allie: That is my only card that has an annual fee actually, and I mostly got that card for the signup bonus. A lot of them you can do the first year with no annual fee, so I’ll have to decide at the end of the year whether that annual fee will be worth it for next year.

22:49 Emily: Thanks for sharing those strategies. I did not really get into travel hacking when I was in graduate school because living in Durham and flying to lots of different parts of the country, I was always taking different airlines, so at that time I was kind of like, “Well, it doesn’t really make sense. I’m never loyal to one airline.” I didn’t get a co-branded card at that time. Now that I live in Seattle, I fly Alaska so much because it’s a hub, so at this point, for my specific situation, it makes a lot more sense to get that card and just take the strategy a whole different way. I’m really glad to hear that you found a solution that’s working for you, even though you aren’t loyal to one airline, and using those general rewards cards that work across any type of travel is an excellent way to do that, so thank you so much for sharing that with us.

23:34 Allie: Still make a frequent flyer account for any airline that you’re going to fly on, because if you fly on it again, you might collect enough points to do something with it.

23:45 Emily: Great point.

What are your top financial goals?

23:46 Emily: Okay, so that was your, your top five expenses. Let’s then switch to talking about your financial goals, if you have any. We’ve already talked about paying above the minimum payment on those student loans, so that’s awesome that you’re doing that. Are you working on any other financial goals?

Maxing out Roth IRA

24:02 Allie: I’m also at the moment maxing out my Roth IRA for retirement, so that’s $500 a month since the maximum contribution is now $6,000 a year. I decided not to dip into that goal for these medical expenses that have come up because my student loan interest is only 4% and generally that’s kind of the breaking point on when you’re likely to beat the market and a non-taxable account versus paying down debt.

24:34 Emily: Thanks for that insight. I really love that now in 2019 we have that $6,000 limit on the IRA because it makes the math so much easier. It’s $500 every month. I don’t know if you think about things this way, but are your Roth IRA contributions coming from your stipend, or are they coming from your side hustle income?

24:55 Allie: So I do track my budget on Mint, but I’ve also been putting it into a spreadsheet so I can plan ahead because Mint won’t let you plan for next month. I put my money in one big pot, but because my IRA is something that I would not stop contributing to if I didn’t have Rover income, I’d probably say it comes from my stipend.

25:22 Emily: That makes sense. In terms of your priorities, maxing out your IRA comes before paying off your student loans and so you’re using a side hustle income really for the student loans and the contribution to the IRA as the more stable, constant goal that you have. Well, I think that’s just fantastic that you’re able to and that you’re choosing to max out that IRA. I’m so excited for you.

Emily: If anyone is thinking about doing an IRA during grad school, I’ll link in the show notes, a post that I’ve done about how much of a difference to your net worth doing that IRA during graduate school will make. Top line numbers, you can read more about it in the post, is that if you contribute $250 per month during grad school for five years, and we make some assumptions about your rate of return, if you look out 50 years from when you finish, you will be solidly into retirement at that point, that contribution just during graduate school turns into $1 million based on these compound interest calculations. You contributing $500 a month, if you do that for five years, we’re looking at $2 million, 50 years out from graduate school. Again making certain assumptions, but that’s the kind of scale that we’re talking about for making room for this within your stipend and your budget and so forth. I’m really excited for you, Allie, and what the future holds for your finances.

Targeted Savings Accounts

26:52 Emily: Any other goals that you want to discuss now?

26:55 Allie: Other than that student loan, which is kind of on the back burner, I’ve hit my emergency fund goal and some other savings goals. I do have separate designated savings accounts for my cat in case of medical expenses and for my car, just for repairing and eventually in like five or six years, probably buying a new car.

27:23 Emily: It sounds like you’re employing what I call the targeted savings accounts model or sinking funds model, which is excellent. I really love that for graduate students to help them through the months where one, two, three large expenses hit and your normal cash flow can’t handle that. I’m really glad to hear about that.

What are your top financial tips for your peers?

27:41 Emily: So let’s wrap up here, Allie, with your best advice for your peers.

27:46 Allie: One big thing is keeping some extra money in that checking account. This will allow you to automate everything. What I did is I contributed to my emergency savings until I had some extra and then I just pulled that back into the checking account. That way I had $500 buffer so that on first of the month I can always pay my rent, so that I set those credit cards to auto pay, so that I set my targeted savings accounts to auto withdraw, and the same for my retirement and my student loans. It just makes me worry so much less. Then my second tip is for those with a side gig, if you can, push the income you get from that side gig into next month’s budget. For a little while, I was taking the $50 I made last week and including it in this month’s budget, which made for really erratic budgeting and also made me more likely to put that $50 toward something I want to do instead of a savings goal.

28:49 Emily: I think those two pieces of advice are really excellent and I’ll just expound on them a little bit more. The basic concept that you’re talking about, with pushing your income forward into next month, is what I call being on time with your budget. I recently read the book You Need a Budget*. So there’s a budgeting software, You Need a Budget, and there’s an associated book called You Need a Budget. What they call it is aging your money. What this means is basically in the course of a month, whatever paychecks you receive, those go towards funding your next month’s budget.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

Emily: A lot of people play a game, especially people who are paid bi-monthly or bi-weekly, where the paycheck they receive is immediately going to pay for expenses — so it’s like first paycheck of the month pays for these immediate expenses, second paycheck of the month pays for the bills I’ve time to be in the second part of the month. Instead, to give yourself a little bit more margin, a little bit more space and calm, take all the income you make in a given month, and say that’s funding my next month’s budget.

Emily: That’s exactly what you’re doing with your side hustle income, so you’re not turning around and spending the money you make the next week, you’re saving it for the next month. I think that’s really smart, especially for what you just said. When you put off spending the money until the new budgeting period, you can have some more time for reflection and planning and making sure that you’re using the money in the way that you think is best and not something more impulsively. I actually think that it’s somewhat easy for graduate students, if they’re paid monthly, to do this. Are you paid on a monthly schedule?

30:21 Allie: We’re paid biweekly.

30:23 Emily: If you haven’t already done this, my suggestion would be to age that second paycheck or the first one, I guess to be for that next month. It’s a very challenging thing to do, especially for someone who has really, really tight cashflow because essentially you’re saving up half your month’s salary to be delayed until using it the next month. It’s a very, very challenging thing to do, but a really excellent one and again, I really admire the “You Need a Budget” framework for calling that out as ageing your money and they have a specific tool within the software that helps the user do that. So thanks for those two pieces of advice.

31:06 Emily: Allie, thank you so much for breaking down your budget with us today and giving us this wonderful insight and wonderful advice and best of luck to you with your finances and the upcoming year.

31:16 Allie: Yeah, absolutely.

Outtro

31:19 Emily: Listeners, thank you so much for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There you can find links to all the episode show notes, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to PFforPhDs.com/helpout. There are plenty of ways do so without laying out any of your own money. See you in the next episode and remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening, by Poddington Bear from the free music archive and it’s shared under CC by NC.

This NDSEG Fellow Prioritizes Housing and Saving for Mid- and Long-Term Goals

August 5, 2019 by Jewel Lipps

In this episode, Emily interviews Lourdes Bobbio, a graduate student in materials science at Penn State and NDSEG fellow. Lourdes breaks down the top five expenses in her budget: housing, food, taxes, utilities, and subscription services. She explains the financials systems she has put in place to reach financial success during her PhD: targeted savings, automated transfers, quarterly estimated tax, high-yield savings accounts, and taxable retirement investments with a roboadvisor. Lourdes has decided to prioritize her housing within her budget, but still balances that expense with plenty of saving for her future wedding and retirement.

Links mentioned in episode

  • Financially Navigating Your Upcoming PhD Career Transition
  • Personal Finance for PhDs Podcast Hub
  • Volunteer as a Guest for the Podcast 
  • Quarterly Estimated Tax for Fellowship Recipients
  • Lourdes’s WealthFront referral link

NDSEG fellow budget goals

0:00 Introduction

1:07 Please Introduce Yourself

Lourdes Bobbio is a fourth year PhD student at Penn State University in State College, Pennsylvania. She is in the materials science and engineering department. She currently lives alone.

1:55 What is your income?

Lourdes is on the National Defense Science and Engineering Graduate fellowship. She makes $38,400 each year which is $3,200 per month. She says that this income goes pretty far in State College.

2:37 What are your five largest expenses each month?

Lourdes explains that the cost of living in State College is fairly low, especially compared to where she grew up near Washington, DC and where she went to undergraduate in Boston. She was more accustomed to high cost of living. Her top expenses are rent, taxes, food, utilities and subscription services.

3:08 #1 Expense: Rent

Lourdes lives in the downtown area of State College. She lives on her own without roommates. She determined that she values being able to walk to work every day, living close to campus, living near restaurants, and living by herself. She doesn’t have a car, so she doesn’t have car related expenses in her budget. She says she has never owned a car. She says a majority of graduate students in State College have a car. The town is small and there is a limited number of things to do. If you want to go away for the weekend, having a car is useful. She says there is an abundance of housing close to campus and a fairly good bus system.

She spends about $1500 per month for rent. She lives in a one bedroom with an office space which could be a second bedroom. She values having a space of her own. Because it is a college town, it runs on the school schedule. She says the cycle of finding apartments is over in November and December. She has lived in the same place for her whole time in graduate school. She says for her first year of graduate school, she wasn’t on the NDSEG fellowship. Her parents helped her pay rent a little bit and they stayed in the office room when they came to visit her. When she got her fellowship, she determined she could pay for the apartment on her own.

Lourdes says that her boyfriend has a car, and several of her friends own a car. When she wants to travel out of town, she goes with them.

8:46 #2 Expense: Taxes

Lourdes charges herself for taxes. Because she has fellowship income, she does not have automatic withholding for her taxes, so she needs to make quarterly estimated tax payments to the IRS. When she gets paid at the beginning of the month, she takes out the money for taxes right away and puts it into a savings account. When it’s time to make the quarterly payment, she has the money available. Emily emphasizes that the majority of fellows do not have taxes withheld and fellows need to withhold taxes themselves.

When she first got her fellowship and realized that no taxes would be withheld, she had to go through the process of filling out the 1040-ES worksheet to figure out the total amount that she would owe. She figured that out and divided it by twelve so she could save that amount each month. She has a spreadsheet to plan her budget for the entire year. She sets it aside in a high yield savings account until she has to pay it each quarter. Emily explains that 1040-ES is not submitted to the IRS and she has a workshop to help people work through the form.

Lourdes banks with Discover online bank and she also has a credit card with them. She puts her long term savings there. She has a checking account with a local credit union and a short term savings account.

13:42 #3 Expense: Food

Lourdes includes groceries and going out to eat in her food expenses. She says she spends more on dining out than she would like to, but she doesn’t feel guilty about it because she budgets for it and knows how much she can spend. Emily shares that budgeting is “freeing” and Lourdes agrees. Lourdes says that she values the social time that is associated with dining out. She spends about $200 to $300 per month on food.

15:42 #4 and #5 Expense: Utilities and Subscription Services

Lourdes says that she pays $30 to $40 on electricity. She pays about $25 per month on subscription services, Netflix and Spotify. She says that Audible is about $15 per month and she recently cut it. She reevaluates what she is subscribed to each year.

Her apartment has internet and cable included. She wouldn’t have paid for cable if it wasn’t included. She says that internet can be pricey and she’s glad it is included in her rent.

19:08 What are you currently doing to further your financial goals?

Lourdes has short term, mid term, and long term goals. She says she has two savings accounts to break down her goals. She has a savings account through her credit union that’s connected to her checking account. She puts money for her short term goals there. Her mid term and long term goals go into her high yield savings account.

Her short term goals include a general travel fund. She takes a bus to go to DC to visit her parents. She puts about $15 to $20 per month for travelling home. She has a gift fund as well, which helps her save for going to weddings. She has a “fun fund” where she saves for higher price experiences, like going to Broadway shows that have $60 tickets. She also uses her fun fund for buying items for her hobbies, like baking equipment. Emily says that she calls this a system of targeted savings account. This is a system for saving for irregular expenses.

Her mid term savings goals is for her wedding. She is saving about a couple hundred dollars per month for her wedding. She is also thinking about buying a house in the future and she is saving with that in mind. Additionally, because she is on a fellowship, she has to pay out of pocket for her health insurance. Recently when she had to be taken off of her parent’s health insurance, she used her emergency savings account to pay for health insurance. Now she has been saving for her next year’s health insurance premium.

26:28 Do you have long term goals?

Lourdes is also saving for retirement. For one year in graduate school, before she was on her fellowship, she was able to max out her Roth IRA. She learned that she is not eligible to contribute to a Roth IRA while on a fellowship. Now she invests in a general taxable brokerage account. She does not contribute as much but she tries to put $100 or $200 per month into it.

Emily explains that your eligibility for an IRA depends on you having taxable compensation or earned income. For graduate students, this means W-2 pay which is typically an assistantship. The NDSEG fellowship doesn’t count as taxable compensation or earned income. At this point, many people don’t bother saving for retirement because they don’t have an IRA. Emily encourages investing at as an early an age as possible.

Lourdes said when she learned about the tax and retirement savings of her fellowship, she realized that she would have to invest in a taxable account. She did a lot of research into what she wanted to invest in. She didn’t feel very knowledgeable. She used Vanguard for her Roth IRA but she wanted to try something else. She currently uses an online roboadvisor Wealthfront, which she likes so far. She says it is an easy way to get a broad portfolio. She thinks in the future she would move to somewhere with lower fees. She says she has no fees because her amount is below the threshold of $15,000. Wealthfront lowers the threshold with referrals. Her referral link in these shownotes.

32:30 What is your best financial advice that you’d share with your peers?

Lourdes advises not to be afraid of having a budget. She says many people are worried that budgets are restricting. She says that budgets are freeing, especially as a graduate student on a limited income. She says the budget gives her freedom that is very valuable and makes finances less scary.

33:50 Conclusion

An Unfunded Summer Didn’t Deter this PhD Student Thanks to Her Creative Side Hustle

December 24, 2018 by Emily

In this episode, Emily interviews Bailey Poland, a rising second-year PhD student in rhetoric and writing at Bowling Green State University. Bailey earns a stipend of just $14,000 for the academic year, but manages to live a comfortable life thanks to her disciplined budgeting and two side hustles. Unlike many of her classmates, she devoted her first summer as a PhD student exclusively to research, relying on her side hustle income and savings from her stipend to tide her over until the next academic year started. Emily and Bailey discuss in detail Bailey’s housing choice, frugal habits, and unique Patreon side hustle that complements her graduate work.

Links mentioned in episode

  • Personal Finance for PhDs Membership Community
  • Volunteer as a Guest for the Podcast
  • Frugal Month
  • How to Financially Navigate an Unfunded Summer
  • Bailey Poland’s Patreon

unfunded summer PhD

0:00 Introduction

1:26 Q1: Please Introduce Yourself

Bailey Poland is a second year PhD student in the Rhetoric and Writing program at Bowling Green State University. Bowling Green is a city in Ohio, located to the south of Toledo, Ohio. Bailey’s stipend is $14,000 per academic year. Additionally, Bailey earns $460 per month from Patreon and $150 quarterly from copy-editing a music magazine focused on Texas. She is the only person in her household.

Bailey’s PhD stipend does not include summer funding. She budgets savings over the academic year in order to meet her expenses over the summer.

3:25 Q2: What are your five largest expenses each month?

Bailey’s largest expenses are rent at $600 per month, car payment at $200 per month, health insurance and fees at $400 per month, food at $150 to $200 per month, and car insurance at $112 per month.

4:14 #1 Expense: Rent

Bailey rents a two bedroom apartment for $600 per month. She says this rate is higher than other options available in Bowling Green. She looked at options for rent at rates of $350 to $450 per month, but these apartments were in poor quality or clearly undergraduate housing. Bailey used to own a house, so she approached her apartment search with those expectations.

Bailey’s apartment is in downtown Bowling Green. She walks to campus, so she doesn’t use her car or have a university parking pass. She drives to the grocery store, but she lives above a coffee shop. She thinks she is in the perfect location. She lives by herself in the two-bedroom apartment, so she sleeps in the smaller bedroom and uses the extra bedroom as her office and library.

6:18 #2 Expense: Car Payment

Bailey pays $200 per month for her car. She has a 2017 vehicle that she bought new. She traded in her older Toyota Corolla when she bought her new car. Due to unfortunate family circumstances, Bailey received money from inheritance and estate closure. She used this money for her car payments. She has stayed ahead of interest and has gotten ahead on payments.

8:06 #3 Expense: Health Insurance and Fees

Bailey pays health and insurance and fees in lump sums a couple times a year. The amount works out to about $400 per month. She uses her credit card to make the payment at the start of each semester, but she pays it off immediately. Her credit card pays back 1.5% so she received a small kickback. Generally, she doesn’t keep a balance on her credit card so she avoids interest payments.

She made her first health insurance and fees payment before she received any of her graduate school stipend. Because she formerly worked as a marketing analyst for global HR and payroll company, she had enough savings available to make this payment when she started graduate school. She chose to go to graduate school because she was much happier in a classroom than behind a desk in a corporate office.

10:25 #4 Expense: Food

Bailey pays $150 to $200 per month for food, which includes groceries and dining out. She plans and prepares meals ahead of time. She cooks two or three times a week and freezes leftovers. She takes food with her to campus.

She has a limited set of go-to recipes. One of her favorites is chile garlic tofu. She says the meal is filling and takes half an hour to prepare. She gets four meals from one block of tofu. She eats lots of eggs, pasta, and rice-based meals. Her vegetarian cooking has increased since she started PhD program.

Bailey learned meal preparation from trial and error in the first few months of graduate school. She figured out which meals took too long or she didn’t like enough to have leftover. She used the Budget Bites website to find recipes. She cooks on the free nights of her week, because she knows which nights she’ll want to eat dinner as soon as she gets home. Bailey is on campus from 8am to 6pm most of the week. The latest she gets home is 7pm or 8pm. She takes lunch and a small snack with her to campus, and she eats dinner at home.

14:51 #5 Expense: Car Insurance

When Bailey purchased her new car, her car insurance rate increased from $85 per month to $130 per month. She has a plug-in for diagnostics of her driving habit, which lowered her insurance rate to $112 per month. She only regularly drives to and from the grocery store, which is a 10 minute drive. She also drives to her mom’s house, which is 30 minutes away and all highway driving.

Bailey says graduate students can get by without a car in Bowling Green. In her PhD cohort, at least one person doesn’t have a car. Busses run regularly to and from campus. Grocery stores deliver for a fee. Local activities are accessible to pedestrians. Bowling Green does not have cabs, Uber, or Lyft. It is pretty rural. Bailey needs a car to leave town to see her family.

18:10 Can you tell us about your side hustles?

Bailey has two separate side hustles. For one, Bailey copy edits a magazine about the country music scene in Texas. She missed doing copy-editing work, so she posted on Twitter that she was looking for an opportunity. Someone from the magazine responded to her and said they’d pay her to copy edit. Bailey has had this side hustle for three years. She receives $150 every few months and she has learned a lot about a topic that is unfamiliar to her.

For another, Bailey uses Patreon, the crowdfunding platform for artists and creators. She receives $460 each month from Patreon. She got started after she defended her Master’s thesis and she quit her corporate job earlier than she had planned. She was working at a bookstore and she needed more income. Some of her friends had Patreon, so she was familiar with the platform. Bailey started by doing live readings of The Rhetorical Tradition, like live tweeting her readings with funny commentary. People got invested in her live readings and she transitioned the activity to Patreon. Reading The Rhetorical Tradition was a really long project. She planned in advance and read as much as possible during the summer so she wouldn’t need to read during her first graduate school semester. She planned to post about The Rhetorical Tradition on Monday and Friday, post photos of her mom’s three cats on Tuesday and Thursday, and post an essay style blog post on Wednesdays. She only writes one or two truly new posts per month. With her PhD work, she doesn’t have time to write four or five new posts a month. Recently she has started a new reading series that overlaps with her prelim list for her PhD. She is gaining familiarity with texts in her field, having interesting conversations with her patrons, and making some money.

Bailey has created a very niche platform. Starting a Patreon was a huge leap of faith. She used to be super active on Twitter with a group of 18,000 followers. She authored a book, which helped her gain an audience invested in her thoughts. She trusted that her audience would move with her from Twitter to Patreon. She front loaded the work during the summer, so during her first semester it was more like a passive income stream. Now it serves multiple purposes for her. She finds it fulfilling that her academic work is accessible to the public. Her work lately is archival, and through Patreon she can share what it’s like to work in an archive. Bailey finds joy in her patrons and appreciates that they pay for her to do this work.

26:35 How do your colleagues react to your side hustle? Do they take on side hustles?

Bailey says her colleagues know and are supportive. For example, Bailey did a public series on Patreon that was a reflection on teaching practices she learned at Bowling Green. Her program’s website’s homepage included a link to her series. Generally, PhD students are discouraged from outside work because they should focus on doctoral work, but her department gives no formal prohibition of outside work. Most other graduate students have some other work, though it may not be talked about.

During the summer, other PhD students in her department find jobs. Some find online teaching roles, and one is working in the garden center at Lowe’s Hardware Store. One is going to a writers retreat that comes with a stipend. PhD students with spouses don’t work or find part time work.

29:28 Q4: What are you currently doing to further your financial goals?

Bailey has a 401k from her corporate job that she will roll into a Roth IRA over the next few years. She has investments with Betterment that serve as her long-term emergency funds. She has a high earnings online savings account as her primary emergency fund. Her goal is to have three months of expenses saved, and she is $600 short of her goal. Generally, her goal is to have her retirement well planned. She wants to be in academia long term, but she can’t be certain about this path. She wants security and confidence during her job search. Having savings going into graduate school frees up opportunities.

During her first summer as a PhD student, Bailey is working on archival projects and taking a class. During the school year, Bailey has multiple things going on, like classes, teachers, committees, conference planning. Summer is really valuable to devote focused attention to a project. In subsequent summers, it is possible she will take teaching jobs.

34:30 Q4: What don’t you spend money on that might surprise people?

Bailey doesn’t have student loans. She paid all of her loans within two years after undergrad. She hasn’t taken out any loans for higher education. Because she went to a State school, had scholarship, and finished in three years, she had very manageable loans from her undergraduate education. She took a job after college right away.

She has stopped buying books, which is hard for her personally. Even if she buys used books, it adds up quickly. She tries to keep miscellaneous spending low every month. She used to buy $200 to $300 worth of books every month, now she just buys one book a month. She checks out a lot of books from the library, and she lives less than a block from local public library

She doesn’t spend a lot on hobbies. She likes to cross stitch. This is inexpensive and takes a long time. She can spend $20 on one project that entertains her for five months. She has hobbies that help her relax and are not difficult for her budget.

39:00 Q5: What are you happy with in your spending and what would you like to change?

Bailey’s rent is higher than she wants to pay and is more than what others pay. She negotiated for lower increase rate when she renewed her lease. She’s considering doing a spending fast over the summer because she has no stipend coming in. She wants to minimize the hit that her savings is taking. She can find entertainment in Bowling Green for free. For example, there is a huge arts community and a massive arts festival.

42:12 Q6: What is your best advice for someone new to your city who is budget-conscious?

Bailey recommends that someone new to Bowling Green shops around for a place to live. There a lot of good options. Graduate student housing is affordable and it is easy to find a roommate. She says to look for an apartment as early as possible. She started looking in July, which limited her options. She would have looked earlier if she knew.

She advises new PhD students in Bowling Green to plan on saving. She says make sure you have cushion before you get here. Graduate school is stressful enough without living paycheck to paycheck. You should get rid of debt completely if you can.

44:22 Q7: Would you like to make any other comments on what it takes to get by where you live on what you earn?

Bailey says it is definitely possible to live in Bowling Green frugally and have a good time. She says there is always stuff happening that’s free or inexpensive. Toledo is a twenty to thirty minute drive. It may not be possible to live on the stipend alone, but you don’t need much more. Bowling Green has a low cost of living and is a college town invested in the university community.

45:22 Conclusion

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