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Learn from This Professor’s Nightmarish Home Ownership Journey

June 15, 2020 by Meryem Ok Leave a Comment

In this episode, Emily interviews Dr. Kevin Jennings, a professor of Criminal Justice and Criminology at Georgia Southern University in Savannah, Georgia. Kevin and his wife bought a home in Savannah shortly after he started his position, and the house has proven to be a money pit. Kevin catalogues all that has gone wrong with the house, what he wishes he would have known as a first-time home buyer, and the lessons he’s learned the hard way. He also gives excellent insight into the academic job market for someone already on the tenure track and how his status as a homeowner has affected his career prospects.

Links Mentioned in the Episode

Further Resources

How to Qualify for a Mortgage as a Graduate Student or PhD, Even with Non-W-2 Fellowship Income
Purchasing a Home as a Graduate Student with Fellowship Income
Rent vs. Buy Calculators from
- New York Times
- Zillow

Teaser

00:00 Kevin: The one thing I might’ve done differently is look for a house with fewer of these incidental costs, right? So if I wasn’t so close to the water, I wouldn’t have to do the flood insurance. If I wasn’t outside the city limits, I wouldn’t have to pay for the extra fire and protection stuff like that. I wish I would have known about those things in order to judge where to buy and which house to buy.

Intro

00:31 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 six, episode seven, and today my guest is Dr. Kevin Jennings, a professor of Criminal Justice and Criminology at Georgia Southern University in Savannah, Georgia. Kevin and his wife bought a home in Savannah shortly after he started his position. And the house has proven to be a money pit. Kevin catalogs all that has gone wrong with the house, what he wishes he would have known as a first-time home buyer, and the lessons he’s learned the hard way. You won’t want to miss Kevin’s insight into how his choice to purchase this home has affected his mindset toward his academic career. Without further ado, here’s my interview with Dr. Kevin Jennings.

Will You Please Introduce Yourself Further?

01:23 Emily: I have joining me on the podcast today Dr. Kevin Jennings, and he is going to talk to us about, well, a bit of a money pit that he is currently invested in. So, we’re going to hear tons more about that. Kevin, will you please introduce yourself to the audience?

01:37 Kevin: Yeah. Hi, I’m Dr. Kevin Jennings. I’m from Austin, Texas, and I went to Texas State University–Go Bobcats! Meow–and got a PhD in Criminal Justice in 2014. I was then hired at Armstrong State University in Savannah, Georgia, and I moved there immediately after graduating for a tenure track job, which I realize how lucky I am to land a tenure track job just out of getting my PhD. And I mostly focus on cyber crime and digital forensics. So I do a lot of work with law enforcement, but also work with computer science people and tech people to kind of find evidence on digital storage devices.

02:27 Emily: What an exciting topic. We’ll hear more about that at the end of the episode, where people can learn more. So, you moved to Savannah for this position. You said that was four years ago. Is that right?

02:40 Kevin: Five years ago.

Homeownership Journey

02:41 Emily: Five years ago. Okay. And you decided when you moved there shortly after that you were going to buy a home. Can you tell us more about how you did that shortly out of graduate school and why?

02:54 Kevin: So, we moved here in 2014 and rented a house. Unfortunately, in 2015, my grandfather passed away and he was the last of my four grandparents. And he left my parents and his three siblings a fairly decent amount of money. And my parents decided to share some of that with me and my sister. So, we got this decent size chunk of money. It wasn’t a huge amount, but it was enough for a down payment on a house. And my wife and I, having so recently started our actual career jobs, feeling like we were more adulty than we really were, decided to use that as a down payment on a house. So, we shopped around the city of Savannah. We, we were leaning towards finding either a fixer-upper that we could get for cheap and put money into, or kind of a duplex or house that had something we could rent out.

04:00 Kevin: Our real estate agent showed us this house in the neighborhood we were currently living in, which is great, less than 10 minutes from campus, really nice houses. And it was neither of those things, but we both fell in love with it. It’s kind of a two and a half story, four bedroom, two bath, huge backyard, and where the backyard ends, there’s a tidal creek right behind it. It’s just swamp and woods. And it was just beautiful. And we just kind of both fell in love with it. So, even though it wasn’t what we were looking for, we decided that this was the house we really wanted.

Making the Down Payment

04:40 Emily: And with that down payment money you were able to do the purchase?

04:44 Kevin: We were able to afford the down payment, which was I believe 10% of the total purchase cost, which was listed at $160,000. And we were super, super good negotiators and talked them down to 159. So, we put, again, I want to say it was 10% down. And we got this house and we were so excited, but we sat through kind of the lecture from the bank on, “Here’s your mortgage payment and here’s what that’s going to consist of.” And we were really shocked at how little of our actual mortgage payment goes into the principal amount of the loan. I mean, so I have my latest house bill here and my monthly payment is $1,142. Of that $1,142, $233 goes to the principal, which, I mean, that’s what, 20% maybe? So, we were kind of shocked by that. And we were looking at the other kind of things that, that had to go and pay for.

Expected vs. Unexpected Costs

06:05 Kevin: And there was the stuff we were expecting, obviously interest is going to be a big deal. The interest on ours is $460 a month. So, we knew that was going to be a big deal. Taxes, of course we expected. Coming from Texas, the taxes were actually slightly lower than we thought they were going to be. Because Georgia has an income tax rather than relying on property taxes the way Texas does. But then the other things that got added in there are the stuff that really kind of shocked us. First off, because we had that beautiful tidal creek in our backyard, we were required to get flood insurance, which most homeowners insurance doesn’t cover floods. And since Savannah is a low-lying coastal city, plus we’re right up against that tidal creek, we were required by law to get flood insurance. The other thing we didn’t expect was private mortgage insurance. It’s like $200 a month for this private mortgage insurance, essentially because we’re first-time homeowners. And that will go away when we’ve paid the mortgage down to 80% of the level of the value of the house. But since we only put 10% down, getting from 90% of the value to 80% of the value is going to take years.

07:31 Kevin: And we’ve been paying for four years and we’re still, I don’t want to say nowhere close, but not nearly as close as we’d like to be to that 80% level that will allow us to take away that private mortgage insurance. So, that’s $200 a month we’re paying for essentially not having enough money. So, just all those things combined to create a mortgage payment that we really kind of weren’t expecting. Homeowners insurance, flood insurance, private mortgage insurance, all that stuff really adds so much to the monthly fee, which really hurts in the long run.

Mortgage Structure

08:11 Emily: Yeah. I just want to jump in and make a couple of comments for the listener in case they’re not that familiar with the structure of mortgages. You mentioned a couple shocking figures, like the amount of your monthly payment that actually goes towards principal is 200 some dollars. Whereas the amount that goes towards interest is 400 some, and people may not realize this, but mortgages are on an amortization schedule where the great majority of your payment in the first year goes towards interest. Very little goes towards principal. And that shifts over the course of the loan. So, in year 30, if it’s a 30 year mortgage, you’re paying a vast majority towards principal and very little towards interest and ultimately pay off the loan. So, it’s really like when you start over with new mortgages, maybe every five years or something if you move, that amortization schedule, you’re kind of always playing around in the paying mostly interest, very little in principal, part of the amortization schedule.

09:02 Emily: And that’s why it is so difficult, like in your case, to get from 10% equity up to 20%, so you can remove that private mortgage insurance. Because mostly what you’re paying, as you said, is towards interest. Plus, all these other things you had to add onto the mortgage. So, it’s really kind of, you know, people talk about the differences between the advantages of renting versus buying. But the thing is that in your case, and many others, when you have so much of your monthly mortgage payment that goes towards anything other than the principal, that’s almost like paying rent. It’s just money that’s out the door every single month that’s not really building your own net worth, your own equity in the house. It’s just stuff that has to go out the door to keep you in that house. And so I wanted to know, when you were sitting through this explanation from your bank–which actually it’s kind of cool that they gave you the explanation, honestly, like they were doing a little bit there to help educate you–how far along in the process were you, and were you ready to like run out the door or was that no longer an option?

Mortgage: A Little Extra Goes a Long Way

09:59 Kevin: It was no longer an option. But I was so ecstatic over finally owning a home that it didn’t quite hit me, what exactly it meant until I had made a couple of payments. The other thing was, it wasn’t until I think a year after we bought the house, my wife decided to go back to school. So, she helped put me through grad school. And then a year after I graduated and moved here and got this job, she decided to go back to school to become a nurse. Because what she did before, there’s really no job market for here in this part of the country. So, while she was still kind of working a semi-decent job before she went back to school, we were paying extra towards the principal every month, which I had been told was a very, very good idea. Because anything extra you can put in, especially at the beginning of a mortgage, really knocks down the long-term cost of the mortgage.

11:17 Kevin: So, we were able to put an extra, I can’t remember exactly how much, extra 50 or $60 a month towards the mortgage for the first year, maybe two years, that we were in the house. With her back in school, we really had to tighten our belts. We were not able to do that, but now she’s graduated. Just started her new job yesterday, in fact, and I’m really excited to be able to kind of go back to doing that. Putting even just a little bit extra towards that mortgage, I think, will help a lot.

Unforeseen Costs of Home Improvement

11:50 Emily: Yeah. Like you said, you get a lot of bang for your buck when you start paying down that mortgage at the beginning a little bit faster, at least until the point where you can get rid of PMI. I mean, that’s like a really big goal when you have a mortgage. To not be paying insurance on the behalf of the bank to insure against you, to not have to pay that makes a huge difference. Yeah. So, at least to get to that point. That would be amazing. So, you know, I mentioned earlier that your house has kind of turned into a little bit of a money pit, right? So, it’s not only the structure of the mortgage payment that you were learning as you got into the house, that, “Hey, not that much of this money is actually going towards principal.” But in fact, you’ve incurred a lot of other expenses that you did not really realize or factor in when you first got into the house. So, can you outline what those are, please?

12:38 Kevin: Absolutely. So, we were buying this house and we realized we wanted to do a bunch of stuff to it. So, right off the bat, as soon as we bought it, we knew we wanted to take out all the carpet because we hate carpet. And we wanted to replace a lot of the lighting fixtures because the house was built in kind of the mid-nineties. And it had those kind of classic, like little glass globe, things that were super cheap and in every house back then. So, we knew we wanted to replace those. We knew we wanted to paint a bunch of stuff. And that was when my wife and I kind of both realized that we don’t have those skills. We were both very nerdy in high school and college and we never got those, those kind of woodworking and electrician and, you know, I can barely use a screwdriver.

What You Pay is What You Get

13:29 Kevin: So, those skills are something that I really wish I would have had before I decided to buy a house. So, we rip out the carpet, and two big problems presented themselves. One, there were places where the floor was uneven and the carpet kind of hid that. But two, the stairs that we had hoped to just kind of refinish, were just kind of ugly two by fours that they had nailed down. So for the floors, we hired someone to come in and put in some vinyl flooring, which was, I was shocked at how much vinyl flooring costs. But you know, it’s still cheaper than hardwood. The stairs we replaced ourselves and the flooring was not installed properly. We just kind of found somebody on Craigslist or something and brought them in. And that was a really bad idea.

14:34 Kevin: If you’re going to hire someone to come in and work on your house, don’t go for the kind of cheap fly by night operation. Definitely, definitely try to find someone you trust or a company that has, you know, you can go on Yelp and find their reviews. Stuff like that. Then there were little expenses, like we had to replace the mailbox paint, because we wanted to paint a bunch of stuff. But yeah, when we first moved into the house, those were kind of these big expenses that we kind of sort of planned for. We had saved some money to the side that we weren’t putting into the down payment just for those improvements. But we went, I don’t want to say wildly over budget, but fairly over budget on that process.

Hurricanes and Fences and Air (Conditioning) – Oh, My!

15:30 Emily: So, you’re saying there were certain things that when you bought the house, you knew, okay, you hate carpets, you’re going to tear all those out. There were certain things that were obvious upon purchase you knew you were going to take care of, and you had prepared to some degree to do that with savings. What’s next? Were there other things that have come up in the years since then?

15:49 Kevin: So, we are in a coastal city and when we moved here we were told, “Don’t worry about hurricanes. Hurricanes never hit Savannah because we’re kind of tucked into the coast.” And then of course, since we’ve moved into the house, we’ve had two hurricanes. So, our fence, when we first moved in–and for a long time we had dogs. We are, are now dogless, unfortunately, rest in peace–but one of the reasons we liked this house is because it had a fence and a big area for the dogs to play in. But one of the hurricanes that came through kind of finished it off and knocked it down, or at least a large section of it down. So, we got our entire fence replaced which was thousands of dollars we weren’t planning on spending.

16:40 Kevin: And even though we had essentially hurricane insurance, the deductible on that is like almost $5,000, I want to say. So, it really wasn’t financially viable to use the insurance to fix that fence issue. The second problem is that the upper half of the second floor was an add-on. When they originally built the house, it was just the first floor and the main part of the second floor, the upper part was all attic space. The second owners of the house finished out that attic space and turned it into a fourth bedroom. What we didn’t know when we bought the house, and what the home inspection didn’t show, is that when they finished out that area, they had to move the indoor air conditioning unit. When they did that, instead of redoing the drain line, the way they should have, they just ran a new line from where it used to be to where it is now.

AC Repair Fiasco

17:50 Kevin: So, essentially, the drain line for the air conditioner goes from one part of the house, across the house to where the air conditioner used to be, down under the flooring of the attic, then back across the house to where the air conditioner is now to actually drain out of the house. We had no idea that had been done that way. So, we had all these problems with the air conditioner. Finally, we call in a good repair company and they come in and take a look at it. And they’re like, yeah, the drain lines are all bad. But also this air conditioner system is designed and built for a house of the old size. With the addition, you’ve added so many square feet that you really should move up, and it’s getting towards the end of its like 20-year life or whatever it was anyway.

18:45 Kevin: So, if we’re going to do all this work, it’d be a lot better in the long run to just replace the entire system. So, we said, “Okay.” So, we got a new indoor unit, a new outdoor unit. Ended up needing to rerun all of the ducts because when they had done the addition, they had messed up the duct work, new thermostats, whole nine yards. I think we spent $13,000 on essentially a $15,000 system. Then it started having problems and wouldn’t work. And we spent the next year replacing parts and getting service. And finally, finally, after a year they just replaced a huge chunk of the outdoor unit, all these things, but it took them a year in the South Georgia heat with no air conditioning before they finally figured out kind of what was wrong and how it was messing up. But essentially, we ended up with, as part of the replacements, they gave us improvements. So, essentially we got a $17,000 air conditioning system for $13,000. But that’s still $13,000 we hadn’t budgeted for, we hadn’t planned on. So, I think we got a six-year loan, interest-free, luckily, and that’s $230, $240 a month that we weren’t planning on. Which, right when my wife was in the middle of nursing school, was a very difficult financial burden to kind of take on unexpectedly.

20:31 Emily: Yeah. I was just going to ask how you actually did pay for that. I’m thinking about your mortgage payment and that whole system costs about what a year of housing cost for you. That’s I mean, a huge expense. So, glad to hear that you got some decent financing, it’s not going to cost you any extra in interest, but what a saga. And especially to live for a year without proper air conditioning, as you were describing. Are those the big things that you’ve had to lay out for the house?

21:00 Kevin: Those are kind of the big things.

Commercial

21:05 Emily: Emily here for a brief interlude. I bet you and your peers are hungry for financial information right now, especially if it’s tailored for your unique PhD experience. I offer seminars, webinars, and workshops on personal finance for early-career PhDs that can be billed as professional development or personal wellness programming. My events cover a wide range of personal finance topics, or 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. We can absolutely find a way to get this great content to you and your peers, even while social distancing. Now, back to our interview.

Rule of Thumb for Annual Home Expenses

22:03 Emily: There’s a rule of thumb–and you might laugh at this, but maybe you’ve heard it before–there’s a rule of thumb that you should expect to spend on average on your home 1% of the value of the house per year. So, like average 1% of the value of the house per year on home maintenance repairs and so forth. Sounds like you probably have blown that out of the water every year you’ve lived there, right?

22:25 Kevin: Yeah. Oh yeah. So, the downside is we now have our garage doors, we have two garage doors, that need to be replaced because it’s Savannah, Georgia. Everything is wet here, constantly. I mean, it’s just moisture, moisture, moisture. It’s ridiculous. So, our garage doors are rotting out and we need to replace those. Our deck, for similar reasons. It’s not bad, but we’re anticipating that we’re going to need to replace it in the next couple of years. So, there’s more thousands of dollars of stuff that we’re kind of dreading and preparing for. The other things that have really shocked me are things like–we’re technically outside of the city limits, right? So, we have to pay for fire and EMS services directly. Instead of it being paid for through our city or County taxes, we have to pay, I want to say, it’s just under $300 a year to the fire and EMS service to come out. We have to pay for termite inspection yearly, or termite service yearly, which is hundreds of dollars a year. So, all these things have really combined. We didn’t think about it. Going from an apartment to a house you expect, you know, okay, rent, mortgage. There are going to be taxes and interest and principal. But then it seems like there are all these other fees and taxes and payments for things that you would never expect, having spent your entire life, or at least entire adult life, in apartments and renting places. It’s incredible.

Lessons Learned: Do It Right the First Time, Due Diligence

24:29 Emily: Yeah. I think a couple of the lessons that I’m hearing from this, that maybe the listener can apply. Two things. One is do the work right the first time.

24:38 Kevin: Yes.

24:39 Emily: Invest in quality from the beginning, and hopefully you won’t have problems or the replacement costs or whatever won’t come up so soon. Part of that was decisions that you’ve made, part of that was the previous homeowners’ decisions, but pay for it to be done right the first time. And the second one is–maybe, I don’t know, it sounds like you did what any reasonable person would do in terms of buying the home in that you lived in that neighborhood for a year prior to buying and you think you know where everything is, you know where are the schools, whatever you’re considering in your home-buying purchase. Just by living nearby, you’ve learned a lot of those things. But it sounds like you didn’t investigate–and why would you have?–the fact that these services were being billed directly instead of through the tax system, or all these other line items. Or, you know, maybe if you’d understood more about flood insurance, you would’ve told your real estate agent, “No, I’m not interested in anything next to a creek or whatever.”

25:37 Emily: I mean, those are not things you’re going to naturally pick up just by living somewhere. You’re learning this the very hard way. And so, I’m really pleased to be able to share your story with the listeners. Just say like, there are probably going to be more expensive than you think there will be. So, just plan for the unexpected, right? And prepare for that. But maybe do a little bit more due diligence to try to figure out what the peculiarities are of this city that you’re choosing to buy in. Like you were saying, well, people told you hurricanes never hit Savannah. Turns out, at least for the recent years, that hasn’t been the case. But I don’t know, I think you did what any reasonable person would do, so I’m not criticizing you. But I’m just really glad to hear this for anyone else who’s coming up on a home-buying purchase to do a little bit more to figure out what all these little nuanced expenses are going to be.

Do Not Skimp on Home Inspection

26:24 Kevin: Absolutely. The other thing I want to point out is home inspections. Do not skimp on the home inspection. We had a fairly decent one, but they missed a lot of these things where if they’d have been just a little bit more paying attention, a little bit more thorough, we would have known about these things in the contract negotiation process, not a year or two years or three years later. So, do not skimp out on the home inspection.

26:57 Emily: Yeah, definitely. So, I live in Seattle, so in the market here, at least in recent years, it’s been a sellers market, right? And a lot of people, as part of the bid that they enter, they waive inspections. It’s just something that no one wants to hold up the process, but even if you have to go that route based on what’s standard in the market, still do the inspection. Even if you don’t have it as part of the contingency or whatever, still do it so you know all these things upfront, like you were saying.

How Does Being an Academic Affect Homeownership?

27:28 Emily: So, I’m curious about how your position as a faculty member, as an academic, has played into these homeownership decisions or your ability to handle these things, I guess. So, it sounds like you got this tenure track position. Despite a little bit of upheaval with your university, you’ve maintained that and you bought a home where you got your tenure track position, probably what anyone would try to do, if possible soon after. So, yeah. How does being an academic affect this whole homeownership situation?

28:03 Kevin: When I was in grad school, I kind of bought into the belief that if you can find a really nice, good tenure track job you can stay at that university for a long time. Decades, if not your entire career. At the university I went to and the department I was in, there were a lot of professors that had been there for 20, 30 years. So, I was kind of expecting that kind of experience. So, when I moved here and was ready to buy the house, I was very much in this mindset of, “My family will be at this university working here for a long, long, long time.” So, in the University system of Georgia, you have an option between a pension system or a 401k.

29:01 Kevin: And if you’re going to be there longer than 10 years, the pension system is really the better option. So, that’s what I chose because I thought, “Oh, I’ll be here at least 10 years, no big deal. I’ll buy a house. I’ll be here at least the five or six years that it takes to really get enough equity in a home to make a profit when moving.” But I’ve come to kind of find out and realize that job-hopping and transferring positions is almost, or just as important in academia, as it is in private industry. Growing up in Austin, there were a lot of tech people. And tech people were all talking about, “Oh, you’ve got to move jobs every five years or every however many years.” And I thought academia was kind of exempt from that. And it comes to find out, it really isn’t. It’s depressing when you’ve been working at the same university for four or five years and they make new hires, straight out of grad school, hired at well more than you’re making. So, I wish I was able to move or at least have the possibility of moving. I wouldn’t necessarily want to leave. I love my job. I like living here. I like the university I’m at, but being so tied financially, through both the house and the pension, to this one job in this one place is something that even if I am going to stay here for the next 10 or 20 years, it’s still distressing. And it makes me feel like I don’t have options. It makes me feel like I’m stuck. Even if I want to be here, that’s still kind of a bad feeling, you know?

The Golden Handcuffs

30:55 Emily: Yeah. I definitely understand that. You know, sometimes people refer to the benefits or something that a job gives you as golden handcuffs. So, it’s like you feel, you feel tied to your job because you don’t want to lose the great compensation or the benefits, whatever. The pension is a little bit like that for you, but the house is on the other side of that. That’s not so much golden handcuffs as it is kind of an anchor. Until you get this equity up to a certain point, it’s going to be very–I mean, it’s not impossible–but you may take a loss, you may have to bring money to the table. Something, if you were to try to move without having a lot of years under your belt, paying this mortgage and getting the equity up there.

Would You Have Done Anything Differently?

31:36 Emily: So, I definitely understand what you’re saying. And I think it’s really great insight for other people who are looking to enter the job market that we think a lot of times as getting that tenure track position as like, “I’ve made it, this is it. That’s all I needed to do, and I’m going to be set for the rest of my career because I landed that one position.” And what you’re saying is, “Hey, that’s good for the first few years, but don’t think that you’re never going to apply for another job to advance in the way you want to.” That you might not have to move around, as you said, like what happens in the private sector. So, I’m really glad for that insight as well. And just, I don’t know, would you have done anything differently? I mean, knowing this. Now that you know this about your job and your feelings about it, would you still have purchased the house? Because it still kind of seems like the thing to do, right?

32:26 Kevin: Yeah, it does. It depends on what the alternative is. If the alternative was, you know, renting, I don’t think I would have. The one thing I might’ve done differently is look for a house with fewer of these incidental costs, right? So, if I wasn’t so close to the water, I wouldn’t have to do the flood insurance. If I wasn’t outside the city limits, I wouldn’t have to pay for the extra fire and protection stuff like that. I wish I would have known about those things in order to judge where to buy and which house to buy. Right? Does that make sense? So, it’s not that I regret buying a house. It’s that I regret not understanding exactly what the cost of buying this particular house are.

Best Advice for Another Early-Career PhD

33:13 Emily: Right, right. Yeah. Thanks for your insight into that. So, two questions as we wrap up here. The first is what is your best piece of advice for another early-career PhD? It could be related to the conversation we’ve been having, could be something else. What is that?

33:28 Kevin: Start putting money away as fast as you can. Start saving. It can be a 401k, it can be putting extra money towards just a stock trading account. Also, speaking of stock trading accounts, I found the Fidelity, I think it’s a bank, but it has a stock trading app thing. And they have a credit card where you get 2% cash back from every purchase that goes straight into the stock trading account. So, I put all my purchases on that and pay it off in full every month. So, I never pay a dime in interest, but I still get 2% into this longterm savings account. And then once I build up enough money from that I can purchase a stock or an exchange-traded fund or something like that. And then I never touch that. That’s all just socked away money. That’s essentially free money. As long as you’re paying off that card every month, that’s essentially free money. So, definitely do something like that. It can be a travel card that gives you miles on an airline. But make sure it’s paid off in full every month.

Where Can People Find You?

34:50 Emily: And second question, last one here, is where can people find you?

34:55 Kevin: So, I’m on Twitter with the username @CyberCrimeDoc, and I’m on YouTube with the channel name, Arresting Developments. And I actually do have a group I just started not too long ago called Americans for Election Reform. It’s a big political focused on elections and election security and making sure all Americans vote and all votes count. And that is on Facebook and Twitter.

35:29 Emily: All right. Well, thank you so much for joining me today, Kevin, and for telling us this very easy to learn from story.

35:35 Kevin: Absolutely. Thank you so much having me. I really appreciate it.

Outtro

35:38 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, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. 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.

The Necessity of Both Economic Justice Advocacy and Personal Financial Responsibility

May 25, 2020 by Lourdes Bobbio Leave a Comment

In this episode, Emily interviews Dr. Ian Gutierrez, a PhD in clinical psychology and former union leader at the University of Connecticut. While in graduate school, Ian served on the bargaining committee for the newly formed graduate student union, and viewed a higher income as the solution to his personal finance challenges. During his internship year, despite earning about what he had as a graduate student, Ian challenged himself to live within his means and pay down his previously accumulated debt and in the process reformed his practice financial attitudes and practices. At the end of the episode, Ian and Emily discuss the importance of both advocating for economic justice and, to the extent possible, having good personal finance practices.

Links Mentioned

Find Dr. Ian Gutierrez on Twitter
Related Episode: Healthy, Wealthy, and Wise: Choose a PhD Program That Will Support Your Personal and Professional Development
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Teaser

00:00 Ian: It was about at that time when all of the failings of my financial planning became extremely evident. Suddenly I realized that I had to live within my means, which was sort of embarrassing to say 29 or 30 year old.

Introduction

00:23 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode four, and today my guest is Dr. Ian Gutierrez, a PhD in clinical psychology and former union leader at the university of Connecticut. While in graduate school, Ian served on the bargaining committee for the newly formed graduate student union and viewed a higher income as a solution to his personal finance challenges. During his internship year, despite earning about what he had as a graduate student, Ian challenged himself to live within his means and pay down his previously accumulated debt. And in the process reformed his financial attitudes and practices. At the end of the episode, Ian and I discuss the importance of both advocating for economic justice, and, to the extent possible, having good personal finance practices. Without further ado, here’s my interview with Dr. Ian Gutierrez.

Would You Please Introduce Yourself Further?

01:23 Emily: I have joining me on the podcast today, Dr. Ian Gutierrez, and Ian and I first connected actually when I was looking for guests for my “Healthy, Wealthy, and Wise” episode that came out season five, episode two. That was the one that was a compilation episode, with a lot of people and had a couple of guests talking about unions. Ian and I connected and we had such a great conversation that I was like, “Can we just have a whole episode, just your own interview instead of trying to cram all you have to say into just this little tiny spot. So that’s how this episode came about. So Ian, will you please introduce yourself a little bit further to the audience?

02:01 Ian: Sure. Well, first of all, thank you for having me on the podcast. This is very exciting for me. My name is Ian Gutierrez. I have a BFA from New York University in recorded music, which was actually my first love. And then I got my Master’s degree in psychology from the New School, prior to becoming a doctoral student at the University of Connecticut, where I was enrolled from 2012 to 2018 when I defended my dissertation. So I now hold a PhD in clinical psychology from UConn. Shortly following the completion of my clinical training at the Veterans Affairs Medical Center in Cleveland, Ohio, I was very briefly a postdoctoral fellow at the Uniform Services University of the Health Sciences in Bethesda, Maryland. And I am currently a research psychologist with Tech Works LLC in the Washington DC area, where I conduct psychological research on mental health and resilience in support of our nation’s service members.

The Intricacies of Unionization for Graduate Employees

03:03 Emily: It sounds like a fascinating career path, something that would be great to explore at another time, but we’re actually going to go back to your graduate school days at UConn. And of course you were involved at that time with the union. Can you talk a little bit about what the climate was UConn at that time and why you got involved with the union movement?

Impetus for the Union

03:22 Ian: Sure, absolutely. I would actually say, first and foremost that it was one of the best parts of my graduate school experience was being involved with the graduate student unionizing effort. I often tell people that the experience that I had negotiating our first contract after we unionized was one of the best classes I ever took in graduate school. I first got involved with the unionizing effort in 2013. I was serving on our university’s graduate student government, and at the time the university was moving, or attempting to move graduate students over from a state-based employee health insurance plan into a student health insurance plan. Some people call it a SHIP. And bottom line was that we were getting worse health coverage for a higher price. Within the graduate student government we tried to advocate as best we could, but parallel to that, a number of other students thought that maybe unionizing was the way to go.

04:37 Ian: Now, personally, I grew up in a union family. All of my parents are union members in the theater business, actually. So that naturally struck me as the far more effective way to go about advocating for what we needed. I joined the organizing committee for our nascent union at the time and we, after interviewing a number of international unions, where you talk to the Communication Workers of America, Service Employees International Union, AFT, the American Federation of Teachers, we ultimately decided to organized with the United Auto Workers, which had had a lot of success in the area, unionizing graduate students, for instance, just up the road at the University of Massachusetts, Amherst. So we organized our union in 2013 we ran a membership drive, a card counting campaign, to get legal recognition for our union, and that it was a very successful campaign. Very exciting. The state of Connecticut recognized our union in April of 2014, and from that point we moved into the bargaining process with the university administration. At that point, ran to be one of the six members of the bargaining committee, and then over the course of the following year from starting about August of 2014, up until June of 2015, we met with the university administration, I don’t remember exactly, a dozen times, maybe more, as we negotiated our first contract. We were fortunate enough to successfully negotiate our first contract with the union in 2015.

Issues at Play in Union Negotiations

06:29 Emily: Thank you so much for giving that context. I’m wondering when you, when you went into negotiate that first contract, was it mainly the health insurance issue that you all were focusing on, or were there some other issues that also came into play?

06:42 Ian: When we went into negotiating our contract with the administration, of course health insurance was a major issue for graduate students. Of course, it wasn’t the only one. I think actually the university was quite surprised by the litany of issues that we brought up and the many things that we wanted to negotiate over. Healthcare, in the end, turned out to be a remarkably, I won’t go so far as to say easy, but there was a very equitable solution that we were able to come to. In this particular case, the state of Connecticut had what they called the Connecticut Partnership Plan, where the state would work with local governments to work out affordable health care plans for local employees, and so that provided a very nice rubric that could be applied to graduate employees at the university.

07:39 Ian: But that was again, not the only issue that we covered. I think the biggest issues that really came up for us were fee waivers, and then a lot of the rights and protections for the union itself. One of the major differences from being a graduate employee who’s not unionized to being graduate employee who is unionized is that there’s a clear grievance procedure, which in my opinion is actually one of the strongest components, one of the most important components of being unionized as an employee anywhere, is that there’s some kind of legal recourse when something comes up in the workplace, and there’s very clear rules about who to go to, who to raise the issue with, and how the difference can be resolved.

08:34 Ian: But second to that, of course money talks, right? Fee waivers for us was, I very clearly remember, was sort of the last issue that we negotiated over it at some great length and turned out to be the hardest thing for us to come to an agreement on. We ended up coming to a resolution where, what the university called it’s infrastructure fee, which was a $460 per year fee, ended up being waived for graduate assistants. And then the university provided GAs with a hundred dollar credit every year, that ramped up by a few dollars over the course of the contract, to help offset the cost of fees. So those were some of the major issues that came up. I think that barely scratches the surface and certainly we could talk for a long time about the, the 30 to 40 provisions in the contract, but healthcare, tuition and fees, and a grievance procedure where, I think, some of the biggest issues that we really cared about.

09:45 Emily: Yeah, I think all of those are also really common ones to come up in these negotiations across many universities. And I really appreciate your point about the grievance procedure being one of the most important components because it is like the wild west out there in academia. I mean, there’s all these power structures and imbalances and just lack of clarity, and so that actually sounds really great that you would have that in place after that point. Something I wanted to ask you about is from your position at the bargaining table, how did you come to understand that the university, or at least that university, that administration, the people who you were talking with, how did you understand that they viewed graduate students and especially around their financial issues?

Grad Students vs. the Administration

10:27 Ian: Yeah, really interesting question. That to me was one of the more shocking components of the experience. You know, university administrators talk a lot about how important students are to the university, and will say things about how the student body is the lifeblood of the university and the reason that it exists, of course, and there’s a whole political rhetoric around the way in which administrators talk about students. And I think a lot of that comes primarily from their dealings, especially with undergrad, what the undergraduate population, where things are a little bit cleaner. Undergraduates are the public consumers of the education that the university is providing. And they also make up the majority of the student body at almost almost any university.

11:20 Ian: With graduate students, it’s a little bit more complicated because on the one hand graduate students are students. We are receiving an education, but in our roles as research assistants, teaching assistants, graduate assistants, generally, we’re also employees. So things get a lot murkier there and they’re very comfortable talking about us as students. They’re much less comfortable talking about us as employees and at the bargaining table where we’re really presenting fully and in that context only as employees, a lot of that kumbaya rhetoric about us being students really falls away remarkably quickly.

12:03 Ian: At the same time there’s a lot of nostalgia that comes up for a lot of these administrators because most of them, not all of them, but most of them, were graduate students at one point, too, but a lot of their touchstones to what the graduate student experience was like, is what it was like in the sixties, seventies, the eighties, the nineties. And they were looking at a much different financial picture then, than graduate students are looking at now. Not only that, but the demographic of graduate students has in many cases shifted pretty dramatically as well. So it’s not like you’re getting…I mean, who’s ever heard, nowadays of somebody getting out of school through PhD at the age of 24 or 25. Impossible? No, but pretty rare. A lot of folks are getting their PhDs, I know at least in clinical psychology, the average age is about 31. So we’re talking about folks who might already have kids, maybe elderly parents to care for, potentially. Possibly chronic health problems.

13:08 Ian: We’re looking at a much different, a much more complicated picture of who we are, and for the administrators to come to the table and understand who we are, I think was a leap for them, in as much, to be perfectly frank as it was for us to understand the complicated financial picture that the university has to deal with. And I want to be clear in saying that, well certainly there are many acrimonious relationships between graduate employees and administrators at many institutions. I actually came away from the process being more proud of being a graduate of the University of Connecticut, because I think that, while we didn’t always see eye to eye, the administration was really fair in their dealings with us, and I think that we returned that to them in kind. It was certainly a learning experience for us, and I like to think of what’s a learning experience for them as well.

14:11 Emily: So fascinating. Thank you so much for adding that. And I am glad to hear that it wasn’t totally an adversarial relationship there at the table. I actually thought you might’ve been going in a little bit of a different direction when you mentioned the shifting demographics of current graduate students versus maybe some decades ago. Because I’m thinking about more like first generation students getting to graduate school and earning their PhDs. Also people who don’t necessarily come from families that can provide them financial support in the case of an emergency or just on an ongoing basis. I don’t know the stats on this, but I would assume that’s more common now than it was some decades ago, as you know, diversified who’s earning a PhD, which is a great thing, but it certainly comes with different sets of issues and problems then maybe people who got their PhDs some decades ago were facing

14:59 Ian: Just to jump in on that point, I think it’s also really important and one of the other really key components of what makes me proud to have been a part of that union too, was the union’s strong focus on diversity and representation. I understand full well that as a white man, receiving a PhD at a university that I come to the table with a lot of privilege and a voice that some other people might not have. But one of the things that really struck me in the way that our union organized is that the people who in my personal view really made it happen were the student employees of color, and the women who were in our organizing campaign. And it was really actually two women in particular who really made our union possible, and in many ways, to the extent that I was a part of it, I think I sort of rode on their coattails. And when we were negotiating at the table, equal protection policies for our students who might have green cards, or students of color, making sure that there was bathroom access for the trans community at the university — all of these things were a very large component of what our union was about. And I’m very proud of that.

Commercial

16:35 Emily: Hey, social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15 minute call with me at PFforPhDs.com/coaching to determine if financial coaching with me is right for you at this time, I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now back to our interview.

Personal Finances in Grad School in Relation to Unionization

17:21 Emily: Okay, so you’re in graduate school, you’re at the bargaining table, you’re working for better benefits, better processes, higher stipends, fee waivers and so forth. That’s one aspect of personal finance, right? What income is coming in, what your benefits are and so forth. What was going on with you? How were you handling the money that you actually received at that time?

17:43 Ian: Oh man. I would say that despite my heavy involvement in the union, I would mostly describe my practice for personal finance in graduate school as primarily relying on some degree of magical thinking. I didn’t really have a theory of the case regarding my personal finances really in any sense. I had a big picture sense that “more money, good, less money, bad,” but I never had any kind of robust plan on how I was going to move away from debt and towards wealth. I think the implicit thought process that I had was, well, I’m a graduate student and I’m poor and I’m in debt now, and somehow it all kind of come out in the wash after I get my degree and get a real job.

18:40 Emily: I think that’s super common. That sentiment is everywhere in graduate training.

18:47 Ian: And for me, even thinking about personal finances, a component of my life was…I engaged in a lot of avoidance around my own money management. And I think, as I have read into more financial guidance, you know, your Dave Ramsey or your Suze Orman’s or whoever — where do they start? They always start with, in a budget you want to first take a look at how much money you think you have coming in every month. Well, personally, speaking personally about my family background, my family worked in theater and even though you might be a part of a union, how much money you’re making in a month, you don’t know how much money you’re necessarily making in the next week or two weeks. You don’t know when your paycheck is coming and when it comes, you don’t necessarily have the best idea of how large it’s going to be. I never really had a financial budget education from my family background. But then sort of even more strikingly, I never had it in high school. I never had it in college. I never had it in graduate school. I just never had it, which, for being a pretty well educated person, still kind of leaves me. floored. Talking about money, it was almost like talking about sex. It was like everywhere and defining the culture, but you couldn’t actually get a grasp on what was going on.

20:34 Emily: That’s a great analogy.

20:34 Ian: Really striking. I think it really is because money is so personal and it’s such a component of who we are that we all have a lot of the feelings — good, bad, otherwise — around what it says about who we are and our understanding of what our life is and where our lives are going. Long story short, I just really engaged in a lot of avoidance around it, and I also think that part of the way that my own income from graduate school was structured led me into some poor practices as well. For one example, I received half of my income from a GA stipend that I received every two weeks, like a paycheck, but then the other part of my income I received from a fellowship check, which came in these two big checks every year. What it sort of led me to believe was that, well, as an adult, twice a year, you’re just going to received this huge windfall, so I can just spend up a lot of money on a credit card, and, well, no big deal because I’m going to get this big windfall every August and every January. Come to find out, at the end of this golden brick road, that’s actually not what happens in the course of typical adult living. Suddenly, after graduate school, I had this student debt and the cavalry’s not charging over the hill anymore.

22:18 Emily: That’s so interesting. I haven’t interviewed anyone before who’s spoken about the pay frequency, which I mean what you described as maybe a little bit unusual, but there’s plenty of people who deal with a couple of times per year, big checks coming in, or maybe just a pay frequency that they were unfamiliar with, like monthly instead of biweekly, or just any kind of shift. It’s interesting just to hear how that impacted actually the way that you handled your money. Of course there are many budgeting techniques to deal with this and that’s a conversation with me for another time. But I’m really curious now to hear about what actually caused you to change these attitudes in this behavior. Was it getting out of graduate school and realizing that you had a steady paycheck and it wasn’t ever going to be these windfalls? What was your motivation to start exploring the subject area?

23:05 Ian: Well, the one thing that I did decide, and this is a little bit particular to the way that graduate education is structured in clinical psychology, is that if you’re pursuing a doctorate in clinical or counseling or school psychology, you have to complete a year long internship. Most people move for this year long internship and the internship pays a stipend that is roughly similar to what you would get paid as a graduate assistant, depending on locale. It’s anywhere from $20 to $30 grand a year. When I made this move, I knew that I wasn’t going to be enrolled in enough course credits to access loans and I can either fork up a bunch of money to take on six credit hours or whatever it was, so that I could have access to student loans, or I could not sign up for those credit hours and not be eligible for loans.

24:03 Ian: I chose to not sign up for the credit hours and not be eligible for loans. I sort of took the cold turkey approach to student loans. And it was about at that time when all of the failings of my financial planning became extremely evident, because now I wasn’t receiving my windfall fellowship twice a year and I had cut myself off from student loans and a lot of my credit card balances were fairly high. Suddenly I realized that I had to live within my means, which is sort of embarrassing to say as a 29 or 30 year old, but that’s part of the reason I’m here on the podcast saying it, is because I know that my assumption in life is that if it’s affecting me, it’s probably affecting someone else. I can only imagine that there is a silent, I don’t know that it’s a majority, but a silent plurality, of current or former graduate students out there who have also suddenly realized at the ripe age of 30, that they know nothing about financial planning, have been behaving, you know, somewhat irresponsibly, and now they’re in a bad situation.

25:26 Ian: I never really took myself as someone who lived wildly outside of my means. I bought and paid off and used car and sure, my wife and I would go out dinner from time to time, but I wasn’t living the high life by any stretch of the imagination. And yet still, after all of that, I realized that I just didn’t have any scheme for how I was going to manage any of this. To keep on with the language of addiction, and there’s certainly many parallels to be drawn between credit cards and addiction, to be sure, I had sort of hit a rock bottom, where I suddenly realized that I need to come up with a plan, not only so I can pay this stuff off, but so that I can build and save for the future.

26:20 Emily: Yeah. Thank you so much for sharing that because I think you’re absolutely right that many people are waking up at some time or another to realize that in the same way that you did. So first of all, average American kind of thing, a lot of people don’t live within their means or they do in some aspects of their budgeting and they don’t in other. Like they are racking up credit card debt and then occasionally will pay it down, and there’s this cycle there. That’s pretty common. But I think that the graduate student experience sort of exacerbates that mentality. I think academia tells us that well, while you’re a graduate student, even to some extent while you’re a postdoc, you’re excused from the general financial responsibility that you might feel at another stage or at another time in life because well, you know that your pay is going to be low and so what expectations can you really have of yourself when your pay is so low. That’s one aspect of it. The other one is, as you mentioned, the access to student loans, which I think that if people aren’t necessarily using them, they may kind of forget that they do have access to them all the way through graduate school really. But it is there as a backstop, as a good decision or as a bad decision to take it out. You really are given an out all through graduate school that you don’t have to live within your means, unless you choose to, because the culture is telling you you don’t have to do, you have student loans there if you need to take them out. It kind of just contributes to that overall problems. I definitely don’t think you are at all alone.

27:46 Emily: I really think about myself going into graduate school. I very intentionally told myself I’m going to live within my means. And I actually thought about it that way at that time, for various reasons. But that was partially because I had a break between undergrad and grad school, where I had to live within my means. I didn’t have access to student loans, and so it was like, okay, I’m just going to carry forward into my graduate degree with what I learned when I was out of school. But if you don’t have the same attitudes that I do or didn’t have exposure to the same stuff, or you went continuously from college to graduate school, you may not have had the wherewithal to even think about it that way.

Personal Finances After Grad School

28:22 Emily: Okay, you’re getting into your internship year, you don’t have access to the loans, you have the high credit card balances, you’re realizing you actually have to live within the paycheck — what did you do? How did the story evolve?

28:36 Ian: Well, let’s see. I would say that I didn’t start by coping with it in a very…I mean, despite my training in clinical psychology, I want to say that I dealt with it like in a very logical or sensible way. I think mostly I felt terrified, and then anxious, and then afraid, and then hopeless, and then angry, and I cycled through all of this stuff. That was my first reaction, and of course none of that was really particularly helpful. Eventually, I took out a Dave Ramsey book from the library. And I would say that I have mixed feelings about his guidance. I certainly have mixed feelings about prosperity gospel, for sure. But I think the basics, like the super, super basics of what he, or I mean really anyone — him, or Suze Orman, Gaby Dunn — any of these folks out out there, is that the 101 clearly gets you on the right path of figuring out how much money you have coming in every month, determining your expenses, and figuring out what you need to do to balance that equation. There were some other components that I found particularly helpful, where my feeling was, I had heard about this thing called debt snowballing with credit cards and I knew that I wanted to do that, but reading, at least based on Dave Ramsey’s recommendation, that if your finances are really a hotness, which that’s me, the first thing you want to do is save $1000. Save enough money so you have some kind of stop gap if car breaks or unexpected medical bill or what have you.

30:41 Ian: I think that’s what really got me started with it, but I do also want to say that what also got me started with it was after graduate school, having an income that gave me enough hope that I could pay down some of these debts, which I think brings me sort of full circle to a point of balance in my own way of thinking about finances, where I personally believe that true financial responsibility is not just about managing your own finances, but also advocating for greater economic justice. That they’re not separate. Blaming all of your financial problems on the world and the way it is, is not the healthiest way to look at things. Viewing your finances as a personal responsibility that you, yourself need to carry like Atlas to the end of time, come hell or high water, no matter what else is going on out in the world, I also don’t think it’s particularly healthy.

31:52 Ian: There needs to be a balance where we can say to ourselves that the world can be a cruel and unfair place. We have to do whatever it is that we can to live a financially healthy life now, while advocating and fighting for a better future for ourselves and for our children. Even in sort of tying it back to my time in the graduate students union, if I have two legacies that that I left at university of Connecticut, one is my dissertation, which is going to metaphorically collect dust on a server, because the likelihood that anybody will read it except for figuring out how to format own dissertation is pretty low. But the legacy of knowing that we have left, that I and all of the other students who worked together, hand-in-hand, to create a union so that future students could have a more prosperous future while they were in graduate school, that’s something that I can really look back on with pride. I think coming to that sort of healthy balance for me is where I’m currently at in my own thinking about financial health.

33:15 Emily: Yeah, thank you so much for that articulation, that was absolutely fascinating. And I think I also am going on a similar journey to come to the same place, but starting from the opposite side of, okay, just keep your head down, focus on your own business, and not necessarily look up at the wider picture as much. I’m sort of emerging from that viewpoint. Thanks to a lot of these interviews that I’m doing through the podcast, it’s been really a big growth experience for me.

33:45 Emily: What I wanted to ask you about though is in coming to that healthy place of being able to do both of these things, what you think about the idea of the necessity of having your own personal finances in the best shape that they can be in as enabling you to go out and do that good work in the world and advocate for others. I won’t say it’s impossible to do the latter without the former, but I think if you come from an area of personal strength, that it just further enables you to do that work. What do you think about that?

34:17 Ian: I like that idea. I think it resonates with this idea that to help others you need to help yourself, like on the airplane where you’ve got to put the oxygen mask on yourself before you help somebody who’s sitting next to you. I think that that can be true. I don’t think that one needs to preceed the other, however. I think that it’s important that we have a broader conversation, both within higher education, but within society as a whole, about the relationship between economic justice and the economic structures that we’re embedded in, and our own personal financial health. I think, actually, that unions could be a really nice and really good nexus at which students can find that, because at least to me, if a university administrator who’s making $200,000, $300,000 a year comes and lectures me about financial responsibility, my response is not going to be, Thank you, I appreciate that. As a graduate student, my response to that would be, go take a hike, to put it politely.

35:46 Ian: However, I think if unions can sell this idea that a stronger union, a more just economic society is one in which its advocates and its members and its stakeholders are able to responsibly manage their own finances, I think that’s really important. While, at the same time recognizing that there are some situations in which financial responsibility is not itself always the primary problem for someone who’s having financial difficulties. A few examples that come to mind are if you have a child or a loved one or yourself who has had a severe medical emergency and suddenly you have a six figure bill put on your doorstep, the problem there is our healthcare system, and not necessarily how you’ve managed your own money. Of course you still have to come up with a solution and that’s important, but let’s not lose sight of the big picture.

36:59 Ian: I think it’s also important that we recognize the impact that mental health can have on a person’s finances. While I was in graduate school, one of the things that I studied was gambling disorder, for instance. The processes that underly gambling disorders, I mean, I’m sure there are graduate students out there who have issues with gambling, but sort of more broadly just than gambling, if you think about shopping addiction, any kind of mental health problem that might lead to episodes of irresponsible financial behavior. Bipolar disorder would be another one that would fall very neatly in that category. We have to make enough room within our economic justice advocacy to recognize that there are people for whom their financial problems are not primarily caused by a lack of what you might call personal responsibility. I think we can come at it from both directions, but part of getting folks who are able to be financially responsible, to be financially responsible is to have the right vehicle for learning about that, that says the world can be a terrible and unfair place, but in light of that, in recognition of that, let’s help give you the skills to thrive to the best of your ability, financially, in spite of that adversity.

Best Financial Advice for Graduate Students and PhDs

38:27 Emily: I’m so glad you put that in the larger context. I’m really glad that we took the time for that. So as we wrap up the interview, what is your best financial advice for maybe a graduate student or another early career PhD, perhaps something that you’ve learned, post this transformation after you’ve reformed your own practice of personal finance?

38:50 Ian: Sure. I would say that I have three small pieces of advice. The first is keep track of everything that you spend. And this is just personally, I think if you keep track of every little thing you spend, you really understand where your money is going, and it starts to sort of become like a fun game of saving money, where you can go “Oh, well, you know, I could spend, you know, $4 at Starbucks or I could buy a bag of beans and make a cup of coffee at home for 25 cents.” That’s sort of my simple suggestion.

39:29 Ian: Number two is forgive yourself and it’s never too soon to start. Again, sort of having worked in the world of recovery, it’s never too soon to start. Whether you’re 22 and just thinking about graduate school or whether you had gone back to graduate school and you’re 37 and you have two or three kids and you’ve never really seriously considered how to build wealth, it’s never too soon to start.

40:07 Ian: And then number three, my final point would be make economic justice advocacy a core component of your own financial responsibility. Really own the idea in your heart, that taking care of others is taking care of yourself, and taking care of yourself is taking care of others. And in that spirit, hopefully, all of us can create a more economically just life for graduate students in higher education and more broadly, in society at large.

40:45 Emily: Thank you so much Ian. I’m so glad to learn from you and to have your perspective here on the podcast. So thank you so much for giving this interview.

40:53 Ian: Thank you so much. If you would like to, you can follow me on Twitter at @ianagutierrez and it’s been a real pleasure to be here.

Outtro

41:02 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, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. 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 Poddington Bear from the Free Music Archive and is shared under CC by NC podcast editing and show notes creation by Lourdes Bobbio.

Learn From This Poor Kid-Turned-PhD Student’s Different Perspective on Frugality and Debt (Part 2)

March 16, 2020 by Lourdes Bobbio Leave a Comment

In this episode, Emily interview ZW Taylor (Zach), a PhD student in Educational Leadership and Policy at the University of Texas at Austin. As a child, Zach identified as a “poor kid” and never thought higher education was for him. His upbringing and winding path through community college and his bachelor’s and master’s degrees taught him lessons about money that he has carried into his life as a PhD student – for better and for worse. In this second half of the conversation, Zach gives detailed and unique financial advice to prospective and rising graduate students on evaluating stipend offer letters and selecting housing. He was determined to not go into debt during his PhD, so he thoroughly investigated his stipend offer letter and the socioeconomic layout of his new city before accepting the offer. Finally, Zach shares his vision for the future of his finances once he’s done with his PhD and earning a significantly higher paycheck.

Links Mentioned in This Episode

Teaser

00:00 Zach: If they want you and they offer funding, then in a different side of the same coin, they should be able to tell you specifically what you’re getting, because how can you budget, how can you plan without knowing what your income is? I mean, it’s incredibly important. So to your point, encouraging PhD students to be their own best friends and their own advocates and be very clear about what you’re getting before you go.

Introductions

00:29 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five episode eleven and today my guest is Zach Taylor, a PhD student in educational leadership and policy at the University of Texas at Austin. Zach has such a unique perspective and so much wonderful advice that I’ve split our interview into two episodes, last week’s and this one. In this episode, Zach gives detailed and unique financial advice to prospective and rising graduate students on evaluating stipend, offer letters and selecting housing. He was determined to not go into debt during his PhD, so he thoroughly investigated his stipend offer letter and the socioeconomic layout of his new city before accepting the offer. At the end of the episode, Zach shares his vision for the future of his finances once he’s done with his PhD and earning a significantly higher paycheck. Without further ado, here’s the second part of my interview with Zach Taylor.

Financial Advice for Early Career PhDs

01:30 Zach: You know, in terms of advice for other early career PhDs, in terms of saving money and thinking about going to grad school, especially with the kind of frugal mindset is I was not going to go to grad school one, if I had any debt. That was just something that I had always thought to myself that if I’m going, again another childhood lesson, if I’m going to pay for it, I’m going to pay for it in cash and I’m not going to take out a loan. My best advice for early career folks who are thinking about the PhD is if you can work before you go to grad school and pay down any undergrad debt you might have. I know it’s not possible for some folks, but try your best to get some work experience and pay down that debt.

Further reading:

02:18 Zach: And then when you’re thinking about doing the PhD, do some of the same leg work that I did. Investigate the city — where is public transportation? Where are groceries? How can you get around? Talk with other folks who have been there for a couple of years. You know, one reason I came to UT Austin is that everyone was eager to give me their perspective. I mean, when I asked people how do you like living? How much do you spend? Where do you live? How do you get to school? No one held information back from me. Everyone was so willing to share because I think you want to help other folks out. So ask questions and be inquisitive and see where you can make it work financially. But then when you make that choice, I made the choice that I was going to go to a funded PhD program. I was going to work through. I wasn’t expecting just to not have to have an assistantship. I’ve worked all the way through, but I’m also not gonna have to take out any loans. And I think if you have the right combination of work experience and academic experience in certain fields, you can find those programs that are very, very low cost or no cost and be able to work through.

03:27 Emily: I just want to add a couple of comments on those pieces of advice, starting with your most recent one. So in the STEM fields and engineering, where I’m coming from, there’s this advice I guess, that people sometimes say to a prospective graduate students, which is that an acceptance without funding is a tacit rejection. Like if you are not offered funding along with your offer of admission, they don’t really want you there. And that’s typical in those kinds of fields. And at a certain, I’ll say tier of university. Not every graduate students — I mean some people do either take, you know, fully pay for their PhDs on their own, like there’s no funding package offered or they go into a situation where they know, okay, sometimes there’s going to be funding, sometimes there’s not going to be, or okay I’m going to have funding to a degree but I’m also going to have to do X, Y, Z to make up the deficit.

Emily: It’s really hard for me to ever say something as blanket as don’t go to a PhD program if you have to take out debt, because I just, I want to allow for individual situations. But I mean it sounds like from your perspective, even being in a totally different field than I’m coming from, you were still determined, I’m not going to go to graduate school if I have to take out debt. It’s just not going to happen under those circumstances. So you were very selective about where you applied slash the programs that you were actually considering going to, to make sure that you could make it happen in that way, even though it did in your case involve outside work as well.

What to Research When Choosing a Program

04:59 Zach: Absolutely. And one thing that I really insisted upon before I came and I don’t, know of too many other young PhD prospective PhD students who do this, but you really have to push the graduate coordinator or someone in financial aid. Know exactly what you’re getting. It’s really easy to say you’ll have an assistantship and it’ll provide a stipend. After taxes and benefits, how many specific dollars am I getting? When in the month am I being paid? Am I being paid biweekly or monthly? Am I paid over the summer? What are the opportunities for employment over the summer? As someone who is going to embark on a five or six year journey, they owe that to you. They have the information, they can provide that to you.

Zach: Before I came I was very, very explicit in saying, if I’m going to leave this job that I know that I like and I’m going to forego wages for five years and give up a salary and not be able to save any money, what am I specifically getting? What are the specific opportunities? And then matching them up with the area and saying, okay, I can make this sacrifice for four or five years. Yes, I’m going to forego wages and a savings, but I’m also not going to be in so over my head or I’m going to feel pressured to make choices that I wouldn’t normally make. And you know, Emily, to your point, it’s absolutely been the case in my experiences and other classmates that there have been times where they’re unclear about their funding package because it wasn’t made specifically clear when they were admitted. Kind of that tacitly, if you’re not fully funded, we don’t fully want you. If they want you and they offer funding, then in a different side of the same coin, they should be able to tell you specifically what you’re getting, because how can you budget, how can you plan without knowing what your income is? I mean, it’s incredibly important. So to your point, encouraging PhD students to be their own best friends and their own advocates and be very clear about what you’re getting before you go.

07:10 Emily: Oh my gosh, I’m so glad that you made this point even more explicit because it’s one that I talk about frequently during admission season. Check the show notes, if you are a prospective graduate student because there will be links there to further articles and workshops and resources that I have on that exact topic of figuring out exactly what your offer letter is saying to you and asking questions when there’s a lapse in information in the offer letter. And I mean, to your point, pay frequency. I mean that’s not even something that you would necessarily think about, but it’s really important once you’re actually on the ground and doing that budgeting. I’m super glad you brought that up.

Further reading/listening/watching:

Emily: But to go back to one earlier point would you mentioned which was paying off debt and working potentially before starting graduate school. I totally have to concur on this because, now student loans I’ll put in one basket, okay, because student loans can be deferred while you’re in graduate school, but other kinds of debt — credit card debt, car debt, any other kind of debt that you have to be making payments on during graduate school — do everything within your power I would say to clear that before getting into graduate school because the stipend is already so meager, you don’t want to have ongoing payments that you don’t have to, once you’re in that situation. And then of course the student loans in another basket, if it’s at all possible to pay down part or all of them are maybe the ones that the highest interest rate or just to make some kind of progress on that student loan debt, if you’re carrying a lot of it, before you start graduate school. It’s an amazing step to take. It’s a gift to yourself. Me personally, I had some student loans coming out of undergrad. I was sure to pay off all of the unsubsidized student loans before I started graduate school. The subsidized student loans, they’re not going to garner interest during that time. At that point, wasn’t caring about that so much, but I got the unsubsidized ones wiped off before I started graduate school. Just wanted to emphasize that point as well. Please go on with your other other advice for early career PhDs.

08:59 Zach: Yes. So this is more about where you’re planning to study and how you can kind of network beforehand. You brought up a great point that I want to hit on again about where you’re living and how much you’re paying and understanding kind of the socioeconomic context of not the university, but the city. Austin, like you said, is really rapidly growing and I applied across the country. I applied to Indiana, Vanderbilt, Stanford, Michigan, Princeton, Cornell, all over the place. But I was really specific about researching Austin when I got in because I knew how rapidly Austin was growing. And to give you an idea of the cost of living increase and how much graduate students are actually paid, I moved into this current one bedroom apartment back in the spring of 2017 for $960 a month and I am a one hour commute from campus. So I’m one hour away for $960, with utilities it’s about $1200 a month. That was a sacrifice I made. However, these apartments now go for $1310. So they have increased almost $400 in two years. And I’m still one hour from campus. If I was arriving to Austin today and having to sign a lease today, I would pay almost $400 more than I would have paid just two years ago. Now you had talked a 10% increase — 30% increase, 40% increase. And these are not….we don’t have a garage. We don’t have a private yard. We don’t have too many amenities. It’s a pretty standard one bedroom apartment with air conditioning, but it’s also an hour away from campus.

10:53 Zach: I always host PhD students in the spring who are prospective students. And I always, when I show them apartments, I ask not only for the current rent because a lot of major cities have market rent, which means it changes, with the ebbs and flows of moving season throughout the year. Don’t only ask for the rent now and move in, but ask for it three years prior because they have records of all the leasing contracts and all of the, um, leasing and rental agreements. So you can see how rent has changed and gone up or gone down in a certain area. And actually I just helped a friend from Michigan move in just the other week and he and his partner made a very specific decision to go to a certain complex and neighborhood because the rent had been somewhat stable over the past three years and had only gone up about $180 over three years. Whereas my neighborhood is in a different kind of more developing area of Austin and it is growing like crazy.

Zach: Especially when you’re moving into a new city, getting an idea of historical trends and then do the exact same thing for the stipend. How much was the living stipend, how much was the assistantship five years ago? What does it now and do you anticipate a cost of living increase and is that going to be compensated by the university? Something that UT Austin recently did was dedicate new money to try to keep up with cost of living and try to develop some new graduate student housing, which we haven’t really talked about, but always inquire about graduate student and subsidized housing because some universities still do have it. Even though in a very landlocked, city locked university like UT Austin, there’s not a lot of room for expansion anymore, but always ask about the cost of living increases in historical rent in the city, how that relates to the stipend from the university and then what the university is going to do to keep up with that cost of living. I couldn’t agree more.

12:56 Emily: Yeah. I’m so glad you made that point.

Commercial

13:02 Emily: Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

Understanding The Role of Cost of Living Increases

14:05 Emily: Really, a new idea for me is actually asking about those historical rents and seeing the increases. This might be a silly question, but does Austin have any rent protection in place? Like increases can only be a certain amount over time, like in terms of laws in place?

14:21 Zach: Not that I am aware of and it doesn’t seem to have translated to people who have actually been into leases and stayed multiple years. Our rent has only gone up $60 in two years, but for the same apartment, for new leases, it’s that new elevated price. However, and this to me was just absolutely ridiculous, I was actually outraged by this, that we have a valet trash fee that is mandated. That we have to pay $14 a month to have somebody pick up our trashcan outside the door and take it to the dumpster. Now the dumpster is a half a block away and I don’t want to pay for valet trash, but I have to because it’s part of the lease and it’s an industry that Austin supports. So there are some fees — you know I’ve heard a lot about the fee creep and higher education where you might have a tuition freeze, but you can keep charging student fees and those add up. The same thing happens with amenities and fees in Austin. The trash fee has gone up, water has gone up, electricity has gone up. It used to be that we would come in a close to $100 over the summertime for air conditioning. Now it’s closer to $140 or $150, and it’s a dramatic increase. So not only understanding the rent, but really understanding what fees you have to pay, what are mandatory, what are optional, and then how those feeds are going to be adjusted over time, because in some big cities they’re just mandated and you just have to bite the bullet and pay for them even if you don’t want to. But those really add up just in fees. We pay an extra $95 or $100 a month just in fees.

16:09 Emily: Yeah. What I’m getting from this part of our discussion is just the importance of interrogating every single component of your offer, of what your living expenses are going to be. And all the time that you put into researching these different components before you actually move to the city that your graduate school is in, or after graduate school, same story, it’s really going to be worth it. It’s going to pay off when you do this research, because the less you have to learn on the ground once you’re there and make changes, the easier it’s going to be. If you can find a place you want to live for several years right from the beginning, it’s a lot easier for you. I did want to go back to make one other point from what you said earlier about asking about the historical stipends. I definitely think you should and can ask a graduate program that, but I wanted to plug my own website, which is PhDstipends.com and also I have another one for postdocs, postdocsalaries.com. PhD Stipends has been around for five years now, I think. And people enter which academic year, the stipend their listing is for. So if your university has enough data in there, you definitely can look back, even potentially at your own department and see what they were paying five years back to compare it to what’s in your offer letter.

17:24 Zach: Yeah, absolutely. And to your point about having that access to data and actually seeking that out, now that you mentioned that, I don’t know anyone else who did that when they came. A lot of folks were really excited just to be able to come to Austin and to be in a PhD program. It’s a very highly ranked program. It’s very prestigious around the country, so a lot of folks were just happy to be there. But then down the road they really kind of regretted not understanding where they were going to live, how much they were going to make. Also the time crunch in making a decision. I had to make my decision in a series of three or four weeks. I mean really in graduate student visits when I was admitted to PhD programs, I the beginning of February really until about mid-March to visit places, do my research. So also understanding how that’s going to affect whatever job you have at the time.

Zach: When you’re exploring PhD programs, it is a serious time commitment. I mean just finding a PhD program in a city that fits you and your budget and that you can continue to maintain your expectation of living whatever that is, is like a full time job. It’s like being on the job market and people should take it with the same seriousness and explore all of those resources that they can because like you said, I have been very, very fortunate. It was some good planning, but I’ve been very, very fortunate not to have to move every year, not to have to sublet. That means my computer workstation has stayed the same. I have a routine. I’ve been able to write. I’ve been able to travel because I haven’t had to worry about where I’m going to live, how much money I’m going to make. It’s all very budgeted, all very meticulous and I think that has really made the PhD program a much more fulfilling experience, because like you said, I have gone through those hoops initially to make sure that I was in a place that I could afford and I would feel comfortable in.

Final Words of Advice

19:24 Emily: Yeah, absolutely. I’m so glad that you brought up that point as well. Any final advice for other early career PhDs?

19:31 Zach: Yes, so I guess lastly, and it’s kind of more of a philosophical point, is I did make the choice not to go to a PhD program that wasn’t going to financially support me. And I think, most people who pursue a PhD, it’s right in the prime of their earning potential, right? So you’re talking early twenties to anywhere in the late thirties like that 10 to 15 year period, you can make a lot of money during that time of your life and pay down a lot of debt. You have to understand that going and getting a PhD, you’re going to forego wages and you might take on debt. It’s such a double edged sword because you’re losing money on one hand, and you’re kind of having to borrow more money. So really, really committing and making that sacrifice, because understanding how many hundreds and thousands of dollars you may be foregoing in the future, and having to pay back debt, and having lost wages.

Zach: The sacrifices I made were having a very compromised social life and a very kind of frugal living down here because I knew it’s going to be four or five years of just extreme sacrifice. I am not going to go out. I am not going to go out to eat very often, I have only gone out for drinks three times in three and a half years and all three times were for professional networking, and to work on projects. I just don’t do it. A margarita is $12 and that’s my food budget for almost an entire week. I have made that kind of level of commitment to stay out of debt and to do it frugally. Not everyone can do that, but if you can commit to doing that, you can get out without debt or with very low debt and 10 or 15 years down the road, you’ll really thank yourself, and you’ll look back and you’ll realize, you know what? I think that sacrifice was worth it.

21:27 Emily: Yeah, I think so. I mean your point about opportunity cost is a very, very important one and not something that people, I think think about enough going into PhD program. For me, it’s another reason to work before you go into a PhD program because you have a better idea of what you are giving up on the one hand in terms of salary potential during that time. And you also have more context for your PhD work. What is this going to do for me on the career side?

Financial Plans After Grad School

21:51 Emily: I’m gonna surprise you with one last question, Zach. This is not what I prepared you with, but what do you think you’re going to be doing with your finances once you’re done with the PhD? And hopefully, you have a job you enjoy that pays you much better than whar you’re being paid right now. Do you see yourself shedding some of these mindsets and habits that you’ve carried with you to this point? And if so, how? How can you even step away from this since it’s been going on for so long in your life now?

22:22 Zach: Yes. It is such a lifestyle. I cannot emphasize that enough. I have thought about what I want to do with my money when I graduate and get a job and now I don’t have debt and the money is mine to spend. I don’t want a larger than two bedroom house because I’ve never lived in a place larger than that. I wouldn’t feel comfortable in a four bedroom house in the suburbs. That’s just not me. I would not feel at home there or comfortable. I could never buy a new car. I could never do that. I would not feel comfortable driving in a 2019 anything. I’ve always bought used cars. I wouldn’t even feel comfortable doing that. If you remember actually from HEFWA, though, what is really, really important to me is donating. I wanted to stay out of debt and get a PhD and have the earning potential to donate to certain programs that I was a part of as a kid and that really helped me out. I think when people are asked about “why do you save money?” I saved so I can give more. Since I’ve been a PhD student, I have been able to donate about $700 to my alma mater and a mentoring program that they have going that I was a part of when I was there. For me, that is such a better use of the money instead of going downtown a couple of weekends and having drinks. I feel so much better about it.

Zach: I think having an understanding of the kind of money I will make when I’m done and then how I’ve grown up, it’s going to allow me to do a lot more good and amplify a lot of the philanthropy that I’ve started doing, and that is really how I’m going to be spending a lot of my expendable income as you could say. I’m going to start a savings account. I’m going to start a 403B or a 401k or some employer sponsored a savings account. If there’s a state pension program, I’ll participate in that. But it’s really going to free me up to spend money where I think it needs to be spent, which is education and low income kids. And like I said, I’m going to look back on my time at UT and Austin and say, maybe I was able to send some kid to community college because I didn’t go out. I was able to help some kid get their associate’s degree because I made those sacrifices and I will trade that any day of the week.

24:56 Emily: I’m so glad to have that incredible perspective from you on the podcast today. It sounds like a really bright future and happy for you that you’ll be finished quite soon, and you’ll get there before too long. Zach, it’s been an absolute delight to have you on the podcast today. Thank you so much for joining me.

25:16 Zach: Absolutely. Thanks Emily.

Outtro

25:18 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.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 covered 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 Lourdes Bobbio.

Three Financial Strategies Every Early-Career PhD Should Employ (with Kate Mielitz, PhD, AFC)

February 3, 2020 by Lourdes Bobbio Leave a Comment

In this episode, Emily interviews Dr. Kate Mielitz, an assistant professor at Oklahoma State University who holds a PhD in financial planning and is an Accredited Financial Counselor. Kate gives her top three financial tips for early-career PhDs: celebrating financial wins, no matter how small they are; asking questions regarding your pay and benefits; and saving in advance so you can say “yes” to networking opportunities, from a meal or drink with a colleague to conferences. Kate also tells the story of a recent financial challenge she encountered that is highly relatable to anyone in academia. Due to her preparation, what could have easily been a financial disaster became just a hiccup.

Links Mentioned in This Episode

Teaser

00:00 Kate: It is okay to make a financial mistake. I want that very, very clear right now. We are human. It is only money. Yes, you heard it from me. It is only money. How do we use it? It’s the tool that we’re using like the hammer or the screwdriver. If you make a mistake, you pick yourself back up, you carry on, you figure it out. What’s the mistake? You ask the questions of yourself and figure out where you went wrong. You figure out where you need help going forward, and you take proactive steps. You’re going to be okay.

Introduction

00:43 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode five and today my guest is Dr. Kate Mielitz, an assistant professor at Oklahoma State University who holds a PhD in financial planning and is an accredited financial counselor. Kate and I discussed the top three financial strategies early career PhDs should employ: celebrating financial wins, no matter how small, asking questions about your pay and benefits, and planning to spend money on networking. Kate also shares her recent and pretty big financial mistake, which will be highly relatable to anyone in academia, and how she weathered it. Without further ado, here’s my interview with Dr. Kate Mielitz.

01:34 Emily: I am just delighted to have joining me on the podcast today, Dr. Kate Mielitz, who is an assistant professor at Oklahoma State University and an accredited financial counselor. So we have an expert on the show with us today, for once. It’s wonderful. Please introduce yourself to the audience. Tell us a little bit more about how you got where you are and what you do.

01:55 Kate: Yes. Thank you so much Emily for having me on. This is a thrill for me. Let me give you the deep background first. I have 20 years combined experience, a bit little more than that, in collections, bankruptcy, fraud, financial counseling and education. I’ve been an accredited financial counselor for a little over 10 years. And the accredited financial counselor can be associated with and compared to the certified financial planning designation. The accredited financial counselor focuses on some of those foundational pieces, like, do you know how to budget? Do you know how to save? Do you have enough insurance? Do you know how to appropriately use credit? Whereas the CFPs look at wealth growth and wealth management. So my area of expertise is helping people get a solid financial foundation that works for them, that’s specific to them and their financial situation. Then I have my PhD in personal financial planning from Kansas State University and I work in the family financial planning program in the department of family development and family science at the Oklahoma State University.

03:06 Emily: Yeah. And again, it’s such a pleasure to have you on today, Kate. So, because you are an accredited financial counselor and a PhD in this area, and again, an expert, I am basically going to turn the reins over to you and let you direct where you want this to go. I asked you to give me your top three financial strategies that early career PhDs should be using. Let’s talk through those.

Financial Strategy #1: Celebrate Financial Wins

03:28 Kate: First, I want you to remember before I give these three strategies that it’s always dangerous to give me this much leeway, Emily, so thank you for that. But remember that no matter what I say, you need to be true to you. So ground this in your financial reality. And when I say for example, with my first strategy, always celebrate the progress forward that you make on your savings goals no matter how small, I mean that quite literally. If that means that for one month to the next, that all you can get in that savings account is an extra penny — celebrate it. It’s the small victories that then help us get into the bigger victories. Do we want to focus on just putting pennies, nickels, and dimes in savings? Not if we can avoid it, but when we are early career, when we are in graduate school and coming into postdoc and coming right up, it’s not always easy. Finding a way to commit to savings and then doing it always celebrating those small successes is so very, very important.

04:29 Emily: Yeah. I’d love for you to elaborate on the point you were just making about how, okay, even if it’s just a penny, it’s still worthwhile. It’s still something to celebrate. Even if the dollar $10 a hundred dollars, whatever scale we are at, it’s worthwhile doing. And can you talk a little bit about the reasoning behind that? Like why it’s worthwhile to save even if it’s just a few dollars? Because some of my audience members, it can only be a few dollars, if anything.

04:53 Kate: I have so been in those shoes. We could go forever on this, Emily. The fact of the matter is, any teeny tiny amount that you can put forward is still a teeny tiny amount that you’ve put forward. I have worked with families who are experiencing homelessness, who are out of work or supporting a family on minimum wage. So I get working with small amounts and the reason that we focus on the small amounts is because those are bite size. How do we eat an elephant? One bite at a time. Therefore we save a penny, a nickel, a dime, a quarter, a few bucks at a time to make that small progress. So then we’re more conscious about it. The more we’re thinking, “Oh, you know what, this is 34 cents that I got back in change — I’m going to put that in my savings account.” And then the next time, “Oh, this is 56 cents, I’m going to put that in my savings account.” Maybe we can’t do it every time, but as we think about these pennies, whether we collect in a change jar or it’s just, “okay, I made progress,” it’s gonna stick in there and we’re going have these little tickle reminders that it’s like, “well, I was successful. I was successful before. I can be successful this month.” And we’re not focusing on, “Oh my God, I only put 20 bucks in savings. I should just give up now.” Never give up! These teeny tiny amounts add up. Americans throw away billions of pennies a year. I mean, it’s mind blowing. So stop and think about what you can put forward.

Kate: One real quick caveat I wanted to share with you, Emily, on this idea. I remember watching an old Family Feud episode and the host asked, “we surveyed a hundred people on the street, what is the smallest dollar amount you would dive back in the trashcan to retrieve?” I was blown away that the number one answer was a $10 bill. I mean, I was like, are you kidding me? I have gone for 26 cents and I’ll do it because to me those small things make a difference. And I mean, whatever happened to the $1 bill and the $5 bill? Those, those are very valuable, as our quarters and dimes and nickels and pennies. So start small, save small, build as you can and you can do it. So celebrate that small progress.

07:11 Emily: Yes. Oh my gosh, I love this point so much. And one thing I wanted to add to what you’re saying is, one of the most valuable things that I think, and this is I think another rephrasing what you’re saying, of it sticks in your head when you start saving, you know, rounding up to the next dollar, whatever it is. I think what most important thing that it does is it changes your self identity to one of “I am a saver.”

07:32 Kate: Oh yeah, absolutely.

07:33 Emily: Doesn’t matter what the amount is. If you become a saver in your own mind, that’s what’s going to create that habit change that carries into the future when the dollar amounts can be bigger. But you have to start with that identity change. And the best way of doing that is to actually enact savings. Even if it is that small amount.

07:52 Kate: You’ve nailed it, Emily. I mean that’s it. It’s really about phrasing it. When you got your first published article, even if you were fourth or fifth author, didn’t you then say, I’m a published author? Well, yeah, the same thing goes. I’m a graduate student, I’m a successful graduate student. Oh my gosh. I’ve landed my first job. I’m a postdoc, I’m an assistant professor. Own these things. And yes, even if it’s pennies, you are a saver. So now let’s keep going. Absolutely.

08:22 Emily: Yeah. And going back to your original point of celebrate — what are some ways that you can celebrate without spending the 34 cents that you just saved?

08:31 Kate: Absolutely. Well, it’s kind of like weight loss. They say never celebrate weight loss by going out to eat. So we’re not going to celebrate saving by spending, but we’re going to maybe, and this is so key, especially for graduate students in early careers, but give ourselves permission to just kick it. Give ourselves permission to sit back and worry about the hustle, not worry about the side hustle, it exists, and just breathe. Whether that means taking an hour for ourselves and watching an extra show, or that means potluck in with a friend. You already have the food in the, in the cabinet. So let’s have somebody over. They bring a piece, you bring a piece. Nobody’s really out of pocket. Talking about it with friends. Call Emily, send her a message, send me a message. Say, “Hey, listen, I did it!” Celebrate those small things. Tell your mom and your dad. Sometimes it’s just a matter of not physically doing something, but just acknowledging it. Looking at yourself in the mirror and say, dude, you saved. That’s empowering and it’s exciting and it is a way celebrate.

09:41 Emily: Yeah, absolutely. So I think the word celebration maybe can be boiled down to just acknowledgement in some positive way. It could be as small as that or it can be bigger, if you have the means and the time to do so. But the key is do something that’s out of your routine to acknowledge that you accomplished something because you really did.

10:00 Kate: That’s right.

Financial Strategy #2: Ask Questions About Your Finances

10:01 Emily: Okay, let’s move on to your second strategy.

10:04 Kate: Second strategy: ask questions about money. Now, if you are in graduate school and you don’t have access, for example, to a retirement plan, maybe it’s not human resources that you’re going to. If you’re early career definitely be seeking out human resources to ask questions about your insurance plan or your retirement plan and what those things mean. But don’t ever think that you have a question that is too small or too easy or so-and-so is going to think I’m an idiot if I asked this. Listen, Emily and I would not be doing what we are doing if any question were too basic or too small. That’s how we thrive, right? Emily?

10:46 Emily: Exactly.

10:47 Kate: So if you don’t know who to ask, reach out to Emily, reach out to me. We are more than happy to answer any financial question you have because it is your financial health that you need to be focused on. So what resources? No, we’re not going to rescue. Absolutely not. But we’ll get you a list of resources. We’ll point you in the right direction. Sometimes it’s just as simple as, well does this mean that they’re going to match this and that’s a yes or no. So ask the questions and never be scared that “Oh, I’m a graduate student or I’m a PhD, I should know this.” No, not necessarily. That’s why they give PhDs in personal financial planning because other people don’t know. So that’s what I’ve got mine.

11:29 Emily: Yeah. I’ll say especially for, so obviously anyone who is an employee anywhere, you’re going to have an HR department or an HR person, or something. I say person because my husband works for a startup and they do not have an HR department, but they have a person, part of whose job is to handle this kind of thing. So there is someone, if you are an employee, who you can ask questions about the benefits that you’re receiving or even something as simple as, and this is a big question that we’ll get into later, “Hey, when’s my next paycheck coming? What amount is it going to be in?” Those, those are not even trivial questions for, let’s say a graduate student or a postdoc who’s changing how they’re being paid from this system to this system, et cetera. Things can fall through the cracks. It is very worthwhile to keep on top of these questions.

Emily: If it’s not an HR person who’s available to you, go to someone in your department, like the administrative assistant for the graduate program that you’re in or there is someone there. Even if they can’t help you with the question directly, they’re going to be able to point you to the next step. Definitely keep asking questions at your institution until you get the answers that you need around your benefits. And like Kate was just saying, you can go to outside people like me and like her if you have non institution specific questions. One I get all the time is “am I eligible to contribute to an IRA?” I can answer that question for you if you give me a few details about you know, how you’re being paid.

Financial Strategy #3: Plan to Spend on Networking

12:47 Emily: Now, what’s the third third strategy?

12:49 Kate: The third strategy is to plan to spend money networking. We talk a lot about planning to pay our rent. We talk about planning to pay our car payment or our car insurance, but we don’t always talk about planning to spend money socially. And, no, I’m not talking about going and kicking it with the girls or the guys after work, but that can sometimes be a networking tool. But I’m talking about really digging in and you know, once a month, every couple of weeks, having that networking lunch. Who is somebody that you met at an orientation or somebody who your major professor introduced you to, or somebody who you happen to find out via a Google Scholar search has the same area of interest as you in research, but it’s across campus in a whole different department. Reach out, invite that person to lunch. You can go splits down the middle, you can pay, you can switch off and pay as you go, but plan to spend that money. Because the old adage is that it’s not what you know, it’s who you know. But truly it’s what you know and who you know, you’ve got to have both pieces in there and that is so insanely true in academia. It’s what you know and who you know.

14:02 Emily: I think it’s really, really smart, as you’re bringing this up, just to acknowledge that first of all, networking is an important part of career development at every single stage. Never think that you’re too early on to start networking. You are a person worthy of knowing and you should introduce yourself to other people. So plan for it at every single stage of your career and just acknowledge in advance that you’re going to have opportunities come your way and you want to be able to say yes to them immediately without being concerned about where’s that money going to come from? You want to be able to accept a lunch invitation when you’re not really sure if you’re going to end up paying or the other person will, or you want to be able to accept taking a few hours drive to another institution to do a meeting. Anything like that, where you might end up being financially are responsible for, you don’t want to have to say no to that because you’re not prepared. So I really love the idea, and tell me what you think about this Kate, of having, so I’m really into targeted savings accounts or sinking funds, so having a sinking fund or target saving account that’s labeled networking and there’s enough money in there for whatever you think might come your way.

15:08 Kate: You know Emily, I was just thinking in my head, “Oh, I want to make sure that I talk about the budget sheet that I use.” Whether you call it budgeting or spending plan or targeted savings. The fact of the matter is you’ve got to have a plan for those dollars and cents and yes, having that emergency savings — I’m going to remind you, emergency savings comes first — but then secondary to that, what else do you need to have that money set aside for. On our budget sheets, I tell people all the time, I tell my students, I tell my clients, I remind co-counselors all the time — it’s not my money, it’s your money. So what is your plan for it? Where do you intend to spend it? And write it down. If I’m going to spend a $500 a month on entertainment, which I don’t do, but if I was going to spend $500 a month on entertainment, as long as my budget is balanced and I have the dollars and cents to do that, I can do it.

15:58 Kate: Now, when we’re talking about planned networking and we’re talking about spending money consciously to do this, I’m not talking 50 bucks a month. I’m talking maybe as little as $20. But like you said, Emily, maybe it’s a few hours drive to another institution. Or maybe we’re talking about a conference. It’s really big in our industry, and so we’ve got to take the time to find the money. Now it can be very difficult to do on small salaries so seeking out what funding is available through my department, what grant funding, what fellowship, what scholarship monies might be available. Ask. Even if you, graduated, you’re in your first position as an assistant professor or you’re a postdoc, don’t think that that precludes you from opportunities to get assistance to travel. Ask. Worst case scenario, the answer is no, we got nothing. Okay. At least you know, and then going forward you can put those dollars and cents away toward that. But I’m still going to say try and keep that $20 in your pocket so that if you get the opportunity to say, “Hey, let’s go grab a Coke” or “let’s go grab, you know, a quick bite to eat and talk this through,” you’ve got it. It’s not always easy to do, so please do not hesitate to ask a qualified professional for help. How do I put this budget together on these teeny tiny little pennies that I am paid? And there are resources available to help you do just that.

17:23 Emily: Absolutely.

Commercial

17:28 Emily: Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

Saving tips for larger networking events

18:38 Emily: One thing I just wanted to follow up on about the conference travel, because now we’re not talking about a $20 lunch, right? We’re talking about potentially thousands of dollars, between fees and travel and the lodging and all of that. So of course, totally want to underline, ask and ask and ask if there’s any money available from the sponsoring organization, from your department, from your university, from anywhere you get funding, outside scholarships you can apply for. There’s many different potential sources of funding for travel awards. That’s something we’ve covered on the podcast in the past. But I want to say that in some fields, the money is less prevalent, right? And so in some fields you may be able to say, “Oh, of course I’ll be able to find funding for that conference.” And maybe you can keep, you know, just a smaller amount of money available for your incidental expenses while you travel. But in some fields you may know, “well, I may get funding once or twice during my PhD, but really I should be attending a conference every year.” Then, it’s a scary thing, but you just need to acknowledge that that is going to come up at some point and start preparing for it.

Emily: Because the thing is, I think what happens with a lot of people with conference travel is that they end up just with a reaction to it. They act retrospectively instead of proactively about it. If you put a conference on a credit card and it’s $2,000, whatever, you’re gonna end up paying that over months or years and with interest and you may as well flip that around and pay it upfront into your savings over months and years and be gaining interest instead of losing interest. You’re going to end up paying for it slowly over time either way, if it has to come out of pocket and you can’t get it paid for, so just do it upfront instead of on the backend and you’ll come out much further ahead financially. I just hate it when I hear about students who have to forego these really wonderful conferences or networking opportunities because they can’t find the funding, they don’t have the money saved. And it can be a real blow to your career potentially. So it’s just something that’s worth building into your budget, as you were just talking about, early on, you know, from the beginning.

20:36 Kate: And let me, if you don’t mind Emily, I’d like to follow up on, on the comment you made with the credit card. Credit cards are amazing tools when used appropriately. We’re not going to use a hammer to put in a screw, we’re not going to use a credit card to finance everything. But if you know that you can utilize some points off that credit card and/or, emphasis on the and, you can pay that off, say for example, six months from now I will have this conference paid off rather than just making the minimum payment, but you can pay twice or three times the minimum payment, even if you can’t front load the conference because you found out about it last minute, or Oh my gosh, I never thought about it this way and I’m coming up on it. Don’t be afraid to use the credit card as a tool, but I just want you to be careful and I want you to be conscious and I don’t want you to think about, “Oh, it’s okay, I’ll carry a minimum balance for the next however long.” No, no, no. Go into it with the forethought to say, “all right, I’m going to pay this off in six to 10 months. This is how I’m going to do it. And at the same time, I’m going to be saving for next year’s conference.” Again, you are not walking this path alone. You have resources. Ask, ask, ask, ask, and you will get answers and you will find help to help you make these decisions and figure out how you’re going to use these dollars.

22:04 Emily: Absolutely. I feel I have to at this point put in a bid for my own services, which I do offer one-on-one money coaching. And so if you, one of the listening audience members, wants to work with me on these kinds of issues around budgeting or around paying off debt or investing for the future or whatever it might be, please contact me and I will be happy to, you know, have a short call with you to talk more about that. You can find more details about that in the show notes. And Kate, I don’t know if you offer individual services at this point or if you are, uh, you know, strictly in your academic role.

22:37 Kate: I do offer services. You can find, contact information for me and other professionals like me at afcpe.org and you can just search, find a counselor. I think it’s either find a financial counselor or find a financial professional in your area. I happen to be in Oklahoma, but there are many of us throughout the country who work specifically with students, graduate students, postdoc, early career, the broke, the wealthy, across the gamut. So we are available afcpe.org.

23:09 Emily: What I love about that AFCP database, and also if you wanted to search for a CFP, similarly, is that the professionals identify themselves by their areas of expertise or types of people that they prefer to work with. And so for example, for me, I’m not an AFC, but I specialize in graduate students, postdocs and early career PhDs. So probably anyone listening, your,within my area of specialty. But let’s say you had a different situation like you are in the military or your spouse is in the military, or you’re dealing with maybe an inheritance due to the death of a parent or you know, there are all these other special situations that might come up that maybe that’s your primary identification, not as a graduate student or postdoc, and maybe in some other area. That’s what I love about these databases that you can really search and find who is looking for…you are someone’s perfect client, right? And you can try to find that person through one of these databases. Thanks for adding that a resource, Kate, and that’ll be in the show notes as well.

How a AFC Deals With Financial Challenges

24:05 Emily: Okay. I think we’re ready to talk about your financial challenge that you have had recently due to your academic position. This will be very relatable to many people in the audience.

24:15 Kate: Okay, so let me lay it out really quick. Miscommunication is what this boils down to. Misunderstanding. Me, even as a financial professional, not asking the right question. Not full information being passed down the pipeline. So I wanted on the board, nobody is at fault here, but if somebody has to take it, it’s probably me. I didn’t ask the right questions, didn’t think about it the right way. But what happened is this: I have a nine month contract and I wanted to get paid over 12 months from the start, but because of when I did my onboarding paperwork, I couldn’t do it, I had to wait until the next spring. Well, the way I understood it was that when I did my 12 month pay, my pay would become effective July 1st, the new fiscal year of this year. Well, I knew that I was going to be out pay for about a month, but it turns out that that’s not what the actual situation was. Yes, they would input the information, but my 12 month pay would not actually start until my next contract started. My next contract starts September 1st, my first pay September 30th. So instead of one month without pay, I’m four months without pay. Ouch. Just to put it mildly.

25:42 Kate: Fortunately, because by nature I am a saver, I am a scrimper, I have very little fun. My husband is just like, “Can we go?” “No, I got to put the money away. No, we can’t. No, don’t ask me again.” I put money aside and my emergency fund will be empty come payday because I’m still pulling from savings with his retirement, his disability money to pay the bills. But come September, we’re back on the horse. And so yeah, the end of September. So I’m eking, I made it, I had enough money set aside. I had, I didn’t even realize it at the time, but with small changes, I had three to four months in the emergency fund. I’m always shooting for six. We had had a lot of fun and relaxation prior so I could have tightened the belt a little bit more. We only made a few small changes. This has been a hiccup for us. Not a, “Oh my gosh. Oh my gosh,” but again, another learning experience.

26:45 Kate: It is okay to make a financial mistake. I want that very, very clear right now. We are human. It is only money. Yes, you heard it from me. It is only money. You set a hundred dollar bill on the table. You get up and walk away. Forget the wind. It’s not going to get up and walk its feet. How do we use it? And so it’s the tool that we’re using, like the hammer or the screwdriver. And so if you make a mistake, you pick yourself back up, you carry on, you figure it out. What’s the mistake? You ask the questions of yourself, you figure out where you went wrong. You figure out where you need help going forward, and you take proactive steps to fix it. You’re going to be okay. We’re okay. I’m going to be rebuilding my emergency savings over the course of the next year, because that’s probably how long it’s going to take to get things back into the groove. But that’s okay. I now have a plan of action and I lived through it. My family lived through it. Nobody starved. This is a good thing.

27:47 Emily: Yeah. I think that this issue that you ran into, again, for the people inside academia, I mean, I hope it hasn’t happened to you, but you probably know someone this has happened to you. They didn’t, as you were saying, didn’t fully understand the contract that they were signing, didn’t fully understand the timeline that the other party was working on. And you end up without — in your case, it wasn’t specifically without summer funding, but that’s how it sort of laid out — but many people will end up without funding for a summer or a semester or something, at some point in their graduate degrees. Hopefully not as a postdoc, although I have known postdocs that that’s happened to, that they go a lapse and pay for some period of time. But this is exactly what an emergency fund is for, right? The primary way you calculate how large an emergency fund should be is if I lost my income for three to six months, how am I going to pay the bills in the meantime? And that is exactly the kind of emergency fund you had so you were able to sustain yourself and your family through that period. But it’s a super, super relatable problem. I’m really glad that you brought this up because hey, if it happens to you as a graduate student, that’s a mistake that Kate made and so you don’t have to feel bad about making that mistake.

29:01 Kate: Don’t feel bad at all!

29:04 Emily: People with PhDs in personal financial planning can make this kind of mistake too. So don’t feel bad about it. But the point is just to the greatest extent possible to prepare in advance for whatever comes your way. It might not be specifically this kind of lapse in income, but at some point you may have a lapse in income for a variety of different reasons. It’s a great reason to have an emergency fund. All kinds of other emergencies might occur and other great reason to have an emergency fund. As we were saying earlier, use that mindset of putting away even the small amounts of money. Start snowballing that account bigger and bigger and bigger, and over time it’ll eventually become a full-fledged emergency fund or whatever it is that you’re working on. Thank you for sharing that story, Kate.

29:44 Kate: Absolutely. And then when you do use it, like I’m in my position, I’m empty or I will be empty in about three days. Start over. And if that means that I’m starting small and I will, because my last paycheck when I was really focusing on building it, I was getting paid over nine months. Now I’m getting paid over 12 months, so my paycheck is going to be smaller. So my contribution to savings is going to be smaller. But that doesn’t mean that I give up. That doesn’t mean that I look at that and say “Oh, I’m never going to make it.” No, I am going to make it. Is there something I can cut out? Like, I don’t need to go downstairs to grab something to eat everyday. I can pack that sandwich, or you know, small things like that. The things that we hear, no matter where we go, here are easy ways to trim your budget. They are true. Not all are applicable, don’t get me wrong, but if it’s a $1.50 for the soda at the vending machine and you’ve got a cold Coke at home, grab it from home, stick it in your backpack and off to work you go. Small, teeny tiny changes will add up. That’s not just in contributions to savings, but also in decreases to your budget. The small make a difference, because gosh darn those pennies add up.

30:54 Emily: Absolutely. One last point that I wanted to make about this story and what you were just saying, is that if you do end up choosing to make some sacrifices to your lifestyle to fund a savings goal. For example, you’re needing to rebuild your emergency savings, it’s going to take a while. You’re going to have to do a few sacrifices in the meantime. Don’t think that that’s going to be forever. Don’t think that just because you have to give up your weekly lunch out, or whatever it is that you are in the meantime, it’s a temporary thing that you need to do to reach this goal. Once you have reached the goal, you can reevaluate. Is that something that I want to continue in that habit that I’ve created? Or is it time to add that spending back in now that I have a little bit more financial security. But don’t have the mindset that just because you make the cut for some period of time, it has to be forever. Things will be different in a few months or a few years and you can reevaluate at that point.

31:47 Kate: And also don’t be afraid to say, I can’t afford to do it this month. It is absolutely empowering to say I can’t afford to do it this month. Maybe that means that you don’t participate. Okay. But if you are honest with yourself and have the courage to say, I can’t afford it, I guarantee you the person you’re talking to is going to understand, because they have been there or maybe they’re there, but they’re hiding behind a credit card or they’re hiding behind borrowed funds. Listen, people, it happens and it happens all the time. So it is okay to say I can’t afford it. And yes, I know that point number three was the plan to spend money networking. Well, plan to bring a Coke and a sandwich from home and go meet on the bench. Go meet at the union and people watch. Go for a walk in network. You don’t have to have $20 every time if it’s not going to work. If it’s not in your budget, it’s not in your budget. But don’t think that the money needs to stand in the way of that networking.

32:48 Emily: Yes, absolutely.

How to Contact Dr. Kate Mielitz

32:49 Emily: Well Kate, this has just been a wonderful interview and I’m so glad to have met you and to be able to introduce my audience to you and you know, let them know a little bit more about what an AFC is and you know, what do you guys do? And so thank you so much for joining me today.

33:03 Kate: Thank you so much. It’s been an absolute thrill to be on today, Emily. I really appreciate it.

33:08 Emily: And where can people find you if they want to follow up about something?

33:11 Kate: People can find me on Twitter, @KateMielitz, and I have a sneaking suspicion Emily that you’ll put that in the comments. You can also find me on Instagram, @KSMielitz , or if you just Google my name Kate Mielitz and Oklahoma State University, it’ll pop right up and give you my university contact information as well.

33:35 Emily: Beautiful, thank you so much.

33:36 Kate: Thank you.

Outtro

33:38 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.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 covered 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 Lourdes Bobbio.

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

December 16, 2019 by Meryem Ok 1 Comment

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

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 Part-Time PhD Student Needs Her Full-Time Income for Her Financial Goals

November 25, 2019 by Lourdes Bobbio Leave a Comment

In this episode, Emily interviews Patrice French, a PhD student in adult education at Texas A&M. Patrice has a full-time position at her university and is pursuing her PhD part-time. She is paying for her degree through her employee benefits and a small grant she won after searching and applying for over 50 external scholarships and grants. Emily and Patrice discuss her path to the PhD, her decision to maintain her full-time job while in her program, and what she expects the PhD to do for her career going forward. Along the way, they touch on Public Service Loan Forgiveness, repaying consumer debt, side income, investing for retirement, and the positive steps Patrice has taken with her finances over the past few months.

Links Mentioned in This Episode

Teaser

00:00 Patrice: The reality at the PhD level is that there’s not a lot of funding for part time students and that’s just something that I had to contend with. I’ve scoured the internet, I’ve looked throughout all of our university. I looked at regional associations tied to my degree and it’s just not a lot out there for part time students, so being prepared to really fit the cost of your education is something that you have to think seriously about because there’s not going to be a lot of financial support for you as a part time student.

Introduction

00:35 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 fifteen and today my guest is Patrice French, a PhD student in adult education at Texas A&M. Patrice has a full time position at her university and is pursuing her PhD part time. She’s paying for her degree through her employee benefits and a small grant she won after searching and applying for over 50 external scholarships and grants. Patrice and I discussed her path to the PhD, her decision to maintain her full time job while in her program, and what she expects the PhD to do for her career going forward. Along the way, we touch on public service loan forgiveness, repaying consumer debt, side income, investing for retirement, and the positive steps Patrice has taken with our finances over the past few months. I’m very excited to share her perspective here on the podcast. Without further ado, here’s my interview with Patrice French.

01:39 Emily: I have joining me on the podcast today, Patrice French and she will be telling us about her journey to the PhD as a part time student and a full time worker. So Patrice, thank you so much for joining me today.

01:52 Patrice: Thank you for having me Emily.

Will You Please Introduce Yourself Further?

01:54 Emily: Please tell us about yourself — where you’re in school, who your employer is, where you live, all those kinds of.

02:01 Patrice: Sure. Well, I am currently at Texas A&M University. I’ve been here a little over three years and this is also where I am pursuing my PhD. I am finished with my second year in my program, which is educational human resource development with an emphasis in adult education, but I like to call it adult education for short because the degree name is a little bit long and people often don’t know what that means. Texas A&M, the main campus is located in College Station, Texas, which is approximately a hundred miles northwest of Houston, Texas. So we’re not too far aside from some major cities in Texas.

02:44 Emily: Yeah, that sounds great. I actually have a little bit of a personal connection, I guess, to your field because my mother-in-law made her career in adult education and ultimately rose to the level of principal of an adult school. So yeah that’s what she’s been up to. Tell us your backstory, maybe from high school or college and what you were studying and what brought you to your current point.

From Social Work to Adult Education

03:12 Patrice: Sure. I have a background in social work actually. I have my bachelor’s and master’s in social work. I went to Texas Christian University in Fort Worth, Texas for my undergrad and I got my master’s degree at the University of Michigan, also in social work. So for a little bit of time I was licensed to practice social work in the state of Texas, but while I was pursuing my master’s degree, I learned that my focus on social work was pretty much in the minority because I was more focused on policy analysis, whereas most of my colleagues really wante to work inter-personally with families, children, things like that. I made a strategic decision to build my skill in a way that would support the efforts of social work, but at a macro level. While I was at my master’s program, I was a research intern at a social justice education program and my experience there basically just led me to an opportunity in higher ed doing social justice and multicultural education and basically led to my switch from social work to higher ed, which is where I’ve been for the past 10 years.

04:23 Patrice: My first job outside of my master’s degree, I would definitely say parallels different areas of social work, but I’ve transitioned in some ways to being more entrenched in higher ed where I wouldn’t consider my work to be social work. I did diversity and multicultural education work for four years and I was in St. Louis. I moved from University of Michigan to St. Louis in Missouri. I did that work for four years and then I transitioned to doing academic student success and retention work, where I oversaw unit that was tasked with supporting students who are transitioning to make sure they have their tools and things to be successful for retention, et cetera.

05:11 Patrice: I moved back to Texas about three years ago and some of that was precipitated by a major health event with my father. I was searching at the time, but by happenstance I happened to apply right around the time my father became ill. While I was in Houston, which is where I’m from, being with him, I basically got a really quick offer from Texas A&M. and I said, “well, I guess it’s meant to be that I’m back in Texas.” And a couple months later, I was back and that was in 2016 and I’ve been back since.

05:45 Patrice: As far as my trajectory to pursuing a PhD, I had been thinking about that really since I was in my master’s program and thought that I would work for three years and go back to school and become a social work researcher. But since I’ve kind of floated around outside of social work for so long, I didn’t think that was a good fit anymore, but I really was still interested and ended up exploring different programs either in psych or communication or an education for probably two or three years. I decided to take a break from looking at it because I thought it’d be more advantageous to work. I was not willing to sacrifice my income, and with my father’s health, I just put that on the back burner so I can be closer to him and my family to make sure that they had what they need. I was back at A&M and learned that they had an adult education program in my university and I actually work in the college that also hosts my program. I did some research and just decided to apply and got in. So a year into me working at A&M, I started my doctoral program and I started part time and have been pursuing the program part-time since 2017. It’s been a bit of a journey. I will say that I don’t know if I would recommend working full time and being in a doctoral program part-time or even, I know some colleagues that do it both full time. For me, I don’t really have any major life commitments to where I can’t balance it. I have a dog, but I am child-free, I don’t have a partner. Outside of going to visit my family, which is about an hour or 40 minutes drive away from me, which I usually go twice a month, I don’t have those huge commitments to where that it would make it harder to balance outside of just the commitment of supporting myself and making sure I’m doing what I’m meaning to do with my main employment position. And then just figuring out life and making sure I take care of myself, health wise and things like that. It’s been a lot.

Deciding on a Part-Time PhD

08:11 Emily: I can definitely see how you got to the PhD though. It’s clear from the point when you were in your master’s that the more academic kind of work and training was going to be a good fit at some point and you got there in a slightly different field than you were expecting. That’s great. I think you mentioned a little bit earlier that you didn’t want to sacrifice your income, but was that the main reason to do what you’re doing this way, with full time work and part-time PhD, rather than doing the PhD full time or are those programs not like well-funded or how did you come to that decision?

08:48 Patrice: I believe the year I started at A&M as an employee, they just started a new benefit where staff employees who could pursue a degree and get some tuition assistance. You had to work at the university for a minimum of one year to be eligible for that. The way that it was marketed at the time, I thought it was only $2,000 maximum for your pursuit of your degree or maybe between $2000 and $5,000 just for one year. So I was under the impression that I would be funding most of it myself and my program funds traditional full time students that are able to serve in TA, GA, or RA positions. Funding was not an option for me through my program nor was it at the larger university level because most of the graduate funding and fellowships were full time students. Or all of them actually. I haven’t seen any part time student funding fellowships at the university level. Financially, it would not have worked for me to go back to school full time because I think our average GA/TA salary is about $1,900 a month and most of them fund just traditional fall and spring hours, and the summer. My amount of bills and needing to be available if it was necessary to support my family. It just really wasn’t an option for me and I just didn’t want to sacrifice getting to a place where I was sort of comfortable. I didn’t want to struggle like I had been in graduate and undergrad and so I just decided not to do that.

10:31 Patrice: Up until the time when I got admitted, I was searching furiously for funding opportunities and I think I applied for over 50 external scholarships. I have a very detailed spreadsheet that tracks all of that and I didn’t get anything. I was applying to $500 scholarships from law offices or foundation repairs. It was just everything that didn’t have a stipulation for what a student should be, I applied for, and nothing. Right into the start of my program, I talked to our benefits people at the university and that’s when I learned that the benefit actually is as long as I’m employed at the university full time, I will get up to $5,000 a year in tuition assistance, which breaks down to $2000 for the fall, $2000 for the spring and $1000 for the summer. That, in combination with some fee waivers, which I think equate to about $300 a semester, really covers about 80% of my overall tuition fee costs. That ended up being way more affordable for me to have to come up with maybe $400 or $500 a semester in comparison to $2,600. In my college, our tuition and fees, excluding some of the fees that I don’t have to play as an employee , the tuition is about $2,547 per semester if I’m taking six credit hours. It sounds really inexpensive in comparison to some other institutions and I’m in state as well, so that makes a big difference, but still it wouldn’t be affordable on my salary to pay out of pocket without pursuing any external aid or scholarships or loans.

12:25 Patrice: I made a very intentional decision not to pursue any more student loans because I have them now and they are continuing to accrue interest and things of that nature, based on the payment plans I’m under because I am pursuing the public service loan forgiveness and have been under the income based repayment plan for four years. Now I’m on the pay as you earn, but my balance has increased and although I’m in school, I have chosen to waive my deferment so I can continue to make payment towards my loan so I can increase my qualifications sooner than later. I just didn’t want to occur any more debt and so I decided either I’m paying for this out of pocket as much as I can, so that might mean that it takes me 10 years to finish my degree, or I’m going to try to find some aid. Gratefully, I have been able to cover all of my costs for my program. I also found a small grant that I have to apply for annually, but I’ve gotten each year, that is for $1,500 for the fall and the spring.

13:36 Patrice: My net costs for my degree program has been negative for me out of pocket, meaning that in many cases between the grant and my tuition assistance, I actually get a little bit of a refund that I’m able to put towards books and supplies, software and other general living expenses. It’s actually worked out very well and I’m very grateful that I’m able to pursue my degree pretty aggressively. I think two courses per semester is a lot to be doing while working full time. And I do one in the summer. So far it’s been a very affordable degree. And even with that, I have a very detailed spreadsheet to the penny where I’m able to project how much my total degree is going to cost with fees, tuition, even diploma fee, the dissertation fee, even the regalia, I already haven’t an estimated a cost of total attendance. I’m being very diligent towards those costs, even though they have primarily been covered by my institution.

14:43 Emily: This is a very thorough explanation. Clearly you are on top of all of these different areas, in terms of the, and I’m, I’m glad that you mentioned pursuing all of those like scholarship applications that you did. I mean, only one grant has come of it, which is good, it’s what you needed, but not more than that because it was such a limited pool for part-time options. But it definitely sounds like you’ve been funded to the degree that you need to be and you just have to keep working your full time job and time to do the graduate work on the side. It’s different to work a full time job than to be like a TA, because a TA, tt’s only a 20 hour week per hour per week commitment and you have a presumably 40 hour per week commitment, but also as a professional, you’ve been doing this for a while, you’re very efficient. I can see how this would work out like pretty well, definitely financially, and also how you can manage your time. Before we move on from this, what does the future look like for you? What are your career goals with the PhD?

Post PhD Career Goals

15:56 Patrice: I always wanted to get a PhD for the credentials and that is still my primary goal. When I was admitted to my program, since Texas A&M is such a huge research institution, I wanted to open myself up to opportunities that would expose me to the academy, to what a tenure track faculty position could be for me. Is this something that I can see myself doing? So I’ve been building my experiences to both pursue the degree itself and also build my CV to give me opportunities, through publications, research experience. I’m still on the fence about whether or not I’m interested in an academic career and I’m leaning towards that not being for me and I do feel like I have a lot of skill and I’ve gotten some really positive feedback from my professors and peers in the field at conferences I’ve attended, but I don’t know if it’s for me in terms of the work with the writing and a lot has changed in the academy with how competitive it is. And quite honestly, based on my research, I would likely be taking a pay cut and would essentially be transitioning to a new career track that would take me maybe five to seven years to recoup the my salary that I had built thus far. And I don’t know if I’m willing to sacrifice that. I don’t really foresee myself getting a partner anytime soon, that may contribute to making a change in that decision. Aafter this, I do foresee myself staying in higher education. My current role right now is that I’m in an academic administrative position overseeing a program assessment that’s tied to some accreditation needs. It’s very much an administrative role, but there are lots of opportunities in higher ed that with the PhD specifically will open up opportunities. So I’m not too worried about where I’m going to land. I’m just gonna hold on for dear life for right now so I can finish my degree and then make some decisions about that. I’m crossing my fingers, I should be finished by the end of 2021 with everything. I have a year and a half left of coursework, so I should be done fall 2020, and my goal is to devote 2021 to writing. By 2022 I should be at a place to evaluate where I am and make some decisions, things like that. I don’t know, we’ll see.

18:30 Emily: You anticipated my next question because you had offhandedly said earlier, “Oh, might take me 10 years to finish,” but that definitely does not sound like the plan that you see yourself on, so that’s really, really good to hear.

Commercial

18:45 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 long term. 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 wait list 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.

Side Hustling for Extra Income

19:59 Emily: So in terms of funding your PhD, we’ve talked about you have your salary. Thankfully you haven’t, it sounds like, had to use your salary directly to fund the PhD. You have your tuition assistance from your employer. You have this grant that you won. But you told me that you also side hustle, so can you tell me about that?

20:16 Patrice: Yes, I am trying to find multiple ways to supplement my income even though I feel like I’m pretty stable. I did buy a home a couple of years ago and so there’s some costs that I’m looking to cover in terms of maintenance and repairs that are eating away at my salary more than I anticipated and I’m trying to recoup my savings. I have done a number of things. I have done freelancing editing work. I am renting out a room in my house with a colleague and friend of mine. I have done a lot of freelancing stuff as well, mostly editing. And something that’s more towards my student loans, I am partnered with an organization that basically connects nonprofit organizations with freelancers that have a level of skill that the organization needs and upon successful completion of a project, that organization will pay my student loans directly in the form of a stipend. And so I’ve done a couple projects. I haven’t done that many because I’m super busy, but that is another way that I’ve tried to indirectly try to pay down some of my debt with my loans even though I still plan on pursuing public service loan forgiveness, but I don’t know if I will continue to pursue that because it’s counted as income. So I did get a miscellaneous 1099 and it’s taxed, so I don’t know how advantageous it is for me to not see those costs directly, and how it affects my taxes. That’s pretty much what I’ve done. I don’t have a lot of time to do a lot of freelance stuff. Before I started, before I moved here, I did Ubering for a while, which was more lucrative for the drivers than it is now, hearing what I’ve heard, because I do still have some peers that drive for it. But I’m pretty busy so I don’t have a lot of times to do work that takes a lot of time, so any way that I can make free money, that’s where I’m kind of looking at now. The rental income is an easy way to do that and it works out both for myself and my friend because she gets to save money because she’s also in a doctoral program and is really looking to save on costs from renting her own apartment. And I’m able to get a little bit extra income that can go to other things.

22:45 Emily: Yeah, I was going to say the rental income sounds like the perfect solution in your situation because a full time job plus being a PhD student plus trying to side hustle where the side hustling involves trading your time for money, that is a lot on your plate and as you said, you’re visiting your family and so forth. The rental income is really just leveraging another asset you have, not your time, but your home, in a new way. That sounds like a really a really good fit. I’ve published an episode on the podcast before about a homeowner who rents out, who at the time was renting out rooms to his friends and how it was really just, while interpersonally challenging in a couple of ways, really overall very beneficial, mutually. So a good situation when you are able to rent to someone that you know and like and want to be around and trust to pay the rent on time and so forth.

Student Loan Repayment as a Part-Time PhD Student

23:38 Emily: You’ve mentioned your student loans a couple of times and your pursuit of PSLF. I meant to say earlier, it actually makes a lot of sense to me if you are into PSLF to not, I guess go to graduate school full time because I think that would have stopped the clock on that, I’m assuming.

23:56 Patrice: Yes. As long as I’m have my employment verified for full time employment, it would not. It still defers my loans automatically, but there is a one-time option to submit for a waiver of the deferment. You have to either stick with it or you don’t, they’re not going to give you the option to go back and forth, so I made that decision before I started, so I never had a lapse in my qualifying payments for that reason. I’m just sticking very diligently to and really connecting with the loan servicer in regards to where I am and I’m making my minimum payments and just chugging away.

24:37 Emily: And I think you may have mentioned earlier, are the student loans totally from your master’s degree or also from undergrad?

24:44 Patrice: They’re a combination. My undergrad degree was, my first two years were fully funded by scholarships and due to some transition and changes, a part of that was there was an increase in tuition of about up to 7% per year. And TCU is a private institution, so that 5-7% on $19,000, it makes a difference. My last two years of my undergrad, I think I took a total out of, I think, $14,000 and my master’s degree, I took out $24,000 and my master’s funding was only to cover my living expenses because I had a scholarship that covered all of my tuition and fees. While I tried to find employment while I was at Michigan, it was getting really tricky, so I just decided to take out the loans. I was only there for a 13 month program anyway, so I figured, let me just focus on my education and get out and just deal with the loans later. Total for both my degrees it’s about $36,000, but my balance is about $37,500 now eight and a half years later due to the accrual of interest and capitalization since I’ve been on the income based repayment plan instead of the standard option. So it’s just sitting there.

26:01 Emily: I’ve also done other other episodes where we discuss PSLF, very common in our community to be either pursuing it or considering it. What do you think about that decision now, eight and a half years in? Was PSLF the right route for you?

26:17 Patrice: I think it is. My salary when I was right out of my master’s degree was about $30,000 a year and it was in a state that took out state and local taxes, so my take home was about $1,800 per month. I think my standard payment at the time would’ve been about $400. That is a little bit under a quarter of my salary, and so I was really intentional about thinking about the options. I know I’m likely going to stay in nonprofit higher ed. That really wouldn’t be too much of a challenge to pursuing other employment options in lieu of a public service option. Really the salary and then my employment options were my main decisions behind that. I’m a little bit antsy about it given the challenges that I’ve been hearing about, but I think by the time that I’m qualified for forgiveness, there will have been…One, I think that any changes they make will affect new borrowers and not existing borrowers. Let’s say they take it away. I think that it won’t affect me. I think a lot of the hiccups that have happened with the borrowers that are qualifying now will have been remedied by the time that I qualify, which honestly should be in 2022, but I have some payments that are under review that I’ve not gotten a straight answer on in over a year. So my date is September 2023. So within 2022 or 23, I should have a qualification for forgiveness. I’m trying to stick to my decision. That’s why I’m on the fence whether or not I’m going to ambitiously start paying them down, or if I should just stick to the minimum payments because it really aggravates me to see my balance to staying. Because I’ve also been able to maintain a taxable adjusted salary that is, that keeps my payments pretty low. I have a very good accountant that’s able to, with my freelance income, to reduce my income a lot to where what’s reported helps to keep those payments low, which is a goal of mine since I am still covering a lot of other things. But I don’t know. We’ll see. If it happens that it no longer is advantageous for me, then I will make plans to pay them down because I am on a pretty ambitious consumer debt plan right now to where I should be done with all of my consumer debt, excluding my mortgage and my student loans, by next year. And so that should free up a lot of salary, especially if I continue to get some supplemental income through renting my room or stuff like that. So if it happens that I want to change my mind, I’ll just start ambitiously paying it down and will get rid of it.

29:19 Emily: You sound, overall, pretty optimistic about the program. I share your optimism.

29:25 Patrice: Cautiously, I’m cautiously —

29:27 Emily: Yeah, very good point. And really since you’ve been on the plan for eight years, it makes sense to hold out for that last 20% and just see it through and hope for the best.

Other Financial Goals

29:40 Emily: Tell about your other financial goals. You mentioned other debt repayment.

29:45 Patrice: Yes. So my goals right now are to really get a hold on my consumer debt. I have a little bit of credit card debt. I have a car that I have a year and a few months left back on that. I actually have been listening to a lot of your podcasts and reading the blog and have put together a debt plan where I think I’m using the avalanche method to really just target one area of debt at a time. I’m targeting the highest interest rate and then just tackling it and then going to the next. I have a pretty robust plan that if I stick to it, I should be done with everything by the end of June. I have a couple of credit cards and I have a car payment that I think has about $6,000 left on it. I had a really good interest rate on that. It has 2% interest on my car. Really, it wouldn’t save me that much. I have a loan for doing some home repairs and I would pay off a year early, a little bit under, maybe 10 months early on my current plan. I’m really just focused on getting the consumer debt down.

30:57 Patrice: I also want to build up my savings because partially me buying a house, there were some unanticipated expenses of repair really early on to me purchasing them. Since I had done so much on the down payment, I didn’t have the savings to do the repairs, so that was part of the reason why I have a loan for doing some of their repairs. By paying off all of this debt, it will free up a lot of my income so I can start saving, which is a big goal. I’d really like to have more of a cushion than I have right now. Besides that, some larger goals are to just do a lot better at my mid-term and long-term planning. I usually would just plan month to month and all my bills are really the same, so they’re on auto repayments. Any overspending I’m doing or not planning ahead is my fault, quite honestly, unless there’s an unexpected expense, like if my tire blew out or something. But a part of it is just me just being too social and liking to go out and drink and eat out when I can easily just eat at home. It’s just being more fortuitous on my budget so that I could meet some of these financial goals and I’m being less reliant on overspending and really trying to plan out.

32:19 Patrice: I actually have a spreadsheet that is between now and 2020 that kind of plans out how much I’m expected to spend on all my bills, which really shouldn’t change. And then as those debt balances go down, I anticipate that my salary is going to go up so I can start planning for more savings and planning around travel because that’s a big thing that I don’t do a good job at. If I’m traveling for a conference, which a lot of that is self funded, or I’m just going to visit friends and stuff, I kind of just figure it out, and usually me figuring out is putting on my credit card and paying it off later, which isn’t the best approach. I’ve actually applied for a credit card that has a really good mileage rate. There are no airports that are really close to me where I have a preferred airline and so I’m really focusing on putting my recurring bills on that card to build up points, so that I can use that for more of my travel instead of just relying on just any old card. I’m trying to be a little bit more savvy with things. I definitely think when I get through with my debt, I won’t really have to worry about trickling back to my credit cards since there will be so much more flexibility in my salary or my take home anyway. That’s about it.

33:40 Emily: Yeah. It sounds like you’re tackling now the personal finance side of things with the same kind of diligence and energy that you were in these other earlier areas that we discussed more related to your career. That sounds amazing. There are so many wonderful strategies that you just laid out and so I hope that everyone caught them the first time around. Great stuff that you’re doing right now. How are you doing on long-long-term, like retirement stuff? Does your employer already do a lot of that?

Retirement Savings

34:10 Patrice: Yeah. My previous employer, I worked at and institution in St. Louis, I forget what they matched up to, but after the year I was able to contribute at a matching rate up at least to 5%, but I think I might be wrong.I have a 403b that is sitting, that I haven’t touched, I’m just letting it accrue. And then I have a separate retirement plan since I worked for the state of Texas. They take a little bit longer to get vested in, so they’re contributing an equal amount, which is 7.6%, that I’m contributing each month. But after five years I’ll be fully vested as an employee. Um, so if I ever leave I can just let it stay there, I can come back and it’s a really robust retirement system. I will definitely be here long enough to get vested. Those are my main two things and because of that, I haven’t really pursued any other retirement options such as a Roth IRA or things like that, because I’m well-matched at my institutions and I think it’s the equivalent of a pension retirement with the state of Texas. I don’t think it’s your traditional investment fund. I think it’s fully funded and that my eligibility I think is at 55 years age or the equivalent of I think 20 years of service or something. If I wanted to, if I ended up staying in the state of Texas or at this institution, I would have the option to retire at 55 because I’ve been working here since before I was 30. I think it’s a good option. That’s something I’m paying attention to more readily, but I’ve been contributing to my retirement since I was 22, at a minimum of at least 2.5% of my salary, which was not a lot at the time because I was making $30,000 or $33,000 or whatever. But definitely at a point now I’m maxing out the full contributions and maybe if my salary is freed up once I start paying off my debt and have a more sizable savings and I might take out in a Roth IRA to maximize their savings as well. Or I think I’m also looking into some investments, but that’s kind of a long-term thing. I would feel more comfortable pursuing investments once all of my debt is free, so I’ll have a lot more pocket money to play with, assuming that I’m in the same role I’m in now, making the same salary that I am.

36:41 Emily: Yeah. I can definitely see this as one of the advantages of doing the PhD part-time while working full time is that not only do you have the higher salary, but you have these benefits that graduate students never receive. That’s awesome. And it seems like over the next two, three, four years, a lot of different pieces of your finances are going to get a lot easier, right? That’s going to be paid and PSLF will either come through or you’ll have to focus on paying off in another way. Other consumer debt will be gone. It really seems like…And of course when you finish your PhD and your salary hopefully will change, it’ll really be a pretty nice rosy picture at that time and you’ll be able to pursue the IRA or other types of savings, or whatever lifestyle stuff, whatever you want at that point.

37:29 Patrice: Yes. Yes. That’s my goal. Something I neglected to mention is hat my tuition benefit that the university is actually really smart in this because if you’re pursuing graduate level work, and you get tuition assistance from your employer in excess of $5,250 in a calendar year, anything over that amount would be taxed as income. And my previous institution gave a hundred percent tuition remission, but it was a private institution and tuition was about, I think $25,000 a year. So even if you were pursuing part time, most of my colleagues that were pursuing degrees, they would actually end up owing taxes annually because of that. Then our employer worked out a deal where you can just pay the taxes out of your salary, so it wouldn’t feel like such a big hit. But I don’t have to worry about the tuition assistance being a taxable benefit because it’s right under that mark in a calendar year, which is fantastic.

Financial Advice for Part-Time PhDs

38:32 Emily: Yeah, because I mostly deal with full time students, it’s something that I’m like, “Oh yeah, I remember those numbers, I remember being aware of that,” but it’s not something I’m intimately familiar with, so I’m glad you can tell us about that on the podcast. As we wrap up here, what is your best financial advice for another PhD student? Perhaps a part time student.

38:54 Patrice: I would definitely say, look and find as many resources as you can to fund your education. Depending on your program, there may be funding through grants. For example, I’m on a research project right now, that I’m not being funded on, but they got a little bit of money to fund graduate students for extra work. I know that it may be something to consider between the time you’re already spending working, but there is funding out there within your programs, through a lot of the research that’s being done. It’s really just being proactive to ask for it and also don’t feel like you have to rush to graduate and get it done. That’s something that I had to reconcile with, and I had to keep asking myself, why am I really pushing to get this done by this date? And there’s no real answer to that. So if you are reasonable with your time, that is something to make it really affordable, in terms of whether or not you’re going to pursue self funding or program funding or even things like loans and stuff like that. I have a colleague of mine that she and her husband actually bought an RV and we are a huge tailgating community at Texas A&M and she actually rents out her RV during our football season and that is partially how she’s able to fund her cost of her program. And so I’ve heard of some really creative things in addition to just the taking out loans or paying out of pocket that have helped support them.

Patrice: Unfortunately the reality at the PhD level is that there’s not a lot of funding for part time students and that’s just something that I had to contend with. In doing my exhaustive internet search, I was on some premium scholarship websites where you pay a fee to look in databases. I’ve scoured the internet, I’ve looked throughout all of our university. I looked at regional associations tied to my degree and it’s just not a lot out there for part time students. So being prepared to really fit the cost of your education is something that you have to think seriously about because there’s not going to be a lot of financial support for you as a part time student, even if your program gives a lot of flexibility in the pursuit of your degree, which my program does by offering a number of courses online and then in the evening. So it doesn’t really conflict with my nine to five, eight to five work schedule, but it just is hard. There’s just no way around it , there really isn’t. Maybe for some people that are in a partner relationship that it’s more feasible for them. Thankfully through my benefits I am able to not really worry about my cost, but if I wasn’t, I definitely would be taking a lot more time to pursue my degree because I am very much committed to not incurring any more student loan debt.

41:45 Emily: Yeah, I think the listeners can pretty well trust what you’re saying, when you say I have scoured the internet because you’re obviously very thorough in your work and so it’s disappointing to hear that, but better to be realistic about the situation than to go into it hoping that you’re going to win something that’s just not available to you. Thank you so much for joining me on the podcast. I am so glad to have your perspective here.

42:08 Patrice: Thank you so much Emily. I’m glad I’m able to share.

Outtro

42:12 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.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 covered 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 Poddington Bear from the Free Music Achive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.