career transition

The Financial Upside to Leaving Academia

September 20, 2021 by Meryem Ok Leave a Comment

In this episode, Emily interviews Dr. Chris Caterine, the author of Leaving Academia: A Practical Guide. Chris holds a PhD in classics and worked as a visiting assistant professor before transitioning into a career in the private sector. Leaving Academia addresses the necessary identity shift and practical steps that accompany this process and grew out of the informational interviews Chris conducted. Emily and Chris discuss the financial pressures that motivated Chris to shift to a non-academic career and how to financially prepare for that change. They also discuss the role side hustles and volunteer experiences can play in helping you land a non-academic job. This episode is a must-listen for anyone currently in PhD training or working in academia!

Links Mentioned in the Episode

Leaving Academia: A Practical Guide (Book by Dr. Chris Caterine)
Dr. Chris Caterine’s Website
PhDStipends.com
PostdocSalaries.com
PF for PhDs S3E6: How Finances During Grad School Affected This PhD’s Career Path (Money Story with Dr. Scott Kennedy)
PF for PhDs: Community
Salesforce.com
PF for PhDs S3E10: This PhD Developed His SciComm Career Through Side Hustling (Money Story with Dr. Gaius Augustus)
Dr. Chris Caterine Twitter
Dr. Chris Caterine LinkedIn
PF for PhDs S2E7: How to Successfully Plan for Retirement Before and After Obtaining Your PhD (Expert Interview with Dr. Brandon Renfro)
PF for PhDs: Podcast Hub
PF for PhDs: Subscribe to Mailing List

Teaser

00:00 Chris: And when I really stared down that fact it became very, very hard for me to cling to this idea that it’s okay to accept a certain degree of poverty or lack of wealth in being an academic. And to really say, you know what, like actually, I want to have some nice things and I’m not sure I’m willing to be ashamed of that anymore.

Introduction

00:27 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 10, Episode 7, and today my guest is Dr. Chris Caterine, the author of Leaving Academia: A Practical Guide, which was published one year ago. Chris holds a PhD in classics and worked as a visiting assistant professor before transitioning into a career in the private sector. Leaving Academia addresses the necessary identity shift and practical steps that accompany this process and grew out of the informational interviews Chris conducted. Chris and I discuss the financial pressures that motivated Chris to shift to a non-academic career and how to financially prepare for that challenge. We also discuss the role side hustles and volunteer experiences can play in helping you land a non-academic job. This episode is a must-listen for anyone currently in PhD training or working in academia!

01:29 Emily: Did you know that I run a couple of database websites for collecting stipend and salary information for PhD trainees? The domains are PhD Stipends dot com and Postdoc Salaries dot com. If you haven’t done it yet, would you please take a minute to: 1. Fill out the survey to report your 2021-2022 stipend or salary to the appropriate website? The databases consist of crowd-sourced information, so they rely on the willingness of PhD trainees like you to self-report their income. 2. Share the site with your peers over a social network, a listserv, or a forum website? These websites are super useful for prospective PhD students and postdocs, but they are also often used for advocacy efforts to bolster the case for raising stipends and salaries. Thank you so much for participating in these efforts! Without further ado, here’s my interview with Dr. Chris Caterine.

Will You Please Introduce Yourself Further?

02:32 Emily: I am delighted to have joining me on the podcast today, Dr. Chris Caterine. He is the author of the new book, Leaving Academia: A Practical Guide, and I’m super delighted to have him on because we’re going to be talking about career changes, graduate students, and PhDs and academics who are leaving academia and how personal finance relates to that process. So I’m super excited. Chris, will you please introduce yourself a little bit further for the audience?

02:56 Chris: Of course. Thank you so much for having me, Emily. Again, I’m Chris Caterine, I’m a communication strategist and proposal writer for a global consulting firm. My academic career was actually in classics, which is Greek and Roman literature history and all that stuff. I got my PhD in 2014 from the University of Virginia. And as Emily said, last year I had a book published called Leaving Academia: A Practical Guide with Princeton University Press.

03:20 Emily: Fabulous. And in the book, it talks a lot about your own journey, as well as what you learned from others. And there were lots and lots of interviews which went into the book, which was fascinating. Can you just tell us like quick synopsis, what’s the book about, what do you want the reader to do with it?

03:34 Chris: The book is really designed to do two things. The first thing is that I’ll go to the practical side, which is to say, if you are in academia and you realize that you don’t have a career, a future in academia, which, you know, 93% of entering social sciences and humanities graduate students don’t, then the book gives you practical steps, just put one foot in front of the other and figure out what you need to do to find a new career. Even if you have no idea what that’s going to be. And that practical side of the book again, is good for everybody, not just humanities and social sciences, but STEM folks as well. The other side of the book is almost more psychological or identity-driven. And that’s really trying to get into the mindset of people who can’t imagine having any career besides a professorship. And what sort of, how do you approach what is ultimately an identity crisis, not just knowing what you will do, but not knowing who you will be if you leave the academy. I think those tend to drive more towards the humanities and social sciences side because there’s always been more industry outs for people in STEM. But really it applies to anybody who views academia as vocation and feels called into that line of work and realized since then, that might not be their future.

04:50 Emily: I love the way you described that. And I also loved, I don’t remember if it’s the introduction or something, but you sort of positioned what your book adds to the field already, because I don’t know if I read some of the exact same books you’re referencing, but I read the kind of book that you’re referencing, which is like a lot of like personal essays or like individual stories around careers that people have after they, you know, get out of graduate school or finish their PhD. And that’s wonderful to see examples of what’s going on, but your book is more about, okay, what is the actual like logistically, like, what is the process here? Like what do I actually do to get to that end point that I see as possible? And I really appreciated that. And of course I love, and I’m sure everybody loves that these six chapters have alliteration for all the titles to them.

Motivation for Leaving Academia

05:32 Emily: So there’s, I’ll just read them out because I have the book here. Dread, discern, discover, decipher, develop, and deploy. And I actually found I thought my favorite parts of it were actually in decipher when you were talking about, I don’t know if you use this term, but the translatable skills that you develop in academia and how they actually relate to other jobs you could do later. And I know I’d always heard that in graduate school, you have translatable skills, you can use them later, but like your explanation was just more detailed than anything I’d read before, which I found really delightful, it made me feel a little bit better about the things that I learned while I was in academia. So thank you for that. So, delightful book, and as I said it’s, it was driven by all these informational interviews that you did. And you did more in-depth interviews for the book. But I wanted to know about sort of your motivation for leaving academia. And it’s apparent from the book that finance has played at least some role in that. So would you please elaborate on that?

06:32 Chris: Yeah, really, for me, I think I began accepting that I was going to be leaving academia around age 30. It sounds a little bit cliché, but it was a big transition point, even if I didn’t want to admit it. And I was getting to that stage of life where you know, my wife and I had been married for a few years. We were thinking that we probably wanted to start a family at some point. I just remember looking at all of these jobs I was applying to, you know, I was making $40,000 a year teaching a 3/3 as a visiting assistant professor. And I was applying for jobs like that, that were apart from my wife and I was saying, well, first of all, how do we have kids if we’re living apart, that’s really work. But also like just doing the math and the salary and trying to think, okay, if we’re trying to live in two places, that’s two households, 40, 50, even $60,000 a year like this, just like the math doesn’t work.

07:22 Chris: And on top of that, even if we lived in the same place somehow, you know, solved the two-body problem, because my wife is also an academic, or still is an academic. Even if we solve that, I looked at it and said, you know, I don’t know that my wife and I would be able to give any child or children in the future, anything resembling the quality of life that our parents gave us. And when I really stared down that fact, it became very, very hard for me to cling to this idea that it’s okay to accept a certain degree of poverty or lack of wealth in being an academic. And to really say, you know what, like brass tacks, actually, I want to have some nice things, and I’m not sure I’m willing to be ashamed of that anymore.

08:07 Emily: So interesting. I mean, really what you’re talking about here is a realization of your own values as you grew, you know, towards age 30 and so forth, and realizing that the career, which is one of your values, I’m sure that aligned in some way with your values was in conflict with these other values of what is the standard of living that I want? What is the kind of family that I want? And you resolved, I assume, this conflict by having a career outside of academia that still, again I’m assuming, fulfills many of your values and so forth, but this book is about the process of finding that and landing that career. I’m just wondering, because we’ve heard the story before, a similar story before on the podcast. I’ll refer listeners to the episode with Dr. Scott Kennedy, who similar to you, came into academia, aspiring to the professoriate.

Financial Framework in Grad School

08:51 Emily: And during graduate school got married and actually had, I think, two or three children during graduate school, and realized that it was just not tenable financially and exited academia and found fulfillment elsewhere. So that was a wonderful example, but I want to know. Okay. You just mentioned, you know, as a visiting assistant professor, the $40K salary. Did you know, like back when you were in graduate school, that that was your financial future, if you stayed in academia? Or did you have like a rosier picture? Like what did you think was going to happen?

09:18 Chris: Well, in grad school, I was living on an $18,000 a year stipend. So I figured anything more than that would make me rich. I mean, I literally just thought it’s double the buying power and of course that isn’t actually the case, you know, taxes increase. If you’re living with a partner, like maybe you have two incomes, but you need more space for the two of you. The costs do not kind of move up in a linear way. And so I sort of expected that as my salary went up, you know, in a linear way that the costs would track and they just don’t actually in a lot of ways. And so, I really worked hard to live on that, that $18K a year. You know, it’s funny, I was looking at my pandemic hair, which is getting all too long in the back and I was like, man it hasn’t been this long since graduate school.

10:03 Chris: And I’m like, oh yeah. Like I got one haircut a fiscal quarter for $12 at a place, you know, a 20-minute drive away because I wanted to not put money into that and save it for drinks out, whatever it was. And so I think I just assumed that like my spending was so low that anything that I brought in would let me do infinitely more. And part of that was I was living in a low cost area. And part of that was, I just didn’t understand how those costs scaled, and part of it was that, you know, at age 22 the prospect of kids was a long way off. And then you start thinking about it, you say, oh, I have 18 years to save, you know, $350,000 for college. That’s that’s not going to work right on $40 a year. The math just doesn’t track. So yeah, I think my thinking definitely changed later on. But in graduate school I just assumed that it would be okay.

Financial Strain as a Common Motivator

11:03 Emily: And I think that, you know, you said earlier, oh, it’s cliché approaching my 30th birthday, I had all these, you know, realizations or whatever. But I think that your story, again, is common that as we age, we realize that we want a higher standard of living than what we were enduring during graduate school. And the other thing, you mention this, I think, somewhere in your book that during graduate school, I don’t believe that you were contributing to your retirement. That was something you were able to do only once you had your full-time job and so forth. And so there’s also this like sort of deferred cost, like you’re pushing off responsibility to the future for yourself. And so, yeah, maybe $40K is not actually double $18 K because you have XYZ taxes and retirement and all these other things. Maybe a house, maybe a family, all these other things you want to do. So I totally understand. And it’s the same, you know, experience that I have as well. Do you find that financial strain in academia is a common motivator for leaving academia for other people?

11:59 Chris: Yeah. A lot of people that I’ve spoken with do raise that issue. And I would say that the stories vary a lot. These are some people who say I have a ton of debt, I have nothing in savings. And you know, I’m done with graduate school in three months. Can you help me. And that’s a big ask. You know, I can give advice. I can tell you maybe how to prioritize that three months that you have, but that’s a challenging situation. For other people they see it a little bit earlier on, and maybe they realize that things won’t work out financially, for other people, especially in the U.S., healthcare becomes an issue as well. I would say that that is a big motivating factor for a lot of people. And I think as you do get closer to completing, and as you start applying for jobs and thinking about you know, incurring the cost to move for a jobs that pays you $30,000 like that’s going to cost you a few thousand anyway, you’re kind of burning negative on that deal.

13:06 Chris: I think when people start actually thinking about that or trying it out a few times and seeing how it works out, yeah, the finances do become a big issue. And especially looking at salaries outside of the academy, it’s just wild. I mean, I felt rich when I went from my $18,000 to $40,000 as a visiting assistant professor. And I didn’t realize just how small a salary that was until I began looking outside.

Personal Finance Strain on Contingent Faculty

13:36 Emily: Yeah, my husband’s also PhD and he and I went through a similar thing going from like graduate student to postdoc salary, but then realizing, oh, wait, we’re paying FICA now. Okay. It doesn’t go that far. So I’m actually wondering, so, you know, you mentioned near the start of the interview that only maybe 7% ish of people who start a PhD program will actually end up in a tenure-track job. And I think one of the issues that maybe is not discussed head-on, but certainly indirectly in your book is the problem of contingent faculty, right? So if you get the tenure-track job, then maybe you are on a decent salary path. I mean, I don’t know about your field necessarily, but I have certainly run across many citations of professors making over $100K a year and even $150K or more, but that’s not at the contingent level, the visiting level, the adjunct level. Can you talk a little bit about sort of the strain on the personal finances of contingent faculty, as they’re maybe holding out hope of this, you know this ultimate dream job?

14:38 Chris: Oh, this one really breaks my heart. And one of the things that actually precipitated my move outside of academia was working on contingent faculty issues for my professional society. So that was the first time I really started to look at what life could be like. And when you start hearing figures that something like, it’s like 54% of adjuncts qualify for food stamps you know, like I can’t remember all the statistics off the top of my head now, but I mean, the numbers are really bleak, and you start realizing like, oh my God, this is severe. And as a society, we’re essentially subsidizing these universities that don’t pay people. Like, what, why do we do this? Why do we put up for it? I think the thing that really crushes me so much now, when I talk to people in contingent roles who say, well, you know, I want to try one or two more times is that, you know, they are missing out on the opportunity cost of the situation as well.

15:42 Chris: And it’s like, well, yeah, okay. You can try to get an academic job one or two more times, and maybe you have a, you know, three to 5% chance of getting one, but all the time that you spend on those applications, all the money you spent flying to the conference interview for the job, whatever it is, all of that time and money could be put into other things that could be preparing you for a career that actually makes you happier than being an academic and gets you out from under the thumb of the system that is fundamentally broken. And convincing people that if they’ve bought into the idea that their identity is tied up in being a professor is very, very hard. And there’s sort of only so much that you can do to get people to move past that. And I hope, you know, the early chapters of my book, “Dread,” I give this dire name, title, because I’m trying to shake that sense into some people who maybe are resistant to it. But really, you know, for some people, it is just a matter of coming up and seeing what that’s like. But I would encourage all your listeners to really go out and read some stories of what contingent life is actually like financially. It’s not a good situation.

Commercial

16:53 Emily: Emily here for a brief interlude. If you are a fan of this podcast, I invite you to check out the Personal Finance for PhDs Community at PFforPhDs.community. The community is for PhDs and people pursuing PhDs who want to take charge of their personal finances by opening and funding an IRA, starting to budget, aggressively paying off debt, financially navigating a life or career transition, maximizing the income from a side hustle, preparing an accurate tax return, and much more. Inside the community, you’ll have access to a library of financial education products, including my recent set of Wealthy PhD Workshops. There is also a discussion forum, monthly live calls with me, and progress journaling for financial goals. Our next live discussion and Q&A call is on Wednesday, September 22nd, 2021. Basically, the community exists to help you reach your financial goals, whatever they are. Go to pfforphds.community to find out more. I can’t wait to help propel you to financial success! Now, back to the interview.

Changing Money Mindsets

18:06 Emily: Chris, I know we could stay on the subject for quite a while, and I wish we could, but let’s talk a little bit more about money mindset, specifically for you. So, you know, what was your attitude towards money, practice of personal finance when you were in graduate school, versus did it change later on as you became a visiting assistant professor, as you moved into your non-academic job?

18:26 Chris: So growing up, both my parents were trained as CPAs. I had like a pretty decent financial literacy growing up in that, you know, I knew how to balance a checkbook. I knew how to make at least a basic budget and make sure that there was more money coming in and going out and use that to sort of set my discretionary spending accordingly. So I’d been doing that sort of all the way through graduate school and had adapted pretty well to a very modest standard of living. And I was proud of doing it, and I still am that I did it, but, you know, as time went on, I think, especially with my move to New Orleans. You know, I grew up in Boston, went to school in Virginia. When I ended up in new Orleans, I saw a very different mode of life and people here definitely embrace the better things in life.

19:14 Chris: There’s good music, good food, good drink. And I started saying, wait a minute, like, why am I deferring all of that like a hundred percent? And so my wife and I had made a choice to live in a smaller apartment so that we could afford to dine out in New Orleans thinking we’d only be here for one year. Well, eight years later, here we are. So you know, geography sort of changed my outlook on what I actually wanted to be doing with my money. Not just squirreling it away in the bank, but using it to enjoy life. And I think I also ended up going from being extremely risk averse in graduate school. Just because there wasn’t that much, so if I lost any of it I felt it more, to over time just becoming a little bit more comfortable with risk.

20:01 Chris: And for me, leaving academia was actually a process of embracing risk and embracing financial risk in a way that I hadn’t before. So I had one year left on my visiting assistant professor contract and my wife and I had decided that we wanted to stay in New Orleans no matter what. And we decided to buy a house. And I was terrified of that decision, because we could afford the monthly payments for the next year, but I had no idea what was coming after. I hadn’t really built a good network. I didn’t have good leads on jobs. It was a big question mark, and I actually used that life event to sort of put my back against a wall and say like, if there’s the prospect of losing this house if I don’t figure something out, then I better figure something out. And that was a huge motivator to me. Again I was in a privileged position to be able to do that, but that was sort of the rationale was using sort of a financial tool to push me into a space where I was uncomfortable.

21:09 Emily: I think I’ve heard this referred to as like a commitment device. Like there’s going to be some real big downside if I do not follow through on my goal of X, Y, Z. I’ve heard it in a lower stakes situation than home ownership, but I think this qualifies as well. And, you know, I think what you said earlier about the opportunity cost of that particular example, the opportunity costs of staying in a contingent faculty position, doing 1, 2, 3 more cycles on the job market. There’s also a major opportunity cost to graduate school. There’s also a major opportunity cost at staying at these lower salary levels. So you said, you know, I had to think about risk in a different way. I had to be willing to take on more risk. There was implicit risk in what you were already doing, but it probably wasn’t forefront in your mind, right? Like the risk of spending years and years and years pursuing this career that was not working out financially, was never going to work out financially. But it’s so hard to see that. It’s hard to see graduate school as opportunity cost.

22:11 Chris: It is. And I think the biggest challenge with the PhD right now is really that if you want to be a professor, it is a credential that you need to get. So if you want to keep the professorship open as a possibility for your future, that is the only path you have to do it. And yet, the vast, vast majority of people who get a PhD, can’t become professors. And I think because of that tension, people do get sucked into this mentality that you just need to forge ahead. And anything that you do that deviates from your scholarship or your teaching is ultimately going to be lessening your odds of that thing that you’re working towards. So it feels like a risk-averse position to be overly narrow, when actually it’s not.

Preparing Finances for Leaving Academia

23:00 Emily: Very well phrased. You mentioned earlier an example of, you know, someone coming to you for advice who has three months until they’re not being paid anymore and they have a lot of debt and so forth. And you’re saying, oh, it’s a short timeframe. We can do something here, but let’s say that, you know, some listeners have a longer timeframe, a year or more before they’re thinking about exiting academia. What can that person do to help prepare their finances for this process of leaving academia?

23:30 Chris: I would say, you know, save every penny that you can because at a certain point, you can actually buy time. And what I mean by that is that if you have, you know, three months of expenses in the bank, then even after your last paycheck hits, you will not necessarily need to take the first job that comes your way. And if you are making a major career change, you know, from a planned academic path to something totally different, it is likely that the first offer that you get is not going to be a job you want. And, you know, I cite these examples in the book, but I was interviewing for jobs to pour samples of beer at the grocery store. I was offered a job to sell life insurance, which seemed like a really good idea going through the interview process until I stopped to think about it and then said, wait a minute, like actually this whole thing, the financial arrangement that they put before me was a scam.

24:32 Chris: And I had, you know, friends and family fortunately say like, yes, we didn’t want to be discouraging, but that would be a bad idea. And because I had some savings in the bank because I had a partner with a stable income, you know, we’d looked at the numbers and said, okay, I can probably wait three to six months after that last paycheck. And then at that point I’ll need to shift my mindset into another, take anything that’s available or, you know, begin looking outside of New Orleans and consider potentially having to uproot. But the more you can save, the more flexibility you will have to make a sort of a positive choice at that end game, instead of being backed into something that you’re not totally happy with.

Benefits of Pursuing a Side Hustle for Skill-Building

25:16 Emily: I am in total agreement. And if someone were to follow this process in your book, it’s very deliberate and it takes a good amount of time, not just like the number of hours, but sort of longitudinally for you to be able to process and understand what’s going on and make the networking connections and so forth. It takes quite a bit of time. So to give yourself that runway, it’s the same thing with entrepreneurship, give yourself a runway before your paycheck ends, or, you know, if you can give yourself runway with savings, the more you can, the less of a desperate situation you will end up in eventually. And hopefully, as you said, you can make a positive career choice. And so I really enjoyed that you talked about in the chapter “Develop” how a side hustle can further this whole process. And I think in that chapter, you were specifically citing side hustles as a way for you to sort of add to your resume, add more experiences, demonstrate your skills, that sort of thing. But I think that side hustles could probably be helpful in multiple stages of this process of leaving academia. Can you talk about the benefits that you’ve seen of pursuing a side hustle?

26:18 Chris: For me, what I will say first of all, is that in graduate school, the only side hustle I had was tutoring, which was great because it got me some extra money, but it was also a really foolish thing to do because it didn’t get me anything besides that money. Like it didn’t actually make me a better teacher. It didn’t develop any new skills. It just sort of deepened my presence in a space that I was already in. So if you’re thinking of doing that and like, you just need a little bit of extra cash. Okay, fine. But again, think about opportunity cost. How could you spend that time? Could you get, you know, more than $15 or $20 an hour tutoring to do something else? You know, in that regard, I got lucky. I had a neighbor and a close friend who had a small business.

26:59 Chris: It was him and one other developer. And he just needed somebody to help with website development and like maintaining his books and like doing all this stuff that I had no idea how to do. And I knew him well enough that he said, well, I can pay you. I think he gave me 15 bucks an hour, and he said, “you know, I know that like me giving you $15 an hour to do it is going to free up time for me to bill my clients. And it’s going to let you learn some skills. And it’s probably, you’re going to figure it out faster than somebody I’d pay $35. So I’m good.” Now I got lucky with that situation, but it was great because I brought in a little bit of extra money, but I also began thinking about, okay, how do you sell a business service to a buyer who is probably resistant to incurring that expense in the first place?

27:50 Chris: Where do you go to advertise to small and mature businesses for kind of a small salesforce.com development group. So I began thinking in all these different ways, and it turned out that all that practice talking about technology services for maybe skeptical business audiences really paved the way for the stuff I’m doing now, where most of the time I’m working on proposals for big technology for the patient. I had no idea that would pan out, but that’s sort of how it did. So I think, you know, to get back the core of the question, how can side hustles really help? You don’t know how they could help. But I think you want to use them as a way to simultaneously build new skills and make some extra money. And if you let them do double duty, then that’s great.

28:47 Chris: My wife has a saying now which is like, she doesn’t do anything that doesn’t count twice. And if she can’t kind of apply it in two places, it’s not worth doing because the time investment is just too high. So I think that’s a really good attitude to take as you’re exploring new careers, as you’re trying to, you know, make extra money in graduate school or even beyond graduate school. You know, tutoring, you know, working in a restaurant, all that stuff can, yes, get you money, but is it going to be advancing those other career objectives that you have? If the answer is no, then you might want to think again about how to balance that equation.

Career-Advancing Side Hustles

29:24 Emily: Yeah, you’re absolutely speaking my language here. I have an interview with Dr. Gaius Augustus, which we’ll link in the show notes, where we talk through this framework that I have thinking about how valuable a side hustle will be to you. My favorite side hustle, I call career-advancing side hustles. Double-duty, as you said, it brings in money and also helps you demonstrate a skill, learn a new skill, have another line for your CV, expand your network, anything like that. And I think what was interesting about your example of, you know, keeping the books for your friend’s business is that you didn’t know how that experience was going to advance your career. And it turned out it did, in retrospect. And I think that just speaks to the benefit of like trying something new. And as you said, instead of staying in the same space that you already know tutoring, you know, it’s in your wheelhouse already, try to stretch yourself a little bit and it’ll spark new thoughts and it’ll spark new perspectives.

30:13 Emily: And so, yeah, just give some new things, a chance. And I noticed from that chapter of your book, it seemed like you were pursuing this side hustle, maybe, you know, some other volunteer experience and so forth over a fairly short period of time. And you got a lot out of it over just like a few months, six-month period or something. And so it doesn’t have to be like, oh, I have to set this up and do it the entire time I’m in graduate school. No, just try something. You know, see if you benefit from it. If it’s good pay and you do, keep doing it. Or if not, try something else. Just experiment with it.

30:40 Chris: Yeah. In software development, they have this concept of failing fast. And the idea is that it’s good to experiment and try little things. And like the sooner you find out something doesn’t work, the sooner you can stop spending time doing that thing. And so, I think that sort of agile and iterative approach to trying new stuff to build career skills is absolutely the right path.

31:01 Emily: I think the other benefit is that, you know, working for your friend’s business for a bit, it gave you some language probably that you didn’t have before. Not just the skills, but just that practice, as you said, of speaking with people you weren’t speaking with already inside academia and just that diversity of experience helped you, ultimately, you know, get the job that you have, because I know you said in the book that it took practice to change the kind of language that you use the kind of speech that you used from what you were used to in academia to what was acceptable in the business world, and that exposure can help a person, you know, along with that process.

31:33 Chris: Yeah. It’s maybe expected that a communications strategists would say that like career changes ultimately come down to communication. But in this case, I really do think that that’s the biggest challenge, is just that academics speak their own language, their own jargon. We have ways of interacting with people that are different from the world outside. And until you go out there and learn how other people speak and behave, the like trying to translate is a fool’s errand. It’d be like me trying to translate Latin into Mandarin. I can’t do it until I know Mandarin.

Best Financial Advice for Another Early-Career PhD

32:06 Emily: Chris, this has been such a wonderful conversation. I’m so glad you came on the podcast. I know we’re leaving the listeners wanting more. So where can they find you and where can they find your book?

32:15 Chris: So I’m available on Twitter @clcaterine, also on LinkedIn, Christopher L. Caterine. My book is available from Princeton University Press on Amazon and also at local independent bookstores.

32:27 Emily: Very good. And by the way, hat tip to Dr. Brandon Renfro who connected us, and you can listen to his episode, we will link that in the show notes as well. So Chris, the question that I ask all my guests at the end of our interviews is what is your financial advice for another early-career PhD? So would you please share that with us?

32:44 Chris: You know, we looped this earlier and I think budgeting is a really valuable tool and you should absolutely do it, but sort of don’t be tricked by thinking that the budget that you set for yourself as a graduate student is going to scale up. And yeah, you know run models, figure out what you might need to have the sort of life you want to live, and use that to figure out what kind of income you would need from a job to live that life. And if you have real data that backs it up, you can be really targeted in the jobs you pursue, both inside and outside of the academy, and find a career that works for your life.

33:21 Emily: Yeah. And I think that’s a wonderful exercise to couple with all the exercises that you lay out in your book. So thank you so much again for joining me on the podcast today!

33:29 Chris: Thanks so much for having me!

Outtro

33:37 Emily: Listeners, thank you for joining me for this episode. PFforPhds.com/Podcast is the hub for the Personal Finance for PhDs Podcast. On that page are links to all the episode show notes, which include full transcripts and videos of the interviews. There is also a form to voluntee to be interviewed on the podcast. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media, with an email list listserv, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in like investing, debt repayment, and effective budgeting. I also license prerecorded workshops on 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 by Lourdes Bobbio, and show notes creation by Meryem Ok.

Insights from a Financial Planner Who Works with Academics

April 26, 2021 by Lourdes Bobbio Leave a Comment

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

Links Mentioned in this Episode

Teaser

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

Introduction

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

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

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

Book Giveaway

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

First Go at Grad School

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

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

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

What Drove the Decision to Leave Grad School

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

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

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

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

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

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

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

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

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

Life after Leaving Grad School

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

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

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

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

Transitioning into a Career as a Financial Planner

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

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

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

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

Insights into Personal Finance for PhDs

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

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

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

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

Commercial

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

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

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

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

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

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

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

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

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

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

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

Going Back to Grad School After a Career Shift

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

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

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

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

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

Best Advice for an Early Career PhD

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

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

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

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

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

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

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

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

Listener Q&A: Are Fellowships Taxable

Question

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

Answer

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

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

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

Outtro

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

How a Boom-and-Bust Money Mindset from Grad School Serves This Start-Up Founder Well

April 12, 2021 by Lourdes Bobbio Leave a Comment

In this episode, Emily interviews Dr. Lindy Ledohowski, a PhD in English, former tenure-track professor, and founder of the ed tech start-up EssayJack. Lindy describes the money mindset she developed as a college and graduate student while experiencing boom and bust cycles of income and budgeting for must-haves and investments in herself. Lindy narrates how her money mindset has been in concordance or not with how she’s generated income throughout her career, and how it is serving her well now as a start-up founder. She emphasizes that a safety net enables career risk and how she prefers to bet on herself rather than other financial instruments.

Links Mentioned in this Episode

Find Dr. Lindy Ledohowski on Twitter and LinkedIn
Find EssayJack on Twitter, LinkedIn, Instagram, and Facebook
Quarterly Estimated Tax for Fellowship Recipients
Personal Finance for PhDs: Quarterly Estimated Tax
Personal Finance for PhDs: Community
Personal Finance for PhDs: Podcast Hub
Personal Finance for PhDs: Subscribe to the mailing list

Teaser

00:00 Lindy: Even that TA income that was more regular, certainly wasn’t enough to comfortably cover month to month costs. I’ve since read that you’re not supposed to spend something more than one third of your income on fixed housing costs and that was never my case. It was often I was spending anywhere from 60 to 90% of what monthly envelope was on just fixed costs.

Introduction

00:33 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season eight, episode 15 and today my guest is Dr. Lindy Ledohowski, a PhD in English, former tenure track professor, and founder of the ed tech startup EssayJack. Lindy describes the money mindset she developed as a college and graduate student while experiencing boom and bust cycles of income and budgeting for must haves and investments in herself. Lindy narrates how her money mindset has been in concordance or not with how she’s generated income throughout her career, and how it is serving her well now, as a startup founder. She emphasizes that a safety net enables career risk and how she prefers to bet on herself rather than other financial instruments.

01:31 Emily: I’m recording this near the end of March shortly after finishing my 10th webinar for a university client in this month alone. That sets a record for my business in terms of speaking engagement density. I want to send a super sincere and heartfelt thank you to all of the people who have recommended me to their universities and other organizations, particularly in the past year. I shared with you last month that I really wasn’t sure how my business would fare when the pandemic started given that the revenue was so reliant on in-person speaking engagements, but between webinars, individual, and bulk purchases of my tax workshops and the Personal Finance for PhDs Community, my business has actually flourished in the past year, and especially this spring. I know that is in large part due to the recommendations of the graduate students and PhDs who listened to this podcast. I know that because the people who book me tell me so. I really, really appreciate you supporting me in this manner. I’m so happy to be able to provide this podcast to you for free, and it is possible thanks to the products and services I sell to universities and individuals.

Book Giveaway

02:42 Emily: Now it’s time for the book giveaway contest. In April, 2021, I’m giving away, one copy of “Walden on Wheels” by Ken Ilgunas, which is the Personal Finance for PhDs Community book club selection for June, 2021. Everyone who enters the contest during April, we’ll have a chance to win a copy of this book. If you would like to enter the giveaway contest, please rate and review this podcast on Apple podcasts, take a screenshot of your review, and email it to me emily@pfforphds.com. I’ll choose a winner at the end of April, from all the entries you can find full instructions@pfforphds.com/podcast.

03:22 Emily: The podcast received review this week titled “Customized and Encouraging Info”: “I’ve been interested in personal finance for awhile, but a lot of advice from other sources doesn’t really apply to my unique situation as a graduate student. This podcast, and the online resources on filing taxes as a grad student on a fellowship have been so enlightening and useful/relatable in a way that other sources aren’t. They’ve also helped me to challenge my sometimes limiting mindset about money as a graduate student, and have helped me begin to save and invest more than I thought I’d be able to on my stipend. Definitely recommend for anyone grad school or thinking about entering grad school. This is really important info that we don’t get from our school/programs.”

04:04 Emily: Thank you so much for this review! This reviewer really gets what I’m doing with the podcast and business. Without further ado, here’s my interview with Dr. Lindy Ledohowski.

Will You Please Introduce Yourself Further?

04:22 Emily: I have joining me on the podcast today. Dr. Lindy Ledohowski. She is the founder of EssayJack. She’s also a PhD. She’s a former faculty member — we’re going to find out all about that. When Lindy and I were preparing for this episode, we realized that she has a super interesting parallel story to her career story, which is the story of how her money mindset has served her very well in some of these stages, not so well in other stages. And it’s a little bit of an interesting flip on what we usually hear. A lot of times we talk about how money mindsets we develop in academia are harmful to our finances. Lindy has found the opposite of that. She’s found some concordance with her money mindset nurtured in graduate school with her success with finances later in life. We’re going to hear all about that. Lindy, thank you so much for joining me today. I’m really pleased to have you on. Will you please introduce yourself a little bit further to the audience?

05:15 Lindy: Yeah, absolutely. Thanks so much for that introduction. I am Dr. Lindy Ledohowski. I have an English PhD. Before I was an English professor at the university of Waterloo, I had been a high school English teacher. Then I left full-time teaching and founded, as you say, EssayJack, which is an ed tech software solution in the academic writing space.

Money Mindset in Young Adulthood

05:38 Emily: That’s fantastic. It’s obvious how your business grew out exactly of your career, so fascinating. We’ll get a little bit of that story today, but really I want to focus on this money mindset aspect. What was the money mindset that you were developing in your childhood early experiences with money in your young adulthood?

05:56 Lindy: It’s actually interesting looking back in hindsight, because you don’t know that you’re developing a money mindset when you’re in the middle of it. For me I think it’s best characterized as kind of a boom and bust. All throughout high school and then my undergrad, I certainly taught during the school year. I was a busser on weekends and then I was a waitress and then I would make the majority of my money that had to last throughout the school year in the summer months. When I was a high school student that was all day long babysitting, nine to five, whereas during the school year, it might be a couple of hours after school. And then similarly through undergrad, I relied very heavily on making a lot of tips and making all that money over a full-time summer working gig, and then during the academic year, I would scale back so I could focus on my full-time classes.

06:51 Lindy: That really gave me an approach to finances that was like, make as much as you can in as short a time as possible, and then budget that surplus over a long sort of drought period. That really started to get shaped for me in my teen years and then into my undergrad. I had my first job was as a paper route when I was 11, and then it was, as I say, babysitting, and then into the hospitality industry and customer service.

07:25 Emily: Now I can see how that kind of pattern, which I think is not uncommon for young adults and people who are still in their schooling years, but I can see how that pattern could divorce in your mind work from money in the sense that you’re doing a lot of work all the time, which is the work of being in school — the classes and so forth — but sometimes you’re not doing that kind of work and you’re doing the kind of work that makes money and that’s that period of intensity of earning the money and then spreading it out through the rest of the time. As an entrepreneur, I can see how that separation of what is work for money and what is work that just has to be done to further your general development, how that can help you later on, but you developed that early on while you were still in the cycle of the academic year.

08:11 Lindy: Yeah, absolutely. You put it really well that it made that separation between work and money. And then also I think it gave me a sense of budgeting through scarcity. And also I’m not really counting on financing for things because I very early was training myself to not think about, “Oh, I have a stable monthly salary, which I will then allocate for various purchases.” I always had to make a bunch of money and then buy the thing, whatever that thing is that I wanted.

Money Management and Budgeting Strategies through Scarcity

08:56 Emily: It’s so interesting that you use that term, budgeting through scarcity. And I think when we were prepping for this, you also use the term hoarding — hoarding money during the good times and eking it out during the leaner times to get through that. What kinds of strategies were you using during those early years? How did you budget for when your income was much lower or like zero versus when that income was much higher?

09:19 Lindy: One of the interesting things, and I don’t know if this is just my own personality traits, but as you focus on developing a money mindset unconsciously, in my case, what that meant is that I very quickly began to prioritize the “must haves” and the “nice to haves” for me. I was never, for instance, really into like clothes or fashion. That wasn’t my thing. I also had an older sister whose best friend was really into fashion, so from the two of them, I could inherit hand me downs and that was more than enough for me. I don’t know if I’m particularly stylish, so I didn’t need to color my hair or all that. Those kinds of things became “nice to have” for me and even in a time when my bank account was very flush, I still never ran out and bought a bunch of clothes or did my hair or things like that.

10:15 Lindy: Whereas, books were always my passion and I could justify also spending some of that money on books because I would think of them as a longer-term investment in my intellectual future. Even if I was buying books as a high school or undergrad student, I always knew that I was going to sort of go on and do more. I loved books and that was sort of investing in myself. Similarly for me a must have, would be say traveling. Interestingly, I had a conversation with my then boyfriend as an undergrad because his attitude towards money was to invest it in financial investments. Whereas if I had a little bit extra, I’d budget a backpacking trip and I always thought, well, I’m investing in myself and how my brain is going to be broadened by different perspectives. I think that came into play in terms of creating a hierarchy of, if I have limited funds in that hoarding and scarcity time, what will I spend it on and what won’t I spend it on?

11:22 Emily: I’m so glad you gave us that insight, because first of all, I’m glad to hear that your “must haves” were not literally just like food and shelter. Of course you took care of that, but had added onto that what you considered to be investments. And it’s so interesting that you were thinking about them that way, even that early on, because as I said earlier, obviously your career has evolved in such a way that probably all those experiences, the books, especially, did contribute to ultimately like your founding of your company and everything. I don’t think that many people at that age think about investing in themselves in those ways, but you did.

12:00 Lindy: I think maybe that’s a personality quirk of my own, or maybe my good fortune. And speaking of good fortune, as you mentioned, I did have a place to live. During my undergrad, I lived at home. The deal with my parents was that I could live at home rent free and so I need to flag that because that’s just a tidbit of good fortune on my part that not everybody shares. Again, back when I was doing undergrad, so that was in the nineties, I was able to make enough money waitressing and saving my tips over the summer that I could afford tuition. And again, that’s a very different financial reality than what people are facing today. That kind of make it all and then put it into your tuition, buy books, and then also the fact that I did have that family help, means that I had a bit of a buffer and it’s fair to recognize that little bit of a buffer that I certainly had.

13:00 Emily: Absolutely. It sounds also then that you didn’t take out debt, at least you haven’t mentioned it so far during those undergrad years.

13:07 Lindy: No, no. And that was actually what the conversation was with that then boyfriend, because he and his parents took out student loans and then he and his parents had a plan for investing that money and making money on the student loans and all that. It was very sophisticated in a way that I didn’t have with my family at all. We didn’t really talk about finances in any sort of concrete way, aside from the “we love you and if you need help, we’ll help you” kind of way, which again, I’m lucky that I had people in my corner, but it wasn’t like a sophisticated financial education in those early days.

13:47 Lindy: In my young twenties, then that boyfriend, and he was the first boy I lived with, we then had to talk about those finances in terms of how we split things up financially in a shared housing. I was really sort of dumbfounded to know that he had this whole other financial reality based on the availability of student loan debt at the time, whereas I just had the neither a borrower nor a lender be. And so if I didn’t have the money, I didn’t spend it, was kind of my approach at the time.

14:23 Emily: Yeah. I like your simpler approach. For the record, for anyone who’s listening, please don’t take out student loans just to invest the money. I do not endorse this approach. It is something I’ve been asked about from time to time and it’s very risky, very, very risky. I’ll just put it that way.

14:39 Emily: That was some of the strategies you were using. What about budgeting at that time? Did you have any particular way that you were doing it, or you just found this sort of natural rhythm of your spending?

14:48 Lindy: A couple of ways. One, I definitely found a kind of natural rhythm to the spending, which is you don’t spend very much and then whatever you have leftover is the surplus for travel or for something else. After my undergrad degree where I was living at home, then I did have a proper job that had a salary and the deal with my parents was I could have one more year at home rent free, so I could sort of get on my feet. I used that to again, sort of boom and bust, to hoard that income so that I could then go and do another degree, and that was my education degree. I was more conscious of budgeting at that time, because I had a really specific target. I want to do a bachelor of education degree. I know that I’m going to have to, at that point, move away, pay for housing, pay for tuition, sort of figure out all of that. I did have a spreadsheet and tracked things, and then once I had a couple of months of the spreadsheet, I could then sort of see, okay, well, typically this is how much I spend on a given month. If I go over that, that’s a problem. And then if I can be competitive with myself and get under that, then that’s great.

16:06 Emily: I see. So you actually had a little like gamification element kind of going on.

16:10 Lindy: Yeah, absolutely. Like self gamification. It was like, can I go lower?

Income Changes and Money Mindset During Graduate School

16:16 Emily: Yeah. And so we’re kind of talking about you mentioned a second bachelor’s degree, but then of course, at some point you went into graduate school and got your PhD as well. Can you talk about how this money mindset served you or didn’t serve you during that time?

16:31 Lindy: As I just mentioned, after the undergrad, then I worked and saved money, did the education degree. Then I worked as a teacher and saved money so that I can go to graduate school. I did a master’s, which was unfunded and then the PhD, which was fully funded. I went straight through for that and I did borrow some money from my dad, at the time to do that unfunded masters, but I had a chunk saved from my education degree. That money mindedness meant that as I went through, one of the things for sure, when I was contemplating a PhD after the masters, and I really loved my master’s degree, which is what made me want to continue on and do doctoral work. But one of the absolute deal breakers was it had to be fully funded and it had to be significantly, fully funded. Not all fully funded PhDs are fully funded equally.

17:29 Lindy: I knew that any university would happily take me as a PhD if I was going to be willing to pay them, but it would be a real vote of confidence if they said, yes, we will take you, and here’s the financial commitment we’re making towards you and your success. I think the fact that was a real must have for me in the application process for the PhD came out of that money mindset that had been developing along the way.

17:58 Lindy: And then in the PhD, similarly, there’s these funding cycles. You apply for grants and scholarships and all of that at one time of the year and then it ups your funding for the subsequent years of the PhD. had five years of guaranteed funding from the university, and I immediately then upped that by various kind of scholarships and grants. And again, then was able to sort of dole out the month by month stuff when I would get a big stipend or a big award in September or January, and then make it last for the subsequent term and semester and top up. I did also do some teaching and TA work and again, that was paid more regularly, so I at least had the combination of some TA work that was paid regularly and then grants and scholarships and fellowships that came in these lump sums.

18:48 Emily: Yeah, so a combination of regular income, irregular income, larger sums, and I really liked that you pointed out the grant cycle and the fellowship applications and all of that, because that’s another example of how you work, like on an application, it’s not immediately for money, but some percentage of them presumably will work out and you can have this cash influx based on that later. For you, I think it was just probably grooving in even further, again, this boom and bust cycle and all the things that you’ve mentioned so far and work not being directly for pay, but sort of indirectly for pay later on.

19:26 Emily: Is there anything else you want to say about those grad school years? How did you come out of them financially? It sounds like you maybe were making a decent amount of money with all these sources combined.

19:37 Lindy: Yeah. Interestingly, I made more money as a grad student than I did as a high school teacher, to be quite honest. And part of that again has to do with taxation, so certain grants and fellowships and scholarships, aren’t taxable in the same way that a teaching income is fully taxed as regular income

19:57 Emily: Actually, we’ll note, because we haven’t said so far, but you’re in Canada. Actually, no, you mentioned the university name, so we know you’re in Canada. But yes, different situation in the States.

20:04 Lindy: Yeah, I was going to say, anything I say about taxes will be specific to the Canadian context. My schooling was in Canada and then my work life has also been principally in Canada. There were certain kind of tax benefits to the way that the graduate funding was set up. Everybody sort of jokes about being a starving student and I still was, but I was less starving as a PhD student than I had been as a full-time school teacher. And again, that’s just because you know, it was early days and I hadn’t sort of stuck with teaching long enough to go up the ranks or anything like that.

20:44 Lindy: The only thing that I will certainly say about my PhD experience from a financial perspective is that even that TA income that was more regular, certainly wasn’t enough to comfortably cover month to month costs. I’ve since read that you’re not supposed to spend more than one third of your income on fixed housing costs. That was never my case. It was often I was spending anywhere from 60 to 90% of what a monthly envelope was on just fixed costs. I got very good at going to every single free wine and cheese on campus and getting food. Any holiday party anybody would in invite me to. I ate a lot of canned goods and pasta, and so if I was invited to somebody’s house, it would be the produce that I’d be eating because that you couldn’t sort of buy in bulk at the beginning of the semester and have it last, whereas you can buy cans of tuna and that’ll last. That gives you a bit of a color on that PhD experience.

21:57 Emily: It also does for you and your budgeting method, I guess. Knowing that you have money in the bank, but eating this way, being this frugal and so forth, knowing that you have to make it last until the next influx comes in. I do think that gives us a good picture.

Post PhD Salary: How Having Steady Cashflow Changed the Money Mindset

22:12 Emily: Now, after your PhD, you had regular employment. You had a salary, maybe not for the first time, but maybe in a different way than you had before in your life. Tell us about that period when you were a professor.

22:26 Lindy: After my PhD, I did a post-doctoral fellowship and again, that was much the same as, as the PhD in terms of lump sums of money. Then I became a tenure track professor. That had full benefits, full salary, all of those sorts of wonderful things. But interestingly, at that point I was then married. My husband is an academic and we had jobs in different cities. And so again, the budgeting became sort of weird because we were now using our two regular salaries to spend on the monthly costs of running two homes. We had two apartments in two different cities and traveling back and forth. Then any surplus I had was on driving or flying to be in the same city as my spouse. However, what I did find in that because that was our experience, I was well-suited to continuing a bit of that boom and bust and spend the money that was surplus on travel to see my spouse.

23:26 Lindy: What was interesting for me is at the time banks were only too willing to give us financing. because we were in two different cities, I had an old 15 year old car, we were going to sell that and buy a new car so that I could safely drive on the highway. And the dealership is like “we can give you this kind of financing because you’re both professors” and I was really uncomfortable with that. We were like, “well, we have our savings, let’s just buy the car.” In hindsight, I don’t know that that was the smartest decision given that cars are depreciating assets.

24:02 Lindy: But again, at the time I was very uncomfortable with this idea of taking on something that was a month to month to month debt, because I hadn’t built up my trust in the system that money would be there month to month to month in the way that I think if you start working at a regular job early and have that continuity over time, you start to have faith that, yeah, even though you might run out of money by the 30th of the month, it rolls over and new money comes in. I, temperamentally, didn’t feel that that was the case, even though, obviously as a professor, that is the case.

24:41 Lindy: So as I say, we made the choice to buy the car outright and again, hoard all of our money and live cheaply in the hopes that we could then save up for a down payment. That’s kind of how that money mindedness — the boom and bust, the hoarding — carried over into the academic job when we were both professors and seemingly could have had a much more regular financial life. We still kind of didn’t.

25:06 Emily: I’m so glad you pointed that out because really we’re talking about whatever it was 10, 15, maybe close to 20 years of this boom and bust cycle developed by the type of income you have with maybe some periodic, yes, you had some regular income, but it was never as much compared to that irregular income. I can totally understand why you didn’t immediately have trust that the salary is going to keep coming in and so forth.

Commercial

25:31 Emily: Emily here, for a brief interlude. The federal annual tax filing deadline was extended to May 17th, 2021, but the federal estimated tax due date remains April 15th, 2021. This is the perfect time of year to evaluate the income tax due on your fellowship or training grant stipend. Filling out the estimated tax worksheet and form 1040ES will tell you how much you can expect your tax liability to be this year and whether you are required to pay estimated tax. Whether you’re required to pay throughout the year or not, I suggest that you start saving for your ultimate tax bill from each paycheck in a dedicated savings account. If you need some help with the estimated tax worksheet, or want to ask me a question, please join my workshop, quarterly estimated tax for fellowship recipients. It explains every line of the worksheet and answers common questions that postbaccs, grad students, and postdocs have about estimate tax, such as what to do when you switch on or off a fellowship in the middle of a calendar year. Go to pfforphds.com/QETax to learn more about and join the workshop. Now, back to our interview.

Transitioning to Entrepreneurship

26L49 Emily: So you’re going along, you have your salary job and everything, but at some point you become inspired to start your company. I’d like for you to talk about the financial aspects of that transition — did you prepare financially before jumping into self-employment or were you already prepared based on the way that you were living? Or these kinds of insights?

27:10 Lindy: Before starting the company that I now head up, which is EssatJack, and that’s an ed tech software solution, I did a couple of years of consulting. So between being a professor and starting a tech startup, I was like, “okay, this living in two cities as two professors is untenable. All of the money that we’re making, we’re spending to rent two apartments or to travel back and forth to see each other, and I just don’t see this being a sustainable future for us. Something’s got to give, and the something that’s got to give is I’ll give up this job and figure out what comes next.

27:45 Lindy: I was very lucky. Again, I secured a grant — this is apparently just how I roll. I get the chunk of money and then decide what to do with it. So I secured a grant which gave me the confidence to take a year’s no pay leave from my job as a professor, as a kind of get the first toe in the water of quitting without actually quitting first. I had this grant, I was working on a conference in a symposium and ultimately it then became a book. But what I also did during that time was I started consulting. I started taking consulting projects just to see what can I do and then that gave me a certain confidence in being able to charge for my services.

28:27 Lindy: You made a really good point earlier on in the podcast about how my mindset divorced labor from financial remuneration, which I think is absolutely spot on. The time as a consultant remarried those two things together for me, because it made it very clear that my time was worth money, so I had to a, charge appropriately for it and not do free work on the gamble that it would pay off later in the way that say applying for grants and things like that is that kind of a gamble. Secondly, I also ran into like a scalability problem. There are only so many hours in the day that as a single sole proprietor consultant, you can work. At some point you max out and you can’t charge for 27 hours a day worth of work. That was ultimately how I got to the end of my time as a consultant is that I just sort of was like, there’s more work than hours in the day for me to do it, so I need to now start thinking about what’s the next step? Do I grow out the consultancy or do I think of something else? That’s kind of how that money mindset of the boom and bust carried over into consulting and I really did have to change my approach to labor and finance and more closely see every minute I worked as having to be worth money.

29:56 Emily: Yeah, I see. You had in that narrative that you didn’t officially leave your job, but you took unpaid leave for a year, testing the waters, after securing a grant as well. I’m wondering, obviously I think anyone can see that your life at that time with your husband was untenable, that’s not a long-term solution, but I think a lot of other people still in the face of something like that of there’s this really big thing about my job that’s unsatisfactory, they still stay in it maybe longer than you did. I would like for you to just speak briefly about this transition and how you decided to do that unpaid leave versus just leaving it right away. Did that make it easier taking the half step out? And also, is there anything that you wish you had done differently in that transition from the full-time position to the consulting?

30:48 Lindy: I think the first part of the answer is profoundly gendered. Many female professionals in the Academy and other professional fields find their careers just taking off at the time where they biologically, if they want to have children, they have to. That’s the window, you kind of have to do it. And that was the case for me. I was in my early thirties as a professor and my husband and I, we hadn’t yet decided whether or not we had wanted kids. It had always been like a “maybe one day kind of conversation. But being professors in two different cities and the ages that we were made it very important for us to get some clarity around, well, do we even want to have a family because if we do, that’s something that we’re really going to have to get on sooner rather than later. What came out of that conversation was the recognition that while we still didn’t know if we wanted kids or not, we knew that we didn’t want that decision to be made by circumstance. We didn’t want to fall into not having kids because we lived in two different cities and couldn’t figure out how to do it in that context, in a way that would make us both happy and satisfied as parents or as a family. That I think helped because it was like, well, this is a huge life decision and it could happen to us by circumstance and you can never know what that feeling is going to be like down the road, if you regret it. And I certainly didn’t want to be in that situation.

32:28 Lindy: Taking the leave kind of helped, as I say, sort of give me the confidence that I could actually make money outside of the Academy, which was my big fear. I was like, “Well, this is what I know. This is what I’m good at. This is what I can do. And I like it and all the rest of it.” Being able to sort of throw my hat over the fence, so to speak, as a metaphor for then you got to go in and get your hat, meant that I then began to feel confident that I could pitch for consulting gigs. I could get them. I could do the work. It could be rewarding. I could get paid. And then that also gave us the opportunity to live in the same city, to think about whether or not we wanted a family. In the end we decided we didn’t want kids. We have a cat. She’s amazing. But I’m very happy with that because it was a choice that we made as opposed to one day we woke up and realized that that that window had closed. So that, I think, as I say, the first part of that answer is a profoundly gendered answer.

Money Management Shifts during Self-Employment

33:28 Emily: What I found really interesting in there is that, okay, so you’ve, you stated that this period of consultancy, tied your time and earning back together. Your husband during that time, I think still was salaried. Is that right? So you still had that part of your finances was salaried. How did that change your money management or did it? Were you starting to trust the salary system or were you still like hoarding and then making these investments?

33:58 Lindy: I was definitely still hoarding. As soon as I left my job as a professor and started as a consultant, I definitely got back into the hoarding mindset, partially because as a consultant, it is also very boom and bust. You have periods of intense work and then periods where you don’t necessarily have the work or you’re calling around and trying to get work, so you need to kind of have enough that you’re carrying yourself through the lean times. Particularly at the beginning, you have no confidence that the lean time will end. You do one job and then it’s lean time and you think, Oh my God, I’m never going to make money again. And then you get another job. And then over time, you start to feel a bit more confident that even in a moment when there happens to be a break, that that’s temporary, but it takes a while to sort of get through that. And every time there’s a bit of a break or a lull in projects, at least for me, I was like, “Oh my God, I’ll never work again and I’m a failure and this is terrible and I’m never going to make any money.” I certainly hoarded quite a fair bit.

35:06 Lindy: And then again, because we didn’t know in the early days, did we want to have kids? I wasn’t paying into any benefits package at that point as a consultant, I was just myself. I knew there’d be no maternity leave, so whatever the next step was going to be, I needed to make sure that we had saved and had a buffer. And again, just as I flagged, my early years, I was very lucky to have family support. I had a home where I could live and, and there were financial resources there to support me, as an adult I was very lucky to have a spouse who had a full-time job. Again, I’ve had the ability to take probably some greater risks because of that backstop.

35:56 Lindy: Other people who are in similar situations to me may also think about one person covering the costs and one person taking the risks, because I think that’s a reasonable way for two people in a financial partnership, a marriage, to plan things out. My dad always said, if you can live on 50% of what you make, so one person’s salary and bank the other, you get much farther ahead than if you spend a hundred percent, month to month to month. Again, the finances of dad, the boomer generation are obviously different from us, but I did have that message in the back of my mind for sure.

36:40 Emily: Yeah. That is a really interesting way to put it and quite true that a safety net is maybe not strictly necessary, but can make it easier and more psychologically palatable to take a risk like that.

36:55 Emily: Okay, now you’re in this period of you did this consulting work for a while, but you mentioned earlier that you wanted to scale, ultimately, and so that’s where the business, the software solution comes in. Also, to today, is your husband still in that academic position?

37:09 Lindy: Yeah. He’s still a full-time tenured law professor and he loves it, and will probably continue doing it until one day he’ll be an emeritus professor, I think.

Interplay Between Lindy’s Money Mindset and Entrepreneurship

37:22 Emily: Okay. Another question we have here is after doing the consulting and starting the business, did you start to realize that there were some mismatches between your financial mindset and how the system worked? We talked about the system of being a salaried employee earlier in terms of your employer, but what about the system of, as you mentioned earlier of financing for instance, or you’ve also brought up taxes?

37:46 Lindy: Yeah, so really interestingly, as I say, as a consultant, I was doing that hoarding. Initially because it was like, well, maybe if we want to have a kid, we want to have a buffer. And then there were also things like, well, maybe we want to buy a house, so we need a down payment. And then as I started to think, okay, well, let’s get away from a service-based business and start thinking about a product-based business, we know we’re going to need to have some savings to put into that. All of those considerations required having some kind of chunk of money to allocate towards them.

38:19 Lindy: Then it was as we started to refine those things — okay, now we’re going to buy a house. We thought we were in such a great position because neither of us have student loan debts, we have some savings. Then when we started house hunting, we realized actually what we could afford was kind of not what we thought we wanted, so that was a bit of an eye opener to realize that while we, I think very blithely and naively thought, “Oh, well, we’re sort of trundling towards a middle-class life,” we weren’t, and that was surprising. The houses we saw in the neighborhood we were looking at, which we thought were standard middle-class-y, “this is us”, we’re utterly priced out of that. That again was one of those moments where I was like, well, I need to work a lot harder and save a lot more money so that we can sort of buy a nice house or whatever the case may be.

39:17 Emily: To clarify there, was it that you weren’t making enough money to afford that kind of house or was it that the lending system didn’t recognize your income as contributing towards a mortgage of the size needed?

39:30 Lindy: It was essentially that the mortgage that we needed to secure would be based on my husband’s income, not mine, because I didn’t have…and again, you need say as a consultant, self-employed, you need years of income that you can then show and they still only take a percentage of that, that they count towards your overall income to debt ratio. That meant we were in a much smaller position. The only way to up that was we had to make and save more money, so that even though the overall borrowing amount, the debt amount would remain the same, we’d have a bigger down payment, and so the actual house purchase increased. So we paused that house hunt and I scurried around and tried to make a bunch more money so that we could have more. That’s what got us thinking and that carried over into, we were like, “Hey, I need to move from a service based business to a product based business.”

40:35 Lindy: It got me thinking about income to debt ratios in a way that was entirely new and my money mindset, which is very boom and bust is helpful. Particularly now in sort of tech and startup, you may have to spend a fair bit of money at the beginning to build the thing before the thing that you’re building is actually going to start generating revenue. There’s a chunk of time where you’re spending money, but not making any because you haven’t built the thing yet. But it also got me into dealing with traditional lending institutions. In a tech company, there is no collateral. If I want to start a restaurant, I go to a bank and I have the business plan and I’m like, “okay, I want to borrow some money and either rent this restaurant or buy this restaurant or whatever,” and there’s stuff that the bank can take back if that business fails.

41:31 Lindy: Whereas if I say, okay, here’s my business plan, here’s the product I want to build, it’s this technological product and it’s going to be built in the cloud. There is no hard good. There’s nothing a bank can take, it’s all intellectual property. While there’s a lot of value in that intellectual property, it’s not value that somebody else really can monetize in your absence. I was kind of naive about that. I thought, “Oh, well, you know, we’re building this thing. There’s this need, both educators and students need help with academic writing and there are essay mills out there where people are plagiarizing and cheating, and we are actually providing a real viable, technical solution that’s pedagogically sound, that’s built by a couple of professors, all of that. But it means that you can’t necessarily go to banks and get that funded, unless you’re willing to say, “Oh, and you can take my house if this fails.” It’s really sort of getting comfortable with a fair degree of financial risk.

42:38 Emily: I’m thinking this is where venture capital comes in. Is that something you have pursued or are pursuing?

42:44 Lindy: Yeah. We’re right now in the middle of a financing raid. We held off on venture capital for a very, very long time. We had revenues and savings and bootstraps and friends and family and loans and any grants. As I say, I’m the queen of getting grants. Any kind of, um, funding we could get without external investors in the early days, that’s what we pursued. VCs can be fantastic, but there’s also a risk in the sense that if you get them in too early, they are driving a particular business model for your business, and for us, in the early days, I wasn’t sure exactly what our business model is. Academic writing — is that something that’s going to go viral? Do we want it to go viral? Or is it going to be like a meat and potatoes business where you sign up, you get a subscription, it serves your needs while you’re a student writer, and then you move on to the rest of your life, being able to think and write critically because of the skills that you’ve learned. Or do we need to lock you in like Facebook and keep you forever?

43:52 Lindy: I was very wary of inviting other people into the company early on, lest they derail what is…My passion is to create an ethical business that is viable and that provides a real solution and isn’t a gimmick, and isn’t just out there to steal user’s data and sell it to the highest bidder. But of course, many VCs, that’s what they’re looking for. In the early days, I felt our bargaining power would be quite low, because it’d be like, “here’s my idea” and they’d be like, “well, your idea is unproven.” Whereas now, as we’re going out to investors, like, “okay, we’re selling all over the world. We have schools, colleges, and universities. We have individual subscribers. We’ve won a bunch of awards.” We’re in a much more solid position to then say, “Do you VC want to be part of this journey?” As opposed to “do you want to derail and take over the journey yourself?”

44:58 Emily: So fascinating. I’m so glad you gave us that insight. I’m sure there are probably many people in the audience who are thinking in their futures that maybe, VC or startups could be part of that. I’m really excited that you shared that.

Investing in Yourself as a Way of Financial Growth

45:10 Emily: Is there anything else that you want to add about your money mindset that you’ve been developing all these years and your financial life as a founder that we haven’t covered already?

45:19 Lindy: The only thing that I would add is that I think I have been able to take sort of a fair degree of, and I mean, it’s calculated risk, but my calculated risks are always to invest in myself. At earlier times where it was like, I’ll put the time and energy into this grant or this application, now as a startup founder, it’s “I will put the time into developing this content or this product, or pitch decks or financial business models that I’m going to present to lending institutions.” All of that work, which now again, is sort of decoupled from payment in a very specific way. I’m back in the realm where I do a bunch of stuff, and I’m betting that it will pay off in the end. And so being able to do that has always been I’m betting on myself. I’m assuming that if I put any chunk of money I have in a financial institution savings vehicle, that I’ll make small percentages. Whereas if I invest in myself, what I’m gambling on is that I’ll be able to make multiples on that investment. That has developed over time, as I’ve started to think, well, I have the personality type, I’d rather be the one trying really hard, than just handing my money over to the bank and letting an account manager invest in various funds, and I have no insight or understanding on how those work. I’m not a trained financial analyst. I still don’t understand money markets with that degree of specificity. And if I wanted to invest in that, I’d need to then rely on somebody else. Whereas if I invest in myself, I rely on myself. If I take a day off, then that’s my fault if I screw up. Whereas if I work really hard and produce results, I’m the one who benefits from that. That’s the final that I would say, is that I certainly have had to develop the confidence in myself to then bet on myself.

47:35 Emily: Yeah, this is so fascinating. And it is a very different approach from my financial approach, so I’m so glad to have your perspective on the podcast as well, because again, I think this is going to resonate with a certain slice of the audience who wants to be or is the type of entrepreneur that you are. This is really going to resonate with them. And you know, what some other people might be listening and say, I don’t want the life that Lindy has. It’s not for me. I want that salary.

48:00 Lindy: Exactly. That’s the thing that’s so clear is that if you’re going to leave the Academy or leave a stable job, I think you do need to know. If a must have is financial stability and security, then certainly don’t become an entrepreneur. If say you have the backstop of either you’ve got family money or in my case, a spouse with a job or something like that, and you have the sort of weirdo seemingly risk-taker, roll the dice kind of personality, then I think entrepreneurship is really exciting because the relationship between whether you do a good job or not is absolutely connected. Not in a day to day “did I get paid today for my work,” but in the big macro picture. The market, the world at large will tell you whether you did a good job or not.

48:54 Emily: Yes, absolutely. Well, Lindy this has been such a fascinating conversation. One, can you tell people where they can find you, where they can find EssayJack and so forth?

49:04 Lindy: Yeah, so EssayJack is essayjack.com, and then on Twitter and Instagram, it’s @essayjack. For me, I’m @DoctorLindy on both Twitter and Instagram. On Instagram, you’ll just see pictures of my cat, but you’re more than welcome to find me there. And then both on LinkedIn as well.

Best Financial Advice for an Early Career PhD

49:26 Emily: Yeah. Great. And the question that I ask all my guests at the conclusion of our interviews is what is your best financial advice for another early PhD? It can be an emphasis of something that we’ve already touched on in the interview, or it can be something completely different.

49:39 Lindy: The best bit of advice is honestly to keep your debt load as low as possible, like consumer debt load. Ideally at zero, but as low as you possibly can because ultimately if you’re starting from a level position and then earning onwards, whether it’s with a stable job or entrepreneurship, you’re already in the positives going upwards. If you’re already in debt, it is just so hard to start digging your way out. So as much as you can minimize that, that would be my key advice. Learn how to get hand-me-down clothes from your older sister.

50:20 Emily: Yes. I totally totally agree, especially, gosh, for people who are in graduate school and have that lower income. If you have the option to not obligate that future income, please avoid it whenever possible. I totally agree. Well, Lindy, thank you so much for giving us this interview. It was a real pleasure to talk with you and I’m sure the audience found this absolutely fascinating as I did.

50:39 Lindy: It was really great to chat through all of this with you. You unearth things that I’m not aware that I think until I say it.

Listener Q&A: Investing on a Living Wage

Question

50:51 Emily: Now onto the listener question and answer segment today’s question was asked in advance of a live webinar I gave recently for a university client, so it is anonymous. Here is the question: “How much should I invest if I make a living wage?”

Answer

51:08 Emily: Back in season eight, episode seven, I answered a simpler version of this question, which was” what percent of income should be used for investment? In that answer, I gave my overall ideas about what percentage of your gross income should be used to invest for retirement. Now this question specifies that the person makes a living wage. So does my general answer from the previous question change at all, knowing that this person makes a living wage?

51:37 Emily: Living wage is sort of a general term, but I like to refer to the living wage database from MIT, livingwage.mit.edu. That living wage is calculated by looking at how much money a single person or a family spends on average in a variety of different necessary budgeting categories.

51:58 Emily: Let’s say you’re a single person and you’re earning the living wage for a single person in some given area of the country. What that means is that if you are an average spender across all of these different categories, you would not spend any of your wage on discretionary expenses or saving. All of it would go towards those necessary expenses.

52:21 Emily: The first way I can answer this question is if you’re only making a living wage, it’s okay if you’re not investing, I mean, of course I want you to be investing or saving or working on debt repayment or whatever your goal is, but given how much you’re being paid and how much the cost of living is in your area, that may not be feasible for you. I want you to give yourself some grace, if you are not able to invest right now, or you’re not able to invest as much as I talked about in that previous answer.

52:50 Emily: Now, let’s go a step deeper with this. I just mentioned that the living wage is based on averages. You do not have to spend an average amount of money in these various categories. The big, big one that goes into this is on housing expense, so again, if you’re a single person, the living wage calculator that I referenced assumes that you will live on your own. Just by making the one choice to live with a flatmate, instead of by yourself, you’ve already radically reduced your spending compared to what the living wage thinks you should be spending in probably your biggest expense area, overall. That one choice alone, even if you’re average in every other category might free up enough money for you to be able to spend on some discretionary expenses and start investing.

53:39 Emily: You don’t have to do this just with housing. In every one of these necessary expense categories that go into the living wage, you can strive to spend below that level. And if you did that across all these areas, you would free up quite a bit of cash flow to go towards other financial purposes. So that’s my answer. If you are making a living wage, you “should” be investing anywhere from 0% up to the amounts I talked about in that previous answer of 10% of your gross income, 15 or 20% of your gross income, depending on your age when you start investing.

54:13 Emily: But I want to leave you with one final thought, which is have a plan to make more than the living wage. Whether that is by finish up your graduate program and moving on to a postdoc or another type of job. Whether that’s increasing your income in some other way in the meantime, before you can make that career leap, earning more is the other way to circumvent this problem on investing when you only make a living wage.

54:38 Emily: Thank you so much to anonymous for submitting this question. If you would like to submit a question to be answered in a future episode, please go to pfforphds.com/podcast and follow the instructions you find there. I love answering questions, so please submit yours.

Outtro

54:55 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest, and submitting a question for the Q&A segment. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email list serve, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt, repayment and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe through that list. You’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. Music is Stages of Awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC podcast, editing and show notes creation by Lourdes Bobbio.

How This Prof Developed Her Career, Family, and Finances (with Dr. Sarah Birken of AcaDames)

March 22, 2021 by Meryem Ok 1 Comment

In this episode, Emily interviews Dr. Sarah Birken, a faculty member in the Wake Forest School of Medicine and co-host of the podcast AcaDames. Sarah tells the story of her financial life from her PhD training to her research faculty position at UNC to her new tenured position at Wake Forest, which paralleled the births of her children. She has recently experienced a financial awakening after years of being unaware of her cash flow. Sarah explains the motivation behind some of the financial decisions she’s made, such as working part-time and accepting her position at Wake Forest. Graduate students and PhDs who aspire to become faculty members and/or parents will find this episode fascinating!

Links Mentioned in This Episode

I Will Teach You to Be Rich (Book by Ramit Sethi)
Emily@PFforPhDs.com (E-mail for Book Giveaway)
PF for PhDs: Podcast Hub (Book Giveaway Instructions)
@birkensarah (Sarah’s Twitter)
AcaDames Website
AcaDames: Sarah Job Search and Transitions Episodes
How This Graduate Student Financially Manages Daycare Costs, Debt Repayment, Saving, and Side Hustling (Budget Breakdown with Aubrey Jones)
PF for PhDs: Tax Center
Personal Capital
PF for PhDs: Tax Workshop
PF for PhDs: Subscribe to Mailing List

Teaser

00:00 Sarah: I think I probably would have taken out a loan and, you know, if I could have understood that I would be making an amount of money in the future and really taken that into account and would be able to pay off a reasonable loan, I probably would’ve done that.

Introduction

00:22 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is season eight, episode 12, and today my guest is Dr. Sarah Birken, a faculty member in the Wake Forest School of Medicine, and co-host of the podcast AcaDames. Sarah tells the story of her financial life, from her PhD training, to a research faculty position at UNC, to her new tenured position at Wake Forest, which paralleled the births of her children. She has recently experienced a financial awakening after years of being unaware of her cashflow. Sarah explains the motivation behind some of the financial decisions she’s made such as working part-time at UNC and accepting her position at Wake Forest. Graduate students and PhDs who aspire to become faculty members and or parents will find this episode fascinating. On the theme of post-PhD financial life, I thought I would give you another update on my family’s house-hunting process since it’s almost literally all I can think about at the moment. The housing market is wild right now, y’all.

01:29 Emily: My husband and I are trying to buy a single-family home in the San Diego area. We are first-time home buyers, and we are looking for a home we can live in for the next 20 years, at least, which is putting a lot of pressure on the process. We look at every home to see if it can meet not only our immediate needs, such as sufficient indoor and outdoor space for us to weather the rest of the pandemic, but also our anticipated needs when our children are in high school. The cycle that we’ve fallen into just about every week for the last six weeks is to monitor the listings that go up throughout the week and message our real estate agent about any houses we want to see that weekend. On Saturday, we drive from Orange County to San Diego County, leaving our kids with their grandparents.

02:14 Emily: We see between one and four houses and debate the merits of each house for the rest of the weekend. Finally, we submit an offer or not by early in the following week. Then the cycle starts over again, even before we hear back about the offer we submitted. As of the time of this recording, we have submitted three offers on homes, none of which have been accepted. All of the offers were between seven and 12% over the asking price. With the latter two offers, we waived the appraisal contingency, which means that we still intended to buy the home, even if it didn’t appraise for the sale price, and would bring cash to the closing table to make up the difference between the appraisal and sale price. I never knew that was a thing before getting into this process. Our offer was the first runner-up on the latter two homes, which I suppose means we’re offering in the right ballpark.

03:07 Emily: On the second house, we lost out to a buyer who was quote, “willing to beat any other offer,” end quote. And on the third house, we lost out to an all-cash buyer who waived all contingencies. So, on top of California real estate prices always being mindbogglingly high, inventory is very low at the moment. And buyer demand is bidding prices up well over asking. It seems like a very bad time to buy. Yet, here we are trying to, because we are personally and financially more than ready for this step. I’ve been trying to think of advice for future first-time home buyers in my audience, and I might end up doing a whole episode on this process once it’s complete. For now, my advice is to do absolutely the opposite of everything we’re doing.

Emily’s Home-Buying Advice

03:50 Emily: One, don’t buy in a sellers market. Two, don’t buy in a pandemic. Three, don’t buy from a distance. That is, unless it’s the right time to buy, like it is for us. My one actionable piece of advice right now for future buyers is to regularly go to open houses, starting well in advance of when you actually want to buy. In California during the pandemic open houses aren’t allowed. So we missed out on seeing lots of houses casually. We only see a very small number of houses seriously. The problem is that we didn’t really know everything that we were looking for when we started the process and we’ve become more specific in our vision as we’ve seen more homes. We’ve probably doubled our list of must-have and nice-to-have features since including minimum square footages for various areas of the home and lot. It’s the kind of stuff we never paid attention to when simply visiting other people’s homes. We’ve also learned about sort of California-specific things like unpermitted additions and Mello-Roos. So, there is a big learning curve for first-time home buyers. And that open house phase, I think would have been really helpful. Wish us luck to get a house soon so we are put out of our misery.

Book Giveaway Contest

05:06 Emily: Now, it’s time for the book giveaway contest. In March, 2021, I’m giving away one copy of I Will Teach You to Be Rich by Ramit Sethi, which is the Personal Finance for PhDs Community book club selection for May, 2021. Everyone who enters the contest during March will have a chance to win a copy of this book. I’m personally really looking forward to reading I Will Teach You to Be Rich for the first time. I have recommended this book and given it as a gift before, but never read it. I do know, however, from reading Ramit’s website and listening to interviews with him that in some ways he has a very different approach to personal finance than I do, such as putting a big emphasis on earning more. So, I think I’ll really benefit from reading a full book from his viewpoint. If you would like to enter the giveaway contest, please rate and review this podcast on Apple podcasts, take a screenshot of your review, and email it to me at emily@pfforphds.com. I’ll choose a winner at the end of March from all the entries. You can find full instructions at pfforphds.com/podcast. Without further ado, here’s my interview with Dr. Sarah Birken of AcaDames.

Will You Please Introduce Yourself Further?

06:17 Emily: I have a really special guest joining me on the podcast today. It’s Dr. Sarah Birken, you know her from AcaDames where she’s a co-host. She also recently became a faculty member at the Wake Forest School of Medicine. So congrats to Sarah for that. And we are going to be talking today about finances through career transition points. And it’s a real pleasure for me to get to speak with someone, interview someone on the podcast who has been through a few transitions, you know, post-graduate school. So I think she’s going to have some really great lessons for us who are a little younger on in our career to to take from it. So, Sarah, thank you so much for joining me on the podcast. And will you please introduce yourself a little bit further for the listeners?

07:00 Sarah: Yeah, sure. Thank you so much for having me. It’s a real pleasure. And I’ve been getting some friendly joking from friends and family that I’m on a personal finance, finance podcast. But yeah, so Sarah Birken, I am an Associate Professor in the Department of Implementation Science at the Wake Forest School of Medicine Division of Public Health Sciences. And as you mentioned, AcaDames co-host. I have been in the field of implementation science since the end of my PhD where I found out that that was in fact what I was doing. My post-doctoral fellowship was in cancer prevention and control. And as we’ll talk a little bit more about, I started out in a half-time research faculty position after my post-doc then moved to full-time and just in July 2020 transitioned to a tenure-track position at Wake Forest.

Sarah’s Finances and Money Mindset in Grad School

08:00 Emily: Yeah, it’s fantastic. And I know you covered that very well on your podcast. So, we’ll link to, in the show notes, a few of those episodes. So let’s start, you know, way back during graduate school and tell us what your finances were like at that time and whether you were aware of them working on them at all? Maybe not?

08:18 Sarah: Yeah. I mean, I have the benefit of having been partnered with somebody who was always very on top of finances. And I started graduate school after having made very, very little money as an administrator at a community health center. And when I applied for graduate school, I had like a vague sense that I wanted to make more money than I was making at the community health center. It would’ve been hard to make too much less than that, but I mostly, my objectives were not to be in a ton of debt and to be able to pay for graduate school, period. And when I applied for graduate schools and I did all over the country and got a full ride to UNC, that was so much of a blessing. I didn’t even, I mean, I knew that I was really lucky and I knew how wonderful it was that I wasn’t going to have to pay for graduate school, but I didn’t fully understand it at the time because I was pretty irresponsible with money.

09:31 Emily: Did anything regarding like your money mindset start to change during graduate school? And were you making more money, by the way, than you were from your prior job?

09:40 Sarah: Yeah. I was making not an appreciable amount more once I was in graduate school, right? Because I had, you know, my tuition and health insurance paid for, and I had a stipend through graduate school, but it was peanuts. It was really very little money. And so I just got accustomed to spending very little. I didn’t take out any loans because I didn’t have to, but I didn’t spend very much because I didn’t have very much to spend. So my, you know, modus operandi was just spend as little as possible, which I think in retrospect was not a great idea because instead of thinking of how much do I have to spend, it was just head in the sand. Don’t spend too much.

10:32 Emily: Yeah. So it sounds like you were, yeah, sort of in denial about, or like not wanting to deal with money very much.

10:39 Sarah: Oh yeah. Correct.

10:40 Emily: Thankfully the good part of that is you were erring on the side of not overspending, but underspending, but had you been in a little bit of a different headspace, you would have loosened the purse strings a little bit.

10:50 Sarah: Yep, yep. Exactly.

How Having a Child in Grad School Shifted Finances

10:52 Emily: What else happened in graduate school that affected your finances?

10:55 Sarah: Yeah, so I transitioned from the master’s program into the PhD program. So I completed the master’s and then started the PhD. And the stipend situation was really the same. I again had the tuition remission and the health insurance covered and the stipend, and I was kind of, you know, rocking and rolling doing the graduate school thing. And then I became pregnant with my first child in my second year of graduate school. And kind of, that was a big wake up call. Like I can, I can certainly continue to try to spend as little as possible, but I’m going to have a whole new creature to take care of. And some immediate things that became clear were that I needed to not live next to the drug dealer who I was living next door to anymore. I didn’t feel like I was in imminent danger, but certainly it was not a setting, it was a ton of graduate students and just not the sort of place where you want to raise a child if at all possible. So, I decided to find a single-family home and moved a little bit farther away from the university and found a job that was 30 hours a week, in addition to graduate school, that would pay a little bit more. So I went from making probably around $20,000 to making about $40,000 overnight. Which at the time felt very luxurious.

12:31 Emily: Wow, I don’t know that I’ve interviewed anyone else who’s made that kind of decision. So you took a 30-hour per week job. Does that mean you gave up the job you had, like if it was an assistantship, or how did that work combined with the, you know, the funding of graduate school?

12:46 Sarah: Yeah, that’s an important nuance. So, in the first two years of my PhD program, we were guaranteed some sort of position that would include a stipend. So that was a research assistantship or a teaching assistantship. And then a lot of students find a fellowship that will, you know, a pre-doctoral fellowship that will cover the cost of their schooling, their dissertation writing. And I had applied for maybe one or two, maybe it was even just one fellowship, didn’t get it, and was really worried. Like, what am I going to do next? And so I emailed faculty who were doing research in my area and they didn’t have any funding. And so I emailed the chair of the department and said, here’s my situation. Do you have any suggestions? And she said, actually there is a coordinator position for the reaccreditation of the school of public health. It is 30 hours a week. It is a real 30 hours a week. So it’s not like an assistantship where you might work, you know, 10 hours one week, you know, 25, the next. It was going to be a full 30-hour week position, but it made double what I did before. So that’s how I ended up in that position.

14:00 Emily: Okay. And was your funding still, that is for like the tuition and fees and so forth, was that still provided by your program?

14:08 Sarah: Yes, it was.

Housing Expenses and Saving on Childcare

14:09 Emily: Okay. Yeah. That’s, that’s really interesting. Of course I know sometimes people who get into the ABD stage have different work arrangements, but I’m really glad to hear how that worked out in particular for you. Okay, so you’re making more money but you have the child, so what’s the next stage in the finances?

14:26 Sarah: Yeah, so we had bought this house and it was very inexpensive and I think it felt comfortable because where I live in North Carolina, really, the market is such that it was as affordable to buy a home as it was to rent a home. And that way, you know, I was building equity and I, you know, I had been for teaching spin classes on the side just to kind of make some extra money and fill in gaps for fees, for example, were not covered by the tuition remission. Which, you know, sometimes they were like $700, nothing to sneeze at. So my partner did start making a little bit more money, but in the meantime there was a gap where he wasn’t making very much money. So we, again, were just really trying to keep things as inexpensive as possible. So one of the decisions I made, it was primarily for kind of personal reasons, but also financial. I had minimal childcare, which was pretty stressful because I was doing, you know, my dissertation, I was working 30 hours a week, and I had an infant. But it was important to me to kind of keep things as limited as possible in terms of expenses and childcare is extremely expensive around here. Probably no more expensive than elsewhere, but it was like a second mortgage to have full-time childcare.

15:56 Emily: Yeah. I was going to ask you about that next because yeah, childcare is, I’ve definitely spoken with other graduate students who have, because the flexible schedule, like tried to make it work and not having at least full-time childcare, maybe just part-time or something. How do you feel about that decision now?

16:14 Sarah: You know, I have reflected on it because I do know of graduate students who have children who have gotten childcare. And in retrospect, I do wish I had given myself the grace of having a little bit more help than I did, because it was just a lot. I remember being extremely sleep deprived. I don’t regret anything because I really savored that time with my daughter, but it was stressful in a way that I don’t think I would want my child to do for themselves if they were in that situation. So I think I probably would have taken out a loan and, you know, if I could have understood that I would be making an amount of money in the future and really taken that into account and would be able to pay off a reasonable loan, I probably would have done that.

17:09 Emily: Yeah. I’ll link in the show notes to another episode where I interviewed a graduate student who is currently taking out student loans for daycare and also side hustling and doing all the things on top of it. Do you feel like you still finished in good form or maybe you took a little bit longer or how do you think that worked out?

17:26 Sarah: You know, I took three years to finish my dissertation. So, it was two years for the master’s program, two years for the predoctoral coursework, and then three years of writing my dissertation. And honestly, I think, you know, a lot of people finish their dissertation in two years in my program. For me, I think it was less about having a child and more about like data issues as, you know, these things go. But yeah, I felt like I was in a pretty good position when I graduated.

Decision to Do a Postdoc After Grad School

17:58 Emily: Okay. And so you did a postdoc after graduate school, is that right?

18:01 Sarah: Yes, I did a postdoc, but I did go on the job market in a very limited way, mostly because I wanted my dissertation chair to read my dissertation. And I knew that if I were on the job market, he would read my dissertation, and it worked. And so I very seriously considered a faculty position that I was offered. And the salary that was offered, it was a nine-month tenure-track faculty position. And I was considering also two different postdocs that I had been offered in North Carolina. The faculty position was outside of North Carolina. And you know, postdocs didn’t make, there was one postdoc that made not terribly far off from the faculty position. And then another post-doc that was just very little money. It was a T32 and it had no research support. And the postdoc that I ended up taking, it was an R25, which at the time you could do a post-doc, they funded them that way. And it was a much more generous salary than the T32. It had research funding. I hadn’t even been counseled about thinking about a startup package for a faculty position. And I don’t know if that was on the table. I’m not sure I remember, I don’t remember talking about it. And so again, in retrospect, it was really smart of me to take the generous post-doc that had research funding that had a little bit more generous salary than the other one. And I did that for three years. And for each of the two years subsequent to the first, I got a $5,000 raise.

19:43 Emily: Yeah, not bad. It’s very curious though, because you don’t hear about people turning down tenure-track positions too often. So what was it that tipped things in favor of doing the postdoc?

19:53 Sarah: Primarily, my partner was not super excited about moving, and I felt like I wanted to make sure that he was comfortable with our next life stage, our next, you know, career decision. And also I did get advice from somebody at the institution where I had gotten the tenure-track offer that I should do a post-doc. And part of that, I think for her, the reason she recommended that was because I would have time off of the tenure-track clock, the tenure clock to publish, to get some preliminary data for a career development award. And so taking those things together, it was a pretty clear decision.

20:40 Emily: So, your idea then at that point was to go on the job market again, after the conclusion of the postdoc and be a stronger position for winning funding and getting a position at that time.

20:51 Sarah: Exactly.

Sarah’s Finances and Money Mindset During the Postdoc

20:52 Emily: Gotcha. Okay. So let’s talk about the finances during the postdoc. How much were you making approximately at that time and you know, what was going on?

21:00 Sarah: So, I started at, I want to say $50,000, which is pretty good for a postdoc back in 2011. And then the next year I made 55 and then the final year I made 60, which was really pretty sweet.

21:16 Emily: Yeah. That raise schedule is, yeah, that’s pretty good.

21:19 Sarah: Yes. I finally felt like I was able to breathe a little bit. I mean, I wasn’t exactly like going on fancy vacations and buying a new car which, you know, I hadn’t done. I think, you know, my husband and I went on our very extravagant honeymoon. We went to New Zealand six months after we got married. But other than that, we really weren’t doing anything extravagant. I was driving the same car I had gotten right after college which was used anyway. And so, I think that I just was able to feel like I didn’t have to scrimp and save at every turn making $60,000 a year, which is pretty good.

22:02 Emily: Yeah. And regarding, you know, your child as well, how were you spending money in that respect?

22:09 Sarah: And at this point, I had two children. So in October of my first year of the postdoc, three years after my first child was born, I had a second child. And so, at this point, my daughter was in preschool about half-time. And then my son, I stayed home with exclusively for quite a while, maybe six months, again, kind of fitting my work around the edges, having a little bit of in-home daycare. Somebody would come into my home and watch him while my daughter was at preschool and I would get some work done. And I was doing a lot of work at night and on the weekends.

22:51 Emily: Yeah. So, you had your full-time job, but it was fit into the margins around the children’s schedule.

22:57 Sarah: Exactly. It’s the double-edged sword of that flexible job situation. And I don’t do bench science, so I really was on my own schedule for the most part.

Retrospective Reflections on the Affordability of Childcare

23:07 Emily: Yeah. And I’ll ask you the same question again. How do you feel about that arrangement now, looking back on it?

23:13 Sarah: I mean, I think I’d probably give you the same answer, that first of all, I probably could have afforded more childcare. Particularly once I was making, you know, above $50,000, I probably could have done it. It would have been a little bit tight, but I could have afforded it. Again, it was kind of my own personal comfort level with how much I wanted to be away from my children, but it also was, I just was so used to living as restrictively as possible. It didn’t even occur to me to get more help because I just operated as stringently as possible, but I didn’t have to. And if I had taken a little bit more time to really understand my finances, my cashflow, I’m very lucky. I didn’t have any debt from college. My parents paid for college. I didn’t have any debt from graduate school, aside from my house. I didn’t have any huge responsibilities, liabilities, so I probably could have afforded it. And if I had really examined my finances, I would have seen that.

24:22 Emily: Yeah. I’m asking these questions because I was in a similar period. So I have two children. They’re four and two right now. And in their very young years I was self-employed. And so I had this wonderful flexibility. And so I also didn’t employ as much childcare as I could have, and we sort of slowly dipped our toe into more and more childcare as they got a little bit older. And then the pandemic took the childcare away, and I really, really miss it. So that’s kind of my perspective on this. It’s like, yeah, I could have done a little bit more with that and been a little bit more focused on my work. And maybe for my business, you know, maybe gotten things ramped up a little bit faster than they had been. But, you know, like you said, also, like not regretting having the time with the children because that’s wonderful, but yeah, I’m just curious now for, I know, obviously there’s, you know, younger listeners maybe still in graduate school, maybe they haven’t had any children yet. Just trying to think through these decisions. I think it’s useful as you do on your podcast to talk through the issues that people face as they’re juggling career plus, you know, caregiving for family members and so forth.

25:24 Sarah: Yeah. And I think the bottom line is, you know, it is an intersection of personal values, finances, aspirations for what you want to do with your money, and just understanding all of those fully is going to position you best to make the right decision.

Commercial

25:47 Emily: Emily here, for a brief interlude. Taxes are weirdly, unexpectedly difficult for funded grad students and fellowship recipients at any level of PhD training. Your university might send you strange tax forms or no tax forms at all. They might not withhold your income tax from your paychecks, even though you owe it. It’s a mess. I’ve created a ton of free resources to assist you with understanding and preparing your 2020 tax return, which are available at pfforphds.com/tax. I hope you’ll check them out to ease much of the stress of tax season. If you want to go deeper with the material or have a question for me, please join one of my tax workshops, which you can find links to from P F F O R P H D S.com/T A X. It would be my pleasure to you save time and potentially money this tax season. So don’t hesitate to reach out. Now, back to our interview.

Retirement Savings, Directed Gift-Giving, and Coaching

26:52 Emily: So, let’s also talk a little bit about what financial practices did you have? Because you were saying you weren’t super aware of your cashflow during that time. You didn’t really examine it. So, were you budgeting? Were you saving? What was going on?

27:05 Sarah: Yeah, so by this time my partner was a personal financial planner, which was extremely convenient. He had always been really interested in personal finance. And so, you know, early on I had been, even when I worked at the community health center, I maxed out my retirement savings or contributions and didn’t have that option as a graduate student, no benefits there, but we certainly were saving as much as we could. Just a little bit here and there. But I was not a participant in that decision by my own, kind of, I guess it was more passivity than it was a conscious decision that I didn’t want to be involved in that. And so, I think for me, I just had so little perspective on any of our cashflow. But we had set up 529 plans for each of our children before their birth. And that was something that we started to ask anybody who wanted to give presents to just contribute to 529 plans. So, these were the kinds of things that we were starting to do that would make things a little bit easier and asking for things like, instead of stuff, like memberships to museums and things like that.

28:18 Emily: Yeah, I like that directed gift-giving, the nudges, that’s a good tip for any future parents. Okay. So, any more that you wanted to say about that postdoc position?

28:28 Sarah: I did work with a professional coach when I was trying to make a decision about kind of what I wanted to do towards the end of the postdoc in terms of my next steps. And one thing she encouraged me to think about was that there are all types of currency, and salary is just one of those. You know, benefits are just another component, but flexibility, anything really that you value as a human, you know, personal happiness, contentment in your relationship, proximity to family, be that far or near, depending on what you want. These are all important forms of currency. And that was kind of my orientation as I sought another position following my postdoc.

29:15 Emily: Yeah, that sounds like a really great exercise to go through when you’re at that point of deciding where you’re going to go next in your career. Is that something, an exercise you would recommend to others?

29:25 Sarah: Oh my gosh. Yes. Literally writing it down. I think just making all of those things as explicit as possible. Again, in the vein of really having clear picture of all of these things. Now, still at this point, I didn’t have a clear picture of my finances, but at least knew that that was a consideration that I had to account for.

Sarah’s Half-Time Research Track Faculty Position

29:50 Emily: Yeah. So, you went on the job market again, and where did you end up?

29:55Sarah: Well, so I didn’t really go on the job market. One of the major values that I pulled out of my experience with the coach was that I did want to stay home part-time with my children. I really liked being home part-time and I liked kind of being able to be with them as much as possible while continuing to do my research. And so, I basically worked with a mentor who was in a powerful position to design a half-time research track faculty position. Again, this was a huge compromise in terms of, you know, just financial benefits because it was half a salary, it was no benefits. So I forewent retirement savings aside from any personal contributions, which I did make, and, you know, was on my partner’s benefits which was stressful because he worked for a very small firm. Health insurance was very limited and expensive, but that was a conscious decision on my part to forego the benefits, you know, real and kind of personal, associated with the kind that I would get in a full-time position.

31:10 Emily: Yeah, I think, so I also work part-time now because I can design my own schedule. I find it to be great. And I think a lot of people wish that they could negotiate for that kind of, like still keep their career going, maybe a little slower speed than before, but still on some kind of track while having a lot more time for their own stuff, for their own families or whatever it is that they’re doing. How long were you in that part-time role?

Transition to Full-Time Contingent Faculty Position

31:37 Sarah: I was in the part-time role, I want to say, for maybe a year and a half or two years. And then I sought a position elsewhere because I was ready to work full-time, and it didn’t seem like that was going to be an option at UNC in my department. And so I did get an offer for a full-time position at another institution. And as you know, the chips fell, I was offered a full-time position at UNC in the same department where I was. It was still research track. So I was completely contingent, which means that I ate what I killed. If I didn’t get a grant to cover my salary, I wasn’t going to get a salary ever or a full salary. So that was stressful. But I was taking into account, frankly, a couple of things. One was the kind of intellectual freedom that I would have being in this, even though it was not a tenure-track faculty position, I had the intellectual freedom to do investigator-initiated research. Another consideration was, I was just scared, basically, to do something new or to think about what else my career might look like. I was kind of already on a path, and it was frightening to me to think about doing something different.

33:08 Emily: I see. So, were you at UNC that entire time, or was your postdoc at a different institution?

33:13 Sarah: No, my postdoc was at UNC and its Cancer Center.

Sarah’s Finances During Full-Time Faculty Position

33:17 Emily: I see. I think you’ve talked about on your podcast about the relative of merits of staying at an institution, right? The same institution where you did your graduate work. So yeah, I’d love it if you could give me an episode and I’ll link to it in the show notes for like further discussion about that. For our purposes, now you have this full-time role. You know, you’re going after your own grants, but you get to set your own salary. What do you want to say about the finances during that stage?

33:45 Sarah: I have to say that it was a kind of delay cognitive shift, because I doubled my salary overnight and I was still functioning as though I made half of my salary. And, you know, I really, because I had never confronted or taken the time or the initiative to closely examine my finances, I couldn’t adjust my thinking around finances or how I spent my money. Again, my M.O. was just make as much as possible and spend as little as possible. And I think that, on the one hand, that continued to work out relatively well, but on the other hand, it meant that I was really deferring to my partner for all things, all financial decisions. And I do not recommend that. I cannot overemphasize, and I remember sitting down with a financial planner who helped my partner and me before we got married.

34:50 Sarah: And she said, you need to focus on this. You need to pay attention. And I, honestly, where my brain was was to say like, I’ll figure it out when I need to. Like, right now, I’m overwhelmed with everything I have on my plate. And I don’t want to think about it. There was nothing anybody could have said to convince me to pay more attention to it until I was ready, which is kind of my personality anyway. But at this stage, it’s much harder to wrap my head around things because things are much more complicated. And I would like to think that if I had started earlier and focused when things were simpler, I would be able to keep up a little bit better now. Now that I really am taking the bull by the horns, I am able to get my head around it. I’m happy to say I was right. You know, I need to figure it out now and I am figuring it out, but it’s much more complicated than it would have been, say, when I was in graduate school.

35:50 Emily: I think that’s a really, really great message for the people listening who are starting their adulthood, right? And I actually have, not about finances generally, but I kind of say the same thing about taxes, actually. Like when you start understanding how your tax return works and how income tax operates when you have a simple income, a small income, you know, no assets, no house, no all this complexity that can come like later on, as your financial life gets more complicated, your taxes also get more complicated. And so I can definitely see how, yeah, if you were deferring this work to your partner for all those years now, suddenly you open your eyes and you have this wonderful paying job, but you’ve got the two kids and you have all the different, you know, aspects of your finances that are going on. I can definitely see how it could be certainly overwhelming, but I’m really glad to hear that you’re finally, you know, deciding to take charge of it. So definitely the advice is pay attention when it’s small and, you know, your knowledge will grow as your finances become more complicated. Yeah.

36:52 Sarah: Absolutely.

36:54 Emily: Is there anything else that you want to say about your finances during that period when you were still at UNC, but at the full-time role?

Negotiating Salary as Research Track Faculty

37:01 Sarah: The only kind of negotiating advantage one has as a research track faculty member is that the institution is not on the hook at all for the money that they’re paying you. Because it’s not them paying you. It is completely grant funding. And as a non-physician research scientist, there is no amount that, you know, if I were a physician and I made over the NIH cap, then sure, the institution would have been on the hook for the remainder, but that wasn’t the case for me. So, that was something where I didn’t feel like it was asking too much. So, I did kind of push that a little bit more than I would have otherwise when I was negotiating that retention package.

37:53 Emily: Because as you said earlier, you’re completely funding your own salary. Plus, the research expenses, the lab, whatever it is, well, you said you weren’t lab-based research, but whatever it is that you’re funding costwise.

38:01 Sarah: Right, exactly.

38:02 Emily: Yeah. So, what I’m taking that to mean is that you can set your own salary, but there’s some input from the institution and you don’t want to shoot too high because then you’re running through the grant money more quickly. Is that right?

38:13 Sarah: I mean, that is a consideration, although you kind of put in for a percent effort, but that will eat up the research budget a little bit. That wasn’t something I thought of too much, just because I think the kind of incremental chunk of the overall budget that my salary would take up, you know, a $5,000 increase in my salary, isn’t going to blow my budget.

Sarah’s New Tenure-Track Position at Wake Forest

38:40 Emily: Gotcha. Let’s talk about your new position now. What prompted you to go for it and be willing to leave UNC?

38:49 Sarah: Oh my gosh, it was such a process, but I had a career development award. That is how I funded 75% of my salary for the time, the three years that I was in a full-time position. The other 25% was made up of teaching and other kind of co-investigator positions. And as I near the end of my career development award, you know, the writing was on the wall. I was going to have to, you go from 75% of your salary being covered to, you know, whatever you can pull in with grants. And after your career development award is over, as a, you know, an academic researcher. You’re never going to have a grant that’s going to cover that percent of your salary again. It’s just, you know, you might, if it’s a really generous project, you might get 25%, but usually it’s more on the order of like 10, 15, 20% of your effort.

39:47 Sarah: And that means that you’re on a lot of projects. And funding being what it is, it did not seem like something that was viable for me in a research track position, being able to pull in enough money to support the lifestyle that I had come, you know, again, I was still not spending a ton of money. But, you know, we moved from a smaller house to a bigger house. We had bought a new car by that time. These are things that do add up and, frankly, I wasn’t excited about making half a salary anymore. And, you know, one of the things that happened when I was on faculty was I just wore, in graduate school and for the postdoc, I really just more whatever clothes I had and I just didn’t really care. And something happened and I was like, I love clothes. And I still only buy used clothes to the extent possible. I really am like a big consignment person, but still, these are kind of the orientations that shifted a little bit. So.

40:58 Emily: I want to actually interject there because I think it’s, again, I’m so pleased to speak with someone who’s a little bit further on in their career, because I think this is a great perspective to have that the lifestyle sacrifices that you are willing to do in your twenties might not be ones that you’re willing to do later on. Now, of course, within personal finance, there’s this FIRE movement and there’s lean FIRE, which is, you know, keeping your lifestyle capped at this really low level. And you expect to live on that in perpetuity, maybe for a subset of the population that is acceptable. But I think most Americans on average kind of want to spend more as they, you know, advance through their lives. They grow accustomed to certain comforts and little luxuries that they want to keep around. So, I think that’s a perfectly reasonable perspective. It’s something I’ve observed in myself as well of, yeah, growing to like a little bit more spending once it’s available and not wanting to backtrack from that.

41:53 Sarah: Yeah, exactly. Yeah. And so, you know, going through a tenure-track position was, in some respects, kind of just a psychological shift. I knew that I could probably find a position that would have some startup, which would cover a part of my salary and kind of the percent coverage that I would have would decrease over time. This is kind of the way things go in my field. But that psychological comfort of knowing that I didn’t have to pull in a hundred percent of my salary based on grants was enough to pull me away. And it was time for me to find a position that felt more secure. So, really it was just psychological. I am in a soft money position now, but I like to call it, you know, semi-firm because it is, you know, my startup package was such that I started out with 90% of my salary funded and then it will decrease over five years to 65% of my salary I need to pull in from outside. And my thinking was, if, you know, I’m five years into a tenure-track faculty position and I can’t pull in 65% of my salary, then I probably shouldn’t be doing the kind of research that I’m doing. There’s a little bit of wiggle room because there are lean years, but I feel like I should be able to do that. So, it felt very fair.

43:27 Emily: Interesting. Yeah, this is, it’s kind of a lesson in like betting on yourself, I guess, that you’ve gone through. That is to say, you’re giving yourself a little bit more time for that transition by getting your salary covered again, but you’ve just sought out the structure within academia that makes you feel comfortable at any given time. I really love this lesson about like negotiating for what you want. Like when you did the half-time position, then, well, you phrased it as if it fell into your lap, but somehow you managed to get that to be a full-time position. So, presumably there was some kind of negotiation going on there, or at least going after a position. Yeah, I really like how you’ve been kind of flexible and gone with what you want and what you feel comfortable with, through these you know, through this arc of your career. Is there anything else that you want to say about negotiating that startup package?

Negotiating a Startup Package

44:13 Sarah: Yeah, I mean, I think it’s important to acknowledge a couple of things. So, one is kind of a small thing, but it was really important. When I was a postdoc, I attended a seminar given by an expert in negotiating. And one of the things I remember from that was, you know, well, two things I remember from that, one was start with a win. And the other thing was, you know, you can be honest about what you’re hoping for in terms of the outcome. And so when I was faced with the opportunity to negotiate, because I had been offered a position, I took those things to heart. So, I knew that I wanted the position. And so I didn’t, you know, make any effort to suggest otherwise. I said, I really want this to work out. I’m looking forward to finding a way that we can make that happen so that we’re both happy. And I think that was true and it was nice and it made for a really comfortable negotiation.

45:15 Emily: Yeah. You’re sort of establishing from the beginning, like we’re going to be working together. So let’s make this a pleasant process and both get something that we want here.

45:24 Sarah: Exactly. And, you know, I think I had very different expectations about what the salary was going to be, not very different, but sufficiently different, that that was one of the things that I wanted to negotiate. And we came to a place that we were both happy with. And the startup package made up for kind of any, you know, difference between what I kind of thought the salary was going to be versus what it was. And I certainly came out of the negotiation feeling really good about where things landed. And I think my chair did too.

45:58 Emily: Yeah. I think that’s the best kind of outcome is that you, it’s actually something that I like to say about discussing finances generally is that you, you learn a lot about another person by sort of exposing your values through discussing how you handle your money and what your aspirations are and so forth. And this the same kind of thing could happen through negotiation. My husband actually was in, it wasn’t a negotiation, but it was a performance review recently. And he was asked by his supervisor, well, what motivates you? Is it more salary? Is it more something else? Like what’s going to really, you know, get you to do great work for us? I thought that was a great question, you know?

46:34 Sarah: Great question.

What Motivated You to Face Up to Your Finances?

46:34 Emily: Yeah. Is there anything else that you want to add about, you know, finances through this arc? Do you want to talk about what motivated you to finally face up to your finances and do that whole process?

46:48 Sarah: You know, I turned 40 this year, last year. And I think with taking on a new position, really, it was, I mean, I should emphasize what a big deal it was for me to leave UNC. I like control. I like being able to anticipate what things are going to be tomorrow. And for me to take the leap to leave an institution that I had been at for five years as a faculty member for three years as a postdoc and for seven years as a graduate student was huge. Huge. Especially since I had had several opportunities prior to that to leave and I hadn’t. So, I think, you know, a combination of turning 40 and having succeeded in shoehorning myself out of my comfort zone and, you know, emphasis on the succeeded. Because I really did succeed.

47:47 Sarah: I got exactly what I wanted. That empowered me to be like, Oh, I can do this. Like I’ve got skills, I can handle this. So, and I, you know, I now work with, and there’s a website called Personal Capital that I use and I’m working with a financial planner through them and just getting a hold of the basics. I think I’ve just come to recognize that I have skills, and I’m smart. And I just need to approach this in a really pretty straightforward way of like, I make money, I spend money. I should be able to know what those things are and have a full picture. And I owe it to myself to have that full picture. And hopefully all of the kind of, you know, considerations I have when I look back at my trajectory, I can think that moving forward, I’m going to have a much clearer picture and I will be able to make decisions that are fully informed.

Best Financial Advice for Another Early-Career PhD

48:52 Emily: I’m so glad that you’ve come to this point. And isn’t it fortuitous that I asked you to come on the podcast right at the same time as you’re going through this personal journey as well? You have a new lease on your financial life now. It’s wonderful to hear. So, Sarah, as we wrap up, the question that I ask all my guests is what is your best financial advice for another early-career PhD? And that could be something that you want to emphasize that we’ve already touched on, or it could be something completely new?

49:17 Sarah: Well, I mean, I guess I’ll just double down on the idea of, I think if I could go back and tell myself it would just be, for me, I like things as simple as possible. I would just break out a spreadsheet and put in my income and start tracking my spending. Like that’s pretty easy. It really is. And it’s really easy now with all the apps. And I think that just doing that is a first step. And then you start to get curious, like, okay, well, what do I do with the gap between what I make and what I spend? Okay, I got to do something about that. Or what do I do if I have a little extra? What can I do with that? And it kind of can be a natural progression.

50:02 Emily: I think that’s exactly right. I’ve heard that from other guests as well. And it’s something I went through myself is just that very first baby step is just to start tracking. Just to write down what’s going on, and then you don’t have to push yourself to start budgeting or do anything complicated right away. Just start observing what’s going on. And then as you said, you’ll become curious, you’ll naturally start to make changes. Yeah, I think that’s wonderful advice. Well, thank you, Sarah so much for this interview. It’s so fascinating to learn about, you know, the arc of your career and how your finances have changed through all of that as well.

50:30 Sarah: This has been lovely. Thank you so much for inviting me.

Listener Q&A: Taxable Fellowship and Scholarship Income

50:38 Emily: Now, onto the listener question and answer segment. Today’s question was asked during a live tax webinar I gave recently for a university client. So, it is anonymous. Here is the question. Quote, “How does the IRS verify the amount of taxable fellowship and scholarship income that we report on our form 1040?” End quote. I love answering questions during live events, and I especially love questions like this one that are completely unique. I’d never been asked this one before. It sort of goes to this fundamental thing about income tax in the U.S. which is that the IRS does not necessarily know in advance what your tax liability is. You are really telling the IRS what it is through generating your tax return. So there’s a lot of individual responsibility there, and there’s also kind of a lot of, you know, trust on the IRS’s that you are doing a good job at reporting, you know, your income and your expenses and so forth accurately. That is, unless they decide to audit you. Anyway, that’s pretty unlikely for a grad student.

51:39 Emily: So, to give you some context for this question in the workshop, I talk a lot about how to track down all of your income sources as a graduate student and also all of your qualified education expenses. Now, if your university issued you a form 1098T, you would think that that 1098T would be a complete record of those two things, but it is not. I emphasize in the workshop that it’s very common for graduate students to have additional qualified education expenses not listed in box one of the 1098T that they can use to reduce their taxable income, and therefore, ultimately, their tax liability. So, the question is basically asking, well, if my taxable scholarship and fellowship income is not simply box five of the 1098T minus box one of the 1098T, how does the IRS know that I actually have those expenses?

52:32 Emily: Or how does it know that I did my math right on the subtraction? And my answer, at least for U.S. citizens and residents, is that the IRS doesn’t really know what went into calculating that taxable scholarship and fellowship income, at least when you first submit your tax return. All you’re reporting is that net number, the taxable fellowship and scholarship income. You’re not putting on your tax return anywhere your total scholarship and fellowship income and your total qualified education expenses, only the net of those two. So, in that tax return, you’re not showing the math, right? You’re only showing the answer. However, my firm suggestion is that you keep your notes on this process. Keep the receipts. Keep the records of all the qualified education expenses and so forth. Because while unlikely, it is possible that the IRS may come back to you and say, Hey, we don’t understand where this number came from of your taxable scholarship or fellowship income.

53:31 Emily: What is it? What went into this calculation? And then you’ll be able to show how you did the math there. It’s not something you have to submit in your initial tax return, but it is very handy to keep around for several years in case the IRS does question your return. By the way, that’s not necessarily a full formal audit. It could just be something that you respond to in a brief letter or over the phone. I’ve actually coached several graduate students through something similar to this process where the IRS didn’t understand how they were reporting their grad student income. And they were able to, you know, write a coherent letter, justifying it, and the issue was put to bed. So I loved answering that question in the live webinar. I’m glad to have been able to replicate that for you here. By the way, there are two ways that you can get more of this kind of tax info in your life.

54:17 Emily: One is that you can join my tax workshop, which is called How to Complete your Grad Student Tax Return (and Understand It, Too!). You can join that as an individual, or actually you can even make a bulk purchase. Like if you want to arrange that through your department or grad student association or something. You can find out more details about the tax workshop at pfforphds.com/taxworkshop. I am also available for live events. Believe it or not in previous tax seasons, I have been booked late in March to give an event actually that was in-person that year in early April. So, if you want to bring this kind of material to graduate students and even postdocs broadly within your university, please just email me, emily@pfforphds.com, to kind of get the ball rolling on that. If you would like to submit a question to be answered in a future episode, please go to pfforphds.com/podcast and follow the instructions you find there. I love answering questions, so please submit yours.

Outtro

55:21 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episode show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book, giveaway contest and submitting a question for the Q&A segment. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email listserv, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. 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 New PhD’s Salary Tripled But Her Scarcity Mindset Lingered

September 7, 2020 by Meryem Ok Leave a Comment

In this episode, Emily interviews Dr. Samantha Snively, a PhD in literature who recently transitioned to a non-academic job at the University of California at Davis. Samantha tells the story of her financial and logistical transition out of graduate school with an emphasis on the unexpected emotions that arose upon receiving a much higher and steadier income. Samantha and Emily also discuss how to shed the scarcity mindset imparted by academia and the distinction between lifestyle inflation and lifestyle catch-up.

Links Mentioned in the Episode

Teaser

00:00 Samantha: And you get so used to doing a lot of work as a graduate student for very little pay that it does distort your sense of what you’re worth, what your skills are worth, what anyone wants to pay for your skills.

Introduction

00:16 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 seven, episode one, and today my guest is Dr. Samantha Snively. Samantha transitioned out of graduate school last year and into a nonacademic job at her Alma mater. Samantha’s income tripled and became much more reliable upon taking the job which brought forth some unexpected emotions. We discuss the mental shifts that Samantha is working through, such as healing her scarcity mindset, as well as processing the difference between lifestyle inflation and lifestyle catch-up. I highly recommend listening to this very insightful conversation. Without further ado, here’s my interview with Dr. Samantha Snively.

Will You Please Introduce Yourself Further?

01:06 Emily: I have joining me on the podcast today, Dr. Samantha Snively. I’m very excited to have her on. She’s going to be talking to us about kind of the emotional and financial rollercoaster of transitioning out of graduate school and into a professional career. So, Samantha, I’m so delighted to have you on. Will you please introduce yourself a little bit further for our listeners?

01:27 Samantha: Absolutely. Thank you for having me, Emily. I am delighted to be talking about this topic with you. My name is Samantha Snively. I am currently working as a proposal writer in higher ed development for the University of California Davis, but just this past June, I received my PhD from UC Davis, a PhD in English literature, and I focused on and wrote a dissertation on experimental culture and scientific knowledge-making in 17th century England, particularly focusing on women’s writing and women’s work in the household. So, I finished that and moved pretty quickly into a nonacademic job in service at the university, but not on the tenure track.

Transition Out of Grad School

02:08 Emily: Gotcha. So this is actually really fresh for you. We’re recording this interview in January, 2020. So, it’s only in the last six, nine months. Can you tell us a little bit more details about the timing of your transition out of graduate school and those sorts of other logistical details?

02:24 Samantha: Absolutely. So I realized in my second to last year in graduate school that I didn’t want to make a tenure track run. More importantly, that I did want to work in a job where I could advocate for the importance of research and the importance of universities and higher ed and the importance of the humanities. So, I started looking for jobs in November, 2018 because I wasn’t in a position financially to not have a job after graduation. So, I wanted to start that search early. I started my search in November with the goal of having a job by June, 2019 graduation time.

02:59 Samantha: And just very briefly, I think I had my first phone interview for a job in late December. My first in-person in early January. And then in the job I’m working in now, that moved pretty quickly. I applied back in November, had no sense of what was happening. I had thought they’d forgotten about me. And then I got a surprise phone screen in late January from the person who’s currently my boss. And from there, it moved really quickly. They asked for writing samples. I sent them in. They sent a writing test. That was a model of what we do on a day-to-day basis. They seemed to like that, so I had an in person interview, another writing test. They called me back for another in-person interview and a conversation with leadership. And I think I had a job offer by mid February, 2019. So, I started the job this past April, and I got my degree in June.

Was this Good Timing for You?

03:55 Emily: I see. It’s actually, it’s so hard to get the timing of this right, right? When do you apply? When do you reasonably think you will get a job offer and then what your start date is going to be? All of that against already the complications we have of timing a defense date and writing the dissertation. And there are a lot of moving parts at once. And so I’m wondering was that a good timing for you the way it worked out for you? Or if you had your ideal world, would it have been a little bit different?

04:23 Samantha: That’s a great question. Yes and no, this job search has been an exercise in getting what you need and not necessarily what you want. So, I think in an ideal world, I would have liked to finish the dissertation, graduate, and then start a job. But the way it worked out ended up working well for me, because it avoided the anxiety of being unemployed after finishing the degree. And I intentionally made the choices I did to avoid some of that anxiety. So, I’m very happy with the way it turned out, because it alleviated a lot of my biggest worries, but also the job search taught me that sometimes you have to compromise. I targeted my search in Seattle where my longterm partner lives. And I am not in Seattle. I am working in Sacramento. So, it works out in a way that is good for you, but perhaps not the way you originally envisioned. So, I’m very happy now, but I don’t think that this is where I thought I would be like a year ago.

Negotiated Start Date

05:23 Emily: It is really hard to see, especially with your transitioning to a job outside of academia, if you don’t have prior work experience, it’s really hard to know all these things, but that’s why we tell these stories, right? Because it’ll help people coming along behind. You mentioned that you weren’t in a financial position to have a lapse in income. Did your paycheck from the university, the one part of the university end over here on a Friday and Monday it’s going to pick up in this other part of the university, or did you actually have a little bit of a gap? Did you take any kind of a break, or what was the situation?

05:57 Samantha: The answer to both is no. But again, I was grateful for that. So, I got the job offer in February. I negotiated to be able to start a bit later than they would have liked. So, I had to finish out the quarter. UC Davis is on the quarter system. I had commitments in the quarter. I had a couple of part time jobs I needed to transition out of. And so I finished up the last week of the quarter, which was the second to last week of March. I took a break for the final week of March and then started the first day of April. And so there was no gap financially because I think the March paycheck from grad school got me into April and then the next pay cycle got me into May. I don’t know that I’d recommend that fast of a transition if you are able to do it, but it was anxiety-relieving for me. And it helped me focus on other things rather than stressing about money.

06:50 Emily: Yeah. And you just mentioned negotiation there. You negotiated the start date. Did you attempt, or were you successful in negotiating any other aspect of your package?

07:00 Samantha: I did attempt to negotiate. But because I work for UC Davis, which is part of the state of California, the salary bands are all set and were publicly posted. So, I did know the range that I would be going in. And so there was, I suspected there was not a lot of room to negotiate and I was correct. But I did ask for the practice, and I’m glad I did, but no, I did not have the opportunity to negotiate. But the financial compensation package was, I was very happy with it. So, the negotiating start date with what I needed.

Emotional Response to the Salary Offer

07:34 Emily: You mentioned you have a little bit of financial precarity. You receive this job offer, you receive the salary offer, you’re looking at it, what’s running through your mind? What are you feeling?

07:44 Samantha: Frankly, shock at first. The posted salary band was part of the reason I originally thought I wouldn’t be qualified for the job because it was almost three times what I was making as a graduate student. And you get so used to doing a lot of work as a graduate student for very little pay that it does distort your sense of what you’re worth, what your skills are worth, what anyone wants to pay for your skills. So, at first I couldn’t believe it. It’s like, is there a number of extra here? Is something going on? And I think perhaps the second emotion was relief because I realized I didn’t have to worry about the things I’ve been worrying about for the past several years. Honestly, where is the next paycheck coming from? Will I be able to ever take a vacation? Will I ever be able to live in the same city as my partner? Will I ever be able to save for further than six months down the road?

08:38 Samantha: So, relief was a big part of it. It allowed me to settle in to my new life and to have a bit of space to breathe and to really reflect on what I wanted to be doing and who I was and who I had become after graduate school. So, that was good. And I think the next big emotion that I noticed was guilt. Surprise, surprise. You spend six years in a graduate program, working continuously and in a culture of overwork that can often be toxic. And so when I moved into a job that was an eight to five schedule with a very generous boss, everyone was very flexible about their hours. I started to have feelings of guilt about taking a lunch break because I thought, well, if the, if the pay is so high, surely I must need to work enough to meet that pay. And it took me a while, several months, and it’s even still lingering today, to realize that it is okay to take a lunch break. It is okay to have a doctor’s appointment, period. You know, working through those feelings of guilt because the value of my labor is suddenly so much higher than it was a year ago, even though I’m doing very much the same kinds of things, that was an adjustment as well.

09:56 Emily: This is so interesting. I want to comment on both of those emotions. If you don’t mind, I’m going to tell a slightly lengthy story. It’s actually not about myself, but it’s about my reaction when my husband got his first post-PhD job offer. I’ll link in the show notes to a blog post where I wrote about this, but basically what happened is my husband was in Seattle interviewing for the job that he ultimately took. They offered it to him and he took it. And while he was actually flying from Seattle back to Durham, I knew the flight times and knew he was in the air, I was using his computer and I saw an email come into his inbox that was from the company that he had been interviewing with. And it was the job offer, and it included the salary. And, you know, listeners are probably pretty familiar with my story, like my husband and I worked very hard and we’re very fortunate. And actually were in a very good place with our finances for graduate students during the time when we were in graduate school, especially by the time we finished. We had cash in the bank. We had investments. We had very little debt that was very manageable.

11:01 Emily: But still, when I opened up that email and I saw that salary offer–and we knew the ballpark of what it was going to be–I started bawling, and I felt this huge sense of relief. And I thought to myself, we don’t have to struggle anymore. And I thought, I didn’t even know that I thought we were struggling. I thought we were succeeding. And we were succeeding definitely by external measures, but still I had that emotion somewhat, that feeling somewhere inside that sort of erupted out of me when I saw that that salary offer. And so, it was a great deal of relief, shock as well, and shock at my own response to it, I guess, and relief seeing that number. So, I think we’ll come back to the actual transition of well, does that salary turn out to be what you think it’s going to be once you actually move out of your grad school mindset and so forth, but that’s the first story I want to tell.

Money Mindset: Overcoming Feelings of Guilt

11:52 Emily: The second one is I find this guilt emotion so interesting. And I guess I can understand where it’s coming from because it’s almost like, how much harder can you possibly work? Like you’re in graduate school and you’re working yourself to the bone for a very low salary or pay or cobbled together funding or whatever it is. And then I can see you going into this job and making about three times as much and thinking, “I just can’t work three times harder.” And, you know, you can’t work three times harder, but “Oh my gosh, I’m not even expected to work three times harder? It’s actually okay to have all this flexibility and I can leave my work at work and go home.” We haven’t said that you actually do that, but you know, that’s the case for some people. What a rollercoaster ride and what a shift. Right? At that point. So, do you want to elaborate on that any further?

12:45 Samantha: Absolutely. You are describing spot-on things. I think it was certainly an adjustment. And it was the realization moving into something in a work environment that was more normal. And that allowed me to leave my work at work and, you know, to be able to have weekends, to be able to spend time with friends and family and settle into it made me realize how toxic and draining–and I use toxic mindfully–that that culture can be that expects incessant production from people who also have families and have, you know, the right to rest and to care for their bodies who are doing intense intellectual work, which is, you know, it is not physical labor. And so it is a certain kind of privilege to do intellectual work, but also to keep it up all the time is draining.

13:42 Samantha: And it is only increasing in academia, the pressure to do more and do more. And for less, especially for people from marginalized groups or minoritized groups, a lot of that labor is put onto them by a structure that just exists to extract as much value with as little pay as possible. And so, it did help me realize how erroneous my own thinking had gotten, because I’d internalized a lot of academia’s self-valuation. As I started to transition out, I started to withdraw from that feeling a little bit. It got to a point where I heard a colleague gleefully tell us that she had worked from 10:00 PM to 2:00 AM last night, as if it was something to be proud of. And that’s when I realized, I don’t want this. Something is terribly wrong if we have gotten here.

14:33 Samantha: And it’s not the only field in which this happens, right? There are other work cultures where this sort of overwork is valorized, but yeah, it was simultaneously realizing that I didn’t want it. I didn’t choose it. And yet it was in my mind still. It still affected the choices I made and the way I thought about my own work. But it was honestly very healing to take a nonacademic job. It allowed me, as I said earlier, to rethink what I’ve been taught by the Academy and from my familial background. And it allowed me to think about what my values actually were.

15:09 Emily: Yeah. I can definitely see how that increase in pay and also the more work that has better boundaries around it and more reasonable expectations can, you finally have a chance to breathe, take some space for yourself. Take some time for reflection. Yeah. When you’re in graduate school and in some kinds of jobs, this training period, it’s just push, push, push, push, push, and you can end up going quite off course and in a weird direction, if you don’t take that time periodically to reassess.

Appreciating and Using Privilege to Help Others

15:37 Emily: Okay. So, you’ve talked about the initial shock of the salary offer and this feeling of guilt that cropped up, but then realizing that your mindset was also changing as you were moving out further away from the graduate school experience. Were there any other emotions that you wanted to bring up along that path?

15:54 Samantha: I think another thing that surprised me was how quickly people started to say things like, “Oh, well, you can afford it now.” And how often that was my fellow graduate students. So, I think it was, you know, this is not a critique, but more of an illustration that this mindset affects us all. So, that was surprising. I didn’t expect that to come or to come so quickly. That would be a big one. And I think, now that I am almost a year through the new job and I’m navigating this transition, I’m thinking a lot more about the ways in which even, as I came out of graduate school, that all the different ways in which I’m privileged and the fact that I have landed on my feet and landed in a space of calm and restoration only motivates me more to want to change things and to use the fact that I am being paid decently well to help others and advocate for others who still are not. So, that’s something that’s been coming up more often is realizing like I am in an interesting position in the university and I have a lot of privilege. How can I use that to improve things moving forward?

How Would You Describe the Scarcity Mindset?

17:06 Emily: Mhm. That’s awesome. So, you’ve brought up some aspects of your mindset that you have started to shed as you’re putting more time between yourself and the end of your degree. And you use the term with me scarcity mindset. I think some of those ideas around scarcity have come up so far. We haven’t used that term yet. How would you describe the scarcity mindset that is developed in academia by many people?

17:30 Samantha: That’s a great question. I understand it, knowing that there are others who actually study it and have a much better understanding, but I understand it as the scarcity mindset is a combination of not making enough. So, not making a living wage. I live in a part of California that is lower cost of living for California, but high cost of living compared to anywhere else. It’s not in the major cities of the U.S. So, realizing that the money you earn through hard work does not go as far as you need it to. And there’s nothing you can do about that except work more. So, there’s that, you’re not being paid enough, but also realizing as grad students do, that you might not be paid continuously. And so, if you make enough money one month where you can pay all your expenses, the scarcity mindset is knowing that you might not be paid for four months out of the summer, which we were not. We don’t get paid from July to November. Hurray. So, it’s that too. It’s knowing that no matter what you do, you may have to weather the summer, a health crisis. You could be one blown tire away from having to take loans. So, that’s how I understand it. And it creeps into everything. It affects health, it affects community function, all sorts of things.

18:51 Emily: Hmm. So, what I have been interested in lately is I’ve been learning about scarcity mindset as well, almost from like an entrepreneurial, like side of things. And then it has caused me to think a little bit more about it in the academic setting. But there’s scarcity mindset, and there’s like actual scarcity that sort of objectively is going on in your life. And graduate students often have both of those things overlapping, but they can also exist independent of each other. You can have a scarcity mindset and not actually be experiencing scarcity. Maybe it’s something that happened in your childhood. Maybe it’s something that was going on during graduate school, but you’ve moved past it. You have a higher salary now, but the mindset can still follow you. Likewise, you can have a very tight financial situation and not have a scarcity mindset around it, even if it is pervasive in the community around you. I think that academia itself tries to impart upon us a scarcity mindset, even if not every member in that environment is actually experiencing scarcity. So, I’m wondering for you, as your income has gone up even though, okay, you’re still living in a high cost of living area. I’m sure there are still financial challenges associated with it, but have you been able to move past or sort of work to heal the scarcity mindset that you developed during your time in academia?

Moving Past the Scarcity Mindset Developed in Academia

20:14 Samantha: I’m starting to, and that’s a wonderful way of expressing it. That it can be both from the way you were raised and an environment that cultivates it, sometimes artificially. We think about how grants work. Grants and the publish or perish culture is the artificial scarcity mindset. From my own experience, I definitely felt it coming up when I transitioned to a nonacademic job, and in surprising ways. The first place I noticed it was with my own health. I suddenly had the means and the health insurance to be able to get new glasses, for example, and deal with a couple of health things that my parents could not afford to deal to treat as a child. And I couldn’t afford to treat in graduate school. And even though I knew on paper, I had the funds, I still felt like it was indulgent, which is ridiculous.

21:09 Samantha: Not that I thought it, but the fact that taking care of your health could be ridiculous ever, but it popped up there. It pops up even still, and as I’m working through this, but it pops up now in the difference between cost and value. So, what something costs versus how much you will get out of it. And for me, the big test was my car. I could not afford a car in graduate school. And so, I needed to buy a car for this new job and for the next phase of my life. And I found myself, you know, I had saved in grad school and, like you and your partner, had done okay, asterisk for graduate students. So, I had some savings that I had earmarked for a car, but I found myself as I researched thinking like, “Well, why don’t I just save as much money on this car as possible, buy the cheapest thing I can find?” And only through the advice of some friends realize that, yes, it might be upfront cheaper, but what about increased maintenance costs? I could buy a jumper, and for many people that’s what you can do. And so you do what you can. But I was on the verge of making a decision where I spent as little as possible, but would incur greater costs down the road. And so thankfully, through some wiser people in my life, I ended up spending all of my budget, but got a 10-year-old car with 44,000 miles on it. And so, it has saved me in gas and insurance and maintenance costs. And that’s not something that was intuitive to me coming out of grad school. I was looking for the lowest bottom line and not thinking about the future.

Pro Tip: Get Comprehensive Car Insurance

22:48 Samantha: And that is, I think, also part of the scarcity mindset is not having the means to be able to plan for the future. If you cannot afford to save, you cannot make longterm financial decisions. It’s as simple as buying what you need in the moment versus buying bulk. And many people are not able to do that. So, it shows up there. It shows up with health, and it showed up when I took my first vacation, again, something I’d saved up for, I split costs with my best friends, had a wonderful time. It was the first vacation I’ve ever been able to take, and it was wonderful. But when I got back, found out someone had stolen my catalytic converter out of my car, and that is a $2,600 repair. So, one of my tips to your listeners will be, if at all possible, get comprehensive car insurance.

23:37 Samantha: Again, something I didn’t do because I thought it was a way to cut costs. And it was at the time. And then not. But when that happened, I didn’t think, “What a terrible thing that someone has committed a crime.” I thought, “How stupid of me. I shouldn’t have gone on vacation. This was a terrible decision. I never should have taken time to take pleasure and enjoy time with friends.” And that’s messed up, too. So, I’m trying to remind myself that that’s what savings are for. That’s what insurance is for. That’s what the fact that the next paycheck is coming is for. You save money precisely to weather things, not that something you weather is a moral stain against you. And if you have to spend money, you’ve saved, you have somehow messed up. It does me no good if I hoard it.

24:31 Samantha: So, that’s been a little bit healing. Is remembering that I am saving, I am managing my money. I have people who will help me, either through advice or through the loan of a car at first, or a tip about a cheaper flight, or something like that. And people who are gentle about money. And also to remember that at least for now there will be another paycheck. And that’s something that is still not intuitive to know that I won’t have to be saving for when June hits. So, it’s a slow process, and it’s been kind of an expensive lesson to learn. So, if that answers your question.

25:12 Emily: Yeah, it definitely does. Your comments are reminding me of a distinction that we tend to draw in the personal finance community between frugal and cheap. And cheap is, it sounds a bit, you know, pejorative, but when you’re in that scarcity mindset and the actual scarcity in your life, you don’t have any other choice, right? There’s no choice to be frugal. There’s only the choice to be cheap, unfortunately. This is a big complaint kind of around frugality actually, is that it does take a little bit of upfront capital to be frugal sometimes with certain like verbal tips or strategies that you might use. Like you just mentioned buying in bulk. That’s one where it takes some upfront capital to be able to spend more over the longer term. But when you’re stuck in this very short-term cycle, you can’t even make those little mini investments in your future of a frugal tip or something like that. So, it’s a position that people are forced into. If you cannot do it in some way, you will eventually sort of snowball. You can eventually start to snowball frugal tips together and overall be spending less money, but like you have to get it started somehow. And that’s really a difficult thing to overcome. Thank you so much for sharing those anecdotes.

Commercial

26:25 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.

Change Financial Attitudes with Positive Self-Talk

27:24 Emily: Something I’ve been learning about, and actually, I’ve had a couple other interviews have been published, one with Lucie Bland, one with Cortnie Baity, kind of around how to change your financial attitudes. And something that I have, again, been learning more from the entrepreneurial community is the use of affirmations, is what they’re called. Which the first time I heard about–the first dozen times I heard about affirmations–I was like, “Whoa, that is a weird, like, I don’t want to get into this,” but really what it is, is it’s just, self-talk. Like, it’s just kind of, if you notice yourself saying, like, you just mentioned a few things, you’ve said yourself, “Oh, I don’t deserve to have a rest or pleasure,” when you notice yourself saying something like that, just having something there to yourself to counter it. “But no, I do deserve periodic rest. I work very hard and I earn enough money that I can invest in my future.” Like whatever it is for you that needs to be there in that self-talk can be really useful in starting to combat this mindset. I’m wondering, do you use that strategy or has it been something else that you’ve been using to work through this mindset?

28:27 Samantha: I mean I will always plug the value of therapy, not necessarily as a specific answer to your question, but more as you know, the chance to have someone else to talk to and to reflect on the ways in which you’ve been trained to think, and to have someone else say, “You don’t have to do this all the time.” So, if at all possible, find affordable affordable therapy. I don’t know that I use affirmations specifically, but I do receive affirmation from my community, from my partner who will say as I’m in tears after having the car parts stolen, like, “This is not your fault.” Or people who say, “It’s okay to have these questions about how do I manage my finances? What is the best form of insurance?” I don’t know that I repeat them to myself, but I’m trying to have more gentleness towards myself and to everyone else around me. And to understand that you don’t know where everyone is coming from. You don’t know what the background might be. And so, you don’t know the ways in which someone’s actions are a production of years of training and experiences.

29:37 Samantha: I’m very much still learning. So, I think that’s probably the answer. I haven’t figured out everything that works. Still seeking advice. A lot of it is experiential and realizing, “Okay, if I do this, what happens? If I try this, what will happen? Will I be okay if I have to weather a large expense?” And then experience does teach you, you will be okay. No one will shun you. Your worth does not diminish as a human being because you take a weekend off. These sorts of things. A lot of it is just learning by doing.

How to Combat Lifestyle Creep

30:10 Emily: Yeah, I’m really glad that you mentioned the supportive people you have around you to try to help you counter the residual scarcity mindset. But you mentioned earlier that you’ve also heard from people, “Oh, you can afford it.” And so something that I try to talk about when I have the opportunity is combating lifestyle inflation or lifestyle creep. When, you know, we come out of the PhD or out of a postdoc and you finally have that three times higher salary or whatever it is, you, maybe yourself, or maybe people around you, start to say, “I can afford this now.” And that’s potentially true, but you know, maybe there are some other reasons, other financial goals you might want to work on. So, what’s been your experience with lifestyle creep with this job transition?

30:55 Samantha: Great question. Absolutely, I have felt it. I mean, no one is buying diamonds and furs here, but certainly the realization that I could buy the nice olive oil and also get work pants when I needed them, was new to me. And so, I certainly experienced a certain amount of pushing the boundaries of my budget. Not necessarily intentionally, but suddenly just realizing, “I can afford this. I can afford these modest things.” For me, I think the danger is that the modest things add up. And so, I have to, you know, be mindful and ask myself if I need it and also pace out my consumption.

31:39 Samantha: I think the other thing that happened was there were a lot of high ticket purchases all at once. So, I moved, I had to purchase a car. I did a lot of health things. And that very much, I suppose you could think of that as lifestyle creep. You could also think of it as catch-up. So, a lot of, you know, health catch-up. Moving to a space where you feel safe and comfortable, moving out of a town that is rapidly outpricing all of its student inhabitants was one of the things that I decided to do. So, definitely there was some lifestyle expansion. Also, to be gentle to myself, I have to think about what is the startup cost of a new light versus, you know, going to the grocery store and buying the fancy stuff that you don’t need or luxury goods. So, thinking about what was important, what I needed. I needed to fix certain things about my health.

Think About Needs vs. Wants

32:42 Samantha: I probably could have gotten away without a car, but it would have made life incredibly difficult and sometimes unsafe. So, thinking about needs versus wants and realizing that it is okay to have expensive needs if you can meet them. That’s also an obligation to make sure that other people can meet their needs, but that it’s still important to temper your wants. So, just because I can afford it, doesn’t necessarily mean I need it in my life. And so, I’m trying to acknowledge the fact that I’m building a new life and catching up from years of not being able to take care of certain things, but also keeping an eye on the expansiveness of my wants and trying to make sure that I’m not spending to create a feeling. So, do I want this because I will use it a lot and it fills a need and might give me joy? Fine.

33:40 Samantha: Am I using this to create a feeling of joy? That’s a different question for me. So, those are sort of the things I’ve discovered so far for combating it. Prioritizing financial goals is, as you say, a lot of the grad school skills that I learned have helped so far, you know, shopping second-hand, being a coupon pro, repurposing or reusing, reflecting on how you spend your money, that has all been useful. But I think in this new phase, I’m also allowing myself to experience joy. And the more I do that, the more I realize actually you don’t need necessarily to spend money to experience joy. If I have the freedom from financial anxiety, I am finding that I am finding joy in things that don’t require me to outlay money. So, that was was unexpected.

34:38 Emily: So, so insightful. Thank you so much for that. Listeners, I want you to go back a couple of minutes and listen to that whole section again, because I think it was just amazing. And there were actually multiple things I wanted to pull out, but I think the couple most important ones were one, I love this distinction between lifestyle creep or lifestyle inflation, but then also lifestyle catch-up, because sort of the whole idea behind lifestyle creep and it being a negative thing is that it’s mindless. Like, “Oh, I got a raise. That means money’s going to disappear. I’m just going to spend it on whatever, and it’s not very intentional.” And this can happen when you are living an okay lifestyle to begin with that you’re comfortable with. But what you’re talking about is when you have been living for an extended period of time, well below what is to you a reasonable lifestyle, like many graduate students are during training. And once you have the means to step out of that, it’s not unintentional at all.

Mindfulness with Long-term Financial Commitments

35:40 Emily: You need to increase your spending in certain areas because you’ve been artificially deflating it prior to that point. So, that’s perfectly fine and no one will fault you for that. Another kind of point I’d like to make, and you talked around this a little bit, I think, is that one of the real dangers with lifestyle inflation, especially something where like you have three extra incomes, some large jump like that, is getting yourself into big long-term commitments, like housing and transportation. Maybe there are some others in there, that you didn’t really realize that you were biting off so much because you were so giddy from seeing that high salary. And those are the really dangerous ones, right? So, that’s the part to be really careful is these fixed expenses. When you inflate those really rapidly, or without a whole lot of planning, but you know, to do what you were saying and just have like some startup costs, okay. They’re sort of one-off things. Even if you have a few of them at once, as long as your budget can absorb them, like that’s not going to hurt you in the longterm. It’s really those fixed expenses, especially the contracts that you’re in, that you need to be careful about.

36:49 Samantha: Something you said about, you know, suddenly the mindless spending, got me thinking it is scary how quickly it happens, too. And I think this has been instructive for me, realizing how it is possible to be, you know, the stories you hear about. Someone making $300,000 a year and saying that they don’t have any disposable income. It’s the lack of mindfulness. It’s the lack of, you know, checking yourself, checking your privilege. But I’ve learned enough in these past nine months to realize those patterns can transfer. If you don’t have contentment or if you don’t have the reflective mindset at 60, $70,000, I understand how you can get to be a rich person who thinks the same way. And not in an empathetic, like “Let’s all pity the rich,” but in a, “Oh, we really need to be checking at every level.”

37:49 Emily: And it’s part of human nature rather than necessarily a character flaw. It’s just kind of present in all of us. It’s something we all have to combat a little bit.

37:59 Samantha: And time as a graduate student doesn’t exempt you from that. Like you have to do the work no matter where you are.

Best Financial Advice for Another Early-Career PhD

38:04 Emily: Yeah. I agree. Last question here. What is your best financial advice for another early-career PhD?

38:11 Samantha: I think the advice works the same for many people and will scale. Save what you can, always, and that does not have to be a certain amount, right? What you can, can be $20, $10, $5, a quarter. It’s more about prioritizing your future in whatever way you can. And also high yield savings accounts are pretty great. I did not discover them until a few years ago, and it’s wonderful. The rates right now are pretty great. So, save what you can and put it in a place where it will work for you, but you will also be able to access it. Another tip would definitely be, if you can afford it, get comprehensive car insurance. I think it was like $5 extra a month for me. And if I’d had it, I would not have to spend multiple thousands of dollars to fix someone else’s crime.

39:05 Samantha: So, I did not know that going in. I want to share that with your listeners because sharing financial knowledge is how I got to where I was. And there’s a lot I still don’t know. So, I want to pass that on. So, I think the biggest one though, and we’ve been talking around and about this, is to think about income and personal value in the ways in which they are divorced in graduate school, the ways in which if you step into a non-academic career job, they can suddenly become linked. And so, I think my biggest piece of advice would be to make time to ground yourself and to think about what you value and what your values are. So that even, you know, no matter what income bracket you’re in, especially if you jumped tax brackets, that you are always in touch with what matters to you, the non-monetary things that are of value, your worth as a human being, your rights as a human being, all of these things are not tied to the income you make.

40:02 Samantha: And that it’s okay to return to that. You can remind yourself of this. It can be difficult if you’re in a workplace or in an environment or a culture where suddenly you see a lot of conspicuous consumption. If you jump out of graduate school to an industry where that’s the norm, the industry I work in, we will use phrases like, “Oh, that’s only a million dollars,” all the time. And that was a shock. So, I think, keep returning to the fact that your personal value is not connected to your income. It wasn’t in grad school, and that was the problem. And that is a problem that should be fixed, but that also means that it’s not in the world beyond academia as well. Money is something you use to pay your bills, to care for your family, to build a better world, to save for your future. It’s a tool and not a marker of value. And so, just finding ways to return to that and to reflect on what you value, how you express your values through consumption, if that’s something you decide you want to do. How you can use your income and your consumption to build a better world for others. If you have the financial freedom to do that, that’s some advice that I’m starting to learn, and I would like to encourage our listeners to do. I’m sure they’re already doing it.

41:26 Emily: Thank you so much for that Samantha. Thank you so much for this delightful interview. I am so glad to have your voice and your perspective and be able to share it with the listeners.

41:36 Samantha: Well, thank you for having me. It was a pleasure to talk. I wish we could talk more.

Outtro

41:40 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.

How to Improve Your Finances While Social Distancing

April 11, 2020 by Emily Leave a Comment

Now that we’re a few weeks into our new normal of social distancing / isolation / quarantine, you may find yourself with the time, ability, and willingness to work on your personal finances*. Below are my top suggestions of activities you can engage in while social distancing that are highly likely to improve your finances in the short or long term, helping you to save money, pay off debt, and invest more money.

*If this sounds preposterous to you, this article isn’t for you right now! Keep taking care of yourself, your loved ones, and your community. If you want to know how I’m getting on without my regular childcare, listen to this podcast episode.

This is post contains affiliate links. Thank you for supporting PF for PhDs!

Read a Personal Finance Book

Reading (or listening to) a book is the most time-efficient way to consume high-quality, curated personal finance content. I started my personal finance journey with a few cornerstone books (some of which appear on the list below) before moving on to blogs and podcasts. Reading a book is a great way to get a firm foundation—if you choose the right book.

In normal times, I would suggest that you check your local or university library first for the books you are interested in before considering purchasing. Personally, I know my local library branches are closed, but ebooks are still an option.

The list below includes some of my personal favorites and suggestions I received in response to a Twitter prompt. The knowledge you’ll glean from any one of these books is worth incalculably more than you would pay for them if you do decide to purchase!

A Random Walk Down Wall Street by Burton G. Malkiel
Broke Millennial by Erin Lowry
I Will Teach You to Be Rich by Ramit Sethi
The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach
The Laws of Wealth by Daniel Crosby
The Millionaire Next Door by Thomas J. Stanley and William D. Danko
The One-Page Financial Plan: A Simple Way to Be Smart About Your Money by Carl Richards
The Simple Path to Wealth by JL Collins
The Two-Income Trap: Why Middle-Class Parents Are (Still) Going Broke by Elizabeth Warren and Amelia Warren Tyagi
You Need a Budget by Jesse Mecham
Your Money or Your Life by Vicki Robin and Joe Dominguez

Catch Up on a Podcast

For fascinating interviews with financially successful people and in-depth discussions of particular financial strategies, I turn to podcasts. (Podcasts are the one thing I have more of in my current life than I do in my regular life!)

Personally, I am a Completionist, so I prefer to listen through the full archives of most podcasts that I decide to subscribe to. Now that you have the time, here are a few of my favorite personal finance podcasts and other popular ones in the space. Listen to a couple of the recent episodes; maybe you’ll decide to commit to the archive!

Bad with Money
Choose FI
Gradblogger
How to Money
Journey to Launch
Personal Finance for PhDs (I course I have to include my own!)
So Money
The Fairer Cents
The Mad FIentist

File Your Tax Return

I am a major tax return procrastinator. My husband and I usually start working on our tax return in April and submit it barely under the deadline. Confession: This year, with the filing deadline extension to 7/15, we haven’t even started yet.

I do think that preparing your tax return is a good social distancing activity if you have the capacity. You can put an evening or two’s worth of uninterrupted time blocks to work with your tax software or even manually prepare your return (that’s our preferred method).

If you are expecting a refund, file ASAP to receive your refund ASAP. It’s your money! It should be working for you, either by paying expenses if you’ve experienced an income drop or going into savings, debt repayment, or investing if you income has stayed steady.

My tax workshop, How to Complete Your PhD Tax Return (and Understand It, Too!), comprises videos, worksheet(s), and live Q&A calls. Please consider joining through the appropriate link:

Network

One of the upsides of physical social distancing for some people is the chance to connect remotely with a different set of people than usual. (I am highly envious of this! I had high hopes to reconnect with old friends during this time… My children’s insistence on derailing all adult conversations has dashed those hopes.)

Instead of limiting your Facetime/Zoom calls to your family and friends, consider reaching out to people in your professional network.

In a general sense you should be networking like this all the time, but the motivation intensifies if you are coming up on an expected transition point in your PhD career or you think your job/position is at risk and you might need to look for another soon.

An excellent, low-risk group to network with right now is people who graduated from (or otherwise left) your PhD program in recent years. You can reach out over email to see what they’re up to and schedule a call if that is mutually agreeable.

If you reach out to someone and don’t receive a response, don’t take it personally! People are dealing with a lot right now. Just cast a wide net, and appreciate the people who are able to give you some of their time right now.

Oh, and always ask at the end of an interesting conversation if the other person can recommend one or more people for you to connect with next!

Explore Career Options

As a spin off of networking, right now is also an incredible time to work on exploring your career options. Yes, the academic job market looks abysmal right now, but—upside?—it’s been trending that way for decades, so there are lots and lots of PhDs established in non-academic careers that might be of interest to you.

A great first place to go for resources is your university’s career center. (Check on this even as an alum—you may have access to resources from all the universities/colleges you’ve graduated from.) The robustness of their resources for PhDs in particular might be strong or weak, but some of their resources for undergrads will still be helpful.

The career center may have assessment tools, instructional resources for job seekers, recordings of past live events, and opportunities to meet one-on-one with staff. If you know they have a resource that is not currently available online, submit a request that it is made available.

Two platforms for PhD job seekers in particular are Beyond the Professoriate (Aurora) and Versatile PhD. If your institution has a subscription, access the platform through its login mechanism, but if not you can sign up as an individual. Beyond the Professoriate has an upcoming online career conference as well.

To combine networking with exploring career options, set up informational interviews with people in careers you’d like to learn more about. From my experience on both sides of informational interviews, they can be quite enjoyable and beneficial for both parties!

Invest in a Frugal Strategy

Most of us are practicing forced frugality these days in a few areas of our budget. I’d wager that your discretionary spending was down in March from where it was February and that April will be lower than March. There are lots of possible uses for that freed-up cash flow, but consider one more: investing in a frugal strategy.

One of the major, legitimate complaints about frugal practices is that they take some capital to get started with. I’ve heard “Frugality is only for the rich,” for example. This is not the case for every frugal strategy, but it is for some. Well, now that you have some capital, what frugal strategies can you ‘invest’ in that you know will pay off with decreased spending over the long term?

I’ll give you one tiny example: Last December, I ‘fessed up—to myself—that my family (which includes two tiny children, one of whom is still in a high chair) was consuming paper towels at a positively alarming rate. We were buying the huge packs from Costco for $20 each half a dozen times per year. This didn’t sit well with me from a financial or an environmental perspective, so I purchased these microfiber cloths (12 for $12—now I wish I had doubled it!). They work far better than paper towels, our paper towel consumption rate dropped like a rock (we’ve probably made up for that initial investment twice over by now), and they haven’t substantially added to our laundry load. (Again, two tiny children—we already do a ton of laundry, including cloth diapers.) These towels were absolutely a frugal investment. Bonus: Not having the pressure right now of needing to buy this particular paper product before we run out when it is in short supply is a load off my mind!

Ask yourself: Are there any frugal strategies I’ve wanted to try but haven’t yet because of the up-front investment of capital? Can I use my newfound cash flow right now to establish one of the strategies? And if it wasn’t money but rather time was your limiting factor before: What frugal strategy did you never have time to initiate, but you can put in the time now to make it a habit?

Here are a few ideas for similar frugal/environmental investments, gleaned from this Twitter thread:

Bee’s Wrap as an alternative to plastic wrap
Silicone Reusable Food Bag as an alternative to sandwich bags
Silicone Baking Mats as an alternative to parchment paper/foil/cooking spray
Reusable Facial Cleansing Pads as an alternative to disposable cotton pads
Wire Mesh Coffee Filter as an alternative to paper coffee filters
Wool Dryer Balls as an alternative to dryer sheets

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Clear Out Your Closets, Etc.

My mother, a retired empty nester, has undertaken as her social distancing project clearing out the basement storage area of the home my parents have lived in for 30 years. It’s a massive project, and it is made more difficult by the closure of some of the places you might normally go to resell, donate, recycle, or trash your old possessions.

I do think a spring cleaning/clearing out is a good activity for right now. This might positively affect your finances if you are willing to hold on to the valuable items long enough to resell them. (You might be able to resell currently, but I suspect the demand will be relatively low.) If nothing else, it will benefit your mental health and will reduce the amount of work you’ll need to do leading up to your next move.

Close Old Financial Accounts (and Open New Ones?)

Spring cleaning can apply to your finances as well as your home!

You may very well have old banking or credit accounts that you no longer use or have need for. If you can close the old bank accounts without going anywhere in person, do so! Some people like to keep old credit card accounts open because length of credit history and utilization ratio play into your credit score. However, if you have a high credit score already, you should consider closing the accounts you don’t need; maybe just keep the single oldest account open. The suggestion to close old accounts goes quintuple for any accounts that charge you a fee.

In the same vein, now is a great time to join (aspects of) your financial accounts with your spouse or partner if you have decided to keep joint money. My husband and I decided to join as much as we could after we got married, and the months-long process involved researching and opening new accounts, waiting for money to transfer, and closing old accounts. Again, it’s a great social distancing activity as long as you don’t have to go anywhere in person. (Another reason online-only banks are my preferred institutions!)

If you’ve never looked into it before, you could put your free time into figuring out how to generate extra income from credit card or banking rewards. Please keep in mind that offers might be somewhat different during social distancing than they were before (or will be again). Before you open any new accounts, triple-check that you can meet the minimum spending requirements or transfer amounts given your (presumed) lower level of current spending.

Further Listening: How to Make Money without Working: Credit Card Rewards and 529s

Plumb Your Values/Dream

If you’ve been able and willing to slow down and reflect, this pandemic might have granted you new insight into what you want for your life. I don’t think you should be making any life-altering decisions in this stressful period, but lean into your different perspective and deepen your introspection.

What is truly important to you? What are the aspects of your life that make you feel fulfilled? What can you change about how you manage your finances to better support those aspects?

Further Reading: Determining Your Values and Financial Goals While in Graduate School

Get Coaching, Take a Course, or Join a Community

One way you can invest in yourself right now is to establish a relationship with a coach, join a community, or take a course focused on an area of personal or professional development. Spending money on this kind of endeavor makes it much more likely that you will actually take the necessary steps to ensure your financial success.

If your chosen area is finances, consider how you and I could work together. I offer one-on-one financial coaching, and I am also going to open up the doors to my program, The Wealthy PhD, in May 2020. Through both avenues, you will have individualized access to actionable knowledge, inspiration, and accountability. If you feel confident in your income security, this is the perfect time to firm up your financial plans and even take advantage of the unique opportunities this period affords.

If finances aren’t your preferred area of focus right now, I also recommend checking out the services offered by my colleagues:

Dr. Jen Polk coaches PhDs on their careers
Dr. Katy Peplin’s community Thrive PhD supports graduate students around the mechanics of graduate school and their mental health
Dr. Katie Linder offers podcasts with actionable tips, coaching and courses for academics on productivity and related topics
Dr. Echo Rivera offers courses and coaching on effective presentation design & presenting with data for academics, scientists, and researchers (grad students through PhDs)

If you do commit to working on your professional or personal development in one of these other areas, I’m confident that there will be an indirect positive effect on your net worth! Perhaps at that point you’ll be ready to directly work on your finances with me.

How have you improved your finances while social distancing?