Personal Finance for PhDs

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This PhD Works Part-Time After Reaching Financial Independence in Austin Texas

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In this episode, Emily interview Dr. Corwin Olson, who completed his PhD in aerospace engineering and achieved financial independence (FI) just a handful of years later. Corwin argues that using a traditional IRA is typically advantageous over a Roth IRA, even for a grad student, if they have aspirations to retire early in the 0% marginal income tax bracket. Corwin and Emily walk step-by-step through his family’s finances and his money mindset from the time he finished his master’s in 2009 with a “$0 net worth” to when they reached FI in 2021. Corwin tried out unemployment during the pandemic, but ultimately returned to work a part-time schedule because he still wanted to use his engineering skills professionally. Corwin’s story highlights how a PhD can achieve a highly satisfying job and work-life balance through a combination of financial freedom and career capital.

Links mentioned in the Episode

This PhD Works Part-Time After Reaching Financial Independence in Austin Texas

Teaser

Corwin (00:00): It’s not about not working. This is what I tell everyone I meet who has not heard about FIRE or FI much before. It is not about not working. It is about control over your life. If you are financially independent, then you get to dictate what you do, like broadly across your entire life. I really wanted that control over my life, especially since we wanted to have another kid and we did. Uh, and so when, uh, our kid number two came along, my wife dropped down to halftime and then, uh, about six months later, I also dropped to zero time. And then I went back to work halftime this spring. It’s a perfect, um, application of FI. We decided that we were gonna do something different and that gave us the ability to do so without stressing about money.

Introduction

Emily (00:55): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (01:24): This is Season 17, Episode 9, and today my guest is Dr. Corwin Olson, who completed his PhD in aerospace engineering and achieved financial independence (FI) just a handful of years later. Corwin argues that using a traditional IRA is typically advantageous over a Roth IRA, even for a grad student, if they have aspirations to retire early in the 0% marginal income tax bracket. Corwin and I walk step-by-step through his family’s finances and his money mindset from the time he finished his master’s in 2009 with a “$0 net worth” to when they reached FI in 2021. Corwin tried out unemployment during the pandemic, but ultimately returned to work a part-time schedule because he still wanted to use his engineering skills professionally. Corwin’s story highlights how a PhD can achieve a highly satisfying job and work-life balance through a combination of financial freedom and career capital.

Emily (02:21): This spring, I’m bringing back my 15-minute introductory calls! This is a chance for you and I to meet one-on-one. I want to hear your current financial questions and challenges. If I can provide some quick value by answering a question or pointing you to a resource I absolutely will. These calls are a way for me to keep a pulse on what’s going on financially in our community so that I can address whatever comes up through my seminars for universities and the free content I create. I used to offer these calls years ago to everyone who joined my mailing list, and they were so fun and valuable to both of us! I would love to meet you, so please sign up today at PFforPhDs.com/intro/. By the way, we’re taking a short break from publishing podcast episodes between Season 17 and Season 18. You can expect the next episode to drop on June 3, 2024. You can find the show notes for this episode at PFforPhDs.com/s17e9/. Without further ado, here’s my interview with Dr. Corwin Olson.

Will You Please Introduce Yourself Further?

Emily (03:35): I am delighted to have joining me on the podcast today, Dr. Corwin Olson of Engineering Your FI. Corwin is a PhD in aerospace engineering and he is now financially independent. And we met just a couple weeks ago. We’re recording this in November, 2023. We met at FinCon 2023, which happened in late October, and we ran into each other first at the taxes subgroup interest area, and I saw, um, his name and he saw mine and we knew we had to connect further. Um, so I’m just really excited to have a fellow engineer PhD on the podcast who is excited about personal finance and specifically fire. We’re gonna learn a lot from Corwin today. Um, so Corwin, will you please just introduce yourself, um, and your family to us a little bit further?

Corwin (04:20): Sure. Uh, married family, uh, two kids young on <inaudible>, two and seven. Uh, born in Dallas, Texas. Uh, but I’ve lived in Texas most of my life. So I’m currently in Austin, Texas. Uh, got my bachelor’s and master’s at UT Austin, university of Texas at Austin Aerospace Engineering back in the aughts. And uh, I also was fortunate enough as an undergraduate to become a certified NASA instructor, so that was a lot of fun. I got a lot of good leadership and speaking skills from that. Uh, worked to Washington DC for a few years and worked a company that did navigation for a big NASA mission, which was a lot of fun. Went back for my PhD in 2012. Uh, same school UT Austin and I worked on autonomous optical navigation around small bodies like asteroids and comets. Uh, then finished up my PhD in 2016 and continued on with UT as a researcher in one of the labs here at ut. And it was towards the second half of my PhD program. And then after getting my PhD that I got a lot more interested in personal finance and fire and discovered that whole community

Defining Financial Terms

Emily (05:24): Emily here breaking in during the editing process. Since Corwin and I about to jump into some heavy financial nerd-speak, I want to take a second here to define terms for new listeners. 1) FIRE stands for financial independence retire early and FI stands for financial independence. People in the FIRE movement strive for early financial independence so that they have the option to stop working, and by early I mean perhaps in your 30s or 40s. 2) An IRA is an individual retirement arrangement, and it is a tax break that the federal government offers to incentive investing for retirement. In 2024, you can invest up to $7,000 in an IRA if you’re under age 50 and have taxable compensation. When you open an IRA, you can choose a traditional version or a Roth version or both. With a traditional IRA, you get an income tax break on the money you contribute in the year of your contribution. The money then grows tax-free, and you pay ordinary income tax on the withdrawals in retirement. With a Roth IRA, you pay your full income tax on your contribution, and then the money grows income tax-free and you withdraw it income tax-free in retirement. The standard advice is to contribute to Roth accounts when you are in your lower-earning years and a relatively low income tax bracket and switch to traditional when in your higher-earning years and a relatively high income tax bracket. Corwin is going to argue that people who want to retire early should really prefer to contribute to traditional accounts, and that includes grad students in the 12% federal marginal tax bracket. OK back to the interview.

Contributing to a Traditional IRA vs a Roth IRA in Grad School

Emily (06:49): Now, you said something very provocative to me at FinCon, which was that I, I may butcher what you said, but it was something on the lines of pretty much everybody should just be using traditional retirement accounts. And maybe you were saying that in the context of people who are interested in pursuing FI. Can you re restate what, what caught my attention during our conversation?

Corwin (07:07): Well, I think my main motivation was to emphasize how much better traditional is than a lot of people think. They think, oh, I wanna pay my taxes now, might be larger later. And from everything I’ve read for lots of different places, especially in the fire community, if you do the math, it consistently shows that traditional seems to come out on top.

Emily (07:30): Of course, my follow up question to you at that time was what about the grad students Corwin? Mm-Hmm <affirmative>. So that is what you have worked on in the few weeks since we left FinCon preparing for this interview. So let’s talk now about a grad student kind of specific scenario. So we’re talking about someone who’s in graduate school, we’re gonna make the assumption that they’re in the 12% marginal tax bracket. I’ve always kinda said, uh, virtually every grad student I’ve ever spoken with, if they’re investing in an in an IRA, they’re using a Roth. It’s just like the popular option by far and there’s reasons for that which we’ll go into. Um, but you we’re just gonna do the math for us. So yeah, please tell us now like the scenarios that you were looking at and kind of the outcomes and where people can read your full post about this.

Corwin (08:13): Sure. So, uh, I did this most recent blog post on engineeringyourfi.com, traditional Roth versus traditional IRA contributions in grad school. And I put the Python code that I used to generate all these results in the post. You can go download it, take a look. I know a lot of grad students know Python, so that’s good <laugh>. Um, the broad strokes conclusion is generally, you know what people have said for many, many years. It all depends on your input versus output tax rates, right? So if you are a hundred percent confident that you’re gonna be withdrawing your money in a 24% marginal tax bracket later in life and you’re in grad school now and you’re in the 12% tax bracket, then yeah you should just put it into Roth if you’re totally sure of that, right? But I think what I like to push for is that actually, especially if you’re at all interested in financial independence at an early age, retiring early, taking sabbaticals, um, then actually it can make a lot more sense to go after traditional because it is actually a lot more feasible to have a 0% tax bracket is a FIREd person, early retired person, uh, by taking a advantage of the standard deduction and the really large typically, um, 0% long-term capital gains bracket. So I did a lot of plots and I showed, you know, not just the values of the traditional versus Roth, which is deceptive, right? ’cause you haven’t paid taxes on the traditional but also the cash out value of each. And there’s some really cool nuances and fluctuations after you hit 60 or 59 and a half, things simplify a lot, right? There’s no 10% penalty. But in general, um, I still would prefer traditional because I think with our expense levels we can very easily have a 0% tax bracket and it’s quite beneficial for us to go do that. So a lot more detail in the post though.

Emily (10:00): Yeah. So what I was kind of thinking through when I was looking at these results here, which are basically like, well, okay, you’re looking at your 12% current marginal tax bracket that you would presumably be paying as a graduate student versus when you want to withdraw from this account. Maybe that’s before retirement age, maybe that’s after, um, what is your marginal tax rate going to be? Then you looked at three assumptions, which was zero, as you’ve just been mentioning 24% and also 12%. Um, and once you actually pay the tax on this money, once you get it outta the traditional account, um, it was sort of, it was even right just as good if you were withdrawing it in the 12% tax bracket, right? Same, same. Um, if you manage to get down at that 0% tax bracket, then there’s a clear advantage for the traditional and if you’re a managing to be withdrawing money in the 24% tax bracket, there’s an advantage for the Roth. But what I was thinking about and maybe what could be a thought exercise for the listener is what is your tax bracket going to be in retirement? Because when you say something like 24%, like that might be your tax bracket in your, your peak, you know, earning years, working years for your family, something in that range. But a lot of people live on much less money in retirement. That is to say they have to withdraw much less money than they were earning because maybe they had a high savings rate going on. Maybe their expenses have dropped later in life because their kids are outta the house or whatever the reason is. Um, so it’s very hard to sort of predict what, what is your tax bracket going to be later in life? Is it gonna be as high as it is in your working years? Is it definitely going to be lower? Um, and especially sitting from the position of a grad student when you don’t really know what your career is going to be. So definitely like for those of you who want to nerd out about tax rates and would be open to the possibility of maybe not doing a Roth IRA during grad school, maybe doing the traditional, definitely check out Corwin’s post at Engineering Your FI. Um, but I want to talk further now about your personal story and why for you that 0% tax bracket, oh, the traditional would’ve been the better choice, um, was is something that you have, have, you know, achieved in this at a relatively early age. So yeah, let’s talk more about your like personal story. So you told us earlier that you worked for several years before pursuing your PhD. You weren’t into the fire movement at that time. Um, so were you doing things like contributing to your tax advantage retirement accounts? Like or was it something you didn’t even think about at that time?

Pre-FIRE Finances

Corwin (12:15): Yeah, so I was fortunate to get my master’s in 2009. Went down to a net worth of $0 <laugh> because I spent all my savings going through a big backpacking trip. But my uncle sent me this article, snail mail of course, you know, back in 2009 and it’s my Uncle <laugh> and it was this money article about how you should invest in index funds. And I’m like, Hmm, okay, what are these things? The markets had just crashed, you know, they were very low valuations. So I was like, you know, I should probably do this. At the very least, I uh, wanted to match my 401k for my employer, right. And my wife had started working around the same time. So we did that, but we also had to save for a wedding and we lived in Washington DC very expensive. So at the time we were not focused on maxing out our savings rate, but we did know we needed to start investing and that paid off quite heavily because the markets were so down. We started our careers. We were lucky to get jobs <laugh> in 2009, right when the market, the economy was, uh, suffering heavily. So yeah, we were fortunate

Emily (13:12): So you had a savings rate.

Corwin (13:14): Yeah, right. I don’t even know what it was. It was definitely under 50% <laugh>.

Emily (13:19): So. Okay. So let’s kind of fast forward to when you started your PhD. I think you said that was 2012, right? Yes. And so what was your mindset like at that time around, I mean, I’m presuming you took a pay cut, right? Uh, but maybe your wife maintained her income. Like just talk us through kind of the, the shift in household finances that occurred when you started your PhD.

Corwin (13:37): Sure. So I was very fortunate that because of my work experience and grades and all that, I was able to get this really nice NASA fellowship and I also was able to get a really nice UT fellowship. So I made a pretty nice salary in graduate school, 45K a year. Uh, so it is possible to do that <laugh> for the, uh, the folks who are listening out there. Uh, it’s, you know, not super common. Usually you’re looking at close to 20k, although maybe that number’s higher now because of inflation, you know? Um, but you can make a bit more money with these fellowships. That’s why I strongly encourage all grad students to go after them. Um, but yeah, I, uh, I was more into minimalism back then ’cause I didn’t know about fire and so I thought, okay, maybe this is how I need to, to live my life, be minimalist <laugh>. But yeah, it was still, you know, finances were not, were always on the back burner still at that point.

Emily (14:28): So you were still saving, but it was not a, a major focus until a few years later, is that right?

Corwin (14:32): Right, right, right.

Post-PhD Finances and the Financial Independence Movement

Emily (14:33): Okay. So let’s talk about when you were finishing your PhD. Um, what was going on with your family overall and then how your finances changed when you got that post PhD job?

Corwin (14:42): We were pregnant with my first child. Uh, and so he was born three months before my dissertation <laugh>, which was quite rough. And you know, my wife and I are thinking about what we wanted to do after I got my degree and she was enjoying her job. She wanted to continue there. I was thinking about the business, small business, thought I might do something entrepreneurial. And it was when I discovered the FI movement, it was a Mr. Money Mustache article as it is for so many people. Uh, that really launched me down that, uh, community path, uh, to find out about all of that. And then I realized, actually I think that’s what I want most out of life right now, <laugh>. So I was fortunate that there, um, was a high paying engineering job that I could take here in Austin, a a really good lab here. So, uh, I decided, well, I think that’s what I want. Also, we have a baby coming and this would be nice to have that stability for that. Maybe a little less stress <laugh> a few less hours. I always told people my easy job was going into the office, right? Uh, so that was where we decided, okay, let’s just do two full-time jobs and let’s really ramp up our savings rate. So we ramped it up to, I think on average about 70%. Um, and one of the reasons I was able to do that is I was very fortunate that I had access to an additional retirement account, 457B, which hopefully some of your listeners are familiar with. So we maxed out that we maxed out my 403B, my wife’s 401k. That helped a tremendous amount with getting that kind of savings, right? So, yeah.

Emily (16:17): Wow. I just, I wanna probe a little bit further on like, okay, you, you’ve had this career already, you’ve just finished your PhD and you decide I don’t wanna work anymore. Or like, I don’t wanna have to work anymore in a, in a relatively short period of time, right? ’cause most people, you finish a PhD, you’re looking at 30, 40, 50 year career after that point. But that is very antithetical to like the MMM like mindset. So what exactly was your goal and what was your motivation for pursuing that goal?

Corwin (16:45): So it was really about the latter thing you just said and not the former thing. You said it’s not about not working. This is what I tell everyone I meet who has not heard about fire or fi much before. It is not about not working. It is about control over your life. If you are financially independent, then you get to dictate what you do like broadly across your entire life. So my wife took advantage of that by essentially creating a new role within our company. She’s like, I’m not as enjoying this as much, but I would like to stay with y’all. I like the people I’m working with. I’d rather do this. And they said, oh, okay, well let’s say yeah, <laugh>. So she’s continued to do that and she really likes it. And I also really wanted that control over my life, especially since we wanted to have another kid. And we did. Uh, and so when, uh, our kid number two came along, my wife dropped down to halftime, and then, uh, about six months later, I also dropped to zero time. And then I went back to work halftime this spring and we could talk a lot more about that <laugh> as well. But it’s really just the, I mean, it’s a perfect, um, application of FI. We decided that we were gonna do something different and that gave us the ability to do so without stressing about money.

Emily (17:59): So this is just a very short timeline and I know you, you know, you had been saving since like 2009 at a lower rate, but really we’re talking like 2016 when you started your post PhD job, um, to, it sounds like about 2021 when you were able to really change like your work lives. Um, I mean that’s only five years. Like even the most aggressive, like fire people talk about 10 years, right? Not starting from zero. Um, yeah, so like this is just, it’s just amazing. I mean, I know the 70% savings rate, like that’s what did it, right? That’s a really, really high savings rate.

Corwin (18:31): Well, market the markets too-

Emily (18:32): But I’m just marveling over this short timeline. Mm-Hmm,

Corwin (18:34): <affirmative> Yeah, the market’s really exploded. If it had been a bad or even mediocre market during that time, we, we would not have done that. I mean, it was just because the stock market, we didn’t do anything other than bland vanilla total stock market index funds. So we didn’t pick stocks or anything like that to try to get lucky with, you know, which ones we’ve chose. So it was good fortune as well, big time.

Emily (18:57): I think in some ways your story is relatable, like you just said, using index funds. No crazy inaccessible investing strategies. Uh, furthermore, as you mentioned earlier, you took a straight W2 job, you didn’t, you know, strike out on your own and start the business. There can be upside to that. There can also be downside. Um, and so in, in that way it’s relatable, but come on, a 70% savings rate, like that’s the part that’s like, how are you doing this? So I want you to give me a couple of like structural things like how, how your life is that helps you achieve or at that time, right from, from those incomes you had then that 70% savings rate. I know you mentioned you use the pre-tax retirement accounts, that’s awesome. But it doesn’t, uh, change your actual spending. So like how are you keeping the spending down? Like where do you live, what do you drive? Like these kinds of things. Yeah, right.

Expenses with a 70% Savings Rate

Corwin (19:40): So we’re fortunate that we live in Austin, Texas, which historically has been a lower cost of living. Now it’s changing. We bought our house in 2013, which at the time we thought, oh, this is way too late. You know, we’re gonna pay so much more money than we would’ve a year ago or whatever. But our house is doubled in value since then. Our mortgage is so much lower than it would be if we bought in Austin now. Um, and we’ve also been consistently frugal. We were both raised pretty frugally, so you know, our five year spending inflation adjusted is around 50K ish. So now, uh, that does not include daycare. Uh, daycare is something that we do pay for, but that’s gonna end in like two or three years. So we kind of set that as a lump that together on the side kind of deal.

Corwin (20:28): Um, but it’s been primarily keeping expenses down. Uh, we do a lot of things like travel hacking, which I love, you know, figuring out ways to pay for travel without, ’cause if we didn’t do that, our spending would be a significantly higher. Um, and just, you know, variety of things. I’m always optimizing perhaps obsessively <laugh>. Uh, so yeah, it’s, it was something that we were able to uh, just continue to work at. We got Mint mobile for example, and that slashed our cell phone bill dramatically. We never even knew about it beforehand. And so it was just consistent, you know, inflation things go up. But every year we kind of go down for us a bit as we found optimizations for various things. Now I think we’ve pretty plateaued essentially. Um, we just bought a new roof, so <laugh> that brought up our spending quite a bit.

Corwin (21:20): Uh, but yeah, I mean it’s, I think that a lot of people are scared by the 50% or higher numbers and I’m always telling people, you should save at least 50% of your income. And I usually get eye rolls or stares or okay, this guy’s like off the wall. I dunno, I’m not listening to him anymore, but, which is bad, right? <laugh>. But I think it’s still something that I love to see people achieve or at least work to achieve. Because if you do the math, you’ve seen it probably before these various plots, like from zero, how long it takes to get financial independence. If you’re at 50% it’s 15 years. So, and higher percentages don’t shave that many more years off ’cause of that exponential growth. So I feel like that’s a nice sweet spot done with mandatory work in a decade and a half, I feel like that really gets, speaks to a lot of people.

Corwin (22:09): So I’m always pushing that, you know, try to get to 50% even if you’re not there, try to get there because you’ll gain so much more power over your life so much faster as a result. And that was really what was important to us. That’s what motivated us this entire time before we discovered fire. You know, my wife and I would be like, well is this important or not? We didn’t have like a unifying goal, so, you know, that caught us on the same page so much better. So fire’s good for your marriage for a lot of reasons. I think <laugh> also, I think, you know, money conflicts are one of the big things that drive a lot of marital stress. So that was another thing that was important to us. So, yeah, I don’t know if I really answered your question, but we just try to keep expenses down general.

Emily (22:48): Yeah, I think the key answer in there was the home purchase in 2013, but yeah, furthermore not upgrading, right? Because I know, you know, this is the temptation when you have your first baby or your second baby is we have to live in a bigger place. We have to drive a bigger car, a newer car, like there’s lifestyle inflation that’s, that’s baked into those like sort of um, life transition points, family transition points. And so at least with respect to your home, you’ve clearly, um, avoided that temptation of of lifestyle inflation.

Corwin (23:15): It’s hard though. We wish we had another room in this house all the time. <laugh>, especially when grandparents come to visit. This is my office slash guest room. So you know, when uh, when uh, we’ve got visitors, I lose my office and that’s annoying. But you know, it’s okay.

Emily (23:32): Do you think you’re gonna stay?

Corwin (23:36): Probably. Uh, so our son’s in elementary school now and I think if we were to buy a new house, we would probably need to move to a different neighborhood, different area. He’d have to change schools and it doesn’t seem like it’s worth it. We’ve thought about doing an add-on as well, so especially with interest rates the way they are now. So we’re, we’re camp mortgage. We’re team mortgage, so, uh, we’ve got a pretty low mortgage as well, so, yeah.

Benefits of Financial Independence

Emily (24:00): Yeah, so it sounds like you’re gonna try to find a way to stick it out in the same house and, and keep that mortgage. That’s amazing. Um, okay, well I wanna talk more about like the, the benefits you’ve experienced of the, the degree of fire that you have now, which was, you mentioned that you, your wife went to half time, you left your job for time, now you’re back working part-time. Can you just talk about how, um, this FI achievement slash the mindset stuff enabled you to find that like satisfaction with your work and the control over how you work?

Corwin (24:26): Yeah, so I, I was not, I was an unemployed bum for a year and a half and, uh, <laugh>

Emily (24:27): Stay home dad <laugh>.

Corwin (24:33): <laugh> I prefer an unemployed bum because it gets people like what, uh, but I think that after a while I also realized, you know, I spent close to 20 years developing all these engineering skills and it’s like I was doing a lot of other projects that were fun. I worked on this site engineering your FI and that was fun, but I also felt like it just felt so, uh, wasteful, I guess is the best word. Like not use those skills anymore. I missed a lot of the friends I had at the lab that I worked at. And so, um, I had lunch with my boss slash friend, a former boss slash friend from the lab. And you know, he told me there’s some really cool stuff going on, you know, would you be interested in maybe come back? So I spoke with him, I spoke with some of the other management and we greeted on this really nice halftime deal where I always get to leave by two o’clock.

Corwin (25:19): I always leave by two o’clock to, to pick up my son from school. We bike home from school. That was something I always wanted when I was a kid to be able to, you know, go home with my parents bike home, whatever, right? So I was like, that’s very, very important to me. And uh, it’s allowed me to continue working on my site. Other things, projects, just logistics at home. So it’s been really, really nice. My wife is same. She gets to volunteer at the school a lot because she’s working halftime. So it’s been a really nice balance. I wrote a whole blog post about the pros and cons of halftime part-time after fire because, you know, mathematically you don’t need to <laugh>. Um, so I tried to uh, lay out those ’cause I wrote so many pros and cons list <laugh> before I went back, so yeah.

Emily (26:06): Yeah, I have a similar work schedule. My business allows me to work about halftime same as you. I work kind of while my kid is in school and then we get the late, you know, the latter part of the afternoon together. Um, which I mean that flexibility is, is kind of like invaluable as a parent, honestly. Like, um, it’s, it’s very, very difficult once your kids get into elementary school to figure out how you’re gonna run everything if you have like two traditional nine to five like schedules. So I definitely see the appeal there, but like I was just saying, there’s multiple ways you can achieve this, right? Business ownership, working part-time being totally fi, um, maybe just having an alternative kind of work schedule. Like all these different possibilities are there, but the more, as you were saying earlier, the more kind of confidence you have that you don’t need your job <laugh> in exactly the format that you have it right now, the more that gives you the ability to negotiate for what would really work for you, which is so beautiful. So you don’t have to be all the way FI to get there. Um, you happen to be, but you can just be like on the path and be secure enough that, you know, you can take a risk with that kind of ask.

Corwin (27:07): Yeah, yeah. I talked, one of the other articles on my site is, uh, something called Flamingo Fire Flamingo Fi, which I was a big fan that first time I heard of it. It originally came from a blogger in Australia actually. And when I first encountered that, I thought this is a great balance of FI versus, uh, not being so aggressive with your savings. Early on, their philosophy was save up to halfway to the FI point and then, uh, work however much you need to to cover expenses. And then about a decade or so you’ll be traditional FI. So it’s more aggressive than coast fi, less aggressive than standard fi. Mm. And so I thought that’s a really nice balance. And so I feel like we’re kind of the fat flamingo fi version because we’re at standard fire closer to that. But with these halftime jobs, we more than cover our expenses and we expect, you know, probably within, you know, half a decade or so, something like that, we’ll probably be more of the fat FI level, whatever that means. So, uh, yeah, it’s, it’s nice to have these different levels and different ways to have power over your life. Big time.

Emily (28:12): I’m thinking about the phrase live like a grad student, live like a resident, you know, that like, um, live like you’re still a trainee even afterwards. Now. I think that really applies in your case because you had the very nice stipend. I mean, 45K in 2012 is like really, really, I was making like 28 K in 2012. Um, you have that like nicer sort of level of income while you were in graduate school plus your wife’s job and everything. Uh, but it sounds like you probably about maintained your lifestyle, um, even with increases in income aside from the additional expenses for childcare and so forth that come with the kids. Does that sound about right?

Corwin (28:44): Yeah, yeah. Roughly, if anything, we lowered it. Mm-Hmm. Because we found various ways to stop wasting money <laugh> on things like cell phone bills and other things. I found that you could call these companies that could compare your insurance rates across a whole bunch of different companies and, you know, always found it’s the lowest rate, et cetera, et cetera. You know, it’s like the more you know, knowledge you gain the, the faster the snowball starts, right? So that was a, you know, a big thing that we, you know, I always try to keep it in mind inflation <laugh> as well, because sometimes it’s going up, but you’re still going, you’re still doing good compared to inflation, especially recently. But, uh, but yeah, we definitely strove to not inflate after the PhD for sure.

Commercial

Emily (29:31): Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as taxes, goal-setting, investing, frugality, increasing income, or student loans, each tailored specifically for graduate students and postdocs? I offer seminars and workshops on these topics and more in a variety of formats, and I’m now booking for the 2024-2025 academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker or facilitator to your university, graduate school, graduate student association, or postdoc office? My seminars are usually slated as professional development or personal wellness. Orientations or very close to the start of the academic year would be a perfect time for tax education or general personal finance content. Ask the potential host to go to PFforPhDs.com/financial-education/ or simply email me at [email protected] to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.

Corwin’s Book: Engineering Your PhD

Emily (30:58): Since you were just mentioning, we were just talking about your excellent stipend and so forth, you have a book, right? That’s relevant to graduate students. Can you tell us about that?

Corwin (31:06): Sure. Uh, so this is something I wrote back in 2019. Uh, it’s called Engineering Your PhD, an Actionable Guide to Earning Your Graduate Degree in Engineering. I had looked around online and I found books that were designed, written for PhDs and how to get your PhD the best <laugh>, but not a lot for engineering. There’s like maybe one or two others. And I had all this knowledge in my brain from when I got my PhD about how to do various things that I really wished I’d known before I started graduate school. So it was really more of like a passion project, like let’s get this into a more permanent form. Something I can hand to my kids one day if they wanna go to graduate school and say, Hey, engineering, at least you know, this is the collection of things that I thought were important when I finished up. So yeah, it’s on Amazon now and uh, um, I will say it’s not really my focus anymore to focus on academia. I’m much more interested in FI and fire and personal finance and things like that. It’s been a while since I was in academia. Now that’s hard to believe, but, uh, yeah, it’s still I think a well-written book according to my very biased opinion <laugh>. So if anyone interested in, uh, joining, uh, interested in checking that out, you’re certainly welcome to.

Emily (32:20): Editing Emily breaking in again! Corwin very generously is offering Engineering Your PhD free for download for five days after the publication of this interview. If you’d like to grab it, please go to PFforPhDs.com/S17E9/ and you’ll see the Amazon link in the list of links near the starts of the show notes. OK back to the interview.

The Future of Corwin’s FI Journey

Emily (32:43): So thanks for telling us about the book. Um, I wanted to ask one more question before we get to our final one, which is what, what does the future look like, right? You’re, you’re, you’re at FI, maybe you’re gonna continue building towards a fatter version of FI. You, you have your halftime work schedule. Like do you anticipate making any changes or are you just gonna cruise to a traditional retirement age at this? Like what do you think?

Corwin (33:04): I don’t know. That’s a good question. So for the foreseeable future, we’re gonna continue doing our part-time roles. I think that’s a good balance for us with young kids right now. But things could change in the future. Maybe we decide we wanna actually ramp up, we want to strengthen our careers, we wanna get more into what we’re doing in our jobs. Maybe we wanna go the opposite direction and do less or focus on entrepreneurial activities. You know, we live here in Austin, Texas where it gets very warm in the summertime. So I think we’ve toyed around with the idea of living elsewhere during the summer times when the kids are out of school. Uh, so that’s something that might be of interest to us, but that’s, you know, more like the summertime versus the rest of the entire year. So, you know, we could take sabbaticals from our, uh, part-time roles for a couple months, get outta the heat and then come back. That sounds really nice. Uh, and then who knows, you know, once my daughter graduates from high school, uh, in 16 years <laugh>, then, you know, the world’s our oyster. We might go elsewhere, we might go to Colorado or depending how hot the earth is at that point we may have to go further north <laugh>. Um, so yeah, we’ll, uh, we’ll have to see what happens.

Emily (34:15): Okay. I just love how like calm and like chill that answer was just like, I don’t know, we’re doing FI. We’ll see where it goes. We’ll do what we want. Um, and that’s really what fire affords you. Um, especially fire in, you know, professional fields like you have where you have so much career capital as Cal Newport would say by this point, right? You can deploy it in different ways, right? Um, so I love that.

Best Financial Advice for Another Early-Career PhD

Emily (34:36): Okay, so let’s get to our standard question. What is your best financial advice for another early career PhD? It could be something that we’ve touched on already in the interview or it could be something completely new.

Corwin (34:47): So a few things that are very standard boilerplate pieces of advice. Well, maybe one’s not so much. First thing is track your expenses. I mean, if you’re not tracking your expenses, that is the foundation for everything. If you have no idea how much you’re spending, then you’re not going to be able to make almost any progress on lots of different things, especially if you wanna pursue financial independence. ’cause that’s gonna tell you how much money you need to save. That’s gonna tell you your savings rate is all kinds of things. Uh, and you’re not gonna be able to reduce it if you don’t know how much you’re spending. Uh, another thing is, like I mentioned earlier, I’m always pushing for a 50% savings rate, if not currently, then aspirationally trying to get there because it’s such a powerful thing for your finances and getting to financial independence within a couple decades.

Corwin (35:30): Uh, also a big fan of not getting complicated with investments. Put everything into a low cost stock market index fund, like V-T-S-A-X. First thing I do when I look at a fund is go straight to the expense ratio. <laugh>, it’s the first thing I do. But the last thing I would say is maybe a little less, um, uh, traditional, which is I encourage people to build their own tracking systems, their own financial tracking systems. There’s so many tools out there, just an infinite number of tools you can pop your numbers into and get all these different things. But I feel like if you do your own thing, you’re building the skills up to track your finances that you have that ultimate customization for what you actually want, right? Even if it’s just spreadsheets, you know, that’s, that’s perfectly fine. It’s usually free. You’re not paying anything. Again, that’s good for your savings rate, right? Um, but I do recommend trying out some other tools as well, uh, to see if the numbers line at least closely or roughly <laugh>. So yeah, that’s be my top pieces of finance advice for grad students.

Emily (36:35): I really love. Well, but the first and the last one, right track and also build your own, um, tool for doing so and, and doing more than just tracking because at the moment that we’re recording this finance internet is a buzz because Mint has announced they’re shutting down their, uh, budgeting feature and they’re kind of transitioning over, I think completely to Credit Karma stuff. So I’ve been a mint user for like, I don’t know, like 13 or 14 years now. And not that I’ve been completely reliant on it, but to the degree that I have my own stuff going on, I’m really happy for that now. ’cause now I’m like, okay, what do I do? I have to like download all this data. It’s gonna be like unusable CSV files, like what is going to happen with this like track record? So, but as you were saying, like there’s other great tools out there. Like you need a budget, it’s so popular, but there is a yearly fee to it. And so if you don’t want to have that kind of subscription, build your own stuff, it’s not, I don’t know, it’s not that complicated. I guess it depends on how great you are with like, you know, spreadsheets and stuff. But, um, so I love that advice of just like, be ready for these services to shut down on you. It’s literally happening to me at this moment. Yeah. So don’t be totally reliant on outside, you know, um, apps and so forth.

Corwin (37:40): Yeah, I think if you’re smart enough to get into a decent graduates program, then I think you’re smart enough to create a spreadsheet that can track your finances at least at a crude level that you can be fully in control of <laugh>. So yeah.

Emily (37:54): Yeah. Um, I’ll take the opportunity to plug something of mine in the show notes. I’ve literally not announced this on the podcast yet, uh, as of this recording. But I made an a simple Excel spending tracker that incorporates a couple of my like philosophies about how to manage money, which are to, um, spend what you earned last month, <laugh>, like don’t spend what just came in, like wait until the next month to spend it. Hmm. Um, and also to incorporate, um, sinking funds or targeted savings like into that, that system. So I don’t know, people ask me for a long time, like if I could just send them a simple spending tracker and I finally made one a few weeks ago in response to someone at a speaking engagement who wanted it. So go to PFforPhDs.com/tracker if you wanna download that and take it and make it your own and build it out and have it do other things and take my ideas, discard my ideas, whatever you like. But if you want a starting point, like there’s a starting point for you Corwin, um, it’s been a such a fascinating conversation. I’m so excited for how your life has unfolding and how the PhD has played a role in that. Um, it’s so excellent and thank you so much for sharing your story with the audience and coming on the podcast.

Corwin (38:57): Thank you very much.

Outtro

Emily (39:08):  Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

Expert-Level Frugality from ChatGPT and Grad Students Like You

by

In this episode, Emily features contributions from the PhD community and from ChatGPT around the topic of frugal tips. Grad students in particular are typically open to exercising frugality to decrease their expenses. Emily talks through her framework on how to decide which area of spending to target first with frugality. She then demonstrates how to use ChatGPT to find as many frugal tips as you could ever want. The episode ends with the frugal tips submitted by grad students and PhDs, which are often more tailored and actionable than the generic ones you can find online.

Links mentioned in the Episode

Expert-Level Frugality from ChatGPT and Grad Students Like You

Introduction

00:05 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

00:34 Emily: This is Season 16, Episode 6, and today my guest is ChatGPT and all of you! Our topic is frugal tips. Grad students in particular are typically open to exercising frugality to decrease their expenses. I talk through my framework on how to decide which area of spending to target first with frugality. I then demonstrate how to use ChatGPT to find as many frugal tips as you could ever want. The episode ends with the frugal tips submitted by grad students and PhDs, which are often more tailored and actionable than the generic ones you can find online. You may have heard that Mint, the popular budgeting app, is half being shut down and half being moved under the Credit Karma umbrella. Longtime Mint users are freaking out and looking for alternatives. As it happens, a few weeks ago I finally cleaned up and made available the Excel spreadsheet I use for tracking to fulfill a request made in advance of a webinar. If you would like to try out manual tracking, please take my spreadsheet and use it as is or build it out however you like. It includes a couple of budgeting principles that I like to follow and teach to grad students. There’s a companion video available explaining those principles. If you’d like to grab the spreadsheet, it’s totally free, just register through PFforPhDs.com/tracker/. You can find the show notes for this episode at PFforPhDs.com/s16e6/. Without further ado, here’s our episode on frugal tips.

02:20 Emily: PhD students are pretty frugal, right? I mean, not everyone in every area of life, but a degree of frugality is necessary if you have any hope of staying in the black throughout your PhD. Now, that frugality may come naturally or it may be something you have to white-knuckle through, but it will happen. I did my PhD during the Great Recession, and frugality was a very popular topic in the personal finance blogosphere, of which I was a part. I remember reading blog post compilations of frugal tips and thinking that I already practiced the great majority of them, and some of my peers did, too. After some time of honing my own frugality, it became a bit of a struggle for me to find new-to-me frugal tips that I was willing to try out. Everyone has their own limits, of course. That’s one of the tricky things about searching for frugal tips: You have to wade through a bunch of tips that aren’t relevant for your life or that go beyond your comfort zone to find one or two that could really work for you. This episode will help you with that process of finding frugal tips that might actually work for you. First, I will share my frugality framework to help you prioritize which budget categories are the best to target with frugal tips. Second, I’ll tell you how to use two invaluable resources to come up with relevant frugal tips, ChatGPT and your peers, and include example tips from both sources.

Frugality Framework

03:41 Emily: Some frugal tips are poised to have a greater effect on your budget than others, especially if they take significant time and/or energy. The juice is not worth the squeeze, so to speak. The Frugality Framework that I’m about to share with you is one that I teach during some of my personal finance seminars for universities. When people decide that they would like to reduce their expenses, it’s often a bit of a panic response. They realize they’re over budget or racking up debt or are about to experience a decrease in income or an increase in another expense. For example, after 3.5 years of forbearance on federal student loans, in October they went back into repayment, so borrowers suddenly had a new expense of tens, hundreds, or thousands of dollars per month that they hadn’t had to pay in quite a long time, if ever. The common response to this is to reduce or eliminate the types of expenses that will have an immediate effect on your overall spending and that give the least resistance. Generally speaking, the first target expenses are variable and discretionary. Variable expenses are ones where your spending correlates with your consumption level, and discretionary expenses are optional, not required to keep you alive and productive. Variable and discretionary budget categories include eating and drinking outside of your home, entertainment, appearance-related personal care, some types of shopping, and much more. You might even be able to immediately reduce spending in budget categories that are commonly viewed as necessary but that have a discretionary fraction as well, such as groceries and gas.

05:16 Emily: This can be very effective in the immediate term to alleviate a cash crunch, but it is likely to only be sustainable for a short period of time. Discretionary expenses are the ones that provide some flavor and enjoyment to our day, and life is likely to feel bleaker without them. Because these expenses are variable, it takes willpower to sustain cuts in these areas, and that willpower will eventually deplete. As easy as it is to reduce or eliminate spending in these areas, it’s just as easy to turn the spending back on once that happens. I don’t want to convey that it’s impossible to sustain cuts to variable and discretionary expenses or that your life won’t be worth living if you do. But to make sustainable, long-term changes to these areas, you will have to make your lower-spending lifestyle a habit and really learn to love your frugal substitutes. That takes time, and if your willpower runs out before your habits take hold, your spending can easily bounce back. There is a time and place for frugality in your discretionary and variable expenses. But if you know that your frugality needs to be a long-term practice, such as the length of your PhD, I suggest a different approach.

06:30 Emily: Think of your expenses as falling into four quadrants, arranged in a square. The two columns are for your variable and fixed expenses. The two rows are for your large and small expenses, or you could picture a continuum here if you like. The expenses that we just mentioned mostly fall into the small and variable quadrant, with some budget categories like groceries probably falling into the large and variable quadrant. The quadrant that I believe you should focus your frugality efforts on first is the fixed and large quadrant. Your fixed and large budget categories almost certainly include your rent or mortgage, your car payment and car insurance if you own a car, and childcare if you have a young child. The reason that I suggest putting your frugalizing energy into this category first is that reductions in these expenses are the 80:20 solution to reducing your spending without depleting your time and energy reserves. By definition, if you reduce a fixed expense, that lower spending level is locked in for the term of your contract and probably indefinitely into the future. Once the change is made, you don’t have to spend any more time or energy to maintain the reduction. Furthermore, because these are large expenses, they have the greatest potential to affect your overall spending level. Even a 10% reduction in your rent or mortgage translates to a savings of dozens or perhaps more than one hundred dollars each month, whereas you would have to dramatically reduce or eliminate entirely a small expense to have the same effect.

08:07 Emily: You already know why almost no one starts with this category though, right? It’s because it’s intimidating and difficult to reduce expenses of the type that I mentioned. For housing, it would likely involve moving, which takes time, research, expense, and a whole lot of effort. It’s also not something that you can do immediately, but requires an acceptance of a long-term commitment to frugal living. Same thing goes for selling or trading your car or finding a different childcare arrangement. These are incredibly challenging tasks to undertake, and they lack the immediate gratification that denying yourself a restaurant meal can provide. But the effort that accompanies changing one of these expenses, I believe, is worth it, if you can get a large enough expense reduction. I went through this personally in graduate school. I moved four times during my PhD, and in three of those moves I reduced my rent expense without sacrificing square footage or proximity to my university. When I finished graduate school, I looked back at the most effective strategies that I employed to increase my cash flow, and those moves topped the list. If you’re interested, I detailed the whole list in Season 1 Episode 1 of this podcast. Frankly, I think it’s highly atypical to make an optimal housing decision in your first year of your PhD program, doubly so if you are moving from out of the area, so at least one move during grad school is warranted once you get to know the housing market and area as a local.

09:37 Emily: Once you’ve investigated and addressed your large, fixed expenses to the greatest extent possible, it’s time to move on to the other quadrants, which should be far less daunting. The second quadrant to focus on is your small, fixed expenses, which can include your internet service provider, your cell service provider, any ongoing subscriptions, and insurance policies. Again, we are not focusing only on discretionary expenses here, but also re-evaluating what are usually considered necessary expenses. Yes, it is necessary to have a cell phone, and probably a smartphone with a data plan at that. But there are likely many plans available that will fulfill your needs, and you have a choice about whether you want to pay for discretionary elements such as a large amount of data. Consider each of your small, fixed expenses through this lens, and keep in mind that annual re-evaluation and frequent switching of providers is typically the best strategy to keep expenses low. The cost of this once-per-year expenditure of time and effort to shop around is well worth it when you find a way to lock in a lower spend for one of these fixed expenses as no ongoing willpower is needed.

10:50 Emily: The third quadrant to work on is your large, variable expenses. Groceries almost certainly fall into this quadrant, and depending on your lifestyle, other potential budget categories are travel, gas, shopping, hobbies, entertainment, and appearance-related personal care. Because these expenses are larger, there is room for a significant reduction in spending, but being variable, they are beset by some of the same issues as those of the small, variable quadrant. You will need to start with experimentation into how to reduce these expenses, but the experimentation must shift into habit formation around any tips you want to use long-term, or else they will not feel sustainable. For example, if you want to reduce your grocery spending through purchasing and eating less meat and dairy, the experimental phase might involve trying out new recipes, with the habit coming when a few of them graduate into your regular meal preparation rotation. Personally, my family has implemented a “decide once,” to borrow one of the principles of the Lazy Genius, of always purchasing gas when we shop at Costco because it is reliably less expensive than the alternatives. We have also been experimenting with a decide once of always flying Southwest when available as it is a budget airline and we are plugged into its companion pass and points system.

12:12 Emily: Finally, we can return to considering the fourth and final quadrant, your small, variable expenses. Perhaps by the time you have worked through all three other quadrants, you will not feel the need to make any further budget reductions. If you would like to reduce your spending further, at least you will have practiced determining for your life what is necessary and what is discretionary and what you value and the frugal habit formation process. You’ll be better positioned to tackle this category. Perhaps you could even pair some immediate cuts to your small, variable expenses to some cuts to your fixed expenses that are in the works so that you can increase your spending once again when your fixed expenses drop. You have to know yourself to figure out what will work for you when it comes to using willpower to sustain reductions in expenses and how you can transition it into habits. For example, Gretchen Rubin has a framework classifying people into abstainers vs. moderators. Budgeting variable expenses is usually an exercise in moderation as you say yes to certain expenses within limits. If you’re an abstainer like me, it might be easier to tell yourself that you simply do not spend any money in certain categories while eliminating or raising the limits on other categories. Now that I’ve shared with you my recommended theoretical approach to frugalizing your budget, I’d like to point you to some resources for actually finding frugal tips to experiment with in your budget categories of interest.

Resources on Frugal Tips

13:43 Emily: From my blogging days, I know that the internet is littered with lists of frugal tips, and there are books and other resources that you can tap as well. But since I want you to target just one budget category at a time, I’m going to point you to two resources where you can really target the type of information that you’re seeking: ChatGPT and your peers.

ChatGPT

14:05 Emily: Seeking frugal tips is an accessible and easy way to use ChatGPT; it’s not at all sophisticated. I used the free version of ChatGPT that is available at chat.openai.com for my queries. I like ChatGPT for this over a search engine because you can be quite specific with your query and iterate it as necessary. I’m going to give you one example of seeking frugal tips for a fixed cost and one for a variable cost. Let’s start with exploring frugal tips to reduce the cost of your internet service, a fixed cost. My first request was “Please list 10 ways to reduce the cost of my internet service.” This is what ChatGPT returned:

“Reducing the cost of your internet service can help you save money. Here are ten ways to do just that:

  1. Shop Around for Providers: Compare different internet service providers in your area to find the most cost-effective plan. Some areas have multiple providers, each offering different pricing and packages.
  2. Bundle Services: Many providers offer discounts when you bundle internet with other services like cable TV or phone. Consider bundling if you need these services.
  3. Negotiate with Your Current Provider: Contact your current internet service provider and ask if they can offer you a better deal. They may have promotions or discounts available, especially if you’ve been a loyal customer.
  4. Downgrade Your Plan: If you’re not using the full capacity of your current plan, consider downgrading to a lower-speed tier. You can save money by paying for only what you need.
  5. Cut Out Unnecessary Features: Some plans come with extras like unlimited data, premium channels, or additional services you might not need. Trim these to lower your monthly bill.
  6. Use Wi-Fi Instead of Cellular Data: When at home, connect your mobile devices to your Wi-Fi network to avoid using expensive cellular data.
  7. Monitor Your Data Usage: Some providers charge extra for exceeding data caps. Be mindful of your usage to avoid these charges.
  8. Buy Your Modem and Router: Many providers charge a monthly rental fee for their equipment. Consider purchasing your own modem and router to save in the long run.
  9. Look for Promotions and Deals: Keep an eye out for special promotions, discounts, or introductory rates offered by internet service providers. These can provide significant savings, especially for new customers.
  10. Consider Alternative Technologies: Depending on your location, you might have access to alternative internet technologies like fixed wireless, satellite, or DSL. These may offer more cost-effective options than traditional cable or fiber.

Remember to check the terms and conditions of any changes you make to your internet service, as well as any potential termination fees or contract requirements. Additionally, the best approach to cost reduction may vary depending on your location and the specific providers available in your area.”

17:09 Emily: I like this list pretty well. It includes all the standard suggestions that I would have thought of or eventually found. I was curious if we could get a little more creative, though, so I iterated my next request as “Please list 20 ways to reduce the cost of my internet service.” ChatGPT added ten more ideas. I won’t repeat all of them as most were redundant, but one that I thought was out-of-the-box was to “Take Advantage of Government Programs: Check if you qualify for government assistance programs that provide discounted internet service to low-income households.” One suggestion I didn’t see on this list but that I would like to add, in case you are looking for ways to reduce your internet bill, is to ask your internet service provider what types of discounts they offer so you can make sure that you’re enrolled in all the applicable ones. So if you really were looking for ways to reduce this fixed cost, you could start with the suggestions to shop around providers, including considering alternative technologies, and then either switch or negotiate with your current provider, and make sure that the plan you have fits your purposes well. I thought ChatGPT might be able to help a bit further with the negotiation suggestion, so I asked it “What should I say in a negotiation with my internet service provider?” That resulted in a list of 15 suggestions for how to handle such a negotiation. After seeing that list, I decided a sample script would be more helpful, so I asked “Would you please write a sample script of a negotiation between a customer and an internet service provider?” ChatGPT then created a sample script that started out as

“Customer (C): Good morning. I’m calling because I’ve been reviewing my monthly expenses, and I’m finding that my internet bill is becoming a bit too high for my budget. I wanted to discuss some options for reducing the cost.

Internet Service Provider (ISP): Good morning, I understand your concern. I’d be happy to help you with that. May I have your account number or name, please?

C: Sure, my account number is [Your Account Number] or my name is [Your Name].

ISP: Thank you for that. I see your account. Can you please tell me specifically what you’re looking to change or reduce in your service?

C: Well, I’ve noticed that there are some new promotions from your company that offer lower prices for similar plans. I’d like to see if I can get a lower monthly rate on my current plan.

ISP: I see. I can certainly check if there are any promotions available for your account. Before I do that, can I ask how long you’ve been a customer with us?

C: I’ve been a customer for [X] years, and I’ve generally been satisfied with the service.

ISP: Thank you for your loyalty. Let me check our current promotions for you.”

The script continues on with the customer and customer service agent exploring various options. It ends this way, which I thought was interesting:

“C: Thank you for the information. Let me think about it for a moment. Can I also request that you send me an email confirmation of the new promotion and bundle details we discussed?

ISP: Certainly, I’ll send that confirmation right away.

C: Great, thank you for your assistance. I’ll take some time to think about the bundle offer and the new promotion, and I’ll get back to you with my decision.

ISP: You’re welcome. Feel free to call us anytime if you have any questions or if you decide to make any changes. Thank you for choosing our service.

C: Thank you for your help, and have a great day.”

20:32 Emily: I liked seeing this sample script as it made the whole process seem much more approachable. Our second example is in how to reduce the cost of groceries, a variable cost. The field of possibilities for reducing spending on groceries is just about infinite, so I’m going to use ChatGPT to follow one type of suggestion until we get some really concrete ideas. My first prompt is “Please list 10 frugal tips to reduce the amount of money I spend on groceries.” This is what ChatGPT returned:

“Certainly! Here are 10 frugal tips to help you reduce your grocery expenses:

  1. Create a Budget: Start by setting a budget for your grocery spending. Having a clear budget will help you stay on track and avoid overspending.
  2. Meal Planning: Plan your meals for the week in advance. This allows you to make a shopping list with only the items you need, reducing impulsive purchases.
  3. Use Coupons and Discounts: Keep an eye out for coupons, discounts, and special offers from your local grocery stores. Many stores offer loyalty programs that can provide significant savings.
  4. Buy in Bulk: Purchase non-perishable items in bulk when they are on sale. This is especially useful for items like pasta, rice, canned goods, and frozen foods.
  5. Shop Seasonal Produce: Fruits and vegetables that are in season are often cheaper and fresher. Take advantage of seasonal produce to save on your grocery bill.
  6. Avoid Convenience Foods: Pre-packaged and convenience foods tend to be more expensive. Buy whole ingredients and prepare meals from scratch whenever possible.
  7. Compare Prices: Pay attention to unit prices (price per ounce, pound, etc.) to determine the best value. Sometimes buying larger quantities is more cost-effective, but not always.
  8. Reduce Meat Consumption: Meat can be one of the more expensive items in your cart. Consider incorporating more plant-based meals into your diet to save money.
  9. Use Leftovers: Don’t waste food. Use leftovers creatively to make new meals, reducing the need for additional ingredients.
  10. Store Brands: Often, store-brand or generic products are just as good as name brands but come at a lower cost. Give them a try to see where you can save.

Remember, the key to saving money on groceries is to be mindful of your spending and make intentional choices when shopping. With a little planning and effort, you can significantly reduce your grocery expenses.”

23:08 Emily: These tips are all great but very high-level, and I don’t yet know exactly how I would implement them. Several of the tips are getting at changing my diet to incorporate less costly foods, so I’m curious which foods exactly ChatGPT would suggest that I buy. My next prompt is “What are 10 low-cost but filling foods I can buy in a grocery store?” This is what ChatGPT returned:

“You can find many low-cost but filling foods at the grocery store. These items are not only budget-friendly but can also provide you with satisfying meals. Here are 10 such options:

  1. Oatmeal: A versatile and filling breakfast option that’s high in fiber. You can add fruits, nuts, or honey for extra flavor.
  2. Rice and Beans: Both rice and beans are inexpensive staples that, when combined, create a complete protein source. They are versatile and can be used in various dishes.
  3. Pasta: Pasta is an affordable and filling carbohydrate. Pair it with a simple tomato sauce, vegetables, or beans for a hearty meal.
  4. Eggs: Eggs are a great source of protein and can be used in a variety of dishes, from omelets to frittatas.
  5. Canned Tuna or Salmon: These canned fish options are not only low-cost but also high in protein. You can make sandwiches, salads, or pasta dishes with them.
  6. Frozen Vegetables: Frozen vegetables are often more affordable than fresh ones and have a long shelf life. They can be used in soups, stir-fries, and as side dishes.
  7. Potatoes: Potatoes are a cheap source of carbohydrates and can be prepared in numerous ways, from baked potatoes to mashed potatoes.
  8. Peanut Butter: Peanut butter is an inexpensive source of healthy fats and protein. Spread it on whole-grain bread or use it as a dip for fruits and veggies.
  9. Canned Soup: Canned soups, especially when on sale, can be a cost-effective way to have a quick and filling meal.
  10. Cabbage: Cabbage is a low-cost vegetable that can be used in salads, coleslaw, stir-fries, and soups. It’s a great source of vitamins and fiber.

Remember to balance your diet with a variety of these foods to ensure you’re getting a range of nutrients. These options can serve as the foundation for many nutritious and filling meals without breaking the bank.”

25:34 Emily: That’s a great list! Now I know a few items to add to my grocery list to displace some others. But I don’t quite yet know how I would use these grocery items. I asked ChatGPT: “Would you please point me to 10 recipes that incorporate the aforementioned foods?” I thought it might return links to full recipes, but instead it lists simple recipes right in the response.

“Certainly! Here are 10 recipes that incorporate the low-cost, filling foods mentioned earlier:

  1. Oatmeal with Banana and Peanut Butter:
    • Cook rolled oats with water or milk.
    • Top with sliced bananas and a dollop of peanut butter for a satisfying breakfast.
  2. Rice and Beans Burrito:
    • Cook rice and black beans.
    • Wrap them in a tortilla with salsa, cheese, and any other desired toppings.
  3. Pasta Primavera:
    • Cook pasta and mix it with sautéed frozen vegetables, olive oil, garlic, and a sprinkle of Parmesan cheese.
  4. Scrambled Eggs with Veggies:
    • Whisk eggs and cook them with sautéed bell peppers, onions, and spinach. Season with salt and pepper.
  5. Tuna Salad Sandwich:
    • Mix canned tuna with mayonnaise or Greek yogurt and add chopped celery and pickles. Spread it on whole-grain bread with lettuce and tomato.
  6. Baked Potato Bar:
    • Bake potatoes and set up a toppings bar with options like sour cream, cheddar cheese, chives, and bacon bits.
  7. Pasta with Canned Tomato Sauce:
    • Cook pasta and toss it in canned tomato sauce with garlic, herbs, and a drizzle of olive oil.
  8. Stir-Fried Frozen Vegetable Medley:
    • Sauté a mix of frozen vegetables in a hot pan with garlic and ginger. Add soy sauce and serve over rice or noodles.
  9. Peanut Butter and Banana Sandwich:
    • Spread peanut butter on whole-grain bread and add sliced bananas for a quick and nutritious lunch.
  10. Cabbage and Sausage Stir-Fry:
    • Sauté sliced cabbage with sliced sausage in a pan. Season with salt, pepper, and your choice of spices.

These recipes are simple, budget-friendly, and make good use of the low-cost, filling foods we discussed earlier. You can customize them to suit your taste and dietary preferences.”

27:48 Emily: I’m quite happy with this list! I could pick one or two of these new recipes to incorporate into my meal plan and grocery list. Let’s take the final step with ChatGPT, which is to create a meal plan. I asked, “Would you please create a meal plan of five lunches I can bring to work from the aforementioned recipes and/or low-cost foods?” This is what ChatGPT returned: 

“Of course! Here’s a meal plan for five budget-friendly work lunches using the low-cost foods and recipes mentioned earlier:

Day 1: Pasta Primavera

  • Lunch: Pasta Primavera (pasta with sautéed frozen vegetables, olive oil, garlic, and Parmesan cheese).
  • Side: A piece of fruit (e.g., an apple or an orange).

Day 2: Rice and Beans Burrito

  • Lunch: Rice and Beans Burrito (rice and black beans wrapped in a tortilla with salsa, cheese, and toppings).
  • Side: Baby carrots with hummus.

Day 3: Cabbage and Sausage Stir-Fry

  • Lunch: Cabbage and Sausage Stir-Fry (sautéed cabbage and sliced sausage with your choice of seasonings).
  • Side: Greek yogurt with a drizzle of honey.

Day 4: Tuna Salad Sandwich

  • Lunch: Tuna Salad Sandwich (canned tuna mixed with mayo or Greek yogurt, celery, and pickles, on whole-grain bread with lettuce and tomato).
  • Side: A small serving of mixed berries.

Day 5: Baked Potato Bar

  • Lunch: Baked Potato Bar (baked potatoes with toppings like sour cream, cheddar cheese, and chives).
  • Side: A side salad with vinaigrette dressing.

These meal ideas are not only budget-friendly but also relatively easy to prepare. You can make adjustments to suit your taste preferences, and they’re designed to be portable and easy to bring to work. Don’t forget to prepare and pack them in advance to ensure a convenient and satisfying lunch experience.” 

29:38 Emily: That’s where we’re going to leave this exploration of grocery-related frugal tips. I focused more on what I would do at home rather than exactly how to navigate the grocery store, but your frugal experimentation with your grocery budget is likely to go down a completely different path.

Commercial

29:55 Emily: Emily here for a brief interlude! I’m hard at work behind the scenes updating my suite of tax return preparation workshops for tax year 2023. These pre-recorded educational workshops explain how to identify, calculate, and report your higher education-related income and expenses on your federal tax return. For the 2023 tax season starting in January 2024, I’m offering four versions of this workshop, one each for US citizen/resident graduate students, postdocs, and postbacs and non-resident graduate students and postdocs. While I do sell these workshops to individuals, I prefer to license them to universities so that the end users, graduate students, postdocs, and postbacs, can access them for free. Would you please reach out to your graduate school, graduate student government, postdoc office, international house, fellowship coordinator, etc. to request that they sponsor one of my tax preparation workshops for you and your peers? I’d love to receive a warm introduction to a potential sponsor this fall so we can hit the ground running in January serving those early bird filers. You can find more information about licensing these workshops at P F f o r P h D s dot com slash tax dash workshops. Please pass that page on to the potential sponsor. Now back to our interview.

Peers

31:39 Emily: The other excellent resource for frugal tips, in my opinion, is your peers. They have the most natural insight into your financial situation and the options and resources available to you. For example, perhaps your university or the surrounding community offers certain discount programs, but they aren’t well-advertised. Your peer could alert you to this fact. This happened to me, actually. When I was in grad school, I went to the dentist for the first time in my city, and because we didn’t have dental insurance, I paid cash for my visit. I mentioned how my morning had gone to my officemate, and she told me that our health insurance actually offered a discount program. You were able to get 50% off the cash price if you provided your health insurance card to certain dental care providers. I called the office I had seen that morning, and I was very lucky that they were one of the partners and they refunded me half of what I had paid! That small exchange with my peer saved me a couple hundred dollars that morning, and a couple thousand over the course of my time in grad school. Now that’s a valuable frugal tip! The ideal peers to learn from are those who attend your same university, but I wanted to get you started with frugal tips from your peers around the country who listen to this podcast, which they have submitted over the past few weeks. I’ve organized these tips into distinct budget categories. I’ll also add in some comments of my own as we go through.

Housing

33:11 Emily: An anonymous contributor said: “Consider grad housing and an RA position as this can reduce your housing costs a lot.” This simple tip is probably more valuable than all of the others put together, honestly. Several of our past podcast interviews have discussed the value of subsidized campus housing and the possibility of reducing or eliminating your housing expense through serving as a resident advisor. I want to point you in particular to the Season 10 Episode 8 interview with Dr. Erika Moore Taylor. Erika served as a resident advisor in four out of the five years of her PhD program, completely eliminating her housing expense in those years. Now, make no mistake, being a resident advisor is a part-time job, but it’s a comparatively lucrative part-time job that is unlikely to raise any red flags within your program. Since we only received that one housing-related tip—and it was a stellar one, make no mistake—I’ll make one further suggestion. Of course, you can go to ChatGPT for specific ideas on how to reduce your housing expense. But my meta-suggestion is to get to know the housing market in your area, definitely the rental and also potentially the buying market. You’re very unlikely to make an optimal housing choice in your first year of grad school, especially if you’re new to the area. Real estate is local, after all. Be intentional about getting to know the housing market during that first year by talking with your peers about where they live, how much they pay, and whether they like it, and also searching for housing through a variety of mechanisms, not just online. Through that process, you’re likely to discover a less expensive way to fulfill your housing needs and wants. And if housing in your area is inexpensive enough, please consider purchasing a home and house hacking, which is when you purchase a home and rent out part of it to roommates. We did a whole episode on house hacking with Sam Hogan, which is Season 8 Episode 4.

Transportation

35:16 Emily: Several of our contributors mentioned either living car-free or using your car less due to high gas and parking costs. They suggested taking public transit or biking instead. Ricky Gettys from Penn State added that his campus offers a bike den, and you can use their tools and expertise to maintain your bike. An anonymous contributor observed, “Many cities allow you to ride for free with your student ID.” Another anonymous contributor who has a car suggested finding free street parking near campus and walking a bit further instead of paying for parking, noting “I saved ~$3000 over the course of my PhD because I never bought a parking pass.”

35:58 Courtney B: Hi, this is Courtney Behringer, PhD student at Oregon State and my frugal tip is that used e-bikes are very plentiful right now on the market, including Facebook marketplace and Craigslist and with a little of negotiation, you could likely get one for under $300 and new ones are getting cheaper every day. I’ve avoided hundreds of dollars in parking and gas and it has only been five months with my e-bike and I actually get to my office faster.

36:26 Emily: Even if you own a car, I think it’s really smart to get to know and try out the biking and public transit routes between your home and your university. There may come a time when your car is unavailable to you, and you’ll need an alternative way of getting to campus. Who knows, you may find the alternative more pleasant than driving and parking. There are some trade-offs if you decide to live car-free, and Shaniah at Emory had a tip that straddles this transportation category with our next category of food: “If you don’t have a car, try Door Dash or Uber Eats. Consider getting a Dash Pass for discounts on large grocery purchases. The cost for delivery is way less than Ubering back and forth.”

Food

37:07 Emily: I received a lot of food-related frugal tips, so we’re going to divide them into tips that relate to eating out of your own kitchen and those that relate to procuring food outside of your home. First, the tips related to eating out of your own kitchen. Right off the bat, we receive the simple advice from an anonymous contributor to “cook at home.” It’s virtually always less expensive to eat food that you prepare yourself vs. food that someone else prepares. So if you want to spend less on food overall, as often as possible and to the greatest extent possible, eat from your own kitchen. Another anonymous contributor put it like this: “Instead of eating out, cook your own meal whenever possible. I personally don’t do this as much as I should but I have other PhD friends who cook most of the time; it saves a lot of money for them.”

38:00 Emily: Pranav from Purdue offered several pieces of advice on the practicalities of making this strategy work, particularly when you are on campus: “1. Avoid buying coffee or snacks during the day. Keep a coffee mug, coffee, tea, granola bars, and other snacks at your desk. Carry fruits every day. 2. Cook at home and plan to carry food for most, if not all, meals on campus. If you eat chicken, marinate on weekends and use through the week in pasta, salad or sandwiches. 3. If you like salad, and a refrigerator is available at your lab for food, store salad dressing and salt/pepper there. Then you just carry a packet of salad and marinated chicken or boiled eggs, and/or fruits. 4. If you plan to stay till late night on campus, make overnight oats in the morning. This helps me avoid the urge to buy dinner, because I know I have already prepared it at home.” Anonymous from Tufts concurs, saying: “I avoid buying food or coffee out by bringing a lunch and coffee with me each day.” They then extended the advice on beverages to alcohol, saying: “I like drinking wine at the end of my day and so I buy a full box of wine at a time to receive a 15-20% discount.” When it comes to actually doing all this cooking that we’re talking about, an anonymous contributor shared: “Meal prep: One of the biggest expenses is eating out. However much you try to eat out healthy, it will be worse than when you cook. Make 4 or 5 things at once to save time, portion and keep them in identical containers so you have a sense of surprise when you open your lunch box. Eating food you cook is better than eating out on multiple fronts.”

39:41 Emily: How about frugality in procuring all the groceries you’ll need? Katie suggested visiting the food pantry on campus. Food pantries or food banks are increasingly available and increasingly utilized on university campuses. 

39:55 Courtney B: Another frugal tip I have is that many universities have a basic needs center. It might not be called that, um, or some sort of food pantry. Um, and my university gives out quality groceries once a week, which always includes eggs, bread, and yogurt, but also often vegetables and fruit that last me a whole week. Um, this program aims to reduce food waste in the community and provide shame-free food to students.

40:22 Emily: An anonymous contributor suggested a subscription to an imperfect produce delivery box or a community supported agriculture (CSA) farm.

40:32 Courtney B: Courtney here with another tip. I am learning the art of gardening and preserving. There’s a veggie you use a lot. For example, spinach or tomatoes consider planting a lot in the spring and harvesting in the fall and freezing for the rest of the year. I recently did this with jalapenos and now I have jalapenos to last me a year in the freezer. Speaking about freezers, you can freeze just about any food, too much tomato paste, freeze it, garlic, ginger, freeze it, freeze bread. Food waste is expensive and as a busy PhD student, I love pulling things outta the freezer as needed.

41:04 Emily: Shaniah from Emory submitted several tips related to grocery shopping: “1. Join Grocery Store reward programs for discounts and deals. CVS, Kroger and Publix have really good promotions. 2. Shop online first (add items to your cart) then go in person. This helps you stick to your budget and pr events overspending. 3. Download the store apps. Similar to #1, this helps you scan items before adding it to your cart; some grocery stores do not update their grocery store price tags / labels.” Finally, as an in-between solution, Shaniah from Emory suggested substituting restaurant meals for a meal subscription service. Second, the tips related to procuring food outside your home. As you might expect, obtaining free food on campus was brought up several times, including by an anonymous contributor who said “FREE FOOD opportunities abound on campus – make the most out of them! (‘One of the essential skills to be a great researcher is being able to find free food.)” Katie suggested bringing food storage containers to campus so that you can easily collect this free food and save it to be eaten later. An anonymous contributor took another approach: “Look in to graduate student off-campus meal plans. At UC Berkeley, our off-campus meal plan equates to getting an all-you-can-eat lunch for $10. There aren’t many restrictions and any unused money rolls over to the next semester.” Ricky Gettys from Penn State pointed out that “kids under 6 eat free at the campus dining halls” and a few other establishments, so that would really help out a young family. We also heard that tip in the Season 16 Episode 4 interview with Dr. Ilana Horwitz regarding Stanford.

Subscriptions

42:51 Emily: Katie and an anonymous contributor were both thinking along the same lines regarding a gym membership, pointing out that your university’s gym might be free or discounted or your health insurance might reimburse you for a gym membership. Another anonymous contributor from Tufts shared: “I use my school’s offerings such as free NYT for my news following.” I have to say, something I really miss about grad school is the abundant free or discounted on-campus resources like the ones mentioned in this section. I didn’t appreciate them enough until after I left!

Miscellaneous

43:28 Emily: Anonymous from Tufts offered a creative solution, “I try to get Amazon gift cards through side gigs (e.g., participating in user interviews or events on campus that pay) to pay for basic household/personal items so that those little costs don’t hit my budget.” Grad students often complain about being considered a student only when it suits the university vs. an employee only when it suits the university, but this anonymous contributor is trying to have the best of both worlds: “Check for (college) student discounts at businesses, these usually still apply to PhD students. Also check your university HR website for employee discounts, you might be able to use some of these too if you can be considered an employee.” Katie added: “Also look into if your university partners with community businesses, often you can get free/discounted things that way. I use my grad student id for any student discounts I can—movie theaters, admission costs, etc.” Another anonymous contributor was thinking along the same lines: “Utilize coupons/discounts/other promotions from school, local newspaper ads, etc.” Another anonymous contributor said “Pay attention to your graduate student society and university calendar as there may be free or discounted events for students on and off campus.” An anonymous contributor suggested “Finding furniture and other home goods on facebook marketplace.”

44:56 Courtney B: Another frugal tip here from Courtney Thrifting. Items enclosed is sustainable and a frugal game changer. I go about twice a month through the thrift store and set price boundaries for myself, and I recently found very nice clothes for conferences for $5 each piece. Um, pro tip go after each semester is over when students are dumping items like crazy.

45:21 Emily: And finally, another anonymous contributor noted that “Events that give away free t-shirts/clothing items are your friends.” It’s a trope, but all those free T-shirts saved me significant money in grad school!

Financial

45:37 Emily: I wasn’t necessarily expecting this, but I received several financially-related frugal tips. From an anonymous contributor: “Have a system (app, spreadsheet, etc.) where you track monthly budgets and expenditures grouped into budget categories.” Absolutely wonderful advice that is an umbrella over all the other frugal tips. Another anonymous contributor said, “Have 2 separate bank accounts. A high yield savings account and a spending account. Adjust the money you put into the spending account from each paycheck such that it is only a little bit more than your monthly budget. This keeps you disciplined about spending while you know that you are not running out of money.” I believe this person is saying to deposit your paycheck into the savings account and allocate to the spending account only what you actually want to spend that month plus a bit of wiggle room, like a more extreme version of the adage to pay yourself first. I like this strategy a lot! Pranav from Purdue suggested, “Maximize bank and credit card rewards and referrals and use a budgeting (not spend tracking) app like YNAB. YouTube is excellent for information about this. (pay on time and in full, and don’t spend money you don’t have!). First year of YNAB is free for college students.” At the time of this recording, Mint has just announced that it is partially transitioning to Credit Karma/partially shutting down at the end of 2023, so frankly this is a great time to try out another budgeting system like YNAB, which stands for You Need a Budget, or my simple spreadsheet tracker, which you can find at PFforPhDs.com/tracker/. Finally, Ricky Gettys from Penn State said, “Most Grad student stipends are NOT taxable at Penn State, meaning income is $0 on PA tax returns. That means that federal programs are almost guaranteed to apply (SNAP, Medicaid, ACP aka free internet).” I can’t verify everything in this tip, but I do know that fellowship income not reported on a Form W-2 is not considered taxable income in Pennsylvania, so if I were on fellowship in Pennsylvania I would for sure look into all the programs that Ricky listed. I hope you all enjoyed listening to this episode as much as I enjoyed creating it! If you have a frugal tip of your own to share, please visit the show notes at PFforPhDs.com/S16E6/ and add it as a comment there. I can’t wait to hear your tips and how you will use the strategies in this episode!

Outtro

48:09 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

This Grad Student Interrogated Her Budget and Worked on the Side to Financially Thrive

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In this episode, Emily interviews Alyce Viens, a 4th-year PhD student in communications at the University of Connecticut. On the eve of her defense, Alyce looks back over her time in graduate school to share the strategies that have help her pay off her student loans, invest for retirement, and save a down payment on a home. We discuss how Alyce budgeted, practiced frugality (including with conference travel), and supplemented her stipend.

Links Mentioned in this Episode

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Teaser

00:00 Alyce: You know, I was able to just not have to wait until I graduated and got, you know, quote unquote, a real job to start my financial journey. You know, not having to delay those things, you know, having that healthy emergency fund, but also being able to, you know, build up investments and, you know, have the down payment for a house and no debt. It’s just, it’s been very, very freeing and liberating.

Introduction

00:31 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is Season 11, Episode 2, and today my guest is Alyce Viens, a 4th-year PhD student in communications at the University of Connecticut. On the eve of her defense, Alyce looks back over her time in graduate school to share the strategies that have helped her pay off her student loans, invest for retirement, and save a down payment on a home. We discuss how Alyce budgeted, practiced frugality (including with conference travel), and supplemented her stipend. I have a gift for you if you’re not yet subscribed to the Personal Finance for PhDs mailing list. At the end of every interview, I ask my guest for their best financial advice for another early-career PhD. My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. The document is even organized by topic so you can easily see which type of advice is most popular. I invite you to join the mailing list to receive access to this document through PFforPhDs.com/advice/. I hope this quick, powerful resource will help you up-level your finances in this new year! Without further ado, here’s my interview with Alyce Viens.

Will You Please Introduce Yourself Further?

02:02 Emily: I am delighted to have joining me on the podcast today Alyce Viens. She is wrapping up her time in graduate school, finishing up her PhD very soon. And she’s here to give us a retrospective on the finances of her PhD. Where she was when she started, where she is now, what she did in between. So Alyce, thank you so much for coming on the podcast. And welcome, please tell the listeners a little bit more about yourself.

02:24 Alyce: Yeah, thank you for having me. I’m really excited to be here. So I am, I guess now a fourth-and-a-half year PhD finishing up. I’ll be defending two weeks from today, actually. So I’m very excited about that. My PhD will be in Mass Communication from the University of Connecticut. So I’ve been studying media effects and things like that for the last four plus years. But I now work as a market researcher for a consumer and brand research company that’s based in DC, but I work remotely. I live in upstate New York. So that’s what I’ve been doing for the last six months is going on to the industry side, the dark side, as I know some people in academia call it.

Budgeting Lessons for Grad Students: Tracking Spending

03:12 Emily: I do want to circle back and hear more about that decision to take that job prior to actually finishing up. But we’ll save that for the end of the interview. What lessons would you like to impart on the grad students and PhDs listening about budgeting, particularly during grad school or maybe in general?

03:28 Alyce: Yeah, so I mean, the reality is that as grad students we’re just not making a ton of money, but we still have a lot of the expenses that we would consider to be sort of adult expenses. We still have to pay for our housing, potentially cars, and we have to buy our food and all of those things that we have to pay for now that we’re adults. But we don’t have income necessarily to match all of those things. So the one thing that I would recommend to anybody, whether you’re a grad student or not, is to spend your first month before you ever build a budget and just look at any time money is leaving your pocket, whether it’s cash or debit card or an automatic subscription, a student loan payment, regardless of what it is, write it down, categorize it.

04:14 Alyce: Like don’t just say I spent, you know, $10 on food today. Well, did you spend $10 at the grocery store, or did you spend $10 at Starbucks on food? And then do that for a month. Don’t change your habits, just make it a regular month. And I think that’s the best place to start because you can really start to see, where am I spending all my money? I find that when I had less income, it wasn’t the large expenditures that I was doing. Like I wasn’t going out and buying myself a new iPhone every few months. Like I wasn’t making any large purchases. It was those little ones that time where, you know, I forgot to pack myself lunch and I had to go to a restaurant to get it. Or I had to go to the grocery store to buy something quickly. You know, it’s a lot of those really little things that can catch up with you. And as grad students with that limited income, that has to be the first place I think that you start is looking where you’re spending your money, and then we can start to assess where you can maybe make some cuts.

05:17 Emily: Did you use like software or an app? Or do you like to do things manually, and what do you recommend to other people?

05:23 Alyce: Yeah, so I would just have like a notes file going in my phone just to kind of, so for those moments where, you know, you kind of spontaneously spend money, I would throw all my receipts in my wallet for those times that I forgot to write it down. And then I would honestly just put them into an Excel sheet because you know, it makes it nice and easy, you know, when all is said and done for you to just kind of group them and see what those totals are.

Frugality is Worth it to Avoid Debt

05:53 Emily: Is there anything else that you want to add about budgeting?

05:58 Alyce: I would say, you know, I fully recognize that that 30% housing threshold may be very hard to reach. And so, you know, reach it as much as you can, get those housing costs down as much as you can, but also recognize if you spend a little bit more on housing. Okay. Well that just means we maybe need to make a little bit extra side income, or we need to just adjust our budget accordingly and maybe we spend less on something else. So I think, you know, there are opportunities, you know, depending on where you end up. Sometimes your graduate school is going to be in Southern California and you’re gonna be paying a fortune in housing. But where can you cut? Or where can you add as much as possible? And the same thing goes with really any aspect of your budget.

06:50 Alyce: You’re going to have to cut somewhere. You know, frugality and, you know, really making it as being financially well and not putting yourself further into debt as a grad student, it is going to involve some small sacrifices. I’m not going to lie and say, it’s all sunshine and rainbows all the time. There are going to be times where you have to say no to yourself, or you have to maybe get something that’s a little bit less than what you maybe wanted to. But it’s all about finding the balance. And it doesn’t have to be this miserable existence where you, you know, live in a tiny, tiny room and live on ramen noodles, but there are ways to make it work. You have to be willing to put in the work to find out where those places are. Because it’s easier to just fall into debt.

Strategies for Minimizing Expenses

07:40 Emily: Okay. So you mentioned earlier, like, okay, cutting expenses and also increasing income. And I want to ask you about both of those things. So, what are some strategies that you used in terms of decreasing expenses or minimizing expenses?

07:52 Alyce: Yeah. So the first thing that you have to do is just, like I said, cut those small unnecessary expenses. You’re going to have to buy gas for your car. You’re going to have to pay for insurance. You’re going to have to pay rent. But what you don’t have to do is buy lunch on campus every day, because you didn’t have lunch. What you don’t have to do is order pizza because you got home late. Those are things that you don’t have to spend money on. So look for opportunities to not do that. So I always kept snacks in my my drawer just, or like a loaf of bread and some peanut butter or like Graham crackers and peanut butter or something that I could kind of default to when I was on campus longer than I intended, or I didn’t have anything at home that I could make as a lunch or a dinner. You know, we’re there sometimes for a long time, I get it.

08:44 Alyce: You run out of meals. So have those emergency meals in your desk at work or in your backpack or in your car, wherever you need to keep them. Also, I like to make emergency meals for my house. So I always, like I’ll, you know, make a lot of something, you know, if I cook chicken, I’ll cook two or three extra pieces of it. So it’s done, freeze them in the individual packages, and then it’s just a microwave away. Or have emergency kind of food ready. So when you do get home late and you don’t feel like cooking, you always have that can of soup in the pantry. You always have something that you don’t have to spend money on. You can, you know, evaluate things that you are spending your money on that you do need to, or, you know, you would like to, but are there ways that you can reduce it?

09:33 Alyce: You know, do you need the, the fanciest Wi-Fi plan for your home internet? Probably not. I can tell you, I have a very cheap one now and it works just as well as any other one. Just don’t have seven devices going at a time. You know, do you have a subscription to Netflix, Hulu, Spotify? Do you have all of these and are you actually using them? Can you share expenses with somebody else? You know, I know it’s only, you know, $12 a month, but you know, those things they add up when you’re talking about how they compound on each other. So I think it’s just realistically looking at what are you spending your money on and are there ways that you could reduce that spending if not eliminate it completely?

10:21 Emily: Yeah. I like the process that you’re outlining here, like first tracking all expenses, and then interrogating each one of those expenses. I would say even, you know, the necessary expenses are also worth interrogating. There are a little bit of, well, for example, you mentioned gas in your car. Okay. So like figure out what’s the station that you’re always going to go to that consistently has like the cheapest price that’s not too far out of your way or whatever. Like just figure that out, make the decision one time, and then you’re always gonna be getting gas from that station. It’s always at the best price that you know about. So anyway, the necessary expenses are worth interrogating. You just like go down your entire list. Like you were saying, ask yourself for every one, how can I reduce this? How can I share this? Can I go without this? I really like that strategy. And it does matter, like you said, even those small few dollar expenses per month, they do matter in a grad student budget, whereas they might not in a normal salary kind of budget.

Know What’s a Good Sale Price

11:14 Alyce: Yeah, certainly. And I think I worked at a grocery store when I was in college and it was by far probably, you know, it’s retail, so it’s miserable. But in terms of life lessons, probably the best experience that I had in terms of life lessons of learning how much things should cost. Because the reality is, if you walk into a grocery store willy nilly just to buy whatever you want that day, whatever you decide that you need that week, you’re going to end up spending more than you should. You know, know what chicken breast should cost. I’ll give you an example. You should never spend more than $1.99 a pound on chicken breast. That might vary if you live in a really more expensive state. And I know we’re in inflation right now, but knowing, you know, what’s a good sale price and being willing to, you know, freeze something because you can have it later.

12:09 Alyce: Buying in bulk. You know, if that’s applicable to you. If you have roommates, there’s no reason why you can’t buy, you know, the Costco size toilet paper, you’re probably going to use it. And you’re probably going to save a lot of money in doing so. So learn how much things should cost. You know, look at the sales fires, use coupons. I’m a big proponent of coupons and people think they’re, you know, it’s challenging and you have to be like the TLC coupon moms. You really don’t. Every grocery store now has an app that you can load the coupons right onto your app, or right onto your store card. Coupons.com is a really great place. You know, if you’re going to spend the money anyway, why not save the money on it?

12:56 Emily: I love that you brought up couponing because it’s actually not something I don’t think we’ve discussed in detail on the podcast before. But as you said, I found it also like, I coupon at a very minor level. Like what my grocery store sends me, my grocery store learns my spending patterns because of whatever I’ve signed up for with them. And then they send me coupons on the stuff I actually buy, which is awesome. And then double awesome is when you can pair a coupon with like something already being on sale and that being, you know, you’re able to like stack that or whatever. Give me another like more advanced strategy. Like for instance, how are you using coupons.com?

Advanced Couponing Strategies

13:29 Alyce: Yeah. So I will check coupons.com anytime before I go shopping just to see what is available. And the trick with coupons is don’t buy something just because you have a coupon for it, because chances are, you’re probably not getting a deal. Just because you, you know, save 55 cents on that, doesn’t mean it was necessarily a good deal, especially if it’s something that you weren’t going to buy anyway. So it’s important you only use it on things that you were intending to buy, but also, you know, compare to, you know, maybe the store brand, if that’s applicable. Sometimes, you know, if it’s not on sale, you know, using a coupon on a brand name, it’s still not going to save you anymore than if you had just bought the generic brand of it. So I’ll check coupons.com just to kind of see what’s available and take the ones that I want.

14:21 Alyce: And again, only using on things that you’re going to. I’ll check the app of the store that I’m going to be shopping at to see, do they have coupons that I might want to use? I also will Google. So sometimes like, you know, P&G might have their own separate coupons that they don’t publish on like a public platform like coupons.com, and it might just be linked to their website. And you just have to put in an email. I have a burner email just for specifically that purpose. Like I don’t ever check it. It’s just for putting in to get any kind of special codes and deals. And that’s really for everything. It’s not just for for groceries. Like Kohl’s, for example, if you need to go buy new conference clothes or whatever you might need to get at Kohl’s, almost always, if you go on their website, they have at least a 15% off coupon that you can print out or show on your phone.

15:18 Alyce: You know, stores are desperate to get people actually in stores now because you know, we’re moving so much to online. So, I find that coupons are more often available than not. So if you need something, just do a little bit of searching. The other thing I would recommend is an app it’s called Ibotta. I B O T T A. And you go onto this app, and you just select what store you’re shopping at. And it will show you just a plethora of coupons available that you’ll get cash back on. And you just add it to your list. You upload your receipt afterwards, and they put this money into your kind of Ibotta account and you can withdraw that money once you reach, I think it’s $20. So I’ve saved over two, probably over $300, by using this app. And it’s often for things that, again, I’m already buying. So if I’m going to buy that box of pasta, I’m gonna buy it and save a dollar on it because I can.

16:20 Emily: All right, I have homework now. Great ideas for me to implement.

Commercial

16:25 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 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 2021 tax return, which are available at PFforPhDs.com/tax/. I hope you will 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 are linked from PFforPhDs.com/tax/. I offer one workshop on preparing your annual tax return for graduate students and one workshop on calculating your quarterly estimated tax for fellowship and training grant recipients. The first live Q&A call for the annual tax return workshop is coming up on Sunday, January 23rd. For fellowship and training grant recipients, please be aware that the deadline to make your quarter 4 payment, if applicable, is January 18th if you are not planning to file your tax return by the end of January. 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.

Conference Travel Frugality

18:01 Emily: Now, you mentioned earlier, you had a lot of thoughts on conference travel. So how have you employed frugality in that area?

18:07 Alyce: Yeah, so conferences, you know, are the bane of grad students’ financial existence, because they are so expensive. So the first thing I would recommend is looking to funding sources. And these aren’t always going to be available, but you really never know. So ask your department, you know, hopefully you’re aware by that point if they have options, but just ask them. Sometimes they’ll pay your registration fee at the very minimum. Sometimes you’ll get a travel stipend, whatever it might be. So, you know, certainly look to your department, look to the university. Sometimes, I know my university one time during your PhD, you could apply for a travel grant and it was $750. You can only use it once. But it was nice because it paid for, you know, a bulk of one of the trips that I had to make. So starting there, and then look to the conference itself.

19:03 Alyce: Sometimes they give away money to graduate students. I know one that I was attending every year, all you had to do was just check off when you registered that you were interested in graduate student funding. And when you got to the conference, you got a check for $150. Sometimes certain like caucuses, I don’t know how every you know, conference in every field runs, but at least at the communication conferences, there were different caucuses. And sometimes they would offer travel funding of, you know, $75, $150, whatever they had available. So start with those funding sources. The next thing that I would recommend, and I will preach this until the ends of the earth, do not use the conference recommended hotel or the conference recommended airline, if you do have to travel by air, as we so often do. They almost always are more expensive.

20:02 Alyce: You know, you’ve got think, when a conference is picking a hotel, they’re picking something very nice that can accommodate a lot of people, has all the conference rooms, things like that. So the room and prices are going to be more expensive. So I always, when I went to conferences, stayed no more than a quarter mile, something I could easily walk to, down the street. There’s always going to be a cheaper hotel available for you to stay at. I even did the math once. It was cheaper, even if it was a little bit further to even like take an Uber back and forth every day than it was to stay at the conference hotel. So that’s a great option that you can save money. Same thing with airlines. You know, they give you the group code, certainly check it, but also, you know, use Orbitz, use Southwest, because they’re not linked to Orbitz, and they often have really cheap prices. You know, and find the best deal. There’s no reason that you have to go with Delta airlines because that’s what the conference said you should use. If there’s a better deal on a flight, then take it. There’s no reason you have to spend more money.

Have a Conference Buddy

21:13 Emily: That’s all great stuff. And another thing you mentioned to me in our prep for this interview was to have a conference buddy. So what does that mean?

21:21 Alyce: Yeah. And I also recommend having a conference buddy. So this was somebody in my department that I traveled with. I knew we were going to be attending the same conferences most of the time. So what we would do is we would book our flights together. We would always plan to share a hotel room. It was somebody I trusted and I knew, you know, wasn’t a random stranger that’s going to steal my stuff in the middle of the night. And then we would, you know, split the cost of transportation to and from the airport, you know, we’d share the Uber. We would split the cost of parking, whatever it was, pretty much everything was, you know, minus the flight because obviously we had to pay for our own tickets, but it was all cut in half. And that, you know, saved us so much money. There was one conference we went to, we were actually able to drive to, me and my conference buddy, we actually made money on the conference based on the amount of funding that we were able to get from the conference itself and us splitting our costs.

22:20 Alyce: I think we both ended up netting like $30 each. So definitely find a conference buddy as soon as you can, somebody who you are connected with in your department or even outside of your department, if you make a friend in another school. It’s really a great way to save some money. I will also add some kind of silly ways to save money at conferences. So one, book a hotel that offers free breakfast, because that covers one of your meals. One of the biggest expenses of conferences is you’ve got to buy all of your meals while you’re there. So get your free breakfast every day. That’s one less meal that you have to pay for. And it’s a meal you’re probably never going to sit down and eat with anybody anyway. And if, you know, that free breakfast, sometimes I would, you know, take a couple extra apples or something and put them in my bag and I would bring like single serve peanut butters or something.

23:20 Alyce: And then that covered me for a lunch as well that I didn’t have to pay for. Because again, you know, you’re going from you know, panel to panel. You don’t always have time to go sit and eat a lunch anyway. So, you know, instead of spending, you know, the $10 on a small sandwich, you know, eat the stuff from the free breakfast or pack protein bars. Pack things that you can have just as kind of a go-to, because you may have to, you know, go out to eat for dinners, for networking purposes. You’re going to have to spend money for meals at conferences, but cut it where you can. Also, attend the free receptions. There’s almost always food. It’s a great opportunity for networking, but there’s always going to be food at these things or, you know, our conferences, a lot of the bigger schools would host party receptions. You obviously shouldn’t go there and just like stuff your face and leave. Like, integrate it into a networking opportunity, but there’s food. And honestly that’s, you know, a big expense at conferences that I initially found when I first started going to them was how much money I was wasting on just eating out every meal. And so I just started packing my own food as much as I could and just found opportunities to cut those costs.

24:40 Emily: Those are great suggestions. And I love the way you kind of, the outline you just gave of, you know, finding funding at your university level, finding funding at the conference level. How can you frugalize these larger expenses within the conference? How do you frugalize the smaller expenses within the conference? So clearly again, you’re sort of interrogating every step of that process and finding how to optimize it. So I just love that. Is there anything else you want to add about frugal strategies used during grad at school?

Ask for Practical Gifts

25:08 Alyce: The other thing I think I would add is just to, when you know there are going to be things that you need to have, you know, you need to buy textbooks, you need, you know, those flights, use holidays and birthdays and things like that strategically. You know, you probably really don’t need, you know, a new bag or a new pair of shoes or whatever it is that you might normally ask for for Christmas, but you may need, you know, an American airlines gift card to help you get you to that conference. You know, your life’s not going to be less fulfilled without that pair of shoes, but your life might be a heck of a lot easier if you don’t have to pay hundreds of dollars for a flight. You know, if you’re going to have to buy textbooks, ask for an Amazon gift card because you’re going to be able to buy those books and share them. I can’t tell you how many times, you know, again, my conference buddy, you know, I had sort of class buddies too. We would just buy as a class one copy of the required textbook, and we would just pass it around and have designated days that we used it. You know, there are just, if you really interrogate, like I like that word, you keep using, interrogate your expenses, there are ways to find those cuts.

26:26 Emily: Yeah. And another thing that you’ve brought up a couple times, you know, the conference buddy, now the class and textbook buddies and so forth, like use your fellow graduate students as a resource. You know, they’re in the same spot as you, more or less, right?

26:37 Alyce: They’re just as broke.

26:39 Emily: Yeah. So whatever you can share, whatever tips you can, you know, share with them, maybe you’ve taught one of them how to coupon and they’re going to teach you how to do this other thing. You know, you all are kind of a wealth of resources, a wealth of knowledge, in terms of how to manage your finances during graduate school. And again, you’re coming on the podcast, you’re sharing with everybody. That’s awesome.

Increasing Your Income

26:57 Emily: Okay. Let’s move on to increasing income then. So what strategies did you use to bring in extra income, increase your stipend, during grad school?

27:07 Alyce: Yeah, so you know, I fully recognize, you know, while we’re in the thick of it, you know, sort of that nine-month span where you’re TAing or maybe you’re an RA, it’s hard to find those opportunities to increase income. So, I would try and always make the best of those three months that I did have off. So I really did a variety of things. So the one that was probably the most lucrative was I would grade AP exams. So they’re looking for subject matter experts in, you know, these AP subjects. And, you know, I did communication, so there’s not an AP communication course, but there is a course called seminar, which is basically they learn how to evaluate and write arguments and, you know, conduct research, you know, write a research paper. And so they needed people to grade those.

28:00 Alyce: So that was something I did for the last know, six years or so. And it was one week online. So I could work from my home and, you know, you just read paper after paper and you score them. It’s certainly not fun, but I can tell you, it pays like $26 an hour. And so, one week of work was able to cover me for almost all of my entire expenses for the summer where I had no income coming in. So that’s a really great opportunity. I think you go to readap.com I think is the website for it. Or if you just Google AP scoring opportunities, it should come up.

28:44 Emily: Yeah. That’s an amazing suggestion. I think it would be applicable, most graduate students are probably going to find some kind of AP exam that they’re qualified to grade.

28:52 Alyce: I mean, they love graduate students because we’re available. You know, they’re often recruiting college professors or high school teachers, but that’s, you know, it’s a little bit harder for them. But grad students, we’re readily available and we’re desperate for money. So they know they can squeeze a lot of hours out of us. So like I said, it’s not a fun week, but you know, you can knock it out and again, you can pay for most of your expenses. And, you know, as I did it more and more, I started to get promoted to leadership positions on it. So I was able to get more hours and make more money. So it is something you can stick with long-term. Unfortunately, now that I work full-time, I won’t be able to do it anymore. But it was a great opportunity.

Balancing Summer Research and Side Hustles

29:36 Emily: Okay. So you mentioned the one week of AP grading can cover your expenses, more or less, for the whole summer. How were you spending your summers, since you didn’t have a stipend during that time? Were you trying to focus on research, or did you get other jobs aside from this AP one?

29:51 Alyce: I would do a little bit of both. So I didn’t want to spend, you know, the entire summer working all of the time. You know, I think that’s, you know, such an important time for graduate students to recharge, but I also recognize this is an opportunity for me to make a little bit of extra money when I’m not as busy. You know, you’re not going to do research for, you know, 24 hours a day, every day during the summer. You’re just not. So you know, where I could, I tried to find, you know, those additional opportunities.

30:23 Emily: Yeah. So what were some things that you did during your summers that you would recommend to someone else, like the AP grading? And then also, did you do anything during the academic year?

30:32 Alyce: Yeah, so one summer, so it was about six weeks because obviously, you know, our summer is a little bit longer than the regular school year summer. I went and substitute taught at a middle school in my town, you know, especially in COVID right now. They’re really desperate for substitute teachers. And I actually really liked it because it was such an easy job because most of the time, you know, as a substitute teacher, you’re putting on a movie or you’re giving them a worksheet to do. And so I brought my laptop and I would do work, I would do my research. And so I think, you know, I probably would’ve even considered doing that during the year if I was able to, just because it didn’t require a ton of like cognitive effort on my part. And I still was able to kind of dedicate some time. Just make sure you check with your university first.

31:26 Alyce: They usually have a policy about working any kind of supplemental income as a graduate student. You do usually have to get it approved. So make sure you check with those policies. I know some people got burned by that. So I did that. I think those were the two main ones that I did. I also would just do like little things here and there, especially during the academic year, like I would take online surveys. You know, we know how much we pay people for research. And so I would, you know, find opportunities to take those. My fiancé and I ate many a free dinner based on these online surveys and just, you know, getting the free gift cards from those things of that nature. So those were kind of the main ones that I did. I knew some people who, you know, when grocery stores have to change over all of their price tags, there was somebody I knew who would go on Saturday night, they work from like 11:00 PM to 7:00 AM, just one night a week, changing over all of the price tags. And that was the only extra job that they had, but it was enough to kind of, you know, pay for, you know, maybe one week pays for your cell phone bill, the next week pays for your electric bill. You know, when you’re accumulating 50, 60, $70 for that one night, you know, you can then apply it to a specific thing.

Financial Accomplishments During Grad School

35:13 Emily: So we’ve talked about a ton of different strategies. But I want to know for your financial picture, what did this all amount to? You know, how much did, if you wanna express that as net worth, you want to express that as not going into debt or, you know, what did you sort of accomplish financially using these strategies over the course of graduate school?

35:32 Alyce: Yeah, so you know, I’m happy to say that because of that frugality and because I was so strategic with, you know, the money that I saved, you know, if we want to quantify this, I was able to pay off all of my student loans before I ever graduated. So I’m going to graduate completely debt-free. And I didn’t have an assistantship for my master’s. I didn’t know that a thing, if anybody’s listening to this as a potential master’s student, look into those funding options, I didn’t know that was even a thing. So I was able to graduate or will graduate completely debt-free. My fiancé and I were able to buy a house. So we actually just moved into our first house a few months ago, you know, again, before graduating, which was really exciting. And in terms of, you know, if I’m quantifying this on a net worth perspective, you know, I’m sitting pretty well.

36:27 Alyce: You know, probably over $60,000, you know, in investments or in sort of cash assets, not including, you know, obviously any equity we’re building in our house, but you know, I was able to just not have to wait until I graduated and got, you know, quote unquote, a real job to start my financial journey to start building, you know, that down payment towards a house or, you know, start building my retirement income. You know, it’s so, so important. You know, the more we delay our retirement savings, the less opportunity we have to make those grow. And so, you know, not having to delay those things, you know, having that healthy emergency fund, but also being able to, you know, build up investments and, you know, have the down payment for our house, no debt, it’s just, it’s been very, very freeing and liberating. And so, I certainly encourage everybody to, you know, strive to get to that place.

37:31 Emily: I love that. I’m really glad that it amounted to all of that for you. I mean sometimes graduate students need to do everything we’ve talked about out just to break even, right? The stipends are just that, you know, dismal. But I’m really glad that for you, all that effort added up to an actual net worth increase and, you know, paying off the student loans and all the great things you’ve been able to accomplish. It’s amazing. So congratulations! Congratulations also on the job, and the upcoming defense and the house and all these wonderful things that are going on. So where can listeners find you? And I understand that you have written a book.

38:05 Alyce: Yeah. So this was kind of just a little mini passion project that I wrote because I didn’t have enough to do with working full-time and writing a dissertation that I also decided to write a little bit of a book, it’s called Financial Wellness 101: Everything You Wish You Learned in School About Saving Money, Building a Budget, and Growing Wealth as a Young Professional. And I wrote it with the intention of it really just being for those people who are kind of fresh out of college or even out of graduate school who just, you know, don’t have any idea. It’s the first time we’re really managing our money on a large scale. We don’t understand what is a 401(k), what’s a Roth IRA? What do all these letters mean? Do I really need to be saving for retirement? How do I set up a budget?

38:51 Alyce: You know, where am I spending more money than I should be? So it’s a very, you know, no frills, it’s self-published so it’s not fancy, it’s not edited by any extent. But it is available. So users can find, or your listeners can find me on Twitter @Alyce_Viens, and on that, you’ll see the link for, it’ll take you to the ebook version. If that’s something you’re interested in. And I actually set up for your listeners, if they use code GRAD, G R A D, they’ll get $5 off the cost of the book. And I will also email you an additional section that I wrote of the book that’s specifically for graduate students and some of those ways that you can save money with conferences and funding and all kinds of things like that. So it’s sort of an added perk that you would get for free, and it is also available on Amazon if you prefer Amazon.

Best Financial Advice for Another Early-Career PhD

39:52 Emily: Okay. Yeah, we will put all of those links in the show notes, that is a great offer to get that additional chapter or whatever it is. Lovely. Well, Alyce, it was so good to have you on the podcast. I ask all of my guests one final question, which is what is your best financial advice for another early-career PhD? And it could be something that we have touched on already in the interview, or it could be something completely different.

40:15 Alyce: I would say, my piece of advice is to avoid accumulating any additional debt.

40:23 Emily: Yes, very simple and very powerful advice. So that is so great. Thank you so much for coming on the podcast!

40:28 Alyce: Thank you for having me! This was fun.

Outtro

40:35 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? I have collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. If you’ve been enjoying the podcast, here are 3 ways you can help it grow: 1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. 2. Share an episode you found particularly valuable on social media, with a email list-serv, or as a link from your website. 3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and increasing cash flow. I also license pre-recorded workshops on taxes. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

How to Pursue FIRE in Graduate School

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In this episode, Emily shares the first section of a written guide she recently added to the Personal Finance for PhDs Community, titled How to Pursue FIRE in Graduate School. FIRE stands for Financial Independence / Retire Early, and it’s a big movement among personal finance enthusiasts right now. At first, Emily didn’t believe graduate school and the pursuit of FIRE were compatible, but the many interviewees she’s had on the podcast who are pursuing a PhD and FIRE simultaneously changed her mind. In the introduction, Emily introduces FIRE and the general ways people pursue it and lists the four biggest levers a graduate student could pull to pursue FIRE right away.

Links Mentioned in the Episode

Introduction

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 19, and today I’m going to read to you the introduction to a written guide that I recently added to the Personal Finance for PhDs Community, titled How to Pursue FIRE in Graduate School. FIRE stands for Financial Independence / Retire Early, and it’s a big movement among personal finance enthusiasts right now. I have to admit that at first I didn’t think graduate school and the pursuit of FIRE were compatible, but the many interviewees I’ve had on the podcast who are pursuing a PhD and FIRE simultaneously changed my mind. In the introduction, which I’ll read to you momentarily, I introduce FIRE and the general ways people pursue it and list what I think are the four biggest levers a graduate student could pull to pursue FIRE right away.

If you are pursuing FIRE or are interested in it, I’d love to hear from you. Please join the Personal Finance for PhDs Community at PFforPhDs.community right now, today. Once you’re a member, you can do two things:

  1. Read the rest of the guide, which goes into detail about all the financial opportunities graduate students have to pursue FIRE, from increasing their incomes to building assets to mindset work.
  2. Join me and other Community members for a special live discussion and Q&A call on Wednesday, December 15, 2021 at 5:30 PM Pacific Time. We have live calls like this once per month, and this month’s is dedicated to the topic of FIRE. I really want to hear from you. I’m going to continue to expand and edit the guide based on the ideas and experiences of Community members and future podcast interviewees.

In case you’re listening to this after December 2021, no worries. You can still join the Community to read the current incarnation of the guide and chat with us about FIRE in the Forum or the next upcoming monthly call. Again, go to PFforPhDs.community to sign up!

One last note. I reference a bunch of previous podcast episodes in the introduction. All these episodes are linked in the show notes, which you can find linked from PFforPhDs.com/podcast/.
Without further ado, here’s the introduction to How to Pursue FIRE in Graduate School.

How to Pursue FIRE in Graduate School: Introduction

I was in graduate school when the current incarnation of the FIRE movement started picking up steam. At that time, the acronym FIRE (financial independence / retire early) was not yet in use, and people focused mostly on the “retire early” goal—not retiring at 55 like some Boomers had, but retiring by 30 or 40. Pete Adeney of Mr. Money Mustache was one of the leading voices, having achieved early retirement at age 30 by combining a well-paid engineering career with rigorous frugality.

At first, I found the idea of early retirement to be largely unappealing. The chief reason was that graduate school was supposed to be the foundation for a long, meaningful, fulfilling career… Why would I plan to retire early from that already? Why would any PhD (a group I was growing more interested in creating content for)? I couldn’t get behind that idea.

Thankfully, my disinterest in FIRE in my mid-20s didn’t diminish my passion for personal finance writ large, and I still invested, practiced frugality, and attempted to increase my income to the best of my ability and knowledge at that time.

My view is different now, a decade later. While I still don’t consider myself part of the FIRE movement, I do see its appeal, even for PhDs.

1) I’ve changed: I’m ten years older. I have children now. I’ve switched careers, and I’m a business owner. I earn and spend much more money than I did during graduate school. My and my husband’s parents have retired (at a traditional age). I better understand why having the financial ability to downshift, change, or stop active work before age 70 is attractive.

2) The FIRE movement has changed: There’s a greater emphasis on financial independence rather than early retirement. The featured voices are more diverse. There are numerous well-documented paths to achieve FIRE, not just the earn-a-lot/spend-very-little model from Mr. Money Mustache.

3) Most importantly, I’ve met numerous graduate students and PhDs who do identify as part of the FIRE movement. They don’t see a contradiction between pursuing a PhD-type career and financial independence simultaneously. I’ve learned from their philosophies and methods. The Personal Finance for PhDs Podcast interviews I’ve published that touch on FIRE have been with:

In this guide, I won’t attempt to convince you to pursue FIRE—because I haven’t fully convinced myself. I will show you how you can pursue FIRE as a funded PhD student. We will explore multiple potential strategies, and I am confident that you will be able to adopt at least one of them.

How you pursue FIRE during graduate school will look different than how you pursue it when you have a post-PhD “Real Job,” but you can get started right here, right now.

What is FIRE?

FIRE stands for Financial Independence / Retire Early. FIRE is a movement within the broader personal finance community that has gained popularity in the last decade, roughly coinciding with the long bull stock market post-Great Recession.

Being financially independent (FI) means that you no longer need to work for an income to maintain your lifestyle and that you expect to maintain this status until your death. Once you cease working to generate an income, you have retired. The early part of the name refers to achieving financial independence earlier than the typical retirement age of 70-ish. Some superstars in this movement reach FI by age 30, while others set their sights on age 40 or 50.

Broadly speaking, there are three common ways to achieve FIRE, and some people use a combination:

  1. Purchase a portfolio of paper assets (e.g., stocks and bonds) from which you can draw an income
  2. Buy or build an asset or set of assets that generate income, such as a business or real estate portfolio
  3. Qualify for a pension, e.g., after 20 years of military service

I’m going to omit the option of a pension from the remainder of my discussion because 1) it’s not common for people in my audience to qualify for one, 2) within the FIRE movement it’s typically combined with another strategy as well, and 3) there are other good resources on pensions specifically.

How you determine that you have achieved FI is beyond the scope of this guide. Our focus is on the start of the journey, the pursuit of FI, and how to do it during graduate school.

However, to give you a rough idea, to know that you are FI you must have a good grasp on how much money it takes to sustain your lifestyle, i.e., how much you spend yearly. For example, FatFIRE is considered a yearly spend of $100,000 or more, while LeanFIRE is considered a yearly spend of $40,000 or less.

If you have a pension or own a business or real estate portfolio, the amount of income it generates should be more than the amount of money you spend for you to be considered FI. With respect to paper assets, a popular rule of thumb based on the Trinity Study is to have a portfolio of twenty-five times your yearly spend. For example, if you want to live on $40,000 per year indefinitely, adjusted for inflation, your portfolio should be valued at $1,000,000 or more.

How do you pursue FIRE?

How exactly you will pursue FIRE depends a great deal on your personality, career goals, and lifestyle desires.

At some point, you must create or purchase assets of the type I listed above. While you can start on that during grad school, creating or purchasing assets does not have to be the first step on your journey to FIRE, depending on the rest of your financial picture. If you are in debt, your first step may be to repay debt. If you have no savings or little savings, your first step might be to save up cash. If your income is low or unreliable, your first step might be to increase your income so that you don’t rack up any debt.

I recommend following the eight-step Financial Framework that I developed for use by graduate students and early-career PhDs. It will help you decide which financial goal is best to pursue at any given stage in your financial journey. You can find this Framework detailed in several resources inside the Personal Finance for PhDs Community, including the ebook The Wealthy PhD and the recorded workshop Optimized Financial Goal-Setting for Early-Career PhDs.

In brief, the Framework Steps are to:

  1. Save a starter emergency fund
  2. Pay off all high-priority debt
  3. Prepare for irregular expenses
  4. Invest a minimum percent of your income for retirement
  5. Pay off all medium-priority debt
  6. Save a full emergency fund
  7. Invest more for retirement and/or other goals
  8. Pay off all low-priority debt

The Framework is fully compatible with the pursuit of FIRE, though a FIRE adherent will likely move through the Framework steps faster than the average and may pursue additional financial goals such as purchasing real estate.

There are two less tangible but no less important ways that I recommend that you pursue FIRE starting in graduate school, both of which involve your own development.

1) Your career. I am confident that one of the major reasons you entered graduate school was for career development. Using your time in graduate school to set yourself up for a fulfilling and well-paying career is vital. Do not lose sight of this goal in your pursuit of FIRE. Your future, higher income is going to play a major role in how fast you will achieve FIRE. On the flip side, if a PhD no longer figures into your vision for your future, do not stay in graduate school; jump ship for a higher-paying job.

2) Your mindset and systems. To achieve FIRE, you must have a certain kind of money mindset and well-established systems and habits. You will continually develop these in your pursuit of FIRE. Even if you are unable to increase your net worth much during graduate school, pursuing your career and mindset development now is worthwhile to pay major dividends later.

What makes grad school different?

Your pursuit of FIRE during grad school is likely to look quite different from how you would pursue it if you were not in grad school or how you will pursue it post-PhD.

Generally speaking, PhD students accept a low stipend in exchange for training that—we hope—will qualify them for more lucrative jobs later on. They could be making more money right now in another job, but graduate school is a long-term career investment. Blanket personal finance advice to switch jobs or negotiate to increase your income does not apply well for graduate students (although there are many ways to increase your income, which I cover later in this guide).

In non-pandemic times, most graduate students are required to live in close proximity to the university they attend, although some may be permitted to finish their degrees remotely. For the former group, geographic arbitrage is not available. Geographic arbitrage, a common FIRE strategy, is when you choose to live in a low cost-of-living area while maintaining an income more suited for a high cost-of-living area so that you can boost your savings rate.

Finally, graduate school is a major time commitment. Few PhD students consistently cap their work weeks at 40 hours. You may have less time for outside income-increasing or asset-creating pursuits during grad school in comparison with other times of life.

My Personal Favorite Steps

In the second half of this guide, I will explore numerous possible strategies to further your FIRE journey during grad school. Some of them are what I call “big levers,” which are strategies that are virtually guaranteed to greatly increase your available cash flow and are possibly unusual choices for a graduate student. This increased cash flow can then be saved, invested, or used to repay debt. In your pursuit of FIRE during grad school, I think it will be very helpful for your psychology to pull one of these big levers if you’re able to. It will be clear to you that you are serious about your commitment to FIRE, which will help keep you on the path.

I want to give you a quick preview here as to what I believe these big levers are before we go through all the strategies in much more detail.

Big lever #1 is to choose a graduate program that provides a 12-month stipend that is well above the local living wage. If you’re a prospective graduate student, simply don’t consider any offers that fail to meet that bar, even if they are good fit for you otherwise.

Big lever #2 is to commit to applying for awards like it’s your part-time job—everything from multi-year, full-stipend fellowships to small poster competitions.

Big lever #3 is to radically reduce or eliminate your housing expense. Two potential ways you can achieve that are to house hack or serve as a resident advisor.

Big lever #4 is to start a side business with the potential, at least, to pay you a high hourly rate. You’re most likely to generate a high pay rate by employing the skills and knowledge you’ve developed during your graduate program.

If you can’t pull one of these big levers in your remaining time in graduate school, that’s fine. Put in place one of the smaller strategies from this guide, and if possible keep stacking those up throughout your time in graduate school.

Personally, even though I hadn’t committed to FIRE when I was a graduate student, I was putting a lot of effort into my personal finances. I didn’t know about these big levers or most of the other strategies I’ll discuss in the second half of the guide. I pulled just one big lever by accident, which was to attend Duke for my PhD in biomedical engineering. I wasn’t at all considering the stipend when I made that decision, but I realized later what a boon it was. My stipend was approximately 30% higher than the local living wage, which meant that with careful budgeting I could sustain a decent savings rate.

Over our seven years of PhD training, my husband and I increased our combined net worth by over $100,000. You can hear all about how we did that in Season 1 Episode 1 of the Personal Finance for PhDs Podcast. Now, seven years removed from when we defended, I can clearly see that the time value of money continues to honor those early efforts, even though we earn and save much more post-PhD. That money forms the bedrock of our current financial security.

By applying just one of the big levers or a few of the smaller strategies in this guide, I firmly believe that you also will accelerate your progress toward FIRE, even as a graduate student. Many of the people I’ve interviewed on the Personal Finance for PhDs Podcast have far exceeded my own degree of financial success using the strategies I’ll share with you next.

Conclusion

It’s Emily again! That is the end of the introduction to How to Pursue FIRE in Graduate School. If you liked what you heard and want to read about all the strategies and join the live call on Wednesday, December 15, 2021, please join the Personal Finance for PhDs Community at PFforPhDs.community. I look forward to hearing your thoughts!

Outro

Listeners, thank you for joining me for this episode!

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

If you’ve been enjoying the podcast, here are 4 ways you can help it grow:

  1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use.
  2. Share an episode you found particularly valuable on social media, with a email list-serv, or as a link from your website.
  3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license pre-recorded workshops on taxes.
  4. Subscribe to my mailing list at PFforPhDs.com/subscribe/. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs.

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

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 me, Emily Roberts.

This PhD’s Money Mindset from Childhood Has Served Her Well Through Multiple Phases

by

In this episode, Emily interviews Dr. Judy Chan, a PhD and staff member at the University of British Columbia. As a child of immigrants to Canada, Judy learned early on the virtues of hard work, saving, and the value of a dollar. She applied these principles consistently while she earned her PhD, started her business, and became a parent—to great effect.

Links Mentioned in This Episode

Teaser

00:00 Judy: And it was hard. I do feel that I have more advanced knowledge than my average colleague or my friend, and even going to the bank, they didn’t really take me seriously when I asked them questions. Or they assigned a very junior financial advisor to me when I actually knew all the answers myself. But I didn’t have enough money to get more experience. I don’t know. Is it just my money, my net worth, or my look, or my age, but I was never able to talk to someone who’s more experienced. So I had to do a lot of my own learning.

Introduction

00:49 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 9, Episode 5, and today my guest is Dr. Judy Chan, a PhD and staff member at the University of British Columbia. As a child of immigrants to Canada, Judy learned early on the virtues of hard work, saving, and the value of a dollar. She applied these principles consistently while she earned her PhD, started her business, and became a parent—to great effect. We have a special event coming up on Sunday, July 18, 2021! It’s the second installment of my Wealthy PhD Workshop series, and it’s on everyone’s favorite subject: investing! This workshop is for you if you want to learn how to start investing, particularly if you are a grad student or postdoc who is not covered by a workplace-based retirement plan like a 401(k) or 403(b). I will also teach you about passive investing, which is the most effective, least expensive, and most time-efficient manner of investing. Even if you’re not a novice investor, you can use this workshop to double-check that your current investing strategy is appropriate for your goals. Furthermore, we will discuss the relative merits of discount brokerage firms, roboadvisors, and microinvesting platforms. This is going to be a value-packed session, so please join us on July 18th. You can register at PFforPhDs.com/WPhDinvest/. That’s PF for PhDs dot com slash W for Wealthy P H D I N V E S T. By the way, after you register, you’ll be asked if you want to upgrade into a membership in the Personal Finance for PhDs Community. I do recommend this upgrade because you will have access to the recording of the previous workshop in the Wealthy PhD series, among other things. That workshop on financial goals will help you figure out if now is the right time to start investing or whether you should instead be focusing on saving up cash or paying down debt. Again, please go to PFforPhDs.com/WPhDinvest to register for the workshop this coming Sunday.

Book Giveaway Contest

03:19 Emily: Now onto the book giveaway contest! In July 2021 I’m giving away one copy of Get Good with Money: Ten Simple Steps to Becoming Financially Whole by Tiffany ‘The Budgetnista’ Aliche, which is the Personal Finance for PhDs Community Book Club selection for September 2021. Everyone who enters the contest during July will have a chance to win a copy of this book. Over the last year or so, I’ve become quite a fan of Tiffany’s. I am a loyal listener of her podcast, Brown Ambition, which she co-hosts with Mandi Woodruff, and we read one of her self-published books last September in the Book Club. I was thrilled when her first traditionally published book became a runaway bestseller this past spring, and I knew I had to schedule it into the Book Club. I hope you will join us inside the Community in September to follow The Budgetnista’s plan to become financially whole. If you would like to enter the giveaway contest, please rate AND REVIEW this podcast on Apple Podcasts, take a screenshot of your review, and email it to me at emily at PFforPhDs dot com. I’ll choose a winner at the end of July from all the entries. You can find full instructions at PFforPhDs.com/podcast. Without further ado, here’s my interview with Dr. Judy Chan.

Will You Please Introduce Yourself Further?

04:43 Emily: I have joining me on the podcast today, Dr. Judy Chan. She’s a staff member at the University of British Columbia, and she is going to kind of tell us about her life through a financial lens. So we’re going to start with her childhood, we’re going to go all the way up to now. It’s a real pleasure for me to speak with Judy today because, you know, I interview a lot of grad students and recent PhDs on the podcast, and I love it, but I also love getting to hear from people who are more than a few years removed from that because they have a perspective on, you know, the post-PhD stages as well. So I’m really happy to welcome Judy to the podcast. Judy, will you please introduce yourself a little bit further for the audience?

05:20 Judy: So my name is Judy. I am a staff member at my university, UBC, and I have a side business and I am also a busy mom of two kids. Parents around in the city, so yes, busy, and that’s me.

05:38 Emily: Yeah. Great. Well, we’re going to hear your kind of whole life story coming up and we’re going to insert some financial advice for anyone, you know, coming up on that stage as we go through. So Judy, as everyone in therapy will do, let’s start with your childhood. You know, tell us about your childhood and how it, you know, helped you develop a money mindset.

06:00 Judy: I think I grew up in a very hardworking household. My dad was a restaurant owner back in Hong Kong and I remember him. We would hardly see him. He worked 18 hours a day. I remember him sleeping in the back storage area. But he worked really hard. And we didn’t see him. He doesn’t take days off. I remember we are the only business that opened on Chinese New Year day in the whole entire street. We can go in the middle of the road and play. So that’s how I grew up. I remember not spending any time off meaning that I was actually helping early in the restaurant throughout the Chinese New Year.

Childhood Memories and Life Lessons in Canada

06:45 Emily: Yeah. Tell us about what happened upon your parents immigrating to Canada.

06:49 Judy: I think I also learned big lessons because we are very fortunate that growing up, like we were able to move to Canada in a pretty good, solid financial stage. I remember we got a house. In Hong Kong, we lived in apartments, so we got a house here. Everything was good. My parents, my dad was telling us that he’s retired now. So looking back, it was like he worked really, really hard for 15, 20 years, and then he was able to enjoy his retirement in Canada. He also opened a restaurant for a very short amount of time. We helped out. But it was all very good and fun memories. It’s hardworking, but it was a really good memory for us. Every time when I see people who, other people who also grew up in the restaurant, I think we have some shared memory there.

07:41 Emily: I see. However, you did not take that route in your own life. So I’m wondering, you know, looking back on your childhood, I’m glad you have such positive memories, but what have you taken from that about how, you know, you’re raising your own children?

07:56 Judy: Raising my own children, we just have to work really hard and be very sensitive to money. I remember back then getting wholesale, on average, is actually more expensive than trying to get your cans of pops from the super market, from the big retail supermarket, where the retail price is lower than the wholesale price. So my dad would take us to the big supermarket and we would be loading, like hand carry, trays and trays of pops and juice to bring it back to the restaurant. So my dad got us helping all the time and he would tell us, this is how much we are buying. This is how much we are selling, and this is the price difference. And this is how we mark up, or he doesn’t say it, he just said, look, this is how people do business.

08:49 Judy: And people might pay $10 for a burger, but it may only cost us a dollar. But if we can find ways to cut the cost down to 80 cents, that’s an extra 20 cents for us, for the family. So when we go out, my kids are very lucky. They grew up, I think they are in a very privileged space, but we will continue to remind them that things that we get, there’s a huge markup out there. And we may be able to make it on our own, or like clothings or other things, at a lower cost. So telling them the value of the product that we are getting every day.

09:31 Emily: Yeah. So, it sounds like you had some real, you know, organic lessons around cost and value and the value of the dollar and what, you know, what you can add to the situation because you grew up in that entrepreneurial family, and that’s also something that you’re instilling in your children.

Funding During Grad School

09:47 Emily: So let’s move on to your university days. You were at UBC for undergrad and grad school. Tell us about your funding situation during grad school.

09:56 Judy: Oh, grad school was amazing. I didn’t know that there’s so much funding available for grad students. There’s scholarship and fellowship and TA ship. There’s also a lots of smaller scholarship that I never realized. I think in the way, undergraduate in order to get scholarship and fellowship it’s very competitive. My experience is that grad school is so much easier. And so there’s funding and scholarship everywhere, just apply to them and start saving. So again, in my situation, I was lucky enough that I started as early as six years old, I was able to continue to see the numbers in my bank book, bank account, grow. But I do feel that for most grad students that, hopefully, you will get enough fellowship and scholarship for your basic needs. And there are other source of income around campus. Like I work at UBC now. So I see there’s actually a lots of employment opportunities out there and use them to start building your own wealth, your own saving. Those are extra income that you don’t need now. The basics should be covered by your fellowship, scholarship, and the extra money should go towards the savings, if possible.

11:24 Emily: Yeah, I totally agree that probably there’s going to be a lot of work in the life of a graduate student. You know, there’s going to be your work and your dissertation. There may be an assistantship that you’re performing. Hopefully you’re applying for fellowships and winning some of them on top of that. Maybe you have a side job. There’s a lot of different opportunities. Now, some of those opportunities might be restricted by the, you know, the rules of where you’re living. So one, you know, in the U.S., international students, they’re not going to be allowed to have those side jobs, right? It’s only the, you know, 20 hours per week on campus that they’ve been granted. That’s it. Another thing would be like, if your university, or rather your department, restricts outside work in some manner. So you of course have to check into your, you know, specific situation there. But yes, there are a lot of opportunities in theory for graduate students. I also want to ask you, so did you continue to live with your parents during graduate school, or did you get your own place?

12:16 Judy: I continue to live with my parents.

12:19 Emily: So I ask this because I know that Vancouver is an incredibly high cost-of-living city, and that a grad student stipend may not be enough to support someone if they are living independently. And so that’s a real boon to your finances that you stayed in the same city, I’m sure it was partially by design that you did that. Yes. And you had that opportunity. So that’s wonderful. So you were able to work and save and, you know, live with your parents and yeah. Any advice that you have for a current graduate student or an entering graduate student aside from just apply, apply, apply?

12:56 Judy: I also worked really hard. Like I did my research during the daytime, and then I definitely carved out time to do my teaching assistantship, of the fellowship. There are times that I was doing more hours than what my department allowed. But I did work six days a week, seven to seven sometimes or later into the evening. And I was very disciplined. Any money that I earned on the side, I would spend it, you know, let’s go out for a drink, but they would go straight into my savings account.

Side Business as a Franchisee

13:34 Emily: I also understand that, you know, you mentioned during your college years, you were doing a lot of tutoring as a side job, but you also started a business during graduate school as a tutor. Can you tell us about that and why you decided to take that on?

13:46 Judy: Everything is luck, but then it’s also an opportunity. Like I was doing a lot of tutoring, and I noticed there’s a gap and there’s something that is not available here. And a friend introduced me to a franchise, and I think my friend actually asked me, wanted me, was asking me to be a manager to help him out. But I looked at the franchise, I love it. I like it. I really, I really felt the gap that I noticed myself. So I started a franchise, and at that time with my boyfriend then, he always wanted his own business. It doesn’t matter what it is. That boyfriend is now my husband. So, it worked out quite well. And to be honest, now that I look back, I take risks, but it’s all very calculated risk. Running a tutoring center has minimal cost. There’s no inventory. You just need to rent a space, very minimal decoration and renovation. So, I started a tutoring center when I was in the middle of my PhD.

15:00 Emily: Wow. And, you know, you said that a friend initially approached you about this opportunity. Was that a friend who was also in grad school or somebody from another, oh, wow. Okay. So, did he also have a tutoring center locally?

15:12 Judy: So he started, he looked into the franchise and then he started, he became a franchisee. So, then I asked him, well, how can I be one too? So he was also a grad student at that time.

15:27 Emily: Wow. This is a fascinating idea. I’ve never thought about people becoming franchisees during graduate school, except I’m now remembering that I actually knew someone who did that in a different business. So when I was in graduate school, I was friends with someone who was a franchisee for PhD Posters. I don’t know if they’re still in existence, but they had multiple locations around the U.S. And it’s a poster printing service. And so it wouldn’t be, you know, it would be grad students usually affiliated with the university and they would, you know, drop off posters that people ordered to the various lab spaces. And anyway, it seemed like a great kind of business model for a grad student wanting to run a side business. And it sounds like your business was also, you know, in a similar way, a little bit of overhead for the space, but I’m imagining you paid contractors, right? To do the tutoring. So that’s not any, you know, serious payroll costs. Yeah. Interesting.

Investing and Self-Learning Personal Finance

16:17 Emily: Okay. So when, you know, you’re getting to the end of graduate school, it sounds like you had a healthy savings account at that point. Do you want to tell us, you know, what your net worth was? Or were you doing any, like investing, or was it strictly just cash savings?

16:31 Judy: It was, oh, whoa. I started looking into mutual funds. Someone introduced me to the idea of mutual funds. My dad did a lot of stock trading. So I understand the buy low sell high idea. But he only knows about the trademark that’s in Hong Kong. He has no idea how the Canadian or the American system work. So I wasn’t able to get any support from him. Like, he doesn’t understand the system. And he’s, I don’t know, he doesn’t share much about how he managed his finances. So I had to learn everything on my own. And it was hard. I think, I do feel that I have more advanced knowledge than my average colleague or my friend, and even going to the bank, they didn’t really take me seriously when I asked them questions.

17:23 Judy: Or they assigned a very junior financial advisor to me when I actually knew all the answers myself. But I didn’t have enough money to get like more experience. I don’t know if it’s just my money, my net worth, or my look, or my age, but I was never able to talk to someone who’s more experienced. So I had to do a lot of my own learning. But I was lucky during our grad years, one of our technicians in the lab, he’s a very advanced investor. So there were a few of us, we would spend our afternoon tea time. Oh, by the way, I studied food science. So we would spend our ice cream time talking about finance. So there are a few of us who would exchange ideas on what can we do with our money, stocks, mutual funds. But I had to do a lot of my own learning.

18:30 Emily: And so that process did start during graduate school.

18:33 Judy: Yes. Officially start in graduate school. I’ve always been curious and interested about trading, buying stocks, but I just didn’t have enough confidence as a high schooler. I think in high school, I was already keen to know more, but it was, no, I would say I started in undergrad, in college, that I wanted to know more.

18:57 Emily: Yeah. That’s a really kind of interesting combination of like, seeing an example from your parent and getting some of the mindset of the importance of investing from your parent, yet not being able to receive the practical help because of being in a different context. I hadn’t heard of that before, but yeah. So it’s actually for you maybe a little bit the best of both worlds, because you got to be inspired by your parents, but still had to do all the legwork on your own to figure it out. Which of course means you really internalize what you’re learning.

19:25 Judy: I also learned how to do my own income tax when I was in high school. I had to help my parents because English is not their first language. My parents actually relied on me to look for an accountant. And I am someone who loves numbers and money. And so actually read into personal income tax when I was in high school. And so yeah, I had to do all that education on my own. So till today I still do my own income tax.

19:52 Emily: Yeah. They certainly, you were forced to grow up, and it’s benefited you. Right?

19:57 Judy: Thank you. Yes.

Commercial

20:00 Emily: Emily here for a brief interlude! This announcement is for prospective and first-year graduate students. My colleague, Dr. Toyin Alli of The Academic Society, offers a fantastic course just for you called Grad School Prep. The course teaches you Toyin’s 4-step Gradboss Method, which is to uncover grad school secrets, transform your mindset, uplevel your productivity, and master time management. I contributed a very comprehensive webinar to the course, titled “Set Yourself Up for Financial Success in Graduate School.” It explores the financial norms of grad school and the financial secrets of grad school. I also give you a plan for what to focus on in your finances in each season of the year that you apply to and into your first year of grad school. If this all sounds great to you, please register at theacademicsociety.com/emily for Toyin’s free masterclass on what to expect in your first semester of grad school and the three big mistakes that keep grad students stuck in a cycle of anxiety, overwhelm, and procrastination. You’ll also learn more about how to join Grad School Prep if you’d like to go a step further. Again, that’s the academic society dot com slash e m i l y for my affiliate link for the course. Now back to our interview.

Finances Post-PhD: Real Estate Advenures

21:27 Emily: Okay. Let’s talk about the post-PhD phase. But we’re not going to quite get to kids yet. So let’s talk about your finances, you know, after you finished grad school.

21:37 Judy: Yes. So it was time to get married. Looking back, my boyfriend then, my husband now, he said I was crazy. Because we just started a new business. We were still very young, and before we got married, because we were in a very stable relationship, we knew we were going to get married. It’s just a matter of Judy finishing her PhD. Everything was on hold until I was able to finish my PhD, and my choice.

22:06 Emily: I think that’s a common story.

22:09 Judy : And then sometime around that, after the business, before my PhD, before we got married, I said, “Let’s get an apartment. We need to get into the real estate market.” The real estate market in Vancouver has been crazy for the last 15, 20 years. It’s been always up with a little dip, a little dip, but it’s always up. So I said let’s go buy our first apartment. So we got our first apartment, and one of my criteria is we need to have a tenant in the apartment. It will be a bonus if there’s an existing tenant in the apartment. We would just carry over the rental lease. So we did that before my PhD was done, before we got married.

22:58 Emily: Wow. So I’ve learned that this, this term is house hacking. Buy a property, live in it with your tenant. And whether that is, you know, in an apartment where you’re sort of, it’s a roommate situation. That could also be like a multi-family if you went that route. But yeah, really glad to hear that you used that strategy. It’s one I’m very excited about, learning more about this spring. We did a focus on, well, I’m not sure when this will be published, so it’s either in the past or upcoming, but in March, 2021, we are reading The House Hacking Strategy in our book club, inside the Personal Finance for PhDs Community. So if that hasn’t happened yet, listeners check that out if this strategy interests you. I’d like to know some of the numbers on that. Like how much did having a tenant there help you out? You know, was it worthwhile to sacrifice, you know, the privacy and so forth?

23:47 Judy: Yes!

23:48 Emily: And how many years did you do that for?

23:50 Judy: So we had the tenant for less than a year, and then we got married. So we moved into, we asked the tenant to leave because we need to get into, that’s our place. So that’s when I officially moved out from my, our parents, same for him. He was living with his parents. And then, so we got married, I finished my PhD. Finished PhD, got married, and you know, all those orders are important in Chinese culture. So, and then I was pregnant. And then when I was pregnant, I was in the elevator in the apartment, and I go, no, I don’t want my kids to grow up in an apartment. I want my kids to grow in a house. You know, this is why we come to North America. We want to live in a house. And then I did like very quick, it wasn’t too hard to find out that we can actually afford a house. If we rent out the basement, that fits into what you just told us now, the house hacking, because the tenant will basically be able to pay for the difference that we have to pay in our mortgage. That’s it? Why not? Right? We got to sell our apartment, get a bigger house. The rental that we can get from our basement will pay for the difference. So it was a very logical change or purchase for us, for me.

From House Hacking to House Upgrading

25:14 Emily: Yeah. It enabled you to upgrade your housing situation, get more space and so forth without having the full, full burden of the cost solely on your incomes. And so how long did you stay in that arrangement?

25:26 Judy: We stayed in that arrangement for about four years. That was after my second kid was born. And, again, I’m so lucky. I have a girl and a son. A girl and a boy. And then at that time I had that illusion, because I came to Vancouver, Canada when I was 14 and my parents put us in the basement. I was happy. Like my sister and I, we were just happy to be in the basement. So I had that illusion that I can put my kids in the basement. So we can ask our tenant to leave. They can go into the basement. But I forgot that in between five years old and 12 years old, I cannot put them in the basement. So we, at that time in the main floor, we had two bedrooms. So, we really need a third bedroom, because you know, two kids. So, and then we were really lucky again. We were looking for, it was about time to upgrade, oh, by the way, my money advice, any extra money we have, we put it into our mortgage. So, when I shop for mortgage, I really look for a very flexible repayment method. So any extra money goes in, we actually, every month we pay more than we need to. And then at the end of the year, we also put all the savings into the house.

26:51 Emily: That’s on top of investing though. Right? Because you’re still, were you doing any like retirement stuff through your work?

26:57 Judy: Yes, yes, yes, yes, yes. Retirement stuff. Take advantage of the retirement pension plan at work and then putting any extra money into the mortgage. So we were able to, four years into the house, we were able to upgrade to a bigger house.

27:17 Emily: So that strategy, it sounds like is because you knew that you would be not in that house for decades, you knew you’d be changing. And so you get the mortgage paid down. So you have a lot of equity to go into your next property. Is that the idea?

27:29 Judy: No, no. We didn’t know that. Like, when I purchased the house with the, I call that a smaller house with the two bedroom in the main floor and two bedroom in the basement, I really thought that my kids would grow up in the basement because I enjoyed it as a teenager, but I forgot about that “in the middle” time. And so, when it was time, when I needed to have two bedrooms, one bedroom for my son and one for my daughter, I felt that we need, to upgrade the house. And having so much of the mortgage that’s been paid down, helped us upgrade our house.

28:06 Emily: Gotcha.

28:07 Judy: I paid it then, what was the reason, I just don’t want to own that much money. I have extra money, then just pay down the mortgage because everything that I pay then will go straight to the principal, and then I don’t have to pay interest on them.

28:24 Emily: Yeah, absolutely. I’m inquiring about this because, you know, we are in a super low interest rate environment right now.

28:32 Judy: Yes.

28:33 Emily: What was your interest rate at that time?

28:36 Judy: 2.5. It was super low. Yeah. It was super low. Yeah.

28:40 Emily: So this was really about you, as you just said, not being comfortable with holding that much debt and as you know, I’m tracking through your story, this is the first debt that you’ve actually taken out, right?

28:50 Judy: Yeah.

28:50 Emily: Yeah. So you’re just, you’re just a naturally debt-averse person. And this is part of that.

28:58 Judy: But at the same time, it doesn’t matter. Okay. Let’s say just pick a number. 3%. 3% is pretty low. I see where you’re going, why don’t I put the money into the stock market? I have to earn 6% return because I have to pay tax on that return in order for me to earn that 3%. And so to me, and the stock market is known to be volatile. It’s not a guarantee. So on one hand I feel that I am getting that guaranteed 3% saving instead of putting the money in a stock market that I need at least just like rough number. Right. I need at least 6% because I have to pay tax on my, on my earning. And I don’t want to do that calculation. I don’t want to worry about that.

Business Updates and Additional Family Expenses

29:53 Emily: Yeah, no, the guaranteed return on debt repayment is very attractive. I agree. So we’ve talked about, you know, real estate changes. Let’s get an update on your business, you know, from that time period.

30:08 Judy: Business was going well. It was going well, we were happy, word of mouth. We were able to generate the money that we forecast. It was going well. Until the pandemic. I have to admit, pandemic has a huge impact on our finance right now. But it’s okay because I do have a stable job at the university.

30:30 Emily: Yeah. So you have your full-time position. Was your husband’s full-time job the business, or did he have a job in addition to that?

30:35 Judy: No, very soon once we made the decision to go into the franchise, and as we were doing our renovations and as we’re getting the prep work going, he had a full-time job at that time. He felt that he needed to dedicate, and he wanted to. And I said, sure. Because I knew he always wanted to be a business owner, and I was doing my PhD. So it made sense that there’s a dedicated person at the business. So he’s full-time there.

31:06 Emily: Gotcha. And let’s talk then about the addition of the children. And you’ve already mentioned that that’s caused some real estate, you know upheavals, but you know, how else have your finances changed upon having children?

How Have Your Finances Changed Upon Having Children?

31:20 Judy: A lot. A lot. Children are very expensive for financial life. Yeah. It’s like daycare. Daycare is expensive in Canada. You know, every month is one TV, right? Every month is one iPhone, if you have to compare it to material. Also because, in Canada, the illusion is we can get a whole year off, but the whole year off for me also means a significant pay cut, right? Yes. Legally, we can get the time off, and then we will go back to having a job, but there’s a difference in income. So, that was okay. Because I think the business was doing well, and I have enough savings. I never need to worry about that. But I have to say that every month that the childcare, the daycare fee, was hard to swallow in the beginning. Whoa, that’s another iPhone. That’s another TV. So, it’s expensive to have kids.

32:26 Emily: So then what happened with your finances overall? Does that translate to a lower savings rate or, you know, did you change your lifestyle during that period?

32:36 Judy: I think we had to change our saving strategy. Like we just have to put more expenses, and less saving. Yes.

32:45 Emily: Yeah. So I have two children, they’re ages four and two. Of course, pandemic year is a weird year, and we’re not paying for childcare right now, but I am looking forward to my daughter turning five and starting kindergarten. And maybe there’ll be some, you know, before or aftercare, I don’t know, but I’m really looking forward to that state-sponsored childcare that’s coming. I’ll still have to pay for the little one for another, you know, few years, but yeah, it’s a really, really significant bite. And so it’s kind of a, you know, it’s a phase of life, right? When you have to pay for childcare, it’s a phase of life you have to accept. Yeah. Your savings rate is going to be lower than it would have been, but Hey, once the expense goes away, you just can put all that money back into savings and your rate will shoot up.

33:28 Judy: Oh, Emily, I don’t know when that will be, when we can get into that stage. Because when they are four and two is the daycare. When they are five to nine is all the extra curriculum activities. My daughter, she dances. Her first dance dress that she needs for her performance was more expensive than my wedding dress. That’s it. That’s it. That’s expensive.

33:57 Emily: Yeah. I’ve heard that too. Both about expenses with kids, is that, yeah, the daycare is a lot of the beginning, but also just shifts later on to being other things. And then also, you know, the intensity of the parenting is much more like it’s physical when they’re young, but it’s very emotional when they’re older and you just have different kind of roles to play as they age. And how old are your children now?

34:18 Judy: They are 10 and 12.

Financial Advice for First-Time Parents

34:19 Emily: Okay. And so what is your advice for someone, you know, anticipating the birth of their first child or who has young children, you know, financial advice for that person?

34:30 Judy: For kids stuff? I would say, I feel a lot of people, they would like to invest into one thing like a car seat, a stroller. I would say, go ahead, buy that luxurious thing that you really want for your kids. But everything else, get hand-me-downs. Get it from your friend. Because they grow up so fast. They grow up so fast. They don’t need all these fancy little cute dresses. And by the time you actually can fit into the dress, we live in Vancouver. So the summer time we only have three sunny days ever. Like hot sunny days. I mean, I remember we had so many cute little dressed that we really couldn’t use them. So, hand-me-downs. Get hand-me-downs.

35:11 Emily: Yeah. I think we followed your advice for our children. The one big, nice expensive thing that we bought was a Bob stroller. Right. Jogging stroller. And then everything else, we did buy new cribs, but we bought like Ikea, like bottom of the line, like so simple, stripped down Ikea cribs and tons and tons of used clothes. We were so fortunate to be, you know, sort of passed used clothes and then we pass them on to the next family afterwards. That’s exactly it worked. Yeah. Yeah. It’s a wonderful boon, if you can get into a parenting community that does that sort of thing. But yeah, I do think we followed your advice. We picked one thing that we wanted and everything else was just really just as cheap as we could get it.

35:49 Judy: And then the other one advice, well, for me that works really well, is I told my kids that I would pay for their education, for their readings, and everything. Because I think my mom was really frugal to a point that looking back, there are moments I go, mom, you know, you could have spent a little bit more money on my education. Because I think we have PhDs. So we care about education. So I really wanted to let my kids know. I am willing to spend money on things that are important to me. And the thing that is important to me is your education. So they know, they know that they can go into the local bookstore, we call it the bookstore. They can buy almost anything in the bookstore, including toys, you know, the bookstore has so many other gadgets. But they take advantage of it. And I actually allow them to, you know, as a bookstore, we will buy something educational. So I don’t, when it comes to book, I have no limit for my kids. Yes.

36:52 Emily: And is there any other advice that you want to add in at this stage for new parents or parents of littles?

36:59 Judy: The phone is a very attractive thing. You know, it’s just one phone. You have so many toys in there, but stay away from it as much as possible. Get your toys from your friends. Get your free toys from your friends. That costs very little money. And, for me before the pandemic, I’ve been strictly using cash in front of my kids. I carry cash. I really want to show them the exchange of money. But during the pandemic it was a lot harder, but they are older now. I think they understand the money, they have some understanding of money, but before the pandemic, I strictly used cash, especially in front of the kids.

37:44 Emily: Yeah. I think that’s a really good tip. Actually, so I mentioned, my daughter is four, she turned four during the pandemic. And at four we were like, okay, we’re going to start really teaching her about money. Like, what is this concept? You know? But because it was during the pandemic, there was no way that we wanted to handle cash coins, anything. So we did get a toy that, you know, represents money, but it’s something that I feel she’s missing out on a little bit now. And I want to somehow, you know, establish that for her later.

38:11 Judy: Well, four is still young. Right? So you still have a lot of time. There’s no hurry. And yeah. She still has a whole lifetime to learn about money.

Best Financial Advice for Another Early-Career PhD

38:22 Emily: Yes. So Judy, thank you so much for this interview. I loved hearing about kind of your journey and your advice. To wrap up my interviews, I always ask my guests, what is your best financial advice for another early-career PhD? It could something that we haven’t mentioned so far in the interview or something you just want to circle back to and emphasize.

38:40 Judy: You don’t really need to spend money on things that you need to impress other people. You know, just really know what is important to you and what you need. Really understand what you need and what you want, the difference between the two. I mean, I’m not saying that you cannot get the thing you want, but knowing that this purchase is what I need, and this is a purchase that is what I want. And have that differentiation in your head, in your mind. I think that’s already a very good start.

39:11 Emily: Yeah. I think that’s an incredible insight. Especially, to me, I always think about this when it comes to recurring expenses like recurring, fixed expenses. So, you know, we talked about housing a bit earlier. So what in your housing cost is a need, and what is an upgrade to that, a want? And I think it’s important just to keep in mind in case you ever come upon a situation where, you know, you want to cut back, you’ll know, okay, well, you know what, the house actually is bigger than what we needed at this point, or the car, or whatever it is. Like if you differentiate between, okay, well, I could have this, I can afford this, you know, more of a want thing right now, but just to keep in mind. Yeah. There is a way that I can scale this down, you know, should it come to it in the future. Like you said, to differentiate in your mind, I really like that advice. And will you let us know, you know, about your business and you said, you know, it’s a little bit on the skids during the pandemic, give us kind of an update on that and where people can find you if they’re interested in learning more about it?

40:06 Judy: Well, my business is more catered to kids. And so it’s a reading center, we specialize in fostering reading and writing. We have lots of books. Good levels from the state. And so it’s called Reading Town, it’s a franchise and, and I love reading with kids. And we have programs that are good from Kindergarten all the way to grade 12. Lots of readings. Yes.

40:38 Emily: Yeah. Thank you so much for letting me know about that. And thank you so much for joining me today.

40:41 Judy: Thank you, Emily.

Outtro

40:43 Emily: Listeners, thank you for joining me for this episode! pfforphds.com/podcast/ is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes’ show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest. I’d love for you to check it out and get more involved! If you’ve been enjoying the podcast, here are 4 ways you can help it grow: 1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me! 2. Share an episode you found particularly valuable on social media, with a email list-serv, or as a link from your website. 3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license pre-recorded workshops on taxes. 4. Subscribe to my mailing list at PFforPhDs.com/subscribe/. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

This PhD Got a Late Start Financially But Is on Track to Retire Early

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In this episode, Emily interview Dr. Sean Sanders, Director and Senior Editor for Custom Publishing for the journal Science and Program Director for Outreach. Sean came to the US for a postdoc position with little savings. Living in the DC area on a postdoc salary was financially challenging; he didn’t start to make real progress with his finances until he left his postdoc for an industry job, which more than doubled his salary. Sean and Emily discuss the strategies he has used to build wealth in the last decade, from moving to reduce housing expenses to retirement investing to purchasing real estate. They go into great detail about Sean’s passive investing strategy and the mistakes he made in the past. Sean lists his favorite books and podcasts on personal finance that he has used to improve his knowledge over the years.

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

Links Mentioned

PhD early retirement

Teaser

00:00 Sean: When I was thinking about being a scientist, I always had the impression that scientists are poor. We never make money, and that you did research because you loved it. You know, when I moved over to the USA, I really didn’t have much in savings, so I didn’t really think about it very much. I had to learn from scratch once I moved to the US and once I had a little bit of income to invest, that’s really when I started thinking about what I wanted to do with it.

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 six, episode eight, and today my guest is Dr. Sean Sanders, director and senior editor for custom publishing for the journal Science and program director for outreach. Sean came to the US for a postdoc position with little savings. Living in the DC area on a postdoc salary was financially challenging. He didn’t start to make real progress with his finances until he left his postdoc for an industry job, which more than doubled his salary. Sean and I discuss the strategies. He is used to build wealth in the last decade or so, from moving to reduce housing expenses, to retirement investing, to purchasing real estate. We have a particularly involved and enjoyable discussion of Sean’s passive investing strategy and the mistakes he made in the past. We also swap recommendations of personal finance websites, books, and podcasts. Sean is now on track to retire early, and I’m sure his story will give hope to other PhDs who have, or will enter their thirties without any appreciable savings. Without further ado, here’s my interview with Dr. Sean Sanders.

Will You Please Introduce Yourself Further?

01:50 Emily: I’m delighted to have joining me on the podcast today, Dr. Sean Sanders. Sean works for AAAS and actually we met recently and did an event together at the end of 2019, Fiscal Fitness for Scientists. We’ll link it up from the show notes is a great event that Sean moderated and I was part of the panel. That’s how we first connected, but as we talked more and more at that event, I realized that Sean has an amazing story of his own to tell with respect to his own personal finances, so that’s what we’re going to be discussing today. Sort of how his career has evolved and also his finances, alongside those. Sean it’s really a pleasure to have you joining me here, and will you please introduce yourself further for the audience?

02:29 Sean: Hi, Emily. Thank you so much for inviting me, for the opportunity to talk to your audience. It really is a great pleasure for me to be here. I think we had some fantastic conversations when we met and I’m so pleased to share a little bit more of my story. I’m currently the director and senior editor for custom publishing at Science, here in Washington, DC. I’ve been in this position about 13 years now, but I actually started out as a research scientist. To give you a very overview of my career arc is I started my studies in South Africa. I grew up in Cape Town. I did my undergrad at the University of Cape Town. I then did a one year what we call an honors degree, which is equivalent to a one year masters. I took a break for a while and then I did a PhD actually at University of Cambridge in the UK. I was very fortunate to get in there. Following that, I moved over to the US to do a postdoc at national institutes of health, doing cancer research. I then moved on to a second postdoc at Georgetown University. I was there for about a year and a half, and then a few things happened, which we’ll probably get into a little bit later in the podcast, and I ended up moving into industry, into a small biotech company where I was for about three and a half years. Then got laid off from that, and that’s another story in itself. Then I moved into publishing and I joined the journal BioTechniques for a couple of years. Then, I finally got an offer at Science and I’ve been here for 13 years now. It’s quite a convoluted journey, but it’s been really interesting. And obviously I’ve learned a lot of things along the way.

Early Career Money Mindset

04:09 Emily: Yeah, love it. We’ll be hearing about a few of those as we go forward. Going back to your days in training during your PhD and your postdoc, was your plan to stay in academia and that changed during that second post doc. And then alongside that, with your plan to be in academia, how were you handling your finances at that time? And what was your view of finances generally?

04:29 Sean: When I was thinking about being a scientist, I always had the impression that scientists are poor. We never make money and that you did research because you loved it. And that’s what I wanted to do. I really had just a great passion for research. I really enjoyed investigating. So that’s what I wanted to do. When I was doing my undergraduate, I didn’t really think about finances. I didn’t have much money, even when I moved over to the US I, I really didn’t have much in savings. I didn’t really think about it very much. I had to learn from scratch once I moved to the US and once I had a little bit of income to invest, that’s really when I started thinking about what I wanted to do with it.

05:15 Emily: You’re referencing your move to the US, is that a thing in and of itself, your move to the US, or is it more that you were just advancing in your career and it was a later stage and you were earning more money?

05:26 Sean: I think it was a little bit of both. I was a student through the time that I was in the UK at Cambridge University. As a student, I had a very generous scholarship from the Welcome trust, and I actually managed to save a little bit of money to bring over to the US, but it wasn’t more than a few thousand dollars, so I really was starting from scratch. I didn’t have any income to save and at that point, I didn’t even know what a retirement account was.

05:54 Emily: Yeah. I mean, the transition to the US also comes getting used to a whole other financial system, which I think we’ll talk about more in a moment. So your view was that scientists are always poor. That was your plan. Did you think that would even be the case once you got the tenure track job? You just really thought that was going to be your whole life?

06:13 Sean: Yeah. I didn’t think that scientists earned more than like $70,0000 or $80,000. And, you did it for the love of it. You were working off grants, so you never really made a lot of money. I didn’t ever think that I would be able to retire any time before 65, 70.

Changes in Finances Leads to Changes in Money Mindset

06:31 Emily: Got it. But you mentioned earlier that sometime during your second postdoc, something happened, something changed. Can you tell that story please?

06:38 Sean: Sure. As I said, I was at NIH for about three and a half years, and then I moved to Georgetown University. One thing that I should share with everyone is coming from South Africa, when I moved to NIH, I was on a J-1 visa. I’m not sure if your audience are familiar with this, some probably are, but it’s a training visa. While you’re on a training visa, you’re essentially like a student. You don’t pay taxes like a worker does, and you don’t pay social security. You don’t pay Medicare. Any of that. Now, the advantage of that is there’s more money in your pocket. The disadvantage is you don’t have that social safety net. When I moved to Georgetown University, I got into an H visa, which is what I wanted, because that’s a working visa and enabled me to stay in the country for longer and also progress to a green card, which I eventually did. But what comes along with that is all these other taxes. I had to pay federal tax. I had to pay state tax. I even had to pay county tax in Montgomery County, which was a huge surprise. When I was thinking about this job and looking at the finances and seeing what they would pay me, I didn’t even think about all these additional taxes and I didn’t do my due diligence, and that really came back to bite me.

07:53 Emily: I want to add in there that this is not even necessarily a story that’s unique to someone switching visa types or anything, or becoming a resident. This is something that can happen. I think even moving from graduate school to the postdoc level, or postdoc to another type of job. The reason is not regarding income tax, but regarding payroll tax. As graduate students, generally speaking students, don’t pay payroll ta, that is for social security and Medicare. They have a student exemption. Also anyone who’s not receiving wages, so anyone on fellowship, non W2, they also aren’t paying payroll tax. So getting out of those kinds of training stages, that payroll tax can be, it’s like 7.65% on the employee side, so if you weren’t expecting that, it can be a shock. For you the shock was bigger, because it is not only payroll, but it’s also income taxes and other things, but just wanted to point out like other people need a little heads up about this as well.

08:45 Sean: Right. I wasn’t completely ignorant to the federal taxes I’d had have to pay, but it was just everything at the same time. On top of that, I found out that I had to pay for parking on campus, which I didn’t know about and that was an extra hundred dollars a month or something. All of these things sort of piled on top of each other and then I’d been there for about a year and I read a story in the local paper about what garbage collectors or sanitation engineers, I guess they call them, were being paid, and it was actually a couple of thousand dollars more than I was being paid as a postdoc. Not to take anything away from any kind of employment, it’s all honest work, but I felt that with all the work that I put in to get these higher degrees, I really wasn’t doing myself any justice by being in a position where I wasn’t getting paid, what I thought I was worth.

09:39 Sean: I made a decision at that point to start looking around and I started doing a search for a job in industry, and I was very fortunate to find something up in Massachusetts. The thing is it’s something that probably affects a lot of your listeners is that you can’t always make easy moves, geographically. Some people have families, they have kids, they have spouses. I was in the fortunate position that I could, so I looked very broadly around the country. I looked on the West Coast, I looked up in New England, and I found a great position in Massachusetts, and almost instantaneously I’m more than doubled my salary. I’ve heard of some people calling this geographic arbitrage where you’re willing to move to a different place for our highest salary, and that’s what I did. And although I didn’t love living in Massachusetts, the snow was horrendous, but it was worthwhile for me, and it really set me off on a new financial path, where I could actually save some money and invest in my future.

Making Lifestyle Changes to Increase Savings

10:38 Emily: Yeah. Please elaborate on that. What were the changes that you started making in that time with the higher salary?

10:45 Sean: Well, I think probably the biggest thing was just starting to put away money in savings. As I’m sure you’ve talked about, the first thing I did is I started an emergency fund. I brought up about three months of savings. I also put money into my company’s 401k, immediately. It was as soon as I could, I think it was six months before I could vest. There were also some stock options, which ended up not being worth anything because the company to go under, but it was, it was things that I needed to think about and learn.

11:18 Sean: I started really focusing on living below my means because actually when I was at Georgetown University, I actually found that from the numbers that I looked at, I was actually losing money. So I was spending more than I was earning. Part of that was living in Montgomery County, which was expensive.

11:37 Emily: If you don’t mind, just how were you financing that. If you were actually losing money, was it savings previously built up that you’re drawing down or were you accumulating consumer net?

11:47 Sean: No, it wasn’t debt. I just couldn’t come out on what I was earning. At the time was paying about $800 or $900 a month in rent and that was about 40% or 50% of my income. I didn’t go out that much, but you want a little bit of spending money and I was paying all these other things. I was paying for parking. And I was managing to save a little bit, but really not much. It just made it clear to me that I needed to find some way to focus a bit more on my financial future and get the kind of position where I could actually save and have something in retirement.

12:27 Emily: Yeah. One thing that I discuss during the seminars that I give at universities, one of the points I try to make is that there’s a lot that you can do within your finances while in training, regarding frugality and finding the low rent place to live or what have you. But ultimately, the best thing you can do for your career is to finish that training, be out of graduate school, be out of the post doc, and get that your full salary. The point that I’m trying to make is, although I love to talk about frugal strategies and I love to talk about side hustling and all that stuff, none of that should distract you from just progressing in your career and moving on and getting that higher salary. When you did that, when you achieved that, and you decided, okay, we’re ending this postdoc, I’m getting another type of position, you said that you were focusing on living beneath your means, but I wonder how that compared to your lifestyle when you were at Georgetown. When you got the new job, did you consciously increase your lifestyle in any way, yet still live beneath your means, or were you trying to keep it pretty much feeling like you had during your postdoc?

13:30 Sean: No, I was very focused on saving as much as I could because, at that point I was in my thirties already and I really had very little savings to speak of, and I knew that I really had to start doing something, because I didn’t want to reach 35 or 40 and not have any savings. I’ve always focused on living beneath my means. I can tell you, just an interesting story. When I was up in Massachusetts, I had a coworker who I remember was talking about leasing a car with her husband, and they turned in their previous car. They were paying something like $500 a month or something exorbitant like that. They turned in the car and they could’ve got a cheaper car, but instead they got a better car, a fancier car for the same payment. And that made absolutely no sense to me. Why wouldn’t you get the same car or similar car that’s cheaper and pay $350 a month. That was a mentality that I never understood and I didn’t want to fall into that trap. The way I looked at it is I’m going to get the cheapest car I can. I buy a second hand car, drive it into the ground. I’m going to spend as little as possible on rent. And in fact, what I did is I moved three times in five years while I was up in Massachusetts, both to get closer to work, so my commute was shorter, but also to save on rent. The one move that I made was into a new condo unit that had just been refurbished and they were giving a special for the year and two months of free rent. I stayed there for the year and then I moved. Again, if you’re able to do something like that, you can save quite a lot of money. And I mean, it probably saved me about $5,000.

15:08 Emily: Yeah. This is a strategy that I also try to mention because it’s one I used during graduate school. For example, I moved a couple of times specifically because okay, our rent is increasing, we know what else is around, that’s available. Can you talk about how you actually executed that though? Because it is a really daunting thing to both research a new place to live and then actually execute the move, and it can be expensive too. How did you do this, and still come out ahead financially?

15:32 Sean: As far as moving, you just got to have very patient friends who are willing to help you move. And I always depended on them. I tapped into my network and I’d hire a U-Haul and throw everything in there and move to the next place. Actually, just to add a little bit to the story, once I I’d been at this company for about three and a half years, the company ran out of funding, we were venture capitalist funded, and I got laid off along with the rest of most of the rest of the business. I decided I’d have to move. I couldn’t afford the apartment that I was in. I moved from a two bedroom apartment to a one bedroom, a little bit away from the main part of the city, so it was cheaper. The commute was a little bit longer, but it was definitely worthwhile. Again, I saved quite a lot of money that way. To your question about how I did it, I would just always be keeping a lookout for new places. Both as I drove around and online, I’d constantly be researching, see if there were any deals. And to this day, I do things like that with for instance, CD rates. I look every couple of months just to see where the certificate of deposit rates are, see if I can get a better deal some way. If there’s a good savings account that I can move my money into, my emergency fund, just to get maybe a half a percent or percent more.

16:55 Emily: Yeah. It sounds like you’re just kind of keeping a pulse on the market. Whatever markets you’re involved in, you’re keeping an eye on it to see if there’s a better deal available.

New Financial Goals

17:03 Emily: Okay, so when you increased your salary, you moved to Boston, eventually, of course, you found yourself back in the DC area, you mentioned using the 401k available to you through work, you mentioned living beneath your means consciously. It sounds like you didn’t have any debt or no significant debt to work on. Were there any other financial goals that you’ve set for yourself, with this higher salary?

17:31 Sean: Not really. I’m not much of a goal setter, and that’s probably one of my downfalls. I don’t have a budget. I feel that I just spend as little as possible. I would do things like I would eat out very seldom. I’d rather get takeout or cook at. I was not married, I didn’t have kids, and I know that definitely adds complications to everyone’s stories. I was very fortunate, from that point of view. And I really just wanted to build up as much savings as I could and put the maximum into whatever retirement funds that I could, just to really build up a nest egg for myself in retirement. And also, my parents were aging at that point and I wanted to make sure that if necessary, I could provide for them.

18:20 Sean: Then the other thing that I had in mind is that I did eventually want to buy a property to live in. That was sort of one of my goals. I wasn’t saving consciously towards that as in, I didn’t set aside a separate bank account and put in money for a down payment, which some people say is a good way to do it, sort of use the bucket mentality. I was thinking about the future, but not in any specific way, but I did know that eventually I wanted to be a homeowner and have a place that I could call my own, that I knew I couldn’t get kicked out of because somebody wanted to raise the rent.

18:57 Emily: And has that happened? Have you purchased a home?

18:59 Sean: I did. When I moved back to Washington to my, my position at Science and AAAS, I decided…well, actually my thought process was, I think you’re old enough now you should get a place of your own, so I bought a condo in an area called Columbia Heights, which is an up and coming area in DC. I was quite strategic in doing that. I wanted an area that had recently been revitalized and that was not too expensive, but that I saw some opportunity. Also DC, as you probably know, is a city that will always have people coming to live there. It’s a huge itinerant population that are coming to work for government, for law firms, et cetera. I thought having a place there would be good because when I eventually upgraded or got married or moved out, I’d be able to rent it. That’s actually what I’m doing. I lived in the unit for eight years and I’ve been renting it now for five years, and basically my rent covers my mortgage payment and the condo fees with a little bit of extra. It’s worked out really well.

20:01 Emily: Nice. Have you bought another property or are you renting again your primary residence?

20:05 Sean: No, I actually, I got married, and I moved into my now wife’s house, up here in Silver Spring. I’m looking to possibly buy another rental property, an investment property, but this area is really, really expensive and you need to find just the right place to make it worthwhile, and it’s really tough. I’ve been looking for over a year now and it’s very difficult.

Commercial

20:34 Emily: Hey, social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15 minute call with me at PFforPhDs.com/coaching to determine if financial coaching with me is right for you at this time, I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now back to our interview.

Financial Strategies and Advice

21:20 Emily: Okay. Yeah. So I think we’ve gotten a good landscape of the goals that you had — saving cash, using your 401k, buying property, and some of the strategies that you use, but were there any other strategies that you’d like to throw out there for the audience? Anything you’ve tried and found works really well for you?

21:37 Sean: As I mentioned, I’m as frugal as I can be. I try to live below my means and save as much as I can. The other thing that I learned in the last few years is that…Well, let me take a step back. When I moved to the NIH and I started investing, I had a little bit of extra money, I got advice from the banker who was at the local Crest Star branch, which is, I think became SunTrust eventually. There was a little bank at the NIH and he recommended some stocks that I could invest in, some mutual funds, and I didn’t know any better, so I put some money into that, but I learned over the years about what kind of fees are involved, especially with mutual funds.

22:21 Sean: I started reading and listening to podcasts, and my strategy now really is all index fund investing. I invest in ETFs, exchange traded funds. They have very low expense ratios, usually less than 1%, and I have no doubt on your show, you’ve talked about the power of compounding. If you start early and save, by the time you get to retirement, you’ll have a good nest egg. The same applies for expenses, sort of in reverse. If you have very high expenses on your investments, you’re going to lose a lot of that money. I recognized that I had not done my due diligence on the type of funds that I was investing in. There’s a few people that I follow that I’ll maybe mention some of the podcasts that I listened to who talk about index fund investing and how much more efficient it is than investing in especially managed mutual funds, where you’re paying 1%, 2%, sometimes 3% or 4% in the expense ratio.

Investing Strategies and Tips

23:22 Emily: Yeah. I do want to elaborate on that because investing and the specifics, like this, are not something that we talk about on the podcast, as much as I would like to, because I love the subject. Expense ratios, for those who don’t know, it’s just kind of a catch all number representing how expensive it is to own that fund. And basically whatever amount of return you’re getting, you have to subtract those fees, those expenses right off of it. So if over the long-term, you might expect like an 8% average annual rate of return, if you have a 1% fee that you’re paying, it knocks you down to 7%. And while that doesn’t necessarily sound like a lot, like 1% doesn’t necessarily strike you as very high, I’ve seen calculations on this, where it can result in a net worth decrease over the decades of hundreds of thousands of dollars ,for just paying something like a 1% fee, where you could have gotten with an ETF or an index fund, maybe 0.1%, maybe 0.05%, maybe 0% in some cases. So there are much less expensive funds out there, and the expense of owning an actively managed mutual fund is one of the reasons why index funds and ETFs are actually, in the long-term, better investments in the sense that you end up with more money in your pocket, usually, when you invest in those kinds of vehicles, rather than actively managed mutual funds. Expenses are one of the big reasons why that is the case. Do you agree, would you like to elaborate at all?

24:40 Sean: Absolutely. I think we’re singing from the same hymnal. I completely agree and for the scientists out there, as much of your audience is, there is a lot of good research that shows that investing in managed mutual funds is not beneficial to you. You actually end up making less money than if you invest in exchange traded funds. The reason is that the management of the funds will sometimes be good for a few years, but then they always going to have downtimes, and the success of the fund really has very little to do with the manager. There are very few people in this world who actually know how to invest well in the stock market, and maybe just a few people like Warren Buffet and Jack Bogle are ones that maybe it would come to mind. But really for the majority of us, we don’t have the time or the resources to really understand every single stock that we invest in.

25:39 Sean: Just to talk a little bit more about ETFs, essentially what you’re doing with an ETF is similar to a mutual fund, where you are investing in a basket of companies. So instead of just investing in a single stock, so say I buy Amazon or Apple, I invest in the broad market. Say I have a Vanguard total stock market ETF, and that basically encapsulate the entire stock market, and that way it protects you against volatility and risk. You’re not going to make the same returns as if you invested say in Facebook 10 years ago, and now it’s worth 20 times as much as it was, but slow and steady wins the race as far as I’m concerned. You’re not going to lose your pants by investing all your money in a company, or in Bitcoin, or something scary like that.

26:27 Emily: Yeah. Lots of good long-term investing principles and philosophies that we’re throwing out there. Anything more that you’d like to say about investing or other strategies you’ve been using?

26:37 Sean: Maybe I’ll just talk a little bit about some of the other ETFs invest in. I will mention before the end of the podcast, a few resources that I really like. But from the advice that I’ve read, really the methodology that I follow is to get broad market funds. I invest in the total stock markets. Then I have a little bit of money in small cap and medium cap ETFs, or mid cap ETFs. Then I also have some in an international equity ETF, and all of these actually are through Vanguard. I did want to mention this because you did mention that there are some expense ratios that are zero, and there are companies now, including Vanguard and Fidelity that are offering some of their ETFs at a zero expense ratio, which is fantastic. And a lot of them also offer free investing so that there’s no charge to purchase these ETFs, and I think that’s a great deal.

27:37 Sean: Then the other two areas of the market that I do invest in are a total bond market ETF, as well as a REIT which is a real estate investment ETF. Basically, it’s very similar to the other ETFs that invest in companies that are invested in real real estate. And the reason I do that is just to diversify. Generally, REITs don’t move with as much volatility as the rest of the markets, so they’re a little bit more stable, but they’re not quite as as low return as bonds are. They’re kind of between stocks and bonds. I have it a little bit, maybe about 10 or 15% of my portfolio in that.

29:19 Emily: I think what you’re describing, it might for the uninitiated listener, sound a little bit complicated. You’ve thrown out maybe five, half a dozen different ETFs you’re invested in, but to my ear, what this is, is a well diversified and an appropriate asset allocation for you and your investing goals. And you need a few different ones of these buckets to make those two things happen. But the actual investments that you’re in are all in themselves well-diversified and across market sectors. You are not for example, picking individual stocks. As you mentioned, you had done that in the past, or your advisor was telling you how to do that in the past. You’re also not picking market sectors. I didn’t hear you say, Oh, well, I’m invested in a special biotech ETF, or a special some other one. You’re going for something that’s representative of full market sectors. You are really avoiding the kind of psychological traps that we can easily fall into around investing, of thinking we know where the market’s going or one segment of the market, so I appreciate that approach. Are those kinds of things that you’ve done in the past and that you’ve learned from and changed your approach, or did you avoid some of those pitfalls entirely?

29:23 Sean: I think it’s been an evolution over the years that I’ve sort of moved more and more towards ETFs as I’ve become more comfortable with them. Really, I went from investing in individual stocks to investing in mutual funds and then into ETFs. I did want to make the point though, that I don’t want to tell you shouldn’t invest in individual funds or in more narrow market ETFs, but just do your due diligence. And also, one of my mantras is I don’t invest money that I can’t afford to lose. If there is money that I need say in the next couple of years, that is not money that’s going to be in the stock market. I’m investing long-term. In fact, in my investment account, I’ve sold very few of my stocks. I’ve sold some of the original ones that were high expense ratios and some of the individual stocks, but I really haven’t sold much except to rebalance. I’m investing for the long-term. I’m putting money in, I’m not taking much money out. If you think you’re going to need to buy a house in the next five years, that money shouldn’t be in the stock market, that should be in something safer.

30:30 Emily: Yeah, I totally agree with you. You mentioned earlier using your 401k — are all of your investments inside that 401k, or do you use other kinds of vehicles as well, like an IRA or a taxable investment account?

30:42 Sean: I try to max out my 401k. I actually have a 403b, which is essentially the nonprofit version of a 401k because I work for a nonprofit, AAAA. I do also put as much money as I can, as I’m allowed, into a traditional IRA. There’s also a Roth IRA that’s available to some people. There is a cap on your income where you can no longer invest in a Roth IRA, but if you are able to I’d recommend that as well. And then I also have just a straight brokerage account where I put in after tax money. Anything that’s left over goes into that.

31:24 Emily: I do want to mention, because this is a conversation about investing, at least it’s part of it, that earlier, 2019 and prior, graduate students and postdocs who are on fellowship, who did not have W-2 income, they were not able to contribute that non-W-2 fellowship income to IRAs, but starting in 2020, that law has changed and you are now able to contribute non-W-2 fellowship income to IRA. So anyone who had learned about that old system, but hadn’t yet heard about the update, I want to throw that out there for them, that you are able to now use that kind of vehicle, even if you have non-W-2 fellowship would come during graduate school or your post doc.

32:01 Sean: That is great news.

Financial Literacy Resources

32:03 Emily: What we’ve come to, I think is kind of a very…I don’t necessarily want to see sophisticated because it’s also simple, but a well-tuned practice of your personal finances. You’ve mentioned a couple of times, maybe you can take a little bit more time now to say, how did you actually come to this point? How did you learn about all these different strategies and start to implement them? Because it’s not something that many of us would get from our mother’s knee, for example.

32:33 Sean: When I moved to this country, I was very fortunate to meet somebody who already worked at the NIH, who kind set me on the right path. His name is Chi Kang and he’s still a good friend of mine. We’ve known each other for more years than I can count. He gave me some really great advice to start off. One that I remember is as soon as you come to the country, start building up a credit history. Even if you don’t need credit, take out a small loan for a car or something like that, because you really need that later on in life, if you plan to stay in the country.

33:03 Sean: Really, I just enjoyed reading articles, online reading books. I’m something of an autodidact, so I like to learn myself. I don’t necessarily like being taught things. I just love to read as widely as possible. I kind of got into a little bit of the wrong track early on when I started reading magazines like Money. They used to make my head spin because they’re always jumping around from the latest thing to the next latest thing that you need to invest in. And I realized when I learned a bit more, that they’re really just selling a magazine. I don’t think there’s really good information there. Once more articles started getting online and more podcasts became available, that really became my primary source. There’s a really fantastic series that it gets quite deep into the weeds, but you can take away what you want from it. But there’s a guy named J.L. Collins who you’ve probably heard of, Jim Collins, who did a fantastic series on stocks, it’s called the stock series and it’s available at jlcollinsnh.com and I’m sure you’ll link to that in the show notes.

34:10 Emily: I will. It’s a very famous, very well-known stock series.

34:13 Sean: Yeah. I’m probably about three quarters of the way through that, and it is quite dense, but you get so much information from that. It’s really amazing. That could be your single resource for investing for the rest of your life, and you’d probably be just fine. He actually has a couple of really nice, different types of investment portfolios from a single ETF through to, I think, a seven or nine ETF portfolio. And that’s actually one of the portfolios that I followed. I sort of took the four stock portfolio and I’ve based my investing on that. I didn’t come up with all of this myself, just so that everybody knows. As I think Einstein said, “we stand on the shoulders of giants.”

34:55 Emily: Just to add, J.L. Collins published a book based on that stock series called The Simple Path to Wealth in either 2018 or 2019. We’ll link to that as well in the show notes, if you prefer book over blog post form.

35:08 Sean: Yep, that’s a great one as well. And then a few other books that your listeners might be interested in is The Four Pillars of Investing, that I’m sure you’ve heard of, that’s William Bernstein, and A Random Walk Down Wall Street, which is also a really great book. Right now I’m actually reading for the first time in my life, The Seven Habits of Highly Effective People by Stephen Covey, which isn’t necessarily about investing, but it’s a really great book about how to think about your life and how you’d like to be in your life. It definitely can be applied to your investment strategy.

35:45 Sean: Then if I can, I’d love to mention some podcasts that I listened to.

35:50 Emily: Of course, I am a great podcast lover!

35:54 Sean: Of course. I’m sure you’ve heard of, of a number of these. One of my favorites at the moment is Afford Anything with Paula Pant. She covers quite a broad range of investments and investment strategies, but what I like about it is it’s just very accessible. The way she talks about these things, she explains things really well. Every other week, she has a guest and on the alternate week, she answers questions from her audience. I always come away from every single podcast with some nugget of information that I can apply. Another one that I like is the Mad FIentist. That’s like scientists with an F instead of the S-C. It’s called the Financial Independence Podcast. I haven’t seen any new podcasts since October last year, but I think he’s still going.

36:44 Emily: He has an irregular publishing schedule, but what he does is everything he publishes is so high quality. It’s fantastic. Yes.

36:53 Sean: Yeah, no, he’s great. And I also love the graphic that he has for his podcast. It’s a crazy guy in a lab coat. Then the other one is The White Coat Investor with Dr. Jim Dahle. Now this is actually specifically for medical doctors, but I think a lot of what he talks about is applicable to everybody and also specifically to scientists. And then of course there’s Planet Money and The Indicator from NPR, which I think are just really great podcasts about the broader macro economic principles and really very interesting, accessible content that can help you learn about sort of how the financial world more broadly works.

37:32 Emily: I like those two. They’re not exactly well, The Indicator more so, but they’re not exactly like breaking news, but it sort of keeps me up to date on what’s going on the economy more broadly without being overwhelmed by daily content. I used to listen to Marketplace, for example, when I had more time, and I liked it, but it’s a lot every day to take all that information. Not all shakes out to be really that important in the long run, so I really like Planet Money and The Indicator for that.

37:59 Sean: And I like the way that they sometimes take a different look at the economy, or they’ll take something that you think has nothing to do with the economy and apply economic principles.

38:10 Emily: I think I cut you off a little bit, but I think you were going to mention ChooseFI, as well.

38:15 Sean: Yes. ChooseFI was the last one. So this is a new one to me. I haven’t really had much of a chance to listen to it. I’ve binged on a few episodes. I find that I have too many podcasts that I want to listen to, but I get to it when I can. They also really have some fantastic information and if folks don’t know this FI term refers to financial independence. Some people call it the FIRE movement, financial independence retire early, and this is something I’ve only started learning about it in the last few years, but it really resonates with me. Sort of harking back to what I said previously about thinking that I would just have a straight career path and retire when I was 65 or 70, this really gave me some insight into how I can change up that story, and I’m actually on the path and intending to retire hopefully within the next five years. So I’m hoping by the age of 55, which will give you a clue to how old I am. It gave me some confidence to look at my finances and say, you know, maybe I can do this.

39:21 Emily: Yeah, I’m glad you mentioned the FIRE movement, because as you were talking and telling your story, I could tell that you would find a home within that movement, if you hadn’t already, which it sounds like you have, as it’s become more popular. You were on this path before it really exploded. I also really love ChooseFI. We’re recording this in March 2020, and I just a couple of weeks ago, finished listening through their entire archive, which was like an eight month project as I was, of course, listening to new episodes as well. It was a big thing to tackle, but I think it was really worthwhile. Even though I don’t necessarily consider myself part of that movement, I got a ton out of all of that content. And actually what you said earlier reminded me of one of the hosts, Brad Barrett’s little mantras, which was, he basically says he doesn’t keep a budget either. He just says, “well, I just default to not spending money. I’m just going to save a hundred percent until I decide that something is worth spending on.” So that reminded me of sort of your philosophy as well.

40:16 Sean: Yeah, absolutely.

40:16 Emily: Since we’re swapping podcast recommendations, I will add one more, which is So Money with Farnoosh Torabi. She does three episodes a week. Her Friday episodes are Q&A’s ,and then she has guests on Mondays and Wednesdays. She has a little bit more of a women in money and women in entrepreneurship spin on the personal finance content, but still very strong in personal finance. So I really love that one, as well.

Final Words of Advice

40:38 Emily: I think we’re now down to our last question, which is what is your best financial advice for another early career PhD?

40:46 Sean: I think we’ve probably touched on all of these. I would say that the top four that I have is, remember the awesome power of compounding. Start early, save as much as you can. I know there’s, there’s plenty of calculators out there that you can play with online and see if you save even $20 a month, or $50 a month, when you you’re doing a PhD, and I know it sounds like a lot, but if you just save whatever you can, when you get to retirement age, you will have a good nest egg.

41:19 Emily: The way that I like to phrase that in my seminars is never discount whatever small amount of money it is that you can put towards investing when you’re early on in your twenties or your thirties. Never discount that because it will add up and compound being just a startling amount of money.

41:36 Sean: Yeah, absolutely. And I completely agree. The other one is educate yourself and do your homework. We all make mistakes. I certainly made my share, but I guess I’ll add to that, one of my other mantras, which is that the perfect can be the enemy of the good. There’s never going to be a perfect investment strategy. Things are going to change. You’re going to learn as you go, but just start, do something, start investing, even if it’s very small. There’s plenty of apps out there now, like Robinhood is a really great way to just start investing in small amounts of money. So yeah, start now. Don’t wait until you know everything.

42:14 Sean: Then the last one is really just live below your means. It’s kind of like if you’re trying to lose weight, you’ve got to take in fewer calories than you expend, and your body will lose the weight. It’s the same — if you spend less money than you bring in, you will save. It’ll be automatic.

42:32 Emily: Yeah. And I like to turn that on its head a little bit. I think this is probably a strategy you use, although we haven’t articulated it, is to pay yourself first. That old personal finance chestnut, but to live beneath your means, give yourself less means. Save first, give yourself less means to live on, if you are tempted to spend your checking account down to zero, as I am. What I have to do is get that money out of my checking account, out of my mind first, and then I know that I can safely spend the rest if I want to.

43:03 Sean: Right. And there’s so many ways to do that now. Even my bank will do automatic sweeps from my checking account into a savings account. I just set the amount and it does it automatically every month, so you don’t even see the money.

43:14 Emily: Absolutely. Well, Sean, I enjoyed this conversation so much and I think the listeners will have gotten a lot out of it, especially our discussion about investing, so thank you so much for joining me.

43:22 Sean: Oh, it’s such a pleasure. I really appreciate the invite and hopefully we’ll stay in touch and swap some more podcasts

Outtro

43:30 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the personal finance for PhDs podcast. There you can find links to all the episode show notes, and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.