frugality

As a Single Parent, This Graduate Student Utilizes Every Possible Resource

January 14, 2019 by Jewel Lipps Leave a Comment

In this podcast episode, Emily interview Lauri Lutes, a fourth-year PhD student at Oregon State University and single mother. Lauri’s stipend is equivalent to the local living wage for just one adult, yet she supports herself and her daughter on it without using student loans. Lauri details how she makes ends meet by taking advantage of every possible university and community benefit, such as subsidized and free childcare, food assistance, and recreation and arts scholarships. Lauri additionally serves her community by advocating for graduate student parents on two university boards.

Links mentioned in episode

0:00 Introduction

1:02 Please Introduce Yourself

Lauri Lutes is a PhD student at Oregon State University. She studies viruses on sweet cherry trees. She has an 8 year old daughter and she’s a single mom.

2:19 What is your current annual income and expenses?

Lauri’s graduate stipend is $24,000 per year. Her assistantship is assured for her entire PhD, for either teaching or research. Her modest estimate of her current annual expenses is $27,000 to $30,000. These expenses cover a bare minimum, like paying rent, and don’t include expenses like a car payment. Her estimates don’t take into account her supplemental income from food assistance programs.

According to MIT’s Living Wage Calculator (livingwage.mit.edu), the living wage for one adult with one child in Benton County, Oregon is $51,000 before tax/$42,000 after tax. In order to live with her daughter on her Oregon State University PhD stipend, Lauri has to take advantage of every possible resource.

4:24 What benefits do you receive and how did you find these benefits?

When Lauri was considering graduate school, her daughter was four years old. Lauri was most interested in Pacific Northwest universities, and she was surprised to learn that Oregon State University offers resources to help graduate students who are parents be successful.

Lauri receives two main benefits from the university. First, she receives a childcare subsidy that is provided through student fees and donor funding. Through the childcare subsidy, up to 50% of childcare expenses are covered. This subsidy is applicable for childcare for very young children before they’re in school, as well as for before and after school programs for children in public school. Lauri says it’s rare for a university to offer this assistance, and for the subsidy to cover up to 50%.

Second, Lauri receives assistance for non-school childcare. Oregon State University has two childcare facilities that are drop-in for up to three hours per day. This service is free. The childcare facilities are located in the library and in the recreation center. They are open from 10am to 7pm on the weekends and during the weekdays as well. They accept children on a first-come, first-serve basis, but Lauri has not had problems with accessing childcare from these facilities. Student workers from child development, education relevant fields are the childcare providers. Lauri says the facilities are a well-managed, reliable resource for student parents.

9:31 What is your daily routine like? Is your advisor supportive?

During Lauri’s first couple of years in her PhD program, she served in orchards throughout the entire State. Lauri had to take day trips and overnight trips for her work. She relied on friends and her community for help. Lately, she is in the lab for most of the day. She tries to keep a 9 to 5 work schedule. Her work doesn’t require her to be in the lab on the weekends. When she does travel, the bulk of her work is in the Columbia River Gorge, which is three hour drive from her university.

Laurie says she has an incredibly supportive advisor. She says she is fortunate that her advisor doesn’t make her compromise her parenting for her work. During her graduate school interviews, Lauri didn’t emphasize that she had a daughter, but she didn’t make it a secret. She encourages other people to consider how their potential advisors would support them.

13:06 Tell us about your service experience on advisory boards and committees.

Lauri was invited to join the advisory board of the university’s Family Resource Center. She viewed this as a place to get her voice heard, and to give a voice to graduate student parents. The advisory board decides on the budget for student fees, where that funding goes under the umbrella of the Family Resource Center. This budget includes the childcare assistance stipend, which is available for students with families on campus and employees with dependents.

Additionally, Lauri is the graduate student representative on the committee for children, youth and families in the university’s faculty senate. This committee reports directly to president of the university. To Lauri, this seems like they can make changes on the university level. This committee considers the university experience of students and faculty with dependents, not limited to only young children. Lauri says they want to cultivate a culture of care at the university, that includes being able to support students and faculty in whatever is going on in their lives. When employers are sensitive to family and personal issues, people are kept in the workforce.

17:34 What strategies do you use to keep expenses down?

Lauri emphasizes how important it was to let go of the stigma of needing help and asking for help. Before graduate school, Lauri had a stable position in industry and an income to support herself and her daughter. Graduate school brought a drastic change in income which was difficult to accept and deal with. To achieve her goal of getting a PhD, she had to use university and community resources.

Lauri uses the food bank on campus, and has let go of the stigma of actually going to food bank. Food insecurity is not only experienced by people with families. It is an all too common issue being discussed at many universities. Over half of Lauri’s income goes to rent, and there is no way for her to make that better. Lauri says one way to supplement her income is in food assistance. She says she has to accept that this is where she’s at right now. Oregon State University manages a twitter account @eatfreeOSU that provides centralized posts of where there is leftover free food from events. Some people rely on free food from seminars.

Lauri gets some funding through the SNAP food assistance program. She applied online, which she says was a fairly easy process, and had a phone interview. She had to prove her income initially and again every six months or whenever her income changes. SNAP benefits are for her daughter, not for use by her. The State of Oregon provides information for SNAP online. Oregon State University’s Human Services Resource Center is very helpful for students. Not every university has a centralized center for finding food assistance.

Lauri is enrolled in Mealbux, a university program funded by student fees. She applies every term. The application is a questionnaire about a student’s income and food insecurity situation. The funds are loaded onto the student id card for use on campus. This assistance is specifically for Lauri. Mealbux helps with a student’s sense of belonging on campus.

Lauri recently moved her daughter to school closer to home. At this new school, her daughter participates in free lunch program. Lauri has a car that is very old so she doesn’t have car payment. She rarely uses her car and expects it to break down anytime. She uses her bicycle to get around. She knows food expenses are hard to minimize.

Lauri finds community resources in many places. Local parks and recreation department has scholarships available, such as one that allowed them membership to community pool. Her daughter gets scholarships to take classes, like dance class or painting class. These are things Lauri wouldn’t be able to afford otherwise. Another resource is the Arts for All programs that provide inexpensive tickets to theater events. Lauri says don’t be afraid to apply for help and scholarships. She wants to give her daughter opportunities that she can’t afford on her own. She’s always looking for resources and she’s not afraid to take advantage of available programs.

30:30 Why have you chosen to this frugal strategy instead of taking out student loans?

Lauri has debt from her undergraduate education. These loans are deferred, but they are looming over her. She does not want to contribute more than she absolutely has to. She did take out a few loans to help transition into the PhD program. She has $30,000 loans for undergrad, and she’d rather make sacrifices now than contribute more to debt.

Lauri used to make living wage and be comfortable. Her goal isn’t to increase her wages with her PhD. Her field, plant pathology, is not known for high wages. She wants to be open to a postdoc position after graduate school. She expects to make similar wages as she did in the industry job she had with a Bachelors degree. She went to graduate school for education, fulfillment, and opportunity. When she finishes her PhD, she won’t make a lot of money that she can use to pay off debt. Emily adds that it’s challenging to pay off debt at any time.

33:55 Final Comments

Lauri advises graduate student parents to take advantage of resources. Search for them, ask about them, and talk to others about possible benefits. By diving into resources, you’ll become aware of more. She believes that getting a PhD is worth the financial sacrifice. Though it is a financial challenge, don’t give up on your dreams.

34:55 Conclusion

Can a PhD Achieve FIRE?

January 7, 2019 by Emily Leave a Comment

Would you like for paid work to become optional for the rest of your life? What would you do with your time if you didn’t have to work? When you become “financially independent,” you have enough money and passive income streams to sustain you for the rest of your life without earning any more. At that point, you have the option of retiring (whether or not you actually do). Achieving this goal in youth or middle age instead of 65 is the objective of adherents of the FIRE movement (Financial Independence / Retire Early). Typically, FIRE walkers earn high salaries and save a radically large percentage of their income. This article explores whether FIRE is a good or reasonable goal for a PhD (graduate student, postdoc, or PhD with a Real Job) to set.

Further listening: This Prof Used Geographic Arbitrage to Design Her Ideal Career and Personal Life

What Is the FIRE Movement?

The FIRE movement (or at least the current iteration of the trend) started to gain traction within the last decade. Two of the fathers of the movement who documented their FIRE journeys on popular blogs are Jacob Lund Fisker (Early Retirement Extreme) and Pete Adeney (Mr. Money Mustache). They both advocate establishing a very frugal lifestyle to 1) save a high percentage of your income while working and 2) minimize the size of the nest egg needed to retire from paid work.

Now that the FIRE movement has gained popularity, it has diversified (it’s not just for young, single, male tech workers!) and splintered. One of the useful delineations is among ‘lean FIRE,’ ‘FIRE,’ and ‘fat FIRE.’ Roughly speaking, lean FIRE adherents seek to achieve FIRE primarily through expense minimization (and a high salary as well) while fat FIRE adherents seek to achieve FIRE primarily through vastly out-earning their spending (and keeping a lid on expenses as well), with regular FIRE falling somewhere in the middle.

Why Would a PhD Want to FIRE?

A person who completes a PhD has passion for her work (as well as incredible perseverance). I find it hard to imagine that such a person would want to retire early from her chosen field – especially those pursuing a life of the mind in academia.

But people who complete PhDs are also people. They end up in all types of jobs with all levels of job satisfaction. Even those with high job satisfaction might want to escape the demands of full-time work.

Even if retiring early is not attractive, becoming financially independent may be. Once you are financially independent, even if you keep working, you don’t have to be concerned about losing your job or put up with a job that’s no longer a good fit. Even during the journey to FIRE, you will have a much, much greater degree of financial security than most Americans, which brings peace of mind.

How Do You FIRE?

While difficult and rare to achieve, the mechanism of becoming FIRE is easy to understand.

To become financially independent (from active work), you need to have investments and/or passive income streams that will pay for your expenses in perpetuity. I’ll focus this discussion on the investments needed rather than the passive income streams.

Basically, to achieve FIRE, you need a nest egg of investments that is large enough that you can withdraw what you need to live on each year without eating into the principal. The higher your living expenses, the larger the nest egg you need to support them in perpetuity.

FIRE adherents usually follow the “4% Rule,” also called the Safe Withdrawal Rate (SWR), or perhaps a more conservative 3% or 3.5% Rule. The 4% Rule means that withdrawing 4% of your portfolio balance each year gives you a very good chance of your portfolio not running out of money prior to your death; it is based on historical market returns. (Early retirees may adjust this rule to be more conservative due to their post-FIRE life expectancy being longer than a typical retirement.)

The 4% Rule shows you the two vital factors to FIRE: size of your nest egg and yearly living expenses. Therefore, to achieve FIRE you must save (invest) a lot of money and keep your living expenses in check. For example, for a household with $50,000 in yearly living expenses, a portfolio of $1,250,000 is needed.

A person pursuing LeanFIRE will primarily focus on minimizing living expenses. The rough definition of LeanFIRE is living expenses of under $40,000/year or a portfolio of $1,000,000. A person pursuing FatFIRE will primarily focus on building a large portfolio. The rough definition of FatFIRE is a portfolio of over $2,500,000 or living expenses of at least $100,000/year.

There is a delightful synergy between the necessarily high savings rate and necessarily low expenses. Given a static income, the less you spend on living expenses, the higher your savings rate can become, enabling you to achieve FIRE even faster. Mr. Money Mustache published in “The Shockingly Simple Math Behind Early Retirement” a set of ratios that illustrates the relationship between savings rate and years of saving needed until the SWR could be achieved. For example, with a savings rate of 10%, you need 51 years to save before you can retire, but that drops to 22 years with a savings rate of 40% and 8.5 years with a savings rate of 70%.

Because the key to achieving FIRE is an unusually (to say the least) high savings rate, it is almost exclusively pursued by high income earners. There is a floor on how low you can drop your living expenses (although that varies person to person), so if your income doesn’t exceed your expenses by much, achieving the “E” in FIRE becomes a remote possibility.

Can PhDs FIRE?

PhDs can FIRE if they commit to the process, but they have challenges that are not shared by their peers from college who went immediately into high-paying careers. (It has been done; Jacob Lund Fisker has a PhD and retired at age 33.)

The ideal path for someone pursuing FIRE is to obtain a high-paying job immediately upon completion of their education at 18 or 22, commit to a low-cost lifestyle, set up a radically high savings rate into investments, and keep the pedal to the metal until FIRE is achieved, for instance by age 30 or 35.

A PhD becomes derailed from this ideal path upon entering graduate school. Unless he previously set up massive passive income streams, a grad student’s income is nowhere near large enough to achieve a high savings rate (even if you live in a van like Ken Ilgunas did at Duke). This means that pursuing FIRE with a high savings rate will have to wait until landing a post-PhD Real Job.

However, the graduate school experience offers a unique advantage to FIRE: A necessarily low lifestyle. The $40,000/year maximum living expense for the definition of LeanFIRE is much higher than what virtually every graduate student takes home after paying income tax. Even a couple living the graduate student lifestyle can usually spend less than that amount.

Further reading: What Grad Students Can Learn from the FIRE Movement

A PhD also confers the possibility of a high income. While PhDs are not needed in currently high-paying careers such as finance, medicine (some specialties), computer science, and engineering, a person with a PhD does on average earn much more in a lifetime than the average person with less education, and people with PhDs can absolutely land well-paying jobs.

Therefore, a PhD maintaining her grad school lifestyle (more or less) while earning a high salary post-PhD is a recipe for FIRE, albeit starting in earnest closer to age 30 than age 20. A LeanFIRE early retirement can still be achieved within a short period, and of course she could opt for FatFIRE if her income is generous enough.

However, a graduate student (or postdoc) who commits to FIRE can go further than this default:

Instead of living at 100% of net income during graduate school, save (invest) as much as possible. This will have the dual effect of further lowering living expenses and getting a head start on building your nest egg.
Experiment with frugality to discover whether you want to ultimately pursue LeanFIRE, FIRE, or FatFIRE. You may decide that living below a graduate student’s means is not what you want long-term.
Finish your training as quickly as possible to increase your income as early as possible. Prepare yourself to land a high-paying job through professional development and networking.

Further reading: Whether You Save During Grad School Can Have a $1,000,000 Effect on Your Retirement

What Is Your Reason to FIRE?

Ultimately, it’s vital to have clarity on why you want to pursue FIRE. It’s easy to become consumed by the numbers and the process and lose track of your motivation along the way. Sometimes it’s possible to achieve aspects of the FIRE lifestyle without actually being FIRE, and I think that’s particularly true for PhDs who have a lot of transferrable skills and potential for autonomy. Remember the parable of the fisherman and the businessman. Just like you shouldn’t put your “Real Life” on hold during graduate school, you shouldn’t put your Real Life on hold while building up to FIRE.

If you are a PhD (-in-training) and seriously pursuing FIRE, I’d love to interview you on my podcast! Please fill out this form to volunteer.

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

December 24, 2018 by Emily Leave a Comment

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

Links mentioned in episode

0:00 Introduction

1:26 Q1: Please Introduce Yourself

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

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

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

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

4:14 #1 Expense: Rent

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

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

6:18 #2 Expense: Car Payment

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

8:06 #3 Expense: Health Insurance and Fees

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

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

10:25 #4 Expense: Food

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

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

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

14:51 #5 Expense: Car Insurance

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

45:22 Conclusion

PhD Job Transitions Are an Opportunity to Break Negative Financial Habits

October 28, 2018 by Emily Leave a Comment

Pursuing a PhD and post-PhD jobs usually means frequent professional and personal upheaval. Changing jobs/”jobs” and moving are typical for each stage of training and possibly career: posbacc programs or jobs, master’s/PhD programs, postdocs, and Real Jobs. Every time you change jobs or move, your routines and habits are upended, including those that affect your finances. The upside of these frequent transitions is that each time you give yourself a clean slate upon which to write new habits. That’s great news for anyone with a degree of dissatisfaction with their current habits.

I recently read Better Than Before by Gretchen Rubin, which is about how to create and maintain habits. The quotes included in this article are from the chapter “Temporary Becomes Permanent: Clean Slate.” While it is not a financial book, the strategies included in Better Than Before can be applied to your financial life, and the Strategy of the Clean Slate struck me as particularly useful for PhDs.

Why the Clean Slate Works

A great proportion of our decisions each day are not ones we make consciously but rather are part of our routine or standard responses to stimuli. This is great when you have cultivated positive habits or at least are not in any negative habits. But a negative habit can be incredibly challenging to break under normal circumstances.

Any beginning is a time of special power for habit creation, and at certain times we experience a clean slate, in which circumstances change in a way that makes a fresh start possible–if we’re alert for the opportunity.

Experiencing a clean slate – a wiping away of your previous habits in part or much of your life – can greatly benefit you if you had any negative habits or even a desire to start new positive habits. The old stimuli that prompted you into your negative habit are no longer there, and instead you can tie your new stimuli to positive habits. There is also an opportunity for a strong change in your self-conception, such as “In my new job/city, I am a person who ___.”

There’s a magic in the beginning of anything. We want to begin right, and a good start feels auspicious… Because we’re creatures of habit, the first marks on that slate often prove indelible. We should start the way we want to continue.

When you experience a clean slate for whatever reason, you should very intentionally start practices that you want to become positive habits and keep yourself from falling back into old habits. This will likely take some preparation in advance of the occurrence of the clean slate. You should devote some time to brainstorming the positive habits you want to begin practicing and the negative habits you want to drop so that you’re ready to hit the ground running when you have that clean slate.

I now pay very close attention to the first few times I do anything because I know those decisions will shape my baseline habits; to deviate from them will feel like a deprivation or an imposition.

Job Transition and Moves Are Perfect Clean Slates

The slate may be wiped clean by a change in surroundings: a new apartment, a new city, even rearranged furniture. Or some major aspect of life may change: a new job, a new school, a new doctor.

Job changes for PhDs come relatively frequently throughout training and sometimes following, and many or all of those job changes may very well involve a move. A new job in a new city is just about the cleanest slate you can get when it comes to your habits (not including changes in the members of your family): new home, new job, new co-workers, new commute, new city to learn.

Not only are you in a different environment with your old triggers and routines wiped away, but the people surrounding you are no longer reinforcing your prior habits and associating you with them. You have a chance to forge relationships without succumbing to any negative habits.

What Kinds of Financial Habits Should You Lose with a Clean Slate

Mindless Spending

The entire point of a habit is that it takes little to no conscious decision-making to carry out. If you are aware of any mindless spending that you currently engage in, resolve to drop it with your upcoming clean slate (if not before!).

Mindless spending is spending that you neither need nor even truly want to do. Perhaps it gives you some satisfaction, but it’s all too fleeting. You pick up a coffee every day during your commute because that’s what you always have in your hand on your way in. You browse a certain store and make a purchase on the same day of the week because that’s how you kill time in between work an an evening activity. You go out with the same people to the same bar/restaurant/club every weekend because that’s where you went when you first met them. Somehow these actions became habits even as your desire to do them faded. You may not have even realized the cumulative effect they were having on your finances.

With your clean slate, you have the opportunity to drop these old habits and begin how you want to continue, e.g., brewing coffee at home, taking a route that doesn’t pass any shops, and meeting people through fun and less expensive activities.

Living Beyond Your Means

In many graduate programs and at many places, limiting your spending to the means provided by your stipend/salary is not possible or at least not palatable. In those cases, accruing debt, usually student loan or credit card debt, is a necessary evil. Still more PhDs (in training) accrue debt because of a lack of sufficient motivation to avoid it.

Living beyond your means is a negative financial habit, necessary or not. When you start a new, higher-paying job, make a clean break with that habit. In your new job, you are A Person Who Lives Within Your Means. In fact, you should not only resolve to not accrue any new credit card (or similar) debt, but you should start repaying your accumulated debt. If credit cards were your debt of choice, stop putting new charges on them entirely.

Hiding Your Head in Sand

Sometimes a negative financial habit is simply the absence of a good financial habit. Your financial state during grad school or after can be so discouraging that you stop looking at it entirely. You might slip into being unaware of the balances in your checking and savings accounts, the balances on your credit cards, the total of your student loan debt, the value of your investments (if any!), etc.

At some point and after some healing, you’ll start looking at your finances again – perhaps when you have a higher income and the future looks rosier. With your clean slate, leave behind your habit of hiding your head in the sand and put in place a new habit of regularly looking over your finances comprehensively, even if it’s painful at first.

Keeping Up with the Joneses

Keeping up with the Joneses is a negative financial habit for anyone, but it’s particularly impossible for PhDs on trainee income. You don’t want to be in that habit when your higher income rolls in, as you might actually be able to make a go of keeping up. Do whatever you need to do to (leave/filter social media, stop watching HGTV) to keep the Joneses out of sight and out of mind.

What Kinds of Financial Habits Should You Implement or Maintain with a Clean Slate

The Strategy of the Clean Slate can help us launch a new habit with less effort.

With your clean slate, adopt a new identity as a person who practices positive financial habits and is actively working to improve your financial health.

Tracking/Budgeting Your Spending

Tracking your spending and creating a spending plan (a budget) are fundamental tools for managing your finances well.

Tracking can be done relatively automatically with software, so the easiest way to implement this habit is to sign up for Mint/You Need a Budget/similar, hook up your bank accounts, and check on your spending periodically (at least once per week).

After you have an idea of your expenses, you can start projecting them with a budget, which will help you be mindful about your spending in your trouble areas. You may have to update your budget frequently if you’ve recently moved, but after some time checking in with it once a month or more will become automatic.

Track Your Net Worth

When my husband and I transitioned to our first post-PhD Real Jobs, I started manually tracking our net worth. Yes, our Mint account has it, too, but I liked my own formatting. Once per month on the 1st, I copy all of our account balances into an Excel spreadsheet and update my graph. You don’t need to check frequently for the habit of tracking your net worth to be valuable. After all, “That which is measured, improves.”

Negotiating

That a candidate will attempt to negotiate a job offer is almost always expected. (Grad school offer letters are an exception, though some students do attempt to negotiate. Negotiating a postdoc offer is more common than you might think.) If your clean slate comes with a new job, be sure that you negotiate that job offer (and every one that follows). You may make an exception if the offer is clearly and objectively on the generous side of appropriate, but even then you can still try to negotiate some benefit. A raise gained through negotiation is the easiest money you’ll ever earn, and it compounds throughout your career!

Automatic Saving and Being “a Saver”

Post-clean slate and with a higher income, you are a saver, no matter what you were before. Enforce this positive financial habit by setting up automated transfers to your savings account, loans, or investments, depending on your goal. Incrementally increase your savings rate over time.

Investing can be very intimidating to someone just starting to get their finances in order. It’s doubly intimidating for someone who doesn’t have access to a 401(k)/403(b)/similar like a grad student and some postdocs. With your clean slate, put in place the positive financial habit of investing (if that’s an appropriate financial goal). If your new job offers a retirement account match, by all means take full advantage, and invest beyond that up to your goal amount. Never leave match money on the table!

It’s a shame not to exploit the power of the strategy of the Clean Slate when it presents itself. For instance, the time of moving introduces so much upheaval into our customary habits that change becomes far easier. In one study of people trying to make a change–such as changes in career or education, relationships, addictive behaviors, or health behaviors including dieting–36 percent of successful changes were associated with a move to a new place.

The Downside to a Clean Slate

While the clean slate offers tremendous opportunity for forming new habits, it can disrupt a person’s existing good habits by eliminating a useful cue or breaking up a positive routine.

To this point in the article I have largely assumed that you have some negative financial habits that can be eliminated by a Clean Slate, and I’ve suggested positive financial habits to fill the vacuum. But you also may well have positive financial habits that will be jeopardized by the Clean Slate. It’s understandable that you habits will be disrupted by a Clean Slate as dramatic as a move and job change, so as soon as possible (before you feel settled and ready) jump right back into your old positive habits so you don’t slide into negative habits in their absence. As much as possible, maintain monitoring your habits through your transition so you have an accountability system urging you to return to them as soon as possible.

Travel and Savings Are This Frugal Grad Student’s Top Priorities

October 22, 2018 by Emily 1 Comment

This podcast episode is a budget breakdown with Latisha Franklin, a third-year graduate student in biochemistry and molecular biology at Penn State University. Latisha works to keep her housing and especially food spending low so that she can spend more on experiences, such as her yearly international vacation. She employs several powerful strategies in her frugality and budgeting to enable her saving, such as taking out cash for variable spending, prioritizing a “me” budget category, vegan meal prepping, and actually reading her email to find free food on campus. Emily and Latisha discuss how establishing a routine schedule lends itself well to developing frugal practices.

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0:00 Introduction

1:14 Q1: Please Introduce Yourself

Latisha Franklin is a third-year graduate student in the Biochemistry and Molecular Biology program at Penn State University. She moved to State College, Pennsylvania, for graduate school from her hometown Mobile, Alabama.

Her stipend is $1,996 per month after taxes.

2:27 Q2: What are your five largest expenses each month?

Latisha’s top expense categories are rent, car insurance, food, bills, and “me,” in other words, money she can spend freely on herself. She shares that she budgets much of her income for her Roth IRA and savings.

3:57 #1 Expense: Rent

Latisha lived in a one-bedroom apartment with her dog at the time of the interview. However, she had plans to move. Her rent was $820 per month and the rent in her new place is $710 per month. Originally, she wanted to move to a new place with a roommate. When those plans fell through, her realtor helped her find the new apartment.

Her new apartment is attached to a house. She has access to a backyard for her dog, which was appealing to her. Her new apartment is closer to Penn State, a 5 minute drive and 20 minute walk from campus. The neighborhood is family-oriented. This is in contrast to her former neighborhood that had a good mix of graduate students, young families, and late-career adults.

Latisha thinks Penn State graduate students living alone pay about $900 or more for rent. She thinks that $700 is the low end of the range for rents. In her estimates, she is not taking into account possible lower rents in shared housing with roommates.

8:29 #2 Expense: Car Insurance

Latisha has a 2016 Hyundai Tuscon. She bought the car new in winter 2015 and paid it off completely within two years. She used savings she had been building since middle school to buy the car new. Her monthly insurance payment is $159.

10:22 #3 Expense: Food

Latisha spends $150 per month on food. She spends $20 each week for food that she’ll eat during the week, and $50 each month to buy items she’ll use throughout the month. Her strategy to keep food expenses low is to meal prep and cook in bulk.

During her first year, she found herself cooking every other day. Cooking was too time-intensive, so she read articles about meal prepping. Now, she uses Sundays as her meal prep and cooking day. She makes enough to last the week and portions food into six or seven containers.

Latisha didn’t have any dietary restrictions or considerations during her first year in graduate school. She has now removed meat and dairy from her diet. She uses many kinds of beans, rice, nuts, and fruit in her meals. She buys fruit from the farmers markets and from her share of community supported agriculture (CSA).

Her meals include muffins, which she eats every week, salads, soups, and pastas. Additionally, Latisha eats free meals on campus as often as three times a week. She takes ten minutes each day to read her university emails to find events with free food that also match her interest. She rarely eats take-out or at restaurants, and this expense is from her “me” category.

18:54 #4 Expense: Bills

Latisha’s pays for electricity and wifi, because heat and water are included in her rent. Her parents pay for her cell phone bills. The electricity bill is $13 per month and wifi bill is $32 per month. To keep electricity costs down, Latisha makes the most of daylight for work. During the evening, she relaxes and minimizes her electricity use.

In her new apartment, she will have to pay for all utilities separately. She’ll have more bills, so she has planned to increase this budget category.

21:38 #5 Expense: “Me,” or Variable Spending

Latisha budgets about $20 a week, or strictly $100 a month, to spend as she wishes on herself. Typically, she uses this money to go to the movies, go out to dinner, or try something new. She bought herself a microscope because she enjoys using it to look at everyday items. Overall, she prefers “experiences, not stuff.”

Latisha’s strategy is to keep her “me” budget in cash. Using cash is strategy to keep variable spending in check. She mentions that credit cards didn’t suit her.

25:17 Q3: What are you currently doing to further your financial goals?

Latisha prioritizes savings. Since her teenage years, she kept savings for undetermined large purchases. For example, she bought her new car with her savings, even though she hadn’t intentionally planned the purchase.

She contributes $150 per month to a Roth IRA for retirement. She saves $50 per month in her savings account. This is about 10% of her net income. She is focused on building her Roth IRA

She started savings with a CD, about three years ago, without much knowledge of savings or investing. Her dad encouraged her to get a Roth IRA. Latisha read Emily’s emails and is now working on better managing her Roth IRA.

Latisha has set a goal to take one big trip a year. Here she discusses saving for her trip to Iceland. She has budgeted about $100 per month and has $1,200 saved at the time of the interview. She likes to travel and wants to get out and see the world while she has minimal responsibilities. Iceland is the first big trip that she has initiated on her own.

33:24 Q4: What don’t you spend money on that might surprise people?

Latisha spends very little on food. Many of her peers claim to not have the time to cook, so they get take out or eat out more often. She found the time on the weekends to prepare all her meals for the week, so she saves time during the week. Emily and Latisha agree that in reality, getting take out or going to eat can take just as much time as preparing your own meals. Prioritizing cooking your own meals is a great frugal strategy.

35:34 Q5: What are you happy with in your spending and what would you like to change?

Latisha is happy that most of her money goes to experiences, not things. She wants to add money to food, because she believes trying new kinds of foods is a good experience. Joining the CSA is one way she is trying new foods. She is interested in new fruits, like dragonfruit. Additionally, she is happy has “cushion money” so she is prepared for anything.

36:48 Q6: What is your best advice for someone new to your city who is budget-conscious?

Latisha recommends over estimating your budget so you have cushion money. This reduces stress and helps even out irregular expenses. One strategy that Latisha uses is to set up separate accounts for her money. For example, she moves her income out of her spending account into a reserve account. This restricts how much money is available for her to spend, but the money is still accessible if she really needs it.

Latisha also recommends personalizing your budget. She has had financial training that emphasizes certain income percentages for budget categories, but this advice doesn’t suit her lifestyle. She realized this when she went through the process of purchasing a home but ultimately could not get approval. During the process to buy a home, she found that financial advisors insisted that 50-60% of income is budgeted to living expenses. Though she was frustrated she couldn’t buy a home, she is glad she went through the process and would recommend the experience to other graduate students.

44:46 Q7: Would you like to make any other comments on what it takes to get by where you live on what you earn?

Latisha takes the bus for her commute. She does not use her car for every day commuting, just for irregular driving, like taking her dog to the groomer. Penn state has a graduate students bus ridership program that Latisha says is a $180 one time fee, then free riding for the entire year. Just a few rides each month would make the pass pay off. She says this is definitely worth it.

Latisha says her budget is possible because she manages her time carefully and sticks to a routine. Her budget is a result of her focused lifestyle. Emily and Latisha agree that budgeting is easier and more accessible when you recognize the patterns you have in place in your life.

48:30 Final Comments

Latisha and Emily hope listeners learned more about frugal strategies for living on a graduate stipend.

48:45 Conclusion

This Grad Student in DC Prioritizes Living Alone and Investing in Mental Health

August 27, 2018 by Emily Leave a Comment

In this episode, Emily interviews Christina Padilla, a PhD candidate at Georgetown University in human development and public policy earning $38,000 per year. Christina shares her top five expenses as a DC resident: rent, groceries, eating and drinking out, regular monthly expenses (i.e., phone, internet), and the copay for her therapist. They discuss Christina’s tips on leveling up her housing, meal planning, living car-free, and finding frugal fun in the city.

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0:00 Introduction

1:18 Q1: Please Introduce Yourself

Christina Padilla is a PhD candidate at Georgetown University in Washington, D.C. She is in the psychology department, and specifically in the human development and public policy program. Her research focuses on early childhood, parenting, and early education.

Christina completed her undergraduate studies in Baltimore before taking a 2-year research position at the National Institute of Health (NIH) in the D.C. area, and then stayed for graduate school.

3:11 Q2: What are the top expenses that you have, either in a typical month or in the last month?

Christina’s top five expenses per month are rent, groceries, eating and drinking out, other regularly occurring monthly expenses like phone and internet access, and a copay for therapy, which she started in the fall.

4:15 Expense #1: Rent

Her first year at the NIH, Christina lived in Maryland because it was closer to her lab and her rent was only $600-$700 plus utilities, but she hated being so far outside the city. In her second year at the NIH, she moved to a group house and paid $800 a month. However, it was a very old house and required Christina to have four roommates. She lived there for three years, including her first two years of graduate school, and then decided it was worth it to live by herself. She had saved money to be able to live in a studio.

Now, Christina is budgeting with an income of $38,000 for the fall 2017 through the summer; after that, her funding situation is uncertain. She allocates $2,700 per month, and of that, rent is $1,350. For a place in D.C., that is not very expensive. Christina lives alone in a rent-controlled studio apartment in a very desirable area outside of Dupont Circle.

Transportation was once one of Christina’s top expenses, and she would spend $150 a month to get to and from campus. She does not own a car: all the costs were for public transportation. At present, she is able to walk to campus, and now spends about $40 every other month on Metro costs. Georgetown also has a free shuttle between the area she lives and the university campus.

9:13 Is the building that you’re living in popular with students?

Another graduate student living in the building recommended it to Christina when she moved out, but Christina took a different unit because the cost was significantly less due to rent control factors. A number of other Georgetown students do live in the building; there are quite a lot of young people and quite a lot of long-term residents, but very few people in between.

11:43 Expense #2: Groceries

Christina spends about $200 per month on groceries on average. Unless she is going to a social event, she tries to cook all of her meals at home instead of ordering out. Christina has a small kitchen, which it is in a separate room from the rest of the apartment. She does not have a dishwasher or garbage disposal, but all other major appliances are included.

13:11 Have you always tried to cook at home, or is that something you decided to do along the way?

Cooking dinner at home is a habit Christina has always had; eating out was only for special occasions, rather than a casual habit. Even when she was at the NIH, she would cook every day. Her savings enabled her to take a lengthy trip to Europe before starting graduate school—Christina and another woman compared their spending and found that a major factor in Christina’s savings for the trip was that she was not ordering out, and the other woman was ordering food almost every day.

16:17 Do you have any comments on how you keep food costs down in a high cost of living area?

Christina also allocates $200 per month for eating out, but her ability to stay within both budgets was enhanced when she started meal planning. Planning meals for a week and only buying what’s necessary for that week has helped her stay within her budget. Christina enjoys cooking, and so cooking food and freezing it is both relaxing and budget-friendly.

On Sundays, Christina will make breakfast and lunch for at least Monday through Wednesday, and cook again on Wednesdays. Previously, she would try to prepare meals one day ahead of time but would often find that she was too tired or busy to do so, and ended up having to cook in the morning or buy meals. By planning meals ahead and cooking in bulk, Christina saves herself money and time.

19:13 Expense #3: Eating and Drinking Out

Christina sometimes feels that $200 per month for eating and drinking out may be high, but acknowledges that D.C. is an expensive city to eat in—one brunch could cost $50 or $60. Brunch and happy hours are both popular in the city, and the costs of each can add up. The $200 also includes going out for celebrations and other social events. Christina avoids going out to eat unless it is with other people so that it stays a treat instead of becoming an expensive habit.

21:21 Expense #4: Other Regular Monthly Expenses

Other regular monthly expenses make up the fourth largest category for Christina, which amount to about $100 per month. She pays $35 each month for her phone, $43 for internet access, $13 for dental insurance, and $5 for Spotify, which is cheaper with a student membership. The cell phone price is for the cost of the actual phone; the one thing Christina’s parents still pay for is Verizon service.

22:12 Expense #5: Therapy Co-Pays

In the fall, Christina was having a difficult time with her dissertation. The $200 per month she now spends on co-pays were originally going into savings and have transitioned into payment for counseling. Christina mentions that all graduate students need support but sometimes struggle with talking about it or feeling justified in seeking out help, and enjoys talking about counseling to help de-stigmatize it. She considers it an investment in herself and getting through graduate school in one piece.

23:24 Will you be finishing grad school soon?

Christina has an external fellowship for $30,000 for two years, and her department gave her an extra $8,000 to match everyone else’s stipends. She will continue to receive the $30,000 stipend but does not know whether her department will award the $8,000 again. She hopes to finish in January of 2019. She may drop her counseling sessions to once or twice a month instead of each week.

25:33 Q3: What financial goals are you working on?

In addition to the five categories and other spending, Christina saves at least $200 per month. $100 goes into a mutual fund with Schwab and $100 goes into a Roth IRA that she set up last year.

Christina does not get a very good interest rate on her savings account and chose to invest in a mutual fund because of an episode of the John Oliver Show “Last Week Tonight,” from which she learned it would be a good option for her savings goals. She has not decided whether to use it for a mid-life expense or for long-term savings, such as a down payment on a house or for retirement.

28:03 Q4: What don’t you spend that much money on that might surprise people?

People are often surprised by how little Christina goes out to eat. Many people in graduate school tend to order in a lot for convenience. However, many people bring lunch to campus, so Christina regularly eats lunch with other people in her lab, and bringing food has not been an isolating experience.

29:24 Q5: What are you happy with in your current spending and what would you like to change?

Christina is overall happy that she is staying afloat and able to save money even though she lives in an expensive city. Many of her friends have “real” jobs where they make more money, and it is hard to compare herself to them, but she is pleased with being able to save at all. She tries to think positively about being paid to get a degree and be happy that a stipend is available, that tuition is covered, and that she has no student loan debt.

31:43 What advice would you have for someone who is starting in their first year at Georgetown?

Christina’s number one piece of advice is to be honest and reflective with yourself about your priorities in terms of housing. It’s not always possible to live in a luxury building in a great location without roommates and have low rent. There are housing options for all priorities, but you have to be honest about what you want and to be ready to make sacrifices in terms of money, location, or roommates. A lot of people live outside D.C. in Virginia or in Maryland, but many of those areas have become as expensive as D.C., so comparing prices is important.

Georgetown does not offer much graduate student housing, and what’s available is about equally expensive as other housing options if not more. Georgetown does provide shuttles, however, because the campus is not connected to the Metro line.

35:30 Any closing thoughts or other comments about living in D.C. on $38,000 per year?

D.C. has a lot of free activities, especially in the summer. There are many free outdoor concerts, and all of the D.C. museums and monuments are free to visit.

No matter where you live, setting a budget and sticking to it is immensely helpful. Christina uses the free version an app called Good Budget, which allows you to create spending categories and record your transactions. The app will show a green bar decreasing as you spend throughout the month. Christina found that Mint was not helpful for her in curbing her spending and now uses Good Budget instead.

Trying to keep up with people who have “real” jobs and salaries is impossible, but it is possible to politely take charge of social situations. For example, Christina recommends offering to choose the restaurant where friends will gather and selecting a lower-cost option. Other people may not recognize that their budget constraints might be looser than a graduate student’s.

Christina opts for casually steering events with friends towards more affordable activities, and will occasionally decline to go to things if they are too expensive. She has found that most people are fairly sensitive to graduate student budgets and have no problem with less expensive activities and options.