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This Grad Student Travels for Free by Churning Credit Cards

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In this episode, Emily interviews Julie Chang, a graduate student at Stanford University. Julie’s partner and parents live on the East Coast and she has family abroad, so during grad school she has pursued a specific credit card rewards strategy known as churning to help her travel hack. She has regularly flown domestically and internationally for several years almost exclusively using points and miles instead of cash. Julie details how she manages her churning strategy, including how she meets minimum spending requirements on her stipend, and how she has changed her strategy during the pandemic.

Links Mentioned in this Episode

grad student travel hacking

Teaser

00:00 Julie: Even if you don’t want to start off with churning right away, my best advice is to just get a credit card with a low minimum spend, and at least use that to start building your credit score and acquiring some points.

Introduction

00:18 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host Dr. Emily Roberts. This is season seven, episode eight, and today my guest is Julie Chang, a graduate student at Stanford university. Julie’s partner and parents live on the East coast and she has family abroad, so during grad school, she has pursued a specific credit card rewards strategy known as churning to help her travel hack. She has regularly flown domestically and internationally for several years, almost exclusively using points and miles instead of cash. Julie details, how she manages her churning strategy, including how she meets minimum spending requirements on her stipend and how she has changed her strategy during the pandemic.

01:06 Emily: Julie and I don’t go deeply into the topic of who can or should pursue credit card rewards or how to get started, so I’m going to point you to some free resources I’ve created on those topics. They’re all linked from the show notes for this episode, which you can find pfforphds.com/podcast. My article titled “Perfect Use of a Credit Card” explains how to avoid all the pitfalls that easily accompany credit card usage by putting in place some pretty stringent rules. You will have to be well-practiced and following strict rules in this area if you want to succeed with credit card rewards. My article titled “How to Establish Credit in the US” is for people who have recently arrived in the U S or who have lived in the US for many years, without taking out any debt. It explains how to get your first toe hold in the world of credit and how to build your credit score over time. Finally, in 2019, I published a podcast interview with Seonwoo Lee titled “How To Make Money Without Working: Credit Card rewards and 529s”. That episode is quite complimentary to this one, and I recommend listening to it. If you want to go deeper into the subject. Without further ado, here’s my interview with Julie Chang.

Will You Please Introduce Yourself Further

02:20 Emily: I have joining me on the podcast today, Julie Chang. She is a graduate student at Stanford currently, and we’re going to be talking about credit card hacking, credit card rewards strategies today. So, Julie, will you please introduce yourself a little bit further?

02:34 Julie: Sure. I’m a fifth year bioengineering PhD student at Stanford, and I’m currently studying how the mechanical properties of the extracellular matrix affect cell behavior and specifically in the context of cancer.

Credit Cards vs. Debit Cards

02:48 Emily: Yeah. Excellent. You have done what I used to view as the impossible, which is having a strategy for credit card rewards during graduate school. And I always thought there’s a little bit out of reach, so I’m really excited to learn more about credit card reward strategies in general, and then the strategy that you use in particular. Let’s just start off for listeners with what are the general advantages for using a credit card versus using a debit card? Because I know for me, I definitely started out just using debit cards. I was a little bit afraid of credit card. So what are the advantages?

03:22 Julie: Yeah, so I think there’s a couple of main advantages. The first is that you can earn rewards often in the form of points or miles, and then you can actually redeem this for either cash back or for miles to fund plane tickets. And on another point is that you can actually use credit cards to help build credit history. So in the future, when you’re buying a house, getting a mortgage, having a high credit score is super important.

03:50 Emily: And another benefit I’ll add to the two that you just mentioned is there’s a little bit more fraud protection available for credit cards. It’s quite easy to have a fraudulent charge reversed, erased on a credit card versus maybe more of a process or maybe even potentially impossible with certain charges on debit cards. Those are three, three great ones.

Pursuing Credit Card Rewards

04:08 Emily: Specifically on the rewards aspect of using credit cards, what are the different kinds of goals you might be able to pursue?

04:15 Julie: Right. Sometimes you can acquire airline points, so you can get a lot of Delta points, American airline points, and then you can use those to re redeem tickets, either domestically or internationally. On the other hand, you can also use points for cash back. Then you can actually use this to kind of pay yourself back when you purchase, say groceries or anything else. It kind of depends on the credit card.

04:43 Emily: Yeah. I know when I was in graduate school and I started learning about this area, I definitely only tried to pursue the static cashback, because I guess I sort of felt like the travel rewards were a little bit more, it’s a little bit higher level. It’s a little bit more complicated. It’s something you have to learn. There’s more of a learning curve on that. So I definitely stuck with the static stuff at first, which I think is a pretty common approach for people. But both of those are different kinds of strategies that will work. For you in particular why are we talking to this today? Why is this a strategy that you have learned a lot about and decided to pursue during your graduate degree?

05:19 Julie: For me, I’m doing my PhD program in California, but my family lives in New York, so then I would have to go back during breaks and my partner, he’s actually also a PhD student in Atlanta, so this requires a lot of traveling. Also a lot of my relatives are in Taiwan, so occasionally I make these international trips. Basically my perspective is using credit cards on things that I would purchase anyway and slowly build points to then redeem for these flight tickets. My goal was to not spend too much money on flights during grad school, but I don’t want money to be kind of a limiting factor in that I can’t see my partner or my family.

06:08 Emily: Okay. And was there…when did the shift happen? When did you set this as a goal? Was it just when you were starting graduate school, when you were looking at the geography of the situation and realizing the challenge, or did you go for while paying for flights in cash and then said, well, there must be a better way here.

06:23 Julie: I got into it just before graduate school since, I think to apply for credit cards, it’s a lot easier to apply for credit cards after you’re a certain age. It might be 21. So before then, I wasn’t really applying for credit cards anyway. And I think just when I turned 21 and then it was right before I went to graduate school, so it kind of worked out in that sense. And then I just kind of learned about it from searching online.

06:54 Emily: Yeah. And would you say that you’ve done more traveling than you would have been able to do just if you were paying straight cash? What’s been the effect on your finances, I guess?

07:06 Julie: Yeah. Essentially I typically don’t really need to factor flights into my budget, which is really, really awesome. And basically when I need to travel, I typically am able to, of course I still need to look at my budget overall, but there is a lot of flexibility. Another example is that my partner and I, we were able to go on a vacation to Greece, which typically the tickets might be a little bit more expensive and because we were able to pay for our flights in points, then maybe we have a little bit more flexibility in our budget for say housing or for food, during our vacation. So it definitely just reduces the impact of needing to spend a lot on a vacation.

07:50 Emily: Oh yeah. I mean, I can’t remember exactly what I was saving to spend on travel during graduate school, but I think it was at least a couple hundred dollars per month per person. And that was really mostly just for like obligation travel, like I have to go see my family, I want to go attend this wedding. So yeah, it’s really inspiring what you’ve been able to do. I’m really excited to dive into the mechanics of exactly how this happened.

The Basics of Credit Card Churning

08:13 Emily: What you have been doing as a strategy known as credit card churning. Can you explain what that is?

08:20 Julie: Yeah. Basically the bulk of the cash back from credit cards isn’t necessarily through the exact amount of money that you spend. It’s actually through these bonuses of signing up for new credit cards. For example, in some credit cards, you can get a certain number of points, usually it’s pretty high, maybe like 50,000 points, if you spend a certain amount of money in a few months. So a lot of cards you might have to spend $1,000 to $4,000 in about three months. And these points have 50,000 points. It could translate to say $500 if one is 1 cent, but if you can actually increase the value, say 1.50 cents per point, it becomes $750.

09:05 Emily: Yeah. I think maybe another way of phrasing what you just said is the amount of money that you need to spend to gain a given level of rewards is much less when you do that through signup bonuses, rather than through ongoing spending and ongoing cash back. There’s this lucrative period available right when you sign up for a new card. It’s the incentive that they’re giving you to do your business through that card versus some others. It’s this opportunity to capitalize on, right when you first switch onto a card. And so credit card churning is like very frequent switching onto new cards to gain those early on sign up bonuses. Is that right?

09:42 Julie: Yes, that’s correct.

Keeping Track of of Credit Cards

09:44 Emily: Okay, awesome. For you, as I said earlier, this is a little bit of an advanced level strategy. How do you keep track of all these cards that you either currently have, or maybe ones that you need to close, or maybe ones that you’re planning on opening? What is your mechanically…how do you keep track of all this?

10:04 Julie: Oh yeah. I basically do this through an old-fashioned spreadsheet. I color code everything. I typically put when I sign up for a credit card. And this is especially important if a credit card has an annual fee, because potentially you might want to cancel or downgrade the card when the annual fee comes up because it might not be worth keeping the card.

10:27 Emily: Yeah. So you keep track of when you sign up for a card, and then when one year, let’s say, is up for something that has an annual fee. Do you keep track of anything else? Maybe the minimum spend amount I would imagine, and the time period over what you have to do that?

10:40 Julie: Yeah. I keep track of all of that. I actually go into more detail in which I actually, every month I update all the point totals that I have and I also keep track of all of my redemption. So I think that might be a little bit extra in the amount of information I’m keeping track of, but for me it’s actually pretty fun to just tabulate everything.

11:01 Emily: Yeah. I could totally see how this would be fun because there’s kind of two halves of this, right? There’s like the accumulation of points and then there’s the planning of how am I going to actually use these points. And that is the really pleasurable par, I think, especially if one enjoys planning then getting to play around with different scenarios and so forth. Well, let’s come back to that in a few moments.

Meeting Minimum Spends

11:20 Emily: We just mentioned the minimum spending requirements like between one and $4,000 over a period of some months, that might seem like a lot of money on a graduate student’s stipend. So how do you actually make sure that you’re going to meet these minimum spends without, as you said earlier, outspending your budget, outspending your planned expenditures?

11:40 Julie: First I just want to be clear that everyone has to be very careful and tracking their finances. And you’re definitely in a very privileged position if you are able to do this. But for me, I look at many different factors. So one is timing. If I have a big purchase coming up, then I might as well use it in a minimum, spend another, more specific for graduate students is if you have conferences. So conferences can be pretty expensive. Sometimes you have to use your own credit card, so why not actually use it to help meet a minimum spend? Another thing that I’ve done is paying stuff in advance for other people, especially my family, where, for example, if we have a cell phone bill, I can pay that ahead of time. Another one that actually found out more recently is that you can actually pay estimated taxes with credit cards. And this is really interesting because with a credit card, there is a fee of, I think the lowest is 1.87%. But say, if you have a credit card that does 2% or even a special credit card, if the rotating category matches 5%, you can actually make money by paying the estimated taxes, which you actually have to do anyway. However, if you don’t have a card for that, if you’re actually trying to meet a minimum spend, perhaps it is worth it to pay that fee to kind of help you get that really high bonus for the credit card.

How Many Cards is Too Many

13:09 Emily: So for you, like let’s say in 2019, how many new cards did you sign up for?

13:19 Julie: I would say I haven’t signed up for too many cards just because I’ve been slowing down a little bit towards the end of my PhD, but I would guess maybe three to four cards, so nothing too crazy. I know there’s people that are super into it that might sign up for 10-20 cards per year.

13:36 Emily: Yeah. Well, that’s 10-20, that’s a number of more minimum spends that you need to hit. Actually three to four sounds like fast, but like okay, reasonable pace for graduate students. I think that this strategy of keeping track of minimum spends and what your expenses might be that are coming up that might help you meet those minimum spends, it goes actually really well with the strategy I love to talk about, which is that of targeted savings accounts. Not specifically the saving in advance for doing things, which is also a good idea, but actually more the planning aspect that comes along with keeping account budgeting like that is that you can look out over the next six months or over the next year and say, yup, I know that this large expense is hitting in this month. I know this needs to be, be paid here. And I definitely found that there were some one, two month periods when I was in graduate school where I would have like a flight I needed to buy, well, I was buying them in cash, a flight I needed to buy, and my six month car insurance premium was coming up and there were some other maybe some housewares or electronics purchase we need to make. There were definitely months where they would hit kind of like that, and I was budgeting for those and using targeted savings and thought that was great, but hey, the next level up from that is yes, save in advance, but why not also put it on a credit card and meet a minimum spend that you’re gearing up for anyway.

When to Apply for a New Card

14:48 Emily: This is more of a personally motivated question, but how far in advance of, let’s say a major purchase that you know is coming up on a certain date, would you need to sign up for a card? How do you actually time this so you know that you have the card ready to go when you actually need to make the purchase.

15:04 Julie: Yeah. I mean, I would probably do at least a month just because you have to apply for the card. And in some cases, if you’re not approved right away, you might have to wait a week or so. And that doesn’t mean that they’ll reject you, it’s just something that is part of the process. Another is if you put a credit freeze on your credit score, so that’s actually something I’ve done to be extra careful, you might have to lift your credit freeze, and that also takes some time. So I would budget at least a month.

15:35 Emily: Yeah. I know there’s a little bit of a game there because you need to give some buffer time in advance, but you also need to have enough purchases within the period of time to get the bonus to go through.

Commercial

15:46 Emily: Emily here for a brief interlude. If you are a fan of this podcast, I invite you to check out the Personal Finance for PhDs Community at pfforphds.community. The community is for PhDs and people pursuing PhDs who want to take charge of their personal finances by opening and funding an IRA, starting to budget, aggressively paying off debt, financially navigating a life or career transition, maximizing the income from a side hustle, preparing an accurate tax return, and much more. Inside the community, you’ll have access to a library of financial education products, which I add to every month. There is also a discussion forum, monthly live calls with me, book club and progress journaling for financial goals. Basically, the community exists to help you reach your financial goals, whatever they are go to pfforphds.community to find out more. I can’t wait to help propel you to financial success. Now back to the interview.

Using Credit Card Churning to Fund Travel

16:50 Emily: So you mentioned the challenge that you were facing of living far from your family and your partner, and you also mentioned, okay, you’ve been able to, for instance, you were able to go to Greece with your partner. What were some of the other benefits that you’ve experienced by doing this? For instance, have you ballparked like how much money you have not spent on travel by doing this strategy? Or can you tell us a little bit more about the upside?

17:13 Julie: It’s definitely quite a bit of money that I’ve saved through travel. I don’t remember exactly how much, but for example, I would go from California to New York round trip before the pandemic, probably two to three times a year. Then in addition, I would also go to Atlanta or vice versa maybe a couple of times a year. So it’s definitely many flights that I’ve saved on. And pretty much I’ve been able to not pay cash for most of my flights during grad school.

17:44 Emily: Yeah. It’s just an incredible benefit to not have to have that aspect in your budget, of paying for travel when you know that you have to do it like this. It’s really amazing that money can come kind of from nowhere, if you have a great credit score, if you’re really on top of your budget, if you have a spreadsheet like you do and you’re keeping track of everything and being diligent. It’s just amazing how much money you can free up for your budget. So I hope this is sounding like good news to some people in the audience who are currently spending more than they would like to on travel.

Credit Card Churning Strategies

18:14 Emily: For you, like when you’re realizing you’ve come to the end of a one period of minimum spend and you start thinking, well, what’s going to be my next card, how do you search out these cards? How do you actually find that’s going to be the best fit for you?

18:27 Julie: There’s a lot of very active communities on the internet. Specifically on Reddit, there’s a subreddit called churning that has all of these. There’s a lot of specific websites such as Doctor of Credit. Actually, I keep pretty up to date and people will typically announce whether there might be a new card coming up. But for me as a graduate student, if I know I don’t have any big purchases coming up, it’s also a practice of self-restraint, where I know I shouldn’t apply for new credit card, and instead kind of look at my portfolio of credit cards and see perhaps certain cards have increased points per certain category and maximize that instead.

19:10 Emily: I see. And then you mentioned earlier cards with annual fees, specifically canceling a card with an annual fee before that second fee comes up. How do those overall play into your strategy? Is it something that people should consider or maybe should avoid? What are your thoughts about that?

19:26 Julie: I would say definitely for beginners, maybe focusing on cards without annual fees because they also have much lower minimum spends, so it would be pretty easy to hit minimum spend. But for me, the only card I have with an annual fee that I currently use is a Chase Sapphire Reserve. For me, I always have to do a calculation, whether it’s worth it for me to keep the card for the next year. There’s certain factors that I consider. One is looking at the benefits that the card offers and if I would actually use that, and another that I might consider is whether keeping the card will help me increase the value of the points that I’m spending. For example, with the Chase Sapphire Reserve, each point I can actually redeem for 1.50 cents instead of just 1 cent.

20:19 Emily: Yeah. I actually, so also for me, the Chase Sapphire Reserve was the first or maybe the second card with an annual fee that I ever signed up for. And I actually just canceled it a few months ago because I was like, I’m not traveling. I’m not traveling anytime soon. I don’t want to pay this fee because I do not see any redemption on the horizon. What I did specifically with that was I transferred the points to another Chase branded card that we had figuring at some point in the future, I’ll probably get the Reserve or the Preferred again, transfer the points back and be able to redeem them at at least that much value, if not more/better later on. So that was my particular solution to that, but I’m glad that you reevaluated and decided, okay, I’m going to keep this card for the time being. It does have some pretty nice perks to it for a high fee.

Churning During the Pandemic

21:04 Emily: Speaking of the pandemic and recent changes, what has been going on with you and this strategy in the last six months?

21:11 Julie: Yeah. So there has actually been a lot of changes to the point space since the pandemic and I think these effects are likely to stay for quite a while. So obviously I’m not redeeming my points for travel; however, for Chase, because they realize this they’re actually allowing you to redeem 1.50 cent per point for groceries. Before it used to be just travel, but now it’s actually for grocery purchases. So for me, if I put my grocery spend on the Chase Sapphire reserve, I’m able to redeem those points for the groceries. And also since I had a few canceled flights this earlier this year, then I’m not really looking to apply for cards that will give me more miles, but I might look for cars that give me a little bit more flexibility in how I can use those points.

22:01 Emily: Hmm. So when I thought about the pandemic and affecting my travel plans, both personally and professionally, I’m already in a period of not applying for cards right now because my husband and I are looking forward to buying a house in a few months. And so we don’t want to be messing around with our credit right now. If not, I think I would probably still be signing up for stuff because I, again, hypothetically, I think my attitude would be well, get the points, bank them now, spend them later at some point. Why is that not your approach? Why do you prefer the flexibility right now?

Julie (22:36): Well, so actually right now, I’m not really applying for cards and I’m just kind of using my current portfolio of cards to reach or to kind of build up the points, as you said. I might look towards applying for a card later this year, but I’m actually not in a rush to apply for new cards right now.

Planning Point Spending

22:59 Emily: Yeah. You said you updated your spreadsheet monthly with figuring out how many points you currently have and with what providers and so forth, how do you go about planning how you’re going to spend the points? What is that process like for figuring out, okay, these points transfer to this airline, you know, all of the complexity that goes along with that.

23:18 Julie: Yeah. That I would say is actually the hard part of figuring out how to use those points. There’s certain programs, like Chase, where it’s pretty easy to redeem the points because you can just do it through any airline by using Chase travel, but certain cards you can actually transfer it to specific airlines and convert it into miles, which is actually, even though it’s harder, it could be better because you could get better value for your points. For me, I like having points in several different companies, for example, also in American Express. I also have points specifically in Delta, so then whenever I, for example, if I want to travel to New York, I can look at what are the different points I have and figure out which program I want to redeem it in for the best value.

24:10 Emily: I’m also thinking that some of this, the planning of the redemption might be specific to your local city. You obviously live in a major city with several different airports and airlines to choose from. I’m also reflecting, I recently moved from Seattle to the Los Angeles area. So in Seattle it’s all about Alaska. Like Alaska is by far the winner airline right there, so I was always trying to sort of figure out how to get Alaska airline points versus other things. Now that I live in a different kind of city I’m thinking, well, my strategy might need to be different. Do you know of any resources where people can find out more about the airlines that service their local airports or maybe their destination where they commonly go, they want to figure out how to do that?

24:51 Julie: I think the best way to figure that out is just looking through the specific airline website and figuring out which destinations your city travels to. But otherwise also just looking online to see what other people tend to do in your city.

25:08 Emily: Yeah. And I guess if you live in a major city, like the San Francisco Bay area, Seattle, Los Angeles, there’s going to be plenty of conversation around how to do this in cities like that. Well, is there anything else you want to add to tell the audience more about your strategy or what you’ve been able to do with it?

25:26 Julie: I think as a graduate student, even if you don’t want to start off with churning right away, my best advice is to just get a credit card with a low minimum spend and at least use that to start building your credit score and acquiring some points.

Best Financial Advice for Early Career PhDs

25:43 Emily: So Julie, as we wrap up this interview, what is your best financial advice for another early career PhD?

25:50 Julie: My best financial advice would be to start early. Many financial related actions serve their greatest benefits when done early, so the effects can be compounded over time. And I think this not only applies to investments compounding over time, but also any positive practices that you do such as saving money on food by not eating out too much or using credit cards to your advantage.

26:14 Emily: Yeah, absolutely agree. Starting early, I mean, a lot of graduate students might feel like they don’t have a lot of options right now, especially living on a lower stipend, but anything you can do any habits that you can form any even habits of mind that you can work on, it’s all going to benefit you throughout your time in graduate school, after that going into your career, and really, I like to think of it as, if you build up these habits and practices and thought patterns right now during graduate school, once you get that higher salary later, you’re going to be able to like hit the ground running blast through financial goals, when you get to that point, if you’ve done the sort of mental preparation beforehand, even if you don’t see a lot of actual financial progress earlier on.

26:57 Emily: Thank you so much that advice, and thank you so much for joining me today, telling the audience about your strategy. I’m really excited post buying a house to be back on the credit card rewards game so this is really inspiring to me.

27:11 Julie: Thank you.

Outtro

27:13 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.

This PhD Student’s Intricate Budgeting System Uses Cash Symbolically

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In this episode, Emily interviews Alicia Jones, a PhD student at the University of Illinois at Urbana-Champaign and the creator of the YouTube channel Alicia Does Adulting. Alicia explains in detail her intricate budgeting system, which involves creating a zero-based budget every two weeks, allocating cold hard cash into envelopes, contributing to her debt avalanche, and funding her targeted savings accounts. She uses this budget to keep her intimately connected with her spending decisions and accountable to her financial goals. Alicia and her husband have paid off $70,000 of debt in the past year and a half and now have a positive net worth.

Links Mentioned in this Episode

Teaser

00:00 Alicia: I try to turn whatever I can into a game. And finance has become a game for me. I do the little colored charts. I want to see exactly how much money I can put towards savings or debt each month and that continues to motivate me.

Introduction

00:18 Emily: Welcome to the Personal Finance for PhDs Podcast, a higher education In personal finance. I’m your host, Dr. Emily Roberts. This is season seven, episode six. And today my guest is Alicia Jones, a PhD student at the University of Illinois at Urbana-Champaign and the creator of the YouTube channel, Alicia Does Adulting. Alicia explains, in detail, her intricate budgeting system, which involves creating a zero based budget every two weeks, allocating cold, hard cash into envelopes, contributing to her debt, avalanche and funding her targeted savings accounts. She uses this budget to keep her intimately connected with her spending decisions and accountable to her financial goals. So far Alicia, and her husband has paid off $70,000 of debt in a year and a half and now have a positive net worth.

01:12 Emily: You’ll hear an exciting new addition to the interview today, which is a couple of questions contributed live by members of the Personal Finance for PhDs community. Going forward, members of the community are invited to attend my podcast recording sessions and ask their own questions of my guests. If you would like to participate in the interviews as well, all you have to do is join the community at pfforphds.community. If you’d like to check out my schedule of upcoming podcast recording sessions, you can find that pfforphds.com/podcast. Joining the community is an excellent way to support the podcast. Plus, you’ll receive myriad other benefits. Without further ado, here’s my interview with Alicia Jones from Alicia Does Adulting.

Will You Please Introduce Yourself Further?

01:58 Emily: I have joining me on the podcast today Alicia Jones from Alicia Does Adulting, which is the name of her YouTube channel. And Alicia has really fantastic story to tell us, but really primarily, she’s here to teach us her budgeting system, which is quite intricate. And I highly recommend that you go check out her YouTube channel. It’s actually really fascinating. You’ll be hearing more about it as we go forward. Ao Alicia, please introduce yourself a little bit further for our audience.

02:26 Alicia: Well, thank you so much for having me. This is super exciting. My name is Alicia. I’m a third year doctoral student and I go to the University of Illinois at Urbana-Champaige. I am studying kinesiology. I actually got my masters from U of I in kinesiology as well. And my research interests are kind of varied. I’ve not had the most traditional grad student experience. I am running on average three studies at once, just because of the way my program is. Overall, my research is how behavioral changes impact the overall wellbeing of people with and without disabilities. I also work in MS work. I work in breast cancer work. I kind of do a little bit of everything, but it’s nice being in kinesiology because you get to wear leggings to class sometimes. If you’re looking for a major or concentration, highly recommend exercise science for that.

03:20 Emily: All right. That’s really fun. Well, thank you so much for sharing that. And along the way of your grad school journey, or maybe before, I don’t know, you developed an interest in personal finance, and in particular, you started your YouTube channel, Alicia Does Adulting. The channel name is quite general, but I think that you mostly talk about personal finance stuff, is that right?

03:39 Alicia: Yeah. The way that I introduced the channel is that I’m attempting to get my life together and I’m focusing on finances first. Eventually I would like to fully adult with all the aspects of adulting, but I’m not there yet. I’m still working on the money part.

03:55 Emily: Yeah. Well, the money part is going to, it takes a lifetime to work all this stuff out.

Alicia’s Budgeting System

The Basics

03:59 Emily: Really excited to get to the topic of our conversation today, which is on your budgeting system, which of course, when I saw your YouTube videos, I was absolutely fascinated by this. Please, I know it’s going to take a little while to explain, but just kind of walk us through all the different elements that you use for your budgeting.

04:14 Alicia: Definitely. I will start off with, I’m not saying that this budgeting system is for everyone. Everyone has their own way of making this work for them. I actually originally started doing a monthly budget and it failed horribly and I started playing around with it from there. The way that I will describe my budgeting system is that it is a zero-based, paycheck-to-paycheck budget.

04:41 Alicia: What does that mean? Zero-based means that I take any remaining penny after my bills, expenses, free spending money, any of that, and it gets given a specific job. So before the pandemic, that was pretty much exclusively going towards debt. When the pandemic hit, I switched my goals and I wanted to save some money, so it all went there. So I have $0 left after my paychecks are all cleared. I do keep a little bit of money in my checking account just because math is not always my friend and sometimes I forget something. I leave about a hundred dollars cushion. So you don’t have to worry about overdraft fees this way.

05:23 Alicia: Then I do paycheck to paycheck. Between my husband and I, we have anywhere between four and eight or nine jobs at once. The paycheck to paycheck system worked well for me because every other Friday we each had a steady income coming in on those days. All of the bills that come up during that pay period, I take care of all of that during that paycheck. Then if I’m saving up for something, I can kind of devote that. It comes down to a lot of planning and a little bit of strategy, I guess.

05:56 Emily: Yeah. Let me make sure understand exactly what’s going on here, because this is definitely different from how I budget and probably how most people do it, which is one of the reasons why I wanted to have you on. When you say that you have the zero based budget, is what you mean that when you receive your pay or at least every second Friday, when you’re settling up, you are at that point, allocating all of the money for the upcoming two weeks, is that right?

06:20 Alicia: I do it within the week. Anything that was due on that Friday, I account it starting there up until the next Thursday. Whenever the bill is hit, for the most part, I tend to pay my bills about two weeks in advance, just because I’d never want to miss it. That just tends to be my system, but if you look at a true paycheck to paycheck, it would be within that Friday to the following Thursday.

Dealing with Variable Expenses

06:46 Emily: Okay. And then I understand that the bills that have come in, that’s a fixed amount, you know what it is. What about money that’s sort of up to you, like your grocery spending or some discretionary money. Are you allocating a maximum that you’re going to put towards that? Or how do you handle variable expenses?

07:05 Alicia: This is where my system probably gets more complicated to people, but it’s what works for me. I use a cash envelope system on top of it. For groceries, for example, for our household, every paycheck, I set aside $300 for household, so groceries and whatever else might come about, but then I put everything on credit cards. If you watch my channel, you’ll see I will do an expense tracker where I go through every single penny that I spent, then I actually will take the money out of the cash envelopes. The reason why I like this system is I am a chronic spender. I actually managed to get myself into $15,000 of debt in my early twenties and I never want to be in credit card debt like that again. This is kind of like a checks and balance system. If I didn’t have that check for me personally, if I say I’m only spending $50 on clothing, and then I find a $75 outfit that I really want, in my brain, I still want credit card. I want to put it on a credit card. I want it now, that kind of thing.

Alicia: What I can do with my system is, “okay, I bought the $75 outfit, I have to make a sacrifice somewhere else because I don’t have any flexibility.” That $25 could come out of my household to make up the difference, but then I can’t spend all of my money on household. It kind of becomes a checks and balance system. And for me, I’m flexible with it. Some people, with the envelope system, it’s very much like when you hit the end of your envelope, you cannot spend any more. And I just give myself a little bit more leeway. Things come up, or sometimes you just need to de-stress a little bit and maybe you go out and have a drink with a friend or something. As long as I’m making sacrifices and none of it stays on my credit card, then I’m happy with it.

09:01 Emily: So the cash aspect is actually a stand in for just, this is the limit. The important part is not literally that you’re using cash because ultimately when you make the purchases, you are not using cash, you are using credit cards. But the cash is just sort of a visual and physical reminder that, okay, that’s the end of the envelope, you’ve reached the end, now you must reallocate if you need to go beyond that. I definitely like this aspect of it because I am not that strict with my budget anymore. I used to be quite strict in a similar way, like, okay, I overspent here, I’ll have to transfer from somewhere else now. I sort of let it go, but I definitely find it attractive to, at the end of the day, make sure everything’s added up to zero to account for the entire paycheck.

How Alicia Keeps Her System Flexible

09:43 Emily: Okay, we’ve talked about it being a paycheck to paycheck budget, a zero based budget. You’re allocating every single dollar that’s coming in. We talked about the cash envelopes. Are there any other elements to your budget that you’d like to share?

09:56 Alicia: I think the big thing for me, and it’s one of the things that I think some people don’t understand if you’ve watched the channel for a little bit. It’s strict and slightly complicated, but it also allows for a lot of flexibility, and that was something that was really important to me. Everyone that’s listening to this is either in grad school or wants to go to grad school or has experienced grad school and we know how stressful it is. And I try to add as little extra stressors to my life as I can, but I have a bunch of student loan debt that I really want to pay off. I have a bunch of financial goals, like I’m working towards technically retiring early. I want to have that kind of cushion in my bank account. So I want to start working towards those goals, but I also just don’t want to stress myself any more. It is a little bit time consuming, which is why I’ll say it’s probably not for everyone, but it is something to potentially give it a try. It’s been really fun on the YouTube channel in particular, because I get to hear people trying my system and it was never really meant for other people to try it, it’s just what worked for me, so it’s been really cool to hear success stories about how it works. If you’re interested in it, definitely give it a shot.

11:11 Emily: There was one more thing that I wanted to ask you about, which is, I believe that you also use sinking funds or, I use the term targeted savings accounts for that. Is that the same as your envelopes or is that a separate sort of variation on that?

11:25 Alicia: It’s very similar, but I leave my sinking funds online because they’re usually bigger purchases and I just don’t want to have that cash on me, personally. I put all of my sinking funds into one checking account and then I have an online tracker for everything. It’s a similar kind of grace system of, I actually have three sinking funds that are negative right now, and it’s because I’ve borrowed from other places. We do an annual trip to Canada, but we didn’t this year because the borders were closed. So I have some money set aside in that account that I can borrow from. I do highly recommend sinking funds or targeted savings. They have been a massive game changer for me because that was one of the ways that when I originally started to budget without much guidance, those types of things like needing new tires, I logically knew that those that was going to happen, but I never planned for it. And then the month would come and it would be a disaster and it would go on a credit card and then I’d carry on. And that’s how I got $15,000 of credit card debt.

12:31 Emily: Yeah. Can you actually, for the listener, explain a little bit further what a sinking fund or a targeted savings account is, and actually give a few maybe examples or your list of which ones you have named.

12:41 Alicia: Definitely. Sinking funds and targeted savings accounts are things that you’re saving up for that you know will eventually happen. For me and my family, we celebrate Christmas. Christmas happens same time every single year, and I know approximately how much I want to spend. So instead of in December pulling $600 out of my budget, every single month, I put $50 into a Christmas sinking fund account. I have some for the Canada trip that I mentioned, which is usually about a $2,000 expense, so I save a couple hundred dollars every single month, so it doesn’t feel super overwhelming to me.

13:19 Alicia: I actually did some research into sinking funds because they were such a game changer and I’m a grad student nerd, so I wanted to know what the literature said, and it’s actually a concept of being able to allocate money with a name. I don’t know if any listener or if you might have this experience, but I’ve actually always been a semi-decent saver. I always had money and usually several thousand dollars, at least in my savings account, but then my tires would blow up and I would need new ones and I’d put it on a credit card because to me in my brain that wasn’t an emergency. I shouldn’t take that out of my emergency savings. That money always has to be there. So by allocating this little bit of money that just sits to the side that has a name, it makes the rational jump of, “Oh, I need new tires. I have a car maintenance fund. It comes from the car maintenance.” That is probably one thing I will keep the rest of my life, no matter what. It is a massive game changer for me.

14:19 Emily: Yeah. I absolutely love sinking funds and targeted savings accounts as well. I started using them in grad school as well, when, similar to you, I had some expenses come up and in our case we didn’t go into credit card debt, but we just had to say no to a bunch of stuff that we didn’t want to say no to. And it kind of helped us realize, okay, well we do need to do some advanced planning for these sort of large expenses that come up every so often. So I started using them in grad school as well. And I did have a year when I didn’t use them, which was the year from when we left Durham, where we were living during graduate school and moved to Seattle. And so for that first year in Seattle, everything was an upheaval and we had no idea, it was a lot harder to predict your expenses once you moved to new place, et cetera, et cetera. But after that year, I was like, “Nope, I’m tired of living this way. I need to go back to having the targeted savings accounts in place.” So they’re back in place and still in play, which has been wonderful. Of course, 2020 has thrown things off quite a bit. Like you didn’t end up using your Canada trip money and certainly we’ve had spending opportunities that we anticipated that didn’t happen, so there’s definitely been some reallocation, but you kind of have to roll with it.

Using a Combination of Cash and Credit

15:25 Emily: Actually we have a question that just came in from one of my Personal Finance for PhD community members. I invite my community members to listen in on my podcast recordings. So if you are listening to this podcast and you want to be in on these recording sessions and ask your own questions, I invite you to join the community. You can find it at pfforphds.community. The question that just came in is: why or how did you decide to use both cash and a credit card and not just cash? What do you do with the cash since you’re not actually spending it? And this is exactly the question that I was gonna ask too, so please go ahead.

16:00 Alicia: Yeah. This is one of the biggest questions that I get. The big reason why I didn’t want to use just cash is because I’m on campus very late at night. And so I didn’t feel comfortable. I have a very relatively safe campus, but I just didn’t want to have any extra money on me that I didn’t need to have. I’m also not a purse or bag carrier, so I have just like a little wallet that has my keys. So having the credit cards was more convenient for me and some places on my campus actually don’t take cash, they only take cards. So the few times I’d like go to pay for something. I would have had to put it on a card anyway. But there are a few benefits for me personally, at least I guess, not just me, but you do get a little bit of extra security. If something goes wrong, if it’s a payment that you didn’t actually make or something like that, there’s security systems built into credit cards, which is beneficial. I have a little bit of extra leeway. If something massive happens, so for a real life example, last night, I had to take my cat to an emergency vet and that is $2,000 and that was not in the budget. That will go on a credit card, which now gives me 30 days to pay it off before any interest hits. That’s a nice benefit. And you also get cash back. Eventually I do want to get into travel hacking, but right now I just use the cash back to help pay off random bills that come up that I wasn’t expecting or kind of like treat yourself things. And on average, I make about a hundred dollars a month on my cash back credit cards, so I’ll take that.

17:42 Emily: Yeah, that definitely helps with the budget as well, to give you a little bit more wiggle room. And then the other part of that question was, so you literally have cash in your home, and it just gets recycled paycheck to paycheck period? What exactly is happening with that cash?

17:56 Alicia: It kind of depends. Before COVID, I was very good at taking that money, putting it into the deposit envelope and taking it right back to the bank. Since I’ve been limiting my trips, it has been getting recycled. So the people at my bank know me very well and they know I have very specific denominations that I asked for. They were very used to me doing it, but it is just kind of like a cycle of cash. So I end my week on a Thursday and usually on Friday is when I will go through all of my expenses and pull out all the cash. If it’s convenient for me to go to the bank, that money just goes back and then goes directly to credit cards. If not, since COVID that money kind of just sits there, and then the next time I need to take out cash, I just don’t take it. So the cash that got left in the bank account that never came out, goes towards the credit cards.

Commercial

18:49 Emily: Emily here for a brief interlude. If you are a fan of this podcast, I invite you to check out the Personal Finance for PhDs Community at pfforphds.community. The community is for PhDs and people pursuing PhDs who want to take charge of their personal finances by opening and funding an IRA, starting to budget, aggressively paying off debt, financially navigating a life or career transition, maximizing the income from a side hustle, preparing an accurate tax return, and much more. Inside the community, you’ll have access to a library of financial education products, which I add to every month. There is also a discussion forum, monthly live calls with me, book club and progress journaling for financial goals. Basically, the community exists to help you reach your financial goals, whatever they are go to pfforphds.community to find out more. I can’t wait to help propel you to financial success. Now back to the interview.

Debt Repayment Under Alicia’s Budgeting System

19:53 Emily: You mentioned earlier that you’re working on student loan debt repayments, some other debt repayment — how does your debt repayment process figure into the budget?

20:02 Alicia: That’s one of the reasons why I like the zero based budget. I do a debt avalanche. I target one debt at a time and I specifically targeted the highest interest debt to save the most amount of money that I could in interest. I have an allotted amount of all of the previous debt that I’ve paid off. Each month $1,600 actually goes towards debt pretty much no matter what. Maybe in a massive emergency I wouldn’t, but I pretty much do that every month. Then whatever excess money I have goes towards debt. I pay all of my bills, I do all of my cash envelopes and sinking funds, and then every other penny gets thrown towards debt.

20:47 Emily: I see.

20:48 Alicia: It becomes a big part of my budget.

20:50 Emily: Just to clarify, I think when you said all the debt you’ve paid off in the past, what you’re talking about is the minimum payments of each one of the debts that you’ve made in the past that have now been cleared. You’re still quote unquote making that minimum payment. You’re just making it to the next debt and you you’re in your list, the top debt in your list. So it used to be that you had minimum payments of $1,600 and now some portion of that is you just throwing additional money at your current top loan, is that right?

21:18 Alicia: Yep. And so the way it ended up working with the debt avalanche method in particular, pretty much all of my big minimum payments were first. I did, after about five months of starting budgeting, get a $20,000 medical bill, so I put that onto a credit card and I had one year to pay that off and I made the decision to have that as part of my minimum payments and my debt snowball too. It got a lot bigger because of that.

21:44 Emily: Yeah. Wow. I’m so glad to have these examples of real life coming at you. Not that it’s pleasant or happy, but just as instructive as it is for the listeners to learn how you’re dealing with that, because I’m sure a lot of them have had similar experiences or are having similar experiences.

22:00 Emily: One comment about that debt repayment method — I think I made this name up, so I don’t know if anyone else uses it, but I call what you just explained saving first and last. In the personal finance community, we talk a lot about pay yourself first. So as soon as you get paid, you do your debt snowball, you put money towards that, all of your financial goals, you put money there, then you spend whatever remains. But I also used your system of, okay, I have my financial goals, that’s happening right after I get paid, and then whatever money I have left over because I came in under budget in X, Y, Z categories, that also gets saved or thrown into a debt snowball or debt avalanche process. I call that saving first and last because saving last is like not a good idea, but saving first and last to me that was like motivational to come in under budget in these various categories so I would have more money to throw towards the financial goals. Does that work same for you?

22:54 Alicia: Yeah. And I don’t know if you’ve read any of like the gamify literature, but that’s kind of what I do with everything is I try to turn whatever I can into a game. And finance has become a game for me. I do the little color charts. I want to see exactly how much money I can put towards savings or debt each month. And that continues to motivate me. I hadn’t thought about that it was first and last, but it definitely is.

Why This Budgeting Method Works For Alicia

23:19 Emily: Yeah. So you mentioned earlier, your system is complex, it’s intricate. That may not be for everyone, but why have you made it so complex to yourself? Why do you think that this is working well for you?

23:32 Alicia: I think a big part of it is that I am very numbers driven and I wanted to take this journey to learn as much as I could about myself and about my finances, particularly since I’m the spender of my family. I wanted to know every little piece of data and I don’t really show it too much on the channel, but I do run the numbers for myself. I like to see exactly how much I’ve increased in household spending from this time, this year versus last time. It’s complicated, but part of it just feels like I’m learning lessons every single week. And particularly with using cash and credit, I’m having to constantly remind myself that you can have certain things, but you have to make sacrifices. You don’t just get the easy win all the time. You have to balance it out.

24:24 Emily: Yeah. When I talk with people about budgeting, sometimes I talk about the merits of using an app versus like maybe creating your own spreadsheet, or at least doing manual tracking in some manner, even if it is in an app or something. And what I say about that is that, doing these things manually keeps you very intimate with your numbers. It keeps you very closely connected to facing up to the decisions that you’re making and reconciling them. It sounds like that’s why you’re doing that. In terms of recommending the system to anyone else, who do you think the system would work well for?

24:56 Alicia: It has to be someone that’s pretty motivated, I think, because it does take more time than just tracking it within an app. But I think this is someone who, if you’re very motivated by learning, I think that’s probably the biggest thing. I’m constantly diving back into my own spending habits and I really like self help type things. I love working on self-improvement and that’s, I think why I was really drawn to this method of constantly having to learn and adapt and that to me is exciting.

25:30 Emily: Yeah, that sounds wonderful. What motivates you to stick with this now intricate and somewhat time consuming system?

25:40 Alicia: Honestly, one of the biggest thing is accountability. One of the reasons why I first started this channel is I’ve found that the more that I talk about things that I experienced in my life, the more people I find to have experienced similar things, or can relate and give advice. I started talking about money with my friends and family. I started talking about it on my YouTube channel, and if you follow it, you see just about everything that I spend and do and whatnot. Unless I forget something, you see it. Knowing that that’s always there, that my friends are now tracking my progress in some ways, on the times that I’ve just really wanted to go and do something, maybe not super crazy, but a little bit frivolous I don’t because I know someone’s holding me accountable to it. And unfortunately I’m not the type of person that can just hold myself accountable. Having other people has really, really helped me in this journey.

26:39 Emily: Yeah. I’ll say another vote for that as well. My current website, my home on the web is pfforphds.com but during graduate school, I was actually blogging for under a different website, which was evolvingpf.com, Evolving Personal Finance. And I similarly, not as frequently as you, but I would do at least monthly reports of this was everything I spent and this was a very popular thing to do on the internet at that time. And I’m sure it’s still maybe on YouTube as well. And it was really, really great accountability for us, helping us to stick to our goals. We use that during the time that we were in graduate school when we really had a tight budget and we had high, lofty goals for our money. It seems less necessary in my life now, post PhD, so I’ve kind of moved on from it, but it was a really, really useful tool for that time. And just actually to mention the community again, this is something that any listener can do through the PFforPhDs Community, if you choose to use it that way. It can be great for accountability, and you’re welcome to report all your spending inside that community as well, if you want. It’ll be private. It won’t be open for everyone to see, but you will have the other community members there to at least in theory, hold you accountable.

How Alicia Uses Her Budgeting Method for Achieving Financial Goals

27:48 Emily: I was also thinking about your debt repayment journey, and now you said earlier that you’ve also started saving up more since the pandemic. Maybe your priorities are a little bit different. Can you talk about using this budgeting system and how you’re motivated to use it towards your financial goals?

28:03 Alicia: Yeah. So I started this journey with $120,000 of debt and actually just this month, I’m under the $50,000 mark, so we’re making some pretty good progress. But it comes back to the idea of kind of gamifying everything. I turn as much as I can of my life into a game to keep it fun and interesting. Each month being able to see my savings account get higher, and then you get additional interest, which is also a nice little boost because it feels like free money. And then seeing my interest amounts go down when I pay off debt or just seeing the numbers go down. Each and every month I track that I track both of those and then I also track my net worth. And so each of those has become a game to me, and again, I try to not have too much stress in my life, so if my net worth goes down, I don’t beat myself up over it. I know it’s part of the journey. When the pandemic hit, I was working really hard to pay off all of my debt by May of 2021 beause that’s when I turned 30 and I wanted to be debt free by 30. That didn’t happen and that’s not going to happen because pandemic, but now I’ve been able to see my investments grow a little bit. I’ve been able to see my savings grow. Having constant check-ins, or at least regular check-ins really helps keep me motivated.

29:21 Emily: Yeah. Thank you for telling us about that. How do you think being a PhD student interacts with this journey? I know you’re married, so presumably your husband is not a graduate student as well. Do you think that being a PhD student plays into your budgeting or your financial goals at all?

29:39 Alicia: I think in some ways. I think possibly the reason why it’s so complicated is because I do like data as much as I do, and I like being able to see those numbers. Tracking absolutely every single thing, maybe a PhD thing, but I think also being a PhD student and looking at things from more of a logical point of view has also really helped me. Being able to sit down and like logically look at the debt versus how much money I could have in retirement has really helped me on the journey. It’s helped me take some of the emotions out of finance when finance is a very emotional thing. It can be your entire life. I think that’s kind of where the PhD-ness comes out

30:23 Emily: More of like the personality of a PhD student or PhD. Will you please recommend a video or two, if people want to check out your channel, Alicia Does Adulting. So you count cash on your channel, which I had never watched a video of before, but now that I’ve seen on your channel, wow it’s actually pretty riveting. Would you recommend a video or two for people to kind of get an intro to you?

30:46 Alicia: It sounds really odd when you tell people the first time I’m a former bank teller, so the sound of cash is very soothing to me. That’s how I actually found personal finance YouTube, was cash counting. Any of the “budget with me”, you can see in detail how I do my budgets and then see the cash counting, which is very fun. I actually have a video coming out this next week, which is really exciting, so before October 1st and it’s the science of cyclical savings. I’ve kind of evolved my channel a little bit into at least two educational videos per month-ish, when I can.I dug into financial literature and I started to find different savings strategies, investment strategies. Different things that my population for the most part is not PhD students they’re not going to go to academic literature, so I kind of break it down into more lay terms for people, because I genuinely just want everyone to have a good financial standing and for it to not be stressful for them. That will be out next week and I’m really excited to talk about that, and how you can save 80% each month more than if you didn’t have a plan.

31:59 Emily: Oh, wow. Yeah. I’ll definitely watch that video and will, and get from the show notes as well beause it should be out by the time this episode comes out. That sounds fabulous.

Questions from the Personal Finance for PhDs Community

32:06 Emily: I want to take a pause here and invite any members of the Personal Finance for PhDs Community who have a question at this point. This is your opportunity to follow up with Alicia and maybe get some more specifics for your situation.

32:18 Emily: Okay, so we do have one question that came in from a community member. Would you say that using cash is symbolic for you more than anything?

32:27 Alicia: I think symbolic is a really good word for it. I just need one extra thing of accountability and I’m the type of person if I hand over $20 that actually wasn’t as painful for me as having to budget it at the end, so using just cash envelopes, didn’t really work for me in that sense, but physically going through and having to pull money out of my personal spending for an unexpected thing is very symbolic and just kind of helps visualize that process for me.

33:00 Emily: Yeah. I really liked that aspect of it as well. Thank you so much for sharing that with us. I actually didn’t really catch on to that just from watching a few of your videos, that the cash was really being recycled, at this point, not before, but at this point.

Best Financial Advice for an Early Career PhD

33:10 Emily: We’ll wrap up with our final question, Alicia, which is what is your best financial advice for another early career PhD?

33:17 Alicia: My biggest advice is it’s never too early to start and it is never too late to start. Every little bit that I’ve done along the way has helped. Every step you take really does help you and if you have never really thought about looking at your finances, today’s the day to start because you never know when one of these unexpected massive things are going to hit. Since I started my journey, I’ve had a lot of massive financial things happen and because I understood my money and I understood where I was at, I could face $20,000 of medical debt with relative calmness, which I can guarantee you, Alicia from five years ago would have been a sobbing mess over all of it and I was actually pretty calm. My biggest advice is just start. Even if it’s small, even if it’s $5, it really does add up.

34:13 Emily: Yeah, I totally totally agree. And actually just to give people some scope, you said you’ve paid off, I think it’s over $70,000 worth of debt right now. Over what time period did you do that?

34:22 Alicia: It’s been about a year and a half.

34:25 Emily: Oh wow!

34:26 Alicia: Yeah! Our first year was really good and then everything kind of hit the fan. This year has not been great, but we actually went from a negative $56,000 net worth and we’re now in the positives. We’re about to hit $10,000, which might not sound like a big net worth to a lot of people, but it was a big deal for me to be positive.

34:46 Emily: Yeah. You’re now at a $10,000-aire, right? Every order of magnitude we can celebrate. Well, this has been such a wonderful conversation, Alicia, and thank you so much for joining me and sharing your experience and your wisdom with my listeners.

35:00 Alicia: Well, thank you so much for having me. This has been super fun!

Outtro

35:04 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.

Why and How to Start a Coaching Side Hustle as a Grad Student, Academic, or Researcher

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In this episode, Emily interviews Cheryl Lau, a PhD student and branding and content coach serving graduate students, academics, and researchers. Cheryl assists her clients with their service-based side hustles, and our interview today is on why and how to start a coaching business on the side of your PhD training or full-time job. Cheryl identifies two mindset shifts that new coaches might need to make before they dive into their businesses and the first three steps they should take. Cheryl shares her story of figuring out personal branding following a quarter-life crisis and the financial impact that her own coaching income has on her grad student finances.

Links Mentioned in the Episode

Teaser

00:00 Cheryl: And that’s what I realized that, “Oh, wow. I actually have some answers and suggestions and tips. Maybe I can help people on that.” So, what I did first was actually started working with people for free. And I saw that, well, one of my clients actually was able to get a paying client for her own business. And that’s when I realized, you know what, I can charge for this.

Introduction

00:23 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season seven, episode five, and today my guest is Cheryl Lau, a PhD student and branding and content coach serving graduate students, academics, and researchers. Cheryl assists her clients with their service-based side hustles, and our interview today is on why and how to start a coaching business on the side of your PhD training or full-time job. Cheryl identifies two mindset shifts that new coaches might need to make before they dive into their businesses. And the first three steps they should take. Cheryl shares her story of figuring out personal branding, following a quarter-life crisis, and the financial impact that her own coaching income has on her grad student finances. You can find out more about Cheryl and her business at cheryltheory.com. Cheryl and I met through the self-tenure community run by Dr. Chris Cloney. And speaking of coaching, Chris is actually my online business coach. If you want to learn more about starting and running an online business as an academic or researcher, definitely check out Chris’s resources at gradblogger.com and selftenure.com. What Cheryl and I cover in this interview dovetails very nicely with some resources I’ve released this fall inside the Personal Finance for PhDs Community. If you run a business as a side hustle, whether coaching or otherwise, you may be interested in my new course, Best Financial Practices for Your Self-Employment Side Hustle. I’ve covered two topics so far how to budget with a variable side income and how to choose a self-employment retirement account. If you are maxing out your IRA this year and don’t have access to a 401(k) or 403(b), I highly recommend the latter module. To view all the benefits of being part of the community and sign up, visit pfforphds.community. Without further ado, here’s my interview with Cheryl Lau.

Will You Please Introduce Yourself Further?

02:30 Emily: I’m really excited to introduce you all today to Cheryl Lau. She is a branding and content coach focusing on PhD, students, academics, and researchers. And specifically today, we’re going to be talking about coaching businesses. Now, I just said, Cheryl herself is a coach, she helps other people who are also coaches, and I also serve as a coach. So, we have a lot of coach talk going on today. And just to frame this a little bit, Cheryl specifically works with people who doing coaching or other service based businesses as a side hustle. So, this is absolutely something that you can do on the side of your graduate work, your PhD training, your full-time job. That’s perfectly okay. So, I want you to keep listening to this episode, even if you’re initially thinking, “Wait, why would I become a coach? What could I possibly coach someone about?” No, that’s what we’re going to be talking about today. So, you’ll probably have your mind expanded a little bit about the possibility of you starting a coaching business, and Cheryl’s here with us too, to help us do that. So Cheryl, will you please tell the audience just a little bit more about yourself?

03:32 Cheryl: Sure. So hi everyone. My name is Cheryl and I am originally from Toronto, Canada, but right now I am based in Hong Kong. So, originally I studied psychology at the University of Toronto, and now I am starting my PhD in Social Welfare at the Chinese University of Hong Kong. And online, I am a brand and content coach or strategist, and I basically help academics, graduate students, and researchers to really show up online confidently and build a brand and a side hustle business that really makes an income and an impact.

What is a Coach, and What is a Coaching Business?

04:05 Emily: So perfect. Thank you. Okay. So, Cheryl, what is a coach, and what is a coaching business? Because I know a lot of people, my audience will never have hired a coach for anything, they aren’t coaches themselves. So, what exactly are we talking about?

04:18 Cheryl: Sure. So the pure, pure, pure definition, if you search on Google, I’m sure the definitions will be something along the lines of empowering the client to make a decision for himself or to empower clients to really think on their own and think about how they want to achieve their own goals. So, that’s like the pure, pure definition of coaching. But how I like to look at a coaching business is basically using your own preexisting skills, knowledge or experiences to help someone solve a problem. And that could be in the form of coaching, mentorship, or teaching. So, basically if you’ve been able to get a result for yourself or for others and you can help other people achieve that same result, you can start a coaching business on that.

04:59 Emily: Yeah. So, a coaching business could be drawn out of professional expertise, certainly, but it can also kind of be drawn from expertise that’s developed through your personal journey and then expanding that beyond just yourself, working with other people, learning from other people. And I would say that latter describes, you know, my journey as a personal finance expert, right? Like I don’t have any certifications when it comes to like the financial stuff, but I’ve spent enough time in this space, talked with enough people, listened to enough great resources that I consider myself an expert, and bill myself as an expert in that area. So really, you know, you don’t have to be a professional in the area that you ultimately coach in. You just have to be, well, frankly, you just have to be more competent than your clients, really. I’ve heard it said that, to be a coach, you have to be just one or two steps ahead of the person you’re trying to help. So, like in the financial realm, you don’t have to be a certified financial planner. If you want to coach people on their budgeting, you have to be like pretty good at budgeting. You don’t even have to know about investments or all the other stuff. So, you can sort of narrow the scope of what you’re going to be coaching on based on the actual expertise that you do have. Don’t feel like you have to be an expert across the board at everything, right?

06:11 Cheryl: Yeah. And I totally agree with that. I feel like there are maybe a few different ways that people can look inside or in the past and assess where they can draw, they can derive a coaching business from. So, maybe like you said, your personal experiences or maybe achievements you’ve accomplished. Let’s say, for example, maybe you were a TEDx speaker. You can teach people how to become a TEDx speaker or get invited to speak at TEDx events. Or maybe if you’re really just naturally gifted at something, maybe you’re just a naturally good listener, so maybe you have a particular strength and you’re really upbeat and motivating and uplifting to other people. You can support people by being a listener. Perhaps you can become a life coach eventually. So, there are many different ways you can look at your skills, your achievements, or your strengths. And I think by looking at those three areas, you can kind of start thinking about what are things I can help people solve a problem on?

Why Coaching is a Good Side Hustle

07:05 Emily: Absolutely. So, let’s get back to like the idea of the coaching business. Why would someone want to pursue this while they have a full-time job or while they are in graduate school, for example? Like why is this a good side hustle?

07:20 Cheryl: So, as graduate students or academics, your time is very, very valuable. And by being able to start a coaching business on something that you already know by using your preexisting knowledge, skills, or experiences or achievements, you’re not starting from scratch. You’re not learning an entire new craft from stage zero, but rather you’re already building on top of what you already know. So, the learning curve is a lot faster. And that said, you really do not need an original idea. So, contrary to maybe startups where you need something that’s very new and fresh and original, here, your coaching business model or the problem that you’re helping to solve for other people. It’s usually kind of mundane. It’s nothing that new. So, maybe for example, for me as a brand and content coach, there’s many people helping others in marketing or starting an online business or side hustle.

08:17 Cheryl: So, the idea itself is not new, but in fact, where there is competition, that means there’s more demand for that service. And so, because time is so valuable as a graduate student or a PhD or academic, by building a business that doesn’t require you to learn that much skills upfront, you can save a lot of time. And also by working closely with your clients, whether that’s one on one or in a group setting, you’re really able to help pinpoint what are areas that people are getting stuck on and you can really answer their questions and help them resolve issues as they come up really quickly. And as a result, your clients are getting much faster results and much higher quality results than if you were to just create an ebook and give them all the information and they were to implement it on their own. Because challenges do come up, limiting beliefs and self-doubts do come up. But if you’re able to coach them through those limiting beliefs, then they’re able to get results much, much faster. So, those are a couple of reasons people might consider starting a coaching business.

Active vs. Passive Coaching Income

09:17 Emily: Yeah. You made a couple great points in there that I wanted to follow up on. One is regarding like the value of your time as a researcher. Service-based side hustles in general, they’re the fastest way to make money on the side when you’re literally trading your time for money. So, you know, you mentioned this in contrast to like for instance, writing ebook and publishing it and maybe generating passive income over time. That’s another way to help people, but they’re very different approaches and you can charge a lot more for one-on-one or small group services than you can for an ebook, for example. And you’re literally just trading like your hours for money. And so it’s very, very fast. You can build it very quickly, turn it around. Of course, you need people who want your service.

10:03 Emily: But it’s a very quick way to make money and more reliable, I would say, then doing something like trying to generate passive income from an ebook. And I think another point that you made in there that I wanted to pull out is that the way that you’re serving people is different than them just trying to learn something on their own. They probably have already attempted to learn and take action on whatever the subject area is that you are coaching in. Like in my sphere, in personal finance, maybe someone listens to my podcast, other podcasts, maybe they love to read about personal finance, maybe they read books. But there is still a disconnect between absorbing that information and actually implementing it in their life. And so if someone is at that stage of, “Well, I’ve taken in a lot of content, but you know what, I’m just not making changes in my life, and I want to.” That might be a place where a coach could step in, like I could step in, and help that person get to that next step. So, they’re both valuable, but it’s very different approaches for helping people achieve their results.

11:03 Cheryl: Yeah, totally. And you know, there are so many different ways that a person can make money online using your own skills and experience and knowledge. But one thing that’s very unique about coaching is that, or one benefit I should say, is that by serving your audience in such a high touch, high accountability, high personalization manner, even the quality of the results that your clients will get will be a lot better than if they were to do it on their own. And because of that, the testimonials that you’ll get in return at the end of your work together will be much better. And your testimonials are very important, especially when you’re building a coaching business because other people want to see that, “Hey, this person can actually help me solve a problem and get me really good results.” And so testimonials are really important for the marketing aspect of your coaching business.

Flexible Working Hours

11:51 Emily: I think another thing that you haven’t necessarily touched on yet, but is another point in favor of coaching as a side hustle, is that it’s very scalable in terms of time. Like you can spend an hour a month coaching if you want to, or you can spend many hours per week and that could be your side hustle. And so, it’s different than, you know, a side job, let’s say where someone else is dictating your schedule and the amount of hours you should work. It’s completely up to you as the business owner to dictate how many hours you’re going to work per period of time.

12:20 Cheryl: Yeah. That’s a really great point because the flexibility of the coach is just incredible because all you really need is wifi and Zoom basically. So, by being able to, basically honestly, you can work from anywhere. You can be a coach anywhere, as long as you have the internet, even the startup costs that you need to start a coaching business are quite low compared to other business models. You don’t need that much tech. You don’t need that much software. You just need Zoom and internet, basically. You can easily package later on if you choose. So, you can package what you’ve taught and coach people on into a digital course, a passive product. But after you gain more experience, after you really pinpoint what are areas that people really struggle with and what are questions that come up over and over again, and you take notes on those issues and challenges that come up, you can easily create a digital course or digital product based on your experiences as a coach. And you can sell that much better, as opposed to just creating a course upfront and not really knowing if it’s going to be able to help people get results.

Mindset Shifts to Start a Coaching Business

13:22 Emily: Yeah, I totally agree. We’re talking to like graduate students, a lot of people and other PhDs, and they might be thinking like, who, “Who am I to be starting to be starting a coaching business, what is this? So, what are some of the mindset shifts that someone in my audience who is sort of intrigued by this idea? What do they might need to work on in their mindset before they’re able to really embark on a coaching business?

13:44 Cheryl: So, you just mentioned basically imposter syndrome: who am I to start a coaching business? And I think that is massive. And I think one other, I guess, belief that goes hand in hand with imposter syndrome is the idea, or basically the fear of judgment. So, what are people going to think if I start a coaching business? So, one perspective shift that I would really like to offer your audience today is to think about who are you trying to work with versus who are the people who might potentially be making judgments about your business? Because ultimately whatever you do in your life, there will be people who are making judgments about you, even if you’re not doing anything. Even if you’re not doing a coaching business, you’ll still receive judgment. So, the question is how much time and concern are you giving to the people who you’re trying to serve versus the people who really aren’t going to become clients in the long run?

14:32 Cheryl: And so, I would really encourage the audience who might be thinking of starting a coaching business to really think about, “Okay, this is a target audience I want to serve and how can I actually get my message and/or work in front of them so that they can see the value of my work?” As opposed to just worrying about what people are going to think, especially those who are really just never going to become fans or supporters of my work, because there’s definitely people who would never really see the value of coaching. So, that means that they’re unlikely to become paying clients or part of your audience. So, if you are really worried about what are people going to think, I would urge you to just to just focus on the impact that you can make and the audience that you want to serve, as opposed to worrying about people whose opinions really have no bearing on you serving that particular audience.

Navigating Imposter Syndrome

15:17 Cheryl: And also, as we mentioned, imposter syndrome. One really easy way to navigate this imposter syndrome is to remember that imposter syndrome really roots from feeling like you’re not credible enough to start this coaching business. But if you just remember that you’re starting a coaching business based off of your preexisting skills and knowledge and experiences, these are things that you’ve already done before, and you’re simply helping other people do the exact same thing. So, if it really is an issue that comes up, one thing that I encourage all of my own clients to do is to start working with people for free first. That way you can actually make sure that you can help people and get them results and not worry about, “Oh my gosh, can I really help people?” But by having actual evidence, concrete evidence that you can get results for other people, you are not only running your business in integrity, but you’re also able to work through that imposter syndrome by seeing that, “You know what, I can do this.”

16:13 Emily: Some people around you might be saying, “Wait, would anyone find value in the coaching that you’re providing?” But like you said, if you actually start working with clients and on a free basis or low-cost basis to begin with, then you can prove to yourself and the people who might be questioning around you, “Oh yes, I do help people get results. Like this is what I’ve done. This is what I’ve helped them do in the past.” You have the receipts basically. Once you start working with people and you can keep track of those testimonials and keep track of their results, that can both encourage you and help you answer to people who are wondering really what you’re doing here.

16:48 Cheryl: Yeah. I love that point. And you know what, very recently, I think about two months ago, I was meeting with an old classmate. So, my classmate said, “Wait, people actually pay you for this?” And I’m not gonna lie, I was pretty taken aback when I heard her say that. Because for many, many months, I’ve been working on my business and I’ve been working with clients and helping them get results. And to suddenly hear someone I used to be friends with question the validity or the legitimacy of my business was really shocking. But then in order to snap back into the swing of things, I reminded myself that, “Hey, you know what, I do have the receipts, just go on my website and you’ll see all these testimonials.” And I remember once again that I have worked with people, I’ve helped them get results.

17:35 Cheryl: And as a result, I’m able to run my business in integrity. And I think that’s really important for people to remember that you are focusing on people that you can actually help as opposed to faking your way into getting clients. Because, as opposed to just signing on every single client that is in sight, really focus on helping people that you can actually help so that imposter syndrome doesn’t come up and you can actually see the clients achieve amazing transformations.

18:01 Emily: Hmm. I totally agree about being selective about the clients that you take on. I think just coaching overall is kind of an unknown industry, or at least maybe among like the academic audience, it might be a little unfamiliar. So, I think the question of like, “People pay you to do that?” I can understand why you’d be a little taken aback by that, but I don’t think it was probably meant in offense, just like, “Oh my gosh, like there’s an industry around people getting paid to do this thing?” But like we were saying earlier, you know, for people who really want that high touch interaction with a coach, then yes. They decide at some point some of them that it is worth it to them and they choose to pay for it. So, it’s the decision of your clients, not the people around you.

Commercial

18:44 Emily: Emily here, for a brief interlude. If you are a fan of this podcast, I invite you to check out the Personal Finance for PhDs Community at pfforphds.community. The Community is for PhDs and people pursuing PhDs who want to take charge of their personal finances by opening and funding an IRA, starting to budget, aggressively paying off debt, financially navigating a life or career transition, maximizing the income from a side hustle, preparing an accurate tax return, and much more. Inside the Community, you’ll have access to a library of financial education products, which I add to every month. There is also a discussion forum, monthly live calls with me, a book club, and progress journaling for financial goals. Basically, the Community exists to help you reach your financial goals, whatever they are. Go to pfforphds.community to find out more. I can’t wait to help propel you to financial success. Now, back to the interview.

First Steps Toward Starting a Coaching Business

19:47 Emily: Let’s say that we’ve talked someone into, “Okay, I’m going to consider starting a coaching business. I have my area of expertise, my area in mind that I want to coach in.” What are some of the first steps that that person should take towards starting this coaching business?

20:02 Cheryl: So, I would say the first step is really getting clear on what do you want to coach on? And I think that if you want to gain more clarity on that, one of the steps that you can take is to really identify an achievement or a process that you’ve undergone and just map out that process step-by-step. What are the steps that you took or different areas or components that contributed to that final result? So, really just write down what are the different steps or parts of you being able to achieve a certain result or solve a specific problem for yourself.

20:35 Cheryl: And that will become kind of like your framework or methodology that you can walk people through to help them get results as well. Because ultimately, the goal is to be able to help someone through a process that is unique to you and something that you’ve done for yourself as opposed to teaching something that you haven’t really done for yourself. So, I think the first step is to really identify what are the key steps or key areas that have led you to where you are today. And then the next step would be marketing and sales. So, perhaps you can be on social media to share your services, to talk about your program, and to talk about how you’ve been able to get results for yourself. And really just share how excited you are about the program and why this worked for you and why it will work for other people who are struggling with something similar as well.

21:22 Cheryl: And finally, just delivering a really awesome coaching experience for a client. And I think those are the very fundamental steps that people can take when they’re just starting out. I mean, there are so many different things that you can do. You can start a webinar funnel, you can start an email list, you can create a podcast or YouTube channel. There are so many different things you can do to market and promote your coaching program. But I think at the core of it, having clarity on your offer, being able to share insight on your first few clients and also deliver really good results with people. I think that’s the core. The first few steps that people should look into first.

Finding Your First Few Clients and Charging for Coaching

21:55 Emily: I also think that there might be some people in the audience who are a little bit nervous about, you know, you used the word marketing. Like a little bit nervous about kind of putting themselves out there as like this coach in this certain area. You know, you mentioned earlier taking on your first few clients for free. So, I sort of view that as like an exploratory process, both for the coach and the people being coached. The coach is sort of investigating, is this something, you know, like you said earlier, can I provide value? Can I help this person achieve results? Do I like it? What do I think my time is worth? They’re kind of exploring through that process. And then of course you do need to start charging and I would say pretty soon. You know, don’t do that for very long. Can you talk to me about those first few clients? Maybe how to find them and then also the transition between doing that for free and then starting to charge for it.

22:44 Cheryl: Yeah. The interesting thing that I’ve learned about working with people for free is that because they’re not necessarily financially invested in your program, the chances of them staying committed throughout the entire process is not as committed as someone who has actually invested money into your coaching program. So, what I would suggest when you’re finding beta clients is to really be selective about it. So, invite people as opposed to just shouting it from the rooftops and hoping that people will inquire about it. So for example, what I did was actually, I looked at my current audience and I would recall the conversations I had with people and identify two or three people who I think would be a good fit and really fun to work with. And I send them a personalized message and say that, “Hey, this is my goal. I really want to launch this paid program in a few months time. But first I want to make sure that this actually works. So, based on our conversation so far, here’s what we talked about. And I think that this will be a really helpful program for you, and it will be complimentary, it’ll be for free. And in return, I just would really love for feedback and a testimonial if I provided value.” And so that’s how I would go about inviting people to be clients, your first few beta clients, you could say.

Transitioning from Free to Fee-Based Coaching

23:58 Emily: And how about that transition to starting to ask for money? I think that’s a really intimidating one for everyone, self-employed people–especially people who have been cultured by academia to believe that they should be giving away their work for free.

24:14 Cheryl: Yeah, that is a very, very interesting topic to talk about because you know, how I did it was I simply worked with people for free first and got the testimonials. And that just gave me the full-fledged confidence to tell people that, “You know what, here are the results I was able to help people achieve, both internally in terms of mindset and externally in terms of what they’re able to achieve online or for their own personal goals. And here’s why I am so confident in my work.” I think for someone who is starting a coaching business, just being very confident in yourself is something that is very important when it comes to marketing or selling your program. As long as you truly believe that you’re able to get results with people, as long as you truly believe in the impact of your work, I think that that energy can exude and can translate and people can tell. People can really tell when you’re confident in your work. But for someone who might be a little bit nervous about it, what I recommend is, I think pricing is a tricky thing. But what I recommend is just to pick a price that you are comfortable saying and sharing with people and just stick with it. No need to compare your prices with other people. Just pick a price, a number, it’s very arbitrary, to be honest. Just pick a number and then increase from there. As you gain confidence, continue increasing your prices and have it reflect the value of your work.

25:32 Cheryl: So, I think for people who might be nervous for charging, start low and increase as you go, that might be a way to go about it. Of course, please charge. Please charge for your time and the value and impact that you’re going to make for people. But when you’re just starting out, it might be a little trickier. But over time, you’ll recognize the value and impact of your work. And as a result, your prices will go up naturally as well.

Free is Okay at First, But Start Charging Soon

25:57 Emily: Yeah, I definitely agree. Okay. So, what we’re pointing out is, okay, free is okay at first, but put a limit on it. Start charging somewhere, and increase it. Whatever you feel, whatever you think you can say with a straight face, maybe after talking yourself up a little bit, start there and then increase it. I’ll say two quick anecdotes about that. One was from when I started my speaking aspect of my business. I decided to offer a free seminar to three clients. It was based on what was convenient to me geographically. And then I said, “After that, that’s it. I’m done doing things for free, and I’m going to be charging, and this is the price point.” So, I did that. One school turned me down. So, I gave two free seminars, and then I started charging. And in those first few months of starting to pitch myself and telling people about the seminar content and stuff, I was laughed at, and I was told that my prices were not appropriate a couple of different times. But I sort of knew that they were appropriate based on what I’ve learned about the market pricing.

27:00 Emily: And I just kind of had to persevere through that and, you know, ultimately, just a few months later, was able to earn that amount that I had been asking for, and then have increased my prices every year, since then. So, talk with a lot of people, once you’re ready to start charging. Cast a wide net for potential clients, and don’t be discouraged if the first two people you talk to don’t like the price point. That’s okay. Just keep pitching it and keep putting it out there, making sure of course that it’s reasonable for the market that you’re in. So, that’s one anecdote for my business.

27:32 Emily: Another that I’ll relay is Dr. Jen Polk, whose brand is From PhD to Life. She is a career coach specializing in PhDs. And I remember her saying that when she started this, this was probably about 10 years ago, she started doing this. She asked people, her first paying clients, for $10 for an hour of work. And that was the price point. And she is a huge advocate of people increasing their prices and charging what you’re worth and so forth because she did start out with like way, way, way, undervaluing herself right out the gate. And I think she did that for a little longer than she would like, which is why she’s always telling people the advice that we just gave, which is just increase, increase, increase. As you were saying, as you grow in confidence, as your pile of receipts of great testimonials grows and grows.

Origin Story of Cheryl’s Coaching Business

28:17 Emily: So, I totally think your action steps were were wonderful and right on the point. And now I want to get to a little bit more of your story. Out in the front of this interview, we wanted to talk about coaching more generally, but now I want to hear a little bit more about your story. And especially now that you’re starting a PhD program, what your coaching business is going to look like on the side of your graduate work. So, can you tell us more about your story of starting your business?

28:40 Cheryl: All right. So, let’s bring it back to a few years ago when it really started for me through a quarter-life crisis, essentially. So, what had happened was I was actually in law school. I finished my undergrad and I went straight into law school because I was in the mindset of, “Oh my gosh, what a prestigious career.” That was the mentality I had back then. So, I immediately jumped into law school without really thinking about, “Is this a really good personality and career fit for me?” But, you know, lesson learned. But fast forward a year later into law school, I realized this really was just not the right fit for me. I mean, it was very interesting to learn about the law, but being a lawyer is a completely different story. And after my internships, I realized that I just cannot do this. And so I made the very difficult decision to drop out of law school, and this was late 2018.

29:29 Cheryl: And I realized at the time, “Wow, what am I going to do with my life? Essentially, I entered my quarter-life crisis at that point. And I was dabbling in the internet looking at career websites. And I found the term personal branding. And that was very interesting to me. I’ve never heard of the concept before, but I thought, “You know what, let me try to build an online presence. I don’t know where it’s going to go.” So, what I actually ended up doing was creating a YouTube channel to share my experiences about navigating parents’ expectations, making difficult life decisions. The channel does not exist anymore, but what happened was that I was actually building a slow and steady audience on Instagram and YouTube, and people were asking me questions. They were asking me questions about, “Wow, how did you have the confidence to show up online? Like, I really want to share this experience or that experience, but I’m just so scared. Or, “How are you able to grow an audience on social media?”

30:18 Cheryl: And that’s when I realized that, “Oh, wow, I actually have some answers and suggestions and tips. Maybe I can help people on that.” So, what I did first was I actually started working with people for free. And I saw that, “Wow, one of my clients actually was able to get a paying client for her own business.” And that’s when I realized, you know what, I can charge for this. And that’s how my coaching business came about. I officially launched my paid program in March of 2019 and have been charging ever since. And fast forward to today as a PhD student, this is a side hustle for me. And my PhD is my first priority right now, but that said, my side hustle is a large source of income for me compared to my stipend. And just having that extra income, it’s able to help me feel more financially secure. Especially with such uncertain times right now, just having that sense of security is very comforting for me.

31:15 Emily: Absolutely. I don’t know how your stipend is at your university, but there are plenty of places here in the U.S. where graduate students are not paid a living wage, barely paid a living wage. And having a side hustle, especially like we talked about earlier, one where you can immediately start making money trading your time for money can really help you through. Through feeling more financial security, as you were just saying, through being able to, you know, enable some pleasures in your life that you want to pay for, to enable saving. Like there are all different kinds of goals that you might put in place for your side hustle income. So, I’m really glad that you mentioned the financial aspect of this too.

Learn More About Cheryl Theory

31:56 Emily: So, where can people find you online, Cheryl, if they want to learn more about your business and your work?

32:01 Cheryl: Alright. So, I can be found mostly hanging out on Instagram. So, you can find me @cheryltheory. And just for a fun fact, my last name is not theory, but it was simply because all of the variations in the full name was taken. So, I had to pick an Instagram handle name. So, I decided to call my business name Cheryl Theory because back in high school, I thought, “One day I’m going to have my own theory.” So, that was just a running joke for myself. So, I created my business name, my username as Cheryl Theory. And you can also find me at my website, cheryltheory.com.

Best Financial Advice for an Early-Career PhD

32:37 Emily: Perfect. So final question, Cheryl, that I ask all of my guests is what is your best financial advice for another early-career PhD? And it could be related to something that we’ve talked about today, or it could be something entirely else.

32:51 Cheryl: Sure. So, I think if I were to tie in a piece of financial advice related to the topic we were talking about today, is starting a coaching business can really bring in an extra source of income that can create so many different opportunities and options for you. But that said, one mistake that I see time and time again when it comes to new coaches, is that they get stuck in consuming information and not actually taking action on it. So, this is more so a business advice as opposed to financial advice, but I think it ties in with your coaching side hustle. So, instead of just waiting for you to feel ready and waiting to listen to another podcast or watching another YouTube video or download another PDF guide, just take action on what you’ve learned in those pieces of content, and actually just move forward. And if you fail, fail fast. And if you have to make tweaks, tweak fast.

33:42 Cheryl: The point of the matter is to take action really quickly and refine as you go so that you can keep moving forward. Because the interesting thing is that rather than having a step-by-step checklist that you can follow, and if you check off all the boxes, you’re going to get the coaching business success. That’s really not how it works, but rather there’s so many different ways that you can make money online. Just find what works for you and commit to it. So, continue taking action and not get stuck in information consumption or analysis paralysis.

34:08 Emily: Thank you so much for joining me Cheryl. This was a great conversation. I really hope that some people in the audience are going to start businesses based on, you know, hearing this. If you do, please let me and Cheryl know. And thank you. Yeah. Thank you again, Cheryl for joining me.

34:23 Cheryl: Thank you for having me.

Outtro

34:24 Emily: Listeners. Thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

This PhD’s Message for University Housing Is “Work with Us, Not Against Us”

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In this episode, Emily interviews Dr. Travis Seifman, a postdoc at the University of Tokyo. During graduate school, Travis lived in university housing at multiple universities, but chiefly two campuses of the University of California. While the housing was subsidized and convenient to arrange, Travis noted a few downsides and annoyances. Travis and Emily discuss the differences between university housing and private housing and wonder how best to allocate this scarce resource. Travis proposes an adjustment in the approach that universities can take toward their housing administration: “Make it reasonable for adults.” This episode, recorded in August 2019, should serve as a conversation starter regarding the objective of university housing and its administration, especially in the era of COVID-19.

Links Mentioned in the Episode

Teaser

00:00 Travis: The purpose of university housing is not to make money for the university. The purpose of university housing is to provide an affordable place to live for students, in light of the fact that we’re only making X amount and they know full well that we’re only making X amount. And in light of the fact that in many of these communities, local housing, regular market housing is extremely expensive. Making it affordable, and then also making it reasonable for adults.

Updates

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 seven, episode four, and before we jump into the interview, I have some personal and business updates to share with you. I’m going to start adding short updates to the beginning of each episode. This week, I have a pretty huge one on both the personal and business front, which is that my family moved from Seattle, Washington to Orange County, California at the end of August, my husband and I lived in Seattle for five years and had both of our kids while we lived there, so it’s a big change for all of us. This move brings us one step closer to our next financial goal of buying our very first home, which we are trying to do in 2021. I am documenting all the steps we’re taking to reach that goal in my progress journal inside the Personal Finance for PhDs community. If you want to keep up with our journey, or document your own, or access the multitude of resources in the community, you can find it at pfforphds.community. Now onto the interview.

Introduction

01:35 Emily: My guest is Dr. Travis Seifman, a postdoc at the university of Tokyo. During graduate school, Travis lived in university housing at multiple universities, but chiefly two campuses of the University of California. While the housing was subsidized and convenient to arrange, Travis noted a few downsides and annoyances. We discussed the differences between university housing and private housing, and wonder how best to allocate this scarce resource. Travis proposes an adjustment in the approach that universities can take toward their housing administration: make it reasonable for adults. I expect that this episode recorded in August, 2019 will serve as a conversation starter regarding the objective of university housing and its administration, especially in the era of COVID-19. Without further ado, here’s my interview with Dr. Travis Seifman.

Can You Please Introduce Yourself Further?

02:29 Emily: I have joined me on the podcast today, Dr. Travis Seifman. I’m delighted to have him. Travis, thank you so much for joining me. We’re going to be talking today about university-affiliated housing and Travis’s wide range of experiences with university affiliated housing. So Travis, thank you for joining me today, and will you please tell the audience a little bit more about yourself?

02:49 Travis: Thanks so much for having me, Emily. I’ve just finished my PhD in history at UC Santa Barbara, University of California, Santa Barbara, this year. My main research focus is on early modern Japan and Okinawa and rituals, diplomatic relations between them. I previously did two master’s degrees, actually at the University of Hawaii and the School of Oriental and African Studies at the University of London. Um, so I’ve lived in a few different places. And during my research, I also lived for a short time at the University of the Ryukyus in Okinawa, and at the University of Tokyo.

Travis’s Experience with University-Affiliated Housing

03:25 Emily: And all these different places that you’ve lived, at least some of them, or most of them you’ve lived in what I’m saying is university-affiliated housing. Can you describe the housing situations — main situation or multiple — that you’ve had?

03:37 Travis: Yeah, sure. Just to say it very briefly. When I was at SOAS in London, I stayed in grad student dorms, university housing. University of Hawaii, I stayed in regular private departments for one year. And then for two years, I lived at the East West Center, a federally funded think tank organization located adjacent to the university of Hawaii. So I lived in their dorms for a couple of years. Then, when I moved to UC Santa Barbara, they have dorms for single grad students and they also have family housing. I’ve lived in both of those, and I’ve also lived with my girlfriend at the family housing at UCLA. And during my research trips, I stayed at university dorms, visiting researcher dorms at both University of Ryukyus and university of Tokyo.

04:22 Emily: Why don’t you start with where you UCSB where did your PhD? What was your experience there with that housing?

04:28 Travis: To a certain extent, I would say it’s overall positive, simply in that university housing is always an easy go to option when you’re moving across the country or even moving to a different country. You know how to apply for it. You don’t have to arrive early, or get a hotel while you search for apartments and all this kind of stuff. And it’s often cheaper than the housing that’s around.

04:50 Emily: Do you think that it’s sometimes or usually is cheaper than going off campus because the accommodations are different, like maybe less private, for example, than what you’d get off campus, or have you actually lived in like subsidized university housing?

05:08 Travis: I think everywhere I’ve lived has been subsidized, whether it’s subsidized enough is another question. One place we could start is to just talk about the price. When I was living in the single dorms, the single person dorms at UC Santa Barbara to begin with my first year, the rent was somewhere around $980 per person in a four bedroom apartment. And the apartments in that area are somewhere around that cost. It’s the most I’ve ever paid to live anywhere. It was more than I paid to live in a private apartment in Honolulu. It was more than I’ve paid anywhere else that I’ve lived in my life for dorms in Goleta, which is a town that I had never heard of before I even moved there. We’re not even in Santa Barbara proper.

05:52 Emily: One clarifying question — you were living in a single person room, right? You had a private room in a four bedroom suite, is that right?

06:00 Travis: Yeah, it’s four individual private rooms, shared in a suite. It was $980, or somewhere around there, per month. And after I think, my second or third year there, the grad student association, or perhaps it was the TA union, actually managed to negotiate with the administration to get the rent lowered to $780, which I thought was an incredible victory. I don’t know how typical that is at other campuses, but we did manage to get it down. Regardless of what the market can bear in the area, it’s much more reasonable based on what we’re being paid.

06:38 Emily: Do you mind sharing what your stipend was at that time?

06:41 Travis: I believe it was somewhere around $1,900 a month, so if you spend half of that on rent —

06:46 Emily: Yeah, that’s quite high.

06:48 Travis: Yeah, and meanwhile, the family housing was somewhere around $1,300 a month, so you’re paying $1,300 for an entire apartment. I understand, obviously, subsidizing for families because they need it more, they have more dependents, but just to sort of mentioned that.

07:07 Emily: When you describe family housing or a whole apartment, are you saying it’s a studio or a one bedroom, two bedroom? How large is it?

07:14 Travis: Yeah, so I forget what precisely the rates are, but UCSB family housing has one bedroom apartments, they have two bedroom apartments. There’s a number of different configurations, but basically one bedroom and two bedroom, and I think they charge somewhere around $1,300 a month. And I’ve lived in one of those two bedroom apartments for a year as well.

07:36 Emily: So that was $1,300 for the entire apartment, so split between two presumably adults, maybe they have kids or maybe they don’t.

07:47 Travis: Yeah, exactly. So split between two adults, presumably both adults have some kind of income, but you know, one of them might not, one might be on a grad student stipend and the other one might be stay at home spouse, with children.

08:01 Emily: I think that’s not uncommon among international students, that if you get a spousal visa, the spouse is not permitted to work in the United States.

08:10 Travis: Right. That’s true. I hadn’t actually thought about that point. That’s true.

University-Affiliated Housing vs. the Private Market

08:13 Emily: How did it compare for you as a renter in that place versus if you had gone to the private market, as you had in the past?

08:22 Travis: When you’re working with the university housing, at least you have the advantage of that there’s an entire administration there and you kind of know who to talk to, as opposed to finding the landlord, like how do I actually get in touch with them? And to be fair, I suppose a lot of the rules probably aren’t too different, in terms of whether or not you’re allowed to have pets, most apartments don’t allow pets. Most landlords don’t want you repainting the walls or putting nails in the walls or anything like that. So in terms of a lot of those things, I suppose, I can’t say it’s too different. University housing has the opportunity to be more caring and more understanding about students. The idea that a landlord is in it for the money, that’s just the way things are. The university, ostensibly is not in it for the money. They’re in it to provide housing for members of their community. And so there’s an opportunity there to say, not just anything goes, but just to kind of be understanding of people’s needs, provide allowances, and just be a little bit more open.

09:30 Emily: I think what you’re saying is these students are part of the university community, right? The university is also their employer in many cases, or the administrator of their fellowships. It’s where they’re spending all their time and you’re part of this specific group. It’s not like when you go to the open market and as you said, it’s basically just about price, that’s it. It’s not intentionally trying to foster community or positive relationships between the landlord or the tenants or among the tenants or anything. So university housing is in a different position in that way. And like you said, one of the really positive things that it does is it makes it easy for students who are moving to a new area to find housing. They know they’re not going to be hosed. They’re not going to get in with a bad landlord or whatever. If it’s provided by the university, they know they have already a degree of trust there, is that right?

10:20: Right, right. And I think two places where private housing has the advantage over university housing because of the way that it’s administered, is in terms of access to guests, for example. I’ve had private landlords who’ve said we don’t want really loud parties, we don’t want you disrupting the whole community. But generally you have a key to your apartment that you can give to a guest if you’re leaving for a week or whatever it is. Nobody needs to know about it. You can have overnight guests and nobody needs to know about it. You can sublease and whether that’s officially allowed or not under the lease, you can sublease and people generally don’t have to know about it. University housing, they have all kinds [rules] — you can only sublease to single students who are actively UCSB students. Or if you’re in a family apartment, you can only sublease to people who qualify to be in a family apartment. If you’re going away for the summer, or if you’re going to wait for a whole year to do your research, it’s extremely limiting and for no really good reason.

11:21 Travis: A lot of university apartments, typically at UCSB, they’ve instituted that you don’t have any kind of key to your apartment. You open it with your student card. So again, if I’m even just having a guest over for one night, and I need my student card to get myself into stuff on campus, I can’t give them the card to get into the apartment. It’s these kinds of, I guess, on their point of view, it helps them enforce things maybe, or maybe it’s just a convenience that they didn’t think about the ramifications of, but it’s that kind of stuff where I’m an adult and who’s to say that I can’t have overnight guests. And even at the University of Tokyo apartments, even though the rules said that your overnight guest has to be officially a family member — a sibling, parent, or spouse, or child, I guess — when I actually, when my girlfriend actually came to visit me, they said, “well, we’ve put her down as your sister, so don’t worry about it.” And it’s that kind of, we can get into it later or maybe not, but it’s that kind of being willing to bend the rules that I think is, or not even bend the rules, but just be willing to help students rather than I’m here to enforce the rules, which I think a lot housing departments could afford to have a bit more of.

12:33 Emily: Yeah, that’s interesting. Thanks for providing the example of how you actually access your home. I was thinking, I guess it kind of makes sense for security purposes that you don’t want keys being given out and anybody being able to access whatever, especially because you have roommates within your suite, right?

12:51 Travis: That’s true. And security is an issue.

12:53 Emily: But like you said, it doesn’t allow for any discretion on the part of the actual person who lives there. And you wouldn’t have that kind of — I mean, with landlords, it’s like, okay, you’re not allowed to make copies of your keys. Most likely that’s in the lease somewhere. But as you said, it doesn’t mean you can’t allow your guests to have access a time or two when you’re not physically with them. It’s again, up to your discretion, as the person having the guest over.

Interplay Between the University and it’s Housing Office

13:18 Emily: What other experiences would you like to share?

13:20 Travis: One main thing that I would like to touch upon as I touched upon a little bit already is just the idea of having the staff there to say, I’m here to help you, I’m here to help you figure things out rather than I’m here to enforce rules. To give just a couple of examples of that, UCSB housing, if you have your own car, you can register that car, not any other. Only one car and you can park in the parking structure every day. If you don’t have your own car, you get, I believe it’s two visitor park passes a month and it’s included in your rent. I had my girlfriend coming up from LA however often, and granted that’s not allowed under the lease to be having overnight guests, but even so you won’t let me register her car because it’s not in my name, so what am I supposed to do, how am I supposed to have people park? I’m allowed to park all the time. It’s included in my rent if I have my own car, but because I don’t, I only get two passes a month. Anyway, the point of the story is to say that you walk in and the administrators say, “I don’t make the rules, I just enforce them” rather than saying, “I don’t make the rules. And I know they’re stupid, so let me tell you, actually, you can park over there over the weekends, or actually you can park here, or actually, if you use this code, you can get extra visitor passes.” Fill me in on what tricks or tips there are for making this more viable. And similarly —

14:56 Emily: I think that’s a more generalizable problem with bureaucracy, and the people who enforce it, as you said, rather than actually make the rules, but the people who are on the ground, interacting with those who are displeased about the rules. Often, the first response is just a recitation of this is the rule. Like I know the rules and this is the rule. It’s a little bit harder to find someone who’s willing to like find a creative solution. And often those people know what the creative solutions are because they know the rules so well, they’re supposed to enforce them, so they know the ways around them. It’s nice when you do find someone who is willing to work with you, but it might be something that you have to push for a little bit like, “I know the rule, but like, is there another way that I can get the result that I’m going for without breaking the rule?”

15:39 Travis: Right. Exactly. And that has to do with the way that university housing is integrated into the university administration, rather than being a separate entity, because if you have a private landlord, you can deal with them and they might be more friendly or less friendly that you can deal with them without it impacting reputation with the administration or I don’t know what to say, because it’s so integrated. And then of course, you have the opposite problem as well that very often housing is not integrated well enough into the administration, and I’ve had times when the cashier’s office agreed to let me defer my rent beausethe knew they hadn’t paid me. They knew that I wasn’t in the payroll yet, so they agreed to defer my rent for a few months and then nobody told housing.

16:21 Emily: Can you talk a little bit more about that? Because not being paid on time is actually a surprisingly common problem among graduate students. You would think that if whatever the problem was — the fellowship didn’t come through, it wasn’t processed on time, whatever it was — that housing, being affiliated with the university, they would have some procedures in place for “Oh yeah, this happens sometimes. It’s not the student’s fault. It’s again on the administration, and we have this policy where they can not pay rent for awhile.” You would hope that that would be in place. Whereas with the landlord, it might be a lot of hoops you have to jump through to convince them that it’s okay for you to not pay rent. Maybe you’ll get kicked out. That’s a possibility. So it sounds like it didn’t operate quite so smoothly for you.

17:05 Travis: Right. Actually that’s a really good point too, in terms of the pros and cons of university housing. The landlord doesn’t care whether you’ve been paid or not. I mean, they could choose to be flexible on a personal basis. Whereas the university you’re hoping it’s more integrated that they know. This particular case at Santa Barbara, it worked out very well in the end. Generally speaking, I’ve had overall, I don’t know why, but somehow UC Santa Barbara administration overall seems to be the least problematic of places that I’ve interacted with. They do seem to get their stuff together. When I first arrived at, at UCSB, as happens, I think anywhere that you go, it takes a little time to get into the payroll system. The semester or the academic year starts at the very end of September, so until you’ve worked through the month of October, then you get paid at the beginning of November. Otherwise they have no work to pay you for just yet. For whatever reason, maybe it’s typical for undergrads to pay for their housing on a quarterly basis rather than on a monthly basis. So originally they charged me three months rent at once and they wanted to take it all out of my fellowship before I could even pay my credit card bills, before I could buy groceries, before I could do anything else. Long story short, I talked to the cashier’s office and they were understanding and flexible and they agreed to not only put me back onto a monthly basis, but also to defer it so I didn’t have to pay the first few months rent until November. I then started receiving notices from the housing office saying that I hadn’t paid the rent.

18:44 Emily: So it was more of an internal communication problem within the housing office.

18:46 Travis: Right. It was just an internal communication problem between the cashier’s office on campus and the housing office over by the dorms.

Commercial

18:56 Emily: Emily here for a brief interlude. If you are a fan of this podcast, I invite you to check out the Personal Finance for PhDs Community at pfforphds.community. The community is for PhDs and people pursuing PhDs who want to take charge of their personal finances by opening and funding an IRA, starting to budget, aggressively paying off debt, financially navigating a life or career transition, maximizing the income from a side hustle, preparing an accurate tax return, and much more. Inside the community, you’ll have access to a library of financial education products, which I add to every month. There is also a discussion forum, monthly live calls with me, book club and progress journaling for financial goals. Basically, the community exists to help you reach your financial goals, whatever they are go to pfforphds.community to find out more. I can’t wait to help propel you to financial success. Now back to the interview.

Single vs. Family University-Affiliated Housing

19:59 Emily: And then the other thing that you brought up that I was interested in is you brought this up a little bit earlier about the price differential between single student housing and family housing, and you mentioned to me earlier that what is the definition of a family is a little bit of a strange thing to be talking about with university housing, right?

20:21 Travis: Right. Sure. At UCSB and I think probably UCLA as well are quite flexible and quite open minded about what counts as a family. I hope that it works similarly at other campuses. I hope that it does. At UCSB, when I applied for family housing with my girlfriend, you don’t have to be married, you don’t have to be in a hetero relationship. All kinds of different possibilities are possible — single parent with children, all kinds of different possibilities are acceptable. But you have to prove it. And I understand why on the administrative side, because you have such a limited number of units for family housing, you want to make sure that the people who are living there are actually families who are ostensibly more in need of the extra subsidized apartments. So I understand from the administrative side that they have to find some way of kind of proving that you’re a family.

21:28 Travis: At UCLA, they just do that through a very limited set of things. You have to have a shared bank account, proof of a former lease that you used to lease together under both of your names, marriage certificates, other kinds of very formal things. UCSB, for better or for worse, they say, even if you don’t have those kinds of very formal documents, you can share with us Facebook posts, texts, screenshots of your personal and private stuff to help try to show, try to prove that you’re in a meaningful relationship. So we shared with them screenshots from Facebook and from texting to say, “Oh, my parents are coming in for Thanksgiving. Are you going to be coming to dinner with us?” Or things like this.

22:18 Emily: This reminds me a little bit of, and I only know about this from TV or whatever, about green card marriages. Not green card marriages, but marriages in which a green card is involved and like having to prove to the government that you are actually in a romantically-inspired marriage, as opposed to some other kind of arrangement. It seems a little bit of overstepping.

22:45 Emily: I guess what I’m curious about with respect to family housing, and maybe this gets into more what you think or what you think the university thinks the purpose of family housing is? What do you think the purpose of it is? And is it accomplishing that purpose?

23:00 Travis: Yeah, that’s a good question. I think it’s a complicated issue because I think that for families, especially for grad students, like I was saying before, if one partner is on a grad student stipend and the other partners being a stay at home spouse, stay at home parent. Or even if both parents are on grad student stipends, you’re providing an opportunity, providing a way for them to live affordably as a family, with their dependents. For those in those situations obviously it’s a very good thing that that’s provided. I can’t imagine how some of my friends managed to afford…just how do you afford to live? We get paid roughly $1,900 a month. If your rent is $1,300 a month for the whole apartment, and that’s your only income for an entire family with one or two kids, I don’t know how people do it. So I appreciate that they have family housing for that purpose.

24:05 Travis: But then of course the flip side is that the single students are saying, just because I’m single, just because I don’t happen to have a romantic partner or a larger family, I have to pay more per person at least to stay in these smaller apartments. I personally have never had problem with being in a dorm room situation where I have my private room attached to a common room. But I know a lot of people also who say, I’m an adult and I want a whole apartment to myself or something like this. UCLA has studio apartments for single grad students and they charge a lot of money for them. UCSB the only option on campus is these two or four bedroom apartments, like I was talking about before.

24:54 Emily: Yeah. I guess this conversation is making me think about what is the purpose of family housing? Because like you said, it’s a differentially applied benefit. There’s more subsidy available to some people because of their family versus other people. And is that fair or is that not? But we were talking about university housing versus private off campus housing, where off campus the only regulation you’re going to find is a maximum number of people who can live in a certain size space. They don’t care, married, unmarried, children, not, it doesn’t matter. So maybe there is an opportunity with on campus housing to provide some, as we were talking about earlier, some additional support for the students in most need, like we were talking about students moving long distance or from overseas — hey, that university housing is there for you to make the whole process easier. And so maybe there is an opportunity to sort of subsidize students who are more in need, like those with dependents. But for me, the harder argument actually is extending that benefit to students in two income households, two income families without any dependence. That’s what, to me, gets a little bit tricky. Like you were saying, single adult versus a couple where it’s just two adults — why should that couple get any more subsidy if both of them are working, if both of them are permitted to work? For me it’s a little bit harder to extend this benefit beyond those who have actual dependents, whether they’re children or non-working spouses.

26:29 Travis: Right. And also, as you’re saying about this, it makes me think about international students who — I don’t know the ins and outs of it. I think being an international student is a lot more difficult in all kinds of ways than the rest of us know. But I wonder, I would imagine that for international students, even beyond the simple matter of the convenience of not having to look for an apartment, the convenience of being able to just arrive in the US and have already arranged an apartment. I would imagine that looking for a private apartment as an international student, you probably have all kinds of trouble with documentation with guarantors. Part of the reason that I’ve never looked for a private apartment for myself in Japan the many times that I’ve gone there for research is because I don’t have a Japanese guarantor, and I don’t have a Japanese bank account, and I don’t have a Japanese phone number until after I have an address to give the phone company to say that I live in Japan and to get a phone number.

27:25 Emily: There’s credit scores as well. That’s another major hurdle for international students coming to the US. The US doesn’t recognize any credit that might have been established in other places.

27:35 Travis: So that’s a whole other conversation to be had about whether some kind of more consideration should be given to international students, especially international students with a family, with dependents rather than domestic students, perhaps. And then just to kind of throw it in there, at the East West center, you have the opposite situation where the East West center dorms are only for people who are on a fellowship or otherwise sort of officially affiliated with the East West center, which is this sort of Asia Pacific studies organization. And it’s about, I think it’s about 75%, my numbers might be wrong, I think it’s about 75% international students. You can only get in there if you’re on a particular kind of affiliation with this organization. If you’re a UH student who doesn’t have that affiliation, you don’t get to live in these dorms. And the dorms are primarily single rooms and double rooms. The single rooms are $400 a month, the last I checked. That was about 10 years ago, but extremely reasonable, especially for Honolulu. But if you’re in a family, you can’t live there. It’s actually kind of the opposite situation of trying to get into these subsidized apartments and family housing at other campuses. That’s a whole other complicated…they really want people to live in the community and interact with each other, on a day to day basis. But if you’re in a family, then you can’t. I think you’re absolutely right. These are the conversations that people are having. Is it fair to have these subsidized apartments only for people in certain situations, and especially if the the second spouse, the non grad student spouse is earning a proper full salary at whatever job it may be, then they absolutely can afford that apartment while other people can’t.

29:16 Emily: And in your experience, has there been any means testing. Have you been asked what your income is when you apply for housing?

29:23 Travis: I don’t recall whether or not I’ve been asked, but I’m not aware of…I mean, I don’t know what goes on in the back rooms, but I’m not aware of that being a policy. I’m not aware of them giving preference to people who don’t have the second income or anything like that. I definitely know people who live in family housing who have a second income, people who don’t have a second income, international students, non international students.

29:54 Emily: It’s just interesting, because again, when we’re comparing with private landlords, how much you make is a very important question for them to ask, to make sure that you can afford the apartment. But of course, there’s no case where they’re going to say, Oh, you make too much, of course we can’t live here. Make however much you want. It’s fine. But it goes again, back to the question of what is the purpose of university housing, and if it is subsidized, and if it is one of their objectives to help students and students’ families who have less means to be renting off campus or whatever, then it might make sense to ask about that. But again, that’s another example of maybe some overstepping that could be going on. So this is a very complicated issue, obviously.

The Ideal University Housing System

30:29 Emily: I’m wondering for you, Travis, if you were to design your ideal university housing system, maybe what would your goals be? And how would you try to achieve those goals?

30:42 Travis: It’s a really good question, and I tried to give it some thought. I don’t know, I have to admit as much as we all have gripes, and I certainly have gripes. At the same time, I’m not an expert administrator, all of the ins and outs of how it should be done, and I understand that people are trying to do what they can, but I think the key point is the purpose of university housing is not to make money for the university. The purpose of university housing is to provide an affordable place to live, for students, in light of the fact that we’re only making X amount and they know full well, that we’re only making X amount. And in light of the fact that in many of these communities, I guess it all depends on where you are at college, but for the places that I’ve lived, local housing, regular market housing is extremely expensive. Making it affordable, and then also making it reasonable for adults.

31:34 Travis: I think part of it is also whatever regulations you have — we didn’t really get into this too much — but whatever regulations you have for undergrad housing, keeping in mind, I mean they are legally adults, but you mind certain notions of trying to take care and keep control over the community in loco parentis, and all of that kind of stuff. Simply extending those policies to grad students isn’t the best way, and acknowledging that as grad students, we want to have a full apartment to ourselves, or at least have the option. We want to redecorate our places. We want to be able to have parking. We want to be able to have pets. We want to be able to come and go over the summer or for a whole year and still retain our apartment. Or if we can’t retain our apartment, then work with us as adults, I think is sort of the key point.

32:13 Travis: And again, just working with people in a way that works with us and not against us. I understand there’s a much more complicated conversation about bureaucracy in general, in terms of, if you give people exceptions, then who are you not giving exceptions to? And how is that fair? And what’s the purpose of policies if you’re not going to enforce them and all these kinds of things. Saying you can’t have overnight guests unless officially of your relationship. And then what happens when you have a girlfriend or even just a friend coming? I pay for this apartment, I should be allowed to have people stay. Just various things like that. I think the key point is just making it affordable, making it a place where real adults can live and making it friendly and workable. Making it a place where people are working with you and not against you. It’s kind of the three points I would make.

33:04 Emily: I’m really glad to have your perspective as someone who’s lived in multiple different university-affiliated housing situations like what’s worked well, what have you, what positive things have you seen about it, maybe what things can be changed. It seems to me that one of the main points that you’re making is just that the administration needs to listen to the students, and as you were just saying, treat them like adults. It seems like that at least happened in your experience at UCSB, when the union or the GSA or whichever it was, was heard and actually got that rent lowered, which is an amazing victory. I just really appreciate your perspective on those issues.

Best Financial Advice for Early Career PhDs

33:41 Emily: As we finish up, would you please share with us what your best financial advice is for another early career PhD?

33:48 Travis: Yeah, I think as someone who’s just finished, I’m not sure what kind of advice I can give for other people who have just finished, but for people who are still in the PhD, I think my main advice would just be to keep your eyes out for whatever you can apply to, and kind of be aware of the fellowships and other kinds of resources that are available for you. You can’t spend hours and hours and hours applying to every single thing and investigating every single thing, but be aware of what’s available to you and take advantage of it. If your department offers whether explicitly or sort of implicitly offers that everybody gets summer funding, at least once or offers that everyone gets at least one quarter or two quarters off before the end, make sure you take advantage of that, make sure you do that. Don’t miss the deadlines. Just be aware of what’s out there and be aware of what you’re eligible for, not just in your department, but also in grad div or in School of Humanities or in whatever other things it might be coming from.

34:49 Travis: The other thing I would say is push and advocate and make the professors, make the faculty and administration aware that certain kinds of things are not funded. This is going into a whole other conversation, and I’ll just take one more minute, but for example, at Santa Barbara, I was fortunate to have a certain amount of funding available possible, potential to me for conference travel and for research travel. And that seems very logical from a top down kind of, okay, we’re giving money for conference, traveling for research travel.

35:22 Travis: Well, what about language study and what about things that are not strictly language study? Because I’ve gotten the funding in the past to study, there’s a thing called FLAS, the Foreign Language Area Studies scholarship, which allows you to study modern languages that the government considers to be of strategic value. But then when they find out that you’re studying classical Japanese or classical Chinese, or you’re not really in a language program per se, but you’re doing paleography or how to handle documents or a workshop on how to handle documents. Well, now it’s not language study, so now there’s no funding for that. You need to make people aware that these programs exist and they cost money and you need to have funding for it from some avenue. FLAS won’t pay for it and if conference travel and research travel won’t cover it, what can the department do? What can grad div do to create something that will cover book history workshops, paleography courses, archeology field, school, and so forth.

36:18 Emily: Yeah, it sounds like, again, you’re bringing up the points of being flexible with people. If everyone’s on the same page about what the goals are, then let’s be flexible about the way that we get there. Or just not letting people fall through the cracks. If you create big planks and boards, let’s make sure there aren’t gaps that people are actually falling into between those boards. Thank you so much for adding that Travis, and thank you so much for giving this interview.

36:45 Travis: Thanks so much for having me. This was really wonderful. I really appreciate it.

Outtro

36:48 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.

This Postdoc from a Low-Income Family Evolved Her Financial Attitudes and Practices During Her PhD Training

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In this episode, Emily interviews Dr. Fushcia Hoover, a postdoc at the National Socio-Environmental Synthesis Center. Fushcia grew up in a low-income family and graduated from college in 2009. Unable to find full-time work, she accelerated her plans to pursue graduate school, ultimately earning a PhD from Purdue University and winning an NSF Graduate Research Fellowship. Fuschia’s background imparted her with certain financial attitudes and skills that influenced her financial journey through her PhD and postdocs. On the positive side, she already knew how to keep her expenses low and she had enough discretionary income from her stipend to pay off her undergrad student loans, even while sending money home to her mother. On the negative side, she was unfamiliar with investing and understandably gun-shy after witnessing the stock market crash. Fushcia and Emily discuss how her financial attitudes and practices evolved during her PhD and first postdoc and why and how she negotiated her salary for her second postdoc position.

Links Mentioned in the Episode

Teaser

00:00 Fushcia: As a graduate student, postdoc, there’s this expectation that we just kind of have to accept things as they are. And, certainly in some cases, yes, that’s true. But I think in a lot of cases, there are always things that are negotiable and that are malleable. And I think a lot of that comes down to recognizing how valuable you are, not just as a person, but also as the work and your contribution.

Introduction

00:35 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season seven, episode two, and today my guest is Dr. Fushcia Hoover, a postdoc at the National Socio-Environmental Synthesis Center. Fuschia grew up in a low income family and graduated from college into the depths of the great recession. Those experiences, and parted her with certain financial attitudes and skills that influenced her financial journey through her PhD and postdocs. On the positive side, she already knew how to keep her expenses low, and she had enough discretionary income from her stipend to pay off her undergrad student loans. On the negative side, she was unfamiliar with investing and understandably gun shy after witnessing the stock market crash. Fushcia and I discuss how her financial attitudes and practices evolved during her PhD and first postdoc, and why and how she negotiated her salary for her second postdoc position. You absolutely do not want to miss her concluding words of encouragement for all PhDs, but especially those in marginalized groups. By the way we recorded this interview in October, 2019. Without further ado. Here’s my interview with Dr. Fushcia Hoover.

Will You Please Introduce Yourself Further?

01:54 Emily: I have joining me on the podcast today, Dr. Fushcia Hoover, tnd she’s going to be Talking to us about her background, coming from a low income family and ultimately entering graduate school and a couple of different postdocs. And what she has picked up and learned about finances along the way and the work she’s done on her own mindset. I’m really excited about this episode. Fushcia, thank you so much for joining me, and will you tell the audience a little bit more about yourself please?

02:17 Fushcia: Thank you so much for having me I’m happy to be here. I am a engineer by training. My graduate degrees are all from Purdue University, Ag and Bioengineering, but I actually got my degrees from an interdisciplinary program, the ecological sciences and engineering program at Purdue. And so a lot of my research that I do now, as well as my dissertation work, looks at both social and ecological aspects of storm water management and the way green spaces and green infrastructure can be used to reduce runoff during rainfall events, but then what are the different environmental justice potential impacts. Then recently I have also started incorporating black geography theory, which looks a bit more at the way that people and places are connected and the historical and cultural connections between those two, and what that means in terms of storm water management planning and where we place green spaces and green infrastructure. That’s kind of where I’m at now, so I like to call myself, well, it always changes, but currently I call myself a socio-ecological systems hydrologist.

03:45 Emily: That is so fascinating, that the arc of your work has gone in that direction, from the technological to the more sociological. Okay, great. And so you said you have your all degrees from Purdue, bachelors through PhD, is that right?

04:00 Fushcia: No. My bachelor’s is actually from the University of St. Thomas, which is based in Saint Paul, Minnesota, where I originally am from and grew up. That degree was mechanical engineering, as my bachelor’s. And then I also had a minor in Middle Eastern studies. I’ve always been interested in balancing my science and the technical work that I do with more social and cultural components. That’s where I started and I’ve just been traveling the Midwest sense, but now I’m on the East coast.

04:34 Emily: Yeah. So tell us about your positions that you’ve had since you’ve finished.

04:39 Fushcia: Yeah, so I finished in 2017. My first postdoc was through the National Academy of Sciences. And that’s called National Research Council graduate fellowship, or post graduate fellowship, I believe. That was based at the Environmental Protection Agency in Cincinnati, Ohio. I was there for a year and eight months, so almost two years. Then, my contract for that ended, and my boss and I weren’t sure if there was going to be additional funding, so I had been applying to other postdocs, one of which is the one I’m currently in, which is with the, this is very long, so bear with me, the National Socio-Environmental Synthesis Center, um, or SESYNC for short, and that’s in Annapolis, Maryland. So both very research focused. All I do is research. At the time I wasn’t interested in going into academia. Things have changed since. Then I worked in this position with Sarah Moreau, who is a faculty at Arizona State University.

05:52 Emily: Gotcha. So interesting that you just dropped in there that you’re now more interested in academia than you were before. People don’t usually go in that direction, but not the subject of our interview today. I’ll have to follow-up about that another time.

Growing up in a Low-Income Family

06:05 Emily: Let’s take a step back even further to your childhood and then basically your time going through college and up until you entered graduate school. Just really briefly, what was your financial experience during that time?

06:18 Fushcia: My mom is a single parent and I have a twin sister as well, so it was the two of us and our mom. We grew up in a single parent households and we had been low income for the duration of my childhood into early adulthood. Certainly for anyone that is from, I think either one of those demographics, there was a lot of like coupons and buying things either on sale or clearance or discount. On and off throughout growing up, we would have access to food stamps, depending on what my mom’s specific financial situation was at the time. The great thing about growing up in Minnesota was that there were and are amazing social services. In terms of basic needs like healthcare, we were on the free and reduced lunch program, we always had all those things. So it actually took me a very long time to realize that we were low income because of that. It was, I think until seventh grade, when I realized that lunch wasn’t free. I just thought that was a service everybody got and people who brought their lunch, that was just a preference. I really grew up in that environment of saving and being very conscious about spending.

07:53 Fushcia: My mom was also very open with us in terms of explaining why we could only get things on sale, but I think the child, part of me was still like, well, if she wanted to, we could get this, but she’s just being a mom. You know, “parents are mean” type of childhood mentality. It wasn’t until I got older, I was like, “Oh yeah, that makes sense.”

Loans and Scholarships During Undergrad

08:21 Emily: Yeah. Thanks for telling us about that. Then, when you got to college, what was the situation then? You mentioned the school that you went to, but was it private or public, and how did you fund it?

08:34 Fushcia: It’s the largest private university in the state of Minnesota, and I was fortunate there was a college access program and I was part of in high school called College Possible. I made my sister join as well, so we were both part of the program and it helped teach us about scholarships, applying for college, doing college visits, as well as like practicing the ACT, which is what most of the Midwest takes as the college entrance exam. I think I had applied to between 20 and 30 scholarships as a senior, and then the ones that I was awarded, combined with, I received a full tuition scholarship from the University of St. Thomas based on my academic record and I’d done a lot of community service as a high school student as well. So through that, I was actually receiving refund checks, which is pretty rare.

09:45 Fushcia: A big part of the conversation my mom had with us in terms of college was that she could not afford to send us to college and she could not afford to co-sign on a loan. So my sister and I were very diligent about then seeking out money and applying for scholarships and finding resources that could help us pay our way, or in my case get paid, through college. I took out two loans, one for my last semester of college, and then for a January term study abroad. When I finished, I had about $7,000 in debt and that was all within Sallie Mae at the time, so one was subsidized and one was un-subsidized.

10:40 Emily: That is really good. I mean, to have access to that program, first of all, maybe that was part and parcel with the general great services you had access to in Minnesota, but yeah, that set you up amazingly and to of course then put in the work and get the scores and do the scholarships and everything that, I mean, it’s clear why that happened and why you ended up in that position. So your tuition, you had a scholarship. You had enough scholarships coming in to cover the room and board and so forth, so that you’re actually receiving at sometimes a little bit of money back. Then you took out some small student loans for part of that experience. So coming out of college, about $7,000 worth of student loans and you didn’t go immediately to graduate school, is that right?

11:19 Fushcia: Yeah, that’s correct. And I actually forgot, I did have, I think it was maybe like a $3,000 loan from Wells Fargo, which, well, maybe I can save this for the end as one of my pieces of advice, but at the time I didn’t know about kind of self-loans or just the loan system. My checking and savings were through Wells Fargo, and I was like, “okay”, not knowing that that doesn’t allow you to defer your loan and that the rates are higher.

11:52 Fushcia: When I graduated, in 2009, which if you remember, was kind of the peak of the financial crisis.

12:03 Emily: Yeah, the worst year to be graduating.

12:05 Fushcia: Yes, it was a horrible year to graduate. I didn’t have a job. I had started working part time for a program that I was a part of while at St. Thomas. And then I had transitioned into working for a program called AVID or the Advancement Via Individual Determination, which was located in the public — well, it’s a national program, but I specifically worked within the Saint Paul public school system. Tthat was part time as well. So I was doing that, I had moved back home, I was living with my mom and barely able to pay my $50 a month minimum for my Wells Fargo loan. I had been able to put it into forbearance for six months. That was the only thing that they would allow me to do. It was actually a very…I was very stressed. Thankfully, living with my mom helped cut down on a lot of expenses, but it was a lot of penny pinching. I think my income was maybe $500 a month, before taxes. So, trying to give my mom something and then basically pay for my cell phone and basic expenses and then this loan. That was my financial situation upon graduating.

Starting Graduate School in the Midst of the Great Recession

13:39 Emily: And did the difficulty in finding work of that year, the peak year, did that play in your decision to go to graduate school or had that always been the plan?

13:48 Fushcia: I’d always wanted to go to graduate school. I did not want to go right away. I was really mentally and emotionally exhausted after undergrad.

13:59 Emily: I know that feeling.

14:01 Fushcia: Yes, and I think a lot of us have those feelings even after grad school as well. I think the only difference was that I went to grad school sooner than if I would have had a full time job. I worked part time for almost two years before going back to grad school, because I also wanted to make sure that I wanted to go back and I didn’t know what I wanted to go back for quite yet. I knew I wanted to stay within engineering, but I didn’t know…I knew a lot of what I didn’t want to do. I took that time to figure out the programs and the schools of interest and what my potential research interests could be.

14:49 Emily: Gotcha. So when you entered graduate school, was that actually an increase in your income from working, I guess it’s still part time technically in graduate school, but was your income higher than at that point?

15:02 Fushcia: It was. It’s funny, a lot of people talk about how poor graduate students are and how we’re going to pay, and we are. I certainly agree that for the work that we’re doing, all graduate students should be paid more. But it was such a jump in income for me. I think especially going into an engineering program at Purdue, I think my monthly income was about $2,500 per month. All of a sudden, not only did I have a higher income, but I also had a dependable income. And it was an income that I was going to be getting, regardless of my hours that I put it in. That was the first time being on a salary, and having something that I was like, “okay, wow, I can pay my bills, I can pay my loans, and that’s not something that I’m going to have to worry about. Where’s this money going to come from? Am I going to make my minimum payment this month?” It was a big relief for me in a lot of ways.

16:13 Emily: Yeah. And I would imagine that stipend goes pretty far in Lafayette, Indiana, does it not?

Employing Frugal Strategies in Grad School

16:19 Fushcia: Oh yes, it does. And I very much…I had two roommates, I didn’t have a car either. I had a bicycle, so I was pretty much biking or Lafayette, if you’re a student, or basically if you are affiliated with Purdue and you have a Purdue ID, then you get to take the public transportation system for free, so I wasn’t having to spend money there. It was really just groceries and utilities and rent split between three people. I found a lot of ways to reduce the amount of expenses that I had because then I had also then started sending money back to my mom. I was sending her about $300 every month. Definitely trying to funnel resources and reduce costs.

17:09 Emily: Yeah. It sounds like you took a lot of the the strategies that you’d been using prior to that point, and also some of the mindsets you’d had to that point. That was what you applied right then. You found the low cost living situation, you used the public transit instead of owning a car, so you really reduce your expenses right off. But it sounds like still, even with sending your mom money, you probably had a good bit of discretionary money to be working with, above the bills that needed to be paid. What did you start doing in your personal finances at that point? What did you have to learn about since you now finally have this discretionary money to do what you want with? What did you learn about what did you apply in your life?

Paying off Student Loans During Graduate School

17:49 Fushcia: It’s funny, I had taken a financial literacy workshop before I started graduate school, and that was more focused on like budgeting and saving and negotiating whether you pay off credit card debt first, or if you have student loans and how you prioritize your debts. The biggest thing, aside from sending money home to my mom was that I started making monthly payments on the undergraduate loans that I had. I targeted the Wells Fargo private loan first, and then —

18:28 Emily: I just have a follow up about that. Were those loans, at least maybe the federal ones, in deferment at that point?

18:34 Fushcia: They were, yes.

18:36 Emily: And what about the Wells Fargo one? Was that in deferment?

18:38 Fushcia: No, the Wells Fargo, my forbearance had ended after the first six months, from me finishing my undergrad degree. I had only been making $50 a month payments, so you can imagine on a $3,000 loan, that’s not very much. So I kicked that up and I think I started making either between $150 and $200 loan payments every month. So about $500 every month was going to this one particular loan and then my mom. Then the rest that was remaining after bills and rent, I was just putting into savings or using for other expenses like going out to eat or going home for the holidays, things like that.

19:34 Emily: What I like to call irregular expenses.

19:37 Fushcia: Yes, irregular expenses.

19:38 Emily: The ones that can really mess up your cashflow if you try to pay for them in just one month. How long did it take you then? Did you just keep working in paying down those loans straight before adding any other goals to the picture and how long did it take you to pay them off?

19:50 Fushcia: I did. I had paid off my Wells Fargo loan by the end of my masters, so just under two years, and then my government loans, it took about two and a half. I don’t remember if it was two and a half or three years. I think part of the decision why, even though those loans were in deferment, one of them was unsubsidized, so it was gaining interest. And I think because of coming from low income background, and even though I was in this position where I had a steady paycheck, I was still really worried that it would end. Certainly, I knew the degree would end and I wasn’t sure what my income would look like after that, and I didn’t want to have that stress. I think I might’ve been the only one I knew of my friends with loans from undergrad who was actively paying it down.

20:54 Fushcia: That was my goal, was to have zero debt by the time I graduated from Purdue. Pretty much all of the focus was on paying off those loans. Then I would typically have anywhere from like $200 to $400 that I would just put into savings every month.

21:17 Emily: I will say, in my contact with graduate students, some people do, but it’s on the rare side to be working on paying down student loans while in graduate school. I think yours because they’re relatively small, might…I think some people get really defeatist about student loans. Especially if you have more than a hundred thousand dollars or multiple tens of thousands of dollars of student loans, it can feel really, really daunting, and why even bother like getting started on your low salary during graduate school. But I think yours, they were a fraction of what you made in a given year, and so it felt like something that you could tackle, probably. And like you were saying, you had that fear of, well, what if your program ends for whatever reason? Well, then the loans are coming out of deferment, you have to make at least minimum payments, and then what’s your income going to be? You don’t know. That decision definitely makes sense to me.

Commercial

22:12 Emily: Hey, social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15 minute call with me at PFforPhDs.com/coaching to determine if financial coaching with me is right for you at this time, I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now back to our interview.

Personal Finance Mindset Shift During and Post-PhD

22:58 Emily: Did you do anything else within your personal finances during graduate school, aside from paying off those loans and then also building up savings?

23:06 Fushcia: No. I had conversations, I talked with a couple of friends who were working about IRAs and investments, but it was all very intimidating. I think for me, at the time, it was easier to just put my money in savings and then I could also see it, and there wasn’t like a fear of losing it. With investments, I think particularly because of being an adult through the stock market crash, and also remembering when Enron went under and people’s entire pensions were lost. I have a, I wouldn’t say a strong distrust, but I would say I’m very kind of apathetic and very wary of different financial institutions. Even Sallie Mae and Freddie Mac and all of those. For me, I was like, “nope, I want to have my money with me, so I’m putting it in my savings account.” By then I had also transferred to a credit union, so I felt a lot more secure about credit unions as financial institutions, int that I’m an owner in this. And I have amplified checking, so then I was getting, I don’t remember what the return is, but it’s a couple percent return. I was like, “okay, I like this. I can make money from my own money.” Even though I had those conversations with a lot of friends who had higher income backgrounds or whose families did, and so these were conversations that they had. It still wasn’t something I felt comfortable really digging into because I think part of me still felt like I didn’t have the financial security yet to start investing.

25:05 Emily: Yeah. It’s interesting. I graduated from college in 2007, so two years before you did, so before the crisis hit and I was safely in graduate school, by the time everything went down. But I took away like a different kind of financial trauma from that whole period, which is that I’m very gun shy about the housing market. I’ve still always been a renter. I have yet to buy my first home. And that’s partially because, while I didn’t personally experience, all the media coverage is about people losing their homes and foreclosures. So while I was very gung ho about getting into the stock market and I was able to experience the rise right after the crash, it’s still is something that lingers with me regarding the housing. It’s just interesting to talk to someone near a similar age who had some witnessing and some stake in everything that happened and what’s lingering.

Investing

25:58 Emily: Actually, maybe you’ve turned this around since then. You were talking about during graduate school, you were nervous to start investing. And I think it actually is really smart to build up the cash savings to get the debt paid off before embarking on that. At what point did you, or have you started to invest?

26:14 Fushcia: I started a few months, maybe six months into my first postdoc. By the time I finished at Purdue, I had about a four month break where I was job searching and then preparing for a move, and I had saved up about maybe $5,000 to $6,000 in savings. One of things that I did start doing was also using credit cards as a way to prepare for high cost expenses. I had opened a card, um, just before I graduated so that it allowed me to have 18 months of 0% APR because I knew I’m not going to have a job. I was at a part time job that I got to cover basic things, but in terms of, I have to move, that card held all of those expenses. Then once I started my postdoc and getting paid, I worked on paying that down, and since I had 18 months, there was no rush. But then, because I was like, “Okay, I have a job.” As an engineer coming in for an NRC, my stipend was $69,000 for the year, which certainly is very high compared to a lot of postdocs, but I think most of the federal agencies, you’re going to see a higher salary, that’s closer to what a full time federal employee would be making

27:55 Emily: And for you in particular that’s over double what you had been making her in graduate school.

27:59 Fushcia: Yes. Well, and I should say that my first year of my master’s I applied for and was awarded a National Science Foundation GRFP, so I think that also really allowed me to focus on my debt because then I was making $30K. I still had to account for the taxes, which was not fun, but compared to my friends in college of liberal arts, who were in English or social science making $13K, that’s a big difference. One of the things that I actually learned from you was while I was in my first postdoc, I joined the National Postdoc Association, and you were a guest. This would have been a couple of years now. I watched your webinar, when you gave a presentation. From that point, I looked more into kind of the difference between an IRA and a independent tax account and figuring out, okay, with NRC, it’s the same thing. They don’t take out taxes. And so then —

29:19 Emily: I’ll jump in there and say, because you were on fellowship, because you were not technically an employee, I’m just explaining for the listener, you wouldn’t have had access to the workplace based retirement account, whatever that would be, that they would offer to their full time employees. So you’re still dealing with a stipend, you still have to handle the taxes manually, and you’re really only tax advantaged retirement option would be an IRA. Nothing was being offered through your employer, because you didn’t have an employer.

29:47 Fushcia: Yes. I was a contractor. I did a little bit of…well, I should say I did a lot of research trying to figure out then where I wanted to open an account. I actually ended up going with an online system called Betterment because I did not have the time to actually look into managing my own investments. I think because so much stuff is online, it also made it easy for me, so then I didn’t have to find an office location to go into. In my postdoc now we are considered faculty of the University of Maryland and the University of Maryland is a state run system, so we actually have mandatory investment portfolios and the portfolio that I chose is through the I don’t remember the, the full meaning, but it’s TIAA.

30:53 Emily: Yeah. I don’t know what it stands for either, but TIAA or TIAA CREF.

30:57 Fushcia: I still have my betterment accounts and I haven’t decided how much I’ll be putting into it. They take out just over 7% from my salary for the TIAA account, so I need to figure out what that balance is going to look like. Now I was like, okay, it’s probably about time. I was a little bit nervous about being older, like 31, and just starting to invest. But I think because I don’t have any debts and because, well I have a little bit of credit card debt, but I also just moved for this postdoc. I think that’s why I was finally at a point where I feel confident that I will have a job and I will continue to have income and that’s not going to be something I’ll be lacking anymore. And so now I can fully invest having confidence in, well the system is still problematic, but I at least have confidence that I’m not going to wake up and be without a job.

Learning Debt Management Strategies

32:12 Emily: You said earlier there were maybe some things that you brought out of your childhood that you had an aversion towards debt. A smart one. But you also maybe weren’t exposed to conversations around investing and IRAs, maybe like some of your peers were. Was there anything else that you kind of felt maybe you were a little bit out of step with other people during graduate school, or during your postdocs regarding personal finance. And anything you had to learn or mindsets to change or overcome?

32:44 Fushcia: I think I definitely learned about the healthy ways that you can use credit cards to manage certain debts. I think that that came from conversations with a close friend when I moved for my postdoc. I opened a card to buffer that, and a lot of that helped and realizing that all debt doesn’t have to be bad. That it can help you create a credit score and debt management techniques and strategies, and build out this financial portfolio that can actually then make you have a higher score and more competitive for other loans and things like that. A lot of that came from conversations with friends who had either taught themselves that, or they learned it by proxy from their parents. Just asking about their debt and how they managed it, and then also asking, are you afraid that you won’t pay it off or are you afraid that it’s going to be there forever? Certainly, I remember an ex of mine, she was like, “Yeah, it’s just going be there, and it’s just this thing that I have, and I’ll make payments, and it sucks, but also I have the education that I wanted to get and I’m in the job that I I think through those conversations, it definitely helps release some of the anxiety and like intense fear around debt.

34:48 Fushcia: Listening to webinars or reading your blog, for example, and just trying to educate myself more, so that I’m more informed and that’s definitely alleviated a lot of the fear and anxiety, but I think I still like coupons, I still like things on sale. It’s still really hard for me to pay full price for clothing or a pair of shoes that’s a hundred dollars. I’m like, no, can’t do that. Like you, I’ve been a renter this whole time and I don’t know if I want to buy property or a home. I did buy a car when I moved to Cincinnati, and so I’m making those monthly payments now. Part of it is also okay, well, I’m going to make these payments and pay off my car and then maybe see where I’m at in terms of, if I’m in a permanent position that then I feel more comfortable buying a home. I think some of the approaches I still have to managing that is to have one type of debt at a time. Take on debt, pay it off and take on a new debt, pay it off.

36:10 Emily: Yeah, it sounds like you really have learned much more about, as you were saying earlier, debt management or how you can use debt as a tool, especially to avoid large expenditures of cash. Because it sounds like you still have cash savings to a degree, but it’s more about not wanting to let go of that and using debt to help you basically just hold both to have the cash and to have the debt, so that you can feel, feel more secure around it. Is that right?

36:39 Fushcia: Yeah. I think that’s a really good way of kind of summing that up.

Negotiating a Post-Doc Salary

36:44 Emily: Yeah. And then the other thing that you mentioned that you wanted to talk about in this interview was negotiating your salary, which is also kind of another mindset leap, right? Like not only, maybe from someone coming from the kind of background that you have, but also just being in academia where like with your first postdoc, negotiation is not really an option, but it sounds like you did at your first opportunity, negotiate. Can you tell us how that worked?

37:09 Fushcia: Yeah. To be honest, a lot of it was just like, I know I need to practice this because I know I’ll have to do it at some point, so let me just practice it now because it’s lower stakes.

37:21 Emily: Yeah. Good point.

37:25 Fushcia: Part of that came from in your webinar you had been talking about kind of how you plan for transitions. So either going from your degree to a postdoc, postdoc to a full time permanent position, and managing the moving costs and change in expenses. I had sat down and looked at essentially the cost of living for Annapolis and estimating what my costs are now, and what’s expected to grow. The majority of that, it’s about a 300% increase in housing expenses from Cincinnati to Annapolis. I started there and then looked at how much would I want in savings or investments, and then worked with the business office at SESYNC to then figure out is there a parking cost? Learning about the exact percentage rate that they take out for retirement or investments. Trying to find what are all the other hidden costs and expenses that come with this position so that I could factor that into my budget and then know what would my minimum salary need to be, because I know my minimum payments for my car. I know my cell phone payments. Those are things that I know and then wanting to make sure that it had wiggle room.

38:54 Fushcia: Then I think on top of that, I also wanted to try and stay as close as possible to what I was already making. Certainly, it can be challenging to do that with a different type of postdoc, particularly because this one’s affiliated with the University of Maryland, academic post docs are much slower. But I didn’t want to have this $20,000 drop, because the great thing about the NRC was that they gave a $1,500 increase every year. I came in at $69,000, but then the next year I was making $70,500. So it’s like, okay, well, how close can we get to this?

39:38 Fushcia: Again, a lot of it was using my network, and talking to in particular, a good friend who is now at Cornell. She had just finished her PhD, and she had negotiated her position. Asking her for advice and resources and how you frame what you’re negotiating for and the language that you use so that it’s still appropriate and respectful, but that you’re still firm, in terms of, these are my skills, particularly because I was coming out of a postdoc. I already have almost two years of experience post-PhD, and I’ll have all these other publications, and knowing different questions to ask.

40:22 Fushcia: I wrote up this letter, had a few people review it. Ironically, when I asked my former PhD advisor, she was like, “We don’t do that. If someone were to do that, maybe I’d give like a two to 3000 increase.” But when I had looked up other negotiation strategies on Inside Higher Ed, I used a lot of their articles. They mentioned, I think it’s 15% to 22% is typically what you negotiate as your range, particularly if it’s not a lateral position, if you’re moving up. So I was like, “Okay, we’re going to go for 15%.” And they did not give it to me, but they came close. From there I went back and said, “Okay, based on this salary, could I make it work?” And I could. It’s going to be tight, which is a bit frustrating to have a point where you have more flexibility and you have more expendable income and now it feels a little bit more like being a grad student again where it’s a smaller salary. I have to be more conscious of where my money is going and not spending as much as I was, particularly now that I have a car and all the expenses that are associated with that. But I know that I have the skills to make it work. And at this point I’m also looking for a permanent position after this postdoc. I don’t anticipate after this two year position, being in a situation where I have to kind of penny pinch and reduce costs elsewhere.

42:23 Emily: Yeah. It sounds like you approach that — I mean, it’s clear that you did a lot of research and preparation through that process, not only taking what you learned from the webinar that I gave, but also this research you did with the articles in Inside Higher Ed and in speaking with your friend. You really prepared for that and kind of the best way possible, so it’s a great, it’s a great model for the listeners to hear, especially because you knew that you were going into an almost guaranteed income drop and also a cost of living increase. Both of those factors just highlight the need for being really careful around this. And if your academic advisor said, well, this isn’t done, I mean, it is, it is done sometimes, in some places. Maybe no one’s ever attempted it with her.

43:06 Emily: I want to point the listeners to one of my resources, which is postdocsalaries.com. And there’s also another one PhDstipends.com, for those in graduate school. It’s kind of like a Glassdoor, but for those types of positions, for postdocs and for grad student positions. That’s just another resource out there, if people want to get benchmarks on what is reasonable to be paid for different kinds of postdocs in different areas of the country. And I also ask questions about negotiation on that survey. I think the last time I looked in the database, it was around 25% or maybe a third of the people who had answered the questions had said, yes, I at least attempted to negotiate salary or benefits for the postdoc position. I think it’s becoming more and more popular, as people realize that this is a standard thing you do in most jobs, and why don’t we at least try it in these academic or nonacademic postdocs. That was great story.

43:58 Fushcia: Well, and I think too, salary, while I think it is very important, isn’t the only thing that you can negotiate. You can negotiate moving expenses and you can negotiate time off. I also negotiated my start time because I wanted to finish through my contract at the EPA before coming to SESYNC. That was something that I successfully negotiated. I had picked my top three things of these are the things that I would like, so we’ll see where they can meet me. There’s another postdoc who negotiated because he also was coming out of a previous postdoc and then everyone else who we’ve talked to, we were having a conversation and they were like, I didn’t know that you could do that. And we were like, all they can say is no, especially once they offer you a position, if they want you. If you don’t ask, you’ll never know.

45:02 Fushcia: I would also say for all the listeners that if you are going to any type of public institution, you can look up everyone’s salary, that’s all publicly accessible information. And that was something that I did to give me a sense of what are the ranges for the people that are employed within the center. I had an idea of what their budget is to figure out do I ask for the 15% or I do I ask for the 20% to 25%.

45:29 Emily: Yeah, that’s a great advantage when you’re going to those types of places, that there’s a large degree of transparency around salary there. That’s an amazing thing to look up, if that’s where you’re applying.

Best Financial Advice for an Early Career PhD

45:41 Emily: Last question here, Fushcia, as we wrap up — what is your best financial advice for another early career PhD? And that could be something that we have touched on in this interview, or it could be something completely else.

45:53 Fushcia: I think my first piece of advice would be to do as much research as you can. As grad students, we’re training basically how to do research and conduct research. I think we already have a lot of the skills to be able to access these resources and information and find ways or people to help us get there. I would say that most of the way that I have navigated my finances has been through talking to friends, talking to people who are in positions where I see myself going, and just doing the research and using the academic online journals that are available or financial journals, blogs, anything, and everything that you can capture to try and help inform what the decision that will be best for you, or rather the best decision for you.

47:00 Fushcia: The second thing that I would say is to give yourself more value and credit than what you would default to. I think as a graduate student, postdoc, there’s this expectation that we just kind of have to accept things as they are. And certainly in some cases, yes, that’s true. But I think in a lot of cases, there are always things that are negotiable and that are malleable. I think a lot of that comes down to recognizing how valuable you are, not just as a person, but also as the work and your contributions and that the majority of the people in this country do not have PhDs, so you’re bringing in a very valuable skillset, which, when you’re going into a space where everybody has PhDs, it may not seem like that, but I think it’s important to remind yourself of that.

48:05 Fushcia: I think especially, I say this to women postdocs, women of color, black women postdocs, we are already underestimated in many way. We are already underpaid in many ways, thinking about your initial salary offer or associated benefits. I think because of all the work that’s coming out from the national academies and other research centers about this still huge discrepancy across all fields, I think I use that as a way to empower me to ask for more. Because now it’s not just valuing my work and what I bring, but also recognizing that I’m already going to be undervalued, because of what I look like when I come in the room. I think that would be the last piece of advice that I would say for all the postdocs out there. And this includes folks who are femme or femme-identified. If you’re any type of on the marginalized periphery, ask for more, because again, all they can say is no. And if they take back that offer, then that’s probably not a place you want to go in the first place. Because you want to go where you’re going to be celebrated and valued. Give yourself more value than what you default to.

49:39 Emily: I think you put that so well. That was great. I have nothing to add there. Just everybody go back and listen to that again, listen to it a few more times, especially if you’re in one of these groups that Fuschia just identified. Absolutely.

49:50 Emily: Well, thank you so much for this wonderful interview and it was really a pleasure to speak with you today.

49:54 Fushcia: Yes. Thank you so much. This was really fun. I hope that whoever’s listening has been able to take something away, even if it’s just to know that you’re not the only one that’s in grad school who’s from a low income background or is having anxiety or fear around debt or salary. That’s that’s normal and also you will be okay. Everything will be fine.

50:23 Emily: Love that. Thank you so much.

50:25 Fushcia: Yes. Thank you.

Outtro

50:27 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.

This New PhD’s Salary Tripled But Her Scarcity Mindset Lingered

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

Links Mentioned in the Episode

PhD scarcity mindset

Teaser

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

Introduction

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

Will You Please Introduce Yourself Further?

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

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

Transition Out of Grad School

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

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

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

Was this Good Timing for You?

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

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

Negotiated Start Date

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

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

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

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

Emotional Response to the Salary Offer

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

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

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

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

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

Money Mindset: Overcoming Feelings of Guilt

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

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

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

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

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

Appreciating and Using Privilege to Help Others

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

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

How Would You Describe the Scarcity Mindset?

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

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

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

Moving Past the Scarcity Mindset Developed in Academia

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

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

Pro Tip: Get Comprehensive Car Insurance

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

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

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

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

Commercial

26:25 Emily: Emily here for a brief interlude. I bet you and your peers are hungry for financial information right now, especially if it’s tailored for your unique PhD experience. I offer seminars, webinars, and workshops on personal finance for early career PhDs that can be billed as professional development or personal wellness programming. My events cover a wide range of personal finance topics, or take a deep dive into the financial topics that matter most to PhDs like taxes, investing, career transitions, and frugality. If you’re interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. We can absolutely find a way to get this great content to you and your peers, even while social distancing. Now, back to our interview.

Change Financial Attitudes with Positive Self-Talk

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

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

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

How to Combat Lifestyle Creep

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

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

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

Think About Needs vs. Wants

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

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

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

Mindfulness with Long-term Financial Commitments

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

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

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

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

Best Financial Advice for Another Early-Career PhD

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

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

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

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

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

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

Outtro

41:40 Emily: Listeners. Thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.