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money mindset

How This PhD Student’s Budgeting Practice Enabled a Hawaiian Vacation

July 20, 2020 by Lourdes Bobbio

In this episode, Emily interviews Sean from Authentically Average, a fourth-year PhD student at a university in Houston, TX. Sean and his wife have very intentionally set up their budget to reflect their values, and now live and die by their budget. Their top three budget priorities are retirement savings, tithing, and travel. Sean’s budget helps him say “no” to certain areas of spending or opportunities for spending so that he can say “yes” to his travel aspirations. Sean describes a wellness vacation he and his wife took to Hawaii and why travel is such a high priority right now.

Links Mentioned

  • Find Sean on his blog, Authentically Average, and on Twitter, Instagram, and Pinterest
  • Find out more about Sean’s leadership coaching
  • Blog Post: Put Your Money In What You Value
  • Blog Post: Travaasa Hana Highlight Reel
  • Personal Finance for PhDs: Financial Coaching
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
budgeting for travel on a grad student stipend

Teaser

00:00 Sean: If you aren’t budgeting yet, try to get there as soon as possible. Tracking expenses is great and it’s helpful to get you in the right mindset. But until you are, I think, front end saying this is the money I will have coming in, here are the places it’s going to go, you can’t really capture your values fully and where to invest unless you’re doing it upfront.

Introduction

00:26 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode 12. And today my guest is Sean from Authentically Average, a fourth year PhD student at a university in Houston, Texas. Sean, and his wife live and die by their budget. And they have put a lot of effort into making sure that their budget reflects their values. Their top three budget priorities are retirement savings, timing, and travel. Sean describes a vacation they took to Hawaii and the ways they minimize spending in lower priority areas of their life so that they can spend more on vacations and other types of experiential living. By the way, we recorded this interview in September, 2019. Without further ado, here’s my interview with Sean from authentically average.

Will You Please Introduce Yourself Further?

01:18 Emily: I am delighted to have joined me on the podcast day Sean, from Authentically Average. Authentically Average is the name of his blog. And Sean, I’ll just let you introduce yourself to the listeners.

01:28 Sean: Sure. Thanks Emily for having me. My name is Sean. I run the authentically average blog. I characterize myself as a PhD student, husband, chef, pretty much all of the above kind of general life stuff, and that’s the focus of the blogs, every day kind of living. I’m a PhD student in the 3D printing space. I just started my fourth year, so I’m hopefully approaching the light at the end of the tunnel. I live in Houston with my wife, Allie. We have nine children, and by children, I mean plants and most of them are still alive. I’m doing a PhD in 3D printing space. I got my bachelor’s in chemical engineering before that, went directly to grad school, and still trying to figure out what I’m looking for afterwards. I’m thinking like medical device route. That’s a really interesting space for me and the community in Houston is really kind of exploding right now, so I’m really passionate about trying to see that grow.

02:36 Emily: Yeah. Sounds really good. And I understand that your wife is a graduate student as well.

02:41 Sean: She is. My wife is getting her MBA currently. She’s super woman. She’s working full time and getting her MBA on the weekends. A lot of school at our house.

02:50 Emily: Yeah, that’s a full plate. I guess you might not be the busiest one in the household.

02:57 Sean: I think it goes both ways. The nicety of being a PhD student, sometimes, is depending on your advisor, the work schedule is not necessarily lighter, but more flexible. I tend to do a lot more of the, I talked about this briefly on my blog, but like, I tend to do a lot more of the household activities, like the cleaning and cooking and stuff, just because I’m the one that has the time for it. It’s like not always super sexy to talk about sometimes, but if I don’t cook, we don’t eat. Somebody’s got to do it. But we like to share. I mean, she’s got a lot on her plate right now from a professional capacity, so I’m happy to take on those other roles.

Translating Life Values to Your Budget

03:45 Emily: Yeah. And I guess that’s one of those things that you can talk about on a blog that is named Authentically Average. You can talk about your everyday experiences. And money of course, is among those. You recently published a post that was kind of talking about your financial values, which is something that I love to talk about. It’s the foundational concept in personal finance, yet not one that gets a lot of airtime, I feel like, unfortunately, so why don’t you go ahead and tell us about how your values inform how you use your money.

04:20 Sean: Sure. Thank you for that. A couple of weeks ago, the focus of that post was, and we can talk about this in a little bit, but I had gone on a vacation and some people were like, “Oh wow, this is great” and some people were kind of like, “okay, great, you went on this really nice vacation, but your blog is authentically average, how do you reconcile those?” I started thinking about it. I said, okay, I should probably take a step back. The value focus, like you said, is I think central to personal finance and making “smart” decisions with money, but not one that’s talked about a lot. Primarily the goal for that was “here are my values, here’s what I try to invest my money in, and by extension a little bit my time.”

Retirement Savings

05:10 Sean: For me and my wife, we have three top tier values, and then beyond that, everything kind of falls into place. The first one is financial security, so saving for retirement, making sure that we are doing the things we need to do now so that we can live comfortably later. I think that sometimes people get really caught up in this concept of like, I’m doing what I gotta do right now, and that’s fine. And sometimes they are not saving for retirement because they feel like they can’t and that there’s a lot there to kind of go through. And sometimes because they simply don’t think about it. The first time that I kind of understood the concept of like retirement savings and compounding interest and all of that, I started to notice, Oh, wow, there’s a lot of ground that I can make up here in my late twenties and set the stage for how my thirties and forties are going to go. That’s the first piece. The second piece is —

06:14 Emily: Actually, I want to make one offshoot comment to that because of course, saving for retirement is something that I love to talk about. One point that I really like to make when I’m speaking with graduate students or other sort of people on the younger side, younger and lower income side of things, is that if you look at those compound interest calculators, the time is what matters. I mean the time and the amount of money you save, of course they both matter, but the time — you wouldn’t believe what a little bit of extra time will get you in terms of increased returns. And so I always say, whatever amount…like if you feel like you can’t save anything okay, maybe that’s true, but if you can even find like $10, $50 a month that you can start putting away for that purpose, it’s unbelievable what a huge difference that makes on the back end of things, just to have those few extra years. Don’t be discouraged if you can’t save like a thousand dollars a month. That is a very large and unreasonable amount of money for a graduate student level of income, but a smaller amount of money makes a really, really big difference too.

07:18 Sean: Yeah, definitely. And just to kind of keep going on that thread, the stereotypical thing that people give of why you should start investing as early as possible is they talk about if you invest for 10 years from 20 to 30, the amount of money that you make during that time, by the time you retire, will outpace starting from 30 and moving forward. You can’t possibly catch up. Just like you said, sometimes I think people get like, Oh no, I can’t do that much., and that’s okay, but if you can do something, that’s great.

07:55 Emily: Yeah. I think one of the really difficult things that people run into early on is that they’re dealing with debt loads and they might have to clear those first before they can even touch the investing for retirement side of things. But since you’re already starting to invest retirement, I take it you’re either debt-free or you have debt that does not concern you.

08:14 Sean: We are debt free. I would say that my wife and I are very blessed, lucky, strategic, however you want to look at it, I guess. We paid our last debt off last year. I had an outstanding car note that I paid off. We again are very fortunate, I think, to be able to cash flow her MBA. That’s something that I think is a challenge, especially in higher education. I know that the finances for PhDs vary pretty drastically depending on field. In my PhD program, it’s tuition free, and we collect a stipend for working here. When I think about my PhD, I think about it more as job than I think an education of being a student. And I think collecting a paycheck helps me keep that association clear. So yeah, we are debt free. We are investing some. I’d like to be investing more, but also, you know, like you just said, there are different things that we’re trying to take care of and trying to keep all the balls in the air at the same time.

09:23 Sean: Yeah, definitely. Okay. So that is one of your top priorities, is saving for retirement. What’s the next one?

Experiential Living

09:30 Sean: So there’s two more. The second one would be, we have a really big focus on, I call it experiential living, but in the current case it’s travel. I joked about having plant children. Allie and I don’t have any kids yet. We have plans to have kids, but we just don’t have them right now. We have this focus on like, if there are things that would either be impossible or significantly more difficult to do when we have kids and when we’re older, we’d love to do them now. That post that you mentioned earlier about our travel, we went to Maui for a week over the summer. That was born out of like, “Hey, this is a great time to just go and spend a week in Hawaii and just, you know, live it up.” I mean, responsibly, but this is great. After saving for retirement, our next focus is, Hey, we want to have a good time, and for us having a good time looks like going out and exploring.

10:33 Emily: So I was really curious about this term, you just used — experiential living. Right now you said it looks like travel. What are the other things that might fall under that category for you?

10:42 Sean: I guess one thing is I know that some people, their focus is they want this nice X or Y. I think Allie and I, we would much rather save up money for a few pay periods and go to a nice concert or go see a play or a musical or something than buy a new TV or buy something else for the house. We do live in a nice apartment and we’ve decorated and all of that, but we would much rather do something that’s I think a little bit more like out and active. There’s not anything good or bad about that, or any other way. That’s just our preference.

11:24 Emily: Okay. So is this basically boiling down to the personal finance experiences versus stuff debate where everyone has kind of come down to the side of experiences? Is that what I’m hearing

11:36 Sean: Somewhat, yeah. I think that the stuff thing, depending on what the stuff is, is very valuable, in terms of having stuff and, and that’s all fine. But also I know just from, we did the like whole KonMari thing a couple months ago and realized, Oh, I have a lot of stuff. It was nice at the time, but in hindsight I would rather, I think have spent the money that I spent on that stuff on doing something.

12:06 Emily: Yeah. I actually heard this really great thing on a podcast recently. It was on the ChooseFI podcast and the, one of the people that they were interviewing, I can’t remember who the guest was said, something like he strives to have one memorable moment per month, some new thing that he’s never tried before. Travel would certainly fall under that, but it could be like a cooking class or like just doing something different out of your routine, once per month, he has that goal to make a memory, basically, with his wife. And actually it can be the same moment or they can have two different moments, one that each one prefers more per month, but that was his goal. And I thought that was amazing, and I really want to implement it in my life now, because I do feel like months can go by where it’s like, yeah, what happened that was great or notable or important, I’m not even sure.

12:59 Emily: Okay. So experiences, concerts, travel, that kind of stuff. And so right now your focus is doing the things that you would have a harder time doing once you have children. And I will have to say that when I read your post about your vacation, I was like, how do I get rid of my kids for a week, so I can do this. It sounds awesome. What is your third top priority?

Tithing

13:20 Sean: Again, so saving for retirement, travel and experiential living. The third one, honestly, is giving back and tithing. My wife and I tithe every pay period. I know sometimes as graduate students that can seem like a tumultous topic. We already do not make all that much money —

13:45 Emily: Actually, Sean, let’s pause there because some of the listeners might not be familiar with the term “tithe”, could you define that?

13:51 Sean: Sure. In a traditional tithe you would be giving, donating a 10th or some amounts. I mean, tithe literally is “10th”, but giving some amount back to your church family. My wife and I are Catholic. We give back to, we split between the church that we currently go to and then we also support a couple of students through the FOCUS program. They do ministry on college campuses throughout the United States. Good clarification. We give back to our church. For us, we do a traditional 10% tithe. That’s just, I think how we have decided that that’s where we want to put that value at. Does that kind of answer that?

14:39 Emily: Yeah. It’s not something that’s come up on the podcast hardly at all, but we also tithe and have for throughout graduate school, a long time. And it definitely, while I knew other graduate students from our church who also did that practice, it wasn’t something that I felt like was really widespread or something that graduate students could really get a handle on that large percentage. The 10% is a very, very large chunk of your income, but, I feel like tithing for me in terms of like the budget actually pushed us towards what I call percentage-based budgeting. If a 10th of your gross income is going towards that, we also did a certain percentage, it changed over time, starting at 10%, for like saving for retirement and then now we’re up to like 20%, so we’ve increased that over time. And I’m trying to remember, well, taxes are also sort of, not exactly a percentage, but you can convert them to a percentage of your income, so for us, it was like these different goals scale with the amount of money that we make, which I really liked that there was like this flexible percentage. The percentage is fixed, but the amount of money is changes depending on what your income is.

15:51 Emily: I really liked that way of thinking about budgeting, that you should have percentages going towards different things. And it actually goes pretty well with the balanced money formula. I don’t know if you’re familiar with this at all. It basically says that you should keep your necessary expenses below half of your take home pay. And I really liked that as well because, I think for graduate students, there’s this phrase that Dave Ramsey uses that I really like, not for graduate schools, but for people in general, which is something like “act your wage”, something along those lines. I think this percentage-based budgeting, I think, is really appropriate for people who have incomes that they expect to change a lot, like graduate school. Hopefully it’ll be going up alive later on, but if you have those percentages it can keep you really grounded and something can be consistent through those fluctuations in income basically.

16:44 Sean: Right. Definitely. Yeah. We do a similar thing in terms of trying to make sure that we’re doing a percentage breakdown on our budget. One small detail, we do typically everything on net pay, and then also when we get a tax return, I mean, ideally our tax return is zero, right. But if we do get a tax return, then we’ll do the same thing on whatever the return is. But I think it basically shakes out to be the same thing. I have found that to be really helpful. I feel like it helps us recognize where are we essentially overspending in our lives, and conversely, where could we be giving more attention, certainly.

Living and Dying By Your Budget

17:32 Emily: A phrase that I read in your recent post was we live and die by our budget, and that really stuck out because you talked about, I guess, that your budget is a plan for how you’re going to spend your money. And if opportunities arise after you’ve made the, you oftentimes say no to those opportunities, you stick with your original plan. I just wanted to ask you about that. How did you guys put together your budget, and how do you find the fortitude to stick with it?

18:02 Sean: I mentioned this very briefly before, disclaimer, this is not an ad, wish it was an ad, but it’s not, my wife and I use it’s called YNAB, or You Need A Budget. It’s a budgeting tool online that you use, to keep everything in order. One of the, I think, nice things about living and dying by your budget is it tells you how much money you’ve budgeted and allocated to every, whatever category you want to put it in. And if you overspend, the color of the money bar goes from a nice, pretty green to a very angry red color. And that’s just like, I think, maybe potentially a little bit of an immature way, but it’s really reinforcing for me of like, Hey, you made your money angry because you spent more than you allocated.

18:56 Sean: I joke about that sometimes living and dying by our budget. Really, it’s taken a lot of discipline to get to the point that we are now and give yourself grace and patience to get there as you’re working through things and things come up, of course. But we’re in a space right now where we have a set of goals, like I talked about, and a set of values. Sometimes things come up that don’t align with those, or potentially detract a little bit from them and we have to make a mature decision on like, Hey, is it worth us to do this? So one of the things I talk about in that post is, a friend of ours came to us and said, Hey, we want to go to this football game, last minute. Allie and I are huge college football fans, I went to a big football school for undergrad. Great, right, in terms of an interest standpoint, I think that’s great.

19:55 Sean: We started to look at the finances and said man, this is going to be like a thousand dollar trip just out of the blue. And I think at the beginning of the year, had we started the year and said, Hey, we want this to come up and we want to plan for this — great, okay, we’ll budget for it. But a few weeks out, we had to say, no. I mean, first of all, based on our budget, we literally did not have the money to do it without taking money from other standpoints. I really struggle with the idea of pulling money that we had saved for retirement out of retirement to go to a football game. But more than that, I think it’s sometimes difficult when you…This is always a challenge when you have very diverse friend groups is like, everybody has their own different set of values. And I want those people to understand, like friends of mine, that sometimes I to turn things down. Like, hey, I love you guys. You’re great, I appreciate everything about you, and I appreciate our relationship, but just understand that me not wanting to come out, or me not wanting to do this last minute, isn’t a reflection on like our relationship and is a reflection on I just don’t have the money for it according to what my wife and I decided it was important to us.

21:11 Emily: Yeah. There’s another blogger, content creator in the personal finance space, Paula and her brand is Afford Anything. And so her tagline is kind of like, “you can afford anything, but you can’t afford everything.” She’s really, like you were just saying, you have to get really clear about what’s important to you because you want to be able to say yes to the things that are at the top of your list. And that does mean saying no to the things that fall further down and that’s hard. But you can’t say yes to everything. If you say yes to everything, you’ll end up saying no to the things that are most important to you, if you accept every opportunity that comes your way.

21:52 Emily: I have to say though, your story reminded me of when I was in graduate school. I went to Duke and Duke won two championships while I was there 2010 and 2015. 2015 was technically after I defended, but I was still enrolled as a student and I still had tickets to games and stuff. So anyway, in 2010, of course you never know, going in to the tournament, how it’s going to turn out. And at the last second, we had an opportunity to go to the Final Four. Duke went, and my husband and I had the opportunity to attend. They were giving away tickets for students. It was actually free. The tickets were free. All you had to do was get there and stay there. And we really deliberated, and I don’t know that it came down to mostly a financial decision. There were other time reasons why we decided not to go. We had already traveled actually the previous year to see them play and they hadn’t advanced, and so we already had like, kind of that disappointment. So we decided against going, and of course in 2010, they ended up winning, same story in 2015. That’s just one of my major regrets from when I was in graduate school, because I was a fan, that I let anything stand in the way of like attending those events. So I do think that my main regrets from graduate school, in terms of my personal life were things that I didn’t do that money played into why I didn’t do it. It probably wasn’t the whole situation, but yeah, there’s two times I can point to an opportunity came my way and I said no to it, a very reasoned decision, and I really think that was the wrong way to go.

23:27 Sean: Yeah. And sometimes I think that that’s a struggle because we’ve done a couple of things too, where it’s like, Oh, this is such a good opportunity to do this thing. Sometimes, and I say this with a mountain of salt, occasionally we will not live and die by the budget. And the only way that that works is to have intentionally over allocated somewhere else, so that the total amount of money is still there, like the money to cover a different decision is still there. It’s not like we’re living outside of our means, but we do give ourselves a little bit of grace. Sometimes I’m like, this is a really big deal. That trip to Hawaii was pretty much entirely planned for, but there were a couple of things once we got there, that was like, you know what, we’re here, I think we’ll regret this thing if we don’t do it, let’s do it and we’ll figure it out.

24:27 Emily: Yeah. I think that strategy of over saving or just saving for things that you don’t know quite what you’re saving for — at some point a friend will invite you to do something, at some point you’ll have an opportunity to come your way that you’ll want to say yes to at the last second. And I think the way that most people who are not on top of their finances would handle it would just say, okay, I’m going to put it on a credit card, I’ll worry about how to pay for it later, which is not a great strategy. But if you save in advance and you’re just not totally sure what that money is going to go for, but you’re pretty sure something’s going to pique your fancy along the way then you can be able to say yes again to those opportunities, knowing that it’s still within everything you’ve allocated for an advance,

25:08 Sean: Just a small insight, we have a category in our budget called “stuff we forgot to budget for”, and we put a small amount, however much, in there every pay period just because inevitably something comes up. Now, if it’s an emergency, we have separate money set aside. You mentioned Dave Ramsey earlier — we have a separate emergency fund set aside for that kind of thing. This is more like your friend asked you to do something, you have an opportunity to go watch Duke win a championship, whatever.

25:44 Emily: Yeah, exactly.

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25:48 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.

Frugal Tips for Experiential Living

26:34 Emily: So I’m wondering if you have any ways, any sort of frugal things that you’ve done in your life that help you have these experiences that you want have. Either minimizing the money that it takes to do those things or minimizing other areas in your budget so that you can free up more money for your top priority. Are there any like really good strategies you use in that vein?

26:58 Sean: I think the stereotypical student might fight this a little bit. I’ll start with the like ways of like daily life first. We cook 99% of our meals. That’s just the way it is. For me that’s two reasons. That post that I wrote is primarily about investing your money in what you value, but there’s also a small segment on investing your time in what you value and no question about it, cooking for yourself takes it takes time. It costs money to go buy groceries and it takes time to cook those meals. I think it’s easier to go out to eat, from a time perspective or pick up quick ready meals and that kind of thing, but from a time perspective, like at that point, I’m investing in my health. It’s almost exclusively healthier for you to cook for yourself than it is to go out to eat, and it’s almost exclusively less expensive to cook for yourself too. In that post I talk about, Allie and I have been discussing potentially giving ourselves a little bit more room on this and kind of grace on this for when we want to go out. We don’t go out to eat ever. Like once every couple of weeks and the reasoning for that is, whatever amount of money I would spend on going out to eat a couple nights a week is better suited towards saving for Hawaii, or, we’ve been married for just over a year, for our honeymoon we went to Italy. We spent two weeks there. That’s not an inconsequential trip size, and the only way that that works is you’re making cuts, so to speak, elsewhere in your life.

28:37 Sean: The other thing for us has been we’re busy people. She’s in school part time, well, no she’s in school full time and working full time, and I’m working full time and doing things at home. And so it’s really important for us to invest in our marriage. Regular date nights are important, but it doesn’t always have to be this five star restaurant. Those types of things are nicem, but I think I also get 90 plus percent of the relationship building component from that type of date from going to somewhere kind of casual, hole-in-the-wall, or going on an experience. We talked about this this morning, actually. It’s been a couple weeks since we had a formal date, and one thing that we’re going to do next week is we’re going clothes shopping and we’re going to Marshall’s-hop. There’s like seven of them within a 10 mile radius of us and we’re just gonna — we found that when we hit, we really hit there, but they’re very hit and miss, but there’s a lot of them, so we can kind of hop between and see. I think that that might sound somewhat silly to some people, but for us, we like investing in clothes that makes us feel good and feel professional, but also not breaking the bank and this “adventuring”, so to speak, and helping each other try things on — that I think is a fun relationship building activity that literally the travel aspect only costs the gas, and then we would have budgeted for the clothes. There’s that aspect on like life-hacking.

30:11 Sean: From a travel hacking standpoint, honestly, it’s just time. You have to decide how much your time is worth, but we always look for great deals on hotels and flights. Google has a flight tracker that you can use. It’ll send you alerts when your flights fall. I do the same thing for a lot of the hotels. A lot of third party websites are great. For Italy, actually this, this is a great story. For Italy, the flights were going to be like, I don’t remember like $1800 a piece or something, like a lot of money. We went in May, so like the beginning of high season, I get it. Then, the day before I was going to buy, because they weren’t falling, I said, “Oh, let me just look on another website.” I went on, I think it was Priceline or one of the third party website and it was like half that, together. I was like, “Yes, I’m absolutely doing this. We’ll take a weird layover to save half the cost. You could write a book about that, but that’s the things that I think of.

31:15 Emily: Yeah. I think when your goal is to have experiences and make memories and so forth, I guess there’s been research on this that like the anticipation of the experience is a big component of your satisfaction with it. And so taking the time to plan, and do whatever travel hacking and price comparisons and all of that, it actually enhances like your ultimate experience when you put a lot of effort into it upfront. I don’t know, to me it’s a little bit counter-intuitive, but yeah. So pursuing these travel hacking strategies, um, in addition to saving money can actually make you feel better about the whole thing. I guess what I was thinking about when you’re talking, especially about like the food and not spending so much money on eating out and so forth. That was a strategy that we used also. We cut out basically all kinds of convenience food, in favor of cooking for ourselves. And that is like a little bit of a sacrifice because yeah, you have to plan it a little bit more and all that, that goes into cooking. But for us, like for you, the money that we were not spending on convenience eating went towards our travel fund. And so when we knew exactly where the money that we would’ve spent on one thing was going to go, if we didn’t actually carry through with the eating out or whatever it was, that makes the whole thing a lot more palatable. It makes the whole thing go down easier if you know, okay, yeah, I’m sacrificing a little bit in this moment right here, but that is going to enable something really fantastic later on.

32:43 Sean: Right, right, right, right.

32:45 Emily: Any other frugal strategies around those things, either minimizing expenses on things you really want to do or cutting expenses and things that are not such a high priority?

32:54 Sean: I think the only additional thing that I’ll add is — it’s especially common, I think because like I, as a PhD understand or PhD student, rather, my time is limited. I think that my time is a little bit larger than some other people’s because I just try to make a point of, I’m only working X hours this week. Like this is my job and I’m putting this much into it. And that sometimes works for people and sometimes doesn’t. But I see a lot of, because we have such little free time, convenience buying and convenience spending somewhat to kind of what you, you mentioned earlier. And I think in some ways you do have to give yourself a little bit of that because the amount that you stress over not making convenient spend is also a use of resources, maybe not for the best. Just watch it. I always go back to “live and die by the budget”. Until I had a budget that I like actually did religiously every week and every pay period, I didn’t have a clue. And I started to look at my spending habits and said, man, I didn’t realize I was spending this much on snacks, or this much on cable and this other thing that I don’t even use. It just, it never occurred to me because I was always tracking my spending after the fact that never really looking forward any further than the next couple of weeks.

34:20 Emily: Yeah. I mean, tracking your spending is an amazing thing to do as like a first step. It actually does start to change your behavior in many cases. But if you’re just tracking it as a passive activity and it’s not actually balancing, okay, well, where do I want my money to go? And do I prefer it here? Or do I prefer it there? That’s what you have to do with your budgeting. They’re both really useful, um, activities, but I guess once the shock of the tracking wears off and you make whatever sort of subconscious changes you’re going to want to make from that, you need to start budgeting to get that further of value add from the activity.

When Budgeting Pays Off: Sean’s Trip to Hawaii

34:54 Emily: So we’ve teased this enough. Tell us about your trip to Hawaii, that made me so jealous.

35:01 Sean: We went to Maui specifically. We went to Hana, which is a very small town on the East coast of Maui. Allie was really into this idea of like a wellness retreat. And I did, I think the stereotypical husband thing that I hate and I was like, what are you talking about? No. And then I started to look into it. I was like, Oh, this actually sounds pretty awesome. So I was like, okay, yeah, let’s go for it, sure. There was a resort there called the Travaasa, just right in the town. Hana is not really the type of place that you go to and stay at unless you go to this hotel. There’s not a city center. It’s people that live there and this hotel and that’s it.

35:45 Sean: So we went and we said, okay, you know, let’s do it. This sounds great, let’s go. The only thing I’ll say about traveling to Hana is getting to the airports, great, but there’s a very famous road there called the road to Hana and it’s like 90 degree turns the whole way. It’s 40 or 50 miles and it took us three hours. You’re crawling and it’s crazy. But scenery is amazing and beautiful. The little food stops on the way are great. And then once we actually got there, it was just like paradise. It’s still the States, so there is cell service, but there’s no wifi available. The cell service is kind of shaky, we turned our work phones off, and just lived, and it was awesome.

36:34 Sean: There’s there was a lot to do there. They have a spa on site. I’m not a huge massage/spa person, but I was the most relaxed I’ve ever been in my whole life that week. The food was awesome. There was waterfront yoga and like paddle boarding and horseback riding and just like all of this stuff that we don’t ever do in our daily lives. It was really awesome to just for once I think go and just exist. My wife and I, in particular, but I think more generally PhD students and other graduate students, you’re just going nonstop all the time, and there’s not really any moment where you kind of just sit back and you’re like, “Hey, I’m not thinking about anything about tomorrow, except whether I want to do this cool thing or that cool thing.” I don’t know, I think that was a nice refresher for us.

37:34 Sean: Everything about it was super chill. The only not super chill thing about it is, there was actually a wildfire on the West side of the island while we were there. We went back to catch our flight and all the planes are delayed because they’re trying to get people that live there, like out of danger. Things are, I don’t want to say fine because you know, wildfires are extremely dangerous and there was a lot of damage there. People are generally fine. There were a lot of people that got helped. Everybody was safe. I don’t recall seeing any reports of fatalities, which is incredible. But for us, we’re literally there with our bags in a very small airport on Maui and we’re just like, “all right, guess we’ll chill.” I think a small price to pay, obviously relative to potentially losing your home in a fire, of course. But for us, nobody told us anything. Our airline didn’t give us any updates. We just got there and they were like, we’ll see what happens. Like I said, there’s a much longer post about it with pictures that are describing it way better than I can tell it, but highly recommend. Would definitely do it again. It was great.

38:54 Emily: What really struck me about the, your description of this vacation was that I didn’t do anything like that when I was in graduate school, except for my honeymoon. The honeymoon was relaxing. I mentioned that we saved a lot for travel before, but it was all obligation travel, all of it. We were usually traveling domestically to either see our families, or go to weddings, or attend reunions. Other stuff where somebody else was dictating the schedule, the timing, the place, all of that. I’m not trying to say that was a…We wanted to do it. We wanted to do all that obligation travel. Going to weddings is really important to us. That’s a high value for us, but it just kind of squeezed out any other possibility of taking a vacation that was just for us and just for the purposes of recuperation. There were always other purposes for the trips — seeing certain people, or witnessing certain events. Looking back on it, I did not give myself a proper amount of rest, throughout that process. And it’s still something that I struggle with, so I’m really glad that you guys, made it a priority, made the time for it. Hopefully you’ll do it a few more, maybe not the same vacation, but something similar, a few more times during graduate school so you guys can finish strong and finish healthy. So that sounds amazing, and yeah, we can point people to the post from the show notes.

Financial Advice for Early Career PhDs

40:23 Emily: As we finish up here Sean standard question that I ask all my guests — what is your best financial advice for another early career PhD? And that could be something related to what we’ve talked about today, or it could be something entirely different.

40:36 Sean: Sure. Just because we’re towards the end, I’ll give two quick ones, because I think they’re both very important. The first one we’ve touched about a few times is if you aren’t budgeting yet, try to get there as soon as possible. Like you said, tracking expenses is great and it’s helpful to get you in the right mindset. But until you are, I think front end, saying this is the money I will have coming in, here are the places it’s going to go, you can’t really capture your values fully in like where to invest unless you’re doing it on the front end. So that’s the first thing that I recommend.

41:12 Sean: The other thing is, depending on your program, especially for PhD students on grants and fellowships, so kind of take that with a very specific niche market in mind, sometimes you will be allowed to pursue other things outside of your degree and have side jobs and side hustles. I know, recently talked to another student, here in Houston who, I think was baby-sitting or dog-sitting. Am I remembering that right?

41:39 Emily: Pet-sitting.

41:39 Sean: Pet-sitting, right. And like, okay, great. So she had a side hustle and that’s awesome. Sometimes you can and look around for what things are available because the extra cash is really useful. Sometimes you can’t, on paper. They expect you to be in the lab, and if you have time that you could be giving to another job, you should be spending it in the lab. And I think my recommendation for that is more of a career-related one. You’re a graduate student and you’re contributing to the academic space. That’s beneficial to the field. It should also be beneficial to you, and so I think that I always recommend that students take opportunities that they find, when they become available, in stride, because it may be a value add to their career or to their finances, that isn’t necessarily a value add to their academic education. And that’s okay. I think sometimes we get this feeling of guilt of like, I’m not working hard enough in the lab. And if that’s true, okay, work harder in the lab, but if it’s not true and you can be doing other things that are beneficial for you, it’s okay to do things outside of lab. And I really struggled with that when I first got to graduate school, and I see that as a common struggle now.

42:55 Emily: Yeah, I guess, so I’ve been reading a lot about like time management, recently, to work on my own time management practices, and I guess one thing I’ve learned, I’ve been reading and listening to a lot of Laura Vanderkam’s stuff, and so she references research that’s on…First of all, that people don’t work as much as they say they do. Like people who are reporting that they work 80 hour weeks, almost always are never working more than like 55 hours a week. They may be at work for 80 hours a week, and that’s not a good return on your investment of time, is just to be around more. You should be resting or doing other things instead of that. But another part of that is that there’s sort of an optimal amount of work that you can put into something in a given week, and once you start going beyond that, your returns for the amount of time you’re putting in decrease and decrease and decrease. After 40 or 45 hours, you may be putting in more time, but you’re not necessarily getting that much more of it. It’s kind of this like 80/20 principle.

43:51 Sean: Yup, definitely.

43:52 Emily: Yeah. So I’ll just say like on that time management component, that it can really be beneficial for you if you don’t consider research to be like a black hole, you just throw more and more and more and more time into, that’s not necessarily the best way to approach it, but rather more like managing your energy and managing your time as well. And if that gives you time to pivot to a side hustle or hobby or, you know, exercise or whatever it is you want to do, that’s probably going to end up giving you more energy rather than taking away from your work. Do you know what I mean?

44:22 Sean: Right, definitely.

44:22 Emily: Just like taking vacations, you don’t do it necessarily for the reason of being more productive, but you probably are more productive when you come back from it.

44:29 Sean: Absolutely.

Where to Find Sean Online

44:33 Emily: Where can people find you if they want to read your blog or follow up with you elsewhere?

44:37 Sean: Sure. I’ll send these over so you can put them on the show notes as well. The name of the blog is Authentically Average. It’s authenticallyaverage.com. No hyphens or spaces. On Instagram and Pinterest I’m @AuthenticallyAverage, one word. Twitter was a little weird and I have @AuthenticAvg. That’s where you can find all of the different ways to connect with me. The two posts that we talked about today are up as pins on Pinterest. I can send those over and people can look at them if they want to. I love using Pinterest, just as a side note, I think it’s been really fun. If you are in the 3D-printing space and see me at an academic conference, come and say hey. I’m not shy. If you happen to recognize me, I’m happy to talk and all of that.

43:33 Emily: Yeah. Well, thank you so much for coming on the podcast and having this great discussion with me, Sean.

45:37 Sean: Yeah. Thank you for having me

Outtro

45:39 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 Got a Late Start Financially But Is on Track to Retire Early

June 22, 2020 by Lourdes Bobbio

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

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

Links Mentioned

  • Find Dr. Sean Sanders on LinkedIn
  • Fiscal Fitness for Scientists
  • The Stock Series by JL Collins
  • The Simple Path to Wealth by JL Collins
  • A Random Walk down Wall Street by Burton Malkiel
  • The Four Pillars of Investing by William Bernstein
  • The Seven Habits of Highly Effective People by Stephen Covey
  • Afford Anything Podcast
  • Financial Independence Podcast with the Mad Fientist
  • The White Coat Investor Podcast
  • Planet Money from NPR
  • The Indicator Podcast
  • ChooseFI Podcast
  • So Money Podcast
  • Personal Finance for PhDs: Financial Coaching
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
PhD early retirement

Teaser

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

Introduction

00:33 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode eight, and today my guest is Dr. Sean Sanders, director and senior editor for custom publishing for the journal Science and program director for outreach. Sean came to the US for a postdoc position with little savings. Living in the DC area on a postdoc salary was financially challenging. He didn’t start to make real progress with his finances until he left his postdoc for an industry job, which more than doubled his salary. Sean and I discuss the strategies. He is used to build wealth in the last decade or so, from moving to reduce housing expenses, to retirement investing, to purchasing real estate. We have a particularly involved and enjoyable discussion of Sean’s passive investing strategy and the mistakes he made in the past. We also swap recommendations of personal finance websites, books, and podcasts. Sean is now on track to retire early, and I’m sure his story will give hope to other PhDs who have, or will enter their thirties without any appreciable savings. Without further ado, here’s my interview with Dr. Sean Sanders.

Will You Please Introduce Yourself Further?

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

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

Early Career Money Mindset

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

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

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

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

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

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

Changes in Finances Leads to Changes in Money Mindset

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

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

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

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

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

Making Lifestyle Changes to Increase Savings

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

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

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

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

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

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

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

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

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

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

New Financial Goals

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

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

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

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

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

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

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

Commercial

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

Financial Strategies and Advice

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

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

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

Investing Strategies and Tips

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

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

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

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

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

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

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

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

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

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

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

32:01 Sean: That is great news.

Financial Literacy Resources

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

40:16 Sean: Yeah, absolutely.

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

Final Words of Advice

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

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

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

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

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

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

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

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

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

Outtro

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

The Necessity of Both Economic Justice Advocacy and Personal Financial Responsibility

May 25, 2020 by Lourdes Bobbio

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

Links Mentioned

  • Find Dr. Ian Gutierrez on Twitter
  • Related Episode: Healthy, Wealthy, and Wise: Choose a PhD Program That Will Support Your Personal and Professional Development
  • Personal Finance for PhDs: Financial Coaching
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
grad student union

Teaser

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

Introduction

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

Would You Please Introduce Yourself Further?

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

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

The Intricacies of Unionization for Graduate Employees

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

Impetus for the Union

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

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

Issues at Play in Union Negotiations

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

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

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

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

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

Grad Students vs. the Administration

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

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

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

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

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

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

Commercial

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

Personal Finances in Grad School in Relation to Unionization

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

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

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

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

20:34 Emily: That’s a great analogy.

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

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

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

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

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

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

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

Personal Finances After Grad School

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

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

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

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

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

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

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

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

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

Best Financial Advice for Graduate Students and PhDs

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

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

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

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

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

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

Outtro

41:02 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the personal finance for PhDs podcast. There you can find links to all the episode show notes, and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC podcast editing and show notes creation by Lourdes Bobbio.

How a Book Inspired This PhD’s Financial Turnaround

April 13, 2020 by Lourdes Bobbio

In this episode, Emily interviews Dr. Amanda, a tenure-track professor at a small college in the midwest. At the start graduate school, Amanda was disengaged from her finances and considered grad school to be a financial continuation of undergrad. She had resigned herself to being a “poor graduate student” until she read Ramit Sethi’s book, I Will Teach You to Be Rich. Slowly, the financial messages in that book replaced the limiting beliefs she had absorbed from academia. Amanda took small steps to improve her finances, starting with her bank accounts and opening a Roth IRA, and over time her strides with her finances became bigger and bigger. At the end of the episode, Amanda summarizes the financial success she is now experiences and connects it to the hard and slow work she did on her finances during grad school and her postdoc.

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

Links Mentioned

  • Find Dr. Amanda on her website and on Twitter
  • Listen to a previous episode with Dr. Amanda: “This Prof Used Geographic Arbitrage to Design Her Ideal Career and Personal Life”
  • I Will Teach You to Be Rich by Ramit Sethi
  • This PhD Government Scientist Is Pursuing Financial Independence: Part 1
  • Personal Finance for PhDs: Tax Center
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list

Teaser

00:00 Amanda: I was initially a little bit resistant and I had the, “Oh, I’m a poor grad student” identity, I definitely did. I thought of myself as a poor graduate student and thought, well, all grad students are poor, that’s what it’s supposed to be, and I hadn’t challenged that at all at that point.

Introduction

00:19 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode 15. And today, my guest is Dr. Amanda, a tenure track professor at a small college in the Midwest. When she started graduate school, Amanda was disengaged from her finances. She had resigned herself to being a poor graduate student, until she encountered Ramit Sethi’s book, I Will Teach You to Be Rich. Slowly, the financial messages in that book replaced the limiting beliefs she had absorbed from academia. Amanda took small steps to improve her finances starting with her bank accounts and over time, her strides with her finances became bigger and bigger. At the end of the episode, we get a glimpse at how the hard and slow work she did on her finances during grad school and her postdoc is now paying off in spades. Without further ado, here’s my interview with Dr. Amanda.

Will You Please Introduce Yourself Further?

01:16 Emily: I’m so glad to have Dr. Amanda joining me on the podcast again today. She was first on in season one, episode 11 talking about geographic arbitrage, and her career transition from her postdoc into her academic job. And anyway, if you didn’t listen to that episode, and you have time right now, go back and listen to it. But today we’re going to pick up and talk about something that she briefly mentioned in that first interview that I thought was fascinating enough that I wanted a whole interview devoted to it, which is her financial turnaround story. We would definitely say that Dr. Amanda is financially successful today, but she’s not always identify that way, so we’re gonna explore that story in a lot more depth. Amanda, thank you so much for coming back on the podcast and being willing to share this aspect of your story.

02:01 Amanda: Thanks for having me.

02:02 Emily: So would you please tell us a little bit more about yourself, maybe for those of you who didn’t listen to the first episode?

02:08 Amanda: Sure. I am an assistant professor in a college of education. And I work primarily with doctoral level students. I teach courses on research, writing, qualitative methods. And then I also teach a course on information and information literacy and innovation. My background is in digital media and learning, and specifically video games and learning. A lot of my research has been around the digital games industry, and then how people learn from playing video games, both games designed to be educational, but also commercial games and game communities.

Life Before the Financial Turnaround

02:45 Emily: Great. And tell us briefly about where you went to graduate school where you did your postdoc and about your family, how that formed along the way.

02:53 Amanda: Sure. I guess the first thing is, after I graduated from college, I moved out to the San Francisco Bay area for a short time, and worked as an editor in the games industry. And that’s how I developed an interest in video games and doing work on games. But I was always a school person and I had intended to go back to school to attend graduate school. And so I decided at that time that I wanted to do something with games. When I was looking for graduate programs, really my criteria was I want to work with people who are doing interesting things with video games. I felt like there was a lot of emphasis on games research, on games and obesity, games and violence, really negative things. And I thought, you know, there are a lot of great things happening in this industry. And I felt like there was a lot of potential for games to be used for a more positive impact. And so my search for graduate programs was really just who’s doing stuff around games in their potential.

Amanda: I found a group of people at the University of Wisconsin, Madison called the games learning society group, and they were a group of scholars doing really fascinating work from games and learning perspective. These were people looking at games like Civilization and World of Warcraft and how are students learning about history from a systemic point of view from Civilization, and how are high school boys, who are really disengaged with school, acquiring literacy skills and critical thinking skills and math skills from playing World of Warcraft. That was graduate school. And then following, that I did a postdoc at USC, the University of Southern California in Los Angeles, where I worked on a project where we were looking at using a game to teach first generation, low-income students about the process of applying for college.

04:43 Emily: Wow, that is so fascinating. And I think along the way you met your husband, is that right?

04:48 Amanda: I did. So I met my husband Dennis in graduate school. His advisor was actually married to my advisor.

04:55 Emily: Oh, wow. Incestuous relationship.

04:58 Amanda: Yeah, and I was I think resistant to dating him for a little while because of that, but he just turned out to be too awesome of a person, and so we started dating in grad school. Then we ended up getting married during the postdoc, and he went out to Los Angeles with me.

05:14 Emily: Was he doing a postdoc during that time as well? Or did he have a different type of job?

05:16 Amanda: He was working for the University. I’m blanking on his job title. But he was working with the USC games group, teaching courses, and then also helping manage their tech program. So he was working more with students who are learning to be game developers. And then I was in the College of Education, doing work – it was a large grant with the US Department of Education is what I was working on.

05:38 Emily: Okay, yeah. And going back to that first interview, the transition out of your postdoc, deciding where to apply for academic jobs, all that we covered in the previous interview. So if people are interested in your subsequent career path, they can go back and listen to that. But today we’re going to be talking about your financial journey during that whole time. Can you start with kind of the before, when you weren’t feeling so financially successful? What was your financial life like at that time and what were your financial attitudes?

06:11 Amanda: I think it wasn’t even that I wasn’t feeling financially successful. I wasn’t financially engaged. I had this narrative in my head, you know what, I’m good at school, as long as I do well in school, and I work hard, I will be successful and that is something that I worry about when I’m done with school. Later on, when I’m an adult, even though of course, if you get a PhD you end up spending a good amount of time in school as an adult. But I had this attitude that money was something that I would worry about later.

06:40 Emily: I’m curious how that actually plays in because you had work experience prior to starting your PhD. Is that the same attitude you had at that time? Or did it actually switch when you entered graduate school?

06:51 Amanda: Yeah, so I was working. I did work full time as an editor after my undergrad, and so I started paying off my student loans. I didn’t have a huge number of student loans, but I had taken out some loans, particularly I took two classes abroad when I was an undergrad, and so I had borrowed some money beyond scholarships for that. So I started making the payments, and I just sent in whatever the minimum expected payment amount was, and wasn’t really thinking about it. I mean, I did pretty well in that I was an English major, who at least managed to pay my rent and make a living in San Francisco. And this was right around the time of the beginning of the financial crisis, too, so there was a lot of anxiety and I knew a lot of people who are laid off at that time. I kind of felt like, “Oh, well, I have a job and I’m paying the rent and it’s San Francisco, so I must be doing just fine or even really great.” Things like investing for the long term or bigger goals weren’t really on my radar. I was just sort of paying the rent and paying the student loans.

07:57 Emily: Yeah, well, given the the time and the place that you were in I actually think you probably were doing very well. But in graduate school, you had that same attitude of just kind of going along and school is your primary focus. Is that right?

08:10 Amanda: Yeah. I hadn’t really had a good understanding of how graduate school was different from undergraduate, and so I borrowed money my first year of grad school. I took out whatever loans were offered as a part of the FAFSA, even though I had a project assistantship that year. And it wasn’t until I was kind of well into that first year that I understood, “Oh, you can work as a project assistant or research assistant, a teaching assistant and throughout grad school, I had each of those roles. And that can be enough to live on.” It’s not an exciting lifestyle, but I hadn’t realized at first that I didn’t need to be taking out those loans. So I took them out, and then I just didn’t do anything mindful with them. I probably did a little bit of travel, I ate out probably more than I needed to, and just that money sort of trickled through. I didn’t blow through it right away or anything like that, or need to take out additional loans, but I just didn’t understand the ways that you could avoid taking on additional debt in grad school. I sort of treated it like undergrad, just not knowing how that system worked until I was further along.

What Sparked the Financial Turnaround

09:16 Emily: I see. Yeah, that kind of makes sense, actually, because you were thinking about yourself as a student again. I guess that’s part of what this podcast is about, right? Making a wider awareness known that graduate school should be handled financially completely differently than you’ve handled your undergraduate degree. So when did this start to change? When did you start to have a greater degree of engagement or awareness around your finances?

09:40 Amanda: Sure. So my boyfriend at the time, now husband, had started reading, I Will Teach You to Be Rich, a book by Ramit Sethi. And if you’re not familiar with it, it’s really a book that just sort of walks you through how to set up a financial framework tohelp you be successful. He talks about how to use credit cards strategically how to set up the right sorts of bank accounts — checking savings, how to get started investing. He was reading that book and we just decided to read it together. We worked through it chapter by chapter. And from there, we started feeling really motivated by by that book, in particular.

10:23 Emily: This is really interesting to me, because this may be a better question for your husband, but the title of Ramit’s book, I Will Teach You to Be Rich — how did you even have the idea that that book was for you, because rich was nowhere near what was going on for you at that time?

10:40 Amanda: Not even close.

10:41 Emily: Maybe it was the teach you, like you were a learner, you wanted to be taught?

10:45 Amanda: I remember being really resistant to the book because I hated the title. I remember actually making fun of it or just saying, wow, it seems really cocky. And there were parts of the writing style where I felt like it was a little more aggressive than really appealed to me. But I also found I was just kind of drawn in by some of the message. I was initially a little bit resistant. And I had the, “Oh, I’m a poor grad student” identity I definitely did. I thought of myself as a poor graduate student and thought, “well, all grad students are poor. That’s what it’s supposed to be.” And I hadn’t challenged that at all at that point. But I do remember being actually turned off by the title of the book, so it’s funny that you mentioned that. But he was reading it and it was fun to be reading a book together too, and having that partner to talk things through and bounce ideas off of, and then we were able to hold each other accountable to actually doing something once we had read through the book.

11:42 Emily: Yeah. So did you encounter any other resistance to that identity as a poor graduate student? Was that pushing back at all against the messaging you’re receiving from the book?

Mindset Shift

11:55 Amanda: Yeah. I came up against some limiting beliefs at that point. As I was reading the book, I started having these feelings that “oh, well, I feel like I’m starting too late” or “as a graduate student, I don’t make enough money for financial planning to be worthwhile, that that’s still not something I can do.” I was simultaneously feeling like I had waited too long and like I still needed to wait longer. And that was really frustrating for me, because I have the type of personality where once I decide I want to do something, I want to act on it right now, or yesterday. It was frustrating to me to start learning about all these things, but not really feel like I had the means to put everything that I wanted to into place right away.

12:38 Emily: Yeah, I can imagine that a lot of people starting to learn about personal finance in graduate school, from whatever source, can feel that way. And it’s to your credit that you kept engaging with the material, instead of just totally turning off and say, “Oh, I have to pick up this book again in a few years later on.” I can definitely understand why hearing the message, while maybe this is not what he intended, but to you interpreting as I’m already starting too late when you were probably in what your mid-20s or so?

13:07 Amanda: Yeah.

13:09 Emily: Yeah, it’s not like objectively actually that late, but when you understand that people who did not go to graduate school route can be working on this right away when they finish their bachelor’s or even potentially earlier, that can be really frustrating. And like you said, you have all these great ideas once you start accepting the messages, but still, nothing has really changed in terms of your means and ability to work on them.But still, you were able to start making some changes. Once you started accepting the messages, what did you do right away even while you were still in graduate school?

Small Steps Make a Difference

13:47 Amanda: The book actually had really specific instructions about how to set up — I don’t think he frames it this way, but it’s essentially setting up a framework for yourself. One of the things that Sethi talks about is getting away from high-fee brick and mortar banks. A lot of banks charge to have a checking account if you don’t have a certain amount of money in it. And for most graduate graduate students, those minimums aren’t necessarily realistic. ATM fees are things that just can kind of bleed through. He had recommended switching to an online bank, and at the time, he had specifically, I think, recommended the Charles Schwab high yield investor checking. And so we both switched over our banks, because I think one of us was with Wells Fargo at the time, the other was with Bank of America. We were with exactly those banks that he was saying, “you know what, these are just set up to make you fail. They’re never going to do you any favors, get out.”

14:42 Emily: I don’t think anything has changed in the 10 or so years since that point. I would still say anyone who’s a Bank of America and Wells Fargo, get out of that relationship ASAP.

14:53 Amanda: Exactly. And one of the things that I love about the Charles Schwab account and that I think is really good for grad students, especially if you’re presenting research, is you get reimbursed ATM fees from anywhere in the world. Any ATM fees that you end up paying while you’re at a conference, it can even be an international conference where those can be really steep fees, at the end of the month, you will get a deposit in your checking account that reimburses you for all of those fees. That’s a feature that I just really like, and it’s not a lot of money, but over you know, several years that does start to add up.

15:25 Emily: And I think that on a graduate students stipend, those $3 or $5 here and there — it’s a higher percentage of the money that you’re working with as a graduate student that it would be for Ramit’s general audience. Like maybe that tip is “okay, it’s a good thing for them to do, but it doesn’t make that big of an impact,” but for graduate students, coming up at the end of month with 20 extra dollars or so like that can make a decent difference in your life, especially if your savings goal starts out at that $10, $20, $50 level. That can really help you meet that

15:58 Amanda: Yeah and it’s okay if that’s where you’re starting. Another thing that we did is we set up higher interest savings accounts. This was when interest rates were really low. Right now it’s realistic to maybe get, at the time of this recording anyway, 2% or a little over 2% on a savings account. At that time, I believe 1% was the absolute most you’re going to get, and so we weren’t talking a lot of money, but it was the same principle. I was with one of those banks where I think the interest was under 0.5%, so even with a lot of money, you’re not going to be earning anything. And so, you know, with the amount of money that I that we had in savings at that time, 1% was still only earning us, maybe pennies, but a few more pennies. But over time, as we started saving more and built up an emergency fund, those pennies became a latte every month. Now it looks a little bit more like a dinner out, maybe a modest dinner out, but it’s something. I think it’s important if you can aggregate those kinds of small gains across a bunch of areas, then they do start to make a difference. It’s changing your attitude from I don’t care that I’m bleeding money a little bit here and there on fees and interests that I could be earning. It’s saying, I’m taking control of this and I am mindful of where all of those dollars go and how I can now be in control of my financial situation.

17:26 Emily: Yeah, I can see how this example of changing where you bank can be a really impactful psychological when at the start of a financial journey, like what you’re talking about, because it’s not like you’ve set a savings goal and that you’re feeling discouraged about that, because you know, you only make X amount of money. It’s something that you do have complete control over and it doesn’t cost you any money. In fact, it’s going to be bringing money back into your account, a few dollars at a time. I can definitely see how this can be a wonderful first step to take when you’re starting to take in your financial life. You actually just mentioned a term I wonder, based on our last interview, if you also listen to the Choose FI podcast?

18:07 Amanda: Definitely. What was the term that I used?

18:08 Emily: You didn’t quite say it the way they did — aggregation of marginal gains. I’ll explain that for the audience. This Choose FI podcast is about the financial independence movement. We’ve had a pair of interviews on that with Gov Worker in season three, so if you want to learn more about the FIRE movement, financial independence and retire early, you can listen that one. We also touched on it in Amanda’s first interview. But anyway, on this Choose FI podcast, they have this term that they’ve come up with throughout their episodes, the aggregation of marginal gains, which is when you just make a tiny little change in your financial life, like the one that Amanda just mentioned, of stopping to pay ATM fees or stopping to pay fees just to hold a small balance in a checking or savings account. Those are very, very small things to do. But once you add up ten small things or hundred small things, that aggregation becomes really significant in your finances. This can be that step one for your aggregation of marginal gains. So yeah, thank you so much that example Amanda.

Commercial

19:09 Emily: Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

Long-Term Changes

20:17 Emily: Anything else structurally that you changed around your finances at that time when you first started following the I Will Teach You to Be Rich framework?

20:24 Amanda: One other account that I got set up, which I think in the long run is going to have been really important, is taking control of getting started with retirement savings. Because I had opened the checking account with Charles Schwab, which is an investment firm, I also then opened a Roth IRA and I forced myself to remember that I had had some 401k savings from that editorial job that I had had before, but I wasn’t paying any attention to it. I couldn’t have told you how much I had saved. I sort of knew where it was. I still to this day today do not know how I had had that money invested at that time. So what I did is I opened up an IRA and I rolled that 401k over. And it was not much money, because I had not been — at the time I had been in San Francisco, I was proud to be paying my rent, I wasn’t worried about saving for decades out in the future. But what I did is I got that money to where now I knew where it was and then I had it on my radar to when I had windfall money from contract work or side projects that I was doing, I was like, “You know what, I can start to invest in a Roth IRA.” And that’s something that, sure, it would have been great to start at 18, but I can start right now and that’s still going to be really good for me over time.

21:41 Emily: Yeah, that’s amazing. I love that you specifically tied any windfall money or any extra side hustle money or whatever it was, you then had a place to put it. There wasn’t the extra hurdle of, “Oh, I have an extra $50 in my account right now. What do I do with it? I’m not sure” and it ends up just floating away somewhere you don’t even know where it went. You had then a place to put it. This is another great first step to take, is just to open an account, just to set it up, as long as there’s no minimum, or you can meet the minimum required to open it, just so you have a place about money to go. I think it makes such a huge difference that once you have that goal in mind, okay, any money extra money that comes in, this is where it goes. And it’s really easy to follow through on that once you’ve gotten over the activation barrier of setting up setting up the account.

22:31 Amanda: And both my husband and I, throughout the years have split that money between Roth IRAs and then that’s how we made substantial payments to our student loans. Both of us have done side projects where we might get a couple thousand dollars here and there, for consulting work or book projects or other things. We were very mindful that 100% of that money, we would just take it and allocate it toward one of those two goals. We had actually paid off a good chunk of student loans while we were still in school or within that first year, just because we were really consistent about taking that extra money and putting all of it towards either long term investments or towards the student loans with the highest interest rates, because at that point, we had pooled together all of those loans and actually started tracking, “Okay, what are the interest rates on each of these and which do we need to tackle first?”

23:28 Emily: Is that something else you learned from I Will Teach You to Be Rich, how to handle the debt? Were you following that part of earnings plan as well?

23:37 Amanda: Yes. And we were big fans. It was it was obvious for us that we wanted to tackle highest interest rate first. I know some people will start with the smallest loans, just to get those those wins, that sort of dopamine hit from getting a loan paid off. But for us even if the higher interest rate loans were bigger, we started with those.

23:57 Emily: So you’re going through the remainder of your graduate degree and you had this system for living off of your stipend for your budget and then pushing forward your finances with the extra money that was coming in. That’s how you finished out graduate school. Was there anything you did to keep yourself on this path of sticking to your goals and sticking to this idea of financial improvement through that time?

24:20 Amanda: Yeah. I mentioned that I have an “I want to do things now, now, now” sort of personality. As we transitioned from graduate school to the postdoc phase, we were in a higher cost of living area, but we are making more money. I felt like “okay, now we can start to do some more things.” There are things that we couldn’t do as students that now we can really tackle. One of the things we did, we were in Los Angeles, which means we spent a good amount of time in traffic. We were fortunate enough that we both were working at USC, at the same university. That meant we had a good chunk of time every day in the car and so we started listening to podcasts at that time.

Amanda: Really there’s a handful of podcasts that we had started listening to. We started listening to Afford Anything, Paula Pant’s podcast. We listened to The Mad Fientist, which is another financial independence podcast. We started listening to some entrepreneurial and side hustle podcasts. We were really just looking for ideas for things we could do and those podcasts really kind of helped keep us looking for new improvements that we could make and kept us motivated too. Sometimes the smart thing is not to change your goals, but just keep doing what you’re doing, but for me, I needed that motivation. I needed to be constantly learning new things and assimilating new information, and then making little tweaks along the way.

25:55 Emily: Yeah, I think those are all fantastic suggestions. I also love listening to podcasts. Not surprising, having my own podcast, I love the medium and listen to a lot of different ones. All the ones that you mentioned are excellent. We’ve already mentioned Choose FI, that could be another one to throw into the mix for the listener. Of course mine has a completely different audience than many of these other ones. If you’re already a listener, please stick with it, because I think this will help motivate you as well. And then the other one that I really like for motivation is Dave Ramsey’s podcast/radio show. You probably have to be in a debt repayment phase of life to really appreciate it, but he is very motivational, I will say that. That’s another idea if you’re looking for motivational podcasts.

Life after a Financial Turnaround

Emily: Let’s take the last couple minutes here, Amanda, and just give us some highlights of what’s been going on. What did you hit? You eventually paid off your student loans. What would have been the financial highlights of years, finishing out your postdoc, and then since then?

26:54 Amanda: We were fortunate enough to really get our loans paid off within a couple years of us graduating. That was a huge win for us. But of course, I wanted to keep that momentum going. Every time we complete a goal, I say, “okay, but we can’t lose momentum. So what are we going to do next?” And so we, we paid off the student loans and then we were kind of in that transition to a lower cost of living area, which I covered in that other podcasts, so I won’t talk about it. But that was another thing we wanted to do. My family’s in the Midwest, I had wanted to get back to the Midwest. That was something that we felt was important before we started a family.

Amanda: We started transitioning from high cost of living area to a lower cost of living area and that made home-ownership really feasible for us. We saved up and at the end of the last year — we weren’t planning to buy a house until this year, but we just ended up finding the right house in the right neighborhood, and we we had enough saved where we were able to make that happen. That was one of the latest things we did and now we just had our first child. I had a daughter in June, and so we’re wanting to get a little bit put away for her college already, too. We’re working on that and we’re kind of hoping to make a purchase of a rental property in the next couple years, so that’s another goal that we’re working on right now.

28:14 Emily: I think this is an amazing example of how much your financial progress accelerates once you have the higher income to be working with, and you can’t expect that to necessarily happen if you haven’t laid the groundwork earlier. If you do have the attitude of, “well, I’m still in graduate school, I’m still in my postdoc, I just have to worry about money later,” It’s not necessarily all going to turn on a dime for you when your income changes. But for you, Amanda, because you guys have been working so diligently on these various goals with whatever means you had for all those years, once you had the higher incomes, it was just like, boom, you knew exactly what to do with it. You knew where to funnel your money. You could make really, really quick progress and that’s the same thing that happened my finances as well — laying the groundwork during graduate school, once the income changed, the winds just come faster and faster and faster, even though they were really slow and hard fought in the beginning years. I really appreciate hearing this more about that “after” aspect of your story, after the financial transformation.

29:17 Amanda: I’ve heard that the first $100,000 is the hardest, for net worth. And I do believe that that’s probably true. I don’t know how well documented that is, but that’s something that I’ve heard before on podcasts and on blogs. It does seem like, it doesn’t really matter if it’s $100,000 or whatever it is, the beginning is the hardest to make progress because your money isn’t making much money, you probably aren’t making much money, because otherwise you could be making things move a lot faster. But it is true that if you’re just consistent about it, and have a framework set up and have goals that you’re working towards, it does really feel like your ability to do things does you know pick up pace a little bit.

30:01 Emily: Yeah, I would agree with that. I can definitely attest in my own life, the first $100,000, which I documented, actually, it’s in season one, episode one, of how we got to our first $100,000 of net worth, that was a long journey and it’s the next iterations that have come a lot faster, obviously. Now, I didn’t start very much in debt, we had sort of a slightly negative net worth, not huge. But if you have like a very negative net worth, maybe you’re working on over $100,000 of student loan debt to pay off, there’s sort of two phases to that journey — there’s getting to zero and then there’s getting to the first $100,000, and your first $100,000 of positive net worth will be easier than when you’re working to get to zero. It’ll be easier than that, but it will not be totally as easy as someone who started at zero, if that makes sense, just because of the way compound interest work.

30:54 Amanda: When we first calculated our net worth it was negative. It wasn’t significantly negative. And I do agree that if you are one of those people who happens to have six figures of student loan debt, you’ve got a different process to go through. Hopefully a soon to be future income that will help you tackle that with pretty good pace. When we first calculated it, it was below zero, and that was frustrating. That was definitely something for us that didn’t feel good. But we knew that we couldn’t get to zero and above zero without just tackling it. We were fortunate enough, right around the time we got married, we calculated and we were at zero when we got married, and we had a very, very modest tiny family only wedding in order to keep it that way. We didn’t want the wedding to drag us further down, but I think when we got married we are right around zero. So that was kind of a neat place because symbolically It was like okay, you know, we’re married and now we have nowhere to go but up. Let’s get moving on that.

31:57 Emily: Yeah, that sounds amazing.

Final Words of Advice

32:00 Emily: Final question here, Amanda, which is one that I asked all of my guests. Now, we’ve already heard you say a lot of financial advice during this entire podcast, but it was mostly you following the advice of others. I’m curious now that you’ve been through this whole process, what you would turn around and say to another early career PhD, in terms of your best financial advice for that person?

32:18 Amanda: Sure. So something that we do, and I guess this applies for people who have a partner, something that my husband and I do is we do a monthly finance update. It’s really just a spreadsheet where we keep track of our debts, and our savings and investments. We just go through and update the balances of all of those accounts every month. It doesn’t really take long, but it’s something that I look forward to because it means that we have a conversation around money and it means that at least once a month, probably more often just because it’s become a hobby of mine. But you know, if it’s not something you’re that interested in scheduling a regular check in, like once a month, it’s just a good way to make sure that you’re communicating financially. And I feel like that’s been really good for us because it means we’re making sure we’re still on the same page about our goals. And if we are starting to have different ideas, then we have a conversation about Okay, do we want to prioritize this thing or this other thing first?

33:18 Emily: Yeah, that’s a fantastic suggestion. Again, for anyone who is in a relationship with another person, however you handle your finances, you know, joint separate or Yours, Mine and Ours. I think that monthly check in can serve any one of those models really well.

Emily: Amanda, it’s been an absolute delight to have you back on the podcast. I’m so glad that you made time for this. Congratulations on the new addition to your family, both the baby and the house and the potential next rental property, all of it. It sounds wonderful, and it was really great to catch up with you today.

33:47 Amanda: Yeah, you too. It was good to talk to you, Emily. And thanks for having me on.

Outtro

33:51 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

This PhD Healed Her Scarcity Money Mindset Using a Goal-Setting Framework (Part 2)

September 23, 2019 by Meryem Ok

In this episode, Emily interviews Dr. Lucie Bland, about her financial journey from graduate school to self-employment. Lucie was severely underpaid as a PhD student, and she felt such guilt and shame around spending that she became terrified of money. Her money mindset didn’t improve when her income increased several-fold as a postdoc, and it wasn’t until she discovered the Good-Better-Best goal-setting framework that she started to heal her relationship with money. She now describes herself as a money boss. In this second half of the conversation, Lucie describes the Good-Better-Best goal-setting framework and how she applied it to personal finance as well as other areas of life. She also shares how mastering her personal finances enabled her to take the leap into self-employment.

Listen to part 1 of this interview!

Links Mentioned in the Episode

  • Lucie’s Website: luciebland.com
  • Lucie’s Free Guide to Writer’s Block
  • Personal Finance for PhDs: Speaking
  • Personal Finance for PhDs: Help Out

PhD self-employed money boss

Teaser

00:00 Lucie: Money is so interesting because it’s where you have a conflict between all your limiting beliefs and your trapped emotion and your resources that are linked to survival. That’s why money triggers our fear centers so much. It’s the modern-day saber-toothed tiger that’s coming to eat us.

Introduction

00:24 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode six, and today my guest is Dr. Lucie Bland, a self-employed PhD living in Australia. Lucie has such an amazing story to tell that I’ve split it into two episodes. Last week’s and this one in this episode, Lucie shares how she relied on the Good-Better-Best, or GBB, framework when she decided to become self-employed. She also illustrates her current practice of personal finance now that she is a self-described “money boss.” She proposes many ways PhDs can use the GBB framework with respect to income, personal finance, research, and other areas of life. Without further ado, here’s the second part of my interview with Dr. Lucie Bland.

Lucie’s Self-Employment Journey: Using GBB

01:19 Emily: Okay. Now we’re going to resume talking a bit more about your self-employment journey. So you’ve already told us that you went through this period of re-evaluation where you’re taking time off from your postdoc, then you went back part-time to your postdoc, which didn’t work out very well because it’s very difficult to do research part-time. And you also had a side job as an editor for some time. But then you were saying that you sort of realized that you really wanted to be self-employed and wanted to have more control over your work, control of your schedule, I assume that self-employment would offer you. So let’s talk more about this GBB model and how you used it in this journey towards self-employment.

02:02 Lucie: Yes. Basically, when I was using GBB in the budgeting I realized that my “Good” goal, or my minimum viable income, is 33,000 Australian dollars, which is actually not that much. It basically means that I need to make $50,000 minus tax, which is a very realistic start for a business. And especially kind of as we talked about before, I still have a lot of savings. So doing these highly-paid postdocs enabled me to have the financial security to then go on and do my business without taking a loan, without taking a lot of risks in many ways. And so using that GBB framework enabled me to make a really intentional decision and actually a very low-risk decision to start my own business.

Two Forms of Runway: Savings and Part-Time Work

02:56 Emily: Yeah, so I was highly involved in the personal finance community, the personal finance blogosphere in 2011 to 2015, I would say. And I watched a lot of other people in that space move from being employees to being self-employed. And ultimately, I did this as well. And the term that we used for what you did was to give yourself a runway. So you gave yourself two kinds of runways. The first was by having a good amount of savings from having that higher income for a number of years. So you knew that you could have no income coming in for some period of time and you would be fine. Or you know, a lower than ideal amount of income. And the other runway you gave yourself was working this part-time position, having the side job, experimenting with how much you would need to work for other people but still be able to fulfill what you wanted to do and ultimately you could drop those things off as you were able to take off with your business income and no longer need those need the runway.

03:52 Emily: Right. So, two forms of runway. Just for anyone considering self-employment or considering maybe even doing another job that’s lower-paid. Any kind of transition like that, giving yourself some runway. Here’s a great idea, whether it’s through savings or side jobs or whatever it might be. Yeah. Anything else you want to say about using that model and your transition to self-employment?

Taking the Time to Experiment and Make Mistakes

04:16 Lucie: Yes. And you know, I think you make very good points about using the two different types of runway. And for me, in a way where doing the postdoc part-time worked really well in that it gave me time to know what I wanted to do. Because it did take me two years, two whole years to figure out what I really wanted to do. And that’s very typical of any career transition if you read the career-coaching literature. So it gave me time to set up my business and know what I wanted to do. It gave me that time where I was only working part-time hours to set things up behind the scenes, make lots of mistakes, go down lots of rabbit holes and not have that pressure of things having to work out immediately in the sense that, now, I’m in my first year of business. But really, I’ve been doing this for almost two years. I know how things work a little bit better. So again, probably a theme that’s coming through this interview is that I’m actually a little bit risk-averse in many ways. But I was much more comfortable making that decision to jump into my business. Having had just a little bit of legs under that idea and a little bit of knowledge, some numbers through my GBB goals and my budgeting other than flying by the seat of my pants, which is not really me.

05:32 Emily: Really what you’re doing, in all those different approaches that you just mentioned, is giving self-employment or your business, the ultimate business idea that you settled on, the best chance it could possibly have. Because like you said, when you’re first starting out with a new venture, you have to do a little bit of experimentation. You have to bumble around a little bit and make some mistakes. And if you have given yourself no runway and it has to work within two months or whatever it is, you have to make enough money to start sustaining your lifestyle within that short period of time. It doesn’t give your business really the room to evolve and grow and succeed. And so, yeah, I definitely would say that if you’re serious and very, very aspirational about becoming self-employed, you need to build that into your plan, right. Build some bumbling around and some mistakes into your plan.

06:21 Lucie: Yeah.

What Does Your Business Look Like Now?

06:22 Emily: And so what did you ultimately come to, you know, through this period of experimentation, what does your business look like now?

06:29 Lucie: Now I run an editing and coaching business and I’ve got three arms to my business. I’ve got editing, coaching and writing workshops. And the advantage with professional services businesses, like yours and mine, is that they have very low expenses, and in a way, they’re quite low risk. They do require some work in terms of to make it more leveraged or passive. You know, I need to evolve my business model in terms of I can take holidays and not have to be working all the time. Because otherwise, I’m just my own boss that’s still the slave to working every day. But for me, it’s a much better balance.

07:09 Lucie: And I would say that I definitely went from surviving to thriving. And that’s where being really intentional and self-knowledge is critical in the sense that when I did this career-coaching with this What Color Is Your Parachute?* book, one of the things I realized was that creativity and freedom or some of my core values. If I’m not getting this in a job, then being self-employed, you have ultimate control, you have ultimate freedom. And so there are lots of reasons why for me this is the best choice. And I think for people who would be listening to the podcast, then any self-knowledge that you have about your own values, about your own preferred work environments can only enhance your decision-making. Regardless of whether you want to continue in academia or do something else. It’s like your minimum viable income, but for your personal happiness.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

Professional and Personal Development

08:06 Emily: Yeah, exactly. I did a lot during graduate school. I would always pay attention when the career center or professional development stuff sent out emails about workshops and events they were doing. And I was always like, yeah, if I can go, I’m going to go, and did a lot similar to you. Like self-exploration, guided exercises, little tests and stuff to help me figure out like what was the work environment that I wanted and so forth. And it was funny because at that time, it didn’t at all occur to me that self-employment would’ve been a good fit. And yet, I’m really enjoying it now. I’ll link to a post in the show notes about how I think that PhD research and self-employment actually have a lot of overlap in terms of the skills that you learn in one can apply to the other. But what you were just mentioning about kind of being your own boss and managing your time and so forth. I think that there is room for another loose interpretation of the Good-Better-Best goal framework there. Like “Good” might be working 40 hours a week, every single week out of the year, “Better” as being able to have a little bit more freedom and flexibility with your time, and “Best” is being able to have so much stuff outsourced and have people on your team that you can take time away from your business whenever you like. There are so many ways that Good-Better-Best framework I think can be applied outside of just how much money do you need to make to fund your lifestyle. Right? It seems so flexible.

The Many Applications of the GBB Framework

09:29 Lucie: Yeah. It can actually be applied to anything. So, for example, for a PhD student or a postdoc Good-Better-Best: How many papers do you want to publish this year? For me, I run writing workshops. How many people do I want in my writing workshop? What’s the minimum to make it viable? What would be a better goal that I would be happy with? And what would be the best that I would be completely chapped with? What’s your Good-Better-Best for losing weight or gaining weight or eating better. So, it can be applied literally to any form of goal-setting. And it actually makes any form of goal-setting much more realistic in that life is not black and white. It’s not like we meet or we fail at reaching our goals. And this gradation actually enhances motivation. That’s why it works so well for different areas, because once you reach your Good goal, you really want to reach your Better goal. Versus with traditional goal-setting: If you reach your goal, then what’s left?

10:27 Emily: Yeah. I love that you stated it that way, that you brought that up. I was thinking the exact same thing that it’s not a black and white success or failure with a razor-thin line in between the two for whatever your goal might be. As you were saying, there are gradations there of success. And even sometimes failures can be reframed as successes, you know, if you can see them the right way and so forth. So, I really love that. I think the audience members hold me to that, but I think I may try to figure out how to apply this Good-Better-Best framework within the teaching that I do within personal finance. Because I do talk about goal-setting and about financial goals. But as you were saying, it can be so demotivating to not reach a goal.

11:08 Emily: And yet you also want your goals to be very lofty, right? Like you want to be able to strive for something. So, it’s again about self-knowledge, about knowing what’s going to work for you. Do you want to strive for something and maybe not quite reach it but feel good about it? And know that you’re going to focus maybe on that Best goal? Or, do you want to set something that you know you can succeed at and then you’ll be motivated to move on from there? Well, that’s the “Good” goal. I feel like this is a good framework for people of many different kinds of mindsets toward goal-setting. So, I don’t know. I’m really excited about this. I’m really excited about learning about this framework.

Applying GBB to Research Life

11:40 Lucie: And I think one aspect where I really wish I had known about Good, Better goals when I was doing my postdoc was exactly about how many papers to publish. Because especially within research, there’s this kind of like runaway consumption model in that you need to do more and more and more and more. And if you never put a note on it, you’ll never reach it. And it’s very frustrating. Versus I feel that if now I was working in research again, I would definitely set myself Good-Better-Best goals just so I would know when to stop and relax and take a break.

12:17  Emily: I love that. Have you had any other thoughts about that? How you would apply GBB to research life for those who are still in it?

12:27 Lucie: Yes. So definitely in terms of your income and your budgeting, any of your key performance indicators, your grant income. More and more of academic life is measured with numbers, whether we like it or not. But because it is done this way, we better get on board with it. You can even apply the GBB to your h index if you really want to.

12:52 Emily: I was just thinking that. Yeah.

12:54 Lucie: But there again, it’s about, you know, having that realistic benchmark and then that motivational benchmark and that dream benchmark rather than having these unattainable goals. That makes it much more attainable and then you can discuss it with your supervisors or with your peers. And then for me, I wish I would not have gotten so run into the ground, in the sense that if you reach your “Best” goal, maybe you can take the foot off the accelerator.

How Can People Work with You? *Free Gift*

13:24 Emily: Yeah. And not get to the point like you did where you just had to throw up your hands and say, I have to take a complete break and escape from this for a while. Is there anything else that you’d like to tell us about your business? Like who do you work with or how can people work with you?

13:40 Lucie: Yeah. So, I have a website. It’s called luciebland.com. L u c i e b l a n d. And I have a blog where I blog about everything, academic writing and productivity. So you might have guessed, I’m really into goal-setting. I’m actually a certified coach, and so I work professionally with people to help them reach their goals. Especially their publication goals in a kind of holistic manner. And so I love to blog about evidence-based techniques to reach your goals. And I will send out a little gift and surprise that I would like to offer to the listeners of this podcast. I have a free Guide to Beating Writer’s Block. Everyone suffers from writer’s block one moment or another. And so I have a really nice free guide that recaps the different techniques that you can use to beat writer’s block. And you can get that at luciebland.com/write. So that’s w r i t e. And so you can go and download that for free. And I always kind of keep it to my side if I ever feel my motivation lacking I always refer back to these little exercises.

How Are Your Personal Finances Now?

14:46 Emily: Yeah, that’s great. Thank you for that. And we’ll link to that as well from the show notes. So if you want to go there first, that’s fine. So, when we started talking about doing this interview, you described yourself as a money boss or maybe it was an aspiring money boss–you’re getting to be towards the money boss state. And so there was this huge difference between the mindset that you had towards money during your PhD and where you are now. And so can you talk a little bit more about how you’re managing your personal finances right now, how you’re using the GBB framework and your personal finances? And just more about the healthy point that you are at or that you’re developing at this moment in comparison with where you were a few years ago.

15:33 Lucie: Yeah. Well, I think that really the proof is in the pudding in that five years ago, I was never looking at my bank accounts and I was completely in the dark about anything financial. And now, I make extremely detailed 2-year cashflow projections using that GBB framework. And I feel good. I feel good about it now. I enjoy it. And that’s why I’m on this podcast because I’ve actually become a personal finance nerd. So, you can see the extent of the transformation, both in practical terms and in terms of mindsets, and especially now both, given my background as a coach. So, when I trained as a coach, I worked with a lot of clients who had money issues because money is so interesting because it’s where you have a conflict between all of your limiting beliefs and your trapped emotion and your resources that are linked to survival.

Money: The Modern-Day Saber-Toothed Tiger

16:30 Lucie: That’s why money triggers our fear centers so much. It’s the modern-day saber-toothed tiger that’s coming to eat us. And so there’s a perfectly logical explanation to why money is so difficult to so many people, both for the people who are really in scarcity mindset or the people who own that runaway consumption type of spending. And so what I love about the GBB goals and the budgeting is that, for those of us who are scientists, it really taps into our experimental tendencies. So for me, going from being scared of my finances to budgeting, I took it with a lot of self-love and self-compassion in that, “Okay, I’ll just see how it is.” Had a glass of wine because I couldn’t bear to look at my expenses without a little treat, and “I’m going to tweak a few things. I’m not going to change everything all at once. I’m just going to see how it is.” As if I was running an experiment in the lab. Like, what’s working, what’s not?

17:34 Lucie: What can I change next month? What can I change the month after that? And getting kind of that objective perspective with the numbers removes that emotion. Because we’re not going to go from fearful to excited all at once. You know, going from fearful to curious is a very good progression. Maybe then you become curious about your money, curious about how it functions, what other little tricks you can use. So, for example, I went through a phase where I would change all my electricity and gas providers and my phone. I went through all the things very methodically, with my personal expenses. Yeah, the gas bill.

Easy Ways to Make Extra Income

18:33 Lucie: And then another thing that really helped my mindset, especially for people who suffer from a scarcity mindset, is I started generating lots of money from random places. I became a lot more inventive with how I generate income. For example, over the weekend, I worked at festivals during my postdoc. Most postdocs don’t do that. Just work at festivals to make a little bit of cash. I sold a lot of my unused furniture and unused clothes. So, I just started to have these random little pockets of money that would come from kind of very odd places. And then that increased my belief that I could make money easily. Money is not that difficult to make. There are lots of places where we can make money, so I can imagine some people being on Airtasker or even driving Uber, et cetera. There are actually lots of ways to make little pots of cash in this day and age. And so both kind of doing the budgeting, revising my expenses, and creating these additional pools of cash really increased my confidence.

Commercial

19:26 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs, and other early-career PhDs for universities, institutes, conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you are 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. That’s p f f o r p h d s.com/speaking. Now back to the interview.

Frugal Experimentation

20:15 Emily: I wanted to add kind of two further examples to what you were just saying. One is frugal experimentation. You said that you can take sort of an experimentalist approach towards managing your money, and this is something that I’ve talked about as well. If you’re looking for ways to reduce your expenditures, or like you were saying earlier, not necessarily reduce what you’re spending but rather shift from using your money in ways that don’t give you as much satisfaction towards ways that do give you more satisfaction is a better way of thinking about it, right? Rather than just spend less everywhere. But if you are looking for something that you don’t care about spending money on too much, how can I spend less and less in this area? So I can redirect my money elsewhere. You can run what I call frugal experiments.

20:56 Emily: And so I think this is what you were mentioning. You would find a frugal tip somewhere online or whatever from a friend, and just try it out in your life. And what I say is to try it for 30 days. So it’s really giving it a good shot. Seeing if you can make it habitual and make it mindless and easy for you, and then go ahead and evaluate what was the actual effect. How much money did you end up not spending in that area that you didn’t care so much about? Was it worth the effort that you put in? Were you able to make it a habit? Were you able to make it easy? And if the answer is no, it didn’t reduce my spending enough to make all that effort worthwhile, well then just go back to whatever you were doing before. You can just easily reverse it.

21:35 Emily: And so you can do maybe, you know, one frugal experiment per month and just take like sort of a playful approach to it as you were saying. It’s not do or die in every single one of these things. You don’t have to change everything about your lifestyle in one fell swoop, but you can just take these small areas and make a change. And if you don’t like the change, then just go back. No big deal. So that’s one comment I wanted to make. And the other one is about finding other ways to earn or finding that money would start coming your way once you were thinking about it a little bit differently.

Having a Plan for Windfall Money

22:09 Emily: And what I did during graduate school, again, when our incomes were lower and it was very important to me that we used our money in the best way possible. I was very careful that I had a plan for any, what I might call windfall money that came my way. So it could be receiving maybe a gift, a birthday gift or something. Or it could be, I occasionally would participate in studies, like clinical trials. Very minor stuff. You know, psychological surveys, that kind of thing. If I made $10 from that, okay, well I would always have a plan for where that money was going to go. It wasn’t something that went into my general checking account to be just floating out there and who knows where it went. It went towards what we were using, targeted savings accounts. So it went into my target savings account for travel usually, or one time we were saving up for like a camera purchase for a DSLR. And so we would put in the extra money that we found into that savings account for that ultimate goal.

23:10 Emily: And I think having a plan for where that money was supposed to go, to help me use my money in a way that was most satisfactory to me, really made me pay more attention to all those little ways that money came to me. Whether it was from earning it or whether from, I don’t getting cash back on something, right. I had cashback credit cards, like just having a plan for any of those little non-salary income sources of money. Having a plan for what to do with it made sure that I was using it in a way that felt most optimal for me. And so I really love that you said that example as well. And maybe money was coming your way from time to time earlier, but you just weren’t paying attention in the right way to it to be able to use it in a way that was satisfactory.

23:53 Lucie: Yeah. And what I love about your example, Emily, is the actually you were almost using GBB. Because when you talk about your camera in your savings account, you know, to me that’s like your “Better” goals. And so, you were intuitively using a similar system by putting all that windfall income into these very specific goals.

Anything Else About Being a Money Boss?

24:14 Emily: Yup. That’s probably why I’m so excited about the framework is that it’s a way of sort of crystallizing how I was thinking about things already in a way that will help me communicate those ideas better with other people. Anything else you want to say about becoming a money boss or how you are a money boss? How you behave as a money boss now?

24:32 Lucie: So definitely this in terms that I’m spending more time being more future-oriented. So for example, now thinking of buying a property having these two-year cashflow projections, dreaming to the multiple six-figure business. All of these things now are within reach because I can actually monitor my progress to them rather than feeling stumped. And the other thing that has happened, which is surprising me a lot, is that I’m teaching basic business finance to other entrepreneurs, which seems really odd. But I’m actually doing it. And so, teaching other people how to do cashflow projections, how to manage money in their business. And so for me, especially lots of everything that we’ve talked about in this conversation, is a complete turn around.

25:24 Lucie: I had the skill set to do that. My training in biology was in specifically statistics. I was a computational modeler. So, money should not have been so difficult to me because I know how to deal with numbers. But it was the emotions attached to it that were blocking me. Versus now, I can really feel that my mathematical skills or my decision-making skills, I can use them to the best of their effect because basically my conscious mind and my subconscious mind are in the same direction. And now, I can head towards the future and make these better longterm decisions and also help other people make decisions like that.

26:10 Emily: Yeah, I love that point. I mean sometimes I hear that personal finance is intimidating to people because it is about numbers. Kind of. They think it’s about numbers. But really, I mean especially if we’re talking about PhDs, the level of mathematical ability is a very low bar to be passing to be successful in personal finance. It’s really all about mindset and emotion and understanding your values and self-knowledge and all the things that we’ve been talking about in this conversation. That dwarfs the ability, in terms working with numbers, to be successful in personal finance. Of course, it helps if you’re comfortable with math and everything, but it’s not what’s holding you back basically if you’re not feeling successful in that area.

Start Frugal Experiments Today

26:54 Lucie: What I would say as well to anyone listening is to start doing these frugal experiments. Start doing it now. And that’s not because I want to scare anyone out. But now especially that I work with business owners a lot more: people who can manage their money well will always be catered for, and you’ll definitely have a leading edge over anyone. Actually, very few people manage their money well. And so, if you can have both these mathematical skills that most of us would have in the academic world. and the willingness and the right mindset to manage your money. And if you can do it as soon as possible, let’s say in your late twenties or whatever. The rest of your life is going to be so much easier because of things like compound interest. And so it’s really worth kind of pulling the BandAid off and starting small today. Let’s say, looking at your phone bill and how you can optimize that, and then just gradually looking at all the other elements.

27:59 Emily: Yeah, I think you put that so well. And I could not agree more. Start today. And it doesn’t have to big, it doesn’t have to be scary. Have a glass of wine, like you said, whatever it takes for you to be able to look at your account transactions or whatever it is that your starting point needs to be. Just start, and start small. And the earlier you do it, the more you’re going to benefit really throughout the rest of your life. So as we sum up here, how do you think that PhDs can use the GBB framework with respect to personal finance and with respect to other areas of life?

How PhD Students Can Use the GBB Framework

28:35 Lucie: Yes, I think that the main two ways that PhD students can use the GBB framework are first, in terms of budgeting their expenses, or trying to align that concept of what is “Good” or what is the minimum viable income that you need. And kind of either reducing your expenses or rejigging your expenses to some things that provide higher value. And if this is available to you, also diversifying your income. Unfortunately, now we’re in an increasing world of casualization of the academic workforce. So a lot of people are working smaller contracts and having kind of little pools of money, and the GBB framework is great for that. But also for people who might have a more stable income, there are lots of opportunities out there to make more money if you wish. And so, once you’ve costed out what your dreams are going to cost you–your savings account, your camera, and your holidays–then really it’s up to you how you reach that goal. And for me, it’s a motivation to work hard because I enjoy doing it and especially with the Best goal, that’s where you can allow yourself to dream big. And I can imagine as well that having that GBB framework comes in extremely useful when negotiating for jobs. Because once you have that number in mind, it’s crystallized in your head. I need that number. I would like that number. I really, really want that number. And it’s up to you to make it happen.

Look at the Numbers and What Works For You

30:07 Emily: Yeah. Excellent point. I think something that may be useful for someone who’s in a really, really tight spot with money, maybe it’s during graduate school, like you were really not making a sufficient income for where you were living. If you are allowed to take on outside work, if it’s permitted by your contract or you think you can get away with it, whatever the situation is. I think it could be really useful to actually look, as you were just saying, at what is the shortfall that I have between what I’m making right now and what that minimum viable income is. And if I did this type of work, how many hours would it actually take to make up that shortfall? Because I’m thinking that maybe a lot of PhD students in that situation don’t need to work an additional 20 hours per week at the pay rate that they can gain using the skills from their PhD.

30:59 Emily: Maybe they’re going to be able to make a very decent hourly rate. Maybe it’s $20 per hour. Maybe it’s $50 per hour. Maybe it’s $200 per hour depending on what their skill sets are and what the market is. But really looking at, okay, well if I just worked an extra two hours a week or five hours a week, maybe I can make up that shortfall and it would make such a huge difference to your general sense of wellbeing in your life to be able to do that. This is just basically an argument for looking at the numbers and looking at potential income in certain areas as we’ve been talking about throughout this entire episode. And again, trying to figure out what is it really going to take to make that amount of money. And maybe it’s not as much effort or not as much time as you were thinking it would be when you were just sort of hiding your head in the sand about it.

Diversification of Income: Side Hustles

31:45 Lucie: Yes, that’s excellent advice. And as you say, a lot of PhD students have a lot of skills that are very much in demand. For example, tutoring or teacher relief, et cetera. Even my editing job was something I could do from home anywhere and that any PhD student with superior English could do and would pay quite well. And so there are lots of opportunities both online and offline to make these extra little pools of money. And as you say, it might only be like two or three hours a week.

32:17 Emily: Yeah. So I think that was using the GBB framework on your personal finances and on budgeting. That was the first suggestion. What was the second one?

32:26 Lucie: Ah, yeah, the second one was to diversify your income.

32:29 Emily: Ah, okay. Yeah. Great. I love both of those suggestions. And really the diversification of income strategy is not just one for PhD students as you did during your postdoc. Or even maybe if you had had a regular job at that time, you were just experimenting and you were exploring with other types of work that you could do. And eventually, you were able to hit on what is now your business and what is really bringing joy and satisfaction in your life. But without sort of stepping out of your current status, without stepping out of your comfort zone, you wouldn’t have taken that journey and been able to get to this point. So again, a theme coming up again is experimentation, whether it’s with new types of work or frugal strategies or what have you.

Additional Benefits of Side Hustling

33:10 Lucie: And I think there are a lot of other benefits to having a side hustle experimenting beyond the extra money. You know, there are lots of talks that most PhD students don’t stay in the academic world and need to translate their skills to industry or the business world, et cetera. And experimenting and having a side hustle is the perfect way to do that, in addition to earning more money.

33:34 Emily: Yeah, if some of the different topics we’ve covered in this episode have peaked your interest, listener, please go to the show notes because I have written about so many of these things in different ways. I’m going to add a lot of links there to different articles I have that you can go to explore deeper and of course also visit Lucie’s site. You want to mention it again, Lucie?

33:53 Lucie: Luciebland.com. L u c i e b l a n d.

33:58 Emily: Yeah. Especially if you want more content around what she is specializing in. Lucie, it was such a pleasure to talk with you today, and I’ve learned a ton from this conversation. I’m sure the listeners have as well. Thank you so, so much for this interview.

34:10 Lucie: Thank you, Emily.

Outtro

34:12 Emily: Listeners, thank you so much 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, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to pfforphds.com/helpout. There are plenty of ways to do so without laying out any of your own money. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC.

This PhD Healed Her Scarcity Money Mindset Using a Goal-Setting Framework (Part 1)

September 16, 2019 by Meryem Ok

In this episode, Emily interviews Dr. Lucie Bland about her financial journey from graduate school to self-employment. Lucie was severely underpaid as a PhD student, and she felt such guilt and shame around spending that she became terrified of money. Her money mindset didn’t improve when her income increased several-fold as a postdoc, and it wasn’t until she discovered the Good-Better-Best goal setting framework that she started to heal her relationship with money. She now describes herself as a money boss. In this first half of the conversation, Lucie details her financial journey from underpaid PhD student to well-paid postdoc and how she needed to take a break from full-time employment to set herself on the right career and financial trajectory.

Listen to Part 2 of this interview!

Links Mentioned in the Episode

  • Lucie’s Website: luciebland.com
  • Personal Finance for PhDs: Speaking
  • What Color is Your Parachute?
  • Good-Better-Best with Megan Hale
  • Financially Navigating Your Upcoming PhD Career Transition
  • Personal Finance for PhDs: Help Out

healed money mindset

Teaser

00:00 Lucie: I did go to some extent through that transition of seeing not money as like an enemy or something that needs to be hoarded, but something that can be used as an investment for a good life. When I was doing my PhD, I was not future-oriented. I was in survival mode.

Introduction

00:21 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode five, and today my guest is Dr. Lucie Bland, self-employed PhD living in Australia. Lucie has such an amazing story to tell that I’ve split it into two episodes. This one and next week’s. In this episode, Lucie talks us through the roller coaster of her financial journey from severely underpaid graduate student in London to well-compensated postdoc in Australia to not having an income to starting a business. Lucie describes herself during graduate school as “terrified of money,” And that didn’t automatically improve when her income more than tripled and her cost of living dropped. We discuss the intentional steps she took to heal her money mindset, including the goal-setting framework that she now applies in her personal and professional life. Without further ado, here’s the first part of my interview with Dr. Lucie Bland.

Will You Please Introduce Yourself Further?

01:26 Emily: Thank you so much for joining me on the podcast today. We have a really delightful set of episodes ahead for us. It’s going to be a two-parter. My guest today is Dr. Lucie Bland and so I’m going to kick it right over to her right now and have her introduce herself to you a little bit further.

01:44 Lucie: Thank you, Emily. Thank you for having me on the podcast. My name is Dr. Lucie Bland. I’m an editor and writing coach and I help researchers and writers get published.

01:54 Emily: Yeah, that sounds really exciting. Can you tell us what your background is?

01:59 Lucie: Yeah. I graduated from Oxford University with a degree in biological sciences and then I did my PhD at Imperial College, London in Ecology in 2014. That’s when I finished, and then I moved to Australia for two postdocs in conservation science. The first one at the University of Melbourne and the second one at Deakin University. And now for about a year I’ve been running my academic editing business, which I now do full time. So very much serving the academic community, but I’m no longer directly a researcher.

02:34 Emily: Yeah. Well, we are in the same boat in that respect. Can you say right away up top what your website is?

02:42 Lucie: My website is luciebland.com and that’s spelled l u c i e b l a n d.com.

02:49 Emily: Yeah. And any other personal details you’d like to share, maybe where you’re living now or is your household just you?

02:56 Lucie: I live in Melbourne with my boyfriend and our Burmese mountain dog that you might see in the video if he comes around.

03:05 Emily: Yeah. Enticement to hop over to YouTube and watch this on the video instead of over the podcast. Okay. So we have this great story that I know a little bit about already, so bring us back to your time in graduate school. What was going on with you financially at that time, both in terms of like how much money you were making and also what was your relationship with money?

Lucie’s Evolving Relationship to Money

03:30 Lucie: Yeah, my money situation, my relationship to money when I was doing my PhD was very different to how it is now. I was living in London, one of the most expensive cities in the world, and I was earning 13,000 pounds per year, which is 16,000 US dollars. And I would spend 650 pounds a month on rent, which is 60% of my income. And I remember that time reading a report that said that your level of basic socioeconomic level can be determined by how much you spend on rent, and the higher it is the poorer you are. So that was a little bit depressing to me. But despite having these really high expenses and that really low income, I was really not wise about money at all. My money strategy was to bury my head in the sand. I was paid quarterly, which would mean that I would run out of money every quarter.

04:27 Lucie: And I didn’t have a savings account. So normal accounts could be very regularly in the double digits and I just didn’t know how that would happen. And when I moved to Australia, I experienced a very different money situation in that my income pretty much tripled. I was paid $80,000 a year and I lived in a really funky flat on my own in the hipster part of town. So I kind of went from rags to riches, but I very much kept my very Scrooge-y lifestyle and I still didn’t budget. It did mean that I was saving $20,000 a year because my expenses were really low cause I would still collect vouchers and coupons and have that very “PhD student” lifestyle. But I wouldn’t say that my budgeting skills or my approach to money improved in any way. It was just that my income was higher.

05:26 Emily: Gotcha. Yeah, that’s a great overview, and I think it’s one that’s going to be relatable to a lot of people within the audience. Most of my audience is in the U.S. and the cost of living differences can be so wide between, you know, New York and San Francisco versus certain cities in the Midwest that are quite a bit smaller. And so a graduate stipend can also kind of be all over the map and it doesn’t necessarily correlate with higher stipends in higher cities necessarily. Sometimes that’s the case and sometimes not. I’ve interviewed several people on the podcast who live in high cost of living cities but have an okay kind of income, maybe double or more what you just mentioned, and others where that’s completely not the case. A much, much lower income. Actually, I want to go back a little bit further and talk about your mindset from even before you started graduate school. Would you say that you grew up middle class, or what was your mindset about money or the socioeconomic status you had prior to entering graduate school?

Money Mindset Before Grad School

06:34 Lucie: Yes, so I was definitely middle class. Especially my father had a very relaxed and confident approach to money and to some extent my mother as well. But in a way they hadn’t taught me any budgeting skills at all, which is a little bit sad, but kind of looking a bit backwards again. And that has really influenced my money story. My French grandparents grew up under German occupation and under rationing and that really influenced their mindset around money and around the use of resources. And to some extent, even in my kind of middle class nuclear family, especially, my mother could also have that very Scrooge-y or scarcity mindset. And I remember my grandparents still drinking chicory, which is a coffee replacement that’s made from the root of a plant, that French people used to drink under the German occupation.

07:30 Lucie: And so they still had some of these relic habits of, you know, we don’t know when the next meal is coming. And so you’ve got to finish off your plate, you’ve got to use all your resources in a very savvy way, which in many cases can be a good approach. But I think that as a child, I really internalized that. And one of the funny stories in my family is that at the age of 10 or 11, I signed up to this website, it was called scrooge.com and got lots of vouchers and was very obsessed with using those and not spending any money. So, I’m quite conscious that my personal money story and approach to money, well to some extent determined by my socioeconomic level or being from a middle-class family, was also influenced by lots of other family patterns that predated that.

Money Mindset During Grad School

08:20 Emily: Yeah. So I guess we could suffice to say that in some ways you were unprepared for being in graduate school on that kind of income and in that expensive city. In other ways, you had maybe some skills and some mindsets that would be, I hesitate to even say helpful. I mean helpful to survive, but maybe not helpful to be sort of healthy mentally overall towards money, especially later on once you have that income increase. So when you were accepted to graduate school and you knew what that stipend was going to be, and you knew more or less where you’d be living and that it was going to be 60% of your income going towards rent, what were your thoughts? How did you approach that situation? Did you think, “well, I’m just going to have to make this work. I’ll do it somehow”? Or did you consider debt? And I don’t know if that was even really an option for you.

09:14 Lucie: The thing is I didn’t even know that I was going to spend 60% of my income on rent because I hadn’t calculated it at all. I was completely in the dark, and no, that was not an option. I’ve never had a loan or credit card. Again, different countries have different approaches to that. And for me, I was just going to have to eat pasta. That’s how short-sighted my thinking was. To some extent, I could have considered a student loan, which I might not have been eligible for as a French person. But you know, my thinking was not even that advanced.

09:54 Emily: Right. And so once you did find out, once you did secure housing and you knew how much of your stipend was going to be eaten up by rent, what was your plan at that point, and kind of how did you get through it? And I guess this might be sort of advice in sort of how to keep expenses low. Although of course in the overall arc of this conversation, that’s not really what we want to be talking about. But for those years, how did you get by?

10:19 Lucie: I probably spent very little money on food, and I did go out a little bit, but I wouldn’t do anything that was fun. You know, I would probably not go to the cinema. I probably would not go to expensive parties. One of the things I did in London, I had a bike and I would be very savvy about whether I would take the tube or the bus. The bus was cheaper, and so everything became a decision. And if the decision presented itself to me, I would always take the cheaper option. So, I didn’t think long-term about do I need to build savings? Do I need to think a bit longer term? It was extremely short-term.

10:57 Emily: Was thinking long-term even an option though?

Short-Term versus Long-Term Vision

11:01 Lucie: At that stage, I wasn’t thinking long-term at all because I just couldn’t. I didn’t have the funds to do it.

11:09 Emily: Yeah. It’s not really a personal oversight. It’s just this is how the day-to-day is passing by of thinking about these really minute decisions around money, which are so important to whether you’re going to stay in the block for the month or the quarter. So you were surviving by being extremely frugal in many areas and not spending much on entertainment. I wonder, were your classmates living in a similar manner?

11:39 Lucie: Yes. Yes, we were all living in house shares in London. In quite difficult conditions with lots of issues with housemates, with landlords, with boilers breaking and not getting repaired. Like in a way it was a very kind of low-income status. And I remember kind of looking in awe at some of the PhD students who might be a little bit older who might have worked before and had a bit more savings or maybe had a partner who could support them, who lived in a real adult flat and had furniture that they bought new rather than scavenged from the streets. And to me that was very much a vision of the long-term future. It’s definitely not something I was doing then.

12:27 Emily: Did you find that it was helpful to have that comradery with some of your classmates? Did it make getting through this experience a little bit more bearable?

12:37 Lucie: Yes, and to some extent, even people who would start their first job in London. So, not a PhD student, would probably be on a similar income. And that was 2010. It was post-global financial crisis. So actually some people had decided to do a PhD or go to graduate school just to avoid getting a job. Because there were so few jobs. So that was kind of the economic climate of the time, which has improved slightly now, but we were all very much in that same mindset regardless of whether someone was starting, you know, their first teaching job or was doing your PhD or had a job in admin or in sales at a small company. None of us were making the big bucks.

Money’s Impact on Lucie’s PhD Perfomance

13:20 Emily: How do you think that being–it sounds like very consumed with thoughts about money and decisions around money on a daily basis–do you think that had any effect on your scholarship?

13:34 Lucie: Do you mean how I performed during my PhD?

13:37 Emily: Yeah. Like, let’s say your income was double of that, and you had an easier time with money, there was less stress there. Do you think that you would have done better?

13:49 Lucie: I actually think the opposite in that because I couldn’t do that much outside of going to work and coming back home, I worked really hard. And that’s what I would just do. I had a very traditional existence of cycling to Uni, doing my PhD, and coming back. And I think that to some extent doing my PhD, was a release from my money worries, and that’s why I worked so hard on it. So that could be my specific experience.

14:18 Emily: Yeah. I don’t know if that’s generalizable. I mean, I’m happy to hear that you thought it was a positive effect on your work. But I remember when I was interviewing for graduate schools that I heard that argument from–I interviewed in a city that didn’t have a whole lot going on. A very, very small city, rural–and the argument was kind of, well there’s nothing to do here except for our work. And the weather is really tough in winter. And so we just work, and that’s all. Versus if you lived in a very exciting city or one where there’s just a lot more fun activities going on, you might be more tempted to get out of the lab and go to these other things. But we’re talking about living in London and having that attitude. So, I’m a little bit surprised by that. That you were able to kind of “tunnel vision” on just your work during that time.

15:07 Lucie: Yeah. I think that in that case, it’s very much necessity is the mother invention or this dictates how you behave.

15:16 Emily: Yeah, exactly.

15:16 Lucie: And that’s why I was very relieved when I moved out of London, came to Australia where the cost of living compared to London is lower. You know, it’s kind of insane to say. Australia has a reputation for being expensive, but I found Australia very cheap.

15:32 Emily:  Yeah. Let’s talk about that transition now. But first, how many years were you in London doing your PhD?

15:38 Lucie: Four years.

Financial Life as a Postdoc in Australia

15:39 Emily: Okay. So that’s plenty of time for this to become a very ingrained mindset and approach towards money. So, you finish up and you’ve accepted a postdoc in Australia. Tell us about that. Tell us about the money that you’re making and where you’re living and so forth.

15:55 Lucie: Yes. I was very excited to come to Australia to come to Melbourne. As I said, I would be making $80,000, which was way more money than I’d ever made. I could afford to live on my own, which was a big thing in a really nice little flat in the inner city. I bought a car, I bought new furniture, you know, things were going really well. But what I noticed as well was that I did keep a lot of my former habits in the sense that, for example, Melburnians are big fans of their coffee. All the postdocs would go to the really nice coffee shops and have take-away coffee and bring it back to their office while I was very purposefully making instant coffee in a little kitchen so as to avoid buying coffees. And most of my decisions were like that in that I still got reclaimed furniture from the streets. I would do most of my shopping at op shops, which is very eco-friendly but there is a limit to how healthy that is as well. And so, even though my income was higher, I had still kept that mindset of trying to keep my cost of living as low as possible. Not really from a conscious intention, but just because that was the only thing I knew how to do.

17:13 Emily: Yeah, it sounds it’s actually hearkening back to your example from your grandparents, right. Even the coffee, specifically. So this is really interesting to me to talk to you about this transition because it’s something that I think about a lot and that I talk about quite a bit as well of how should PhDs manage their money once they’re out of graduate school. And I think the standard personal finance advice that I often say as well is live like a college student. And that’s the general advice, and the way it applies for graduate students that I say is “continue at your graduate student lifestyle for as long as possible.” Even though, once you’re making this higher income, to kind of make up for the lost time and the lost income from the previous years, so that’s a time when you can be building up savings and starting to invest and so forth.

18:05 Emily: But I trip over that advice sometimes a little bit. And especially in a case like yours, because if your lifestyle was so constrained, due to your graduate income, that’s not good advice any longer, right? You should increase your lifestyle as your income goes up, and still do all the things you want to, you know, be saving and so forth, investing or paying off debt, whatever it is you need to do. But if you have been consumed and shutting out large portions of your life because of lack of money, that’s not something that should continue. So I’m really glad to have your example as one that is counter to the advice that I usually give and the advice that many people would probably hear once they are seeking out personal finance content. So, can you talk a little bit more about that change? Once your income is higher, how did you start changing how you were using your money and thinking about your money?

Money Change #1: Saving Toward Retirement

19:05 Lucie: The first decision that I ever made about my money, that was a very good decision, which was based on the advice of one of my friends who’s a financial advisor, was that when I started my postdoc in Australia, we’re very lucky that we have 17% of our salary be put into a superannuation fund by our employer. So the employer adds to our salary 17% and puts it into a fund for our retirement. But we can make additional pre-tax contributions. And I made the maximum pre-tax contribution, which was 9.5%. So, I basically had a quarter of my salary going into a super every month, and that was not increasing my lifestyle. That was making a very conscious decision about investing in my future. And that was pretty much the little seed that then grew not into expanding my lifestyle but into this view of investing in myself in the sense that I can invest in savings, I can invest in my super, but I can also invest in my own wellbeing, not because I’m being frivolous, but because it pays off.

20:17 Lucie: It pays off, let’s say to have a gym membership, to have a yoga membership, to have healthy social relationships, et cetera. And so I think that I did go to some extent through that transition of seeing not money as like an enemy or something that needs to be hoarded, but something that can be used as an investment for a good life. And that was what I’d seen in some of these older PhD students in London who were maybe buying a property, et Cetera, that they were investing in their future. Versus when I was doing my PhD, I was not future-oriented. I was in survival mode. Versus this increase in salary opened up for me the possibility that I could plan for a future.

21:01 Emily: I think you put that so well and I want everyone listening, if you’ve resonated with anything, Lucy said so far to go back a minute or two and listen to that–what you just said, over again–because I think it was so, so insightful and well-put. As you were saying, the first intentional money decision that you made after this income increase was not about just going crazy and spending because you’d been so restricted for so long and just splashing out on everything. But rather, being able to think about really changing how you even viewed money. What you said was in viewing it as being able to invest in yourself and having an enjoyable and healthy lifestyle overall rather than trying to hoard it as much as possible because there was such a scarcity, you know, before that point.

21:52 Emily: And I did want to add a slight translation for my, my listeners in the U.S. So, our equivalent to what you did was, when you got your higher salary, basically we would call it “maxed out your 401(k),” which in the U.S. is $19,000 per year. So if anyone’s listening who has started a new post-PhD job and you’re wondering what to do with that lovely salary bump, maxing out your 401(k) is an excellent thing to do. For the reasons that Lucy just mentioned, that it is an investment in yourself and it’s an investment in your future.

Commercial

22:25 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs, and other early-career PhDs for universities, institutes and conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you are 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. That’s p f f o r p h d s.com/speaking. Now back to the interview.

Money Change #2: Impulse Shopping

23:13 Emily: So were there any other changes that you made, after that point, after starting to think about the long-term with respect to retirement? What other changes did you start making?

23:24 Lucie: Probably the next change that I made, which was not a good change, and that happened in my second postdoc, was that I started to impulse shop, and that was entirely related to the stress that I was under. So for, as you said, for a few years I managed to keep my spending quite low, and to have that fairly frugal lifestyle. But then after years of PhD, years of postdoc being put under a lot of pressure, I was starting to struggle, and I could see that being reflected in my spending. And I very quickly knew that this was an issue. So it wasn’t that I was being frivolous in being released, I was using that kind of as an emotional Band-Aid. And that kind of was one of the alarm bells that told me that maybe I need a bit of time off or to think about why I was in academia and what I’d wanted to do. Because one of the symptoms of this was how I was sending my money, which was not really in accordance with my values, and that was quite troublesome to me.

24:31 Emily: Yeah. I think that’s also very common behavior, whether people can afford it or not. So, coming to impulse spending just to emotionally relieve some kind of stress or difficulty or pain that’s going on. So, yeah. Can you tell me more about, having recognized that issue, what then did you do? You just mentioned you took some time off from your postdoc.

Leave of Absence from Postdoc

24:56 Lucie: So I think this was kind of part of a larger quarter-life crisis in the sense that the pressure had been mounting probably since the first day that I started my first postdoc in Australia. And now that was three years later of full-time work with a lot of international travel, a lot of publications. We’re all familiar with that kind of lifestyle. And I just didn’t know why I was in research anymore. I felt really lost and kind of, as we talked about before, I could not see my future in it. And I didn’t know if it was because I was too stressed or confused or because it was genuinely not what I wanted to do. So I was very lucky that I could ask for a six-month unpaid leave of absence from my university and kind of take a little break from all my responsibilities. Because, especially in my first postdoc, I think I must have supervised four or five students to completion. I think I kind of bumped to a lecturer role very quickly. But that amount of responsibility, and then it kind of caught up with me a few years later, was like, well, I’m going down this route very quickly. Do I want to continue with this route?

26:16 Emily: Yeah, really in many jobs, many workplaces, there is a great deal of just going with the flow and some inertia. And you can get to a point where your job duties are not at all kind of what you expected or what you signed up for, but it evolved. So that’s amazing that you made the decision and also were able to say, “okay, hold on a second, I need to take some time to figure out where I really want to go next.” And this is maybe a little bit of a naive question, but were you able to fund that period of being away from your job because your expenses had been so far below your income for the previous years?

26:53 Lucie: Yes, I had a lot of savings at that point.

26:56 Emily: Yeah. And, what I say quite a bit, that money gives you options. And so, you’d been earning quite a lot and saving quite a lot for those few years, and then you had the option to take a step back and have that time to reevaluate. So, what did you do with that time off?

Personal and Career Development Journey

27:16 Lucie: First, I had a holiday to see my parents in Europe, which was great. And I think the first two or three months of the six-month period, I was brain dead. I was recovering. I was watching TV, doing all of these silly things that people do when they finish their PhD. But I’ve seen that quite a lot in first or second postdocs in that people who don’t take a break between their PhD and their postdoc tend to get hit at a later date with trying to cope with all that change. I had also moved to Australia by myself and so I think it just all caught up with me a little bit later. So, I spent a few months resting and relaxing, and that’s when I started to coach myself. I became very interested in these personal development and career development books.

28:09 Lucie: I started to use a career coaching book that’s called, What Color is Your Parachute? It’s a very famous career coaching book.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

28:16 Emily: Yes, I’ve read that.

Part-Time Editing, Part-Time Postdoc

28:18 Lucie: Yeah, it’s great. And basically, I figured out that probably a very good job for me, which matched to actually want I wanted to do as a child–I wanted to be a writer. And what I was enjoying, what I was really good at as an academic was publishing. And kind of putting these two things together, I was like, “well, getting a job as an editor would be quite a good fit.” And I got a small job with a big global editing company, editing research papers, writing research papers, kind of being a writer for hire. And I really enjoyed that but it paid very little, and I was just starting out. And I could see with the budgeting that I had started doing when I was off work–because that was another really great habit that I’ve gotten into–was that just having that editing job was not gonna cut it for the type of life that I wanted. And that kind of spurred that decision to go back to my postdoc part-time. I was also not sure whether I wanted to quit academia completely. I thought that maybe if I worked part-time, I could cope with the challenges of academia better because I would have reduced hours. Then I could do my editing job as well. So that was the plan in that period, which would be to do the postdoc job part-time and the editing job part-time, and then together it would make a healthy income.

29:52 Emily: I love just how intentional you were with all of those decisions. The series of decisions that you made there, in trying to align your career with what you really wanted to do. And also, you briefly mentioned, but starting to budget is a major, huge leap in one’s personal finances. And that, it sounds like, sort of contributed to the career planning. Right? How much money do I actually need to make to fund the lifestyle that I want and then how can I redirect my career to make sure that I make that amount of money? And is that how it worked out? Did you find that the half-time postdoc position was lower stress, and was that a good situation that you were then in?

Backfired Plan: Full-Time Work for Part-Time Pay

30:35 Lucie: In a way that was a complete failure, in that I was doing full-time work for part-time hours and part-time pay. And I’ve heard that story a lot with other people, in that research is a job that is difficult to do part-time. And a lot of mothers, a lot of people who would want to work part-time for lots of reasons, find it challenging. After a while, I did end up quitting the editing job because it was too much in that postdoc responsibilities would come during my editing hours and would influence the quality of my work at the editing company. And because I was an employee of the university, they kind of took it as this is your priority, and your other job is not a priority. And that was quite difficult to manage. And also at that time I would realize that having my own business would enable me to make the kind of money that I want it to make from editing instead of working for an editing company. And so that spurred my decision to quit the editing job and to start my own business. So, as you’d mentioned, some of these decisions were intentional, but also some of them were just due from the decision to go part-time, in a way, backfired.

32:02 Emily: Yeah. So, did you end up not staying part-time for very long? How long did you stay at that part-time?

Going Full-Time into Self-Employment

32:09 Lucie: I stayed part-time for a year. And then I went full-time with the business. I had a few months to start the business when I was still part-time at the university. And that gave me a little bit of a cushion. And then again with the budgeting, I realized within three months that actually with the business, I was making enough money to not need the Uni job, which I then let go of. It makes it sound like a very drastic and calculated decision. There was a lot of kind of emotional decisions that went into it as well because I love research and I continue in a way, but I knew that having my own business would be a better decision for me for the lifestyle that I want to have, for the type of people that I want to surround myself with, etc. And finances were I guess one of the drivers of that decision. But there were also lots of other things that went into it.

33:08 Emily: Yeah. I have many of the same thoughts around and motivations around becoming self-employed. So, we’re going to talk plenty about your transition to self-employment in the second part of this two-part series. But before we do that, I wanted you to introduce this Good-Better-Best framework that you started using. I believe during this period when you were taking a break from work and when you started budgeting. What is that framework, and how were you using it?

Good Better Best (GBB) Framework

33:40 Lucie: Yes. So the framework that I was using at the time along with my budgeting is called Good-Better-Best goals. And it’s a framework that was devised by business coach Megan Hale. So when I was on my break, I just sucked up a lot of books and podcasts on how to be an entrepreneur. And usually these guys have much healthier attitudes to money. People have worked really hard on their money story and their finances to be at a stage where they can own their own business. And so that GBB method relies on defining Good-Better-Best benchmarks in terms of income generation. So, your “Good” goal is your minimum viable income. It’s the minimum of amount of money that you need to survive. Probably, my income when I was a PhD in London was even below what could be called a minimum viable income because it came with so much strain.

34:40 Lucie: A “Good” goal in the GBB framework is your basics, your rent, your bills, et cetera. Your food, and maybe something that you find really important–a little bit of going out or a Netflix subscription, but it really doesn’t go overboard. It’s pretty much the minimum that you need to have a relatively happy life. Then it gets very exciting when we go to the “Better” and the “Best” goals because then we start to cast out some of these big dreams that we have. So, for example, for me and my “Better” goals, I’ve got things such as buying furniture, buying a new dog, going on holiday. So, that’s when your lifestyle starts to improve and increase. Like you were mentioning, with having a postdoc that has better pay. Usually, people get to that “Better” benchmark where they can start to save money. They can work towards these big dreams. And because they cast it out in advance, it’s very motivational in the sense that, let’s say budgeting or restricting your income and things that you don’t like. It comes natural because you want to reach these other goals. Instead of feeling restricted, you’re just moving your money around to enable going towards the things you really want.

35:56 Lucie: And then the “Best” goal really blows your mind in the sense that if you could make that much money, it would be almost unfathomable. And you could afford so many different things. So, here you can cast a lot of these bigger dreams like buying a house or going on very luxurious holidays, et cetera. And so because you have these three benchmarks, you can always assess where you are in this very logical and objective manner. And maybe that’s something we’ll go into the next episode. It helps you get out of this very emotional attitude to money or this very fear-based attitude to money because then they just become numbers in a spreadsheet. They are in an order: Good, Better, Best. And then you can address them in this objective manner rather than having no numbers or this nebulous idea in your head that your dreams are never going to come true because they are too expensive, versus when you know exactly how much it’s going to cost, you can start working towards it.

Expanding the GBB Framework for Personal Goals

36:59 Emily: Yeah. I think you explained that very well. So, the source that it came from for you and the way that you first learned about it is very oriented around being self-employed or being a business owner in terms of having variable levels of income and a degree of control over your income. If I make this amount that’s going to keep the lights on and my life’s going to be okay. If I strive for this amount, then the next levels I could unlock in my lifestyle, and then, okay, the third level is even well above that. But given your history, coming as a PhD student and then as a postdoc, how did you massage this framework into something that you could use maybe in your personal life and not just as an aspiring business owner?

37:46 Lucie: Yes. Well, first, just defining the “Good” goal. This is applicable to anyone in the sense that most people actually don’t know their minimum viable income. And that would change their decisions on what type of job to take, what city to move to. They might think that a certain city is too expensive or a certain job doesn’t pay enough, et cetera, versus if you have a really good handle on how much you actually spend. For me, I’ve done personal budgeting for more than a year, so I know my yearly fluctuations. That enables me to make much more informed decisions about every aspect of my life. Because if I want to go for job, let’s say I’m not self-employed, I would know what this job would allow me to do and whether, let’s say I would be ready to move to a cheaper area or to a more expensive area. And the GBB goals would put that into context.

Financially Navigating a PhD Career Transition

38:47 Emily: Yeah. I actually love that you brought that up in terms of evaluating your next position. If you’re getting out of graduate school, going to a postdoc, going to another job. This is actually something that I’ve talked about in some materials that I released in the summer of 2019, which if you want to check that out, you can go to pfforphds.com/next. N e x t. And that’s about putting a job offer, a salary offer that you receive in the context of the local cost of living for the new place that you don’t live yet. And there’s ways to do that without having tracked your own spending like you’re talking about. Like trying to figure out, okay, how does this new city’s cost of living compare to where I currently live, what I currently make, what would I be making there? How does it compare?

39:27 Emily: But it’s much, much more powerful if you actually do what you’re talking about and have tracked and budgeted for yourself wherever you’re currently living. And it gives you so much more information for then evaluating that next salary offer. And like you were saying, okay, maybe in graduate school, you’re able to spend at the “Good” level. Or maybe you’re not. Maybe you’re at an insufficient level and it’s even below what you would consider to be a “Good” level of spending. You’ll at least have a handle on that. You’ll know where your current salary and current expenditures relate to that, “Good” or “Better” or whatever it is level. And that will help you evaluate, as you were saying, the next position that you might be offered. Or in your case, well, how much money do I really need to make to make this leap into self-employment, which will be so much better for me and you know, x, y, z other areas. But can I do it financially? It helps you evaluate that. Am I getting that right?

40:21 Lucie: Yes. Completely.

Final Advice for a Healthier Money Mindset

40:23 Emily: So, something that you mentioned when we were first talking about doing this interview was that you had used this GBB framework to heal your mindset towards money. So, that’s this period that we’ve been talking about. And when you’re really facing your numbers and starting to budget and so forth. What advice do you have for another, let’s say PhD student currently who is struggling both with a low income and with an unhealthy mindset towards money?

40:53 Lucie: Yeah. My main advice would be to start taking action now in the sense of doing very basic budgeting because not knowing where your money’s at makes things worse. We think when we’re putting our head in the sand that things are better because we’re not looking under the hood but it actually makes things worse. And the reason why it’s important to take some form of action really early on–and this thinking is corroborated by forms of therapy such as cognitive behavioral therapy–is that by changing your behaviors, you actually change your beliefs. It doesn’t really work the other way around. You won’t wake up tomorrow with another set of beliefs about money. It’s about taking action. And then this informs our beliefs and how we evolve in relation to money. And so by taking small actions such as when I started, which was very simple, which was just to print out my bank statement and then put a little circle around the expenses that brought me a lot of joy or a lot of value and then a little cross with the ones that I was not so sure about. I was like, maybe that’s wasted money. And then just gradually adjust your spending so that you only have the little circles. And that can help you towards what is your minimum viable income, what’s your “Good” goal without all the extraneous bits that you spend money on but actually you don’t enjoy that much.

42:14 Emily: Yeah, I absolutely love that advice. It’s sort of increasing the efficiency of the use of your money. So, I think that’s wonderful advice for that student.

Outtro

42:23 Emily: Listeners, thank you so much 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, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to pfforphds.com/helpout. There are plenty of ways to do so without laying out any of your own money. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC.

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