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Entering a PhD Program with Significant Debt and Investments

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In this episode, Emily interviews Alexandra Savinkina, who is starting a PhD program at Yale University after completing a master’s degree and working for several years. She has spent the last few years pursuing Public Service Loan Forgiveness while contributing to retirement accounts and saving and is therefore entering her PhD with significant student loan debt and significant assets. Alexandra and Emily discuss Alexandra’s financial goals during her PhD, including how much to spend on rent, financing a car vs. purchasing it with cash, whether to defer student loans or stay in an income-driven repayment plan, and how to continue to invest for retirement while in grad school.

Links Mentioned in the Episode

PhD debt and investments

Teaser

00:00 Alexandra: Yeah, I think it will definitely be a lifestyle decrease. A lot of my spending, not in the last year, has gone to things like travel. And I also think that the longer that I’ve had a salary and have, you know, my social circle has been people with salaries.

Introduction

00:20 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is season 10, episode five, and today my guest is Alexandra Savinkina, who is starting a PhD program at Yale University after completing a master’s degree and working for several years. Alexandra spent the last few years pursuing public service loan forgiveness while contributing to retirement accounts and saving, and is therefore entering her PhD with significant student loan debt and significant assets. We discuss Alexandra’s financial goals during her PhD, including how much is spent on rent, financing a car versus purchasing it with cash, whether to defer student loans or stay in an income-driven repayment plan, and how to continue to invest for retirement while in grad school. This episode will be instructive for anyone anticipating or in the midst of a career transition or financial crossroads.

00:34 Emily: At the start of a new academic year, I always like to bring up tax considerations, especially for new graduate students. If you haven’t yet, go back and listen to season 10 episode two of this podcast titled, “What to Do at the Start of the Academic Year to Make Next Tax Season Easier.” If you have already started or switched onto fellowship funding for your stipend or salary, please take note of the upcoming quarterly estimated tax deadline of September 15th, 2021. To determine whether you are required to pay estimated tax, fill out the estimated tax worksheet on page eight of form 1040ES. If you need any help with the worksheet, consider joining my workshop at PFforPhDs.com/QETax. The live Q&A call for this quarter is this coming Sunday, September 12th. This is the best time to join this workshop to definitively answer whether you are required to pay estimated tax and how much income tax you can expect to pay in 2021. Again, if you’d like my help with figuring this out, the best place to go is P F F O R P H D s.com/Q for quarterly, E for estimated, T A X. Without further ado, here’s my interview with Alexandra Savinkina.

Will You Please Introduce Yourself Further?

02:46 Emily: I have joining me on the podcast today, Alexandra Savinkina. Our topic today is starting a PhD at a slightly older age. So Alexandra is 30 and she’s starting her PhD this upcoming fall in epidemiology. So I’m really excited to have her on. And Alexandra, would you please introduce yourself a little bit further to the audience?

03:04 Alexandra: Sure! Hi, I’m Alexandra. As you know, I’ll be starting my PhD this fall. I’m really excited about it. I got my bachelor’s degree back in 2013 in biology, and then during that time was working in an HIV virology lab and thinking about graduate school, but knew I wanted to go into the sciences. I was pretty sure I didn’t want to do bench work forever, and so instead of making that decision right away, I did a year abroad teaching in the South Pacific. And experiences there as well as past experiences kind of brought me to public health. So I did my Masters in Public Health at Emory University, right after getting back from the south Pacific. And then I worked at the Centers for Disease Control and Prevention for three years. And at that point started thinking more seriously about a PhD, but instead pivoted a little bit, moved to Boston, and have been working in academia for the last couple of years before really making that decision to pursue that PhD program now.

Why is Now the Right Time for the PhD?

04:14 Emily: I love that you’ve been out of undergrad, out of your masters for several years now. You have a really solid start to a career, actually. So why is it that you decided that this was the right time for the PhD?

04:25 Alexandra: Yeah, so I actually did apply to PhD programs to be totally transparent. Two years ago, I got into some programs, I didn’t get into other programs. And when I was weighing my options at that point, there wasn’t really any program that was a perfect fit in terms of both something that financially I was comfortable with in terms of stipend and really excited about the program itself. At the same time, my partner matched into a medical residency program in Boston. And when I was kind of weighing my options in that way, I hadn’t been accepted to any programs on the east coast, but I realized all of the programs I was really excited about were in the Northeast. So I started looking at jobs and ended up just accidentally finding something that when I read the job description was like exactly what I wanted to do.

05:22 Alexandra: But while working in this job and being like very solidly in academia, I think I’ve been able to realize that every single piece of the job that I really like is a piece that if I want to continue that as a career, I’m going to need a higher degree for. And so I think that’s really what’s led me to be like, okay, I definitely want to do this. And the upside is that during the last two years, I’ve really been able to grow my network, grow my skillset, and I was able to get into my first choice PhD program both from two years ago and from applying this around.

05:59 Emily: Amazing! What restraint you have, I feel like, for that application cycle from two years ago to get into some places, but then just to say, no, ultimately. Like, I just feel like you feel you’re so committed to that point, right? To the idea of going to graduate school, that I really commend you for holding out for what you really wanted in and you got it and that’s amazing. Congratulations!

06:21 Alexandra: Thank you. Yeah, it was very scary. It was a scary decision to make. So on this side of it, I’m pretty happy, but when I was kind of waiting to hear back from programs this time around, I think there was kind of that anxiety hanging over me of like, what if I don’t get in anywhere? And I did get in places two years ago, so I’m glad it worked out the way it did.

Tell Us About Your Balance Sheet: Assets and Liabilities

06:43 Emily: Yeah. I really can’t imagine that anybody would be a weaker candidate having, you know, another two years of work experience. Plus, you know, I think we could hear the clarity in what you were just saying about, you know, your career plans at this point. Maybe you didn’t have that or had that to a lesser degree, you know, two years before, but that’s amazing. Again, congratulations. So let’s talk about your money. You have money, and not money, at this point in your life. Your balance sheet is a little bit more complex than maybe when you’re coming right out of undergrad. So yeah. Tell us about, just give us a quick overview of your balance sheet, your assets, your liabilities, then we’ll talk a little bit more about each of them.

07:20 Alexandra: Yeah, so right now my one big liability are my graduate school loans from my master’s program. Yeah. That’s kind of the one big thing hanging over my head. I don’t really have any other debt right now. And then on the asset side, my assets are split mostly between my retirement savings, both from the 403(b) that I have from my current position. And then I’ve maxed out my Roth IRA every year that I’ve been able to. So for the last three years. And then the other half is sort of in standard savings as well as a long-term investment account and a little bit in short-term, like swing investment, which is just kind of fun money at the moment. But I’m living in Boston right now. I’m moving to New Haven. So my one new big liability is going to be a car that I’m going to need to purchase.

08:17 Emily: Gotcha. Okay, well, let’s start on the liability side. So it makes sense to me that you have student loan debt from a master’s in public health degree. And that is that just from the graduate degree or also from undergrad?

08:32 Alexandra: I had a tiny bit of loans from undergrad, but I’ve paid all of those off. So at this point, it’s just the graduate degree.

Paying Off Student Loan Debt

08:41 Emily: So let’s take this out of the context of you’re heading into graduate school just for a second and talk about, okay. You’ve been in the workforce for several years post-master’s degree. Have you been aggressively trying to pay down that student loan debt, or are you using public service loan forgiveness? Or what has been your plan for that debt?

08:59 Alexandra: Yeah, not aggressively paying it off. The first couple of years, I wish that I’d put a little bit more thought into it. I didn’t, I think at that point, my thinking was I’ll pay it off, but without any kind of really exact plan. For the last few years, I’ve really focused that more. And I am going for public service loan forgiveness. My job at the CDC did not qualify because it was a fellowship position, but my current job does. And so I’m about two years in, and I’ve gone through the paperwork. I’ve kind of stayed vigilant with that. And so I’m really hoping, I’m almost certain that any job I’ll take post-PhD will qualify. So I’m really trying to go down that path.

09:46 Emily: Yeah. This makes sense to me with your career plans for, ideally, it sounds like staying in academia, or if not, it seems like there’ll be plenty of nonprofit type work for you after that point. Sorry, did you say you were going to stay in academia? Or planning to?

10:01 Alexandra: Great question. I think right now that’s the plan. I want to kind of use this time in PhD to see if that’s really the course I want to be on. But I do love kind of the freedom that academia offers. I need to see if I’m any good at writing grants.

10:18 Emily: Gotcha. Okay. So plan A, academia, otherwise, probably a PSLF qualifying employer. And did you say approximately what that student loan balance was?

10:29 Alexandra: No, it’s right around $80,000.

10:32 Emily: Yeah. Okay. So I did an episode a season or two ago with Meagan Landress who’s a certified student loan professional. And so she shared with us her rule of thumb that she does with her consulting, which is around one and a half times your full income. So post-PhD income, your expected income. If your student loan debt balances one and a half times or higher, then that, again, it’s a rule of thumb, not super precise, but makes you a good candidate for income-driven repayment programs with forgiveness. Even down to about one times your income would be, if you had an opportunity to use PSLF, that could also be a great option versus paying them off aggressively. And since of course, you know, your ultimate career several years away, you probably don’t have necessarily a good handle on what that salary is going to be. And certainly in the intervening time, your salary is not going to be high during the PhD. So that decision makes sense. And obviously PSLF has a really popular program with academics.

Retirement Contributions, Investing, and Savings

11:30 Emily: Okay. So we have the student loan debt balance, but instead of paying that down aggressively, you’ve instead, it sounds like, been focusing on building up the assets side of the balance sheet. So you mentioned, you know, some retirement with your employer, Roth IRA contributions, and also taxable investments and cash savings, which sounds like a great sort of mix to have at this point. Is there anything that you want to share with us about how you’ve built that up or why you focused on that in the meantime?

11:57 Alexandra: Yeah, I think honestly coming straight out of my master’s program, it wasn’t especially difficult because, while I wasn’t making like a huge salary, it was hugely more than I’ve ever made before in my entire life. And so I think I’d been so used to living really frugally that it was easy to kind of save some money. And once I started and I started learning a little bit more about investment and about the value of money, I think I just made it a priority. So one thing I do is I just automatically have money transfer from my checking account to my savings account every single time I’ve a paycheck. And then I have money transferred directly from my savings account to an investment account as well. So it’s not even something that I think about. Like, it just happens automatically. I know that it’s going to happen. It happens when I know I have money in the account, so I don’t have to worry about like overdrafting. And so I think that’s been one of the best ways for me to do it is just kind of consistency.

Financial Predictions for Graduate School

13:05 Emily: Yeah. I love that strategy, obviously, automating as much as you can with your finances. So let’s shift now to talking about graduate school again, what I guess financial predictions have you made? So we’re recording this in June, 2021. So you’re still, it sounds like probably a couple months away from moving and starting your program. Can you share with us like what your stipend is going to be, and have you put together any of those big rock expenses? Like, do you have your housing set already? You mentioned a car that you’re going to purchase. Yeah. Can you give us kind of a picture there?

13:38 Alexandra: Yeah. So my stipend is $38,000. So my housing I do have set. My rent will be $800, and I’ll be living with a couple of other PhD students. I made the decision to live with people to save a little bit of money and also on the personal end, my boyfriend’s still in Boston. So I do plan on kind of going back and forth. So it didn’t make financial sense to necessarily put more money into living by myself. And then the other big thing will be the car. I’m planning on buying a used car, but I want something that will last me a little bit of time, and I’m a little bit anxious on the car side. I haven’t really owned a car in a long time. Haven’t really had to take care of one. So I want something that’s not too old and too unreliable. So I’m looking at about 10 to $15,000 on that. And I’m still sort of going back and forth between just paying it out right from my savings or financing to just have that monthly payment, which should be affordable.

14:41 Emily: Yeah. I mean, it sounds like with the stipend as relatively high, that’s among the higher stipends that I hear right now. Which is awesome. Congratulations. And then yeah, the rent being pretty reasonable for that level of income. Yeah. It sounds like you could afford the debt payment if you wanted to. But it also sounds like you have the option of paying in cash. So yeah. What are your thoughts there? So, in general, I kind of don’t love the idea of graduate students holding debt that they don’t need to. That is to say, debt that like, they need to actually be making payments on like a car payment. But, you know, you could do it. The other thing about that car purchase is I think it’s a lot more painful to part with cash than it is to finance something. And so you might end up with a lower-priced purchase if you told yourself it has to be in cash. So I don’t know. Where do you think you’re going to come down on that?

15:35 Alexandra: I’m really torn on it. I think part of it is almost mental. I think I know that if I have a car payment I need to pay, that money will go towards that car payment. I think I’m a little bit less certain that if I don’t have that car payment, that same amount of money will go into savings. And so I think that’s the one place where, and I don’t think that’s necessarily a good financial decision. But I think mentally that’s one of the reasons why I’m considering financing. But I agree with you. I am a little bit nervous about taking on more debt. And so I’m still sort of on the fence about it. I have been slowly putting away money. So I will have the cash kind of handy outside of investments if I do choose to do it out in cash.

16:27 Emily: And if you end up financing the car, will you keep that money in cash or will you invest it?

16:33 Alexandra: That’s the other thing. I would most likely transfer that into investments. And so there is some question about kind of where that money would be making the best value.

16:42 Emily: Yeah. So it’s more about like maybe leveraging debt, not just yeah, having cash, but also paying debt at the same time.

Commercial

16:52 Emily: Emily here for a brief interlude. These action items are for you if you recently switched or will soon switch onto non-W2 fellowship income as a grad student, postdoc, or post-bacc and are not having income tax withheld from your stipend or salary. Action item number one: Fill out the estimated tax worksheet in form 1040ES. This worksheet will estimate how much income tax you will owe in 2021 and tell you whether you’re required to make manual tax payments on a quarterly basis. The next quarterly estimated tax due date is September 15th, 2021. Action item number two: Whether you are required to make estimated tax payments or pay a lump sum at tax time, open a separate named savings account for your future tax payments, calculate the fraction of each paycheck that will ultimately go toward tax, and set up an automated recurring transfer from your checking account to your tax savings account to prepare for that bill. This is what I call a system of self-withholding, and I suggest putting it in place starting with your very first fellowship paycheck so that you don’t get into a financial bind when the payment deadline arrives. If you need some help with the estimated tax worksheet, or want to ask me a question, please join my workshop, Quarterly Estimated Tax for fellowship recipients. It explains every line of the worksheet and answers common questions that PhD trainees have about estimated tax. Go to PFforPhDs.com/QETax to learn more about and join the workshop. Now, back to our interview.

Expected Expenses and Lifestyle Changes

18:31 Emily: Do you have any idea about the rest of your expenses? It sounds like maybe you’re sort of a more naturally frugal person. So have you made any predictions on that front about like, you know, general spending money or like groceries? Or I guess what I’m asking is, do you think you will be able to keep a similar lifestyle to what you’ve been living the last few years, or will you actually have to take a lifestyle decrease and be a little bit more frugal on the lower salary?

18:57 Alexandra: Yeah, I think it will definitely be a lifestyle decrease. A lot of my spending, not in the last year, has gone to things like travel. And I also think that the longer that I’ve had a salary and, you know, my social circle has been people with salaries, eating out has become more expensive, trips have become more expensive. And that’s one of the things I think I’m going to need to be more careful of because, you know, most of my social circle aren’t grad students, but I will be, which is different than the last time I was a grad student where my entire social circle also made no money. So I think it’ll definitely be a little bit of cutting back on some of, kind of more of the luxury items I’ve gotten more used to. I’ve always been pretty frugal in terms of big expenses. Things like rent, bigger kind of monthly payments. But I have kind of splurged on some things which I’ll need to be a little bit more careful on, I think.

20:03 Emily: So, when you move, you’ll have a whole new cohort of peers. So, they will be making probably exactly the same amount of money as you, right? The people in your program, or more or less. So, you’re really talking about your partner and your friends in Boston and maybe other places around the country. Is that right?

20:19 Alexandra: Yeah. Yeah.

20:20 Emily: Yeah. So I’m thinking that it may be fairly easy for you to keep those day-to-day or month-to-month expenses on the lower side, since that will be, you know, the people you’re interacting with there in New Haven. But yeah, you may have to be pretty intentional about budgeting for travel, for example, or whatever are things you might be doing with these like older friends.

20:40 Alexandra: Yeah, definitely. And I think, you know, I really don’t want to be dipping into my savings for any kind of normal life expenses. So, I think I will just need to be a little bit more strict and careful about that. I do think it’s very doable. It is a very decent stipend comparatively, so that’s really nice.

21:05 Emily: Yeah. In the grad student world, it’s a great stipend. In the working world, it’s a low salary.

21:11 Alexandra: Yeah.

Travel Hacking and Asset Building

21:12 Emily: Yeah. Well, have you gotten into travel hacking at all? Is that something you practiced earlier on?

21:18 Alexandra: I’m not sure what that is.

21:19 Emily: Oh, okay. Yeah, so travel hacking is basically just sort of structuring credit card rewards to figure out how to pay for travel, either get it for free or super inexpensively. So like, it sounds like you haven’t gotten into that game yet.

21:35 Alexandra: I actually do have one really great travel credit card, and it is the card that I use for almost all of my purchases and it does purchase a good amount of my plane tickets, which is nice. So yeah, I guess I just didn’t know there was a term for it, so a little bit. Yeah. And that helps.

21:55 Emily: Yeah. I’m thinking that, as a graduate student, it might be a way to enhance that travel aspect of your life without necessarily spending much more money. Although it is difficult to turn credit cards as a graduate student because your spending is going to be on the lower side. So like meeting signup bonuses. Anyway, if you’re interested, we’ll link in the show notes, I’ve done a couple of different interviews with people who have travel hacked as graduate students through credit card reward accumulation. So anyway, only a strategy good for someone who is really strict about their credit card usage, but very on top of things. So it sounds like you are that way anyway. Okay. So what financial goals do you think you’ll pursue during your PhD? You already stated one which is not dip into savings, so live off of the stipend on an ongoing basis. Yeah. Anything else that you think you might want to do either in terms of building assets or the step that you’ll have maybe during grad school?

22:49 Alexandra: Yeah. So in terms of assets, yeah, my biggest one is not to dip into my savings. I think beyond that, if possible, I would really like to keep funding a Roth. I don’t know if I’ll be able to, I’m not sure what the mechanism of my stipend will be yet. I know I’ll be able to find one for 2021. But if I’m able to, after that, I would like to do that.

Non-W2 Income Eligible for IRA

23:13 Emily: Actually, let me pause there for a second. So, are you referring to having W2 income versus fellowship income?

23:22 Alexandra: Yeah.

23:22 Emily: So the good news, and this may be different from the last time you were in grad school, is that fellowship income, non-W2 income, is eligible to be contributed to an IRA as of 2020. So that’s a new like law change. So we’ll link in the show notes the podcast episode where I discuss that. But yeah it changed with the SECURE Act, which was passed at the end of 2019. So, going forward, whatever type of stipend you in grad school, you would be eligible for the IRA all the way through.

23:49 Alexandra: Oh, that’s excellent. Okay. So I think that would be one of my goals. But it sort of ties to the second part of, I am trying to decide what to do with my loans a little bit. Right now, I’m in income-based repayment, and I could stay in income-based repayment and make very low payments monthly, or I could pause my payments completely during graduate school. And I haven’t made the decision of sort of what’s the right move.

Public Service Loan Forgiveness (PSLF) Eligibility

24:20 Emily: Yeah. So, I’ve looked into this before. So, I want to ask you, I thought that you had to work full-time, or let’s just say like 30 hours a week or more, to be eligible for a PSLF. Is that not the case?

24:34 Alexandra: Yeah, it is. So I would not be eligible for PSLF during that time, unfortunately. I would, I think, if I stay in income-based repayment, be eligible for like the 20-year forgiveness. So it keeps me on track for that, I guess.

24:52 Emily: But I think, what we’re talking about then is you making, however long your PhD is, five years or whatever it is, five years of payments, that you wouldn’t need to make if PSLF ends up working out. Is that right?

25:06 Alexandra: Yeah. I think the only reason I’m sort of considering it is it does make me nervous that, you know, the balance is going to go up and up and up while I’m in grad school. At the same time, you’re right. It doesn’t make a lot of sense because I’m just paying in money that I don’t need to. So most likely, my thinking was, especially now that I know I can fund a Roth IRA, would be to put my money there.

25:33 Emily: Yeah. I mean, unless your payment was zero, which, I mean, I guess that’s possible. I don’t know exactly how that would work on precisely what your stipend is, but if it was a zero payment, it’s like, oh, well, why not? You know, keep it going. But if it’s anything above zero, yeah, because, well, it’s a gamble, right? Because either PSLF is going to end up working out and you’ll make ultimately, whatever it was, eight more years of payments after your PhD, or it’s not and it would have been a good idea, I guess, to make those payments during your low-earning graduate school years. So yeah, it sounds like you would either be doubling down on PSLF being the route for you, or deciding that that’s too risky and that you want some other backup options.

26:20 Alexandra: Exactly, exactly. So that’s kind of where my thinking is, as well. That said, I think the amount of payment I would be able to make or would need to make in income-based repayment wouldn’t be that high enough to make a huge difference, I don’t think.

Keep Within the Rules of the Game

26:36 Emily: So, it sounds like you’d be sort of like purchasing an insurance policy. Like I’m going to make whatever this low payment is, which is manageable for me on my grad student stipend, as a backup plan to have five more years or whatever it is of payments if PSLF doesn’t work out. Yeah, I guess it depends on how risk-averse you are, right? And how much you believe in the program. Yeah, I haven’t heard anyone propose that strategy to me. So, you may be more risk-averse than other people I’ve spoken to about PSLF, potentially. But I encourage you to go and listen to that interview with Meagan Landress, because it may make you feel a little bit more comfortable with that ballooning payoff balance. Because the way that she talks about it, and the way that people who work in this area and are, you know, strategic about it, it’s just, it’s like playing a game.

27:31 Emily: Like you just have to keep within the rules of the game. And you know, as you said, you’ve been really on top of like getting your income, you know, your employment certified and all of that, so like, it sounds like you have the practice of like complying with PSLF already, so that probably wouldn’t end up being an issue. But yeah, it’s just about like playing the game and manipulating the numbers. And like we talked about with the debt, you know, whether to take out a car loan or whether it be cash and maybe you could invest, it’s a little bit of a leverage situation. You know, keep this student loan debt that ideally would be in part forgiven later on so that you can fund the IRA and do all these things on the asset-building side. So yeah, that episode might make you feel a little bit more comfortable with this, I’m just going to compartmentalize this debt, it is what it is, you know, that kind of approach.

28:19 Alexandra: Yeah, definitely. I do always do better when I don’t really look at it. So yeah, I think I will listen to that episode for sure. And I think even this conversation kind of makes me feel a little bit better about just letting that go for now.

Consider Projected Asset Growth

28:35 Emily: Yeah. And you know, we’re, again, I’m recording this in June, 2021. So you’ve had over a year now of having payments paused. So you’ve had over a year of credit toward your PSLF time and you haven’t been making payments, right? Yeah. So good. You’ve been building up the asset side of the balance sheet, which is exactly, you know, the intention of the program to give people some relief there. So when you volunteered for this episode, you said that you were, you know, a bit nervous about this income decrease, and then also correspondingly not being able to invest as much. So you want to keep the IRA going some level or perhaps even maxing it out if you’re able to, but have you looked at all into how much your existing assets are projected to grow over that five-year period?

29:23 Alexandra: No, I’ve not looked at the five-year. I use Wealthfront for my long-term investment, so I can see like projected growth to retirement, but I haven’t really looked into it over five years at all.

29:38 Emily: Yeah. I think that is another just element add into this, as you’re thinking about whether to invest the money you would spend on a car versus, you know, paying for it in cash versus financing, that kind of decision. And also, as you’re thinking through, you know, your ballooning student loan balance, you thought about those liabilities growing, but yeah. I encourage you to look at how much your assets are expected to grow, because yes, it is a disadvantage in some capacity to be having this, you know, salary decrease to be going to the PhD program, but you already have assets in your corner. You already have what I say is sort of a tailwind at your back in terms of your net worth growing throughout graduate school. So, the income for you is not as important because you know, of course we’re assuming that like the stock market, for example, will go up over five years. Maybe it won’t, it’s a short period of time. But you at least have that possibility of that happening, the likelihood of that happening over a five-year period. So it may make you feel a little bit better about the student loans to see how much the assets are potentially going to grow.

30:40 Alexandra: Yeah. That’s a really, really great point.

Have You Thought About Purchasing a Home?

30:42 Emily: So, I’ll just ask you one more question. Have you thought about purchasing a house, or rather to say, a home?

30:49 Alexandra: No, I am also a little bit commitment-phobic and purchasing a house sounds very frightening to me. That said, my partner just purchased a house in Boston.

31:03 Emily: So you are familiar with the process. Well then, I have one other podcast episode to recommend to you which is way back in season two, I think. So I did an interview with Jonathan Sun who was going into his second-year PhD at Yale, and he purchased a house. And so we talk about the process of doing that and some of the difficulties that he ran into with his fellowship income, which has since we’ve done a lot more work in that area. And it’s a little bit less of an issue now, but anyway, I just mentioned it because having a very decent stipend and New Haven real estate being like maybe approachable. We’ll see, I know everything’s been in a big, like run-up recently, so maybe not, but it’s the kind of market where like, sometimes it’s possible for a grad student to buy. Now that may be not be a good fit for you personally, for whatever reason, but in terms of like, you know, upleveling your finances during graduate school, purchasing a home, and then having as you already plan to, roommates in that house would be a very strong financial move, but not the right fit for everyone.

32:06 Alexandra: Yeah. I think I would be thinking about all of this a little bit differently were I not in a relationship. I think right now my plan is actually to move to New Haven for about a year. And then, the way that the PhD program works is you take courses for the first year and then you’re pretty much working on your dissertation. So I’m hoping to be able to pop back over to Boston for kind of the next few years and just commute into Yale when I need to be there. The pros of which is I probably will save on living expenses after that first year.

32:42 Emily: Yeah. That makes sense. Yeah. If it’s a one-year stint in New Haven, then absolutely. I mean, you wouldn’t even be able to like purchase because it takes months and months to set that sort of thing up. Yeah, that makes sense if you’re not actually planning on living there. Yeah, very good. Well, I’m really glad to hear this, like, long-term plan from you.

Best Financial Advice for Another Early-Career PhD

33:01 Emily: Well Alexandra, I end my interviews by asking my guests, what is your best financial advice for another early-career PhD? And it could be something that we’ve touched on in the interview or it could be something completely new.

33:12 Alexandra: Yeah. So I think one thing is that I already kind of touched on, I think it really helps me to have all of my savings and investment money automatically taken out of my account. So that it’s just something that happens that I don’t have to think about. I think another thing that has always helped me, especially when moving from one position to another or from one place to another, is I do a line budget for like a month or a couple months where I’ll write down every single thing that I buy and where that falls into my budget. And that has really, I think, helped me stay within my budget as salaries have shifted or locations have shifted. And I plan to do the same again when I start my PhD to make sure that I’m living within my means and able to make those savings payments.

34:03 Emily: Yeah. That’s an awesome, awesome tip. Well, it was a delight to have you on Alexandra. Thank you so much for sharing like your thoughts about this upcoming period. I think it’s going to be really relatable to other people who have been in the workforce for several years, and definitely other people who have had, you know, debt from previous degrees and heading back into graduate school. So thank you so much for being so open about this and best of luck to you this fall.

34:25 Alexandra: No problem. Thank you so much. This was really great and really helpful.

Outtro

34:35 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs Podcast. On that page are links to all the episode show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media, with an email listserv, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license prerecorded workshops on taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps! The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

How This Non-Budgeting PhD Accomplishes Major Financial Goals

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In this episode, Emily interviews Dr. Alana Rister, a PhD in chemistry and the founder of the Science Grad School Coach. Alana and Emily discuss two major aspects of Alana’s finances from grad school and her postdoc: student loans and a condo purchase. Alana’s main financial goal during grad school was paying down her variable interest rate private student loans, and the strategies she used will be very accessible to grad students who, like her, don’t budget. Alana and her partner took a gamble in purchasing a condo when they moved for her postdoc, and then sold it less than a year later when she left that position. Listen through to the end of the interview to learn the connection between that condo purchase and the Science Grad School Coach!

Links Mentioned in this Episode

accomplish major financial goals

Teaser

00:00 Alana: Let’s preface this with I am not a budgeter. I’m really, it very much stresses me out because I’ve never been at a point where I’m really financially secure. So I’ve never been at a point where I’ve made a reasonable budget and there’s been a positive at the end.

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 10, episode four, and today my guest is Dr. Alana Rister, a PhD in chemistry and the founder of the Science Grad School Coach. We discuss two major aspects of Elena’s finances from grad school and her postdoc: student loans and a condo purchase. Alana’s main financial goal during grad school was paying down her variable interest rate private student loans, and the strategies she used will be very accessible to grad students who, like her, don’t budget. Alana and her partner took a gamble in purchasing a condo when they moved for her postdoc, and then sold it less than a year later when she left that position. Listen through to the end of the interview to learn the connection between that condo purchase and the Science Grad School Coach.

01:19 Emily: I have my first two speaking engagements of the 2021-2022 academic year coming up this week. Speaking live to and with graduate students and PhDs is my absolute favorite activity within my business, even in a remote format. I’ve built out a slate of offerings this year that I’m incredibly proud of. My flagship seminar is the graduate student and postdoc’s guide to personal finance. And it’s typically what I recommend to first-time hosts, as it covers a broad array of personal finance topics, which of course I discuss through the lens of the PhD experience. I also have four deep-dive seminars on financial goals, investing, debt repayment, and cashflow. I offer these in three formats, which is new for me this year. I can deliver this material as a one-hour live lecture and Q&A, a two-hour live workshop, or a flipped classroom model in which I give access to the workshop videos and individual exercises in advance, and then hold a live call exclusively for discussion and Q&A. I’m really pleased to be able to work with grad students and PhD is to create actionable steps to improve their finances in each of these areas.

02:31 Emily: These four deep-dive seminars work very well as a series, but can also be booked individually. If any of those seminars sound interesting to you, please recommend me as a speaker to your university, graduate school, graduate student association, postdoc office, or department. It’s super easy and relatively inexpensive to arrange a remote event with me. Ask the potential host to go to PFforPhds.com/speaking, or simply email me at emily@pfforphds.com to start the process. I really, really appreciate these recommendations. They go very far to support Personal Finance for PhDs so I can continue to provide great content, like this podcast, for free. Without further ado, here’s my interview with Dr. Alana Rister.

Will You Please Introduce Yourself Further?

03:23 Emily: I am delighted to have joining me on the podcast today, Dr. Alana Rister of Science Grad School Coach. And it’s really exciting that she volunteered to be on the podcast. We are going to talk about some of her financial decisions from the past, a decision from grad school, a decision up from her postdoc, and I hope we are all going to learn a lot from her stories. So Alana, thank you so much for joining me. And will you introduce yourself a little bit further to the audience?

03:45 Alana: Yeah. So thank you so much for having me. I’m so excited to be here. As you said, I’m Dr. Alana Rister. I am the founder of the Science Grad School Coach. And I got my PhD in chemistry in 2019 from the University of Nebraska. And since then, went on to a postdoc at East Carolina University, and have since taken a few months off to you found the Science Grad School Coach. And that’s kind of where I am today.

04:16 Emily: Yeah. And, by the time this airs, you will be in a new position. Do you want to tell us more about that?

04:21 Alana: I will. So I’m actually going back to where I got my PhD from, and I’m going to be a metabolomics and proteomics research specialist. So I’m getting to go back into research. I’m basically doing a lot of working on doing metabolomics and proteomics for other professors. So I’m going to be a predominantly lab position getting to do fun research.

04:45 Emily: That sounds awesome. I always thought when I was going through my PhD process that I would love to be, I would call it a staff scientist. Is that a fair term? Yeah, I would like to be a staff scientist somewhere. Of course my career went in a different direction, but I find that kind of position to be really attractive. So congratulations!

05:02 Alana: Thank you!

Student Loan Situation at the Start of Grad School

05:03 Emily: Alright. So the first subject we’re talking about today is student loans. Everyone’s favorite. We’re actually going to focus on your private student loans, and we’ll get into why in a moment, but give us the full kind of picture of what your student loan situation was coming into grad school.

05:20 Alana: Yeah, so I actually went to a private undergraduate university. And I did that because it was actually the same for me to go there as my in-state public university, because I got a bunch of scholarships to the private and no scholarships to the public. So I went there, but I still had to rack up a lot in student loans, unfortunately. So when I entered graduate school, I have the numbers here. So I had $15,539 in subsidized loans, $35,418 in unsubsidized loans, and then a $13,000 private loan. So my freshman year was the only year I took out private loans in undergrad. And that was that $13,000 private loan. So altogether, if I did my math right, it comes out to $63,957 that I had in student loans going into graduate school.

06:22 Emily: Yeah. And how did you feel about that at the time?

06:27 Alana: So I was not great. I was really worried because I knew that I had all this kind of loan built up. And when you get to graduate school, you might not be thinking about your loans because they’re generally deferred. And so it’s something, oh, I don’t need to make this payment. I don’t need to worry about it, but I knew that that bill was going to come due and I knew when it was going to come due, I wasn’t going to really have the financial security to pay it off. So I was constantly looking for ways to figure out, you know, how can I pay these things off quicker? One, just because of trying to not pay as much interest, but then two, so that when I did get out of graduate school, I didn’t have, because I think if I would’ve left graduate school with all of that money, it would have been almost $800 a month that I would have had to pay back using like the government’s extended repayment. It would have been over a thousand if I like tried to pay it all back in 10 years. And I was like, looking at what postdocs got paid and what other things got paid. I was like, there’s no way I’m going to be able to afford this. So I was really worried in graduate school about how I was going to navigate after graduate school, even though it wasn’t a payment I needed to make at that time.

Which Loan Did You Target First?

07:48 Emily: That is so interesting that you were more concerned about your future self when the deferment was over, than you were about maybe how were you going to do it in the meantime, right? I mean, I think it’s really forward thinking, but I think it’s unusual, right? Because many of us, I think within our finances have a very like optimistic view. Like, my income is going to be so much higher later, and that we hope of course that’s true. But also don’t necessarily, when we’re younger, think about, well, yeah, my income might be higher, but also I might have some expenses that are higher when I’m older also. So, so interesting, but you, you noted, there were three different buckets of student loans for you, federal subsidized, federal unsubsidized, and private. And so was there like one of those that you were going to target first or that bothered you the most?

08:39 Alana: Yes. So my private loan definitely bothered me the most. And that is because it had the highest interest rate, is the first reason it bothered me. The second reason is, so COVID-19 has apparently happened. And through that time we’ve had a forbearance on student loans. That doesn’t apply to private student loans. And so I knew that private student loans generally aren’t as nice as well when it comes to, you know, forbearances or deferments for your situation. And so when I got my student loan, my interest rate was at 7%. And by the time I paid off that student loan, because I had a variable interest rate, because someone told me that was smart to do back then. It was at 11% interest rate. Yeah. It was literally going up every month in the interest that I was paying.

09:35 Emily: Wow. What a great note of warning for the listener regarding variable student loans. First of all, to have it at 7%, 7%, it’s like, okay. Yeah, it’s kind of a going rate, like, but to get up to 11? Wow. In an overall low interest rate environment. I actually also had a variable interest rate student loan, a federal one, actually. It might’ve even, yeah, it was subsidized, and then became this variable rate student loan once I came out of deferment. But because of the time period, and I think because it was federal and not private like yours, the interest rate, I think it was like at two-something percent, three-something percent. When it got up to four, I was like, you got to go, and we just paid it off. So I’m just like really balking at 11. So it was really, really good foresight again for you to say, to target that as like, oh, wow, this is variable. I don’t know which direction this is going. Like let’s work on this first. So was that like your main financial goal during graduate school is working on paying down that private student loan?

10:35 Alana: Yeah, so that was definitely the main thing I wanted to do was pay that off and then have that off my chest. Because I mean, I still had, you know, several tens of thousands more student loans that I needed to work on. So that became kind of my main goal and what I was putting money towards. I still did like other things as well. I planned for trips and stuff like that that I could go do. But that was definitely, my goal was I wanted to pay off all $13,000 by the end of my PhD. I didn’t get to that. I did $10,000, mainly because I graduated a year and a half early in my PhD, so I graduated in three and a half years. So I ended up paying it off by what would have been the end of my fourth year.

Strategies to Pay Off the Private Loan

11:23 Emily: Oh, wow. Well, that’s a great financial decision all on its own. Just get out of grad school faster. That’s awesome. I love that you identified paying off the loan in its entirety as like an ambitious goal. It’s the kind of thing that like, you know that phrase like, shoot for the moon, and even if you miss you’ll end up among the stars? Like paying off $10K, like you’re among the stars, like that’s amazing in three and a half years. That’s amazing. So let’s hear more about how you mechanically did that. Like what strategies were you using?

11:50 Alana: So I think there were probably like three, okay, let’s preface this with I am not a budgeter. I’m really, it very much stresses me out because I’ve never been at a point where I’m really financially secure. So I’ve never been at a point where I’ve made a reasonable budget and there’s been a positive at the end. So it like always stresses me out to just make a budget. So I’m just like in general, very conscious of spending money, and every time I’m spending money, I’m kind of like, is this really worth spending or not? So that’s kind of, I don’t know if that’s really a strategy, but that’s just kind of how I am.

12:27 Emily: Yeah. It’s like a predisposition, kind of.

12:30 Alana: Yeah. So probably the biggest thing that helped me to be able to do it was that I went to a graduate program in Lincoln, Nebraska. So location is a big thing when you’re choosing a graduate school, and I really wanted to go to a big city. Fortunately, I think, I didn’t get into programs in big cities. And so I came here and you can get, so my first apartment, I shared it with two other people. It was, you know, fairly new apartments, very modern. It was a $400 rent. So it’s just so much cheaper to live in a place like Lincoln. So I think my monthly stipend was $1,700 after taxes. And so that goes a lot further when your rent is only $400 of that 1700. So I think that’s a major factor is the fact that I was living in a much lower cost-of-living area.

13:29 Alana: And then what I would do is, so whenever my like bank account gets below $1,500, I like start freaking out. So I plan to every month to try and put $500 towards my student loan. So we get paid once a month at the end of the month. So right before my paycheck would hit, I would look at my bank account and I would say, okay, there’s this much. And if, you know, I had $2,000 left, I would pay $500 if I had below that I would pay until I hit that $1,500 mark. And so that was kind of my strategy in paying that loan off.

14:09 Emily: Yeah. I really like the way you articulated that and think it is probably really relatable for people who, as you said, are not budgeters or are not into that, but like you are kind of have a predisposition of, okay, I’m really going to kind of carefully weigh my spending and you have this target of $500 per month in mind. Yeah. Maybe you don’t hit that every month, but you’re going to be, when you’re drawing close to that and you’re starting to eat into that balance, you’re aware of it. So yeah, I think that strategy can be really relatable.

Take Advantage of Research Award Opportunities

14:36 Alana: The third one I did is I actually worked on getting a bunch of research awards. So I got a research fellowship that I think was right around $3,000 that was paid out over two years. And I put all of that money towards that private loan. I got multiple research poster awards. There was actually one poster session that was done every year that I literally just went to it to try and get the award so that I could put it towards my student loans. And I think I won like first or second place every year, which was like a 200 to 250 or $300 award. So it’s a nice, you know, amount of cash coming in. So I would do things like that, looking for fellowships, research awards, poster sessions, talk sessions and trying to do things like that, to be able to get some extra income and probably about $3,000 to $5,000 of what I paid towards my student loans probably came from the research awards and fellowships that I got.

15:42 Emily: That’s incredible. And what a boost for your CV, too, like so nice to have that double benefit if, you know, whatever your motivation is for going, you know, going after these things, going after awards, the outcome is great if you actually get it. And even if you don’t, it’s still worthwhile. So yeah, that’s great to hear. And so those awards, when you mentioned your stipend earlier, that’s all on top of that stipend. So you just kind of had a plan of like any windfall money, like that would go straight towards the student loans.

16:09 Alana: Yep.

16:10 Emily: Alright. Yeah. Anything else you want to share with us about how you made that work?

16:15 Alana: I don’t think so. I mean, those were kind of my biggest things. It wasn’t a very planned thing, but it was a thing that was like always on the front of my mind. Anytime I would look at my finances, I kept thinking, is there a way I can put more money to get this, you know, student loan paid down?

Current Status of Loans

16:31 Emily: Yeah. Well, let’s hear current updates. So you said you finished in 2019, we’re now in 2021. We’re recording this in April, 2021. So yeah. Where are your private student loans now? Where do they stand?

16:45 Alana: Yeah, so I paid off, so it was just one private student loan. I paid off all $13,000 March of last year. So three months after I graduated, I had the last $3,000 paid off on that one.

17:01 Emily: Incredible, congratulations!

17:04 Alana: Thank you!

17:05 Emily: Then, regarding the federal loans, we know what happened, just starting in March, 2020, administrative forbearance. What are your kind of plans around your payoff for that? Like, are you going to stick with an income-driven payment plan? Are you going to do it more aggressively?

17:19 Alana: So right now I’m on the standard, but the extended standard. So, because I had, I think it’s $25,000. Because I had over the 25,000, there’s an extended where they give you 25 years to pay it off instead of 10 years. So I’m on that right now. And my plan is that, once I start my new job and I have, you know, a little bit more money coming in, I paid some off as I’ve had, you know, extra cash in, but as I start this one, I’m going to start more heavily putting it on to those student loans. So I’m not going to change the actual plan I’m on because there’s no penalty for paying things off early. I’m just going to, you know, put extra income that I get towards my student loans to be able to pay those off more quickly, if that makes sense.

18:11 Emily: Yeah, it totally does. So you’re keeping that minimum payment low just for flexibility, but you still have that as kind of a primary goal. And you’ll still be doing aggressively and just because we are in April, 2021, what do you think about the possibility of student loan cancellation to any degree? Are you factoring that into your plan?

18:32 Alana: So I am not, I am a plan for the worst, hope for the best kind of person. So I’m not, I would be very thankful and appreciative if there was any form of cancellation because, you know, I have a partner who also comes with their student loans, but I’m not banking on it. I think that’s been in talks for a very long time with not really much coming of it. So the forbearance that happened in 2020 was actually a huge benefit to me and has allowed me to make a lot of decisions that I wouldn’t have been able to make had I not had the COVID forbearance. So I’m thankful for that, but I’m not going to, you know, make a plan that, you know, student loans will get canceled or partially forgiven.

19:23 Emily: Yeah. Well, this is a really exciting time. I’m so glad that we caught you right here at the cusp of your new job in that new phase. But again, congratulations on killing the private student loans, having them be completely gone.

19:34 Alana: Thank you.

Commercial

19:36 Emily: Emily here for a brief interlude. These action items are for you if you recently switched or will soon switch on to non-W2 fellowship income as a grad student, postdoc, or postbac and are not having income tax withheld from your stipend or salary. Action item number one: fill out the estimated tax worksheet in form 1040ES. This worksheet will estimate how much income tax you will owe in 2021 and tell you whether you’re required to make manual tax payments on a quarterly basis. The next quarterly estimated tax due date is September 15th, 2021. Action item number two: whether you are required to make estimated tax payments or pay a lump sum at tax time, open a separate named savings count for your future tax payments, calculate the fraction of each paycheck that will ultimately go toward tax, and set up an automated recurring transfer from your checking account into your tax savings account to prepare for that bill. This is what I call a system of self-withholding, and I suggest putting it in place starting with your very first fellowship paycheck so that you don’t get into a financial bind when the payment deadline arrives. If you need some help with the estimated tax worksheet, or want to ask me a question, please join my workshop, Quarterly Estimated Tax for Fellowship Recipients. It explains every line of the worksheet and answers common questions that PhD trainees have about estimated tax. Go to PFforPhds.com/QETax to learn more about and join the workshop. Now, back to our interview.

Real Estate Purchase During Postdoc

21:15 Emily: Okay, let’s talk about the next topic you wanted to bring up, which is about your real estate purchase during your postdoc. So let’s hear the whole story around that.

21:23 Alana: So I met my partner in graduate school, actually, the day before I started graduate school, I met my partner. And so he had a house. He had bought a house years before we met, and when we moved, he sold the house. So we had some money come in from that. And when I took a postdoc, I took a postdoc in Greenville, North Carolina. And it is kind of interesting because when I was looking for housing options, I had the option of paying around a thousand dollars a month for a one-bedroom, one-bath apartment, or I could buy a condo that I could pay $650 a month for a two-bed, two-bath condo.

22:12 Emily: Those numbers are very surprising.

22:14 Alana: Yeah. So real estate was really, really cheap there. And to get into a decent apartment that, you know, wasn’t bug-infested and had other problems, it was very expensive to do there. So we decided to invest and we bought a $85,000 condo, two-bed, two-bath condo. And you know, my partner comes from a family that has constantly flipped homes. So this condo looked very bad. It kind of looked like it had been run down from the seventies, but was built in the nineties. So it was kind of interesting, it had been a rental for years and we kind of transformed it. I think one of my friends said it looked like a modern New York City apartment by the time we were done with it. So it was kind of interesting because we worked a lot on the condo and made it look a lot nicer, but our main driving factor for buying it was primarily because it was so much cheaper. And it was going save us so much money in the long-run. Both because we were investing in something, and then also just because the monthly payment was so much lower when we bought something versus renting a place.

23:36 Emily: How did you fit such major renovation projects around your research schedule?

Renovations and Research

23:44 Alana: I think there’s like a couple things. So one, I didn’t do most of the work. I’m going to be honest. So my partner, Greenville’s a really small town, so my partner actually had difficulty finding jobs there. So he was unemployed for about half the time we were in Greenville, and he spent a lot of his time working on it. I was more the design person. So I was like, this is what we’re going to do. And then I did some of the renovations and it kind of became like our hobby. So I took a week off at the end of my PhD, went down to Greenville, and we did the initial renovation. So we redid the floors, painted the walls, made it at least livable. And that was kind of the bulk. And then we did one more bulk right before we sold the place.

24:30 Alana: That kind of put us over the edge on getting a higher price back. But I think kind of knowing what you’re doing helped because like some things we really didn’t know what we were doing and Googling a lot of things. But I think having someone that, you know, my partner knew a lot more what they were doing when coming to a construction project and then, you know, it kind of ends up being fun after a while. And so that kind of became where we put our free time when we worked on it together around my research schedule.

25:05 Emily: Yeah. That’s really good to hear. I always kind of wonder about how like sort of logistically that works. Anyway, so my husband and I just closed on our first house. It’s very turnkey, but there are like a few things we wanted to change. So we’re kind of in the midst of like this, how much do we outsource? How much do we DIY? What kind of capacity do we have to actually work on this house? Or, you know, those kinds of questions are kind of circling in my mind right now. So I’m just really glad to hear how you did it. So I have been consuming more real estate investing content recently, a little bit from BiggerPockets, and I know Mindy Jensen, who’s the co-host of the BiggerPockets money podcast calls, what you described, a live-in flip. So that’s what she does, like serially, she does live-in flips, one after the other. But that’s great. So you had that initial experience. Now, I think you said that your postdoc was pretty short term, is that right?

25:58 Alana: Yeah, so it wasn’t supposed to be. So I started January 3rd, I think 2020, and I ended it October 31st, 2020. So it was about a 10-month long postdoc. The initial contract was until March of 2021, and then I was supposed to extend it for like another year, but I ended up kind of cutting it short and actually moving back to Lincoln, Nebraska.

Is a Real Estate Purchase Worthwhile?

26:28 Emily: Yeah. And so I think this is something that’s really on the minds of people when they move for grad school, move for a postdoc, move for a first job is, how long am I actually going to be here, and is a real estate purchase worthwhile? So can you tell us your thoughts on that? Like, did you have that thought you first moved there? I mean, obviously the numbers made a lot of sense, but over what time period did the numbers make sense?

26:49 Alana: Yeah, so I definitely had that thought, especially because when you’re looking at buying or selling, there are a couple of things you have to, so I said, you know, it was $650 per month, you know, versus a thousand. So that’s like what, a $350 difference that I probably would have been paying. But then you look at your down payment. So my down payment on the condo was just under $5,000, which was a lot cheaper than a lot of real estate down payments. But if you spread that out through time, you would realize that that’s a lot more than the thousand dollars a month. And so there were a lot of questions that we had on whether this was going to be a smart purchase or not. We were expecting me to stay for about two years. And generally you want, you know, for, I think the advice usually given is five years to make a real estate purchase. You want to be there for about five years. But I think the biggest thing was just our comfort level. And especially with the lack of really good landlords in Greenville, we felt like we were more suited, we knew the real estate market. We knew how to sell houses. We knew how to do that stuff. So we kind of took a gamble. And we went that direction instead. And we were like, we might come out at a loss in the end, but we think our experience there is going be a lot better. And so it might be worth that loss in the end.

28:21 Emily: Yeah. I was going to ask how did it end up turning out?

28:25 Alana: Yes. So actually it was really good. One, we did flip it, so we bought it for $85,000. We sold it for $99,500. So a pretty nice, we actually got an offer for like $104K, but it didn’t appraise for that. So it was a pretty big, you know, good chunk of change, I think after all the sales commissions and everything, we came out, because we also sold all the furniture with the house. So we came out with about $15,000 in the end. But the biggest thing was, that we didn’t think about, is because we had bought real estate, we weren’t hooked into a lease. So we sold our place, we went under contract in September, which means we could leave, where if we had started a lease in January, by the time, you know, October came around, which is when we left, we left October 1st. So by the time that came around, we would have had three months left on our lease. So we have had to end up paying a lot more to get nothing just to break our lease. So ultimately it was kind of a good decision in that we were able to, you know, leave without having to worry about paying, you know, penalty fees.

29:36 Emily: Yeah. I’m really glad that, you know, you’re here to tell this story because I think, for me anyway, my mind more naturally goes to like the downsides of taking, you know, risky decisions. And I think everyone should of course be aware of the potential downsides, but just know that there are upsides also that you might experience that are just as, or maybe even more likely, than the downside. So like, yeah, clearly it was a risk, it was a risk at two years, it was more of a risk at 10 months or nine months or whatever. But it did work out, and the thing is, you didn’t have to sell. If that was not going to work out financially for you, you were not required to sell, you could have moved and rented it out. You had other options. Right. It’s just that, oh, selling did make sense. And so you went through with it.

30:21 Alana: Yeah. So we actually considered that. We were looking at actually either doing Airbnbs for it or doing a long-term rental. And we actually looked into it, and like right as that was happening, there was kind of a real estate bubble. Because of COVID, nobody was selling real estate. So there was a scarcity on the market, and suddenly condos that were usually priced at the 60 to 80,000 range were starting to go near a hundred thousand. And like, so we were like, okay, this seems like it’s a good decision. And we could have always denied a contract if we were like, okay, we’re not going to get enough out of it. And we kind of just wanted the peace of mind. We didn’t really ever want to go back to Greenville. So we didn’t want to have a place that we knew we would have to take care of, but it was definitely something we looked into. And if we stayed closer to the area, we probably would have done it for short-term rental or something.

Real Estate Flip Funded Science Grad School Coach 

31:16 Emily: Yeah. Well this is so interesting. I’m really glad to like kind of learn that it did work out positively in your case. And so when you volunteered for this, you said you wanted to tell how that real estate flip funded your Science Grad School Coach endeavor. So tell us about that.

31:34 Alana: So that $15,000 that we got from the sale of the condo, which knowing for like me and my partner, if it hadn’t been in the condo, because we, you know, put $5,000 down, it probably wouldn’t have been around by the time we got, because again, we’re not budgeters. So the fact that it was there and we had that money, it allowed me to kind of make the decision. My partner finally got like his dream job back in Lincoln. So we made the decision for me to go unemployed and work on building this business and for him to come here, and his job was not fully going to support us here. So the money that we got from the sale of our house actually made up for at least a year. We would have been fine for at least a year between the savings and then also, you know, his income.

32:30 Alana: And so that kind of started me having the freedom to really pursue starting the Science Grad School Coach and work on it. And then on the side, I kind of looked at applying to jobs and things like that. Because I was kind of sad to leave research. I still wasn’t exactly sure what I wanted to do. And now kind of right as things are starting to come into play with the Science Grad School Coach, I’m also starting a new job. So like in the end, it was a risky decision. And the only reason we could have taken that decision was because we bought a house and sold it and had that extra money leftover to then come here and have that time. And now I am employed, starting Monday, I will be employed. And so that’s going to give me the opportunity to kind of do both. Both the Science Grad School Coach, and then also go back into research.

33:24 Emily: Yeah, this just, you know, is another example of what I like to say is money gives you options, right? The option to pursue fun employment. The option to wait for a great job opportunity to come and not try to force yourself into one that’s not a great fit, et cetera, et cetera, et cetera. And I also had, I guess, somewhat of a similar story when I started Personal Finance for PhDs, which just in the sense that my husband and I focused a lot of our energy and our finances on retirement investing when we were in graduate school. And so by the time we finished, and I talk about this in season one episode one, by the time we finished, we had quite a good nest egg, and that made us feel comfortable to take risks with our careers. So he took a job at a startup, which we were very concerned about.

Where to Learn More About Science Grad School Coach

34:09 Emily: It happens to be that he’s still at that same position six years later, but we did not know at the time that it would be around for six years. So he took a job at a startup and I started my business, which, you know, low revenue, you know, initially. So yeah, it was risky, but we felt confident, not because we had a bolus of cash savings as you did, but just because generally we were doing pretty well on the retirement front and we, you know, felt like it was okay to take a risk. So just so interesting, like I’d just love to hear another example of how your finances, like, we all know that our careers can affect our finances, right? By what job we choose and so forth, but how your finances affect your career as well. And for you, your ability to start your side business. So yeah, I’m just, I’m really glad to hear that. If people are intrigued by Science Grad School Coach, where can they find you and you know, what are you doing there?

34:59 Alana: Yeah. So the Science Grad School Coach is kind of the business I developed to help people with pursuing research. So like I said, one of the ways I was able to pay off, you know, a lot of my student loans was because of getting research awards and research posters. And something I realized is I’m actually good at doing research. But I didn’t start out that way. When I started in graduate school, I was really frustrated because I felt like everyone expected me to know things, but nobody ever taught me those things. So I had to kind of, over time figure all these different things out from how do I create a research idea, to how do I write a paper, to how do I put a poster together? And so what I’ve done is basically I want to share that knowledge with other people.

35:50 Alana: And that’s what the Science Grad School Coach is. So if you’re interested, I do have a YouTube channel which is the Science Grad School Coach. And there’s where I share a lot of, kind of shorter videos on different topics around research and how to get better at research and do things like that. You can also find me on Twitter at @scigradcoach. And then I also have a full resource pages if you’re interested that I have several different resources on there from how to create ideas, how to write a paper, how to do your dissertation. And you can find that at sciencegradschoolcoach.com/resources. And so those are kind of three different places where you can connect with me and hopefully get to learn some of the things that I’m trying to share. And hopefully it’s helpful.

36:43 Emily: Yeah. I love that impulse and I wish that I had run across a few of those resources back when I was in graduate school. Maybe the information was there. I don’t know. I didn’t, I was not plugged into it if it was.

36:54 Alana: Yeah, I definitely wasn’t either. And I think people don’t realize that research can be easy, and then it’s just because we’re not taught how to do it and we’re just expected to, and then we have to deal with the frustration of being like, I don’t know what I’m doing, but I feel like I’m supposed to know. So I did something wrong. And it’s not that you ever did anything wrong. It’s just how the system is set up is not set up for researchers to do well, I guess. It’s set up to make you struggle when you don’t need to. Because like I ended up writing or publishing seven papers in my three years as a graduate student, but it didn’t start out that way, right? Because I like really struggled. And then I started learning where I can write a research paper. Once I have the data, I can write it, you know, in a day or two. And that’s just because now I know how to do it. And so that’s what I’m trying to share with other people.

Best Financial Advice for Another Early-Career PhD

37:47 Emily: Yeah. Excellent. Very worthwhile endeavor. Love it. Okay. I’ll ask you the question that I end all my interviews with, which is what is your best financial advice for another early-career PhD?

37:59 Alana: So this is probably not the best advice, but I think my best advice is to think a lot about the location you’re going to. That’s one of the reasons why I came to the university I came to was because I started looking up rent prices and saw how cheap it was. But something that you may not know is before, so I came back to Lincoln after my postdoc. But I actually got two different job offers before I came back to Lincoln. I got an industry job that was going to pay me $85,000 that was in a middle, kind of a higher than Lincoln, cost-of-living, but it was just not the right job for me. But then I got my dream job, which was a postdoc. It was doing the dream research I wanted to do in Seattle. And I looked at the living cost, and I said, I’m going to have to take on debt to go work a job.

38:56 Alana: And I refuse to do that. And so I actually went for unemployment because it was cheaper for me to come to Lincoln and be unemployed than it was for me to go to Seattle and work a job. And so that was a really hard decision for me to make, because I really wanted to do that research. But I think it’s important to think about the fact that even as an early PhD, like you are worth something, and if you’re not going to be netting positive while working a job, you really may want to reconsider taking those jobs because that really shouldn’t be a thing, especially after you have a PhD.

39:40 Emily: What an indictment, you know, of the salaries that we pay, both graduate students and postdocs. Absolutely. And it’s so unfortunate. I mean, it’s the academic loss, the research engine’s loss that you did that calculus and came on the side of, I can’t take this job because you simply don’t pay me enough. You made a rational decision in the face of that, you know, situation, but it’s just so unfortunate that things are set up that way. In any case, you have another wonderful job coming up now in Lincoln. And yeah, I totally agree with you. You have to be very careful about examining the cost-of-living versus salaries. You know, the salary numbers, if you’re coming from a lower or a middle, you know, cost-of-living city, moving to a high-cost living city, like maybe that initial postdoc salary looked to you like, Hmm, not bad, but then you had to actually look into it and say, oh no, Seattle, quite expensive. It’s not going to work. So I totally agree with you do that at every single, you know, any job you’re trying to take going forward. Is there anything else you wanted to add on that?

40:40 Alana: I think that’s the main thing. Yeah, and like Seattle, like that was my dream city too. Like that is where like I want to go retire. So it was like so tempting to take it. And then just to realize that you’re literally not paying me enough to even afford rent, really. And so this new job I’m taking is just slightly over that same salary, but it’s so much more livable because Lincoln is literally less than half the cost-of-living of Seattle. So making that kind of decision, I think it’s so tempting to think that if I take this dream job, it’s going to propel me to the next dream thing. And kind of after different situations in my life, I realized that that’s not always true, and it’s not worth either going through a toxic situation or a situation where you’re not making enough money to live for a hope of the next thing, because if you don’t get that next thing, you’ve screwed yourself.

41:41 Emily: Yes. Such an important message. I mean, we all know the abysmal hiring rates for of course faculty positions, but even as I said earlier, like we tend to be really optimistic about the whole salary situation in research. And Hey, we all hope it comes about, but you’ve got to look at the downsides, too. So it’s interesting that you’ve sort of illustrated in your story, a couple different gambles that we’ve been talking about and how you’ve made different decisions, you know, in the face of these. So yeah, I love that, you know, you illustrated those points. Thank you so much for joining me today. It was a pleasure to have you and to get to know you.

42:14 Alana: Yeah. Thank you so much for having me. And I hope that my story can be helpful to other people especially about, you know, thinking about student loans while you’re in grad school. Because the other thing is, unless you have subsidized loans, your interest is still building while you’re doing that. So just, you know, thinking about that and then kind of making smart decisions when it comes to, you know, gambles. So I’m actually, I’m not a risk taker. I realize that this sounds like I’m a risk taker. I’m really not. Like I weigh through the pros and cons of everything I do. And you know, there are some risks you have to take in life, but I try to limit those to those that are just absolutely necessary. So I hope that this can help people that sometimes it works well. And sometimes not taking an opportunity also works well in the end.

43:07 Emily: Yeah. Thank you so much for sharing these stories and for joining me.

43:09 Alana: Yeah. Thank you!

Outtro

43:11 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/Podcast is the hub for the Personal Finance for PhDs Podcast. On that page are links to all the episode show notes, which includes full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media, with an email listserv, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license prerecorded workshops on taxes. Four, subscribe to my mailing list at PFforPhds.com/Subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember you don’t have to have a PhD to succeed with personal finance, but it helps! The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio, and show notes creation by Meryem Ok.

This Start-Up Centers Graduate Students and Pays Them Handsomely

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In this episode, Emily interviews Jin Chow, a graduate student at Stanford, and Stephen Weber, a graduate student at the University of Georgia. Jin is the co-founder of Polygence, a start-up that facilitates graduate students and PhDs remotely mentoring high school students one-on-one through well-defined research projects. Stephen has mentored five students and speaks to the advantages of Polygence as a flexible and lucrative side hustle. We discuss whether and how to tell your PhD advisor about a side hustle, and who is or is not a good fit for becoming a mentor with Polygence. Jin also briefly shares the story of how she co-founded Polygence as a graduate student on an F-1 visa. If you’re looking for a side hustle that’s convenient to balance with your graduate work, check out Polygence: they are hiring mentors now!

Links Mentioned in the Episode

grad student side hustle

Teaser

00:00 Stephen: You know, it’s kind of funny to say, but I’m getting paid to learn more about things that I would already be interested in learning about.

Introduction

00:12 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is Season 10, Episode 3, and today my guests are Jin Chow, a graduate student at Stanford, and Stephen Weber, a graduate student at the University of Georgia. Jin is the co-founder of Polygence, a start-up that facilitates graduate students and PhDs remotely mentoring high school students one-on-one through well-defined research projects. Stephen has mentored five students and speaks to the advantages of Polygence as a flexible and lucrative side hustle. We discuss whether and how to tell your PhD advisor about a side hustle, and who is or is not a good fit for becoming a mentor for Polygence. Jin also briefly shares the story of how she co-founded Polygence as a graduate student on an F-1 visa. If you’re looking for a side hustle that’s convenient to balance with your graduate work and want to help cultivate the next generation of researchers, check out Polygence: they are hiring mentors now!

01:19 Emily: If you have a pretty well-established side hustle, whether as a contractor with a company like Polygence or your own sole proprietorship, you may be wondering how best to manage that stream of income. This is especially true if you incur any expenses with respect to your side hustle. I have a course titled Best Financial Practices for Your Self-Employment Side Hustle that speaks to two chief areas of interest for people with this type of side hustle. 1: How to financially manage variable business income and expenses so that your personal finances aren’t negatively affected. This half of the course teaches some basic business and personal finance principles to keep everything orderly. 2: What type of self-employment retirement account option to use. If you are a super-saver who maxes out your IRA yearly and doesn’t have access to a workplace-based retirement account, you can actually use your self-employment income to open and fund an additional tax-advantaged retirement account. My course explains which of the several options is the best fit for a solopreneur side hustler. If you’d like to learn more about and purchase this course, please go to PFforPhDs.com/sesh/. That’s P F f o r P h D s dot com slash s for self e for employment s for side h for hustle. Without further ado, here’s my interview with Jin Chow and Stephen Weber.

Will You Please Introduce Yourselves Further?

02:54 Emily: I have joining me on the podcast today, Jin Chow and Stephen Weber. They are representing Polygence. So I first heard about Polygence a few weeks back when I was at a conference, I had the pleasure of speaking with another employee and learned what they do, which is providing mentorship opportunities to high school students and hooking them up with graduate students and PhDs. And the reason that we’re bringing this episode to you is of course, to tell you a little bit about the company, but also to let you know that this is a potential side hustle opportunity. We’re going to get into more of that momentarily. So Jin and Stephen, will you please take a moment to introduce yourselves a little bit further to the audience?

03:31 Jin: Awesome. Hi everyone. My name is Jin, really grateful to Emily for having us on today. A little background about myself, I’m originally from Hong Kong, came to the U.S. for college, studied Comparative Literature at Princeton for my undergrad, and I’m currently a PhD Candidate at Stanford, also in Comparative Literature. And in terms of research background, I’ve just been working mostly on French and Arabic literature. And then right now I’m putting my PhD on hold to work full-Time on Polygence. I’m one of the founders.

04:00 Emily: Yeah, super interesting. We’ll get back to that at the end of the interview. Stephen, go ahead and introduce yourself.

04:05 Stephen: Well, thanks for having me. My name’s Stephen. I’m actually a third-year PhD student at the University of Georgia. My research is focused on Parkinson’s Disease and the association of the immune system and potentially perpetuating that. And then before that I was actually a research professional at Stanford University. I worked with the stem cell Institute, teaching and training anywhere from undergraduates, to postdocs, to professors on application of a specific methodology. And yeah, that’s a little bit about me.

04:40 Emily: And what’s your role with Polygence now?

04:42 Stephen: Yeah, so now at Polygence I’m a mentor and I have been for about a year and a half and recently have moved into being a mentor affairs coordinator. And that’s where I’m at now.

How to Get Involved with Polygence

04:53 Emily: Yeah. So we’re going to hear more about what is this mentor role. But to back up a little bit, Jin, as founder, co-founder let us know more about Polygence, what it’s about, and how can graduate students and PhDs get involved with the company?

05:08 Jin: Totally. So Emily, I think you gave a really great overview of what it is. So we’re an online project-based learning platform where we connect PhD candidates, masters candidates, postdocs, and also people who already have their advanced degrees with really motivated and intellectually curious high schoolers to work on personalized research projects. And our mission on the mentor side really is to democratize access to the knowledge that’s in so many PhD candidates heads and also to give PhD candidates, graduate students in general, a chance to earn some side money because we know how not well universities pay PhD students and graduate students in general. And so on the mentor side, that really is our mission. And we want to make sure that students high schoolers from all around the world who are passionate about different kinds of academic disciplines can get a chance to connect with experts like yourselves, our listeners today. And to do something beyond the school curriculum and to learn something new, create something fun and cool. And so for, in terms of how mentors can get involved, we have an open rolling application season for any mentor to express interest on our website. We’ll put in the link in the show notes later. And also once you sign up, we have rolling interviews, you’ll meet with one of our team members and then we’ll onboard you.

06:29 Emily: It’s so unusual. I really don’t think I’ve spoken to anyone else who has centered the graduate student experience in the broader mission of a startup or a company. And of course it’s very like laudable that we want to help mentor and educate these up-and-coming researchers who are currently in high school and so forth. That’s all wonderful. But to hear that, okay, this was founded by a graduate student. You can, I guess maybe you want to introduce your co-founder in a moment as well, but founded by a graduate student and really again, centers that graduate student experience and the financial concerns of graduate students. So unusual. And I’m really excited to talk to you about that.

07:06 Jin: Yeah. Maybe I’ll just take three seconds to say a little bit more about my co-founder too. So I think the reason why we’re so centered on the graduate experience is because when we founded it, I was in the middle of it. I was in my second year of the PhD program and my co-founder, Janos, had just finished his PhD in physics. And so we both just knew so well how difficult it is financially as a graduate student. And also we both just love teaching so much, but didn’t get enough of that in our own respective programs. And so those two things coming together just made the graduate experience like front and center for us.

Stephen’s Role as a Mentor

07:36 Emily: Fantastic. Fantastic. So Stephen, not speaking as the founder, but speaking as someone who has been a mentor with Polygence and now has moved into an even bigger role. What has been your experience as a mentor?

07:50 Stephen: Yeah, I mean, I think that that’s one of the biggest questions. So I actually am a part of doing the interviews for potentially onboarding mentors. And so, you know, that’s a question that I get asked a lot is so why are you still here? You know, because I think for a lot of graduate students, their experience is TA ships, right? Wherein they are paid poorly for their time. And they’re expected to do a lot. And they often have that as an interference to their day to day. You know, especially someone who’s coming from the hard sciences where there’s a lot of really long days spent in the lab, for instance, it can be hard to juggle the responsibilities of that plus being a TA. And so despite having a really huge love for teaching, it can be really difficult to make that work.

08:37 Stephen: And it also is not quite as flexible as the schedule at Polygence, right? So at Polygence, you’re committing to hour-long sessions with students, roughly once a week, and you can make those times whenever is good for you. So I think that that’s part of why I’m still with it, obviously, but it also adds value to the fact that I get to still enjoy it each time. You know, it’s not just a, “I have to be here doing this.” This is something that I want to do. I feel like my time is compensated well. And I feel like I get to talk about things that I really want to talk about. Whereas as a graduate student, you’re often TAing for courses that may not be within your wheelhouse or may not be of specific interest. They might just be departmental courses that you’re just kind of asked to TA for. So I think that that’s another huge point of why I’m still here is that I feel like I get to not only talk about what I like, but also get to explore it in ways that are new and novel for incoming students.

Intangible Benefits of Mentorship

09:32 Emily: We’re going to talk more about sort of the financial side of this in just a moment, but I wanted to hear some more about like maybe the intangible benefits, the intangible experience, the warm fuzzies that you get from working with these students. Like you’ve done multiple cycles of this, I understand. So, you know, what is your enjoyment of the process?

09:52 Stephen: Yeah, so I’ve, what is it, five students now at this point and I’ve had three of them publish their work in high school-tier journals. And so, you know, for me, what I think is kind of like a part of it that you can’t really capture with, like the financial element is that you’re getting to be a part of the developmental process for people that have a passion similar to yours. And I mean, maybe I’m like the outlier, but when I was in high school, I can definitely say that I didn’t have this kind of opportunity. And so it was a really novel experience to be a part of the early foundation-laying of students who really want to pursue this. And not only do they get to learn more about a subject, but they also get to learn more about the ins and outs of the career itself.

10:37 Stephen: And I think for me that would have been hugely valuable to know here are skills that I could start working on now in high school to get ready for, you know, a long-term academic career. And I think that those are parts of the intangible that just feel like, you know, it’s paying it forward in a way of like, okay, so I struggled through and learned these things. Let me try to provide some insight for you that you can now take forward and maybe try to share with people around you as you go through the academic process.

Why this Side Hustle is a Great Fit for Grad Students

11:04 Emily: Wonderful. I also am reflecting on kind of my experience in high school. And I was fortunate that I did have research opportunities because I attended a particular school that offered that, but they weren’t like one-on-one, it was group. And I think that given my personality, I think a one-on-one setting would have been fantastic for me at that age. We talked about how the commitment when you’re mentoring a student through Polygence is approximately one hour about once a week, and that it’s flexible to be, you know, conforming to the mentor’s schedule. And I love this because one of the key key elements I think of a successful side hustle in graduate school is being able to schedule something that’s not going to interfere with, as you said, Stephen, your long days in lab. Like that really does need to be your priority. And so being able to do something around that is absolutely perfect. Is there any other reason that you can think of that this particular side hustle is a great fit for graduate students?

11:56 Stephen: There’s a whole host of reasons really, I guess, but you know, there’s some of the core ones are in addition to the flexibility of it all, it’s also an opportunity to maybe explore parts of research that your boss doesn’t really find interesting. You know, because for me, my area of research is very niche. And so as a result, I don’t get to explore some of the outside things. It’s not that I don’t have an interest, but now I’m getting, you know, it’s kind of funny to say, but I’m getting paid to learn more about things that I would already be interested in learning about. And, you know, those were opportunities really because, you know, some of the conversations that I’ve had with my students have actually turned around and been things that I was able to employ in my own research. And so, you know, those are things that just through the conversation, through the ever-evolving amount of information you’re getting from these students. And from that process of learning more about your own subject, I think it kind of pays itself back to you in addition to, you know, being compensated for that time.

12:53 Jin: I’ve heard from some mentors too, that like, especially for those who are thinking about building a career in teaching, whether in high school teaching or later in academia, obviously getting more teaching experience and connecting with young people is something that is really beneficial for their own sort of pedagogical development as a teacher and an educator. And obviously getting paid to get that experience. Our hourly rate is usually around $75 and above. And so that’s usually sort of both the financial and also the paying it forward and as well as the teaching experience piece is what I hear most from mentors.

13:29 Emily: Yeah. I was just thinking that like, you know, one of the things that you’re supposed to be doing in graduate school is being exposed to new ideas by networking and talking with new people and going to conferences and going to seminars and so forth. And this is just another way to have that happen, to have to be exposed to another like creative mind who’s not as encultured maybe yet to the way that we think in academia that can help you spark your own ideas. As you said, Stephen, to go back into your research to feed back into that. And so I just think this is again, another way of doing that kind of networking and exploration, but getting paid for it at the same time which is fantastic.

Financial Benefits of Polygence Side Hustle

14:06 Emily: So Jin, you just mentioned the pay rate, usually $75 per hour and above. Fantastic for a side hustle for a graduate student. Stephen, you said you’ve done five cycles of this mentorship program. And so what have you been doing with this side hustle money? How has this money impacted your financial life?

14:26 Stephen: Yeah, I mean, it, in a sense it provides a certain semblance of security, right? So, you know, as a graduate student, you don’t really make a whole lot, really, especially when you consider taxes and just having to pay student fees and all of this stuff. So basically that money basically affords the ability to have hobbies again, whereas before it could be difficult to do that. So I’ve done martial arts my whole life. So being able to pay for training at gyms, that’s sometimes a sacrifice that has to be made of, you know, if I don’t have any additional income, it may be hard to kind of balance that out. So that’s, you know, one place, it also just adds a little bit of actual savings to your life, which is, you know, an amazing thing to be able to have as graduate student is that you can kind of accrue that semblance of like, oh, I’m not living paycheck-to-paycheck anymore. So I think that those are two key ways that it’s been, you know, a nice opportunity for sure.

15:20 Emily: Yeah. I’m just thinking I’m doing tiny bit of arithmetic here. Okay. So $75 an hour once per week, we’re talking 300 a month if you’re doing this for a whole month. And I know, because this is cyclical, people might not be like continuously involved with mentorship, but let’s say you do it for six months out of the year. That’s $1,800 coming in for the year that you didn’t have before. And that goes a pretty nice far ways to contributing to an IRA, for example, where the max is $6,000 per year. If you wanted to invest it there are plenty of other good things you can do. Like Stephen, you just said improving your physical and mental health and you’re making time for hobbies and so forth. Lots of good things you can do with money, but that’s a pretty nice chunk of change, especially as we mentioned for the hourly commitment.

Commercial

16:06 Emily: Emily here for a brief interlude. We have a special event coming up on Friday, August 27th, 2021. It’s the fourth installment of my Wealthy PhD workshop series. The subject is debt repayment. This workshop is for you if you’re in debt of any kind and want to learn the best strategies for getting out of debt. These strategies are tailored to the PhD experience, particularly that of graduate students. We will cover student loans, of course, which are such a complex topic, as well as mortgages, credit card debt, auto debt, medical debt, et cetera. I’ll give you a spreadsheet that will help you work through in which order to tackle your debts, taking into account the type of debt, the interest rate, and the pay-off balance. We’ll also discuss how to sustain your motivation through a long debt repayment process. This is going to be a value-packed session. So please join us on August 27th. You can register at pfforphds.com slash wphddebt. That’s PFforPhDs.com/W for wealthy P H D D E B T. Now back to our interview.

How to Inform Your Mentor About a Side Hustle

17:22 Emily: So Stephen, we talked earlier about how flexible and low time commitment this is. Did you choose to tell your mentor that you were involved with this? Did you choose to keep it on the down low? Like yeah. How did the sort of time management work with you and your mentor?

17:39 Stephen: Yeah, that’s a great question. You know, I get that question from mentors all the time actually is how do you kind of balance this with other obligations? And I mean, I would 100% advocate for informing your mentor, right? Because I think without doing that, it’s not really going to be something that is going to feel comfortable for you, but this isn’t something that needs to be hidden, right? This is a teaching opportunity that your mentor is probably going to be very enthused about you doing, you know, especially if they’re not in need of you to be on a TAship. This is just further development professionally. It also affords you the opportunity to make a little bit of extra income, which as mentors will often tell you, it’s nice to not have students feeling like they’re starving. You know what I mean? And so I think that those are pieces that are important.

18:21 Stephen: And so I certainly told my mentor, and basically I just laid it out as this is not going to impact any of my day-to-day work. Because as I was saying before, you know, the flexibility of the scheduling affords you to be able to set this up well after anything that would be needed in your day-to-day. It can be done on weekends wherein you may not have as many obligations to your full-time position, whatever that might be. And so I think that that’s really how it should be approached, is that this is just a additional professional development opportunity. And I would wager that most mentors and most programs are going to completely support and advocate for that.

18:58 Emily: Yeah. I think that unless there’s an explicit prohibition on any kind of outside work for money, this is probably one of the first things that’s going to go over pretty well with a mentor because of the time commitment because of flexibility. Jin, have you seen other mentors take the same approach as Stephen or different ones? Do you have anything to add about how to approach your advisor with, “Hey, I’m going to take this opportunity”?

19:24 Jin: Yeah, I think definitely a lot of the other mentors that I’ve talked to have just made it very clear with their PIs, that this is not going to affect, or maybe this will even enhance, their own work. And especially those who are thinking about, again, a career in teaching, this usually just goes over really well with PIs. The only sort of difference is I think there are some mentors, if they have certain funding from certain foundations and sources that explicitly prohibit, let’s say outside work, then there have been some conversations where the mentor realized that they can’t actually get paid for the work. And they’re going to just volunteer and work with some of our scholarship students in the scholarship program. But in general, for most of our mentors, it’s gone over actually really well with their PIs. And most of our mentors will want to tell their PIs just in the name of transparency.

Anyone Who Might Not Be a Good Fit at the Moment?

20:12 Emily: To kind of expand on that question a little bit more, Jin. So you just mentioned, okay, there might be some limited circumstances where, contractually, graduate students are not permitted to be paid for outside work. Are there any other people who might be excited by this episode and thinking that they might want to work with Polygence, but that you know already would not be a good fit at least at the moment?

20:35 Jin: Yeah, so unfortunately we are not able to employ graduate students who are on student visas, just because with payment issues, we need everyone to have U.S. work authorization. So mentors who are on F-1 student visas or I think J-1 student visas as well. Sadly, the only way to get involved is through volunteering, which some of our mentors still do, but obviously we know that the financial reward is something that’s very important. And so that’s one thing that’s unfortunate. But for international mentors who are on OPT, CPT, or H1B visas or obviously on a green card, they are absolutely welcome to the paid side of the program. But again, just because of legal issues, we can’t with international students on student visas. Yeah. And I would also say in general, in terms of like what makes a good mentor, is someone who’s really excited about teaching, someone who likes connecting with young kids, and who has a little bit of extra time and energy to devote to this.

21:38 Emily: Yeah, absolutely. And if any international students or students on F-1 or J-1 visas are listening, I released an episode a few months back on what kind of side work is allowed for students on those visas. And it’s a very illuminating episode. So we’ll link it from the show notes, but yes, very clearly this would be considered self-employment income. And that is not a type of income that F-1 students can pursue except on OPT or CPT. So yeah, just want make that clear, but Jin, you’re kind of speaking from personal experience here. You know, you mentioned that you were an international student, at least when you first came to the States. So can you talk more about your experience founding this startup as an international student and someone pursuing their PhD? That’s a lot of things.

22:18 Jin: Totally. It was, I think emotionally, just so, dealing with American immigration is just, I think emotionally exhausting, and I’m still in the middle of it because now I’m actually in the middle of dealing with the green card process, which is a whole separate headache. But yeah, so I was on F-1 from undergrad until the beginning of my PhD. And then when I first established Polygence with my co-founder, I was still an F-1 and I just wasn’t getting paid. It was just sort of like a unpaid thing for the exact same reasons that we were talking about. And then when I decided I wanted to take time off and be paid by the company and do work on Polygence full-time, I then applied for part-time CPT because I wasn’t ABD yet. Like I wasn’t all but dissertation yet, so I couldn’t exactly just do OPT.

23:06 Jin: And so I was on part-time CPT for the first year of my full-time work with Polygence. And then I got married and then started the green card process after which I got the temporary EAD from work authorization thing. But all that to say, I think, yeah, navigating immigration and having an extra source of income as an international student, like I know full well to all of our listeners who are going through the same thing, like how much of an emotional drain it is. But there are ways to work around it. And sort of going back to our previous topic of how the department or how my own, you know, academic bosses dealt with it. They were actually really, really supportive of me actually taking time off even, partly because the job market is so dismal in the humanities that they’re like, if it’s one PhD candidate to fight for one job in comparative literature on a yearly basis, that’s, you know, a win for us. And so they were actually really supportive of me taking a break and helping me throughout the whole visa debacle.

Jin: What is Your Work-Life Balance and PhD Status?

24:14 Emily: So I definitely understand the pressures and the circumstances that led to you saying, okay, this is a solution. I need to take a pause in my program, do CPT for a bit. Are you back into pursuing the PhD actively now? Like what is your work-life balance going on right now?

24:32 Jin: Yeah, it’s still a little bit complicated right now. I’ve finally gotten to ABD. I was actually working somewhat on my perspectives and on my research during the first year of me being on CPT. But now that I’m all but dissertation, I can just take my time. I’m not being funded by Stanford at all. But I’m still sort of on paper enrolled so that I can still stay in housing and get health insurance, that kind of thing. But I am full-time working on the company.

24:59 Emily: Oh, that’s so interesting. Yeah. I didn’t realize you had that set up right now. So everybody hates this question. How long do you think it will take you to finish the PhD? Like when you have a full-time position and you’re doing this on the side, I know this is something that so many people get into when they are ABD, especially in fields like yours, where you don’t have to be in the lab and you’re not being funded by a grant and blah, blah, blah. So like just let us know a little bit more about how you’re managing both aspects of this work.

25:25 Jin: Yeah. It’s definitely a little hairy and tricky because I actually still have, I think one or two more courses that I’m supposed to teach at Stanford. But other than that I’m essentially just writing. And it depends on how quickly I write and how much time I can spare outside of working on the company. Right now, it’s not a lot of time that I can spare, just because I think the company just takes up all of my bandwidth and mind space. That being said, I definitely do want to finish it, because the research I’ve been doing and the novels that I’m working with are things that I care deeply about and derive a lot of intellectual satisfaction from. But I think it really is still a bit of a black box in terms of when I can devote myself to the extent that I would want to. And to the extent that the work deserves my attention while working on the company. So that is still a little bit unclear. I was thinking that maybe I could slowly chip away at the dissertation while working on the company, but that’s clearly not really happening. So I’m going to have to sort of kick the can a little bit further down the road.

Next Steps for Getting Involved with Polygence

26:30 Emily: Okay. Well, that was fascinating. Thank you so much for sharing. Let’s circle back to how people can get involved with Polygence if they want to. What is the next step, if they’re like, oh yeah, I’m really, really interested in becoming a mentor. I want to learn more.

26:42 Jin: Yeah. So the next step would to go to the link in the show notes. It’s our short mentor interest form. It takes three seconds to fill out. And once you fill that out, we basically ask you what discipline you’re in, where in your program. Yeah. What stage in your program you are, name, email, whether you have work authorization, very important. And then after that, we will ask you to schedule a 15-minute preliminary call with one of our mentor interviewers. And it’s where you can learn a little more about the program, ask questions about what students are like, what kinds of projects they do. And then after that interview, we will set you up on the platform with your own profile account. And then after that, we will start sending you students once we’ve done a background check on you as well. And then we have a lot of really cool mentor programming and scaffolding to help you get more comfortable with this kind of one-on-one Socratic project-based teaching model, where we offer sort of teaching demo preparation sessions, where we ask you to prepare a mock assignment. And we put you in groups with other new mentors, and maybe Stephen can talk a little more about those because he’s the leading a lot of them.

27:47 Stephen: Yeah. So the teaching demos, they’re the opportunity for incoming mentors who have been matched with a student to be able to kind of review some general tips and tricks essentially of, you know, how to kind of engage with the student initially, because we have a lot of mentors who come in with previous teaching experience, obviously, but with a particular format that we are trying to support. Sometimes it’s a little bit different, right? Because you mentioned earlier, Emily, about how like most of these teaching opportunities are typically in groups, which kind of affords a certain social flexibility. But when it’s, one-on-one, it’s a slightly different architecture, which requires, you know, a little bit more of a, like how do you motivate maybe a shy student or how do you engage with a student who’s very enthusiastic and maybe needs to kind of regain some semblance of focus? You know, those are just little things that can come up, but we, as, you know, mentor support team members, we want to make sure that mentors feel like they have access to the information that they’ll need to be as successful as possible with students, because their success very directly affects the success of the students. Right? So we want to make sure that we’re providing that kind of support.

Best Advice for an Early-Career PhD

28:55 Emily: I’m so glad to hear that you’re not just being thrown into like, as happens so often in academia, you’re just being thrown into a situation and expect that you already know what to do, and there’s no like clear way to go for help. Okay. That’s really good to hear. Awesome. So people know where they can go next and we will just wrap up by, I’ll ask you the same question that I ask of everyone that I interview on the podcast, which is what is your best financial advice for an early-career PhD? And Jin, why don’t you go first?

29:22 Jin: That is a million-dollar question. I would say be on top of your savings and make sure that you are saving at least a little bit every month. I know a lot of people, you know, also have student loans to deal with and other things. But I think what was really helpful for me is like really learning how to budget and make sure that on a weekly basis or even on a daily basis, I know how much is coming in and out of my accounts. And also if you’re able to, you know, have a little bit of fun as well, be kind to yourself because I think being a PhD student or any graduate student is really hard mentally and intellectually. And if you have, you know, a little bit of extra funds, whether it’s through Polygence or some other side hustle, treat yourself to something from time to time and just be kind to yourself because this is a marathon, not a sprint.

30:11 Stephen: Yeah. Well, for me, it works out best to use an Excel sheet honestly, right? For the budgeting. And I think that it’s good to kind of orchestrate what is good for you. For some people, they want to spend more money on food. Some people want to spend more money on free time, hobbies, whatever it might be. But I think kind of looking at what you have available to yourself, setting aside, obviously, a column for savings just for who knows what, but, you know, as Jin was saying, being able to kind of establish something to give yourself a break every once in a while and provide yourself some semblance of excitement, I think is really key. Because once you have that, you won’t feel the need to maybe overspend unnecessarily in certain segments of your life. And so I think that that can really be a great way to get the most out of what you have available as a grad student. For sure.

31:00 Emily: You both articulated that so well. Thank you so much for joining me on this episode and I hope that you have a great season of recruiting mentors. Hopefully, a few from this podcast.

31:10 Jin: Thank you, thanks for having us.

Outtro

31:10 Emily: Listeners, thank you for joining me for this episode. PFforPhds.com/podcast is the hub for the Personal Finance for PhDs Podcast. On that page are links to all the episode show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media, with an email listserv, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license prerecorded workshops on taxes. Four, subscribe to my mailing list at PFforPhds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember you don’t have to have a PhD to succeed with personal finance, but it helps! The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio, and show notes creation by Meryem Ok.

How This Grad Student Plans to Contribute to His Roth IRA Using 529 Money

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In this episode, Emily interviews Ben Wills, who is starting a master’s of science at Georgia Tech at age 29. They discuss the interesting jobs and experiences that Ben had in his 20s and why he is now pursuing a graduate degree. Ben’s main financial goals for graduate school are to not accumulate any debt and to max out his Roth IRA each year, and he shares how those goals align with his values. Ben and Emily discuss how to remove money from Ben’s 529 account without penalty to supplement his stipend and keep him on track to reach his financial goals while living in Atlanta.

Links Mentioned In This Episode

529 Roth IRA grad school

Teaser

00:00 Ben: Have a little kind of metacognitive experience and, you know, watch your feelings, watch the stories that are in your head and just have, you know, a sense of curiosity like, oh, where did this come from? And how is this helping?

Introduction

00:18 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is Season 10, Episode 1, and today my guest is Ben Wills, who is starting a master’s of science at Georgia Tech at age 29. Ben relays the interesting jobs and experiences that he had in his 20s and why he is now pursuing a graduate degree. Ben’s main financial goals for graduate school are to not accumulate any debt and to max out his Roth IRA each year, and he shares how those goals align with his values. We discuss how to remove money from his 529 account without penalty to supplement his stipend and keep him on track to reach his financial goals while living in Atlanta.

01:05 Emily: I’m excited to announce that with Season 10, we’re resuming a once-per-week publication schedule! Lots of great interviews are coming your way… which means I have to record lots of great interviews. If you are interested in being a guest on this podcast, you can do exactly what Ben did, which is to go to PFforPhDs.com/podcastvolunteer/ and submit your info there. I highly encourage you to volunteer now as I will batch record interviews over the next few months that will be published through April 2022.

01:37 Emily: If you’ve listened to at least a couple of interviews you know that they are pretty low-key and casual. Many of my guests have told me that this was their first podcast interview ever and that the had a great time! Don’t worry if you’re not super sure of the topic of your interview. A lot of volunteers type a few ideas into the form and then we settle on one over email. Again, now is the time to volunteer! Go to PFforPhDs.com/podcastvolunteer/. I can’t wait to speak with you! Without further ado, here’s my interview with Ben Wills.

Will You Please Introduce Yourself Further?

02:13 Emily: I am delighted to have joining me on the podcast today Ben Wills. He is entering graduate school in fall 2021. He’s going to be a master student, and is not quite a traditional student. He’s actually 29. And so we are going to be talking about his career-to-date, why he’s pursuing graduate school, and what his financial goals are going to be as a person with a little bit more financial experience than someone coming into graduate school right out of college. So, Ben, thank you so much for volunteering to be on the podcast. And will you please introduce yourself a little bit further?

02:42 Ben: Sure thing, thanks for having me. Ben Wills, again, I use he/him pronouns as you got right. I am 29. I studied cognitive science as an undergrad way back when, at this point, and basically since undergrad, I’ve done kind of a potpourri of fun, like life-building, resume-building sorts of experiences as I’ve kind of approached it. So I spent an AmeriCorps year in Juneau, Alaska working with men who committed domestic violence and betters intervention programs. Then I worked at a law firm doing disability law for a couple of years, and I got funding from my Alma mater to do some research in Australia with a research mentor. And then I got my current job, which is, I’m a project manager and research assistant at a bioethics think tank in New York. And I’ve been here for almost three years and coming to the end of my tenure.

03:34 Emily: Wow. Let’s discuss that further in a minute. That was exciting. What is the program that you’re going into and where will you be?

03:40 Ben: Yeah, I am going to be starting a master’s in science in the history and sociology of technology and science at Georgia tech.

Work Experiences Prior to Master’s

03:49 Emily: All right. Congrats. And that is a mouthful. My graduate degree has many syllables as well and many words that sort of trip people up who aren’t in the field. So that’s fun. Well, yeah. Tell us more about these work experiences and like maybe was there a direction you were going in or you were just kind of looking for that like interesting, fun, next thing? Like how did that go?

04:09 Ben: Yeah, I basically knew that I will probably end up in a career where it’s kind of my career. You know, right now I’m looking at kind of going into a law or public policy sort of space after this degree. And if I get really sucked into, maybe academia. I kind of saw opportunities and did what felt right at the time. So for the AmeriCorps program, I was in college, I was working on a senior thesis, and I was just so focused on me and my work that I really felt like I needed to kind of turn my attention outwards. And so doing a year where it’s called a service year and the particular program I was in we were living in an intentional community, all like working in social service organizations, and we had a very kind of structured experience. And it was really perfect for me.

05:00 Ben: After focusing on magnetic resonance imaging of people and researching what the self is with a neuro imaging scanner, such a thing can be done, to focusing on, you know, humans and what people’s needs are and kind of like social context. So that was really important and generative for me. And then after that, I moved back home to my folks and I’ve been interested in law for a while, and I was fortunate enough to be connected to someone who was looking for a legal assistant. And so I started working at a law firm downtown. And then yeah, my Alma mater has this kind of pocket of money that you can apply to called the Maguire Fellowship. And you can basically use it to, it’s a competitive fellowship, but you can use it to fund study or independent research abroad.

05:51 Ben: And I had read a book called Delusions of Gender by Cordelia Fine in college that was really cool to me because she was one of the first people that I had read who within science talked about, kind of like, the social construct of science. And, you know, if you have scientists with, you know, gendered expectations of what, you know, men and women and other people’s kind of reality is, then those expectations will be born out in their research methods and their results. And that kind of blew my mind and I wanted to work with her. And so, you know, I just emailed her and said, Hey, if I get some money, can I come work with you? And she said, sure. So I applied for it and got it. So I was in Melbourne, Australia for a year.

06:29 Ben: Then, yeah, I was kind of testing what does law look like? What does academia look like? What is the intersection of the two kind of in a public policy sort of facing academic sort of situation? That’s where I am now, which is a place called the Hastings Center. And I’d actually taken a class with one of the scholars at my school, Vassar. He had adjuncted there, and his name is Erik Parens, and I took a class with him on the post-human future which is all about, you know, gene editing humans and all this sort of wild cool stuff. And I thought it was great. And I kept that kind of organization in the back of my mind when I was in Australia, applied to a project manager research assistant position there and got it. So I flew back to Oregon, bought a car, and 10 days later, I was in New York, starting up a new job.

Decision to Pursue Master’s in Science

07:20 Emily: Wow. This is so exciting. And what brought you specifically to the decision to pursue the master’s in science over maybe a law degree or some other kind of further education that you might do?

07:31 Ben: Yeah, so I think, you know, at this point I’m really interested in kind of doing more of an applied kind of work. So, you know, compared to the kind of academic environment that I’m interested in, which is, you know, a little bit more social science, humanities, I’m interested, you know, in terms of topic areas that I’m interested in. I was interested in doing more of an applied thing and, you know, when you’re going to law school, when you’re doing a terminal master’s in public policy, for example, those are kind of like, you know, they’re vocational schools basically. You’re getting a degree and you’re learning skills, and you’re learning a way of thinking. And I still had questions that I want to answer and kind of ways of thinking and topics of exploring. I’m particularly interested in direct consumer telemedicine like Hims and Hers and Roman.

08:15 Ben: If you’ve ever seen subway ads with phallic cacti or on your Instagram feed, those are advertisements from these direct to consumer telemedicine startups that I’m interested in kind of researching their kind of ethical implications. And I want to explore this more and you can’t really do that, you know, in law school. But I didn’t want to commit to a whole PhD, and Georgia Tech’s program is interdisciplinary. They have people who are coming from history of technology, coming from sociology of technology, also medical sociology. They have folks, faculty there, and it seemed like a great opportunity to kind of learn more about what I’m interested in without having to commit to a whole PhD to do it. And also, I was lucky enough to get funding to do that, which was a real difference maker.

09:03 Emily: Yeah, I was just going to say, I think the funding, like it’s clear from your work history. Like you’ve had some, not really jobs, but they come with money, right? Like the AmeriCorps thing, the fellowship that you did, or whatever it was, in Australia. So you have found a way to get money, at least some, while you’re still exploring these different areas. And the masters seems to be an extension of that as well.

09:25 Ben: I think that’s fair to say. Yeah, I definitely wouldn’t have done this program if I hadn’t gotten funding. I’m only going to take on debt for something that has a little bit more kind of monetizable potential.

Shifts in Money Mindset: From College to Present

09:38 Emily: Well, yeah, let’s talk more about the money stuff then. Through these various different jobs and experiences that you had since college, or maybe even before then, you know, what do you know about money or what is your money mindset right now that you think is different than what it was for you coming out of college or going into college?

09:57 Ben: Yeah, that’s a great question. I think college is a really weird time for finances. If you have the privilege that I did going to school, you know, I had to go to a school that had really good need-based financial aid, but I wasn’t financially independent. I didn’t have to make sure that I could afford rent and stuff. I was living on campus. And so I didn’t quite know how money worked really. So, and then living in Alaska, we all kind of shared expenses. Everything was very structured. So it was kind of, you know, the kiddie pool version of understanding what it is like to be a person who lives in a world where everything costs something. And so I think it was about the time I was 24 that I started living on my own for the first time, got a lease with a friend, and I started learning how things work. But of course I had some kind of money mindsets that I came up with.

10:48 Ben: And some of those were things like, my folks are very frugal and they went through a pretty lean time when I was in middle school. And so I definitely have a frugal kind of ethic. And I don’t spend money that I don’t need to. And I, you know, learned things like, you know, take advantage of credit card intro offers, but don’t carry a balance ever, ever, ever, or it’s not worth it. You know? So I was really lucky to learn some pretty smart ways of thinking about money from my folks. And also my mom does kind of investing almost as a hobby. She gets really into, you know, managing my dad’s and hers, you know, retirement finances, and, you know, thinking about how, you know, the best way to kind of help them to retire. She’s 10 years older than my dad and close to retirement. So this is something that’s very much on her mind and I’ve learned a lot from what she’s been able to learn, which I consider myself very lucky. Because I think, you know, this kind of, what you don’t know costs you. And that’s not fair, but I’m glad that I know what I know.

11:47 Emily: I’m really interested in hearing more about your AmeriCorps experience in particular, because I don’t think I’ve interviewed anyone on the podcast who did AmeriCorps, we haven’t had a detailed discussion about it. But I, as a person who didn’t do it, kind of think about AmeriCorps as even more financially difficult than your average grad student situation, like living on less. And I understand a lot of it is like, it has to be subsidized like your housing and your food and so forth in many places. So how do you think that you having had an AmeriCorps experience in your past, how do you think that specifically affects how you’re thinking about graduate school and your finances in graduate school?

12:25 Ben: Yeah. Great question. I think, so the interesting thing is, so it’s an AmeriCorps program, but it was AmeriCorps-funded to an organization called Jesuit Volunteer Corps Northwest, which has existed since before AmeriCorps existed. And so they take funding from the federal government for that, but they, you know, they already have a house where I lived, you know, they put me with these other people. And you know, the house’s rent is like prearranged with the landlord. So there’s a lot of that sort of stuff, which is so stressful about moving to a new place and expensive about moving to a new place. You know, it’s already furnished. The house just gets, you know, new people every year. So that was great. But you’re right. We had very little money. You know, we had, I think like $180 a month for fun, a hundred dollars a month for fun total. That’s if you want a burger, if you want a beer, if you want to, you know, take an Uber, whatever. You know, and we were challenged to not access any money that we had saved, but to actually try to live within our means.

13:27 Ben: And so I know, you know, preparing me for grad school. I know that I can live leanly. We, I think our whole house lived, we were six people and we spent $80 a week on food. Like we ate a lot of rice and beans, and if it’s beans and rice then that’s two dishes. You know, so I don’t intend to be living quite as lean, but I know that like, you know, I know that I can do that. And I definitely have some kind of ethic about like, do I really, is it going to be that much worse to do the easier option and save a lot of money, you know, for any particular thing? One example of that ethic is, you know, when I flew from Australia back to Portland at the end of my tenure, it was like $400 cheaper to fly to Seattle and then take a train down.

14:13 Ben: And so I did that. And you know, it’s kind of looking for that sort of thing. I think that’s a little bit of a mindset that I’ve picked up with my family. It was reinforced with AmeriCorps. And just one more thing quickly on that, you know, there’s definitely some negative sides to, you know, I think I still have a little bit of kind of a food scarcity mindset, you know, I’m always like, Hmm, this fridge is looking a little bare. You know, because we did run lean, you know, so there’s positives and negatives as well, but that was all part of it. And I’m, I’m really glad for the experience.

Financial Goals for Graduate School

14:40 Emily: I can’t remember where I heard this from, but it was recently and it was some well-known personal finance personality who phrased it something like spending money, like this is this person’s default mindset. Spending money is a failure of creativity. Like you can get anything or just about anything for no money, little money. And it’s only a matter of, do you want to put in the effort to be creative and you know, maybe take some extra time or something? Or do you want to go, as you were just saying, the easy route, which is spending a little bit more money to get, you know, the convenient option. So I’m not, I mean, that’s a very extreme view, but I can see a little bit of that, you know, in, in what you were describing. So going into graduate school again with your stipend, do you want to share what your stipend is by the way?

15:28 Ben: Yeah, so the standard graduate stipend is about $18,000. I have a little internal fellowship on top of that. That brings me up to about 22 or 23. And then I can also work as a research assistant for a faculty member and also work a little bit over the summer. So my understanding is that I can make between 30 and up to $36,000 a year, most likely.

15:57 Emily: And are you, have you already arranged for that assistantship or do you know that’s coming or is it like a possibility?

16:04 Ben: It sounds like an “everybody who wants one can get one” kind of a thing, is my understanding. So I haven’t started that process yet.

16:13 Emily: Okay. I feel a little bit relieved because when you said 18, I was going, oh no, Atlanta. Wow. Okay. But no 30. Yeah. Okay. We’re getting into a reasonable range there for, you know, for a graduate student. And so knowing that stipend or that range that you’ll be receiving, you know, looking at that, looking at the cost of living and so forth, what are your financial goals, if any, for graduate school?

16:35 Ben: Yeah, I think I have two big goals, which is to not go into debt, and continue to try to fully fund my retirement. I think that’s maybe a big thing that sets me apart from just people who are just coming out of undergrad is I’ve realized and, you know, thanks to folks in my life who have impressed this upon me, how important it is to, you know, save for retirement. And if literally, if all you do is max out your Roth IRA from the time you’re like 19 or 20, you can probably retire comfortably. You know, if you just do that, or comfortably enough. And that’s huge. And I know, you know, that what I wasn’t contributing as a 20 or 21-year-old, it’s all the more important that I, you know, max out my Roth IRA contributions now. So when I talked about that with the graduate advisor, that was, you know, that’s something that certainly wasn’t on her mind for us. And maybe a lot of graduate students aren’t thinking about that, you know, but for me, I’m not expecting to come into a lot of money later in life, and I want to be financially stable, and I don’t want to work until I’m 95. So those are the two main things, I think. Also have little fun maybe.

Retirement Savings History

17:45 Emily: Yeah, well, fun can be frugal, but if you want to max out that Roth IRA, there’s a definite dollar sign attached to that. What’s been your history with retirement investing through these various different jobs? Have you been able to do some or has it been kind of patchy?

17:59 Ben: Hmm. Yeah, I think it’s depended. I have typically, I think after the AmeriCorps year, I have contributed at least some to my Roth IRA. With my current job, they have a fantastic 403(b) program, which is like a 401(k) for nonprofits, I think. And they do a match, too. So what I do is I do the minimum for the full match from them. And then I contribute because I like Vanguard better than TIAA-CREF. I contribute to my Roth IRA separately. So I’m doing the best now that I’ve ever done as far as that’s concerned, but I have been contributing you know, anywhere from a couple thousand to the cap for the past five years or so.

18:45 Emily: Yeah. That’s great. And I love that you have these two goals that you articulated, don’t go into debt and max out the Roth IRA. I mean, as you said, like just those two things alone, you’re going to be in such good shape. You know, if you can do that through your master’s program or if you decide to go on for the PhD as well. Those are two very, very strong goals. How do you think you’re going to make it happen? Like, have you done any projections about cost of living in Atlanta? And you said you’re moving from New York there, right? So it’s going to be a big cost of living difference.

19:14 Ben: Yeah, actually it’s interesting. So I’m in Beacon, New York right now, which is in the mid-Hudson Valley. And Beacon is not cheap. My current living situation with utilities is probably $750, $800 a month, a room in a house. And so I think it’s realistic to get about that in Atlanta, just from the little bit of Craigslist slewthing that I’ve done so far. So I haven’t done a lot of planning. For all the stuff that I know about what you’re supposed to do with money, I’m not very good at actually budgeting for, for worse. But I think my mindset is assuming that expenses are not going to be that much different.

19:55 Emily: Okay. And when is your, when are you planning on moving?

20:01 Ben: My family is going camping in mid-August. And so I think I’m going to try to move right after that, which will mean that I’ll be like moving into a place and starting school in like five days, or something like that, in the mid-August heat and humidity which will be a heck of a time. But that’s what I’m thinking about right now.

529 Tax-Advantaged Savings Account

20:20 Emily: Yeah, that’s great. We’re recording this in April, 2021. So you still have quite a bit of time to be planning and finding a place and finding that assistantship and so forth. And I understand as well that you have a 529 that you wanted to talk about. And so for the listeners who do not know what that is, do you want to explain briefly what a 529 is and how you got one?

20:42 Ben: Yeah. Correct me if I’m wrong, but my understanding of a 529 is it’s a tax-advantaged savings account specifically for qualified educational expenses. So you can put money in there and then, you know, there are tax advantages that I think depends on the state at least to what the tax advantages are, but then you can spend that money on things like tuition, room and board, fees, other sorts of things.

21:11 Emily: That’s exactly right. But just to add onto it, so the growth, so money that’s contributed to a 529, similar to an IRA, typically if you invest it, it’s going to grow. And that growth is tax-free as long as when you end up withdrawing it, it’s for, as you said, the 529 definition of qualified education expenses, which is like tuition and also living expenses for a full-time student. And it depends on what state you live in, whether or not there is a tax advantage on the contributions. So there’s no federal like deduction the way you could have for like a traditional IRA, but your state, depending on what state you live in, when you do the contribution, they might give you a tax break on their state tax for doing the contributions. And it’s most common for parents to do this for their children or their grandchildren or something like that. So it’s something that often people start when their children are very young, so there’s lots of time for the investments to grow.

22:02 Ben: Yeah. And to the second part of your question, in my particular case, my folks did this great thing where, you know, I was expected to contribute two or $3,000 a year to my education in undergrad that I made from working over the summers. And my folks said, we’re going to take that money, instead of sending it to Vassar, basically, I think, we’ll cover that. And we’ll just hold it in a 529. And so when you go to grad school, you better go to grad school, when you go to grad school, that’ll be there and have grown and be there waiting for you.

Commercial

22:39 Emily: Emily here for a brief interlude. These action items are for you if you recently switched or will soon switch onto non-W2 fellowship income as a grad student, postdoc, or post-bac and are not having income tax withheld from your stipend or salary. Action item number one: fill out the estimated tax worksheet in form 1040ES. This worksheet will estimate how much income tax you will owe in 2021 and tell you whether you are required to make manual tax payments on a quarterly basis. The next quarterly estimated tax due date is September 15th, 2021. Action item number two: whether you are required to make estimated tax payments or pay a lump sum at tax time, open a separate named savings account for your future tax payments, calculate the fraction of each paycheck that will ultimately go toward tax, and set up an automated recurring transfer from your checking account to your tax savings account and to prepare for that bill. This is what I call a system of self-withholding, and I suggest putting it in place starting with your very first fellowship paycheck so that you don’t get into a financial bind when the payment deadline arrives. If you need some help with the estimated tax worksheet, or want to ask me a question, please join my workshop, Quarterly Estimated Tax for Fellowship Recipients. It explains every line of the worksheet and answers common questions that PhD trainees have about estimated tax. Go to PFforPhds.com/QETax, to learn more about and join the workshop. Now, back to our interview.

529: To Use or Not to Use?

24:19 Emily: Yeah, so you have this nice little nest egg that’s available to you but is kind of specifically tied for education expenses. So what are your thoughts about that? Like, is it something that you want to draw on during graduate school or that you feel you have to, or what are your thoughts?

24:35 Ben: Yeah, well, it’s kind of a use it, or it just sits there sort of thing. So I guess if I didn’t use it, then I would have to be doing something like giving it to my sister if she just needs it or giving it to a cousin or something like that, I suppose. So I definitely want to use it. And one of the questions in my head is like, does it make sense to use it now? Or if I’m probably, but not definitely, going to something like law school or a public policy program or even a PhD, you know, I could definitely use it for those. So would it make more sense to use it now or later, is one question I have. That’s kind of what I’m thinking about. And the way I’ve thought it is, basically, it would be really hard to max out my Roth IRA while earning between 30 and $36,000 a year at the most. But if I have, you know, the 529 is worth about $12,000. If I pull $6,000 a year from the Roth IRA, or excuse me from the 529, that covers my Roth IRA contribution. So it would be as if I was making 36 to $42,000 a year and maxing my Roth IRA contribution. And that sounds pretty good to me. That sounds doable. So that’s kind of how I’m thinking about it is making that possible.

25:56 Emily: Yeah, I was thinking kind of the same thing, because you were phrasing it just now as like using the money in the 529, but I’m thinking about it more as getting the money out of the 529 in a reasonable way where you’re not going to be taxed and all the growth and so forth. Just getting it out so that you can use it for whatever, if that is your Roth IRA contribution, I mean, money is fungible, right? So it could be the Roth IRA. It could be anything else. It doesn’t really matter. But yeah, to give you that extra cushion, and then let’s say it was sort of a, it feels like almost direct, like withdrawal from the 529 and a contribution $6,000 to the IRA. All you’re doing then is making the money more flexible actually, right? Because in the first case, it can only be used for these well, without penalty, can only be used for these qualified education expenses, versus with the Roth IRA, well, you can withdraw your contributions at any time or you can leave it and let it grow for the decades and, you know, withdraw it tax-free and so forth.

26:50 Emily: So yeah, I really see it more of it as not using the money, but just transferring the money to some other place in an indirect way, which you can only do without taxes and penalties and so forth when you have qualified education expenses as you do in this upcoming phase of life. Another thing to think about, another twist in this is, and I don’t know, I haven’t looked it up for Georgia Tech, but some, especially public, universities do allow their graduate students who are employees to contribute to the university’s 403(b) or 457. So that’s also something to look into before you, again, make a final decision about what to do with the 529 is, do I have access not only to a Roth IRA, but also a 403(b) or 457? And could I even supercharge my retirement savings above that $6K per year level? Yeah. So something else to think about.

457 Retirement Plan

27:39 Ben: What’s a 457?

27:42 Emily: 457 is another tax-advantaged retirement account. It’s a little bit similar to a 401(k). So 401(k) and 403(b) are very similar to one another, as you said. One is in the private sector, one is in the nonprofit sector. A 457 was originally constructed, I guess, for like highly-compensated employees. And so it’s available usually in addition to a 403(b) or something similar. But in some cases, at universities, it seems that it’s often, if they have one, it’s sometimes available to any employee, not just, you know, C-suite or whatever. So just something to look into whether or not there is one, whether or not you’re eligible for it. And the 457 has some slightly different benefits than a 403(b) does. If I remember correctly, you can actually access the money more easily than you can in a 403(b), like you don’t have to be like retirement age necessarily to do it. So I’m speaking a little bit out of my like zone of competency here, but yes, it’s sometimes available to graduate student employees.

28:43 Ben: Cool. Thanks.

What Are Qualified Education Expenses?

28:46 Emily: The other thing that I wanted to hit on with this discussion of 529s is what are qualified education expenses. And, you know, longtime listeners of the podcast or readers of my other material know that that term, qualified education expenses, is something that we talk about a lot with respect to figuring out your income tax as a graduate student. Now, and if you have dived really deep into my material, you know that there’s a different definition of qualified education expense for each different tax benefit that you might be talking about. And so it turns out that 529s, or qualified tuition programs, have their own definition of qualified education expenses that is vastly different from the other ones. So you mentioned earlier that qualified education expenses include tuition fees. You know, we’re, we’re accustomed to those things being qualified education expenses, but in the case of 529s, that also includes your expected living expenses.

29:38 Emily: I can’t remember what’s the exact term the universities use, like cost of attendance, I think, which is inclusive of both the educational expenses and also reasonable living expenses, whether you would be living on campus or off campus. Cost of attendance is something that I think comes up a lot for undergrads, but not so much for funded graduate students, but it’s really relevant for our conversation of getting money out of a 529. And one really good episode to listen to which I did previously on the podcast is season two, episode nine, with Seonwoo Lee. And we’re talking about 529s in that episode as well, but it’s from a different, a little bit of a different perspective, but it’s still a conversation about what is a qualified education expense and what are the anticipated educational expenses that you can use to remove money from a 529 without penalty. And so in your case, have you calculated like how much you would be able to get out of the 529 per year using that anticipated cost of attendance?

30:34 Ben: Yeah, so I think the, you know, again I have about 12 and change thousand dollars in there. And the estimated cost of attendance I think is about just by happenstance, Seonwoo also goes to Georgia Tech. So he mentioned that it was about $10,000. So if those numbers are still good, then, tell me if I’m wrong, but I feel like I’m pretty in the clear. You know, I’ll probably take about half of the 529 out each of the two years I’m in the program and that’ll go underneath the $10,000. And even if I do the thing that he was talking about, contribute $2,000 into a Georgia state 529 and pull it out for the tax advantage, credit deduction, whatever it is that’ll still be under the total of $10,000. I don’t know if that’s how it works. I assumed that I couldn’t like, yeah, like pull $10,000 out and then add $2,000 at the Georgia one and then be over my cost of attendance. I don’t know, but I don’t think I would do that anyway.

31:35 Emily: Yeah, that sounds right to me. So the way that you calculate how much money you could get out of a 529 each year is you have to take the total cost of attendance, and then you have to subtract from that all of your tax-free money. So in your case, if you’re fully funded, it would be like tuition and fees and so forth. So the cost of attendance is going to be reduced to, again, if you’re fully funded, it’s essentially just the portion of the cost of attendance that is like your living expenses. And so, I don’t know, $10,000 per year sounds really low to me, but I would have to look at the numbers too. So whatever it is, as long as you don’t have tax-free funding that is already paying for that, then that’s your cap for removing money from the 529 for that given year. And anyway, all of this, I was just reviewing it before our conversation. All of this is in publication 970 chapter eight, which is called qualified tuition program.

529 is Typically NOT in the Name of the Student

32:30 Emily: Yeah. Anything else you want to talk about regarding 529s? It’s an interesting and unusual topic for me.

32:36 Ben: Maybe just, this might be useful for listeners is I just remember that my mom did something kind of tricky or clever with 529s where she had it like, in her name, not in my name, because if it was in my name for undergrad, they would’ve taken all that money. And if it was in her name, I guess they, you know, the financial aid office looked at it differently or something like that. I never got the full story from her, but is that right? Is that how that works?

33:08 Emily: I don’t know exactly the mechanics of it, but it is recommended that 529 money be in the name of the parent or the grandparent, whoever’s doing the contributing, not in the name of the student. And I do think it’s for those FAFSA type calculations that it’s again, weighted less heavily in the assets of the family if it’s held technically by the parent. And in a 529, you have to designate a beneficiary. So you’re presumably the designated beneficiary on this particular 529, but it’s very easy to switch the beneficiary. So the money still belongs to your parents, so they could, you know, yoinks it away from you if they wanted to, because it’s theirs until it’s actually, you know, removed for your qualified education expenses and so forth. But that’s why it’s really easy to just choose a different beneficiary and move the money from, you know, let’s say in the case of like my family. So I’m about to start 529s for my two children. And I don’t really care whose beneficiary name is on it because I’m just considering it for either child. And if the oldest one has some leftover, I would just switch it to the younger one because I’m thinking of it as my money, right? Until later on in life. So yeah, so it’s really easy to switch the beneficiary and it does make sense for the contributor or the parent or whoever to hold it.

34:20 Ben: Okay.

Best Financial Advice for Another Early-Career Grad Student

34:22 Emily: Yeah. Well, it’s been so much fun to talk with you, Ben, and it’s a very kind of different story for the podcast listeners. So I’m excited about that. The question that I end all my interviews with is what is your best financial advice for another early-career PhD or graduate student perhaps in your case?

34:40 Ben: I think of two things. One is to remember that like, money is real. And sometimes you feel like you can plug your ears and shut your eyes and it’s less real, but it’s still sitting there or not sitting there. So for me, it’s really helpful to try to develop a relationship with my money where I’m not, you know, checking my balance on my phone and going, you know, I just, I don’t want to have a contentious emotional relationship with money. You know, like, the world is structured to make us feel nervous about money. And I don’t think that it’s a healthy relationship to have if you have the ability to not be nervous about it in that way. So, you know, I try to check it more often, just, you know, just so I know what’s going on and there’s no mysteries, because it’s all internal to me, it’s all my own money.

35:33 Ben: And the other thing is there’s this really insidious idea that like, in order to feel like, like we’re told that we need to buy things for ourselves because we deserve it or because we need to like treat ourselves. And so people, you know, like I just saw this person who was like living in her parents’ house, not a lot of money, she’s like, should I buy like the iPhone, like 12, actually the iPhone 12, you know, gajillion or something like that. And like, you know, you do what you want with your money. I’m not here to like make moral judgements, but she was doing it in kind of the mindset of like, I want to treat myself or I deserve it or that sort of thing. And that is just a load of bologna that like marketers have worked really hard on for the past 20 years to be like, you deserve this meal, you deserve this trip, you know?

36:20 Ben: And like the more we can extract ourselves from like taking in that, like marketing lingo of like what we deserve and don’t deserve based on you know, like what is expensive or not expensive, if we can kind of like, you know, develop a more internal sense of like, you know, rewarding ourselves and not have it be based on how expensive something is. Like, you know, I love myself a lot. So I’m spending, you know, more on myself to get the nicer thing or whatever, you know, it’s like, I don’t know, it just makes me kind of sad. And so I guess my advice is to like, you know, kind of have a little kind of metacognitive experience and, you know, watch your feelings, watch the stories that are in your head, and just have, you know, a sense of curiosity, like, oh, where did this come from? And how is this helping me?

37:10 Emily: Wow. Yeah. I find both of those points to be super insightful. And actually we could probably do a whole other episode just on what you just mentioned about like observing feelings that arise in yourself when you think about money and so forth. I love that point, but it’s a great one to end on. And Ben, thank you so much for joining me today. It was really fun to talk with you.

37:28 Ben: Yeah, it was a pleasure. Thank you.

Outtro

37:31 Emily: Listeners. Thank you for joining me for this episode. PFforPhds.com/podcast is the hub for the Personal Finance for PhDs Podcast. On that page are links to all the episodes show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media, with an email listserv, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license prerecorded workshops on taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

How This JD/PhD Overcame Money Terror and Avoidance

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In this episode, Emily interviews Dr. Michelle Thompson, who has had multiple careers as a lawyer, an adjunct, and now a coach and business owner. Michelle observed her mother’s terror and her father’s avoidance regarding money and combined the two in her own adulthood. Emily and Michelle discuss the financial struggle of earning a low stipend as a graduate student in NYC and taking on student debt for summer research and daycare/preschool. It wasn’t until Michelle started her business that she proactively changed her relationship with money through a book and coaching. Michelle speaks to the merits of facing the dark side of your relationship with money; she is now in the best financial shape of her life.

Links Mentioned in this Episode

money mindset PhD

Teaser

00:00 Michelle: Whatever bedevils you about money, you have to look at because whatever bedevils you will sabotage your relationship with money. Take time to do that work and I promise you whatever is screwing with you with money will screw with you about actually getting the doctorate done.

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.

00:32 Emily: This is Season 9, Episode 6, and today my guest is Dr. Michelle Thompson, who has had multiple careers as a lawyer, an adjunct, and now a coach and business owner. Michelle observed her mother’s terror and her father’s avoidance regarding money and combined the two in her own adulthood. Michelle and I discuss the financial struggle of earning a low stipend as a graduate student in New York City and taking on student debt for summer research and daycare and preschool. It wasn’t until Michelle started her business that she proactively changed her relationship with money through a book and coaching. Michelle speaks to the merits of facing the dark side of your relationship with money; she is now in the best financial shape of her life. Quick content warning. There is a brief mention of suicidal ideation in the interview.

01:24 Emily: It’s the end of July, and I know that taxes are probably the furthest thing from your mind at the moment. However, I do have a special request for every one of you who is going to be on fellowship in the upcoming academic year, whether as a new fellow or continuing fellow. If your university does not offer automatic income tax withholding on non-W-2 fellowship income: Would you please request that my workshop, Quarterly Estimated Tax for Fellowship Recipients, be purchased on behalf of those who want to take it? You could make this request of your graduate school, postdoc office, department, graduate student association, etc.

01:57 Emily: The workshop assists graduate student and postdoc fellowship recipients who are not having income tax withheld from their stipends or salaries figure out whether they are required to pay estimated tax and if so how much and when. The workshop consists of numerous short videos, a spreadsheet, and a live Q&A call just prior to the next quarterly deadline. You can find more details at PF for PhDs dot com slash q e tax. That’s q for quarterly e for estimated T A X.

02:28 Emily: I’ve been enrolling individuals in this workshop for several years, and in the last year have branched out to bulk purchases for university offices and groups. Purchasing this workshop on behalf of students and postdocs is incredibly helpful because it can reach people who aren’t even clued in about the possibility of having to pay quarterly estimated tax or who are unable to pay for the workshop.

02:51 Emily: I’m making this request now because the next quarterly deadline is September 15, 2021, and the office or group you approach may need some time to arrange the purchase. If they are interested, they can get in touch with me at emily at PF for PhDs dot com. The start of the academic year is the perfect time to learn about estimated tax because you can start saving for your eventual payment from your very first fellowship paycheck.

03:18 Emily: Thank you for helping me spread the word about this workshop and prevent financial hardship next tax season!

Book Giveaway

03:31 Emily: Now onto the book giveaway contest!

03:36 Emily: In July 2021 I’m giving away one copy of Get Good with Money: Ten Simple Steps to Becoming Financially Whole by Tiffany ‘The Budgetnista’ Aliche, which is the Personal Finance for PhDs Community Book Club selection for September 2021. Everyone who enters the contest during July will have a chance to win a copy of this book.

03:56 Emily: Not only will Get Good with Money be our Book Club selection for September, but we will also devote our monthly Challenge to assessing and working through the ten aspects of financial wholeness as individuals.

04:09 Emily: If you would like to enter the giveaway contest, please rate AND REVIEW this podcast on Apple Podcasts, take a screenshot of your review, and email it to me at emily at PFforPhDs dot com. I’ll choose a winner at the end of July from all the entries. You can find full instructions at PFforPhDs.com/podcast.

04:31 Emily: Without further ado, here’s my interview with Dr. Michelle Thompson.

Will You Please Introduce Yourself Further?

04:41 Emily: I’m delighted to have joining me on the podcast today, Dr. Michelle Thompson. She’s had quite a career. She is a JD and a PhD, actually. She’s now self-employed, although she’s had many other jobs in the meantime, and what we’re going to talk through today is kind of her life in stages and also what she’s learned at each stage, the kind of money mindset that she developed at each stage. She has some very interesting things to say to us about academia. I’m really looking forward to this conversation. Michelle, thank you so much for joining me and would you please introduce yourself to the audience a little bit further?

05:14 Michelle: Absolutely! It’s my pleasure to be here. Thank you for having me. I am the founder of a boutique coaching firm called Michelle Dionne Thompson Coaching and Consulting. I work with clients to marry their purpose with their expertise in communities. In addition to that, I do teach part time. I love to teach. I love being with college students. I teach in the black studies department at City College of New York. And I am currently a publishing scholar as well. I’m turning my dissertation into a monograph. It’s called Resistant Vision: The post-emancipation realities of Jamaican’s Accompong Maroons from 1842 to 1901. Because I’m a glutton for punishment, my first career rodeo was as a lawyer. I was a member of the inaugural class of what is now Equal Justice Works fellows. And I used that fellowship to deliver legal services to people living with AIDS in Anacostia, in Washington, DC. And after that, I negotiated collective bargaining agreements with service employees international union district 1199, EDC in Baltimore, Maryland, and Washington DC.

06:20 Emily: Wow. I wish that we were going to talk more about your career specifically today. It sounds fascinating. But where you are going to focus on the finances through a few of those stages.

Money Mindset Developed in Early Childhood

06:30 Emily: Let’s start where all good therapy sessions do in your childhood. What money mindsets did you observe in your parents and also develop during your childhood?

06:43 Michelle: My parents were raised poor people from Jamaica and my mom immigrated from Jamaica to England to become a nurse. It was her goal in life and it probably opened up more than she ever thought. She was shrewd about money, but she was absolutely terrified about handling money. My mom died of dementia and at the one of the few last times that she could really comprehend her money, this I use lightly because dementia, her money situation, she actually had an estate worth over a million dollars, way more than she ever, ever thought she would ever, ever have in her natural life.

07:38 Michelle: But to get there, she was shrewd. She knew how to save. For a girl who didn’t have much food, she was blown away with how much food she could acquire with so little money in the United States. And every single time she got paid, she was absolutely terrified — “I have to pay the bills!” She’d take out her checkbook. She would balance her checkbook. She would make sure all of the transactions were recorded in the check register. She was flawless about it, but she was absolutely terrified every single time it happened. She worked at University of Chicago, hospitals and clinics for many, many years, and that allowed her to send my sister and I to those schools for many years, because we got half off of the tuition. Every single time the tuition bill came, she would be like, “Oh my gosh, I have to pay the tuition!” She would work overtime. It’s a hard life in some ways. She would have to work overtime for a few shifts and the money was there. If you think about it in the more woo-woo world, she could manifest money. That wasn’t the problem, but the energy of fear, always behind that. And I think that actually very much shaped my relationship with money as a young person and actually shaped this as a new thought. It shaped an attitude of avoidance of money.

09:10 Emily: Yeah. Wow. Thank you so much for that. That really, it passed down to you. It rubbed off on you in a way that you were treating money, thinking about money similarly. It wasn’t like you went the opposite direction. You were sort of more a little bit in line with what your mom was thinking.

09:25 Michelle: Well, the fear was totally intact. I think as an adult, that’s what I grappled with the fear of not having money. But instead of being on top of it, I would avoid handling it. And my dad apparently was more of the avoidance end of things. My mom would get mad because they would get the mail and he would just set them aside. She’s like, you have to open that. She would move towards it, he would move away from it. I took his move away from it and the fear.

09:56 Emily: I see, I see. Actually I’m remembering there are these there’s this framework, I’ve actually talked about it on the podcast before — we’ll link the episode in the show notes — but there’s a framework around it’s called money scripts. There’s four personality types around money and I remember one of them is money vigilance. So sort of what your mom was doing, being really on top of it. And then another one is money avoidance.

10:18 Michelle: I didn’t know these scripts, but here we go.

10:21 Emily: You’re falling very neatly into those boxes sound like, but in both cases it’s motivated by fear, which is very interesting.

10:26 Michelle: Absolutely, absolutely.

10:27 Emily: Did that actually, this fear part of it, did that play into your first career choice as a lawyer? Was that like a stable thing for you financially or that you perceived it would be?

10:38 Michelle: I remember being 12 and writing down in a journal, I want to be a lawyer. And I think I wanted to be a lawyer because I knew it was a way to make sure I earned the money I needed and not have to worry about it. Earned enough money so I could avoid it, now that I think about it. Right. I do think that because I was doing public interest work, I wasn’t making that kind of money. It didn’t manifest that way, but I think that was part of the intentionality behind becoming a lawyer.

11:11 Emily: Yeah and that’s part of the public perception of lawyers, maybe, especially at that time. I think now we have maybe a better understanding, post-recession, what law careers are, but before then it’s like, oh, you know, doctor, lawyer engineer, like great salary.

Money Mindset During Law School

11:27 Emily: Let’s talk about your money mindset, money situation during law school and then as you were working as a lawyer.

11:33 Michelle: With my fellowship came up a component that was loan forgiveness, but it wasn’t mashed in the same check. They would give me two separate payments, so I would get my paycheck and then I would get the loan forgiveness. And it was the first time I’d been held that accountable for money, so every single time I got that check — again, everything was about fear — I couldn’t figure out how to save money really during that time. I think if I had the tools I have now, then I probably could have, but I couldn’t actually figure it out at the time. I was really scared of handling checking accounts. There was all of this stuff. I had actually lost a checking account. And so I was unable to open one. I can have a savings account. I was paying everything cash and I was holding onto things through a savings account or cash. My whole money systems were really very, very janky and it was spending money to pay bills. I was good about making sure I paid the rent, generally about paying my student loans, paying the utilities, but again, every single pay period, I was absolutely terrified of doing it.

12:51 Michelle: By the time I got to working at the union, it was enough time that I could reopen a checking account. And I needed a car. That was the first like huge purchase I had to make. And, oh my gosh! I did research. I’m like, okay, this is the car I want. What really, really scared me was car insurance. I started to do it and I was in my early thirties and I was like, I can’t afford to have a car. And I just stopped the process. Avoidance. I just stopped the process. I can’t do this. When I worked for a couple more months, I’m like, okay, this clearly is not going to work. I need a car. And so it was like, okay, you have to look into other insurance companies. Then I finally found All State. I’ll say it actually gave me a rate that I was like, “okay, that I can do.” But I was absolutely terrified to actually make that purchase. I was terrified to do the insurance. I would shake is I handed them the check to actually do the down payment on the car. Complete the fear that my parents brought to handling money.

14:02 Emily: So that terror was specifically that you could not actually afford the car, that you would not be able to make the payments on the loan and the payments on the insurance?

14:12 Michelle: I think going into it, that was certainly the fear. Although, clearly I had budgeted and saw, “oh, I could do this,” but I was scared about it anyway, the way that my mom was scared about tuition.

14:28 Emily: Yeah. And I guess her solution was working more with that also a solution for you, or was earning more through overtime not a possibility?

14:37 Michelle: That wasn’t a possibility but I budgeted it. I could see the budget and how it would work. I don’t think, I believed the budget, which is funny, right? But I don’t think I believed the budget. And then shortly after that, there was an opportunity. I was thinking about buying a piece of real estate and I could do it because my employer had a 401k set aside for me that I could actually use to apply to a first-time home purchase. I saw cute place. I was like, oh, wow, this would be good. Actually, it wasn’t that expensive, especially given Washington DC. I was too scared to do it. I’m like, I can’t afford this responsibility. Oh my gosh, I’d have to tear up the floors. You know what I mean? The whole, “I can’t afford it. I can’t do it. I can’t afford it. I can’t do it.” That was the recording, if you will. That was the greatest hits that I played and I backed out of it until later.

Money Mindset During the PhD

15:31 Emily: Wow. Yeah. Let’s talk about you moving towards your PhD then. Maybe a little bit about why you did that.

15:39 Michelle: Sure. So a couple of things. On my mother’s side, we’re the descendants of a community of runaway slaves called Maroons. And those were some of the earliest historical narratives I heard. I had met my partner, my current partner in Washington, DC, when I was practicing law, who was a full professor at a major public institution in the Midwest and had gotten an offer to come to a school in New York city. And she said, you could get a doctorate. And I was like, what? Because I assumed that that process was only open to people who like went from undergrad and they got like A’s and whatever. She’s like, “no, no, no, you could totally do it.” And that’s what inspired me to do it. But also having a partner who earned a lot more than I did actually provided me with a level of financial security that actually made this easier. Like it made it look like a possibility. I didn’t have to be in New York city, paying York rents, trying to cobble a life together for myself. There’s a different kind of security for the first time in my life. And as a feminist, it’s like really, really hard for me to say that, but to be real about my money story, actually being partnered did provide a level of financial security that I had never experienced before.

17:02 Emily: Yeah. I mean, of course your finances naturally always change in some degree when you partner up, but I’m wondering, were you still feeling terror? Were you still feeling avoidance? Did you ask your partner to take over not only some of the financial, like literal paying for things, but also maybe the management? How did that work out?

17:25 Michelle: I did the management, she did the paying. We actually had split it up so we would pay for things according to percentage. Like if we put our income together, if we added it all up together, my income would come to a percentage of her income, so I was responsible for that percentage of what we were doing in the household. And that’s how we set it up. I found that I was a lot less scared to handle money with a partner. There’s something about being on your own and handling it that was far more terrifying to me than doing it with somebody else.

18:01 Emily: Yeah, I think along those lines of like your relationship with money, I think does change a bit when you, when you are partnered. I really enjoyed the, um, having like sort of the team aspect, like we are working together towards these goals and I had someone to bounce ideas off of and sort of talk over decisions. And when you’re the only one responsible for your money, it’s all on you. Because it is such a taboo topic, most people don’t have an accountability partner, they talk to, or like a friend that they’re comfortable talking to about this. It’s really like you just finally have someone who you can really share and be open about these things.

18:34 Michelle: I wouldn’t go that crazy with it. I don’t feel like we ever did that. But at least I knew that, I mean, for me, it was important to know that I wasn’t going to be homeless and that I would be able to eat, which is very tight again, it’s very tied to my parents own fears because they were raised poor. So I knew that part would be covered.

18:57 Emily: And this is specifically during your PhD program, right? Salary as a lawyer, you’re doing okay. But as a PhD student, it’s a very different situation. Can you talk about what your stipend was? And you mentioned you were living in New York, can you tell us about what the finances on your side of things were?

19:13 Michelle: Sure. I was earning, I want to say $20,000 a year and nothing over the summer.

19:19 Emily: And what year was that in?

19:23 Michelle: This was 2001. I started my doctorate in 2003. I did a master’s in 2001. Yeah, I think it was something like that. Then I gave birth to my son in 2004. So I actually borrowed because you can’t have a little, little one and write anything. Like you can’t, you can’t be doing the full-time childcare. The first year I worked, I didn’t really borrow. I was a teaching assistant and that actually worked for that year, but the following year I needed to do research in Jamaica. I actually think things worked out. There was a fellowship I got, um, that was part of New York university, so that worked out that year. But the following year, when we returned to the states, that’s when I needed him to be a preschool. It’s the years between when they’re three and five, when they’re — New York city now has public preschool, but there was very little of that at the time. I couldn’t afford in terms of getting my work done to have an hour and a half of childcare. That was useless. By the time you get to an hour and a half, you could write for 15 minutes and then you’re up and you have to get the child’s again. I actually borrowed a lot to make sure that he was in preschool. That’s what I assumed on my end during graduate school and I would also borrow to get through the summers because I never could get summer funding, which is, I think that’s a really hard part of being a doctoral student, summer funding. I never could get summer funding, so I borrowed, so I could go into the field in Jamaica. Although it was cheaper to live in Jamaica, I would borrow it to go there. And, I would borrow to do my research and I would borrow to do childcare so I could do my research.

21:30 Emily: Yeah, absolutely. This is bringing another element to the conversation, which is being the parent of a child who needs full-time attention, and how to balance that with doing your dissertation. I have talked to some people who try to work and do the childcare and trade off with their partners and such, and that’s often motivated by a philosophy around like what child-rearing should be and they try to make it work. I know it’s challenging, but it’s also on the other challenging —

21:58 Michelle: I found that the person who earns the most money will do the least childcare. That’s how it worked out in my relationship. And I’m not going to negotiate about whether I need the childcare, the childcare has to happen. So that was the deal with the devil I made. Fine.

22:17 Emily: Yeah. I have another episode that I don’t know if it’ll be published before or after this one, so this might be a preview of coming events for the listener, about another story of a parent who actually became a single parent at some point during graduate school and the same kind of thing of how much student debt had to be taken out to finance the daycare and so forth for the child. And it’s another huge layer of financial pressure that can happen for PhD students who parents during that time, or already were parents before starting graduate school.

22:46 Michelle: Exactly.

Commercial

22:49 Emily: Emily here for a brief interlude!

Emily: This announcement is for prospective and first-year graduate students.

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Emily: I contributed a very comprehensive webinar to the course, titled “Set Yourself Up for Financial Success in Graduate School.” It explores the financial norms of grad school and the financial secrets of grad school. I also give you a plan for what to focus on in your finances in each season of the year that you apply to and into your first year of grad school.

Emily: If this all sounds great to you, please register at theacademicsociety.com/emily for Toyin’s free masterclass on what to expect in your first semester of grad school and the three big mistakes that keep grad students stuck in a cycle of anxiety, overwhelm, and procrastination. You’ll also learn more about how to join Grad School Prep if you’d like to go a step further. Again, that’s the academic society dot com slash e m i l y for my affiliate link for the course.

Emily: Now back to our interview.

Financial Stress during the PhD

24:16 Emily: So what does it do to a developing scholar to be under financial stress, like $20K per year in New York City, kind of financial stress?

24:26 Michelle: You know, again like this is where my spouse or partner at the time really provided. I can’t imagine what it’s like having to come up with rent in New York City on $20,000 a year. I just can’t. Actually, if I had to do that, I think I definitely would’ve practiced law part-time. I would’ve by hook or crook figured out how to do it and it would have taken me a lot more time to finish my doctorate. It’s just because they’re two huge things. I didn’t have to do that. My partner, we were in university housing, so we were paying far less rent. It was actually embarrassing. I had colleagues who lived in my building who were doctoral students. They paid more for rent than we did. We had a lot more space in our apartment. That was actually something that was in place. For me, you house me, you feed me, I’m good. I could cover the food, the housing was covered and it was okay for me.

Michelle: What was stressful was how am I going to fund the summers? It was always like, I guess I’m going to borrow. That was what was hard for me. For me, I just have to know there’s a pot of money I can go to, to make it work. I actually did a good job of saying, I have this much for the summer, this is how I’m going to handle that. Or, okay, good. This is the, this is the pot of money for childcare. Got it. I think at another point in my life, because I felt less secure, I might’ve dipped into that for other things and then would always be scrambling to make it up. That actually didn’t happen. Childcare always got paid. I could always make my summer bills. I could always pay for the flights. That actually worked out. And so I think in some ways I wasn’t as pressed, but I was borrowing out of my ears to actually make it happen.

26:19 Emily: And did financing your PhD feel different than financing your JD?

26:24 Michelle: No. Because I borrowed to get my JD. But for the JD, I went to a state school and they actually gave me, I wasn’t an Iowa resident, but they actually gave me in-state tuition, so it was so little money. It was ridiculous.

26:40 Emily: I guess I’m just thinking about like the norms in fields, like it’s normal to borrow for your JD. It’s fantastic if you get a discount or get a scholarship or whatever. For the PhD, it’s much more, well, it’s kind of field dependent, whether or not it’s normal to borrow. And I’m sure it’s city dependent. I mean, in places like New York, it’s gonna be more likely.

27:00 Michelle: I find in the humanities it also depends on where your advisor’s willing to go to bat for you. And my advisor, wasn’t super thrilled to go to bat for me. If they’re willing to go to bat for you, they’ll find money, they’ll help you find money, but that wasn’t the case for me. And I’m determined. I’m like, “oh, I’m here, I’m gonna finish this, I see this through to its completion.” For me, it’s just raw determination that has me doing things. I’ll just do what it takes.

Finances as Gatekeeper for Academia

27:42 Emily: How do finances serve as a gatekeeper for academia? I mean, you’re obviously tenacious, but maybe to someone else, would it have been more of an impediment or even maybe for you at a different time of life, if you weren’t partnered, like you said, you may have been doing it part time. What’s the gatekeeping aspect of this?

27:59 Michelle: There’s so many things. If you don’t come from a family who has an academic background in this particular way. Okay, it’s great. Like it’s a fully funded program, they’re covering your tuition and they’ve given you a stipend. That’s what I received. And that is great, I’m not knocking that. And there are things that you don’t know about. The cost of research is high. There’s a reason why faculty have research accounts. Just saying. If you have to travel to do any of your research and most of us have to travel to do our research, even if it’s domestic or international, you don’t have a handle on…I think what really turns the screws on people, if you’re not clear about it, is that you really have to pay to do the research to make this happen. And that’s where the the rubber hits the road. We act like we don’t have to talk about people having families in academia, but people have families in academia and you can’t raise a child full-time and do any meaningful research and write up that research. You can’t square, you can’t square the circle. It doesn’t work.

29:33 Emily: Yeah, academia might be flexible, but that doesn’t mean it’s not hours and hours and hours of work that have to be done with a degree of concentration.

29:41 Michelle: Exactly. If you’re going to sleep at any rate. I’m a fan of sleep. I think that’s the gatekeeping part of it. If you’re male and you’re married to a female, it’s expected that that spouse is going to pick that up for you. It’s expected that you’re doing the thing that’s going to make you the breadwinner of the family. That’s not expected the other way around. Programs don’t feel any obligation to make that happen for you. And then again, who’s going to bat for you to actually find funding for summers, etc. That’s a whole other whole other.

30:15 Emily: Yeah, and I think we’ve seen this thrown into super sharp relief during COVID. It’s a recession that’s largely women are losing or leaving their jobs at much higher rates than men are. Lot of that has to do with caregiving responsibility.

30:29 Michelle: Exactly. Women are publishing substantially less during COVID. For academic women it’s just dropped precipitously because Junior’s on zoom over here.

30:39 Emily: Yeah. These stresses have been there for many, many decades, but they’re much more obvious in the current crisis and things have sped up and become much more acute right now.

Finances and Money Mindset Post-PhD

30:50 Emily: Let’s talk about your story a little bit more. Once you did finish the PhD, where did your career go after that and where did your relationship with your finances go after that?

30:58 Michelle: I finished and it was like number one, “Oh, I’m not, I’m not getting institutional support from New York University anymore.” I was an adjunct at three different schools. I live in Manhattan. I was commuting to New Jersey and I was commuting to Staten island, which can take just as long as commuting to New Jersey. I was working these jobs, exhausted and I couldn’t make my credit card bills. I put my loans on forbearance but I couldn’t make my credit card bills. All of that fear about money was popping up again. And actually got to a point where I was getting suicidal and I would look at my eight year old and I go, you can’t do that to him.

31:52 Michelle: I think if I give my mind a solution for a problem, I can focus on the solution and not the problem. I decided I’m not going to pay the credit card bills for now, which is actually probably a good decision. It wasn’t great for my credit history, but it was a good decision. I was like, okay, maybe I could do journalism. Turns out journalism is in the same free fall that academia is in, pro-tip. I had been part of this peer counseling organization for years, and I knew that I had skills of listening to people and helping them shift their lives. I was thinking, I wish I could make money doing that. I come to my computer and there’s an email that says giving away scholarships to learn how to become a coach and I was like, that would be, thank you. I applied for the scholarship and I got it and I hadn’t looked back, but it turns out, just because there’s a possibility of how you could like build something so that you can support yourself doesn’t mean that you don’t have all the same money dredge that you had. And actually it’s been being a business owner that has put in sharp relief that I cannot carry this abject terror about handling my money with me the rest of my life, because I’m going to be handling a business side of finances and my own personal finances.

33:14 Emily: Yeah, I hadn’t thought about that, but you really… being an employee is vastly different financially from being a business owner and I can see how that would really bleed over and affect your entire relationship with money and not just handling the business finances.

A Shift in Money Mindset

33:28 Michelle: Exactly, exactly. I noticed that once clients paid me, it would be this absolute fear. Like, “oh my gosh, they paid me.” I’m here to be paid by clients! I mean, I’m here to help people, I’m here to serve, but people pay me to serve them. That’s the arrangement. This is not, this is not an energetic moment here. I hired a coach in part to help me sort this out. There’s a book that I use to actually help me deal with this constant worry about finances and to actually look at the emotional bedrocks connected to me and my money story. I actually started to incorporate a series of tools to help me manage the money and it got me to a point where I could call the credit card company to go, “okay, look, I know I owe you money, what’s the arrangement we’re going to make? Money wasn’t doing things to me. I was starting to shape the narrative I wanted to about money.

34:37 Emily: Wow what a shift, what an incredible shift!

34:37 Michelle: That’s been a huge, huge shift.

34:42 Emily: I’m going to get that title from you after the interview and I’ll put it in the shownotes.

34:47 Michelle: That’s what it is, Overcoming Underearning by Barbara Stanny.

34:52 Emily: Yes! I have read a different one of her books, but yes, I’m familiar with that author.

34:55 Michelle: This is the foundational book that actually helped me turn things around with money.

35:03 Emily: Wow what a recommendation!

35:03 Michelle: Again, it was all of the overcome your money fears and earn what you deserve. That was what I needed to do. Amazing.

35:12 Emily: That you still have this at your fingertips. Literally did not have to get up out of your chair to get it.

35:16 Michelle: I know, it’s like right there. I’ve worked through it twice. And if I find I’m up against another something, I’m going to pull it back out again and I’m going to work the exercises again. This book has been absolutely foundational for me. Working with a coach about my business and part of why — my coach was Britt Bolnick with In Arms Coaching is so amazing is that she understands that to run a business, you have to tackle all of these inner demons that like show up and try to sabotage you, otherwise you can’t build a business, you can’t serve people. That’s really the bottom line — you can’t serve people if you’re afraid of the money.

35:57 Michelle: She brought in other people who helped you think about what is your personality with money? I’m an investor, apparently. Who knew? I got to assess that. This man ran a workshop that we did. It was like, oh, I could save. You know, it’s not a lot, but for the first time in my life, I actually have saved in a regular savings account, a little over a thousand dollars. It’s not much, but considering that I could not figure this out at all, it’s huge! I paid off a line of credit. I paid down, I finally had room on my credit card. If I needed to rent a car, I could do it. These things have changed. A friend of mine told me about You Need A Budget. Game changer. This is a work in progress, but it’s actually been a point where it’s like, oh, I need to set up regular times with my money and we need to have hot and heavy dates. It’s set up a set of habits that I don’t worry about having money.

37:06 Michelle: Last year my mother died. God bless her. She did enough work with her estate that there was actually, after actually her care for having dementia, there was an estate. Not the biggest estate in the world. I don’t need the biggest estate. It’s a modest estate. I already got some of that. I got the apartment in DC. I sold it some years ago and I got the profit from it and I just handed half of it to my partner because I was afraid of what I was going to do with the money. This time, I was like, hmm, excellent. I’m a member of business networking international. There was someone in my chapter who does financial advising. I was like, hi, I’m on the phone with you. I need you to help me handle this money. I didn’t blink. I wasn’t freaked out by it. I replaced my hardware. This is a very different…I don’t have to be an abject fear every single time I’m dealing with money. That it’s like, wow. That has been a big shift.

38:04 Emily: Yeah! This is an incredible, incredible shift. And especially because your initial relationship with your money, the avoidance and the fear and so forth was in place for decades. Starting your childhood, for decades in your adulthood as well, and this leveling up. Well, I don’t know if it’s up, but getting to the level of being a business owner forced you to totally work on this and really master it. I’m so glad to hear those examples. I think during our initial phone call, you mentioned You Need A Budget, but you said that you couldn’t have used it prior to this transformation. It’s a great tool, but you have to be ready to use the tool.

38:45 Michelle: If you’re terrified of looking at your money and I’m not saying I’ve conquered it. You don’t like, it shows up in different ways. But if I don’t understand that, oh right, I can be really scared when I handle my money, I would have just avoided using the tools. Like that’s great. And not use it. But now I’m like, okay, do you know you’re scared. Let’s just get into it. Let’s get into it and do it.

39:12 Emily: Yeah. Wow. What a fantastic shift!

Money Mindset as a Business Owner

39:13 Emily: Is there anything else that you’d like to tell us about your money mindset now, or your relationship with money as a business owner?

39:22 Michelle: I really firmly believe that…I’m a big follower of Carolyn L. Elliott who wrote the book, Existential Kink. One of my coach for coaches, her approach to coaching is about looking at shadow sides. It’s the very Yung-ian and approach both of them have very Yung-ian approaches to the world. And I really firmly believe that if you do not turn and face the shadow, if you will, the dark side of yourself, when it comes to money and actually just really bring that dark side to life. It’s not just about money. It’s about pretty much anything you’re doing about writing, about building your career — if you do not turn and face the places that might scare the bejesus out of you, whatever it is, you’re not going to get a handle on your money, on your love, your sex, whatever it is, your career options, anything that means anything to you, you’re not going to be able to handle it. You’ve got to be able to walk and spend time in those dark places, because once you actually really clear about what the peanut gallery is doing, you can actually go, okay, I understand that’s a peanut gallery. We’re going to do this.

40:41 Emily: I see. And I’m so glad that you mentioned the different tools that you use, the book, the coaching, and so forth, to get to this point, to be facing that aspect of your personality or that side of yourself. Thank you so much for sharing this story with us and I know, again, it’s not something we talk about a whole lot, and I’m sure there’s people in the audience. Well, I’m not sure. I don’t know if someone experiencing money avoidance will be listening to a podcast about money, but maybe someone knows someone and they can send this episode and say, you know, we grew up this way with money. You want to listen to what Michelle has to say about this, because maybe what she experienced can help you.

41:17 Michelle: I’ll say this. I know that I’ve listened to all sorts of resources about money before I actually did anything about it. So I know you money avoiders. You actually would like to not avoid money and you’ll acquire resources. The next step is to actually turn and use them.

41:33 Emily: Yeah. And I think for you, part of your money avoidance, and part of your solution to this was the book Overcoming Underearning. There might be a different book that’s appropriate for different people, depending on because that’s really like an entrepreneurial type. That’s for entrepreneurs.

41:48 Michelle: There’s Jen Cincero, You’re a Badass at Handling Money, which is funny, but also really concrete tools. You see, I’ve read them all. But that’s a really lovely starting point to actually manage money as well.

42:04 Emily: I’ve read that one too. It’s a lot about money mindset stuff, so it’s a wonderful one if you want to start learning about that and start to change your mental relationship with money.

Best Financial Advice for an Early Career PhD

42:15 Emily: Michelle, thank you so much for this interview and standard question that I ask all of my guests to wrap up is what financial advice do you have for an early career PhD? What’s your best financial advice? And that could be something that we touched on in the interview, or it could be something completely other.

42:33 Michelle: Number one, you may need to do the research necessary to find funding for those times where your academic institution isn’t going to fund you. And they may not be super supportive in doing it, but do it anyway. That’s number one. Number two, it’s never too early — All right, I have three pieces of lights. So that’s number one: do the research. Start in September, to look for money for the spring. I mean, for the summer.

43:06 Michelle: Number two, whatever bedevils you about money, you have to look at because whatever bedevils, you will sabotage your relationship with money in a time where you actually are going to need to budget and be really on top of your finances, because I assume I’m presuming that you’re single and you don’t have a lot of the fundamental support that you need. So take time to do that work and I promise you, whatever is screwing with you with money will screw with you about actually getting the doctorate done.

43:39 Michelle: And number three, once you start to clarify what the, what those devils are, find the tools to help you make it work. YNAB is, I think it’s $90 a year. It is worth every dime, as a way of actually managing what you have and sticking with it. Those would be my three pieces of advice.

44:05 Emily: Yeah. Thank you so much. I think that’s a wonderful quick summary of kind of the journey that we’ve gone through during the interview. Thank you again, Michelle. Thank you so much for this interview and for joining me.

44:13 Michelle: You’re welcome! Thank you for having me.

Outtro

44:20 Emily: Listeners, thank you for joining me for this episode!

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

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

  1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me!
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  3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license pre-recorded workshops on taxes.
  4. Subscribe to my mailing list at PFforPhDs.com/subscribe/. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs.

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

Emily: The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC.

Emily: Podcast editing and show notes creation by Lourdes Bobbio.

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

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

Links Mentioned in This Episode

Teaser

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

Introduction

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

Book Giveaway Contest

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

Will You Please Introduce Yourself Further?

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

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

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

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

Childhood Memories and Life Lessons in Canada

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

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

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

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

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

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

Funding During Grad School

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

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

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

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

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

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

Side Business as a Franchisee

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

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

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

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

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

Investing and Self-Learning Personal Finance

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

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

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

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

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

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

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

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

19:57 Judy: Thank you. Yes.

Commercial

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

Finances Post-PhD: Real Estate Advenures

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

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

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

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

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

23:47 Judy: Yes!

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

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

From House Hacking to House Upgrading

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

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

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

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

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

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

28:06 Emily: Gotcha.

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

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

28:32 Judy: Yes.

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

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

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

28:50 Judy: Yeah.

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

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

Business Updates and Additional Family Expenses

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

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

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

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

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

How Have Your Finances Changed Upon Having Children?

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

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

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

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

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

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

34:18 Judy: They are 10 and 12.

Financial Advice for First-Time Parents

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

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

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

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

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

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

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

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

Best Financial Advice for Another Early-Career PhD

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

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

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

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

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

40:41 Judy: Thank you, Emily.

Outtro

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