How This Graduate Student Rejects the Academic Culture of Being Broke

January 27, 2020 by Meryem Ok

In this episode, Emily interviews Hajer Nakua, a rising second-year PhD student in neuroscience at the University of Toronto. Hajer describes how the culture of being “broke” in academia becomes a self-fulfilling prophecy for individual graduate students. Hajer and Emily discuss in detail Hajer’s top three strategies for breaking this cycle of brokeness in graduate school and how you can change your money mindset. Hajer identifies the culture of consumerism as the top culprit.

Links Mentioned in the Episode

Teaser

00:00 Hajer: You know, if people don’t talk about how they’re spending money and all they talk about is the fact that they’re broke, it’s really easy to be like, “Okay, yeah, sure.” But to be more open with money and not have it very taboo I think will really help spearhead discussions of what does it mean to be in graduate school and have money. Like, how are the best ways to spend my stipend?

Intro

00:25 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 five, episode four, and today my guest is Hajer Nakua, a rising second-year PhD student in neuroscience at the University of Toronto. Hajer describes how the culture of being broke in academia becomes a self-fulfilling prophecy for individual graduate students. We discuss in detail her top three strategies for breaking this cycle of brokeness in graduate school, and how you can change your money mindset. Without further ado, here’s my interview with Hajer Nakua.

Will You Please Introduce Yourself Further?

01:04 Emily: I have joining me on the podcast today, Hajer Nakua, and she is a recently started graduate student. We are recording this in August of 2019 so she’s going into her second year. And we’re going to be discussing today the “culture of broke” inside academia and how to combat that with your own personal finances. So, Hajer, thank you so much for joining me today. And will you please tell the audience a little bit more about yourself?

01:28 Hajer: Thank you very much, Emily, for having me. And sure. I just finished my undergrad in Psychology, Neuroscience & Behavior at McMaster University in Ontario. I finished in April 2018, and in September 2018, I started my graduate training at the University of Toronto. It’s technically in the Institute of Medical Science, but my field is specifically neuroscience. And even more specific, I use computational technology. So, things like neuroimaging, brain imaging, MRI, to better understand brain behavior relationships in a population of psychiatric children.

The Culture of “Broke” in Academia

02:07 Emily: Very, very interesting. So, you have been in academia–well, your PhD program, at any rate–for only about a year, but that’s been long enough to start to absorb the culture of being broke. So, would you please start to describe that for me?

02:22 Hajer: Sure. I’ve actually noticed this culture very, very persistently in undergrad, and it’s more of a student thing than when you’re a PhD–you’re still considered a student. And it’s just the idea that students, because they don’t have a very stable income, they’re supposed to be broke. And that is a very, very persistent limiting belief that many students have. And I find that particularly in PhD, Masters, or any graduate school program because of the high expense of the program, people just sort of settle into the idea of, “Oh, I’m broke, I’m supposed to be broke.” And it often limits them from taking the necessary measures to try to build wealth even during their PhD or graduate school training.

03:00 Emily: Well, you know you have found a very friendly audience in me with this message. I totally agree with you. To me, like if you’re looking at the numbers, right? Like if you’re actually looking people’s income and outflow and everything, to me, there’s usually a pretty big difference between someone who is paying out of pocket to be in school. They’re probably taking on student loan debt or maybe they’re supported by their families or even maybe they’re drawing on their own savings from the past, and someone who does have their education expenses paid for, plus there’s a stipend on top of that. That to me is like black and white, a very different situation. But you’re right that, because there’s often a continuum between those two things, people who are on the, “Well, you actually do have an income side of that,” can have some of the mindset still from when they were on the other side of the equation. Again, because as you said, the label of “student” is still there. And you said for me a couple of magic words, which were “limiting beliefs,” which I am very interested in. Can you expand on that a little bit?

Can You Expand on Limiting Beliefs?

04:03 Hajer: Sure. So, in general, a limiting belief is this very persistent idea someone has that often allows them to settle into something that prevents them from moving forward with whatever it is that they want in their life. And that’s a very vague and general explanation. But in this case, I find that when people say things such as, “Oh, I’m broke,” they sort of get over the idea that, “Maybe I should have a savings account, maybe I should start, you know, being more financially savvy.” They’re like, “Should I buy this $10 meal? Yeah. Whatever. I’m broke. What another $10?” So, it’s this constant idea that any sort of wealth, any money management is not applicable to their life.”

04:46 Emily: Yeah.

04:46 Hajer: I think that’s very persistent in particularly graduate school. And quickly commenting on one thing that you said. Although there is a stipend, and it’s fair that many people move for a PhD program, so that often goes towards living expenses. So, of course, the amount of money that someone gets, it’s not high, but it’s still, as you said, a little bit surprising to me sometimes that there’s such a strong sense of, “I have no money,” even though technically there is some sort of cash flow coming in.

05:16 Emily: Yeah. And this is another difficult point, right? Because for some people, the stipend is insufficient to live on in that city. It’s tragic that some graduate schools choose to pay their students that way–their workers or their fellowship recipients–that’s something that needs to change kind of about the higher education system as a whole. So, in some cases, it really is true. There’s not enough to live on. You have to be going into debt, whether it’s student loan debt or consumer debt or you’re being supported by someone else. And I think around 50%, or if I’m trying to remember the stats correctly, around 50% or less of doctoral students ultimately do take out some sort of student loans during their graduate degrees, right? Not just from undergrad. Yet, in other cases, as you were just saying, the stipend may be sufficient to live on maybe even sufficient to do a little bit more with.

06:09 Emily: But because of those limiting beliefs, that isn’t even considered, it’s just an assumption. You’re a student, you’re going to be broke, there’s nothing else you can do about it. And like you said, sort of acquiescing to that idea and not acting in a way that could change that situation just because you think that it can’t be changed. Yeah, this is a big part of my message, so I’m really glad that we can have this discussion today. So, what would you say that if someone does accept being broke as a limiting belief, even if it’s not factually numbers-wise necessarily the case–what’s the harm in that? What’s the effect in that?

The Harm of Brokeness as a Limiting Belief

06:48 Hajer: It prevents them from trying to seek opportunities to sort of build any sort of wealth or income. When I say wealth, I don’t mean, you know, those like $1 million wealth. I mean, just sort of being able to work towards your financial freedom, which is a huge goal, particularly in the West as a lot of prices have been getting a lot more expensive. So, it prevents starting that. People often say, “Oh, in my PhD I’m broke so I’m going to stay that way. And then maybe after I’ll sort of think about how I want to think about money or how I want to build my income.” I find that very problematic because PhD is a really pivotal time in your life. So, the vast majority of people start between 22 to 32, in that decade, a lot of students are. And that’s a really key time to sort of build for retirement, or whatever it is, any goals that you may have.

07:40 Hajer: So, starting from an early age, they think, “Oh, that’s it. That’s a problem for later.” Or, “No, I don’t have the money to try to really focus on building financial freedom slowly, slowly, slowly.” It can really be detrimental in their ability to A) save, and also learn how to be good with money when you don’t have a lot of money. Because we’re not saying that PhD students have a great salary, as we’ve spoken about before, but it’s still important to sort of think about ways to be financially savvy at a time where you may not have a lot of wealth. And then as you build on later in life, you’ll get better and better at it. So, I feel like there’s a lot of wasted opportunity during the PhD years once someone succumbs to that limiting belief.

Investing in Yourself: A Cautionary Tale to Grad Students

08:25 Emily: Yeah, I totally agree. There are two points in there that I’d like to follow up with. The first is, so at least I have heard, you know, from some aspects of the culture, that your twenties are your time to invest in yourself. Don’t really worry so much about saving for retirement or whatever it might be. There’s time to do that later. Your twenties are your time to invest in yourself. And, if you’ve heard that message, you might think, “Well, yeah, I’m pursuing a PhD. Like that’s a great thing to be doing with my twenties in terms of investing in yourself.” And that’s true. But I do think that maybe the people who are propagating that, “Twenties are the time to invest in yourself” message are assuming that people have a much higher income. That during the course of your 20s, you’re going to be ramping up that income and you know, pursuing all these different opportunities.

09:12 Emily: Maybe you’re starting your own company or whatever it is. That’s a little bit of a different level of potential wealth, you might say, then what we’re talking about in more like the PhD land. Because it is a really difficult thing to start off, let’s say in your twenties, with a certain stipend. And then five, six, seven plus years later still have pretty much that same stipend that’s coming in. It’s very difficult to increase your income at all while you’re in graduate school unless you turn to outside sources of work. So, that’s something that doesn’t really jive for me about that message of like, “Invest in yourself in your 20s.” It’s like, yeah, you can do that, but please note that your income, if you do that through graduate school, is not actually going to be increasing during that time. Or at least not, you know, appreciably.

Investing in Retirement: Slow and Steady Pays Off

09:57 Emily: So, that was one thing that I wanted to point out. And the other one was just, as you were saying, I just wanted to underline the power of starting to invest. Whether that’s, you know, paying off debt or actually investing in stocks or something in your 20s is incredibly valuable because you have so much more time on your side before you reach the goal of, “Okay, I want to support myself in retirement,” or whatever your goal might be. It’s so, so valuable to put away even a very small amount of money early on. The earlier on you can do it, the better because of the magic and the power of compound interest. So, it’s something where like, as you were just saying, if you acquiesce to the idea that you’re going to be broke and you can’t, you know, invest for retirement or pay off your debt or whatever–if you succumb to that idea in your 20s, you might dismiss, “Oh, well, okay, I did have like $20 this month that I could have saved, or like $50. That’s not that much money, whatever. It’s fine.” Actually that is a lot of money once you compound it over multiple decades. So, it’s something where, as you were saying, succumbing to that limiting belief really does damage you in the long-term. If there was something you could have done about it, you know, in the present, which again, for some people it isn’t, but for others perhaps you could.

Investing in Yourself vs. Your Future ≠ Mutually Exclusive

11:16 Hajer: Yeah. And also I wanted to comment on the idea that, “Oh, in your 20s you’re supposed to enjoy yourself and invest in yourself.” And while I agree with that philosophical idea, I think that people often make it very mutually exclusive where there is being financially savvy and then there’s enjoying spending on yourself and investing in yourself and quote unquote self-care and all that kind of stuff. So, I think the message which is driven by consumerism teaches people that, “Oh, you don’t need to think about the future now. You don’t need to be financially savvy now. It’s just spend whatever you want to spend.” And if you have that limiting belief that you’re broke, it’s a very easy message to take in. And it also sort of fills that cognitive dissonance that anyone may have. However, again, I don’t think it’s mutually exclusive.

12:02 Hajer: I think that you can equally–if you’re able to support yourself and your stipend is sufficient–I do genuinely think that you can enjoy yourself and invest in yourself, whether it is with consumerism goods or other self-care habits, and also plan for the future and try to be more financially savvy. And it doesn’t need to be as complicated as investing, but like you said, it could just be having an emergency account that you know that every month a hundred dollars is going to be put in the savings account. I definitely think that in many cases, you can do both. And I think life is very enjoyable when you do both because you know that you’re enjoying the present, but you also know that you are planning for the future, and I think that there’s a lot of sort of warmth that comes with that on the inside.

12:45 Emily: Yeah, I totally agree with what you’re saying. This is what I found to be the case as well, that I never wanted to completely sacrifice my enjoyment of the present. A part of me enjoying the present was feeling more secure in my finances. And so it wasn’t like it has to be all one way or the other. And again, this is another limiting belief, right? Like, “You can only work on your financial future and then the present is going to be completely sacrificed.” Or, “You can only enjoy the present and then you cannot do anything for the future.” In fact, there usually is a balance between those two things. And why also when we choose to be extreme in one way, do we always choose the extreme of enjoying the present and not the extreme of sacrifice in the present, at least for the vast majority of people? So, yeah, I really enjoyed that part of our discussion. So, okay, let’s say we have a listener who says, “Okay, I’m hearing you. I’m hearing you. What can I do now on my grad student stipend or my postdoc salary?” Or whatever amount of money is coming in. You know, “How can I not be broke anymore? I’ve been telling myself that I have to be broke. Okay. Maybe I don’t have to, but what do I actually do to not be broke anymore?”

How to Exit the Cycle of Broke

13:51 Hajer: Okay. I love this question. I wanted to say more of a philosophical idea and then go towards practical tips. The first thing is to recognize that you’re always accountable for all the money that you use and you spend, because I think that people often–I hear this all the time, “I don’t know where the money goes. It just sort of leaves my bank account, and I just keep tapping. I have no idea what I’m buying.” So, I think when you’re at that level, you really need to step back and think, “Where is my money going?” If you’re a Tapper, if you’re just like, “I can tap my way through life,” you really need to sit back and think, “Well, what am I actually tapping on? How do I stop these habits?”

14:29 Hajer: So, I think that’s the first important step to acknowledge self-accountability in your spending and financial habits and your financial future. That’s number one. Number two, I think saving money can be a lot easier than people expect. And oftentimes when you go to YouTube or you read these blogs, they have these very complex budgets and you know, all these things are very meticulous and they understand that as a graduate student, a lot of our time is spent on project management, making sure that we’re sort of completing every stage of the project. So, you don’t want to add so much more to your plate that you’re being super meticulous. So some habits that I started off with is A) have an automatic transfer from a checking account to a savings account. So, I will check how much money would I need to save per month for whatever it is that I want. Maybe I’m saving up for a vacation, saving up for a car, whatever it is that you want to do. Calculate your monthly budget and then just transfer that so it’s on autopilot. You never have to think about it. And whatever’s left in your checking account, you can just spend. And that way it’s a much simpler methodology to get the end goal. Which is that, there’s a certain amount allotted for things that you want to do. You’re thinking about the future, but you have enough to enjoy.

You Don’t Have to Budget in Order to Save

15:43 Emily: I want to add to that for a moment because I think this is a really, really good and important point. Because there are some people who as you said, maybe it’s because of busy-ness, but maybe it’s not–some people don’t want to keep a budget. They don’t like to be feeling–even though they’re telling themselves what to do–they don’t like being told what to do with their money at any given time. So, the thing is though is that you don’t have to budget to save, but you can just go ahead as you were just saying and take the step of saving. And as long as you don’t end up overdrawing the amount of money you have left, then Hey, you’ve accomplished the step of saving and you’re trusting yourself to stay within the ultimate confines of the remainder of your money.

16:25 Emily: And you don’t have to silo all that money off into different categories if you don’t want to. If that’s helpful for you, great. But if you’re too busy, you don’t like it, just start saving and you know, adjust–you can live off the rest of it. So that tip, I mean, if that’s the only one anyone gets out of the podcast, that’s a hugely powerful one. I totally agree with you. Automate savings, do it first thing after you get paid. Don’t allow yourself to consider that money part of your general monthly spending, but rather put it first thing towards whatever goal it is that you’re working on, as you said. So, please continue. But I love that first point.

Tip 1: Automated Savings. Tip 2: Check Your Food Expenses

16:57 Hajer: I’m happy that you like it. What really helps me, especially during grad school–because I’m someone who is more on the meticulous end. I like know exactly where everything’s going in all aspects of my life. But I really found that this tip is the best one to start off with because I’m a big believer in gradual changes. So, nobody’s going to go from a reckless spender to a meticulous budgeter in a month because they have this very intense goal. And I think that it’s not practical to think that or to take those steps. So, I think sort of automated savings is the best way to go especially for graduate students. And then further on, as your money increases, you may want to be a little bit more meticulous. My second tip, and I’ve seen this in undergrad and graduate school, people spend an absurd amount of money on food, I’ve learned.

17:43 Hajer: And not grocery shopping. We’re not talking about whole foods, organic apples, we’re just talking about buying food every single day, buying a coffee and a drink with that. So, a lot of people that I know in graduate school spend $20 a day just on their daily food intake, in addition to any grocery shopping that they may do. And I really wanted to bring this up because when you really calculate how much money food takes out of your wallet, it almost would make you cry because it’s just one of those things that you don’t feel it because it’s $15 here, it doesn’t seem like a lot. The next day, $7 here, it doesn’t feel like a lot. So, that’s one thing. If you find that a lot of your money is being spent on to-go food, so food outside of your own home and outside of groceries, I really think the first step in addition to the savings account is tightening that up and trying to just do the grocery shopping and meal-prepping or whatever it is that’s how you want to eat. It’s up to you. So, we’re not talking about from a health perspective, although it helps. But from a money perspective, I really think that’s the first place people need to look at–their food spending habits.

Pay Attention to Repeated Spending Patterns

18:48 Emily: Yeah, of course. I have more to say on this as well because I love this tip as well. So, I actually found myself falling into this when I was in graduate school. So, something that would happen to me–and you can tell me if you relate to this–this is especially in the first couple of years when I was in grad school and I was still in classes and had like homework to do and stuff. So, you know, go to campus, you know, do your classes. I’ve packed my lunch. Okay. I packed my lunch every day, but there were plenty of days when I would sort of, without knowing in advance, I would actually stay late. So, I would stay over the dinner hour and be working on campus in the evenings because, you know, I had like a good study group going for like a couple of my classes.

19:23 Emily: We would meet and kind of talk about the homework and stuff, you know, in the evenings, a couple days a week. Maybe there’s something in the lab that I didn’t get to during the day. I need to get to it a little bit later. But I didn’t want to be hungry, of course. So anyway, I would go and buy convenience food on campus. This would happen, you know, once, twice a week, something like that. Not seemingly a hugely damaging habit. But when I kind of stepped back and evaluated that, I was like, “Okay, this is a pattern. It’s not totally unexpected that I stay into the evenings at least a couple days, you know, on campus.” So it’s not like, “Oh my gosh, this is only happening this one time. It’s a one-time exception.” No, it was an exception that was happening on a regular basis.

20:05 Emily: And so once I realized that that pattern had formed, I was like, “Okay, I need to do more than just pack my lunch. I have to also keep some food that I could eat for dinner at least as a heavy snack or something that’ll tide me over until I actually get home in the little bit later part of the evening.” So, it’s one thing, of course–people have heard the tip, right? To pack your lunch–but I would say just if you see patterns developing where you need to eat on campus and you see yourself turning to convenience foods, just try to acknowledge that that’s happening and take some steps so that it doesn’t catch you by surprise.

Keep a Snack Drawer, and Bring Your Own Tea (or Coffee)

20:38 Hajer: I actually had the exact same experience. I started to develop like a snack drawer. So, there’s a couple of healthy snacks I like, some that I make, some, you know, whatever it may be–maybe it’s like an apple or something for the week–and I keep that there. And that way, whenever I have to stay later–which I try not to do, I am someone who, you know, at 4:00 PM that’s my home time–but of course, like you said, there are times you just can’t control it. So, I know that there is something there and it’s something that I brought. Even if it’s a $3-4 bagel, that still adds up. My biggest thing was I used to really enjoy buying tea outside. I just loved in the morning coming with my tea and it was only $2 and 67 cents from Starbucks at the time.

21:24 Hajer: I memorized it and I always had it ready because I knew exactly how much it was. But over time you realize how much it would cost. And what I started to do is A) bring my own tea and buy a really cute mug. So, I felt good walking in with my tea mug. But sometimes if I didn’t have my mug, I would actually just ask for a cup and hot water and I would bring my tea bag, and I have them on my desk. And that saved a lot of money. But you just don’t feel that because $2.67 doesn’t seem like that much money. So, even something as small as tea, I felt that like, “Oh wow. By the end of the month, I have considerably more money than I did last month.” And it was just one very small change.

21:59 Emily: Yeah, because it’s a daily or an almost daily habit. Making a small change can make a huge difference.

Commercial

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Changing Your Money Mindset

23:12 Hajer: One thing that has really helped me is–so, there’s multiple aspects of consumerism that we all fall into, and I think it’s very pertinent in grad school just because, “Oh yeah, the whole broke culture.” But it’s a very funny dissonance where we love to talk about how broke we are, but we love to spend money at the same time. So, I find that’s very common. So, in general, in addition to food, other habits that you may have, I think it’s very important to check. So, many of us like to spend a lot of money on fast fashion. And we know that it’s not going to last very long. We just love the idea of going into a fast-fashion store, buying a $40 shirt. Seems like a good idea, but you know, in four months you’re not going to wear that shirt anymore.

23:54 Hajer: So, it’s things like that where you really want to try to look at alternatives where you may have to put in a greater sum in the beginning, but in the long run you’re really going to help your finances. And I think thinking in that way has really helped. So, instead of the idea of instant gratification, “I want a latte right now. I want this shirt right now. I want this meal right now.” Get outside that mindset. And instead think, “Okay, long-term, what do I want? Because when it comes to the food or the clothes or whatever, the idea is, “I want to have a meal that I enjoy.” That’s really the core of what you want. But that can come in many different ways. And many of it you can save a lot of money with.

24:34 Hajer: “I want to buy clothes that I enjoy.” Okay, well, what are better spending habits that you may do so that in the long-term, you know that you’re saving money? So, and just in general, letting go of the need of instant gratification, which to be honest, is very, very hard in our very, very multi-consumerism culture. Many businesses make billions of dollars because of the fact that it’s very hard to let go of instant gratification. But the way that I like to think about it is, the PhD is the biggest test of lack of instant gratification in your entire life. You are never going to get this level of delayed gratification where you work two years and you got one paper. You know, you work four or five years, you finally got your PhD. So, really changing your mindset and saying, you know, “I’m doing this for the long run. Like I know that the PhD is not going to be enjoyable all the time, but at the end I’m going to enjoy it.” Think that same way about money and your finances. And I think that one thing is just so powerful, and it can fuel a lot of change. So, although it’s not as much a practical tip, but I think that’s an important way to redirect or reconceptualize how you view your spending habits.

The Multiple Benefits of Being Future-Focused

25:47 Emily: Yes. Unsurprisingly, I love this point as well. This is actually something that I’ve spoken and written about on a few occasions, but I’ve never heard anybody else bring it up. So, I’m really glad that you did, which is the specific characteristics of a person who is in a PhD program or has completed a PhD program. Some of those characteristics can lend themselves very, very well to financial success. As you were just saying, thinking long-term about your career. “Okay, I’m going to dedicate multiple years to achieving this PhD.” As you were just saying, sometimes the experiments, the research itself, can take a really, really long time, especially at the beginning. You become really persistent. You are dedicated when you are in a PhD program or have accomplished a PhD, and you’re really future-focused.

26:33 Emily: And all those things serve really, really well if you’re able to translate them into the area of your personal finances as well. PhDs are also resourceful. They are creative. They’re all these really positive things. Even just getting admitted into a graduate program means that you have a lot of these characteristics and you will further develop them during the course of the PhD. And so yeah, if you can find a way to apply those in the financial realm as well, I mean you’re going to be a superstar, basically. Just by the characteristics that brought you to the stage of training that you’re already at. So, I really, really totally agree with this point. I think something that you said that people don’t necessarily acknowledge is if they take a step back from the treadmill of consumerism, they might think, “I have to live this way forever. I have to be frugal forever. I have to say no to buying X, Y, Z forever.”

You Don’t Have to Be Rich in Order to Be Frugal

27:27 Emily: But the thing is that if you can take that step back from consumerism for a period of maybe a few years and really get your finances solid underneath you, and really do things like investing in yourself and increasing your income and so forth, you can add–I mean consumerism is kind of a negative word–but you can add mindful spending back in after a period of, you know, stepping back from it, if you just again, have some wherewithal to your finances. So, for example, something that is a common criticism of frugality tips that are disseminated is that you have to already have money to be frugal, right? So, stuff like buying in bulk or like what you were just saying, actually, buying an investment piece of clothing that’s a little bit more money instead of multiple cheaper pieces of clothing that aren’t going to fall apart faster.

28:19 Emily: Well, you do need money upfront to do those things. So, a common criticism of frugality is you have to be rich to be frugal, right? It kind of doesn’t make sense. But the thing is that it doesn’t take that long of building up some savings or something to have enough money to start taking those frugal steps that do require an upfront investment, which of course not all of them do. And so, it might be that, “Okay, yeah, I’m just going to go on a spending fast for three months. At the end of the free three months, I will be able to take all these other frugal steps, which will then be able to fund me starting to spend again.” So, it doesn’t have to be a forever sacrifice. It can be a short-term thing that can then sort of catapult you to greater and greater ability to build your wealth. Does that make sense?

Inching Toward Investments: Take Your Time

29:04 Hajer: Totally. And I had a couple of comments on the frugality. Because I used to actually think like that, too. I used to think, “You know, frugality comes from a relative place of privilege.” To be able to think–and even the comment on fast fashion that I brought up, I was listening to a podcast and one of the key women who tried to really vouch for sustainable fashion. She works with a lot of celebrities. She talks about the fact that if you really calculate how much money you are spending on fast fashion, you could easily buy a couple of those things and investment pieces. So, again, it’s the idea–and like you mentioned as a PhD student–you know, really understanding where’s the investment worth being put in. And another really important point that I wanted to say is, I don’t think it’s wise to do all these changes all at once.

29:54 Hajer: To be like, “Okay, that’s it. I’m kind of all out. I’m changing everything I wanted to change.” There are of course going be habits that trickle in and that’s totally fine. But it’s again thinking that you’re responsible for your wealth, your financial management. So, what are the steps that you think you can do? And then start from there and slowly build in. So, you know, if you want to be a little bit more frugal or you want to go on a spending fast, but you want to make sure that you have some money initially just in case, then make that your priority and you’ll sort of focus on that. So, these are all gradual tips that require time to sort of get back on your feet of comfort with your money and comfort with your finances, but it’s important just to start somewhere and then, you know, build from there.

30:41 Emily: Yeah, I think that the idea that you have to revolutionize everything in your life at once to be successful with money is another one of those limiting beliefs that isn’t true that we tell ourselves as an excuse to getting out of doing anything. So, when I think about my own journey–when I started my business, Personal Finance for PhDs, it was when I finished graduate school and I had already attained a great deal of financial success at that point. And so if you looked at me at the end of graduate school and saw, “Okay, she’s got her stuff together, she’s budgeting, she’s saving, she’s investing, paying off debt, all that stuff.” It’s easy to overlook the seven years between college and when I finished my PhD that it took to get to that point of success. And I did not start off doing everything right out of the gate, right? This is something that I learned very gradually over time, and yet still, by my own definition, obtained a great deal of financial success several years later. So, it’s not that you have to exactly be like me or exactly be like you or exactly be like someone else you hold up as a model, like a financial mentor or something. You don’t have to instantly transform to be that person. It’s okay for it to take years. It will still be effective if you make slow changes. In fact, probably more so because it’s more sustainable.

Personal Finance Really Is “Personal”

31:55 Hajer: Exactly. And also take into consideration your personal situation. So, many PhD students live at home, so of course they don’t have the very high rent to pay. And of course that makes many things easier. Many PhD students are supported by other individuals that help them out. And some PhD students, again, are living in a more difficult financial situation in the sense that they have to pay rent and they’re solely responsible for themselves. So, take in your situation, and really think about what are the actionable steps that I can do, what are the beliefs that are holding me back? How do I change those? And again, it will take years to be really comfortable with the way that you want to spend money, and that’s completely okay. And there’s never the best way to money. There are certain things that some people may think, “Oh, you don’t need to spend on that.” But I personally like to and I’m okay with that. So reaching that place where you’re confident and comfortable in your money spending, it takes many years. But like you said, it’s always worth it. But it’s always important to take in your personal situation and your personal wealth and not try to compare your situation to someone else’s.

33:02 Emily: This is actually one of my favorite things about personal finance, is that it is intensely personal and intensely individual and there is not a cookie-cutter solution that’s going to work for everyone. It’s a challenging thing for me as a personal finance educator, but it’s just something that makes it such a rich field to be in. I want to get back to this question of mindset. Are there any more comments that you want to make about how to break this mindset, this accepting of the culture of being broke?

Encouraging Open Dialogues About Money in Grad School

33:29 Hajer: I think the first thing I want to say, like we mentioned, this culture is very, very persistent. This mindset is very, very hard to stay out of. Like sometimes I find, even though I’m totally against it, I find that I say things about the whole broke culture of being a student. In terms of breaking the mindset, it’s just always important to understand what being broke means and what us casually saying the word means. Many people, as we mentioned, do have some level of finances that they can spend. If you find that you are able to spend money, you’re technically not broke. So, you just think about that, and then take the steps that you want to take to get more financial freedom. And also just, I think it’s really helpful to bring up the conversations around your colleagues, whether that’s in school, your classmates, those in your lab.

34:22 Hajer: I do that often in my lab. It’s quite a big lab. So, we often talk about money and what does it mean to have money in graduate school. And sometimes if someone says, “Oh, you know, graduate students are always broke,” it’s important to sort of chime in and think, “Okay, well why are we broke? How do you break those down? Is it something that we just think in our head?” So, that’s why I think this podcast, I really gravitate towards it. Because it is just trying to have that conversation started. And I think that’s the most effective way to break that down because it’s hard as an individual, even if you got over that, just sort of change the culture around you and it will always creep into your mindset. But just starting the conversation, it doesn’t have to be on a podcast, of course.

35:02 Hajer: Individually, it’s really important to talk to the people around you about money and not make money a very taboo topic. Because I think if people don’t talk about how they’re spending money and all they talked about is the fact that they’re broke, it’s really easy to be like, “Okay, yeah, sure.” But to be more open with money and not have it very taboo I think will really help spearhead discussions of what does it mean to be in graduate school and have money. Like, how are the best ways to spend my stipend?

Call to Action: The Importance of Budget Breakdowns

35:32 Emily: This is one of the reasons why I really love doing the budget breakdown episodes that I have done in the past. In my first season of the podcast, I did 50% of the interviews were budget breakdowns where I think it was all graduate students except I did my own as well. I think it was all graduate students and talking about, “Okay, this is where I live, this is how much I make and this is how I spend it and these are my financial goals.” And it’s something that I’ve continued with the podcast, although not at the 50% frequency, but I just want to point out that I love these local examples, right? These very relatable examples. If someone else from that same institution living in the same city hears that particular podcast, that’s an easy way to start a discussion–not necessarily even with the person who was interviewed, but just someone else like, “Oh my gosh, I heard this thing and that person is spending how much on rent? And that means that they can turn around and do this with their finances. I wonder how I can find a place where I can only spend that much on rent?” Or like, “Wow, they meal prep their food and that means they only–you know.”

36:25 Emily: But it’s really valuable to see those local examples that are very, very relatable to you. Because it’s very easy to dismiss, as we were talking about before, frugal tips or something as something that doesn’t apply to me because I live in X , Y, Z and this is my particular situation. Well, if you end up talking to people who make the same amount of money that you do and live in the same place that you do, it’s a lot more relatable and their strategies are a lot more translatable. And frankly, you’re more likely to hear them if you listen to them. If you hear them from someone who you can identify with in those other factors. So, this is basically just a call for any listeners, please volunteer and submit your budget breakdown. Volunteer for a budget breakdown episode because I love doing those and I’m not really getting that many volunteers for them now, which is why we do a lot of other types of episodes. But anyway, I still love them. They hold a special place in my heart and I think they’re really valuable.

37:11 Hajer: I love them as well. On YouTube, I think Glamour magazine on YouTube has a lot of budget breakdowns, particularly in individuals in very expensive city like New York, San Francisco. And again, it’s really nice sort of think about how someone else spends their money and then you can translate that into thinking about how you spend your money. Another tip is, the first step if you’re going to take one actionable step, especially to break down the whole broke culture, is to really calculate how much money is going in every month, how much money are you spending? And that way you can numerically counteract the idea that, “Oh, you’re broke.” Because if it’s the, “Oh wow. After all the money that I get and after I spend it, I still have $400, like I’m not really a broke.” So, I think it’s really getting in tune with how much you’re spending. But because of the way the culture is right now, not many people are in tune with their spending habits. So, again, falling into that very broke culture. It’s very easy.

Tell Us More About Your Podcast Team

38:07 Emily: So, I understand you are part of a podcast team as well. So, what is that podcast and how can people find it? What is it about?

38:15 Hajer: So, it’s called Raw Talk Podcast, and essentially it’s a science communication podcast headed by students in the Institute of Medical Science at the University of Toronto. And essentially what the team tries to do is take these really key topics that people are interested in and go to scientists and ask them about their research and the latest discoveries of those topics. So, we’ve covered a wide array of topics such as autism spectrum disorder, the circadian rhythm, mental health in graduate school. And the idea is just to help you know, the general public and everyone understand what is the latest research and how do we best understand some of these topics that are not always well-represented in the media or that people may be curious in. You can find it on Facebook, Instagram, any podcast app, and Twitter and it’s just Raw Talk Podcast. And on Instagram, there’s a lot of new content featuring our guests and some really cool science tips or science fun facts. So, we really just try to break down some of the complex parts of science and be able to translate it using very local researchers that many people can Google and email.

39:31 Emily: This is such a fun way for people to get involved in science communication, I think. I mean I love podcasting obviously, And I just think it’s an amazing medium. And so, this is something that I know has been started. This kind of thing has been started at many other universities as well. And so, I mean if this is something that attracts you about potentially communicating science from your own university and you don’t want to take it all on yourself, it’s a really good idea to get a few other students together who are also interested in the same thing and start it up together and kind of spread the work around. So, that’s exciting. How long has this podcast been going on for?

40:06 Hajer: When the summer finished, which was about April, May, we just finished our third season, so we’re starting our fourth season in September.

How Else Can You Be Reached?

40:18 Emily: Great, great. Okay. And how else can people find you individually?

40:23 Hajer: Sure. So, I recently just started a science communication account myself as a science student and also moreso to share the graduate student experience and experience with research and academia. What does it look like, particularly being from more of an underrepresented group? I really wanted to share what that looks like, navigating academia and research. So, my main platform right now is Instagram, but I do hope to branch out and start blogging. But my Instagram is, @itshajernakua. So, I T S H A J E R N A K U A. And yeah, it’ll be really nice. And I try to share tips of grad school, tips about finding passion with research, and I’m also starting to get more into financial and money tips as a graduate student.

41:08 Emily: That sounds amazing. Okay, well, thank you so much for coming on the podcast and sharing this wonderful content.

41:14 Hajer: Thank you so much for having me. This is my first podcast being interviewed, not interviewing. So, this is really exciting.

Outtro

41:20 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhD’s are most interested in like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode. And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

How This Graduate Student Financially Manages Daycare Costs, Debt Repayment, Saving, and Side Hustling

December 16, 2019 by Meryem Ok

In this episode, Emily interviews Aubrey Jones, a PhD candidate in social work who lives in Tennessee. Aubrey is married and has a 3-year-old and a 1-year-old, which means childcare is their household’s largest expense. They discuss how Aubrey’s family found a great deal on their housing and how to minimize food waste with littles. Aubrey and her husband both have variable incomes, which play into their savings and debt repayment strategy; Aubrey’s main side hustle is a very popular and accessible one for graduate students. Aubrey and her husband have set their debt repayment and savings goals so that they can buy a home about a year after moving for Aubrey’s first post-PhD job.

Links Mentioned in the Episode

Teaser

00:00 Aubrey: You’ll find the money for things that you prioritize, and I think that’s so true. In the past, we didn’t necessarily prioritize our savings, and so it was hard to find money for that. And now suddenly, we’re prioritizing it and prioritizing extra payments, and it’s because we figured out where we can cut and what we don’t need to do.

Intro

00:26 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode 18, and today my guest for this budget breakdown episode is Aubrey Jones, a PhD candidate in social work who lives in Tennessee. Aubrey is married and has two small children, which means childcare is their household’s largest expense. We discuss how their family found a great deal on their housing and how to minimize food waste with littles. Aubrey and her husband both have variable incomes which play into their savings and debt repayment strategy, and Aubrey’s main side hustle is a very popular and accessible one for graduate students. Aubrey and her husband have set their debt repayment and savings goals so they can buy a home about a year after moving for Aubrey’s first post-PhD job. Don’t miss Aubrey’s spot-on financial advice at the end of the episode. Without further ado, here’s my interview with Aubrey Jones.

Will You Please Introduce Yourself Further?

01:25 Emily: I am delighted to welcome to the podcast today Aubrey Jones who is going to be doing a budget breakdown episode for us and she’s got some really interesting elements in here. So, I’m really looking forward to this conversation. Aubrey, will you please introduce yourself, your career, and your family?

01:43 Aubrey: Sure. So, My name’s Aubrey Jones, and I have a husband, Josh. And then we have two little kids. We’ve got a three-year-old and a one-year-old, Madison and Simon. And basically, I started the PhD program with a seven-month-old, and when I finished my PhD program, I will have a four-year-old and a two-year-old. And I am getting my PhD in hopes to become a research professor, hopefully in R1, in the near future.

02:17 Emily: And what is your field?

02:18 Aubrey: My field is social work.

02:22 Emily: It sounded like you’re about a year away from finishing, hopefully?

02:27 Aubrey: Yes, I am a year away from finishing. I was able to take an extra year because I was awarded an extra GRA position for the fourth year. So, I was able to do that, which was nice.

Aubrey’s Household Income

02:41 Emily: All right, well we are actually in a very similar spot. My two children are the same ages, roughly, as your two. So, I’m sure many of your expenses will sound very similar to me. So, please tell me about your household income, your income as a doctoral student, and other sources of income in your household.

02:58 Aubrey: Sure. So, as a doctoral student, I received a stipend throughout my entire program, and it’s fluctuated from year to year, but it’s on average about $15,000 a year. And then it’s covered my health insurance also. And then my husband works in a job in which sometimes he will get additional money. So he’s a recruiter and he works on a draw system, and once he’s caught up, then any additional money that he gets goes straight to him. So, our household income fluctuates as well. So, usually anywhere from about $55,000 on the low end to $75,000 on the high end is where we fluctuate. And then, I recently just started teaching with VIPKid. I had been hearing about it, I have friends who’ve done it, and I finally jumped in to do it just to supplement some costs in our household because the hours are so flexible. And then as a doctoral student, I’ve also just picked up other side work with professors who had funding and were able to pay me to do stuff like that during the summer or in addition to get the extra experience and also the extra income.

04:18 Emily: So, the $15K stipend that you mentioned, is that just during the academic year or is that 12 months?

04:26 Aubrey: It is 12 months. So, you’re required to do about 10 hours of graduate research assistantship work, and then they break it out throughout the year as your payments.

04:40 Emily: Okay. So the additional work you’ve taken on within your academic role or to the side of it–you said during the summer, but that’s not because you’re not being paid during the summer–it’s just because you have some different time allocations or something?

04:52 Aubrey: Yes, correct.

Side Hustle: What is VIPKid?

04:54 Emily: Gotcha. So, I want to hear a little bit more about VIPKid because, similarly to you, I have been hearing that name a lot and I don’t know how new it is, but it feels new to me. So, can you say–maybe for someone else who’s interested in this kind of side hustle–what you’re doing exactly and what kind of the advantages are that you see?

05:13 Aubrey: Sure. So, I really love it. I actually just started this month, and there’s a fluctuation in pay. It ranges from $14 an hour to, I believe, $22 an hour. And the way that they do it is you teach a 25-minute class to kids in China and you’re teaching them English. So, you don’t have to know any Chinese. You just have to take some TESOL certificates that the company actually offers you for free and go through some mock interviews so they can see that you’re using props in your classroom that you’re using, it’s shortened TPR [Total Physical Response], but basically they want to see lots of hand gestures and pointing at your mouth and telling the kids, you know, listen. So, the 25-minute class is what you teach, and they pay you by 25 minutes. So, most people start out at about $8 per 25-minute class.

06:25 Aubrey: And then, assuming you get another class, that’s where it turns into that hourly pay of $14 to $22. But essentially you teach a 25-minute class, you get half of that $14 to $22 an hour. And you open up the schedule and you choose when you’re available. So, they tell you what the peak times are and you’re running on Beijing time. So, for people who are in Eastern Standard Time, I almost think that they’ve got it the best because the peak times are between 7:00 AM and 9:00 AM and then in the evenings on Friday and Saturdays from about 8:00 PM to 11:00 PM. You can teach all through the night, and I know some people do. I do not. So, I teach in the mornings from about 6:00 to 7:00 AM. Mostly because my kids are still sleeping, and sometimes I get the full time booked. Sometimes I don’t.

07:26 Aubrey: So, like I said, this is my first month doing it and I’ve made–well it’s not even the whole month yet. So just in the month of July, I’ll make about at least a hundred dollars, assuming I get no others classes booked.

VIPKid: Teaching English to Kids in China

07:40 Emily: I was a little bit confused about this. So, you said that you’re teaching in English. Are you teaching English or what is the subject matter that you’re teaching?

07:50 Aubrey: Yeah. So, the goal of VIPKid, the reason that parents in China sign their kids up for it is to help their kids learn how to be more comfortable talking to native English speakers. So, you are teaching English, but the whole class is also in English. And so, by proxy, you’re having a conversation in English, you’re trying to teach them certain things in English, and so you might be teaching them different vocabulary words that day.

08:18 Aubrey: So, this week I was teaching a kid “stamp,” so I had an envelope and I had some stamps and we talked about the word stamp and you say “stamp” and you make them repeat it twice so that they’re learning the word and then they’re learning in context. I teach primarily older kids who are already fluent in English. So, it’s more of making them comfortable having that conversation as opposed to teaching them new things. Now, some people teach younger kids–like three, four years old. So, they really are teaching them English words and what that means. And so, they might say “happy, sad” and have them repeat it back. So, it just depends. But VIPKid already has the lessons prepared for you. So, you go through it with the student and the older kids read most of it. The goal is to have them talking about 75% of the time.

09:14 Emily: Gotcha. And I think I’m picking up that this is a one-on-one interaction?

VIPKid versus Qkids

09:18 Aubrey: It is a one-on-one interaction. Yes. And there’s another company called Qkids which is similar, and they do anywhere from one to four kids in the classroom. And they actually schedule for you. Whereas VIPKid, the parents choose you as a teacher. So, it’s a lot more competitive to make a savvy profile that parents want to choose you.

09:44 Emily: I see. Well yeah, I can definitely see why this is an attractive, exploding side hustle. At any rate, as of July, 2019. So, thanks for telling us about your experience with that. Do you like doing this so far? Do you imagine continuing? And how many hours are you devoting to it per week?

10:04 Aubrey: Okay. Yeah, so I do, I really like it. It’s a lot of fun. It’s different than anything I’ve done in the past, and I will definitely keep doing it for the foreseeable future. Right now, the summer months are kind of slow so I’ve been able to just open up more slots knowing that I wasn’t going to see as many kids. But in the future, primarily in the fall, I will be finishing my dissertation so I won’t be devoting nearly as much time to it. But after I’m done dissertating, probably five to 10 hours a week.

10:41 Emily: I’m really glad that you brought this up because I can see how, for someone who wants a side hustle, this is a really, really accessible one. It sounds like you’re able to get started pretty fast too.

10:52 Aubrey: Yeah, it took me about two weeks to go through the whole process.

10:57 Emily: Yeah. Excellent. Okay, so let’s dive into the budget breakdown, right? So, we’re going to talk through your top five expenses. And I don’t remember if you mentioned, but where do you live?

11:09 Aubrey: We live in Tennessee.

Budget Breakdown: Top Expense = Daycare

11:11 Emily: Okay, great. So, top expense.

11:15 Aubrey: Our top expense is daycare.

11:18 Emily: Ah, new and different because usually this is rent, but I am not surprised that daycare is at the top of your list with two children. So, how much are you spending?

11:27 Aubrey: Yes. So, daycare is about $1,000 a month for both kids to be in daycare full-time. And so, our youngest kid was not in daycare the whole time. He actually just started going to daycare more recently. And that’s because, as a graduate student, I was really lucky to have such a flexible schedule where he could essentially just home with me. I wasn’t taking classes, I was working on my dissertation, and when I had to work on my dissertation or do extra work for my GRA position, I was able to do so in the evenings or on the weekends when my husband was home. But now that I’m in the final stretch of my dissertation, I need the distractions out of the house so that I can work all the time. So again, that’s new. When it was just our daughter, it was closer to like $600 a month, I want to say, for her. So, obviously not greater than our rent at that point.

12:27 Emily: Yeah. I’ve had a similar approach. I am the primary caregiver for our children and so we mix in childcare maybe as needed and it kind of fluctuates. It really changes a lot with how old your children are and kind of what type of kids they are. Whether or not they give you time that you can be doing other things or whether they require a lot of hands-on attention, and that changes with age. So yeah, I definitely feel you on what you were trying to do in the past and also your decision to put them both in daycare full-time now. Is there anything else, any other comments you want to make on that daycare expense?

13:05 Aubrey: So another way that we reduced the cost of daycare too was our daughter was in daycare full-time when we first started, and I was a full-time student. And then once my classes started slowing down and they were online, I was able to transition her to a “Mother’s Day Out” program, which is just a part-time daycare, essentially. And so that drastically reduced our cost. It was like $80 a week to have her in that three days a week and they fed her and everything. So that was great. And then in the summers we’re able to take them both out and just pay about half the cost to keep their spots if we need to or if we want to so they can go part-time and full-time in the summer for a reduced rate, essentially.

Does Your University Aid with Childcare Expenses?

13:58 Emily: And does your university help at all with childcare expenses?

14:03 Aubrey: They do not. I will say that my professors and department have been incredibly supportive of me having kids and just understanding that. There was one time I had to bring my daughter to class with me because there was like a nasty flu outbreak happening at her school and I wasn’t about to let her get it, let alone really let myself get it. So, one of my professors let me bring her, and I was so thankful. And she just hung out and loved it. So they’re like emotionally supportive of that. But financially, no.

14:44 Emily: Yeah. They help you to a degree, but not as much as maybe we would like. Okay. Number one expense: childcare. What’s that second expense?

Budget Breakdown: 2nd Expense = Rent

14:55 Aubrey: Rent. So, we pay just a little over $907 a month, so I rounded it up to $908. And we actually pay below market value for where we live. We have a two-bedroom condo, we’ve got a garage, we’ve got a backyard, two bath. And I think our neighbors rent for about $1200 a month. When we first moved here, we actually only paid $875 a month and we were living across the street. And then our landlords decided to sell. And so we already knew the neighborhood. We really loved the neighborhood. This might sound silly, but we knew our mailman and to us, that was just so great. Like, we really know this place. And we had some friends who lived across the street and they happened to be moving out and going somewhere else. And we told them, “Hey, our landlords are selling, can we rent from you because we know you’re not ready to sell yet?” And they said, “Yeah, sure you can just cover our mortgage and our HOA fees.” And so that’s how it bumped up to $908, but still below market value for this area. So we’ve been really fortunate in that.

16:17 Emily: That is an amazing deal. I have to say, not the best financial decision for them, but really great for you.

16:27 Aubrey: Yeah.

16:28 Emily: Yeah. And of course, you know, I actually talked about this with another episode I did in season three. I interviewed a landlord who was renting to people he knew from his program. You know, they were his roommates at first. Then when he moved out it was people he had known from that graduate program, and he just talked about what like peace of mind it gave him to know his tenants and trust them. And so, yeah. Maybe they’re giving you a good deal on this rent, but they probably also have a lot less stress.

16:58 Aubrey: Yeah, absolutely. Yeah. And some of it too, like we do have to take care of some things on our own just because they weren’t really prepared to be landlords. So, like we have to pay to have someone come out and fix our dishwasher, which isn’t a big deal to us, but there are just a couple of trade-offs to it. But again, it’s better than having to go out and move all of our stuff and pay. I mean, that would be a large amount of money to increase that we just weren’t prepared for or ready for.

17:34 Emily: Yeah. Well, yeah, it sounds like a really good situation that you’re in. And I guess the tip that may be applicable to other people is get to know some homeowners who are ahead of you. Yeah. I actually also rented a private residence from a former graduate student who was then in a postdoc somewhere else when I was in graduate school, I did not know her personally so I don’t think we got any rental discount, but yeah, you know it happens. People buy, and then they move on.

Commercial

18:03 Emily: Emily here for a brief interlude. As a listener of this podcast, every week you hear strategies that another PhD has used to improve their financial picture. But listening and learning does not automatically translate into action in your own financial life. If you are ready to change how you think about and handle your money but need some help getting started, I can be of service. There are two main ways you can work with me to create and implement a financial plan tailored for you. First, I offer one-on-one financial coaching, either as a single session or a series as you make changes over the longterm. You can find out more at pfforphds.com/coaching. Second, I offer a group program called The Wealthy PhD that is part-coaching, part-course, and part-community. You can find out more and join the waitlist for the next time I open the program at pfforphds.com/wealthyPhD. I believe it’s possible to succeed with your finances at every stage of PhD training and throughout your career. Let’s figure out together how to make that happen for you. Now, back to the interview.

Budget Breakdown: 3rd Expense = Food

19:18 Emily: Okay. So, really good deal on rent. Excellent job on that. What’s that third expense?

19:23 Aubrey: This would be food. So, we are not super great at keeping our food costs down. That ranges anywhere from $800 to $1,000 dollars a month right now. And $1,000 is pretty rare. But, I was going through prepping for this and I felt like, “Well, let’s be honest, we’ve hit $1,000 before.” So, it doesn’t normally happen. We keep it closer to $800, and we’re pretty strict on that. So, we are feeding two kids. Our one-year-old, I swear, is just a garbage disposal. He just consumes everything and anything right now. And I was nursing him for about eight months, and then his appetite exploded. So, we switched him over to formula. So, we’re weaning off formula. So, that should start decreasing.

20:22 Aubrey: And then it also has a lot of our household stuff too, like diapers and pull-ups. We potty trained our oldest before our second was born because there was no way we were paying for two kids in diapers, and that was the best thing we ever did. She took to it really easily. I’m a little nervous the second time around that it may not go quite as well. And then we keep tons and tons of fresh produce in the house. But other ways that I do try to reduce the cost, things that we’ve been thinking about a lot more lately, especially once we started keeping track of our expenses, is food waste. And so that always seemed to really obvious to me. I would hear people talk about that and I would think, well, I don’t waste food. What are you talking about?

Strategies to Avoid Food Waste with Littles

21:09 Aubrey: And now I’m so much more cognizant of it. And my three-year-old will take two bites of something and say, “I’m done.” And in the past I used to think, “Okay, whatever.” And I would just toss it. And now, “What are you doing?” So, I just put it in the fridge and when she gets hungry later I put it back out on the table and say, “You can finish this if you’re that hungry.” And most of the time she doesn’t want to finish it because she’s not actually hungry. She’s just fishing around to see what I’ll give her. And then we’re really big on right now food exposure and trying to make sure that they’re constantly being exposed to vegetables. So, I’ve been buying a lot of frozen vegetables, which is really helping, so I’m not wasting the fresh vegetables. But I’m still able to make sure that they’re at least, even if they’re not eating it, they’re seeing it on their plate. So, that’s how we’ve decreased it. We don’t eat out. We cook almost all of our meals at home. My husband gets to eat out a little more for work. But yeah, I don’t see it going down much more, to be honest.

22:23 Emily: Yeah. I have to say, there’s again a lot of similarities in spending patterns between the two of us in this area because our one-year-old is also like eating everything in sight right now. She’s going through some kind of crazy growth spurt, which is actually great because that means that food that other people don’t want to finish, we can give to her, and she’ll finish it. So, that’s working out well. I also do the same thing. If my three-year-old doesn’t finish something, I may pack it back into the fridge because, like you, when it was just me and my husband, I was like, “Yeah, we don’t really waste that much food. Like we’re pretty on top of food consumption. But then you have a child who throws food on the floor, and like there’s a lot more waste that happens. So, we try to reduce it where we’re able to.

23:05 Aubrey: Yes, exactly.

23:05 Emily: And yeah, same thing about formula, which I hope is not a forever expense for us, but it’s pretty expensive in the meantime. So, yeah. Thank you for that insight. Oh, and the diaper situation. Yes. We also potty trained before our second was born so that we would not have two in diapers at the same time. Although we cloth diaper. So, for us it was more about not having to buy more cloth diapers to add to the stash. Right? Which is kind of the most expensive part of that whole process. So, yeah. All right. Thank you for your insight into that category. So what is your fourth largest expense?

Budget Breakdown: 4th Expense = Car Debt

23:39 Aubrey: So, that would be my husband’s car payment, which is $300 a month. And then we usually throw extra money at that. And that is one of the fewer pieces of debt that we have. And we plan to have that paid off by the end of the year, actually. Because he does do recruiting and he sometimes gets those bonus paychecks, we have just been able to throw that at debt. So, like last month we were able to throw an extra $1,000 at his car that wasn’t in the budget. So, that is always really nice. But we actually just had to get him a car because he had a 2000 Subaru and it finally just died while he was driving one day with our three-year-old. And so, it was time for him to get a car.

24:33 Emily: So, you’ve really taken that drive-it-into-the-ground advice to heart. You know, mostly when I talk to people about cars or I think about cars, it’s like we think about that long period, the almost two-decade period when you’re driving that single car. I don’t know when he bought it exactly, but the many years. And people are a little nervous about the endpoint. So, can you talk to me about when it broke down with your three-year-old in the car and how you handled that? It seems that it was okay, right?

24:59 Aubrey: It was a traumatizing week for her because my car, which is actually only three years old, broke down two days before, and she was in the car and we had to call my classmate to come pick us up. And then she was driving with dad and they were actually stopping to get her a treat because she had been such a good big sister. So, they stopped at Starbucks and they were in the drive-through and it just died in the drive-through line. And he had to push it. And so, twice in one week, this poor kid was in a car that broke down. So, that was a little traumatic. And she still talks about it. And this was three months ago, maybe. So, he had to get out and just push it by himself. And she did this cute little reenactment of him doing it. And I had to come pick them up, so I had to get the baby woken up from his nap and then go get them. And his car sat at Starbucks for three days until we could get a tow truck out there. And our insurance luckily covers the tow truck expenses. And so, he tried to put it on Facebook Marketplace to see if anyone was good at fixing cars or needed parts, and he didn’t get any bites. And so finally he just went to I think like an impound lot or something. But yeah, we had one car for like a month, so I was driving him to work and that’s across town. And so we had to really navigate our schedules. And then I tried to convince him to just have one car because we were making it work, but he wasn’t going for it. So, that’s how we ended up with a car payment.

26:51 Emily: Yeah, thanks for that story because we are also currently driving a car into the ground. And I do think about when that final end-point is going to be and what exactly is going to happen. But usually it’s okay. It’s a little difficult in the short-term, but it’s kind of worth it, right? To keep a car for a long time.

27:09 Aubrey: Absolutely.

27:10 Emily: So, what is the fifth expense on your list?

Budget Breakdown: 5th Expense = Husband’s Student Loan

27:12 Aubrey: That fifth one is my husband’s student loan. And that is $219 a month. And that should hopefully be paid off by the end of the year also.

27:22 Emily: Yeah. Let’s talk about that next and sort of under the category of financial goals. So, you’ve mentioned two types of debt so far. And so, what is your strategy with repaying debt?

27:35 Aubrey: Yes. So, the car and his student loan and my student loans are the only debt that we have. And so, right now, his student loan is bigger than his car payment. So, the car is our first thing that we’re trying to prioritize. So, any of the VIPKid money that I get is going to the car. Basically, we’re doing that snowball [method].

28:00 Emily: Yeah, I think it’s that snowball method. I was just going to say, you live in Tennessee, so this is Dave Country. [Do you follow Dave Ramsey?]

28:07 Aubrey: It is Dave Country. I don’t, but I do follow a lot of debt-free, financial independence people who have done Dave Ramsey. So, that’s where I’ve picked up some of our ideas and stuff. So, we’re really just attacking that car payment, putting anything extra that he gets to it. We’ve got a lot of financial goals, and this is why we’re not exactly Dave Ramsey because we’re also trying to save for a house at the same time. And so, our goal is to be debt-free from car payments and his student loans by the time we’re ready to purchase a house. And then my student loans are just kind of this whole other thing that right now we’re just unfortunately avoiding because I’m still in school. And we’ve limited using any student loans while I’ve been in my program except for one year when the baby was born and we just wanted to have that extra cushion just in case we knew that he would probably go to daycare. And we just weren’t sure, because my husband’s income fluctuates so much, if we’d be able to afford it every month or not.

29:18 Aubrey: So, the months that he gets a bonus check, we pay daycare out-of-pocket. And we pay most of daycare out-of-pocket and then supplement with those student loans. And then everything else goes to debt that’s not covering daycare. And then like I said, the VIPKid or any babysitting that I do or like I adjunct sometimes also, so that money goes straight to the car. So yeah, that’s our goal. Again, we think we’ll have that tackled by the end of this year just with where his business is at.

Importance of Prioritizing Your Financial Goals

29:52 Emily: I really love the strategy that you’re using. And I’ll make it explicit again. So, you’ve decided what your priorities are–car, husband student loan, your student loan–and you’re making whatever minimum payments are necessary on those and throwing all your money that you come up within a given month to that top-priority debt. That includes side hustle money. And this is very “Dave” like to have this clear prioritization and to throw everything you can at your top priority. And the reason that it works really well–and then I’m really glad you’re using this–is because it does keep you motivated to earn extra money in whatever ways you can fit into your schedule. As opposed to just like, “Oh, I think I should be side hustling in general. My budget could use some more padding.”

30:43 Emily: It’s much better to tie it to a specific goal. In your case, it’s debt repayment. And so, it really keeps your motivation high for pushing yourself because it is hard to be a parent and be in a PhD program and have the work associated with that. So, you’re doing a lot obviously, but it’s clear that you know exactly why, right? And you know, it’s a limited-term thing. As Dave says, “Live like no one else. So later you can live like no one else.” Which means, live like no one else right now. You’re hustling. You’re throwing everything you can at the debt. And then later, living like no one else is when you are wealthy and comfortable and the picture is rosy. So, it’s like a short-term period of sacrifice to really turbocharge and get ahead. I wanted to ask about your house downpayment goal. So, am I right in assuming that you guys will be moving wherever you get a job?

31:37 Aubrey: Yes, we will be moving wherever I get a job. So, our goal is to hopefully purchase a house about a year after. Just so we can get a feel for that area first before just showing up and buying a house and then realizing we chose the worst area to be. So, we do have money in our budget dedicated to savings. Which was something that we hadn’t always done. We used to kind of just, “Oh, okay, we have $10 left over this month, let’s put that in savings.” Where now we dedicate at least $200 goes to savings every month. So, that is obviously for emergencies or for this house if we can. And then, once his car and student loan get paid off, then the rest of his paychecks and stuff will start going to that down payment. And again, we hope that we’ll have probably $10,000 to $15,000 by the time we’re ready to move, is kind of our goal.

32:38 Emily: Yeah, that sounds really good. I think you’re really, again, on the right track by planning on renting for a year, wherever you move to. Because I totally agree. It’s really difficult to make such an important decision like where you’re going to live, especially in your case. You guys already have kids, so you know your kids are going to be in school, and like there’s just a lot of considerations there–to take that time to really get to know the area. And of course, continue to save up more money, for the down payment or whatever, before jumping into that purchase. So, final question here. What is your best financial advice for one of your peers? Maybe another parent in a graduate program?

Best Financial Advice for One of Your Peers?

33:17 Aubrey: Yeah, so I think my best advice would be to just remember why you’re doing it. Because we have tried many times to live like this and it’s always just become, “Ah, whatever we don’t want to.” And now we’re very motivated, I think, because of our children. Like we want to give them a house and like a nice life. So that’s my “why” of why we’re doing it. Why am I waking up at 5:00 AM to teach kids in Beijing English? It’s so that we can have this hopefully financial independence and teach our kids what to do with money. And then my husband has a good saying that he’s told his friends who are just starting out having kids and they’re freaking out about not being able to afford things. And he tells them, “You’ll find the money for things that you prioritize.” And I think that’s so true. In the past, we didn’t necessarily prioritize our savings and so it was hard to find money for that. And now suddenly we’re prioritizing it, and we’re prioritizing extra payments. And it’s because we figured out where we can cut and what we don’t need to do.

34:35 Emily: I think you are so exactly right with those comments, and they’re so insightful. I totally agree that you have to establish the “why” for why you care about personal finance at all, why you should care about your own finances. And then, once you know the “why,” that tells you your priorities, right? Top, second, et cetera. So like, it does make it so much easier when you know clearly what your motivation is, I think. Yeah. You and your husband–I think you guys are doing great. Really. Like, yeah, it sounds really good. I mean, I’m so glad you’re on a clear plan and there’s like a timeline on it, and yeah. It seems like it’ll all coalesce within the next one to two years with, you know. Hopefully, you’ll have the job you want and be in an okay place to live. Not much choice on that necessarily, but hopefully you’ll enjoy it, and the debt will be done, and you’ll be taking out a mortgage, and that’ll be a whole other ball game, and yeah. Sounds delightful, actually.

35:29 Aubrey: Yeah. And I will say, we’re very fortunate with his job that allows him to get bonuses and stuff that lets us pay things off, which is why it’s kind of variable and all over the place. But it wouldn’t be possible without his job, so we’re super thankful for that.

35:48 Emily: Yeah, of course. Well, best of luck to you and your family. And thank you so much for joining me today.

35:54 Aubrey: Yeah, thank you for having me.

Outtro

35:56 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

This Soon-to-Be PhD Is Facing Debt and Underemployment as He Goes on the Academic Job Market

December 2, 2019 by Meryem Ok

In this episode, Emily interviews Chad Frazier, a graduate student in history at Georgetown University who is about to complete his PhD and go on the academic job market. Chad’s career plans and personal finances have changed a lot during his PhD (and a master’s before that). When he received his stipend offer from Georgetown, he thought he had made it. But seven years later, the pay increases haven’t kept pace with housing prices in DC, and Chad has accumulated credit card debt. As he applies for faculty positions, Chad faces underemployment, and the grace period on his student loans from his undergrad and master’s degrees is quite limited. Chad argues that universities have a moral obligation to pay their grad students a living wage so that they can thrive academically. (Update: Chad successfully defended his PhD just prior to the publication of this episode!)

Links Mentioned in the Episode

Teaser

00:00 Chad: I just spent the last 10 years at an institution, and I’m now actually financially worse off than I was when I started. At times that makes me really scared and angry. And that wasn’t something that I imagined it would be like when I would get to this point.

Introduction

00:21 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode 16, and today my guest is Chad Frazier, a rising eighth year PhD student in history at Georgetown. Chad and I discuss some really tough and even emotional issues in this interview including large student loan balances, credit card debt, underemployment, the difficult academic job market, and the feeling of being let down by your university. Chad shares quite openly the current state of his finances and career aspirations. We discuss what universities can do to alleviate financial stress among their grad students as well as what prospective grad students should think about when they look at a stipend offer letter. Without further ado, here’s my interview with Chad Frazier. You don’t want to miss this one.

Will You Please Introduce Yourself Further?

01:15 Emily: I am joined today on the podcast by Chad Frazier, who is currently a PhD student at Georgetown. And we’re going to be talking about the financial issues that arise, particularly as you’re getting close to the completion of a PhD. Right? You’re getting to to the end of graduate school, and what happens next and how do you handle that with your finances? It’s a really challenging situation for many, many, many PhDs. So Chad, I’m really delighted that you joined me today. And will you please tell the audience a little bit more about yourself?

01:46 Chad: Yeah, sure. First off, happy to be on the podcast, Emily. So just kind of a little background. I’m, like you said, just in the process of finishing up my PhD. I’m kind of planning to defend middle to late part of September. I focus on US history. Before that, I got my MA at Georgetown, which is the institution I’m currently at, BA at Dickinson. I guess those are kind of the broad highlights. I’ve been in the last couple of years, very active with the graduate union here at Georgetown. I’m part of the organizing committee and started getting more and more interested as part of that work in the last couple of years.

Evolution of Career Plans in Grad School

02:32 Emily: Yeah. Super interested here. Maybe not specifically about the unionization issues or your role in that, but just about your thinking around those issues as it relates to what we’re going to be talking about today. So, you’re almost done with your PhD. What are your current career plans, what you think you’ll be doing next, and also maybe how has that changed over the course of your degree?

02:54 Chad: Okay. Yeah. So when I started out the PhD, which would have been fall of 2012, the plan was generally that I was going to just tenure track, ideally at a liberal arts college. I was a peer writing tutor in undergrad and I really liked the experience of teaching. That said, I was kind of amenable to the idea of like maybe doing alternate career paths, kind of sidetracks, that led eventually to this final goal. But I can’t say that I really thought about them in any sort of depth. I think I figured, “Oh, I’ll just figure it out as I go.” So, like last year, I tried the academic job market for the first time, kind of a soft search. I didn’t get anything, which was not unexpected where I was with my dissertation. And then I’m going to try it again this year–be better, generally more competitive I think–and we’ll see what happens there. But over the course of the sort of last several years, I have just gotten more interested in other possible career paths. Because there are maybe some things about academia that I’m not always a fan of. And I think in particular, one would flag, like I mentioned, the unionization, maybe involvement with something to do with the labor movement, either as an organizer or researcher for a union. I’m also working with a professor here on building an online archive. So it looks at teachers in the labor movement. So it’s kind of up in the air.

When Does Your Graduate Student Position End?

04:18 Emily: Yeah. So it sounds like you’re getting other kinds of work experience. Right? Other kinds of, or not necessarily work, maybe it’s volunteer as well, but other kinds of experiences that’ll help you figure out what you want to do with your career and maybe you know, land, whatever that next job is. So you said you’re planning on going back on the job market again this fall. When does your position as a graduate student actually end or do you have an end date for that?

04:41 Chad: So I actually just put in paperwork with the graduate school. So the way this basically works is, I will defend, ideally late September. Once I do that, and generally, I am sure this is true for a lot of people, the assumption is that when you get in the room, you’re ready. Then there are revisions, which part of that is what your committee says, part of it is shaping it to the graduate school. And, as far as the university is concerned, when I’m in that mode, I’m still a student. And it’s just then once those are done, you file it with the graduate school, and then you apply to graduate, which for me the plan is to do that in December.

Plan for Income Until Graduation

05:24 Emily: And so as far as your income goes, in the meantime, do you have an assistantship that’ll still be ongoing, or what’s the plan for the income?

05:32 Chad: So the plan for the income by sort of Georgetown rules is basically after seventh year, which my seventh year technically concluded in May, I’m not eligible for any kind of assistantship, whether as a TA or an RA. So, the work I’ve been doing with the online archive is paid out of an Institute here at Georgetown called the Kalmanovitz Initiative. And I’m figuring out how many hours they will be able to pay me for that. But I’m also looking for sort of part time jobs. One of the advantages of being in DC is there’s a fair amount of work for research with journalists or stuff like that to kind of make enough money that I can make ends meet until I can have something more definite.

Are You Considered an Employee at Georgetown?

06:20 Emily: So, the position that you’ve had at Georgetown, not your assistantship, are you an employee technically or is that like an independent contractor position?

06:32 Chad: So, I’m an employee. It’s routed through sort of the student payroll office. It’s a little complicated just because the way the rules are here with PhD students, we have to estimate how many hours a week I plan to work and how many weeks. And then they are like, “Oh, this is his stipend.” And then that gets dispersed out in biweekly installments. They changed that recently. It used to be able to have been, oh, just hourly, as long as I didn’t exceed like some certain restraints, that would have been fine. Bureaucracy.

What is the State of Your Finances at this Point?

07:05 Emily: Yeah. So, it sounds like you have a part-time position that’ll be ongoing through Georgetown. And then on top of that you do need to work a bit more as well as actually finishing up your dissertation and doing the defense and all of that. So, it’s a lot going on at this juncture. It’s a time of transition and a challenging time. So, can you tell me a little bit more about the state of your finances at this point? It sounds like, well first of all, is that income that you anticipate making going to be enough to sort of keep your head above water or is that still a question mark?

07:43 Chad: So, the way it’s kind of shaping up is that income that I’m going to get from the job with KI, with Kalmanovitz Initiative, probably I’m hoping that’s enough to cover rent. And then the additional work–the idea is basically enough that I can feed myself and pay for Metro and sort of living expenses and hopefully get enough too that I can start paying down credit cards a bit more. Because I’m very cognizant of the fact that, six months after I graduate, the student loans are going to start coming due. And that’s going to drop like anvil from heaven, it feels like. So, I want to have hopefully something ready for that where I’m not getting hit from two sides.

History of Chad’s Student Loans

08:37 Emily: Yeah, totally. So, you’ve mentioned you have student loans. Do you want to share like the amount of that, or like which degree you accumulated them from?

08:47 Chad: Yeah, sure. So, I went to a private liberal arts school, Dickinson College, for my undergrad. And I got lucky. I got a pretty good financial aid package there that most of it consisted of scholarships and grants. And I only had to take out, I think, anywhere from 10 to 20,000 [dollars]. Most of the student debt I’ve accumulated was because of my master’s degree that I took before I started my PhD. And for that, I basically have to look through the records and that’s about 80 to 81,000 dollars. So that’s, yeah.

09:20 Emily: Yeah, that’s going to be a large minimum payment. Even if you go one of these income-driven routes, depending on what you’re doing the rest of the year, assuming you haven’t gotten like a full-time faculty position yet. Anyway, it’ll be a large payment, presumably. So, that sounds really, really tough, but it’s also pretty common as you might imagine. Okay, so you have the student loan debt from your earlier degrees, not from the PhD itself. And then you mentioned credit card debt. Do you want to share the amount of that, and how it was that you accumulated it?

Accumulation of Credit Card Debt

09:54 Chad: Yeah, because I’m not sure. I don’t think I can pull the dollar amount right off the top of my head. But it’s basically–so, a little background about how a PhD sort of works at Georgetown. I was admitted with a five-year package, which meant that for three years there was a service obligation, which I TA’d. Two years was non-service. And then basically, for year six through seven, the department was able to fund me kind of on a discretionary basis. I got a fellowship my sixth year where I got to teach my own class, and then I got a semester of non-service. And then this last year I was on service. And I got a decent enough job working kind of as an administrative assistant to a professor. But the big issue was, that fellowship when I was getting paid was only nine months out of the year, which is pretty common for humanities and social science students here at Georgetown.

10:55 Chad: And so that meant that like, I tried to set aside money so I could cover rent. I would basically always try to find an extra, some sort of job either during the semester where I could save up money or a job during the summer where I could kind of live off of that. Invariably, credit cards became the sort of go-to during the summer. And the usual MO is, in the summer months, pay them down during the year, and then in the summer months make minimum payments until–maybe a little extra if you can–you get back into the fall, and then start paying them down again. And that worked actually pretty well the first couple of years. It’s just in the last two, three years, cost of living has been going up in DC with rent. And also with like, you know, last summer I had three really close friends who got married, and I wanted to go to their weddings and I had to pay for that. And I went to a conference in November that I didn’t get reimbursed for that was on the West coast, which was expensive. And it’s been hard to sort of do that, pay it down this last year where, come June, they were all maxed out, and I just was boxed in.

12:15 Emily: Yeah. I think what you’re describing is super common for PhD students, for people in their twenties and thirties, generally. I mean the nine-month pay, of course, is fairly unique to our mode of work, depending on what kind of field you’re in. But yeah, I mean it sounds like you had the right idea, right? Save up during the year, so you’re cognizant of that in advance. You’re trying to plan for it in advance, save up during the year, live on that over the summer, plus you work a little bit. But it’s really hard to do that planning. It’s just a really, really challenging situation to be in. So yeah, it sounds like credit cards came into that for you as well as the whole irregular expenses thing, you know, going to people’s weddings. I also really value attending weddings.

13:00 Emily: I love being able to go, I always had to travel. It was a challenge, financially. And what you mentioned, of course, the conference thing. We all know inside academia that conferences either are not paid for at all for students, or the student has to pay upfront and then the reimbursements, and it’s months later. That can definitely get people into cycles of credit card debt as well. It’s a huge, widespread problem, I would say. So, I’m sure all of this sounds very relatable to the audience, and I’m really thankful to you for sort of bearing yourself this way and sharing this because it is a really difficult thing to talk about publicly. So, thank you so much for doing that. Is there any other debt that you’re dealing with at this point aside from the credit cards and student loans?

Any Other Debt Besides Credit Cards and Student Loans?

13:41 Chad: I think those are the two biggest sort of issues. Like, yeah, there’s nothing else really out there. I rent so I don’t have to worry about like a mortgage. I don’t like to drive. I don’t own a car. So, it’s public transit. So yeah, it’s pretty much just credit cards and student debt.

14:01 Emily: Yeah. And it sounds like, given that you don’t own a car–which is one of my very go-to suggestions for people trying to reduce their expenses–you live in an expensive city. That’s how it is. You pay a lot in rent. You don’t own a car. Rent’s been going up, presumably, as is almost always the case. Stipends do not keep up with rising rent costs and yeah, it’s just a really, really tough spot to be in. I’m curious actually what your thought process was about choosing–and maybe it’s not really like a conscious choice, but like you have been accumulating credit card debt over the past couple of years. You know, at first, you said you were in a cycle of, “Okay, I build it up and then I pay it down.” But as you said, the last couple years, it’s been more building up than paying down.

14:43 Chad: Yeah.

14:44 Emily: Why did you go that route instead of taking out additional student loan debt?

Why Credit Cards Over Additional Student Loans?

14:50 Chad: I think part of that was I was just being cognizant of the fact that I had a fair amount coming in from my master’s program in particular. I actually had this conversation with my mom a couple of times. Where she’s like, “Well you should just put in for FAFSA and try to get more. You should try to get another student loan or something.” And I was like, “But I’ve already got at least 80,000 perhaps up to a hundred thousand, and it sort of seemed like I would be mortgaging my future even more so than I did. In the early years of the program, kind of you brought up the whole idea of stipends not keeping up–throughout sort of my time here at Georgetown, usually the stipend has gone up in each year by about a thousand dollars, which in year one that meant I went from 22 to 23 thousand. That was like a 5% increase. And that I think helped keep ahead of a lot of stuff.

15:50 Chad: And then, more recently it’s like now that last year–the university introduced a wage freeze this year, but the year before it was like–that amounted about 3.5%. I don’t have terribly many expenses. I used to joke that I only allowed myself sort of three very basic luxuries, which was food, like going out to eat. Not that I go out anywhere very expensive. Booze. I like beer, but I like cheap beer. Weirdly enough. And then books. And those, even there, I’m like, “Oh, I won’t spend more than like 25 bucks.” So, it was like, “Oh, these are really small things.” And it’s not like I was going on trips to Europe or anything that expensive. So it was like, “Okay, the credit cards just seemed more manageable.”

16:48 Emily: It really seems like just mentioning those little luxuries that you allowed yourself–which again, like you just said, did not amount to a lot of money–it really illustrates for me how large a chunk of your income must be taken up by your necessary expenses. Because what you mentioned as discretionary expenses have not been outrageous by any means of course. So, it just for me really illustrates this like probably 60, 70, 80% of your income has probably been taken up by like your rent and your basic food and you know, basic transportation and all that kind of stuff, which is a really, really, really tough spot to be in. There’s a benchmark that I like to reference which is called the balanced money formula, which I don’t know if it was created, but it was definitely popularized by Elizabeth Warren and her daughter in their book from, it must be 10 plus years ago now, All Your Worth*.

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

The Balanced Money Formula

17:43 Emily: And they introduce this concept of the balanced money formula. And in that, a person’s necessary expenses–so you know, stuff to keep you alive, housing, food, et cetera. Also, all the contracts that you are in, your insurance, that kind of stuff–that should amount to no more than 50% of your net income after-tax income. And that’s to live like a balanced life. On a sustainable basis, it shouldn’t be more than 50%. If you go above that, it’s like warning, warning, warning. This is not going to feel sustainable for you. It sounds like you’ve probably been in that warning zone your entire time you’ve been in graduate school most likely. And again, really, really common for graduate students, especially those who live in higher cost of living areas. So, that benchmark can feel really discouraging to people who have lower incomes. And it’s just kind of something that like, I don’t know, just you need to acknowledge. It’s going to feel really difficult to live on your stipend if you can’t fit your rent and your transportation and your food under that 50% figure. And is that something that’s worthwhile to attend the institution you want to attend and do the research and pursue our passions in our careers. It’s a tough spot to be in.

Commercial

18:59 Emily: Emily here for a brief interlude. As a listener of this podcast, every week you hear strategies that another PhD has used to improve their financial picture. But listening and learning does not automatically translate into action in your own financial life. If you are ready to change how you think about and handle your money but need some help getting started, I can be of service. There are two main ways you can work with me to create and implement a financial plan tailored for you. First, I offer one-on-one financial coaching, either as a single session or a series as you make changes over the longterm. You can find out more at pfforphds.com/coaching. Second, I offer a group program called The Wealthy PhD that is part-coaching, part-course, and part-community. You can find out more and join the waitlist for the next time I open the program at pfforphds.com/wealthyPhD. I believe it’s possible to succeed with your finances at every stage of PhD training and throughout your career. Let’s figure out together how to make that happen for you. Now, back to the interview.

Anything Else You Would Like to Share?

20:14 Emily: I wondered if you had any additional thoughts, feelings that you wanted to share regarding what we’ve been talking about. Your career transition upcoming, about the state of your finances right now. Anything you haven’t said so far?

20:28 Chad: I think in terms of sort of the way this has all been. Because again, I don’t come from money. My dad works as a supply manager at a college bookstore. My mom recently started working for Chick-fil-A. Like, working-class family. And there was even this weird stretch when I started the PhD in 2012, my dad who had gotten fired from his job like just after the financial crisis and just took the opportunity to go back to school himself, to finish first his undergrad degree. He could only find a job working part-time for a big-box retailer. And you know, there were moments where mom was calling me up and having to borrow little bits of money from me and then she’d pay them back to make their ends meet. And there was just this sort of sense of like, “Oh, I made it. I’m okay. Like this is not a lot, but it’s going to be kind of uphill, you know, all going up from here.”

21:35 Chad: And then now to be in this position where I kind of feel like at times I just spent the last 10 years at an institution, counting the same institution for both my MA and my PhD, and I’m now actually financially worse off than I was when I started. And I think at times that makes me really scared, and at times it really also bothers me–like now, my mom has to front me money for stuff like getting a new cell phone. Because my old one was four years old and couldn’t hold a charge for like a few hours–and angry. And that wasn’t something that I imagined it would be like when I would get to this point. I felt like it would be tough. There’d be an adjustment, but I didn’t think there would be quite this type of problem.

Supporting Family Members During Graduate School

22:27 Emily: Yeah. Thank you so much for sharing that. Yeah, just thank you for sharing the point that you’ve gotten to here. I think that graduate students supporting their family members to a degree–and it could be their parents, it could be a sibling, it could be a dependent child–is something that is, in my opinion, not really talked about that much openly. But it happens a lot. And your degree of like, you know, maybe short term loans to your family that happened over what seems like a relatively short period of time is a more brief, just smaller kind of support that you were able to provide at that time, which is awesome. And other graduate students support their family members for a significant fraction of their stipend for years.

23:19 Emily: And maybe it’s remittances they’re sending to another country. It could be within the US. That situation happens all the time, too. And so, I’m glad to share your perspective on the podcast of thinking, “Okay, I made it into my PhD program. I’m no longer taking out student debt. I have an income. I’m making it. I’m living in DC. The future ahead of me is bright. I’m going to be a professor.” And then, you know, seven years later coming to this point, like, “I’m not so sure what my career is going to be. I have a lot of student loan debt. I have consumer debt. I don’t quite know how I’m going to be making it from month to month starting in just a few months.” So, really, really tough spot to be in. But again, I don’t think it’s that uncommon for PhD students. What has been your observation about how your situation maybe compares to some of your other peers?

How Does Your Situation Compare to That of Your Peers?

24:11 Chad: Actually, I think you’re right. In talking with my peers, there are a lot of similarities. Like you were talking about grads supporting other grads. I’ve got friends in my program, other departments that I’ve gotten familiar with thanks to my involvement with the union, where they’ve got families–or like one of my really best friends in my cohort was from the Philippines and throughout the program he was sending money home to Manila to help his family out. And yeah, it is very common. It’s just, the more jarring thing about it is that for me, on one hand with history, more and more of an awareness of like, “Okay, the job market has sort of changed. Higher ed: We’ve seen this sort of adjunctification of labor. Okay, we need to start thinking about alternative pathways or career diversity.” Different labels get used for different fields. But there really has never been this sort of awareness about the financial dimension. I think the only time it’s ever come up in conversations with faculty are like, “Oh, the stipend’s enough, right? You’re doing okay.” Or, “You’re not having to take out loans for this, are you?” And I’m like, “No, I’m living within my means. I’m fine.” And part of it is, this stuff is kind of new-ish. It’s not necessarily out of the blue, but it is new-ish. And for a lot of faculty, this is wasn’t their experience and isn’t their experience now. So yeah, those are kind of two broad impressions.

Universities Do Not See All of Our Financial Struggles

25:45 Emily: Yeah. I think what I’ve observed from maybe more of the university perspective is they track things like amount of student loan debt taken out. And so, if they don’t see a lot of, let’s say, PhD students taking out student loans–like you have consciously avoided student loans because of your existing level of debt–then they may not be aware of the hardships that people are undertaking outside of the university system, like racking up credit card debt or like borrowing money from other sorts of lenders or from family members or whatever it might be to again sort of keep their head above water. And also, the whole side hustling thing, which is super, super common. And I’m generally a fan of side hustling, especially when it advances your own career, like what you’ve been doing with your other position. Like that’s exposed you to a new area of work and maybe you’ll keep going in that area.

26:40 Emily: So, what can be really beneficial in a lot of ways, but it’s something that can be distracting from the degree, especially if a student has a lot of other responsibilities going on too, like they have a family or whatever. So, it’s not great if a student has to side hustle. It’s okay if they want to and they can balance it or whatever. But it’s not a good situation when they have to do it to just keep their heads above water. So, all of that can be very stressful. Of course, of course it’s stressful and can affect career decisions. And I think what you’ve been talking about–that we’re specifically talking about transitioning out of graduate school–the idea that your stipend is enough to make it on like a month to month basis is kind of one thing. But is it enough to actually bridge you until you get to the kind of job that you’re supposed to have as a PhD?

27:27 Emily: And we know as you were just mentioning from the academic job market that it can take multiple cycles of going through this before maybe you get a possession or maybe you don’t. And what are you doing in the meantime? Are you adjuncting? Like that’s not a really solid situation either. So, it’s not only a stipend needs to serve you in getting, you know, from month to month, but it also should be enough that you can actually transition into the next position, you know, and not have to take on let’s say a bunch of credit card debt or whatever it is in the transition. Like to have to move and to have to have a lapse in employment and all the expenses as you enter the job market. Anyway, that’s me going on for a while about that. So, these challenges are definitely common. What do you think are some solutions or better practices that either the universities could be doing or individuals could be doing or anybody else could be doing to kind of alleviate this situation?

Solutions for Universities and Individuals

28:21 Chad: Yeah. Well, I think universities kind of start from the top and work down. Because I very much do believe in sort of this idea of agency and personal responsibility. But you have an obligation to make the best of the cards that you’re dealt. But you’re also not the one dealing the cards. And I think universities really do have an obligation–for PhDs or master’s students who are working– to pay them sort of a living wage. And there are definitely forces that are nudging them in that direction. Whether it’s like Washington DC, which has passed a referendum that I think will eventually set the minimum wage to $15 an hour which has started leading new improvements for friends that I know or master’s students who work hourly. Graduate unionization, kind of nudging for upped stipends. Also just, there’s the competitive angle of this, you know, trying to get the best recruits. I know with Georgetown we want to get the best people and we’re competing against universities like, for example, Emory or Vanderbilt that actually pay better and are also in cheaper cities compared to Washington DC. So I think universities have an obligation there.

29:40 Chad: I also think sometimes with just like master’s students, it’s a thing that is kind of maybe a joke or a truism, at least with the people I’ve talked to here, that, “Oh, master’s students, your job is basically subsidizing the PhDs or you’re subsidizing the department,” so you have an incentive to bring in more people. And it’s not necessarily going to be a funded program. And you know, okay, I paid in my $80,000. So as a PhD, I don’t always feel bad when I go into the department supply closet and be like, “I need a notepad.” But part of the function of some master’s programs is to recruit people, like identify people that would be good in PhDs. And I don’t know, the sort of like treating folks as a revenue source in that way. It’s just deeply unsettling. And not that I necessarily have an answer to that, but I think universities thinking of alternative ways to handle that or to control sort of tuition is important.

Are Students Primarily Producers or Consumers?

30:38 Emily: What I’m thinking about when you’re saying this is whether the student is primarily a consumer of what the university produces or a producer of that work. And scholarship is part of what a university produces, right? As well as the teaching and everything. So, for undergraduates I guess we kind of accept that they are consumers of the university, and they or the government or whoever should be paying for them to get this lovely education. PhD students we generally see as producers. They’re either teaching and spreading their knowledge and mentoring people, or they’re producing scholarship that is worthwhile. Master’s students I feel like could fall in either category and maybe are viewed mostly as consumers, yet as you were just saying, especially if they’re going onto the PhD level and producing scholarship of their own, even at the master’s level, maybe they should be viewed more as like producers.

31:40 Emily: But anyway, all of this is so, so complicated. And I’m really glad that you brought up like the unionization movement and how that’s affecting this conversation, as well as the competition thing. Of course. I was just thinking that, if we are going to view PhD students as producers of work, it makes a lot of sense to pay people enough that they don’t have to feel stress. Because if what the university wants is a product out of a graduate student, whether it’s a class or whether it’s a paper or whatever, it makes sense to give them an environment where they can produce a good product. And paying them enough that they don’t have to side hustle and they don’t have to take out debt and they don’t have to feel stressed, and it’s not a cloud looming over them all the time. It makes sense to me in terms of producing the best product out of those people as possible. I don’t know what your thoughts are on that.

Quality Work Requires Quality Pay

32:30 Chad: No, I absolutely agree with it. And I think it’s interesting because for me when I first got involved with the unionization effort here at Georgetown–it’s really funny if like, someone had tried to talk to me and get me involved by talking about how low my pay was, that wouldn’t have worked. It would have just been like, “Well no I make enough. It’s not a lot, but I make enough to just get by, and I have a little extra if I want to go out to eat with friends, I can do it.” For me the issue was sort of more transparency about things like job listings and responsibilities. But kind of over the last two to three years, as I have gotten closer and closer to the sort of end, it’s now much more about sort of money and like the awareness that, like what you were talking about earlier, a stipend that just allows earning a living in a livable wage that kind of also gives people a cushion. I’ve been lucky. I haven’t had any sort of serious medical problems or family issues that would’ve required like a massive outlay at one time. But there are a lot of people that don’t have that privilege. So, that’s for me like the big part of the unionization effort. Now it’s just like, we want people to do good, so we should create conditions where they can do good. Like, can do the thing that they signed up to do, whether that’s research, whether that’s teaching.

34:04 Emily: Yeah, absolutely. Thank you so much for that part of the discussion. I think we’ll just conclude the interview here by asking you what is your best financial advice for one of your peers? Maybe someone who’s anticipating the end of the PhD coming up fast.

Best Financial Advice for Your Peers

34:21 Chad: I think probably my best advice would maybe be more geared towards people earlier on, which is recognize that you’re going to change. When I started, I was 25 years old. $22,000 sounded like a lot of money. And like I said earlier, I felt like I kind of had made it. Recognizing that by about now I’m 31. I’ve had friends getting married and needs change. And seven years is a long time to be in one place. So, be aware of that, and when you’re starting out, make a plan kind of on that basis. You’ll hear some of the faculty here talk about, “You need to have like a 10-year plan for academic stuff.” Like when you’re going to publish and do all this sort of stuff. But I think also just the idea of having some sort of longterm financial plan, especially when you’re a graduate student and you’re dealing with pretty thin margins already.

Consider Long-Term Financial Goals and Changing Needs

35:17 Emily: Yeah. I totally agree and want to just underline what you said. To someone who’s in their early twenties or mid-twenties or something, that first stipend offer can seem great. Totally adequate. Fine. You’re looking at your rent, whatever it’s going to be fine. And then you get a few years down the line and your life changes and your career goals change and your responsibilities increase, often. I had another interview in season three with Scott Kennedy and he talked about getting married and having children during graduate school, which is not something that he had in his plan when he accepted that first offer letter. But it was, you know, over the years that he spent in graduate schools, something that came into his life. And so an amount of money that can seem workable at a younger age doesn’t necessarily seem so workable later. Not just because of the individual and your own life changes that you incur, but also as we were just talking about, because stipends don’t keep up generally with the cost of living and inflation, especially in these higher cost of living cities.

36:12 Emily: So, it could be that you’re actually falling behind in terms of an indexed amount of money as well as you yourself are getting older and having all these changes occur in your own life. So, it’s just an argument for prospective graduate students to be not accepting of something that seems “okay,” but really looking, as we were just saying, for competitive offers that will offer you well above the living wage for whatever area you’re moving to. Another thing which we didn’t discuss in detail, but tuition and fees–the responsibility that falls upon the graduate student for paying those–that can sometimes change. And universities who are facing funding shortfalls can change the package that you receive. So, hey, maybe your stipend doesn’t decrease or maybe your stipend goes up, as you were saying. Maybe it’s $1,000 a year, but maybe your fees are also going up by hundreds of dollars per year. That could easily be the case too.

37:04 Emily: And once you start in a program, you start feeling stuck and you’re invested, and there are sunk costs and so forth. And so, it’s just something to think about at the beginning to have more margin than you anticipate that you’re actually going to need because over five years, over seven years, whatever it is, a lot can change. So, Chad, thank you so much for this interview. It was really a pleasure to have you. Thank you for sharing so openly about your situation.

37:26 Chad: Yeah, thanks for having me. It was great talking with you.

Outtro

37:29 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the personal finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is “Stages of Awakening” by Podington Bear from the free music archive, and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

This PhD Compares Her Experiences at a Unionized University and a Non-Unionized University

November 18, 2019 by Meryem Ok

In this episode, Emily interviews Dr. Carly Overfelt. Carly received a master’s from Purdue University, which does not have a graduate student union, and a PhD from the University of Massachusetts at Amherst, which has a longstanding graduate student union. Carly compares and contrasts her experiences as a graduate student worker at her two alma maters; she received higher pay and benefits at UMass. She shares the history of the graduate student union at UMass and the nature of her work within the union’s bargaining unit. At the end of the interview, we address the core questions around graduate student unions: Does the university view graduate students primarily as students or primarily as workers? Are graduate students paid well enough for their assistantship work to allow them to pursue their other job of completing their dissertation?

Links Mentioned in the Episode

Teaser

00:00 Carly: A lot of union work and bargaining is holding onto as much of what you already had as you can because unions are not as powerful as they used to be. And so, usually, when you’re bargaining, you’re trying to mitigate something disastrous that the management is doing. They’re usually slashing something, and you are using your collective power to mitigate that as much as possible.

Introduction

00:27 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode 14, and today my guest is Dr. Carly Overfelt. Carly received a masters from Purdue University, which does not have a graduate student union, and a PhD from the University of Massachusetts at Amherst, which has a longstanding graduate student union. Carly compares and contrasts her experiences as a graduate student worker at her two alma maters. She shares the history of the graduate student union at UMass and the nature of her work within the union’s bargaining unit. At the end of the interview, we get to the heart of the question around graduate student unions: Does your university support you in your dual roles as student and worker, or does one eclipse the other? Without further ado, here’s my interview with Dr. Carly Overfelt.

Will You Please Introduce Yourself Further?

01:24 Emily: I am delighted to have on the podcast with me today Dr. Carly Overfelt, and she is here to talk to us about being at two different universities during graduate school, one that didn’t have a union and one that did and the differences between those two experiences. So, Carly, thank you so much for joining me today, and will you please tell us a little bit more about yourself?

01:44 Carly: Yeah, thanks so much for having me. I’m Carly, and I started my graduate school journey at Purdue University where I did a master’s degree in linguistics and then a master’s degree in English. That took me about three and a half years, and then I started a PhD at the University of Massachusetts at Amherst. I finished my PhD in the spring of 2017. My interests were in linguistics and literature. I got interested in supporting linguistic diversity through my teaching. So, the position I have right now is at a small liberal arts college in Minnesota, and I’m kind of an adviser/tutor/instructor for our international students and domestic multilingual students. Yeah, it’s a great job.

Finances while at a Non-Unionized University

02:33 Emily: Very interesting. Yeah. Glad to hear that you’re enjoying that. So, let’s go back to your days at Purdue as a master’s student. So, what was the financial lay of the land at this non-unionized university?

02:48 Carly: Right. So, you know, since I had never been to a unionized university yet, I didn’t really have a comparison point, but I remember, you know, just like so many graduate students- broke all time, you know, my rent was almost 50% of my pay. Which I think is going to sound familiar to a lot of folks. That was the start of my expertise in the side hustle. In addition to teaching a few times a week and having meetings with students in office hours, I was also tutoring three nights a week for about $20 an hour cash. And so, I ended up spending so much of my time during the week on my side hustle that it was really hard for me to perform as well in my courses as I wanted to and to do the research that is necessary to do well. Right. So that was pretty tough.

03:42 Emily: Yeah. So it sounds like, were you a TA for the entirety of your time there? That was how you received your stipend?

03:50 Carly: I was. I was teaching a communications class for international graduate students, and the whole time I was there, I was teaching for that program. And sometimes there was a summer version of that that I could teach.

04:06 Emily: Yeah, it’s a little bit surprising to me, just given that Purdue is in a low cost of living area. I mean, we’re already hearing like, okay, you move from Purdue to UMass Amherst. I’d imagine there’s a big cost of living difference there. But even in Purdue, your stipend was only about twice what your rent was or maybe not even that much it sounds like.

04:24 Carly: Right, right. That’s right. And we did have health insurance benefits. Some of that came out of our paycheck, and they were fine. They weren’t as good as what I had through my parents before I started graduate school. But it was like, it was okay.

04:38 Emily: How about dental and vision?

04:41 Carly: Dental and vision was a little bit extra. And they would take that out of your paycheck as well. Some other things I want to note–and these were differences I didn’t notice as much until later–but we did not get paid through the holiday months. So, it was kind of several weeks that we were not getting paid. And we also had hefty fees through our program in the fall semester. And sometimes we would start getting bills for those before we had gotten a full paycheck through our teaching associateships. So, that was pretty tough.

05:16 Emily: Okay. So, you’re saying that your stipend was not a 12-month stipend, but it stopped over winter break and then what about the summer?

05:23 Carly: Right. So, it stopped over winter break, and it didn’t continue for the summer unless you were lucky enough to have a summer class assigned to you, and then it would pick up again in, say, like June.

05:36 Emily: And also, of course, the very common problem of paying fees one time per year or one time per semester. And it’s a real hit to the budget. That’s a really hard thing to cash flow on a grad student stipend. Yeah. OK. So not such a pretty picture.

05:51 Carly: No. Pretty tough.

05:52 Emily: Anything else you want to add to that?

05:54 Carly: No, I think that’s about it. That pretty much covers it.

Finances while at a Unionized University

05:57 Emily: Okay. And then when you moved on to UMass Amherst, you started realizing things didn’t have to be the way they were.

06:05 Carly: Right.

06:06 Emily: So, what was it like there?

06:09 Carly: I was very excited when I heard that they were unionized because I, you know, grew up in kind of a union household. My dad and stepdad both were kind of hardcore union. So, I was like, “Oh yeah, let’s do this!” But I didn’t realize how much it was going to change my financial picture until just like kind of living it. So, a few major differences right away. We were paid a lot more. Maybe not twice as much, but it was at least a 30% increase over–maybe 40% over–what I was being paid before. And that’s just wages, not talking about benefits. So that was noticeable. The fees were smaller, but also it was written into our contract that you could have that spread throughout and taken out of your paycheck, and we were paid through the holidays.

06:58 Emily: I really love the benefit of actually paying something with each paycheck. Because like, I mean fees–it kind of depends. They may be a reality or not, but just if you know what they are and they’re going to come at regular intervals, they are a lot easier to deal with. So, love that. And you said you were paid through holidays, and what about summer?

07:17 Carly: In the summer, it was kind of similar where if you were lucky enough to have a summer class assignment, which in my department was extremely rare, then you could be paid through the summers. So, I still had to, you know, work my side hustle skills, but at least I only had to do that in the summer. Sometimes I would do my side hustles during the week to just sort of help myself with the cushion for the summer. But to put that in perspective, I would do maybe one four-hour, you know, side gig shift per week to sort of just keep my relationship with that employer, and then work during the summer more hours for that kind of side hustle. So I actually was able to spend time on research and writing and conferences. I think I went to one conference the whole time I was at Purdue in terms of presenting, and then that switched to actually having the time to work towards that. And I was going to maybe two conferences per year when I was in my PhD program because I had time to do it. It was great.

What about Travel Funding and TA-ships?

08:20 Emily: Actually, I’m glad you brought up conference travel because that’s kind of another benefit that may or may not be in place. So it sounds like, because you weren’t side hustling so much, you had more time to go to conferences. Was there additional funding available for that sort of thing, or were you paying for that out of your own pocket?

08:34 Carly: I was usually paying for that out of my own pocket. There was a little bit more funding in that department, but it wasn’t part of the union contract bargaining. I think it was just a department that had different maybe funding priorities, you know, just generally for their graduate students. I don’t think I’m remembering this incorrectly, I think that was something that was just department-specific.

08:58 Emily: Gotcha. And were you also a TA throughout your PhD? Like that was your position every term?

09:05 Carly: I was. I was a TA, first teaching for the writing program, and then teaching for the English department, and getting my stipend through that and benefits which were very good and actually better than the benefits I have in my full-time alt-ac job right now.

09:24 Emily: What do you mean by that? What makes them better?

09:27 Carly: So, the deductible and coinsurance strategies that we usually get through our employer benefits. You know, when you lose the power of sort of negotiating for that and it just sort of gets handed to you from on high, it doesn’t take long to start seeing the differences in what are you going to pay in copay, what types of services are covered, and that kind of thing.

Paid Leave and Other Union Benefits at UMass Amherst

09:51 Emily: Gotcha. Let’s see, you talked about leave over the holidays, but–was built in the contract and maybe in contrast to when you were at Purdue–any like other kinds of paid leave? Or maybe you didn’t access this but you know about it, like maybe parental leave or short term disability leave, anything like that?

10:12 Carly: Yeah, there were different leaves that were available. There was even vacation in our contract. Of course, no one ever took it because you’re teaching, right? So, it was pretty rare for anyone to actually, you know, do that. But if you were savvy enough about your union contract, you kind of notice those things. Or if you were sort of touching base with your union reps enough to sort of learn about some of the more specific–because a lot of times, and this makes sense, a lot of times residents were thinking about the pay. That’s really the main thing that they’re concerned about. But there are sort of these other things that you learn about that you have those benefits. If you’re sort of plugged into the union a little bit more and reading their emails and doing all that–it takes a lot of time though. Right?

10:56 Carly: And you know, grad students are always very busy. So, you know, no shame for people who didn’t know about some of those details. But if you were plugged into it, there were different things. Some things that, you know, were negotiated in the contract were, like, paid parking. So, if you just want to park on campus as a grad student employee, everyone knows that can be very expensive. But the union had actually negotiated certain rates for graduate student employees to lower those costs. So, another benefit was, one of the bargaining years that I was there, the bargaining team negotiated access to all-gender restrooms where you’re working. So, in these huge campuses, right? You know, it’s not the same experience for everyone in every department, every building. And that’s something that you should be able to use the restroom and feel comfortable and safe. And that’s something that was actually written into the contract. So, that was a huge one.

11:53 Emily: Yeah, that’s super interesting. Yeah, interesting that we get down to that level of sort of granular detail, right? Like you were saying, it’s not just the pay. There are all these benefits and other working conditions that can be brought to the table. And like you were saying, I think something that is useful to think about is that when you have a union in place, it sort of brings all the disparate parts of the different departments–for example, like graduate students in different schools and different departments at the university–it brings them to the same like playing field and gets them all the same benefits. And it’s not like there’s going to be this level of pay and benefits over here and this over here. Is that correct?

Departmental Differences in Pay Rates and Raises

12:35 Carly: There was still some difference in pay. So, for example, I worked for the writing program my first few years and we had the lowest hourly pay. It was still way better than what I was getting at Purdue. I think it was something like $22 an hour when I started at UMass, but there was a minimum wage on campus for graduate student work, and we were making that minimum wage. So, if you’re coming from a different department that’s more well-resourced or you know, maybe use this recruiting tool, then you may get paid more. My husband was in the linguistics department and he got paid more than me, and I just was always annoyed about that.

13:15 Emily: So, the union helped establish the minimum wage across the university, which your department said, “Yup, that’s what we pay.” Did the union also negotiate the pay rates at other departments? Or is that just the department saying, “Okay, we see the minimum, but we’re going to be paying more than that?”

13:33 Carly: I think that that’s what other departments would do. I can’t speak specifically to that, but I think that that’s how the disparities–and you know, when I say disparity, it was pretty minimal. It wasn’t a huge difference among the departments–but there was a difference. So that was sometimes annoying to me. But yeah, when they would negotiate raises, it was like a general raise. And so, how that might work out in particular departments might vary.

Additional Experiences with the Union

13:59 Emily: I see. So, aside from just being a student at the university, did you have experience with the union as not just a student?

14:10 Carly: I did. You know, I was already sort of interested in unions and so I was a steward at first, which means that you maybe come with someone to a meeting with their supervisor that they think might be a little bit tricky, and you come and you’re sort of a support person for them. And then I was in the leadership for the graduate student bargaining unit part of our union, because we were part of a–and some people who don’t know, there’s usually a much bigger organization like the United Auto Workers was ours. And then the graduate students at UMass were one shop as they say, one workplace, in that. So, I was in the leadership of that. And then I kind of just kept getting more involved and I volunteered on the joint council, which is where all of the shops, the workplaces, kind of have representation. And then eventually I was on the executive board as the secretary and that’s where you have like the president of the union and this would be over the entire union for us. It was UAW 2322. And so we had, I think there at the end about like 3000 members. So, there was a lot of opportunity to be involved and to meet different people. And so that was an interesting perspective.

15:21 Emily: Yeah. What an interesting opportunity for, maybe not work experience, but volunteer experience that is very professional as part of your graduate experience. Like, yeah.

15:33 Carly: Yeah. I have used a lot of that experience in, you know, my work even now working on committees with people who have extremely different backgrounds than myself. Just collaborating towards a common goal. Most of everything that I did was volunteer-based, but something that people don’t know sometimes is that, if your graduate students are unionized, sometimes there are paid positions within that shop, so to speak. That is a fellowship or assistantship that comes with the pay and benefits, you know, that we’re talking about. So, sometimes people would step into one of those roles out of their teaching fellowship and do one of those leadership roles for a year and then step back into the funding stream of their department, which was really great to have that kind of opportunity.

16:20 Emily: Yeah, that’s kind of some more jobs to go around. I guess.

16:23 Carly: That’s right.

Commercial

16:27 Emily: Emily here for a brief interlude. As a listener of this podcast, every week you hear strategies that another PhD has used to improve their financial picture. But listening and learning does not automatically translate into action in your own financial life. If you are ready to change how you think about and handle your money but need some help getting started, I can be of service. There are two main ways you can work with me to create and implement a financial plan tailored for you. First, I offer one-on-one financial coaching, either as a single session or a series as you make changes over the long-term. You can find out more at pfforphds.com/coaching. Second, I offer a group program called The Wealthy PhD that is part-coaching, part-course, and part-community. You can find out more and join the waitlist for the next time I open the program at pfforphds.com/wealthyPhD. I believe it’s possible to succeed with your finances at every stage of PhD training and throughout your career. Let’s figure out together how to make that happen for you. Now, back to the interview.

History of the UMass Amherst Union

17:41 Emily: So, you kind of talked about what your experience was again as a student at UMass. When was the union at UMass Amherst established?

17:50 Carly: This was established in the 1990s, so by the time I was there, it was a really longstanding, well-established union, sometimes even seen as a model for organizing in other places. Around the time I was there, the University of Connecticut organized as well. And so, yeah, there wasn’t a lot of memory of what that was like at first, although I think it was kind of tense, and I believe that the students did go on strike to help create that union. When I was there, when we would bargain every maybe two or three years–I think that’s right–it could get a little bit tense with the relationship in terms of like the bargaining team and the administration. But other than that, usually it was pretty calm. A lot of people didn’t know that we were unionized, which was kind of interesting and a little discouraging. If you’re involved in the union, you’re like, “Hey, you know, this is like this really great thing that’s happening here.” But yeah, so it was interesting.

18:52 Emily: So, while you were in graduate school, it sounds like since there were contracts being renegotiated every two or three years, did you see any changes year over year to those contracts?

19:06 Carly: For sure. So, we always would bargain–I’m now using the word “we” to just being “we the union,” I wasn’t on the bargaining team–but we always negotiated for higher wages. So, it was usually between a 2-3% raise. I’d want people to know that when you’re talking about one and 2%, you’re usually just keeping up with the cost of living. So, we get excited when it’s 2-3%, right? And you’re just getting a little bit higher than that.

19:33 Emily: Is that 2-3% over the two-to-three-year period or is that every year within that period?

19:40 Carly: Yeah, so because it was usually stepped up. So, maybe it would be 1% for the first year and then 2% for the second year, or something like that. And so, you would see gains over cost of living, I guess, is the important point. You know, one thing that people don’t think about sometimes is that if you’re not getting a raise that at least equals cost of living, your employer is paying you less money for the same work. And that’s one of the benefits of the union experience. You start to think in those terms a little bit, which everyone benefits when they’re kind of thinking about that for themselves. I guess the major point I want to make is that it was over the cost of living.

How About Changes in Fees?

20:21 Emily: Yeah. How about the fees? Because I mean, you said already that the fees were at least set up so that you could pay them with each paycheck. But something I’ve seen at other universities is, not only is the pay stagnant, but the fees are increased. The out-of-pocket fees are increasing. Did you see any changes to that fee structure while you were there?

20:43 Carly: I think our fee structure stayed about the same. I don’t remember any major changes with the fees. So, that’s not one thing, but maybe a different example of a gain would be the health insurance difference. So actually, and this is sort of a larger context and other union leaders that you interview can probably corroborate this, but a lot of union work and bargaining is holding onto as much of what you already had as you can because unions are not as powerful as they used to be. And so, usually when you’re bargaining, you’re trying to mitigate something disastrous that the management is doing. They’re usually slashing something and you are using your collective power to mitigate that as much as possible. That’s going to sound really cynical to some folks, but when we’re talking about the benefits side of things, it just is true.

21:33 Carly: So, for example, the insurance turned into kind of a co-insurance the first year I started. So, I don’t remember what it was exactly the year before I started, but I remember that they upped it to like a $5,000 deductible, which was a huge difference from before. And the union over time and a lot of effort was able to cut that to $2,500. That’s half. Right? Still wasn’t as good as it was before, but with the rising costs of health insurance and just unions just being what they are in the U.S. right now, that was what they were kind of able to do. You wouldn’t feel that difference if you don’t have like a major accident or a chronic illness, but for people who are experiencing that, it was a major difference for them.

Any Downsides or Tradeoffs with the Union?

22:20 Emily: Yeah. I appreciate you making the point about it’s not necessarily about seeing gains, like while again just a beneficiary of the contract, but rather you don’t know behind the scenes what is being pushed back against, you know, what changes might have been had there not been some bargaining power there on behalf of the student workers. Were there any downsides or tradeoffs you would say for the union being in place at UMass Amherst?

22:50 Carly: Right. So really the major thing is that you’re going to pay union dues, and depending on what state you live in, that might look different. So when I was at UMass, it was 2% which is something like two hours worth of labor, I think is the way that they figure that. And so there was the option to be an agency fee payer and now we’re kind of getting into the legislation around union membership and that kind of thing. And if you didn’t want to pay the 2%, and you could be an agency fee payer and pay 1.7% because of the laws in effect in Massachusetts at that time. Somewhere like Indiana, you could get away with paying zero, but you’re still covered because you’re in the bargaining unit. You still get all those benefits, anything that they bargain you get. If something terrible happens in your workplace, like you’re sexually harassed, the union is behind you 100% and they do all of the things that they would do for anyone else.

23:48 Carly: But then you’re either not paying the dues, somewhere like Indiana, or you’re paying a smaller amount. And so at UMass Amherst it was 1.7 or 2%. You’d be surprised how many people chose the 1.7. And I understand that because people are thinking, I want as much of my paycheck as possible. But you know, from my perspective it’s like, “Pay the 2% and be a voting member.” That’s kind of changing. There are some changes with legislation around that. I’m actually not sure how long Massachusetts will be able to do that. I think they’re about to go to a system where they can’t require that 1.7% anymore. But so, right. Paying dues. Something that people think about is a potential trade-off would be maybe the attitudes on campus around the union. Do we have an adversarial kind of relationship with the university? And that kind of thing.

24:40 Carly: And not really, I mean, if you’re on the bargaining committee, it could get kind of tense with the administration during that time, as I said before. But being part of the union or being a union member from my experience, didn’t make like my advisor feel differently about me. It didn’t make me seem like a troublemaker, you know. It was just, it was kind of normal because the union had been there so long. If I had been there during like the initial fight, I guess you could say it might be different.

Other Union Groups on Campus

25:09 Emily: Yeah, I can definitely see how that could be the case. But with a union in place for decades, it’s just kind of part of the landscape now. Were there any other union groups on campus? Like adjuncts or faculty or postdocs or staff members, anything like that?

25:23 Carly: Yes. So the postdocs were in the same union with us. They were a different shop, but within the same union. And they were you know, maybe like less active because they were usually on campus for maybe one or two years. The faculty were also unionized, but they were in a different union. The staff were unionized and they were in a different union. And then also I think Massachusetts at that time had legislation where any contract work that they did on campus, like construction, etc., they had to hire union workers or at least there were some incentives to doing that. So, If we marched around with signs about something like the co-insurance issue, we had support from all different directions. And sometimes we would have events and actions, you know, together. But I remember specifically one time marching across campus with a sign and the guys over here on the forklift doing whatever they’re doing construction-wise, like kind of honking and supporting us. So, it was kind of a cool way of being part of a community on your campus as well.

26:24 Emily: I’m really glad to get this picture of an established union for the graduate students and postdocs–or postdocs separately, different shop–but then also just pretty much most people on campus, right? Being part of one union or another. So it’s a very normalized part of the culture. So this is a very, I guess maybe could say like quiescent situation. Like, it’s just this is how things are at that university. So we may hear in other interviews I do in the next few months from some different situations where unionization is a newer concept or maybe only the graduate students are unionized, not other people.

26:56 Carly: Right.

Anything Else About Your Union Experience?

26:56 Emily: I don’t know. So it’s really interesting. I’m really glad to have your perspective there. So, anything else you want to add on this before we wrap up?

27:03 Carly: You know, I would say, just looking back on my time at Purdue, I remember that they made a change with our health insurance benefits once where suddenly like birth control was not going to be covered at all whatsoever. It didn’t matter what your doctor said, if you needed it to live, it doesn’t matter. Right. And I remember being really angry about that and not feeling like I could do anything. If that had happened at UMass Amherst, hell no. That would not have gone without a fight and it probably would have eventually gotten into the contract that that has to be covered. And it was covered. That kind of thing was covered through our insurance. So, you know, just looking back, you think a lot differently, and I feel really grateful that I was part of that and I was actually able to do research and writing, which is what you’re there to do. So, it was great.

27:48 Emily: Yeah. It sounds like your experience at Purdue, versus at UMass, that you were much more supported as like a well-rounded student, I guess you could say. Which is kind of a funny thing to say when we’re talking about unions because we’re really focused on employees, right? Like the important part is that you were an employee of the university and therefore were part of this bargaining unit and so forth. But what I’m thinking of is that you really were supported more as a whole student rather than at Purdue, it sounds like you were treated like you’re a TA. In terms of the relationship between the university and you, that’s what they cared about. You’re serving as a TA, that’s what you’re being paid for, et cetera. Maybe you had other types of relationships with other people there, but in terms of the administration, they saw you as a worker who was just there to perform some task.

Grad Students: When are you Working versus Studying?

28:41 Carly: I see your intuition, totally, but it’s almost the opposite. And let me kind of explain that. So, at Purdue, if there was pushback about something like pay, et cetera, the rationale that the university would give is this is your stipend, this isn’t wages. You’re a student and this is a stipend that you get. Because if they thought about us as workers, then they would have to reckon with what are we getting paid hourly, right? What does that calculate to? And that was some of the rationale against some agitation to unionize while I was there. Actually there was some movement towards that, which is a whole other story. But yeah, that was usually their argument if someone had to complain about something. At UMass, they saw us as workers more than at Purdue, and we benefited from that.

29:31 Carly: But sometimes there was still a little bit of that. If there was something that someone’s complaining about, if they could benefit by seeing you as a student for these purposes and as a worker for these purposes and they could work the system to sort of benefit in certain ways. And usually when we insisted on being seen as workers, that’s when we would usually do the best. So, it’s kind of interesting that you say that because it kind of gets us into the heart of that question is like, when are you working and when are you studying? And I would argue that you really have two jobs. One is the thing that you’re getting your pay and benefits for, and the other thing is your research and writing and thinking. And that’s also your job.

30:09 Carly: And so, if you’re at a place where you’re unionized, you can do both of those jobs. If you’re at a place that isn’t, you may find that you’re only doing one of your jobs because the rest of your time is your side hustle to try to kind of make up for the pace. So, that’s kind of a long-winded way of saying that you’re really hitting at the heart of the question, which is when are you a student? When are you a worker, and why does that matter? What are the implications for that?

30:31 Emily: I’m so glad that we got to that additional level of insight on this. I guess that I was thinking more so, and you brought this up too, is like that the university maybe in a nonunion situation sees that their graduate students are both employees and students, and they’re going to do whatever’s best for them in terms of, do I want to treat you more as a student? Do you want to treat you more as an employee? Well, we’re just going to do whatever is in our best interest. The dual relationship in that case can work against the student worker. Whereas, it sounds like what you’re saying, at least in the case when you have unionized in terms of your work, that is more protected, and then you as an individual can have that protected part of your compensation, your benefits and so forth, be able to enable you to do the other part of your job as you said, which is actually what you’re in grad school to do, like kind of scholarship and your own professional development. Does that sound right?

31:31 Carly: Yep, absolutely.

Financial Advice for Early-Career PhDs

31:32 Emily: Okay. I’m so glad we got there, and so last question as we wrap up, Carly, which is just what I like to ask everyone. What is your best financial advice for another early-career PhD?

31:43 Carly: I would say, and this is right from what we were just talking about, which is what you’re doing is work, and it’s labor. And don’t forget that, and think about what it’s worth. And when you’re doing things, think about how is that coming back to you in terms of hourly work. So, thinking about how much time you’re spending on different components of your teaching and your research and your writing, and how is that coming back to you and what’s it worth to you? Sometimes people say don’t do anything for free. Maybe sometimes, but like know what you gave away, right? Know what was the value of that. And it has really helped me think about like my career steps afterwards and thinking about what I’m worth and what I want. So yeah, what you’re doing is work. It is.

32:32 Emily: Well, thank you so much for this interview, Carly. I really enjoyed speaking with you about this really sort of topical and timely issue in getting your perspective from those two different institutions you’ve been part of. So thank you.

32:46 Carly: Yeah. Thank you so much for having me. It’s been a pleasure.

Outtro

32:49 Emily: Well, listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

This Higher Ed Career Coach Worked Her Way Out of Financial Ruin Caused by the Great Recession

November 4, 2019 by Meryem Ok

In this episode, Emily interviews Beth Moser, a certified career coach specializing in higher education clients pursuing career change. Beth was All But Dissertation and pregnant with her first child when the Great Recession hit Phoenix and she was laid off from her museum job, so she and her husband lived on his graduate student stipend and the money she earned from odd jobs. Their home also lost enough value so as to go underwater, which tied them to Phoenix long-term while the value recovered. These events brought them to “financial ruin,” and they spent the next several years digging themselves out of that hole. Beth and her husband pursued several strategies to improve their finances over the coming years, including a career change for Beth, slashing household expenses, better financial management, and working with a financial advisor. Beth concludes with excellent money mindset advice for younger PhD trainees. You can find Beth at Academics at Work.

Links Mentioned in the Episode

Teaser

00:00 Beth: I don’t have a dime to save. What are you talking about? There’s no point. And now I’m like, now having seen the power of stashing away $5 here, $10 there over time. I’m like, huh, what actually could I have saved? What might have been?

Introduction

00:23 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode 12, and today my guest is Beth Moser, a certified career coach and the founder of Academics at Work. Beth was ABD (all but dissertation), married to another grad student, and pregnant with their first child when the great recession hit Phoenix. She was laid off from her museum job at the same time their house went underwater, which brought them to what she calls “financial ruin.” Beth and her husband lived on his graduate student stipend and the money she earned from odd jobs while she reevaluated and eventually changed her career objectives. To climb out of that hole, they slashed their household expenses, implemented basic and advanced budgeting techniques, and worked with a financial advisor. Listen through the end of the episode to hear Beth’s excellent advice for PhD trainees regarding money mindset. Without further ado, here’s my interview with Beth Moser.

Will You Please Introduce Yourself Further?

01:26 Emily: I have joining me on the podcast today Beth Moser who has, well, quite a story for us, quite a financial story from her own personal life relating to her family and pursuing a PhD and having children and the great recession. So I’m really excited to dive into this story. Beth, would you please introduce yourself to us a little bit further? Tell us about your family and your career to date.

01:51 Beth: Sure. Thank you so much for having me, Emily. So my name is Beth Moser. I’m a certified career coach and I specialize in coaching higher ed clients who need career change. As part of that, I am a training manager who does professional development workshops for graduate colleges, for graduate students, postdocs and faculty on why they need to be incorporating this into their own lives and into their curricula. So I work in higher ed as well. I am married, I have a spouse who is an academic, and I have two children. But when this financial journey that we’re going to be talking about today started, I didn’t have children. So that was some time ago. And I live here in Tempe, Arizona.

What Led to Your “Financial Ruin”?

02:48 Emily: Yeah. Excellent. So let’s go back because what we’re going to be talking through here is kind of a perfect storm of events that brought you to–what you described to me when we talked for this episode–you described this to me as “financial ruin.” A sequence of events that brought you and your husband and your family to financial ruin in the midst of, you know, pursuing degrees and so forth. So, let’s find out what that was. What was the sequence of events here?

03:20 Beth: Sure. Yes, so some of this is unique to us and our circumstances and the timing. And some of it I think a lot of your listeners and readers can relate to. So, I went to get my PhD to go into what’s called an alternative academic or “alt-ac” career. I went to get my PhD so I could get a job in museums. And so, when I came out of working through my coursework and was in the midst of my dissertation, I landed a full-time job in the museum’s field, which was my ultimate goal. As you might surmise, it’s not a very well-paying field. Museums are of course, nonprofits. And so, when I started my first full-time job in 2006, I was making about $36,000 a year with no benefits. So, when I went to work full-time, my husband and I switched off.

04:25 Beth: He had wanted to get his PhD as well. So, since I had landed a full-time job and my career, he quit his full-time job to go start his PhD program. So, he got a stipend of making about $12,000 a year. So, total, I mean, for the two of us, for a single couple in their thirties, we were making about $48,000 a year in the Phoenix metropolitan area. So, not great, but not horrible either, especially when you’re considering we didn’t have children at that time when we moved here. For his PhD program, we bought a home because we thought, you know, well we can and that will keep our costs lower than rent. And so, we were fortunate in that respect, at least at the start. So, for the first three years of my full time career, I was not making more than about $36,000 a year.

05:26 Beth: But within three years with position increases and promotions, I eventually was making $50,000 a year plus benefits. I finally was making benefits, but that’s the first time. In my mid-thirties was the first time I started getting any employer retirement plan of any sort, including any employer match of any kind. So, I got started on saving for retirement relatively late into my career. Okay. So, in the midst of that I finally got pregnant. We had wanted to have children. I was three months pregnant when the recession had started hitting and I got laid off from the museum that I was working on. At that time, we spent four months surviving only on my husband’s graduate school stipend and me taking odd jobs here and there. You know, babysitting, working an office job for people for, you know, 12 bucks an hour, but nothing steady.

Aftereffects of the Great Recession in Pheonix, AZ

06:31 Beth: And then, when I was seven months pregnant, I finally landed a full-time benefits-eligible permanent job at a higher ed institution. But I only had two months of paychecks there before I gave birth and then had eight weeks of unpaid leave. So, during that summer in 2011, you know, we had already had three months of me not having an income. Of us surviving on my husband’s pretty paltry stipend, and then having the enormous cost of diapers and you know, cribs and strollers and car seats and all of that with no income on my part. So, in the midst of all of that, our lives were changing financially. They were changing personally. They were changing in ways big and small. In ways that were amazing and incredible, but also incredibly challenging as you can imagine. So, what finally led to what I call financial ruin is the aftereffects of the recession hit particularly hard here in the Phoenix area, and the home that we were living in lost over 50% of its value.

07:48 Beth: So we could not consider moving to downsize our living expenses because we were what’s called “underwater.” That meant that our home was worth far more than what we owed on it. And we did not qualify for state or federal programs to offset that or alleviate that to get out from under that because we were, and this is a great irony, too far underwater to qualify for that program to help us. So we found ourselves, you know, in the first year of our first child’s life, really relying on credit cards, unfortunately, relying on piecing together unemployment in odd jobs for several months, falling behind on monthly bills, and then finally starting to catch up once I was back at work full-time after parental leave. But it was really, really difficult to climb out of that over the next several years. So, that’s what I wanted to talk with you about today.

08:56 Emily: Yeah. Beth, thank you so much for that introduction. Oh man, it’s taken me back. I didn’t personally experience hardship during the great recession, but it’s taken me back to all the media coverage and everything because I was very involved in the personal finance, you know, sphere at that time. Just a terrible situation that so many people were in. You were not alone in being so far underwater, especially in your particular area. And wow, I’m really glad to have the opportunity to talk with you to get the second half that story. Right? Because we know that so many families were hit so hard by the recession. And of course with you personally, it ended up coinciding with, as you said, a wonderful time of life but also a particularly challenging time of life, especially financially challenging that is having your first child. So, I’m really glad to hear how you ended up climbing out of that because I think that’s the part of the story that we don’t hear so much. And especially how, you know, you did that as a person who was in higher ed, is working in higher ed and also your husband still pursuing his PhD at the time that we’re, you know, picking this up. Is that right?

09:57 Beth: Yes.

Strategies for Financial Recovery

09:58 Emily: Yeah. So, thank you so much for sharing that with us. So, okay. The strategies that you were using to climb out of the financial ruin and it’s taken, what, we’re going on eight years, it sounds like? Since this point you identify as like the low point?

10:12 Beth: Right.

Recovery Strategy #1/4: Increasing Income

10:13 Emily: So, it’s been quite a while. You’ve probably tried a lot of different things. So, we’re going to break down your strategies into three main categories and then kind of a catch-all. And so, the first one there is regarding increasing income. So, how did you do that? Aside from, as you just said, you landed a job. You actually weren’t out of work for too long, relatively, that’s not so bad. So, aside from that, again, a full-time job with full-time pay, what else were you two doing to increase your income?

10:41 Beth: So, when I was laid off from museums, I decided that that was the end of that career, unfortunately. I mean, that had been the goal of me going to graduate school. That had been the focus of my dissertation work. It was my passion. But when reality hits you, and especially when your life changes and your marriage becomes more of a priority or your partnership and having a family or children and other things outside of yourself that you have to consider financially, it just became really real that it was time for me to grow up, perhaps. I don’t really like to use that phrase, but to really get real with myself about what my financial needs were and what ours were in providing for, you know, a tiny child who was going to grow over the course of our lifetime. So, strategy number one was to accept and work through that difficult decision to close down one career and change directions.

Recovery Strategy #2/4: Decreasing Household Expenses

11:47 Beth: So, that helped me prioritize. I need something that pays at least a livable wage for myself and has great benefits including retirement plans and matching and of course, great health insurance in order to just, you know, close that chapter and move forward. So I targeted my job search exclusively to sectors and employers where my skills would transfer, but that was my priority. Finding employers that would pay a much better wage and that would provide those benefits. So, that was strategy number one in increasing my income: being really targeted with what sectors I was applying for and networking in and going after. The second strategy was to decrease our household expenses. Now, as I alluded to, we weren’t able to decrease our housing expenses. So, while our neighbors were scooping up the exact quality of homes at literally 50% of what we were paying for our mortgage monthly, we could not address that one. We tried to qualify for a program, a HARP program was what it was called and we didn’t. So, that was a fixed expense.

Did You Consider Taking the Foreclosure Hit?

13:11 Emily: I want to jump in there with a question because I do remember at the time a lot of people were walking away from their homes that were too far underwater, taking the foreclosure hit to their credit and just saying it’s too far gone. So you guys didn’t go that route. Did you think about it?

13:25 Beth: I did think about it and I consulted with others who had done it and people who had not done it. I decided not to do it because I held my credit score tightly at value. So I knew that we were going to come out of this someday (our financial circumstances). And I didn’t want to also have to tackle just a really horrible credit score because that can take years to repair as well.

13:52 Emily: Yeah, it sounded like it didn’t get to the point where you had to walk away. There may have been a point that it could have gone that direction, but because it sounded like you did an amazing job searching for and networking for the new job, it didn’t get to that point where it was a necessity.

14:07 Beth: Correct. Yes. And so, we sat down and we looked at what can we downsize on as far as our monthly expenses. So, we went down to sharing one vehicle. That way we didn’t have to carry insurance on the other car. We wouldn’t have gas expenses on the other car. We live within walking distance to grocery stores and coffee shops and so forth. So, we started walking to the grocery store decreasing mileage and usage of our vehicle and gas expenses. So, we would coordinate going to and from work together so that we had that only one vehicle expense. We used my husband’s vehicle because he did not have to pay for parking at his work, but I did at mine. So, he would drop me off, drive off to his job, park for free. He would come back and get me at the end of the day.

15:09 Beth: And then we really cut down on all like entertainment expenses. We got really lean and mean about it. So we dropped streaming services of all types. We didn’t even have the Netflix DVD service, which existed back in that day still. We didn’t do any movie rentals. We wouldn’t go out to movies. We cut down on eating out. And I mean, like by cut down, I mean, we did not do it. So, we got really disciplined about what expenses are necessary and which ones would be nice to have again in the future, but that we can’t afford right now. We made huge use of our libraries. We would rent DVDs and movies and streaming there all the time. But it just meant that we did not have the luxury of having, you know, just flip on the TV and whatever’s on tonight is what we’re going to be able to watch.

Decreasing Expenses while Starting a Family

16:05 Emily: How did this effort in decreasing expenses play with you having a baby for the first time? Because I think there’s an idea in our culture that babies need a lot of stuff and you have to provide a level of care for children. I don’t know. So, how were you handling applying the decreasing expenses mindset to your first baby?

16:30 Beth: So, one of the things that we did was I sat down with women friends of mine who had recently had babies and said, okay, you know, you go to the baby websites and you go to the stores and they give you this like, you know, flip book of all the things you need. Okay. What are the absolute essentials that I must have? And so for instance, people were saying, okay, yes, they’re going to tell you you need a pack and play. But really here’s my bassinet. My baby doesn’t even fit in it anymore. Use it for the first three months. And then when she needs to grow into a crib, we can go, you know, get you a crib at Target or whatever. You don’t need, you know, this, that or the other. You don’t need toys yet. She’s too little.

17:19 Beth: So it really helped me focus in on like: these are the absolute bare bones essentials that you need to have a baby. And just having, you know, that critical mindset about what we consume. Right? And I mean, if you think about it from the “this is a first-world problem” perspective. Like thinking about, okay, well families who live in tiny apartments in giant cities around the world or in smaller, more humble circumstances, they don’t need these things for their babies and their babies grow up healthy and beautiful too. So, just really being critical about the buying, what we could borrow from friends. Using secondhand stores for buying baby onesies and that sort of thing. And then luckily I was able to nurse so I didn’t have the expense of formula. I say, luckily I was able to, because there’s also this cultural presumption that, “just nurse and you’ll be fine.” But that is not always an expense that can be eliminated. I know many women who have been either physically unable to nurse or their baby can’t nurse and formula is no joke. It is really expensive. So, I do recognize that that was something we lucked out on.

18:38 Emily: Yeah. Thanks for those comments. I want to jump in here with some comments of my own as I have two children that are fairly young. So, it’s a recent thing for me. The first is, this is kind of weird, but my husband and I watched the documentary, which was available on Netflix, maybe it still is called “Babies.” It’s like a no-narration documentary just following these four babies in different countries through their first years of life. And so, it’s a really fun, funny kind of documentary. But what we took away from that is babies thrive in all kinds of different situations. Like, they’re good, they’re gonna develop, no matter if you have this, you know, doodad or this gadget or you do this thing this way or that way. You know, babies are very adaptable and, you know, robust and so it’s going to be fine.

Any Other Strategies to Decrease Expenses?

19:23 Emily: You know, no matter what you choose, it’s going to be okay. So, we enjoyed that and I’d recommend that to someone who is looking forward to becoming a parent. I really liked what you did in talking with multiple, other new mothers or recent mothers or recent parents to get their perspectives on what you actually need. I say multiple because babies are also very individual. And so, what was essential to one parent might not have been essential to another parent, might not be essential to you. And so it’s great to get an idea of from several different people. “Okay, that one person said that one thing was essential, but I didn’t hear that from, you know, so and so and so and so. So maybe I’ll hold off on that.” And I just think the idea of, as you said, like babies don’t need all the stuff from their first two years of life upon their birth. Right? You can acquire these things slowly as you determine that they actually make sense for you. So, it doesn’t have to be a buying binge like right at the beginning. So, Please continue on. Were there any other ways that you decreased your expenses during that period?

20:23 Beth: I mean that was the main thing, the main categories. We couldn’t, you know, decrease utilities or we couldn’t drop Wi-Fi. So those were the main things, like any entertainment sort of things. And then the other thing, you touched upon this earlier, are these like cultural messages that we receive as new parents. And one of the big ones especially that I see is like date night and how important it is to remain committed to your partner. Yes, that is of course important. But for the first six months of your baby’s life, you are so tired that even if someone had come and offered us date night, we would have been like, where’s the closest place where we can go take a nap? You know, so that was not something that we had any interest in spending money on anyway. But we really didn’t use a sitter. We didn’t go out for that sort of thing, honestly, for the first year at all. I mean for like birthday dinner out or something like that, we had a friend watch the baby. We would trade off and say like, “Hey, the baby’s very calm during mornings, so let’s go out and have a leisurely brunch together and bring the baby.” Right? Like you don’t have to buy into this messaging about how much children have to cost.

21:46 Emily: Yeah. Great, great point.

Commercial

21:51 Emily: Emily here for a brief interlude. As a listener of this podcast, every week you hear strategies that another PhD has used to improve their financial picture. But listening and learning does not automatically translate into action in your own financial life. If you are ready to change how you think about and handle your money but need some help getting started, I can be of service. There are two main ways you can work with me to create and implement a financial plan tailored for you. First, I offer one-on-one financial coaching, either as a single session or a series as you make changes over the longterm. You can find out more at pfforphds.com/coaching. Second, I offer a group program called The Wealthy PhD that is part-coaching, part-course, and part-community. You can find out more and join the waitlist for the next time I open the program at pfforphds/wealthyphd. I believe it’s possible to succeed with your finances at every stage of PhD training and throughout your career. Let’s figure out together how to make that happen for you. Now, back to the interview.

Recovery Strategy #3/4: Sticking to a Budget

23:06 Emily: Okay, so the third kind of category that we want to talk about is financial strategies or financial management. So what, aside from increasing income and decreasing expenses, could you do with your finances to help you through this period?

23:19 Beth: Okay. So, one of the things that we did was, and this is not going to be eye-opening to you, but it really was to us, was to finally follow the adulting advice of creating and sticking to a budget. I know how insane that sounds for people in their thirties to finally like “adult up” and sit down with an Excel spreadsheet and say okay, how much is Wi-Fi, how much is our utilities, how much is our car insurance, how much is our mortgage? But we started looking at that and sticking to it. So, that was first and foremost was getting real about these are our expenses.

24:07 Beth: Burying your head in the sand and pretending like, “Oh, you mean I have to pay my cell phone bill every month?” That’s not a viable strategy. So, actually facing the reality and the facts was another strategy that really helped us. You know, I think as academics in particular, you get a lot of messaging and a lot of training in your self-worth and therefore perhaps your, you know, financial value being wrapped up in your job title and what you tell people you do. But you cannot ignore the financial realities of what you have to provide for yourself and your family. And I don’t think there’s enough about that in graduate school for any of us. And I think for those of us who aren’t in graduate school in MBA programs or accounting or finance, like it’s just, you know, sort of back of the mind consideration. And so we finally decided to get real about that.

25:12 Emily: Yup. Classic advice, but always perennially good. And I kind of feel like, I guess I feel like some people can get away without budgeting if they make a lot of money or if they have very, very, very, very, very simple lives and simple desires. But 97% of the population I feel like would benefit from keeping a regular budget. So, it sounded like it took you a little bit longer to get there, but when the need was high enough, you did and you found it to be a useful tool.

Maintaining Your Budget for Continued Savings

25:44 Beth: Yes. And so, one of the ways we use that tool was even as we started to catch up on the backlog of expenses that we had been tacking onto credit cards out of necessity. So, we started to tackle debt. But then as my income rose over several years–because I stayed in this full-time role, I found a new career, I was doing good work, so I was getting promotions and increases over time–we maintained our budget. So, we could use that extra income not to like restore all the streaming services, and sign back up for the premium whatever, and start doing date night once a month, but to focus on getting rid of that debt and then start to tack away even tiny amounts for savings.

26:35 Emily: Yeah, you really had a large hole that you had to dig yourselves out of first before you could even consider increasing things on the lifestyle side. And again this is not, I mean, none of this was like your fault, right? Like this is all just what happened like nationally and in your housing market in particular that caused this. And I’m sure that, you know, it took so many years of sacrifice to do this and it must be frustrating that like you were kind of just generally a victim of what was going on, like more generally. So anyway, it must have been frustrating and difficult, but I really admire that you stuck at it and you stuck with it for so many years to ultimately get ahead.

The Benefits of a Financial Manager

27:14 Beth: Yeah. And so, one thing we did was we decided to add on one strategic expense and it was a huge expense to us at the time, but we met with a financial manager two times. So, I can’t quote this for sure, but I believe each session–I know each session was an hour–but I believe it was $150 an hour. And that was a huge add on for us at the time. But the knowledge and the toolkit that we came away with like has paid off in spades for years to come. So one of the things she did was she took our budget and she tried to convince us–and the first session, it was a little hard for us to hear this–that we did have spare room in our budget to start saving. And we were like, no, we really don’t.

28:10 Beth: But she actually did the math and she did some forecasting with us and she showed us that if you make your savings automatic and you start putting that away before you can even see it in your checking account so it’s not there for you to spend or consider spending, then you can honestly start to build up savings. And so she taught us about, we used a tool called Capital One 360. It’s an online bank and within that particular bank it’s free to set up an account and you can set up as many accounts as you need. So we set one up, for instance, for future child activities, like day camps during the summer or sports lessons or whatever. We set up one for travel with, I mean, we weren’t traveling at the time, but we were like, “Hey, maybe we’re going to want to take a big beach vacation, a weekend trip to San Diego one of these days.”

29:10 Beth: So we set up these little goal buckets in Capital One. And I’m telling you, like five bucks out of that paycheck and 10 bucks out of this paycheck, and what seems like a coffee here or a lunch there. Really small amounts. We were so skeptical that this strategy was going to work, but she had seen it work before and she had the expertise to back it up. So we said, we’ll give it a shot. And I have been continuously blown away by this, and I still use it to this day. So, within our first year of trying this, even with our really modest higher ed incomes–and my husband had finished his graduate school programming at that time but was on the job market, which as we know is problematic. So he was adjuncting only so we were not living large.

30:04 Beth: We were not high on the hog. We had climbed out of this debt and so forth, but we were not like, you know, going on extravagant vacations or anything like that–but in the first year we were able to save about $5,000. And then the second year, $10,000 on top of that. So, it completely blew me away that like five bucks here, 10 bucks there. Oh, I have a few extra dollars left over from grocery shopping. Okay. Tuck that away. We’re actually going to go put that in the ATM and transfer it over to the Capital One 360 funds and then we’re not going to touch those funds. They’re there for those goals. Just leave it and forget it. And they’re not making huge interest. Right? Like we are not talking about anything more than the interest rate you’d get at your bank or credit union. So, it’s not like this is some investment strategy. It’s literally just set it and forget it but don’t touch it. So that was a huge eye-opener for us.

Financial Advising Tip #1: Targeted Savings Accounts

31:08 Emily: I really love that you brought up this strategy because it’s one of my favorite ones. Especially for, you know, grad students and postdocs, people with lower cashflows, but I talk about this very, very frequently. I call it targeted savings accounts. Other people call it sinking funds. I’m not sure what term your advisor used, but it’s exactly what you described. Putting away a small savings rate with every single pay period. And then pulling the money back out when you have those, you know, a reason for it. If you want to take a trip or maybe you have car repairs or whatever the buckets are that you’ve set up. I also have seen this work in my own life and other people’s lives. And it is amazing that there’s actually a difference between saving in theory and saving in reality.

31:51 Emily: Like you might tell yourself, “I never have money, you know, I never have $5, $10 leftover at the end of the month. How could I possibly be saving anything?” Or like, “Oh yeah, I’m saving but my savings are just sitting in my checking account and oops, I actually kind of spend them from time to time without thinking about it.” It’s amazing what a difference it makes to actually sequester the money away from your general cashflow. And I really love that you particularly use Capital One 360. My husband and I currently bank with Ally, which has the same kind of structure, but I used to bank with Capital One 360 and it was totally great and you know, no big reason for the change, but I also set up targeted savings funds there. So, if anyone’s looking to implement this strategy, using an online bank like Capital One 360 or Ally is a really good choice because some of the larger brick and mortar banks might charge you fees for having accounts open or maybe they’ll charge you a fee if your balance drops below a certain amount.

32:45 Emily: And when we’re talking about these accounts, the balance might be $5. That’s all that might be in there at one point or another when you’re starting out or if you’ve just depleted it. So, it’s really important to have an account that has no minimums, and Ally and Capital One 360 both offer those kinds of accounts. So, really good tip to check those out. In particular, if you like this strategy, and I’ll link in the show notes some more writing I’ve done about this strategy. But thank you so much for describing it Beth.

Financial Advising Tip #2: Use Cash for Day-to-Day Expenses

33:09 Beth: Yeah, I mean it’s been huge for us. So, the other strategy that our financial advisor had us use was to use cash for all of our day-to-day expenses. And I’m not talking about the complicated, here’s the envelope for groceries and here’s the envelope for eating out and like figure all of that. No, just take a lump sum of cash out of each paycheck. And it sounds like a lot, like maybe it’s $400, maybe it’s $800. That, you would have to consult with somebody on, but use it for all your groceries, your cleaning supplies, your coffee shop runs, your lunches out, the beer happy hour after work, whatever it is. And the reason for that is, for whatever psychological reason, whatever behavioral economists call this, you really do think twice about that purchase when you’re using cash, much more than you would with your debit card. So, it has been incredibly powerful and honestly, I get a charge now at the end of every two-week pay cycle where I’m like, “Haha, I still have 40 bucks left over, and I’m actually going to shove that into my Capital One 360, because I actually do want to do like a trip to Denver next year and go have some amazing food and beer. And that’s going to be way more fun for me than using this 40 bucks to go out to lunch a couple of times this week.”

34:39 Emily: What I really love is with your leftover money that you saved it. You weren’t like, “Oh, leftover money. Yeah, great. I’m going to blow it. Like it’s already been accounted for.” You’re like, “No, I’m actually weighing like should I use it for this purpose in the here and now or should I use it for this purpose? Maybe it’s a longer term thing that I’m saving for.” And sounds like much of the time you said, “Nope, I have this other goal, I know exactly where this money is going to go, it’s going to give me more pleasure, more satisfaction to put it over here. Even though it’s, you know, saving in the meantime but it’s saving to spend in the short term.” So, I really love that you actually followed through on that because that’s the part that a lot of people don’t do is the last final step of actually saving the money that they have available to save.

Recovery Strategy #4/4: Research Your Resources

35:18 Beth: Yup. And the final strategy, which I’ll just touch on briefly, is it’s a lot of hard work and it’s a lot of discipline, and that can get tiring over time, but it pays off. So for instance, in 2013 when we had our second child, okay, childcare expenses are about to skyrocket. Like you wouldn’t believe. Well, okay, so let’s take the time and do a lot of research and homework and find a childcare share situation. So for that, we were able to find a place that during the academic year we had part-time childcare and we could take summers off but still hold our place for the next academic year. So that way during summers when my husband was adjuncting only online courses, he would watch the children at no childcare expense to us. So, it’s really hard to find that sort of circumstance, but you might have something equivalent in your life that it’s going be hard to find, but it’s going to be worth the effort to find.

Were There Any Other Strategies You Used?

36:23 Emily: Yeah, it just shows the creativity and the resource in terms of the time you were willing to put into researching certain things is not easy, as you said. But when you can apply those things, you can come up with financially pretty frugal solutions that still work for you. Okay. Were there any other strategies you want to get to that you were using during the period of those years?

Curate Social Media Exposure, Find Your Support System

36:47 Beth: I think a lot of it was trying as much as possible to curate what we looked at and saw. So like staying off of some social media sites where everybody’s flaunting their amazing vacations and you’re like, “Oh, I’m missing out on that.” Or you know, I started reading a blog for instance, about a woman who decided to see how much she could save by bringing her lunch to work every single day for an entire year. So just seeking out where you could that support system, whether it’s virtual or in real life, being really mindful about not going to those after-work happy hours where you know, “Okay, sure. One beer. Well, now I’m hungry, I’m also going to get an appetizer.” So really just being mindful about surrounding yourself with the support system you need to stay on track.

37:45 Emily: Yeah, and I think within an academic setting, I would imagine you can find those other people. Those frugal friends, the classmates who are living on the same kind of income that you are. I’m sure you can find other people who are living above their means in some way or another. So it’s not necessarily everyone in that setting, but you can definitely find that support system. And I did, I know during graduate school because I happened to be very open about talking about money. Other people who were open to talking about money realized that about me and we became friends around that common interest, I would say. So they exist. You might have to sniff them out, but the support systems do exist. Okay. Beth, I think we’ve gotten through the strategies you used to recover from the financial ruin on as you’ve been doing over those several years and since then. So, is there any advice that you would give your past self? You know, anything that you wish you had considered or wish you could have done differently during that time? Given that again, a lot of these forces were completely out of your control.

Final Financial Advice to Oneself

38:49 Beth: Yes. Yeah. So yes, I have two really key takeaways that I wish my younger self would have known. The first one is I wish I had had the ability to more critically consider my future financial needs when it came to choosing a career. So my initial career I was dead set on working in museums and even knowing the realities of the job market and the pay and, you know, how long it takes to get a livable wage in that industry with benefits. I still chose to do it. And it’s not that I regret that at all. It was an amazing experience. But if I could have somehow talked myself into considering like, “Hey, you probably do want to get married someday, you probably do want children. It may be that you’re going to have changes in your life that shift around your personal priorities and some of those are going to cost a lot of money.” I wish that I could have taken that into consideration when making my career choice more deliberately and not tossed finances to the wind as if like, “Well, you know, we’ll figure out how to make it work with whatever this industry pays.”

40:07 Emily: Yeah. It sounds like you were forced to do that, right? When you were laid off from your museum job and you totally did this reevaluation and had gotten to your new career path. That was when it had happened, but maybe you could’ve done that a little bit earlier. And if you go to the show notes, I’ll link from this episode a whole other discussion I had in season three, I believe it was episode six with Scott Kennedy. And we talked again about that same subject of how the reality of “he wanted to have a family, have children” and how did that affect his career decisions in terms of which career paths will pay enough to support a family versus others. Because there are plenty of things you can do because you have a great passion for it that might support a single person but probably not a family. So in that episode, he also grappled with the tough thing of closing a door to a career path that was very attractive to him and turning to something that was also attractive but going to pay quite a bit better. So thank you for that point. What was the other one you wanted to make?

Learn to Critically Examine Your Self-Talk

41:10 Beth: So the second is I would tell my younger self to really hear what you tell yourself and that are truths and beliefs that you have about your money. Because they may not turn out to be true at all. That is the case in my instance. So now, you know, knowing how much I’ve been able to save by this sort of, I forget the term that you use, but this automatic savings out of my paycheck into these Capital One 360 accounts. I wish I had tried that a long time ago. Because I’m sure–in fact I know–I was telling myself in my twenties and before all of this happened, like “I don’t have a dime to save. What are you talking about? There’s no point.” And now I’m like, now having seen the power of stashing away $5 here, $10 there over time, I’m like, “huh, what actually could I have saved? What might have been?” So I really wish I had been able to critically examine that self-talk.

42:17 Emily: Yeah. Thank you so much for making that point. And I think it’s a really common one among graduate students or PhD trainees in general. You know, “I’m meant to be living close to the bone during these years. I’m not meant to be paying off debt. I’m not meant to be saving. I’m not meant to be investing.” That’s a story that academia tells us. Is it actually true? For some people it is. They definitely don’t make enough money to do anything else. Other people, it is possible. So it’s more of a matter of what are your priorities. So thank you so much for bringing that up. And as we wrap up here Beth, could you tell us a little bit more about your business and how people can find you?

Beth’s Website: Academics at Work

42:52 Beth: Yeah, thanks, Emily. So I’m a career coach. You can find me at academicsatwork.com. I have a blog there where I share all kinds of tips about changing careers or making the one that you’re working at now thriving in that to advance and what you need to think through in terms of networking, your resume, your cover letter and career-changing. And aligning your career with your needs, which change over time. So that’s where you can find me. You can also reach me at [email protected]. And I really, really appreciate your blog, Emily. I have started nerding out about paying more attention to my finances as a result of this, you know, climbing out of this hole that I had. And so that’s how I found your blog. And I just think it’s such an incredible tool that everyone should know about and be using. So I’m so glad you’re doing this podcast. You’ve got the blog. And I really appreciate you having me today.

43:52 Emily: Aw, thank you so much for saying that Beth. And I’m really glad that we got to hear your origin story, kind of view yourself as your first client in terms of a career coach and how that worked out for you. It’s clear that you made that transition very well and rather quickly, finding another job within only three months. So I’m excited to see more about what you do for other people now that that’s your business. So again, thank you so much for joining me and it was really a pleasure to talk with you.

44:17 Beth: Thank you so much!

Outtro

44:19 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

The Graduate Student Savings Act Fixes a Major Flaw in Tax-Advantaged Retirement Accounts

October 14, 2019 by Meryem Ok

In this episode, Emily interviews Abigail Dove, a PhD student at Johns Hopkins. Abby spent last summer as a science policy fellow at the Federation of American Societies for Experimental Biology (FASEB). Her major policy accomplishment during her internship was to secure FASEB’s endorsement of the Graduate Student Savings Act of 2019 (GSSA), a bill that has been proposed in both chambers of Congress. Graduate students and postdocs are not currently permitted to contribute their non-W-2 income, which typically comes from fellowships and training grants, to Individual Retirement Arrangements (IRAs). The GSSA would allow this type of income to be contributed and have a very beneficial effect on the PhD trainee workforce. Abby explains her role in shepherding the GSSA endorsement through FASEB, what the GSSA would do for graduate students and postdocs, and how the GSSA relates to the SECURE Act, another bill that has passed the House and is before the Senate.

Links Mentioned in the Episode

Teaser

00:00 Abigail: But it was a little tricky for FASEB to first navigate the waters. They’ve never supported a tax legislation before. You think that experimental biology doesn’t have that much to do with legislation on tax. But here was a perfect one for them to start.

Introduction

00:22 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode nine and today my guest is Abigail Dove, a PhD student at Johns Hopkins and recent science policy fellow at FASEB, the Federation of American Societies for Experimental Biology. Abby’s major policy accomplishment during her summer at FASEB was to secure FASEB’s endorsement of the Graduate Student Savings Act of 2019, or GSSA, a bill that has been proposed in both chambers of Congress. Graduate students and postdocs are not currently permitted to contribute their non-W2 income, which typically comes from fellowships and training grants to individual retirement arrangements or IRAs. The GSSA would fix that problem and have a very beneficial effect on the PhD trainee workforce. Abby explains her role in shepherding the GSSA endorsement through FASEB, what the GSSA would do for graduate students and post docs, and how the GSSA relates to the Secure Act, another bill that as of this recording has passed the House and is before the Senate. Without further ado, here’s my interview with Abigail Dove.

Will You Please Introduce Yourself Further?

01:33 Emily: I have joining me on the podcast today, Abigail Dove, and she is a PhD student who completed an internship at FASEB last summer. And she has a lot to tell us about the Graduate Student Savings Act. So if you have been wondering about your IRA and why you can or cannot contribute to it, that’s what we’re going to be discussing in today’s episode. Abby, thank you so much for joining me today and will you please introduce yourself a little bit further?

01:59 Abigail: Sure. Thanks for having me. My name is Abigail Dove. Currently, I’m a PhD student at Johns Hopkins and I just started my sixth year. I work in fruit flies and study the gonad development. A little bit of my background: I first started as an undergraduate at Bard college, a small liberal arts school in upstate New York. And then I did a postbac for two years at the NIH NIDDK (National Institute of Diabetes and Digestive and Kidney Diseases) before starting at Hopkins. What we’re talking about is kind of the work that I did at my internship at FASEB, which is the Federation of American Societies for Experimental Biology, which I guess to be a little more descriptive it’s a society that represents 29 member societies, which has about 150,000 scientists that they represent.

Tell Us More About Your FASEB Internship

02:57 Emily: Excellent. You and I have common that we both did a postbac at the NIH. In fact, I’ve interviewed several other people on the podcast who have that on their resumes as well. So very popular program. Anyone still in college considering going for a PhD in biomedical sciences or related areas should definitely consider the NIH postbac program. It’s amazing. Okay. So you had this internship at FASEB last summer. What exactly were you doing in that role? Because it’s a little bit unusual for a graduate student to have an internship. And I think especially a graduate student in the biological sciences because, I don’t know about you, but I sort of observe the culture as like, “ah, you need to stay at the bench 120% of your time and never do anything away from the bench.” So please tell us a little bit more about what you were doing in that internship.

03:40 Abigail: Yeah, so I was really fortunate. I have a PI that–we both know that I’m interested in a career that is outside of the academic track. So, I did a lot of science outreach and I knew that I like communicating science to the public. So I wanted to pursue this career of science policy as a way to talk to the public about science and its importance. So what I did at FASEB, I had a lot of responsibilities. I was particularly interested in training and workforce policy. So, policy that relates to students, postdocs, and even faculty as it’s something that everyone can relate to. So that was one of the reasons that I was most interested in it. And I did a wide range of things. I hosted a webinar on work-life balance and the lab culture and we can include a link to that if anyone wants to watch it later. I represented FASEB on Capitol Hill and at the NIH for different events and I generated comments on sexual harassment that will soon be sent to the NIH. I also helped organize an online symposium series for the FASEB Science Policy Committee on challenges facing women throughout their career lifetime. And then I compiled minutes for the meetings, I drafted talking points for committee members, and then the big thing that I did was I spearheaded FASEB’s endorsement of the Graduate Student Savings Act.

How to Land a Science Policy Internship

05:13 Emily: Excellent. And we’ll get a lot more into that in a moment. But that sounds like a really exciting internship. It’s absolutely fabulous that your PI was supportive in you completing that. I actually did a science policy internship as well. The Mirzayan Policy Fellowship out of the national academies. That was actually after I finished graduate school. But it’s available to current graduate students as well. So, if what Abby was describing sounds amazing to you, that’s another potential avenue for you to get that kind of experience in science policy. Okay. So how did you actually land this internship if other people are interested in doing something similar?

05:46 Abigail: Yeah, so I first started–we have an office at Hopkins, it’s called the Biomedical Careers Initiative Office. And it’s really great for people that are looking for careers outside of the academic track. They were offering a course on science policy and advocacy that was actually being taught by the Director of Public Affairs at FASEB, Jennifer Zeitzer, and the Director of Science Policy, Dr. Yvette Seger. So the class gave us a background on legislation and how bills get enacted into law. And we did some case studies on different issues in science policy. They also taught us how to be a science advocate. But finally, we had to write a policy memo on an opportunity or challenge in research activities supported by federal funding, and we had to give an elevator pitch on that to the class as well. And I did mine on saving for retirement as a graduate student and a postdoc.

06:48 Emily: Yeah. Excellent. And so was it through that paper and that pitch that you gave that you found the Graduate Student Savings Act?

06:56 Abigail: Yes, that’s how I found it. Oh, I guess we didn’t cover how I got the position too. So this office that hosted the class actually also hosts internships for students. And so FASEB was also accepting applications for science policy fellows through the Biomedical Careers Initiative Office. So I applied for that directly. But they also have internships for a wide range of different careers outside of the academic track, including industry and consulting and patent law as well as policy.

What is the Graduate Student Savings Act?

07:33 Emily: It sounds like a great deal of support actually, that Hopkins is providing and helping you sort of step a little bit outside of academia into another role that can really presumably help your post-PhD career, should you decide to pursue one in science policy. So let’s kind of back up a second and explain more about what the Graduate Student Savings Act is because it’s probably not one that most people have ever heard of. Right? Like probably a lot of people in my audience, they know about IRAs. Maybe they don’t have one, but they sort of know they’re supposed to or maybe they know they might not be able to have one. So what is the Graduate Student Savings Act?

08:06 Abigail: Yeah, so the Graduate Student Savings Act. There’s a bill in both the House and the Senate and they’re essentially the exact same bill, so they’re called companion bills. And they would allow graduate students and postdocs who receive their income through either a fellowship or stipend to contribute to an IRA or an individual retirement account. The current issue right now is that on the current tax law, trainees who are receiving their income through a fellowship or a stipend are actually prohibited from contributing to an IRA because it’s not considered compensation or earned income.

08:44 Emily: Exactly. And I like to further kind of clarify this for people by saying within academia we might use the word fellowship in different ways. We might use the word stipend in different ways. Nobody’s ever heard the word compensation. But what it really boils down to is, is your graduate student or postdoc income reported on a W2 or not reported on a W2? It could be reported somewhere else, it could be reported not at all. W2 income is the kind of income, taxable compensation, or earned income that can be contributed to an IRA under the current law. And anything else in terms of graduate student, postdoc income non-W2 does not fall into that category, unfortunately. So that’s how things currently stand. The Graduate Student Savings Act includes this type of non-W2 or fellowship income in taxable compensation for the purposes of contributing to an IRA. Is that correct?

09:39 Abigail: Yes. And unfortunately, it doesn’t change its designation universally. It doesn’t make it earned income or compensation, but it just allows it to be saved for retirement purposes in an IRA.

09:51 Emily: Yeah. This is one of those confusing things about the tax code in general is that they use these terms like “taxable compensation” and “earned income” under different contexts. And so sometimes they have different definitions under different contexts. So earned income has other implications in the tax code, like around the earned income tax credit. Whereas, taxable compensation has a different meaning. It’s under the section for IRA contributions and so forth. So it’s sort of defined there as “taxable compensation for the purposes of contributing to an IRA is these things,” and currently, it says explicitly, “does not include fellowship income, not reported on a W2.” So that’s the current status. But then there’s this Graduate Student Savings Act bill as you said, it’s sort of on the floor in both the House and the Senate.

How Abby Got FASEB to Endorse the GSSA

10:37 Emily: I was looking at the history of this and I think the first time it was introduced was 2016 and it’s introduced every year I think in more or less the same form until now, 2019. We should actually say we’re recording this interview on September 25th, 2019. It will be released within a couple of weeks of that date. So things might have changed. But as of September 25th, 2019, the Graduate Student Savings Act has not been passed but it is, I guess, available to be passed. So, what was the process like for getting FASEB to ultimately endorse the Graduate Student Savings Act, and what work did you do to make that happen?

11:15 Abigail: Yeah, so originally before I even did the class, FASEB was not aware of the Graduate Student Savings Act at all. It wasn’t on their radar. It wasn’t until I wrote my policy memo on the issues of graduate students saving for retirement, and I actually did the research and I was just Googling it and I came across it on my own, that we both kind of became aware of it. And so I kind of took this on as a task that I wanted to complete in my fellowship and I thought it was an important task and FASEB was great. If there was an issue that I really wanted to take on and it was something that was good for FASEB to endorse, they would have no problem with me taking the lead. So this was my big accomplishment of the fellowship.

12:04 Abigail: And since FASEB is a nonprofit organization any bill that they support needs to have bipartisan support for endorsement. And that thankfully both the House and Senate bill had bipartisan support on both pieces of legislation. I think some of the previous iterations of the Graduate Student Savings Act didn’t have bipartisan support. So this was really important for FASEB to get on board. But it was a little tricky for FASEB to first navigate the waters. They’ve never supported a tax legislation before. You think that experimental biology doesn’t have that much to do with legislation on tax. But here was a perfect one for them to start.

Personal Impact of Flawed Tax Legislation

12:49 Emily: Yeah. As you were saying earlier, it’s a clear workforce issue. Right? So that’s the definite connection or conduit between what they do generally and this weird little tax quirk that happens to deeply affect their own workforce.

13:03 Abigail: Well, yes. So this actually personally affected me. From when I was in college and doing other side jobs, I was always contributing to an IRA, if possible. My dad is very financially responsible and he just told me when I was young, “you need to have an IRA.” He always recommended a Roth IRA. He always thought it would be better to get tax first and any profit you make later you don’t get taxed on. So there’s two different IRAs, a Roth and the standard IRA. So maybe some clarity on that. But this personally affected me when I was a post-bac for those two years I was receiving stipend income and wasn’t reported on a W2 so I couldn’t contribute to an IRA for those two years.

13:51 Abigail: Then my first year in graduate school I was on a training grant, so also not receiving a W2 so I couldn’t contribute. My second year I was actually a teaching assistant, so I was being employed by the university somewhat and getting my income reported on the W2. So I was for that year able to contribute, which was really great. And then I got awarded the National Science Foundation, Graduate Research Fellowship award.

14:20 Emily: Congratulations, but also, dun, dun, dun.

14:23 Abigail: Yeah. So it was really great. But then I also couldn’t contribute to my IRA because it wasn’t reported on a W2. So that affected me for my third and fourth year of graduate school. My fifth year I got married. So that changed things a little. I was still on my NSF fellowship. But because I was married to someone who had a real job and was receiving income that was deemed compensation, I was able to contribute to my Roth IRA just because I was married to my husband. so that was my last year of my fellowship. Now I’m back at Hopkins and I’m TA’ing for this year. So I will again be able to contribute even if my husband wasn’t receiving earned income himself.

15:14 Emily: Yeah, I have a little bit of a similar story of flip-flopping between RAs and fellowship income. And at some point I got married and so my husband, having a similar situation of flip-flopping between RAs and fellowship income, it helped in certain years one of us would have a taxable compensation, maybe the other one wouldn’t. So one of the things that helps people in this situation–under the current status of fellowship income, non-W2 income is not eligible to be contributed to an IRA–one thing that helps is that the academic year and the calendar year do not line up. So, if you have different sources of funding in two different academic years, maybe you can be covered for one calendar year in terms of being able to contribute. It helps if you’re married of course, to someone with taxable compensation. And the other workaround is actually having a side hustle that is self employment income. So self-employment income is taxable compensation that can be contributed to an IRA. So that’s something I sometimes float with people who are frustrated by their multi-year wonderful fellowship packages that don’t allow them to contribute to an IRA. If it’s possible to side hustle, that’s another way to kind of sneak in that eligibility. So, your stipend wouldn’t be eligible, but that side hustle income would be eligible. All these are workaround solutions, the real main solution is just changing the tax code because this is ridiculous that this is happening, right?

Commercial

16:35 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs, and other early-career PhDs for universities, institutes, conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you are interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. That’s p f f o r p h d s.com/speaking. Now back to the interview.

Anything Else About Your Role in FASEB?

17:25 Emily: Okay. So, anything else to add about your role with getting FASEB to endorse the GSSA?

17:31 Abigail: Yeah. So, because it was a tax bill and FASEB had never endorsed a tax bill before, they want it to go through full process of endorsement. They wanted to get everyone’s feedback on it. So the first step was going through their Training and Career Opportunities Subcommittee. So, they have a monthly meeting, I prepared talking points for the chair of that committee, and we discussed it and they couldn’t see anything wrong with it. So, we got a full endorsement from that subcommittee. Then we had to go up one level to the Science Policy Committee and did the same thing, had to talk to the entire committee, got overwhelming support of it. So, it got pushed up to the next FASEB tier, which was the executive committee. They gave the final approval. Actually, for the Training and Career Opportunities Subcommittee and the Science Policy Committee, I made a one-page summary of the current situation and how the Graduate Student Savings Act would change that. So, a one-page review for them. And then when we went for approval for the Executive Committee, we had the full letter drafted for them to approve, and we can also give you a link to the FASEB’s endorsement letter too, as well.

18:56 Abigail: Normally, it would go to the FASEB board for approval, but the board was jam-packed with what they had to do for that month. So, because we got unanimous support from the two committees before that, they thought that the Executive Committee approval would be sufficient. But I started my internship in June and it wasn’t approved until the first week of September. So, it does take a long time for this approval to go through because you have to wait every month for the next committee to happen. And if there are changes and edits to it, then it can also take a lot of time. You want to do it as quick as possible so the endorsement actually has an effect if the bill is getting voted on soon.

19:47 Emily: Yeah, exactly. This is fascinating to hear kind of how the sausage is made, and not even to make the policy, but just to get something like this: an endorsement from group whose endorsement matters in this kind of thing. What I’m just thinking is how good it is that FASEB has connections to the current trainee workforce like through you and other interns they accept because they had you to tell them, “Hey, this is an issue that’s going on. And by the way, there’s a solution to it and it’s in front of Congress right now.” So it’s just, I guess it’s really good for them to offer these kinds of internships programs to get those fresh ideas and those connections to people who are still in training.

20:30 Abigail: Yeah, I think they really appreciate the fellowship program for that same perspective. The younger generation. People serving on these committees and the boards are faculty members that have been serving for a while and they’re very removed from this training portion. I think there might be–and correct me if I’m wrong–but I think there could be a few postdocs who are serving on boards, but I think that’s very unlikely. Most of it’s always faculty. There’s never a postbac representative in these meetings. So, having a fellow there, they really value so they can get that younger perspective on what’s happening currently.

What is the SECURE Act?

21:10 Emily: Yeah. That’s excellent. Okay. So that was your role with FASEB and then with respect to the GSSA, the Graduate Student Savings Act. There is a different bill before Congress that has sucked up a lot more attention in terms of changing the tax code than the GSSA has, and that is the SECURE Act. Can you tell us what the SECURE Act is? Not in a lot of detail, but basically just how it relates to the Graduate Students Savings Act?

21:35 Abigail: The SECURE Act is Setting Every Community Up for Retirement Enhancement Act of 2019, and it’s just a massive retirement savings bill. For some perspective, the Graduate Student Savings Act is a two-page bill, whereas the Secure Act is 124 pages. So it’s just way too large for FASEB to endorse something so big. But fortunately, it has almost the exact same wording as the Graduate Student Savings Act in one of its sections. So it would get across the same thing as the Graduate Student Savings Act. It would allow graduate students receiving unearned income to contribute to an IRA account. It just was too big of a bill for FASEB to endorse because we can’t vet everything and it’s a little bit out of FASEB’s wheelhouse.

22:22 Emily: Yeah. So, basically what sounds like has happened is that the Secure Act has absorbed the Graduate Student Savings Act pretty much verbatim. And it’s making a lot of other changes as you said to retirement accounts. I’ll link to a couple articles on the Secure Act from the show notes, but some other things that caught my eye that it’s trying to address are like having part time workers have more access to 401k’s. It’s changing a little bit of the distribution rules, like once you’re actually in retirement and about inherited IRAs and there’s just a lot of changes there. Abby and I were glancing over it and we saw something that, “Oh maybe this addresses the kiddie tax.” We’re not even sure about that, which would be amazing if it does. So there’s a lot of different things that it touches.

23:02 Emily: And as you were saying earlier, like for FASEB being able to endorse the GSSA, the GSSA had to have bipartisan support. In fact the Secure Act does have bipartisan support. It passed the House and is currently hung up in the Senate as of, again, September 25th. Because the Secure Act passed the House with such strong bipartisan support, everyone kind of thought that it would pass the Senate really quickly. But it’s been hung up, so its future is uncertain but hopefully it will get through. And the wording that was adopted from the GSSA, hopefully that would actually be maintained. And in the final version we would actually see this benefit be extended to graduate students and postdocs where it wasn’t before. But that’s kind of where things stand as of today as of this recording. Hey, maybe by the time this is published something will have changed on that front. That would be awesome.

23:56 Abigail: I think something also important to note is that the wording of the bill, I don’t think that it would also apply to postbacs. It seems very specifically to graduate students and postdocs. So I think, unfortunately, postbacs would be still excluded from the Graduate Student Savings Act.

How Will the Internship Help Your Future?

24:12 Emily: Hmm. Interesting. Yeah. I’ll have to take a look at that because I didn’t realize there were distinctions being made among different levels of training. We’ll see how that actually shakes out. It’s always sort of uncertain until kind of the next tax cycle rolls around how these things are actually going to be implemented and everything. Thank you for pointing that out. For postbacs out there, this might not be the news you’re looking for. Maybe you still need the side hustle or maybe you still need to get married to have one of these workarounds. Just kidding, people don’t do that. Okay. So Abby, how do you think that this internship experience with FASEB is going to benefit your future career?

24:52 Abigail: Oh, I think it benefited me already tremendously. Besides from just getting a sense of what science policy really is and getting to immerse myself in it and what I would expect in a job. I got great networking. I already met a bunch of people because FASEB represents so many other societies. You know, I really got to get my name around and people know my work now. I also just got a ton of experience. I generated a bunch of writing samples, which is really crucial in the science policy job search, and I think I’ll get great references also for future jobs. So, it’s benefited me tremendously.

25:30 Emily: Do you have specific plans yet for after you finish? Like what positions you might apply for?

25:35 Abigail: Yes, I’m probably looking for science policy analyst positions. When I graduate. I don’t see really any benefit of doing a postdoc afterwards. There are people that continue to do more science policy fellowships. I’m kind of in the boat where I would just like to be out of fellowships and schooling and just want a real job. And I think with this internship I generated enough experience that I would be able to get an entry-level position and be a sought-after candidate.

Final Advice for Early-Career Grad Students

26:08 Emily: Yeah, I have a great deal of sympathy with that position of, “okay, I don’t need any more training. I’m trained. Let me have a job. Finally.” Definitely. So Abby, last question here, which is one I ask all of my guests. What is your best financial advice for another early-career PhD? And that could be related to something we’ve talked about today or it could be something entirely different.

26:29 Abigail: Yeah. So I think of course I would recommend that everyone should open and save in a Roth IRA account and start saving what they can, even if they can’t hit the max. But I think more importantly, we know that graduate school is a really stressful time, and I think it’s really important to invest in your personal wellbeing. And so if that means, paying for workout classes or traveling or if it’s even retail therapy. I think whatever it is, if it’s important to you and if it makes grad school a little bit saner for you it’s important to put some money aside and make time for yourself.

27:08 Emily: Yeah, it’s, it’s actually a little bit weird that sometimes we have to give graduate students permission to spend money on themselves. But if you think about it like more broadly, other people when they receive the financial advice to cut back on those discretionary expenses, cut back on those Wants and so forth, it’s usually because they’re spending at such a level that’s actually endangering their other financial security.

27:35 Emily: Graduate students I would say in general are not spending a sufficient percentage of their income on discretionary things for themselves. Actually, sort of to tie this back to the GSSA, one of the co-sponsors of the GSSA is Senator Elizabeth Warren. She’s sponsored every year in the past, whatever, four years that it’s been up. Many years ago, back when she was a consumer advocate, basically, she wrote this book called All Your Worth*. She co-authored it with her daughter. And that book promotes the balanced money formula, which is to spend, of your after-tax income, no more than 50% of your after-tax income on Needs, 30% on Wants and 20% to Savings. And I was looking at that the other day and I’m thinking that graduate students, I would be surprised if they spent 30% of their income on their Wants.

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

28:28 Emily: Usually, it’s that Needs category that gets up to 60, 70, 80% or more because of rents and high costs of living areas and low stipends and all of those kinds of problems. So yeah, in fact, sometimes we do need to hear the advice that it is okay to spend a little bit of money on yourself to help bolster your mental health and help you get through graduate school in great shape. Of course, it’s ideal if you can do that alongside saving for your future and doing all these other great things, but we want you to get through graduate school in one piece. So yeah, thank you for that advice, Abby, and for giving this interview today.

29:02 Abigail: Well, thank you for having me.

Outtro

29:05 Emily: Listeners, thank you so much for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to pfforphds.com/helpout. There are plenty of ways to do so without laying out any of your own money. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC.