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This Grad Student’s Side Hustle Is Trading Options

February 14, 2022 by Meryem Ok Leave a Comment

In this episode, Emily interviews Min Sub Lee, a 4th year PhD candidate in Molecular and Medical Pharmacology at UCLA. Over the past year, Min Sub has developed a side hustle in options trading, which is selling or buying the option or right to sell or buy stock. Min Sub teaches us what covered calls, put options, and put-credit spread options are. He shares how he learned this technique and why he thinks it’s a good fit for a graduate student’s budget and schedule. Min Sub keeps this strategy low-risk by limiting it to only a small fraction of his investment portfolio and making small, consistent bets. This content is not advice for financial, legal, or tax purposes, and if you are interested in options trading, please do extensive research before you begin!

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Teaser

00:00 Min Sub: You know, as long as you’re consistent, as long as you are committed to your goals, I really think that in the long picture, right, the money will compound on its own. And you know, I am a very strong believer that anyone can, you know, achieve great wealth, no matter what kind of income you’re making. I personally think that as long as you have the right mindset, as long as you have the right strategy for it, then anyone can do this. That includes grad students.

Introduction

00:31 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is Season 11, Episode 4, and today my guest is Min Sub Lee, a 4th year PhD candidate in Molecular and Medical Pharmacology at UCLA. Over the past year, Min Sub has developed a side hustle in options trading, which is selling or buying the option or right to sell or buy stock. Min Sub teaches us what covered calls, put options, and put-credit spread options are. He shares how he learned this technique and why he thinks it’s a good fit for a graduate student’s budget and schedule. Min Sub keeps this strategy low-risk by limiting it to only a small fraction of his investment portfolio and making small, consistent bets. This content is not advice for financial, legal, or tax purposes, and if you are interested in options trading, please do extensive research before you begin! I have a new little project that I’d love for you to participate in! I’m crowdsourcing information on what tax forms are being issued for various fellowship and training grant funding sources. I’ve published an article with the data I’ve collected so far at PFforPhDs.com/taxform/. So if your stipend or salary was from a fellowship or training grant issued from the NIH, NSF, Ford Foundation, DoD, DoE, Hertz Foundation, Paul and Daisy Soros Fellowship Program, Life Sciences Research Foundation, American Association of University Women, etc., or an internal fellowship source, please fill out the survey linked from PFforPhDs.com/taxform/ to help out other people with the same type of funding who are confused about the tax form they received or lack of tax form. Thank you! Without further ado, here’s my interview with Min Sub Lee.

Will You Please Introduce Yourself Further?

02:32 Emily: I am delighted to have joining me on the podcast today Min Sub Lee. He is a current graduate student at UCLA, and we are going to discuss options trading, which is a form of investing that I know nothing about. So it’s very exciting for me to get to learn alongside probably many of you listeners. So Min Sub, would you please introduce yourself a little bit further for the listeners?

02:51 Min Sub: Yeah. Hi, Emily. Very nice to meet you. It’s very good to be here. My name is Min Sub. I’m currently a fourth year PhD candidate. I’m currently studying molecular and medical pharmacology at the University of California, Los Angeles. And I am very passionate about financial education, financial literacy, and hopefully I can provide some good value to my audience who may not be familiar with how options work and you know, all that good stuff.

What are Trading Options?

03:17 Emily: Yeah, sounds great. I am definitely in that audience. So, as longtime listeners know, I am a dyed in the wool passive investor. I set up my investments a decade ago and have not touched them since, because I’m very happy with how things are going. So, actively investing is not something that I do and it’s not something that I teach, but of course I want to learn about it, and I’m happy to share the information with the listeners as well. So, Min Sub, let’s start with what are options, and how does this differ from what we might otherwise think of as like stock trading?

03:50 Min Sub: Yeah, absolutely. So basically most of us are probably familiar with the concept of buying shares of a company. So essentially when we purchase, let’s say 100 shares of, you know, your favorite company, you know, let’s say McDonald’s or something, or, you know, Walmart or Target. Well, that basically means that you are essentially part owner of a company’s equity. Now, options are something that I honestly never considered doing until this year. Because you know, you might hear in the media saying that, well, you know, people have like based lots of their money on options, right? People basically, you know, put their entire life savings into options. They basically lost it all. So options really have a very negative sort of like vibe on overall market trading. But I actually wanted to, you know, change that sort of like sentiment today because options training can actually be very profitable and very, very safe if you do it correctly.

04:46 Min Sub: Right. So, essentially what options are is that options are basically a right or some kind of a contract to buy or sell typically 100 shares of a company. So here’s an example that I usually tell my friends whenever they ask me, you know, about options. So, let’s say that you are a home buyer, and I am a home seller, right? So, I currently own a house that is currently selling for about $500,000 right now. And you are interested in buying my house. However, you currently do not have the full $500,000 in cash, but you are willing to essentially have the right to buy my house. So, let’s say that you pay me $100,000 of quote unquote premium, and what the premium states is that you basically ask me if you can buy a $500,000 house for $200,000 with a $100,000 premium.

05:49 Min Sub: And essentially how that works is, you know, typically when we have those contracts, we set some kind of a contract date and some kind of a strike price. So essentially let’s say in three years, even if my house let’s say appreciates to 1 million dollars, because you have a contract with me stating that you have the right to buy my house for $200,000, essentially you could buy my house at a total of $300,000 if you add up your initial premium plus the amount that you want to pay for. So that is, in a nutshell, how options work. And, you know, obviously things can go wrong both ways because you know, my house can easily collapse to, you know, $0, right? So in that case, you know, then your premium might be deemed worthless. But at the same time, you know, like if my house appreciates to, you know, 10 million, right, then you can technically, you know, buy my house for the premium price that we’ve sort of contracted for.

06:44 Min Sub: Now, the truth is, for the most part, people who buy these call option contracts, many of these premiums expire worthless. And what that means is, typically what happens is, you know, like either the price did not appreciate in value as they wanted, so basically their contracts become worthless, right? Or, you know, the other concept is that sometimes over time there’s a concept called data decay, which means even if you hold an options contract for, let’s say three years, if you do not exercise that contract for some time, the data decay essentially can actually wear off part of your option contract on a daily basis. So, essentially people’s contract just becomes worthless, one because the actual security price doesn’t appreciate, or because of the fact that data decay has essentially just devalued the entire contract on its own, and your premium is just deemed worthless at that point. So, there are different ways how people can exercise options. But typically, you know, I say about 90% of the time, you know, people who own call options typically are on a losing streak, but you know, in the end they’re not losing a lot of money because they’re only paying a small premium to essentially have the contract, if that makes sense.

07:55 Emily: I see. Yeah. So, it does actually, and I’m not sure how familiar the listeners are with this, but I don’t know the stats on this exactly, but it turns out that like over the many, many decades, you know, 90 plus percent of the value that’s been created in the U.S. economy is coming from like the tail end of stocks that have done like incredibly well. Whereas the vast majority of companies either like break even, or lose money like over the long-term. And so it sounds similar to that. So like a lot of the bets that you’re going to make if you enter into this are going to not turn out in your favor, but because you’re making small bets, you only have to win big a certain percentage of the time to overall come out ahead.

08:35 Min Sub: Exactly. Yes. Which is why, you know, when people typically buy options, they only, you know, play with a very small percentage of their portfolio because it is money that people can live without,k right? But, you know, if the country goes well, then people can make lots of money in that sense. Right.

Safer Ways to Approach Options Trading

08:50 Emily: Okay. So I think we have the basic idea of what options are. So then how do you approach options trading in such a way that you think you’re going to come out ahead mostly?

09:03 Min Sub: Right. So, I mean, there are different ways to win in options trading. So how about this, let me start with actually some of the safer ways to start options? Because I think, you know, most people still think of options as a fundamentally evil thing, and they just sort of, you know, fear losing a lot of money. And that is, you know, not wrong. You know, if you play options really incorrectly, if you really think that you could sort of win big with options, right? You’re not thinking in the right mindset, right? Because in the end, options should be only about 20% max of your total portfolio. For me, you know, I only play with maybe 10% of my total you know, security asset portfolio, mainly because I know that if I lose that 10%, you know, I’m not going to lose my sleep on that, right?

09:46 Emily: If I heard you correctly, what you’re saying is that about 90% of all the money you have available to be invested is not invested under this strategy. You’re doing maybe a long-term diversified index situation, probably?

10:00 Min Sub: Correct.

10:01 Emily: Okay. Good to know. Okay. So we’re talking about this fraction of your portfolio, and the strategy that you’re using in that. Please continue.

Strategy #1: Covered Call Option

10:07 Min Sub: Correct. Yes. Yeah. So there are actually three sort of strategies that I adopted on options. And I really think that these strategies are very, very useful for anyone to get started. Mainly because, first of all, they’re risk-free, right? Technically, there are still some risks to options. So, I mean, don’t think that this is actually something that’s guaranteed to make money, because if you do it incorrectly, you will lose part of something. So, the first strategy I’m going to talk about is actually a strategy called a covered call option. So, how this works is, the one requirement that you have to have for this strategy is that you must own 100 shares of some security, some stock class. And basically, here is what’s happening. So let’s say that you have these 100 shares of a company or of some stock, and this stock has not been moving for the past year, or this stock basically has been trending sideways.

11:02 Min Sub: You know, maybe it’s been swinging up and down, but maybe like plus or minus two to 5%, you know, on a flat basis, right? And you know, like you’re looking at your other, you know, stocks like Tesla, you know, and like other big stocks and, you know, you’re jealous because you kind of want to, you know, like start liquidating some of this and start to, you know, maybe consider putting your money into asset classes that actually do appreciate more value. So instead of doing that, right, which I don’t recommend, you should never just jump and just liquidate your cash just to jump on a hot stock just because it’s moving up like 20%, you know, on a weekly basis. But essentially how cover calls work is you can basically kind of say that I think that the current stock that I’m owning is not going to go above 10% of value in the next certain time. Right?

11:55 Min Sub: So let’s say that, you know, by next month, by December 3rd or something, right? You know, my hundred shares, I do not expect these shares to go above a certain price. So what we can do is we can actually sell a covered call and receive a premium. So, basically I am kind of betting that because I sort of know on a high trends basis that I don’t think that these shares will go above a certain strike price, I am willing to sell a covered call option on my current shares. And with that, you can actually earn roughly between about two to 3% of your current assets. So let’s say that you own about 100 shares worth of, you know, your favorite stock. Pinterest, let’s say, right? And, you know, you currently have about, let’s say $5,000 worth of Pinterest.

12:46 Min Sub: And, you know, you can sell a covered call option and receive about, you know, two to 3% of your current holdings. And if your bet is correct, right? If you’re correct in a sense that Pinterest did not go above 10% in value, then you’re basically going to keep that premium, right? You’re basically going to keep your current shares, and you’re also going to keep the premium, and we can actually do this on a weekly basis because we can actually sell a weekly cover call options on your securities. So essentially, you know, for stocks that you believe that you don’t really expect them to move on a really volatile basis, then this is a very good strategy to actually sort of earn passive income. It’s kind of like earning dividends, you know, on your stocks, right? To an extent. Now, the downside, you know, of course, is Pinterest might all of a sudden skyrocket, right?

13:38 Min Sub: You know, there might be really good news, you know, something, let’s say there’s an acquisition purpose. And, you know, like Pinterest might literally go up 30%. Well, in that case, you’re kind of screwed because you promised to sell 100 shares of your security at a specific strike price. And if the price of Pinterest has gone up way over your strike price, then there’s a high likely chance that you’ll be called out, which means, you know, you will still get your premium, but you’re forced to sell your 100 shares of a company at a target price. So typically selling a cover call is a very good viable option for stocks that typically don’t move too much. You know, stocks like Apple, like Microsoft, you know, these stocks that tend to have a very low volatility and, you know, stocks that typically have very low, you know, like ups and downs are very good ways to actually utilize cover call options as a strategy. I’ve been using this option for quite a while, and I’ve made pretty decent income. And so far, I have never got called out yet. So hopefully I can, you know, stay that way for next, you know, whatever years I continue to do options.

14:50 Emily: With that example, is the price that you agree to sell that stock for what you’re calling the strike price? So like, in your example, it was that like 10% above wherever the price was when you made this bet?

15:02 Min Sub: Correct.

15:02 Emily: So I guess what I’m thinking is, for you as the person who is, you know, currently owning these hundred shares, basically you get money if your stock doesn’t move that much, or if it goes up quite a lot, you still get more than you had in the first place, because you’re selling at that slightly higher price. It’s just not as high as it could have gone had you never put that, you said it’s a covered call, right?

15:26 Min Sub: Exactly. Perfect. Exactly.

15:28 Emily: Yeah, so I see the attraction here.

15:31 Min Sub: Yeah. So like I said, right, it’s very good for stocks that don’t really have a high volatility because you know, if your stock goes, let’s say down, right? That, you know, it still sucks because your stock went down, right? But you’re not going to be called out. But you know, if your stock let’s say suddenly goes up to like 20%, then you know, it’s an opportunity cost that you sort of gave up because of a premium in that sense. So that is one down side, but overall, like, you know, if you feel like there is a security that you just want to hold for a long time, but want a little bit more passive income, then this is one really good strategy to do so.

Feasibility for Grad Students

16:04 Emily: I guess a further follow up question about this, this a little bit relates to like, how feasible is it for a graduate student to do this. To own a hundred shares of a stock, the stock has to be fairly low in price, right? For that to be manageable for a grad student kind of income. So like for instance, when you have done this strategy, what is the stock price or some examples of stock prices that you’ve done this for?

16:26 Min Sub: Yeah. So, you know, I mean, I’ve been trading for some time, about two and a half years now. And honestly, like when I first started this strategy, I didn’t start with covered call options. I actually started with another option trading that I slowly, you know, started to accumulate a little bit of cash on the side. And I’ll actually get to that strategy, which is actually much more feasible and practical for grad students. But right now I currently only, if I were to be transparent with my portfolio, I currently own 100 shares of Lemonade right now. So, Lemonade is actually an insurance company that I really believe that there’s a good future growth to this, but Lemonade also has been trending sideways for a long time. Right now, Lemonade is trending for about $62 if I’m looking at it correctly, and it’s been like this for about the past three months. So, like I simply just used the strategy to, you know, essentially like gain a little bit of passive income on a weekly basis to at least, you know, get something out of it.

17:23 Emily: Hmm. Okay. So the way that you’re using this strategy is you have what you want to be a long-term holding, but you don’t expect it to take off anytime soon or do much movements anytime soon. So you’re making, as you said, some income from it in the meantime.

17:38 Min Sub: Right. Right. Exactly.

Strategy #2: Selling a Cash Secured Put Option

17:39 Emily: Very interesting. Okay. Well, I think you said there were three sort of approaches that you wanted to cover for options trading. So what’s the second one.

17:45 Min Sub: Yeah. So the second one is actually a little bit similar to the covered call option. So the second one is called selling a cash secured put option. So how this works is basically you are obligated to, this time instead of sell, you’re obligated to actually buy one hundred shares of a company that you like. Okay. So, I currently do not have many sold puts going on right now. But let’s say that you have a company, okay? I don’t know, let’s say that you really want to buy Costco or something, right? But you know, you currently don’t like the price right now because Costco is trending for about, you know, $350. I don’t know, I haven’t checked, but let’s say it is. But you know, you really want to own Costco at a lower price. So what you could do is you could actually sell a put option.

18:42 Min Sub: And how that works is for a put option, you actually need a collateral this time. So in the case of a cover call, your collateral was your 100 shares of a security, but for a put option, your collateral is actually cash. That’s why it’s actually called a cash secured put option. And because an option contract typically, you know, moves 100 shares at a time, you know, and maybe Costco is not a good example in this case, but basically we need to have, you know, so if you’re willing to buy Costco at $320, then you need to have a cash security collateral of about $32,000 in your account, which might seem impractical for grad students. But that’s kind of like how put options work. And basically what happens is you also get a premium on that. So you can basically put your collateral up, and then you also receive a premium based on that collateral.

19:34 Min Sub: So if Costco let’s say never goes down to $320, let’s say, right? Let’s say Costco just moons and let’s say it just stays at $350. Well, then the good news is that your premium is still yours. You get to keep that premium, and you actually get to keep your collateral, right? Because you know, basically in a put option, you’re obligated to buy the shares. But if your strike price has not reached below your expectation, then you know, after a week, right? Essentially your put options will expire worthless and you get to keep your money and you get to keep your premium, potentially. Now, I really like puts because here’s, and, you know, put options, I think is really never a losing strategy. Let’s say that Costco actually does go down to $320. Let’s say. Well, remember the reason why you’ve done it in the first place is because you are actually willing to pay that much money for Costco, right?

20:28 Min Sub: So, in a sense, it’s not a losing game because that was your original bet, right? You have an entry strategy and you wanted to basically buy a hundred shares. So even if Costco, you know, falls after earnings or something, you know, let’s say it falls down to $319. Well then yeah, you’ll be called out, right? You will lose your collateral. And actually you’re forced to basically buy 100 shares. But the good thing about that is, let’s say that, you know, you just don’t like Costco anymore all of a sudden. You can always, you know, sell those hundred shares back in the market, right? And essentially, you know, if that happens, then technically you get your collateral back, and you also get to keep the premium that you originally settled for. So I really think that put options is a very attractive strategy.

Risks of Selling Puts

21:10 Min Sub: The only downside course is that, you know, you need to have a lot of collateral depending on what kind of security you’re trying to buy. But other than that, I really think that selling puts is very lucrative. Especially if you have some cash that you really have no idea how to spend it, but you know, you’re going to at least keep your cash as collateral, then you can sort of receive some passive income premiums, in that sense. I sold puts quite often, you know, during this spring, when the market was very red and you know, I made pretty good income from that. So I’m very happy about that choice. Right now the market is doing really well. So put options are not very attractive right now, but you know, the next time we enter a barren market, I’m hoping to, you know, like consider selling more puts, if I have some more cash on the sideline.

21:54 Emily: So one follow-up question, again, I’ll use your example, and thank you for giving one. So in your example, you agree to buy Costco at $320, but you mentioned, let’s say it fell to $319. What if it falls to $200? So are you still agreeing to buy at $320?

22:10 Min Sub: Exactly. Yes. So that is a risk of selling puts, right? So essentially you know, again, which is why you should not do a put option contract on stock with a very high volatility. You know, Costco has a fairly low volatility. It’s deemed a very safe stock. You know, its P multiple is very low. So, you know, I personally don’t think that Costco will drop that much money unless there is some kind of a really bad earnings report, a really bad guidance or something. But, you know, usually with either your cover calls or selling puts, you should not do these strategies on really volatile stocks because, like I said, we know for fact that if it goes in both ways, we are kind of screwed. So that’s a very good follow up point. And thank you for mentioning that.

22:57 Emily: Okay, thank you.

Commercial

23:00 Emily: Emily here for a brief interlude! Taxes are weirdly, unexpectedly difficult for funded grad students and fellowship recipients at any level of PhD training. Your university might send you strange tax forms or no tax forms at all. They might not withhold income tax from your paychecks, even though you owe it. It’s a mess. I’ve created a ton of free resources to assist you with understanding and preparing your 2021 tax return, which are available at PFforPhDs.com/tax/. I hope you will check them out to ease much of the stress of tax season. If you want to go deeper with the material or have a question for me, please join one of my tax workshops, which are linked from PFforPhDs.com/tax/. I offer one workshop on preparing your annual tax return for graduate students and one workshop on calculating your quarterly estimated tax for fellowship and training grant recipients. It would be my pleasure to help you save you time and potentially money this tax season, so don’t hesitate to reach out. Now back to our interview.

Strategy #3: Put Credit Spread Option

24:15 Emily: And what’s a third strategy?

24:18 Min Sub: Great. Yes. So this is a strategy that I really, really like, because I think this is a great strategy for all grad because, unlike covered calls or, you know, cash secured puts, you don’t actually need a whole lot of security or, you know, a whole lot of, you know, collateral. Basically this is called a put credit spread option strategy, and how this works is essentially, you have a put option that is going both ways at the same time. So essentially, you are selling a put, but you’re also simultaneously buying a put at the same time, right? So here’s an example that I thought of yesterday, right? So, let’s say that you are selling a put option for Apple, right? So Apple is, you know, let’s say trending around $147 as of now. And remember what that means is if you’re only selling a cash secured put, you are basically putting $14,700 as a collateral because you’re willing to buy apple at that strike price, right?

25:23 Min Sub: But what if you don’t have that much money? What if you actually don’t have that cash? Well, then you could actually, you know, take that advantage and actually do the opposite. You could actually buy a put option for the same company, but at a lower strike price. So essentially let’s say you sold a put for $147, but you’re actually now going to buy a put option for the same security, but at a lower price, let’s say $146, right? And then remember, when you’re selling a put, you are receiving a premium, and when you’re buying a put, you’re actually paying a premium for that security. So essentially you’re actually receiving the difference on the premium between your sold put and your bought put. So if your sold put was, let’s say $37 of credit, but your bought put is $23 in credit.

26:14 Min Sub: That means your net credit on this put credit spread strategy would be $14, right? Because you’re basically receiving a difference between your sold put and your bought put, right? And you know, of course, you still need to have some collateral, and how the collateral works is basically, it’s the difference between your strike price of your sold put and the strike price of your bought put. So if you sold your put for $147 and you bought your put for $146, the difference is $1, right? But remember, because options operate for 100 shares, your total collateral that you’ll be paying for is $100, right? But you’re actually receiving a premium of $14. So if you put it that way, so if your collateral was $100 and your net premium was $14, that’s about a 14% profit from your collateral.

27:12 Min Sub: And, you know, if you’re correct that Apple basically did not go below your put price, then you know, you can actually keep your premium and your collateral. And the beautiful thing about this put spread strategy is that, unlike the cover puts, unlike the cover calls, you don’t need to have 100 shares, you don’t need to have, you know, basically a lot of cash as a collateral. So I really think this is a really good strategy, and I’ve actually been doing this for quite a while sometime in January of this year. And you know, I’ve been doing this on a weekly basis. And also the one good thing about this strategy is that there are actually ETFs that you could do this. So ETFs, like SPY and QQQ, those two are the two, you know great ETFs for this strategy.

28:00 Min Sub: Mainly because these ETFs actually have three different strike dates per week, right? So basically Monday, Wednesday, and Friday, they have a different strike expiration date. So essentially if you do this correctly, you can actually do this three times a week. And if you, you know, let’s say you sold about, you know, three contracts per, you know, like every two days. And if you make about, let’s say to be conservative, let’s say about $8 per contract. Well, that’s still about $24, you know, on that expiration date. But if you multiply that by three days, that’s still about, you know, $74 of just profit that you’re making from just the strategy. And, you know, like, I think I kind of can figure out your next question. Is this actually a very, you know, like good time commitment for grad students? Because, you know, it might sound like this is very long, very time lucrative and, you know, very, very time sensitive.

28:58 Min Sub: And the truth is, when you first learn how to do this, it does require a little bit of, you know, time to sort of like learn this. But honestly, like once you get more comfortable with these strategies, all you really have to do is simply just wake up in the morning and then, you know, just open your brokerage account, and like on your phone, or it could be on your computer, and just trade these options for, you know, maybe like the first, like 15 minutes of the market open. And that’s it. As long as your security is sold, then you can just, you know, put down your computer, go on a hike, you know, get your breakfast, go to lab. And, you know, like not worry about it until the next expiration date, which is, you know, typically in two days. So I really think that this is a very good tangible strategy that anyone can actually utilize, whether it’s grad students or whether you’re just trying to get started with options.

Recommended Resources for Executing Options Trades

29:47 Emily: If someone is listening and is really interested in pursuing this strategy, but they have no idea where to start, where would you recommend they go to learn more about how to execute these options trades, but also, you know, the research into like, you know, which particular stocks should you be doing which particular, you know, option trade for? So like, what are some really great sources that you’ve learned from in the past few months and years?

30:09 Min Sub: Right. So here’s the thing. So when I first learned about stocks in general or options in general, I actually started with paper money. Because I personally don’t like losing money, and you know, like learning something new like this, even if it’s like a hundred bucks, I mean, even if, you know, that might be a small percent of my portfolio, I don’t like losing money. I mean, so like I would rather be somewhat of an intermediate expert on this field before I actually use real currency. So, you know, there are actually, you know, like online, you know, sources, you know that you could use. I think that the one that I used was actually called the Stockwatch, I think, but basically there are a lot of paper trading platforms where you can sort of like play with fake money and see if this strategy works for you.

30:56 Min Sub: And once you are comfortable with trading fake money, and once you have profited, maybe even become a millionaire with the paper money, I think by then, you know, maybe to me, you know, it took about maybe a good three weeks to be more comfortable with this. So it was a very good learning period for me. And, you know, I’m very glad that I took that time to actually learn about this because now, you know, again, like I said, the time investment, you know, initially might be a little painful, it’s just sort of a big climb, but once you are comfortable with the level of, you know, risk-free training, then honestly this becomes a very routine task for me. So, I started using, you know, a paper training currency, but, you know, there are a lot of YouTube videos out there nowadays, right?

31:43 Min Sub: If you just, you know, look up, you know, how to sell covered call options, how to sell put options, right? How to do a put credit spread. There are many, many sources that people actually use. And there are actually, you know, plenty of day traders online who actually record their, you know, online, you know, videos on live. And they actually show how to execute different trades and they actually do tutorials of this. So there are actually endless amounts of resources that anyone can get started with this strategy. So if anyone is really interested in actually starting, you know, to learn a little bit about options, you know, how to actually trade options in a risk-free way, then I really think that those two ways are a very good start. And you really must make sure that you have enough collateral cash that, again, you are comfortable losing potentially. Because, you know, like I said, I’m only doing this for about 15% of my portfolio, right? Because you know, like I will not lose my sleep if, I mean, it would still stuck, but I will not lose my sleep, you know, if I potentially, you know, lose everything the next day.

Fairly Low Time Commitment

32:46 Emily: Yeah. So I want you to make some comments now about how compatible you think this strategy is with like a grad student lifestyle. And we’re talking both income, like available money to be invested, and of course, again, we’re only talking about a percentage of that total portfolio. And also the time. So like you mentioned earlier, I think there was a little bit of time invested to learn the strategy and you were, you know, playing around with a simulation. And then you actually start doing it. But once you are familiar and comfortable, it sounds like it’s a fairly low time commitment on like the daily or weekly basis, right? To actually execute the trades.

33:25 Min Sub: Yeah. It really is. I mean, you know, honestly, like the actual, like trading itself takes, you know, maybe less than three seconds. You know, like as long as you set your own strike price that you’re comfortable with, and as long as you are, you know, like consistent with what you want to sell it for or buy it for, then it really just, you know, like usually, you know, like I do multiple options on Monday because, you know, technically Monday is when the new market opens, unless it’s a holiday, and then the option contracts expire usually on Fridays. So usually selling a weekly put or cover call on the same week, I think is a very good, consistent income. Now sometimes, you know, like I do a little bit of longer calls. I make longer contracts if I feel like, you know, I can get more premium because you know, the longer your contracts are, the more premium you will get.

34:13 Min Sub: So sometimes if I feel like a stock, you know, might not potentially move for maybe another like two weeks or so, right? Then, you know, I could consider doing that for a longer time, which means the next week I’ll just take a week off or something because I don’t actually have to worry about you know, like losing maybe a premium in that sense. Yeah. So like, honestly, like once you sort of reach that phase of, you know, I learned how to do options, I kind of know what I’m doing, right? Once you sort of like, I think pass that barrier, I think from there, it becomes a very, very passive thing. And that’s the reason why I chose to participate in this podcast because, you know, when we talk about, you know, like passive income, you know, and side hustles. Most side hustles that we are familiar with, you know, usually requires some kind of a time commitment.

35:01 Min Sub: You know, we spend about, you know, an hour or two tutoring, we spend an hour or two, you know, maybe, being a tour guide or something. Or, you know, like you could be some kind of a, you know, participant in some, you know, case study, right? But I think with options, you know, it’s very great because it doesn’t require you to actually exchange your active time for money. Because once you sort of like, you know, have a system, right? It’s kind of like, you know, you are generating your own, you know, machine that gives you your own passive income. Now, you know, don’t get me wrong. Like, again, there are risks to options trading. So, you know, don’t think that everyone’s an expert, because I definitely lost some money during this. You know, but for me, like, you know, because I was very consistent over time and I was very keen to what I believe, and I was very committed to my purchases and other stuff. I was able to make a slowly but substantial income that I still have today. And I’m still looking forward to, you know, keep on doing this, you know, hopefully until I graduate. And by then, who knows what’s going to happen.

Choosing the “Right” Stocks

36:00 Emily: So kind of one more follow-up question on that. Like, I understand that, you kind of said once you set up this like system or like machine, you know, consistently. Yes, there are risks, but you have generated a fairly consistent passive income from this. But I guess I’m more wondering about how you’re figuring out, like you’ve mentioned several individual stocks as examples so far in our conversation, like there’s whatever thousands of stocks to choose from. Like how do you actually figure out which ones you’re going to be making these bets on? Like what resources do you use?

36:30 Min Sub: Yeah, that’s a very good question. So when you talk about like stocks that are deemed considered safe, so there are actually many measurements you can actually learn about this. So, basically when I first got really into investing, I actually read the book called The Intelligent Investor. I actually have it here. Let me pull it out right now. So it’s called The Intelligent Investor by Benjamin Graham. If you see this right here. And basically this is a really good book because it actually really shows you a lot about how to, you know, pick the stocks that are right for you. Essentially, you know, there are two like great measurements of a stock that you consider, right? Because remember, when we do a covered call, you want to choose a stock that has a fairly low volatility that does not tend to move up and down in price too much, right?

37:15 Min Sub: So, you know, a good example would be Google, right? Google or Apple, right? Those two, you know, are very big, you know, big blue chip stocks that have already performed very, very well. Right? So, these are called, you know, large market cap stocks because these companies have already grown, and you know, the amount of growth that they are projecting forward is a lot less compared to, let’s say new SPE companies that have just, you know, IPO’d and you know, these companies have a lot more, you know, potential to grow, right? So I mean, you know, if you’re looking for, let’s say this growth stock investing, then you should not do options on them, personally, because you know, these, like I said, these growth stocks can either go both ways and, you know, because of the high volatility. You might receive more premium, but you have a much higher risk of losing all your money.

37:59 Min Sub: So I would personally stay away from any of those companies that have a very small market cap, right. And, you know, market cap simply means it’s the total asset of a company. So you can basically multiply the share price times the number of shares, that’s how you get market cap. The other measurement is actually a measurement called beta. So I don’t know if you’re familiar with beta, but beta is basically a comparison to the S&P 500 index. And for those who are not familiar with the S&P 500, the S&P 500 basically is a way to think about the U.S. economy as a whole, right? So if your S&P 500 sort of grows on this path, then we can kind of expect that the U.S. economy also follows that trajectory, essentially. So if your beta for a stock is one, that means that stock essentially aligns parallel to the S&P 500.

38:48 Min Sub: So an example of a stock that would have beta one is actually Google, right? Basically, if you actually look at the past chart of Google versus the S&P right, we can actually see that they actually largely overlap together. You know, mainly because, you know, those two companies, they sort of flow in the same trajectory, right? So if I were to, you know, recommend a stock to do options on, I would choose a stock with a very low beta, or with a beta that’s as close to one as possible, mainly because we know those stocks are a lot less volatile compared to other stocks, right? You know, please don’t do, you know, options on, you know, like stuff like Tesla right? Because we know Tesla goes like up and down, in like so many ways.

39:30 Min Sub: So, it’s really, really risky to you know, do those kind of options, you know, unless you have a lot of money to lose, right? And the third measurement that I also look at is something called the PE ratio. So that’s called the price to earnings ratio. And typically I mean, some people say that PE ratio is a measurement of companies’, you know, future performances. But usually I like to basically use a metric where the PE ratio for a company typically should be around 20 or lower. And basically with that measurement, that usually means that the company has already grown, you know, has a lot of built-in growth. And there is a lot less growth potential possible in the future. So, it’s kind of like Google.

40:13 Min Sub: So Google also has a fairly low PE ratio because, you know, they also have grown so much these past, you know, couple decades that you know, we don’t expect Google to, you know, become like a master large cap stock in the future. So, you know, like you could actually search up these stocks on Yahoo finance, and actually look at their charts. And, you know, these charts will actually display all the parameters that I talked about. Beta, PE ratio, market cap, all that stuff. And, you know, if you are interested in learning more about this stuff, there are plenty of resources out there online. The one source that I really like is a source called Investopedia, actually. So Investopedia is basically like an encyclopedia with all the investment terms.

40:54 Min Sub: So, you know, like if you want to know more about, you know, what is a large cap company versus a low cap company? What is a PE ratio? What is a beta? You know, what are call options? You know, you will be able to find individual articles on all of these. So, again, it takes a little bit of time and practice to be familiar with these, but I personally think that as long as you are comfortable and as long as you are interested in making money, then I think these are very good strategies that we could potentially incorporate in our daily lifestyle. Especially if you like investing.

Portfolio Growth in 2021

41:26 Emily: Sounds really attractive. So for your personal portfolio, do you mind sharing how long you’ve been doing this for, how much money you’ve made or how much your portfolio’s grown, and how much time you think you’ve put into the research and the execution?

41:44 Min Sub: So this year alone. So if I were to, you know, just add up all of my total put credit spreads that I made from January 2nd to now. I have about $7,322. And that is because I was able to do this on a weekly basis. You know, I was selling SPY put credit spreads on three times a day, and eventually, you know, those money has been accumulating and compounding. And quite frankly, that’s the reason why I was actually able to accumulate a little bit more capital to start, you know, selling puts. Remember to sell put options, we need cash collateral. So because now I had a little bit of cash, now I’m able to, you know, use these put option strategies to actually sell puts on companies that I’m willing to buy. So basically, like, you know, I think you can see what I’m getting at here, you know, as long as you’re consistent, as long as you are committed to your goals, I really think that in the long picture, right, the money will compound on its own. And, you know, I am a very strong believer that anyone can achieve great wealth, no matter what kind of income that you’re making. So, I personally think that as long as you have the right mindset, as long as you have the right strategy for it, then anyone can do this. That includes grad students.

43:01 Emily: I love the way you put that. I don’t have anything to add to that, except to just say that $7,000 in, let’s see we’re in November now. So almost a year of what is essentially like a side hustle. You know, not that active, you’re not spending a lot, a lot of time on it. It’s a very decent rate of return, especially for a graduate student. So yeah, this is very exciting.

Best Financial Advice for Another Early-Career PhD

43:21 Emily: It’s been really a pleasure for me to learn more about this. So thank you so much for volunteering to be on the podcast. I want to conclude with the question that I ask of all my guests, which is what is your best financial advice for another early-career PhD? And it can be something related to what we’ve talked about today or something completely else.

43:40 Min Sub: Yeah. So this is actually not financial advice, but this is actually, I think, a very good personal habit that everybody should employ, and that is to wake up early. So the reason why I started waking up early was actually frankly, because the stock market in California opens at 6:30. And, you know, like, you know, if I’m trying to get the best bet out of this, right? You know, usually I like to do most of my trades in the morning. But honestly, you know, quite frankly, like after I started to have very prosperous morning habits, I realized that I feel like I have a lot more time in my day, right? Because, you know, when we wake up at let’s say 9:00 AM or 10:00 AM, right? You know, like we tend to feel I think more lazy because the sun’s already out and, you know, we already hear people outside. So, I really feel like fostering this kind of like early morning routine is a very good habit, I think for really anyone, right? Because not only do you feel like you have more time, but I think that, you know, in the morning when people are, you know, mostly asleep typically usually like I get less distracted and I tend to get more work done in the morning, personally.

44:50 Emily: I have to say that I concur, and it’s even a surprise to me. Well, it was so good to meet you Min Sub! Thank you so much for coming on and sharing about this topic. New to me, new to probably many of the listeners, but really exciting to learn about. So thank you! It was great to have you on!

45:05 Min Sub: My pleasure! Thank you so much for having me!

Outtro

45:12 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? I have collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. If you’ve been enjoying the podcast, here are 3 ways you can help it grow: 1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. 2. Share an episode you found particularly valuable on social media, with an email list-serv, or as a link from your website. 3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and increasing cash flow. I also license pre-recorded workshops on taxes. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

Is Fellowship Income Eligible to Be Contributed to an IRA?

February 6, 2022 by Emily 27 Comments

Update 2/22/2022: Great news! The point of this article has been fulfilled because the IRS re-revised Publication 970 for tax year 2021 to reflect the current tax code, which permits taxable graduate student and postdoc income, whether reported on a Form W-2 or not, to be contributed to an IRA.

Publication 970 p. 5 NOW states: “Individual retirement arrangements (IRAs). You can set up and make contributions to an IRA if you receive taxable compensation. A scholarship or fellowship grant is generally taxable compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. However, for tax years beginning after 2019, certain non-tuition fellowship and stipend payments not reported to you on Form W-2 are treated as taxable compensation for IRA purposes. These include amounts paid to you to aid you in the pursuit of graduate or postdoctoral study and included in your gross income under the rules discussed in this chapter. Taxable amounts not reported to you on Form W-2 are generally included in gross income as discussed later under Reporting Scholarships and Fellowship Grants.”

The rest of this article is unchanged from its original publication date on 2/6/2022.

Believe it or not, I look forward to the release of each new version of the IRS’s Publication 970, which covers how fellowship and scholarship income is taxed. I read it thoroughly and make sure that what I teach is in line with it. However, when I opened up the new 2021 version a few days ago, I was disappointed to read on p. 5: “Individual retirement arrangements (IRAs). You can set up and make contributions to an IRA if you receive “taxable compensation” (formerly “earned income”). Under this rule, a taxable scholarship or fellowship grant is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement.” Disappointed doesn’t really touch the depths of my feelings… I was momentarily devastated! I’ve been telling you for over two years now that fellowship income is eligible to be contributed to an IRA regardless of how it is reported or not reported at tax time. Was I wrong? Let’s explore the relevant texts. I have great respect for the IRS publications and find them very useful, but they are not the final word on tax law… the tax code is.

Further reading/listening:

Pre-2020 Status

You must have “taxable compensation” to contribute to an IRA in a given tax year. You can contribute up to the cap for that year ($6,000 in 2019-2022) or your amount of taxable compensation, whichever is lower.

Through tax year 2019, with respect to PhD trainee income, only income reported on a Form W-2 was considered “taxable compensation.”

The text from the 2019 version of Publication 970, Tax Benefits
for Education, reads on p. 5: “Individual retirement arrangements (IRAs). You can set up and make contributions to an IRA if you receive taxable compensation. Under this rule, a taxable scholarship or fellowship grant is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. For more information about IRAs, see Pub. 590-A and Pub. 590-B.”

Similarly, the text from the 2019 version of Publication 590A, Contributions to Individual Retirement Arrangements (IRAs), reads on p. 6: “Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2.”

This text is very clear and reflects the widely held understanding of eligibility for IRA contributions. It was very disappointing for many members of the PhD community; winning a fellowship often comes with a pay raise and therefore an enhanced ability to save for retirement, yet those recipients were barred from making IRA contributions. Keep in mind, these fellowships were taxable as ordinary income, just not considered taxable compensation for IRA contribution purposes. I didn’t like this rule, but I taught it as part of my personal finance material.

The Graduate Student Savings Act

Somehow, the plight of graduate students and postdocs who received fellowship income was heard! The Graduate Student Savings Act proposed to change the definition of taxable compensation. It was put before Congress as a bill in 2016, 2017, and 2019.

An excerpt of the fact sheet for the Graduate Student Savings Act of 2019 reads: “While fellowship or stipend income is taxed by federal and state governments, it doesn’t qualify as “compensation,” meaning that none of a student’s fellowship funds can be saved in an IRA… Many postdoctoral fellows… also receive taxable fellowship income, yet these fellows are also barred from using their fellowship income to contribute to tax-preferred retirement accounts. The Graduate Students Savings Act of 2019 would ensure that any graduate student or postdoctoral fellow who is
paid for their work or their studies can save a portion of their stipend in an IRA.”

While not using super specific or technical language, this excerpt makes clear the intent of the bill: to allow “any graduate student or postdoctoral fellow who is paid for their work or their studies” to contribute to an IRA, i.e., change the definition of taxable compensation.

Graduate Student Savings Act was not successful in being passed as an independent bill in any of those years. Then, in 2019, it was included in the SECURE Act.

The SECURE Act

The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) is described by Investopedia as a “far-reaching bill includes significant provisions aimed at increasing access to tax-advantaged accounts and preventing older Americans from outliving their assets.” It was signed into law on December 20, 2019.

The Graduate Student Savings Act was included in the SECURE Act. Here is the relevant text from the bill:

“SEC. 106. CERTAIN TAXABLE NON-TUITION FELLOWSHIP AND STIPEND PAYMENTS TREATED AS COMPENSATION FOR IRA PURPOSES.

“(a) In General.—Paragraph (1) of section 219(f) of the Internal Revenue Code of 1986 is amended by adding at the end the following: “The term ‘compensation’ shall include any amount which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study.”.

“(b) Effective Date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2019.”

This expands the definition of taxable compensation for the purposes of contributing to an IRA beyond what is reported on a Form W-2. To me, this definition clearly includes taxable fellowship and training grant income paid as stipends and salaries not reported on a Form W-2.

The Tax Code (2021)

From the current Internal Revenue Code section 219 on Retirement Savings, section (f)(1) reads:

“(1) Compensation For purposes of this section, the term “compensation” includes earned income (as defined in section 401(c)(2)). The term “compensation” does not include any amount received as a pension or annuity and does not include any amount received as deferred compensation. For purposes of this paragraph, section 401(c)(2) shall be applied as if the term trade or business for purposes of section 1402 included service described in subsection (c)(6). The term “compensation” includes any differential wage payment (as defined in section 3401(h)(2)). The term “compensation” shall include any amount which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study.”

Again, I read this as any type of grad student and postdoc salary or stipend with no clauses about being reported on a Form W-2. The language is very similar to how IRS Publication 970 describes fellowship income on p. 5: “A fellowship grant is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research.”

The Internal Revenue Code does seem, to me, to reflect the intent of the Graduate Student Savings Act of expanding the definition of taxable compensation with respect to graduate student and postdoc income beyond what is reported on a Form W-2.

The 2021 Publications

Publication 970

As I stated at the start of this article, Publication 970 disappointingly has not changed its tune on the definition of taxable compensation. It says the same thing in 2021 that it did in 2019 as if the Graduate Student Savings Act had never passed.

Publication 590-A

Publication 590-A, to its credit, now has some mixed language regarding taxable compensation and fellowship stipends and salaries. I’ll compare the 2018 and 2021 versions of this publication.

The 2018 version of Publication 590-A contains exactly one reference to fellowship income on p. 6 in the section titled What Is Compensation?: “Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2.”

The 2021 version of Publication 590-A contains this language on p. 6 in the section titled What Is Compensation?: “Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2.” So no change there.

However, further down in the same section it says: “Graduate or postdoctoral study. Compensation includes any income paid to you to aid you in the pursuit of graduate or postdoctoral study.”

Are they trying to draw a distinction between “any income paid to you to aid you in the pursuit of graduate or postdoctoral study” and “scholarship and fellowship payments”? What could “any” income mean if not, at least in part, fellowship payments?

To further muddy these waters, Publication 590-A includes Table 1-1, Compensation for Purposes of an IRA. The 2018 version of this table doesn’t mention either fellowship income or graduate or postdoctoral study. The 2021 version lists “taxable non-tuition fellowship and stipend payments” as included in the definition of taxable compensation.

This language in the table is consistent with both employee and non-employee graduate student and postdoc income, again, with no mention of a Form W-2 reporting requirement.

Furthermore, the 2021 version of Publication 590-A says under the Reminders section on p. 2: “Certain taxable non-tuition fellowship and stipend payments. For tax years beginning after 2019, certain taxable non-tuition fellowship and stipend payments are treated as compensation for the purpose of IRA contributions. Compensation will include any amount included in your gross income and paid to aid in your pursuit of graduate or postdoctoral study.”

I am not sure what “certain” means in this paragraph. “Non-tuition fellowship and stipend payments” reads to me as stipend or salary as long as your tuition is being paid by another source of funding. “Any amount included in your gross income and paid to aid in your pursuit of graduate or postdoctoral study” reads to me as both your employee income (reported on a Form W-2) such as from a graduate assistantship position or postdoctoral employee position and taxable non-employee (not reported on a Form W-2), often sourced from a fellowship or training grant.

My Conclusion

My conclusion is that the very clear language in Publication 970 and Publication 590-A excluding taxable fellowship and scholarship income from the definition of taxable compensation unless it is reported on a Form W-2 is not consistent with the spirit of the Graduate Student Savings Act or the current tax code. The changes made by the SECURE Act to the tax code included in the definition of taxable compensation “any amount which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study.” To me, this means that if you receive a taxable stipend or salary as a graduate student or postdoc, even if it is not reported on a Form W-2, it is taxable compensation for the purpose of contributing to an IRA.

What Do You Think?

I am really struggling with this and I honestly want to know: Do you see a flaw in my reasoning? Is there some difference between “fellowship” and “any income paid… in the pursuit of graduate and postdoctoral study”? Leave a comment here or email me ([email protected]). I am open to the idea that there is something I don’t see or understand. Or let me know if you agree with me.

What Can We Do?

If my argument is valid and the text in IRS Publication 970 and Publication 590A (in part) is incorrect, what can be done? Hit me with your ideas for getting this text updated.

My initial idea is to write to the offices of the Senators (Elizabeth Warren, Mike Lee, Ron Wyden, and Tim Scott) who sponsored the Graduate Student Savings Act to see if they can clarify why the IRS’s language in these publications doesn’t reflect the change the Act brought about. Do you have any other ideas?

The big win for our community was getting the Graduate Student Savings Act passed. The follow-through on that win is making sure that people (and tax software/preparers) know about the change so that graduate students and postdocs can functionally contribute to IRAs.

Fellowship and Training Grant Tax Forms

February 2, 2022 by Emily Leave a Comment

There is no single correct IRS tax form on which to report PhD trainee fellowship and training grant stipends and salaries. Universities and funding agencies take different approaches, which often confuses grad students, postdocs, and postbacs. This article shares the crowd-sourced information on how universities and funding agencies are reporting fellowship and training grant income.

Please contribute to this project by filling out this survey to have your tax form included in this article—and share the survey as well.

I have included the number of entries that I’ve received for each type of tax form.

Further reading:

Tax Year 2024 Survey Results

External Fellowships

National Institutes of Health (NIH)

Continuing Education Training Grant (T15)

The T15 has been reported on a:

Form 1098-T Box 5 (1 entry)

Intramural Research Program: Postdoctoral Research Training Award (IRTA)

The postdoc IRTA has been reported on a:

Form 1099-G in Box 6 (1 entry)

Ruth L. Kirschstein Institutional National Research Service Award (T32)

The T32 has been reported on a:

Courtesy letter (2 entries)
W-2 (1 entry)

Ruth L. Kirschstein Predoctoral Individual National Research Service Award (F31)

The F31 has been reported on a:

Form 1099-MISC Box 3 (2 entries)

It has also been not reported in any way (1 entry)

Linked Training Award (TL1)

The TL1 has not been reported in any way (1 entry)

National Science Foundation

Research and Mentoring for Postbaccalaureates in Biological Sciences (RaMP)

The RaMP has been reported on a:

Courtesy letter (1 entry)

Graduate Research Fellowships Program (GRFP)

The GRFP has been reported on a:

Form 1098-T Box 5 (2 entries)
Courtesy letter (1 entry)

It has also been not reported in any way (2 entries)

National Aeronautics and Space Administration

Future Investigators in NASA Earth and Space Science and Technology (FINESST)

The FINESST has been reported on a:

Form 1098-T Box 5 (1 entry)

It has also been not reported in any way (1 entry)

American Institute of Indian Studies

Junior Fellowship

The Junior Fellowship has not been reported in any way (1 entry)

National Institute for Occupational Safety and Health

Occupational Health Psychology Total Worker Program

The Occupational Health Psychology Total Worker Program funding has not been reported in any way (1 entry)

Internal Fellowships

Harvard University

Funding (stipend) for doctoral students still in coursework has not been reported in any way (1 entry – told to use paystub for reporting to IRS)

Northwestern University

The First-Year Fellowship was reported on a courtesy letter (1 entry – letter was requested by recipient).

Stanford University

Funding (stipend) for doctoral students has been reported on Form 1098-T Box 5 (1 entry).

University of Connecticut

The Jorgensen Fellowship has not been reported in any way (1 entry).

University of Pennsylvania

The Educational Fellowship has not been reported in any way (1 entry).

Vanderbilt University

Funding (stipend) for doctoral students has been reported on Form 1098-T Box 5 (1 entry).

Non-tuition scholarship awards (e.g., health insurance, health fee award) have been reported on Form 1098-T Box 5 (1 entry).

Tax Year 2023 Survey Results

External Fellowships

National Institutes of Health (NIH)

Dissertation Award (R36)

The R36 has not been reported in any way (1 entry).

Intramural Research Program: Postdoctoral Research Training Award (IRTA)

The postdoc IRTA has been reported on a:

Form 1099-NEC Box 1 (1 entry)

Ruth L. Kirschstein Institutional National Research Service Award (T32)

The T32 has been reported on a:

Form 1098-T Box 5 (3 entries)

It has also been not reported in any way (2 entries).

Ruth L. Kirschstein Predoctoral Individual National Research Service Award (F31)

The F31 has been reported on a:

Form 1098-T Box 5 (2 entries)
Form 1099-MISC Box 3 (1 entry)

National Science Foundation

Graduate Research Fellowships Program (GRFP)

The GRFP has been reported on a:

Form 1098-T Box 5 (2 entries)
Form W-2 (1 entry)

It has also been not reported in any way (1 entry).

Internal Fellowships

Harvard University

The Prize Fellowship has not been reported in any way (1 entry).

Mayo Clinic Graduate School of Biomedical Sciences

Funding (stipend) for doctoral students has been reported on Form 1099-MISC Box 3 (1 entry).

Ohio State University

The Presidential Fellowship has not been reported in any way (1 entry).

Smithsonian Institution

The postdoctoral Smithsonian Institution Fellowship Program (SIFP) has not been reported in any way (1 entry).

University of Nevada, Reno

The Bilinski Fellowship has been reported on Form 1098-T Box 5 (1 entry).

University of Virginia

The Diversity, Equity, and Inclusion Dean’s Doctoral Fellowship has not been reported in any way (1 entry).

A graduate research assistantship position has not been reported in any way (1 entry).

The Raven Fellowship has been reported on Form 1099-MISC Box 3 (1 entry).

Tax Year 2021 Survey Results

National Institutes of Health (NIH)

Ruth L. Kirschstein Institutional National Research Service Award (T32)

The T32 has been reported on a:

Form 1098-T in Box 5 (5 entries)
Courtesy letter (3 entries)

It has also been not reported in any way (3 entries).

Ruth L. Kirschstein Individual Predoctoral NRSA for MD/PhD and other Dual Degree Fellowships (F30)

The F30 has been reported on a:

Form 1098-T in Box 5 + Form W-2 in Box 14 (1 entry)

Ruth L. Kirschstein Predoctoral Individual National Research Service Award (F31)

The F31 has been reported on a:

Form 1098-T in Box 5 (2 entries)
Form W-2 in Box 1 (1 entry)

It has also been not reported in any way (1 entry).

Ruth L. Kirschstein Postdoctoral Individual National Research Service Award (F32)

The F32 has been not reported in any way (1 entry).

Individual Predoctoral to Postdoctoral Fellow Transition Award (F99/K00)

The F99/K00 has been not reported in any way (1 entry).

Intramural Research Program: Postdoctoral Research Training Award (IRTA)

The postdoc IRTA has been reported on a:

Form 1099-G in Box 6 (1 entry)

NIH Oxford-Cambridge Scholars Program

The Oxford-Cambridge Scholarship has been reported on a:

Form 1099-G in Box 6 (1 entry)

National Center for Advancing Translational Sciences Clinical and Translational Science Awards (CTSA) Program TL1

The CTSA TL1 has been reported on a:

Form 1099-MISC in Box 3 (2 entries)

Clinical Connections-Connecticut (CNC-CT)

The CNC-CT has been not reported in any way (1 entry).

Molecular Biophysics Training Grant

The Molecular Biophysics Training Grant has bee reported on a:

Form 1098-T in Box 5 (1 entry)

National Science Foundation (NSF)

Graduate Research Fellowships Program (GRFP)

The GRFP has been reported on a:

Form 1098-T in Box 5 (13 entries)
Form W-2 Box 1 (1 entry)
Courtesy letter (1 entry)

It has also been not reported in any way (5 entries).

Postdoctoral Research Fellowships in Biology (PRFB)

The PRFB has been not reported in any way (1 entry).

Department of Energy (DoE)

National Nuclear Security Administration (NNSA) Stewardship Science Graduate Fellowship

The NNSA Stewardship Science Graduate Fellowship from the Krell Institute has been reported on a:

Courtesy letter (1 entry)

Department of Defense (DoD)

National Defense Science and Engineering Graduate Fellowship (NDSEG)

The NDSEG has been reported on a:

Form 1099-NEC in Box 1 (1 entry)
Courtesy letter (1 entry)

Science, Mathematics, and Research for Transformation (SMART)

The SMART Scholarship has been reported on a:

Form 1099-MISC Box 3 (1 entry)

The National Academies

Ford Foundation Predoctoral Fellowship

The Ford Foundation Predoctoral Fellowship has been reported on a:

Courtesy letter (1 entry)

Henry Luce Foundation

Clare Boothe Luce Fellowship

The CBL Fellowship has been not reported in any way (1 entry).

Simons Foundation

The Simons Postdoctoral Fellowship has been reported on a courtesy letter (1 entry).

Internal Fellowships

Cornell University

A fellowship for first-year rotating students has been reported on a Form 1098-T in Box 5.

Harvard University

The Prize Fellowship has been not reported in any way (1 entry).

Indiana University

The University fellowship has been reported on a Form 1098-T in Box 5 (1 entry).

Mayo Clinic

The Mayo Foundation for Medical Education & Research Fellowship has been reported on a Form 1098-T in Box 5 + Form 1099-MISC in Box 3 (1 entry).

Rochester Institute of Technology

A graduate research assistantship position has been reported on a Form 1099-MISC in Box 3.

University of California, Berkeley

The Chancellor’s Fellowship has been reported on a Form 1098-T in Box 5.

University of California, San Diego

The Summer Training Academy for Research Success (STARS) Fellowship has been reported on a Form 1098-T in Box 5 and a courtesy letter (1 entry).

University of Connecticut

The Jorgensen Fellowship has been not reported in any way (1 entry).

University of Michigan

The Rackham Merit Fellowship has been reported on a Form 1098-T in Box 5 (1 entry).

University of Pennsylvania

The Dean’s Fellowship in the Graduate School of Education has been reported on a Form W-2 in Box 1 (1 entry).

University of Southern California

The Merit Fellowship has been reported on a Form 1098-T in Box 5 (1 entry).

University of Virginia

The Diversity, Equity, and Inclusion Dean’s Doctoral Fellowship has been not reported in any way (1 entry).

Washington University in St. Louis

The WM Keck Postdoctoral Fellowship has been reported on a courtesy letter (1 entry).

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This Grad Student Worked Multiple Side Jobs to Pay Off Debt

January 31, 2022 by Meryem Ok Leave a Comment

In this episode, Emily interviews Dr. Jeanelle Horcasitas, a PhD in Cultural Studies from UCSD who worked multiple jobs to stay afloat during grad school. Because of some financial events in her childhood and being a first-generation college student, Jeanelle was determined to do her PhD without accumulating any more student loan debt. In fact, she accomplished some major financial goals during graduate school, such as self-funding for a few months leading up to her defense after her dissertation fellowship ended. Don’t miss Jeanelle’s reflections on how her financial goals have changed since finishing grad school and how she’s now resisting hustle culture.

Links Mentioned in the Episode

Jeanelle’s Twitter (@jhorcasi)
Jeanelle’s LinkedIn
Digital Ocean
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EveryDollar App
PF for PhDs Tax Resources
The Total Money Makeover (Book by Dave Ramsey)
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Image for This Grad Student Worked Multiple Side Jobs to Pay Off Debt

Teaser

00:00 Jeanelle: Before, like I said, I felt very survival mode, hustle mode. Like I’ve just got to work hard, work, hard, work hard. And I was very burned out by the time I finished graduate school. But now I’m more of, you know, I’m doing the smart thing. I’m saving. I’m saving for my future and doing what I need to. So, I’ve backed up a little off of that and given myself more grace.

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 11, Episode 3, and today my guest is Dr. Jeanelle Horcasitas, a PhD in Literature and Cultural Studies from UCSD who worked multiple jobs to stay afloat during grad school. Because of some financial events in her childhood and being a first-generation college student, Jeanelle was determined to do her PhD without accumulating any additional student loan debt. In fact, she accomplished some major financial goals during graduate school, including self-funding for a few months leading up to her defense after her dissertation fellowship ended. Don’t miss Jeanelle’s reflections on how her financial goals have changed since finishing grad school and how she’s now resisting hustle culture.

01:14 Emily: Jeanelle and I first connected way back in 2015 when she was working as the Grad Life intern at UCSD. I had very recently launched Personal Finance for PhDs. I reached out to her cold and pitched her The Graduate Student and Postdoc’s Guide to Personal Finance, which was my only seminar offering at that time. She liked the idea and advocated for it within her office, but it didn’t go forward right away. I actually didn’t work with UCSD for the first time until 2020, but Jeanelle had planted the first seeds all those years before. If you are a fan of this podcast, would you please follow Jeanelle’s lead and request that your Graduate School, Graduate Student Association, Postdoc Office, etc. work with me in 2022? I offer a variety of live and pre-recorded seminars and workshops on topics from taxes to investing to cash flow management. My most popular seminar remains The Graduate Student and Postdoc’s Guide to Personal Finance, and although it’s changed a lot over the years, it still touches on a wide variety of personal finance topics so there’s something for everyone. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. And hey, even if they aren’t able to work with me this year, your recommendation could plant a seed for an engagement in a future year. Thank you very much! Without further ado, here’s my interview with Dr. Jeanelle Horcasitas.

Will You Please Introduce Yourself Further?

02:47 Emily: I am delighted to have joining me on the podcast today, Dr. Jeanelle Horcasitas. She was a graduate student at UCSD and has been finished with her PhD for about two years, moving on to the working world. And so we are going to talk about how graduate school went financially for her, how she funded it and so forth, and then also how her, you know, financial life is going now. So Jeanelle, thank you so much for joining me for the podcast. Thank you for volunteering for this interview. And would you please introduce yourself a little bit further for the audience?

03:13 Jeanelle: Yes! Thank you so much, Emily, for bringing me on. I’m excited to speak with you today. So, I went to undergrad at UCLA for English and I did my PhD at UC San Diego in literature and cultural studies. And, you know, since I’ve received my PhD, I did a multitude of jobs within my time at graduate school, but since graduating, I spent some time in graduate career and professional development for biomedical scientists for about a year and a half. And I’ve recently transitioned into the tech space for a company called Digital Ocean. And, you know, one of my biggest motivations for school and getting through it was the fact that I’m first generation. I also come from a low-income family. So a big part of that was the fact that I had to be the one to get myself through school, to pay for it. I knew that my parents were in a financial situation. And I learned that at about 18 when they got divorced, I experienced bankruptcy, foreclosure at the time. And that was very transformative for me at that age to just recognize the impact of financial decisions. And so part of, you know, why I wanted to complete my PhD completely debt-free was because of those reasons of just knowing what having that burden can do to you and how it can impact your future.

Undergrad Funding and Student Loans

04:51 Emily: Wow. Yeah, that’s such such an impressionable age to be going through something like that. So thank you for sharing that with us. Since you mentioned being 18, when you started college, did you also have that determination to do your undergrad debt-free?

05:06 Jeanelle: So when I was 18, I actually went to community college for a few years beforehand, which was really great because since I was low-income, I was able to receive very generous grants like the Pell Grant. And I did my FAFSA, and at that point I just really wanted to start my undergrad. And I remember saying the only thing I’ll go in debt for will be my student, like education and I’ll do student loans. So, I signed away, didn’t really know what I was doing. I did receive fellowships for my undergrad, but I was living in Westwood in Los Angeles next to Bel-Air. And as you know, the cost of living is very high, especially to live in the dorms. So I was only there for about two years, but I did come out of debt. And so at that moment, I hadn’t really felt you know, I need to do this degree debt-free, but I tried to keep the amount I was taking on pretty minimal. So I feel like I didn’t graduate with too much student loan debt, but I did have some.

06:15 Emily: And did you go directly from undergrad to grad school?

06:19 Jeanelle: No. I took a year off to work full-time and try to pay down some of the student loans. And then I went to graduate school after that for about five and a half years.

06:30 Emily: Okay. So entering graduate school, you have a new perspective and you want to do this whole thing debt-free. Were you still carrying any student loan debt at that point, or had you cleared all of it?

06:40 Jeanelle: No. So at the time of graduate school, I still had most of my student loans from my undergrad, and I also had a car payment and car loans. So I carried those two things, and I think the stress came from the fact that I wasn’t getting any younger. I was about to sign away five and a half to seven years of my life. And I knew that I wouldn’t be making a ton of money. I was given like a pretty decent fellowship, but living in San Diego, it still couldn’t cover everything. And so I think from the very beginning, I knew that I wanted to put some sort of plan into place that I was still going to graduate school, but that I would be paying off these loans simultaneously. So that by the time I graduated, I’d be in a better financial position to buy a home or just to not have that hanging over my head for longer than I would’ve liked it to be.

How Does Funding Work in Your Department?

07:53 Emily: Yeah. Very, very ambitious. But I can see how you got there. Tell me a bit about how your field, your department is typically funded. You mentioned you had a fellowship for two years. Is that something you were seeing offered at like multiple different schools? And how did you end up at UCSD in particular, I guess, and specifically related to the finances?

08:13 Jeanelle: That’s a great question. So for the most part, my specific department, they don’t receive a lot of funding. They actually, most of the graduate students have to do TAships and, you know, find a teaching assistant position. And that’s how they get it paid for. Mine was actually through nomination that someone at the literature department had to do for me, and the graduate school, they were the ones that, you know, went through candidates and selected and made that decision. And so, the reason I chose UCSD is because it was such a generous, like first two years will cover you with this stipend. And then the next two years, you’re kind of guaranteed that TAship. And then you figure it out from there. I had a couple of other offers from two other graduate schools, where one was just offering like a fellowship for one quarter, which wasn’t enough for me.

09:21 Jeanelle: And then the other was I think, just a year. And so, I was like, I don’t want to have to pay for this. And I’m going to choose where the money is for the most part. And it ended up being a good decision for that reason. And just for the folks that I got to work with. So I was happy with that, because it seems like it really varies. It’s interesting because it was all UCs where these offers came from. So they have different ways of, I guess, enticing students to come with what kind of money they might have or available for fellowships.

09:58 Emily: I think that’s a point that prospective graduate students really, really need to hear, like they need to investigate the typical funding path in their field. Is it usually from TAship, so that you know, if someone’s offering you a significant fellowship, that it’s really special and they’re really trying to recruit you. And yeah, you may have to do TAships after that ends, but when does it end? Is it two years? Is it one year? You know, how much money is being directed toward you, especially as a recruiting tool. So love that you were, you know, analyzing that at that point.

Sources of Income Beyond Fellowship

10:28 Emily: So you mentioned earlier that you worked like a lot of different jobs during your PhD. And so, what did you do beyond, okay. I have this fellowship for a couple years. I know that you had a fellowship again at the end. And also the TAing that you mentioned. Did you work other jobs in addition to those? And also were they through the university or like completely independent?

10:49 Jeanelle: I had the first two years covered from the fellowship. And the last two were for the TAship. And then my fifth year I got a dissertation fellowship. However, within that time I was working multiple jobs at different places. So for the first two, two and a half years, even though I was on fellowship and taking my, my graduate courses, I was also a graduate student researcher or GSR for the the Graduate Office at UCSD. And I did some freelance writing as well. And I also worked as a student worker for the county of San Diego’s housing office. And so, you know, some, they weren’t all at the same time, but at one point I think they were all happening at once, which was pretty overwhelming, but it was nice, especially for the county job because I could work full-time during the summer, which was great because the fellowship actually it was nice, but it wasn’t always enough to get you through the summer. And they didn’t offer summer fellowships during that time.

11:57 Jeanelle: They started doing it later on during my time at the program. And then during my TAship, I really wanted to focus on teaching, but I had an opportunity to adjunct at the community college as well. So, in addition to TAing a couple of classes, I also taught one to two classes at the community college, which was a great experience. And then during one summer I did an internship in Washington DC. So there were a lot of different jobs that I was doing both, you know, if I had to go in somewhere, or freelancing, mostly writing or editing with different folks.

Side Hustling Amongst Peers

12:40 Emily: I can totally understand your motivation to take on this extra work for extra money. Because of, you know, mentioning your goals about clearing the student loan debt and the car debt and so forth. If you had not had those extra circumstances in your life, not that they’re that extra, because a lot of people have those things. But was the stipend enough to live on, or was it like no, no, everybody has to be side hustling, even if they don’t have, you know, prior student loan debt or whatever? Like, were your peers all doing this greater degree of work as well?

13:09 Jeanelle: Oh, that’s a great question. I think it really comes down to the individual and, you know, what they can take. Personally, I didn’t feel that the stipend was enough living in San Diego. The only time that it felt like it was livable was my first couple years when I was in the graduate student subsidized housing, because it’s so much cheaper. Once I had to live outside of those bounds, the cost of living is just incredible. And, you know, you’re thinking about how am I going to live, but also how am I going to eat? I have, you know, my car, my gas, my car payment, insurance, all these things. Like I said, if you’re fully independent, which I was from my parents it could be a lot at once.

14:02 Jeanelle: And so, I had a mix of, I guess, observations of folks who, there were some people that were like me that were doing at least a couple of jobs at the same time. But then there were some that were just TAing and that was fine. They seemed to be okay, but they were also in graduate housing or they were living with many roommates, which is something else I didn’t really want, and luckily my partner came to move like halfway through my program. And that actually helped a lot as far as support. So, it really depends on the person, but from what I saw, you know, there was a big group that did have to do extra. And then some that they had to sacrifice in different ways, like living with many people or living really far away and commuting, et cetera.

Money Management and Keeping a Budget

14:56 Emily: Yeah. Thank you for sharing those observations as well. So with all these different sources of income and all the different expenses and goals that you had, how were you doing the money management part of things? Like, were you keeping a budget? How did that work?

15:11 Jeanelle: Yeah, so as far as budgeting, I tried the Mint app. And then I was trying this other app called EveryDollar. The issues with those apps that I found were, it captured like your monthly overview of what you were making, but the cash flow of, you know, when the bills come out versus when you get money in and what you actually have enough to pay for groceries that week, or, you know, gas, whatever it might be, it didn’t always line up. And so this was something that my partner and I, we were struggling a lot with, especially when we combined our finances after we got married. And so we found it easiest to create an Excel spreadsheet and it’s just day by day.

16:01 Jeanelle: And it has the categories to the left. But it’s really nice for us because we can really see where we are in real-time and know, okay, if you’re getting paid this Friday, maybe we could do a little more extra fun this weekend, or we know this is coming up. We have to put aside savings for this so that we can sequence it a bit better than these apps that are just, you have this much money for the month when it’s not necessarily true. You don’t have all that money like next week yet. Especially if you’re getting paid biweekly, which for some of my jobs I was.

16:38 Emily: Yeah, I can imagine working with, like, as you said, you had so many different jobs, all the different pay schedules that you must have been dealing with, and then, you know, like your fellowship stopped over the summer, for example, like you mentioned earlier, like it’s just a lot of moving parts. And I do agree that when you have a lot of moving parts, ultimately building your own spreadsheet is maybe the fastest way to a good solution that works for you. So thank you for sharing that with us.

Final PhD Year Funding

17:02 Emily: So you also mentioned earlier that you were funded in your fifth year by a dissertation fellowship, but you said you took five and a half years to finish graduate school. So let’s square that circle. What was your funding like for the last half year?

17:17 Jeanelle: So my last year was actually my fellowship, that was the highest amount I had received. And so, when I say it was a higher amount, it was only like $5,000, you know, more than what the other years had been. But that little bump did help. But, for that one year, I really wanted to finish my dissertation. And so, I had to say no to a lot of my extra jobs that I had. And, like I said, I have a spouse and it was nice to have you know, that support. He works full-time. And he could help with some of those extra, you know, expenses that couldn’t be covered by my stipend alone or anything like that. However, because I knew that I wanted to finish, I had planned, okay, you know, I’m not going to enroll the next year.

18:19 Jeanelle: I’m going to take leave of absence if I don’t finish at the exact year mark, but I know they’re not going to give me any more money after that. So we planned ahead and I decided to teach for one semester during that time. So, I just taught one class and then the rest of the time was dissertating. But all of that went into like a savings. We knew that that was going to be the gap of whatever time off extra I would need without getting my stipend. And so basically from January to August, or no, January to December, for about a year, I had worked on the dissertation, but the money stopped in the summer. So I didn’t have money coming in for about four months. And so I was able to be covered for about three months, and then I was starting to feel really stressed looking for jobs and seeing what we were going to do. So by that last month, when I knew I had my defense date, all those things, I was doing a lot of freelance extra work because by then the savings had run out. So I would say, from that extra time of teaching, I had saved about like a three month, like emergency fund as I wasn’t working during the summer.

19:41 Emily: That end of graduate school, getting to that defense date is such, such a busy period and such a stressful period. And you did as best you could, it sounds like to, you know, be doing the planning ahead financially, but it’s tough that, you know, at the very end there, when you’re applying for jobs, you’re preparing for the defense and all of that stuff that the financial stress had to come back in at that point. But I’m glad it didn’t go on for too long. You finished up very quickly. Yeah.

Starting Dissertation Debt-Free

20:06 Jeanelle: I just wanted to add one thing. I will say, at that time, like when I started my dissertation fellowship, we were debt-free. We didn’t have any more consumer debt. And we were actively saving for this time I would be off but also saving for our house. So the end of that summer was extra stressful because that’s when we bought our first town home condo. So that was an added layer of I need a job because we need to pay for this new place that we just got.

20:35 Emily: Wow. Yeah, that is a lot to put on one, you know, short few-month period, but it is really good to hear that you were done with the debt, especially the student loans, because you know, you mentioned taking a leave of absence. I would guess that, with not being a student anymore, your payments would’ve kicked back in, had you not already been finished with paying that off so that would’ve been like another thing to pay for during that time.

21:02 Jeanelle: The other thing is health insurance. They stop your health insurance. Like I said, luckily I could get on my spouse’s for that short amount of time, but I know that that’s not always the case for everyone. So I’m always like weary of just like, this is my experience, but that’s not always the case. And to think ahead of things like that, if you’re going to do that, like health insurance costs.

21:22 Emily: Yeah, for sure. I mean, it’s good just to know, like you sort of tick down all these boxes, I have to consider this. I have to consider this so that someone else can, if they don’t make the same decisions as you, they have different situation, whatever, that’s fine. But just the thought process is good to hear.

Commercial

21:37 Emily: Emily here for a brief interlude! Taxes are weirdly, unexpectedly difficult for funded grad students and fellowship recipients at any level of PhD training. Your university might send you strange tax forms or no tax forms at all. They might not withhold income tax from your paychecks, even though you owe it. It’s a mess. I’ve created a ton of free resources to assist you with understanding and preparing your 2021 tax return, which are available at PFforPhDs.com/tax/. I hope you will check them out to ease much of the stress of tax season. If you want to go deeper with the material or have a question for me, please join one of my tax workshops, which are linked from PFforPhDs.com/tax/. I offer one workshop on preparing your annual tax return for graduate students and one workshop on calculating your quarterly estimated tax for fellowship and training grant recipients. The next live Q&A call for the annual tax return workshop, How to Complete Your Grad Student Tax Return (and Understand It, Too!), is coming up on Sunday, February 13th. It would be my pleasure to help you save you time and potentially money this tax season, so don’t hesitate to reach out. Now back to our interview.

Setting Financial Goals

23:04 Emily: So you mentioned, you know, by the time you got to the end of graduate school, you had cleared the debt, you’re working on other financial goals. You were then, you got married at some point. And so you and your partner were able to work on these things together. Can you tell me more about those financial goals that you started setting at that point, whether that’s toward the end of graduate school or after graduate school?

23:24 Jeanelle: So when my husband and I got engaged, we were pretty, I would say hesitant to get married for a while because we both had parents that were divorced and a lot of it had to do with financial issues. And so that was a big factor in getting married and figuring out how we were going to do things together. And so before we had gotten engaged, we both were very motivated to pay off our car. We both had car loans and student loans. So at that point, when we got engaged, I had paid off my car, he had paid off his student loans and all we had were basically those reverse things remaining. But now we had this wedding, and these expectations. And so we had to make some pretty hard decisions as far as, you know, this is our budget.

24:17 Jeanelle: We’re not going to go beyond this. We’re going to have a small courthouse wedding, which is what we had with immediate family and we’re gonna have a small get together at a community center. And so, we budgeted at like $10K I would say, and it was probably like $8K that we ended up for everything. And so that was a motivating factor because we wanted to go into our marriage not with anything extra outside of our loan and our cars. And so, I would say like about five months after we got married is when we really combined everything and joined forces and got rid of all of that debt and then started thinking about a house. And so, that was like our main goal is let’s just help each other out.

25:08 Jeanelle: We’re in this together now. Let’s pay these things off, let’s put together what we can for our house. And then start thinking about other things like retirement, because I felt pretty stressed about the fact that I was almost 30. I hadn’t had put anything away for retirement. And they don’t really, they don’t do that for you in graduate school. And it’s just something I didn’t know. I didn’t come from a family that, you know, had made good financial decisions. And so, it felt really tough sometimes to know what was the right thing to do at times.

Internal Motivation for Working on Personal Finance

25:46 Emily: It sounds like you, even though you, you know, were approaching 30 and didn’t have anything in retirement savings, it sounds like you really had your head on straight though about like understanding your own internal motivations for working on personal finance, the budgeting, obviously you’ve been doing, the hustling. So like the elements, right, for financial success, I can easily see were there. And it was like, okay, you clear the debt, you get the house, you’re ready to go, right? You’re ready to hit the ground running. Is that how you felt about it since like getting your post-PhD jobs and the house and how are you doing now, I guess, with these financial goals and dreams?

26:21 Jeanelle: Thank you for that. I like to feel validated because there was just so much I didn’t know. There’s still a lot I don’t know. Since then, I feel like I’ve been able to detach myself a little bit from that tussle and survival mode that I think I’ve been raised on my whole life and experienced just growing up and seeing family struggle and my family struggle. And then just also what’s still happening especially to graduate students and the kind of, you know, these difficult situations that they might be in. So since then, you know, I feel motivated still to do the next thing. So the next thing I’d really love to do is pay off our house. I think that would be really great and would set us up really well.

27:21 Jeanelle: And that’s mostly because I’d to beef up my retirement and just be very aggressive with that because, like I said, I feel like I lost some time for the, you know, those 10 years, I didn’t really do anything since I had turned, you know, 18. And that’s one thing I really wish and regret. But, like I said, because I don’t know much I was a little nervous, but we started talking to a financial advisor and this was something like I said, no one in my family had, and I never really knew what to expect. So we spent some time interviewing folks and figuring out who would actually tell us, like, this is how this is how you invest. This is good because of X reason and someone who would explain those things to us.

28:14 Jeanelle: So I think since then, I feel like I’ve been able to hone in a little bit better on what I want to do financially for my future, in a way that I feel more confident. Before, like I said, I felt very survival mode, hustle mode. Like I’ve just got to work hard, work, hard, work hard. And I was very burned out by the time I finished graduate school. And when I finished, and I defended, I worked right away, and I’ve always been working. And even so, I was still doing freelance stuff. I just felt like I couldn’t say no. I felt like I always needed to keep money flowing in. But now I’m more of, you know, I’m doing the smart thing. I’m saving. I’m saving for my future and doing what I need to do. So, I’ve backed up a little off of that and given myself more grace, because I am making good choices as far as, you know, what the future holds and what I can be doing with investing and retirement and hopefully paying off my home.

29:18 Emily: That’s fantastic to hear. I’m so glad that you’re, you know, on that journey with your money mindset, right? Away from hustling, because it is interesting, like you had to hustle for a long time. It was necessary for survival. It was necessary to meet the sort of just baseline financial goals of getting debt paid off. But now, you know, presumably you’re making a much better income from your primary job. Now you can switch to thinking about investing and how money can be generated and come from work and income you’ve earned in the past and not completely from income you’re earning in the day to day. And eventually of course, when you reach financial independence, when you’re retired or whatever, all of your income will be coming from those, you know, previous investments. So I just love to hear that. Just hearing that transition point is really interesting.

Best Financial Advice for Another Early-Career PhD

30:08 Emily: Well, this has been absolutely fascinating, Jeanelle, and thank you so much for volunteering to come on the podcast. I always end my interviews by asking my guests, what is your best financial advice for another early-career PhD? And that could be something that we have touched on already in the interview, or it could be something completely different.

30:26 Jeanelle: So, this advice I would give especially for folks who are just finishing their PhD, and are not sure, you know, what comes next, or, you know, maybe they have these residual effects or trauma, I would say, and feel like I did. Like you always need to catch up. I felt like all my friends around me were getting promotions. They were buying houses, they had retirement, you know, saved and I felt really behind and it made me feel bad. So I would say, you know, go at your own pace. Everyone is at a different point in their life and you will get there as long as you come up with a plan. And I would say like the most powerful plan you can have is your budget and really reckoning with what you have and what you can do with that.

31:20 Jeanelle: So you know, when I first started, I wasn’t getting a lot of money, but I still made it work within my budget. I lived within my means and what I could do. And now that I have a little bit more flexibility because your income usually goes up a lot more from a grad student stipend, is just to know, just because it’s gone up more, prioritize what you really want for kind of like those future financial goals that you might have. Like think about those things first. Because a lot of times those other things are just temporary satisfaction that we’re trying to get, and it’s okay to do once in a while. You know, it’s nice to splurge once in a while. So I would say, you know, don’t compare yourself. Give yourself some patience with where you’re progressing.

32:13 Jeanelle: And definitely, you know, create that budget. Know that it’s not probably going to work for the first few months. You’re going to have to take some time to get it right. And then once you’re in a place where you feel really good, if you’re like me and you don’t know much, I recommend talking to a financial advisor and expert who can lead you and teach you in a way of, you know, things like investing and what will suit you, and what are good goals to think about. Because if you’ve never learned it, you’ll just never know. And there could be something that unlocks for you. So, that’s what I would say is just, you know, keep going, don’t compare yourself and, you know, go at your own pace. Everyone’s running their own race.

33:02 Emily: I love those thoughts. I actually want to ask you a bonus follow-up question, which is, I really like the advice actually of speaking with a financial advisor once you’re ready for that. I actually am working with a financial advisor myself for the first time in 2021. And it’s actually been really good because I wouldn’t say that I’ve gained necessarily any new knowledge, because of course I am very well informed in this area. Although there have been a few, like really, really detailed questions we’ve asked. What’s been important for me is the behavior change of involving someone else in our picture, asking for advice, and then being like, Ooh, I need to act on this else. Or else this person’s going to follow up with me and I’m going to have to say I didn’t do it. So like, that’s what really, really ultimately matters in finances.

Personal Finance Resources

33:47 Emily: It doesn’t matter actually how much you know, it matters what you do, the action that you take. So like, I love that even though you’re saying, I didn’t know much, I don’t know much. As you’ve learned, you’ve done what you’ve learned about. And that’s really the most important thing, right? Is to just take the action. So, anyway, I love that advice, but the question that I wanted to ask you was, prior maybe to starting to meet with this financial advisor, did you have any personal finance resources, like media, like other podcasts or like books or anything that you consumed that helped you along that way?

34:18 Jeanelle: Yes, you know, one, one of the most helpful books for me was The Total Money Makeover. I don’t know if anyone has heard of Dave Ramsey. I won’t get into like his political stance and some of those problematic things, but I will say the baby step plan that he has is very solid. It’s, you know, I’ve tried to read other books, like How to, I think it’s How to be rich or something like that. And it talks a lot about investing and it just really went over my head. And I liked that it was like, step one, do this step two, do this step three, do this. So that really helped me, at least, and my husband just feel like we could follow a plan that we understood. It was very straightforward. And then later on, when it got to the more complex stuff, like the financial advising and investing, that’s when we were like, okay, let’s get some expertise.

35:13 Jeanelle: There’s no shame. I will say culturally, money just wasn’t talked about in my family. And I wish it was because I feel like that transparency would’ve helped me instead of seeing it in different ways. But you know, it’s nice, like you said, to have that outside person who can give you actionable things that you can do that are really making an impact on your finances and helping you grow you know, to have hopefully a good nest egg. So that was the biggest resource is probably The Total Money Makeover and then the financial advisor. And we have a San Diego financial literacy clinic. I learned about this through working with the county. And so I actually met with a pro bono financial advisor several years ago for that as well. So there are great resources like that too, where you can just talk to someone and have this neutral person listen to you and give you advice.

36:20 Emily: That’s a great, great tip. And it’s great that you found that resource that you knew about through your work. I would say also, you know, of course, anyone listening check for similar resources in your area. Check with like a local credit union. If they don’t offer something like that themselves, they probably know where to refer you for that kind of help. And I’m sure, if you’re below a certain income level, you know, they’ll have some kind of like pro bono sliding scale sort of thing going on. So thank you so much that. Jeanelle, it’s been great catching up with you and thank you again so much for giving this interview.

36:51 Jeanelle: Thank you!

Outtro

36:57 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? I have collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. If you’ve been enjoying the podcast, here are 3 ways you can help it grow: 1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. 2. Share an episode you found particularly valuable on social media, with an email list-serv, or as a link from your website. 3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and increasing cash flow. I also license pre-recorded workshops on taxes. 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.

This Grad Student Interrogated Her Budget and Worked on the Side to Financially Thrive

January 17, 2022 by Meryem Ok Leave a Comment

In this episode, Emily interviews Alyce Viens, a 4th-year PhD student in communications at the University of Connecticut. On the eve of her defense, Alyce looks back over her time in graduate school to share the strategies that have help her pay off her student loans, invest for retirement, and save a down payment on a home. We discuss how Alyce budgeted, practiced frugality (including with conference travel), and supplemented her stipend.

Links Mentioned in this Episode

PF for PhDs: Subscribe to Mailing List
Coupons.com
Ibotta (Cash Savings App)
PF for PhDs: Tax Workshops
AP Scoring Opportunities
Financial Wellness 101: Everything You Wish You Learned in School About Saving Money, Building a Budget, and Growing Wealth as a Young Professional (Book by Alyce Viens)
- Discount code: GRAD
- E-Book
- Amazon
Alyce’s Twitter (@Alyce_Viens)
PF for PhDs: Transcripts and Videos

Image for This Grad Student Interrogated Her Budget and Worked on the Side to Financially Thrive

Teaser

00:00 Alyce: You know, I was able to just not have to wait until I graduated and got, you know, quote unquote, a real job to start my financial journey. You know, not having to delay those things, you know, having that healthy emergency fund, but also being able to, you know, build up investments and, you know, have the down payment for a house and no debt. It’s just, it’s been very, very freeing and liberating.

Introduction

00:31 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is Season 11, Episode 2, and today my guest is Alyce Viens, a 4th-year PhD student in communications at the University of Connecticut. On the eve of her defense, Alyce looks back over her time in graduate school to share the strategies that have helped her pay off her student loans, invest for retirement, and save a down payment on a home. We discuss how Alyce budgeted, practiced frugality (including with conference travel), and supplemented her stipend. I have a gift for you if you’re not yet subscribed to the Personal Finance for PhDs mailing list. At the end of every interview, I ask my guest for their best financial advice for another early-career PhD. My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. The document is even organized by topic so you can easily see which type of advice is most popular. I invite you to join the mailing list to receive access to this document through PFforPhDs.com/advice/. I hope this quick, powerful resource will help you up-level your finances in this new year! Without further ado, here’s my interview with Alyce Viens.

Will You Please Introduce Yourself Further?

02:02 Emily: I am delighted to have joining me on the podcast today Alyce Viens. She is wrapping up her time in graduate school, finishing up her PhD very soon. And she’s here to give us a retrospective on the finances of her PhD. Where she was when she started, where she is now, what she did in between. So Alyce, thank you so much for coming on the podcast. And welcome, please tell the listeners a little bit more about yourself.

02:24 Alyce: Yeah, thank you for having me. I’m really excited to be here. So I am, I guess now a fourth-and-a-half year PhD finishing up. I’ll be defending two weeks from today, actually. So I’m very excited about that. My PhD will be in Mass Communication from the University of Connecticut. So I’ve been studying media effects and things like that for the last four plus years. But I now work as a market researcher for a consumer and brand research company that’s based in DC, but I work remotely. I live in upstate New York. So that’s what I’ve been doing for the last six months is going on to the industry side, the dark side, as I know some people in academia call it.

Budgeting Lessons for Grad Students: Tracking Spending

03:12 Emily: I do want to circle back and hear more about that decision to take that job prior to actually finishing up. But we’ll save that for the end of the interview. What lessons would you like to impart on the grad students and PhDs listening about budgeting, particularly during grad school or maybe in general?

03:28 Alyce: Yeah, so I mean, the reality is that as grad students we’re just not making a ton of money, but we still have a lot of the expenses that we would consider to be sort of adult expenses. We still have to pay for our housing, potentially cars, and we have to buy our food and all of those things that we have to pay for now that we’re adults. But we don’t have income necessarily to match all of those things. So the one thing that I would recommend to anybody, whether you’re a grad student or not, is to spend your first month before you ever build a budget and just look at any time money is leaving your pocket, whether it’s cash or debit card or an automatic subscription, a student loan payment, regardless of what it is, write it down, categorize it.

04:14 Alyce: Like don’t just say I spent, you know, $10 on food today. Well, did you spend $10 at the grocery store, or did you spend $10 at Starbucks on food? And then do that for a month. Don’t change your habits, just make it a regular month. And I think that’s the best place to start because you can really start to see, where am I spending all my money? I find that when I had less income, it wasn’t the large expenditures that I was doing. Like I wasn’t going out and buying myself a new iPhone every few months. Like I wasn’t making any large purchases. It was those little ones that time where, you know, I forgot to pack myself lunch and I had to go to a restaurant to get it. Or I had to go to the grocery store to buy something quickly. You know, it’s a lot of those really little things that can catch up with you. And as grad students with that limited income, that has to be the first place I think that you start is looking where you’re spending your money, and then we can start to assess where you can maybe make some cuts.

05:17 Emily: Did you use like software or an app? Or do you like to do things manually, and what do you recommend to other people?

05:23 Alyce: Yeah, so I would just have like a notes file going in my phone just to kind of, so for those moments where, you know, you kind of spontaneously spend money, I would throw all my receipts in my wallet for those times that I forgot to write it down. And then I would honestly just put them into an Excel sheet because you know, it makes it nice and easy, you know, when all is said and done for you to just kind of group them and see what those totals are.

Frugality is Worth it to Avoid Debt

05:53 Emily: Is there anything else that you want to add about budgeting?

05:58 Alyce: I would say, you know, I fully recognize that that 30% housing threshold may be very hard to reach. And so, you know, reach it as much as you can, get those housing costs down as much as you can, but also recognize if you spend a little bit more on housing. Okay. Well that just means we maybe need to make a little bit extra side income, or we need to just adjust our budget accordingly and maybe we spend less on something else. So I think, you know, there are opportunities, you know, depending on where you end up. Sometimes your graduate school is going to be in Southern California and you’re gonna be paying a fortune in housing. But where can you cut? Or where can you add as much as possible? And the same thing goes with really any aspect of your budget.

06:50 Alyce: You’re going to have to cut somewhere. You know, frugality and, you know, really making it as being financially well and not putting yourself further into debt as a grad student, it is going to involve some small sacrifices. I’m not going to lie and say, it’s all sunshine and rainbows all the time. There are going to be times where you have to say no to yourself, or you have to maybe get something that’s a little bit less than what you maybe wanted to. But it’s all about finding the balance. And it doesn’t have to be this miserable existence where you, you know, live in a tiny, tiny room and live on ramen noodles, but there are ways to make it work. You have to be willing to put in the work to find out where those places are. Because it’s easier to just fall into debt.

Strategies for Minimizing Expenses

07:40 Emily: Okay. So you mentioned earlier, like, okay, cutting expenses and also increasing income. And I want to ask you about both of those things. So, what are some strategies that you used in terms of decreasing expenses or minimizing expenses?

07:52 Alyce: Yeah. So the first thing that you have to do is just, like I said, cut those small unnecessary expenses. You’re going to have to buy gas for your car. You’re going to have to pay for insurance. You’re going to have to pay rent. But what you don’t have to do is buy lunch on campus every day, because you didn’t have lunch. What you don’t have to do is order pizza because you got home late. Those are things that you don’t have to spend money on. So look for opportunities to not do that. So I always kept snacks in my my drawer just, or like a loaf of bread and some peanut butter or like Graham crackers and peanut butter or something that I could kind of default to when I was on campus longer than I intended, or I didn’t have anything at home that I could make as a lunch or a dinner. You know, we’re there sometimes for a long time, I get it.

08:44 Alyce: You run out of meals. So have those emergency meals in your desk at work or in your backpack or in your car, wherever you need to keep them. Also, I like to make emergency meals for my house. So I always, like I’ll, you know, make a lot of something, you know, if I cook chicken, I’ll cook two or three extra pieces of it. So it’s done, freeze them in the individual packages, and then it’s just a microwave away. Or have emergency kind of food ready. So when you do get home late and you don’t feel like cooking, you always have that can of soup in the pantry. You always have something that you don’t have to spend money on. You can, you know, evaluate things that you are spending your money on that you do need to, or, you know, you would like to, but are there ways that you can reduce it?

09:33 Alyce: You know, do you need the, the fanciest Wi-Fi plan for your home internet? Probably not. I can tell you, I have a very cheap one now and it works just as well as any other one. Just don’t have seven devices going at a time. You know, do you have a subscription to Netflix, Hulu, Spotify? Do you have all of these and are you actually using them? Can you share expenses with somebody else? You know, I know it’s only, you know, $12 a month, but you know, those things they add up when you’re talking about how they compound on each other. So I think it’s just realistically looking at what are you spending your money on and are there ways that you could reduce that spending if not eliminate it completely?

10:21 Emily: Yeah. I like the process that you’re outlining here, like first tracking all expenses, and then interrogating each one of those expenses. I would say even, you know, the necessary expenses are also worth interrogating. There are a little bit of, well, for example, you mentioned gas in your car. Okay. So like figure out what’s the station that you’re always going to go to that consistently has like the cheapest price that’s not too far out of your way or whatever. Like just figure that out, make the decision one time, and then you’re always gonna be getting gas from that station. It’s always at the best price that you know about. So anyway, the necessary expenses are worth interrogating. You just like go down your entire list. Like you were saying, ask yourself for every one, how can I reduce this? How can I share this? Can I go without this? I really like that strategy. And it does matter, like you said, even those small few dollar expenses per month, they do matter in a grad student budget, whereas they might not in a normal salary kind of budget.

Know What’s a Good Sale Price

11:14 Alyce: Yeah, certainly. And I think I worked at a grocery store when I was in college and it was by far probably, you know, it’s retail, so it’s miserable. But in terms of life lessons, probably the best experience that I had in terms of life lessons of learning how much things should cost. Because the reality is, if you walk into a grocery store willy nilly just to buy whatever you want that day, whatever you decide that you need that week, you’re going to end up spending more than you should. You know, know what chicken breast should cost. I’ll give you an example. You should never spend more than $1.99 a pound on chicken breast. That might vary if you live in a really more expensive state. And I know we’re in inflation right now, but knowing, you know, what’s a good sale price and being willing to, you know, freeze something because you can have it later.

12:09 Alyce: Buying in bulk. You know, if that’s applicable to you. If you have roommates, there’s no reason why you can’t buy, you know, the Costco size toilet paper, you’re probably going to use it. And you’re probably going to save a lot of money in doing so. So learn how much things should cost. You know, look at the sales fires, use coupons. I’m a big proponent of coupons and people think they’re, you know, it’s challenging and you have to be like the TLC coupon moms. You really don’t. Every grocery store now has an app that you can load the coupons right onto your app, or right onto your store card. Coupons.com is a really great place. You know, if you’re going to spend the money anyway, why not save the money on it?

12:56 Emily: I love that you brought up couponing because it’s actually not something I don’t think we’ve discussed in detail on the podcast before. But as you said, I found it also like, I coupon at a very minor level. Like what my grocery store sends me, my grocery store learns my spending patterns because of whatever I’ve signed up for with them. And then they send me coupons on the stuff I actually buy, which is awesome. And then double awesome is when you can pair a coupon with like something already being on sale and that being, you know, you’re able to like stack that or whatever. Give me another like more advanced strategy. Like for instance, how are you using coupons.com?

Advanced Couponing Strategies

13:29 Alyce: Yeah. So I will check coupons.com anytime before I go shopping just to see what is available. And the trick with coupons is don’t buy something just because you have a coupon for it, because chances are, you’re probably not getting a deal. Just because you, you know, save 55 cents on that, doesn’t mean it was necessarily a good deal, especially if it’s something that you weren’t going to buy anyway. So it’s important you only use it on things that you were intending to buy, but also, you know, compare to, you know, maybe the store brand, if that’s applicable. Sometimes, you know, if it’s not on sale, you know, using a coupon on a brand name, it’s still not going to save you anymore than if you had just bought the generic brand of it. So I’ll check coupons.com just to kind of see what’s available and take the ones that I want.

14:21 Alyce: And again, only using on things that you’re going to. I’ll check the app of the store that I’m going to be shopping at to see, do they have coupons that I might want to use? I also will Google. So sometimes like, you know, P&G might have their own separate coupons that they don’t publish on like a public platform like coupons.com, and it might just be linked to their website. And you just have to put in an email. I have a burner email just for specifically that purpose. Like I don’t ever check it. It’s just for putting in to get any kind of special codes and deals. And that’s really for everything. It’s not just for for groceries. Like Kohl’s, for example, if you need to go buy new conference clothes or whatever you might need to get at Kohl’s, almost always, if you go on their website, they have at least a 15% off coupon that you can print out or show on your phone.

15:18 Alyce: You know, stores are desperate to get people actually in stores now because you know, we’re moving so much to online. So, I find that coupons are more often available than not. So if you need something, just do a little bit of searching. The other thing I would recommend is an app it’s called Ibotta. I B O T T A. And you go onto this app, and you just select what store you’re shopping at. And it will show you just a plethora of coupons available that you’ll get cash back on. And you just add it to your list. You upload your receipt afterwards, and they put this money into your kind of Ibotta account and you can withdraw that money once you reach, I think it’s $20. So I’ve saved over two, probably over $300, by using this app. And it’s often for things that, again, I’m already buying. So if I’m going to buy that box of pasta, I’m gonna buy it and save a dollar on it because I can.

16:20 Emily: All right, I have homework now. Great ideas for me to implement.

Commercial

16:25 Emily: Emily here for a brief interlude! Taxes are weirdly, unexpectedly difficult for funded grad students and fellowship recipients at any level of PhD training. Your university might send you strange tax forms or no tax forms at all. They might not withhold income tax from your paychecks, even though you owe it. It’s a mess. I’ve created a ton of free resources to assist you with understanding and preparing your 2021 tax return, which are available at PFforPhDs.com/tax/. I hope you will check them out to ease much of the stress of tax season. If you want to go deeper with the material or have a question for me, please join one of my tax workshops, which are linked from PFforPhDs.com/tax/. I offer one workshop on preparing your annual tax return for graduate students and one workshop on calculating your quarterly estimated tax for fellowship and training grant recipients. The first live Q&A call for the annual tax return workshop is coming up on Sunday, January 23rd. For fellowship and training grant recipients, please be aware that the deadline to make your quarter 4 payment, if applicable, is January 18th if you are not planning to file your tax return by the end of January. It would be my pleasure to help you save time and potentially money this tax season, so don’t hesitate to reach out. Now, back to our interview.

Conference Travel Frugality

18:01 Emily: Now, you mentioned earlier, you had a lot of thoughts on conference travel. So how have you employed frugality in that area?

18:07 Alyce: Yeah, so conferences, you know, are the bane of grad students’ financial existence, because they are so expensive. So the first thing I would recommend is looking to funding sources. And these aren’t always going to be available, but you really never know. So ask your department, you know, hopefully you’re aware by that point if they have options, but just ask them. Sometimes they’ll pay your registration fee at the very minimum. Sometimes you’ll get a travel stipend, whatever it might be. So, you know, certainly look to your department, look to the university. Sometimes, I know my university one time during your PhD, you could apply for a travel grant and it was $750. You can only use it once. But it was nice because it paid for, you know, a bulk of one of the trips that I had to make. So starting there, and then look to the conference itself.

19:03 Alyce: Sometimes they give away money to graduate students. I know one that I was attending every year, all you had to do was just check off when you registered that you were interested in graduate student funding. And when you got to the conference, you got a check for $150. Sometimes certain like caucuses, I don’t know how every you know, conference in every field runs, but at least at the communication conferences, there were different caucuses. And sometimes they would offer travel funding of, you know, $75, $150, whatever they had available. So start with those funding sources. The next thing that I would recommend, and I will preach this until the ends of the earth, do not use the conference recommended hotel or the conference recommended airline, if you do have to travel by air, as we so often do. They almost always are more expensive.

20:02 Alyce: You know, you’ve got think, when a conference is picking a hotel, they’re picking something very nice that can accommodate a lot of people, has all the conference rooms, things like that. So the room and prices are going to be more expensive. So I always, when I went to conferences, stayed no more than a quarter mile, something I could easily walk to, down the street. There’s always going to be a cheaper hotel available for you to stay at. I even did the math once. It was cheaper, even if it was a little bit further to even like take an Uber back and forth every day than it was to stay at the conference hotel. So that’s a great option that you can save money. Same thing with airlines. You know, they give you the group code, certainly check it, but also, you know, use Orbitz, use Southwest, because they’re not linked to Orbitz, and they often have really cheap prices. You know, and find the best deal. There’s no reason that you have to go with Delta airlines because that’s what the conference said you should use. If there’s a better deal on a flight, then take it. There’s no reason you have to spend more money.

Have a Conference Buddy

21:13 Emily: That’s all great stuff. And another thing you mentioned to me in our prep for this interview was to have a conference buddy. So what does that mean?

21:21 Alyce: Yeah. And I also recommend having a conference buddy. So this was somebody in my department that I traveled with. I knew we were going to be attending the same conferences most of the time. So what we would do is we would book our flights together. We would always plan to share a hotel room. It was somebody I trusted and I knew, you know, wasn’t a random stranger that’s going to steal my stuff in the middle of the night. And then we would, you know, split the cost of transportation to and from the airport, you know, we’d share the Uber. We would split the cost of parking, whatever it was, pretty much everything was, you know, minus the flight because obviously we had to pay for our own tickets, but it was all cut in half. And that, you know, saved us so much money. There was one conference we went to, we were actually able to drive to, me and my conference buddy, we actually made money on the conference based on the amount of funding that we were able to get from the conference itself and us splitting our costs.

22:20 Alyce: I think we both ended up netting like $30 each. So definitely find a conference buddy as soon as you can, somebody who you are connected with in your department or even outside of your department, if you make a friend in another school. It’s really a great way to save some money. I will also add some kind of silly ways to save money at conferences. So one, book a hotel that offers free breakfast, because that covers one of your meals. One of the biggest expenses of conferences is you’ve got to buy all of your meals while you’re there. So get your free breakfast every day. That’s one less meal that you have to pay for. And it’s a meal you’re probably never going to sit down and eat with anybody anyway. And if, you know, that free breakfast, sometimes I would, you know, take a couple extra apples or something and put them in my bag and I would bring like single serve peanut butters or something.

23:20 Alyce: And then that covered me for a lunch as well that I didn’t have to pay for. Because again, you know, you’re going from you know, panel to panel. You don’t always have time to go sit and eat a lunch anyway. So, you know, instead of spending, you know, the $10 on a small sandwich, you know, eat the stuff from the free breakfast or pack protein bars. Pack things that you can have just as kind of a go-to, because you may have to, you know, go out to eat for dinners, for networking purposes. You’re going to have to spend money for meals at conferences, but cut it where you can. Also, attend the free receptions. There’s almost always food. It’s a great opportunity for networking, but there’s always going to be food at these things or, you know, our conferences, a lot of the bigger schools would host party receptions. You obviously shouldn’t go there and just like stuff your face and leave. Like, integrate it into a networking opportunity, but there’s food. And honestly that’s, you know, a big expense at conferences that I initially found when I first started going to them was how much money I was wasting on just eating out every meal. And so I just started packing my own food as much as I could and just found opportunities to cut those costs.

24:40 Emily: Those are great suggestions. And I love the way you kind of, the outline you just gave of, you know, finding funding at your university level, finding funding at the conference level. How can you frugalize these larger expenses within the conference? How do you frugalize the smaller expenses within the conference? So clearly again, you’re sort of interrogating every step of that process and finding how to optimize it. So I just love that. Is there anything else you want to add about frugal strategies used during grad at school?

Ask for Practical Gifts

25:08 Alyce: The other thing I think I would add is just to, when you know there are going to be things that you need to have, you know, you need to buy textbooks, you need, you know, those flights, use holidays and birthdays and things like that strategically. You know, you probably really don’t need, you know, a new bag or a new pair of shoes or whatever it is that you might normally ask for for Christmas, but you may need, you know, an American airlines gift card to help you get you to that conference. You know, your life’s not going to be less fulfilled without that pair of shoes, but your life might be a heck of a lot easier if you don’t have to pay hundreds of dollars for a flight. You know, if you’re going to have to buy textbooks, ask for an Amazon gift card because you’re going to be able to buy those books and share them. I can’t tell you how many times, you know, again, my conference buddy, you know, I had sort of class buddies too. We would just buy as a class one copy of the required textbook, and we would just pass it around and have designated days that we used it. You know, there are just, if you really interrogate, like I like that word, you keep using, interrogate your expenses, there are ways to find those cuts.

26:26 Emily: Yeah. And another thing that you’ve brought up a couple times, you know, the conference buddy, now the class and textbook buddies and so forth, like use your fellow graduate students as a resource. You know, they’re in the same spot as you, more or less, right?

26:37 Alyce: They’re just as broke.

26:39 Emily: Yeah. So whatever you can share, whatever tips you can, you know, share with them, maybe you’ve taught one of them how to coupon and they’re going to teach you how to do this other thing. You know, you all are kind of a wealth of resources, a wealth of knowledge, in terms of how to manage your finances during graduate school. And again, you’re coming on the podcast, you’re sharing with everybody. That’s awesome.

Increasing Your Income

26:57 Emily: Okay. Let’s move on to increasing income then. So what strategies did you use to bring in extra income, increase your stipend, during grad school?

27:07 Alyce: Yeah, so you know, I fully recognize, you know, while we’re in the thick of it, you know, sort of that nine-month span where you’re TAing or maybe you’re an RA, it’s hard to find those opportunities to increase income. So, I would try and always make the best of those three months that I did have off. So I really did a variety of things. So the one that was probably the most lucrative was I would grade AP exams. So they’re looking for subject matter experts in, you know, these AP subjects. And, you know, I did communication, so there’s not an AP communication course, but there is a course called seminar, which is basically they learn how to evaluate and write arguments and, you know, conduct research, you know, write a research paper. And so they needed people to grade those.

28:00 Alyce: So that was something I did for the last know, six years or so. And it was one week online. So I could work from my home and, you know, you just read paper after paper and you score them. It’s certainly not fun, but I can tell you, it pays like $26 an hour. And so, one week of work was able to cover me for almost all of my entire expenses for the summer where I had no income coming in. So that’s a really great opportunity. I think you go to readap.com I think is the website for it. Or if you just Google AP scoring opportunities, it should come up.

28:44 Emily: Yeah. That’s an amazing suggestion. I think it would be applicable, most graduate students are probably going to find some kind of AP exam that they’re qualified to grade.

28:52 Alyce: I mean, they love graduate students because we’re available. You know, they’re often recruiting college professors or high school teachers, but that’s, you know, it’s a little bit harder for them. But grad students, we’re readily available and we’re desperate for money. So they know they can squeeze a lot of hours out of us. So like I said, it’s not a fun week, but you know, you can knock it out and again, you can pay for most of your expenses. And, you know, as I did it more and more, I started to get promoted to leadership positions on it. So I was able to get more hours and make more money. So it is something you can stick with long-term. Unfortunately, now that I work full-time, I won’t be able to do it anymore. But it was a great opportunity.

Balancing Summer Research and Side Hustles

29:36 Emily: Okay. So you mentioned the one week of AP grading can cover your expenses, more or less, for the whole summer. How were you spending your summers, since you didn’t have a stipend during that time? Were you trying to focus on research, or did you get other jobs aside from this AP one?

29:51 Alyce: I would do a little bit of both. So I didn’t want to spend, you know, the entire summer working all of the time. You know, I think that’s, you know, such an important time for graduate students to recharge, but I also recognize this is an opportunity for me to make a little bit of extra money when I’m not as busy. You know, you’re not going to do research for, you know, 24 hours a day, every day during the summer. You’re just not. So you know, where I could, I tried to find, you know, those additional opportunities.

30:23 Emily: Yeah. So what were some things that you did during your summers that you would recommend to someone else, like the AP grading? And then also, did you do anything during the academic year?

30:32 Alyce: Yeah, so one summer, so it was about six weeks because obviously, you know, our summer is a little bit longer than the regular school year summer. I went and substitute taught at a middle school in my town, you know, especially in COVID right now. They’re really desperate for substitute teachers. And I actually really liked it because it was such an easy job because most of the time, you know, as a substitute teacher, you’re putting on a movie or you’re giving them a worksheet to do. And so I brought my laptop and I would do work, I would do my research. And so I think, you know, I probably would’ve even considered doing that during the year if I was able to, just because it didn’t require a ton of like cognitive effort on my part. And I still was able to kind of dedicate some time. Just make sure you check with your university first.

31:26 Alyce: They usually have a policy about working any kind of supplemental income as a graduate student. You do usually have to get it approved. So make sure you check with those policies. I know some people got burned by that. So I did that. I think those were the two main ones that I did. I also would just do like little things here and there, especially during the academic year, like I would take online surveys. You know, we know how much we pay people for research. And so I would, you know, find opportunities to take those. My fiancé and I ate many a free dinner based on these online surveys and just, you know, getting the free gift cards from those things of that nature. So those were kind of the main ones that I did. I knew some people who, you know, when grocery stores have to change over all of their price tags, there was somebody I knew who would go on Saturday night, they work from like 11:00 PM to 7:00 AM, just one night a week, changing over all of the price tags. And that was the only extra job that they had, but it was enough to kind of, you know, pay for, you know, maybe one week pays for your cell phone bill, the next week pays for your electric bill. You know, when you’re accumulating 50, 60, $70 for that one night, you know, you can then apply it to a specific thing.

Financial Accomplishments During Grad School

35:13 Emily: So we’ve talked about a ton of different strategies. But I want to know for your financial picture, what did this all amount to? You know, how much did, if you wanna express that as net worth, you want to express that as not going into debt or, you know, what did you sort of accomplish financially using these strategies over the course of graduate school?

35:32 Alyce: Yeah, so you know, I’m happy to say that because of that frugality and because I was so strategic with, you know, the money that I saved, you know, if we want to quantify this, I was able to pay off all of my student loans before I ever graduated. So I’m going to graduate completely debt-free. And I didn’t have an assistantship for my master’s. I didn’t know that a thing, if anybody’s listening to this as a potential master’s student, look into those funding options, I didn’t know that was even a thing. So I was able to graduate or will graduate completely debt-free. My fiancé and I were able to buy a house. So we actually just moved into our first house a few months ago, you know, again, before graduating, which was really exciting. And in terms of, you know, if I’m quantifying this on a net worth perspective, you know, I’m sitting pretty well.

36:27 Alyce: You know, probably over $60,000, you know, in investments or in sort of cash assets, not including, you know, obviously any equity we’re building in our house, but you know, I was able to just not have to wait until I graduated and got, you know, quote unquote, a real job to start my financial journey to start building, you know, that down payment towards a house or, you know, start building my retirement income. You know, it’s so, so important. You know, the more we delay our retirement savings, the less opportunity we have to make those grow. And so, you know, not having to delay those things, you know, having that healthy emergency fund, but also being able to, you know, build up investments and, you know, have the down payment for our house, no debt, it’s just, it’s been very, very freeing and liberating. And so, I certainly encourage everybody to, you know, strive to get to that place.

37:31 Emily: I love that. I’m really glad that it amounted to all of that for you. I mean sometimes graduate students need to do everything we’ve talked about out just to break even, right? The stipends are just that, you know, dismal. But I’m really glad that for you, all that effort added up to an actual net worth increase and, you know, paying off the student loans and all the great things you’ve been able to accomplish. It’s amazing. So congratulations! Congratulations also on the job, and the upcoming defense and the house and all these wonderful things that are going on. So where can listeners find you? And I understand that you have written a book.

38:05 Alyce: Yeah. So this was kind of just a little mini passion project that I wrote because I didn’t have enough to do with working full-time and writing a dissertation that I also decided to write a little bit of a book, it’s called Financial Wellness 101: Everything You Wish You Learned in School About Saving Money, Building a Budget, and Growing Wealth as a Young Professional. And I wrote it with the intention of it really just being for those people who are kind of fresh out of college or even out of graduate school who just, you know, don’t have any idea. It’s the first time we’re really managing our money on a large scale. We don’t understand what is a 401(k), what’s a Roth IRA? What do all these letters mean? Do I really need to be saving for retirement? How do I set up a budget?

38:51 Alyce: You know, where am I spending more money than I should be? So it’s a very, you know, no frills, it’s self-published so it’s not fancy, it’s not edited by any extent. But it is available. So users can find, or your listeners can find me on Twitter @Alyce_Viens, and on that, you’ll see the link for, it’ll take you to the ebook version. If that’s something you’re interested in. And I actually set up for your listeners, if they use code GRAD, G R A D, they’ll get $5 off the cost of the book. And I will also email you an additional section that I wrote of the book that’s specifically for graduate students and some of those ways that you can save money with conferences and funding and all kinds of things like that. So it’s sort of an added perk that you would get for free, and it is also available on Amazon if you prefer Amazon.

Best Financial Advice for Another Early-Career PhD

39:52 Emily: Okay. Yeah, we will put all of those links in the show notes, that is a great offer to get that additional chapter or whatever it is. Lovely. Well, Alyce, it was so good to have you on the podcast. I ask all of my guests one final question, which is what is your best financial advice for another early-career PhD? And it could be something that we have touched on already in the interview, or it could be something completely different.

40:15 Alyce: I would say, my piece of advice is to avoid accumulating any additional debt.

40:23 Emily: Yes, very simple and very powerful advice. So that is so great. Thank you so much for coming on the podcast!

40:28 Alyce: Thank you for having me! This was fun.

Outtro

40:35 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? I have collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. If you’ve been enjoying the podcast, here are 3 ways you can help it grow: 1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. 2. Share an episode you found particularly valuable on social media, with a email list-serv, or as a link from your website. 3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and increasing cash flow. I also license pre-recorded workshops on taxes. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

This Grad Student’s Defensive Financial Planning Paid Off During the Pandemic

January 3, 2022 by Meryem Ok

In this episode, Emily interviews Maya Gosztyla, a third-year graduate student in biomedical sciences at the University of California at San Diego. Maya has experienced major financial ups and downs over the three years since her first podcast interview. Her husband was unemployed for over a year between moving with her to San Diego and pandemic hiring freezes. However, she managed to support both of them with her grad student stipend and freelance side income thanks to negotiating for a spot in her university’s subsidized housing program. Now that her husband is employed again, they are aggressively pursuing FIRE through investing and enjoying occasional splurges.

Links Mentioned in the Episode

PF for PhDs Tax Workshops
Maya Gosztyla’s Previous PF for PhDs Interview
NYT Interactive Tax Day: Are You Receiving a Marriage Penalty or Bonus?
PF for PhDs Community
PF for PhDs: Best Financial Practices for Your Self-Employment Side Hustle
Upwork (Freelancing Site)
PF for PhDs S6E17: How a Freelancing Career Can Take You from Academia to Affluence (Expert Interview with Courtney Danyel)
PF for PhDs Register for Mailing List
PF for PhDs Podcast Videos/Transcripts

This Grad Student’s Defensive Financial Planning Paid Off During the Pandemic

Teaser

00:00 Maya: My husband didn’t have a job lined up at that point. We weren’t too worried, because San Diego’s a pretty big biotech hub. And so we were doing pretty well on just my stipend end of 2019. We got to 2020, things changed a bit. And so what we thought was going to be just like maybe like, you know, worst case, a six month-unemployment period, turned out to be like over a year of unemployment for him. So it was at that point that I was really happy that I had made the decision to choose a school that I could pay for on just my stipend. Because if we didn’t do that, we would have had a lot of debt after paying for just us that year.

Introduction

00:34 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 11, Episode 1, and today my guest is Maya Gosztyla, a third-year graduate student in biomedical sciences at the University of California at San Diego. Maya has experienced major financial ups and downs over the three years since her first podcast interview. Her husband was unemployed for over a year between moving with her to San Diego and pandemic hiring freezes. However, she managed to support both of them with her grad student stipend and freelance side income thanks to negotiating for a spot in her university’s subsidized housing program. Now that her husband is employed again, they are aggressively pursuing FIRE through investing and enjoying occasional splurges.

It’s January now and you know what that means: Tax season is upon us! At some point in the next three or so months, you will prepare and submit your 2021 tax return, and I am here to help. I have just released the 2021 version of my annual tax return workshop for graduate students, which is titled How to Complete Your Grad Student Tax Return (and Understand It, Too!). The goal of the workshop is to assist you in calculating and reporting your grad student income and maximizing your higher education tax benefits using your qualified education expenses. It supports your federal tax return preparation process whether you use software, employ a human tax preparer, or fill out the IRS forms directly. The workshop comprises videos and worksheets, plus I will hold live Q&A calls throughout tax season for any follow-up questions you might have.

There is another upcoming deadline that graduate students, postbacs, and postdocs should be aware of. The 2021 quarter 4 estimated tax payment is due on January 18, 2022 unless you plan to file your tax return by the end of January. This payment deadline may apply to you if you were paid by a fellowship or training grant for part or all of 2021 and no income tax was withheld from your paychecks. You can find out if you are required to make this payment by filling out IRS Form 1040-ES. If you need some help with calculating your payment, please join my workshop, Quarterly Estimated Tax for Fellowship Recipients. It shows you how to fill out every line of the form and answers common questions from the PhD population, such as when to make these payments if you switch onto or off of fellowship in the course of the calendar year. The quarter 4 live Q&A call for this workshop is scheduled for January 9, 2022. You can find links to these two workshops plus all of my free tax resources at PFforPhDs.com/tax/. By the way, I license both of the workshops that I just mentioned to university clients at a discounted bulk rate, so it’s well worth asking your graduate school, graduate student association, postdoc office, etc. if they are willing to purchase either or both on behalf of yourself and your peers. I hope you will use my resources to ease much of the stress of tax season. Again, you can find everything linked from PFforPhDs.com/tax/. Without further ado, here’s my interview with Maya Gosztyla.

Will You Please Introduce Yourself Further?

04:12 Emily: I am delighted to have back on the podcast, Maya Gosztyla. She’s actually contributed to the podcast three times before. So back when she was a postbac fellow, we did a full interview and season two, episode four, that was mostly about her side hustle. We’re going to hear an update about that later on today. And then she’s also given us two short updates. So season seven, episode 16, she gave us a quick update on how her finances and life were going. And then in season eight, episode seven, she was one of my anonymous guests on the podcast episode on negotiating your grad student stipend and benefits. So, because, you know, we’ve been kind of loosely in touch over the past couple of years. I know that a lot of interesting things have happened in Maya’s finances since we did our full interview. So I asked her to come back on the podcast to talk about all these various developments. So, Maya it’s really great to have you! Would you please re-introduce yourself to the listeners?

05:01 Maya: Yeah, definitely. I’m excited to be back on here after a couple of years. There are some updates. So yeah, my name’s Maya, I’m currently in my third year of my PhD program at UC San Diego studying biomedical sciences. And before this, I did my undergrad at Ohio State. And then I did a one-year postbac at the NIH.

Freelance Side Hustling

05:20 Emily: Yes. And so, that earlier interview that we did was all about your side hustle. So can you fill us in a couple of details about that side hustle?

05:27 Maya: Sure. So I’ve been doing this since like senior year of undergrad. I do some freelance science writing. And since then, I’ve gotten a little bit into science consulting and some freelance programming as well. So I’ve been doing that for a while, and it’s just kind of a way to both supplement my income and also to get some connections with various industries that I might not have met otherwise through my main research.

05:47 Emily: Yeah. I love that you started this side hustle so well in advance of grad school. So it was kind of already established. It’s really kind of hard to get something off the ground as a grad student, but I love that, you know, you already had it going and just had to maintain it.

How Taxes Played a Role in the Decision to Get Married

06:00 Emily: Okay. So we’re just kind of going to step through the last couple of years, since we published our interview. We conducted the interview in maybe like late 2018, early 2019, you were applying to grad school that year, or in that academic year. So things that have happened since then: one, I know that you got married, and I know that the timing of your marriage was influenced by tax matters. So can you explain how taxes played a role in when you decided to get married?

06:26 Maya: Yeah, definitely. So my husband and I, we actually, for a long time, were just like not planning to get married. We’d been together for close to 10 years at this point, like since high school, but, you know, neither of us is religious. We don’t really have any interest in children. So we just didn’t really see much of a need to do the whole legal marriage thing. But then as I started to research more about the kind of financial benefits of marriage, it started to become a lot more useful for us to get married, basically for like kind of a cynical my point, not very romantic view of marriage. And especially as I was going into grad school, as you mentioned, this was kind of the ideal time for us to get married. Partly because I was asking my husband to like move across the country with me and he didn’t have a job lined up yet.

07:04 Maya: So I thought that was kind of a big financial risk for him. And I wanted him to have a little legal protection, I guess. But as you said, the tax reasons were kind of the main thing. Probably most people know that when you’re married filing jointly, your overall tax rate usually goes down somewhat. That can vary depending on your exact incomes. But for us, the thing that kind of made us get married at that point was because I was still eligible for the kiddie tax from my first year of grad school, which is basically, I think it was established so that it was like people who were rich used to kind of give their adult children some of their stocks and like use that to kind of avoid taxes on their part. And so to avoid that if you’re under age 26 and you have unearned income which includes capital gains, but unfortunately also includes a lot of grad school fellowships and scholarships.

The Kiddie Tax

07:50 Maya: Your taxes are like really high on that. Like, I don’t know the exact number, but it was like 20% or something ridiculous like that. So for that first year of grad school, I was only 25. So, I think I was actually 24 going in. So like, I didn’t want to have to pay that crazy tax rate. And if you’re married, you don’t have to pay the kiddie tax. So that right there probably saved us a few thousand dollars. And it also ended up saving us more money that year because we qualified for the retirement savers’ credit which normally, you know, if it was just me, my income would have been a little bit above the limit to get like the maximum benefit. But because we were both below the limit, because my husband didn’t have a job during that first year, which we’ll get into later. Our combined income was low enough that we basically each got a thousand dollars back for that tax credit. So $2,000 plus the kiddie tax savings just for getting married that year.

08:37 Emily: Yeah. I’m sure it’s something that most people don’t think about, especially at the age that you were, you know, 23, 24, that kind of age. So yeah, people want to learn more about the kiddie tax like issue, I have an article on my website it’s linked from PFforPhDs.com/tax. You can find it linked from there. But basically, it’s pretty little known, but as you said, it’s meant to tax unearned income, but unfortunately fellowship income is defined in the same way. It’s defined as unearned income. And so yeah, grad students and postbacs like you were, can get into this strange, like potentially higher tax situation. Now around the time that you were like getting married, making these decisions, the kiddie tax was going through a little bit of a shift. So I think maybe in the year that you got married, it was the worst that it ever got because it was yeah, like the Tax Cuts and Jobs Act, which was passed, I guess at the end of 2017, so effective in 2018, it increased the kiddie tax rates up to the like trust rates.

09:38 Emily: But then after a year or two, they realized what a problem that was, especially for low-income college students. And so they brought it back down to like your parents’ tax rate, which is what it was before. Which is great if your parents are low income and that’s the reason you’re receiving grants and stuff. But like for a lot of graduate students, we received this kind of aid for merit reasons, and not necessarily because your parents have this or that kind of income. And so it can hit students and postbacs and stuff who are not dependents of their parents. So not necessarily even receiving support from their parents, but their parents’ tax rate is considered in their tax rates. So it’s really messed up. But as you said, marriage gets you out of this. It’s like the get out of jail free card for the kiddie tax, and for some other matters like this. So yeah, as you said, not very romantic, but a very practical reason. If you’re already set on being together long-term to have the legal protections, as you said, of marriage in place, and having these kind of extra weird tax benefits, like you mentioned the retirement saver’s credit as well for your husband, presumably.

10:35 Maya: Yeah, it ended up being really important, especially during my husband’s unemployment period, because one of the things that came with marriage was that he can be on my health insurance. And when he aged out of his parents’ health insurance, we would have had to pay much higher rates if we were not married. So it was a benefit that I wasn’t like even thinking about going in, but things like health insurance, also the ability to like open an IRA and contribute for each other. Like since I don’t have any earned income during grad school, I normally wouldn’t be able to use an IRA, but being married lets us do that. And there’s probably even other financial benefits I haven’t figured out yet. So I think it’s a good thing to be aware of that even if you don’t really have like romantic or religious reasons to get married, it’s sometimes still useful just for the financial reasons.

Marriage Penalty or Benefit

11:12 Emily: Yeah. I want to say actually a small correction because it was the case that you couldn’t contribute to an IRA, but that law has changed as of 2020. So even with fellowship income. But for your husband, now, if your husband, as we’ll get into, he went through a period of unemployment. As a spouse, he can still contribute to an IRA based on your earned income. So it’s like anyway, double benefit there. But yeah, it’s really interesting. I’ll try to link it from the show notes. There’s like a graphic, it’s probably from the New York Times or something, where it shows you where there’s a marriage benefit and where there’s a marriage penalty in terms of does having, you know, this income range mean lower tax rates or higher tax rates if you’re married.

11:49 Emily: And depending on where you are, it can either have no effect, there can be a benefit, here can be a penalty, I think down where I’m assuming your tax rates are, it’s neutral, there’s no benefit or penalty. But as you get into like higher incomes and more disparate income, sometimes those things can come into effect. Super interesting. So thank you for telling us about the kiddie tax. Ah, good to be reminded, especially in tax season. Okay. So that affected the timing, the fact that you got married, the timing of it and so forth, and then okay.

Role of Finances in Grad School Selection

12:15 Emily: Going into like application season, admission season, this is kind of just after we did our interview. Did finances come into play for you in considering your various offers or your selection of where to attend graduate school?

12:27 Maya: Yeah. Finances are definitely like probably in my top five or maybe even three criteria for choosing a grad program. I think everyone knows you’re not going to be like living large on a grad stipend, but I at least wanted to not have to have finances be like something else I’d have to worry about on top of my research. And I think some people, especially if you’re going into grad school in a long-term relationship, or if you’re married, you might think that maybe it doesn’t matter quite so much, because you could rely on your spouse’s income. But especially if your spouse works in a field where jobs aren’t always long-term, it’s common for people to like get laid off quickly or switch around jobs. I think it’s really important to be able to support not just yourself, but also both of you for at least a short period of time on just your grad stipend, and not think like, “Oh, I have a spouse, so therefore I don’t have to worry about it too much.”

13:12 Maya: So like for example, in our case, I really wanted somewhere where maybe we won’t be living like with anything extra really, but at least we can survive and like pay the rent and buy food on just my income. Which is like just barely the case where I am at UC San Diego. That’s kind of like right on the border of like slowly losing money over time. But there were definitely some other schools like I’ll mention like the Bay Area, several schools in that area where their stipends are a little higher than here in San Diego, but definitely not enough to cover like the difference in cost of living. And that made me really hesitant to choose any of those schools.

Subsidized Housing

13:43 Emily: Yeah. I really appreciate your mindset going into this. “Okay. I want to be able to support two adults, if necessary, for a short period of time.” And I know this is a situation that often comes up for international students who are bringing spouses along with them who don’t have, you know, the clearance to work in the U.S. And so that’s a major, major consideration for them. I’m really glad you brought that up. And I’m glad that you mentioned like other schools, California, different areas. Now some schools, like ones in the Bay Area maybe, and I know at UCSD, offer subsidized housing. So how did that come into play with your decision-making?

14:16 Maya: Yeah, housing is like, I think for most people, their biggest expense. So any way I could bring down my housing costs was a big plus for me. One of the schools I interviewed at was UCSF and they do have subsidized housing. But it’s not guaranteed, like you’re not guaranteed a slot in grad housing. And in general you only get to stay there like one year, sometimes two. So that was kind of like, made me a little nervous that I might have to pay full Bay Area rent for most, if not all, of my grad school. Here in San Diego, we also have subsidized grad housing. For us it’s a two-year limit. But I was able to, as I talked about in that negotiation video, I was able to negotiate into this program at UCSD, which is designed to recruit grad students to school, where they basically guarantee you a spot in grad housing as soon as you get there, and you get to stay until you graduate. So you don’t have to move out after two years. So basically once I got into that program, that kind of like sealed the deal for UC San Diego for me. It just made it like, like much more comfortably affordable and it just like gave me a lot of peace of mind to not have to worry about rent increases as much.

15:14 Emily: Yeah. That is incredible. Okay. So did you know about that program? Or was it something that you kind of inquired about housing, and then they told you about it? Like how did the conversation go?

15:26 Maya: Yeah, it was kind of actually something that my student host who was the one like driving me around to interviews told me about, because she was also in that program. It’s kind of a weird word of mouth thing. Like the university doesn’t really advertise it, but it’s also the kind of thing where like, if you bring it up, you’re much more likely to get it. So it can be helpful if you interview at a school, you know, even if no, one’s like really mentioned any subsidized housing, maybe some don’t even know about it because they’re not in like the subsidized housing, you know, special program, just like ask around. Because sometimes just knowing about it can really help your odds of finding something like that.

Negotiation Often Starts with a Simple Question

15:55 Emily: That’s incredible. And I think that negotiation often starts that way just like by inquiring sort of innocently like, “Oh, are there any like benefits I should know about? Any special programs I should apply for?” And how did you end up actually getting it? Like, was there an application process? Or how did you know that you secured the spot?

16:13 Maya: Yeah, so basically right after I got my official acceptance to the program and they wanted to know like, was there anything else that could answer my questions or things to basically convince me to join? And at that point, I basically sent them an email saying, “I’m really interested in the program. I also got accepted to this other school, which has a similar stipend, but is in a much lower cost of living city. If there was anything that UC to do to lower my housing costs, such as this subsidized housing program, I would basically commit to UCSD right now,” is what I told them. And then I just sent that email to the grad program. They went back for like a week or two to, I don’t know, discuss something. And then they just emailed me back and said, you have a slot in the program. There was no formal application or anything like that. So it was a very informal thing. I think other people who don’t ask about the program, just get that in their initial offer letter. Like if they’re just a really competitive candidate, they might get that off the bat. So I think it varies between people, but that was how it was for me. It was a pretty informal process.

17:06 Emily: It’s amazing, I won’t say everywhere, but at some kinds of programs, what recruitment strings administrators have to pull on that you would not know about if you weren’t really just like, kind of openly communicating with them. And I think it’s really smart to just say like, “Hey, like I have financial concerns right now. I’m looking at other offers, and what can we do here to like sweeten the pot?” Because as you said, you know, you’re obviously interested in the program, you know, passionate about the program and wanted to go, but like, there’s just this one thing holding you back. And that’s honesty, but it’s also a negotiation tactic. So I’m really, really happy to like hear that story again. Were there any other ways you wanted to mention that finances played a role in your decision of where to go to grad school?

[Addendum: After the conclusion of the interview, Maya shared that UCSD is increasing the rent for on-campus housing for new tenants. Maya’s apartment would rent to a new tenant for over double the price she currently pays. Therefore, subsidized housing at UCSD for grad students matriculating in 2022 may not be a deal compared with unaffiliated housing. More info here.]

Stipend and TA Requirement

17:50 Maya: The stipend was definitely the biggest thing. The other thing to look at, I think, was whether you have to TA to get that stipend. There are some programs, especially with things that are more like a biology program, as opposed to like a biomedical program, where you sometimes have to TA multiple quarters to basically get that stipend, which can really extend your time to graduation. So even if you’re making the same amount, like if you have to be an extra year in grad school, that could cost you like a year of entry-level industry salary, that could be a six-figure difference. So having a program where you may have to TA like one quarter, or like maybe not at all, can make a really big difference to not have to like extend your graduation time, which my program, we only have to TA one quarter. So as soon as that’s done, you can just focus on research. So that’s a big help as well.

18:31 Emily: Yeah. Super, super good point. And I cover this in my course inside the Personal Finance for PhDs Community called like Decipher Your Grad Student Offer Letters or something like that. And that’s one of the points that I go into is like, what is the reason that you are receiving this stipend? What do you have to do to receive it? And if you’re receiving a stipend because you’re TAing, then that is a time commitment. It’s at a part-time employment time commitment of you that doesn’t necessarily exist at all if you’re on fellowship or if you have a research assistantship where, you know, you’re working towards your dissertation the whole time. So really, really important point for any prospective graduate students to consider. So thank you for that.

Commercial

19:09 Emily: Emily here for a brief interlude! Taxes are weirdly, unexpectedly difficult for funded grad students and fellowship recipients at any level of PhD training. Your university might send you strange tax forms or no tax forms at all. They might not withhold income tax from your paychecks, even though you owe it. It’s a mess. I’ve created a ton of free resources to assist you with understanding and preparing your 2021 tax return, which are available at PFforPhDs.com/tax/. I hope you will check them out to ease much of the stress of tax season. If you want to go deeper with the material or have a question for me, please join one of my tax workshops, which are linked from PFforPhDs.com/tax/. I offer one workshop on preparing your annual tax return for graduate students and one workshop on calculating your quarterly estimated tax for fellowship and training grant recipients. The 2021 quarter 4 live Q&A call for the quarterly estimated tax workshop is this coming Sunday, January 9th. Please be aware that the deadline to make your quarter 4 payment, if applicable, is January 18th if you are not planning to file your tax return by the end of January. It would be my pleasure to help you save you time and potentially money this tax season, so don’t hesitate to reach out. Now back to our interview.

Financial Transition at the Start of Grad School

20:45 Emily: Okay. So let’s kind of fast forward. You’ve chosen UCSD, you’ve gotten married, you’re starting the school year. Tell me about the move, the transition to graduate school, especially financially.

20:56 Maya: Yeah, so we moved, I think basically the day after my fellowship at the NIH ended. We just like moved right to San Diego and started getting moved in. My husband didn’t have a job lined up at that point. He has a bioengineering just bachelor’s degree. We weren’t too worried at that point because San Diego is a pretty big like biotech hub, and he was already like getting some interviews after we moved there. And so we were doing pretty well on just my stipend end of 2019. Obviously, we got to 2020 things changed a bit. He’d been getting a lot of interviews and actually already had an offer in hand. But as soon as the pandemic hit, that offer got rescinded. Companies started going remote only and didn’t really want to train any new kind of biology, tech positions like that. And so what we thought was going to be just like, maybe like you know, worst case, six-month unemployment period turned out to be like over a year of unemployment for him. So it was at that point that I was really happy that I had made the decision to choose a school that I could pay for on just my stipend. Because if we didn’t do that, we would have had a lot of debt after paying for just us that year.

21:52 Emily: Yeah. That’s I mean, you couldn’t have seen what was coming, but like your just general emergency worst case scenario like planning really kicked in there. So that’s great. I can’t imagine it was very pleasant. Do you want to share anything about how, I mean, I guess everyone was kind of not really doing anything for most of 2020, like how did it go for you in terms of like actually living on that one stipend?

Managing Living on One Stipend

22:17 Maya: Yeah. I mean, one thing that definitely helped a lot with, I think I mentioned in my original interview that I had been saving really aggressively during my postbac to get kind of an emergency fund built up. And I still had that during grad school and that was super helpful. We ended up not really needing to touch that. We didn’t have any major emergencies, but just knowing that, if something came up, like, especially, you know, what if one of us had to go to the hospital or something, we would have that cushion was really helpful. But on the other hand, with like zero cashflow every month, like I was just really hesitant to spend at all beyond my stipend. Like, you know, if we had to use some of that emergency fund, we’d have no way to replenish it at all. So we had to be kind of like kind of hermits for the whole year.

22:54 Maya: Having subsidized housing definitely helps. One of the things that helped were, like, for example, we share a really old used car that we bought in cash before we moved here. It was very cheap. And I actually don’t even use that car. I bike to lab every day. So there’s basically no like gas maintenance costs at all. We just have that for like buying groceries once a week. So that definitely lowered the cost a lot. Parking is also really expensive in San Diego, so that saved us I’m sure several hundred a month easily. And also things that weren’t really within our control, like for example, loan forbearance, like, you didn’t have to make any loan payments. If we had to make those payments, we probably would have been like bleeding money a little bit during that year, for sure.

23:30 Maya: And then also my side hustle, which we mentioned, I kind of like cranked that up a little bit during that year for obvious reasons, and my husband did some of that too, while he was applying for jobs which, you know, it doesn’t bring in that much money. You only have so much time as a full time grad student to side hustle. But having that extra couple of hundred a month was like really helpful, allowed us to kind of like, maybe once a month we’d like get some takeout and like that money would come from my side hustle. So just like those, you know, occasional things where we’re just really tired and just want some cheap Chinese food or something. Like we could actually do that without having to be super anxious about just like taking from our emergency fund for that kind of thing.

Dual-Income Household

24:02 Emily: Yeah. Thank you so much for sharing that. It sounds like a difficult time, like not really having any outlets, like sort of literally, and also financially. But, eventually the corner turned and he did get a position. And when did he get his full-time job?

24:19 Maya: He first started at the beginning of this year, so just like January 2021, making very little money, like basically the same as my stipend, which is like pretty low. But then like a month or two after that, he got a new job at a different company paying quite a bit more. So we actually have some like positive cashflow, which is like a very welcome change after more than a year of having very little money.

24:39 Emily: Yeah. That’s awesome to hear. And I guess there’s been sort of a sea change with employment generally in that time. And so he probably has a lot, I don’t know, it’s actually a good time to be getting jobs like now, or, you know, earlier this year. That sounds really good.

24:52 Emily: So finally, you had a dual income household. Did you make any changes to your finances? Aside from maybe having a little bit of, you know, loosening up on the purse strings a bit. Did you have any like financial goals that you were working towards, or anything like that?

Financial Goals with Dual Income

25:05 Maya: Yeah, definitely. It was definitely like a pretty slow process. Like I think probably for the first six months of this year, we kind of still lived like hermits, because we just didn’t know like, you know, what if he loses this job again? Like what if like there’s another resurgence in the pandemic and things close down? Like we just didn’t know what’s going to happen. But I just started getting into summer and like things were kind of semi getting back to normal, we did a couple of things to kind of like actually start not just like saving money but investing it. So we’re both really interested in like FIRE, like financial independence retire early. And we had basically had been making zero progress on that, because obviously we just didn’t have any money to invest. But now we actually are able to do things like take some of our savings and put that into our IRAs.

25:40 Maya: And we’re able to max those out this year for the first time. We also had some just for our actual emergency savings, we converted some of that into I bonds, which pay a little bit more interest, like something, I think they’re like five or 6% right now just to keep up with inflation which we couldn’t do before, because you can’t touch them for a year after you put them in I bonds. But now that we have like a bit more of a buffer, we felt comfortable doing that. So we get a little more interest there. And the other thing was that I still do my side hustle, but I’m much more selective now. I’m not just like working crazy hours all weekend. And I’m able to basically just take the jobs that like pay really well per hour and are also interesting to me. And now that money, instead of being like spent every month, I just put it all into a solo 401(k). So that’s all just kind of extra money that our budget never sees. It just goes right into our investments.

Side Hustle Balancing Act

26:27 Emily: Yeah, I want to follow up on that a little bit. So that’s cool that you’ve been able to make these extra moves in your finances, like especially doing the IRAs in 2021. That’s awesome to hear that. Yeah. Talk to me a little bit more about the side hustle. So now that you, you know, feel like you don’t to have the money coming in because you’re depending on it, you said you’re more selective. Does that mean that you’ve increased your pay rate either what you’re asking for, or just you only select jobs that pay more?

26:53 Maya: Yeah, so basically, there’s kind of a balancing act, right? So if you increase your pay, you get fewer customers, but you also like maybe you don’t need as many because you’re making more. So during the pandemic, I kind of had a certain balance where like I wanted to just like maximize money per month, regardless of like hours. But now that I’m limiting myself to closer to like five hours max per week, oftentimes less, I’m definitely cranking up the pay. Like these days, since I have a good bit of experience, I charge a hundred dollars an hour or more sometimes to offer these clients. And they’re all things that I like personally enjoy. They’re not just like boring articles that I’m slugging through. So that’s been helpful, both to just like keep me motivated, like I think I would’ve started to hate it if I had to keep doing it for just any job that would come in. Now it’s more of just like a hobby that I happen to get paid for.

27:35 Emily: Okay. Hold up. So you just said that you work about five hours a week and are looking at a hundred plus dollars per hour. So that’s 2000 a month, if you work consistently. Now that’s rivaling your stipend. I mean, I’m sure your stipend’s a little bit higher, but we’re in the same, like ballpark now. That’s incredible. And so you are, as I understand, you’re not incorporating any of that income into your budget, it’s just going straight into your individual or solo 401(k), right?

28:01 Maya: Yeah, definitely. I mean, I don’t always do five hours a week. It’s kind of the upper limit, but yeah, it’s kind of tough. Sometimes I’m even tempted. I’m like, why am I working extra hours in my lab when I could be making like 10 times this hourly rate on my side hustle? So yeah, it’s like very tempting to work more at it. Honestly, I’ve had to kind of like restrain myself.

Networking via Science Writing

28:17 Emily: That’s something that’s really, really good to be thoughtful about. Because like, so for you, does this freelance writing play into your ultimate career goals? Or is this just something you do for the time being?

28:28 Maya: It’s something I’m just trying to keep open as a door. I don’t think I’d want to be like a full-time science writer, but it’s more just like I’m meeting a lot of people at companies. Like I’m more interested in like a research biotech type position. But a lot of the jobs I do, even though they’re writing, are for like biotech and pharma companies. I’ve even had people like offer me like jobs as like maybe like if you drop out of grad school, we’ll give you this job. And I’m obviously not going to do that, but be great to follow up within a few years and be like, “Hey, I actually graduated. Can I get a job there now?” So it’s more just like those connections that I think are really valuable rather than the actual, like specific writing experience that I’m doing.

29:00 Emily: That is amazing that it can serve as a networking tool as well for your future position. But yeah, I do think it’s smart to limit the number of hours you spend on this because obviously the graduate degree and how well you do with that and how much you publish, whatever, it’s still going to matter for getting your next position. So yeah, don’t leave grad school to do your side hustle full-time. But yeah, that’s an amazing rate. I’m so, I mean, like you said, you’ve been doing it for several years, it’s been what, like four years now or something? So like you’ve built up the skills and the networks and so forth. But like, that’s awesome. So that’s rivaling your stipend, but it’s all going into investments. You’re pursuing FIRE. I do want to mention, I have, again a course inside the Personal Finance for PhDs Community called, the title is like Best Financial Practices for Your Self-Employment Side Hustle.

29:45 Emily: And it goes into the choice of what retirement account to use. If you have, it’s like basically for exactly your situation: you’re in grad school or a postdoc or whatever. You have a side income, you’re self-employed, you’re already maxing out your IRA. What do you do next? And you know, not being offered a 403(b) or whatever through your primary position. Well, because you’re, self-employed, you have the opportunity to open up a self-employment retirement account. You chose the solo 401(k). I did the same thing for my business, so I know what an incredible tool it is. But that is like, if your goal is FIRE, that is really supercharging your progress compared to what you would be doing, you know, just as a grad student who’s not side hustling, so wow.

Being Selective with Clients

30:23 Emily: How are you, I don’t know, like, it seems like there are so many benefits doing it. Like you said, the money you needed it. Now it’s more of an elective thing. And the networking. How do you stay motivated to do that work?

30:36 Maya: Yeah, I think it helps that I’m just very selective in clients. And like, for example, even if the work is interesting, if the client is even kind of like slightly annoying, like if they don’t respond quickly or they like ask for a bunch of edits and don’t want to pay you extra for it, I just like don’t have a reason to take them. So I think it helps to kind of value yourself and to charge what you’re actually valued. And I would encourage people, even if they, like, I started out like, I think like 10 or $20 an hour when I first started. But every single time I got a new client, I would ratchet up that rate just a little bit. And I was expecting like, there to be kind of a cliff when no one would hire me anymore. But like, people kept hiring me.

31:09 Maya: I think some companies like, you know, even if they’re paying me a hundred dollars an hour, if I’m only doing like one or two hours of work for them, like that’s like nothing to their company budget. So even if it feels like a really high rate to you and it makes a big difference in your budget, oftentimes companies will just like take your high rate as a sign like that you must be good at what you do, and they’re willing to pay it. So I would encourage people if you’re doing any kind of side hustle to like slowly increase it until you start to like lose clients and then you can kind of back off.

Advice for Starting Freelancing

31:35 Emily: That’s really, really good advice. And do you have any advice for someone who wants to get started with this line of work? Thinking back to when you were doing it in college, like how did you get your first few clients?

31:44 Maya: Yeah, that’s definitely the hardest part is getting your foot in the door. It helps to use Upwork and those kinds of freelancing websites. Just because if you don’t have any way to like find clients, it’s pretty hard to like get them to hire you. Thos sites, you take a pretty big kind of your pay. It’s something like 20% usually, which can feel kind of painful, especially when you have to pay like 30% ish self-employment tax on top of that. But it helps to start out there. And then sometimes if you have a long-term client, you could go just like bill them directly after you’ve established yourself on there. So using those sites is helpful. And also just kind of networking. If you know like anybody in your lab or anybody else who has some experience in the area that you’re trying to get into, they’re almost always willing to help you find the job. Like I’ve given other people who I’m friends with science writing jobs. Like sometimes if I don’t have time for a client, I’ll like send them to one of my friends who wants to get started and like, they don’t have any experience yet, but because I recommended them and they trust my opinion, they’ll get that job. So those two things together, like being on the website and getting help from other people who are in that network are really helpful.

32:45 Emily: Amazing, amazing advice. And I do want to add, we did a podcast interview with Courtney Danyel in season six, episode 17. Courtney has a business called Endless Freelance Income. So she’s a freelancer herself, plus she teaches other people how to do this. So that’s a great interview also, if you want to get started with not just freelance writing, but like a variety of sort of services that you could do on a freelancing basis. So that’s incredible.

Breaking Away from the Poverty Mindset

33:07 Emily: Maya, it’s been so wonderful to catch up with you! Is there anything else that you want to add about what’s been going on with you financially over the last couple of years?

33:14 Maya: Yeah, I think it’s just definitely been a big time of transition. We’ve gone from just like being pretty much broke, like not really broke because we had an emergency fund, but feeling very broke to actually having like more than double the income we had last year. So yeah, it’s been really nice to be able to not only work toward our investment goals, but actually be able to like, as you said, buy some things that actually improve our life a little bit. Like even just small things we never would have bought last year. Like for example, we have to carry out groceries like about quarter mile from our car to our house. And so we finally bought like a wagon, like it was like a hundred dollars to buy this wagon and like, it is the best purchase we made.

33:46 Maya: Like we never would have bought that last year, but just that’s like now it seems like a small expense. It’s like, well worth it. Like recognizing those things that like, okay, now you can actually afford these things like greatly improve your life and like probably our health so that we’re not like breaking our backs with like tons of groceries. Like that’s really nice to have. So I think it’s good to recognize, like, even while you’re pursuing your investment goals, like still save a little bit to like, not be like having that poverty mindset and trying to actually improve your life a little bit too.

Financial Independence, Early Retirement (FIRE)

34:12 Emily: Totally, totally agree. And I’ll just add another question in here. Your motivation for pursuing FIRE, financial independence and early retirement. You’re in grad school, it seems like you’re planning for a long and wonderful career. How does FIRE play or not play with your career goals?

34:30 Maya: Yeah, it’s kind of a weird thing for people to say in grad school. I think sometimes it’s like, why would you go to school for this long if you don’t want to like work your career for much longer after that? I personally don’t think I would necessarily want to fully retire once I hit that number. Partly for me, it’s just a security thing. Like, you know, if I’m in a job I don’t like, and I want to maybe take a year off and go on sabbatical and then come back and maybe it’ll take me a while to find a new job. I want to be able to do that. And even if I think for now that I really love doing what I do, maybe when I’m 45, I won’t like it anymore. Maybe I’ll never want to look at a pipette ever again, who knows.

35:01 Maya: And also just the freedom for like, for example I’m really interested in the idea of working less than 40 hours a week someday. Maybe even as a freelance basis, like not necessarily in writing but maybe as a consultant or something like that, like maybe just a freelance bioinformatician. I don’t know having the freedom to do that as well is nice. So I don’t necessarily plan to do the traditional, like I hit 45 and I have X dollars, so I’m just going to retire. I have like a lot of options available to me now.

Best Financial Advice for Another Early-Career PhD

35:26 Emily: That’s great to hear. I’m actually, well, by the time this is out, by the time we publish this, this will be out again inside the Personal Finance for PhDs Community. I’m currently working on writing an e-book. It’s going to be titled something like How to Pursue FIRE in Grad School. And so I just love it when I get to meet someone who is doing that and get their like reasoning behind it and how they’re doing it. And the strategies that you’re using are now going to be kind of featured in that e-book. So that’s awesome. If the listener is interested, you can check it out, PFforPhDs.Community. Maya, again, it’s been so wonderful to talk with you. Would you please answer, I don’t think you got to answer this the last time we talked, share with the listener your best financial advice for another early-career PhD?

36:04 Maya: Yeah. So I’d say kind of like a three-pronged approach with it. I think, I don’t remember who, some professor told me this like a long time ago, which was like invest aggressively in your future, and then invest aggressively in your current self. And then everything that isn’t those two things, like cut out pretty ruthlessly. So I think what he meant by that was basically, you know, even if you can only invest $50 a month in your IRA, like do that and commit to it. Also invest in your current self, like, you know, these are my twenties, like I’m not going to be 25 again. So like if someone’s like going whale watching this weekend and it’s a hundred dollars, like if I can make that work, I’m going to do it. I’m not going to be like, “Oh, that could have been going into my retirement.”

36:39 Maya: So it kind of balance those things and be pretty aggressive about doing the things that are really important for your current self and your development as a human. But everything that isn’t those things, like just cut out. Like, you know, I could buy a car, it would make my life mildly more convenient to not have to bike every day. But that’s not something that I feel like really enriches me as a person, or it makes me that much happier. So I don’t do that. So I think that’d be my advice is to figure out like, what is really important to you now and in the future. And don’t feel any hesitation about having to cut out things that aren’t in those two categories.

37:08 Emily: I have never heard it put that way before, but that really resonates with me in my like current mindset towards money. So I’m really glad that you shared that with us. Maya, thank you again for joining us! It’s been wonderful to catch up with you!

37:20 Maya: It’s good to talk to you! It’s been a good three years overall, despite the rocky start.

Outtro

37:29 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? I have collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. If you’ve been enjoying the podcast, here are 3 ways you can help it grow: 1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. 2. Share an episode you found particularly valuable on social media, with a email list-serv, or as a link from your website. 3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and increasing cash flow. I also license pre-recorded workshops on taxes. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.