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Learn from This Professor’s Nightmarish Home Ownership Journey

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In this episode, Emily interviews Dr. Kevin Jennings, a professor of Criminal Justice and Criminology at Georgia Southern University in Savannah, Georgia. Kevin and his wife bought a home in Savannah shortly after he started his position, and the house has proven to be a money pit. Kevin catalogues all that has gone wrong with the house, what he wishes he would have known as a first-time home buyer, and the lessons he’s learned the hard way. He also gives excellent insight into the academic job market for someone already on the tenure track and how his status as a homeowner has affected his career prospects.

Links Mentioned in the Episode

Further Resources

Teaser

00:00 Kevin: The one thing I might’ve done differently is look for a house with fewer of these incidental costs, right? So if I wasn’t so close to the water, I wouldn’t have to do the flood insurance. If I wasn’t outside the city limits, I wouldn’t have to pay for the extra fire and protection stuff like that. I wish I would have known about those things in order to judge where to buy and which house to buy.

Intro

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 six, episode seven, and today my guest is Dr. Kevin Jennings, a professor of Criminal Justice and Criminology at Georgia Southern University in Savannah, Georgia. Kevin and his wife bought a home in Savannah shortly after he started his position. And the house has proven to be a money pit. Kevin catalogs all that has gone wrong with the house, what he wishes he would have known as a first-time home buyer, and the lessons he’s learned the hard way. You won’t want to miss Kevin’s insight into how his choice to purchase this home has affected his mindset toward his academic career. Without further ado, here’s my interview with Dr. Kevin Jennings.

Will You Please Introduce Yourself Further?

01:23 Emily: I have joining me on the podcast today Dr. Kevin Jennings, and he is going to talk to us about, well, a bit of a money pit that he is currently invested in. So, we’re going to hear tons more about that. Kevin, will you please introduce yourself to the audience?

01:37 Kevin: Yeah. Hi, I’m Dr. Kevin Jennings. I’m from Austin, Texas, and I went to Texas State University–Go Bobcats! Meow–and got a PhD in Criminal Justice in 2014. I was then hired at Armstrong State University in Savannah, Georgia, and I moved there immediately after graduating for a tenure track job, which I realize how lucky I am to land a tenure track job just out of getting my PhD. And I mostly focus on cyber crime and digital forensics. So I do a lot of work with law enforcement, but also work with computer science people and tech people to kind of find evidence on digital storage devices.

02:27 Emily: What an exciting topic. We’ll hear more about that at the end of the episode, where people can learn more. So, you moved to Savannah for this position. You said that was four years ago. Is that right?

02:40 Kevin: Five years ago.

Homeownership Journey

02:41 Emily: Five years ago. Okay. And you decided when you moved there shortly after that you were going to buy a home. Can you tell us more about how you did that shortly out of graduate school and why?

02:54 Kevin: So, we moved here in 2014 and rented a house. Unfortunately, in 2015, my grandfather passed away and he was the last of my four grandparents. And he left my parents and his three siblings a fairly decent amount of money. And my parents decided to share some of that with me and my sister. So, we got this decent size chunk of money. It wasn’t a huge amount, but it was enough for a down payment on a house. And my wife and I, having so recently started our actual career jobs, feeling like we were more adulty than we really were, decided to use that as a down payment on a house. So, we shopped around the city of Savannah. We, we were leaning towards finding either a fixer-upper that we could get for cheap and put money into, or kind of a duplex or house that had something we could rent out.

04:00 Kevin: Our real estate agent showed us this house in the neighborhood we were currently living in, which is great, less than 10 minutes from campus, really nice houses. And it was neither of those things, but we both fell in love with it. It’s kind of a two and a half story, four bedroom, two bath, huge backyard, and where the backyard ends, there’s a tidal creek right behind it. It’s just swamp and woods. And it was just beautiful. And we just kind of both fell in love with it. So, even though it wasn’t what we were looking for, we decided that this was the house we really wanted.

Making the Down Payment

04:40 Emily: And with that down payment money you were able to do the purchase?

04:44 Kevin: We were able to afford the down payment, which was I believe 10% of the total purchase cost, which was listed at $160,000. And we were super, super good negotiators and talked them down to 159. So, we put, again, I want to say it was 10% down. And we got this house and we were so excited, but we sat through kind of the lecture from the bank on, “Here’s your mortgage payment and here’s what that’s going to consist of.” And we were really shocked at how little of our actual mortgage payment goes into the principal amount of the loan. I mean, so I have my latest house bill here and my monthly payment is $1,142. Of that $1,142, $233 goes to the principal, which, I mean, that’s what, 20% maybe? So, we were kind of shocked by that. And we were looking at the other kind of things that, that had to go and pay for.

Expected vs. Unexpected Costs

06:05 Kevin: And there was the stuff we were expecting, obviously interest is going to be a big deal. The interest on ours is $460 a month. So, we knew that was going to be a big deal. Taxes, of course we expected. Coming from Texas, the taxes were actually slightly lower than we thought they were going to be. Because Georgia has an income tax rather than relying on property taxes the way Texas does. But then the other things that got added in there are the stuff that really kind of shocked us. First off, because we had that beautiful tidal creek in our backyard, we were required to get flood insurance, which most homeowners insurance doesn’t cover floods. And since Savannah is a low-lying coastal city, plus we’re right up against that tidal creek, we were required by law to get flood insurance. The other thing we didn’t expect was private mortgage insurance. It’s like $200 a month for this private mortgage insurance, essentially because we’re first-time homeowners. And that will go away when we’ve paid the mortgage down to 80% of the level of the value of the house. But since we only put 10% down, getting from 90% of the value to 80% of the value is going to take years.

07:31 Kevin: And we’ve been paying for four years and we’re still, I don’t want to say nowhere close, but not nearly as close as we’d like to be to that 80% level that will allow us to take away that private mortgage insurance. So, that’s $200 a month we’re paying for essentially not having enough money. So, just all those things combined to create a mortgage payment that we really kind of weren’t expecting. Homeowners insurance, flood insurance, private mortgage insurance, all that stuff really adds so much to the monthly fee, which really hurts in the long run.

Mortgage Structure

08:11 Emily: Yeah. I just want to jump in and make a couple of comments for the listener in case they’re not that familiar with the structure of mortgages. You mentioned a couple shocking figures, like the amount of your monthly payment that actually goes towards principal is 200 some dollars. Whereas the amount that goes towards interest is 400 some, and people may not realize this, but mortgages are on an amortization schedule where the great majority of your payment in the first year goes towards interest. Very little goes towards principal. And that shifts over the course of the loan. So, in year 30, if it’s a 30 year mortgage, you’re paying a vast majority towards principal and very little towards interest and ultimately pay off the loan. So, it’s really like when you start over with new mortgages, maybe every five years or something if you move, that amortization schedule, you’re kind of always playing around in the paying mostly interest, very little in principal, part of the amortization schedule.

09:02 Emily: And that’s why it is so difficult, like in your case, to get from 10% equity up to 20%, so you can remove that private mortgage insurance. Because mostly what you’re paying, as you said, is towards interest. Plus, all these other things you had to add onto the mortgage. So, it’s really kind of, you know, people talk about the differences between the advantages of renting versus buying. But the thing is that in your case, and many others, when you have so much of your monthly mortgage payment that goes towards anything other than the principal, that’s almost like paying rent. It’s just money that’s out the door every single month that’s not really building your own net worth, your own equity in the house. It’s just stuff that has to go out the door to keep you in that house. And so I wanted to know, when you were sitting through this explanation from your bank–which actually it’s kind of cool that they gave you the explanation, honestly, like they were doing a little bit there to help educate you–how far along in the process were you, and were you ready to like run out the door or was that no longer an option?

Mortgage: A Little Extra Goes a Long Way

09:59 Kevin: It was no longer an option. But I was so ecstatic over finally owning a home that it didn’t quite hit me, what exactly it meant until I had made a couple of payments. The other thing was, it wasn’t until I think a year after we bought the house, my wife decided to go back to school. So, she helped put me through grad school. And then a year after I graduated and moved here and got this job, she decided to go back to school to become a nurse. Because what she did before, there’s really no job market for here in this part of the country. So, while she was still kind of working a semi-decent job before she went back to school, we were paying extra towards the principal every month, which I had been told was a very, very good idea. Because anything extra you can put in, especially at the beginning of a mortgage, really knocks down the long-term cost of the mortgage.

11:17 Kevin: So, we were able to put an extra, I can’t remember exactly how much, extra 50 or $60 a month towards the mortgage for the first year, maybe two years, that we were in the house. With her back in school, we really had to tighten our belts. We were not able to do that, but now she’s graduated. Just started her new job yesterday, in fact, and I’m really excited to be able to kind of go back to doing that. Putting even just a little bit extra towards that mortgage, I think, will help a lot.

Unforeseen Costs of Home Improvement

11:50 Emily: Yeah. Like you said, you get a lot of bang for your buck when you start paying down that mortgage at the beginning a little bit faster, at least until the point where you can get rid of PMI. I mean, that’s like a really big goal when you have a mortgage. To not be paying insurance on the behalf of the bank to insure against you, to not have to pay that makes a huge difference. Yeah. So, at least to get to that point. That would be amazing. So, you know, I mentioned earlier that your house has kind of turned into a little bit of a money pit, right? So, it’s not only the structure of the mortgage payment that you were learning as you got into the house, that, “Hey, not that much of this money is actually going towards principal.” But in fact, you’ve incurred a lot of other expenses that you did not really realize or factor in when you first got into the house. So, can you outline what those are, please?

12:38 Kevin: Absolutely. So, we were buying this house and we realized we wanted to do a bunch of stuff to it. So, right off the bat, as soon as we bought it, we knew we wanted to take out all the carpet because we hate carpet. And we wanted to replace a lot of the lighting fixtures because the house was built in kind of the mid-nineties. And it had those kind of classic, like little glass globe, things that were super cheap and in every house back then. So, we knew we wanted to replace those. We knew we wanted to paint a bunch of stuff. And that was when my wife and I kind of both realized that we don’t have those skills. We were both very nerdy in high school and college and we never got those, those kind of woodworking and electrician and, you know, I can barely use a screwdriver.

What You Pay is What You Get

13:29 Kevin: So, those skills are something that I really wish I would have had before I decided to buy a house. So, we rip out the carpet, and two big problems presented themselves. One, there were places where the floor was uneven and the carpet kind of hid that. But two, the stairs that we had hoped to just kind of refinish, were just kind of ugly two by fours that they had nailed down. So for the floors, we hired someone to come in and put in some vinyl flooring, which was, I was shocked at how much vinyl flooring costs. But you know, it’s still cheaper than hardwood. The stairs we replaced ourselves and the flooring was not installed properly. We just kind of found somebody on Craigslist or something and brought them in. And that was a really bad idea.

14:34 Kevin: If you’re going to hire someone to come in and work on your house, don’t go for the kind of cheap fly by night operation. Definitely, definitely try to find someone you trust or a company that has, you know, you can go on Yelp and find their reviews. Stuff like that. Then there were little expenses, like we had to replace the mailbox paint, because we wanted to paint a bunch of stuff. But yeah, when we first moved into the house, those were kind of these big expenses that we kind of sort of planned for. We had saved some money to the side that we weren’t putting into the down payment just for those improvements. But we went, I don’t want to say wildly over budget, but fairly over budget on that process.

Hurricanes and Fences and Air (Conditioning) – Oh, My!

15:30 Emily: So, you’re saying there were certain things that when you bought the house, you knew, okay, you hate carpets, you’re going to tear all those out. There were certain things that were obvious upon purchase you knew you were going to take care of, and you had prepared to some degree to do that with savings. What’s next? Were there other things that have come up in the years since then?

15:49 Kevin: So, we are in a coastal city and when we moved here we were told, “Don’t worry about hurricanes. Hurricanes never hit Savannah because we’re kind of tucked into the coast.” And then of course, since we’ve moved into the house, we’ve had two hurricanes. So, our fence, when we first moved in–and for a long time we had dogs. We are, are now dogless, unfortunately, rest in peace–but one of the reasons we liked this house is because it had a fence and a big area for the dogs to play in. But one of the hurricanes that came through kind of finished it off and knocked it down, or at least a large section of it down. So, we got our entire fence replaced which was thousands of dollars we weren’t planning on spending.

16:40 Kevin: And even though we had essentially hurricane insurance, the deductible on that is like almost $5,000, I want to say. So, it really wasn’t financially viable to use the insurance to fix that fence issue. The second problem is that the upper half of the second floor was an add-on. When they originally built the house, it was just the first floor and the main part of the second floor, the upper part was all attic space. The second owners of the house finished out that attic space and turned it into a fourth bedroom. What we didn’t know when we bought the house, and what the home inspection didn’t show, is that when they finished out that area, they had to move the indoor air conditioning unit. When they did that, instead of redoing the drain line, the way they should have, they just ran a new line from where it used to be to where it is now.

AC Repair Fiasco

17:50 Kevin: So, essentially, the drain line for the air conditioner goes from one part of the house, across the house to where the air conditioner used to be, down under the flooring of the attic, then back across the house to where the air conditioner is now to actually drain out of the house. We had no idea that had been done that way. So, we had all these problems with the air conditioner. Finally, we call in a good repair company and they come in and take a look at it. And they’re like, yeah, the drain lines are all bad. But also this air conditioner system is designed and built for a house of the old size. With the addition, you’ve added so many square feet that you really should move up, and it’s getting towards the end of its like 20-year life or whatever it was anyway.

18:45 Kevin: So, if we’re going to do all this work, it’d be a lot better in the long run to just replace the entire system. So, we said, “Okay.” So, we got a new indoor unit, a new outdoor unit. Ended up needing to rerun all of the ducts because when they had done the addition, they had messed up the duct work, new thermostats, whole nine yards. I think we spent $13,000 on essentially a $15,000 system. Then it started having problems and wouldn’t work. And we spent the next year replacing parts and getting service. And finally, finally, after a year they just replaced a huge chunk of the outdoor unit, all these things, but it took them a year in the South Georgia heat with no air conditioning before they finally figured out kind of what was wrong and how it was messing up. But essentially, we ended up with, as part of the replacements, they gave us improvements. So, essentially we got a $17,000 air conditioning system for $13,000. But that’s still $13,000 we hadn’t budgeted for, we hadn’t planned on. So, I think we got a six-year loan, interest-free, luckily, and that’s $230, $240 a month that we weren’t planning on. Which, right when my wife was in the middle of nursing school, was a very difficult financial burden to kind of take on unexpectedly.

20:31 Emily: Yeah. I was just going to ask how you actually did pay for that. I’m thinking about your mortgage payment and that whole system costs about what a year of housing cost for you. That’s I mean, a huge expense. So, glad to hear that you got some decent financing, it’s not going to cost you any extra in interest, but what a saga. And especially to live for a year without proper air conditioning, as you were describing. Are those the big things that you’ve had to lay out for the house?

21:00 Kevin: Those are kind of the big things.

Commercial

21:05 Emily: Emily here for a brief interlude. I bet you and your peers are hungry for financial information right now, especially if it’s tailored for your unique PhD experience. I offer seminars, webinars, and workshops on personal finance for early-career PhDs that can be billed as professional development or personal wellness programming. My events cover a wide range of personal finance topics, or take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you’re interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. We can absolutely find a way to get this great content to you and your peers, even while social distancing. Now, back to our interview.

Rule of Thumb for Annual Home Expenses

22:03 Emily: There’s a rule of thumb–and you might laugh at this, but maybe you’ve heard it before–there’s a rule of thumb that you should expect to spend on average on your home 1% of the value of the house per year. So, like average 1% of the value of the house per year on home maintenance repairs and so forth. Sounds like you probably have blown that out of the water every year you’ve lived there, right?

22:25 Kevin: Yeah. Oh yeah. So, the downside is we now have our garage doors, we have two garage doors, that need to be replaced because it’s Savannah, Georgia. Everything is wet here, constantly. I mean, it’s just moisture, moisture, moisture. It’s ridiculous. So, our garage doors are rotting out and we need to replace those. Our deck, for similar reasons. It’s not bad, but we’re anticipating that we’re going to need to replace it in the next couple of years. So, there’s more thousands of dollars of stuff that we’re kind of dreading and preparing for. The other things that have really shocked me are things like–we’re technically outside of the city limits, right? So, we have to pay for fire and EMS services directly. Instead of it being paid for through our city or County taxes, we have to pay, I want to say, it’s just under $300 a year to the fire and EMS service to come out. We have to pay for termite inspection yearly, or termite service yearly, which is hundreds of dollars a year. So, all these things have really combined. We didn’t think about it. Going from an apartment to a house you expect, you know, okay, rent, mortgage. There are going to be taxes and interest and principal. But then it seems like there are all these other fees and taxes and payments for things that you would never expect, having spent your entire life, or at least entire adult life, in apartments and renting places. It’s incredible.

Lessons Learned: Do It Right the First Time, Due Diligence

24:29 Emily: Yeah. I think a couple of the lessons that I’m hearing from this, that maybe the listener can apply. Two things. One is do the work right the first time.

24:38 Kevin: Yes.

24:39 Emily: Invest in quality from the beginning, and hopefully you won’t have problems or the replacement costs or whatever won’t come up so soon. Part of that was decisions that you’ve made, part of that was the previous homeowners’ decisions, but pay for it to be done right the first time. And the second one is–maybe, I don’t know, it sounds like you did what any reasonable person would do in terms of buying the home in that you lived in that neighborhood for a year prior to buying and you think you know where everything is, you know where are the schools, whatever you’re considering in your home-buying purchase. Just by living nearby, you’ve learned a lot of those things. But it sounds like you didn’t investigate–and why would you have?–the fact that these services were being billed directly instead of through the tax system, or all these other line items. Or, you know, maybe if you’d understood more about flood insurance, you would’ve told your real estate agent, “No, I’m not interested in anything next to a creek or whatever.”

25:37 Emily: I mean, those are not things you’re going to naturally pick up just by living somewhere. You’re learning this the very hard way. And so, I’m really pleased to be able to share your story with the listeners. Just say like, there are probably going to be more expensive than you think there will be. So, just plan for the unexpected, right? And prepare for that. But maybe do a little bit more due diligence to try to figure out what the peculiarities are of this city that you’re choosing to buy in. Like you were saying, well, people told you hurricanes never hit Savannah. Turns out, at least for the recent years, that hasn’t been the case. But I don’t know, I think you did what any reasonable person would do, so I’m not criticizing you. But I’m just really glad to hear this for anyone else who’s coming up on a home-buying purchase to do a little bit more to figure out what all these little nuanced expenses are going to be.

Do Not Skimp on Home Inspection

26:24 Kevin: Absolutely. The other thing I want to point out is home inspections. Do not skimp on the home inspection. We had a fairly decent one, but they missed a lot of these things where if they’d have been just a little bit more paying attention, a little bit more thorough, we would have known about these things in the contract negotiation process, not a year or two years or three years later. So, do not skimp out on the home inspection.

26:57 Emily: Yeah, definitely. So, I live in Seattle, so in the market here, at least in recent years, it’s been a sellers market, right? And a lot of people, as part of the bid that they enter, they waive inspections. It’s just something that no one wants to hold up the process, but even if you have to go that route based on what’s standard in the market, still do the inspection. Even if you don’t have it as part of the contingency or whatever, still do it so you know all these things upfront, like you were saying.

How Does Being an Academic Affect Homeownership?

27:28 Emily: So, I’m curious about how your position as a faculty member, as an academic, has played into these homeownership decisions or your ability to handle these things, I guess. So, it sounds like you got this tenure track position. Despite a little bit of upheaval with your university, you’ve maintained that and you bought a home where you got your tenure track position, probably what anyone would try to do, if possible soon after. So, yeah. How does being an academic affect this whole homeownership situation?

28:03 Kevin: When I was in grad school, I kind of bought into the belief that if you can find a really nice, good tenure track job you can stay at that university for a long time. Decades, if not your entire career. At the university I went to and the department I was in, there were a lot of professors that had been there for 20, 30 years. So, I was kind of expecting that kind of experience. So, when I moved here and was ready to buy the house, I was very much in this mindset of, “My family will be at this university working here for a long, long, long time.” So, in the University system of Georgia, you have an option between a pension system or a 401k.

29:01 Kevin: And if you’re going to be there longer than 10 years, the pension system is really the better option. So, that’s what I chose because I thought, “Oh, I’ll be here at least 10 years, no big deal. I’ll buy a house. I’ll be here at least the five or six years that it takes to really get enough equity in a home to make a profit when moving.” But I’ve come to kind of find out and realize that job-hopping and transferring positions is almost, or just as important in academia, as it is in private industry. Growing up in Austin, there were a lot of tech people. And tech people were all talking about, “Oh, you’ve got to move jobs every five years or every however many years.” And I thought academia was kind of exempt from that. And it comes to find out, it really isn’t. It’s depressing when you’ve been working at the same university for four or five years and they make new hires, straight out of grad school, hired at well more than you’re making. So, I wish I was able to move or at least have the possibility of moving. I wouldn’t necessarily want to leave. I love my job. I like living here. I like the university I’m at, but being so tied financially, through both the house and the pension, to this one job in this one place is something that even if I am going to stay here for the next 10 or 20 years, it’s still distressing. And it makes me feel like I don’t have options. It makes me feel like I’m stuck. Even if I want to be here, that’s still kind of a bad feeling, you know?

The Golden Handcuffs

30:55 Emily: Yeah. I definitely understand that. You know, sometimes people refer to the benefits or something that a job gives you as golden handcuffs. So, it’s like you feel, you feel tied to your job because you don’t want to lose the great compensation or the benefits, whatever. The pension is a little bit like that for you, but the house is on the other side of that. That’s not so much golden handcuffs as it is kind of an anchor. Until you get this equity up to a certain point, it’s going to be very–I mean, it’s not impossible–but you may take a loss, you may have to bring money to the table. Something, if you were to try to move without having a lot of years under your belt, paying this mortgage and getting the equity up there.

Would You Have Done Anything Differently?

31:36 Emily: So, I definitely understand what you’re saying. And I think it’s really great insight for other people who are looking to enter the job market that we think a lot of times as getting that tenure track position as like, “I’ve made it, this is it. That’s all I needed to do, and I’m going to be set for the rest of my career because I landed that one position.” And what you’re saying is, “Hey, that’s good for the first few years, but don’t think that you’re never going to apply for another job to advance in the way you want to.” That you might not have to move around, as you said, like what happens in the private sector. So, I’m really glad for that insight as well. And just, I don’t know, would you have done anything differently? I mean, knowing this. Now that you know this about your job and your feelings about it, would you still have purchased the house? Because it still kind of seems like the thing to do, right?

32:26 Kevin: Yeah, it does. It depends on what the alternative is. If the alternative was, you know, renting, I don’t think I would have. The one thing I might’ve done differently is look for a house with fewer of these incidental costs, right? So, if I wasn’t so close to the water, I wouldn’t have to do the flood insurance. If I wasn’t outside the city limits, I wouldn’t have to pay for the extra fire and protection stuff like that. I wish I would have known about those things in order to judge where to buy and which house to buy. Right? Does that make sense? So, it’s not that I regret buying a house. It’s that I regret not understanding exactly what the cost of buying this particular house are.

Best Advice for Another Early-Career PhD

33:13 Emily: Right, right. Yeah. Thanks for your insight into that. So, two questions as we wrap up here. The first is what is your best piece of advice for another early-career PhD? It could be related to the conversation we’ve been having, could be something else. What is that?

33:28 Kevin: Start putting money away as fast as you can. Start saving. It can be a 401k, it can be putting extra money towards just a stock trading account. Also, speaking of stock trading accounts, I found the Fidelity, I think it’s a bank, but it has a stock trading app thing. And they have a credit card where you get 2% cash back from every purchase that goes straight into the stock trading account. So, I put all my purchases on that and pay it off in full every month. So, I never pay a dime in interest, but I still get 2% into this longterm savings account. And then once I build up enough money from that I can purchase a stock or an exchange-traded fund or something like that. And then I never touch that. That’s all just socked away money. That’s essentially free money. As long as you’re paying off that card every month, that’s essentially free money. So, definitely do something like that. It can be a travel card that gives you miles on an airline. But make sure it’s paid off in full every month.

Where Can People Find You?

34:50 Emily: And second question, last one here, is where can people find you?

34:55 Kevin: So, I’m on Twitter with the username @CyberCrimeDoc, and I’m on YouTube with the channel name, Arresting Developments. And I actually do have a group I just started not too long ago called Americans for Election Reform. It’s a big political focused on elections and election security and making sure all Americans vote and all votes count. And that is on Facebook and Twitter.

35:29 Emily: All right. Well, thank you so much for joining me today, Kevin, and for telling us this very easy to learn from story.

35:35 Kevin: Absolutely. Thank you so much having me. I really appreciate it.

Outtro

35:38 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

How Work Experience Outside Academia Can Bolster Your Academic and Non-Academic Career

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In this episode, Emily interviews Dr. Gillian Hayes, the Vice Provost for Graduate Studies and Dean of the Graduate Division at UC Irvine. Throughout her career as a computer scientist, Gillian has moved back and forth between roles in academia and industry; she argues that the division between the two is more porous than is commonly perceived inside academia and should become even more so for PhDs. Gillian consulted and completed internships as a PhD student and engaged in an even broader range of side hustles as a faculty member. We discuss the real and perceived barriers to side work that PhD trainees encounter in other disciplines. We conclude with why PhD trainees should consider non-academic careers and how to prepare for them.

Links Mentioned

non academic work experience

Teaser

00:00 Gillian: They’re not linear. People take all kinds of curving paths and I would very much like to see the university and academia in general, be a sort of lifelong learning and scholarship partner to people, for moments when they’re both in and out of where we are. Academia will always be here. Go do interesting things, come back. Let’s reconnect. And let’s find ways that we can make those boundaries a little bit more porous.

Introduction

00:32 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode six and today my guest is Dr. Gillian Hayes, the Vice Provost for Graduate Studies and Dean of the Graduate Division at UC Irvine. Throughout her career as a computer scientist, Gillian has moved back and forth between roles in academia and industry. She argues that the division between the two is more porous than is commonly perceived inside academia and should become even more so for PhDs. Gillian consulted and completed internships as a PhD student and engaged in an even broader range of side work as a faculty member, and we discussed the real and perceived barriers to side work that PhD trainees encounter in other disciplines. Don’t miss a minute of this fascinating conversation recorded in February, 2020. Without further ado. Here’s my interview with Dr. Gillian Hayes.

Will You Please Introduce Yourself Further?

01:31 Emily: I have joining me on the podcast today, Dr. Gillian Hayes, who is a Vice Provost and Dean at the University of California at Irvine. We’re going to be discussing side hustling and career development, both what Gillian has done in her own professional development and how she works with students on the same subject. It’s really pleasure to have you on today, Gillian. Will you please introduce yourself a little bit further to our audience?

01:55 Gillian: Sure. Thanks so much, Emily. I’m so glad to be able to be with you all today. I think you’re doing a wonderful service for our students. Just some quick background on me. My training is actually as a computer scientist. Both my undergraduate and PhD work was in computer science. I have a lot of background in working in industry and other places that I’m sure we’re going to talk about later. And the bulk of my research is actually focused on how do we help people who may not be included in the tech world, normally — so kids, underrepresented groups, elderly individuals — how do we help them get involved in the design process and really make responsible, ethical technologies. Here at UCI, since September, I have taken on the role of Vice Provost of Grad Education and Dean of the Graduate Division, which is a very long, convoluted way of saying that I get to be in charge of all the grad students here on campus and help them be as successful as they can be.

02:54 Emily: Yeah. So one big component of that is not only academic success, but success in their future careers. Obviously it reflects very well on your university and program if people go on to have careers success.

Career Path: Grad School to Faculty

03:06 Emily: Let’s start talking a little bit more about your own personal journey. Can you talk us through the work experience that you had prior to graduate school, if any, and then the side hustling that you did during graduate school?

03:18 Gillian: Yeah, absolutely. I should confess, I’m the child of two academics. Both have doctorates, were professors, so I understood academia in a way that I think, it’s important to contextualize the kind of privilege that comes with that. I think I always knew I wanted to go do a doctorate at some point, but beyond that, I was deeply confused when I finished undergraduate and I didn’t know what to do. And I did like all people who don’t know what to do and I went and worked for Deloitte, and sort of got the basic training of how do you be a consultant? How do you be a professional out in the world? I then worked for another company called Avanade, which was a spin-off of Accenture and Microsoft at the time, and just spent a lot of time learning the basics of being a professional before I went back to grad school. Then, while I was in grad school, I also continued to work. I’ve sort of, throughout my career, had this one foot in academia, one foot in industry kind of life. I worked for both Intel and IBM in internships. I also had a side gig driving the golf cart that serves people beer at a wonderful golf course in Georgia called Chateau Alon, which is probably my favorite job that I had in grad school. And then did some additional consulting for a company called Roundarch. So that was sort of all what I was doing while I was in grad school and before grad school, and I think they were all great experiences and can’t recommend it all enough.

Side Hustling During Grad School

04:44 Emily: Yeah. Let’s take a pause there because I think you were in not only a unique position because of your familial upbringing, but also because of your field, computer science, which is so highly employable with just a bachelor’s. Maybe the most of any academic field of any of my guests. So you got some great jobs right after undergrad, and then also continued to side hustle in graduate school. Now I’ve noticed — this is anecdotal, you can tell me if this has been in your observation as well — that computer science is the field that is maybe tied with engineering, but most likely to allow internships and encourage internships and other kinds of consulting and side work during graduate school. So there’s a very big, in my opinion, cultural difference between computer science and perhaps engineering, and then like the biological sciences, the humanities. Can you elaborate on that a little bit?

05:37 Gillian: Yeah. I think that’s a great observation, Emily, and it’s actually something I didn’t even realize was unique until I became a professor because I just thought, well, of course that’s what you would do. You go off to industry. It’s very much encouraged. It’s very much a part of the culture. There are industrial research labs, which I think is a piece that helps alot. So when you talk about interning as a PhD student in computer science or information science or other related fields, you’re typically going to a company that’s going to allow you, and in fact, encourage you to publish the work that you do while you’re there. And so not only are you making lots of money, typically more money in the summer, then you’ll make throughout the entire rest of the year, working at the university, but you’re also doing it in a way that advances your career and helps you publish and helps you build a network with researchers outside of the Academy. And I do think that you’re right, that’s quite unique, although growing a little bit more in other fields, but certainly not to the extent that you see in computing.

06:35 Emily: Yeah. And I don’t mean at all to set this up, like this can only happen inside computer science and never happens elsewhere. I just think that, yeah, in other disciplines, we need to take a page out of what’s going on inside computer science and engineering. And maybe it’s not formal internships, like maybe the structure isn’t quite there yet inside academia to allow for that. Like you said, maybe there aren’t publishing opportunities outside of academia in other fields, the way there possibly is in computer science, but I just think that people in other disciplines, it helps to open your mind a little bit to what’s possible in terms of internships or, you also mentioned consulting, like, can you elaborate a little bit more about that? These kinds of things that are potentially possible, even for people in other fields, if they seek out the opportunities. It might not be presented to them in the way that it is inside computer science, but doesn’t mean it’s not there.

07:21 Gillian: Yeah, I think that’s a great point. What I typically hear from faculty who are worried about their students interning, and this is true by the way, within computer science as well. There are some faculty who don’t like their students to intern, although it’s much more rare than other disciplines. But what I typically hear is, “well, how are they going to get their work done? How are they going to finish their dissertation?” All of those kinds of things. What I have seen in my career, and I’m actually trying to collect the data right now to do a study on this at UCI, to see if we can see if my anecdotal experience holds out across more people, is that actually, not interning or interning it doesn’t slow you down or speed you at particularly much. I did three internships at anywhere from three to five months while I was in graduate school and still finished in five years and did not have a master’s going in. And that’s not to say that I’m somehow special or so fast and so wonderful. But actually what I think is happening is you give your brain a little break from the dissertation and it’s amazing how much more quickly you can actually work on it.

08:25 Gillian: When I see students, and I do have them here, who they can’t intern, they can’t go away for whatever reason, perhaps they have family obligations or other things, and they’re not going to just move to the Bay area for the summer, things like that. Those students they’re not any faster. They really aren’t. And what I see them doing is churning a little bit, and really thinking through their dissertation almost too much. So I would encourage people in any field to seek out those consulting opportunities, even if it’s just do something for a few hours a week, write copy for somebody. Do some beautiful graphic design, if you’re an artist. Do some statistics. I mean, the amazing thing is how much people out in industry need consultants to just do basic statistical analyses, which most of our students in both the behavioral and physical sciences are very skilled in doing. Give your brain that break away from the dissertation and I actually think it speeds you up.

09:25 Emily: Yeah, I actually really agree. I did not intern or anything where the long monotony of the six years I spent in graduate school was not broken up by periods of fresh, different work in any way. That is one of my semi regrets of that time. I want to throw another like possibility in here, not just internships, not just consulting, but something that may be a little bit more palatable to academics, which is a fellowship. Doing a professional fellowship is also sometimes possible and may be something that your advisor is more likely to look favorably upon than some of these other kinds of work. For example, after I finished graduate school, I did a three month science policy fellowship at the National Academies in DC. That fellowship is available to current graduate students, as well as recently graduated PhDs. That’s just another kind of thing you can consider. I had a previous interview, which I’ll link in the show notes with Vicky Johnson from Pro fellow. She runs a database where you can look for these kinds of opportunities for professional fellowships, as well as fellowships that might fund you. Go check that out if you’re looking for something, something else to do that’s going to give you this wider network, this different kinds of experience to stimulate your brain in a different way than just the research you’ve been doing.

10:37 Emily: Okay, so very exciting what you were able to do, what other students could potentially be able to do. Can you say a few more words about how these opportunities for side hustling and interning that you took in graduate school, built your career and set you up for your post PhD job or jobs?

10:54 Gillian: Absolutely. They’re really essential and are a big part of my career story. One of my mentors at Intel actually wound up being on my thesis committee in the end and has continued to be a really wonderful mentor to me throughout my time. Lots of other interns — one of the things that’s great about interning is you meet a bunch of other people who are PhD students at other universities, or sometimes undergraduate or master’s students as well, and they become a part of your professional network. Often companies really roll out the red carpet for interns over the summer. And so you’re going to these fun events and you really get to know a lot of other people. That becomes a really essential part of who you are 20 years later, and I look back now and people that I met as part of an internship that aren’t in my field, that I never would have met otherwise, are some of my good friends now and they’re also professional colleagues.

11:51 Gillian: The other thing I would say though, is it’s not just the industry or the research internships or the fellowships or the kinds of things we’ve been talking about. I sort of joked earlier that my favorite job in grad school was driving the beer cart at the golf course. And I think sometimes we can tend to look down on those kinds of jobs or feel like, well, the only reason you’re doing that is to make a little extra money because we don’t pay grad students enough. Sure. Those things are probably all true, but it’s also the case that I drove around in the most beautiful setting you can imagine and brought all of my books and journal articles with me and parked on the side and read. And again, just got a head break. Just got out of my home, got out of my lab, all of those places. Meet interesting people. You never know who you might get to know and think about in these places. So whatever this sort of side hustle is, I think it’s really good for your brain and for your mental health and for your network.

Side Hustling Post-Grad School

12:49 Emily: So in the jobs that you’ve had after your PhD, have you continued to work on the side and still develop and maintain those networks? Or have you been an academic and solely focused on that?

12:02 Gillian: I am apparently not able to focus on one thing at a time ever. I think that’s okay in academia, actually. It’s part of what makes life so interesting. But no, I’ve absolutely continued to do variety of side hustles. So one of the things is, I took a break. As soon as I got my shiny, new assistant professor job, I went and went back to Roundarch and worked as a consultant again, and just really got to…I always talk about it as cleaning my brain. I was in the slog of writing this dissertation and it’s so painful. You finally get it over the line, and back then we had to measure the margins and do all of this painful stuff, and turned it in and went and got to fly around and talk to people about building websites for a while. That felt really good.

13:53 Gillian: Then I remembered why I left consulting in the first place, because I got kind of bored with it, and got to start my assistant professor position. That cycle has been really important throughout my career. I’ve continued to do consulting on the side, in terms of both technology-related consulting and user experience, and so on. But also because of my research in the autism space, I’ve been able to consult with a lot of folks in K-12 and in special education and help shape where the state of California is going in terms of our care and support of people with autism and related conditions. That’s been valuable both in terms of feeding my research and really understanding what’s out there practically, but also in terms of feeding my own ability to exercise different parts of my brain.

14:40 Gillian: I would also say, academics, they won’t always refer to it as a side hustle — we like to be very pure — but writing books is basically the ultimate side hustle, as far as I’m concerned. We get judged on it because it’s part of the tenure and promotion process. But if you write the right book, that generates all kinds of interesting things — speaking opportunities, consulting opportunities, other things that I think can continue to be important no matter what field that you’re in.

15:11 Gillian: I took it a little further than most in terms of side hustling, which is I started out doing a little bit of consulting for a couple of founders that I knew well from a startup and wound up running the entire company. That’s probably more than most people will do, but I did spend a couple of years as a CEO. What I’ll say there is sometimes your side hustle becomes your main gig for a little while. I took some leave from the university so that I could do that. And I would say to people, if that happens, go for it. You can take a leave of absence. So often people think, “Oh, I can’t get off the grad student treadmill” or “I can’t get off the tenure treadmill” or whatever. You can take a leave of absence for a couple of years and academia will always be here. It’s obviously not for everyone, but I really value the time that I had being able to run a small company and watching them now at a distance under someone else’s leadership and continuing to excel is so pleasurable for me.

16:10 Emily: I’m really glad that you brought up there can be these blurred lines between what is your job as an academic and what is stuff you do on the side, because all of it can be related to your area of expertise and just expressed in different ways.

Commercial

16:28 Emily: Hey, social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15 minute call with me at PFforPhDs.com/coaching to determine if financial coaching with me is right for you at this time, I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now back to our interview.

How Side Hustles Are Viewed in Academia

17:14 Emily: Can you talk to me about structurally, how this has worked for you? You just mentioned you’ve taken official sounds like full time leaves of absence from your job, but do you have, for instance, like an 80% position or have you at some points to allow time for these side things or have you always been kind of a hundred percent at the job and just pursued these outside of…I don’t know, how does this work, time management wise and also official position wise?

17:42 Gillian: Yeah. So official position wise, it really depends as a grad student, it’s fairly easy to sort of zoom in and of things. I did, what’s called an off cycle internship one year and was away for fall semester. Just a matter of filing some paperwork with the university to allow me to do that. That allowed me to be at my internship for five months instead of just sort of the normal three of the summer, which was really, really valuable. It also allowed me a lot of access to people who get a little maxed out in the summertime because there’s so many interns around. I would definitely recommend thinking about being creative with those kinds of things.

18:19 Gillian: Many universities, even if you’re a full time, faculty member have consulting allowances. You can maybe consult X number of hours per year and the university’s not bothered by it. If you do more than that, then they’ll typically want you to take some sort of reduced time or leave of absence, things like that. I would encourage people to really find out what the rules are at their different universities. It may be highly variable. Then the final thing is, my mother always says to me, if you don’t ask, you know, what the answer is. I really tried to take that to heart, and when I was starting working at AVIAA, I was aware that I was also running a master’s program that I was quite attached to, and I didn’t want to let that go. I sort of sat down and tried to think about, okay, if I keep running the master’s program, teach this little bit that will go with that, and I keep supervising the PhD students I have, because you don’t let your PhD students drift, even if you go off to do something else, what does that kind of look like time-wise? I went to my Dean and my department chair and said, I’d like to take a reduced workload. So basically these are the things I’m going to do and not going to do anything else. What does that look like percentage wise? And I’ve talked to a lot of different people who’ve done this. Anywhere from they’re employed at the university 5% time to maybe they’re employed 50%, 80%. You sort of get to different levels and whatever you think is appropriate. My Dean and my Chair looked at that and said, “yeah, that seems about right, we’re good with that,” so I was able to take reduce time, but not a full leave away.

20:02 Gillian: I would just say to people, you never know if you don’t explore it. So think about it and investigate it because you may well be able to do these things, partially. I also was always very upfront with our board of directors and with the founders of the company that I was still going to be doing XYZ things affiliated with the university. And they were good with that. From all of their perspectives, the idea that I would maintain a connection with this wonderful place of scholarship that would potentially bring us excellent new hires and other kinds of people was great. On the surface of it, and before I made those requests, lots of people said to me, “Oh, you can’t do this or you can’t do that,” but I thought, well, maybe. Let’s just ask and find out. So I would encourage people to ask.

20:47 Emily: Yeah, I’m so glad you brought this up and I want to take kind of a grad student or postdoc, spin on that question. Because what I hear a lot from especially graduate students is “I’m not allowed to have a side job or a side income,” and either that’s because of the terms of the assistantship that they have, or the terms of the fellowship that they’ve accepted, or it’s just something cultural that they’ve absorbed, or maybe their advisor said something more explicitly, but I think there’s a range of like, what’s actually permitted, either legally or contractually. And of course, for international students, that’s a whole other discussion of what the visa allows, which is nothing except for like official OPT kind of stuff. But for citizens or residents in the US, can you just talk around this a little bit of is it worth asking, even if you think the answer is going to be no, look at your contract, or what?

21:44 Gillian: I think it’s always worth asking. And I’ll answer that in a couple of ways. One of them is, and I saw some really interesting research, I’ll try to dig it up and send you the link if I can find it. But essentially, if you ask grad students, what do they think their advisor wants of them? They’ll essentially say to get an R1 tenure track position, to have this like life of the mind, to be a mini version of their adviser. And then if you ask the advisors, what do they want of their students, broadly, in a very generic, hypothetical, meta kind of way, they’ll say the same. But if you ask the faculty, think about your last X number of students — I forget what it is, two, three, four, whatever — who’ve graduated with you. What do you think you want for them? Suddenly you start to see industry jobs, government jobs, community colleges, other kinds of two and four year opportunities. Not these sort of tenure track PhD granting institution kinds of jobs. And it’s because we’re sort of inculturated in a broad way to think, yes, we want to create more little faculty that look just like us. But if you think about specific students, you often recognize, well, actually their passion and their strengths lie elsewhere.

23:02 Gillian: It’s that disconnect that I think many of the students are feeling. They know that their advisor, in a broad sense wants this thing, but maybe it’s not for them. If they really open up that conversation, I think most faculty really do want to support them and be open to that. I think it’s always worth asking. Also, the truth is, if you’ve got one of those few faculty that just aren’t interested and aren’t going to want to support you, no matter what, for me, I would want to know that because maybe I need to find a different person to work with, or maybe they stay my primary supervisor, but I find some additional mentorship on the side that can help me get to the places I need to go and that I want to go. I think it’s always worth asking.

23:46 Gillian: The other thing I would say is you can interpret contracts in all kinds of ways, and I’m not an employment lawyer, but what I can say is even if officially our ruling, as the University of California, is that people don’t have jobs outside, we don’t own your life. If I worked at Google or I worked at Deloitte again, or I worked wherever, they don’t get to tell me that I can’t go out on a Saturday morning and be a barista, if I want to. It’s the same here. We don’t own your personal time and your free time. So if it’s not disrupting your job here as a grad student researcher or your job here as a TA, I don’t see that we have a whole lot of standing to tell you that you can’t do it.

24:30 Emily: I’m really glad to have your perspective on, because I think this is something that students…I’ll call it a limiting belief. Like it’s a limiting belief that students have. I can’t, I’m not allowed to have a side job, have a side income. And I, like you, think it’s more important to examine this spirit of that rule or that cultural norm, because really the point is you want to be making progress on your dissertation. You want to put really good energy towards that on a consistent basis. And yeah, your advisor, or you, probably don’t want to be leaving at 5:00 PM every day to go to your second job as a whatever. But there’s so many jobs that you can have now in the internet age that you can do on your own schedule. That’s flexible. It’s not going to interfere with your work. As we talked about earlier, that will give you different kinds of energy and different kinds of stimulation that you aren’t getting through your primary position. I do like to think about the spirit of this. Like, is it interfering with your work? Does are advisor even really need to know about it, if they would never find out naturally. Now for these professional development opportunities, and especially something like interning, obviously you need to involve your advisor, potentially some other people in that conversation, but for a side gig, that’s a few hours a week, maybe they don’t need to know, if it doesn’t interfere.

25:44 Gillian: And you know, you never know. It’s not just that they don’t necessarily interfere, but they can also be argumentative in ways that you could never expect. Actually here’s a great example. I went to grad school with a woman who was a quilter on the side, made absolutely beautiful quilts. And I think sometimes she sold them, but just gorgeous. It takes a lot of time to be a quilter, but it didn’t interfere with her work. In the end, she actually developed this really incredible piece of software that helps teach children geometry, using quilting as a metaphor because of this thing she was doing on the side. Now, if someone had told her stop quilting, it takes up too much time, then she never would have done what she did for her dissertation.

26:29 Emily: Yeah, it is so, so beneficial to have these other areas of your life to give you not only balance, but to help you think about your work in different ways, and just to be like a whole person. You can still be a whole person during your PhD training, while on the tenure track, it’s all encouraged.

Non-Academic Careers

26:44 Emily: So let’s pivot a little bit to talking about non-academic careers. You’ve obviously had an academic career, as well as nonacademic aspects of your career. How can students who, as we were talking about earlier are statistically unlikely to end up in a tenure track position, even if they want to keep their hat in the ring for that sort of thing, how can they simultaneously prepare for a career outside of academia?

27:10 Gillian: Yeah, that’s a great question. The first thing I’ll say is, I think we need an educated workforce and an educated society, and the idea of having loads and loads of people with PhDs that work in places that are not universities is really appealing to me. I think it’s good for the world. I just want to sort of admit to my positionality there. But what I’ll tell you is I know a lot of CEOs of both big and small companies. I know a lot of executive leaders and they come to me and they ask me, where can they find people who can quickly digest an enormous amount of information, write up interesting, analytical thoughts about that. Talk about it with other people, teach it to them, explain it to them and figure out what we do next. And I’m like, that’s someone with a PhD. They’re looking all over business for people with those skills. It’s exactly what we teach, no matter what your field. It’s absolutely the case that the market needs it.

28:10 Gillian: Now we have some work to do to translate and help people understand and help people be marketable and all of those things, but that kind of work and the kind of critical thinking skills that people develop doing a doctorate is absolutely what the highest levels of leadership in the corporate world need desperately. Obviously also in government and nonprofits and other places like that. What I would say to people is just be thinking all the time about how do I translate what I do into something that other people can understand. And I spend a lot of time with people who want to translate an academic CV into a more typical resume, just helping doing that translation work. I would encourage people to seek out people like myself, who’ve had these different kinds of careers. I’m happy for podcast listeners, you can feel free to reach out to me. I might not respond right away, but I’m happy to look at things, and just figure out how do you explain yourself out into the world? That’s the first thing I would say.

29:12 Emily: I actually want to jump in there and plug a colleague of mine, Beyond the Professoriate, Jen Polk and Maren Wood’s business. This is the kind of space that you can join and learn these types of skills, see examples of how other people have made exits from academia into other interesting careers, and have community with other people who are going through the same process. Beyond Prof is one of the places where you can do that.

29:37 Gillian: Absolutely. I direct people to Beyond Prof all the time. That’s actually a better resource than me. They will respond to you more quickly. Definitely check those out. The other thing I would say is, and I’m going to pick on you a tiny bit, Emily, is even using that phrasing of exiting the university, right? One of the things that I sort of bounce up and down on a lot around here is the language of alt-ac, and post-ac, and academic exits, and these kinds of things. I don’t want to take away from people’s feelings. If that’s a helpful way for people to express what they’re going through, then by all means, go ahead, but we don’t have that same language for undergraduates who finish an undergraduate degree. We don’t have that same language for lawyers who finish a JD or medical doctors who finish an MD or any of these other folks.

30:30 Gillian: One of the things that I think is important in culture change, and we need to do this internally at the university, for sure, but also I’d like to do it everywhere is to say careers, they’re not linear. People take all kinds of curving paths and I would very much like to see the university and academia in general be a sort of lifelong learning and scholarship partner to people for moments when they’re both in and out of where we are. Now, I recognize I’m in a place of privilege. This is a much easier thing to do in my field than in others. That is what it is. But I think we need to start with changing some of our language and some of our culture around this notion of, if you don’t get that tenure track job or get that right postdoc right after you’ve finished, that the world is ending for you. No, academia will always be here. Go do interesting things, come back, let’s reconnect, and let’s find ways that we can make those boundaries a little bit more porous.

31:28 Emily: Yeah. I really appreciate that. I totally agree with you. I’ll just leave it at that.

31:34 Emily: Sort of along those lines, what about de-stigmatizing these nonacademic careers? You’ve just mentioned language changes, but are there any other ways that people inside and outside academia cannot be looking down on non-academic careers as the consolation prize for not getting a tenure track position, which for the record is definitely not how I feel about them.

31:59 Gillian: Yeah. Well, you know, I will tell you, again, this is a case where being in computing or engineering is a bit easier. My students go off and make two to three times what I will ever make, and more if they get the right stock options, and money goes a long way for de-stigmatizing all kinds of things. That’s one thing to just kind of know, but I think that’s also true in other fields. There’s lots of ways in which you can have a very healthy, productive, happy, and financially successful career outside of the Academy, and that’s an important thing for people to recognize, and to say that you’re not selling out or failing or any of these other things, if you choose to take that kind of path.

32:43 Gillian: The other piece, I think is academics, faculty tend to the people who’ve been really successful in a very particular model of existing. We’re really good at school, the way school was built. The same is true, by the way in K-12. People who become K-12 teachers are often people who were really good at school, and so it’s very hard to reform a system that’s run by people who are really good at that system. We sort of self select for this reinforcing behavior. Some of it is us taking good, long, hard looks at ourselves. And you start to see this, I think, in the undergraduate and master’s curricular reforms that we’re starting to see, where people are recognizing, hey, maybe Sage on the Stage isn’t the best way to teach. And maybe we should be thinking about active learning. Or in the graduate curriculum for master’s students, maybe we should be thinking about modular learning. That you can do pieces of it now and another piece in a couple of years and so on, and put together a collection of experiences that make the right professional degree for you.

33:50 Gillian: I think that gives me hope that if we’re starting to make reforms in K-12, and we’re making reforms in undergrad, we’re making reforms in our professional degrees, it’s only to some degree a matter of time until we can make some reforms in the PhD world and help people to understand that there are different ways to complete a doctorate, and there are different ways to have a career afterwards. It does take activity. It does take bringing back. We have an alumni speaker series here that we bring back people who did their PhDs here, who have exciting, really cool careers, running science museums, or doing policy or running a startup. And we need to show off more of those success stories too.

34:29 Emily: Yeah, I do see, as I visit universities and speak there for the financial stuff, I’m often included in their conversations around this sort of thing. Well, Emily, you’re in entrepreneurship, how do we encourage our students to consider this path as well? And they show me what they’re already doing. It’s percolating. The idea is there. It’s popping up different places. I don’t know how much it still needs to be included actually in the standard path to doctorate rather than just some side extra thing you might engage in. That would be really great.

Best Financial Advice for PhDs

35:01 Emily: Gillian, I love the ideas you’ve presented in this interview. Thank you so much for giving it. I’m just going to conclude with a question that I ask of all of my guests, which is what is your best financial advice for another early career PhD? Could be related to something we’ve talked about today, or it could be something entirely other,

35:19 Gillian: That is a great question, and I thought this was your hardest question, by the way, that I really had to think about. But I think the first thing I would say is get through whatever you’re going through as fast as you can. You will never recover financially from being out of the workforce for however many years it takes you to do a PhD, even if you are the fastest PhD student in the world. The faster you can go time to degree, get done. I always say the only good dissertation is a done dissertation. Get into the workforce as quickly as you can. And the same thing is true for tenure, or for becoming a full professor, for becoming whatever. Yes, these things take time, but just get through them and don’t worry about making it perfect. Each of these things in academia, it’s a pass/fail exam, so pass and move on to the next thing. That’s the first thing I would say.

36:15 Gillian: The second is make sure your summers are paid. Whether you’re a junior faculty member or a PhD student or whatever, that’s a quarter of your year. And I’m always amazed at how many people take it completely unpaid. There are a variety of ways to get it paid. Whether it’s summer teaching, writing grants, internships, consulting, any of these side hustles we’ve been talking about, but the idea that you would lose a quarter of your income at a very young age, when people are in grad school, postdoc-ing, or as assistant professors, those are your prime earning years, and you’re setting yourself up for the future. So figure out a way to get your summers paid. You work for 12 months, so you should get paid for 12 months, is my general thing.

37:00 Gillian: Then the last thing I would say is be mindful of what free labor you give away. Academia is just chock-full, and I know you’ve talked about this on your podcast before, of free labor. We review for free. We give talks for free. We write for free. And that’s okay. That’s a certain amount of the culture and we should be doing certain things voluntarily, but some things you really should start thinking about getting paid for. And you just need to think about that before you decide, am I going to give up however many hours of my time to this? Well, your time is really, really valuable, so treat it like it’s really valuable.

37:36 Emily: I think it goes back to a point you made earlier, which is just asking. If you’re being asked to do some special thing, like speaking, for example, if you were going to agree to do it for free, like you were just talking about why not just ask, Hey, what can you give me an exchange? Pay, expense reimbursement, some other thing of value to you. Just inquire and know that you’re worthwhile. This goes to imposter syndrome as well. Within academia, we tend to feel that we’re not special. Our skills are not that valuable. Everyone else has the same skills and the same knowledge. That is definitely not true, first of all, even inside academia, but definitely, definitely outside, you will be seen as a unique, special thing, as you were talking about earlier, with your PhD and the skills and knowledge that come along with it.

38:19 Gillian: Absolutely. And every time I say to people, whatever number you’re thinking in your head that you’re worth to give that talk or to consult on that project, double it, and you might be close to the number that’s actually what you’re worth.

38:32 Emily: Yeah. Great, great advice again. The worst they’re going to say is no, or maybe they’ll try to negotiate you down, but if you were going to do it for free or little anyway, hey, that’s not too bad. Gillian, thank you so much for joining me on the podcast today. I really, really enjoyed this conversation.

38:47 Gillian: Thank you, Emily. I did as well, and I look forward to hearing many more wonderful podcasts from you in the future.

38:52 Emily: Oh, thank you so much.

Outtro

38:55 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the personal finance for PhDs podcast. There you can find links to all the episode show notes, and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

This Postdoc Has a System for Debt Repayment That You Can Follow as Well

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In this episode, Emily interviews Dr. Suba Narasimhan, a postdoctoral fellow at Emory University. Suba and her husband each brought debt into their marriage, and once they both had full incomes, they decided to tackle it together. Suba presents a step-by-step plan for anyone at the start of a debt repayment journey. Emily and Suba discuss in detail how to handle credit card debt, including whether to pay credit cards off with student loans or 0% interest promotional credit cards. Suba doesn’t follow the debt snowball or debt avalanche methods exactly, but rather has mixed the two for a custom solution. Suba emphasizes the importance of being kind to yourself while repaying debt and adopting a nonjudgmental attitude toward your and your partner’s debt.

Links Mentioned in the Episode

Teaser

00:00 Suba: You have to think about this as part of your life. And if you have the ability to preplan and save some money, have a little bit of savings, and also just assume that maybe you’ll have to take on more loan debt. How much could you afford given whatever your loan burden is now?

Introduction

00:26 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode five, and today my guest is Dr. Suba Narasimhan, a postdoctoral fellow at Emory University. Despite maintaining a debt-free status until midway through her PhD, Suba eventually took on both student loans and credit card debt due to financial emergencies and adverse situations. When she started her postdoc position, Suba and her husband decided to tackle their debt head-on, even though it was very daunting and anxiety-producing. Suba presents a step-by-step plan for anyone who wants to eliminate their debt and shares her own decisions throughout. Listen through the episode to hear her encouraging words on maintaining a positive, nonjudgmental attitude during debt repayment. Without further ado, here’s my interview with Dr. Suba Narasimhan.

Will You Please Introduce Yourself Further?

01:23 Emily: I am delighted to have joining me on the podcast today, Dr. Suba Narasimhan. Suba will be telling us about her debt repayment journey, which I’m so excited to dive into that topic with her. So, Suba, say “Hi” to the audience, please.

01:35 Suba: Hi! Hi, Emily. Thank you for having me.

01:38 Emily: Thanks so much for volunteering to come on. I actually wanted to tell the audience how we met, which was a couple years ago. So, I gave a seminar at UCLA and Suba came up to me afterwards and she said, “I’m so interested in what you do. I kind of want to do what you do. Can we talk further about this?” And we did. We went and we had lunch, and we had this wonderful conversation. In fact, Suba is the one who encouraged me to start this podcast. So, if you’re a fan of the podcast, you can thank Suba for encouraging me at that point when I was really still considering whether it was something I wanted to go for. So, anyway, I just want to say that if you, an audience member, ever see me at your university or at a conference or if you hear that I’m coming, please come up and introduce yourself and identify yourself as a podcast listener or a mailing list subscriber or whatever you are and I would love to talk to you. If I have time in my schedule, I will hang out with you one on one if it’s at all possible. I love to meet people who are in my audience and consuming my content. I want to hear your insights. So, we’re getting Suba’s insights today. I’m really excited about that. So, Suba, will you please tell the audience a little bit more about yourself?

02:48 Suba: Absolutely. And I have to say, Emily’s a great lunch mate, so you all should totally do what she asked you to and come up and chat with her about finance. So, I am currently a postdoctoral fellow at Emory University, and it’s a really enjoyable experience. I am actually originally from the South and wanted to return to the South. And so that’s kind of how I ended up at Emory. I am in the Department of Behavioral Sciences and Health Education. So, that’s a School of Public Health Department. Yeah, it’s a great job.

Where Did You Do Undergrad?

03:31 Emily: Wonderful. And where did you do your undergrad? So, I know PhD at UCLA, and you’re at Emory now for your postdoc. Where was undergrad?

03:37 Suba: So, for my degree, you tend to do a master’s as well before you go on to your PhD. And so I did both my undergrad and my master’s at UNC Chapel Hill. Go Heels! I know, Emily, your rival school.

03:55 Emily: I was going to say, I think we were in the Triangle at the same time for at least a few years. But yes, I will allow that on my podcast. I’m a generous host. Okay. So, let’s talk about your debt repayment journey, which starts with a debt accumulation journey. So, tell us about that phase of your life.

Debt Accumulation Journey

04:12 Suba: So, I was really, honestly, I was very fortunate. I was really good with money for a long time and I was lucky to have had financial help from my parents during college and to have gotten both through my master’s and most of my PhD without accumulating any type of debt, consumer or student loan debt. And it was around the third year of my schooling in LA where I had a ton of unforeseen circumstances happen. So, I had some family illnesses. I had a lot of different difficult experiences happen and it was an emotionally trying time. And then it also became kind of a desperate time in terms of money. And even though I was working quite a bit, I just wasn’t totally making ends meet. And I think that that’s a very common experience for PhDs and can be one way that you really get into using credit cards or using student loans as a way to kind of just live your life. And being a PhD student is also a time in your life where you have to take a break from what might be a better-paying job to finish your degree. And I wasn’t one of these people, but I also think that there are a lot of people out there that probably are also very reliant on just their stipends to make ends meet. So, I think this is a pretty common situation to happen.

Importance of an Emergency Fund

05:44 Emily: We’re going to talk through how you’re remedying that situation. But just for anyone who hasn’t yet come upon that emergency situation in their life, if there’s any way that you can create some margin right now, some cash savings to help you kind of buffer through something like that, please, please take the opportunity to do so. So you don’t have to have this extreme reaction once an emergency does occur. And like you said, the thing about emergencies is that they’re rarely just financial, right? Something else has gone really poorly in some other area of life. Maybe it’s a huge emotional problem or a health problem or something like that. And so not only are you dealing with like logistics and emotions and just your routines being thrown off and your relationships, then you also have this financial component. So, at least what you can try to do for yourself, if at all possible, is to make the financial component of the emergency less of a thing so you can focus your energy on all these other areas of your life that need it at that time as well. So, that’s my soapbox. Okay.

Your PhD is Part of Your Life Journey

06:43 Suba: No, no, that’s a good soap box because one other thing I was going to say is I counsel a lot of students who are trying to enter PhD programs. And one of the pieces of advice I give them is something that I was given before I started my PhD. And that’s to think of your PhD journey or your PhD work as part of your whole life. And so, to also think about your finances at that time. So, one thing that was positive in this was that I had calculated out how much student loans I could take and feel a little bit less burden. So, the consumer debt I took on was unforeseen, but the student loan debt I had already pre-calculated what I thought was the maximum I could do in terms of payments if I got what I would consider just being a postdoc, honestly, in terms of finances is one of the lower-paying jobs that you can take because you’re usually on an NIH salary scale. So, that’s also my soapbox. You have to think about this as part of your life. And if you have the ability to preplan and save some money, have a little bit of savings, and also just assume that maybe you’ll have to take on more loan debt. How much could you afford given whatever your loan burden is now?

08:13 Emily: Yeah. I really appreciate you saying that because I think that if graduate students are not accustomed to taking out student loans, like maybe they haven’t done it since undergrad or they didn’t even do it in undergrad they might not think of turning to student loans in the case of some emergency expenses popping up. But it sounds like you did, like you took on some credit card debt, but then you also were using student loans to get you through this situation. So, can you talk about some of the advantages and also the disadvantages of choosing to use student loans versus just accumulating more credit card debt?

Student Loans vs. Credit Card Debt

08:47 Suba: Absolutely. I mean, one is that your interest rates–it’s always better to ask your university what type of emergency loan protections they have, which all universities do have that. And you can go to the scholarships and financial aid department and ask them about these short-term loan borrowing programs. And they are a lot more straightforward and they’re a lot more willing to work with you than a credit card company, which is a for-profit company, would be. So, I would say, that’s important. And the positive thing about student loans is that there are certain things, if you’re taking out federal loans, that you have access to which is the counseling components and the grace periods. And you can, eventually, if you do have student loans from undergrad or your master’s or some other type, you can roll them together and refinance them, and going through that is relatively painless.

09:54 Suba: And this is not necessarily something you can do with credit card debt. Right? What I would caution people against is if the student loans that you have to take out are private student loans, that then again gets you into this territory of consumer debt. So, I would really think about the terms and conditions of any private student loans that you might have to take out because they are often better than credit cards, but they still come with a lot of stipulations and issues. The problem with taking out a student loan is, unlike credit card debt, if there is something in the future where you have to declare bankruptcy, which could happen–happens to people for all kinds of reasons–you can’t discharge that debt at this point. And you also have to be really cautious if you’re thinking about maybe doing a public student forgiveness program. Sorry, public, what do you call it again?

10:52 Emily: Public service loan forgiveness.

Know the Terms and Conditions

10:54 Suba: Yeah. Which a lot of people in the medical sciences do. You hear a lot about people in medical and nursing programs, and there are a lot of people who are going to go into a nonprofit sector that think about that and it’s still a really viable option. It’s just you have to know the terms and conditions of that program going in so you can’t add to your debt burden without planning for how you might want to pay them off.

11:20 Emily: Yeah, I totally, totally agree with what you’re saying. I mean, when we’re thinking about credit cards versus student loans, federal student loans or private student loans, usually you’re looking at a lower interest rate for the student loans versus the credit cards. So, that’s attractive. But as you said, there’s a real danger point, which is if you ever get to the point where you are thinking about declining bankruptcy, you can’t get rid of those student loans. So, it’s a gamble, either way you go for it. But I really liked your suggestion of trying to access your university’s emergency loan system, which I don’t know about all, but I know that many universities do have that. And it’s certainly spreading, it’s a popular program that’s coming to more and more places.

Emergency Loans on Short Notice

12:00 Suba: And what I was going to say is you can also get those loans in very short periods of time. That’s why they’re considered emergency loans. So, if you know that there’s something that’s really looming on the horizon and even it’s maybe something that might happen to you next week, that could be something you can talk to a counselor about. And I think universities are really trying to be more sensitive about the fact that students, especially PhD students, are going through, you know, life challenges.

12:32 Emily: Yeah. And the thing about student loans is that they do take some time to apply for and acquire. So, it’s not a quick solution, but it might be something that you can set up if you know that you’re going to be holding debt for a longer period of time. I mean, not having to make payments on it, being in deferment while you’re still a graduate student is a really great benefit if it’s just not something that you are able to pay off in the moment. But of course, then you’re not paying it off. Right? So, the interest is accumulating. So, pluses and minuses there. It sounded like you ended up with a combination, then, of student loans and credit card debt.

Life Happens, Cost-of-Living Matters

13:02 Suba: I did, yeah. And one of the issues was, I was going through a lot of stuff and I just didn’t calculate how much I was spending. And I was having to deal with pretty significant emergencies that kind of made me have to travel and things like that. And so, that was how kind of this situation ended up happening. And then I also had some life circumstance changes that were great. Like I moved in with a partner. But you know, even that, any transition, honestly, is tied to money. And I’m living in Los Angeles. Another really big issue that might not be salient for people who live in maybe smaller places or less expensive places, is that the cost of living and especially the cost of rent goes up really quickly and sometimes without a lot of notice.

14:01 Suba: So, I also had to figure out my living situation and move apartments. So, I had a lot of things that really had nothing to do with my school life, which was going fine. And also, I did have a lot of financial help from school and from my fellowships and things like that. I was a fully-funded student. So, these are all, I think in an attempt not to scare anybody, but more to say we’ve got to think about the shocks and the issues that might come up and maybe prepare for them a little bit.

Inflection Point: Debt Talks

14:39 Emily: Totally, totally agree. So, thanks for going through that part of your story. At some point, you were no longer accumulating debt. In fact, you decided to turn it around and start paying that debt down. So, can you talk about the inflection point?

14:52 Suba: Right. And I think that was fairly recent. So, about a year ago, which coincided with me graduating from my PhD program, I also got married, which was great. And then I moved down here to start my postdoctoral fellowship. And my now husband also had a full-time job. And so, we said we think we want to start this next chapter of our lives. And one of the issues that we had sort of minimally talked about during our time together but hadn’t really deeply delved into was putting our finances together. And so, in having that conversation, we sort of said, “Hey, I think it’s time that we start to think really deeply and then have a clear plan about what we’re going to do and get rid of the debt that we are both carrying.”

15:46 Emily: Can you talk about how you went through that and how you tackled it, maybe for one of your peers listening here who is also facing a mountain of debt, a lot of different types of debt and doesn’t quite know how to start?

Tackling Debt Conversations

15:58 Suba: Yeah. I think the first step is to have a conversation and it’s usually one person says something like, “I’m totally scared about this debt, or I have so much debt and I don’t know what we’re going to do.” So, again, we opened up our finances to each other and said, “Hey, you know, we’ve decided to share a life together. What’s the most important thing that you want to do in the next five years? Like, what is the most important thing you feel like you want to spend money on? And why do you think, you know, getting rid of that debt would help?”

16:32 Suba: And so, having that discussion really made it sort of a positive and nonjudgmental environment to start having these conversations about money, which can be really anxiety-producing. And so, for me, making up these spreadsheets and having a plan and stuff was really energizing. I was like, “Okay, I am solving an issue.” For my husband, it was super anxiety-producing. It just created this feeling of like, “I don’t make enough money. I don’t know what to do.” You know? And so, also stopping at certain parts of this process. It may take, you know, more than one conversation to get to this point. And saying, “Okay, you know, the whole goal of this is not to stigmatize either one of us for bringing what we brought into the relationship, right?”

Dreaming, Not Blaming, Together

17:20 Emily: I like that – I just want to jump in and say, I really like that you started that conversation and are framing it around–I’m going to phrase it differently than you did–around dreaming together, right? Because as you just said, it puts this whole thing in a positive light. It’s not, “Oh, you know, sniping at each other, blaming each other for, you know, what’s happened in the past.” It’s, “No, like we’re standing together, we’re looking to the future. What do we want our bright future to look like? Let’s agree on that. And, okay. What are the steps we have to take to get to that point? Now, let’s tackle it.” But as you said, for some people it can feel like such a big thing to be working on. So challenging, like for your husband that it sounds like he wanted to shy away from it. Right? Whereas you wanted to charge toward it.

18:04 Suba: Yeah, it took different conversations to get to a point where–you know, and the honest truth is, he had less debt than I did. And so, the way I was feeling was, you know, a lot of blame and kind of shame. Or like, why, how did I bring this into our home, you know, kind of thing? And I think that that is a pretty common feeling for a lot of people. I don’t know anybody who’s had this conversation that hasn’t felt all kinds of feelings about it, you know? And so, I think from those big picture conversations you can also kind of talk about priorities. So, maybe one of you likes to travel more than the other. And so, setting up this idea of, “Okay, we’re going to decide that we want to take this many vacations a year or maybe we want to go to this many friends’ weddings a year, that’s important to us. We want to go home for Christmas or for New Year’s or things like that.” You know, like these are kinds of things that flow out of those conversations. What’s important to you, what’s your priority?

Allocating Money Toward Retirement

19:15 Suba: And we disagree on lots of things about spending money. It’s just we’ve allotted the parts of the money that we agree on so that we have this freedom, you know. So, one interesting thing about us is actually we don’t have a joint bank account. We still have separate bank accounts, and we’ve discussed maybe, but we have a joint savings account. And so, we’ve discussed how we allot money into our joint savings. And then we’ve also even talked about how we are going to allocate money towards our retirements because we look at those as shared money. And then after we’ve paid the bulk of our bills or whatever, the leftover that we haven’t allocated is our own money to spend the way that we feel. So, I think it’s also a balance between getting yourselves on the same page, making a shared priority list and plan, but then also saying, “Well, I don’t need to know and account for every dime that you’re spending. If you like to spend money on X thing and I don’t understand it, that’s okay. I don’t need to.” So, it’s not about controlling the other person, either.

Commercial

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

Cataloging Debts

21:21 Emily: Okay, so first step was, “Let’s look at the picture. Okay. Let’s dig our heads out of the sand and look at what is the debt.” Okay. So, what did you do after that point?

21:30 Suba: Absolutely. We cataloged all the debts and the cataloging of this plan. So, essentially, we did create a full spreadsheet at this point of all of the debts, the interest rates, and what types of debt they were. So, was it student loans or consumer debts? And then when interest rates would either change or when they would kick in. And in terms of the consumer debt, one thing that I did was I called the credit card companies and I tried to get my interest rates lowered and be as nice as possible. And it did work for a few of them, actually, honestly. So, don’t be afraid to ask. The worst that can happen is that they say no and you can ask to be kicked up to people who have a little bit more power than maybe the receptionist that you talked to on the phone. And if you do it in a kind way, it works out. And then I also looked at the balance transfer offers that some of my credit cards had. And I would not say, like, open another credit card to do this. I would say, if you already have existing cards, many of them have balance transfer offers and they do charge a fee. So, weigh that fee against the amount that you save in interest by paying it off in the 0% period.

Strategically Using 0% Financing

22:54 Emily: I’m going to ask you a little bit further about this because I’ve never gone through this process myself. So, I want to know a little bit better. So, what you’re talking about is, you have an existing account open, and that account, you know, you see that they’re offering a 0% financing deal, 0% period. And so, what you’re doing then is you’re using that financing to pay off a different credit card balance, right? So, you’re sort of transferring the balance over to the other card that you had open that had that 0% offer. And then the offer is, “Okay, we’re not going to charge you interest for a given period of time.” Usually, it’s like 12 months or 18 months or something like that. What was it in your case?

23:28 Suba: It was 18 months. I only did the ones that were 18 or 22 months. So, the longest period. But you have to do this very strategically. What you don’t ever want to do is to be using these as another crutch so that you can kind of just not pay things off. So, I would then strategically plan to pay per month this amount off a few months before the end of the period. And so, that also gets to my next point. Part of after cataloging your debts, you have to catalog also the salaries that are coming in and the expenses. So, you have to see what your margin of expenses to your income is so that you can make a reasonable plan for your debt payoff.

Making the Minimum Credit Card Payments

24:23 Suba: You shouldn’t use any of these strategies in terms of your credit cards until you figure out, “Can I at least make the minimum payments on my credit cards? And then now I want to make more of a payment on either my credit card or my student loan.” If you’re having trouble making the minimum payments, I would absolutely say call your credit card companies and tell them, “Hey, I’m having a lot of trouble making my minimum payments.” Credit card companies want your money, and it’s better off that you don’t miss your payments because that can affect your entire credit history really negatively. So, these are, these are kind of things you have to do in tandem with one another. You have to catalog your debts and the times in which your debts need to be paid off. But then you also will have to catalog your expenses versus your income to see what’s a comfortable and reasonable amount for you to put towards paying off your debt every month. So, just to say, you had asked me before if I used a debt snowball versus debt avalanche. I think we are a little bit of a combination.

Debt Snowball vs. Debt Avalanche

25:35 Emily: Let’s pause and define that for the listeners who don’t know. I’ll just say, so in the debt snowball and the debt avalanche methods, which are these two very popular methods for repaying debt, repaying multiple debts, you usually pay the minimums on everything and then you make a list of your top priority to your lowest priority debts. And with all the remaining money you have to throw towards debt, you throw it at your top priority. This is in both systems. In the debt snowball method, the top priority is the debt with the lowest balance. And in the debt avalanche method, the top priority is the debt with the highest interest rate.

26:11 Emily: So, debt snowball, you move from smallest balance to largest balance, paying each one off in full. And then moving on to the next one. Debt avalanche method, paying the highest interest rate first. And then once you pay that one-off, completely moving on to the one with the next highest interest rate. The debt snowball method, the sort of reasoning behind it is that it’s very psychologically motivating to be able to cross that small debt, that first small debt off your list and you know, feel like you’re making a lot of progress and move on to the next one. Versus the debt avalanche method is mathematically the most optimal way to go about things. If you were to throw the exact same amount of money into both methods, the debt avalanche method would get you out of debt the fastest. So, go ahead and explain, between those two extreme models, what you actually did.

26:53 Suba: So, I’m still in the process of this. So, I also don’t want to say, “Look at me, I’m debt-free, and I could give you all this advice.” No, we’re still in the process of this and it’s been really fruitful for us. But we started off with the debt avalanche method. So, we wanted to pay off these highest interest debts first and within the reason of the amount of debt pay off that we could do per month. Right? And then when we would get to a certain threshold, so maybe it was a thousand dollars or $500, we would pay off that card or that debt in full. And that gave us, on some months, that would give you just like an extra boost. You know, it just makes you feel good to see that zero balance. And when you pay off a piece of a student loan, they send you a congratulations email. So, that doesn’t hurt too badly, either.

Prioritizing Interest Rates

27:46 Emily: So, I want to clarify because some listeners may have this question. So, if you have at least one, maybe multiple credit cards where you’re currently in a zero interest rate promotional period, does that become a low priority for you or is that still a high priority because the eventual interest rate is going to most likely be quite high? Can you talk a little bit about that?

28:09 Suba: So, I prioritize by the time that the interest rate would change and turn into the higher debt rates. So, say it was January 1st, I would make a plan where I would subtract two months from that, so November, and then I would calculate how much per month I would need to pay on that card to pay it off in full by that November. So, it doesn’t necessarily become a low priority or a higher priority. For some debts, you can’t change the interest rate, right? So, any of those debts would be the debts I would pay off the soonest if I can, or pay off the largest amount. I also thought a lot about how much debt I was carrying per card.

28:57 Suba: So, in one situation, I essentially didn’t have that many credit cards, right? So, one of my cards was more than 30% utilized, which is a lot, and that’s not very good for your credit score, either. So, my goal was to get that less, like lower than 30%. So, I prioritize basically based on the highest debt, and then when the interest rate would change from 0% to whatever it was. And it’s also really important, I don’t want any of your listeners to like go willy nilly and start moving their money around to 0% interest credit cards. That’s a strategy to be used when you need extra time and you have to really make a very clear plan that’s very reasonable to get that done and see what the fee is versus how much benefit you get. So, the fees always range from either 2% to like a minimum of a certain amount of dollars. So, you have to see what that is for each of your, you know, things. And I would definitely call credit card companies first and see if you can lower the interest rate before you change anything.

Automating Debt Payments

30:21 Emily: Okay. What’s your next thing that you did, or your tip for someone else facing this challenge?

30:27 Suba: So, I think, you know, I talked about how you should catalog your expenses towards your income and then figure out what’s a percentage of your paycheck per month that you’re going to put to your debt. And then you want to automate that. So, you basically want to be making a specific payment. And you can either do that, if it’s on your credit card, you can put the payment to a specific date or if it’s to your student loan servicer you can make sure that the check for your student loan comes out of your bank account at the same time.

31:02 Suba: So, you want your income to come in and then that money to go out almost immediately. So, you almost don’t see it, right? So, the reason I say, you know, and this isn’t like news, you know. Automating your finances helps so much because it lowers the stress of you having to keep track of it. But it also tricks you a little bit, psychologically. You never see that money after your paycheck comes in. So, you don’t feel like you have it, right? It’s already gone. It’s already been pledged to something. So, I think that helps.

31:39 Emily: I totally, totally agree. I’m a huge fan of automating, paying yourself first. Absolutely. Go ahead.

Paying Yourself First

31:42 Suba: Yeah. And, you know, there’s been a little bit of discussion sometimes too towards this idea of paying yourself first, right? And I think a lot about that. When you’re starting your first jobs after your PhD and even, you know, some postdocs and fellowships allow you to pay into their retirement system. If there’s a way you can think about putting some level of money per month into retirement, even if it’s just $50 a month or something like that. And that’s something that doesn’t seem astronomical. That’s also an important part of this calculation. And I think there’s a lot of debate on whether you should go whole hog and pay off your debt first and then think about your retirement. And people have all kinds of philosophies. I’m, you know, a moderate. And so, I think you have to live your life. So, you want to try to take advantage of the systems, the positive systems, that you have at the same time. So, my husband and I also looked at our retirement plans and factored in how much money we could put pretax and then put post-tax, if that was possible, into Roth IRAs. So, we thought about that in this whole system as well.

32:58 Emily: Absolutely. We are focusing on talking about debt right now, but once you get certain interest rates of debt eliminated, once those rates, you know, anything you have remaining is sort of in, as you were kind of just saying, a more moderate range, maybe six, seven, 8% or less. That’s the kind of time where you can start saying, “Okay, maybe we should do some retirement savings, not just the debt repayment.” But, to emphasize, if we’re talking about credit card debt, get rid of that credit card debt. Okay, go for that first.

Plan for the Future

33:25 Suba: That should be number one. Absolutely. And I think the next thing that we did then is to think about possible future changes and issues that could come up. So, you know, changes could be things like, “Well we have to prepare for making sure we go visit our family during the holidays or that we have to buy Christmas presents or things like that.” So, kind of trying to figure out what are the issues that we have had in the past that we didn’t prepare for? How can we prepare for them now? So that, you know, that’s an ongoing conversation that’s part of this.

34:08 Emily: I think that’s a really important thing to bring up, especially again for grad students and postdocs who don’t have large amounts of cash flow going through their bank accounts. Because there are going to be months where you have some larger expenses. So, to be able to save up that cash, to handle that at that time, that’s going to prevent you from, again, turning back to the credit card. So, it’s still kind of about debt repayment or debt avoidance to have that cash saved up, again for people who couldn’t easily absorb one of those large expenses in your monthly cash flow.

Small Changes, Big Differences

34:40 Suba: Absolutely. And even if it’s just, you know, a small amount that you put away every month. Again, we’re not having to think about these things in huge dollar amounts. I think sometimes what gets people a little bit down or can be very frustrating is this idea that these have to be very large amounts to make a difference. They don’t. Even if you have a buffer of a hundred dollars and you don’t put that hundred dollars on a high-interest credit card, that’s better. That’s why people have emergency funds. And so, it’s going to take a little bit of preplanning and it’s going to take some time, too. And even if you don’t have much of a buffer and that’s not something you’re able to do, that’s about the situation as well. So, that’s okay as well. It’s just you plan, you say, “Okay, when these credit cards are paid off or when the student loan is paid off, then that money that I’ve allocated towards the credit cards and student loans will now go to another priority.”

35:50 Emily: Exactly. And this goes back to the earlier part of our conversation where we were talking about looking forward into the future. You know, “What does my life, what do I want my life to look like this year, in the next five years, whatever it is?” Part of that is planning, “Okay, I’m going to be doing this type of traveling.” Guess what? Holiday gift-giving season comes up every single year at the same time. We know it’s there. So, yeah, just looking even ahead a few months or a year and just figuring out, “Okay, what are these life things that are going to happen?” They have to be part of the plan as well.

Positive Rewards (Treat Yo’ Self)

36:19 Suba: And part of this too is, just as you prepare for these issues that might come up, you’ve also got to give yourself positive small rewards. And so, what my husband and I did was we thought about things that we could give ourselves as a reward that didn’t involve us spending money. So, maybe once we got to a certain place, we went to like a new park in a city. And you can also prepare in your budget if there are things that cost money, like you want to buy a coffee every morning, you know, you put that into your budget. That’s your small reward for living life as a human being. I think my whole debt payoff philosophy is that you’ve still got to live your life, you know, in the most enjoyable way that you can.

37:12 Suba: Yeah. And another thing is, you can have a potluck with people without telling them the reason why. You know, like that’s another thing. Sometimes you can create a celebration and you don’t necessarily have to tell them, “Well, it’s because I paid 5% of my consumer debt off.” Right? Like that’s still a way to mark something positive and create a positive memory. And you know, things like that, they don’t cost a lot. And so, that also helped keep us motivated. So, we would say, “Okay, well we will save this treat until we get to this point.” And we tried to vary the different kinds of things that we would do.

Business Meeting Times

37:59 Suba: And one of the last things is we created kind of a business meeting time. So, I think one of the issues that happens when you start to get into this mindset of paying off debt or tracking things is that you think about it a lot. And especially if you’re somebody like me who really likes spreadsheets, you’ll be looking at it on your computer all the time and thinking about ways you could optimize. That’s not the best, I think, way to go about it because it can also become negative. You can start to look at the numbers and feel like things are not really moving that much. So, we would create a business meeting time when we would talk about these money-related issues or debt payoff issues. And then the rest of the time we would try not to bring it up. So, having that protected time to talk about it also meant that your entire relationship isn’t really consumed by it. And then also your own thinking throughout the day when you’re working and things are happening, you’re not thinking about it all the time.

39:10 Emily: Yeah, I totally agree with that. I’ve heard the strategy of having a business meeting with your spouse or whatever. And I’ve also definitely heard the strategy of compartmentalizing difficult subjects into, as you said, a time on the calendar. Like you know it’s designated that you’re going to think about it or you’re going to talk about it at that time. It helps it from bleeding into all the rest of your life. So, I really like your combination of those two ideas.

Make it a Positive Environment

39:31 Suba: Yeah. I think when it can kind of create anxiety and worry, and if anyone is prone to anxiety or worry, it could just like snowball into a lot. And you want to treat that time to be a time when other things are not as stressful. So, if you know, maybe like it’s after your kids have gone to bed or it’s on a Sunday because you know like on Sundays you don’t have as much to do, and you want to make that situation as positive as possible. So, sometimes we would like open a beer and sit down or something like that. Just like, make it a positive environment and start off the discussion in a positive way as best you can because these topics are difficult. And every month you may not see progress, right? So, there are things that happen. That’s the other thing. You may have all of these great plans in place and then one month you have to cut down a little bit on paying debt because you have another expense, you know? And so, those are kind of the times when you can have these conversations.

40:43 Emily: Definitely. Again, I love that you’re bringing up any way you can to put kind of a more positive spin on what is fundamentally a really hard situation to be in.

Be Kind to Yourself and Others

40:53 Suba: I guess in the last tip I would say, and I think I’ve said this throughout, is you have to be extremely kind to yourself. I think debt is incredibly stigmatizing. And I feel like I’m somebody who follows a lot of financial blogs and a lot of financial people online. And I think one of the things is we cannot be mean to ourselves or other people about their choices around money. Everybody’s choices are really, really different, and it’s very normal. Especially in this day and age when when people’s jobs are changing so much and maybe they’ve had different circumstances that the only real way to be empowered is to first normalize the fact that this is something that is part of your life. It’s something that happened to you because of a certain set of circumstances, but it’s not something that you can’t control. It’s not something that you eventually can’t get over, you know? And the only real way to be like, I think, empowered is to let go of some of the stigma, especially towards ourselves. We can be really unkind towards ourselves when we make, you know, choices that we don’t think are the best. We should be able to talk about these things a little bit more. And get advice from one another about how to tackle some of these things, even though our situations aren’t the same.

Best Advice for Early-Career PhDs

42:16 Emily: Yeah. And that’s exactly what we’ve done with this interview. And so, Suba, thank you so much for putting yourself out there. So, I like to end with this one question for all of my guests, which is what is your best financial advice for another early-career PhD? It could be related to the conversation we’ve had today, it could be something totally else.

42:34 Suba: I think my best advice is probably two things. One is try to plan, preplan, for changes in your life as much as you can, as best you can. And then the other is it’s never too late to start improving your finances. It doesn’t matter if you are $10,000 in debt, $200 in debt or a hundred thousand dollars in debt. You know, just figure out what your priorities are and see if you can align your priorities with what you want your financial life to look like in the future.

43:08 Emily: Yeah. I don’t want anyone to feel discouraged about debt numbers. I mean even you can look back through the archives, this podcast and I’ve had several interviews with people who are paying off six figures worth of debt successfully. So, it can be done. It does take work, it takes a positive attitude, Suba as you were just saying, it takes organization. But you know what, grad students and PhDs, we have some of those qualities in spades. So, this is definitely something that is tackleable for our community. And again, thank you so much for talking about this topic today on the podcast.

43:40 Suba: Yeah, thank you. Thank you for having me.

Outtro

43:43 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

 

The Necessity of Both Economic Justice Advocacy and Personal Financial Responsibility

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

Links Mentioned

grad student union

Teaser

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

Introduction

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

Would You Please Introduce Yourself Further?

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

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

The Intricacies of Unionization for Graduate Employees

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

Impetus for the Union

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

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

Issues at Play in Union Negotiations

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

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

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

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

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

Grad Students vs. the Administration

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

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

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

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

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

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

Commercial

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

Personal Finances in Grad School in Relation to Unionization

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

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

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

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

20:34 Emily: That’s a great analogy.

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

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

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

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

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

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

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

Personal Finances After Grad School

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

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

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

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

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

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

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

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

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

Best Financial Advice for Graduate Students and PhDs

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

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

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

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

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

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

Outtro

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

The Financial Hurdles of Moving to the US as a Postdoc

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In this episode, Emily interviews Dr. Louise Lassalle, a postdoc at the Lawrence Livermore National Lab in Berkeley, CA. Louise recounts the hurdles in the process of her move from France to the US for her postdoc. We discuss short-term hurdles; e.g., being approved for a rental, establishing credit, and the cost of moving; medium-term hurdles; e.g., choosing a health insurance plan, adjusting to the cost of living, and paying tax; and long-term hurdles, e.g., the cost of applying for a green card. This episode will give international graduate students and postdocs preparing for a move to the US a preview of what is to come and what pitfalls to watch out for.

Links Mentioned

international postdoc US

Teaser

00:00 Louise: Don’t just accept a job offer because you love the science. We are all passionate about it, we just want to do science. But where you live is also important, and if you have to worry too much about the financial then you won’t have as much time to do actual science.

Introduction

00:24 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode three and today my guest is Dr. Louise Lassalle, a postdoc at the Lawrence Livermore National Lab in Berkeley, California. Louise recounts the hurdles in the process of her move from France to the U S for her post-doc. We discuss short-term hurdles like being approved for a rental, establishing credit, and the cost of moving; medium term hurdles like choosing a health insurance plan, adjusting to the cost of living and paying tax; and long-term hurdles like the cost of applying for a green card. This episode will give international graduate students, postdocs and workers preparing for a move to the US a preview of what is to come and what pitfalls to watch out for. Without further ado, here’s my interview with Dr. Louise Lassalle.

Will You Please Introduce Yourself Further?

01:21 Emily: I am delighted how joining me today on the podcast, Dr. Louise Lassalle, and we are going to be discussing the particular financial challenges that come with coming to the US for part of your training. So, Louise, thank you so much for joining me and will you please tell me and the audience a little bit more about yourself?

01:40 Louise: Sure. Thank you for having me. I got my PhD in France, in Grenoble and after that I was looking for postdoc and I think I was looking in all Europe and also in the US and I got a postdoc in San Francisco in Berkeley, more precisely. When I came for my post-doc was my first time in the US. I went to the US neither for vacation or for conferences and I’ve been there for three years now and I’m still the same job, so I’m still on my post-doc.

Initial Financial Challenges with an International Move

02:23 Emily: All right. Yeah. Great to hear. So let’s start back when you first arrived, maybe even before you arrived in the US but when you were applying for your job, getting your job offer — were there any challenges associated with being an international post-doc associated with that stage of things?

Before the Move

02:41 Louise: I think the first thing is even before you come, you already start with a visa application. You already start with paperwork and try to understand what’s going on. I think that’s the visa application was the main thing to understand, make sure you do everything right and I think that’s the main thing.

03:06 Emily: One question to that is that — the visa application, is that something that you’re able to do totally on your own or do you need to consult with a lawyer or something?

03:15 Louise: In the US, most of the post-docs will be on G-1 because it’s the easiest way to get a post-doc. A G-1 is supposed to be for a change and visitor, but university use it for that proposal too. So basically you employer will provide you with a form for DS-2019, and the process is quite easy on G-1s. Now that I know other processes, I realized that G-1 wasn’t that difficult, but as a first timer you don’t know. So you don’t need a lawyer. It’s quite a straightforward.

03:54 Emily: Okay. Yeah. Great. And I think you mentioned to me earlier that one of your difficulties at that stage of things was understanding the salary offer that you received and putting it in context, having never lived in Berkeley before.

04:11 Louise: Yeah. So first I was very excited to get a post-doc in Berkeley and the topic was super interesting for me, so I was already in the mood that I will accept whatsoever. And also the salary was basically twice what I was doing before, but of course it doesn’t work this way because the rent is not the same as it was. The rent would be like three times and all the costs of living are different. So that is my first advice is make sure you know what the cost of living is before. I’m not sure would have been able to negotiate my salary whatsoever. It’s very hard when I just have like a Skype interview with my PI at this point. But perhaps negotiate your starting time, if the flight is too expensive, then say, “okay, can I start like one month later?”, or something like that.

05:12 Emily: Yeah. Actually, so a year or so I launched this project, PostDocSalaries.com and that’s a database of self reported salary and benefit information. And one of the questions I included in that survey is did you negotiate something about your package or not? And I was surprised actually that about, if I remember correctly, it was about a quarter or a third of the people who responded said, yes, they did negotiate, successfully that is. I thought that was actually pretty high. So it’s definitely something that people don’t necessarily know to do, but it’s sort of one of those, well you may as well try, like you might not be successful, but why not try. But I would be interested in knowing if international postdocs have less leverage maybe than domestic ones in going into that negotiation process. I’m not sure.

06:01 Emily: So you decided you were going to accept whatever offer came your way because you’re excited about the topic and so forth. And so did you try before you actually moved to figure out what the cost of living was going to be or were you just kind of like, “Okay, it is what it is, I’m going.”

06:15 Louise: It was a little of both. I think I still started to check on Craigslist to see the rent, but I was still very optimistic about that and I can go little more on how to get to housing after that. So no, I didn’t really look at it more carefully and it was more like, “Let’s go, let’s do it.”

06:42 Emily: Okay. And so did you arrange for housing before you moved or upon your move?

06:47 Louise: So in this also, I was a little too optimistic. I did a book an Airbnb for one week before and it wasn’t enough at all. I should have booked it, I will advise at least two weeks or even one month. Also because, at least for me, where I live is kind of important. You want to make sure you’re making a great choice and I won’t advise anyone to rent something, apart from Airbnb, from outside. You need to see before you sign anything or you send money. I would really advise to go to an Airbnb, even if you spend a little more money at the beginning, and then find something that really fits your needs. And also you don’t know your neighbors, you don’t know the public transport, or if you want to get a car, if you can do it.

07:40 Emily: Yeah, there is a lot. I mean I agree with you. It’s very difficult to rent something sight unseen. You’re taking a big risk there. And so it’s kind of cool actually that there has been this rise in short term rental options so that you can do something for a couple of weeks or a month without having to sign a lease, but just going into a short term rental situation so that you can do all that research on the ground. It sounded like you needed a little bit more time than what you gave yourself. Did you end up extending that Airbnb or moving to a different one or how did you work that out?

08:09 Louise: I moved to another one but I got a very cheap one and it wasn’t great. And then I rushed to rent an apartment and it wasn’t a good one, because what you see in Airbnb is not what you will get. I can expand more on that later on, but you are not actually competing at exactly the same levels as other people, so in general you go to the more expensive or the apartment that kind of no one wants.

Financial To-Do List When You Land

08:37 Emily: Yeah. So what’s the next thing that you would like to address? When you have your flight coming into San Francisco or wherever you flew into, what were the financial challenges that you were facing right away?

08:50 Louise: I think this is for everyone moving somewhere else, you need quite a lot of money to just first book your flight. Since you need your visa and you don’t know when your visa will come up, then you book your flight like two weeks in advance. And for example, I booked my flight and I arrived mid July. It was a more expensive flight I ever booked, and this, I think I could have perhaps negotiated more, or ask for an increase in my relocation fee because of that.

09:28 Louise: To rent, all of this, I think opening a bank account was actually one of the easiest things I’ve ever done. It Is very, very easy, and what helps a lot is to have the letter of employment with you, and that helps also for the renting part. In general, when you go to the city, everyone knows the big universities that are close by and they like to rent, especially if you’re not the students, you are post-doc, because they know that an employee will pay their rent on time and is not going anywhere. This kind of helps as kind of a reference.

10:06 Emily: I actually am curious about how you paid for things like until you had that bank account opened. Did you have a credit card from your home that worked here or how did that work?

10:17 Louise: Yeah, so you can pay with your credit card. Actually in France we don’t have credit cards and our card is both debit and credit. But the equity we can get on it is generally smaller. But you can pay outside. I think we use, I think the cheapest way is to use wise transfer, but this also takes a few days, so sometimes it’s a little harder. I have to say think that with a credit card I was good because after one week I sent some money over and it was okay.

10:55 Emily: Yeah. It sounds like opening a bank account was probably one of the very first things you did right? Like day two or something.

11:02 Louise: And as I say, it was super easy. Some people say that they ask for, for example, security numbers. They don’t or at least the one I went to it was okay.

11:15 Emily: Gotcha. And what about getting like ID here? Is that another thing you did right away?

11:21 Louise: So right away what you need to do is get your social security number, for sure. This was also another paperwork, but I think it was — generally the university will provide you with some guidance on that. Then what you can do, I mean, the only ID you can get here is a driver license, and I got mine actually a few months after I got here because I didn’t need a car. It was more so I didn’t have to bring my passport everywhere. I think a drivers license is great because it’s kind of an ID and, and then you can keep your passport safe.

11:58 Emily: Gotcha. Yeah. Was there anything else that you discovered in those first few weeks here, especially as you’re arranging for housing? Anything that you wish you had known maybe before you moved or that would have made things easier?

12:14 Louise: So I didn’t expect it will be so hard to get an apartment. First, a lot of people ask for reference and they ask for credit score, and if you’ve never lived in the US you don’t have a credit score. And you have your letter of employment, but technically you didn’t start it yet, so you don’t have that previous salary and sometime also when, if you move up as a couple, you just have one salary. So in general, when they do the list and it’s hard to get at the top of the list, because there’s always someone that’s making more than you, or has better credentials.

13:00 Emily: I would imagine just the housing market also in the Bay Area, broadly, is a very difficult place. Lots of competition. So you may have had among the hardest times that you might have in any city around the US. So how did that end up working out?

13:18 Louise: So I rented something very fast and it wasn’t the best apartment ever, and I moved out this apartment after six months. Also, for example, the rental lease, the rule around that is very different from France and it’s much, much harder on the people that are actually renting the apartment than on the owner, and for me was a surprise to sign a lease. I say that I will have to stay there, whatever happened, even if I get a new job for one year, or I will have to elect to pay for it.

13:55 Emily: So the terms were a little bit unfamiliar to you, in terms of it was much more favorable to the owner, the landlord than it was to the tenant. Is that what you’re saying?

14:05 Louise: Yeah.

14:05 Emily: So what would be more typical in France?

14:08 Louise: So in France, in general, the lease is to protect the renter and also owner. So the lease will be a [inaudible] lease. That means that the owner cannot push you away or they need a big reason for doing that, but you can leave. You have to let your landlord know three months in advance and you can go down to one month if it’s a very hot market or if you get a new job or you move for professional reasons. So I think it’s much more close to what the reality here is, that sometimes you just need to move because you get a new job.

14:46 Emily: Yeah, I know the lease that I signed for my current apartment in Seattle, the terms to break the lease were much more stringent, much higher costs than I had signed in the past. So this is definitely one of those local things, right? It can vary from place to place and obviously individual owner or leasing company, like that. But yeah, I think maybe in higher cost of living cities, the owners have a little bit more power and anyway, the terms can be quite high for breaking a lease early.

15:15 Emily: Anything else regarding some of those first financial challenges that you encountered right away when you arrived here?

15:24 Louise: One thing, it is not directly financial, but you have one month, at least in my lab, you have one month to sign up for your healthcare insurance. The postdocs here have great healthcare insurance also because we have a union, so it was negotiated. We pay very low. You still have two ways, like HMO, PPO is covered differently. And so I think it’s not specific to internationals, because what I understand is even for an American it is a complete mess and so I don’t think it’s very specific, but perhaps for international, it had another layer of things you have to take care of and can be very stressful. And I will say especially for people with family, to understand that with kids that you go much more often to the doctor to understand how it works.

16:19 Emily: Yeah, I can imagine that can be a huge challenge because the US healthcare system is really, really challenging for everyone, and especially if you’re coming from somewhere that makes it a lot easier and you’re not familiar with all the weird stuff that happens here, I can see how that could be super challenging. Was your HR department helpful for you in making that kind of decision about which kind of healthcare plan to take? Did they guide you in any way?

16:42 Louise: Yeah, we had some presentation. The problem here is that I think I remember not getting anything. I think I got how it works perhaps one year after, when I was actually explaining to other people and I asked them to sit down and I think it’s just very confusing. Even me when I tried to explain it again to new postdoc, I also get confused at some point., but they try to help you out.

17:10 Emily: Okay.

Commercial

17:13 Emily: Emily here for a brief interlude. I bet you and your peers are hungry for financial information right now, especially if it’s tailored for your unique PhD experience. I offer seminars, webinars, and workshops on personal finance for early career PhDs that can be billed as professional development or personal wellness programming. My events cover a wide range of personal finance topics, or take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you’re interested in having me speak to your group, or recommending me to a potential host, you can find more information and ways to contact me at PFforPhDs.com/speaking. We can absolutely find a way to get this great content to you and your peers even while social distancing. Now back to our interview.

Mid-Term Financial Challenges of an International Move

18:13 Emily: So let’s move to sort of more midterm challenges. You’ve been here for a few months, what were the next sort of set of financial challenges or questions that you had?

18:25 Louise: I think you feel like you are getting a bunch of money, but of course, when you remove the rent and then half is gone, and as the cost of living tends to be also a little higher, so I think you also need to adapt to that and adapt your way of living. Also what you will do in your country that will cost you nothing that here is expensive. For example, the food. You have to rethink and you have to come up with new things because there’s no way I can eat the same way I eat in France, it is way too expensive. I mean this is a small adjustments, but it is and adjustment. For me, and this is personal, but I have a hard time to understand the credit card system. And it scared me at first, that they say, yeah, you have $1,000 and you can spend it. I’m like, but I don’t have it really. I mean, yes, you have it, but not really. Andwhen I should do my reimbursement and how I should reimburse so my credit score actually goes higher. This also was a little confusing for me.

19:38 Emily: I do not think you’re at all alone about that, because even for people who grow up here, if you’ve never been explicitly sat down and taught how a credit score works or read about it for yourself, there’s a lot of misconceptions floating around about it. Like, for instance, some people believe that if you carry a balance on a credit card, it improves your credit score. In fact, the opposite is true. It’ll probably dinging you in some ways. So yeah, understanding that system can be really difficult. Did you start off with a secured credit card? Was that the first kind you got or were you able to qualify for like a normal credit card?

20:14 Louise: I think a normal. So what I heard from some friends is sometimes the bank actually asks them to put a deposit and they get from this deposit and I don’t know why my bank just give me one and they didn’t ask for anything. And even my husband that was, so we were teo on my salary, and my husband got a credit card like this. So yeah, no we didn’t. I think we get the normal one right away.

20:42 Emily: Yeah. I don’t know why that would be either. The path that I also know is the same thing. Secured card. You put down a deposit, then that’s the amount of money you have available to you. So it’s kind of the same as a debit card, but it helps you build credit. It’s something that mostly people only have to use for a few months, maybe six months or something, before they can then move on to the regular credit system. I don’t know why you would be able to jump right into that one either, but glad you didn’t have to take that first step. And how do you feel about credit now? Now that you’re three years in, are you more comfortable with that? Do you use it at all?

21:13 Louise: Oh yeah. I noticed some people have different credit cards and all from a specific supermarket or brand or whatever. And I just, I didn’t go into it. I feel more safe to just have one. And even this, I use it carefully. But yeah. This is this more personal but once you get it, it’s okay.

21:44 Emily: It sounded like you moved in July, three years ago. How about when it came to tax time that following year? How did you work through that?

21:58 Louise: Okay, so first I’m a post-doc employee, so I have a W-2 form, so it’s quite easy. It’s much, much easier than people on fellowship. So you just have to do it once. And I find actually the first year, it’s not so confusing. We had a presentation here to the lab from the tax people, they help us go through and we can send her an email with our specifics, because since also I wasn’t in the US before, so I was no resident for everything, and it was kind of okay. I think the second year I became a resident for California, but not resident for federal, and it makes it a little more difficult. And this year actually my husband got paid, but as self-employed and that for this one was very difficult to figure out how to declare that. The taxes are hard, but it’s also once a year and everyone has to go through it. We invite people to try to find people from the same country because you can have some country has this treaty that you’re exempt from federal taxes, and some country you still need to pay your taxes back then. Some you don’t. This was quite, it was a boost of my salary and helped a lot in the beginning. That’s a big one for federal taxes.

23:34 Emily: And so is that what the tax treaty with France says? Is that what applied to you, that in the first year you moved here you didn’t have to pay federal tax, but starting in the second year you did, is that right?

23:44 Louise: It’s two years.

23:44 Emily: Oh two years.

23:44 Louise: Yeah, it’s two years day to date. And then the fact that I didn’t have to pay in France is because French tax says that you just pay what you earn in France. It is not related to your citizenship like in a US or in Germany.

24:02 Emily: Gotcha. Yeah, I think the US is very unusual. There’s only a couple of countries that tax their citizens no matter where they live, but yeah, US does that, warning.

Additional Advice for PhDs Planning an International Move

24:13 Emily: Anything else? Any other financial challenges you came upon or things that you want to pass on to other people, bits of knowledge, as you were getting acclimated to the US.

24:22 Louise: Yeah, I just think getting used to that you will spend much more cash and you have to be careful with that. Also, you get a little excited. You want to travel, you want to visit, and it can get a little too much. Every time you go on conference you will spend at least $1000 to $2000 and in general you will get reimbursed but after that, so even with credit card and all of this, get prepared for that too and kind of put it on your budget. If you know you will go to a conference, you should have at least $2000 to make sure you cover the cost. This is for everyone, but that’s true that for an international sometimes you already spent so much on getting there and then you need to rebuild your funds.

25:13 Emily: Yeah, I totally agree. You were just mentioning traveling and I guess something that we think about here is that, you know, in France, our perception is that you guys get a lot of vacation time and we get very little vacation time in comparison. How has that been for you?

25:28 Louise: First that’s true. But as I mentioned before, we have a union, we negotiate five weeks vacation. So it’s actually quite good. And we have also some sick leave that we can take from here to here. Five days is the minimum you will get in France, for example. Generally when you work for a university in France, you get more like 10 or 12, weeks per year. So it’s not that far away and I think it’s helped a lot also. Also if we talk about vacation, this is also a burden on the international. It’s like every time you need to renew your visa, you don’t know how long it will take. So in general, in most countries in Europe are okay, but you never know because they can go on back processes and then you don’t know. But people from India or China, it could take like one month, one month and a half, and then you just use all your vacation for that or you just don’t come back.

26:37 Emily: Yeah, that’s really, really challenging. Just the uncertainty around that, I agree.

Long-Term Planning for Permanent Residency

26:42 Emily: So I understand that you are applying for permanent residency, or are looking into it. What’s that process been like?

26:49 Louise: Okay. Actually I got it.

26:52 Emily: Oh yeah. Great. Congratulations!

26:54 Louise: I got it a few weeks ago. The process for the green card — you will need to pay basically two entities. You will need to pay the US government, and it will be I think $2000 to $3000, also depending if you apply as a couple or not. The big thing, the big part of it is to pay a lawyer, and I won’t to go into details, but you may need lawyers. A lot of people go with lawyers because if you need to make your case, even if you get a green card because you are a scientist, there is a lot of legal stuff going into it, and it’s not a straight out science, like you would write a paper. You can get become eligible by just getting married with an American. Your employer can also ask for a green card for you, and you can petition. That’s what I did. And as a scientist you can kind of easily make your case and you can go for one of the easiest ones, national interest. So that’s like US economy needs you, basically. Then there’s the whole process to get people to refer you. Technically, your lawyer will write a reference letter that you will send to them and they will sign it. And then it’s a lot of bunch of paperwork, that you need to put and translate stuff. In general, preparing all of this will take between three to six months, I would say. And then generally this is used both for eligibility and to adjust your status. Eligibility, you will know around six months. Adjustment of status, it depends a lot on where you come from. It can be from one year to 10 or more.

28:40 Emily: Wow. Yeah, that sounds quite the ordeal. And do you mind sharing, how much did you ultimately spend on the lawyer part of it?

28:48 Louise: For the lawyer, I paid for the eligibility part and I paid $5,000 and I think that is roughly what you will pay. There are cheaper ones, but…I did much more math for this one, I wanted to be more prepared. If you look at the postdoc salary, anything else you can get, in general, is much highe,, and that’s th problem. With my G-1 I cannot get a job in industry or nonprofit or anywhere else. And also I cannot have a side job. I just can work for my employer at my university. This, or me, was also why I wanted ,a green card so I can start and perhaps have a side business, if I wanted to.

29:39 Emily: And why did you decide to go that route instead of maybe finding a next employer and going to the H1B route?

29:49 Louise: Because I wanted to do a career move. I wanted to go out of science and go more applied initiative positions in university or nonprofits. To still work with scientists, but more on the kind of development on the science communication part. And for this one, then my skill as a scientist, I will use part of them, but not the specific one, not the technical one. My employer won’t be able to say, because that’s what they do when they ask for your H1B for you, they basically say no American can do it. I was applying for jobs that they can’t say that, so that’s why. And I think even if you can get a n H1B, the H1B for industry, you can just apply once a year and it is a lottery, so even your employer doesn’t know if you will get it. Then I think you have the O-1 that you can apply to, but it is also, I think, depending on the employer, so you do get less freedom on your part. Actually a lot of people that want to stay here a little longer, if they can, the go for a green card because that’s what gives you the most freedom and also peace of mind. Because now if I lose my job now I need to leave the country within a month. So I think a green card also gives you some freedom around this.

31:12 Emily: Yeah. Well, I’m glad that you have completed that process, so you have that peace of mind now. That’s great to hear. Is there anything else that we haven’t covered yet? Some piece of advice you’d want to give to another international student or postdoc moving to the US for the first time?

Final Words of Advice

31:26 Louise: Yeah, so for sure I will say, do your homework, as good as you did when you choose your position, or you look for a job. When you look for a job, you will perhaps do informal interviews, you will do networking, and try to know what is the job about and do you want to go this way? And I think it’s great to do exactly the same when you move to another country, or another city. Do informal interviews. Be aware, because, so I did one, but someone who lived here I think five years ago and so the renting market just completely changed. The rent doubled. So of course what he was saying, he wasn’t what was happening right now. Do some informal interview, too. See if the environment fits you and fits your needs, because this can also be one point. And do the math, too. And be aware that getting an apartment for the first time will be much harder than you think you will be, so take your time for that.

32:34 Emily: Yeah, I agree. And actually I have a resource. I made a webinar and template spreadsheet earlier this summer, so I’ll link that from the show notes that are all about how to budget at a distance. So how to figure out what is that cost of living where you’re moving to. This could be within the US, if you’re coming from another US city, or coming from outside the country, it’s going to work either way. So what are some like resources you can look to, to figure out what does that cost of living going to be, especially the housing, because that’s the really big rock in the middle of your expenses is figuring that out. And so that’ll really help you kind of know, how is that salary offer? Is it going to be sufficient? And certainly for graduate students it is a question mark, whether or not it’s going to be enough to live on, depending on the city and depending on the program. If that sounds good to you, please go check out that resource in the show notes.

33:19 Emily: So Louise, last question before we wrap up. What is your best financial advice for another postdoc or another early career PhD?

33:29 Louise: Really look into it. Don’t just accept a job offer because you love the science. We are all passionate about it. We just want to do science, but where you live is also important, and if you have to worry too much about the financial part, then you won’t have as much time to do the actual science. And especially if you move in with a partner or if you are moving with your family, then you have even more. That is my advice.

34:04 Emily: Oh, excellent. I totally co-sign all of that. Great, great advice. And Louise, thank you so much for this interview and for joining me today.

34:10 Louise: Thank you.

Outtro

34:14 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the personal finance for PhDs podcast. There you can find links to all the episode show notes, and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC podcast editing and show notes creation by Lourdes Bobbio.

This PhD Entrepreneur Advocates for Universal Basic Income (Part 2)

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In this episode, Emily interviews Dr. Jim Pugh, the founder of ShareProgress and co-host of the Basic Income Podcast. Jim defines universal basic income and outlines how it would alleviate poverty and other social ills, including results from research and real-life experiments with basic income. He describes the possible avenues by which universal basic income could be funded and whether it would replace our existing social safety nets. Jim and Emily speculate about how universal basic income might affect higher education funding, including PhD stipends and postdoc salaries, and PhD trainees themselves.

Links Mentioned in the Episode

PhD universal basic income

Teaser

00:00 Jim: You could basically think of this as universal basic fellowships for PhD students because I think that the dynamics that come with it very, very closely would match what it would be if you were getting a fellowship of the same size.

Introduction

00:18 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode two, and today my guest is Dr. Jim Pugh, the founder of ShareProgress and cohost of The Basic Income Podcast. In this second half of our interview, Jim articulates what basic income is and how it would alleviate poverty in the United States, including results from recent research and experimentation. He describes the possible avenues by which it could be funded and whether it would replace our existing social safety nets. We speculate about how basic income might affect higher education, including PhD stipends and postdoc salaries. Without further ado, here’s the second part of my interview with Dr. Jim Pugh.

Will You Please Introduce Yourself Further?

01:06 Emily: We’re back now with part two of my interview with Dr. Jim Pugh. In part one, he told us all about how he started a business a few years after graduate school, which ultimately allowed him a great deal of time freedom. So, his business pays for his lifestyle, but he only works at this point about five hours a week on the business. And that has allowed him to pivot to his advocacy work around universal basic income, which is what we’re going to be hearing a lot more about today. So, Jim, thank you so much for continuing this interview with me. And we want to start off with a basic question about universal basic income because frankly, I probably would not have really heard about this except that you and I are Facebook friends. And also, we’re recording this in September, 2019 and Andrew Yang is a candidate for the democratic nomination for president. So, between those two things, I’ve kind of heard a little bit about basic income, but I would love to hear a lot more about what it actually is from you.

01:59 Jim: Sure. Well, so, just to start with the definition. A universal basic income is a policy that would provide every single person in the country with unconditional cash payments regularly–most people talk about once a month–that’s actually enough to cover basic needs. And the idea of it is that, if you were to enact this, you eradicate absolute poverty. You’re ensuring that everyone does have enough money to cover the fundamentals. And so, in some ways it’s very, very simple because it’s just giving people some cash. But in other ways, we’re potentially talking about something very radical because we would for the first time be saying, we are fully abolishing absolute poverty. We’re saying that absolutely no one in the country should be poor and that we’re going to structure our systems with that in mind. And so the ramifications of that are pretty profound as far as what does it mean for work? What does it mean for health? What does it mean for people’s general lifestyle if you’re actually establishing that fundamental financial security floor?

Benefits of Universal Basic Income (UBI)

03:12 Emily: Okay, so let’s first take the benefits–the upsides of this–and let’s leave aside, for the moment, the practicalities of it, but just to talk about the vision for what this society might be like. So, what are the benefits that people might experience maybe who are currently in poverty but would be lifted out of that through UBI? You started to talk about this a little bit at the end of the last episode. So, there’s actually been research done in this area and there’s been some experimentation. So, can you talk a little about what we know already about how this might change things for people?

03:43 Jim: Yeah, so I think there are the obvious things that we know when people are poor, they can’t afford food or at least healthy food. They may be having trouble finding somewhere to live. They may not be able to take care of themselves. So, if you’re actually ensuring that everyone is up above the poverty line through just regular cash transfers, those are all things that are addressed, first order of facts. But I think beyond that, that’s where things start to get quite interesting because we have seen more and more evidence around how poverty and financial insecurity, if not causing, are at least are greatly contributing to a lot of other issues that we’re dealing with today. And so, people when they are approaching any aspect of their life, they can either be in an abundance mentality where they think, “Okay, I have enough. I can think bigger picture.” Or a scarcity mentality where they feel constrained, which basically gives people tunnel vision that they’re only thinking about what’s right in front of them.

Abundance Mindset, Higher IQ

04:51 Jim: And that difference has huge impacts on what happens to people. So, first off, there have been studies just looking at general intelligence, and there is a substantial shift in people’s IQ level between those two different headspaces. I think it’s around one standard deviation, so about 10 IQ points, smarter when you’re in an abundance mindset as opposed to a scarcity mindset. So, you’re making better decisions. Second, as I said, when you get that tunnel vision and so it means you’re just thinking about what’s right in front of you, it basically prevents you from longterm planning. You can’t be thinking about, “What is my life going to be even a year, much less, five, 10 years down the road?” if you’re worried about, Oh, how am I going to put food on the table tonight or tomorrow? And so, it allows people and encourages people to plan better, to make better longterm decisions which has big impacts around choices on education, choices around what sort of work they pursue, and ultimately, where they do end up in five, 10 years down the road.

Scarcity Mindset Damages Mental and Physical Health

05:58 Jim: And so, beyond just being able to afford health treatments, there’s also a lot of evidence that when you’re in a scarcity mindset, when you’re in poverty, it’s extremely damaging for mental health. And also for physical health, the stress has an impact on that as well. Crime–strong, strong correlation based on people’s financial security as to whether they’re more or less likely to commit crimes. And so there’s all of these second and third order implications around how things would look in our society if we weren’t to have this absolute poverty. That’s seems incredibly promising. And so, that’s why, again, our typical approach as a society is to, when something’s going wrong, to treat the symptoms of it. And this, instead, is really saying, “Let’s actually try to take a step back, deal with some of the underlying causes, and see how much easier that makes dealing with all the rest of this stuff.”

UBI and Job Flexibility

07:00 Emily: Okay. Sounds amazing. It sounds very, very compelling. I’m wondering a little bit more about what the vision for what this society may look like, should we bring it about. You talked earlier about jobs. And so, is the idea that not as many people would need to work? There wouldn’t necessarily be as many people in jobs? Or is the idea that you would have just more freedom and flexibility around when you want to work and when you went to have further training? How does this relate to the jobs, I guess is what I’m asking?

07:28 Jim: I think much more the latter. So, the idea is not that this is something that’s going to replace jobs wholesale. I think it does allow you to pursue a more general definition of work, I would say. And so, in the sense that “job” right now means a fairly specific thing in those conversations about more like a nine to five, like ongoing, consistent workplace. This does give you additional flexibility to think a bit differently about what is the right form of work for you to be doing. So, whether that’s part-time, whether that’s taking some time to get more of an education in the area that ultimately is going to allow you to do something that you feel better about and maybe much more productive for society. Whether it’s going to give you the flexibility if you want to do some sort of family care or staying home with children or elderly folks.

UBI Facilitates Entrepreneurship

08:25 Jim: Another one is entrepreneurship. If you’re considering starting a company or doing something that, in its early stages, may not be giving you a steady paycheck–having more flexibility around that as well. So, it opens up all these doors that most folks, I would say, don’t really have access to at this point in time. As far as overall impact on how much people are working, there have actually been a number of studies on this. And what it suggests is the results vary. That there are certain situations where, when you give people regular, unconditional cash, they work more. It seems like, either through stimulating the local economy and creating jobs or by giving people that flexibility, they end up doing more work. So, Alaska for the last 40 years has actually had a universal income provided by oil in the state. And recent studies have found that the overall work rate hasn’t changed, but you see a lot more people engaging in part-time work than you have in the past. Or, certain groups, studies have found there is a decrease in work, quite consistently actually across studies. The ones where that’s only really stood out is parents with young children and teenagers, basically. And interviewing folks involved in that, it seems like the former is spending more time staying home with kids, the latter spending more time at school. So, again, it’s not captured as work in how we measure it today, but it actually is work and potentially much more pro-social work than they might otherwise be engaged in.

10:06 Emily: So, this is really reminding me of–so I have not read this book. The book is Your Money or Your Life by Vicky Robin, I want to say. And she has a coauthor. Anyway, I heard a podcast interview with her within the last few weeks and she was talking about how in our current society, like you’re saying, there’s a lot of work that is not inside a job, right? There’s a lot of work that people do in our society to further it. A lot of women do this kind of work and it’s not valued in terms of a paycheck from a job, right? That doesn’t mean it’s not contributing to society. And so, I don’t remember if they specifically talked about basic income on that podcast, but this is a way to sort of reframe what counts as work and what counts as doing something valuable with your time.

UBI and Social Safety Nets

10:51 Emily: Yeah. Okay. So, I think I’m getting you here. I have another question: would this replace the social safety nets that we have currently and expand them, I guess you could say?

11:03 Jim: So, there are mixed opinions on this amongst people who advocate for basic income. I’m actually in the camp saying that this should not initially be treated as a replacement for any social programs. And I think the reasons are: one, is that I think there is widespread recognition across the political spectrum that our social safety net is not working as well as we would like it to. You get very different opinions as to what would allow it to work as well as we would like it to. But no one is satisfied with where it’s at. I think a lot of people have talked about, “Let’s provide basic income and then just cut much, if not all, of other social programs because this will eradicate absolute poverty. Why do we need to worry about anything else?” And there are actually, I would say, a lot of edge cases here where it’s people who are dealing with some specific challenge for which cash on its own is not going to quickly solve it. It will help a lot in many situations. But I think there is the risk that if you say, “All right, we’ll get rid of this other stuff and just give you cash,” you’ve basically taken a problem that requires multiple parts to solve and just replaced one part with another. And, in some cases, maybe they keep people worse off because of that.

Targeted Interventions Beyond UBI 

12:25 Emily: Can you be more specific about what is being provided to people now that’s not money?

12:29 Jim: Yeah. So, I think disability being a good one where disabilities can look very different for different sorts of people. And in some cases, the support you would need to actually be able to live with disabilities requires much more than what a basic income would provide. And so, that’s a case where, if someone were to say, “We’re going to wipe everything off the books and just give you that,” a lot of people in that situation are going to be left far worse off. I think there are specific issues around addiction, in some situations, housing assistance where there is obviously there are areas where housing is far, far more expensive. And so, to think that a national UBI would actually be enough for people in the Bay Area to be able to get by, it’s not realistic. And so, that’s a situation where a targeted intervention beyond the UBI is going to be important.

13:22 Jim: And then I think there are other ones where it may be some general challenge where someone’s falling out of the workforce or coming back from deployment abroad where, again, making sure that they have enough cash is important, but there are additional services that come beyond that that also much better set them up to succeed than the cash on its own. And so, I think that that’s a key thing here is to recognize both how transformative and valuable UBI could be, but also that it’s not a panacea. It’s not a silver bullet. It’s something that will need an ecosystem of additional supports if we actually want to have an effective safety net. And so, I don’t think the safety net that we have right now is doing that well enough, and we need to be rethinking that. But I think that there’s a danger when people say, “UBI instead of that,” that we throw the baby out with the bathwater and end up in a situation where people may be much worse off than they are today.

Regional Cost of Living Considerations

14:25 Emily: Yeah. I think because this is, I don’t necessarily want to say it’s a new idea. I mean, you said Alaska has been doing something like this for 40 years, but it’s gained maybe national attention only in recent years. So, this is still an idea that’s being worked out. And at the policy level, if viable, we don’t know exactly what the ultimate solution would look like. And presumably, it would change over decades and generations anyway. So, I’m glad you brought up the cost of living question. Because the U.S. is very diverse in terms of cost of living. Is the ultimate idea still that people would get the same amount of money no matter where they live? Maybe with some additional help, like you were just saying, for certain people in certain areas?

Psychological Implications

15:05 Jim: So yeah, a key part of it is–and I don’t think I said in my original definition, but the idea is–this would be the same amount to everyone. And there are a couple reasons for that. One is logistical that it becomes much easier to manage if it’s the same for everyone. But the other is more psychological. One of the reasons for taking a universal approach is to try to eliminate stigma associated with receiving support, which in our modern age, we all see how much stigma is associated with receiving various forms of welfare. And that, if it’s something that everyone in society is getting, you’re able to get around that. Because why is it wrong for the homeless person on the street to get the check every month if I’m also getting my check every month?

Regional Supplements

15:52 Jim: And so, that’s another reason to have the equal, universal amount. But as you say, what that means is that in particularly different regions across the country, you’re going to see big differences as far as the implications of that. So, there certainly are parts of the country where if you were giving everyone a thousand dollars a month, you can survive without too much difficulty. If you’re in the Bay Area or other places, that does not get you very far. And so, that’s an area where you do need to have something beyond that. There’s been some discussion around regional supplements where you might be able to top up a equal federal amount with something that goes up more for more expensive areas. But I think beyond that, yeah, there may be other targeted interventions that are important.

UBI Increases Mobility

16:46 Jim: I think one question that comes up that we don’t really have a good answer to but people wonder about is, if you’re providing the basic income to everyone, it is going to increase people’s mobility. And so, if you currently feel tied to a certain geography for economic reasons, which may be very expensive, whether that gives you the option to relocate to somewhere that is less expensive. And then that gets very complicated because it goes into community ties and family and things like that where there may be other factors beyond just the economics of it. But it’s something that would be different if we did this and so, potentially, that at least partially would help to mitigate some of those challenges.

Commercial

17:35 Emily: Emily here for a brief interlude. I bet you and your peers are hungry for financial information right now, especially if it’s tailored for your unique PhD experience. I offer seminars, webinars, and workshops on personal finance for early career PhDs that can be billed as professional development or personal wellness programming. My events cover a wide range of personal finance topics or take a deep dive into the financial topics that matter most to PhDs like taxes, investing, career transitions, and frugality. If you’re interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. We can absolutely find a way to get this great content to you and your peers even while social distancing. Now, back to our interview.

The Basic Income Podcast

18:34 Emily: I feel like I could continue asking you questions about this for quite a long time. It’s a good thing you have a podcast where other people can learn more about this. What is the name of your podcast?

18:45 Jim: Our name is a bit on the nose. We are The Basic Income Podcast. We’ve been introducing weekly episodes for about three years now and exploring both UBI specifically, but also, how it relates and connects to all sorts of other areas.

How to Fund UBI in the U.S.

19:00 Emily: Okay. So, I’m going to hold off on the questions that are still swirling in my head and just say, listeners, if you’re excited about this idea, or skeptical of it, or whatever, go ahead and check out the podcast and I’m sure there are other resources that you refer to from there where people can continue to learn even more. So, one more question around the vision of this, which is should we all, or enough of us in the United States, decide this is a good idea, what actually does it look like to fund this? Maybe post-transition, if there is a transition.

Enact Changes to the Tax Code

19:32 Jim: Yeah, so that’s another area where people have very different opinions around. Because, I mean, if we’re looking at it on its face saying, “All right, everyone in the country gets a thousand dollars a month,” that’s about $4 trillion, which is the size of our current governmental spending, which seems insane. But there are various caveats, I would say, that make it much more achievable than it may seem at a glance. My preferred approach to financing is first to recognize that, if you’re going to enact universal basic income, it means you need to make some significant differences in the tax code. And specifically, as a starting point, I think income tax. At its core, the goal of UBI is to provide people with financial security. And so, what that means is that, knowing you’re always going to get your check every month is important because who knows what may happen to you. And having it always there gives you that security.

20:31 Jim: But, if you’re earning a good paycheck, there’s no reason why you should be coming out net ahead, necessarily. And so, to basically update our income tax brackets such that, once people make above a certain point, their UBI is effectively being taxed away. So, maybe that’s four times the poverty level. So, if you as an individual are earning more than 50 or $60,000 a year, basically, you’d be getting your check every month and then you’d be paying a bit more in taxes to cover that expense. If you do it that way and look at what’s eventually the net cost, it drops to somewhere between 500 billion and a trillion dollars a year, which is still a lot, but a lot less than the four trillion we started with.

Shift Tax Programs and Brackets

21:18 Jim: And so, then there are different ideas as to how do you pay for that. That’s much more in line with other somewhat ambitious governmental programs. You can couple together some combination of a carbon tax, the financial transaction tax, a wealth tax. And sort of talking more about that, Elizabeth Warren wrote it up in her campaign where you’re able to raise that amount of money to cover that difference. And also, I think potentially looking at adding a few tax brackets at the top of the income level. If we were to go back to the taxation we had pre-Reagan, that would be bringing in a substantial amount there. So, with those things combined, you can relatively easily actually be able to cover the cost.

UBI and Graduate Training

22:02 Emily: Okay. Very, very interesting. So, I wanted to pivot a little bit to tie this really into more of our PhD audience because we haven’t brought that up so far really. I mean, you mentioned earlier that you know, having a basic income could afford people the flexibility to do more training. Of course, PhDs have a lot of that. Have you given any thought, or has there been any discussion around this, how basic income–I’m sure it’s been discussed at the undergraduate level, how that would affect people pursuing college degrees? You can speak about that a little bit if you like, but I am curious about what you think about how it might affect PhD training in the United States. And specifically, you know, you brought up earlier the scarcity mindset and how that prevented people from thinking longterm and it caused an effective IQ drop.

22:45 Emily: And in season four of this podcast, I published a two-part interview with Dr. Lucie Bland and she talked about her scarcity mindset that she developed during her PhD because she was living in poverty during her PhD. She was funded at a very low level. She lives in a very expensive city, and it’s something that a lot of people can relate to during their graduate training. Although you wouldn’t necessarily think about graduate students, a relatively privileged bunch, I would expect, necessarily being beneficiaries of basic income. But maybe during that training period, they are. So, can you just speak a little bit about that?

UBI and Financial Security

23:18 Jim: Well, I would actually just add on to that. What we’re seeing in the Bay Area right now is not only at the graduate student level, but actually the assistant professor level, in some places, that people are homeless. They can’t afford to live here. So, they’re living out of their cars. Yeah, I mean I think that it’s giving you that layer of financial security, which should help with that. I think, not just because it’s some extra money, but because it would be extra money not tied your employment education situation. And obviously this is not everyone, hopefully a small minority, but if you’re having some bad power dynamics with your professor and feeling like you don’t want to be working with him or her but are not able to step away because of finances you’re receiving from there, it gives you kind of that out knowing that, regardless of what you decide there, you have that income coming in otherwise.

Parallel: UBI and Fellowship Income

24:15 Emily: So, there’s actually a slight parallel there, actually with fellowship income, right? And you did your PhD outside of the state, so, maybe it’s a little bit different there. But here with fellowship income, you know, it’s an award that you receive as an individual. It’s based on your own merits. And so, it’s not necessarily tied to you staying in one person’s lab. And so, I again, I publish an interview in season four where someone was able to switch labs, did not have a good relationship with their first advisor, was able to switch labs partially because she received an NSF graduate research fellowship. And so, similar situation, right? If, you know you can go a few months and transition without a paycheck coming from your advisor, it gives you more freedom there to really seek out the situation that is going to support you best as a developing researcher. So, yeah. Excellent point there. Please continue.

24:59 Jim: Yeah. Well, I was going to say, I think you just nailed it. You could basically think of this as universal basic fellowships for PhD students because I think that, yeah, I think the dynamics that come with it very, very closely with match what it would be if you were getting a fellowship of the same size. I mean obviously with the added flexibility that you could leave a PhD program and still have it. But as far as the context within graduate school, I think that that’s basically what it would be.

25:27 Emily: Just to explore that a little bit further. Because I do think it’s a good analogy. So, one of the great things about fellowship income is that it gives you more freedom in your research, right? So, if you’re not beholden to working on a specific grant for your advisor, like you often are in STEM fields if you have a research assistantship. The fellowship allows you more intellectual flexibility and pursuing projects that are more in line with your own goals. It allows you to pursue collaborations. It’s just a greater degree of freedom. Now, some advisors exact more or less control when they do have people on a grant for research assistantships. That’s sort of up to their discretion. But yeah, the flexibility there in terms of your intellectual pursuits would then translate in terms of UBI into your general career pursuits, life pursuits. It would just be a much broader funding of that.

26:14 Jim: Yeah, I think that’s right. I think I could imagine there would also be kind of a trade-off on that versus greater financial security. Because one of the questions would be, if everyone were getting a basic income, would you still have PhD student stipends and outside fellowships at a similar level? If you would, okay, everyone’s going to be much more economically stable.

Final Thoughts on UBI and Academia

26:40 Emily: You said earlier as like a touch point that, in your vision of this, around 50 or $60,000 of income, that’s when the UBI would kind of phase out. And for the graduate student level, graduate students don’t reach that point. A lot of postdocs don’t reach that point. So, in some sense, if nothing changed on the grant side of things, then it would boost your income. But yes, the question is whether people would still be funded to the same degree given that they have that baseline. So, if the idea right now in academia is we give people just enough money to live on so they don’t have to have other jobs that distract from their PhD research, well then maybe they would just decrease that funding. So, yeah. Any other thoughts around that? I’m sure this has not been very fully explored because it’s a very niche interest.

27:24 Jim: Well, no, I think that this is a specific example of something that is much broader, which is basically, if we were to have UBI, what does that do to wages? And the theory is that it depends a lot on what type of work you’re talking about and how much there is the internal versus external motivation around doing that work. Because if someone’s only doing the work because they’re getting paid to do it, UBI actually has the potential to then increase wages because it basically gives them more leverage to say, “Oh, well I don’t actually like this work. I’m going to go pursue other options.” And a company might then have to say, “Oh, well instead of $8 an hour, we’re going to pay you $15 an hour.” On the flip side, if it’s something that people just want to be doing for other reasons, like perhaps going to graduate school since not too many people go to graduate school to get rich, then there’s the opposite potential where, if someone is basically willing to do it, assuming that they won’t be starving, then universities may say, “Okay, well you’re UBI now instead of giving you $18,000 a year, we’re going to give you six.

28:43 Jim: So, I mean, it’s a whole other topic, but I would say that that’s where unions might come in handy. But yeah, I think it’s one of those areas that it’s very, very difficult to answer and know exactly what will happen until we actually do it. So, we can hypothesize around it. But yeah, that’s an open question.

Value of Teaching and Shifting Landscape in Education

29:07 Emily: Yeah, I guess I’m also thinking about sort of we’re having larger debates and angst in academia around the value of teaching, right? Because there’s this huge adjunct workforce that is, you know, severely underpaid. They don’t have job security and yet such a huge percentage of the classes that undergraduates and graduate students take are being taught by people who are not full-time employees of the institution that they work for or institutions. And it’s just such a difficult area right now. I can definitely see how UBI would help people in that situation, right? Because they are also experiencing poverty or near poverty-like situations, many of them. But, yeah. I mean, we’re in a transition point for education broadly. Like, if we’re moving to massive online courses and so forth, maybe if your teachers are needed. I don’t know. There are just a lot of transition here. I guess when we’re talking about maybe some kinds of jobs disappearing or transitioning, teaching at the higher education level, is one of those jobs that is sort of in transition in the workforces. And so, yeah. UBI is just kind of another element to kind of throw into the mix here that we don’t really know how it’s going to play out entirely.

30:13 Jim: Yeah, I think that’s right. And this applies less, I would say. I would expect it to still apply to some degree, but on the flip side, as far as what is the responsibility of the teacher versus the student? I think, certainly at the elementary and high school level, there’s ample evidence that financial stability of the family that the students are coming from makes a big difference as far as how well they’re able to learn. And so, that’s, I would say, another wrinkle that gets thrown in here as well, where if you are ensuring that everyone who is in the class is in more of an abundance mindset, what implications does that have to what is the most effective way of educating?

Tell Us More About Your Podcast

30:55 Emily: Such an interesting topic, Jim. I think that people will definitely want to follow up with you and learn more about this. Maybe have more discussions with you around what does the potential of UBI look like in affecting higher education and graduate students and postdocs and trainees. Again, tell us a little bit more about what you do. We have the name of it, but what do you do on your podcast?

31:14 Jim: Yeah, so we cover a lot of different areas. Most of the episodes, I think like yours, feature or are centered around a guest interview on some topic. And so, we’ve covered everything from, yeah what does UBI do with the disability community, to what’s happening in Canada with UBI to digging in on some of the modern control pilots that are being done in the U.S. and abroad to what is the connection between UBI and housing? And so, it really covers a lot of different areas, but generally we bring on an expert, we chat with them, and then we talk through what are the ramifications of what they said. And so, really try to dig in a little bit on many different areas.

UBI and Healthcare, Education

32:03 Emily: So, actually one follow-up question that goes maybe more back to our earlier conversation with what does this vision look like? Does the implementation of UBI come with it or depend on a revolution within healthcare and also in higher education? You know, paying for higher education.

32:21 Jim: Yeah. So, I would say healthcare comes up a lot. And in my view, UBI can only truly be successful if we actually have truly universal healthcare because it basically counts on the assumption that you can somewhat reasonably project what is the cost of living for people across the country. In our current system. If you don’t actually have universal coverage, that is impossible. I mean we see all the time, all these cases of people having insane bills for services. And as long as that continues to happen, there’s no way to actually guarantee universal financial security. And so, I see those two things as very, very complementary and part of a whole package that we should be fighting for. And education, perhaps not quite as closely coupled, but I think if we’re talking about what is beyond just financial security, what is really setting people up for longterm success, it seems obvious that we want to make that as accessible as possible. And so, a model where everyone in society has access to higher education is certainly the way to go.

Best Financial Advice for Another PhD

33:29 Emily: Gotcha. Okay. Standard question as we wrap up here that I ask all of my guests which is what is your best financial advice for another PhD? And that could be related to something that we’ve talked about in these two episodes, or it could be something entirely new.

33:44 Jim: I mean, I think it’s just like figuring out your sustainability. So, I mean, thinking about where you’ll be going with your PhD and what is your cost of living then, but just trying to set yourself up so that you’re not heading towards a cliff somewhere, which yeah, I feel like it would look very, very different depending on your specifics.

34:06 Emily: Yeah, definitely. It’s something I talk about a lot for people who are sort of in transition, right, out of graduate school, out of the postdoc into other positions, especially when they’re moving. Make sure you understand the cost of living. As you brought up earlier, you know, in San Francisco, make sure you understand the cost of living that you’re getting into and that the salary that you’ve been offered is is appropriate for that area and negotiate if that is not your initial offer. So, thank you so much for that advice. Jim, this has been a fascinating conversation, really just the tip of the iceberg on this topic, and so thank you so much for joining me.

34:38 Jim: Yeah, I really enjoyed the conversation as well.

Outtro

34:40 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.