Personal Finance for PhDs

Live a financially balanced life - no Real Job required

Income

This Fulbright Fellow Supplements Her Stipend with Prior Savings

by

In this episode, Emily interviews Dr. Caitlin Kirby, a graduate student at Michigan State University and former Fulbright fellow in Germany. Caitlin has been greatly financially challenged on the Fulbright, namely by: 1) the large amount of money needed to move and settle into her new city and university, 2) the high cost of housing relative to the stipend, and 3) the additional expense of bringing her husband with her. Caitlin and the majority of her peers are supplementing their Fulbright income with prior savings. Fortunately, Caitlin and her husband grew their net worth in advance of starting the fellowship through house hacking and savings goals.

Links Mentioned

Fulbright fellowship stipend

Teaser

00:00 Caitlin: We’re paying about €1,025 a month for a furnished apartment with all bills included, which is the norm in Germany, and that’s 85% of my base stipend.

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 16, and today my guest is Dr. Caitlin Kirby, a graduate student at Michigan State University, and former Fulbright fellow in Germany. Caitlin details the financial challenges she experienced on the Fulbright, namely the large amount of money needed to move and settle into her new city and the university, the high cost of housing relative to the stipend and the additional expense of bringing her husband with her. Caitlin and the majority of her peers supplemented their Fulbright income with prior savings. Fortunately, Caitlin and her husband built up savings in advance of starting the fellowship through house hacking and savings goals. This episode is valuable, not just for future Fulbright fellows, but also anyone facing a career transition or move. By the way, we recorded this interview in February, 2020, and I’ve included an August, 2020 update from Caitlin after the interview. Without further ado, here’s my interview with Dr. Caitlin Kirby.

Will You Please Introduce Yourself Further?

01:25 Emily: I have joining me on the podcast today, Caitlin Kirby, and we’re discussing something that I haven’t had the opportunity to before, which is actually the Fulbright fellowship, super exciting, that is as a PhD student. And Caitlin will also be telling us in the second half of the episode about how to prepare for financial challenges that you don’t even know you’re preparing for, like the Fulbright. So Caitlin, I’m really excited to have you on the podcast. Dave, thank you so much. And will you please introduce yourself a little bit to the audience?

01:53 Caitlin: Yeah. Thanks. I’m glad to be joining you. I am a PhD candidate at Michigan State University in Environmental Science and Policy. My dissertation looks at environmental decision making in cross cultural spaces, and I also engage in science education research in university classrooms.

02:13 Emily: Yeah. How did you decide that you wanted to do the Fulbright? I guess maybe my own bias coming into this is that I really think of it as something people do after undergrad while not yet enrolled in a graduate program, but you know much more about this. So how did this come on your radar and why’d you decide to apply for it?

02:31 Caitlin: Yeah, so the program you’re thinking of is probably primarily the English teaching assistant program, which is primarily students who have graduated undergrad and not moved on to a graduate degree program. And then a smaller subset of the Fulbright is study and research grants for graduate students. I have always enjoyed international travel. Like I said, my dissertation is looking in cross cultural spaces. I did some research in South and so it was always something that was kind of on my radar. And actually I was thinking about doing it for a post doc. And in my last couple of years of grad school started looking at the application requirements and figured out that it was going to be simpler to apply as a graduate student, so I did, and here I am.

03:18 Emily: And is this, I know it’s playing into your dissertation, but is this kind of you taking like an extra year or is this really not extending your time to degree at all and it’s just going to go right in with your overall plan?

03:31 Caitlin: Yeah. So a little bit of both. I actually defended my dissertation in October, so it’s kind of an extension of my dissertation and degree time. Although I probably would have graduated in May anyways and now it’s August instead.

Financial Support Provided by Fulbright

03:47 Emily: Gotcha. Well, congratulations on already defending. We’re recording this in February, 2020, so for the listeners reference. Okay, so what financial support does the Fulbright give to you?

04:01 Caitlin: Yeah, so it is different for every country. I am speaking about Germany Fulbright grant. Although I also looked at a lot of the Western European ones. They get a lot of applications as well, have a lot of grants and are fairly similar in that they are relatively expensive places to live. Hopefully this is generalizable across a lot of those spaces. My understanding from folks that I’ve heard from who are in spaces that have lower cost of living is that the stipend is a little bit more generous in those spaces.

04:34 Caitlin: What Fulbright does provide in Germany, if you are a graduate student or an English TA, you get €850 a month. If you’re a PhD candidate, so you’ve passed your comprehensive exams, then it goes up to €1,200 a month. So if you are a PhD student and you can wait until after comps, I think it’s worth it.

04:58 Emily: Yeah, that’s a big raise, surprisingly.

05:01 Caitlin: Yeah and €850 is actually the lowest, I’ve seen for countries in this area. Other countries in Western Europe range from about €1,300 to €1,500 a month. These stipends are not posted on the actual application website. You have to go to the Fulbright website for each individual country to find those, and sometimes they’re not available and sometimes they don’t include all the details.

Financial Challenges of the Fulbright

05:26 Emily: Yeah. So I understand that you have encountered some financial challenges based on that stipend and also maybe a lack of clarity up front about exactly what was going into this whole package. So can you explain a little bit more about what you’ve found?

05:41 Caitlin: Yeah. There are some challenges that are specific to my situation and then some challenges that some other Fulbrighters have also experienced. I would say sort of summarizing those across from what I’ve seen from others and for myself is that the three really primary challenges are that you need a lot of savings at the beginning to cover your first couple of months and some initial expenses. Then number two would be that housing is really kind of the make or break factor in how far your stipend goes. And so if you can look ahead of time when you’re deciding what institution to work with at the cost of living in a city, maybe try and find one that’s not so high. And then the third thing would be, think about any extenuating circumstances that might make it more costly for you as an individual.

06:33 Emily: This actually sounds like really good advice for anyone approaching any financial or location transition whatsoever, so people going into graduate school, going to a post doc, going to your first job, so I really want you to expand more on each one of those points.

#1: Expected and Unexpected Upfront Expenses

06:48 Caitlin: For the initial costs,, or the one-time costs when I arrived here in Germany, first of all, like everything else in academia, the Fulbright stipend model is built on reimbursement. So you buy everything ahead of time, and then after you get your bank account in your country, they will reimburse you, which for Germany can also take a long time. It’s a very bureaucratic country. A lot of the Fulbrighters in Germany were paid late, like two or three months after their grant had started, and it was really inconsistent across different fellowship recipients. Or sometimes they were paid in consistently. So having that initial savings is really important to be able to get you through.

07:34 Emily: What kinds of upfront costs were you experiencing?

07:39 Caitlin: Yeah, so moving costs in general, right? You have to get your travel, which Fulbright covers some of, and sometimes again, depends on the country. My flight was covered and then they provided an additional, like €150 for other expenses, but I decided to fly out of Chicago, which was far away, so I needed hotel and transit and it didn’t really cover all that. Then once we arrived as well, there was a lot of traveling around the city that we had to do to get everything settled. I’m saying we, because I came here with my husband, and that transit was eventually covered by my university pass, which I also had to pay about 300 euros to enroll at a university. And some folks will have to pay tuition as well.

08:29 Emily: Wow. That is a lot, and it sounds like it’s quite variable too. Going into this situation, it sounds like actually you’re in contact with other people doing the Fulbright. And so is there like a network already of people that you can tap to find out, okay, what are all these expenses, or does the program make it really, really clear once you have a host university?

08:51 Caitlin: It was more hearing from other people that I got this information. I don’t remember how I was contacted about this initially actually, but there was a Fulbright Facebook specifically for folks in my year. And some alum had joined that as well. I believe the Fulbright did actually connect me with these social networks. So they are very good about getting you in contact with alumni and folks that you can engage with, and then beyond that, it’s kind of up to the folks in each cohort to decide what to share and how often and all of that.

09:26 Emily: This actually sounds very familiar to what I understand is the experience of many international students coming to the US — the place where they get the most information from, is the network of students from their country already at that university or who are coming in at the same time, which can be truly an amazing resource in many ways. However, if that group doesn’t already have the correct information or the best information, then it can kind of be passed along and not like optimized. It’s probably 80% awesome and then 20% maybe someone else could give you better information, but like that is really the best go to resource.

10:05 Caitlin: Yeah.

10:06 Emily: Not being paid, that is reimbursed for two to three months sounds really long. Were there any other kind of upfront reasons why you needed to tap savings or expenses that you wish you’d known about in advance?

10:22 Caitlin: Yeah. This one is perhaps unique to Germany in that when you get an apartment in Germany, when they say unfurnished, they mean like unfurnished. There are no light fixtures, there are no cupboards, there’s no kitchen sink. So your choices are to come and basically furnish a whole apartment, which I know another married grantee did this year, or you can pay a premium to get a furnished apartment, which are much less available and so much more expensive than —

10:58 Emily: Wow, so it’s typical to bring in your own appliances and like all of that? Do people move that stuff when they move from place to place?

11:06 Caitlin: There’s a reason that Ikea is a big deal here because you can just kind of pack it up and take it with you or you can sell it to the person who’s renting your apartment next, which so then if you’re renting an apartment and they’re offering the kitchen, then you can pay like 1200 euro to, I’ve seen up to like €4,000 to keep the kitchen in the apartment

11:28 Emily: Wow, that is a lot of upfront costs. Anything else to add to that list?

11:34 Caitlin: Some bureaucratic stuff in general. I think most Fulbrighters would be aware of this, but maybe not necessarily how much of it or how much it might add up. So passport photos, the passport itself, some places have expensive visa applications and then myself coming in as a married grantee, there’s extra documentation that we needed around our marriage certificate, getting that translated, paying for my husband’s visa, that kind of thing.

12:02 Emily: It’s a lot of costs. It’s a lot of costs you’re listing. Are you being completely supported by the Fulbright in this year or is Michigan State supplementing at all?

12:11 Caitlin: You’re not allowed to really have significant other income. It’s up to 450, I don’t remember dollars or euro a month is allowed as a Fulbright grantee. And that again, may be specific to Germany that amount, but still the fact that you’re not supposed to have significant outside sources of income holds true. I did receive an award in the semester that I was awarded the Fulbright, from Michigan state. I got some money from them as an award for receiving this fellowship that I then tucked away and said, okay, that’s going to supplement when I am on my Fulbright.

12:52 Emily: Yeah. That’s a great thing to have upfront going into this process.

12:56 Emily: Okay, so we’ve talked about upfront expenses. Sounds like you need massive amount of savings to undertake this. What was the second point that you were going to make?

#2: Cost of Living and Housing in Your New City

13:06 Caitlin: Yeah, housing is definitely the biggest factor in how far your stipend is going to go. That’s again where you might want to consider, because as a Fulbright grantee, you decide which institute you’re going to work with or which university you’re going to attend, and if you somehow have a choice between some different costs of living areas, you might want to choose one that’s a little bit easier on the wallet. Then the other thing that sort of made housing more difficult for myself as an older grantee, and a married grantee is that there’s not really shared housing options available as a married couple. We had to get our own apartment, and that makes it a lot more expensive. It’s a lot more reasonable if you’re able to share space, but a lot of graduate students might not be able to, or might not want to for a variety of reasons.

13:57 Emily: So when you’re talking about sharing space and that not being available to you as a married couple, are you still talking about having like individual bedrooms or is it like a dorm situation or what would other people do if they were single?

14:11 Caitlin: Yeah, so they’re called veh has in German, or WG is the abbreviation for it. And it’s basically everybody has their individual bedroom in an apartment that’s shared with people.

14:24 Emily: Okay. And you can’t share a bedroom then as a couple?

14:28 Caitlin: It’s just extremely rare, so rare that on the websites where you can like search for these housing options, there’s no option to have a couple, or like a male/female mix going into these rooms. So it’s a little bit of a cultural thing.

14:47 Emily: Yeah. Interesting. I mean this point is also super super applicable to anyone moving anywhere. Rent, or your housing expenses more generally, is most likely going to be the largest expense in your budget. It’s very difficult to change once you — I mean, you can change it maybe after a year or something, but once you sign that lease, you’re locked in for a little while. It’s so important to put really the bulk of probably the research that you’re doing into that housing choice. And it does sound like yours was further constrained by bringing your spouse along with you. Anything else you wanted to add about the housing cost?

15:22 Caitlin: I think that about covers it, but just to give an idea, we’re paying about €1,025 a month for a furnished apartment with all bills included, which is the norm in Germany, and that’s 85% of my base stipend. I do also get, I think I didn’t mention that I get some dependent support for my husband being with me. It’s about €270 a month, so not a huge amount. That really has been, that was the biggest shock to me, I think, because I could see on apartment websites, things that were cheaper, but they weren’t able to fit to our needs.

16:05 Emily: Yeah. And do you have any other source of income right now? You’ve mentioned the Fulbright grant, the additional support for having a spouse and then the upfront award that Michigan State gave you to help a little bit with that. Does your husband have any income right now?

16:19 Caitlin: No. He’s not allowed to have income either, both because of visa issues, and then if he did earn significant income, then we would just say, okay, we don’t need the dependent support from Fulbright. But with visa issues and also language issues, it would be very difficult for him to work. So it’s savings and Fulbright.

16:43 Emily: Yeah. Wow. Okay, well, we’ll get into how you’re making that work in a moment. And what was that third point that you wanted to say about everyone’s unique situation?

#3: Individual Personal Finance Situations

16:53 Caitlin: Yeah, so there’s a lot of difficulties that I’ve had with the Fulbright, but I don’t think overall it’s necessarily an unfair stipend. I think that you need to weigh it against your individual needs. So again, myself bringing my husband, that’s two people living on one income, obviously it’s going to be more difficult. If you have student loans that you’re still paying, some of them are eligible for deferment, depends on who your loan provider is, in some cases. If you have pets that you either want to try and bring with you or need to get taken care of. If you have a lease at home that you need to break or keep paying on or storage for your items, regular bills at home. So our car right now is on storage insurance, which is luckily not very much, but still something to consider. Prescription drugs — there is some level of health coverage provided by Fulbright, but they do not pay for regular expenses like that. And accessibility needs too. Our apartment would not be accessible to someone with a wheelchair. And even though there’s great public transportation, you might need to be closer to the city center than we are. Just all kinds of things that maybe are easily or more integrated into your life before you leave that become very obvious as challenges when you’re on your way.

18:20 Emily: A lot to think about there. Actually going back to your second point, I think I was getting the impression that the Fulbright grant is the same across every country. Is that right? The income, that is, that you would get as the same across the country, or is it actually different depending on which university you land in?

18:40 Caitlin: So for Germany, it is the same across the country. Some other countries vary it depending on what the cost of living is in the city that you’re in.

18:50 Emily: Okay. So in some cases you might have a cost of living adjustment built into your income, and in some cases you might not, and that’s why you were saying, okay, let’s be really careful about, which institute you choose to go to in that case.

19:01 Caitlin: Yes. And Germany did actually announce a few months into the grant that they have extra money for a housing stipend. So folks who are in those higher costs of living situations will be able to receive up to €250 a month. And there is some kind of, I think as an American, maybe kind of ridiculous size requirements and that single people get 200 something square feet for that stipend and as a married couple, you can get a 320 square foot apartment, which is tiny. That’s like a studio with like a hot plate and a toaster oven, right? For us, cooking is really important, so we opted to get a prorated stipend and have somewhere with a full kitchen.

19:47 Emily: Gotcha.

Commercial

19:51 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.

Making it Work Despite the Financial Challenges

20:50 Emily: So, I’m freaking out a little bit for you when you mentioned the percentage of your income that your rent takes up. How are you making this work? What have you been doing in the years leading up to going on the Fulbright that makes you not freak out right now about money?

21:09 Caitlin: Yeah. So one piece that I do want to say, is that I’m not necessarily unique in that I am having to use a lot of other savings. On the Facebook group, I mentioned that to the other Fulbrighters in Germany, I just did an informal poll and 62 out of 91 responded, so that’s about 70%, said that they would not be able to financially survive without significant additional savings, gifts or income. So —

21:37 Emily: Is that something that the program makes clear earlier in the application cycle or is this something that comes as a surprise once people are really starting to look into the financials?

21:49 Caitlin: I think it’s more of a surprise. They are pretty upfront about what support is provided, like you can go look at the numbers. I was surprised that that many people were struggling with it because I was thinking like, yeah, this makes sense, I’m supporting two people on this income and my savings, so of course it’s going to feel like a, a stressful year. But I was surprised that that many people expressed that they, they had to use significant outside sources. There were like 15% of people who said that they had money left over for savings, so again it’s working for some people.

22:27 Caitlin: Yeah, but not the majority. All right. Yeah, go ahead. How are you making this work?

22:33 Caitlin: Yeah, so I think like with anything else in academia or life, it’s a combination of luck and privilege and decision making. My husband and I were in a low cost of living area, Michigan State University is in East Lansing right next to Lansing, Michigan’s state capital. We were living in Lansing where houses are fairly cheap and we were able to buy a house when I started graduate school, because I had funds, enough for a down payment, from a relative who had passed away. We intentionally bought this house within biking distance from the university, so we sold one of our cars once we arrived, and we ended up having roommates for almost the entire time that we lived there.

23:23 Emily: How large is your house? How many bedrooms?

23:26 Caitlin: It was a three bedroom.

23:28 Emily: Okay. And so you had one or two tenants that entire time?

23:34 Caitlin: Yes. Usually one, sometimes two.

23:38 Emily: I love this strategy. It’s come to be known as house hacking. It’s actually something I’m excited about covering even more on the podcast. Either — well, whenever this is released — maybe in the recent past, or maybe in the soon to be future. But I love the strategy for graduate students. Of course, it’s only possible in relatively low or moderate cost of living cities, where the housing market is something that a graduate student can kind of grasp. It definitely helps to have two incomes, like presumably you and your husband have, and also to have acquired down payment money from somewhere. Those are things that are very, very helpful, although not strictly necessary, but go into the likelihood of house hacking being possible. Overall, has that single tenant paid your entire mortgage, half of your mortgage? How much of a financial boost has that situation given you?

24:31 Caitlin: We were doing it both for personal and financial reasons. Every single person who lived in our house was someone we knew, either friends or family members. So we charged the actual cost to them, of living there, which maybe doesn’t quite work out in our favor because we were also then paying for maintenance costs and that kind of thing, but it was what we decided to do. All of the income that we got from renters, we put into savings or paying off my husband’s student loans, which we had to do at the beginning of graduate school, or IRAs, retirement accounts.

25:17 Emily: What was your husband’s income like during this time? Did his income far exceed yours, or was it similar to what you were making?

25:25 Caitlin: His income was similar to what I was making, similar to a graduate stipend?

25:29 Emily: Yeah. Okay. Not a huge boost there, but good for two people living in a lower cost of living city. Great, so you were beefing up your savings. Anything else that you were doing during that time to help you prepare for this challenging year?

25:43 Caitlin: Well, so I knew relatively ahead of time that the Fulbright was a possibility and if I didn’t get the Fulbright, we were going to take a trip to travel around Europe anyway, so we had this designated savings account for a Europe trip or Fulbright supplement and we were able to put $5,000 in that. I was also keeping pretty good track of how much money we were spending, so I knew in general how much we would need to supplement the Fulbright and was able to funnel that away in the months leading up to it.

26:18 Emily: How long did you take to directly prepare for the Fulbright and, or generally going to Europe?

26:26 Caitlin: Hmm, that’s a good question. It has been a goal in my financial tracking account for over two years.

26:37 Emily: Okay. Yeah. That’s a great time horizon. I usually encourage people to think out at least a ahead, like what major expenses may be coming their way, but two years is even better, if you can do it. That’s a great kind of baseline to have to prepare. I forgot to ask, what are you doing with your house right now? Is it fully rented out?

26:55 Caitlin: We sold our house before we left. We didn’t want —

26:58 Emily: Oh wow.

26:58 Caitlin: Yeah. And because I’m graduating at the end of the Fulbright, I’ve been applying for jobs. We don’t know where we’ll land, so it just made sense.

27:05 Emily: Okay, so you’re not planning on returning to Lansing, and you’ve closed everything out there that you need to before leaving.

27:13 Caitlin: Yeah.

27:13 Emily: That’s great. So presumably you also had some capital gains from that sale?

27:18 Caitlin: We did, yeah.

27:19 Emily: That’s awesome. Anything else that you’re doing to make your financials work this year?

27:25 Caitlin: Just keeping track, basically, which is a little bit harder in Germany. It’s very much a cash economy and I like to keep track of my purchases with card, but instead I’m out paying cash and euro and then coming home and converting that and remembering what went to what. Keeping track so that we can then also have some money set aside for travel, since that’s part of the mission of the Fulbright, as well as this cultural exchange.

27:56 Emily: That sounds awesome. Anything else you want to say to another potential Fulbright applicant, regarding the finances of, of doing the fellowship?

28:05 Caitlin: I would say don’t be dissuaded based, based on what I’ve said. I think it tends to be most overwhelming at the beginning and then things kind of level out. You either figure out where to make sacrifices, or there are options for you to earn up to an extra 400 euro a month, which is pretty accessible. I would say that it’s still definitely worth it, if in your situation it’s not going to be too burdensome.

28:36 Emily: I think it’s kind of like with any other life transitions, as I was saying earlier. Having cash in your bank account and your savings account is going to help you so much through that transition, and it’s not necessarily like vital, but it is going to make it a lot smoother. And it’s something that you can then repay out of your ongoing income. Like you said, with the reimbursements coming slowly, that can go right back into refilling the savings for the next transition that will be happening at the end of the year, or whatever. So the earlier you can build up savings kind of for whatever comes your way, as you did, the better okay.

Final Words of Advice

29:10 Emily: Caitlin, I end all my interviews by asking my guest, what is your best financial advice for another early career PhD?

29:17 Caitlin: I would say find a way to enjoy or kind of make a game out of financial management, with the caveat that I understand that some PhDs are not in a position where they can really even sustain themselves. You’re allowed to feel stressed out about it if that’s the situation you’re in, but find what works for you and what interests you about your finances, so that you can keep track in a way that makes sense for you. For example, I do not like to budget out where every single bit of my money is going. Instead I set aside, this is for retirement, this is for long-term savings, this is for this specific short term savings goal, and then everything else can get spent because everything’s taken care of. But if you don’t want to even want to look at a spreadsheet, then make a visualization or make it into a presentation, make it interesting for yourself.

30:18 Emily: I love that tip. I don’t know if this is a widely used term, but I call it the “unbudgeting” method. So for those people who don’t want to be down in the weeds with this category versus this category, as long as you have that high level savings or debt repayment or whatever you’re doing, as long as that’s taken care of and ideally through like automated transactions, so you don’t even have to think about it. As long as you’re paying attention to that balance in your checking account, just spend what’s there because you know you have your big goals already taken care of. And it actually — seems like it doesn’t sound like this is your preference — but in a cash economy, budgeting without putting a ton of spreadsheet effort into it can be possible because you just say, here’s my cash for eating out, here’s my cash for groceries, and just spend that down, and don’t worry about having to keep track specifically because you did it ahead of time.

31:09 Emily: Well, thank you so much for joining me on the podcast today, Caitlin. As I said, I’m really excited to discuss the Fulbright. It’s a first for me.

31:16 Caitlin: Yeah. Great, and I’m excited to discuss personal finance.

31:20 Emily: Thank you.

August 2020 Update

31:22 Caitlin: Hi, Caitlin Kirby here with an update on what happened with coronavirus and Fulbright. In March, Fulbright programs around the world started sending people home as coronavirus was coming into those countries. For me in Germany, that meant a couple of weeks of sort of confusing communication from Fulbright, followed by eventually them suggesting that everybody go home, followed shortly by all Fulbright programs, worldwide, being suspended. Again, things were different on a country to country level. For Germany, we were given funding for changes in travel plans to head home. As per regular in the Fulbright program, that was only for the grantee and not for any dependents. And then we were also given our stipend through June 30th, which for me meant that I was receiving a month and a half less of payment. For most people that’s when the program was ending anyway.

32:31 Caitlin: And then Fulbright Germany was also able to provide folks with, I think it was a thousand euros just as additional transition funds. This information kind of all came piecemeal, so it was a little bit stressful in the moment. But I did end up then going back to the United States in March. I was fortunate enough to be able to, at least from the research standpoint, work remotely with my research team back in Germany, so I still got to complete a lot of my goals for the Fulbright, as far as research goes, but obviously missed out on the rest of that experience of being in the country, in Germany. I was also fortunate to then be able to start my postdoctoral research position at the University of Nebraska, Lincoln a little bit early, so I didn’t have gaps in funding, which obviously was really helpful.

33:24 Caitlin: Fulbright, in this coming year, again is a little bit country to country. I know some programs have been canceled because of coronavirus. Some programs are starting late, in January, and that is really all that I’ve heard. If you are just considering applying to Fulbright now, I think chances are better that things will be a little bit more normal by the time you start or at least Fulbright will have better contingency plans for what happens if outbreaks do occur so that you’re not sort of waiting week by week, or really day by day to figure out what’s happening at the commission level or with the Fulbright program, overall.

34:08 Caitlin: One other note, if you are applying this year, there is potential for you to have increased competition because Fulbright did offer for folks whose grants were interrupted to be able to reapply in the coming cycle. They don’t have any priority over folks who are applying for the first time or second time, but that is a possibility for folks who are in situations where they’re able to come home and then apply for Fulbright again, which is not for a lot of people I know who were doing the Fulbright, but it’s, again, a possibility.

34:46 Caitlin: If you want a little bit more information about some of the impacts of the changes in the Fulbright program in different countries, there is a group on Twitter called Fulbright Crisis and they have been cataloging some of the difficulties that people coming back from different countries have had, or people coming back in general. Like for example, the health insurance that Fulbright provided was only in the country that your Fulbright was in so when folks were sent back home, some of them did not have health insurance. And some folks were not provided stipends throughout the program. Like once the programs ended in March, some countries were not providing stipends for their grantees. Again, the Twitter handle for that is @FulbrightCrisis and they’re showcasing some of those difficulties if you want a little bit more information about what that has looked like and maybe what that will look like in the future

Outtro

35:49 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the personal finance for PhDs podcast. There you can find links to all the episode show notes, and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

How This Grad Student Fellow Invests for Retirement and Pays Quarterly Estimated Tax

by

In this episode, Emily interviews Lucy Capano, a rising fourth-year PhD student at Washington University in St. Louis. Since she started her graduate program, Lucy has been funded by a non-W-2 fellowship and training grant, which has affected her financial practices of retirement investing and paying income tax. Lucy and Emily discuss what changed for 2020 to permit fellowship recipients like Lucy to use an IRA and how Lucy handles calculating, saving for, and paying quarterly estimated tax to the IRS. Lucy shares her motivation for pursuing saving and debt repayment goals while in graduate school and her surprising best financial advice for another graduate student.

Links Mentioned in the Episode

fellowship tax investing

Teaser

00:00 Lucy: That amount would automatically withdraw to that separate checking account that I didn’t really use for anything. And then at the end of three months, when it was time to pay quarterly taxes, I knew I had that amount and I was not worried about it. Right? I never even saw it in my regular checking. It only went into that secondary checking account.

Intro

00:22 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode nine, and today my guest is Lucy Capano, a rising fourth-year PhD student at Washington University in St. Louis. Lucy has been funded by non-W2 fellowships and training grants since she started her graduate program, which has affected her financial practices of retirement investing and paying income tax. We discuss what changed for 2020 to permit fellowship recipients like Lucy to use an IRA, and how Lucy handles calculating, saving for, and paying quarterly estimated tax to the IRS. Lucy shares her motivation for pursuing saving and debt repayment goals while in graduate school and her surprising best financial advice for another graduate student. Without further ado, here’s my interview with Lucy Capano.

Will You Please Introduce Yourself Further?

01:21 Emily: I’m delighted to welcome to the podcast today Lucy Capano who’s a rising fourth-year PhD student at Washington University in St. Louis, and we are talking about my two favorite subjects in one episode, investing and taxes, particularly for graduate students, maybe postdocs as well. So, Lucy, would you please tell the audience a little bit about yourself?

01:38 Lucy: Yeah, I’d love to. My name is Lucy, like Emily said, I’m very grateful to be here. I study neurodegenerative diseases and the age-associated causes that could be implementing them in the human brain. And we have a really cool protocol, but this is not about science. This is about taxes and budgeting because as a graduate student, we have a very limited income, and really, depending on where you are, you can have excess, or you can be really, really tight-budgeted. And it took me two-and-a-half years to really figure out where I needed to be. And so, why would I keep that information to myself? I think we should be sharing it.

Estimated Taxes on Non-W2 Fellowship Income

02:19 Emily: Yeah, I see we have a similar mission! So glad to have you on the podcast. So, your personal story, when you started graduate school, you had what I call non-W2 fellowship income. Can you talk a little bit more about that and why that was particularly financially challenging and odd at that time?

02:36 Lucy: Yeah, absolutely. As a first-year, I came in, and generally, that one is non-W2, and then I was immediately transferred to a training grant, which again means that I’m on a non-W2. So, that means my taxes that I would need to pay annually to the government are not taken out of my paycheck automatically. So, I get the full, gross amount given to me, and then I need to section portions of it to be able to pay estimated taxes. So, estimated taxes are due every quarter, April 15th. Oh my gosh. Am I going to get these dates right?

03:12 Emily: I have them. It’s mid-April, mid-June, mid-September, and mid-January, except in 2020 the first two quarters–so what would usually be mid-April and mid-June–have now been bumped back to that July 15th, 2020 annual tax due date. So, three types of tax stuff all due on the same day in 2020, but you got a little bit of a reprieve. So yeah, go ahead. It’s weird, right? It’s three–two–three–four months in length throughout the year. That’s why I also had trouble remembering this for like the first couple of years.

03:44 Lucy: The July has definitely been throwing me off because I’m used to June and now we’ve got July. So, when you get this money, how do you even make sure that you’ve got enough to pay per quarter? And do you want to do it all upfront, which you can totally do? Do you want to actually do it by quarter and hope that you remember? There’s a lot of ways to tackle it. You just need to find what works best.

Grad School Pay Frequency and Investment Goals

04:05 Emily: And so for you, are you being paid monthly? Or what is your pay frequency?

04:10 Lucy: We are paid on the last business day of the month. So, everything comes to me in one large lump sum. And that’s also slightly problematic, right? You need to be able to budget so that your entire month can be paid without overdoing it while waiting for that monthly paycheck to come in.

04:28 Emily: Yeah. Pay frequency is one of these really weird things about graduate school, where most people I think are once per month, but there are some people every two weeks or bi-monthly. And then there are some people on fellowship who receive an entire term’s worth of income two, three times a year. So, that’s a whole other sort of budgeting challenge. It’s nice that you get it up front, but it also causes problems. But that’s what I was wondering about when you mentioned paying the estimated tax. So, let’s talk a little bit more about estimate tax at the end of the interview and switch to talking about investing. So, when you started graduate school, what was your situation around investing? Was it a goal of yours, and were you able to do it?

05:06 Lucy: Yeah, so I moved here from an East Coast city. I’m now in the Midwest, and I love the East Coast, but it is not cheap. Just like the West Coast. And so, we pretty much didn’t have any disposable income. It was paycheck to paycheck. I was working both my lab tech job and a supplemental just to help kind of keep us afloat. And so when we moved here, the cost of living is a lot less. And so, we actually had a surplus after a certain bit of time. You know, after all the moving expenses when we paid those off. And the problem became, I always knew that I wanted to save for retirement and start savings, but I kind of didn’t know where to start. And in addition to that, I had never really had excess money before.

05:52 Lucy: And so a lot of money was escaping places that I didn’t really notice it was escaping. And that was kind of the big “Aha” moment for us was when we shifted. And I’m saying “we,” I live with my partner, we’ve been together for quite some time, was realizing that we had to make a decision. Do we want to go out to eat a bunch of times this month? Or do we want to have the retirement savings and the flexible savings accounts that will get us to the goals that we want, which is probably to move back to a coast, which again, not cheap. So, we need to do a lot of good saving while we’re here.

Retirement Investment: IRAs

06:33 Emily: So, was retirement investing in particular on your mind at that point?

06:38 Lucy: Yeah, so I had worked a number of jobs before coming to grad school. So, I had a 403(b), which is the nonprofit version of a 401(k), and I also had a Roth IRA from that same time. But when I became a graduate student in 2017, I knew that I couldn’t contribute with any of my stipend. So, I couldn’t do much other than build kind of the flexible savings that you keep within your bank account. And so, I knew I was just kind of in limbo and I was going to live there. And then in 2019, the SECURE Act was passed. And that changed the game for graduate students.

07:14 Emily: Yeah. Just to go back and explain that a little bit further because still a lot of people are kind of unaware of all these different laws and so forth. So, 2019 and prior, I think going back to like the eighties, the 1980s, what I referred to earlier, non-W2 fellowship income–so, any kind of fellowship training grant income that you get that’s not on a W2–at that point was not eligible to be contributed to an IRA. It was not considered taxable compensation or earned income. So, that was the situation until the SECURE Act passed. Not to say that everyone receiving that kind of income was totally unable to contribute because if you had a side hustle you could, if you were married to someone with taxable compensation you could, so there were some workarounds. But for plenty of people, it was just a hard “No.” If your stipend, your non-W2 fellowship stipend was your only income in the course of the calendar year, nope. An IRA was not an option for you. But pick up again, please with what the SECURE Act did.

How the SECURE Act Supports Grad Student and Postdoc Savings

08:06 Lucy: Yeah. So, the SECURE Act stands for Setting Every Community Up for Retirement Enhancement Act, which is great. I love that it ends on enhancement and then adds the Act back in. And what it says is that the term compensation shall include any amount, which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study. So, that meant that anything that I could claim as my gross individual income was now able to be used to be saved for retirement.

08:45 Emily: I think that was always a point of confusion prior to 2019, is that, wait, wait a second. My income as a graduate student is taxable? Like I have to pay income tax on this, and yet, I am not allowed to contribute to an IRA? It was very incongruous, hard for people to understand. It was there in black and white in the tax code. It was unambiguous, but it’s just a hard thing logically to come to grips with. So, it’s so great that the SECURE Act, which originally this Act was called the Graduate Student Savings Act, and then it was folded into the SECURE Act. I have a great podcast episode from last fall–two, actually–that I did on the SECURE Act’s passage. So, I’ll include those in the show notes in case you want to go back in time and listen to those. But yeah, end of the day, the great news is starting in 2020, people like you with only this type of non-W2 fellowship income, now you can contribute to an IRA again. So, have you been? How are the savings going?

09:37 Lucy: Yeah, great. We absolutely have started putting money into the Roth. It’s important to start early, right? In high school, we learned about compound interest and investing, and the earlier you start, the more you get out of it in the end. And so, when we talk about budgeting, we usually try to have around–I was taught about six months of your important and unmovable expenses, right? Your rent, your car, your car insurance, whatever else you may have that you know you have to spend monthly in a savings account. But then after that, there’s no point in continuing to build that up. That stuff should now move to retirement savings and kind of investment options. So, now we have automatic, biweekly–which is every two weeks because biweekly is a fun word–directly into the Roth IRA account for me and both my partner. And so, then I go in and I take those and I apply them directly to whichever funds I want to purchase with that.

Why Make Retirement Savings a Priority During Grad School?

10:38 Emily: Yeah. That’s awesome. Can you expand a little bit more about why it is important for you? Like why you have decided to make retirement savings a priority during graduate school? When, first of all, I mean, yeah, we need to acknowledge a lot of people can’t. You said that earlier. Some people are just plain not paid enough. That’s an unfortunate reality of some programs underpaying their students. But for the people who are able to, it might not necessarily be a goal. Maybe they want to do some other things with their money. So, can you expand a little bit more on why this early start is so important?

11:10 Lucy: Yeah. I mean, absolutely. It is definitely personal preference, right? Some people it’s just not on the radar and that’s alright if that’s what makes you feel comfortable. But for me, with the experience that I’ve had growing up and the experience that my partner’s family has had. I think it’s just so important to have that kind of a safety net for when retirement occurs. Both my parents are now retired. They go on trips whenever they feel like it because they have a really wonderful nest egg of savings and retirement funds that they can pull from at any time. And thankfully, they are very comfortable in that regard. And the earlier you start, like I said earlier, it compounds, right? So, every dollar that my Roth IRA makes, I have it reinvesting automatically. Because that’s just more money that gets to live there and build through the market value.

12:02 Emily: I, like you, worked only for one year before I started graduate school. And during that time, I embarked on learning about personal finance and I read this, “Oh, you have to save 10% of your gross income for retirement” rule. And I love rules. So, I was on it. It was challenging, but I was determined to do it. And I kept that up during graduate school. Thankfully, I, like you, also lived in sort of a moderate cost-of-living area and my stipend was fine for there. And so, obviously in more expensive places, as you were mentioning earlier, graduate student stipends don’t really get that much higher. So, it’s quite challenging there, but I was in a good position in that case. So, I was investing for retirement all through graduate school, as well as building up some other kinds of savings.

Investing in Your Future Positively Impacts Your Present

12:44 Emily: And I just have to make a plug for this in case anyone listening to this is not that motivated around it. Because what we found, my husband and I, who was also a graduate student at that time, not only is this like you’re saving and you’re investing for the far-off future, but it actually had an impact in the here and now. Well, after a few years after we really saw the balances building up, and that was actually during quite a strong, bold market. So, the compound returns were coming fast and furious. When we got out of graduate school, we had quite a good nest egg, both in our retirement accounts, and also in cash. And it actually enabled us to make more risky career decisions than we would have otherwise that were actually very well-suited for us. So, having that security of something that we had built during graduate school to be able to fall back on in case that risky decision didn’t turn out so well, that was instrumental in us actually making those decisions to go for our maximum career fulfillment, even at these riskier kinds of jobs. Obviously, I’m referring to my business, which is quite a risky endeavor, especially at the beginning. So, that’s kind of how I found that this mattered for me even decades earlier than I expected it to.

13:54 Lucy: Yeah, we have always known that we would like a house. And in order to have a house, you have to have a down payment. And in order to have a down payment, you have to have savings for it. Right? And there are certain rules surrounding specific savings or retirement accounts like Roth IRAs, where you can actually withdraw a certain portion for a first-time home purchase. So, there are absolutely benefits, and who doesn’t want to imagine being 70 and being like, “I’m just gonna fly to some beach and sit down and have a cocktail.” Right? That sounds really nice. It’s hard to imagine at this current time, but it is going to happen again.

14:34 Emily: True. We are recording this in May, 2020. Yes. Enough said there.

Commercial

14:43 Emily: Emily here for a brief interlude. The deadline for filing your federal tax return and making your quarters one and two estimated tax payments was extended to July 15th, 2020. I never expected to still be talking about taxes into the summer, but here we are. Postbac fellows, funded grad students, and postdoc fellows still need major help in this area because of their unique situation. I provide tons of support to PhD trainees preparing their tax returns and calculating their estimated tax. Go to pfforphds.com/tax to read my free articles and find out if one of my tax workshops is right for you. I have one workshop on how to prepare your annual tax return, and one on how to determine if you owe quarterly estimated tax. Both workshops include videos, supplemental documents, and live Q&A calls with me. Go to P F F O R P H D S.com/T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now, back to the interview.

Strategies for Handling Estimated Tax

16:00 Emily: Okay. I want to return to the situation around estimated tax. If you wouldn’t mind explaining a little bit more about how, you know, you said earlier that your mileage may vary, people handle estimated tax in different ways. I’m curious, what is the best solution that you’ve come to for handling your estimated tax?

16:18 Lucy: Yeah, I was kind of pseudo-mentored by another graduate student, and he was always on this camp that he would save up four or five thousand dollars and pay his entire year’s estimated tax in January of the start of that year. And he would send in four different checks, one with each estimated tax document. And that would be it for the entire year. Now, at the time that he was trying to convince me of that, we did not have that kind of money. And so then I had to find some other way. And of course, I have an old checking account from when I was in high school. And so, what I decided to do was I calculated my estimated tax. Those forms look scary. They’re not that bad. Talk to somebody, talk to your friends, somebody knows how to do it. And once I had kind of figured out my estimated tax, I said, “Okay, well, this divided by four is, let’s say $400. And a quarter of the year is three months. Right? Okay. So, now I have $400, divided by three is, whatever. I can’t do math on the fly like this, but that amount would automatically withdraw to that separate checking account that I didn’t really use for anything. And then at the end of three months, when it was time to pay quarterly taxes, I knew I had that amount and I was not worried about it. Right? I never even saw it in my regular checking. It only we went to that secondary checking account.

17:38 Emily: Yeah. This system that you’re describing is absolutely the one that I recommend. Actually, I featured it in a past interview as well, which I’ll link from the show notes. The interview is with Lourdes Bobbio, and she is an NDSEG fellow. And so, this is exactly what she did to handle her estimated tax. It’s what I did in graduate school as well, and still do, because as a business owner, I also pay quarterly estimated tax. So, I think it’s a perfect system. It’s actually the one that I kind of recommend for everyone. Like you said, to pay all of your estimated tax upfront is a really high amount of savings to have on hand which would be unusual. So, that’s not for everyone.

PF for PhDs Resources on Estimated Tax

18:20 Emily: By the way, I do have a resource on estimated tax. I have a couple, so I’ll link them from the show notes, but if you also just want to go to pfforphds.com/tax, I have an article there called, “The Complete Guide to Quarterly Estimated Tax for Fellowship Recipients,” free article. And I also have a paid workshop. You can join anytime throughout the year. And I have videos that I’ve recorded. There’s like a spreadsheet that is included with that. And I also do live Q&A calls every quarter to answer any kind of final questions you have after you’ve gone through the material. So, that would be a great one to join if estimated tax is a concern for you.

18:53 Emily: As you said, Lucy, look at form 1040-ES if you think you can handle it, fine. It’s really not that hard for fellowship recipients, but I do know some people get a little intimidated. They want that live support. So, like you said, you know, you can turn to–I really hesitate, actually, to say to turn to a friend, because this is an area that people mess up a lot. It sounds like you got really good counsel, but you never know. You don’t know what you don’t know. Right? And so you don’t know if counsel that you’re receiving is good or not. So, I’ll just say, come to me, come to my site. I have the references for you. Yes, listen to your classmates, but trust, but verify. Let me put it that way. When it comes to tax and rumors running around graduate schools.

19:34 Lucy: Yeah. We just recently were talking about taxes with some of our upcoming, or now upcoming second years, asking them how they did and what they felt like, and how we can support them in the future. And they were like, “Oh my God, estimated taxes.” And then it was just like a flurry of papers and pens. And imagine that kind of cartoony instance. And it ended up half of them just decided they weren’t going to pay it because they weren’t sure what to do. And then two of them overpaid by $2,000, which I’m not really sure how that’s possible on our current stipend. Because I think we pay less than $5,000 a year. So, I’m not sure what they were doing for that one quarter, but they totally miscalculated, which is perfectly fine. But that is when finding a resource like Emily might be really helpful if you just don’t want to worry about it. You can go to her. I mean, I’ve never used Emily. I’m sure she’s great. But she seems to know what she’s talking about. And so, if you just don’t want to worry about it, if you pay a little bit upfront, you don’t have to worry long term.

Use Your School’s Tax Resources or Bring in an Outside Expert

20:34 Emily: Yeah. And I also love, you know, you mentioned before we started the recording that your university of WashU is providing–and in particular, your program is providing tax support in the form of workshops, which is amazing. Anyone who’s in a program in a school that does that, I definitely encourage you to attend one of those seminars. If no one is doing it and you feel competent, you can always try to start it doing some peer support in that area. And hey, I am also available and I have a live seminar that’s sort of a live version of the tax workshop that I just mentioned. So, if you want to bring in an outside person and you have a budget, I am available to do that. Because this is such, I mean, this is an area that, I cannot tell you the number of people I talk to every tax season who have maybe been surprised by, “Oh, it’s April and turns out I owe all this tax that I thought was being withheld from my paycheck, but it turns out it wasn’t,” that’s a really tough situation to be in.

21:28 Emily: I’ve talked to people who have gone three, four, five years of that happening and just wake up to the fact that they have all these back taxes. That is so tough. And you know, an ounce of prevention is worth a pound of care. So, we can just say again, if you’re on fellowship, if you’re on a training grant, look into estimated tax, it’s possible, you won’t have to pay them in your first year. Don’t forget about them. Look again in the second year, it could come up at that point. So, please tell your friends. Tell your friends about estimated tax. Send them this podcast episode. And as I was just saying, look for resources at your university. They may be there, or you may be able to start them or bring them in.

22:03 Lucy: And even if they don’t have them, you can let them know that it’s something that the students are interested in. Right? So, I’m the co-director of a student body group, and that’s what we do. We think students need this, so we advocate for that with the administration. And unless they know, they’re not going to be thinking about kind of dealing with this type of stuff.

Any Other Financial Goals?

22:25 Emily: Yeah. I think actually taxes at the graduate student level got a lot more attention after the Tax Cuts and Jobs Act passed because there were those couple months where we thought maybe tuition waivers would be taxed, so anyway, it got a lot of attention. I think after the Act ultimately passed, which thankfully did not have that provision in it, people were just a little bit more aware like, “Oh, okay, I have to deal with taxes. Maybe there are some resources out there that can help.” So, going back to your personal story Lucy, aside from the retirement investing, which is incredible and awesome that you’re doing that, you mentioned saving up for a house. Do you have any other financial goals that you’re going to be working on for the remainder of graduate school?

23:04 Lucy: I mean, really, it’s trying to find that financial stability that we couldn’t find while we lived on the East Coast. So, we were building that initial six-month-ish nest egg that you might want to refer to it as. Now, that’s done. So, we’ve shifted to building kind of the large expense nest egg, right? Like, the next time we have to buy a car, if our fridge breaks, right? Those things that you never want to have to think about, but they absolutely exist within life. And at the same time, we also obviously are working to pay off student loans. And we are working to invest in retirement. It seems like that’s not really feasible, and I’ll be completely honest, I put $50 in every week to that large expense. That’s not a lot, but assuming, and this is all assuming I don’t have a large expense for a couple of years, I’m going to have plenty of money in that.

Even a Little Bit (of Savings) Matters

23:58 Lucy: So, even a little bit matters. You might think $20 doesn’t matter to a Roth IRA, but it does build up. Slow and steady, it builds up. Can you imagine $20 every week over the course of however long your PhD is? I don’t want to say a number because it jinxes us all, but it’s really important to start kind of building these ideas because you don’t want to be caught out in the rain.

24:19 Emily: It sounds like you really have been able to accomplish a lot with the stipend. And I think your experience of moving from a higher cost of living area to St. Louis is really helpful in that way. Unfortunately, a lot of students go the other way and they end up in Boston, New York, San Francisco from a less expensive place. And it’s jarring that way, too. So, you put in your time in the higher cost of living cities and then experienced a bit of relief moving to St. Louis. That’s really great. And you know, I totally agree that even these small amounts of money make a huge difference given enough time. And as you were saying, the PhD is actually pretty significant amount of time. Over the course of five plus years, it can really add up, like it did for me and my husband. And so, anyway, I’m just really pleased to hear that you’re making your stipend work for you so effectively. That’s wonderful.

Best Advice for an Early-Career PhD

25:10 Emily: So, as we’re finishing up the interview, this is a question that I ask everyone who comes on the podcast, what is your best financial advice for another early-career PhD? And it could be something that we’ve mentioned in the course of the interview, or it could be something completely else.

25:23 Lucy: Yeah. I have to fully admit it’s an allowance. Like, I’m over 30 and I have an allowance. When we finally had kind of spare money, every month I would go on and get a graph at the top of my bank account that shows me my personal value and it would stay flat. And I’m like, “What are we spending our money on? This doesn’t make any sense. Okay, I bought this. Okay, I bought that. But it’s really not that bad.” So, we decided to implement an allowance. We’re two over 30-year-olds with an allowance. I mean, I can’t say that enough. And what we figured out was, “Do I really want to spend the money on this, right? Is this really what’s going to make me happy where I can’t necessarily save for retirement?” Which again is my goal. “Is this a thing that I need?” And it really showed us where our money was going, which was just little knickknacks and doodads. And after a year of that allowance, our personal value went up by like $3,000 because we weren’t accidentally spending $500 a month on whatever we felt like. And so, I recommend it. It’s hard and weird to say, but I recommend allowances. It keeps you a little bit honest about it. We have a post-it note on our fridge and we have to write everything we purchase that is for us specifically and not household.

Give Yourself an Allowance for Discretionary Funding

26:48 Emily: So, I want to make sure that I understand what you mean by allowance. So, what you’re saying is like, aside from the necessary expenses, and as you were just mentioning household joint expenses, allowance is, it sounds like something that is just for you as an individual. And it’s probably discretionary, is that right? And as long as you fit it within your allowance every month, or maybe you build up a balance over some time, as long as the purchase fits within that, you’re good to go. If not, you have to say, “Well, I need to wait on it.” Is that right?

27:16 Lucy: Right. Exactly. So, you know, let’s say you’re going to a conference and you need a new suit jacket. That does not count as an allowance. That’s something that’s important for your personal development. Let’s say there’s a really cute dress that has just come out from your favorite company. That is not something that’s related to household or even professional development. So, that’s probably going to go on allowance. I just spent actually the last of my allowance already on a gift for a friend for her birthday. I knew it was something I wanted to do. And so, that was in my budget for the month, or my allowance for the month.

27:55 Emily: Yeah. So, it’s kind of just another way of framing budgeting. Like it’s just a more like catch-all category and you’ve specified it just for you as an individual. I know you’ve mentioned your partner. I mentioned my husband. Like the whole couple money management thing, people do it a lot of different ways. And you really have to find what works for you. I know my experience in graduate school, my husband and I were both graduate students and didn’t have a lot of discretionary income. And so, we didn’t use the allowance system, but it was kind of because there wasn’t that much money left for an allowance after we were doing all of the goals and all the joint spending. So, thankfully we found a way to navigate that over time. But yeah, I think if we had had a little bit more discretionary income, having some autonomy over that money because we do keep joint finances, but having some autonomy over a portion of it, that’s a system that works very, very well for a lot of people. So, I’m really glad you brought it up. Well, Lucy, this has been just a delight and I’m so glad that you came on the podcast. And I hope to have a chance to meet you in person before too long. Because it sounds like you’re doing some incredible work there with your program at WashU. So, thank you so much for joining us and sharing your story and sharing your expertise in this area.

29:03 Lucy: Thank you for having me. It’s such an important component of life and graduate school for those that are interested. And I appreciate that you exist and you’ve been thinking about this and building things around it because it didn’t really seem like it existed when I first started.

29:19 Emily: Sounds good. Thank you so much.

29:21 Lucy: Thanks, Emily.

Outtro

29:23 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 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.

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

by

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.

This PhD Entrepreneur Advocates for Universal Basic Income (Part 1)

by

In this episode, Emily interviews Dr. Jim Pugh, the founder of ShareProgress and co-host of the Basic Income Podcast. Jim earned a PhD in computer science and subsequently worked for the Democratic National Convention and other progressive groups. He always aspired to start a business, and his post-PhD work experience inspired him to found ShareProgress, a software product and consulting service. Jim describes the evolution of his business, which now brings him sufficient income to support him in San Francisco in exchange for about 5 hours of work per week. Jim’s observations of changes in technology and the workforce while building his business and newfound time freedom drew him to investigating universal basic income.

Links Mentioned in This Episode

PhD entrepreneur basic income

Teaser

00:00 Jim: As you’re doing something, you’ll see many other, adjacent great things to do as well, but that can so easily be a distraction from actually figuring out, “Alright, what is the core of this successful business going to look like?” And if you let yourself be pulled in that direction, it can really detract from your chance of building something big.

Introduction

00:25 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode one, and today my guest is Dr. Jim Pugh, the founder of ShareProgress and cohost of The Basic Income Podcast. Jim’s doctoral work in computer science and his experience working for the Democratic National Convention inspired him to start ShareProgress seven years ago. In this first half of our interview, we discuss the growth and evolution of his business, which now brings him sufficient income to support him in San Francisco in exchange for about five hours of work per week. Jim’s observations while building his business and newfound time-freedom drew him to investigating universal basic income. Without further ado, here’s the first part of my interview with Dr. Jim Pugh.

Will You Please Introduce Yourself Further?

01:15 Emily: I am delighted to have joining me on the podcast today, Dr. Jim Pugh. It’s a really special episode for me because Jim and I know each other in real life. He is the older brother of a dear friend of mine and my husband’s from college. And we actually had lunch a couple months ago when we were visiting and had gotten into this really interesting conversation about what Jim’s up to these days, the activism that he does. And it was just really exciting and I could see there was a definite PhD angle there, not just because Jim himself has a PhD but also because what he works on has implications for PhDs. So, we will get into all of that in just a few minutes. So, Jim, will you please take a moment and introduce yourself a little bit further to the listeners?

01:53 Jim: Yeah. Well Emily, thanks for having me on the podcast. My background brings together a few different areas. My academic background is in the sciences. I did my undergraduate and doctorate in computer science, specifically robotics, my doctorate. And following that, ended up getting involved in the political world. And so, I spent some time working on the 2008 Obama campaigns, spent a few years in D.C. after continuing political work out there. And then about six, seven years back decided to take honestly experiences on both those fronts to start my own company called ShareProgress, working primarily with political and nonprofit organizations, providing them with tools and other technical support. And then just in the last few years, I started to delve really in on the activism side of things myself and helped to start an organization that does a lot of work around universal basic income doing both advocacy around that topic and also some policy development work in that field.

What Role Did Your PhD Have in Starting Your Business?

02:58 Emily: Yeah. Super, super exciting. Thank you. Clearly, you have a lot of skills and a lot of interesting experiences that you’ve brought to bear on these most recent endeavors. So, kind of backing up slightly to the business that you started, ShareProgress. How did your PhD prepare you for ultimately starting that business? Obviously, you had some work experience after that point before you started it, but how did the PhD specifically prepare you? Or how did it not prepare you very well for that?

03:25 Jim: So, I would say the PhD itself wasn’t terribly relevant for starting that because I was really in a hard research area and was working on algorithms and models that didn’t have any clear path to monetization to turn it into a company. So, that I don’t think was terribly relevant. What was a bit more relevant is I was involved with, at the university I was working with, which is the Institute of Technology in Lausanne, Switzerland. They actually were making a pretty significant investment in cultivating entrepreneurship amongst their students, both undergraduate and graduate. And so there was a program on campus that was talking a lot about that. And so, I feel like there was some stuff I learned through experience with that going through events, and they had various activities that they would organize. And so, I felt like that it was informative in some ways, but it really was very much focused on taking the sort of research you do through your doctoral degree, through your academic work afterwards and turning that into a company. And my company that I ended up starting really didn’t resemble that much at all because that was much more informed by the political work I’d done and seeing what the needs were in that space. So, there were there aspects around “what does it look like to go through that process?” that I would say generally provided me with some guidance. But as far as the specifics, really not much at all.

Jim’s Entrepreneurship Journey

05:02 Emily: Did you have in your mind at that time that you did want to pursue entrepreneurship?

05:08 Jim: I did. That was something from I think pretty early on in college I realized was an area I was quite interested in. And when I was graduating from undergraduate, actually, I kind of had in my head either go to grad school or do a startup. I didn’t have an idea for a startup, so I said, “Well I guess it’s grad school.” But it definitely was something that I had been thinking about for awhile.

05:34 Emily: And did you initially, when you were getting involved during your PhD program with this training program for entrepreneurship, were you thinking about the possibility that you might turn your PhD work into a company? Or were you already like, “No, that’s definitely not going to happen, but this is just like for future reference?”

05:50 Jim: More the latter. Maybe there were a few moments where I considered something that was closely connected, but in general, that wasn’t where I saw opportunity. I more generally was thinking about, “Oh, I want to do something at some point. And this is an area that interests me and is just an area that’ll be helpful to know more about.”

Relevant Technical Skills Gained During PhD

06:10 Emily: Gotcha. And what about, I guess I could say, your technical chops. Did you use those in your business, or were you always hiring out for that? And then also is that something you got from your PhD, or do you think your undergraduate education was sufficient in that area?

06:23 Jim: I think there definitely was some of that from my PhD. Obviously, as an undergrad I had done a lot in that space, but I think that some of the specific technical skills and areas of expertise–and I think also just generally understanding different technological ecosystems–some of that did come through in my PhD. When I was starting my company, I very much structured it to not have put myself in the role of that technical person because I was interested in really taking on the CEO mantle in the more traditional sense. So, I had hired out for a developer to actually build out our software platform from the get-go. That said, I was being involved in various ways with the technical stuff throughout, and at different points definitely got more engaged on that front. And so, having that background definitely proved to be important and a valuable asset. And honestly, I mean I think those of us who are deeply into tech, and particularly doing software development and whatnot, we think of tech in a pretty extreme way as compared to the population in general. And so, just knowing how to work with various technical systems out there, I know it’s a leap for a lot of people not committed to that space. And so, certainly my background had equipped me well to be able to handle that sort of thing.

07:50 Emily: Yeah, I kind of see this as being a common sort of value of the PhD. You sort of prove yourself in an area, you can work very deeply, you can master something completely. And then after that, a lot of people do take a step back and allow other people to do that kind of work and do more of the management. And that’s kind of the PI model. Right? So, that sort of does apply, in a way, to what you did after. But it sounds like the actual work experience that you had after your PhD with the Obama campaign and so forth, that was what gave you the idea–right?–for what your company would ultimately be. Can you talk a little bit more about that?

Inspiration While Working for the Democratic National Convention

08:19 Jim: Yeah, so the work I was doing, to some degree on the campaign, but in particular when I was out in D.C., I was working for the Democratic National Committee at that point, and we were actually running, effectively, the continuation of the Obama campaign. It was called Organizing for America at that point. And so, my role, I was the director of digital analytics and also web development for the program. And so, it was really paying attention to/digging in on what was actually happening under the hood with all of our digital presence, our social media, our email lists, our website, and so on. And so, I got a chance to see what’s possible, what’s not, what works well, what doesn’t. And one of the observations I had was that so much of our ability to do anything, whether that was raise money, whether it was to try calls to Congress, whether it was to get people turning out in their local communities for events, it depended on us having a wide reach.

09:19 Jim: And that reach, to a large degree, came from us intentionally doing outreach to get people involved. Whether that was big publicity efforts, whether it was paid acquisition online. But then the third category being people bringing in their friends. And actually during that time period, that was really crucial for us that so much of the new people we had coming in, it wasn’t from anything we were doing in particular, it was because our existing supporters were recruiting people they knew to get involved in a campaign and whatever the moment was. And it was an area that there really had not been much investment in as far as figuring out, “Alright, well how do we facilitate, and how do we amplify this?” So, that was really the motivation for my company, which was, “Let’s build some software tools that make this more effective and easier to do.”

How to Gain a Wide-Reaching Audience

10:10 Jim: And so, basically we had a plug and play solution where organizations, as they were doing this sort of advocacy work, they could be encouraging their supporters to be reaching out to their friends through various digital social channels. So, social media, Facebook, Twitter, but also just getting people to email folks they knew and say, “Hey, I’m involved in this really important thing. Will you be involved as well?” And that’s proved very, very effective at bringing in new people, particularly in high-energy moments. And then we allowed organizations to track the analytics on what was happening there. And so they really understood what was going on and actually allowed them to do controlled testing around what sort of messaging they could give to their supporters that made them more convincing, basically, to people they knew. So, when their supporters post on Facebook they could have a couple of different headlines, a couple of different thumbnail images and the system would be able to measure, “Okay, well how effective are those different pieces of content at getting their friends to say, ‘Oh, I’m interested,’ and click through it and get involved.”

Evolution of ShareProgress

11:16 Emily: Yeah. Super scientific approach to that. Right? I’m sure your background helped with that, the design of it. Okay, so that’s around the product that you created. I think you said when you introduced yourself that this was maybe six, seven years ago that you started the company. Two years ago, you transitioned more to doing this advocacy around universal basic income. So, I’m curious about how your role within the company, and in particular the time that you put into it, evolved over that, five-ish-year period.

11:44 Jim: Yeah. So, at the start, the software that I just described, the plan was for that to be the company. That was what we were going to do. I realized relatively early on about six months in that the growth that we were seeing from that wasn’t going to allow us to sustain. And in exploring different investment strategies, the type of company I was looking to build, which very much had a social mission, wasn’t looking to make as much money as possible, as quickly as possible if that compromising that, wasn’t actually a great target for traditional investment routes with startups. And so, what I decided to do was to couple on with that a consulting arm where we would actually work with the same sorts of organizations that we were providing the software to, but a system with either data analysis work or some sort of web design development work, which is similar to what I had been doing out in D.C. prior to that.

12:42 Jim: And so, that actually ended up being the bulk of what the company did for most of its existence. We were able to find clients there. I was able to scale up our staff with that sort of work. And so, while we were doing the software, we were continuing to grow the consulting side of the company. And so, our peak was I think early 2017 we were nine people and most on the consulting side. But it was around that time I had realized–I had known pretty early on, I didn’t really want to start a consulting company. That seemed like where the path to profitability was. But around that time, my interests had started to shift to more of the advocacy work around universal basic income. And we went through some tough periods as far as expectations around business and profits and not matching reality. So, we had to do some downsizing. And so, at that point I actually decided, “This isn’t where I want to be investing my time and effort for the future. So, let’s just ramp down the consultant product company.” And at that point, our software was making enough money that I could support a much smaller staff. And so, over the course of 2017 I went through a process around that. That ended with, at the end of the year, I was having more of a skeleton crew and requiring not very much of my time in order to just keep our software running, or the clients that we had there.

Consulting as a Stage of Growth

14:20 Emily: So, I’m curious, with the evolution of adding the consulting aspect and then winding it down, are you happy that you did that, or do you think that you should have just stuck with the software product kind of throughout that whole time and come to this point where you are now maybe a little bit sooner?

14:36 Jim: Well, it honestly wasn’t an option to do exactly that because we did need the consulting early on in order to make payroll. So, it took a while for us to build up enough of a client base and the software where that was an option at all.

14:49 Emily: So, it’s a stage of growth, then.

14:51 Jim: It was a stage of growth. Whether or not I would have invested as much as I did in that, I think looking at it solely from a business perspective, I think that was probably a mistake. I think that it would have been a better approach to say, “Let’s keep focused on the software. Let’s do this as much as we need to, but let’s not really invest in growing that as the company.” Because I think that in most cases, when you’re trying to do more than one thing, you’re not going to do either of them as well. And so, that would have been the better business decision. As far as from a personal perspective, I think I certainly learned a lot through the whole process. So, I wouldn’t say it was a bad decision from that. It certainly was stressful at times, but I think that it’s hard for me to make a valuative judgment on it.

San Francisco Venture Capital (VC) Environment

15:40 Emily: Sure. I want to say for the context, for the listeners, that you live in San Francisco right now, and you mentioned living in D.C. before that. Did you start the company when you were living in San Francisco?

15:50 Jim: Yes, that’s right.

15:51 Emily: So, you’re in a very different environment than probably most of the listeners who are maybe still on academic campuses, you know, spread throughout the U.S. and other places. So, anyway, I just want to say that because you probably had a lot of exposure just from your environment in things like how to approach for VC funding, whether that’s actually a good idea for your business. You decided that the values that they’re going for are not exactly the values that you were going for. And so it wasn’t a good match there. This is actually something I’ve heard about quite a bit that people elect not to go the VC funding route for various, I guess, “vision” reasons.

16:23 Jim: Well, I should clarify that I did attempt to raise funds for the company with already knowing that there would be certain people I wouldn’t accept money from, certain types of investment that I wouldn’t be comfortable with. But, I was hoping to be able to do it in some capacity and was not successful at it. So, that was part of it. Maybe had I met the right people, those things could have looked differently. But I will say, both prior to that and since then, having observed the dynamics in that space, I see how that would be a challenge for many, many people who are attempting to do something similar. But it wasn’t as though I was equipped to know upfront, “Oh, there’s no way this is going to work.” It was very much a learning experience for me.

Current Role in the Business

17:11 Emily: Yeah, that sounds really great, actually. And you’re still living in San Francisco, so you’re still exposed to all of that stuff. But I’m curious about this decision that you said around two years ago, you wanted to focus more on the UBI stuff and you restructured the business. And now, how much time do you spend working on the business now, maybe per week or per month? And what is your role in it now, exactly?

17:32 Jim: Yeah. Well, I’m still CEO of the business, but to be honest, it probably averages about five hours a week at this point because we want to keep running, we want to keep our clients happy there. The idea is really to have it be maintaining the service rather than doing new things. And so, that just doesn’t require that much work. So, I have an employee who is, basically, like any sort of support we need to provide, is dealing with that, keeping an eye on things, and then myself overseeing things. And that allows us to keep going with that.

18:06 Emily: And to ask kind of a more pointed financial question, but you are supporting yourself entirely off of your business income for which you’re only putting in about five hours a week at this point?

18:16 Jim: That’s right, yes.

Financial Independence and Early Retirement (FIRE) Movement

18:17 Emily: Wonderful. Wonderful set up for you. So, we’ll talk about this a little bit more in the upcoming UBI conversation. But the reason I was kind of interested in your story and sharing it on the podcast is because there’s this big movement in the personal finance community called the FIRE movement, Financial Independence and Early Retirement. In season three, I released a pair of interviews with someone on that subject. And your story, while the FIRE community might not call you financially independent by their definition, a lot of what they’re going for, financial freedom, you have bought for yourself with your business, right? So, there’s a lot of overlap there between the goals of the FIRE movement and what you’ve done for yourself. So, I was really interested in having you on the podcast for that reason.

Business Advice for Early-Career PhDs

18:59 Emily: So, okay, now that we’re going to transition to sort of the universal basic income aspect of our conversation, I kind of wanted to wrap up the aspect of our conversation about the business by just asking if you had to give some advice, if another early-career PhD asked you advice around starting a business, what would you tell that person now?

Advice #1: Talk to People

19:20 Jim: I think just go and talk to a lot of people who’ve been through the process because I think part of the challenge is it does look very different in different situations. And that was something I struggled with early is thinking, “Okay, well, there’s going to be standards around this. And so did a bunch of Googling online for like, “Okay, what is the standard, whether it’s around the equity or whether it’s around other aspects of the business.” And I found some stuff but not as much as I expected. And so, I think that, if you can just talk to a lot of people who have gone through the process, you get a sense of the diversity of ways that can work. And so I think it can give you a better idea as to what the trajectories may seem to be. That was something I know I struggle a lot with, and I think may have delayed me deciding to start a business, is that it just felt too amorphous and scary. Alright, what does it look to get something like this off the ground? And in hindsight, it’s such a simpler process than so much of the work I had done before, but I think that there is that opacity and then those unknowns that make it difficult. I feel like I was not unique in having that perspective.

Advice #2: Find Your Focus

20:33 Jim: And then I think focus is another big thing that I continually struggle with frankly, but I see many, many people struggle with. There’s many great things to do and, as you’re doing something, you’ll see many other, adjacent great things to do as well, but that can so easily be a distraction from actually figuring out, “Alright, what is the core of this successful business going to look like?” And if you let yourself be pulled in that direction, it can really detract from your chance of building something big.

Commercial

21:07 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.

Should Entrepreneurs Move to San Francisco?

22:06 Emily: I’m trying to think about for someone who is, let’s say still affiliated with the university, I would imagine there are some people to talk to there, networking, especially universities that have incubators or something from launching a business out of. But I asked you before about living in San Francisco, what do you think about moving to a place like San Francisco where you can just run into other people who are on a similar path? What do you think about that idea?

22:31 Jim: I mean, I think it’s a very double-edged sword because certainly the density of that happening is a significant asset for a lot of this sort of work. And it is so expensive here that if you’re looking to hire locally, you’re gonna be paying, sometimes easily two, three, four times as much as you’d be paying, not too far away. And so, I think it’s a question of balancing those sorts of things. I mean, I think there are ways, like either if you live somewhere not too far away, where you can go into the city and have those easy conversations in-person with folks, but still be in a place where it doesn’t cost you thousands and thousands of dollars every month to pay for your rent. That could be your compromise. Or, just take the occasional trip out here. Assuming you can afford whatever the travel costs are. And then I think there are other areas where you’re starting to see better density. I don’t really have a great sense for what it actually looks like yet. And I do think that there is a cultural component to why Silicon Valley is Silicon Valley because there’s kind of a pay-it-forward mentality, pretty broadly, where people who have done well are eager to help new people coming in, which I think has made a big difference. But yeah, you get both sides of it.

Advocacy for Universal Basic Income

23:54 Emily: I see. Okay. So, now that you pay for your life based on your business, which you only work in a few hours per week now, I’m curious about this transition that you made two years ago. I mean, you said it was kind of like you became more interested in universal basic income and that movement. You then structured your life so that you didn’t have to work so much. So, I guess the question is, how has your experience of having that business and having that source of income that requires only a very small amount of work at this point or small amount of time, how did that lead you into your advocacy for universal basic income?

24:34 Jim: So, I think there are a couple of different ways that I can answer that. So, as far as what first got me interested in universal basic income, a big part of it was the process of starting my company because I had certain expectations coming in around staffing related to operations, to payroll, to HR services, and expecting that, assuming things at all got off the ground pretty quickly, I would need to be hiring at least part-time help to assist with that. And what I found is that there were all these new online services that automated a lot of that. And so, from the beginning for payroll in the company, we use Gusto. It used to be called ZenPayroll, which you have to plug in the information to start with people’s where they live, their bank account transfer information, what the unemployment insurance rate is in the state. But then every twice a month you just say, “Okay, go,” and it pays them and files their taxes and that’s it. And costs not very much money to do it. And so, that being one example of how technology is allowing us, not just to replace jobs because I think you lose something when you describe it just that way, but is A) definitely changing the way that that work is being done, and B) and this is the thing that really stood out for me, is allowing much smaller groups of people to be able to do far, far more than was true before.

Small Business is the New “Big”

26:14 Jim: Because in the past, if you wanted to start a big company, or I shouldn’t say big, I should say a company that was going to generate a lot of income and wealth, kind of inherent to the process is you would need to involve a lot of other people. And it’s far less true now. You can have a team, I mean if you look at I think, what was it, the WhatsApp team, which is like half a dozen, a dozen people who then sell a company for multiple billions of dollars. Never in human history before could something like that happen. And so I think that was an A-ha moment for me and realizing that things are already starting to and will continue to look very differently than they have in the past and we need to stop assuming that the economic solutions that have been effective before are necessarily the right ones going forward.

27:06 Emily: So, it’s not necessarily just jobs are going away, but maybe some jobs are going away, some other jobs are popping up, the people that create the companies and the software and so forth. Are you also speaking about wealth concentration?

27:20 Jim: Yeah.

27:21 Emily: Gotcha.

Changing Mindset Around Universal Basic Income

27:22 Jim: Yeah. And I think for me, that was as much of a factor as jobs are not. I think we’re used to thinking about the jobs thing, so it’s more clear why that would be problematic if we had only a requirement that 10% of the people have a job. But I think that, particularly as I’ve worked on the issue more, that piece more clearly is a big issue that I think as our systems are structured now is really incompatible with having a fully-functioning society, I would say. Anyway, so that was kind of how I first started to think about UBI, universal basic income. And I don’t even remember where I first heard about the idea. I think I read maybe some piece about the referendum that Switzerland was pursuing.

28:18 Jim: It started back in 2013. But my initial reaction was, “This seems dumb, frankly.” I was like, “Oh, this seems like an oversimplification. Just thinking you can give people money and that will solve things. And then I started to look more into it and look at the research and understanding what are the actual, both economic and psychological ramifications when you do this. And it turns out it was incredibly positive that this is something where we have, at this point, a lot of evidence that unconditional cash–people take that and use it for whatever they actually need to use it for. And that, in fact, it confers a sense of agency to people that they might not otherwise have. And that in itself is hugely beneficial because it encourages people to think more longer term in terms of sensing more responsibility for a situation, all things that are actually very valuable in sending people out for their own longterm success.

29:15 Emily: I want to leave this for part two of this interview. Where we’ll be talking less about your personal story and more about, well, maybe what you’ve been learning over the last few years. We’re going to take a step back and define universal basic income because we haven’t done that yet. So, listeners, if the next part of this conversation sounds like it’s going to be really interesting to you, please tune in next week. For the second part of the interview, we’ll be talking a lot more about universal basic income with the expert, Dr. Jim Pugh.

Outtro

29:40 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.

The Financial and Career Opportunities Available to National Science Foundation Graduate Research Fellows

by

In this episode, Emily interviews Kelsey Wood, a National Science Foundation (NSF) Graduate Research Fellow who now teaches others how to write competitive applications for the Graduate Research Fellowship Program (GRFP). They discuss the decisions that new fellows have to make regarding when to start receiving the funding and the internship opportunities available. Kelsey also issues a warning regarding paying quarterly estimated tax and gives great insights from her course for GRFP applicants. At the end of the interview, Kelsey shares her best financial advice for current graduate students and postdocs.

Links Mentioned in This Episode:

Further Reading:

NSF GRFP finances

Teaser

00:00 Kelsey: I think that a lot of times the graduate groups or the administration will attempt to get as much free labor out of graduate students as they can, but there is actually a lot of money there to pay people, so I think a lot of times grad students need to be proactive in asking for money for things like leading workshops or teaching classes, TA-ing, et cetera.

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 five, episode 16, and today my guest is Kelsey Wood, a graduate student at UC Davis and National Science Foundation Graduate Research Fellow. We discuss the decisions that new NSF fellows have to make regarding when to start receiving the funding and the internship opportunities available. Kelsey also issues a warning regarding paying quarterly estimated tax. Throughout the interview, she shares her insights into how to best manage your finances as a fellowship recipient. Kelsey now teaches others how to write competitive GRFP applications, and she details some excellent strategies from the online course she developed. Without further ado, here’s my interview with Kelsey Wood.

Will You Please Introduce Yourself Further?

01:15 Emily: I am so delighted to be joined on the podcast today by Kelsey Wood. She is currently a graduate student at UC Davis, and she is also a former NSF GRFP fellow. And she’s going to be talking to us about that program and also the advice that she gives people in her course regarding applying successfully for the application. So, Kelsey, I’m so glad to have you. Welcome! Will you please tell the audience a little bit about yourself?

01:39 Kelsey: Sure. Thanks for having me on. I am a PhD student about to graduate in integrated genetics and genomics at UC Davis and I currently am studying plant pathogen interactions. I got my bachelor’s in biology from Reed College where I studied animal behavior and then I happened to get a job in the biotechnology industry working on potato disease resistance. And I really liked my time in industry, but I found that I was frustrated that I couldn’t pursue my own independent research questions. So, I realized I needed to go to graduate school.

02:14 Kelsey: And so, I applied for the NSF GRFP during my first year. Mostly due to peer pressure from a senior grad student who was a GRFP fellow, and he actually gave a workshop on the fellowship where he basically convinced everyone to apply. And I’m glad I did because I actually got it. And then after I received the fellowship, I decided take over that workshop and also encourage other people to apply and give them tips on how they can actually get it. So, I’ve offered a variation of that workshop for the last five years, and I did an online version last year. I held some free webinars that were attended by over 200 people all across the U.S., and then I also offered an intensive workshop with additional webinars, one-on-one and personalized editing services. Participants said that was really helpful in preparing their applications. And actually, out of the 10 people who submitted in the workshop, three of them got it this year and one honorable mention. So, I’m really proud of them and happy that I kind of helped people to get it.

Kelsey’s NSF GFRP Workshop Updates

03:18 Emily: That’s incredible. Oh my gosh. I would have loved to participate in something like that when I was early on in graduate school. Tell people right up front where can they go to find more information about that course?

03:27 Kelsey: Right now, the best place to probably get updates on what I’m going to be offering it–and I’ll also be posting a lot of the materials–is my Twitter. It’s @klsywd (Kelsey Wood), but without any vowels. So, K L S Y W D.

03:42 Emily: So, it sounds like you were a fellow between your second and fourth years of graduate school. Is that right?

03:49 Kelsey: Let’s see. I started the fellowship–it would have been in June, 2014–the summer before my second year. Yeah.

Major Decision Points for NSF GRFP Recipients

03:58 Emily: Okay. And so, what are the decisions? Okay, so let’s say we’re speaking to one of the people who has just found out that they received the GRF. Amazing, congratulations! But they’re faced with a few decisions either right away or during the course of their tenure. So, can you talk through–kind of give them a little preview, what are those decisions that they need to make, and what are some things they should consider as they’re making them?

When To Start Receiving the Stipend

04:23 Kelsey: Sure. So, I mean the first one is when to start receiving the fellowship stipend. So, you’re technically a fellow for five years, but you’re only receiving the stipend for three of those years and then the other two years you’re on tenure–you’re either on tenure or on reserve. Anyways, you only get paid for three years and then the other two years you just you have additional benefits that you can receive from the fellowship, but you’re not paid any longer. And you can start that at any time. What you really want to consider is potentially what other funding sources you might be encountering during graduate school. For example, there are a number of fellowships that you can get after you’ve passed your qualifying exams, which usually happen second or third year. So, if you think you’re going to be applying and getting those fellowships, it can be really good just to start the GRFP right away.

Consider Timing (and Adequate Payment) for TAships

05:14 Kelsey: And then the other fellowship will take over once your GRFP funding runs out. Some really lucky people got multiple fellowships, actually, right at the beginning. Somebody I knew got the GRFP and the Ford fellowship this year, actually. So, they need to decide which ones, what order to get those because you can’t get them both at the same time. But that’s a pretty lucky problem to have. I would say that. And then the other thing is, some people have to do TAships in order to satisfy a degree requirement. And you can’t do a 50% TAship while you’re doing the GRFP. That’s not allowed. So, you might want to maybe get that out of the way first so you can pass your qualifying exams and have that TA under the thing. What I did is I actually TA-ed for free. But in retrospect, I don’t know if I would make that same decision again because it was a lot of work, and I don’t know. I’ve kind of changed my feelings on just doing things like volunteering and for free because there actually is–I think that a lot of times the graduate groups or the administration will attempt to get as much free labor out of graduate students as they can. But there is actually a lot of money there to pay people. So, I think a lot of times grad students need to be proactive in asking for money for things like leading workshops or teaching classes, TA-ing, et cetera. So, that’s what I found. I started asking for stipends for my workshop and I got them. I started asking for stipends for TA-ing grad level classes. They weren’t offering them before, and I started to get them. So, I think in retrospect I maybe would have tried to get paid for a TAship to meet my degree requirements and then taking the GRFP.

07:09 Emily: It is kind of strange that universities have different policies around who gets paid for doing what exactly, because TA-ing–sort of similar to your situation, but–in the department that I was in, in graduate school, we had what they called, a graduation requirement to TA for two semesters, and it was not tied to our stipend. So, we were all being paid in some manner, either research assistantship or on fellowship or something, but we just had to do this TA work on top of it during a couple of semesters. So, that was the way they structured it. It wasn’t tied to our income. But in other places, of course there are some people who are TAs and that’s their stipend and that’s their funding and that’s the source of it. But then there is even another option that I’ve heard of which is essentially sort of being hired as an adjunct, as a graduate student. So, it doesn’t have to do with your base stipend. That could still come from a fellowship or research assistantship or whatever else. But if you take on an additional class as a TA or even as the lead instructor, you could be paid like an adjunct would be paid. So, different places do things different ways.

Check with Your Advisor About Research Grant Cycles

08:11 Emily: But I think to your original point about deciding, “Okay, when do you want to be paid for these three years when you’re in those three years of having the GRF?” You said that you should think about, “Are you going to be applying for different kinds of fellowships post-quals or post-prelims? Are you going to need this TA thing?” You could potentially get it out of the way first and have your funding come from there, initially. I would also want to throw in there, maybe ask your advisor about research grants, and are they at the end of a grant cycle, the beginning of a grant cycle? Because that could also play into it. You don’t want to take the fellowship when your PI has tons of money and then, you know, three years later, maybe there is no funding there for you. So, that’s a potential risk too. So, it’s just kind of being open about what are all these financial factors within your department, within your group, that could play into this.

09:03 Kelsey: Yeah. And actually, that’s a really good point. Because for a lot of people, getting the GRFP actually influences what lab they can join because you’re coming in with your own funding. So, you might be able to join a lab that you wouldn’t have been able to join otherwise. And in that case, you’d probably want to start using your funding right away. And then, you know, you can essentially help your PI get other grants that will take over once the funding runs out. So, that’s a big benefit.

Are You Listed as a Dependent on Your Parents’ Tax Return?

09:33 Emily: I wanted to add one more point. It’s tax season right now. So, I’m thinking a lot about taxes. And so, this weird thing happens with fellowship funding when you’re under the age of 24. I don’t know how old you were when you first started, were you under 24?

09:48 Kelsey: No, I don’t think so.

09:49 Emily: Okay. Yeah. Because you had had at least one year of work experience. But if you’re starting when you’re 22 or 23, anytime that you have fellowship income in a year when you’re age 23 or younger, some weird stuff can happen with your tax return. Namely, your parents might be able to have more of a claim on you as a potential dependent on their tax return, which is not good for you if it turns out that way. And secondly, you might be hit with this weird high tax called the “Kiddie Tax.”

10:16 Emily: And so, I don’t want to go into all that right now, but if you go to my website, pfforphds.com/tax, there are articles there about both of these issues. But my point is just when you have fellowship income and you’re under the age of 24, sometimes it can have these weird effects of making you pay a lot more in tax than you would normally if you were over the age of 24. So, to me that’s just another factor that I want to throw in there of, “Hey, if you’re under the age of 24, maybe consider delaying a year until you actually turn 24, and then take the fellowship if your alternative is having a research assistantship instead, which is W2 income, which is treated somewhat differently tax-wise. So, more details about that if you want to talk with me about it or read about it more, but I’ll just throw that in there for those of you on the younger side.

25% TAships Possible During GRFP

11:00 Kelsey: That’s a really good point. Oh, and I actually thought of one more thing regarding TAships, which I think a lot of people don’t know–or I didn’t realize at first–is that it usually is possible to get a 25% TAship while getting the GRFP. So, that might be an option if that will satisfy your degree requirement. And the other benefit is that you actually get paid on top of the GRFP additional money for the 25% TAship, and that’s allowed within the GRFP rules. So, it’s just something to consider. I did that for one quarter, and it was really nice.

Financial and Career Opportunities for GRFP Recipients

11:34 Emily: Yeah, I love hearing all of these different ideas. Okay. So again, speaking with a new fellowship recipient, what are some of the financial and career opportunities that come along with receiving the fellowship?

11:46 Kelsey: Well, probably the biggest one is just the fact that the stipend is a lot higher than most standard stipends offered for grad students. And so, that makes a really big difference to be able to afford cost of living, which has really gone up in a lot of places, especially in California. I’m sure other places as well. And then another benefit for your career is that winning one fellowship usually leads to winning additional fellowships and awards. And I think one reason for this is that the reviewers look at your CV and they’re like impressed that you have the GRFP so they are more likely to give you these other awards. And then the other reason is that I think that just the practice of writing the fellowship in grants, you become better and better at it. And so you’re able to write more convincing applications.

12:35 Kelsey: So, for me personally, after I got the GRFP, I won research funds from UC Davis. I got like three or four travel awards for conferences. I got the USDA predoctoral fellowship. And then I also applied for a Dean’s award for mentorship and got that. And I’m pretty sure the GRFP helped me a lot in that. And also writing these and teaching classes on fellowship writing probably helped me also become a lot more convincing. So, that’s a huge benefit for your career.

Get the Snowball Rolling, Start Early

13:05 Emily: I’ll actually add in there that I think it makes a ton of sense, like what you’re doing with your course, or the students in your course, it makes a ton of sense to focus and put so much effort into these really early funding applications like before you enter graduate school in your first, maybe second year of graduate school. You don’t have to say, “Okay, this is going to be my bar for every application I’ll ever do.” But as you said, if you can get that snowball rolling of receiving awards right away in the start, it does make the rest of it easier and is very impressive. It’s a wonderful fellowship to win. So, I’ll just say, go take Kelsey’s course. Or somebody else’s. Just get these resources and make sure that you are putting as much effort as you possibly can into these early applications. And like you said, the skill of writing the application itself, that is something that carries over into the future. So, yeah, when you have your time before you’re deep into your research and you’re still doing your classes or whatever, make time for this. Make it almost like a course in your schedule in that semester that you’re applying. Because it really is worthwhile to put in the effort.

14:08 Kelsey: Yeah. And a lot of people don’t want to apply, for example, because they just don’t think they’re going to get it, for various reasons. And I encourage them just to do it anyways as an exercise. And usually by the end of it, I always ask my students during the course evaluation if they thought that the class was worth it, even if they don’t get the fellowship. And like 95% of them say yes, just because it’s the skill, it’s writing about your research. A lot of times if you’re actually writing about your real research, you can use that GRFP application in other grants or your qualifying exams, which is really useful. So yeah, definitely a good skill to get and to get early. And then if you get it, like you said, it’s just a snowball effect.

Internship and International Travel Opportunities

14:54 Kelsey: I was going to mention just the internship and the international travel opportunities that GRFP fellows are able to apply for. So, I didn’t actually apply to either of these, but I have known people who have done the Graduate Research Opportunities Worldwide, the GROW program, and that just allows you to do like three to six months research abroad. You identify a host in another country and then you apply for it. And I heard it has around like a 50% acceptance rate, and they fully fund your travel and living expenses abroad. So, it’s just a nice way to kind of get some international experience, maybe learn a new technique, or use some instrumentation that’s not available at your home lab. And it’s just another fellowship you can add to your CV.

15:49 Emily: I’m also thinking that that’s just an incredible thing to be able to talk about in future job interviews, or whatever. Just having a different kind of experience that broke up graduate school a little bit. Expanding your network, you know, seeing things from another perspective. It’s in the name, right? It’s a real growth opportunity.

Even Without the GRFP, Talk to Your PI About Collaborations

16:08 Kelsey: And I mean, something to consider too is even if you don’t have the GRFP, if your PI does have enough funding, this is something you could probably set up on your own basically doing research in a collaborator’s lab internationally or in the U.S. So, I think it’s something to consider just to diversify the experience that you get and you can talk to your PI about it and it might be something they go for.

16:34 Emily: Yeah. I know actually one of my labmates while I was in graduate school did the Whitaker Fellowship. I don’t know how subject matter-specific that is, but he was able to spend nine months in East Asia. And yeah, I think it was a great experience.

16:48 Kelsey: Yeah. The NSF has another one too that I think is open to all, not just GRFP fellows, that’s just a travel abroad or research abroad fellowship. There are other ones out there too. So, it’s definitely something to look out for and apply for.

17:03 Emily: Okay. So, that was the GROW fellowship, but there’s another internship program, right?

17:07 Kelsey: Yeah. So, there’s the GRIP program. So, it’s the Graduate Research Internship Program, and that one you do research at a federal agency. I don’t know all the ones, but I know like you can do research in the Smithsonian for example, any of the agencies, basically the governmental agencies.

17:28 Emily: That also sounds like an incredible career opportunity.

17:32 Kelsey: Especially if you want to go into government research. You know, I think that nowadays more and more graduate students are realizing that the academic path of being a professor–there are so few opportunities for that and so many graduate students trying to get those, that a lot of people are considering alternative career paths like industry or government jobs. I had a lot of people who took my class who really wanted their end goal to be to work for a governmental agency and do research in that respect. And actually the NSF really encourages that for GRP applicants. So, I tell people, if that’s their career goal, to write about that in their application.

Timing of Internship Programs During Fellowship

18:16 Emily: Just to add on to that, I think having outside work experience before you actually finish your PhD is incredible for finding whatever your next job is. Even if you decide to stay within academia. Again, it gives you multiple perspectives, broader network. But a question I have about the internship programs, is that something that you have to do during your funded years or is that something you can still do on the remaining two years?

18:39 Kelsey: Yeah, that’s a good question. So, both the international program–the GROW program–and the internship program can be done while you’re on reserve. So, while you’re not receiving the stipend. So, it has to be done within the five-year period of when you first start the fellowship. But yeah, that’s really one of the benefits. And I think the GROW is really something you’d probably want to do towards the end of your graduate career–probably both programs–because one, it’s additional funding? So, maybe your GRFP funding has run out and now you can get some more funding for your travel and living expenses.

Design a Custom Internship

19:16 Kelsey: And then the other thing is that you really are probably better able to identify a lab or a governmental agency that would be a right fit for your research at that point. And actually something else regarding internships is, you know, there was a program at UC Davis that’s like the biotechnology program. It’s like a degree, an “emphasis,” and they require that you do an internship as part of the emphasis. But one thing I realized is, even if you’re not in a program like that or even if you’re not a GRFP fellow, you can a lot of times arrange an internship in industry towards the end of your graduate career. Potentially, the company will fund you to do that, too. And it can be a really good chance to explore these career opportunities.

20:07 Kelsey: A lot of times, if you end up doing a good job, the company will be really excited to hire you and it kind of lets you trial industry or trial a company and maybe contribute something else to your research, too. So, I just have realized that a lot of times you can kind of design your own programs. Obviously, you want your advisor to be on board with this, but a lot of times, especially if you can get funding from the company, then they’re going to be very happy about that and they also want to see you grow in your career. So, I think that’s something that people should consider. Even if you’re not a fellow or even if you don’t have an official program, you can kind of craft your own internships during graduate school.

20:51 Emily: Yeah, I totally agree. I think it’s one of the most powerful things you can do for your career, prior to finishing your PhD, while you know you have something to go back to after the summer ends, or whatever. I actually did a science policy fellowship that was three months, the Christine Mirzayan policy fellowship. It’s at the National Academies. And I did it after I finished my PhD. I applied basically around the same time that I was defending, but it’s open to current graduate students as well. In retrospect, sort of like you, I wish I had done it while I was still in my program and I think it would have informed some of the decisions that I made as I was finishing up. So, internships, great for everyone. I know not everyone thinks that internships are for them. I’m from an engineering field, so it’s sort of more normal to think about doing an internship. And of course in computer science or similar fields like that. But I think it’s expanding and it should expand more to other disciplines where it hasn’t been a traditional part of the PhD path.

Commercial

21:50 Emily: Hey social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15-minute call with me at pfforphds.com/coaching to determine if financial coaching with me is right for you at this time. I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now, back to our interview.

Financial Advice for Fellowship Recipients

22:36 Emily: So, let’s broaden this line of questioning a little bit. Not just for people who have just received the NSF GRFP, but people who have received it in previous years who are still receiving that higher stipend. And maybe other people who’ve received outside fellowships that also have some stipend augmentation based on that. What’s your financial advice for people who have received one of these lucrative outside fellowships?

File Estimated Quarterly Taxes (NOT Yearly)

23:00 Kelsey: Yeah, so I think the biggest pieces of advice I have are regarding taxes and savings. And so, the thing you should do immediately is start to file your taxes quarterly instead of yearly. And you can estimate how much taxes you’re going to have to pay quarterly so you can start to save up. My personal sob story is that I did not do this the first year and I ended up filing my taxes and I owed about $5,000, which I didn’t have saved up. So, I ended up having to do a payment plan with the IRS which charges interest, actually quite a bit of interest. So, I ended up having to pay way more in taxes than I would have if I had just started filing quarterly. So, do that right away. I know taxes are not fun, but it’s actually not too hard to calculate if you’re only getting the stipend income, and that’s way better than having to owe it.

23:56 Emily: Actually, let me pause there because this is one of my big areas, right? It’s tax for fellowship recipients. So, was that $5,000 just the IRS or was that split between California and federal?

24:08 Kelsey: Oh, yeah, it was California and federal, split.

24:10 Emily: Okay. That’s within the more reasonable realm. Okay. Yeah, definitely. I mean I’ve actually had, I think, two other people interviewed on the podcast who have also set up payment plans with the IRS based on this exact same situation. So, this is not at all uncommon, and it’s one of my big areas of focus is to get this information in front of new fellowship recipients. No longer is income tax–this is the case at almost all universities–no longer is income tax going to be automatically taken out of your paychecks. It’s something you now have to take responsibility for, like you were just saying.

Personal Finance for PhDs Tax Center

24:43 Emily: So, most likely you are going to be required to pay quarterly estimated tax. And I have a ton of materials about this. Again, if you go to pfforphds.com/tax there’s an article there. And in particular, I have actually a workshop for people in just this exact situation. If you go to pfforphds.com/qetax for quarterly estimated tax, it will forward you to my most recent workshop. And probably similar to yours, Kelsey, I have prerecorded videos for that, and I also do live Q&A calls to help people with questions as they come up through tax season. So, just because of when we’re recording this though, I want to add in that part of the response to the coronavirus crisis actually has been to delay the first, like the Q1 payment for 2020. So, just like with your annual tax return, right now, this year in 2020, it’s no longer April 15th, but rather it’s July 15th.

25:34 Emily: So, for those fellows out there, you have a little bit extra time to figure out what’s going on in 2020 regarding your quarterly estimated tax and making those payments. So, the first payment as of this recording is actually due [July] 15th, which is the quarter two payment. But yeah, totally a common story, like you were just saying, Kelsey, is just to not realize the change that had gone on with your income tax and catching up with it when you actually file your annual return and realizing, “Gosh, now I have all this money that I owe to the IRS.” So, how did that payment plan go for you? Like was the increase in stipend more manageable, or what were your tips around saving I guess?

Start Saving Immediately

26:11 Kelsey: Yeah, so I think I’m still paying off some of my taxes monthly for that. So, anyway, just do it ahead of time and you won’t have to worry about it. And then in terms of saving, the other thing is that, because the GRFP stipend is a lot higher than the normal grad student stipend, you can kind of get used to a certain style of living. Like you’re able to go out to eat more or buy more expensive groceries. And then as soon as the stipend stops, it can be kind of a shock. So, what I’d advise doing is actually just start saving almost immediately. And I use automatic monthly withdrawals to a mutual fund. And the benefit there is I don’t see the money. Like it’s just automatic.

27:02 Kelsey: The savings are out of sight, out of mind. And then when I actually really need it I can go and be like, “Okay, here’s how much I have.” And I’ve done that a few times. I used that to fund a vacation to Europe. And so I advise just like setting something up right away and make sure you can’t see the money. Save up for when the GRFP ends, and also just because you have all this extra money that you wouldn’t be getting otherwise, so you might as well save part of it and not just spend it all.

27:33 Emily: Yeah, I definitely echo what you’re saying. And I think especially where you’re living, it’s a high cost of living area. It’s probably already challenging to live just on that GRFP stipend and it’s certainly less than we’d be making if you were having a regular job. But, think about your peers who are somehow probably managing to survive, hopefully without debt, on that lower stipend level and see if you can maybe keep your fixed expenses, like your housing, your transportation, at that lower level, so that if your income does drop after the fellowship ends, you don’t have to move or you don’t have to sell your car. Or you can adjust the groceries and adjust the restaurant spending. And it’s much easier and more palatable than having to go through those more major upheavals. So, I totally agree with what you’re saying.

Stipend Negotiations and Bonuses for Fellowship Recipients

28:19 Emily: So, something I know that some fellowship recipients do–and it sounds like maybe you didn’t or maybe it wasn’t possible for you–is that once they know that they’re receiving the fellowship, they actually negotiate to have their stipend stay at that fellowship level. Even after it ends, instead of going back down to the baseline level. Or, alternatively, sometimes programs give out one-time bonuses to fellowship winners. Have you heard about that or have any experience in that area?

28:47 Kelsey: It’s something I thought about asking my PI, because after the fellowship ended, I was struggling a little bit, financially. I ended up doing the 25% TAship to recover that income. But I do think that, I mean it’s really going to depend on your PI and their sources of funding, but it is something that is possible, potentially.

29:15 Emily: Yeah. I think it’s kind of a “no harm in asking” situation. And actually, if you happen to receive this fellowship when you’re not yet committed to a program, so prior to starting your first year of graduate school, that is something I would take to every program that you’re heavily, heavily considering, saying, “Okay, I got this fellowship. Can you augment, can you extend the guarantee?” Like what more negotiation room is there now that you’re bringing in all this money for them, right?

29:46 Kelsey: I mean, exactly. You’re bringing in just about a hundred thousand in your stipend dollars alone, not to mention tuition and fees. So, it is pretty lucrative. It’s lucrative for a program and a lab to want to accept you because you’re coming in with all this money and you just asking like, “Oh hey, can I get an extra $5,000 a year?” When you’re bringing in $100,000, it’s really still a pretty good deal for them. So, I definitely encourage people to do it. I’d love to hear if anyone is successful at this.

Details on Kelsey’s NSF GRFP Course

30:17 Emily: Yeah, I always want to hear negotiation stories. Absolutely. Email or tweet me those. So, let’s hear more about your course and the content that you create there. You said the best place to find out more about that is your Twitter, could you repeat your handle?

30:34 Kelsey: Sure. It’s @ K L S Y W D (@klsywd). So, it’s my name without any vowels. It’s pronounced Kelsey Wood.

30:41 Emily: So, tell us a little bit more about the structure of the course. I know you’ve mentioned this a little bit upfront, but last year for example, you ran it between what month and what month and you know, what goes on in that time period?

30:53 Kelsey: Yeah, so one of my biggest pieces of advice for the GRFP is to start it early. So, it’s due in like October now. And if you’re on the quarter system, like UC Davis, classes start at the end of September. So, it’s basically due during the first month of classes and it’s also your first month of grad school. So, you’re either just starting in a lab or doing rotations, and that month is just crazy. So, if you don’t start the fellowship early, it’s going to be really hard to do it all and do it well. So, my course actually starts in August, so then you have kind of a full month to start to think about stuff, outline it.

31:35 Kelsey: And then you have September to really refine it before classes start. And then we do all the final drafting and editing in October. So yeah, my course is a three-month thing. And that’s one of the benefits of doing it online. I wasn’t able to start in August at UC Davis because not everyone had come to Davis yet because it was still summer. So, doing it online, I was able to get people just at least starting to think about it and getting ideas rolling. And so, what I do is I had four different webinars on different topics. So, I covered the two NSF criteria, which are intellectual merit and broader impacts. Basically like a full 45-minute webinar on both of those topics. And I think that’s really important because especially the broader impacts one is really confusing to a lot of people.

Focus on Broader Impacts, Know Your Audience

32:27 Kelsey: It’s something that you pretty much probably have never heard of until the NSF fellowship. And it’s a really important part of that fellowship, too. So, I really emphasize the importance of that. And also, it’s really important that you get broader impacts experience before you apply. And if you’re starting the application early or even people who are listening to this, thinking about applying for next year, should basically right now find some activity that you can do that you can write about in your broader impacts section. So, volunteering, outreach, teaching, et cetera. Because if you don’t have any experience, you’re not going to get it. And then I also do a webinar on writing tips. The biggest one that I’ve learned in all my years of writing is probably just like really knowing your audience and writing for them.

33:21 Kelsey: So, you really want to just imagine who’s reading it and who they want to fund, and you really want to just be that person that they want to fund. I help people do that in their essays. Something else that’s really interesting, and it actually might be a regional difference, is in the way that you want to sell yourself in these essays. So, a lot of people are really understated or humble, and I’m like, “No, you have got to really come off like a rock star and show off all the awesome things that you’ve done.” And apparently, somebody told me that that’s actually frowned upon in the UK or in Europe to do that in your grants.

34:10 Kelsey: But in the U.S., at least, it seems to be more popular or more of a winning technique. And so, the other part of the course is that I read people’s essays and give them a ton of tips and just help them write it and rewrite it to just have a better chance of getting the fellowship. And I also set up peer editing groups, too. And I do think that that’s something you want to do, if you take a class or not. Just find somebody who, especially who’s experienced with the NSF, and have them read your proposal and give you feedback. So, for example, when I applied, I was really lucky to have a former NSF reviewer read my application and give me feedback. And he pretty much destroyed my initial draft. It was red everywhere and he’s like, “Get to the point. Be more concise. This is too vague.” And so, I kind of have internalized his feedback and I use that now when I’m editing people’s essays.

35:13 Emily: Yeah, that sounds incredible. Thanks so much for telling us about the course. And were there any other tips you wanted to add in? I know you just gave several already, but any others?

35:23 Kelsey: I guess the last one would also just be to read a lot of example essays, too, for inspiration. And there are a lot out there. I have my own personal collection. I actually have quite a few in my personal collection that I share with people in the course. And then the ones that are okay to share publicly, I’ll probably be posting on my Twitter or on my website once I get that up.

Best Financial Advice for Early-Career PhDs

35:46 Emily: Yeah, that sounds great. Well, Kelsey, thank you so much for joining me for the interview today. And final question that I ask of all my guests is what is your best financial advice for another early-career PhD?

35:59 Kelsey: Well, I think the number one is to apply for fellowships and you know, cast a wide net and apply for anything that you’re eligible for, pretty much. I think it’s totally worth it. I have a quote that’s from that previous grad student who helped with the NSF workshop, which is, “You win 0% of the fellowships you don’t apply for.” So, I think it’s worth it. You can do it. And I guess the other thing is that I think it is important to consider the cost of living and the stipend amount when you are choosing a graduate school. I don’t know. This wasn’t really made apparent to me. And you know, you’re just like, “Oh no, you just choose the best school or the best lab.” But there is kind of a range in stipends across the U.S. and cost of living. So, I think it’s something to really consider because your finances are a part of your happiness in grad school. So, apply for fellowships, and consider that.

36:58 Emily: Totally, totally concur. Absolutely. Well, Kelsey, thank you so much for joining me today and telling us more about these decisions that come up for GRFP recipients and your own experience and about this fabulous course. Thank you.

37:10 Kelsey: Yeah. Thank you.

Outtro

37:12 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.

Insights from the Bargaining Table with a Graduate Student Union Leader

by

In this episode, Emily interviews Mary Bugbee, a fourth-year PhD student in anthropology at the University of Connecticut. Mary tells the story of the grad student union at UConn, from its inception in 2013 to through the start of the second and current contract. Mary served on the bargaining committee for the second contract and gives her insights from the bargaining table into how the university views graduate student labor. She tells graduate students what they can do to support higher pay and better benefits at unionized and nonunionized universities. Mary also shares how her personal finances have benefitted from the strong union contract and her excellent financial advice for other early-career PhDs.

Links Mentioned in the Episode

grad student union bargaining

Teaser

00:00 Mary: The economic model of universities is exploitative. We’re cheap labor. A lot of us aren’t going to get tenure-track jobs. It’s designed this way for a reason. The problem is structural. Sometimes it’s not individual.

Intro

00:19 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode nine, and today my guest is Mary Bugbee, a fourth-year PhD student in Anthropology at the University of Connecticut. Mary tells the story of the grad student union at UConn, from its inception in 2013 through the start of the second and current contract for which she served on the bargaining committee. She gives her insights from the bargaining table into how the university views graduate student labor and what graduate students at unionized and non-unionized universities can do to support higher pay and better benefits. Mary also shares how her personal finances have benefited from the strong union contract and her excellent financial advice for other early-career PhDs. Without further ado, here’s my interview with Mary Bugbee.

Will You Please Introduce Yourself Further?

01:13 Emily: I have joining me on the podcast today, Mary Bugbee. She is a graduate student at the University of Connecticut, and she has been very active within their graduate student union. So, we’re going to hear a lot more about how that works from Mary. So, please, Mary, take a moment to introduce yourself to us.

01:29 Mary: Hi, and thanks for having me on this podcast. I am very passionate about unionization and that’s what I’ll be talking about. So, my name is Mary Bugbee. I’m a fourth-year PhD student at the University of Connecticut in Anthropology. I’ve also served as the vice president for the graduate employee union, UAW Local 6950, and then served as the president. And during that time, I also served on our bargaining committee for our second contract.

UConn Grad Student Union: First Contract

01:59 Emily: Yeah. So, when you started graduate school, which it sounds like that was during the first contract, what was the status at that point? What was in your offer letter for your stipend and the benefits? What was that first contract including?

02:13 Mary: Okay, so I was really lucky. I came into a university that had a unionized workforce of graduate employees. So, my benefits were really good starting off. I started in the fall of 2016, which was the second year of the first contract that they ever had. I was funded fully, which means for 20 hours a week, split between research assistantship and teaching assistantship. And that was $22,000 about for my nine-month academic year stipend. So, the University of Connecticut, in the Storrs campus, it’s not typical to have 12-month funding. People are usually funded at nine months, and then some people get additional funding. I also had a really good health insurance package. I pay $200 a year, I have no deductible, and my copays are $15, $20, depending on where I go. And it’s awesome.

03:14 Emily: That does sound really good. And you came in as a master’s student, is that right?

03:18 Mary: Yeah, so I got my master’s on my way to the PhD, and the way our stipends are set up is there’s a beginner’s level, a master’s level, and then the PhD candidate level. So, if I had come in with a master’s degree, I would have been making more than $22K.

03:34 Emily: Okay. And was that all part of the contract as well? That sort of graduated stipend level?

03:38 Mary: I believe the graduated stipend level was something in place before the contract, but it was maintained with what they negotiated. Instead of just having the same amounts for like many years in a row, we got raises from year to year. So, that was where the improvement was. So, not just a raise when you get to the next level, but also just a raise each year to help keep up with the cost of living.

Summer Research Fellowship

04:03 Emily: Yeah. So, one more question kind of about what was going on when you came in. You mentioned that your offer didn’t include summer funding. So, for you in particular, did you end up getting summer funding some of the years? Or how has that worked out in the years you’ve been there?

04:16 Mary: Yeah, so my department, the Anthropology Department, has something called a summer research fellowship. It’s basically guaranteed for first and second-year students to do exploratory fieldwork or language training during the summer. So, I had that my first summer and my second summer, which helped a lot. It still only covered my costs in the field, so I had to have savings to pay certain bills when I left for the summer. And since I was in Mexico, I couldn’t work. I didn’t really have any income. So, it was really important that I was able to save during the year. I did have side gigs.

Summer Side Hustling and Housing

04:54 Emily: Okay. Yeah, I was just about to say. So, the $22,000 in that first year that you received over a nine-month period–was that basically just paying for your living expenses during that nine-month period and then you had to side hustle to do the summer self-funding or how did that end up working out?

05:09 Mary: So, I’ve always had a side hustle or two. At one point I had technically four, but I’d say I just had one extra side hustle that first year. I got some per diem hours working as an administrative assistant at a local hospital. It was something I had before I started graduate school. So, I was lucky. I would say the stipend alone was enough to pay my living expenses. I lived with my partner at the time, a one-bedroom apartment. We split rent, although he paid a higher percentage of the rent. Had I lived with just a regular roommate and had a two-bedroom apartment. I think things would have been a lot tighter, because Connecticut is an expensive state. But, I never had a month where I was broke, and I was always able to put a little bit of money away. I’d say I earned maybe a hundred to 200 extra dollars a month with my side hustle.

Was Side Hustling Allowed Under the Union Contract?

06:04 Emily: Okay. I’m always very curious when people talk about side hustles. Is side hustling officially allowed under that first union contract? Or is it something that’s not really addressed?

06:14 Mary: So, the union contract has nothing about whether or not we can have outside employment. The graduate school at UConn actually governs that. And officially, you’re not allowed to work beyond the 20 hours a week in your offer letter. However, with advisor approval, you can. It really depends on your program and your advisor. I’m very fortunate to have a program and an advisor who has been completely okay with me having side hustles as long as I was meeting the academic criteria and progress goals. But some people at the University of Connecticut do not have the same luxury, and their advisors or their programs will give them crap about it if they find out. So, it’s really dependent on where you are in the university.

07:06 Emily: Yeah, that’s unfortunate. I definitely come down on the side of, if you’re doing what’s expected of you in your role as a graduate student, your advisor or whoever should not care what you’re doing outside of that, whether it’s a side hustle, whether it’s other stuff in your personal life. Especially when you’re being paid a stipend, like you were just saying, that’s like maybe adequate, sort of. Really, if you’re going to be making the choice between, “Okay I’m going to side hustle a little bit or I’m going to experience a bunch of financial stress,” and that can affect your work too. Thanks for adding that detail. So, how did you first get involved with the union and what was your role? I mean, you already mentioned a little bit what your roles were, but what were you actually doing?

Mary’s Role in the Grad Student Union

07:42 Mary: So, my research area is actually health policy. And I know a lot about health insurance. So, when I knew the contract was going to be reopened for bargaining–that was in 2017–I decided to get more involved. I wanted to be part of the bargaining committee and help with issues around health insurance. And then from there, I became super involved. I ended up becoming the vice president as well as a member of the bargaining committee. And from there, I’ve just been actively involved ever since. I did resign from the presidency this past May. So, I was the president for the past academic year, but I really need to focus on my research now. So, I’ve moved on and now I’m just a rank and file member and a volunteer. So, that feels good.

08:33 Emily: Yeah. But still doing outreach like this podcast.

08:36 Mary: Yes.

History of the UConn Grad Student Union

08:37 Emily: Okay. So, can you tell me a bit more about maybe the history of the union? When did it first come into place, and how did that work?

08:45 Mary: Yeah. So, from what I understand, there were multiple attempts at unionizing at the University of Connecticut over the years, but it culminated in 2013 when the university decided to just unilaterally change the health plan that the GAs were on to a higher deductible and just a more limited coverage network. So, not only was it more expensive, but it disrupted care for people. There were people who had to switch therapists or primary care physicians because they were no longer in-network. And that was the straw that broke the camel’s back. People realized that, without having a collective bargaining agreement, without having a union, the university could do that sort of thing at will, and they didn’t like being in that vulnerable situation. And on top of that, they were increasing student fees every semester. Wages were stagnant, the workload was becoming an issue. So, there were a lot of factors, but I’d say it was the health insurance. That was the last straw.

Health Insurance as a Common Catalyst for Unionization

09:46 Emily: That’s actually a little bit similar to the story that I heard out of the University of Missouri where–I think this was as a result of the passage of the Affordable Care Act–the university decided to stop offering health insurance or stop making it an included benefit. And so that again, as you were just saying was–and they did this like the day before the start of the coverage period. So, people literally we’re going to be without insurance the next day and finding out–I mean, that’s an extreme scenario. And so that again, as you were just saying, that was the catalyst there for a unionization movement. And I don’t know how quickly they got that into place, but yeah, please continue on with what was happening at UConn.

10:27 Mary: Yeah. So, from there there was a lot of organizing and these were mostly volunteers–or all volunteers at that stage–of people, graduate students who just decided that they needed a union. So, they got buy-in from other groups on campus, including faculty, the Graduate Student Senate. By November, December, 2013, they had selected United Auto Workers for their parent union. I think they had talked with a few others, but they decided UAW was probably their best bet. They have a really good track record in higher education.

11:00 Emily: As I understand, UAW does most, or virtually all, of the grad student unions, is that right?

UConn Breaks Higher Ed Record for Fastest Card Drive

11:07 Mary: I think there are a few AFL grad employee unions, but yeah, UAW I’d say might have the monopoly in higher education graduate employees and postdocs. So, from there, we had the card drive in February 2014 and we actually broke a record at UConn for fastest card drive in higher education organizing history. By early March, over 50% of graduate assistants had said, “Yes, we want a union. And yes, we want to be a member of this union.” By April it was recognized by the university and certified with the state labor board. Bargaining kind of got off on a bad foot. That June, the university decided they didn’t want to do summer bargaining. But they ended up bargaining from August, 2014 to April, 2015, and the first contract was in place by July 1st, 2015. And it was a three-year contract.

12:07 Emily: I see. So, really the initial phase of, “We want to get this in place, let’s get the buy-in.” That happened relatively quickly. But then the bargaining–I’m learning about this for the first time–the bargaining took quite a bit of time.

Bargaining: A Long, Arduous Process

12:19 Mary: Yeah. So, the process of bargaining can be very frustrating. The first contract is always going to take longer because you have to write everything from scratch. So, I was on the bargaining committee for the second contract. So, if you’re a member of the executive board you’re automatically on the bargaining committee. But there are also elections for district representatives so that there’s representation across the graduate assistant community. And then usually there’s a survey that’s done prior to bargaining, or there always is in our case, to elicit what people’s priorities are–to see what matters most to them. And then that’s used to define the bargaining goals. And the membership ratifies that and then bargaining can begin with the university. So, we started the second contract October, 2017 and we bargained until April, 2018. And it was a long, arduous process.

13:18 Emily: So, can you give me some examples of points that people brought up to you during the survey process that they wanted to have on the table for bargaining? Maybe some that ended up in the final contract and some that didn’t.

Issues: Health/Vision Insurance, Parking, Student Fees

13:29 Mary: Yeah, so everyone has always wanted vision insurance. We haven’t gotten that in either of our contracts, unfortunately. But you know, a lot of us wear glasses and contacts, so that gets brought up a lot. Health insurance–people want to keep the health insurance we had. People want wages. Parking is a big issue at UConn. It’s very frustrating. You have to pay to park and then you might pay for a permit and you still won’t be able to find a spot at certain times of day. I understand this is probably a problem at a lot of universities, but it always comes up with our members. But yeah, the student fees are another issue because each semester before we start, before we’ve gotten our first paycheck, we have to pay fees. And my understanding is that before the union was in place, fees were close to a thousand dollars a semester. Now they’re like $600, $700, and that’s with the university increasing fees during that time. So, we’ve kept it pretty low. So, the financial stuff is always big, but there’s other stuff too. And sexual harassment and discrimination protections, those are very important to our members as well.

Active Membership is the Key to a Bargaining Committee

14:41 Emily: I see. So, can you tell me a little bit more about how the bargaining committee works? You just said it was a six-month process. It’s arduous. What are some details there?

14:49 Mary: So you have the team–the negotiating team–and for us, our lead negotiator was an international rep from the UAW because none of us really have experience in bargaining. So, that’s one of the reasons you go with a parent union, because they have all those resources for you. So, he was the lead negotiator. We would try to meet as often as we could. The university wasn’t great about giving us a lot of time. We even met over breaks. Sessions could be from like two hours to four hours, and by the end, like all day sessions. We signed the tentative agreement at two in the morning. So, that’s the actual, active bargaining at the table. What’s most important for people to know about the bargaining process is that you need an active membership. You need to have collective power behind the bargaining team. So, our organizing committee all year long was organizing direct actions, was doing member outreach to educate them about the bargaining process and the trials and tribulations at the table. People would write op-eds for the campus newspaper or other news outlets. So, we were constantly putting pressure on the university from behind the scenes of the actual bargaining table. And that is the reason why we’ve gotten strong contracts both times. It’s because we have really active members who put so much time and energy into securing really good contracts.

Ways to Be an Active Member (Beyond Striking)

16:22 Emily: What does it mean to be an active member? You just mentioned writing op-eds. Did it come to really visible action, like strikes, or anything like that? Or maybe there are some intermediate steps.

16:32 Mary: Yeah, so, we never had a strike. Connecticut is a no-strike state, which doesn’t necessarily mean people wouldn’t strike, but we’ve never had to do that. I’d say being an active member is doing what you can with the time you have. And for graduate students, even the smallest thing can be a big ask. So, it was very inspiring to see people turn out for our big direct action at the end. We had a sit-in at the student union. We had three simultaneous sit-ins. We had some people at the student union chanting, then we had people in the Office of Institutional Equity because sexual harassment was a major theme in bargaining, and then we had people who went to the president’s office. Prior to that, we’d had a big sit-in in her office building a day she was offering office hours. So, like big, public, noisy, direct actions that called attention–not just to people at the university but people outside the university–to what was happening. And some of those people I had never seen at a membership meeting before. They weren’t regularly involved, but they turned out that day, and that was awesome.

Commercial

17:47 Emily: Emily here for a brief interlude. Tax season is upon us, and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns, from free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax. That’s P F F O R P H D S.com/T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now, back to the interview.

Sit-ins Demonstrate Collective Power

18:51 Emily: So, how does something big and visible like a sit-in translate to the bargaining table? Are the people from the opposite side coming in, they’re saying, “Okay, okay, we see, we see”? What’s actually happening?

Mary (19:03): They see the collective power that we have. They see, “Wow, this group of GAs, they do really important work at this university. And if they were to ever not do that work, that would be a big deal.” So, even though we haven’t had a strike, I think that’s always on the back of the mind of the employer, because we do the day-to-day research, the day-to-day teaching. There are 2,200 of us at the university. The university wouldn’t be able to do what they had to do without us, so they have to listen to us. And when they see how much we care and how we’re able to band together in those crucial moments, then they take us seriously.

Changes from the 1st to the 2nd Contract

19:47 Emily: What were some of the changes from the first contract to the second contract that you worked on? Or, was it more about, like, maintaining the really good health insurance that was in place initially?

19:57 Mary: So, I can’t think of anything that we had to give away. But yeah, we wanted to maintain the health plan, and we also wanted raises. So, Connecticut is in a huge budget crisis right now, but we were still able to secure 2% raises year to year. The first contract, it was 3% raises.

20:18 Emily: So, that 2%, it’s basically the cost of living raise. Every year, you get another 2%. Is that right?

20:23 Mary: Yes.

20:23 Emily: During the length of that contract?

Hold On to Your Fundamental Rights

20:25 Mary: Mhm. And we fought tooth and nail to maintain a grievance procedure for sexual harassment and discrimination. The university tried to take that away from us. They tried to use it as a bargaining chip for economic items, which was to me just like completely despicable because that is a problem at UConn, as it is anywhere in higher education.

20:50 Mary: So, we fought tooth and nail to make sure that we still had an avenue of recourse in our collective bargaining agreement in cases of sexual harassment and discrimination. I think that might’ve been our biggest fight at the table. We also tried to get a full fee waiver. That’s what we try every time. We didn’t get that, but we did get an increase in our fee waiver. So, that was helpful. And we secured a relief payment for a new fee that went into place this year for a very beautiful multimillion-dollar student recreation facility they just built, and it’s $200 a semester. So, we get that money back in our first paycheck of the semester.

21:31 Emily: Okay. So, it’s still a fee that you pay, but then you get the money back. And that’s for the length of this contract.

21:37 Mary: Yeah. And the reason it was structured that way was because of how it was financed in bonds. They couldn’t legally give us a waiver. So, that was our work-around.

Union Fees Are Minimal and Worth It

21:46 Emily: Yeah. Interesting. Yeah, it’s good, I guess, to hear about all the different little levers that can be put in different ways. Although, as you said, some levers you don’t want to allow. I’m wondering, what is the fee for the union members? And then, are you totally confident that, based on, for instance, just the lowering of fees or not increase of fees, has that paid back immediately?

22:12 Mary: Oh, definitely. So, people pay 1.095% in dues, and it’s just taken out in paychecks. So, when I was at 75% funding one year, it came out to be like, I think around $10 a paycheck for me. I think for people making the highest amount you can make, it’s around $15 a paycheck. But you get that all back in your fee waiver, and your raises make up for it as well. So, for me, it’s a no-brainer. The union has been instrumental in making sure that I have a decent living wage. So, the least I can do is pay my union dues.

22:52 Emily: Gotcha.

22:52 Mary: And it takes resources to run a union, so that money is needed. You might have to go to arbitration, which costs money. We pay dues to the international UAW who provides us with resources like our lead negotiator during bargaining. And yeah, we also have to pay staff to handle grievances. So, it does take resources to have a strong union.

Remaining Insights About the Bargaining Table

23:18 Emily: Mhm. And are there any other insights that you want to share with the audience about what it’s like to be at the bargaining table? Or, what they might want to know if they are union members but maybe not active in the leadership at the union in their university, or maybe their university doesn’t have a union? Anything else you’d like to share from your unique position?

23:36 Mary: Yeah, so it can be a bleak place at the bargaining table because you come to learn that the university really only cares about its bottom line. And it was very upsetting for me to see them try to use, like, our right to have a grievance procedure for a sexual harassment case as a bargaining chip for economic items. It was very disillusioning, but it was also so inspiring to see what we were able to do as a collective. So, for people who don’t have time to contribute, like signing a card, that’s enough. That’s all what some people can manage. Like sign a card, pay your dues. Whatever little thing you can do helps your union. So, the bargaining is nothing without a strong membership.

What About Postdocs and Non-Employees?

24:24 Emily: Yeah, that’s good to hear that this work is not done by a few individuals who decide to volunteer a great deal of their time, but rather it’s those people, yes, plus they need to have the backing of at least a little bit of effort from a great number of the other workers. What I always wonder about with unions is, like they cover employees of the university–graduate assistants, TAs, RAs. What about the students and the postdocs who are fellowship recipients, who are not technically employees–or, at least for a period of time, they aren’t employees? Are they still benefiting from the negotiation that happens with the union?

25:01 Mary: Yes, absolutely. So, even though they can’t be classified as employees–some postdocs can, which I’ll get into in a second–they can’t be covered by collective bargaining agreement. But some of the things we’ve gained at the table, like our health insurance, that health insurance package is now available to those postdocs and to graduate students on fellowships.

Health Insurance, Not Fee Waivers, Benefit Non-Unionized

25:25 Mary: It’s subsidized a little differently, but it’s still pretty affordable. And I think there are a lot of studies that show when you have unionized employees at a workplace, the non-unionized employees can benefit as well. So, I’d say the health insurance is the big way that it’s benefited those folks.

25:44 Emily: I would imagine fees too? Or, is there a different fee structure for fellows versus employees?

25:50 Mary: So, they don’t get the fee waivers we get because they’re not employees.

25:55 Emily: So, it’s not like the fees have been lowered. It’s just, the fees are high, but you get a waiver for a certain amount of it. Is that how that works?

26:02 Mary: Yeah, exactly. And we always stand in solidarity with grad students when fees are being raised overall because we are in principle against any of that for anyone at UConn. But currently, unfortunately, they still have high student fees.

26:19 Emily: I see. But yeah, the health insurance seems like a big one. Especially what you described earlier, it seems amazing not having a deductible.

26:25 Mary: Yeah.

Unionization Effects on Personal Finance

26:25 Emily: That sort of leads into our second to last question here, which is how has being at a place that has a strong union affected your finances personally?

26:34 Mary: So far, I’ve accrued no debt in grad school. I’ve been able to live on what I’ve made, plus my side hustles, in addition to my TA work. So, I wouldn’t say I’m ever truly comfortable financially, but I do not feel financially vulnerable. I save. That’s why I have side hustles, so I can keep saving, and I don’t have to worry about a medical emergency. For me, that’s a really big thing because I have a chronic illness that’s in remission. It’s been in remission for a long time, but it can rear its ugly head at any moment.

27:12 Mary: And if I don’t have good health insurance, I could go into medical debt in like a week. Or medical bankruptcy, practically. So, I mean, the union is like the reason I went to the University of Connecticut, because I knew the health insurance would cover me in a worst-case scenario. So yeah, I’d say I haven’t been completely comfortable. I definitely took a pay cut from what I was doing before graduate school. But what I’m making allows me to live a decent lifestyle and to put money away.

Pro Tip: Look into Health Insurance Prior to Enrolling

27:45 Emily: I want to follow up on just that point about the health insurance, because I’m curious. So, when you were applying to graduate school and you received a few offer letters, how did you evaluate the health insurance that was being offered to you at that stage prior to actually enrolling?

27:58 Mary: So, I actually didn’t apply to that many graduate schools, and this was the only anthropology program I applied to. So, when I got the offer, I just took it. But I’m from Connecticut, so I knew about the unionization efforts, and I knew to look online and see about the health insurance. So, I don’t think it was mentioned in my offer letter, the health insurance, but the collective bargaining agreement was cited. So yeah, I didn’t really have to do a lot of comparison in the selection process.

28:29 Emily: That’s good to hear though that you were able to just find the information about the health insurance online. Because I know, not necessarily universities, but just in general with private health insurance, sometimes it’s really difficult to figure out what your benefits are, even once you’re actually enrolled in it. So, to do that as a step prior to actually being enrolled, it’s impressive. So, it’s good that they had that transparency that you were able to find the information that you needed right away. Yeah. So, that’s really good to hear. I mean, I’m happy for you, right? That you have a degree of stability and of course not having to take out debt at this stage is awesome.

Best Financial Advice for Early-Career PhDs

29:00 Emily: And so, final question, a standard one that I ask all my guests, is what is your best financial advice for another early-career PhD? And it could be related to something that we’ve talked about today or it could be something completely else.

29:13 Mary: So, individually speaking, this goes back to something you said earlier. I personally like to have side hustles and I think saving is really important. I prefer to have money in the bank and be a little bit more stressed out in terms of my schedule than to have more free time–well, “free time”–and no financial safety net whatsoever. So for me, I think that’s one of the reasons I haven’t had major issues financially in grad school. It’s because I do work on the side. And also, live within your means. But if you can’t–if you can’t balance a budget–don’t be so hard on yourself, because the economic model of universities is exploitative. We’re cheap labor. A lot of us aren’t going to get tenure-track jobs. It’s designed this way for a reason. The problem is structural. Sometimes it’s not individual, so don’t be so hard on yourself if you can’t make ends meet on your stipend. And also, that’s why you should be involved in your union if you have one. And if you don’t, definitely, definitely get involved in a unionization effort. Because even if it fails, it still lays the groundwork for future efforts. For me, it’s the most important thing for my finances in grad school–has been the union.

30:35 Emily: Well, there’s nothing I can add to that. Thank you so much for that statement and for this interview. It’s been wonderful talking with you.

30:41 Mary: Thank you for having me.

Outtro

30:43 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, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive, and is shared under CC by NC. Podcast editing and shownotes creation by Meryem Ok.