Personal Finance for PhDs

Live a financially balanced life - no Real Job required

Stretch that Stipend

Give Yourself a Raise: Re-Evaluate Your Fixed Expenses

by

Increasing your income as a graduate student can be quite challenging, to put it mildly. Stipends sometimes increase with cost-of-living raises or the student’s advancement to candidacy. Fellowships that pay high stipends are quite competitive. You could take out (additional) student loans to give yourself more spending money, but you’ll pay back all that debt (plus interest) later. Establishing a side income or side gig is not an option for all grad students, and those that do are likely making a significant time investment.

A version of this post originally appeared on GradHacker.

give yourself a raise re-evaluate your fixed expenses

Because their options for earning more money are so constrained, grad students seeking to free up extra cash most often turn to decreasing their living expenses. You can effectively “give yourself a raise” by adopting positive financial habits or practicing frugality. This first post in my “Give Yourself a Raise” series focuses on doing so by evaluating your fixed expenses.

I always encourage people looking to reduce their expenses to consider their fixed expenses first. Your fixed expenses are those that are the same every time they occur, such as your rent/mortgage, minimum debt payments, and certain utilities. You only need to make and carry out a one-time decision to reduce a fixed expense, which will free up additional cash flow for you on a regular basis for months or years to come. While this one-time decision might be difficult to make or implement, in my opinion this is often preferable to trying to reduce expenses by methods that require willpower or time on an ongoing basis.

While any of your fixed expenses could potentially go on the chopping block, those that are largest and/or discretionary are usually the ripest for reduction.

Rent/Mortgage

Housing is usually the biggest monthly expenditure grad students have and therefore should be the first to be examined. We all know how to (potentially) reduce our housing expenses: move to a smaller, further, or otherwise less desirable residence; add one or more roommates; or find a better deal. More creative alternative housing arrangements may also be possible, e.g., house-sitting or serving as a resident advisor.

In this area, graduate students usually don’t have a lack of knowledge of how to reduce their housing expenses but rather may not re-examine their decisions as their priorities, finances, and options evolve or are unwilling to move even when it is warranted. My husband and I went several years during grad school without re-evaluating our housing choice until a rent increase compelled us to. Searching for housing and moving certainly wasn’t easy, but by giving up a few amenities and switching from an apartment in a complex to a privately owned townhouse we significantly reduced our rent. The result was an extra $100+ each month that we could put toward other spending that we valued more.

Cable/Internet/Subscription Services

They key question to ask yourself with respect to your fixed utilities and subscription services is “Am I getting the best deal available for what I actually need/want?” It’s easy to lose sight of how well what you’re paying for matches what you truly use, especially as offers and packages change so quickly.

In the last couple years many streaming options have become available for content that used to be the exclusive domain of cable TV. If you’re paying for cable, now is the time to determine if the channels you actually watch are available in a lower-cost form. Don’t forget that you can still watch network TV for free if you have an antenna.

After you’ve determined what you actually want to pay for, simply being a savvy consumer and shopping around for the best price may keep you from spending tens or hundreds of dollars over the course of a year. If you switch providers to get a promotional deal, though, be sure to factor in any activation-type charges that you may incur and the length of the contract you must sign.

Cell Phone Service

People frequently espouse fierce brand loyalties when it comes to their smartphone brands and cell plan providers, which can get in the way of finding the service that fits their needs for the best price. If you’ve never looked at providers other than AT&T and Verizon, you may be able to realize significant savings immediately or when your current contract ends. My husband recently halved his cell phone bill by switching from Verizon to Cricket Wireless, and I count my patronage of Republic Wireless as one of the best financial decisions I made during grad school. Project Fi, Ting, and other mobile virtual network operators are well worth considering, and the service and price are continually improving. Switching providers while keeping your current phone or paying up front for a new phone can give you a lot more options for lowering your fixed expenses than buying a phone through a contract (if you can manage the irregular expense of buying a full-priced phone every so often).

Insurance

Reducing insurance premiums can be tricky because forgoing insurance or paying the least amount possible is often not the best decision (e.g., dropping collision coverage on a car you can’t afford to replace), yet you don’t want to be over-insured (e.g., paying for life insurance when you have no dependents or co-owned debt).

Regularly shopping around for the best price for the types and amounts of insurance you actually need is a great habit to build. You need to do your own research on what coverage you need and not rely on a salesperson to tell you (e.g., begin your reading on auto insurance, renters insurance, and life insurance with independent sources). If you have a good emergency fund, increasing the deductibles on your policies may lower your fixed expenses without jeopardizing your finances. Buying your various policies through the same company may also lower your overall premiums.

While you can ‘give yourself a raise’ by reducing any fixed expense by any amount, in this post I have highlighted the most common fixed expenses with reasonable flexibility to effect significant savings over the course of a year. Your own budget may include other types of fixed expenses that are worth evaluating. When you desire additional cash flow and income increases are hard to come by, it is prudent to focus on reducing your living expenses as best you can. Ultimately, you are the best person to judge whether you are using your money (and time) optimally while you are in grad school.

What fixed expenses have you reduced during grad school and how did you do it? When searching for ways to free up cash flow, do you prefer to focus on your fixed or variable expenses?

A Dozen Frugal Tips for Graduate Students

by

Today’s post is by Brett Green, a physics PhD student at Penn State. These frugal tips are part of the month of frugal tips going up daily on the Personal Finance for PhDs Facebook page. If you want to receive the tips for the entire month plus bonus tips by other PhD contributors like Brett, sign up here.

Frugality is the complement of earning money – earning increases income and frugality decreases expenditure. Just like how earning money can be anywhere from a necessary bore to pay the bills to a way to make a living by doing what you love, frugality doesn’t have to mean undercutting yourself and in fact can lead you to just the opposite! Sometimes it’s almost like a game to me to find new ways to be resourceful and save money, I love learning new things along the way, and habits that save money also mean reduced waste and saved energy. I hope to share some of these benefits with you and hope they prove to be helpful.

On that note, though the main focus here is on saving money, I’m sure that we all are interested in saving time as well as money. When some time-saving ideas tied naturally into these money-saving ideas, I included them too. Besides, you know what they say – “time is money”!

frugal tips for graduate students

Join the Mailing List to Download Frugal Tips for PhDs-in-Training

The download includes 30+ frugal tips for PhDs-in-Training with links to video and additional written content.

You'll receive 1-2 emails per week to help you make the most of your money during your PhD training.

We won't send you spam. Unsubscribe at any time. Powered by Kit

Buy secondhand and at alternative retailers

Buying secondhand and other places “off the beaten path” can have even more benefits than saving you money! You never know what you’ll find at thrift stores – the like-new camera I bought for $10 would have cost me $160 retail, and I’m much happier with my historic Yugoslavian dining room chairs than I’d be with something from the big box stores. The things you’d find in a thrift store are almost invariably not only less pricey but also more unique and interesting! Check out closeout stores too if you have any around, where even new goods can be found at up to half off their normal prices.

Create Your Own Entertainment

Make your own fun instead of paying for it and you’ll save on entertainment! There are myriad ways to amuse yourself without needing to pay for tickets, cable television, or the like. Going to a park, going out with friends, are solid options, as are hobbies. If you don’t have hobbies, this would be a great reason to take one up. As a bonus, if you take up an art or craft, you can sell your work on top of your entertainment savings!

Research Your Purchases Ahead of Time

Give yourself time to have options by starting your search for something you’ll need before you direly need it. Most of the best deals are found by watching and waiting while patiently keeping a lookout. This is especially helpful if you like thrift stores, as their inventories are constantly changing. Similarly, I like to set up Craigslist searches with e-mail alerts so I can jump on good deals right away. Remember, though, that you need to be looking actively to find your query – watching and waiting alone won’t do the job! Try to think of new places to look or people to ask.

Sell before the Move-Out Rush

Plan ahead for a move-out by starting to sell things before the last minute. Your offerings will be the first others will see and you won’t be forced to accept a low offer because of a time crunch. If you aren’t able to sell something, I encourage you to donate it. Even putting aside the societal benefits of charity and waste reduction, this benefits you directly as a tax deduction.

Buy During the Move-out Rush

Conversely, going move-out hunting when students vacate dorms (usually May) and leases are ending (usually August) is a great way to pick up left-behind freebies often in new or like-new condition! Many students fail to plan ahead and end up abandoning things that are perfectly good. One May I picked up two brand-new 500GB hard drives still boxed and sealed in antistatic bags from beside a dumpster, for example, and about a month ago a friend of mine picked up and made $40 off a leather office chair.

Buy and Cook in Bulk

Buy in bulk, and then cook in bulk, use your freezer! The first saves money, the second saves time, and the third saves your food from spoilage when you go in bulk. Some grocery stores display the price per unit (e.g. per pound) beside the package price, making it easy to see that you can save as much as half by buying in bulk. If not, bring a calculator – it takes only seconds to do it yourself! Cooking in bulk means you’ll only have to preheat, clean, etc. once, which is not only a timesaver but can make it less of a chore for those of us who don’t really like to cook. Finally, the wonderful preservation technology of the freezer means you won’t have to throw it out! For example, I buy about six pounds of chicken breasts for less than $2/lb, about half the regular price, and cook and freeze them all so I can just defrost them and have them ready in less than a minute for the next several weeks.

Bring Your Lunch

Pack your own lunch to campus to save both money and time instead of making a detour midday to find a restaurant. On top of that, you get to design your lunch exactly the way you want it, not constrained by any menu!

Grow Your Own

Start your own garden and grow some of your own groceries and spices! It’s awesome to see what you can grow, and you can bet they’ll taste better just because you know that you grew them yourself. You may not even need to go to a garden store – many such as onions, lettuce, and potatoes can be grown from your leftovers. I was a proud potato papa when I found that the two I had buried had grown into twelve! You can also grow many plants from cuttings by taking a few inches off a stem and putting it in water until it roots. I’ve grown mint, basil, rosemary and lemongrass this way.

Bicycle

Buy a quality bike instead of a parking pass! Getting out and riding in the fresh air is good for you too. Learn to take good care of your bike and it’ll serve you well for many years to come, and you’ll be able to help out and impress your friends with your knowledge of bicycles. You’ll be environmentally friendly this way too.

Buy a Home

Buying a house or condominium, if you can, means you’ll be building equity instead of just paying rent. If you have spare rooms you can rent them out as well! Just to be safe, if you plan to sell it after you graduate, it would be wise to talk to those familiar with the housing market to get a picture of how the home’s value might change. I figure, at least, that if you’re looking for a house now, then by the time you’re ready to move another student will be there in your former role as the buyer.

Put in Sweat Equity

Do your own “dirty work” when applicable instead of hiring someone, and you’ll get a sense of satisfaction and pride in addition to saving money! This can be as simple as washing your car by hand, or it could be more complicated, such as home maintenance. Even many things that are at first intimidating, though, actually aren’t so hard once you start. I’ve fixed my water heater for $12 and my gas fireplace for free with just some courage and the manuals, and the sensation of accomplishment and victory afterward is awesome! On the not-so-intimidating (for a young man, at least) side, I’m about to 3D-print a larger hair clipper attachment to match the length I like.

Maintain Properly

Take care of things and they’ll last longer and work better, saving you (you guessed it!) time and money, not to mention possible frustration, in the long run! Whenever you get something new, it’s good practice to check what you need to do to keep it in great shape. Most things will have instructions or a manual available, and even for secondhand goods which no longer have the original copies you can bank on the information being online. When I get a new tool, even if I only skim the features and capabilities, the two places I’ll be sure to read through are safety and maintenance.

Note how many of these come from planning; certainly the 3rd (searching ahead), 4th (selling ahead) and 5th (move-out hunting) and less explicitly also the 6th (cooking ahead), 7th (packing lunch), 10th (buying a home) and 12th (taking care of things) can be thought of in terms of planning ahead. This wasn’t even intentional on my part – it’s just a fact of the way things work that planning ahead is the best way to get things done.

There’s one more thing I think is apropos to share with you, and that’s to keep your approach to saving balanced and in perspective. Frugality can be a double-edged sword, as I often have trouble spending money on myself even when it would be worth it. This can be, for example, buying a cheaper substitute that isn’t really what I wanted or doesn’t adequately accomplish the purpose I wanted it for, or it could be a foregone opportunity, such as museums I didn’t visit or lunch or movies with my friends that I was reluctant to pay for. To be sure, my ideas wouldn’t necessarily correlate with that sort of excessive frugality, but it’s best to be conscious of it now so you’ll be aware of it later. Just be sure that you keep doing what’s best for you overall and put the right importance on other things that matter to you!

All right, I know I said one more thing, but I suppose really it’s two. After all, I would be missing a golden opportunity were I to end this without a frugal pun! “Dumpster diving is a great way to net free stuff. The best, though, is on the side of the highway – that’s how you really get the pick of the litter!”

Thank you for reading!

How to Improve Your Finances this School Year

by

A new school year brings the sense of a fresh start, even for those of us who are largely unmoored from the academic calendar. Even with a PhD trainee’s limited income, we can harness our renewed optimism for our finances each September. If you are willing, there are steps you can take this week, this month, and this year to improve your relationship with money, your money management skills, and your net worth.

A version of this post was first published on GradHacker.

improve your finances

Improve Your Finances This Week

Identify your life values

There is no single right way that everyone should use their money; your own individual best practices will be based on your life values. Your values are the concepts that you hold most dear; examples include freedom, fun, family, health, excellence, and so on. Identifying what is most important to you will bring great clarity to your financial decisions. You can choose to spend more resources fulfilling your values and dispense with things and activities that do not.

Further reading: Determining Your Values and Financial Goals in Graduate School [A Personal Finance for PhDs Guide]

For example, when my husband and I identified ‘community’ as one of our top values, we knew we wanted to allocate more money for traveling to visit our families and attend weddings. To enable that, we cancelled our cable TV and stopped eating out for convenience, as those areas of spending did not correspond to any of our values.

Create a balance sheet

A balance sheet is a snapshot of your entire financial life – every asset and every debt listed by type, financial institution, balance, etc. If you have any confusion or disorganization in your finances – or the tendency to bury your head in the sand – a balance sheet will help you see your whole situation at a glance. If you have debts, you can also include the minimum payments and interest rates so that you can easily decide which payoff to tackle first. Your balance sheet may reveal vestigial accounts or other duplications that you can clear up this week.

Start tracking your spending

My top financial ‘tip’ for grad students newly interested in their finances is to implement a tracking system for all their financial transactions. The simple act of tracking is often enough to start optimizing behavior. You can do this manually with anything from a notebook and pen to an app such as Wally or automatically with software that links to your accounts such as Mint or Mvelopes.

Create a prioritized goal list

Taking your values and balance sheet into consideration, list the current financial goals you would like to reach. You may be able to work on some of those goals simultaneously. For the goals that should be tackled sequentially, choose the order in which you will focus on them so that you can make quick progress. For example, if you have multiple debts you want to pay off, use the debt snowball or debt avalanche method to create your prioritized list.

Improve Your Finances This Month

Implement a frugal strategy

Trying out a new frugal strategy is a great way to unblock what can feel like an impossibly tight financial situation. You don’t have to commit to it forever – just give it a test run so that you can evaluate how much money you save and how it affects your life. (Bonus points if the frugal strategy you choose reduces a fixed expense!) You can find tons of suggestions online (example: 66 Ways to Save Money in New York City) or among your peers.

Further viewing/reading: A Month of Frugal Tip for PhDs-in-Training by PhDs(-in-Training)

Join the Mailing List to Download Frugal Tips for PhDs-in-Training

The download includes 30+ frugal tips for PhDs-in-Training with links to video and additional written content.

You'll receive 1-2 emails per week to help you make the most of your money during your PhD training.

We won't send you spam. Unsubscribe at any time. Powered by Kit

Optimize your food spending

Food spending is a prime target when you are trying to free up more money, as it’s among the largest variable expenses in a grad student’s budget. Check out these articles on how to get the most for your money:

Add to your emergency fund

Even a small amount of available cash can save your bacon in the case of an emergency. If you have nothing put aside for emergencies right now (46% of Americans surveyed couldn’t even cover a $400 emergency), set a goal of saving $1,000 for that purpose. If you already have $1,000, consider setting a larger goal based on your current monthly expenses or your insurance policy deductibles. You can add to your emergency fund with a monthly savings goal or in dribs and drabs as you free up cash.

Improve Your Finances This Year

Right-size your housing and transportation

As housing and transportation eat up a huge fraction of a grad student’s income, it’s important to pay only what you can afford or – in some high cost-of-living areas – as little as is feasible. If you realize that you are overspending on rent or your car, it will take some time and doing but you can correct the situation by moving, getting a roommate, selling your car, switching to cycling for your commute, etc.

Develop a side income

There are two ways to free up more money each month: spend less or earn more. Grad students tend to focus on the “spend less” side of that equation, forgetting that “earn more” is sometimes also an option, depending on the source of your funding and your department’s culture. A judiciously chosen side job can advance your career as well as generate income, providing you with opportunities far beyond what your program can.

Increase Your Income

Join the mailing list to receive our 7-part video series, "How to Increase Your Income as a Graduate Student," including side hustles and passive income.

We won't send you spam. Unsubscribe at any time. Powered by Kit

Regularly invest and/or pay off debt

In some situations, the best a grad student can do is keep his head above water financially in grad school, but in others it is possible for a grad student to increase her wealth. The best way to increase your net worth is to make saving, investing, and/or paying down debt regular and automatic (pay yourself first). Don’t only use frugality or a side income to free up cash flow that is then lost to the ether. Commit that cash flow to working for you through automatic monthly transfers to your savings account, investments, or loans.

Free Email Course: Investing for Early-Career PhDs

Sign up for the mailing list to receive the free 10,000-word email course designed for graduate students, postdocs, and PhDs in their first Real Jobs.

We won't send you spam. Unsubscribe at any time. Powered by Kit

What are you doing this week, month, or year to improve your finances?

Fighting Financial FOMO During Your PhD or Postdoc

by

Perhaps you’ve never put it in these terms, but you’ve likely experienced some degree of financial fear of missing out (financial FOMO) during your PhD training, such as when you:

  • peruse Instagram photos from your friend’s latest vacation
  • read about young professionals maxing out their 401(k) contributions
  • receive a LinkedIn notification about your college classmate’s recent promotion
  • congratulate a friend on buying a home

Becoming a PhD-level researcher takes a lot of time. The PhD itself is usually at least five years long (the average in the US is closer to 8 years), and then you might do a multi-year postdoc (or two) before you finally get a Real Job, inside or outside of academia. And in all that time – for many students, the bulk of their 20s and into their 30s – you see your friends and former classmates walking down your Road Not Taken. Namely, they’re earning more money than you. Perhaps you start thinking that even though you’re both aging at the same rate, they are progressing financially while you are not. And that gives you financial FOMO.

financial FOMO

PhD-Induced Financial FOMO

You can’t live the same lifestyle on a grad student stipend or postdoc salary that you could on a real job salary. Frugality is going to be your constant companion until you’re done with your training! So there are some obvious day-to-day sacrifices that you make to pursue your academic goals.

On top of that, if you’re becoming savvy about personal finance, you know the importance of paying off debt and beginning to invest early in life. As a PhD student, not only do you lack the income to save tens of thousands of dollars each year, you don’t even have a 401(k) or 403(b) in which to save it! Some postdocs have access to 403(b)s, but have a similar problem on the income side as PhD students when it comes to saving.

Further reading: My Realistic Earnings Expectations Push Me to Save Aggressively

So yes, objectively, you are almost certainly missing out on some income that you would have earned if you had worked a real job instead of going to grad school. But that does not mean you should let financial FOMO overwhelm you or cause you anxiety.

Below are five simple steps to take to fight financial FOMO through mindset changes and good financial practices.

Don’t Dwell on Facebook/Instagram/Pinterest Jealousies

“Comparison is the thief of joy.” – Theodore Roosevelt (attributed)

“Don’t waste your time on jealousy. Sometimes you’re ahead; sometimes you’re behind. The race is long, and in the end, it’s only with yourself.” – Baz Luhrmann

If looking at other people’s picture-perfect (for the amount of time it took to snap the picture!) homes, vacations, toys, etc. bums you out, stop looking! It’s a waste of time and detrimental to your mental health.

End Grad School with A Higher Net Worth than the One You Started with

When it comes to building wealth, how much money you earn doesn’t matter; what matters is how much money you put to work for you. A 10% savings rate on a $30k/year salary amasses more than a 0% savings rate on a $1M/year salary. So don’t worry about people who have higher salaries – unless you talk about it, you have no idea if they are actually building wealth.

To the extent that you are able (and still live a reasonable lifestyle), use part of your income to repay debt or invest. Investing even modest amounts of money during your training can have a massive effect on your net worth in your golden years. If you can end grad school with a higher net worth than you started, even by a small amount, that is financial progress.

Free Email Course: Investing for Early-Career PhDs

Sign up for the mailing list to receive the free 10,000-word email course designed for graduate students, postdocs, and PhDs in their first Real Jobs.

We won't send you spam. Unsubscribe at any time. Powered by Kit

Practice Percentage-Based Budgeting

The best thing I did to alleviate my financial FOMO during grad school was to practice percentage-based budgeting. Basically, instead of paying attention to the amount of money I was putting into my Roth IRA (my primary financial goal), I tracked its percentage of my gross income. My initial goal was to save 10% of my gross income, which sounds a heck of a lot better than $200/month. By slowly inching up the percentage over time, my husband and I increased our combined savings rate to 17.5% by the time we finished our PhDs, and then we continued to save at that percentage rate as our income increased as we transitioned out of academia.

The great thing about percentage-based budgeting (loosely based on the Balanced Money Formula) is that it scales with your income. So if your overall goal in life is to save X% of your income (or pay off debt, etc.), practice that during your training as well as after, even though the amounts of money will be quite different. You’re creating the firm habit of saving, which will serve you very well now and throughout your life.

Build Your Career (Don’t Just Work on Your Dissertation)

Just because you’re a grad student or postdoc doesn’t mean you’re not also a career-building professional. You do not have to limit your professional growth during your training to academia-sanctioned activities like publishing papers and attending conferences (though you should definitely do those). You can also gain real work experience and network, which increase your ability to land that first post-PhD Real Job.

Two excellent activities to engage in are a side job and networking.

Side job: Your eligibility for side work depends on your contract or the terms of your fellowship, so check on that and consider your advisor’s stance on outside work before you jump into anything. You will fight your financial FOMO if you can devote a few hours each month or each week to a part-time or freelance job that gives you new skills or an opportunity to demonstrate your existing skills, a larger/better-quality network, and additional money.

Further reading: Can a Graduate Student Have a Side Income?

Networking: Networking doesn’t have to be unnatural or awkward. One easy-access high-quality network is to befriend (or at least be friendly with) and keep up with your peers who exit academia before you, e.g., your labmates/groupmates, other trainees in your department, peers you interviewed with on your prospective students visit weekends, and people you meet socially through the university. (Keep in mind that some people who are “behind” you in training – undergrads, master’s students, and PhD students who started after you – may exit academia before you!) You will have indirect access to the networks they build when they get Real Jobs.

Remember What Brought You to Grad School

Perhaps the most powerful step you can take to fight your financial FOMO is to do some introspection. Identify and reflect on your top life values. Something within those values pushed you to pursue your PhD training. Perhaps it was: making a difference, curiosity, achievement, learning, growth, creativity, service, or knowledge.

Your values are what you hold most dear, presumably more dear than lifestyle elements or wealth (unless those also play into your values). You must find something about your research or career path more compelling than the perks that a Real Job would confer. If not, your issue is not financial FOMO, but rather you need to re-evaluate why you are continuing your training at all.

You can also take some time to enumerate the good things that grad school or your postdoc have brought into your life, such as friends and colleagues, your city, and gratifying (elements of) work. A gratitude journal is a great way to shift your mindset away from experiencing financial FOMO.

How to Establish Credit in the US

by

One of the most common issues international grad students face when they start grad school in the United States is how to establish credit. The US credit system draws its data only from debts incurred in the US, so whatever credit you had in your home country won’t transfer. Although your options for establishing credit are limited when you first arrive in the US, if you take the right steps, you will build credit quickly.

It’s important to note that in the US your credit is all about debt. The chief reason you want to have good credit is so that you will receive favorable lending terms on any future debt you want to take out. (A secondary reason is that potential landlords and employers sometimes check your credit score to verify your trustworthiness or check for conflicts of interest.) To have good credit, you have to have previously demonstrated that you can manage your debt well. Counterintuitively, having a lot of money to your name or paying your non-debt bills (rent, utilities) on time does not positively affect your credit score. Therefore, to establish your credit for the first time, you have to take out a form of debt, even if that is totally unnecessary for your finances.

What is a credit report and credit score?

A credit report is a list of all the financially-related accounts you have used in the past seven years. There are many different institutions that track this data, but the three main ones are Equifax, Experian, and TransUnion. Your credit report will include data on these accounts, such as how long they have been open, how much outstanding debt you have, and whether you have made any late payments.

A credit score is a number from 300 to 850 that summarizes how ‘credit-worthy’ you are. Another way to say that is how risky it would be for an institution to lend to you. Similarly to the credit report, each credit bureau will calculate its own credit score for you, but they will all be similar as they draw from the same data. A credit score above 750 is considered quite good.

FICO credit score range
Image by CafeCredit under CC 2.0

Lenders will look at your FICO credit score, but your attention should be on the accuracy of your credit reports. You can order one free credit report from each bureau once per year through annualcreditreport.com. Once per year (ideally on a 4-month rotation), you should order your credit report from each bureau and check its accuracy. Report any mistakes back to the bureau, and of course if you catch any identity theft, take steps to ameliorate that.

Further reading: “I Want a Credit Card, But I’m Scared”, Don’t Buy the Pro- and Anti-Credit Card Hype

How is my credit score calculated?

While the exact formula each credit bureau uses to calculate your credit score is proprietary, the components are widely recognized at a general level: payment history (35%), amounts owed (30%), length of credit history (15%), account mix (10%), and new credit (10%).

FICO credit score breakdown
source

The way to optimize your credit score is to:

  • make every single payment on time
  • pay down your outstanding debt
  • keep your debt utilization ratio (the percentage of your credit limit that you actually use – both for individual credit cards and all your accounts together) below 30%
  • keep your oldest accounts open (e.g., your first regular credit card)
  • let time pass (to lengthen your credit history!)

In rare situations, taking out a new, un-needed installment loan for the purpose of increasing your credit score might be a reasonable strategy, but you should conduct heavy-duty research that option before taking such a step (i.e., don’t let a bank representative/salesperson talk you into it).

While applying for new debt will have a small, short-term negative effect on your credit score, you should probably only consciously avoid taking out new debt for this reason in the months leading up to applying for a large loan such as a mortgage.

Further reading: Building Credit as an International Student

How can I establish credit for the first time in the US?

Step 1: Sign up for a secured credit card.

A secured credit card operates similarly to a regular credit card, but the lender holds an asset of equal value to the line of credit extended to you. You give the lender an amount of money (e.g., $500), and that amount is the limit of what you can borrow at a time. Use the secured credit card for purchases, then pay it off on time and in full the way you would a regular credit card (or be charged interest, which only harms you). After several months of using the secured credit card properly, you should have a high enough credit score to qualify for a regular credit card.

Be selective about which secured credit card you sign up for. Community banks and credit unions usually offer better products and customer service than national chain banks. Also examine the annual fee on the card and the interest rate (if there is any possibility of you not paying off the card in full every cycle) to minimize your out-of-pocket costs.

Further reading: What Is a Secured Credit Card? How Is It Different from an Unsecured Card?

Step 2: Close your secured credit card and open a regular credit card.

You can ask your lender to upgrade your secured credit card to a regular credit card, or apply for a new regular credit card and, once approved, close your secured credit card. When you upgrade or close your secured credit card account, your deposit will be refunded (assuming you had no balance due).

Continue to use your credit card perfectly, paying off the balance in full before the due date every month. Keep your utilization ratio low. You will probably have a low credit limit on this first card, so if necessary you can pay off the balance multiple times per month.

You should plan to keep your first credit card open for at least seven years, so choose one without an annual fee, even if it doesn’t offer the most lucrative rewards program.

Further reading: How International Student and Immigrant Workers Can Get a Credit Card

Step 3: Take out an installment loan (e.g., auto loan) or open additional credit cards.

This last step is optional, but helpful for building credit faster. After using your credit card perfectly for several months or a year, your credit score should be increasing gradually. At this point, you are eligible for debt with better lending terms than before.

If you want to buy a car, it should be possible to get an auto loan if you can’t pay for the car outright. If you do take out an auto loan and make payments on time, it will continue to improve your credit score. Similarly, if you open more credit card accounts, your credit score will temporarily dip, but your utilization ratio should also become lower to raise your credit in the long term.

But keep in mind why you are trying to build credit in the first place, and don’t harm yourself (e.g., by paying interest on an unnecessary loan or getting in over your head with credit cards) just for the sake of improving your credit score.

How do I build credit over time?

The best ways to build your credit after you first establish credit in the US are to:

1) Continue to pay all your bills on time and in full.

2) Allow time to pass, which will more firmly establish your track record as a responsible borrower and lengthen your credit history.

3) Pay down outstanding installment loans (though not necessarily off completely) and keep your credit utilization ratio low. (It is a myth that you have to carry a balance from month to month on your credit card for it to improve your credit score; in fact, this strategy will depress it.)

International students are not the only graduate students without credit; some domestic students who have avoided student loans and credit cards face the same issue. Just keep in mind your ultimate goal that motivates your desire to establish credit (e.g., qualify for a lease, borrow money for a car at a good interest rate), and don’t take unnecessarily extreme steps with your borrowing simply to achieve a high score. Making on-time payments, holding on to minimal amounts of debt, and time are the best boosters to your credit score.

The Full Cost of Applying to PhD Programs

by

The full cost of applying to PhD programs is significant; it can easily surpass $1,000 and even reach a few thousand dollars if you take a GRE prep course, apply to a large number of programs, and/or pay out of pocket to visit the universities you applied to. Given the enormous impact where and with whom you do your PhD has on your career, it’s vital to present yourself as well as possible in your applications and interactions with faculty. Mostly that’s going to translate to a large investment of time and energy, but sometimes it does translate to spending sufficient money on the application process.

This post outlines the three main direct costs of applying to PhD programs so that you won’t be caught by surprise during the process and can adequately prepare for this expenditure.

cost of applying to PhD programs

Know Your Programs

PhD programs are amazingly diverse. There are field-to-field differences as well as university-to-university differences. It’s imperative that you grasp how the admissions process works in your field and at each university you apply to. There are different expectations regarding the personal and/or research statement that you write, whether you should contact individual faculty members in advance of submitting your application, the purpose of a campus visit, etc.

Another massively important difference is the level of financial support offered to PhD students and what form it comes in. You might be funded by a fellowship, training grant, teaching assistantship, research assistantship inside or outside of your dissertation advisor’s group, or graduate assistantship (or some/all of the above). The support might be year-round or only during certain semesters, and it might be guaranteed for a certain number of years or at the discretion of your advisor or department. You might or might not have to pay fees or insurance premiums out of pocket. You must to know what is typical in your field to evaluate the offers that are ultimately extended to you.

The best way to figure out these largely unspoken cultural and policy differences is to ask current students or recent graduates of the programs you’re interested in. Tap your alumni networks and any relevant personal connections (LinkedIn can help you find these). Faculty members in your field at your current institution or a faculty advisor charged with supporting prospective PhD students are also wonderful resources.

The GRE(s)

While the predictive capabilities of the general GRE have come under fire, most universities in the US still ask for general GRE scores and sometimes subject GRE scores on their applications.

Further listening: Seriously, Can We Ditch the GRE Already?, Does the GRE Predict Which Students Will Succeed?

The registration fee to take the general GRE is $205 and to take the subject GRE (biology, chemistry, literature in English, math, physics, and psychology) is $150 as of July 1, 2017. Test-takers with qualifying financial needs can receive a 50% discount on the fee.

If the programs you’re applying to weight the GRE in their admissions decisions, such as by setting a minimum score, you could decide to study for the exam so you can perform your best. You can avail yourself of free resources available through the ETS website or purchase a review book (tens of dollars), course (hundreds of dollars), or tutoring (thousands of dollars). Whether or not you spend money preparing for the test, you may choose to devote significant time to it. However, extensive preparation for the exam is totally optional, and your time may be better spent on other aspects of your application.

Download the PhD Applications Budget

This spreadsheet lists all the application costs in detail and calculates your total budget.

We won't send you spam. Unsubscribe at any time. Powered by Kit

Application Fees

Most application fees for US PhD programs fall between $50 and $100. Here are a few examples of fees for the 2017-2018 application cycle:

  • Clemson University: $80 for domestic applicants and $90 for international applicants
  • Indiana University at Bloomington: $55 for domestic applicants and $65 for international applicants
  • Johns Hopkins University: $75
  • North Carolina State University: $75 for domestic applicants and $85 for international applicants
  • Rice University: $85
  • University of California at Davis: $105 for domestic applicants and $125 for international applicants
  • University of Kansas: $65 for domestic applicants and $85 for international applicants
  • University of Notre Dame: $75
  • University of Utah: $55 for domestic applicants and $65 for international applicants
  • Washington State University: $75

Many universities also offer fee waivers for qualifying applicants, the details of which can be found on their websites.

In addition to the application fee that the university charges, you will also usually pay a fee to send your GRE scores and transcripts to each university. You can choose to send your GRE scores to four universities for free on test day for the general GRE and upon registration for the subject GRE. To take full advantage, make sure your application list has four schools finalized on it before you are prompted to send the free scores. ETS charges $27 to send your score from each test to each additional recipient.

With the full cost of each PhD application hovering around $100, the cost of applying to a handful of PhD programs adds up quickly. Determining the number of schools to apply to is a challenge: too few, and you risk the randomness of the application process leaving you with no acceptances; too many, and you spend a lot of money and spread your time thin, possibly harming your chances of getting into the university that would fit you best.

Visits and Interviews

Another field-by-field difference is whether the application process involves an interview or campus visit.

Some programs admit or reject applicants outright, and if a prospective student wants to visit the university, she’ll do it on her own dime and schedule. Some programs request interviews, but the interview is conducted over video or the prospective student pays to visit campus. Most STEM programs arrange for a visit weekend, where a group of prospective students is flown to campus to meet with faculty and be courted by the program. That visit weekend might include interviews upon which the admission decision will depend or simply serve to sell the program to admitted students.

The out-of-pocket costs for the visits could be $0 if everything from the flight to your meals are paid for by the department or reimbursed (be prepared to front money, though!) or the applicant could be responsible for the full cost (up to hundreds of dollars for flights, lodging, ground transportation, and food). Even if you think the program will pay for everything, it’s a good idea to budget some walking-around money for each visit in case a meal ends up going unreimbursed or you want to do some sight-seeing or buy a souvenir.

While deciding what programs to apply to and preparing your applications is very time-consuming, it can be done on your schedule. One of the hidden costs of campus visits is the time it takes to leave school or work for 1-3 days. If you have a (part-time) job, save some vacation time or try to shift your hours around so that you don’t have to forgo any wages to go on the visits. However, for schools you are seriously considering, it’s worthwhile to miss work to properly evaluate the programs, and that will need to be factored into your applications budget.

The temporal and monetary cost of applying to PhD programs generally – and the application fee in particular – serves as a disincentive to apply to too many programs. It takes so much time and money to fully investigate and apply to each program (not to mention actually choosing which you will attend!) that you should be judicious about which institutions make your list. This requires carefully evaluating your own research and career goals as well as the programs, but you will without question benefit professionally and personally from this careful introspection in the application stage.

How much did you pay to apply to graduate schools? Did you incur any costs not listed here?