In this episode, Emily interviews Dr. Lindy Ledohowski, a PhD in English, former tenure-track professor, and founder of the ed tech start-up EssayJack. Lindy describes the money mindset she developed as a college and graduate student while experiencing boom and bust cycles of income and budgeting for must-haves and investments in herself. Lindy narrates how her money mindset has been in concordance or not with how she’s generated income throughout her career, and how it is serving her well now as a start-up founder. She emphasizes that a safety net enables career risk and how she prefers to bet on herself rather than other financial instruments.

Links Mentioned in this Episode

• Find Dr. Lindy Ledohowski on Twitter and LinkedIn
• Find EssayJack on Twitter, LinkedIn, Instagram, and Facebook
• Quarterly Estimated Tax for Fellowship Recipients
• Personal Finance for PhDs: Quarterly Estimated Tax
• Personal Finance for PhDs: Community
• Personal Finance for PhDs: Podcast Hub
• Personal Finance for PhDs: Subscribe to the mailing list

Teaser

00:00 Lindy: Even that TA income that was more regular, certainly wasn’t enough to comfortably cover month to month costs. I’ve since read that you’re not supposed to spend something more than one third of your income on fixed housing costs and that was never my case. It was often I was spending anywhere from 60 to 90% of what monthly envelope was on just fixed costs.

Introduction

00:33 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 eight, episode 15 and today my guest is Dr. Lindy Ledohowski, a PhD in English, former tenure track professor, and founder of the ed tech startup EssayJack. Lindy describes the money mindset she developed as a college and graduate student while experiencing boom and bust cycles of income and budgeting for must haves and investments in herself. Lindy narrates how her money mindset has been in concordance or not with how she’s generated income throughout her career, and how it is serving her well now, as a startup founder. She emphasizes that a safety net enables career risk and how she prefers to bet on herself rather than other financial instruments.

01:31 Emily: I’m recording this near the end of March shortly after finishing my 10th webinar for a university client in this month alone. That sets a record for my business in terms of speaking engagement density. I want to send a super sincere and heartfelt thank you to all of the people who have recommended me to their universities and other organizations, particularly in the past year. I shared with you last month that I really wasn’t sure how my business would fare when the pandemic started given that the revenue was so reliant on in-person speaking engagements, but between webinars, individual, and bulk purchases of my tax workshops and the Personal Finance for PhDs Community, my business has actually flourished in the past year, and especially this spring. I know that is in large part due to the recommendations of the graduate students and PhDs who listened to this podcast. I know that because the people who book me tell me so. I really, really appreciate you supporting me in this manner. I’m so happy to be able to provide this podcast to you for free, and it is possible thanks to the products and services I sell to universities and individuals.

Book Giveaway

02:42 Emily: Now it’s time for the book giveaway contest. In April, 2021, I’m giving away, one copy of “Walden on Wheels” by Ken Ilgunas, which is the Personal Finance for PhDs Community book club selection for June, 2021. Everyone who enters the contest during April, we’ll have a chance to win a copy of this book. If you would like to enter the giveaway contest, please rate and review this podcast on Apple podcasts, take a screenshot of your review, and email it to me [email protected]. I’ll choose a winner at the end of April, from all the entries you can find full [email protected]/podcast.

03:22 Emily: The podcast received review this week titled “Customized and Encouraging Info”: “I’ve been interested in personal finance for awhile, but a lot of advice from other sources doesn’t really apply to my unique situation as a graduate student. This podcast, and the online resources on filing taxes as a grad student on a fellowship have been so enlightening and useful/relatable in a way that other sources aren’t. They’ve also helped me to challenge my sometimes limiting mindset about money as a graduate student, and have helped me begin to save and invest more than I thought I’d be able to on my stipend. Definitely recommend for anyone grad school or thinking about entering grad school. This is really important info that we don’t get from our school/programs.”

04:04 Emily: Thank you so much for this review! This reviewer really gets what I’m doing with the podcast and business. Without further ado, here’s my interview with Dr. Lindy Ledohowski.

Will You Please Introduce Yourself Further?

04:22 Emily: I have joining me on the podcast today. Dr. Lindy Ledohowski. She is the founder of EssayJack. She’s also a PhD. She’s a former faculty member — we’re going to find out all about that. When Lindy and I were preparing for this episode, we realized that she has a super interesting parallel story to her career story, which is the story of how her money mindset has served her very well in some of these stages, not so well in other stages. And it’s a little bit of an interesting flip on what we usually hear. A lot of times we talk about how money mindsets we develop in academia are harmful to our finances. Lindy has found the opposite of that. She’s found some concordance with her money mindset nurtured in graduate school with her success with finances later in life. We’re going to hear all about that. Lindy, thank you so much for joining me today. I’m really pleased to have you on. Will you please introduce yourself a little bit further to the audience?

05:15 Lindy: Yeah, absolutely. Thanks so much for that introduction. I am Dr. Lindy Ledohowski. I have an English PhD. Before I was an English professor at the university of Waterloo, I had been a high school English teacher. Then I left full-time teaching and founded, as you say, EssayJack, which is an ed tech software solution in the academic writing space.

Money Mindset in Young Adulthood

05:38 Emily: That’s fantastic. It’s obvious how your business grew out exactly of your career, so fascinating. We’ll get a little bit of that story today, but really I want to focus on this money mindset aspect. What was the money mindset that you were developing in your childhood early experiences with money in your young adulthood?

05:56 Lindy: It’s actually interesting looking back in hindsight, because you don’t know that you’re developing a money mindset when you’re in the middle of it. For me I think it’s best characterized as kind of a boom and bust. All throughout high school and then my undergrad, I certainly taught during the school year. I was a busser on weekends and then I was a waitress and then I would make the majority of my money that had to last throughout the school year in the summer months. When I was a high school student that was all day long babysitting, nine to five, whereas during the school year, it might be a couple of hours after school. And then similarly through undergrad, I relied very heavily on making a lot of tips and making all that money over a full-time summer working gig, and then during the academic year, I would scale back so I could focus on my full-time classes.

06:51 Lindy: That really gave me an approach to finances that was like, make as much as you can in as short a time as possible, and then budget that surplus over a long sort of drought period. That really started to get shaped for me in my teen years and then into my undergrad. I had my first job was as a paper route when I was 11, and then it was, as I say, babysitting, and then into the hospitality industry and customer service.

07:25 Emily: Now I can see how that kind of pattern, which I think is not uncommon for young adults and people who are still in their schooling years, but I can see how that pattern could divorce in your mind work from money in the sense that you’re doing a lot of work all the time, which is the work of being in school — the classes and so forth — but sometimes you’re not doing that kind of work and you’re doing the kind of work that makes money and that’s that period of intensity of earning the money and then spreading it out through the rest of the time. As an entrepreneur, I can see how that separation of what is work for money and what is work that just has to be done to further your general development, how that can help you later on, but you developed that early on while you were still in the cycle of the academic year.

08:11 Lindy: Yeah, absolutely. You put it really well that it made that separation between work and money. And then also I think it gave me a sense of budgeting through scarcity. And also I’m not really counting on financing for things because I very early was training myself to not think about, “Oh, I have a stable monthly salary, which I will then allocate for various purchases.” I always had to make a bunch of money and then buy the thing, whatever that thing is that I wanted.

Money Management and Budgeting Strategies through Scarcity

08:56 Emily: It’s so interesting that you use that term, budgeting through scarcity. And I think when we were prepping for this, you also use the term hoarding — hoarding money during the good times and eking it out during the leaner times to get through that. What kinds of strategies were you using during those early years? How did you budget for when your income was much lower or like zero versus when that income was much higher?

09:19 Lindy: One of the interesting things, and I don’t know if this is just my own personality traits, but as you focus on developing a money mindset unconsciously, in my case, what that meant is that I very quickly began to prioritize the “must haves” and the “nice to haves” for me. I was never, for instance, really into like clothes or fashion. That wasn’t my thing. I also had an older sister whose best friend was really into fashion, so from the two of them, I could inherit hand me downs and that was more than enough for me. I don’t know if I’m particularly stylish, so I didn’t need to color my hair or all that. Those kinds of things became “nice to have” for me and even in a time when my bank account was very flush, I still never ran out and bought a bunch of clothes or did my hair or things like that.

10:15 Lindy: Whereas, books were always my passion and I could justify also spending some of that money on books because I would think of them as a longer-term investment in my intellectual future. Even if I was buying books as a high school or undergrad student, I always knew that I was going to sort of go on and do more. I loved books and that was sort of investing in myself. Similarly for me a must have, would be say traveling. Interestingly, I had a conversation with my then boyfriend as an undergrad because his attitude towards money was to invest it in financial investments. Whereas if I had a little bit extra, I’d budget a backpacking trip and I always thought, well, I’m investing in myself and how my brain is going to be broadened by different perspectives. I think that came into play in terms of creating a hierarchy of, if I have limited funds in that hoarding and scarcity time, what will I spend it on and what won’t I spend it on?

11:22 Emily: I’m so glad you gave us that insight, because first of all, I’m glad to hear that your “must haves” were not literally just like food and shelter. Of course you took care of that, but had added onto that what you considered to be investments. And it’s so interesting that you were thinking about them that way, even that early on, because as I said earlier, obviously your career has evolved in such a way that probably all those experiences, the books, especially, did contribute to ultimately like your founding of your company and everything. I don’t think that many people at that age think about investing in themselves in those ways, but you did.

12:00 Lindy: I think maybe that’s a personality quirk of my own, or maybe my good fortune. And speaking of good fortune, as you mentioned, I did have a place to live. During my undergrad, I lived at home. The deal with my parents was that I could live at home rent free and so I need to flag that because that’s just a tidbit of good fortune on my part that not everybody shares. Again, back when I was doing undergrad, so that was in the nineties, I was able to make enough money waitressing and saving my tips over the summer that I could afford tuition. And again, that’s a very different financial reality than what people are facing today. That kind of make it all and then put it into your tuition, buy books, and then also the fact that I did have that family help, means that I had a bit of a buffer and it’s fair to recognize that little bit of a buffer that I certainly had.

13:00 Emily: Absolutely. It sounds also then that you didn’t take out debt, at least you haven’t mentioned it so far during those undergrad years.

13:07 Lindy: No, no. And that was actually what the conversation was with that then boyfriend, because he and his parents took out student loans and then he and his parents had a plan for investing that money and making money on the student loans and all that. It was very sophisticated in a way that I didn’t have with my family at all. We didn’t really talk about finances in any sort of concrete way, aside from the “we love you and if you need help, we’ll help you” kind of way, which again, I’m lucky that I had people in my corner, but it wasn’t like a sophisticated financial education in those early days.

13:47 Lindy: In my young twenties, then that boyfriend, and he was the first boy I lived with, we then had to talk about those finances in terms of how we split things up financially in a shared housing. I was really sort of dumbfounded to know that he had this whole other financial reality based on the availability of student loan debt at the time, whereas I just had the neither a borrower nor a lender be. And so if I didn’t have the money, I didn’t spend it, was kind of my approach at the time.

14:23 Emily: Yeah. I like your simpler approach. For the record, for anyone who’s listening, please don’t take out student loans just to invest the money. I do not endorse this approach. It is something I’ve been asked about from time to time and it’s very risky, very, very risky. I’ll just put it that way.

14:39 Emily: That was some of the strategies you were using. What about budgeting at that time? Did you have any particular way that you were doing it, or you just found this sort of natural rhythm of your spending?

14:48 Lindy: A couple of ways. One, I definitely found a kind of natural rhythm to the spending, which is you don’t spend very much and then whatever you have leftover is the surplus for travel or for something else. After my undergrad degree where I was living at home, then I did have a proper job that had a salary and the deal with my parents was I could have one more year at home rent free, so I could sort of get on my feet. I used that to again, sort of boom and bust, to hoard that income so that I could then go and do another degree, and that was my education degree. I was more conscious of budgeting at that time, because I had a really specific target. I want to do a bachelor of education degree. I know that I’m going to have to, at that point, move away, pay for housing, pay for tuition, sort of figure out all of that. I did have a spreadsheet and tracked things, and then once I had a couple of months of the spreadsheet, I could then sort of see, okay, well, typically this is how much I spend on a given month. If I go over that, that’s a problem. And then if I can be competitive with myself and get under that, then that’s great.

16:06 Emily: I see. So you actually had a little like gamification element kind of going on.

16:10 Lindy: Yeah, absolutely. Like self gamification. It was like, can I go lower?

Income Changes and Money Mindset During Graduate School

16:16 Emily: Yeah. And so we’re kind of talking about you mentioned a second bachelor’s degree, but then of course, at some point you went into graduate school and got your PhD as well. Can you talk about how this money mindset served you or didn’t serve you during that time?

16:31 Lindy: As I just mentioned, after the undergrad, then I worked and saved money, did the education degree. Then I worked as a teacher and saved money so that I can go to graduate school. I did a master’s, which was unfunded and then the PhD, which was fully funded. I went straight through for that and I did borrow some money from my dad, at the time to do that unfunded masters, but I had a chunk saved from my education degree. That money mindedness meant that as I went through, one of the things for sure, when I was contemplating a PhD after the masters, and I really loved my master’s degree, which is what made me want to continue on and do doctoral work. But one of the absolute deal breakers was it had to be fully funded and it had to be significantly, fully funded. Not all fully funded PhDs are fully funded equally.

17:29 Lindy: I knew that any university would happily take me as a PhD if I was going to be willing to pay them, but it would be a real vote of confidence if they said, yes, we will take you, and here’s the financial commitment we’re making towards you and your success. I think the fact that was a real must have for me in the application process for the PhD came out of that money mindset that had been developing along the way.

17:58 Lindy: And then in the PhD, similarly, there’s these funding cycles. You apply for grants and scholarships and all of that at one time of the year and then it ups your funding for the subsequent years of the PhD. had five years of guaranteed funding from the university, and I immediately then upped that by various kind of scholarships and grants. And again, then was able to sort of dole out the month by month stuff when I would get a big stipend or a big award in September or January, and then make it last for the subsequent term and semester and top up. I did also do some teaching and TA work and again, that was paid more regularly, so I at least had the combination of some TA work that was paid regularly and then grants and scholarships and fellowships that came in these lump sums.

18:48 Emily: Yeah, so a combination of regular income, irregular income, larger sums, and I really liked that you pointed out the grant cycle and the fellowship applications and all of that, because that’s another example of how you work, like on an application, it’s not immediately for money, but some percentage of them presumably will work out and you can have this cash influx based on that later. For you, I think it was just probably grooving in even further, again, this boom and bust cycle and all the things that you’ve mentioned so far and work not being directly for pay, but sort of indirectly for pay later on.

19:26 Emily: Is there anything else you want to say about those grad school years? How did you come out of them financially? It sounds like you maybe were making a decent amount of money with all these sources combined.

19:37 Lindy: Yeah. Interestingly, I made more money as a grad student than I did as a high school teacher, to be quite honest. And part of that again has to do with taxation, so certain grants and fellowships and scholarships, aren’t taxable in the same way that a teaching income is fully taxed as regular income

19:57 Emily: Actually, we’ll note, because we haven’t said so far, but you’re in Canada. Actually, no, you mentioned the university name, so we know you’re in Canada. But yes, different situation in the States.

20:04 Lindy: Yeah, I was going to say, anything I say about taxes will be specific to the Canadian context. My schooling was in Canada and then my work life has also been principally in Canada. There were certain kind of tax benefits to the way that the graduate funding was set up. Everybody sort of jokes about being a starving student and I still was, but I was less starving as a PhD student than I had been as a full-time school teacher. And again, that’s just because you know, it was early days and I hadn’t sort of stuck with teaching long enough to go up the ranks or anything like that.

20:44 Lindy: The only thing that I will certainly say about my PhD experience from a financial perspective is that even that TA income that was more regular, certainly wasn’t enough to comfortably cover month to month costs. I’ve since read that you’re not supposed to spend more than one third of your income on fixed housing costs. That was never my case. It was often I was spending anywhere from 60 to 90% of what a monthly envelope was on just fixed costs. I got very good at going to every single free wine and cheese on campus and getting food. Any holiday party anybody would in invite me to. I ate a lot of canned goods and pasta, and so if I was invited to somebody’s house, it would be the produce that I’d be eating because that you couldn’t sort of buy in bulk at the beginning of the semester and have it last, whereas you can buy cans of tuna and that’ll last. That gives you a bit of a color on that PhD experience.

21:57 Emily: It also does for you and your budgeting method, I guess. Knowing that you have money in the bank, but eating this way, being this frugal and so forth, knowing that you have to make it last until the next influx comes in. I do think that gives us a good picture.

Post PhD Salary: How Having Steady Cashflow Changed the Money Mindset

22:12 Emily: Now, after your PhD, you had regular employment. You had a salary, maybe not for the first time, but maybe in a different way than you had before in your life. Tell us about that period when you were a professor.

22:26 Lindy: After my PhD, I did a post-doctoral fellowship and again, that was much the same as, as the PhD in terms of lump sums of money. Then I became a tenure track professor. That had full benefits, full salary, all of those sorts of wonderful things. But interestingly, at that point I was then married. My husband is an academic and we had jobs in different cities. And so again, the budgeting became sort of weird because we were now using our two regular salaries to spend on the monthly costs of running two homes. We had two apartments in two different cities and traveling back and forth. Then any surplus I had was on driving or flying to be in the same city as my spouse. However, what I did find in that because that was our experience, I was well-suited to continuing a bit of that boom and bust and spend the money that was surplus on travel to see my spouse.

23:26 Lindy: What was interesting for me is at the time banks were only too willing to give us financing. because we were in two different cities, I had an old 15 year old car, we were going to sell that and buy a new car so that I could safely drive on the highway. And the dealership is like “we can give you this kind of financing because you’re both professors” and I was really uncomfortable with that. We were like, “well, we have our savings, let’s just buy the car.” In hindsight, I don’t know that that was the smartest decision given that cars are depreciating assets.

24:02 Lindy: But again, at the time I was very uncomfortable with this idea of taking on something that was a month to month to month debt, because I hadn’t built up my trust in the system that money would be there month to month to month in the way that I think if you start working at a regular job early and have that continuity over time, you start to have faith that, yeah, even though you might run out of money by the 30th of the month, it rolls over and new money comes in. I, temperamentally, didn’t feel that that was the case, even though, obviously as a professor, that is the case.

24:41 Lindy: So as I say, we made the choice to buy the car outright and again, hoard all of our money and live cheaply in the hopes that we could then save up for a down payment. That’s kind of how that money mindedness — the boom and bust, the hoarding — carried over into the academic job when we were both professors and seemingly could have had a much more regular financial life. We still kind of didn’t.

25:06 Emily: I’m so glad you pointed that out because really we’re talking about whatever it was 10, 15, maybe close to 20 years of this boom and bust cycle developed by the type of income you have with maybe some periodic, yes, you had some regular income, but it was never as much compared to that irregular income. I can totally understand why you didn’t immediately have trust that the salary is going to keep coming in and so forth.

Commercial

25:31 Emily: Emily here, for a brief interlude. The federal annual tax filing deadline was extended to May 17th, 2021, but the federal estimated tax due date remains April 15th, 2021. This is the perfect time of year to evaluate the income tax due on your fellowship or training grant stipend. Filling out the estimated tax worksheet and form 1040ES will tell you how much you can expect your tax liability to be this year and whether you are required to pay estimated tax. Whether you’re required to pay throughout the year or not, I suggest that you start saving for your ultimate tax bill from each paycheck in a dedicated savings account. If you need some help with the estimated tax worksheet, or want to ask me a question, please join my workshop, quarterly estimated tax for fellowship recipients. It explains every line of the worksheet and answers common questions that postbaccs, grad students, and postdocs have about estimate tax, such as what to do when you switch on or off a fellowship in the middle of a calendar year. Go to pfforphds.com/QETax to learn more about and join the workshop. Now, back to our interview.

Transitioning to Entrepreneurship

26L49 Emily: So you’re going along, you have your salary job and everything, but at some point you become inspired to start your company. I’d like for you to talk about the financial aspects of that transition — did you prepare financially before jumping into self-employment or were you already prepared based on the way that you were living? Or these kinds of insights?

27:10 Lindy: Before starting the company that I now head up, which is EssatJack, and that’s an ed tech software solution, I did a couple of years of consulting. So between being a professor and starting a tech startup, I was like, “okay, this living in two cities as two professors is untenable. All of the money that we’re making, we’re spending to rent two apartments or to travel back and forth to see each other, and I just don’t see this being a sustainable future for us. Something’s got to give, and the something that’s got to give is I’ll give up this job and figure out what comes next.

27:45 Lindy: I was very lucky. Again, I secured a grant — this is apparently just how I roll. I get the chunk of money and then decide what to do with it. So I secured a grant which gave me the confidence to take a year’s no pay leave from my job as a professor, as a kind of get the first toe in the water of quitting without actually quitting first. I had this grant, I was working on a conference in a symposium and ultimately it then became a book. But what I also did during that time was I started consulting. I started taking consulting projects just to see what can I do and then that gave me a certain confidence in being able to charge for my services.

28:27 Lindy: You made a really good point earlier on in the podcast about how my mindset divorced labor from financial remuneration, which I think is absolutely spot on. The time as a consultant remarried those two things together for me, because it made it very clear that my time was worth money, so I had to a, charge appropriately for it and not do free work on the gamble that it would pay off later in the way that say applying for grants and things like that is that kind of a gamble. Secondly, I also ran into like a scalability problem. There are only so many hours in the day that as a single sole proprietor consultant, you can work. At some point you max out and you can’t charge for 27 hours a day worth of work. That was ultimately how I got to the end of my time as a consultant is that I just sort of was like, there’s more work than hours in the day for me to do it, so I need to now start thinking about what’s the next step? Do I grow out the consultancy or do I think of something else? That’s kind of how that money mindset of the boom and bust carried over into consulting and I really did have to change my approach to labor and finance and more closely see every minute I worked as having to be worth money.

29:56 Emily: Yeah, I see. You had in that narrative that you didn’t officially leave your job, but you took unpaid leave for a year, testing the waters, after securing a grant as well. I’m wondering, obviously I think anyone can see that your life at that time with your husband was untenable, that’s not a long-term solution, but I think a lot of other people still in the face of something like that of there’s this really big thing about my job that’s unsatisfactory, they still stay in it maybe longer than you did. I would like for you to just speak briefly about this transition and how you decided to do that unpaid leave versus just leaving it right away. Did that make it easier taking the half step out? And also, is there anything that you wish you had done differently in that transition from the full-time position to the consulting?

30:48 Lindy: I think the first part of the answer is profoundly gendered. Many female professionals in the Academy and other professional fields find their careers just taking off at the time where they biologically, if they want to have children, they have to. That’s the window, you kind of have to do it. And that was the case for me. I was in my early thirties as a professor and my husband and I, we hadn’t yet decided whether or not we had wanted kids. It had always been like a “maybe one day kind of conversation. But being professors in two different cities and the ages that we were made it very important for us to get some clarity around, well, do we even want to have a family because if we do, that’s something that we’re really going to have to get on sooner rather than later. What came out of that conversation was the recognition that while we still didn’t know if we wanted kids or not, we knew that we didn’t want that decision to be made by circumstance. We didn’t want to fall into not having kids because we lived in two different cities and couldn’t figure out how to do it in that context, in a way that would make us both happy and satisfied as parents or as a family. That I think helped because it was like, well, this is a huge life decision and it could happen to us by circumstance and you can never know what that feeling is going to be like down the road, if you regret it. And I certainly didn’t want to be in that situation.

32:28 Lindy: Taking the leave kind of helped, as I say, sort of give me the confidence that I could actually make money outside of the Academy, which was my big fear. I was like, “Well, this is what I know. This is what I’m good at. This is what I can do. And I like it and all the rest of it.” Being able to sort of throw my hat over the fence, so to speak, as a metaphor for then you got to go in and get your hat, meant that I then began to feel confident that I could pitch for consulting gigs. I could get them. I could do the work. It could be rewarding. I could get paid. And then that also gave us the opportunity to live in the same city, to think about whether or not we wanted a family. In the end we decided we didn’t want kids. We have a cat. She’s amazing. But I’m very happy with that because it was a choice that we made as opposed to one day we woke up and realized that that that window had closed. So that, I think, as I say, the first part of that answer is a profoundly gendered answer.

Money Management Shifts during Self-Employment

33:28 Emily: What I found really interesting in there is that, okay, so you’ve, you stated that this period of consultancy, tied your time and earning back together. Your husband during that time, I think still was salaried. Is that right? So you still had that part of your finances was salaried. How did that change your money management or did it? Were you starting to trust the salary system or were you still like hoarding and then making these investments?

33:58 Lindy: I was definitely still hoarding. As soon as I left my job as a professor and started as a consultant, I definitely got back into the hoarding mindset, partially because as a consultant, it is also very boom and bust. You have periods of intense work and then periods where you don’t necessarily have the work or you’re calling around and trying to get work, so you need to kind of have enough that you’re carrying yourself through the lean times. Particularly at the beginning, you have no confidence that the lean time will end. You do one job and then it’s lean time and you think, Oh my God, I’m never going to make money again. And then you get another job. And then over time, you start to feel a bit more confident that even in a moment when there happens to be a break, that that’s temporary, but it takes a while to sort of get through that. And every time there’s a bit of a break or a lull in projects, at least for me, I was like, “Oh my God, I’ll never work again and I’m a failure and this is terrible and I’m never going to make any money.” I certainly hoarded quite a fair bit.

35:06 Lindy: And then again, because we didn’t know in the early days, did we want to have kids? I wasn’t paying into any benefits package at that point as a consultant, I was just myself. I knew there’d be no maternity leave, so whatever the next step was going to be, I needed to make sure that we had saved and had a buffer. And again, just as I flagged, my early years, I was very lucky to have family support. I had a home where I could live and, and there were financial resources there to support me, as an adult I was very lucky to have a spouse who had a full-time job. Again, I’ve had the ability to take probably some greater risks because of that backstop.

35:56 Lindy: Other people who are in similar situations to me may also think about one person covering the costs and one person taking the risks, because I think that’s a reasonable way for two people in a financial partnership, a marriage, to plan things out. My dad always said, if you can live on 50% of what you make, so one person’s salary and bank the other, you get much farther ahead than if you spend a hundred percent, month to month to month. Again, the finances of dad, the boomer generation are obviously different from us, but I did have that message in the back of my mind for sure.

36:40 Emily: Yeah. That is a really interesting way to put it and quite true that a safety net is maybe not strictly necessary, but can make it easier and more psychologically palatable to take a risk like that.

36:55 Emily: Okay, now you’re in this period of you did this consulting work for a while, but you mentioned earlier that you wanted to scale, ultimately, and so that’s where the business, the software solution comes in. Also, to today, is your husband still in that academic position?

37:09 Lindy: Yeah. He’s still a full-time tenured law professor and he loves it, and will probably continue doing it until one day he’ll be an emeritus professor, I think.

Interplay Between Lindy’s Money Mindset and Entrepreneurship

37:22 Emily: Okay. Another question we have here is after doing the consulting and starting the business, did you start to realize that there were some mismatches between your financial mindset and how the system worked? We talked about the system of being a salaried employee earlier in terms of your employer, but what about the system of, as you mentioned earlier of financing for instance, or you’ve also brought up taxes?

37:46 Lindy: Yeah, so really interestingly, as I say, as a consultant, I was doing that hoarding. Initially because it was like, well, maybe if we want to have a kid, we want to have a buffer. And then there were also things like, well, maybe we want to buy a house, so we need a down payment. And then as I started to think, okay, well, let’s get away from a service-based business and start thinking about a product-based business, we know we’re going to need to have some savings to put into that. All of those considerations required having some kind of chunk of money to allocate towards them.

38:19 Lindy: Then it was as we started to refine those things — okay, now we’re going to buy a house. We thought we were in such a great position because neither of us have student loan debts, we have some savings. Then when we started house hunting, we realized actually what we could afford was kind of not what we thought we wanted, so that was a bit of an eye opener to realize that while we, I think very blithely and naively thought, “Oh, well, we’re sort of trundling towards a middle-class life,” we weren’t, and that was surprising. The houses we saw in the neighborhood we were looking at, which we thought were standard middle-class-y, “this is us”, we’re utterly priced out of that. That again was one of those moments where I was like, well, I need to work a lot harder and save a lot more money so that we can sort of buy a nice house or whatever the case may be.

39:17 Emily: To clarify there, was it that you weren’t making enough money to afford that kind of house or was it that the lending system didn’t recognize your income as contributing towards a mortgage of the size needed?

39:30 Lindy: It was essentially that the mortgage that we needed to secure would be based on my husband’s income, not mine, because I didn’t have…and again, you need say as a consultant, self-employed, you need years of income that you can then show and they still only take a percentage of that, that they count towards your overall income to debt ratio. That meant we were in a much smaller position. The only way to up that was we had to make and save more money, so that even though the overall borrowing amount, the debt amount would remain the same, we’d have a bigger down payment, and so the actual house purchase increased. So we paused that house hunt and I scurried around and tried to make a bunch more money so that we could have more. That’s what got us thinking and that carried over into, we were like, “Hey, I need to move from a service based business to a product based business.”

40:35 Lindy: It got me thinking about income to debt ratios in a way that was entirely new and my money mindset, which is very boom and bust is helpful. Particularly now in sort of tech and startup, you may have to spend a fair bit of money at the beginning to build the thing before the thing that you’re building is actually going to start generating revenue. There’s a chunk of time where you’re spending money, but not making any because you haven’t built the thing yet. But it also got me into dealing with traditional lending institutions. In a tech company, there is no collateral. If I want to start a restaurant, I go to a bank and I have the business plan and I’m like, “okay, I want to borrow some money and either rent this restaurant or buy this restaurant or whatever,” and there’s stuff that the bank can take back if that business fails.

41:31 Lindy: Whereas if I say, okay, here’s my business plan, here’s the product I want to build, it’s this technological product and it’s going to be built in the cloud. There is no hard good. There’s nothing a bank can take, it’s all intellectual property. While there’s a lot of value in that intellectual property, it’s not value that somebody else really can monetize in your absence. I was kind of naive about that. I thought, “Oh, well, you know, we’re building this thing. There’s this need, both educators and students need help with academic writing and there are essay mills out there where people are plagiarizing and cheating, and we are actually providing a real viable, technical solution that’s pedagogically sound, that’s built by a couple of professors, all of that. But it means that you can’t necessarily go to banks and get that funded, unless you’re willing to say, “Oh, and you can take my house if this fails.” It’s really sort of getting comfortable with a fair degree of financial risk.

42:38 Emily: I’m thinking this is where venture capital comes in. Is that something you have pursued or are pursuing?

42:44 Lindy: Yeah. We’re right now in the middle of a financing raid. We held off on venture capital for a very, very long time. We had revenues and savings and bootstraps and friends and family and loans and any grants. As I say, I’m the queen of getting grants. Any kind of, um, funding we could get without external investors in the early days, that’s what we pursued. VCs can be fantastic, but there’s also a risk in the sense that if you get them in too early, they are driving a particular business model for your business, and for us, in the early days, I wasn’t sure exactly what our business model is. Academic writing — is that something that’s going to go viral? Do we want it to go viral? Or is it going to be like a meat and potatoes business where you sign up, you get a subscription, it serves your needs while you’re a student writer, and then you move on to the rest of your life, being able to think and write critically because of the skills that you’ve learned. Or do we need to lock you in like Facebook and keep you forever?

43:52 Lindy: I was very wary of inviting other people into the company early on, lest they derail what is…My passion is to create an ethical business that is viable and that provides a real solution and isn’t a gimmick, and isn’t just out there to steal user’s data and sell it to the highest bidder. But of course, many VCs, that’s what they’re looking for. In the early days, I felt our bargaining power would be quite low, because it’d be like, “here’s my idea” and they’d be like, “well, your idea is unproven.” Whereas now, as we’re going out to investors, like, “okay, we’re selling all over the world. We have schools, colleges, and universities. We have individual subscribers. We’ve won a bunch of awards.” We’re in a much more solid position to then say, “Do you VC want to be part of this journey?” As opposed to “do you want to derail and take over the journey yourself?”

44:58 Emily: So fascinating. I’m so glad you gave us that insight. I’m sure there are probably many people in the audience who are thinking in their futures that maybe, VC or startups could be part of that. I’m really excited that you shared that.

Investing in Yourself as a Way of Financial Growth

45:10 Emily: Is there anything else that you want to add about your money mindset that you’ve been developing all these years and your financial life as a founder that we haven’t covered already?

45:19 Lindy: The only thing that I would add is that I think I have been able to take sort of a fair degree of, and I mean, it’s calculated risk, but my calculated risks are always to invest in myself. At earlier times where it was like, I’ll put the time and energy into this grant or this application, now as a startup founder, it’s “I will put the time into developing this content or this product, or pitch decks or financial business models that I’m going to present to lending institutions.” All of that work, which now again, is sort of decoupled from payment in a very specific way. I’m back in the realm where I do a bunch of stuff, and I’m betting that it will pay off in the end. And so being able to do that has always been I’m betting on myself. I’m assuming that if I put any chunk of money I have in a financial institution savings vehicle, that I’ll make small percentages. Whereas if I invest in myself, what I’m gambling on is that I’ll be able to make multiples on that investment. That has developed over time, as I’ve started to think, well, I have the personality type, I’d rather be the one trying really hard, than just handing my money over to the bank and letting an account manager invest in various funds, and I have no insight or understanding on how those work. I’m not a trained financial analyst. I still don’t understand money markets with that degree of specificity. And if I wanted to invest in that, I’d need to then rely on somebody else. Whereas if I invest in myself, I rely on myself. If I take a day off, then that’s my fault if I screw up. Whereas if I work really hard and produce results, I’m the one who benefits from that. That’s the final that I would say, is that I certainly have had to develop the confidence in myself to then bet on myself.

47:35 Emily: Yeah, this is so fascinating. And it is a very different approach from my financial approach, so I’m so glad to have your perspective on the podcast as well, because again, I think this is going to resonate with a certain slice of the audience who wants to be or is the type of entrepreneur that you are. This is really going to resonate with them. And you know, what some other people might be listening and say, I don’t want the life that Lindy has. It’s not for me. I want that salary.

48:00 Lindy: Exactly. That’s the thing that’s so clear is that if you’re going to leave the Academy or leave a stable job, I think you do need to know. If a must have is financial stability and security, then certainly don’t become an entrepreneur. If say you have the backstop of either you’ve got family money or in my case, a spouse with a job or something like that, and you have the sort of weirdo seemingly risk-taker, roll the dice kind of personality, then I think entrepreneurship is really exciting because the relationship between whether you do a good job or not is absolutely connected. Not in a day to day “did I get paid today for my work,” but in the big macro picture. The market, the world at large will tell you whether you did a good job or not.

48:54 Emily: Yes, absolutely. Well, Lindy this has been such a fascinating conversation. One, can you tell people where they can find you, where they can find EssayJack and so forth?

49:04 Lindy: Yeah, so EssayJack is essayjack.com, and then on Twitter and Instagram, it’s @essayjack. For me, I’m @DoctorLindy on both Twitter and Instagram. On Instagram, you’ll just see pictures of my cat, but you’re more than welcome to find me there. And then both on LinkedIn as well.

Best Financial Advice for an Early Career PhD

49:26 Emily: Yeah. Great. And the question that I ask all my guests at the conclusion of our interviews is what is your best financial advice for another early PhD? It can be an emphasis of something that we’ve already touched on in the interview, or it can be something completely different.

49:39 Lindy: The best bit of advice is honestly to keep your debt load as low as possible, like consumer debt load. Ideally at zero, but as low as you possibly can because ultimately if you’re starting from a level position and then earning onwards, whether it’s with a stable job or entrepreneurship, you’re already in the positives going upwards. If you’re already in debt, it is just so hard to start digging your way out. So as much as you can minimize that, that would be my key advice. Learn how to get hand-me-down clothes from your older sister.

50:20 Emily: Yes. I totally totally agree, especially, gosh, for people who are in graduate school and have that lower income. If you have the option to not obligate that future income, please avoid it whenever possible. I totally agree. Well, Lindy, thank you so much for giving us this interview. It was a real pleasure to talk with you and I’m sure the audience found this absolutely fascinating as I did.

50:39 Lindy: It was really great to chat through all of this with you. You unearth things that I’m not aware that I think until I say it.

Listener Q&A: Investing on a Living Wage

Question

50:51 Emily: Now onto the listener question and answer segment today’s question was asked in advance of a live webinar I gave recently for a university client, so it is anonymous. Here is the question: “How much should I invest if I make a living wage?”

Answer

51:08 Emily: Back in season eight, episode seven, I answered a simpler version of this question, which was” what percent of income should be used for investment? In that answer, I gave my overall ideas about what percentage of your gross income should be used to invest for retirement. Now this question specifies that the person makes a living wage. So does my general answer from the previous question change at all, knowing that this person makes a living wage?

51:37 Emily: Living wage is sort of a general term, but I like to refer to the living wage database from MIT, livingwage.mit.edu. That living wage is calculated by looking at how much money a single person or a family spends on average in a variety of different necessary budgeting categories.

51:58 Emily: Let’s say you’re a single person and you’re earning the living wage for a single person in some given area of the country. What that means is that if you are an average spender across all of these different categories, you would not spend any of your wage on discretionary expenses or saving. All of it would go towards those necessary expenses.

52:21 Emily: The first way I can answer this question is if you’re only making a living wage, it’s okay if you’re not investing, I mean, of course I want you to be investing or saving or working on debt repayment or whatever your goal is, but given how much you’re being paid and how much the cost of living is in your area, that may not be feasible for you. I want you to give yourself some grace, if you are not able to invest right now, or you’re not able to invest as much as I talked about in that previous answer.

52:50 Emily: Now, let’s go a step deeper with this. I just mentioned that the living wage is based on averages. You do not have to spend an average amount of money in these various categories. The big, big one that goes into this is on housing expense, so again, if you’re a single person, the living wage calculator that I referenced assumes that you will live on your own. Just by making the one choice to live with a flatmate, instead of by yourself, you’ve already radically reduced your spending compared to what the living wage thinks you should be spending in probably your biggest expense area, overall. That one choice alone, even if you’re average in every other category might free up enough money for you to be able to spend on some discretionary expenses and start investing.

53:39 Emily: You don’t have to do this just with housing. In every one of these necessary expense categories that go into the living wage, you can strive to spend below that level. And if you did that across all these areas, you would free up quite a bit of cash flow to go towards other financial purposes. So that’s my answer. If you are making a living wage, you “should” be investing anywhere from 0% up to the amounts I talked about in that previous answer of 10% of your gross income, 15 or 20% of your gross income, depending on your age when you start investing.

54:13 Emily: But I want to leave you with one final thought, which is have a plan to make more than the living wage. Whether that is by finish up your graduate program and moving on to a postdoc or another type of job. Whether that’s increasing your income in some other way in the meantime, before you can make that career leap, earning more is the other way to circumvent this problem on investing when you only make a living wage.

54:38 Emily: Thank you so much to anonymous for submitting this question. If you would like to submit a question to be answered in a future episode, please go to pfforphds.com/podcast and follow the instructions you find there. I love answering questions, so please submit yours.

Outtro

54:55 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest, and submitting a question for the Q&A segment. 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 podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email list serve, or as a link from your website. 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. 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.