In this episode, Emily interviews Lexi Jones, a 4th-year PhD student in the Massachusetts Institute of Technology – Woods Hole Oceanographic Institution Joint Program in Oceanography/Applied Ocean Science and Engineering. Prior to Lexi entering graduate school in summer 2019, she resolved to pay down her undergraduate student loan debt first and foremost. However, the confluence of learning more about personal finance, the passage of the Graduate Student Savings Act, and the student loan interest and payment pause starting in March 2020 caused her to adjust her strategy. Instead of paying down her student loans, Lexi has maxed out her IRA for the last few years, built a 4-month emergency fund, paid back debt to her parents, and started saving for a wedding. Lexi and Emily also discuss how Lexi is dealing with the frequent student loan policy changes announced through fall 2022.

Links Mentioned in the Episode

• PF for PhDs Tax Workshops
• PF for PhDs S14E5 Show Notes
• MIT-WHOI Joint Program
• PF for PhDs Tax Center
• Financial Feminist Podcast
• I Will Teach You To Be Rich (Ramit Sethi Podcast)
• Student Loan Planner Podcast
• PF for PhDs S4 Bonus Episode 1 (Published 12/30/2019): Fellowship Income Is Now Eligible to Be Contributed to an IRA! (Expert Discourse with Dr. Emily Roberts)
• PF for PhDs Challenge: Open Your First IRA
• PF for PhDs Subscribe to Mailing List (Access Advice Document)
• PF for PhDs Podcast Hub (Show Notes)

Teaser

00:00 Lexi: I will say that that happening was part of the reason I started educating myself about it. And I had remembered you did that podcast explaining this change. And yeah, so that all kind of coincided with when I started investing into that IRA, which I would not have been able to the previous year. So, it’s just been a confluence of a lot of different things happening and a lot of policy changes that have directly impacted me at least.

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, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. This is Season 14, Episode 5, and today my guest is Lexi Jones, a 4th-year PhD student in the Massachusetts Institute of Technology – Woods Hole Oceanographic Institution Joint Program in Oceanography/Applied Ocean Science and Engineering. Prior to Lexi entering graduate school in summer 2019, she resolved to pay down her undergraduate student loan debt first and foremost. However, the confluence of learning more about personal finance, the passage of the Graduate Student Savings Act, and the student loan interest and payment pause starting in March 2020 caused her to adjust her strategy. Instead of paying down her student loans, Lexi has maxed out her IRA for the last few years, built a 4-month emergency fund, paid back debt to her parents, and started saving for a wedding. Lexi and I also discuss how Lexi is dealing with the frequent student loan policy changes announced through fall 2022.

01:56 Emily: It’s not too late to ask your grad school, postdoc office, grad student association, department, etc. to sponsor my tax return preparation workshop, How to Complete Your PhD Trainee Tax Return (and Understand It, Too!)! It’s really fast and easy to set up enrollment, and I continue to enroll new groups until very close to the end of tax season. I have four versions of the workshop available this year, covering postbacs, grad students, and postdocs and also both citizens/residents and nonresidents. This is a big expansion over who I’ve served in previous years, and I’m really excited for it. The workshop is asynchronous, so you can go through it at any point between now and Tax Day, and I also have a mechanism for answering questions if the core material doesn’t quite connect all the dots for you. Please send an email requesting sponsorship for this workshop to the potential host and include a link to pfforphds.com/tax-workshops/. I offer a bulk purchase discount to my university clients, and they have a choice between fully sponsoring the workshop or subsidizing the cost for the participants. Thank you in advance for recommending this content! You can find the show notes for this episode at PFforPhDs.com/s14e5/. Without further ado, here’s my interview with Lexi Jones.

Will You Please Introduce Yourself Further?

03:27 Emily: I am delighted to have joining me on the podcast today, Lexi Jones. She is a fourth-year PhD student at MIT. We are going to discuss the financial mindset shifts and also shifts in goals that she’s had since she started graduate school. So Lexi, I’m so glad that you volunteered to be on the podcast. Thank you so much for coming on. And will you please introduce yourself to the listeners?

03:47 Lexi: Yeah, thanks for having me! I am Lexi Jones, as you said. I am a fourth-year graduate student, PhD student at MIT. I’m studying oceanography, so I’m in the MIT-WHOI Joint Program, it’s called but I’m based in the Earth, Atmospheric, and Planetary Sciences Department at MIT.

Financial Mindset at the Start of Grad School

04:08 Emily: Okay, thank you so much. So, let’s kind of take it back to when you started graduate school. What was your financial mindset at that time? What goals did you set for yourself? What were you thinking?

04:20 Lexi: Yeah, so, I guess it’s relevant to say I came out of undergrad with some student debt. I did have a good scholarship, but it wasn’t a full ride, so I had both federal debt and I also had debt that I owed my parents. So the combination of those two, I had $41,000 in debt. And so, when I started graduate school, I did take one year off in between undergrad and grad, but I worked as a research assistant where I did not make a lot of money <laugh>. So, it was the most money I’d ever made. And I had come into graduate school really thinking that my number one priority would be to pay off those student loans.

05:07 Emily: Okay. Let’s put some years on this. So, what year did you graduate from undergrad?

05:12 Lexi: I graduated from undergrad in 2018 in the summer.

05:15 Emily: Okay. So, you started grad school fall 2019?

05:19 Lexi: Summer 2019.

Federal Student Loan and Parental Debt

05:20 Emily: Okay. And what was the nature of your federal student loan debt, and then what was the nature of the debt that your parents had?

05:30 Lexi: So, my federal student loan debt, that was all mostly from tuition. It was like around $27,000. And then my parents basically kind of kept tabs of how much they helped me out with things like housing mostly and groceries. And I also paid for some of that myself throughout. And that was at around $13,700. And so that was kind of just, you know, them keeping tabs that, that wasn’t growing interest or anything, but it was, you know, something I was going to have to pay back.

06:03 Emily: Okay. This is a similar situation to like what I was in when I came out of undergrad. My parents sort of sprung on me that they expected me to pay them back, to some degree, for some of their expenses that occurred during my college education. So, it wasn’t like there was a specific loan that they had that I was like then paying. It was just like this sort of overhanging <laugh> amount of money that I was supposed to pay them back. Did you and your parents have like a timeline or like payment amounts or anything kind of formal about this?

06:37 Lexi: Well, I mean, I will say that I was very aware that I was going to have to pay them back. They did not spring it on me. I did actually owe them $23,000, but my graduation gift was they docked off $10K of what I owed them. And I did know I would have to pay it back because they did remortgage their house. Like they took some really big financial steps to help me in college. We’re not very wealthy. I’m from a very blue collar, small town. And so, there wasn’t exactly a timeline, but the expectation was as soon as I started making my own income that I would start working on that. And I do think that they had mentioned to me, I’m trying to think back, but I think their real expectation was once I finished graduate school and started making a quote unquote real income that I was supposed to pay them back.

07:34 Emily: Okay. That’s great. And then your federal student loan debt, was that subsidized, unsubsidized, or a combination?

07:40 Lexi: A combination.

Income-Based Loan Repayment

07:41 Emily: Okay. Great. Since we will be talking about student loans further, I just wanted to get all those like specifics out there. Okay. So, you’re coming into graduate school and you have a degree of concern about this student loan debt. During that year when you worked as a research assistant, you must have gone back into repayment, is that right?

07:57 Lexi: I did, yeah.

07:58 Emily: Okay.

07:58 Lexi: Yeah, so I was looking back at my <laugh> my finances and like 2018, I did start paying it because I was so stressed, even though I was making no money at the end of 2018. So, I went into repayment for around I guess six months I think. Right? Because you have about six months of a timeline to not pay. And then I started graduate school in June, so it wasn’t too long that I was required to pay.

08:26 Emily: And were you on the standard plan at that time?

08:29 Lexi: I was on an income-based repayment plan. I was very nervous to do anything else because I was making so little money.

08:38 Emily: Yeah, totally. And were you eligible for PSLF?

08:44 Lexi: No, I was not.

Initial #1 Priority: Unsubsidized Federal Loans

08:46 Emily: Okay. Okay, great. So, you’re coming into graduate school. We have a really clear picture of the student loans. And so why did you, I guess what was your plan at the beginning of graduate school? Did you want to keep repaying down? Was it your own debt? Was it your parents’ debt? What were you planning on?

09:02 Lexi: At the start of graduate school, I was ignoring my parents’ debt. In my head, you know, that was not gaining interest. They didn’t have strong expectations until after graduate school as we talked about. So, my number one priority was the unsubsidized federal loans. Even though once I started graduate school, I wasn’t required to make payments. But I was so tunnel-visioned on needing to pay that down as soon as possible.

09:31 Emily: Interesting. Okay. But I understand that you have not carried this plan through to the present, so at some point you changed your mind. How did that happen?

09:41 Lexi: Yeah, I think that my parents helped me a lot to save money growing up. It was always save for college though. I don’t really feel like I was taught a lot of skills outside of just saving for college. And I definitely started graduate school with, again, the tunnel vision of paying off that college debt. So, I think I started to get interested in personal finance. I started listening to your podcast and just kind of starting to read about what other people have done and strategies for debt versus kind of building a financial base. I will say on like a personal note, I had one of my best friends in college was diagnosed with stage four cancer in undergrad. So in my head, you know, that was like the worst-case scenario, some financial situation that could happen to me. And I was very scared that I didn’t have any safety net or things like that. And so, I was trying to figure out how do I balance building up that kind of financial base versus paying off the loans.

10:50 Emily: Wow. I am sorry for your friend and also that you witnessed that experience. I definitely fell into the mistaken thought pattern of like young person invulnerability, like, why would you need an emergency fund? I’m just going to start investing and, you know, pay my debt and so forth. So like you unfortunately, but it’s a good conclusion to come to, had a different like perspective on that. Okay. So, you’re shifting into thinking that you need to build up some savings prior to seriously addressing the student loan debt. Were there any other goals that you ended up setting for yourself during graduate school? And I guess actually let’s, let’s talk for a moment about what, what happened with the student loan debt because, you know, whatever, eight months into your first year of graduate school, we entered the administrative forbearance for the federal student loans. And so not only, so effectively those unsubsidized loans became subsidized, right? And so you still didn’t have to make payments. Now you’re not concerned about the interest rate. How much did that shift play into you changing kind of your focus?

Administrative Forbearance

11:54 Lexi: Yeah, so I think, you know, 2019, the start of graduate school I started, I was paying my student loans and also starting to build up that safety net just mostly out of fear of the unknown. And then 2020 definitely changed everything for me. I do go to school at MIT, so we’re in a very high cost-of-living area. And when the pandemic hit, I decided to move back with my long-term partner who lives in Philly. So, just as my like base expenses, my rent cut in half when I moved back to Philly. And then what do we know, I was in Philly for over a year and a half <laugh>. So, my core expenses definitely decreased and my salary stayed the same because luckily I was in a secure position as a PhD student.

12:49 Lexi: The other thing, like you said, our student loans became frozen. And then I think also at that time I was starting to hear whispers, maybe not whispers, but the campaign ideas of student loan forgiveness. So, that was 2020 was when Joe Biden was running for president and that was one of the big kind of promises. And so, I really started to question what my strategy was at that point. And I think I was looking back at my spreadsheets and stuff and around April, 2020 was when I completely stopped putting money into the federal student loans.

13:28 Emily: And how much were you putting in a regular amount up until then? You were then able to divert how much money was that?

13:34 Lexi: Yeah, up until then I was putting in a hundred a week. And at that point when I stopped, I had put in over $6,000 and it really only took off a little bit under $5,000, like with the interest growing. So, I just felt like it was like sinking my money every extra penny I had into this student loan.

Shift from Paying Off Loans to Investing in an IRA

13:58 Emily: Okay. So, now we’re into the pandemic and as we’re recording this, this is November, 2022, so we are still in the administrative forbearance. Maybe we’ll talk in a few more minutes later on about sort of current student loans, what’s going on. But let’s talk more about then what you decided to do with your finances after no longer contributing to your student loan balance. Did you save? Did you invest? What happened?

14:23 Lexi: Yeah, so at that point I had a lot of extra money between lower rent costs and then I wasn’t going out, I wasn’t traveling. And then also the stimulus checks. So, all of that combined, I just had a lot of extra income that I originally had, which is a very privileged position obviously to be in during the pandemic. I, at that point, became interested in investing in an IRA. I was pretty uncomfortable with the idea of investing <laugh> up until 2020. And after I think just reading a lot and, and just learning about really what happens to that money, I decided it was the best thing for me to do at this point. Especially because the earlier you start investing for retirement, the more power that money has later on. So it just to me made sense to build that financial base and, you know, my partner was in a normal industry job with a 401(k) and I was just feeling like I needed to kind of build that up now.

15:36 Emily: I want to note, I think it’s kind of interesting that like I’m sure this experience wouldn’t have been unique to you during the pandemic, but I wonder if it sort of moved you out of like a student bubble? Like moving away from campus, living with your partner, witnessing your partner’s real job, real benefits and so forth. Like, did that give you a different, like less studenty mindset around your finances?

15:58 Lexi: I think so. And also, just the freezing, the combination of all the things I mentioned, kind of, there were so many signs pointing towards stop putting all of your energy into these student loans because you have a chance to really like build for your future. I think the other big thing I didn’t mention, like after putting all of that money into the IRA, I also decided to build up not only my safety net, but also pay my parents back because of this idea of if they were going to forgive student loans, why would I put money into it when it actually could be forgiven? In the beginning they were saying, you know, could be $50,000 forgiven or $20,000 forgiven. In that case I would really be sinking my money into nothing <laugh>.

16:45 Emily: Absolutely. This is the same, outside of this sort of like unique pandemic slash possibility of loan cancellation time period, this is the same mindset that anyone who’s on an income-driven repayment plan leading towards forgiveness needs to apply. You should, if you’re really committed to your income-driven repayment plan, maybe that’s in combination with public service loan forgiveness, you should never make more than the minimum payment because it’s literally futile. Everything will be forgiven at the end of that process. And so, it doesn’t matter whether you have, you know, made extra payments or not. So yeah, it’s hard to wrap your mind around because in the regular world of other types of debt, this is not at all how things work, but student loans are really their own beast that have to be thought about differently than other types of debt that we have.

17:32 Lexi: Yeah, and it really took all of those things for me to get to this point to really like not worry so much about it. Because it just always was such a heavy weight on my head and I think the possibility of forgiveness and them freezing just kind of released that burden. So it was definitely a very, like a combination of a lot of unique circumstances.

Commercial

17:56 Emily: Emily here for a brief interlude! Tax season is in full swing, and the best place to go for infor mation tailored to you as a grad student, postdoc, or postbac is PFforPhDs.com/tax/. From that page I have linked to all of my tax resources, many of which I have updated for tax year 2022. On that page you will find free podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with. The absolute most comprehensive and highest quality resources, however, are my asynchronous tax workshops. I’m offering four tax return preparation workshops for tax year 2022, one each for grad students who are U.S. citizens or residents, postdocs who are U.S. citizens or residents, postbacs who are U.S. citizens or residents, and grad students and postdocs who are nonresidents. Those tax return preparation workshops are in addition to my estimated tax workshop for grad student, postdoc, and postbac fellows who are U.S. citizens or residents.

19:12 Emily: My preferred method for enrolling you in one of these workshops is to find a sponsor at your university or institute. Typically, that sponsor is a graduate school, graduate student association, postdoc office, postdoc association, or an individual school or department. I would very much appreciate you recommending one or more of these workshops to a potential sponsor. If that doesn’t work out, I do sell these workshops to individuals, but I think it’s always worth trying to get it into your hands for free or a subsidized cost. Again, you can find all of these free and paid resources, including a page you can send to a potential workshop sponsor, linked from PFforPhDs.com/tax/. Now back to the interview.

IRA Investment and Parental Debt Repayment

19:59 Emily: Okay, so let’s catch us up to like the present. Like have you continued with the IRA investing? How are your savings looking now? How do you feel about that?

20:07 Lexi: Yeah, so since 2020 I’ve maxed out my IRA every year. So, that’s kind of a non-negotiable for me. I just put in $500 a month and don’t think about it. I will say, I do have a higher stipend than a lot of other graduate students do. But yeah, that is very important to me now and I’m really happy with that <laugh>. During the pandemic, actually last August, I completely paid back my parents. So, that was an amazing feeling and felt so much better than putting my money into the government student loans just because I knew it would make such a bigger impact for them, and I wouldn’t have to worry about it anymore. As we know, like they’re still frozen right now, so I don’t know if I would’ve fully continued to commit to that as much if they had unfroze, but as of right now I still haven’t put anything else into my federal student loans.

21:20 Emily: And you mentioned earlier that you moved to Philadelphia for a year and a half, so I’m wondering how your budget looks right now. Like are you still living with your partner but now you’re back in Boston? Or like how are your, as your expenses have, I’m presuming increased as we’re, you know, moving through and beyond the pandemic, yeah, how have you set up your budget to still support these financial goals?

21:42 Lexi: Yeah, so I lived in Philadelphia until last July. So last July I kind of, I finished saving, paid off my parents. I built up a four-month emergency fund, my safety net. I was continuing to max out my IRA, and then I moved back to Boston. And so, now my rent is around $1050 every month just for me. So my partner and I split equally. So, my rent has doubled, but my income has also increased a little bit. At MIT we are unionized now, so I think that our salary will be pretty stable. And so, because my safety net is already built up now and my parental debt is paid off, now I have been putting money into planning for a wedding actually. So, the money that would be going toward my student loans, I’m instead saving for a wedding now.

22:55 Emily: That’s great. It’s like you caught up in all these areas, right? The emergency fund, the debt to your parents, the student loans still being on pause, and you’re on track with your IRA goals, and now you get to add in a wonderful new financial goal to the mix. So, congratulations on that upcoming life event! You mentioned earlier that, you know, near the beginning of graduate school you started listening to my podcast, but I’m wondering if you had any other recommendations for our listeners of other people or sources you listened to that kind of helped you with these mindset shifts?

Podcast Recommendations

23:27 Lexi: Yeah, I think that your podcast was really helpful for me for getting started just because it’s such a unique situation. All of the recommendations you hear are like, max out your 401(k) if you can. And it’s like, okay, well what if I don’t have a 401(k)? What if I have like just a weird stipend, a weird fellowship, and then don’t have retirement benefits, but I do have health insurance. It’s just a weird situation to be in. So, I feel like not only like with help paying taxes and how to do fellowship versus stipend, your podcast really helped me get started thinking about what should I prioritize specifically as a PhD student. And then I’m starting to think of, okay, what will happen beyond being a PhD student? How can I properly manage my money at that point when I have a quote unquote more normal job? So, I love podcasts. I like listening to the Financial Feminist, if you’ve heard of that one. I think Ramit Sethi has some really good podcasts, more about the psychology around money and just like getting your head out of like, this is this terrible thing I have to pay off the government for the rest of my life. I think just working through some of your psychology, especially if you didn’t grow up with a lot of money or in weird circumstances, I think that podcast is really great as well.

24:57 Emily: Yeah, thanks for those recommendations. The Financial Feminist, is that Tori Dunlap?

25:01 Lexi: Yes.

25:01 Emily: Okay. Yes. So the other part of her brand I guess is Her First 100K. Yeah, I do listen to Ramit’s podcast. It’s different from his other work. Like it’s very different from his book for example, but I like that they complement one another. So, thank you so much for those recommendations.

Shifting Student Loan Policy

25:19 Emily: As I said earlier, we are here in November, 2022 and just, I think it was last week we found out that the proposed student loan cancellation of 10 or $20,000 has been blocked and will not immediately be going forward. And we don’t really know a lot. I’ve actually been wondering how this is not being better covered by mainstream news sources <laugh>, because it seems like massive news just the way the announcement of the cancellation was. So, okay, all we know right now is that it’s blocked for the moment. We don’t know how this is going to resolve. We also don’t know whether the administrative forbearance will be extended again. One of the sources that I listen to, Student Loan Planner, thinks that it will be until we get some clarity on all of this. So, you as a borrower stuck in the middle of all this, what are you thinking and what are you feeling, and what are you hoping about all of this?

26:13 Lexi: Yeah, it’s definitely been a rollercoaster. I mean I thought it was a done deal when I submitted my name to get $10,000 forgiven. Because I definitely qualify. I think anyone in grad school with federal student loans will qualify. And so, I mean what we’re looking at now is I’m at $22,400 of federal student loans, still a mix of subsidized and unsubsidized. If that were to get $10,000 taken off, I think $12,000 is almost half, an incredibly more reasonable amount for me to pay off. And so, I think if the forgiveness goes forward, the way I kind of view that is I will likely get that amount of a pay raise at my next job at least, and can easily pay that off after graduate school. If it doesn’t get forgiven, if it stays frozen, I’m not going to put any money into it. If it does become unfrozen and post-wedding, I may start putting some extra cash into those unsubsidized loans. So, there are a lot of different possibilities. I think, say, none of it gets forgiven but it stays frozen until I finish graduate school, at that point I might you know, refinance and pay it down at a lower interest rate. So, there are a lot of possibilities.

27:46 Emily: Yeah, a lot of different paths that things could take going forward for you. And I actually don’t know this question, but I assume it would be the case, like let’s say that you did get $10,000 worth of cancellation. Can you selectively say that you want that to be your unsubsidized loans?

28:05 Lexi: I have been wondering the same thing, which is so frustrating, like why don’t we know the answers to these questions? But yeah, I really don’t know if it’ll be subsidized, unsubsidized, the lowest interest rate, the highest interest rate. I just really haven’t been able to plan exact numbers for any of that.

28:24 Emily: Yeah, I really have not heard that discussed at all. And it is probably because we really haven’t gotten close enough to the actual cancellation happening for it to have been dealt with by the servicers. As you said, there was an application open for like a few weeks I think, and now it’s been shut down again. Yeah, well I certainly hope that if the cancellation goes through that the borrowers are able to selectively say, you know, this is the loan I want reduced or paid off completely, et cetera. Because of course having those unsubsidized loans wiped out for you would be the most helpful thing in the short-term. And again, there are still lots of other things that could happen, like you were just laid out some possibilities. But the other one on the table is the new income-driven repayment plan that again, was proposed and we don’t know what the final terms will be for that.

29:08 Emily: But it could be that, you know, given that your loans were from your undergraduate degree, that once you are back in repayment after graduate school, you may have a very low repayment that you’re looking at. And so, it might or may not make sense to refinance and you’ll have to, you know, tackle that question when you get to that point. But I agree with you that it would be great if it was only $12K, but even at, you know, $23K ish, I think this is going to be fairly easy to handle on whatever your post-PhD salary is because it is, you know, it’s less than even your graduate student salary right now, one year’s annual salary. So, I hope that’ll be manageable for you. But of course it would be lovely if much of it was wiped out.

29:46 Emily: But again, we’re just waiting and seeing and maybe there’ll be more updates by the time this is published, or maybe we’ll still be waiting and seeing. But it sounds like for you, you have your goals clear. You’re going to keep going with the IRA, you’re going to get through the wedding and the associated expenses, and then you’ll revisit once we know the situation on the ground at that time. Graduate students are in a way, I guess I could say fortunate, just in that if you’re in graduate school, you know, you’re not going to go back into repayment if it’s federal student loans. Whatever happens, you don’t have to make payments while you’re still in deferment, so you have time to kind of figure out what the best course is.

30:20 Lexi: Exactly. Yeah, and I think that’s where, again, another very unique situation that we’re in as a PhD student that, you know, other financial advice is about debt that’s accruing interest. And if you’re in this weird position where your debt’s not accruing interest, you kind of need specific advice for that situation. And I think that’s hard to come by. So thank you for kind of going through all these very nuanced situations.

Playing the Waiting Game

30:47 Emily: Yeah, I will do what I can. I’ve been waiting and seeing maybe by the time this is out, I’ll have done something for the podcast feed, but I’ve been waiting and seeing how things go before making any kind of recommendations to like the grad student audience because again, we don’t know about the end of the administrative forbearance, we don’t know about the cancellation, we don’t know about the IDR plan. It’s just like everything’s up in the air right now. I have contacted again, this brand that I follow, Student Loan Planner, and they’ve agreed to come back on the podcast. They did once before to give some recommendations. But again, we’re going to wait on that until we know what this IDR plan looks like. So, it’s all just a waiting game, and it must be heart-wrenching for you to feel as you said that it was a done deal, that you were going to get this $10K in cancellation and have the rug kind of pulled out from under you on that. So, I am sorry about that.

31:37 Lexi: It’s okay. It honestly did feel too good to be true and I guess maybe it was <laugh>. We’ll see. But yeah, I think, like you said, because I’ve built a financial base, I really do feel prepared either way to take on the debt. Of course, it would be nice for anyone to be $10,000 less in debt. So yes, I hope for everyone that still has debt that it does go through.

32:04 Emily: Yeah, and that’s, I mean, that is the purpose of the administrative forbearance, right? Like there was a lot of uncertainty during the pandemic of course, you know people lost jobs, lost income and so forth. And pausing it for everyone was a quick solution to provide a great deal of relief for people not in graduate school who actually had their payments going on. So, it certainly served a purpose, but we’ll see when it actually ends and whether people are going to start defaulting when they go back into repayment and it could be a mess. We don’t know, again.

Saving for Retirement

32:32 Emily: Well, Lexi, is there anything else that you would like to add about your financial journey and these mindset shifts that you’ve had during graduate school?

32:39 Lexi: Yeah, I guess I would just add that, I think saving for retirement feels like a very far off weird thing to be doing. I’m 26 years old, but the stock market has performed on average at 10% growth. And I think most federal student loans are at most like 4.5% growing interest. So, I think if you have a math brain, which you might as a PhD student, it really does make sense if you have the opportunity to start saving for retirement because I mean even like, just saving now all of the growth that you’ll get on that money is going to be so much more than the interest you’re growing on your student loans. Just something to keep in mind, and that really helped me kind of rationalize this, to me, what felt like an uncomfortable decision.

33:37 Emily: I’m also reflecting that you started graduate school at an interesting time because at the moment you started, if you were on fellowship, I don’t know if you were, but anybody who was on fellowship wouldn’t have been able to contribute to an IRA from that particular source of income, but that changed just at the beginning of 2020. So, it’s just interesting that you were thinking about these things and there was all this news at the time about, you know, the opening up of this benefit to graduate students on fellowship.

34:02 Lexi: I will say that that happening was part of the reason I started educating myself about it. And I had remembered you did that podcast explaining this change. And yes, so that all kind of coincided with when I started investing into that IRA, which I would not have been able to the previous year. So, it’s just been a confluence of a lot of different things happening and a lot of policy changes that have directly impacted me at least.

Best Financial Advice for Another Early-Career PhD

34:31 Emily: Yeah, that’s a good summation of like this episode, just like dealing with the policy changes and sort of the winds of change buffeting you around as a graduate student. Lexi, thank you so much for this interview! I’m really happy to hear about how, you know, there’s been a lot of positive changes that have happened even through the difficult period of the pandemic. So, thank you so much for sharing those mindset shifts with us. The question that I ask all of my guests at the end of our interviews is, would you please share your best financial advice for another early-career PhD? And that could be something that we’ve already touched on in the interview, or it could be something completely new.

35:06 Lexi: Yeah, I mean <laugh> I would just double down on if you can, save for retirement, I think it’s going to be a huge impact for your future. And then also, I think a safety net is really important. Like I said, you never know what could happen even if you’re young. There are a lot of unknowns out there. Even if you feel very secure as I do in my position right now, anything could happen. So, just to have that financial security, I think helps me at least sleep at night.

35:41 Emily: Yeah, thank you for sharing that.

35:41 Lexi: That would be my advice. <Laugh>

35:44 Emily: I will put into the show notes, I have a, I call it like a challenge inside the Personal Finance for PhD’s community, which is a seven-step process for opening your first IRA. So, if any listeners are excited or curious about how to do that and you want a little bit of support from me, you can join that community and take that challenge. Again, we’ll link it in the show notes. And this, I’m imagining when this podcast is being released is a really good time to open a 2022 IRA because you can still open and contribute to one through tax day of the following year. So until, I’m assuming it’s April 15th, unless there’s a holiday, April 15th, 2023, you’ll be able to open and contribute to a 2022 IRA. So, that’s always a great idea. Well Lexi, thank you so much again for volunteering, and it’s been great to speak with you today!

36:27 Lexi: Yeah, thank you so much for having me on and thanks again for having this podcast! It’s amazing.

36:32 Emily: You’re welcome.

Outtro

36:38 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.