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This Graduate Student Switched Universities and Moved Long-Distance to Stick with Her Excellent Advisor

August 19, 2019 by Meryem Ok

In this episode, Emily interviews Dr. Katie Wedemeyer-Strombel, a recent PhD in environmental science and grad student advocate. Katie’s advocacy for her peers grew out of the challenges she faced during graduate school, particularly with respect to her first advisor. Katie details her decision to change labs and ultimately universities a couple years into her PhD and how she handled the financial and logistical aspects of moving from one side of Texas to the other. Emily and Katie discuss their advice for PhD trainees on how to choose a good mentor and preparing for the unexpected.

Links Mentioned in the Episode

  • Personal Finance for PhDs: Speaking
  • Katie’s website: (Katiewedemeyer.wordpress.com)
  • Personal Finance for PhDs: Help Out (https://pfforphds.com/helpout/)

Teaser

00:00 Katie: I never could imagine that it would have happened to me. I applied to one program to work with a certain professor that I was really excited– it was my dream program to get into, my dream project I was going to get to be on– and I didn’t even think to ask around about what’s it like to work with this person.

Introduction

00:22 Emily: Welcome to the personal finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four episode one and today my guest is Dr. Katie Wedemeyer-Strombel, a PhD in environmental science and graduate student advocate. Katie’s advocacy for her peers grew out of the challenges she faced during graduate school. We discuss her decision to change labs and ultimately universities a couple of years into her PhD and in particular how she handled the financial and logistical aspects of moving from one side of Texas to the other. Katie gives excellent advice for every PhD trainee on how to choose a good mentor and preparing for the unexpected. Without further ado, here’s my interview with Dr. Katie Wedemeyer-Strombel.

Will You Please Introduce Yourself Further?

01:13 Emily: I am delighted to be joined today by Dr. Katie Wedemeyer-Strombel and she is going to be telling us about a time of upheaval during her PhD in a variety of different ways. So Katie, will you please tell us a little bit more about yourself?

01:28 Katie: Yeah, and thanks so much for having me. I’m really excited to be here chatting today. I just recently finished my PhD in environmental science at the University of Texas El Paso where I integrated social and natural science to help improve conservation, specifically of sea turtles is what I was looking at. I grew up in southern California in a quiet little beach town and I love to be outside in the mountains and the ocean, playing with my dog, hanging out with my husband. I lived in California for most of my life, did my bachelor’s degree at the University of California, San Diego, then worked at a small zoo and aquarium as the lead educator where I got to talk about science to kids of all different ages, which inspired the pursuit of my PhD where I started at Texas A&M. After my second year, I decided the environment I was in was not a good environment, a good fit for me. And so I left that lab, found a new one and finished my PhD with a new advisor and ended up moving to a new university across the state of Texas. So yeah, it was a long journey. It took me seven years total to finish my PhD. I am thrilled to be done with it recently. It’s still sinking in and I think that’s it.

02:46 Emily: Well you’ve moved again recently, right?

02:48 Katie: Yes, yes. So we just recently moved a couple of weeks ago to the Denver, Colorado area to enjoy a new place and a culture of being outside and exploring. We’re really excited to be in a place where we feel like we’re surrounded by like-minded people.

What Motivated You to Switch Labs?

03:08 Emily: Excellent. So glad to hear that. So let’s go back to just before again this time about people. When you were switching labs and ultimately switching universities. What motivated you to do that switch?

03:23 Katie: So for me, it was even starting early on my first year of grad school. I felt like I really knew what I was getting into. I had taken three years off between undergrad and grad school and I had worked with researchers at a federal research lab. I’d worked with grad students before in that capacity as well. So I felt really confident that I knew what I was getting into. And then I went to grad school and the department culture was not the healthiest. And then within my lab, it was a struggle kind of from the beginning. There were a lot of expectations of working really long hours and kind of going with the philosophy that graduate school is supposed to be miserable and a time that you’re suffering and you’re not allowed to be anything but a grad student or have any hobbies or anything outside of graduate school. If you showed interest in anything else or dedicated time to anything else, including family, then you would fail is essentially what I was told. So I just realized kind of midway through my second year that what I wanted and what I needed for my education and to be successful and in my life to be happy, I was not getting with the professors that I was working with.

04:34 Katie: So, thankfully to the support of other faculty members and to my cohort, I recognized that this was not a good situation for me– that thinking every day, oh man, I don’t think I can do four more years of this. I don’t know that I can make it through that, feeling that way every day, and just realizing that what I was feeling was not how graduate school had to be. It is how it is, unfortunately, for a lot of people, but it’s not how it has to be. It can be a much more positive and a better experience. And so I was able to leave my lab, in part hugely to receiving a National Science Foundation Graduate Research Fellowship, which really helps give me freedom because it was a lot easier to approach new professors having that credential. I was able to find my new advisor who had a really positive way of mentoring her students. Still challenging, still high expectations but in a very positive manner, which for me was the kind of environment that I really needed to thrive. So she initially was still at Texas A&M when I moved into her lab at the beginning of my third year, but she was looking at and then eventually took a job about 12 hours across Texas at the University of Texas El Paso. So after third year my husband and I moved across Texas and started up and spent another four years in El Paso where we finished school.

Warning Signs for Unhealthy Labs

06:09 Emily: Yeah. Thanks for that kind of overview and we’ll be getting into quite a bit more into various components of that story. For someone else who is entering graduate school or entering a new research situation, maybe it’s postdoc, maybe it’s something else. What are the warning signs that they should be looking for for labs and groups to avoid if they have maybe a similar outlook on life as you do that graduate school, that research, should not be consuming 100% of your life?

06:40 Katie: Yeah, that’s a really good question. I think the biggest thing is ask students, ask postdocs working in the labs you’re interested in joining, current students and former students or postdocs and you know, get them on the phone or if you’re there in person, take them out to coffee. Ask them, if you could do it again, would you work with who you’re working with? And take that answer seriously. On the phone or in person, people will be much more candid than say in an email because there’s no track record of it. And in my experience, when I was switching labs, I did a lot of investigating on that front. Talk to a lot of students and collaborators that worked with the people I was looking to work with and, in my experience, students and postdocs were very open and willing to chat with me on the phone or in person.

07:31 Katie: So that’s a big thing, but I think, looking into what is the culture like in that lab or in that department, in that town. Do they emphasize binge drinking as a way to blow off steam and the one way to deal with burnout– which doesn’t actually deal with burnout, it just adds to it. Do they encourage you to take time off to be with your family? Do they seem to have expectations that all you’re going to be doing is your work or do they seem to promote, “Hey, you like that band, why don’t you go to that concert?” Or “Hey, your family has an opportunity to all be together. Why don’t you go do that?” So really asking questions about how do you feel about taking time to see family? How do you feel about my work schedule? If I’m a better worker from 5:00 PM till midnight, is it okay if those are the hours I’m in the lab rather than 7:00 AM till 4:00 PM or whatever works best for you. So getting a feel for what you need and what’s going to work for you and asking those questions to who you’re working with, to people in the department that you’re thinking of joining and especially to the students who are already experiencing that. I think that that’s something that I didn’t do initially that I wish I would’ve done to get a better idea of what I was getting into.

08:55 Emily: I think there are some, I’ll say graduate students especially, who have a beggars can’t be choosers kind of attitude towards their selection of university or program or advisor. And that really may be the case if you have only gotten into one place or only one person will accept you into his or her lab. But the thing is that, as you experienced, if the culture and the work style and whatever it is about the group does not mesh well with what you want, you’re not going to end up being successful anyway. Like it doesn’t matter if they were the only one, if it’s going to put you through way too much strain or you’re going to have to leave their program, whatever it is. I mean it’s hard to say no to like your only opportunity or an opportunity that you would really like to think that it might work. But it’s just about more being honest with yourself that it’s not going to work and the PhD is a long time. It’s not the kind of time period that you can suck it up and power through for five plus years. And hey, it may take even longer if you’re struggling, you know? So it seems to be very, very wise to be very selective on the front end, even if it means turning down what might otherwise seem to be a really good opportunity.

Advice to the “Exceptions”

10:06 Emily: So when I was in graduate school, my husband and I were both very fortunate to have supportive advisors who were the kind of advisors that you’re talking about who didn’t have crazy work expectations, were supportive of family and so forth. But my husband considered joining a lab that had a little bit of a reputation, known among the students for being a more challenging lab to be in and with a more challenging advisor to work with. And I remember he heavily considered joining that lab but ultimately did not, all to the good. And I remember at a later point in graduate school, one of my friends who was a first-year or something, was rotating through labs and considered working with, again, another advisor who had a reputation as being a very difficult person to work with. And having had the experience my husband had, he was counseling this person to, as you were saying, take very seriously what other students, former lab members especially have said about this person to him. And ultimately he decided to join that lab. And he did graduate. But it’s just, I don’t know. What would you say to a person who thinks, “I’m going to be the exception? I’m not going to have that experience in that lab that 80% of people are having.”

11:24 Katie: Yeah, that’s a really good question. People leave labs for a lot of different reasons and sometimes people can be successful in an environment that was very unsuccessful and unhealthy for other students. And so that does happen. It’s not necessarily always like a nuclear situation when people leave labs. But because I’ve shared my story pretty transparently, I’ve heard a lot of horror stories. A lot of people have privileged me with sharing their experiences with me as well. And it’s a risk, I think, to join a lab that you know has a bad reputation. That’s a really good question. Thinking about what to say to a student that thinks that it’s not going to happen to them. I never could imagine that it would have happened to me. I applied to one program to work with a certain professor that I was really excited– it was my dream program to get into, my dream project I was going to get to be on– and I didn’t even think to ask around about what’s it like to work with this person, what it had been before. I probably would have ignored that anyway because I didn’t know any better. I didn’t know much about graduate school really at the time when I was getting into it. You know, it’s a risk, but to a student that thinks that they can go into a lab that doesn’t have a great reputation and thinks they can be successful: If they really want to try and they don’t have other options, they can try and they’re not stuck.

12:51 Katie: That’s a big thing I like to encourage graduate students to recognize is that you are not stuck. Just because you signed up for one program does not mean that that means you are locked into it for five, six, seven years, however long it takes. With the caveat of if you’re an international student, changing is a lot harder because you have visa issues, you have to deal with, you need the sponsorship of a lab. So there are a lot of extra obstacles that international students, underrepresented minorities face that, for example, I didn’t face when I was going through it. But there are options. And so, if the student feels really confident in joining a lab that other people have maybe warned them about, it’s their education and their life and if they decide that they want to take that risk, that just that they know, if for some reason it doesn’t work out that they’re not stuck in that environment, they’re not trapped. They don’t have to prove to anyone that they can withstand whatever treatment they’re getting, that if they’re unhappy or it’s an unhealthy environment that it is okay to say, “I have to leave this environment and find a different one.” Whether that different one remains in grad school or is a total different industry or career change. I think that would be what I would say.

The Advantage of Lab Rotations

14:17 Emily: I think I would add to that: if you know you’re taking a gamble with a certain lab to just be even more intentional about developing relationships with faculty members outside of that one. And it really depends on your program, how much that’s encouraged or not, but you should just take even more of that on for yourself to sort of look around and say, “okay, what are other people I can go to here either to help me stay in the current lab and give me advice, or what have you, support, collaboration, or a potential new advisor to switch to if this one doesn’t work out.” This is one reason why I really liked the system of doing rotations that some fields and some programs had. I personally didn’t do rotations in my lab. Sounds like you didn’t either. But I just think it’s a great idea to try on a lab for a semester or what have you and be able to make a better evaluation at the end of that. So, if you have the opportunity to go to programs that offer rotations, I think it’s a real advantage.

15:14 Katie: Yeah, absolutely. And I know I have a couple of friends who ended up switching labs into a lab of someone else that they had done a rotation with. And so they knew, “well, my interests overlap with this person. I liked that environment. It was a better fit for me.” And so I actually know a couple of students who eventually changed into a rotation lab. And just one more thing that I wanted to add on on this topic is that we keep mentioning labs that have a reputation. And so much of the onus is on the student to navigate this, but what students really need is faculty, especially tenured faculty and administrators in these departments that know that their department and/or faculty in their department have these reputations. People know about it. It’s not surprising when a student leaves the lab, people know their reputation. And yet, those professors still get funding for TA-ships or RA-ships to have students in their lab when there’s a known cycle of either inappropriate behavior of a variety of types or just of being a really negative environment that can emotionally hurt a lot of students. And so it’s a systemic issue and a lot of students are talking out more and more about it. And on Twitter, a lot of faculty are talking out more and more about it and it’s definitely becoming something that in my experience, even like some graduate deans are paying more attention to.

16:44 Katie: But really, the students need the help of established folks in the fields and we need them to help either watch out for students that join those labs or to talk to their colleagues and say, “Hey, your behavior is inappropriate. It’s not okay to treat students like that.” Because so much of the onus is on students. So much of having to navigate changing labs is on the students with zero support from the institution or other faculty unless they’ve already had the opportunity to carve out relationships with other faculty who will advocate for them. So, I talk about this a lot and so much of the advice which is important is to give to students to look out for red flags and what to do in that situation. But I always like to add, we need the help of folks that are more established that already know of these reputations to say, “hey, maybe don’t work with that person or if you get stuck or something seems off, come talk to me.” Just knowing that students have the support and knowing that faculty are working to help fix this problem is going to be a huge step forward I think for academia in general.

Helpful Policies

17:56 Emily: Yeah. Just to add on that, I think that either having policies in place or enforcing policies that are already in place regarding, for instance, the time devoted to work usually is officially limited. For a TA or an RA position often it’s 20 hours per week. How about that’s actually tracked and actually changes are made if students aren’t able to get their work done or whatever it is within that period of time. Also, about vacation policies. I remember during graduate school, midway through when I was in grad school, there was an official vacation policy implemented for Duke overall. And it basically said, I think, that students can have two weeks or more if their advisor wants to give them more. Often international students need more than two weeks at once. So it’s a two weeks or more policy. So it was kind of a good thing because I think often when policies are proposed, people are nervous that the policy could detrimentally affect them. Like maybe I take more than two weeks of vacation per year and my advisor is okay with it, but two weeks would limit me. So that was kind of a good phrasing. Like it had to be at least two weeks. And so that’s at least a policy that could be pointed to. Someone needs to take time off, and if the advisor’s not respecting that, then maybe again someone a level up can start intervening in that situation.

Commercial

19:11 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs and other early career PhDs for universities, institutes, conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs like taxes, investing, career transitions, and frugality. If you are interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. That’s p f f o r p h d s.com/speaking. Now back to the interview.

Challenges with Changing Institutions

19:59 Emily: Thank you so much for that discussion. But moving on to the happier end to that story. You got into the new lab, but you knew from the beginning that there was a move upcoming. That your new advisor was looking around and ultimately did move. So, what were the challenges associated with that of moving and changing institutions partway through your PhD?

20:22 Katie: Yeah, so there were a few different aspects of that. First was my, at the time fiancé and my now husband, he moved out. He was a professional chef for many years in southern California and he walked away from that in California and moved to Texas since we knew I was going to be there for a while and we wanted to be together. So he moved out to Texas two months before I left my first lab. And so he had just gotten there and we stayed there for another year. And so, I had a really strong support system with my cohort. My original cohort mates were just phenomenal and still some of my best friends. And my husband moved out, got a good job and became really close friends with a lot of my cohort mates, some friends on his own as well. And so we lived there for a year and a half and then we had to move and move away from the support system that had seen us through a tough time, that had celebrated our marriage with us. And that was a really tough thing to have to move away from that support system. That was tough both personally, but also we lost support for if we needed help with anything or a place to crash or if we needed just, you know, what you lean on your community for. We had to walk away from all of that.

Financial Considerations

21:45 Katie: And so that was tough and we had just paid for my husband to move from California and then we had just had our wedding and we moved like two months after our wedding. The move itself cost us probably like total $3,500 that we didn’t have lying around. It wasn’t something we had planned for or had expected. We were really fortunate that my parents were able to lend us some money so that we could kind of basically take an interest-free loan from my parents. Not everyone has that option. So we were really, really fortunate to have that to lean on or else we wouldn’t have been able to pay for the moving truck, for instance, to move our stuff across Texas. Because it’s like a 12-hour drive basically from east Texas out to West Texas. And having to put down a new deposit on an apartment, having to start building a life there again and moving everything. And then starting over with no support system was really tough. Again, just didn’t have a place to crash if we needed, didn’t have friends to lean on that were local. And so that added, increased pressure on us in a lot of different ways, both like academically and personally. And so those were the biggest things, having to find all new doctors, having to pay copays to go and do like the initial appointment with the doctors and then just kind of going through all of that and moving. The cost of living was a little bit more expensive where we moved to in El Paso just because it is a city. Not a lot but a little bit more. So that was something that we weren’t totally prepared for either. So those were the big things I think.

Logistical Considerations

23:49 Emily: With the actual moving itself: so, the lab that I was in in graduate school, the reason that I graduated at the time that I did was because my advisor decided to change institutions. It was kind of like he graduated like six or seven people and moved some, some stayed at Duke. So I got to see the front end of the packing up of the lab and I assisted with that. But I was basically out of there at the same time that the move was actually happening. So I’m just curious how much sort of downtime there was for the lab as a whole and also for you to actually do the move physically of the lab and also of yourselves and how much of an interruption that was to your research? And whether that was like vacation time that you had to take or whether it was like, oh no, okay. Like this is something that my work is requiring me to do. So it’s like sort of papered over.

24:43 Katie: It was a pretty stressful time for us. So we got married on May 2nd, 2015. We had a destination wedding in Mexico, which was wonderful. So we took that time and then we took about a week after that to stay for our honeymoon. And then about two weeks later, I went down to my field site for the first time and I was there for about two weeks. And my field sites are really remote so I have very little communication abilities when I’m there. And then I got back home and we had to move out of our apartment I think by the end of May. So we packed everything up, put it in a pod, had that stored for a few months. My husband essentially moved in, we moved in with two of our good friends who had a house and an extra room and they let us stay there for June and July because I had a conference I was going to I think.

25:44 Katie: And I also had a two-week short course that I was going to. So I was doing some traveling as well. And so essentially we moved into a room in our friend’s house with just like a bag and our car’s worth of stuff and a bed and then shipped the rest of our stuff. So we didn’t have most of our stuff for a couple of months. And that summer was really crazy. I traveled a lot and my husband was finishing up work and then we had to drive to El Paso to look for apartments. I think we drove the 12 hours, stayed there for two days, had to get like a hotel and everything for him to go to orientation because he was actually going to be starting as a full-time undergraduate. He left the chef industry and was going back to school.

26:29 Katie: So he had to go to orientation for two days at the new university. So we took that opportunity to drive out there and spend a couple of days looking for apartments. So I think in July we drove out for two days, found an apartment right before we left, had to pay a deposit and then drove all the way back and then spent another couple of weeks in east Texas before we officially left and did the drive back out. So it was a really hectic time and it took away a lot of our honeymooning period where we didn’t really get to just “be.” And part of that we recognize in hindsight, because hindsight’s 20/20 or whatever they say. But we really should have taken more time to just be together and just enjoy being newlyweds. But it was really stressful packing up and leaving and packing up the lab.

27:27 Katie: I didn’t have a lot of stuff in that lab because I hadn’t been in there that long and I hadn’t really started my research yet. So that was a pretty easy thing, at least on my end to do. But yeah, it was a really hectic and stressful time for us. And then coming and getting settled and then jumping right into both being full-time students was challenging for us as well. I’m glad I did it because the advisor that I finished with, Tarla Rai Peterson, she’s so wonderful and was such a supportive and positive role model and still is for me. That was why we decided to make that move. It was a long discussion that my husband and I had before we decided to make that move was: is this worth it? Do we want to upheave our lives and have to go through all of this? And I could tell that this was a really good fit for me and it ended up being a phenomenal fit for me. So, I’m glad that we did it. I wish we would’ve done it a little differently and it would have been great to have planned a little bit more for an unexpected, anything really to come up, during grad school.

Advice for Making a Long-Distance Move

28:44 Emily: Yeah. I want to probe on that point just a little bit more as we finish. So speaking to another graduate student or early career PhD who’s maybe considering a big move like this. I don’t know if it’s optional or not, like this for you, you decided it was worth it. I guess technically it was optional, but you could see the advantages of sticking with that advisor. But like in, in my case, when my lab moved, many of the students were making a decision, do I move with my current advisor or do I try to find another advisor at my current institution? So both kind of for that situation, but also just sort of anyone more in general who’s facing a long-distance move. With this hindsight that you have now, what is your best advice for that person?

29:27 Katie: Make the move the most convenient it can be for you. We kind of did that in a few different ways. Like we paid the extra to have the pod that would store everything so we didn’t have to rent the cheap truck and load a storage unit and then unload it and drive it ourselves. Make sure that it’s going to benefit you to do that. It’s a lot of work to do a long-distance move. It’s hard to upheave your life and move to a new place. So definitely weigh the pros and cons. For me, the pros were hugely outweighing the cons. I would say be proactive of finding community wherever you’re moving to when it’s a new place. That can be really tough to do. It was hard for us.

30:12 Katie: We made a couple of good friends in our new place, but we weren’t there for very long and we both traveled a lot. And so we didn’t really find as full of a community as we had had previously. So think about where are you moving to? Is it a place that is going to make you happy? Just the location in general. That is a huge consideration. Think about community and how you’re going to build community when you get there and look into connections from other friends you may have from your network that’ll be there. And know that it’s going to cost some money. It’s expensive to move anywhere but especially long distance. But I think making that time as least stressful on you as you can by taking time to spend with your loved ones who are in the area. Whether it’s a partner, spend time with them just alone to really try to keep up the normal parts of your life and don’t let your move totally consume you, in the same way that I always say don’t let your research totally consume you.

31:14 Katie: It’s honestly because grad school can be so unpredictable and you don’t really know what’s going to happen if you’re going to have to move again or if you’re going to have to change labs or what that might mean for you. I think to always think that just because you sign up for a program for however many years doesn’t mean that that’s where you’re going to stay or end up. So just kind of always keeping in mind that you have options, that there can be change and that that change might require some resources that you maybe don’t have or hadn’t planned for. So planning for those resources, like trying to save money or people you can lean on that can maybe help you if you’re in a tight spot. Really think about those things. I know we already have a lot to think about, especially as new grad students, but I think just really planning for the unexpected because you never really know what’s going to happen or where you’re going to end up. And so just acknowledging from the beginning that something might happen and you might have to make a change is okay and just trying to have some support you’ve built for yourself in place to help you as you move through that.

Budgeting for the Unexpected

32:20 Emily: Yeah, I totally agree. And specifically on the financial resource, to put a little bit more of a fine, fine point on it. I mean having an emergency fund. Like okay, yeah, moving is not necessarily an emergency, but the thing is when you’re low income, like a graduate student, a lot of things qualify for emergencies that don’t sound like it. But it’s money for a necessary expense and it is unexpected to a degree. So just when you set up your budgets of your life, the first time in graduate school and your postdoc, just have a line item in your budget. It’s going be a small savings rate towards the unexpected as you said. Because the thing is, I mean, I’m always saying like money gives you options. So you were fortunate that you were able to lean on your parents to give you a loan.

33:04 Emily: That money gave you the option of moving. I mean, what if you didn’t have money yourself or didn’t have access to a loan like that? I mean, what really could you have done? Maybe you would’ve passed up this really fantastic opportunity to stay with this advisor. Maybe you wouldn’t have even finished graduate school. So yeah, just having money or having access to money is necessary at many points to sort of get to your career goals and have the life that you need to have. So yeah, if possible at all, build it into your plan that something unexpected is going to happen and you need to give yourself the option to say, to say yes to certain opportunities.

Advocacy for Graduate Students

Emily: So thank you so much, Katie, for sharing this story and being on the podcast today. How can people find you? And I understand you’ve been doing some speaking recently as well. Tell us about that.

33:52 Katie: Yeah. So, you can find me mostly on Twitter. My handle’s @krwedemeyer which is my last name, which I’m sure will be posted somewhere. You can find me on Twitter. That’s where I share a lot of my story and interact with a lot of wonderful early career academics and also established folks who share their stories as well. I was recently an invited keynote speaker at Ohio university’s graduate and professional student appreciation week celebration. And that was a really awesome opportunity to get to share my story and some advice to a room full of graduate students. And it was really cool to see them taking some of the things that I shared, like talk to each other about your struggles and your vulnerabilities, and hearing them actually go, “Oh yeah, I feel that way too. I didn’t know we could say that,” was just a really neat environment to be in. And I also got to speak with the dean of my graduate school and the Graduate Council. So a group of professors at UTEP who are in charge of graduate education and kind of the graduate school environment at UTEP.

35:03 Katie: And I got to speak with them about what we need as students and was able to work with them and they’ve now put on the docket for the fall to create an Ombud position. So, a confidential impartial person who graduate students can go to if they’re struggling with a lab or a professor they’re working with. And so they’re going to actually work to kind of create that position and fulfill that position so that students have more resources. Um, so I’ve been really thankful to be able to speak to both students and also to graduate deans and professors who are in charge of graduate schools. I’ve written a few articles for The Chronicle of Higher Education as well on these same topics, advocating for a healthier and kinder, but yet still intellectually challenging graduate school environment.

35:57 Emily: That’s excellent. And do you have a website for people to check out?

36:00 Katie: I do. It’s katiewedemeyer.wordpress.com.

36:04 Emily: Excellent. Well, thank you again for joining me today.

36:07 Katie: Yeah, thanks so much for having me. I really appreciate it.

Outtro

36:09 Emily: Listeners, thank you so much for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to pfforphds.com/helpout. There are plenty of ways to do so without laying out any of your own money. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC.

How to Plan and Prepare for a Frugal Long-Distance Move

May 22, 2019 by Emily

“Don’t do your PhD at the same university you went to for your bachelor’s, and don’t postdoc at the same university you got your PhD from. You need to demonstrate success in multiple environments.” I heard this advice many times during my PhD training, and this is the path I followed: I did my undergrad in California, my postbac in Maryland, my PhD in North Carolina, a fellowship in DC, and now I live in Washington (for my husband’s first post-PhD Real Job). While there are certainly some PhDs who choose to stay in one certain city or region, the norm is to move a couple times or many times, even internationally. All this moving takes significant time and money to execute, especially once you start collecting possessions you actually want to retain. This article outlines how you can plan and prepare for a frugal long-distance move so that you minimize the cost to you in money, time, and stress.

frugal long-distance move

Further reading:

  • A Step-by-Step Guide to Moving Across the Country with a Baby + 2 Cats (8-Part Series)
  • Our 15 Frugal Moving Tips
  • The Cheapest Way to Move – DIY Moving Tips and More

How Much Will Your Move Cost?

The price of a move runs the gamut from quite inexpensive at a few hundred dollars to quite expensive at several thousand or even on the order of $10,000 once all costs are accounted for. The main factors are:

  • the distance,
  • how many people and how much stuff you’re moving,
  • how much labor you choose to outsource, and
  • the wind-down and start-up costs in each city.

On one end of the scale, if you’re a single person and your possessions amount to a suitcase and a box, moving will be fairly inexpensive, perhaps a few hundred dollars for the transportation and whatever your start-up costs are in your new city (e.g., up-front rent and deposits).

On the other end of the scale, if you’re moving your family and all your stuff from a full house, your transportation costs will be quite high, your wind-down and start-up costs may be high, and you may choose to outsource some of the labor associated with moving to keep it time-efficient.

Buying and selling homes also add layers of expenses that I will not cover in this article.

Components of a Long-Distance Move

Long-distance moves can be expensive both in their direct costs and lost income.

The expense components of your move include:

  • Transporting yourself/your family, including housing and feeding in transit
  • Transporting your possessions, including storage in the new city if necessary
  • Transporting your car(s)
  • Packing materials and labor
  • Wind-down expenses for your old residence
  • Start-up expenses for your new residence, including scouting trips if necessary
  • Unpacking labor
  • Childcare

It’s also vital to plan for the income side of the equation. How much time will you take off between the end of your current position and the start of your next position and what does that translate to in missing dollars from your typical income? How much will maintaining your health insurance cost during that period up until you are covered by your new position?

There is often a trade-off between time and money when it comes to moving. Fast transportation costs more than slow transportation for long-distance moves, but slower transportation may necessitate more time away from work. It costs more to outsource labor such as packing, but if it allows you to take fewer days away from work it may be worthwhile.

When and How to Plan a Frugal Long-Distance Move

Moving long-distance is a major project with many moving pieces, so you should start your planning as soon as you know where you’re headed (if not before!).

Where Will You and Your Stuff Go?

Determine where your new home will be or at least when you will decide where to live.

This requires researching the housing market local to your new position.

If you plan to rent, figure out approximately when you need to sign a lease relative to your start date. The answer may be “not until you arrive in the city” or “several months in advance.” Know that you will have to conduct your housing search in earnest in the month or weeks leading up to that time, which may involve an additional trip to the new city.

If you plan to buy prior to your arrival, it’s never too early to start familiarizing yourself with the housing market and choosing a realtor.

Of course, finding appropriate housing is enormously important to your life and finances, but determining when you will take possession of your new residence will likely impact the method(s) you choose for transporting yourself and your stuff. Namely, when you and your stuff arrive in your new city, where will you/it go? Do you need to arrange for storage for your stuff and lodging for yourself for a period of time before you take possession of your new home?

How Will You and Your Stuff Get There?

Tackle the transportation question. You, your possessions, and your car(s) might travel together or separately, so there are a lot of combinations of methods available. Consider the cost, time, and stress involved in each method.

Ways to transport yourself/your family:

  • Plane
  • Train
  • Bus
  • Car (yours or a rental)
  • Cab of a moving truck

Ways to move your possessions:

  • In a car (yours or a rental)
  • Moving truck/trailer driven by professionals
  • Moving truck or trailer driven by you
  • Pod
  • Shipping (mail, bus, plane)
  • Luggage with you while traveling

Ways to move your car(s):

  • Drive it yourself
  • Trail it behind a moving truck
  • Ship it
  • Hire a driver

Some of the simplest combinations of methods for long-distance moves are:

  • Fast and expensive, lots of stuff: Fly yourself with luggage and hire professionals to move your possessions and your car
  • Fast and inexpensive, little stuff: Drive yourself and your possessions in your car or a rental car
  • Fast and inexpensive, lots of stuff: Drive yourself and your possessions in a rented moving truck trailing your car
  • Slow an inexpensive, little stuff: Fly yourself with luggage and ship your possessions
  • Slow and inexpensive, lots of stuff: Drive your own car with possessions, ship remaining possessions in a pod or boxes

There are many transportation configurations possible, so settle on the one that best conforms with your desired amount of time off, how much money you have available for the move, and the degree you want to be involved with the transportation of your possessions. Be sure to get quotes from several providers of each service you are considering.

Settle on the Dates and Book Everything

Negotiate and finalize your end date for your current position and the start date for your new position. If you are using a professional moving service at any stage, book them as soon as you know the dates. Some services book out weeks and months in advance, and the summer is the busy season.

Prepare for the Move Logistically and Financially

Use the months and weeks leading up to your departure date to prepare for the move to make the final days as smooth as possible.

1) Designate a moving fund

In an ideal situation, you will pay for your move with cash, even if it will later be reimbursed by your employer. Set aside the total amount of money you expect to spend on the move, start-up expenses, etc. plus an extra 10% or more for unexpected expenses.

The more time you have leading up to the move, the more opportunity you have to redirect some of your ongoing savings rate or to earn additional money through side hustling.

If paying for your move with cash is not possible, carefully consider the least damaging type of debt available to you, e.g., a personal bank loan or a 0% interest credit card, and make a plan to pay it off as soon as possible with your new paycheck.

2) Start collecting moving materials for free

You’ll likely need at least some moving materials, e.g., boxes, packing material, tape. Boxes can be readily sources for free in your community. Ask nearby grocery and liquor stores when the best day is to pick up their excess boxes. You can also check craigslist, Freecycle, and Buy Nothing for free boxes. Collect boxes from these sources regularly over the weeks leading up to your move so that you can cover most or all of your needs. Don’t expect to find all the free boxes you need the day before you start packing!

If you end up buying new boxes, consider reselling them once you’ve finished with them to recoup some of your costs.

Packing material is more difficult to reuse so you can check some of the same sources for free material but you may need to buy some of your own.

3) Pare down your possessions

Generally speaking, the less stuff you have to move, the less expensive your move will be. Of course, if you sell vital possessions, there will be a cost to acquire them again in your new city. But think of your move as an opportunity to declutter and make sure you only retain what is most useful and/or important to you.

The possessions that you use frequently will have to be packed up or disposed of last, but in the time leading up to your move, you can go through your less frequently used possessions and either pack them or get rid of them. Selling your possessions is a great way to pad your moving fund, and the more time you give yourself in this process, the more likely you are to be able to sell your stuff. You can also give away your possessions that still have life in them through Buy Nothing or Freecycle or donate them to nonprofit organizations like Goodwill, Habitat for Humanity, the Salvation Army, etc. Your possessions without remaining value can be recycled or, as a last resort, put in the garbage.

Execute the Move

All your planning and preparation will pay off once you start your move! In the final days leading up to your departure, you will pack everything up and clean your old residence. It will take a lot of work so don’t try to cram it into too little time. If your movers show up and you aren’t fully packed, they will pack for you and charge you an arm and a leg!

A couple final tips:

  • Make sure to pack the things you will need during your move or upon getting into your new place separately and/or with clear labels. You don’t want to have to open all your boxes to find a saucepan or your work clothes!
  • Be prepared to spend above your normal levels on food as you pack and unpack your kitchen and as you devote your free time to packing instead of cooking.
  • Enlist your friends and family to help with packing and even childcare while you pack. (But return the favor when you have the opportunity!)

To hear my personal story of how my husband and I moved cross-country for his first post-PhD Real Job (not very frugally!), listen to my podcast episode dropping 5/27/2019!

How Far Will My New Stipend or Salary Go?

May 6, 2019 by Emily

Virtually every PhD will experience this at one point (if not multiple points): You’re looking at an offer letter, whether for grad school, a postdoc, or a Real Job and you’re not sure what to think about the stipend or salary. Because you’ll have to move to a new city to accept the position, you don’t have any context for understanding if it is reasonable or generous or stingy. Your personal finances as well as the local cost of living play heavily into the determination you have to make. Will you be able to survive (or thrive – or neither) on this salary? How far will your new stipend or salary go toward paying your living expenses and getting ahead financially?

new salary new city

This isn’t at all a trivial question, especially for:

  • Graduate students and postdocs who unfortunately can’t assume they will be paid enough to live comfortably.
  • PhDs who are responsible for the well-being of others, e.g., spouse and/or children.
  • International scholars who are prohibited by their visas from working to earn extra money.

You can attempt to answer this question with little or much research, depending on how invested you are in the outcome and what your initial inquiries turn up.

Further reading:

  • How to Start Grad School on the Right Financial Foot
  • How to Put Your New Postdoc Salary in Context
  • How Far Will My Stipend Go?
  • Moving to a High Cost-of-Living City on a Postdoc Salary

Find Answers on the Internet

You can find a first-pass, non-personalized answer to “How far will my new stipend or salary go?” at any time over the internet.

Stipend and Salary Databases for PhDs-in-Training

If your offer is for a graduate program, go to PhDStipends.com and search for stipend entries for your university and other universities in your city, if any. Not only will this data tell you what other graduate students are being paid so you can compare your stipend offer, some of the entries contain subjective comments on how possible it is to live on that stipend. The stipends will also be normalized to the local living wage for the county the university is in (the LW Ratio) – more on that in a moment.

Similarly, if your offer is for a postdoc, use postdocsalaries.com.

The Living Wage

For graduate students and possibly postdocs, a well-researched, insightful database is the Living Wage Calculator. For each county in the US, this resource shows you the minimum your necessities will cost (on average) based on your family size. It calculates the “living wage” needed to support one adult, two adults, adults with children, etc. and breaks it down into its constituent categories: food, child care, medical, housing, transportation, other expenses, and taxes.

As graduate students are likely to be paid close to a living wage (perhaps above or below by up to 50%), this database will give you a starting point on what you can expect to spend in your various necessary budget categories. Postdocs who are paid close to the living wage can also utilize this resource. Higher earners and homeowners will not find the calculations as relevant.

Cost of Living Calculators

If you know what you spend on your expenses in your current city, you can use a cost of living comparison calculator to translate that amount of money into an amount of money in your new city based on the differences in the cost of living.

Some of the prominent cost of living comparison calculators are provided by:

  • CNN
  • PayScale
  • NerdWallet

These cost of living comparisons also break down into sub-categories of spending such as housing, utilities, food, transportation, etc. However, be warned that the housing data come from a mix of renters and owners, so you may find you own housing costs differ dramatically from the expected increase or decrease.

Find Answers from Your Peers

I think the best way to get an accurate answer to “How far will my new stipend or salary go?” is to survey people currently living on it in your new city, i.e., your future peers and co-workers.

This is trickier for PhDs starting Real Jobs because of the (damaging but firm) culture in most workplaces of not disclosing your salary. However, graduate students and postdocs are usually paid on a set schedule, so you can assume that someone already in the position you have accepted (e.g., within your same department or funded by the same source) does have the same or a similar salary to yours.

Simply ask an open-ended question such as “Are you able to make ends meet on the stipend?” or “Do you live more or less comfortably on the salary?” and see what it elicits. Be sure to ask several different people because you one person’s perspective may not be representative.

Find Individualized Answers through Research

If you are willing to dig into some financial weeds, the ultimate way to obtain an individualized answer to “How far will my new stipend or salary go?” is to draft a budget.

After all, your finances are unique, and looking to average data or asking a few peers will not directly speak to your specific obligations, lifestyle, and preferences.

If you already track your spending and keep a budget, you can use that as a starting point, or you can download a fresh template. There are plenty of templates available online, and I’ve also created one specifically for this purpose, which is available below.

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Some line items on your budget will need major overhauls due to your career and geographic transition:

  • Tax: If you’re changing salary and/or state (or making changes to your household), your income tax bill will need to adjust. Some early-career PhDs might also start or stop paying FICA tax or be excused from paying state income tax depending on the exact type of paycheck they will receive in the new position. My favorite calculator for estimating income and FICA taxes is from Smart Asset.
  • Employee/student benefits: With a change in university and/or employer comes different benefits that you may or may not have to pay for out of pocket. If the amount of money you are responsible for paying is not clearly delineated in your offer letter, it is worth inquiring about as you draft your budget. Examples of these types of payments are premiums (and copays/coinsurance) for your health, vision, and dental insurance; life and/or disability insurance premiums; and tuition and/or fees.
  • Student loans: If you are entering graduate school and have decided to defer your student loans, you’ll need to update your minimum required student loan payments to $0. Conversely, if you are exiting deferment for a postdoc or Real Job, you’ll need to know how much your payments will be. Your loan servicer should be able to tell you your minimum payments. If you have federal loans and are considering an income-driven repayment program, you can use the Repayment Estimator from studentloans.gov to compare your payments under different plans.
  • Living expenses: Obviously, if you are changing cities, many of your living expenses will shift. But the ‘major overhaul’ here is if you need to add or subtract whole budget categories, such car ownership, daycare, and travel to visit family, a partner, and/or friends.

As for your living expenses, you can use one or more of the methods detailed in the first two sections of this article to start putting numbers into each budget category. Some living expenses may stay more or less constant even when you change cities (e.g., cell phone bill, cost of electronics) while others will be subject to the cost of living (e.g., housing, utilities, food).

The most important budget categories to get right from a distance are your large, fixed expenses, e.g., housing, transportation (if you own a car), and childcare. The Living Wage calculator and the cost of living comparisons can help here, but it’s going to be even better for you to do your own research and determine your individualized expenses.

The two best ways to research your housing and childcare costs from a distance (and jump-start your housing search) are to ask your peers what they pay and monitor prices online for at least several weeks before you commit to your expense. (Knowing when to sign a lease/pay a deposit is part of familiarizing yourself with a market!)

Drafting a budget will help you decide how much you can afford to spend on these large fixed expenses, so it will be most beneficial to start drafting this budget before you commit to any expenses. Your ability to reach financial goals in your first year in your new position will likely hinge on getting these large, fixed expenses set at an appropriate level, so it’s worth quite a bit of time and research. Variable expenses can be changed more or less on a dime and small expenses aren’t so impactful, so it (literally) pays to focus your effort on the large fixed expenses.

If you would like some additional help with drafting your new budget at a distance, please purchase my previously recorded webinar ($24.99) below. The 30-minute “Draft Your Budget from a Distance” webinar also includes the budget template spreadsheet described above.

The objective of the webinar is to help you draft a complete budget for your new position (in a new city) so that you can set your large, fixed expenses at a reasonable level for your income and determine in advance what financial goals you might set for the next phase in your career.

Sign Up for “Draft Your Budget at a Distance”

The final answer to “How far will my new stipend or salary go?” will only come once you’re living in your new city. But you can start getting approximations on that answer immediately from online sources and your future peers. These initial answers may prompt you to create a more detailed draft budget before you move if it looks like you will experience a financial challenge or reaching financial goals is important to you. This budget will help you determine how much you can afford to spend on the expenses that are generally fixed prior to or upon your move. It will also help you decide how much money you can put toward your financial goals during your next position.

How to Start Grad School on the Right Financial Foot

April 15, 2019 by Emily

Starting a PhD program is, professionally and personally, one of the most exciting times of life. You’re meeting people who will be your peers and advisors in the coming years whose research interest align with yours, getting acclimated to a new university and city, and of course starting a fresh school year. However, many first-year PhD students, as they’re going to happy hours to get to know their cohorts and buying their textbooks, are thinking to themselves: “Am I going to make it until my first paycheck arrives?” Financially speaking, starting a PhD program is one of the most challenging times of life as well.

The financial challenges of the transition into a PhD program are myriad and the resources are likely to be few. Moving to a new place and starting the school year are expensive endeavors, and sub-optimal decisions around housing and transportation may reverberate in your finances for years to come.

I present this article not to discourage you in what should be an invigorating and hopeful experience, but so that you have time to prepare for its unique financial demands. Starting grad school on the right financial foot means that you are poised for financial success throughout your PhD instead of reeling from the initial financial blow and playing catch-up for months and years to come. Here is what you can do in the months leading up to your transition into grad school to start in a place of financial strength.

grad school right financial foot

Draft a Budget ASAP

It’s vital to put your stipend offer in context as early as possible. The number may strike you as generous-for-a-stipend or meager, but until you know something about the local cost of living it is rather meaningless.

The best way to get an idea of how far your stipend will go is to start drafting a budget and use approximate numbers until you lock in various aspects of your living expenses. Two starting points are the Living Wage Calculator and the estimated room and board from your university’s financial aid office. Neither one of these numbers will prove to be totally accurate (I hope they are both overestimates of what you will pay) but it’s a start for the triangulation.

Your draft budget should include:

  • The income tax you expect to pay,
  • Your necessary expenses, i.e., housing, transportation, utilities, groceries, household consumables, clothing, etc.
  • Your discretionary expenses, i.e., restaurant and bar spending, travel, entertainment, etc.), and
  • Your education expenses, i.e., tuition and fees required to be paid out of pocket, course supplies, etc.

Further reading: How to Read Your PhD Program Offer Letter

To a degree, you can use your current expenses (if you track them) to estimate what your future expenses will be, possibly with an adjustment for the shift in the cost of living.

It’s quite difficult to drill down into the specifics of what you will spend in a job/life that you’re not yet in, especially if you are not currently tracking your expenses. Therefore, you can use placeholder percentages to help you estimate your expenses and guide your decisions. For example, the Balanced Money Formula states that you should not spend more than 50% of your net (after tax) income on all of your necessities together (including minimum debt payments). This is a challenging benchmark for grad students to adhere to, especially in high cost of living areas, but it illustrates how important it is to keep your necessary expenses in check to the greatest degree possible.

Further reading:

  • How to Create Your First Budget as a Grad Student
  • The Power of Percentage-Based Budgeting for a Career-Building PhD
  • How Fellows Should Prepare for Tax Time at the Start of the Academic Year

Thoroughly Research Your Housing Options

Housing is by far the largest expense in virtually every grad student’s budget, and first-year PhD students are expected to make this enormous financial decision with little to no insight into the local area. The result is that graduate students often overextend themselves in their housing costs, which are financially, logistically, and emotionally difficult to change.

Starting grad school on the right financial foot means locking in your fixed housing and transportation costs at a reasonable level for your stipend. The general rule of thumb is to spend no more than 25-30% of your net (after tax) income on housing. This guideline proves impossible for many if not most PhD students, who may be paid too little, live in an expensive area, or both.

Further reading: How Much of Your Stipend Should You Spend on Rent?

Particularly in those challenging housing markets, the best course of action to find the most suitable housing (even if you spend more than the guidelines) is to start your search early and thoroughly research your options. I recommend starting your research with a housing survey conducted by your university or graduate student association (if one exists) and senior grad students who are paid a similar stipend to what you will be (e.g., 3rd years and up). From these sources you can ascertain the price range you can expect for housing and potentially tips on the best locations, housing types, and even specific complexes or landlords to pursue.

Further reading: Your Most Important Budget Line Item in Graduate School and Why You Need to Re-Evaluate It

A note on on-campus or university-affiliated housing: On-campus housing is attractive for students moving from a distance because it short-circuits this whole decision-making process. But this type of housing was not all created equal. At some universities, the university housing is subsidized, which means there is likely fierce competition to live in it. At other universities, the university housing is more expensive than comparable non-affiliated housing. You won’t know whether university housing is a good deal and worth pursuing until you talk with current grad students.

Further reading and listening:

  • Should I Buy a Home During Grad School?
  • Purchasing a Home as a Graduate Student with Fellowship Income

Go Frugal on Transportation

Alongside figuring out your housing options and eventually committing to something, you need to decide how you will get around town. If you don’t own a car, you might need to buy one. If you already own a car, you have to decide whether to bring it with you or sell it.

Owning a car, even without a car loan, is a very expensive undertaking. Beyond the cost of the car itself, you typically have to pay for insurance, parking, gas, registration fees, inspection fees, taxes, maintenance, and repairs.

If it is feasible to live car-free in your new city and you don’t currently own a car, I recommend trying to live car-free for your first year. You can always reassess and buy a car at a later time if you decide you want one.

If you decide to buy a car or keep the car you already own, make sure you globally assess your expected costs (not just the best-case scenario!) and write them into your budget. An expensive or newer car costs you more not just in the purchase price but in your insurance premiums as well.

Your transportation and housing expenses are necessary to fix in concert to a degree. If you decide to live car-free, you might choose to pay more to live closer to campus or on a convenient bus route. If you decide to buy or keep a car, you can offset some of those costs by finding less expensive and less convenient housing.

Create a Transition Budget

Most graduate students experience what I call the long and expensive first month of grad school, though I have noticed some universities are working to change this pattern. You must prepare for this long and expensive first month prior to starting your transition to grad school.

The expense of the first month comes from your move. First, the moving expenses themselves: your and your possessions’ transportation to your new city plus the cost of feeding yourself and so forth during that time. Second, the start-up expenses for your new place: first (and last) month’s rent and security deposit, deposits for your utilities, furniture, and stocking your pantry. Third, the expenses of a new school year/term: any money that you must pay to your university in a lump sum and the expenses associated with your coursework.

The long first month refers to the length of time from when you move to your new city until you receive your first paycheck. Personally, I showed up for orientation in mid-August and didn’t receive my first paycheck until the last day of September. Of course, that time includes all your regular living expenses, on the back of your moving expenses.

You want to be sure going into the long first month that you can come out the other side without racking up debt. Saving cash in advance to pay for the transition is the best solution, and a transition budget will help you estimate the total cost.

Build Your Financial Foundation Now

Because you have several months between now and your matriculation into your PhD program, you have the opportunity to establish your financial foundation prior to the challenges of this transition. By financial foundation I am referring to saving cash for the transition, saving an emergency fund, paying off debt, and/or investing – whatever is most appropriate for you right now.

If you currently have a full-time job, you have the most opportunity to shore up this foundation, but even as a student or part-time/gig economy worker, it is still possible to a degree. It will be well worth a few months of sacrifice, either in terms of earning more through a side hustle or spending less through frugality, to start grad school on the right financial foot instead of a few steps behind.

Further reading: Financial Reasons to Work Before Starting Your PhD

After you save the money you need for your transition into grad school, consider whether you can pay off any of your current consumer debt completely (e.g., credit cards, car loan, medical debt, IRS debt). While you can defer student loans while you are in grad school, these other kinds of debts will still require minimum payments even while you receive your stipend, so it’s worthwhile to attempt to knock them out completely.

Further reading:

  • Bring Savings to Grad School
  • Eliminate Debt Before You Start Graduate School

If you spend the time and effort now on planning out your expenses and saving money, once you matriculate you will be able to focus solely on the stimulating new people and experiences you encounter instead of experiencing financial stress. Starting grad school on the right financial foot by locking in a good deal on housing and not allowing yourself to fall into credit card debt also sets you up for financial success throughout your PhD. An ounce of prevention is worth a pound of cure.

If you would like to me to work with you on navigating your financial transition to graduate school, please check out my financial coaching program exclusively for rising grad students.

How to Financially Manage Your NSF Graduate Research Fellowship

April 5, 2019 by Emily

Congratulations on being awarded the National Science Foundation (NSF) Graduate Research Fellowship (GRF) (or a similar remunerative, competitive, national fellowship)! Whether you’re a prospective grad student or a current first- or second-year PhD student, this fellowship is a great boon to your research, your CV, and almost certainly your finances. However, you may not yet realize that your finances will become a bit tricky once you start receiving your fellowship. With the help of this article, you can avoid the pitfalls associated with fellowship income and fully capitalize on the benefits.

NSF GRFP stipend

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

The NSF GRFP’s Negotiation Power

I’m sure you didn’t miss this headline info about the NSF GRFP: The fellowship pays you a stipend of $34,000 plus $12,000 of educational expenses to your institution for three years. Awesome! At the majority of universities in the US, that stipend amount is well above what you would be paid if you didn’t receive the fellowship, so you’ve effectively achieved a raise for the next three years.

But the good news doesn’t stop there: Your university/department might confer even more benefits upon you for winning independent funding. If the administration isn’t forthcoming about these additional benefits, it is appropriate to inquire about them.

Independence

Your new outside funding may give you a degree of independence in your research that you wouldn’t otherwise enjoy. This is highly dependent on your field, department, and advisor, but the fellowship may enable you to take your doctoral research in a direction that you advisor couldn’t or wouldn’t have supported without it. Perhaps you could take a risk on a side project, establish a new collaboration, or take extra time to rotate through a lab to gain new skills.

Additional Funding

At many universities, there is a standard offer of additional funding for winning a multi-year, lucrative fellowship like the NSF. This offer could come in one or more forms, such as:

  • A guarantee of funding for additional years
  • A one-time bonus
  • A stipend supplement above $34,000 while you have the fellowship
  • A stipend supplement after the fellowship concludes (e.g., up to $34,000/year for your remaining time in graduate school)

Not all departments offer additional funding to NSF GRFP recipients, but it’s worth inquiring about with your advisor, the administration, and current NSF fellows at your university. Stipend supplements during the time that you receive the NSF GRF are more common in high cost-of-living cities where the departmental base stipend is near $34,000/year to begin with. For example, searching “NSF” in the PhD Stipends database reveals stipend supplements awarded during the NSF GRFP years to students at the University of California at Berkeley, Northwestern University, and Columbia University, while a student at the University of California at San Diego writes that he/she received no funding incentive for winning the NSF GRF.

For Prospective Graduate Students

You’ll never have more negotiation power than you do as a prospective graduate student with an outside fellowship in hand. Unfortunately, you don’t have a lot of time to negotiate as the NSF GRFP awards list comes out approximately two weeks before grad school decision day, April 15.

Further reading: Vote with Your Feet, Prospective Graduate Students

As quickly as possible, you need to clarify if the offers from the universities you are still considering are going to be sweetened at all now that you have your fellowship. If the financial package from your preferred university isn’t up to par with your other offers (after considering cost of living differences), you can tactfully ask if a bonus, stipend supplement, or guarantee of future funding is possible.

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Budgeting with Your Fellowship Income

There are two vital questions you need to ask of your department before you can begin creating a budget for your NSF GRF stipend.

  1. After the fellowship ends, what will my stipend be?
  2. How frequently is my fellowship disbursed?

Accelerate Progress on Financial Goals

In my ideal personal finance-oriented world, an NSF fellow would live on (less than) the base stipend from his department and put all the excess income received toward growing his wealth. There are a few advantages to that approach:

  • Your lifestyle roughly matches that of your peers in your department.
  • You can relatively quickly achieve financial goals such as saving or debt repayment.
  • If your income is set to drop once the fellowship ends, you avoid acclimation to the higher, temporary income and don’t have to make major lifestyle sacrifices once the three years are up.

Some financial goals you could work on during the time you receive the additional fellowship funds are:

  • Eliminating any troublesome debt (e.g., credit card balances, medical debt, car loan)
  • Saving up cash for short-term needs and expenses (e.g., emergency fund, targeted savings accounts)
  • Investing for long- and mid-term goals (e.g., retirement, house down payment)
  • Pay down student loans

Further reading:

  • Options for Paying Down Debt during Grad School
  • Why Every Grad Student Should Have a $1,000 Emergency Fund
  • Targeted Savings Accounts for Irregular Expenses
  • Whether You Save during Grad School Can Have a $1,000,000 Effect on Your Retirement
  • Why the Roth IRA Is the Ideal Long-Term Savings Vehicle for a Grad Student
  • Why Pay Down Your Student Loans in Grad School

This strategy is easiest to implement for graduate students who start the NSF GRF after one or more years in grad school. Just put all of your ‘raise’ toward financial goals and don’t change anything about your lifestyle! Prospective grad students will have to be more conscious about setting up their grad student lifestyle on a lower income than they will start out with.

Preparing for the Post-Fellowship Income Drop

If you choose to upgrade your lifestyle with your fellowship stipend, be careful to maintain any long-term financial contracts at a level that will be sustainable for you after your income drops (if it will). The two key areas to watch out for are housing and transportation expenses. While it is possible to reduce your spending in either of these areas during grad school, it is a painful process, so it is preferable to lock in your spending in those areas at a level that you can maintain long-term.

Budgeting with an Irregular Income

Sometimes, fellowships are disbursed to the recipient at a frequency other than monthly, e.g., once per term. This schedule can cause issues for budgeting, which is usually framed as turning over each month.

One of the advantages of an infrequent disbursement schedule is that you are paid at the beginning of the period rather than the end, so the money you need throughout the period is already available to you. However, you may not be able/inclined to use typical budgeting software functions and prefer to set up your own budgeting system.

One of the most useful budgeting concepts for people with irregular incomes is that of fixed vs. variable expenses. At the beginning of your budgeting period, project the fixed expenses that will be paid during the period, such as your rent/mortgage, debt payments, certain utilities, subscriptions, etc. Then allocate your remaining income to your variable expenses at a frequency that is convenient for you. For example, you can estimate the variable utility bills that you may pay monthly during the period, plan to spend no more than a certain amount of money each week on groceries, and give yourself a lump sum of money for entertainment for the entire period to be spent as opportunities arise. In this way, allocate your fellowship disbursement so that you are sure that your expenses won’t exceed your income (leaving some buffer for unexpected expenses).

Income Tax Implications of the NSF GRFP

Your NSF GRFP stipend is subject to federal income tax. (It is usually subject to state and local income tax as well, but there are some exceptions.)

Further reading:

  • Grad Student Tax Lie #1: You Don’t Have to Pay Income Tax
  • Grad Student Tax Lie #4: You Don’t Owe Any Taxes Because You Didn’t Receive Any Official Tax Forms
  • Grad Student Tax Lie #5: If Nothing Was Withheld, You Don’t Owe Any Tax

However, the taxation of fellowship stipends is handled completely differently by universities than assistantship pay.

Tax Reporting

While assistantship pay is reported on a W-2, fellowship stipends are not required to be reported in any particular way.

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A large fraction of universities, possibly the majority, do not report outside fellowship stipends on any official tax form. At most, the fellow might receive a courtesy letter, which is an informal letter stating the amount of the fellowship stipend received during the calendar year.

Some universities report fellowship stipends on Form 1098-T in Box 5 (along with other scholarship and grant income).

A small minority of universities report fellowship stipends on Form 1099-MISC in Box 3.

Whatever reporting mechanism used or not used, the important information to bring to your tax return preparation process is the amount of fellowship stipend paid to you during the calendar year. From that point, the fellowship stipend income is treated the same as any other fellowship/scholarship/grant income, and (possibly after some adjustments) it will ultimately be taxed as ordinary income.

Further reading:

  • Weird Tax Situations for Fellowship Recipients
  • How to Prepare Your Grad Student Tax Return

Quarterly Estimated Tax

While you are required to pay federal and usually state income tax on your fellowship stipend, the vast majority of universities do not offer automatic income tax withholding on your fellowship stipend as they normally do for employee pay. (You should inquire whether automatic withholding is an option and use it if so, but the remainder of this section assumes it is not offered.)

This means that you will receive 100% of your gross fellowship stipend instead of your stipend net of income tax as you would assistantship pay. However, the IRS still expects to receive income tax payments throughout the year, so you will have to look into filing quarterly estimated tax.

Further reading: The Complete Guide to Quarterly Estimated Tax for Fellowship Recipients

As a default position, you should assume you are responsible for paying quarterly estimated tax. It’s possible that you won’t be required to in the year you switch on or off of the fellowship or if you’re married to someone with a high income and high withholding, but even in those cases it’s prudent to check.

The way you calculate your quarterly estimated tax due (and figure out if it’s required of you) is by filling out Form 1040-ES. That form will give you the amount of the payment you are supposed to make four times per year and an estimate of your total tax due for the year. You can make the payment online at IRS.gov/payments or through a host of other mechanisms.

Whether or not you are required to file quarterly estimated tax, it’s a great idea to set up a personal system that simulates automatic tax withholding. Open a separate savings account labeled “Income Tax” and transfer in the fraction of each paycheck you receive that you ultimately expect to pay in tax each time you are paid. Then, draw from that savings account when you make your quarterly or yearly tax payments.

Investing Implications of the NSF GRFP

The upside of receiving the NSF GRF is that your income is most likely higher than it would have been, which means you have an increased ability to achieve financial goals during graduate school such as debt repayment, saving, and/or investing.

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Through 2019, fellowship income, like that of the GRFP, was not eligible to be contributed to an Individual Retirement Arrangement (IRA). However, starting with tax year 2020, fellowship income is eligible to be contributed to an IRA, eliminating the only major downside of receiving fellowship income.

Further listening: Fellowship Income Is Now Eligible to Be Contributed to an IRA!

An IRA is a tax-advantaged retirement savings vehicle. It’s a great idea to use an IRA (or other tax-advantaged retirement vehicle such as a 401(k) or 403(b)) for your retirement savings as it helps you maximize your long-term rate of return by protecting your investments from taxes. As a graduate student, you almost certainly don’t have access to the university 403(b), so the IRA is basically the only game in town for tax-advantaged retirement savings.

Further reading:

  • Everything You Need to Know About Roth IRAs in Graduate School
  • Why the Roth IRA Is the Ideal Long-Term Savings Vehicle for a Grad Student
  • Should a Graduate Student Save for Retirement in a Roth IRA?

Making Ends Meet on a Graduate Student Stipend in Los Angeles

March 25, 2019 by Jewel Lipps

In this episode, Emily interviews Adriana Sperlea, a PhD student in computational biology at the University of California at Los Angeles (UCLA). Living in Los Angeles is financially challenging to say the least, and Adriana has found ways to improve her cash flow over time, such as by doing a summer internship, moving into subsidized graduate housing, living car-free, and budgeting intensively. She has even recently started contributing to a Roth IRA! Adriana and Emily additionally discuss how Adriana discovered that she owed a large tax bill on her fellowship income and how she paid those back taxes and started paying quarterly estimated tax.

Links mentioned in episode

  • Tax Center for PhDs-in-Training
  • Volunteer as a Guest for the Podcast
  • Why You Should Invest During Grad School
  • Quarterly Estimated Tax Workshop for Fellowship Recipients

grad student los angeles

Teaser

Adriana (00:00): I tell everyone, I, I’ve told people in my lab being like, no, you have to do this. It’s simple and it’s easy, and it can help you a lot.

Introduction

Emily (00:15): Welcome to the Personal Finance for PhD’s podcast, A Higher Education in Personal Finance. I’m your host, Emily Roberts. This is season two, episode six, and today my guest is Adriana Sperlea, a PhD student at UCLA. Adriana shares her detailed budgeting process, how she keeps her expenses in Los Angeles in check, and what a difference doing an internship made in her financial life. We also discussed the mistake she made with her taxes while receiving a fellowship and how she got that aspect of her financial life back on track. Without further ado, here’s my interview with Adriana Sperlea. I’m welcoming to the podcast episode today, Adriana, who is joining us from, uh, Los Angeles. She’s a graduate student at UCLA, and in today’s episode, we’re covering budgeting, you know, the big challenge of living in a high cost of living area on a grad student stipend. Um, she’s doing really well with this, and she’ll tell us all about her process and what financial goals she’s able to accomplish, and then also about something that happened in her second year of graduate school, which is a big, uh, financial mishap, financial challenge that she had to overcome. And we’re talking about how to, one, not let that happen to you, and two, if something big like that does happen, how to work through it and how to recover from it. So that’s a subject for, um, today’s episode. So Adriana, thank you so much for joining me today.

Please Introduce Yourself

Adriana (01:40): Yeah, hi. It’s great to be here.

Emily (01:43): Uh, so first question right off the bat is, you know, just take a moment to introduce yourself to us, where you are, what you’re studying, and so forth.

Adriana (01:50): Yeah, so my name’s Adriana. I, um, go to UCLA for graduate school. I’m in the bioinformatics program there, uh, which is actually an interdepartmental program, so we don’t have our own department, uh, which sometimes causes all, like, funding gets complicated also. Um, yeah, and I live in Los Angeles. Um, I’m, and I’m actually an international student, so I’m originally from Romania, uh, which also adds a wrinkle to the funding situation.

Emily (02:15): Yeah. Okay, great. Um, and so what, what are you making there? What is your stipend?

Adriana (02:20): Yeah, so, um, we’re, I’m pretty fortunate. We’re in a fully funded program. The stipend is 30, around $32,500 a year, I think it is now. It goes up a little bit every year with inflation and stuff. Um, and so that’s before tax, like after tax, it comes out to about 28,000 a year, I think. Um, which what I know is that every year I get, every month I get $2,400 into my bank account.

Emily (02:45): Okay. And how long have you been there?

Adriana (02:47): So this is my fifth year, that I’ve been here for.

How do you live within your means in Los Angeles?

Emily (02:51): Okay, great. You have long experience then, um in Los Angeles. So, um, right off the bat, you know, when, when we were prepping for this episode, I know about you that you live, uh, within your stipend, you live within your means, you’re not having, you know, loans and so forth coming out for you. And so, um, why did you do that during graduate school? Because I think some people might look at living in LA and living on, you know, 30 some thousand dollars a year and say like, oh gosh, this is gonna be really, really tough. I’m gonna need some extra support from here or there. Um, so why, why did you per not not pursue any of those routes?

Adriana (03:31): So, um, it basically wasn’t really an option for me to pursue those routes. Um, a I don’t have any extra support from my family, um, just because they can’t really afford it, and they’re also far away from me. They’re still back in Romania. Um, and because I’m an international student, I can’t actually take out loans. Um, I, there’s some small private loans that I could probably qualify for now after a few years, but at least in the beginning of my graduate school for sure no. Um, so that was kind of, yeah. Um, the only way I could supplement my income and I did, um, it was actually through, um, internships. So I did do an internship, um, in between my, uh, after my third year of graduate school. But yeah, that was the only extra income, otherwise it would be extremely illegal for me to work, um, federally illegal, so I would get potentially deported. So yeah.

Emily (04:18): Yeah, I noticed that, um, you know, I, I talk a lot about side incomes and stuff and, and to some extent I know that debt is an option, uh, for domestic graduate students. But the thing is that like, if you’re in a tight situation, like some places, some programs, they just plain are not paying enough, and it’s really the international students that are in the hardest squeeze because they have no, as you said, legal, other options out of this. Like, there’s no other way to work, there’s no way to get access to these loans, like that is it, that’s the end of the story. And so I really think that in, in some cases, domestic students can learn a lot from international students on how to make things work because their back is really up against the wall, um, more so than domestic students. So I wanna hear a little, a tiny bit more about this internship, um, so in that year that you, the summer that you did the internship, were you, like, did your grad student stipend stop and you were instead paid through the internship, or did you get like both or how did it work?

Adriana (05:17): Yeah, so I actually got both, but that’s a corner case, like that’s not how it usually works. Um, other people in my program have done internships, and I think depending on when your, where your funding is coming from, most of the time your other funding stops and you just get your internship. Um, in my case, I was on this training grant that, um, encourages, I think it’s actually a requirement of the training grant to do an internship, um, because it’s called Biomedical Big Data Training Grant. So they want to do an internship where you actually explore using big data in the biomedical field, yada, yada. So it’s actually part of the training grant, so they keep paying you. Um, so I got my training grant. I didn’t get, the training grant was actually supplemented by a little bit of a graduate student researcher funding. Um, I didn’t get that part, but I was still getting that and my income from the internship. And I was living in San Diego, which was slightly cheaper than Los Angeles, so that helped too. <laugh>.

Emily (06:08): Yeah. Cool. Okay. So did you actually like sublet your place in Los Angeles for the summer?

Adriana (06:13): Um, so I was living with my boyfriend at the time. Um, so he kept paying. I, I kept paying. Did I pay? It was a little bit ago. I think we had, yeah, I stopped paying half of my rent, I think my half of the rent here. Um, and then, yeah, I subleted a place in San Diego.

Emily (06:29): Yeah. So it’s good that you had the double income because you had the double rent <laugh> for a little while. Yes. Yeah, that can be really tough when you do have to move for just a short, a short period of time. Yeah. Um, okay.

What is your approach to budgeting in Los Angeles?

Emily (06:41): But you had, through that period, I would imagine already this effective like, budgeting system in place. So for, for making it work, for making it on your stipend with no other kind of outside income sources, um, yeah. How, how do you budget? Tell us about your system.

Adriana (06:58): Yeah, so I mean, I think even before budgeting, there’s like kind of the more basic thing where like you kind of have to figure out housing that’s like the first order of priority in LA and it’s hard, but there are ways, I mean, currently for example, I’m in a situation where I’m in graduate student housing that’s subsidized. So it’s actually really affordable. Um, but not, there’s not enough for everyone. So it’s not a, not all graduate students get it. So making it work with roommates, like finding the roommates, like hustling on Craigslist, finding the right deals, like you have to shop around a lot. Um, but there are still ways to find something that can kind of fit in that, like desirable percentage of your income. Maybe. Like, I, I don’t think 30% is feasible in Los Angeles <laugh>. Um, it’ll still probably go up to like 40%, but still, um, yeah, making it work.

Emily (07:47): Well, I would like to hear a little bit more about that one, about the subsidized housing, and then two, just about your, when you’re hustling, when you’re hustling on Craigslist, what are you looking for? How do you find those deals? Because I mean, Los Angeles is a huge city. We’ve got a lot of universities there. I’m sure there are some local people who wanna hear about this because it’s such a problem. And then it will also translate well, I think, to other high cost of living cities. So tell me a little bit more about the, the subsidized housing through UCLA. Like how do you get into it?

Adriana (08:14): So that’s a, that the subsidized housing is a lottery based system. Um, so you just apply and then when someone moves out, they let someone off the wait list in, and I think there’s some random component to it. I don’t really, know, there’s not a, I don’t know exactly how that process works, but you get an email if you got it. So, and you celebrate. 

Emily (08:31): Are you allowed to stay as long as you would like? Or is there a cap on it?

Adriana (08:35): So in the one that I’m currently in, yes. Um, well, no, not, I think it’s nine, seven years, seven or eight years, basically, as long as hopefully you don’t need more than that, so, yeah. Um, but it is month to month, so people sometimes will move out, like not, not at the beginning of a year. Um, and then anyone can take their spot. So, yeah. Um, the, it, it’s actually a great system, but it’s just not enough of it. And I’ve, I’ve talked a lot at UCLA trying to push, um, more housing, more affordable housing for students. It’s needed like Los Angeles, it’s impossible. So

Emily (09:06): How much of a discount are you getting? Like how much is the subsidy?

Adriana (09:10): Uh, well it’s, it’s not like percentage based, but it’s, it’s subsidizing that it is cheaper. So, uh, a one bedroom, we have like a junior one bedroom. It’s me and my fiance now living in it. Um, and we pay, uh, 30, around 1300 for the whole place. So split, I pay like $650 for, for rent, which is amazing for LA.

Emily (09:31): Yeah, 650 sounds like pretty good for a lot of cities around the country. Yeah. So a junior, one bedroom. Okay. Yeah. So it helps certainly if you have someone that you’re willing to share a bedroom with.

Adriana (09:43): Yes, a hundred percent. So that may be, if you have a significant other, then that’s a lot easier. I’ll be honest, I’ve talked to people in grad school that talk about like the advantages of having a partner in terms of rent <laugh>, um, but then also you can share a bedroom. I mean, it’s not ideal as a graduate student. You don’t want to be sharing a bedroom, but if you need to make it work because there’s no other money share a bedroom like that, that can be the case. Yeah.

Emily (10:08): Yeah. I just actually ran into someone, um, not ran into, someone attended a seminar of mine a couple days ago and she said, yep, I live in a, I share a bedroom with my roommate. That is still a thing that is happening, like to make her her budget work. So it’s not, it’s not totally unheard of, not totally out of the question. Okay. I totally agree with you. You have to get that housing component kind of set, and that’s something around which a, a lot of the rest of your budget will, will be determined. Um, yeah. So is there anything else like that? Is housing the one expense that you need to fix first? Or like, what about transportation? Did you figure that out before really working on your budget? 

Adriana (10:43): So I mean, housing and transportation are probably the two big ones. Um, I don’t own a car. Um, so for me it’s like you can pay a little more for rent because I don’t own the cars. I don’t have car costs like insurance and all that, or parking. And so I can live a little closer and not have the car. You can have the car that’s more cost, but you might be able to get cheaper rent. So that’s kind of a balance, I feel like. Um, I mean, if also if you’re somewhere that has public transit, then you, your problems are way easier. But in LA it’s kind of the trade off between car and, um, housing. Yeah.

Emily (11:13): Yeah. Okay. So you live car free. That’s awesome. I love that.

Adriana (11:16): Well, so my fiance does have a car now, so

Emily (11:18): Oh, okay. So you’re sort of, you sort of share a car.

Adriana (11:20): Yes, now I do. Yeah. But I didn’t have one for a very long time,

Emily (11:24): So I, I forgot that I wanted to go back to this, um, this idea of how can you find like, affordable housing? Do you have any tips about that?

Adriana (11:33): Um, yeah, I mean, honestly, a lot of it’s just like spending time and looking around and eventually you’ll find kind of these offers that are not as common. Um, there are in LA there the, there’s this one type of building in LA in particular, I forget what they’re called, but basically they’re like older houses that are honestly like, not earthquake proof, <laugh>, um, they’re the <inaudible> build. They have like a carport underneath. Um, and those, because they’re not retrofitted and they tend to have like slightly older furniture and like the AC is like not super up to date and stuff like that, they tend to go for a little less. And occasionally in some areas there is rent control. So if you can get into a place that has the rent control, then your rent at least won’t go up. Um, so there’s various hacks like that, and it’s all about just like having patience and kind of starting early on the housing search. Um, but I do know that it’s getting harder every year. So yeah, there’s, there’s only so much you can do with that, to be perfectly honest. Like, I don’t wanna like claim that it’s, I have some amazing magic for finding housing because it’s just tough.

Emily (12:37): Yeah. So you’re just saying be patient, um, sort of target, you know, types of buildings that you know, are gonna be less expensive. Yeah, I’m a little concerned about this not being earthquake proof thing, <laugh>. Um,

Adriana (12:50): It’s the truth. That’s how it, I mean, yeah, I don’t know if that like, it’s a good thing to say that you should live somewhere that’s not retrofitted, but I do know those apartments are not well retrofitted. It’s a common thing. And that’s why I think they’re going, a lot of them are being like, replaced by newer developments. Um, but yeah, there’s, I mean, maybe don’t live somewhere that you don’t feel safe, of course. But, um, there, you know, you can definitely sacrifice on things like granite countertops, <laugh>, or the open space. You know, like you’re not gonna get, um, something beautiful, but you can get something livable and clean for, um, more affordable.

What is the system that you use for budgeting?

Emily (13:27): Yeah. Okay. So, okay, so let’s return to the, the budgeting, um. System that you used. I, I’d love to hear more about just how you make it work overall. Once, once you’ve gotten this rent and then like your decision about transportation in place.

Adriana (13:40): Yeah. So I’ve had, for a very long time I had this like spreadsheet system where I would put in my income that comes in every month and I would separate it. I would put in my fixed costs, like the rent that has to be paid and my bills, like my phone bill, um, whatever other bills you have that are just monthly, like if you have a gym membership, if you have other bills, et cetera. Um, if you have to pay for insurance, I guess you have a car, you would have that there too. Um, and then I split whatever is, I did sub subtract that from my monthly income and then I divided into four. Um, ’cause there’s like four weeks in a month. And then whenever I buy something, I entered it, I entered in my spreadsheet and I have a cell that subtracts that from my weekly budget.

Adriana (14:22): Um, and so I always have a sense kind of like, of what I’m spending. Um, and I try, so for me, I, I notice, I think, I think it’s common from a lot of grad students that eating out tends to drive your budget up a lot. Like if you don’t cook your own meals, like that’s gonna be a big expense. Um, so for me it’s all about just, you know, buying my, making sure I buy my groceries on the weekend and kind of prep some type of food and make sure I’m cooking my meals. And if my meals are cooked and I’m on top of that, then I pretty much don’t spend anything Monday through Friday, to be honest. ’cause I just go into lab. I eat lunch that I brought from home and then I come back home. So there’s not a lot of expenses. And so then by the end of the, on the weekend, you still have like a hundred something dollars to work with that. Um, you can, you know, you can go see a movie, you can go out, you can do something.

Emily (15:09): I’ll just recap that for a second. ’cause I wanna make sure I, I really like what I’m hearing. I wanna make sure I understand. So, so you take your, your total monthly income, and then you subtract out all of your, basically your monthly bills. They’re often fixed expenses. Maybe there’s some variable in there, like some utilities or something. I dunno if any of your utilities are variable, but, so you’re subtracting out all those monthly bills and then you take the remainder and you divide it up by the week. And so you have your, your sort of, uh, discretionary or variable spending money for each week, and you start that week by buying your food, your groceries for the week. And you basically just are living sort of a, uh, a lifestyle where you don’t spend much during the week. Like, you know, you’re not, you’re not buying gas, you just said you don’t have a car. You’re not eating out during the week, you’re presumably not doing any entertainment stuff so that when you get to the following weekend, you know, you have, you know, the amount of money you have to work with, uh, in terms of being able to do some discretionary stuff, some fun stuff, um, eating out or entertainment or bar or what have you. Does that sound, is that, yeah.

Adriana (16:08): That’s pretty much it. Yeah. And then, I mean, there’s, you know, you wanna have a little bit of room. I have, I actually have a little bit of money set aside for like, things that come up, you know, like things can come up, so you can’t always anticipate that, like the miscellaneous stuff. Um, but yeah, that’s pretty much how it works. And I mean, um, the other thing is like if I have, I see something that I wanna buy, right? That’s just like something I want that’s fun. I want this new pair of jeans, or I want this, I don’t know, whatever it is. Um, like for example, a new part for my gaming computer, something like that, right? Um, I will, I won’t buy it the moment I want it. I’ll make a list and then at the end of either the month or the week or whenever, after a while, I look at that list and then I go through it and kind of rank the things that I’ve I, that I’ve seen that are like, oh, I would really like to own this. And then the impulse part is out of it, right? So now I can make kind of a cool-headed decision about it and I can see where I’m at, how much can I actually afford? And then I can actually buy a few of those things.

Emily (17:08): Yeah, I love that. I love that idea. So you’re, you’re sort of formalizing the practice of delayed gratification. You have a centralized list that you’re using and you’re adding something catches your eye, you add it to it, and then after some days or maybe a full month or something, you’re reevaluating, do I really want that? Is it worth it? What’s the amount of money I have right now available to spend on it? Yeah, that sounds awesome.

What do you do about large expenses?

Emily (17:30): Um, what do you do about like, large expenses, like if you were to fly home?

Adriana (17:35): Yeah, so I mean, in this past year, because it’s been, um, my rent has gone down since I’ve moved into the subsidized housing, um, I’ve been able to have a little more leeway with that. So I usually have a little more extra money at the end of the month. Um, I have, since my internship, I’ve actually maintained this emergency fund, um, that’s about two or $3,000 in just a savings account that’s not, that I can still access whenever I want to. Um, so usually for big expenses like that, I’ll go into, it’s not really just an emergency fund, I guess it’s more of a big expenses that I, that are necessary though. Um, and I’ll, I’ll use from there and then I’ll gradually fill that back up, um, with money as I have extra during the month. Before that, um, before the internship where I did, I had this like extra money saved up. Um, it was pretty tough. Um, I didn’t go home that often, like all the way to Romania. Um, occasionally my mom would help with that, like she would help with the plane ticket. Um, but yeah, so it, it’s tough when big expenses come up.

Emily (18:47): Yeah, definitely. I mean, I like that you, I mean, it sounds like you had this, this one, one summer, only one summer where you did this internship, but because you were getting that dual pay, because the pay rate was a bit higher, it, it sort of gave your finances overall a boost plus the boost that you’re getting from the subsidized housing. And so kind of between those two, you’ve gotten a little bit ahead, right? You’re able to have this money set aside for kind of whatever comes up. It’s already there, you can draw on it and then refill it. Um, instead of being like, I don’t know, putting something on a credit card and then having to repay that over time, you’re sort of repaying yourself into your own savings.

Adriana (19:25): Yep.

Emily (19:25): Kind of like doing the debt, you know, process. So

Adriana (19:28): I’m super afraid of credit cards, actually <laugh>. So I have credit cards for maximizing like rewards and stuff like that, but I absolutely do not spend money on a credit card unless I have that money in checking like that liquid money. So, yeah.

Emily (19:41): Yeah, that’s perfect. I, I use, in grad school, I, I also was pretty afraid of credit cards for like, the first few years that I was like an adult. And I very strictly stuck to that system of, okay, the money is already in my bank account. I’m spending it just like I would if I were swiping my debit card, but I’m only doing this because I’m getting like extra rewards at the end of the day. I think there’s a healthy amount of fear right there. There’s a healthy level of fear that you can apply to credit cards. Maybe you can take it too far. And certainly some people are not afraid enough, but there’s like a sweet, you know, middle, middle there. Um, okay. Yeah. Is there anything else you wanna say about like, your budgeting or just how you’re making it work in la?

Any other comments about your budget or how you make it work in Los Angeles?

Adriana (20:21): One thing is that recently I have kinda like loosened the reins on how I budget, where I don’t maybe like log everything. Like I would log literally, oh, I bought coffee a dollar 50 into my Excel spreadsheet. I don’t do that anymore in the past year or so. Um, just ’cause you kind of get a sense of it after you’ve done it for a long time of what you can or cannot afford. So you don’t make silly purchases because you know what’s affordable and what’s not. Um, and I think that’s part of the learning system. Like you just, you learn that as you go. So

Emily (20:49): Yeah, you’ve sort of, you’ve internalized your budget. It’s now like in your mind instead of explicitly like in your spreadsheets.

Adriana (20:56): Yep, exactly.

Emily (20:57): Yeah. That’s nice. I, I think I, well, I never completely stopped tracking. I think I also internalized, um, my budget during grad school, but then everything got thrown when I moved. Right? If you go to a new city, you have a different life, different setup. Like you’re kind of, you’re not starting over at, you know, square one, but you’re taking a couple steps back in terms of that, that intuition or that like internalization, I think. So that’s a good time to start doing all the, you know, intensive tracking. Again, if there’s a big shift, you know, in your life.

Commercial

Emily (21:30): Do you know what’s even scarier than an upcoming committee meeting the prospect of preparing your tax return? But it doesn’t have to be that way. I’ve created a variety of free and paid resources to help you get through tax season with as little pain as possible. These resources are specifically for grad students and fellowship recipients postbac through postdoc, check them out at pfforphds.com/tax.

Can you talk about saving for retirement?

Emily (21:59): Okay. And you also told me earlier that you are saving for retirement, you’re contributing to an IRA. Can you tell me a little bit about why you’re doing that and how you’re doing that?

Adriana (22:09): Yeah. I’m not saving much. I’m not even maxing it out <laugh>. Um, but I am saving, so, um, about a year or so ago, I just, so my fiance’s uh, dad actually, he like talks a lot about, uh, investing and stuff like that. And I was like, on Thanksgiving, I was like, I, I need to figure that out. Like, can you tell me what you’re doing? Because you talk like there’s stocks that sounds super complicated. And he was like, all right, this is what you do. You go and you buy this book, it’s called A Random Walk Down Wall Street*, and you read it and then you got this. And that’s what I did. I bought the book and I read and I was like, oh, this is not at all complicated. Like, investing is not rocket science at all. Um, there’s just a weird culture around it that makes it sound complicated.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

Adriana (22:51): And I think people like to talk about it as if it’s something that’s just rocket science, but it’s totally not. It’s super easy and you can do it at like kind of a low risk. I’d say, um, if you want to, and also this is the best time in your life to do it because it doesn’t matter what, like, oh, the market is crashing, I don’t care. That’s a perfect time to buy more because I only have to have access to this money in like 60 years. So maybe not 60, but you know, like 40 years from now. So it’s actually really not stressful at all. I thought it would be super stressful of like, oh my God, now I have to worry about the market. But you really don’t. The best investment strategy when you’re, uh, our age is to just forget your password or something like that, you know, for your investment account and just don’t look at it.

Adriana (23:34): Um, yeah, so I just used, um, I use a Roth IRA because it’s, um, money that’s after. So I’ve already paid taxes on it, um, as opposed to using a traditional IRA or something else that, um, you pay tax when you take money out of it. So when you retire. And my rationale for that was that I’m in probably in the lowest tax bracket I’ll ever be in, um, because it’s the lowest tax bracket that exists. Um, so this is a good time to do that because my tax, uh, is only gonna go up. Um, and yeah, that’s what I do. I put like $200 every, uh, month in it. Um, and that’s just been a recent thing ’cause I was like, oh, I probably can swing that now because of the rent and whatever. So I just did it and it goes up pretty nicely. It’s just like fun to look at it every once in a while and so that you’ve accumulated money and, um, yeah, it’s, you can actually, because of compound interest, right, you can end up having a lot more money when you retire. And I know you write about this on your blog too, and I, I read a little bit about the that there as well.

Emily (24:35): I just, for, for any listener who is nervous or intimidated about investing, I just want you to go back and go back, you know, three or four minutes in this podcast, listen to exactly what Adriana said like a few times and listen to her like, you know, the transformation that she went through in being intimidated to just asking a very simple question of someone getting a book recommendation, which she just gave to you and just saying, read this book. It’s so simple. We do have a culture of making investing seem a lot more complicated than it is. And like, I guess that’s because people make money off of making it sound complicated. But for goodness sake, that does not need to be, it should not be, it is so simple and, you know, you just put it absolutely perfectly about your strategy and, and why you’re doing it that way. And yeah, everyone just listen to that a few times over again. Um, great. Go pick up a random walk down Wall Street. Perfect. Perfect recommendation. Thank you so much for sharing that. I’m, I’m really glad to yeah, hear that the same thing that I say, but just coming from someone else who, who approached it from a different way and got to the same conclusion and I think it’s exactly right. So thank you so much for that.

Adriana (25:42): Yeah, no, yeah, I’m super into inve. Like I tell everyone, I, I’ve told people in my lab being like, no, you have to do this. It’s simple and it’s easy and it can help you a lot. Yeah.

Can you tell us the story of your big financial mistake from your second year?

Emily (25:51): Exactly. Um, so let’s switch gears and talk about this, uh, big financial, uh, mistake or challenge that came up in your second year. Can you tell us that story?

Adriana (26:02): Yeah, so it’s a little bit of a longer story, but I’ll, I’ll try to make it short. Um, so, um, I guess, so when I started graduate school, I was still taxed as an international student. Um, so what that means is, and so I went to, I was an international student in undergrad as well. I went to college in the US um, and I had never had to worry about taxes because they were always withheld from my, um, any salary I had. So I had some small on-campus jobs in undergrad and taxes always been withheld, right? So I never had to worry about it. Um, and then in my, after one quarter in graduate school, I had officially been here for five years and that’s when your, um, your residency status for tax purposes changes from a non-resident alien to resident for tax purposes. So that’s, it literally just means we can now tax as if you’re a resident, but you don’t get anything else that residents get <laugh>.

Adriana (26:56): Um, so when that changed, they actually, so sorry. No, that’s <inaudible>, it was a long time ago, but when it, that actually changed in June, in June of my first year of graduate school. And so what they did is they retrospectively went and said, okay, so this applies to this whole year. It doesn’t apply just starting after June, so we’re actually gonna give you back $3,000 that we withheld from your stipend because you were an international student and we withhold from international students, so we’re giving you back $3,000. Um, and I was like, what is this money that I’m getting back? Why am I getting it back? I don’t even know what it is. Um, and they’re like, yeah, well, taxes, blah, blah, blah, something, something. So I had never heard of anyone having this issue before. I asked a few of the people in the program like how much money they spend on, they, like, did they pay taxes on the fellowship?

Adriana (27:44): How does it work? Because all my money did come from, so it’s, it’s different and, and you write a lot on your blog, there’s tons of resources on this. Um, I’m like, how it’s different if you’re in a fellowship, taxes don’t get withheld, you still have to pay them. Um, and people were like, oh, I paid about a thousand dollars. Oh, I paid like $2,000. There were just like sums all over the board. And I think part of those are from like people, some people were still getting claimed as dependents on their parents. Some people potentially were just committing tax evasion, I’m not quite sure. Um, it’s just all sorts of like information from so many places. And I was like, okay, well this seems fine. Like, I don’t know, I’m just gonna, I’ll, I’ll put this money kind of away. But I did end up spending a little bit from it that I got back.

Adriana (28:26): And then I didn’t know that after that I have to start, like my paycheck went up and I just had no idea what was going on. And I was kind of like, you know, I was like, if, if something bad happens, I would’ve heard about it, right? Because someone else would’ve had this issue and I would’ve, there would’ve been a big uproar about it, but no, then April hit and I had to do my taxes and I did my taxes and it said, you owe $3,000 in taxes. Uh, which was like, what? Um, and it was pretty scary. Um, like I kind of freaked out about it a little bit, um, the way I, you want me to talk about how I dealt with it too, right? Like what happened next?

Emily (29:04): Yeah, yeah. So like the first part of this story is, it’s complicated a little bit because of your previous status as a, a non-resident alien, but it, it is a similar story to what many graduate students go through often, you know, they enter their programs in the biomedical sciences, it’s very common to be on a fellowship or training grant, uh, non W2 income for a year or two, three years at the beginning of your PhD, maybe you won an outside fellowship and so that, that first year, yeah, maybe you came out of college, your income wasn’t too high, maybe you’re still dependent on your parents. It’s, it’s complicated, but also you have usually very little tax due for that year, if any. But then that’s that first full calendar year that you’re in graduate school when you’re supposed to be paying quarterly estimated tax, but you don’t know to do that.

Emily (29:51): Super, super common. I mean, I meet, I meet people in this situation all the time. You don’t know that you’re supposed to be paying and then maybe at the end of the year you figure out that you, you know, had this large amount of tax that you either should have been paying or at least at that point it’s due all at once. Um, or you know, I’ve talked to people who go several years without making this discovery and so then it just builds up and builds up and builds up. In your case, you did figure it out just one year in, um, yeah. That you, you were, were, you know, going to owe tax a good amount of tax on your stipend and maybe you were supposed to be paying that or maybe not during the year. Um, so yeah, that’s kind of where we are. You see this big bill.

How did you pay the tax balance?

Emily (30:28): How did you, I mean, it sounds like you still had some of that money set aside. Did you use that and then where else did you turn for the balance?

Adriana (30:35): Yeah, so I had a little bit set aside, um, but it wasn’t, I think I had about a thousand dollars set aside. Um, so I still had to pay like $2,000. Um, I did get lucky again in that I was actually from a previous year disputing with the IRS, um, over a thousand dollars that they hadn’t given me back on a return. Um, and it was because of this. Um, so they withheld from me, uh, in that first quarter of graduate school, right? That’s from the previous tax year. And I actually was owed that money back because there’s a treaty between Romania and the US and so when you have a treaty status, you can get your tax money back from the first five years. But UCLA still withheld it and they weren’t giving it back, and it was this whole thing. So the, that thousand dollars finally got resolved at the same time as with this giant tax bill. So I got some money from there. Um, and then I actually applied for a payment plan with the IRS, which you can do. And um, they kinda laughed at me because it was only for a thousand dollars <laugh>. Um, but I did, this is usually people that apply for, those have like giant sums, right? That they have to pay, um, or I’m not sure, but they seem to make, they made it seem, when I talk to ’em on the phone as if, why do you need a payment plan for this?

Emily (31:50): Um, yeah. ’cause you’re a grad student and you can’t make a thousand dollars materialize out of nowhere.

Adriana (31:55): Exactly. <laugh>. Um, so I did a payment plan and they were like, yeah, sure, it’s fine. Because usually the, the conditions are just, you have to not have applied for a payment plan in the past five years, I think, and the sum has to be below something absurd, like $200,000. I don’t even know what it was. It was something that wasn’t close. Um, so yeah, so I did that and then I slowly just kind of paid it off. Um, and that actually happened, a similar thing happened to my fiance where he also did a payment plan because he had a smaller tax bill, but it was still a pretty significant sum that he couldn’t just make a appear overnight. So yeah, we, we both took advantage of that. So that’s a good pro tip I guess to.

Emily (32:32): Yeah, that is um, I don’t think I’ve spoken with anybody. I mean, I’m aware these payment plans exist, but I, I don’t think I’ve spoken with anybody before who’s been on one. So it sounds like it was a pretty easy, positive experience. I mean, a lot of people are very intimidated to even like talk to the IRS, like if they know they have this outstanding balance, it’s like, oh, I don’t even wanna engage with this because, you know, they’re gonna like gobble me alive or whatever. But it sounds like it worked out okay. Right.

Adriana (32:58): Yeah, there’s a lot of time spent on hold because they’re, uh, like when you call them that you, there’s not, the call center is super overwhelmed with calls. Um, but they, they, they were, yeah, they were okay with it, so, yeah.

Emily (33:09): Okay. Yeah, so that’s how you worked through it. You had, uh, the savings still, you had a different <laugh> unrelated dispute being resolved at the same time, plus the payment plan and that kind of got you through that. That’s really, really good to know for anyone who is facing a similar, you know, I’m, we’re gonna be releasing this episode shortly before, um, April 15th, 2019. And so if you are a graduate student and you’re coming up on that, you know, you’re filing your annual tax return or maybe it’s your first, um, estimated tax payment for 2019 and you realize that you cannot pay this, the IRS is a place to turn to for help really. Um, it’s, I guess it’s a little bit like finance. I mean it’s IRS debt, like it’s, you’re sort of financing it through the IRS, but it’s, uh, manageable it sounds like, as long as you can afford to be waiting on hold to talk with them. So I’m really glad that you shared that aspect. Thanks.

Adriana (33:57): Yeah, and I don’t think there’s any interest. They never, there’s, it’s an interest free thing, I think for the most part.

Emily (34:02): Yeah, I think if you totally ignore what’s going on and they’re like, then that’s when penalties and interests rack up. But if you engage with them and start working with them, then they can like waive those fees and, and penalties and stuff. So it’s definitely better to just admit that like, Hey, I know, I know this debt exists, you know, this debt exists. Uh, let’s work on, you know, figuring out how to pay it rather than just, uh, yeah, just sort of trying to run and hide ’cause it’s not gonna work out in the long run.

Adriana (34:26): Yeah, absolutely. <laugh>.

Final Comments

Emily (34:28): Yeah. Well, um, yeah, thank you so much Adriana for, for sharing that with us. Do you have any sort of closing comments about, you know, any, any tips you didn’t get in any other part of this interview?

Adriana (34:39): Budgeting can definitely be tough and kind of it’s time consuming and a little bit stressful. Um, but it’s totally worth it because it’s more stressful to not afford to pay your rent <laugh>. So that’s, yeah. 

Emily (34:52): Kind of what we were just talking about, like it’s, it’s better to just face up, fess up, face up to the reality of the situation always and engage, you know, with what, whatever you need to engage with rather than just trying to run hide because it just, it just compounds the problems really. Yeah. Thank you for, thank you for sharing with that, that with us. And uh, thank you so much for being on the podcast today.

Adriana (35:14): Yeah, thank you for having me. This was great,

Outro

Emily (35:18): Adriana. Thank you so much for being my guest on the podcast today. Show notes for this episode are at pfforphds.com/S2E6. As a postscript, this episode is being released shortly before April 15th, 2019, which is the deadline both for your annual tax return and your quarterly estimated tax payment for the first quarter of 2019. If you’re unsure how to go about calculating and making that payment, please consider purchasing my quarterly estimated tax workshop for fellowship recipients. The prerecorded videos walk you line by line through how to fill out Form 1040es. I also hold a live q and a session once per quarter to answer any questions that arise for you during the process. You can find more information about the workshop at the tax center on my website pfforphds.com/tax. If you wanna get in touch with me, you can email me at [email protected] or find me on Twitter at pfforPhDs or Facebook personal finance for PhDs. If you’d like to receive updates on new podcast episodes and other content, go to PFforphds.com/subscribe. See you in the next episode. The music is Stages of Awakening by Poddington Bear from the free Music Archive and is shared under CC by NC Podcast. Editing and show notes creation by Jewel Lipps.

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