• Skip to main content
  • Skip to footer

Personal Finance for PhDs

Live a financially balanced life - no Real Job required

  • Blog
  • Podcast
  • Tax Center
  • PhD Home Loans
  • Work with Emily
  • About Emily Roberts

credit cards

Business Class Flights and Hotel Elite Status on a Grad Student Stipend

April 21, 2025 by Jill Hoffman Leave a Comment

In this episode, Emily interviews Brendan Henrique, a fourth-year PhD student in education at the University of California, Berkeley. Brendan leverages his conference and research travel plus personal spending into free luxury travel by amassing credit card points and elite status at hotel chains. He breaks down how he pursues the points and miles hobby even while living on a grad student stipend and how it’s motivated him to work hard so he can play hard. Brendan’s travel habits might seem out of sync with his income or ‘student’ status, but it’s achievable for many grad students who are free from credit card debt and have a small degree of savings.

Links mentioned in the Episode

  • PF for PhDs Spring 2025 Giveaway
  • Brendan Henrique’s Substack: Grad Student Travel
  • Brendan Henrique’s TikTok: Grad Student Travel
  • Host a PF for PhDs Seminar at Your Institution
  • Emily’s E-mail Address
  • Travel Hacking Resource: MilesTalk
  • Frequent Miler
  • PF for PhDs Subscribe to Mailing List
  • PF for PhDs Podcast Hub
Business Class Flights and Hotel Elite Status on a Grad Student Stipend

Teaser

Brendan (00:00): There is a little cognitive dissonance sometimes, um, to the point that through Instagram, some of my friends thought I just had a pile of money in the corner. Part of the reason I’m kind of talking more about it is there’s not any money in the corner, there’s no treasure chest. It’s just really using points effectively. It’s kind of a big disparity sometimes where like for a conference hotel, I’m staying under the university minimum and you have to be this like very responsible steward of like a grant. And then when I do leisure travel for less money because it’s effectively free, I’m at five star luxury resorts.

Introduction

Emily (00:41): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (01:11): This is Season 20, Episode 8, and today my guest is Brendan Henrique, a fourth-year PhD student in education at the University of California, Berkeley. Brendan leverages his conference and research travel plus personal spending into free luxury travel by amassing credit card points and elite status at hotel chains. He breaks down how he pursues the points and miles hobby even while living on a grad student stipend and how it’s motivated him to work hard so he can play hard. Brendan’s travel habits might seem out of sync with his income or ‘student’ status, but it’s achievable for many grad students who are free from credit card debt and have a small degree of savings.

Emily (01:52): Because we in academia and research are experiencing such precarity in our finances and careers at the moment, I’m doing as much as I can on the financial education side to help you. I’m calling this initiative Giveaway Spring. I’m giving away 60-minute group Q&A calls, 30-minute individual coaching sessions, books, and digital resources—all completely for free—and I’m also sharing the best free financial and career resources I come across for PhDs. Register for my mailing list at PFforPhDs.com/giveaway/ to receive all the details of the current giveaways and an update every other week. You can find the show notes for this episode at PFforPhDs.com/s20e8/. Without further ado, here’s my interview with Brendan Henrique.

Will You Please Introduce Yourself Further?

Emily (02:55): I am delighted to have joining me on the podcast today, Brandon Henrique. He is a fourth year PhD student at University of California Berkeley and we are here talking about travel hacking or the points and miles hobby or stacking travel rewards. We don’t have a really firm term for this, but that’s our topic for today and Brendan’s gonna tell us all about how he does this as a graduate student. So Brendan, thank you so much for volunteering to come on the podcast. Will you please introduce yourself a little bit further for the audience?

Brendan (03:23): Yeah, thank you so much for having me on. I’ve been a fan of kind of the website and everything for a long time. So I am a fourth year student out in sunny California. I study uh, computer science education, um, at the school of Education at UC, Berkeley and I’ve been, I’m in my fourth year.

Using Travel Rewards for Once in a Lifetime Trips

Emily (03:39): Excellent. For you as a graduate student, what kinds of travel rewards stacking strategies do you use? This is a big question, it’s what we’re gonna talk about for the whole interview, but let’s get a high level intro and then we’ll kind of dive into some different ones.

Brendan (03:54): Yeah, so my kind of claim to fame in this is I use a variety of credit card points, whether it’s signup offers, hotel points, conference days where I can generate points to kind of stay in these amazing once in a lifetime resorts, flights, and were kind of redeem these points for really amazing experiences. And that’s kind, I think if I had to summarize in like one paragraph, that’s kind of what I do.

Emily (04:18): Okay. There’s the part of this process where you are um, gaining points and like amassing the rewards and then there’s a part of it where it’s like deploying the rewards and the points and stuff that you’ve amassed. So I wanna talk about both of those. Um, but first do you stay within like a certain um, family of types of points or certain airlines that you use or do you kind of spread everything all over the map? Tell us about that selection process.

Brendan (04:50): Yeah, and this is actually one of the kind of cool parts about points is depending on what credit card family you want to join. So if you’re an Amex person or a Chase person, a lot of those points transfer. So for me the best value for my chase points is transferring it to Hyatt. So I’ve become a really big Hyatt person to the point that I’ve been able to gain the top status with Hyatt where I get the upgrades, I get the free breakfast, kind of the bells and whistles. And so what I recommend to grad students is pick a hotel brand and stick to it. So the big ones are being Marriott, Hyatt, Hilton, and then when you go to those research meetings you have to do field work for a month and they have you at the Holiday Inn, well it might be great to join IHG collect those points. And all of them really have great luxury properties that you can kind of spin the points from the casual stay to the super stay.

Emily (05:39): It makes sense to me that if your university is sending you somewhere for a period of time, they might control, they might choose which brand you’re staying with, it might depend on exactly the location, what’s available and so forth. Um, do you, have you in your experience had agency over that? Um, like when I go to conferences I just try to stay at the conference hotel, but I know some people stay you know, down the street or whatever. So like do you exert control to like stay within your preferred rewards family or do you just go with wherever they wanna send you?

Brendan (06:10): I’ve had both experience. So sometimes it’s like where we have to go to Philadelphia, stay within a mile of the conference center and at that point I do try to go outta my way. Like where’s the nearest Hyatt, my backup kind of family is Hilton so if there’s not a Hyatt, there’s probably a Hilton and that kind of rings true most of the time. There’s been a couple of times where I did like a two week research project where I was on the road and we had to say like a motel, I tried to pick one that had a super family. So for this one it was Wyndham, I forget the sub-brand and Wyndham points can be transferred to Caesar rewards in Las Vegas at one point percent. So I got to eat a great steak dinner because of my two weeks in a motel.

Accumulating Travel Rewards Points

Emily (06:53): I see, okay. You’ve picked a preferred brand but also you try to have some flexibility depending on you know, the location that that’s calling you or what have you. Let’s talk more about the accumulation of rewards. So it sounds like when your university is paying for you to go and stay somewhere that somehow benefits you personally. Can you tell us how that works?

Brendan (07:13): Yeah, so what I make sure I do is I book direct. So if you book through expedia, booking.com, you don’t collect points. So what I recommend to every grad student, I would honestly sign up for the top five hotel brands, make a loyalty account it’s free and then when you do get sent to conferences you can just plug in your rewards number and even if you have to book through like the travel agency or like the conference booking page, every time I’ve had one it allowed me to put in my number and then on the backend they were sync up. So I’m welcomed as like an elite member or loyalty team member. Usually you get better service, especially with a conference hotel, they’re sold out so if there’s a way to split the difference, they’re gonna look who’s a member who’s not and it’s free to join. So that’s kinda one way to personally benefit is to just kind of sign up and make sure you’re using um, kind of the family you want to stick to, whether it’s you know, your Hyatt or Hilton.

Emily (08:05): Okay. So we have our very easy applicable tip number one which is just sign up for the, you know, the loyalty programs for all the hotels that you interact with in your uh, daily, you know, yearly life. Um, so just sign up for ’em all. Great. Let’s talk more about um, amassing points to yourself. Um, you mentioned Chase earlier, so tell us about your, the credit card like aspect of this strategy.

Brendan (08:31): Yeah, so using credit cards you can get a return on the point. So like I think the Chase Sapphire preferred is kind of your typical, most people will say it’s like your introductory travel card. It gets like two or three times on travel. Those points are transferrable to Hyatt. So let’s say you spend a hundred dollars on a hotel for a conference, you get 200 Hyatt points that you could transfer from Chase to Hyatt. You can also use it a few different ways That is kind of a slow grind but it helps you kind of slowly accumulate points. The big leaps are signup offers. So the Chase Sapphire, I think the signup offer right now is 60,000 points. That’s a significant amount of Hyatt points or you can transfer to I think United Air France, a few other partners. That’s a lot of points for Amex. Their offers tend to be a little more generous I think I’ve seen on the platinum card 175,000 Amex points with 1 cent up offer With them though you have to spend a certain amount of money in a certain amount of time. So for Amex I think it’s 8,000 in three months, which is a massive ask Chase. I think it’s a little bit lower, it’s like 4,000 in three months and some are six months. So you kind of have to play what’s that public signup offer and with what those points are worth for you and can you hit that bonus.

Emily (09:46): I think that’s the real key there. Like I just barely started dipping my toe into credit card rewards when I was in graduate school and I mostly stuck with the cash back offers because of two reasons. One, I was nervous about meeting those minimum spends required to get you know, the big sign up bonuses. Um, and two, I really didn’t wanna pay an annual fee ever <laugh>. I didn’t wanna do the math on whether or not it was worth it. I just didn’t wanna pay fees. So can you speak to both of those kind of like objections?

Common Travel Rewards Concerns: Minimum Spending and Annual Fees

Brendan (10:13): Yeah, so I think it’s also a very valid objection if you’re like, you know what, I don’t really like to travel, I like I would rather put the money in a cash back and just kind of pay myself back then there’s cards meant for that. Like I would still recommend you look into it and there are cards that offer great cash back offers where you spend X amount of money and you immediately get it back. So maybe you wait until the end of the year to pay your taxes, you have that sum or estimated taxes, you kind of time it right, you pay with a credit card even with a 2% fee, if the cash back is significant enough it might offset that. And then in regards to I think your other, oh the annual fees, those are a lot trickier. What I like to tell people is we’re graduate students, we’re really good about spreadsheets and like details make a map of it’s gonna work out for you. Some of like my top annual fee card is the platinum card, it’s like 700 a year. I’m very meticulous about extracting every dollar of value on every cent. So there’s a way to get, they have one part of it is a $200 airline fee, so you can’t use it for airfare, you can use it for incidentals. The backdoor hack is the United Travel Bank where you like fill up your travel bank counts as an incidental which you can use for a flight and I find SFO is a United hub, um, as well as like a bunch of other kind of major airports around the country that you can totally one united flight a year that’s paid for.

Emily (11:36): Going back to my, my first objection about like meeting the minimum spends, um, and my comment about like sort of sticking with cashback cards which are usually have lower minimum spends and typically no annual fee. What I’ve learned since then <laugh> since I was in graduate school and had those kinds of objections was that using points for cash back versus using them for travel. There’s a massive um, ROI difference, it’s something like five times, six times, maybe even more of a difference between using those points for travel and points for cash back. So if you are really frugal like I am and especially was in graduate school, I actually would’ve been better served probably by um, using those points that I was accumulating through my normal spending and so forth, um, for travel purposes instead of for cashback purposes. But you know, I didn’t have the bandwidth at the time to understand the whole system. So that’s what you’re, what you know, what you’re helping us do here, which is really fun. Okay, so we talked about collecting points through signup bonuses through ongoing spending on certain cards, whether an annual fee is worth it, do the math, um, figure that out. Tell us a little bit more about the spending of the points and how, how you’ve done that in a really worthwhile way.

Brendan (12:47): Yeah, so it ends up being this kind of complicated optimization problem where you know the points are worth about a penny a piece, some are a little bit less, some are a little bit more and you want to track the maximum value. The best way I found to do that is if you’re trying to redeem it for kind of the lower end of the spectrum. So like a southwest flight, a basic hotel say you’re really only gonna get a penny, a penny 0.5 per point. Where this starts to really get exponentially bigger is your business class flights. Your five star hotels are like, uh, one of the hotels that I’m hoping to stay at is in Paris, the minimum is like 1300 a night but it’s, it’s 45,000 Hyatt points, which is a massive amount of points but point per dollar. It’s an incredible return on investment. And same thing for business cost flights, some of them are like three or $4,000 or international where if you use the points that way I’m getting five to 6 cents per point, which is five times then if you just used it regularly. And that’s kind of the hack is knowing those optimal um, utilization and when to kind of u- hit that value. And that’s the complicated part I would argue.

Emily (13:56): So it sounds like your, is your preference to redeem these points for like the more the step up the little, little luxury travel and not go for economy class and basic hotels and so forth? Or do you do both or like how are you using them?

Brendan (14:11): I kind of aim to get like a minimum value on my points. So for chase points I try to aim to 2.5. So if I do the math that the cents per point redemption isn’t gonna gimme that, I’ll kind of make a hard decision of like do I have to stay at this hotel? Can I find another way to stay there? Like not through, maybe it’s not Hyatt this time, maybe I’ll go to Hilton and check it out and then that’s kind of my cutoff for Amex points. I’m a little more, I kinda held them close because I knew I wanted a business class flight for Europe on a upcoming big trip. Um, so I kind of held them until I saw the moment and then I knew that that value would be there if you watch closely and it popped up on my computer and I snagged it.

Emily (14:52): Okay, this is a bit of a weird question, but you’re a grad student, how does it like feel like psychologically to be traveling in an upgraded way?

Brendan (15:06): Yeah, it, it’s kind of a big disparity sometimes where like for a conference hotel I’m staying under the university minimum and you have to be this like very responsible steward of like a grant. So it’s kind of a, and then when I do leisure travel for less money because it’s effectively free, I’m at five star luxury resorts, it, there is a little cognitive dissonance sometimes, um, to the point that through Instagram some of my friends thought I just had a pile of money in the corner and I had, part of the reason I’m kind of talking more about it is there’s not any money in the corner, there’s no treasure chest. It’s just really using points effectively so that we can, my uh, fiance and I have been able to say at some incredible places from Arizona to Florida and do some incredible stuff because of all these hacks and like tricks.

Gaining Elite Status at Hotel Chains

Emily (15:53): Now you mentioned earlier like stacking deploying of points with like having status at like Hyatt for example. Can you tell us how that works?

Brendan (16:02): Yeah, so what’s great about it is when you redeem the points it’s free to like, or the hotel becomes free. When you then have status, you still get your status benefits. So for Hyatt it’s a little bit harder to get status but when you hit their top, if there’s a suite available that’s in their basic suite, you’re guaranteed to get upgraded to it. Granted some front desk give you a little bit of a hard time, but there’s been times where I’m like, Hey, is there a suite available? I saw one on the app and they’re like, oh my bad. And then all of a sudden I’m in a 800 square foot room, two bathrooms and that’s the fun times at conferences when it’s like you have the massive room because every other room gets sold out and then in the morning for, Hyatt at least, you get to eat breakfast in the lounge or there’s not a lounge, they give you a voucher for the restaurant. So it’s been actually at conferences it’s helped a lot because I’ll fill up at the free breakfast and not have to pay lunch out of the grant money. So it kind of actually I’ll pick a Hyatt and like I’ve argued with like in present an argument to the like whether I’m getting reimbursement, like no, no, by booking this hotel I actually saved you money by the free breakfast and lunch. It allowed me to kind of offset the cost.

Emily (17:11): So I’m so attracted to this idea because I, I know just from my light study of the travel reward space that as you said that Chase redeeming chase points at Hyatt is like a really great value. Um, overall. So I just wanna know how do you get status at Hyatt?

Brendan (17:28): So for their top status you have to stay 60 nights in a year, which is an absurd amount of years. Um, not years, uh, nights there’s some kind of short cuts to get that number lower. One way is if every conference I pick Hyatt, I go to two or three conferences a year, three or four nights, that’s already kind of 10 to 12 nights. So already out of pocket I’m down to like what 50, 48 nights, use point and when you use points, nights count as qualify nights. So then I lower the pay like paid nights even more. When you have the Hyatt credit card, which is their credit card, they give you free, um, what is it, five free qualify nights. So that’s five more nights to hit the 60. And then there’s a few other kind of backdoor hacks where I can gift my status to someone and when they stay I get the night and that allows me to kind of lower, I don’t actually stay 60 nights a year in a hotel because that would be like twice a month, you know. Um, so you’re able to lower that number through some credit card hacks, some of, and then some taking advantage of the Hyatt loyalty program structure itself.

Emily (18:35): Okay. And is this something you have to do every year?

Brendan (18:38): Uh, to some degree the year you earn it you earn it through the rest of the year. And then so if you were to earn Hyatt globalist, I guess you couldn’t hit it now because we’ve only had 28 days. But let’s say you stayed 60 days, you hit it early February, I mean early March you would have it for the rest of this year and the following year. Um, so when I hit globalist, you keep it for the kind of, it’s 12 months plus the remaining of the year.

Emily (19:04): I can see this is a great um, program on their end to retain loyalty <laugh> from you know, frequent travelers and so forth. I think you also mentioned that you use um, travel hacking strategies for rental cars as well, which I’ve like never heard of. So how does that work?

Car Rental Strategies Specific to Grad Students

Brendan (19:18): So this isn’t so much a travel hack as taking advantage of what grad students may not know and if you’re at a large university system, your corporate like office for travel at the university negotiates a ton of travel deals. So I found out recently at Berkeley that because they’re part of the University of California system, they negotiate hundreds of thousands of deals. We have tons of travel offers that just by being an employee of the university you get one of which is uh, tr uh, renter cars. So we get I think 35 to $45 a day rental cars anywhere. What’s amazing about kind of stacking the university discount with a credit card is the Amex platinum gives you top hertz status which allows you to pick any car in like their luxury lane. So when I go to an airport and I need to rent a car, I don’t pick the car that I booked, I go straight to the lane and see what’s available and I’ve done everything from like a Mustang convertible for like 37 a day in San Diego to like we were going to the Grand Canyon. And I wanted like a supped up SUV, there was this like really nice all-wheel drive Buick, but I still paid the same base rate that I paid based off the university discount. And I’ve seen most public big university systems have something like this, whether it’s a travel portal or like just kind of your standard corporate discounts.

Emily (20:36): I had no idea about that. So like I’m not affiliated with the university anymore but I wish I had known that <laugh> back when I was at Duke ’cause yeah, probably they had something if you’re saying that. Um, most do but that’s, that’s like easy tip number two is just check out is there a travel portal for a university that you’re, you know, permitted to book through and yeah see what kind of deals you can get. And it sounds like you can use it for personal travel as well as university business.

Brendan (21:00): Most of them are, they’re tell you you can’t on the travel portal. So for Berkeley there’s some that are very clear that they actually get a, I think the corporate contract gets a kickback and they don’t care whether it’s leisure or for business. With business there’s some more benefits but with leisure you can use the corporate code at lease.

Emily (21:16): Okay, wow. Alright, this sounds really great

Commercial

Emily (21:21): Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as taxes, goal-setting, investing, frugality, increasing income, or student loans, each tailored specifically for graduate students and postdocs? I offer seminars and workshops on these topics and more in a variety of formats. This is a perfect time to book me for a workshop at the end of the current fiscal year or at the beginning of the upcoming academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker or facilitator to your university, graduate school, graduate student association, or postdoc office? My seminars are usually slated as professional development or personal wellness. Ask the potential host to go to PFforPhDs.com/financial-education/ or simply email me at [email protected] to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.

Using Travel Rewards for a $30,000 Honeymoon

Emily (22:46): Now you’ve mentioned your fiance a couple of times. I understand you’ve been gearing up for a honeymoon on you know, using these strategies. Can you tell us about what you’ve booked?

Brendan (22:55): Yeah, so I kind of have been in like points slumber mode where I’m just accumulating hidden and sign up bonuses, asking my fiance if she would also apply to get double the the bonus and you can usually backwards transfer and we’re gonna do a couple weeks in Europe. I’ve never actually been to Europe so I’ve always dreamed of going. Um, so I’m really excited to kind of stay in Europe for a very long time for essentially no money because every hotel has been on points. We got business class flights to and from for about a quarter of a million Amex points, which is like a big number but um, we’ve been kind of saving up for a while with our points to make this once in a lifetime trip possible.

Emily (23:39): Give us like a scale on how many points this took

Brendan (23:44): I actually, I wrote it down just because I knew that this might come up. So it’s about 280,000 chase or Hyatt points kind of. I had to combine them three Hyatt. They have these things called suite upgrade awards where you take your basic book reservation upgrade to the suite three Hilton free night certificates, 800,000 Hilton points and about 350,000 Amex points. So a lot across multiple brands, multiple credit cards.

Emily (24:13): Yeah those are like eye popping numbers um, to me. So how, how long would you say that this took to generate all the points for this trip?

Brendan (24:23): I would say depending on the card, three to four years depending on some were accidents. We were gonna do a big stay at a Hilton so I had started to get into the Hilton ecosystem, decided not to go on the trip so I just had this leftover treasure chest from like three summers ago. Then I was like oh this might be useful on a rainy day and it just kind of kept growing as different Hilton offers came out with different um, signup and you were able to kind of stack them and so I would say we’ve been Hyatt, I tend to use ’em more quickly. So the Hyatt I would say was more than like a year, year and a half.

Emily (24:59): And it sounds like even though you know, you’ve been, the points have been accumulated for around three to four years, but you’ve still been traveling some during that time. You said most recently you’ve been quieter on the travel front to like finalize all of this, but it’s not like it took you all of your spending devoted for three to four years just for this one trip.

Brendan (25:17): No, this involves multiple, like I’ve definitely stayed at Hyatt quite a bit in the last two years. Hilton, I haven’t touched the points I very much like that was kind of don’t touch and then Amex I didn’t touch because I knew, I knew I wanted us to fly to Europe in business class so I kind of wanted to have this kind of flexible chest of points to be able to find the right value and find the right flight route for us to get home.

Emily (25:40): Okay, so you’re staying for essentially free, it sounds like you got all the nights, you got all the flights covered, those, that aspect of the travel. Um, if you would have paid cash for that, how expensive is this trip?

Brendan (25:54): So I have a spreadsheet where I kind of track the value of like the hotel room, what suite we got upgraded to the business class might, when you add it all up plus or minus a little bit, it’s around $30,000 which is, I was almost shocked when I did the math. I checked it twice because I couldn’t believe that the amount of value we were able to extract and we’re averaging anywhere depending on the point like three to 6 cents a point, which is incredible value sometimes I think at the, the Park Hyatt in Paris, the suite goes for 3000 a night. So that was an incredible value for $0. Um, and 45,000 Hyatt points isn’t like normally a lot but at that cash rate, which I certainly would never pay $3,000 for a suite, but that’s what they’re charging someone for it. Um, so I was very amazed that it’s pretty much a brand new car of points.

Emily (26:44): Yeah, a brand new car, uh, I’m assuming over half your stipend for the year. Yeah, I mean it’s, it’s a remarkable, yeah, again, you wouldn’t have paid that but somebody would have for some of all these, for the some of all these components. So, uh, that’s so interesting and again that to me the cognitive dissonance is coming up of like, oh but you’re a grad student. Like you know, do you, you know, not do you deserve but like is it within your realm and understanding of the world to be traveling this way? But that’s the amazing thing that points makes this possible. My goodness

Brendan (27:21): And my fiance is a uh, she was a teacher and now she’s an instructional coach. So we’re both in a similar kind of like highly educated that middle class kind of group or like that it, there is a dissonance of coming back from a couple of really incredible resorts but it’s gone to the point that our friends know were the points people and they’re like, oh where are you off to now? How much did it cost you? Zero. And it’s almost an ongoing joke.

Teaching Other Grad Students about Travel Hacking

Emily (27:46): Yeah. Well on that topic, have you been teaching any of your peers about this? Are they receptive?

Brendan (27:52): So that actually led me to start a Substack, which is my weekly newsletter. I get a lot of questions from a lot of friends like we’re going to Italy, can you help us? So I was like, why don’t I just share everything I know in a way that’s kind of meant for grad students. Um, so every week I post a new post, um, every Wednesday and it’s some either hack some trip report and kind of different ways I’ve come to learn points and I’m trying to kind of write it in a way where to help graduate students understand um, and hopefully like I can kind of help people do this in their own lives with some of the hacks are very low lifts and it’s very much just sign up, search for the travel agency, get this one credit card sign up and you can do this end of year summer amazing dissertation celebration.

Emily (28:37): Yeah, I would say especially for graduate students who do a lot of travel or a decent amount of travel in the course of their work, like it’s kind of, I guess the impression from like travel hacking maybe from like the nineties or something was it was like, oh this is possible if you’re like a consultant who travels every single week on the same airline so you can you know, get the status or whatever. Um, and it’s just changed so much over the decades that this actually is accessible um, even for people who are making like a grad student stipend but especially if travel is a component that your work does pay for to some degree.

Brendan (29:10): Yeah, I think the reimbursable cost part is a really big part that even if you’re at like a Hampton Inn for 100 a night on field work, those are Hilton points. If there’s a Hilton double point promotion, you have the Hilton card, all of a sudden you can add such a big multiplier on something you’re getting, you have to do anyways for your research so why not go to that resort once summer break hits, you know?

Emily (29:33): Yes, wonderful idea. Okay. Earlier you mentioned some example minimum spend levels maybe $4,000 in three months, maybe $8,000 in three months. Um, how do you work it with your like typical level spending as a graduate student to meet any signup bonuses or maybe more like the more aggressive signup bonuses?

Brendan (29:54): Yeah, so let’s, if I, let’s use the 8,000 for the Amex Platinum as kind of like, that’s the highest one I’ve attained. Some tricks that I’ve used is you can pay your taxes with a credit card. They charge like a 2% fee. So if you use estimated taxes you could do time it right? Or if you kind of have the end of the year you have that big lump sum that probably might be able to allow you to hit at least half of it a quarter of it. The other hack I’ve been able to use for smaller ones is if you know you go to Starbucks once a month, 10 times a month, whatever that number is, you can prepay your year for credit like and gift cards. Same thing with Amazon. You can, if you know for uh, the holidays you’re buying a ton of gifts for both you and your friends or family, you can just load your Amazon account a little bit ahead of time and it’s all about the timing. So I wouldn’t sign up with the platinum card with 8,000 and just hope you’re gonna make it. I’d be very intentional with, oh we have the holidays in December, then taxes, maybe I’ll try to do them really quickly in February and then I can kind of get in that three month window or a big conference. If you have a international conference in France, you’re gonna spend a pretty penny. Why not use that towards a signup bonus?

Getting Started with Travel Hacking

Emily (31:08): My goodness. Yeah, most of the conversation around, you know, um, having to front travel expenses and conference fees for graduate students is around complaining rightfully so about you know, having to pay interest on it if they’re not able to pay off the cards and how it actually costs them money and so forth to do it. But you’re completely flipping this on its head and saying, actually use this to your advantage now it does take some savings, right? If you wanna prepay expenses, you have to have the money to do that. So like for you, is this a general savings fund that you have? Do you kind of tap your emergency fund? Like where is the money coming from for you?

Brendan (31:43): I kind of have a small revolving fund that I know that like I’m gonna get reimbursed for the conference or I know that this thing is gonna kind of come and go. So I typically would kind use it almost as like a flex fund that when I need to hit that signup bonus, it goes into it, then the tax or not tax a conference happens, I’m gonna get refunded a month later. Um, if that’s not possible for you, depending on your stipend structure, I would recommend credit cards are probably not a good because you don’t want to, as soon as you hit a penalty at interest charge, all of the point value really starts to get washed away really quickly that if you spend a couple hundred dollars in interest, even that $300 Hyatt Hotel, you’re not gonna break even anymore. So I’m really intentional about staying below and never, never missing a payment.

Emily (32:29): Yeah, this is definitely not an entry level strategy. If you’re a first time listener to this podcast, this is not, okay, go ahead and sign up for the loyalty programs. But like don’t try the credit card stuff until you have, you have all your credit card debt paid off, you have some savings like you said, a flex fund to be able to prepay some things or the conference expenses or, or what have you. Um, this is a level two <laugh> or further like kind of strategy. Um, yeah, I’ve noticed in my own life, um, I, I talk about irregular expenses quite a bit in my uh, teaching but now that I have a higher income than I used to when I was in graduate school. Um, but I also have different expenses. I have kids now I have a house, blah blah. So like I actually just sat down a few months ago and was like, okay, let me look at the cycle of my year. I can figure out like when are these higher expense, you know, periods it’s like March and April for me are like really high spending for some reason. It’s like kids camps, car insurance, like all this stuff. Um, okay now I know February let’s apply for a new card. Hit that sign up bonus. So I’ve just been more intentional about like looking at my year and figuring out okay, these are the key months when it’s a great time to sign up for something

Brendan (33:33): In February works really well because if you hit the bonus around April you can start thinking summer vacation that kind of gives you a three month window when resorts start to, not every hotel releases point availability the same. So three months out is a great time start looking. So that’d be, that’s actually a great timeline. 

Emily (33:48): Yeah, Okay. We were just talking about some things you have to have set in your finances to play around with credit cards <laugh>, but let’s say someone is ready for that, they have all the credit card debt paid off or they’ve never had credit card debt, they have some savings. What’s like the first, the next first step after signing up for those loyalty programs after checking with their university’s travel portal? Um, what’s a good first step after that?

Brendan (34:10): Yeah, I think I would decide what you want to use the points for and then that’s a really great kinda decision tree. So if you’ve heard today you’re like, I really wanna stay at Hyatts, that sounds awesome. I would really recommend the Chase Sapphire preferred. The annual fee is like 95 a year. If you book once through the Chase portal, I think you get $50 back, which offsets annual fee pretty much immediately. The signup offer anywhere from 60, I’ve seen as high as like 90,000, but that hasn’t happened in a while. 60,000 Hyatt points gets you four nights at some like really nice hotels. It could also be two nights at an incredible once in a lifetime hotel depending on how you want to use the points. And I would say find that entry level card if you’re like, you know what I, I don’t mind paying for the hotel, I want an incredible flight experience. American Express points are great for business class flights to Europe, um, or even going west, I’ve seen some amazing deals to like Tokyo from the west coast, from like Seattle or LAX, you wanna fly in first class. There’s some incredible deals to be had that way and if you know that’s you or you want to visit there for leisure or for family or anything, then that might be the route that you want an introductory Amex card, which might be like the American Express Gold, which is kind of your dining and grocery reward card.

Emily (35:25): Yeah, and I would say my tip that I’ll add onto this, it’s just, it’s something you mentioned earlier, but just like staying organized <laugh>, um, staying on top of this. So like try one card, get a spreadsheet set up or whatever system you’re gonna be using to keep track of like, you know, the date that you sign up, the date you have to finish spending, the amount of the spend, what you’re gonna get for it, um, what those extra rewards categories are for ongoing spending. The little um, you know, $50 here, a free night there, all that stuff that can come like with your annual annual fee and so forth. Like just get your system going <laugh>, um, from that first card and then you can kind of layer on and add to it over time.

Brendan (36:01): Now I tell people to kind of get your sea legs with your first travel card and then once you’re like, oh I know how to use points, I know how to transfer, then it’s time to maybe think about a different one but try it out and um, take that first day and see how great if it was to not pay for it.

Emily (36:15): Yeah, I agree. I’ve been like just very slowly making my way into the travel rewards points and miles hobby kind of space. I’ve like, I feel like I know like the Chase Southwest system for that free budget <laugh> flight kind of situation. And the next thing I have my sights on is like international travel. Now I don’t know that I’m gonna be able to go business class ’cause I have a family of four, but we’ll see.

Brendan (36:39): That makes it a little harder.

Emily (36:40): Yeah. But just to be able to take those longer flights to that, you know, the further destinations again for free or you know, low, low fees, you know, depending on the taxes and whatnot. Um, so I’m excited about expanding my own like practice in this area. So I’m talking to myself too as well during this interview. Um, so what’s been kind of the overall like effect on your financial mindset, on your stress, on your, how you spend your time of like pursuing this hobby?

Brendan (37:09): Yeah, I think for me in terms of financial, it’s made me think about return on investment a lot more because now every time we go out as a lab or I take friends out or grad school, I’m the first one to say I’ll pay just venmo me. And you can kind of think about it as a return on investment that it might end up paying your dinner actually, if you think about the points that you get in terms of personal kind of enjoyment of life, knowing that there’s this kind of once in a lifetime stay coming up at the end of the year really has helped motivate me to work harder in my like day-to-day life as a PhD student knowing that as soon as I finish this conference I’m flying to Florida for this really amazing to stay. Um, and kind of, you know, that’s coming up that allows me to kind of stress a little bit more so I, because I know the de-stress has coming where I can just sit pool side for a couple days.

Emily (37:58): I think that’s such an important point because probably a trait that’s pretty common among PhD students is not, um, giving yourself the kudos that you deserve for all the great work that you do and not taking the rest and the rejuve rejuvenation and so forth. Um, and what a great way to sort of enhance that experience to be anticipating it, you know, while you’re collecting these points, planning the trip, working really hard as you said, and then be able to actually, you know, take the vacation and do that relaxation that you need. And it’s, it’s cyclical, right? So like that’s so helpful. I know I didn’t take enough like vacation or personal uh, time, you know, when I was a graduate student and it’s really, um, it’s, it’s not that healthy to live that way. So I’m glad you’re kind of an example here of like a different way to like work hard, play hard, work hard, play hard, 

Brendan (38:45): And especially we have to to work hard a lot of the time. So like why not get that reward at the end of the tunnel, especially like whether it’s yearly at the end of the milestone. Kind of give yourself that reward.

The Grad Student Travel Substack and Other Travel Hacking Resources

Emily (38:57): Absolutely. First of all, share with us the name of your substack and then tell us some other great resources that you use in this space.

Brendan (39:03): Yeah, so my substack is gradstudenttravel.substack.com so when you go to that, you’ll be able to subscribe as soon as you put your email in, you have access to my archive of every post that I’ve ever written and every Wednesday you get an alert with, there’s a new post and it’s kind of a trip report, a new hack, a new trick and so on. And then the things that kind of got me into this space, um, there’s a lot of great blogs and kind of guides that get you in. One is MilesTalk, um, it’s a Facebook group that became, I think it’s a blog that became a Facebook group and now it’s kind of back and forth. He’s been really instrumental in kind of teaching how you can go from one thing to another and just stack all the rewards. And then Frequent Miler is another one. They do some awesome trip reports of, we use Amex points on this business flight to France. We didn’t like this so you should try this, another hack with Amex and kind of even like you read trip reports that people doing what you hope to do. So it’s been able to kind of gimme one aspiration of I want to be that guy on that plane or two how to get there.

Emily (40:07): It’s so much fun. Okay. When should we tune into your substack to see the trip report on your honeymoon?

Brendan (40:13): Yeah, so that trip report should come out probably next fall. Um, so I’ll be able to kind of write it up fully in the meantime. I’m going to, I started a kind of a six part post of like every little piece that went into it. So that would be every month or every two months I’m gonna kind of give a glimpse of how do we find the flight home, how did I use the points, how did I collect that? And then I’ll do a retrospective probably in like maybe a year from now where I say, this is the whole trip, these are the pictures, um, this is all the upgrades we got and everything.

Best Financial Advice for Another Early-Career PhD

Emily (40:46): Awesome. Well we will look forward to that. Okay, Brendan, thank you so much for this interview. I’m so like inspired <laugh>. Um, but I wanna end with the standard question that I ask all of my guests, which is, what is your best financial advice for another early career PhD? And it could be something that we’ve touched on on the interview already or it could be something completely new.

Brendan (41:05): I would say the best advice outside of like kind of dipping your toes in the water and like travel on points would be Roth IRA it. When I was a, I used to be a teacher, a older teacher kind of took me aside and said, Hey, you’re 22, you don’t know what you’re doing. Get a Roth IRA like first day. And I was like, oh, okay. Um, my mom had mentioned it too, so I should have listened to her in the first place. Um, but it really, if you think about what it affords you and there is kind of an opportunity cost for the PhD sometimes with retirement access that it really for me changed how I thought about retirement and finances and even invest in period.

Emily (41:43): Awesome. You know, I have to co-sign that. Love the Roth IRA for graduate students and really for everybody. Um, okay. Well Brendan, thank you so much again for volunteering to come on. It’s been wonderful talking with you.

Brendan (41:54): Thank you so much for having me. This has been awesome.

Outro

Emily (42:07): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by me and show notes creation by Dr. Jill Hoffman.

Financial Hacks Unique to Graduate Students

February 10, 2025 by Jill Hoffman 1 Comment

In this episode, Emily interviews Kyle Smith, a sixth-year graduate student at Penn State, about the financial strategies and hacks he’s used during grad school to increase his income and optimize how he spends and manages his money. In addition to side hustles and credit card and banking bonuses, they discuss how graduate students can benefit from using 529s and 457(b)s in a unique way. Kyle’s message is that finding ways to spend a few percentage points less on much or all of your expenses really adds up over time to confer financial security in the present and increase wealth in the long term.

Links mentioned in the Episode

  • Kyle Smith’s LinkedIn
  • Kyle Smith’s Academic Website
  • Host a PF for PhDs Tax Seminar at Your Institution 
  • PF for PhDs Tax Center for PhDs-in-Training 
  • PF for PhDs S17E9: This PhD Works Part-Time After Reaching Financial Independence in Austin Texas 
  • PF for PhDs Subscribe to Mailing List 
  • PF for PhDs Podcast Hub
Financial Hacks Unique to Graduate Students

Teaser

Kyle (00:00): By saving a few percent off your living expenses, having your emergency fund earn a few extra percent, saving a few percent on your taxes for money, that’s gonna grow a few percent every year until you retire. Um, these things, when combined, uh, really start to add up and let you, uh, get to a place where you have enough money, that you have more financial stability and more flexibility, uh, to do the things you want. Um, and really a lot of it comes from having enough of an emergency fund saved up that you can do these sorts of strategies.

Introduction

Emily (00:39): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (01:08): This is Season 20, Episode 3, and today my guest is Kyle Smith, a sixth-year graduate student at Penn State. Kyle and I go deep on the financial strategies and hacks he’s used during grad school to increase his income and optimize how he spends and manages his money. In addition to side hustles and credit card and banking bonuses, we discuss how graduate students can benefit from using 529s and 457(b)s in a unique way. Kyle’s message is that finding ways to spend a few percentage points less on much or all of your expenses really adds up over time to confer financial security in the present and increase wealth in the long term.

Emily (01:49): The tax year 2024 version of my tax return preparation workshop, How to Complete Your PhD Trainee Tax Return (and Understand It, Too!), is now available! This pre-recorded educational workshop explains how to identify, calculate, and report your higher education-related income and expenses on your federal tax return. Whether you are a graduate student, postdoc, or postbac, domestic or international, there is a version of this workshop designed just for you. While I do sell these workshops to individuals, I prefer to license them to universities so that the graduate students, postdocs, and postbacs can access them for free. Would you please reach out to your graduate school, graduate student government, postdoc office, international house, fellowship coordinator, etc. to request that they sponsor this workshop for you and your peers? You can find more information about licensing these workshops at P F f o r P h D s dot com slash tax dash workshops. Please pass that page on to the potential sponsor. Thank you so, so much for doing so! You can find the show notes for this episode at PFforPhDs.com/s20e3/. Without further ado, here’s my interview with Kyle Smith.

Will You Please Introduce Yourself Further?

Emily (03:24): I am delighted to have joining me on the podcast today, Kyle Smith. He’s a sixth year graduate student at Penn State, and we are going to talk about, well, I’m gonna reference the title of another podcast, I listen to All the Hacks. We’re gonna talk about several different, numerous different kind of financial hacks that Kyle has used throughout graduate school to increase his income, decrease some expenses, optimize finances in a few different ways, and Kyle’s been at it for several years, so he has a lot to share with us, some very unique strategies that we hardly ever touch on in the course of the podcast. So you’re definitely gonna hear some new stuff today. Um, Kyle, thank you so much for volunteering to come on the podcast. And will you please introduce yourself a little bit further for the listeners?

Kyle (04:03): Yeah, my name’s Kyle Smith. I’m a, uh, sixth year graduate student at Penn State. Like you said, uh, I got first introduced to your podcast right before I was starting, uh, graduate school, so I’ve been able to learn from some of your tips over the years. Um, my research, I’m in the anthropology department, uh, looking at dog human interaction. So for my research I’ve gotten to go to the dog park and watch people’s dogs and, uh, study how they think and interact with people, um, which has been a lot of fun.

Motivation Behind Pursuing Financial Hacks

Emily (04:31): Yeah, that does sound like fun. Um, okay. We are going to, as I said, talk about some different financial hacks that graduate students may be able to apply in their own lives. But before we get into your list that you sent me, um, I wanted to know why have you pursued all of these and kept going with, you know, some of them that worked out? Like why not just take your stipend and work with it as is and not put in the effort to find these extra, you know, extra workarounds? So tell us about that motivation.

Kyle (05:02): Yeah, I suppose really kind of my whole life, I’ve just been more of the saver sort of mentality. Um, you know, just whatever money I got, I would usually just save it up. Um, I think I tend to have less expenses that I wanna spend money on compared to a lot of people. Um, but then, so I’ve just tried to, you know, just kind of accumulate enough excess that I have the flexibility that when there is something then that I wanna spend the money on, um, that I have enough of a buffer to do. So. Um, so really been just kind of, uh, trying to optimize things to just accumulate a little bit more, uh, focusing a lot on retirement and especially saving for retirement in a way that gives them flexibility with what to do with that money, which we’ll get into it a little bit later. Um, and just realizing that, you know, any money that you’re saving up now and investing, uh, for the future will be worth a lot more later. Um, so, you know, if you’re fine to do a few things to save on some of your expenses, that that really adds up over time.

Emily (05:59): Absolutely. And I do wanna point out that, um, in the list that you sent me, there really isn’t too much about what I would call like true frugality. We’re actually not talking about decreasing expenses in terms of like giving up, uh, quality or downsizing or anything like that. We’re really gonna be talking about earning more or like financial type ways to spend less without getting less. Is that a fair way to characterize the list?

Kyle (06:24): Yeah, I would say so. With the things I’d mentioned. I mean, I definitely do, you know, try to, you know, spend less money on, you know, don’t eat out super often. Uh, split living expenses with people, um, never lived solo. So, you know, there’s strategies like that that have saved some money. Uh, but um, yeah, a lot of the things I just try to figure out ways where if I have a recurring expense I can save a few percent on it. Um, you know, if I have some money sitting there, I can get a few extra percent on it. Uh, and finding that those really add up over time.

Emily (06:57): Yeah, and I especially wanna point this out for like the listeners who <laugh> have, have felt like they’ve maxed out on spending less. Like I’m doing everything already that I can to spend less and I’m not interested in cutting any further. How can I earn more or optimize more to, you know, free up more money for my goals? Right. So that’s really what we’re talking about today. Okay. So let’s jump into your list. The first thing you told me is that you volunteer for research studies. Tell me about that and how much you’re earning from it.

Grad Student Financial Hack #1: Participating in Research Studies

Kyle (07:27): Yeah, there’s, it’s been a while since I’ve done any of those. Um, but you know, when you’re on campus in a university you can walk around the hallways and see there’s, you know, signs sometimes where they have looking for research participants. Um, you know, so a lot of times I’ll just pay attention to that and um, follow up with that if it seems like something that’s worth pursuing. Um, you know, plenty of studies are kind of short and you can make a quick 20 bucks or some are a little more involved, but you can make hundreds over time. Um, you know, so there was one in particular, uh, that I got quite a bit from because they were doing a longitudinal study of graduate students that started my first year of graduate school. Um, so there were kind of recurring surveys that they would have you do, they’d have you come in sometimes, uh, for some invis- in-person, uh, sampling, such as like cutting your hair to look at your cortisol and stuff like that. Um, you know, so I saved up few hundreds of dollars, uh, through studies like that. There was one I did where they were did an MRI scan of my brain that they also pay you a little bit higher for, uh, ’cause you’re in a cramped box. So yeah, just looking out for opportunities like that allow you to sometimes save just a little bit extra money here or there. Uh, and then if you have a strategy where you’re trying to save anything extra for retirement, uh, or for the long term instead of uh, you know, getting an extra $20 and immediately spending it, then that really adds up over time.

Emily (08:46): Mm-hmm <affirmative>. Either way, whatever you wanna do with it, it’s your extra $20 here or there. I mean, like you said, in any sort of large research university, there’s gonna be studies like that. I think one of the other bonuses is that sometimes they’re actually pretty interesting to participate in. Um, like you actually learn something about yourself or about the study or, or what have you. Have you found that to be the case?

Kyle (09:05): Oh, definitely. Um, you know, it’s been interesting just getting to see a different side to research from the research that I’m doing and the research that I read about. But actually being a participant in it, um, can be pretty interesting sometimes, especially when you see connections with like what you’re doing. Like I had look at the hair, cortisol, the dogs, and I was giving my hair for the hair cortisol. Um, there was actually a study I did when I was an undergrad. I volunteered and they as part of it, uh, took my DNA and I got my 23andme results back in addition to getting paid for doing it. So that was an interesting thing,

Emily (09:37): Definitely. Wow. Gotcha. Okay. Next item on your list was a side hustle, a true side hustle. Tell us more about that.

Grad Student Financial Hack #2: Editing as a Side Hustle

Kyle (09:46): Uh, yeah, this was kind of funny ’cause it was just came out of nowhere. I got an email in my inbox one day, um, saying that the person was a Chinese academic who was looking for American students to help edit manuscripts by Chinese academics. Uh, and asking if I was interested. And I immediately thought that it looked like some sort of scam phishing email. There was a strange address. Um, you know, people offering you money that you’ve never heard of before is usually something to be a little wary of. Um, but it seemed, you know, I thought about it and I was like, well, it might be legit. So I tried to look up the person and looked up his papers. Um, I found that, um, people in the acknowledgements had been thanked for helping translate, so I actually reached out to those people before him and was just is that guy legit, and they, they told me they’d work with them and had good experiences. Um, yeah, so that was just kind of an occasional thing. Sometimes I would do a few of these in a month, sometimes they didn’t offer me any for a while. Um, but yeah, just, uh, he seemed to have some connections to other researchers and try just to reach out to Americans, uh, to help just edit the English. I’ve done a handful of those over the past few years. They usually paid around 150 to $200 per manuscript depending on how long it was.

Emily (10:55): That’s an amazing pay rate. Yeah,

Kyle (10:57): No, it’s been, that’s been a good way to, it’s not a reliable enough thing that I can count on that as predictable income, but just occasionally they reach out and they’re like, Hey, can you do this paper?

Emily (11:07): I really like this type of side hustle that just opportunities come your way and depending on your schedule and your availability, you can just say yes or no and that’s great. It’s nice to not be committed to something when you go through busy or periods as a graduate student.

Kyle (11:21): Yeah. Whenever they’ve reached out about editing these, they’ve asked first if I’m available before sending it and you know, there were a couple times where I’m like, no, sorry, I’m too busy this week.

Grad Student Financial Hack #3: Credit Card/Banking Bonuses

Emily (11:31): Absolutely. Okay, next item on your list is kind of a bigger one. Um, credit card and banking bonuses. Tell us about your strategies here. Yeah,

Kyle (11:40): There, there’s a few websites out there that accumulate these sorts of things. Um, doctor of credit is one where they have bank bonuses and credit card bonuses that are, uh, being offered at that time. Sometimes you get some in the mail so you know it’s worth checking your junk mail about these. Uh, and a lot of times different banks will, or credit cards will offer you like a couple hundred dollars if you sign up for a bank account or open a credit card with them and spend x amount of money in the first certain amount of time. Uh, and in many cases these can be, uh, fairly profitable ways with not that much effort. Um, usually there’s some sort of requirements attached to it, so you have to pay attention to those and carefully note down, uh, what the requirements are and if you can meet those and that you’re not gonna be incurring more expenses than you’re getting back. But for instance, a lot of banks, they’ll say like $200 if you direct deposit at least a thousand dollars. So I just update my direct deposit for that month, you know, have my next paycheck go into there and then, you know, change it back after that. And there’s, if there’s not ongoing fees for maintaining it, um, then that’s sometimes just an easy way to get some money.

Emily (12:47): Okay. Yeah. Let’s pause a little bit on the banking bonuses. Um, so you just gave one example of like, oh, I just had to update my direct deposit to go to a different place. Um, sometimes you might have to keep that up for a few months. I think for some offers like this or other ones I’ve heard of, you have to keep like a certain balance in the account for a certain amount of time. So I’m wondering if you have done anything like that. Have you had to move like a chunk of money somewhere and kept it there to get a bonus?

Kyle (13:13): Yeah, there’s sometimes little requirements like that. Sometimes there’s a minimum bonus for a certain amount of time. Um, some of these, when you run the math, it doesn’t really make sense to do, but others, you know, I can keep a thousand there for three months and then get a few hundred dollars out of it. Uh, assuming you’ve got enough money saved up that you have some flexibility there. It’s a strategy that makes more sense. If you’ve got enough of an emergency fund that um, you have a few extra thousand dollars to spare, uh, some of them require a certain amount of transactions. Um, you know, there’s oftentimes easy ways around this. You can like set up your main account to just transfer $10 in and take it out automatically if you need to have a certain transaction each month, um, in order to not have a fee. Um, some of them are tied to like use your debit card, you know, 20 times in the first month and I just go to the gas station and buy a dollar of gas, buy a dollar gas, buy a dollar of gas just in a row. Um, so there’s ways to trigger it. And if you look on sites like Doctor of Credit, they usually detail, uh, what these are.

Emily (14:11): Hmm, that’s so interesting. I hadn’t heard about those little strategies just to fulfill that requirement like very quickly. That’s very helpful to not have to like think about it over a long period of time and remember, oh, I’m supposed to be using this card versus like this one to do this.

Kyle (14:24): Yeah. I think the way they get you with these things is they’re hoping that, um, it’ll be too much for you to do all that. So they either won’t have to pay the bonus because you trip up or that you just, um, you know, you’re not paying enough attention and then you start accumulating some monthly fee because you weren’t doing their one transaction a month or whatever.

Emily (14:43): So you just have to be really organized. Yeah,

Kyle (14:45): Yeah. You just have to be really organized, pay attention to what exactly the rules are and just make sure you’re following those to a T.

Emily (14:50): Yeah, absolutely. Okay. So let’s take like a credit card example then, since we just talked about bank accounts now. When I was in graduate school, it was quite a while ago, so credit card offers were different than they are now. I know. I was always concerned about being able to reach those signup bonuses like spend 1, 2, 3, 6, whatever it is, thousand dollars over two to four months. These kinds of things are common. Um, and I also, I don’t think in graduate school I ever paid an annual fee for a credit card. I do now <laugh>, but that was something I was just sort of like the whole category. I was just like against it at the time. Right. So like, tell us about that. Like how do you balance knowing that you’re gonna be able to meet these signup bonuses? You know, do you have any tricks about, you know, spending or timing the spending or whatever? Um, and also, yeah, how, how do you weigh the pros and cons if you, if there are some costs associated with it?

Kyle (15:38): Yeah. Um, I just try to pay attention to what my actual level of spending is and what the requirements are. And if there’s something where I don’t think I can meet the requirements won’t do it. I don’t have as many credit cards as some people who really pursue the strategy. Um, but there’s some that are quite easy to meet, like, um, some of the ones from Chase tend to be some of the most sought after ones and you can only get a certain number of credit cards per often before your credit score starts to go down and you start getting rejected. Um, but you know, some of the chase ones you have to spend $500 in the first three months and you get $200 or something like that. And that’s easy enough for most people do if they put all their groceries on it for a few months. Um, there’s some that have had bigger amounts, so some of the chase ones are more lucrative where you can get a thousand dollars signup bonus or so the amount fluctuates. So you have to look at the time, but you have to spend $4,000 in three months. And I don’t spend that much in that amount of time, especially ’cause uh, you know, you’re not paying the rent on the credit card typically. Um, but there are strategies that you can do and I think you’d only wanna do this if you’re the kind of person who knows that you’re gonna specifically be doing the math to spend the right amount to make it worth it for you instead of just spending a bunch of money and thinking, oh, I’m saving money because I get it, uh, a bonus. So what I’ve done when I, you have to spend like the, you know, a larger amount of money, you know, getting a thousand back on 4,000 spending is still worth it if you can make it work. So what I’ve done is just put everything that I can on it during that time. And then when it gets closer to the deadline, um, there’s various grocery stores and pharmacies sell these $500, um, prepaid debit cards with about a $5 fee, um, which normally doesn’t make any financial sense, but if you’re getting essentially 25% back, then you can put the last couple thousand dollars of that on these prepaid cards and then just use those for your expenses for the next few months. Um, so you can kind of preload your spending of that amount and let it stretch over your expenses for for many more months. Um, I’ve also, you know, paired this for if I know I’m gonna be booking some flights for the holidays or some other expenses. So when the timing of when you get these cards can matter a bit too.

Emily (17:47): Yeah. So not only for either one of these strategies, you have to stay very organized. You also have to really know your budget. You have to know what your spending is going to be over the next, you know, three or six months or whatever so that you can understand, yes, I’m gonna have enough spending or I’m not quite going to have enough. So as you said at the end, I’m gonna be able to use this strategy. But prepaying, you know, by buying gift cards or whatever, um, debit cards that requires you to have that money up front. So another area where we talked about like getting that first, you know, thousand two, three, $4,000 in like an emergency fund or just a general savings fund is so, so helpful to actually help you generate even more side hustle money. Like you’re really putting your money to work for you. Now we’re all of course hoping that an emergency wouldn’t come your way in that time when you have some money tied up in a de- in a debit card or whatever. Um, but anyway, it gives you more flexibility. So it’s just something that like builds on itself. Um, so if you get that first thousand, like then maybe the next, you know, few hundred is easier to come by ’cause you can use some of these like tricks and hacks

Kyle (18:45): For sure.

Emily (18:46): Um, and you also were just telling me that you paired this strategy with paying estimated tax on your fellowship. Can you tell us what that strategy was, uh, when, when you were using it?

Kyle (18:57): Yeah, so if you’ve not been listening to this podcast as much and you’re not aware of the estimated taxes, uh, sometimes if you’re on a fellowship, um, they’re not withholding your income tax and you’re responsible for paying that several times a year. Uh, I was on a fellowship like this my first year of graduate school. Some people are on it, if they have the GRFP for three years, depends on your situation. Um, and they let you, um, pay these payments either straight from your bank account or you can pay it with a debit card for like a $2 or so fee I think it is. Um, so again, if you’re able to buy these prepaid debit cards in such a way that you’re earning a decent percent back and then you can use that to pay your prepaid taxes for a small fee, you know, you do the math and see if the, if it works out in your favor, but especially if you’re getting a big bonus or if you have a big percent back on that credit card, then uh, it can end up saving you quite a bit more money than you’re spending in a fee. Um, there’s some credit cards too have like different rotating benefits. Like I have one that has a category that changes, uh, four times a year and sometimes they are giving you a bunch of money back for PayPal and they also normally give you money back for a pharmacy and those stack on top of each other. So if I can get 7% back at a pharmacy by buying a pre-K card and then use that for my taxes that they immediately refund to me, uh, that saves you a decent bit of money. Uh, the last time I tried that, they didn’t let me buy the prepaid card with the credit card at the pharmacy, uh, or with PayPal anyway. Um, so you have to, you know, your mileage may vary as they say, and the, the kind of rules for these things are changing all the time. But if you look at, uh, sites related to, you know, people who are doing these sorts of strategies, you can kind of find out to some extent what works and doesn’t at that time.

Emily (20:42): Yeah, all the like buying of gift cards, buying of prepaid debit cards, those kind of, um, ways to get up to those minimum spends. It’s a common suggestion, but the routes to doing it oftentimes get shut down. <laugh>, it, it makes sense that these things don’t always work in perpetuity, but as you said, there are resources available where you can learn how to pivot.

Kyle (21:01): Mm-hmm <affirmative>.

Emily (21:02): Yeah. Is there anything else you wanna add about the credit card or the banking bonuses?

Kyle (21:07): One thing with regards to the banking is, you know, another strategy is not just the signup bonuses, but banks that are gonna give you a certain amount of, uh, interest on what you have in that account. Uh, most banks tend to give you very low percentages these days, uh, but you can sometimes find some that give you a few percent back. I have most of my money, uh, in an account offered through Vanguard called Cash Plus, uh, that gives I think three or 4%, uh, per year of what you have in there as interest. It’s kind of a clunky account. It seems like it’s not as made to interface very well with other banks. So there’s been some frustrations with using that. But if you have thousands of dollars saved up as an emergency fund and you can get 4% of that back every year, you might as well park that money in a, in an account where it’s gonna be, uh, giving you a decent percentage back. And that just goes back to the whole theme of trying to optimize, uh, your finances by a few percent here or there, especially in the long term.

Commercial

Emily (22:07): Emily here for a brief interlude! Tax season is in full swing, and the best place to go for information tailored to you as a grad student, postdoc, or postbac, is PFforPhDs.com/tax/. From that page I have linked to all of my free tax resources, many of which I have updated for this tax year. On that page you will find podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs and PhDs-to-be. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with. Again, you can find all of these free resources linked from PFforPhDs.com/tax/. Now back to the interview.

Grad Student Financial Hack #4: 529 Contributions

Emily (22:58): Okay, now we’re gonna get into the strategies that I’m really excited about. So the first one is a 529 strategy. So Kyle, tell us, what is a 529 <laugh>? Why would a graduate student be using one? You know, how are you using it in a way that’s very different from how it’s like advertised? 

Kyle (23:14): So a 529 plan is something that was created to help incentivize parents to save money for their kids’ college. Uh, if you’re familiar with retirement accounts, it’s kind of similar to that where you’re getting some tax benefits to be investing money for a long-term goal. Uh, but in this case it’s higher education. Um, the, like I said, the intention seems to be more about saving for your kids’ college, but they have some flexibility about this. It doesn’t have to be your child, it can be your grandkid or your spouse or even for yourself. Uh, and while the intention is that you’re, uh, going to for expenses farther down the road, usually, uh, the minimum amount of time it has to be in there, it seems to be about a week. And it’s not just college that this works for, they let you, you use these funds for K through 12 education that has tuition and also for graduate school. So a lot of states have tax deductions for people who contribute to these plans because they’re trying to incentivize people to invest in higher education. Um, the idea is if you’re a parent, you contribute, you know, a few thousand dollars each year, uh, invest it, and then when you’re taking time that money out for your kids’ education, uh, you don’t owe taxes on that after all the growth and you’ve been saving some money on your state taxes along the way. What I’ve been doing is a tip I learned from, uh, your site years ago where you create an account where you’re both the account owner and the beneficiary, you contribute money to it, withdraw it a week later after the hold lifts, and then you can, if you’re using those money for qualified educational expenses, you’re allowed to deduct that from your state taxes. So the qualified educational expenses, you know, you need to look up and make sure it works, but basically it’s room and board for a graduate student, it’s tuition’s allowed too. But since most graduate students aren’t paying tuition, that’s not as helpful. Uh, I believe you can also do a certain amount of, uh, student loan payments as well. So, you know, I’ll just every few months, uh, contribute some of my money into this account, withdraw it a week later, uh, and then just keep track of how much I’m spending on food and rent and then just kind of do this so that the amount that I’ve contributed and withdrawn, uh, is, you know, as close as I can get it to the amount that I’m spending on room and board without going over it. Uh, and then when it comes time to pay my taxes in Pennsylvania, I can deduct in theory up to $19,000, uh, of contributions from my taxes, assuming that that doesn’t, you know, go that I’m not using these for things that are other than the qualified educational expenses. And since the Pennsylvania income tax is 3.07%, uh, you know, that adds up over time. I think in total I’ve saved about $2,000 on my estate taxes over the years by doing this.

Emily (26:07): Wow. Okay. I can see now why you’re being careful to keep track of how much you’ve actually spent in qualified education expenses. So I didn’t know about Pennsylvania specifically, but some other states I’ve looked at, the benefit might be limited to like $5,000 or like a few hundred dollars even. So with having such a high limit then yeah, it really makes sense that you are trying to, as you said, get as close as you can to matching your actual qualified education expenses so you can try to deduct as much as possible for that year. Um, that may not be as much of a challenge in other states is what I’m saying. ’cause maybe your rent alone for a few months would already max out like that benefit. Uh, we’re using the term qualified education expenses, which very, very astute listeners will know that when we talk about qualified education expenses, we always have to say what the benefit is that is defining that particular instance of qualified education expense. So qualified education expenses from a five for 529 accounts, as you mentioned, include things like living expenses, uh, you know, room and board. Um, it’s defined, but qualified education expenses for other benefits are like only tuition and required fees and so forth. So just be sure that you’re looking at the right definition, the right list when you’re trying to figure out what your qualified education expenses are for 529s. Um, so anyway, your particular benefit in Pennsylvania sounds incredible because that limit is so high. Other states the limits will be different. Sometimes it’s a credit, not a deduction. Um, some states don’t have any benefit and we are talking about a state level benefit, not a federal benefit. So the state that I, that I live in, California doesn’t offer any tax incentives for contributions to 529s. So, you know, you may be stuck with a state that doesn’t participate in this in any way, and then this isn’t gonna work for you. But if you live in a state with income tax <laugh>, then you should certainly look up whether there is any 529 contribution benefit. And I’m just, you know, struck by the fact this is another example where because you have freed up, you know, a thousand, 2000 whatever amount of money that you’re able to move around and do these different things that like these 529 contributions, you’re able to then spend less so, so much more money, like how that little bit of financial flexibility is buying you even more and more and more financial flexibility. So for those listening, I would just say if you haven’t saved that first 1, 2, 3, $4,000, like work on that hard because then you can, these other ideas are then open to you after that point. That’s so awesome. Now I have been wondering about that residence time of like the money being in the account, um, because you know, in your case, like you don’t wanna contribute $19,000 and let it sit there for the whole year, right? You wanna do small bits like frequently throughout the year. Um, so how did you come to find out what the minimum time it had to spend in, in the account to, to, you know, qualify for this deduction?

Kyle (28:49): I don’t remember how I first found out if it was somewhere in the, you know, the documentation about opening it or if I’d seen other people mentioning it. Um, the one thing to note, like you said, the state laws vary quite a bit, so you just have to look up how it applies to you if it does. But the, um, some states require it to be a specific plan from their state and others let you do any 529 plan. Pennsylvania doesn’t care what state it is. So I just did it through I think the Kansas plan because I already had a Schwab bank account and Schwab runs the, uh, Kansas plan, but you know, there’s others through Vanguard or whatever the case may be. So you need to make sure about that. But at least the one that I’ve done through Schwab, the, it just needs to be there for one week minimum. And like you said, I’m not gonna put my entire living expenses for the year all in at the same time. Um, but every month or two, um, if you just have enough money saved up for, you know, the next month’s living expenses, you can put it in, in the middle of the month, take it out, and by the time you’re paying your bills at the start of the next month, um, it’s still back there. Um, so you wanna have, you know, some extra money saved up, but it doesn’t need to be a ton.

Emily (30:03): Yes. Wow. What a powerful strategy. And so you’ve been, have you been doing this the whole time you’ve been in graduate school?

Kyle (30:08): Yeah, I, I first heard of it I think either in the beginning of graduate school or slightly before. Um, so I’ve just been doing that the whole time. Uh, it saved me quite a bit of money on my state taxes.

Emily (30:18): Yeah, you said about $2,000, that’s something like 400 per year approximately, right?

Kyle (30:23): Yeah, something like that. I, uh, I got married last year. Um, my, my spouse is also, she was a graduate student. Um, so once I was married I started contributing for her expenses as well, which saved us a little bit extra. Um, but yeah, if you’re doing this, uh, in graduate school in Pennsylvania, you know, saving 3% on all your rent and food expenses each year really adds up.

Emily (30:47): Yeah, it definitely does. Oh my gosh, I’m so grateful for this example. Thank you so much for sharing this with us.

Kyle (30:52): One important thing to note with the 529 plans, uh, is because they’re not really set up for people to be using it in the way that I’ve been using it is you gotta pay attention to certain details. Like in my account I’m listed as both the account owner and the beneficiary. Uh, so you have to make sure that you are contributing as the account owner and removing money as the beneficiary, uh, because it gives you the option to also remove it as the account owner, uh, I guess for people who contribute it and then decide that they didn’t wanna contribute it. Um, but if you’re removing it as the account owner, uh, then they’ll say that you’re not actually contributing it. Uh, so then you won’t get that tax benefit. So you just need to pay attention to that detail.

Grad Student Financial Hack #5: 457(B) Retirement Accounts

Emily (31:31): Yes. Another example of where being organized and detail oriented is very necessary for making this strategy work. Okay, awesome. And then the last strategy you mentioned to me was about using a 457 retirement account, which is not one that gets a lot of airtime. So tell us what’s different about this account? Why do you choose to use this, um, either uh, first or in, you know, to supplement your other tax advantage retirement accounts?

Kyle (31:58): Yeah, so I was working for a few years before I started graduate school. So I already had a Roth IRA and an account from my employer. Um, they thought I was contributing money and saving up that way. Um, and then when I started graduate school, I was still contributing to the Roth IRA at first. Um, but then I saw, I just think I got some letter in the mail just mentioning employee benefits that I had access to and one of them was a supplemental retirement account and I was like, what is that? Um, so I looked it up and something that a lot of graduate students encounter is that they’re not eligible for most employer sponsored retirement accounts, so they can’t sign up for, you know, a 401k and get their employer matching their contributions or anything like that. Um, but uh, I found in my case this probably holds at some other universities as well that there’s something called a supplemental retirement account where they’re like, we’re not gonna contribute any money to this as your employer, but you’re allowed to put money into it. Um, at first this wouldn’t seem like it has that much of an advantage compared to just your own IRA because you’re managing that yourself. Why would you worry about involving your employer? But I noticed when I was reading the benefits that the 457B seems to have some really specific advantages that are actually quite nice and that I don’t think you can really get, uh, through any other account that I’m aware of. Um, so if you’re not as familiar with, uh, retirement accounts, uh, they, whether they’re an individual retirement account, an IRA or an employer sponsored plan, uh, there’s usually two types, either Roth or traditional. So Roth, you’re paying your taxes on your income now, um, and then contributing it to the account where it can grow, uh, without getting taxed on your dividends or anything when you’re investing it. Uh, and then when you withdraw it when you retire, uh, you don’t owe any tax on it. Traditional is the other way around where you’re saving on your taxes for what you contribute. You don’t have to pay income tax on it, it grows without getting taxed on the dividends. And then when you withdraw it in retirement, you, uh, owe tax on it at that time. Um, so there, there’s two different strategies depending on whether you wanna pay your taxes now or pay your taxes at retirement. And a lot of people seem to recommend the Roth accounts in situations where it actually doesn’t really seem to make sense. Um, the typical advice that you hear is, oh, if you’re, you know, a graduate student or somebody else with a relatively low income, you’ll probably be, uh, earning more money in retirement or when you’re older, so you might as well do the Roth now, uh, and save on your taxes ’cause you’ll owe more tax on it later. Um, there’s really no way of knowing exactly what your taxes will be in retirement because you don’t know how policy will change and how your lifestyle will change. Um, but let’s say for instance, you’re in the 12% tax bracket now and you’re in the same one when you retire. Um, if you contribute to a Roth account, you’re saving the 12% or you’re paying the 12% now and then you withdraw that tax free later. Um, but if you’re contributing to a traditional account, you’re paying, you’re saving the 12% now and then you pay o tax when you retire. But if you’re in the same tax bracket, the first chunk that you pull out goes to your standard deduction and you don’t owe tax on it, the next chunk you pull out is in the 10% bracket. And not only after that, uh, do you owe the 12% tax on it. So your average tax rate will actually be probably lower than your marginal tax rate. So it’s a little more advantageous in many circumstances to do traditional. Uh, one of the disadvantages with traditional, as opposed to Roth, is that money is tied up until you’re 59 and a half and you’re not allowed to remove it early without owing both the income tax on it and also a 10% penalty. Uh, with Roth, one of the nice advantages is you can take that money out, um, that you’ve contributed early without owing any penalties on it. Uh, that’s only a contribution. It’s not what it’s grown from being invested. But the unique thing that I found out about the 457B plan is it kind of is the best of both worlds. You get the tax benefit now, um, which like as I just laid out, is probably in most cases gonna be saving you money on your taxes overall. Um, but uniquely with it you can actually withdraw the money you contribute before retirement age as long as you’ve separated from that employer. Uh, and as a graduate student, I’m not planning on being employed by Penn State for the rest of my life just until I finished my PhD and then after that point I’ll have access to that money should I want it. Um, and I think that this is a really nice advantage because it’s nice to have the flexibility. You know, if years down the line I have a loved one who gets sick and I want to quit my job and you know, for a year or two live off of what I have saved up, I would be able to do that and I would just owe my income tax and not any extra fee. If I get to age 50 and decide I wanna retire, then instead of waiting until 59 and a half, if I have enough money, I could just go ahead and do that and use this account. So it gives you a lot more flexibility about how you wanna use it. Um, yeah, the, this does get withheld from your paycheck, so you have to a month in advance go in and say how much you want withheld. Uh, I’ve kind of adopted a flexible approach about this where I just look at my, uh, expenses and budget and how much money I have and I’ll be like, I have more money saved up than I need, so I’ll make my contributions a little bit higher. Or, oh, I had an unexpected expense this month with car repairs or something, I’ll make it lower. Um, but I’ve been trying to save up through that and uh, I think on average contributed in the like eight to 9,000 per year, uh, into this account, which is actually more than the space from an IRA.

Emily (37:25): Thank you so much for that thorough explanation. Um, I totally agree. So, because I think most, most Americans, if they have any kind of workplace based retirement plan, it’s gonna be a 401k or maybe if they’re a federal employee or something, TSP, but a lot of people who are employed by nonprofits, um, and also government agencies at whatever level, um, might have access to a 403 B and maybe also a 457 as you do, but, but because it’s such a small like kind of percentage of the population, this account doesn’t get a lot of airtime, you know, when retirement accounts are discussed. So you’re exactly right that like this benefit of being able to remove the money early without penalty is pretty unique. Um, that is to say without having a special circumstance, like you can remove sometimes for education or like stuff like buying a home, stuff like that, but, but without any reason, right? You just, you just have access to it whenever you want it. You don’t have to justify it. It is a really unique thing and especially attractive for people who are going for early retirement or as you said, might just wanna access a chunk of money for whatever reason, for special life circumstances or, um, what have you. So it is really unique. It sounds to me like you are using this as your primary tax advantaged retirement account, right? Like you’re, you’re not using a Roth IRA or anything similar in addition.

Kyle (38:39): Yeah. Ever since I found out about this account, I’ve only contributed to that for retirement. Uh, I still have the Roth IRA from before that’s been accumulating money in the meantime. Um, but because of the advantages of this and that I’ll only have access to it for the time that I’m a graduate student, uh, I’ve just been prioritizing anything that I’m saving for retirement into this account.

Emily (38:59): Absolutely. And I do wanna point people to season 17, episode nine, my interview with Dr. Corwin Olson. So he and I had a, a long discussion in that, um, episode about what you were just mentioning, how sometimes contributing to a traditional retirement account, even when you’re in graduate school or a fairly low tax bracket, uh, makes sense, makes sense in certain situations. It’s still not something that I’m gonna say is my number one <laugh> best thing to do. I still firmly believe in the Roth IRA for most people who are going to expect that higher income marginal income tax bracket in retirement. But certainly like we talked about with Corwin, like people who are planning on retiring early have to do a lot different kinds of considerations about filling up like the standard deduction aspect of their, um, income and the 10% bracket and the 12% bracket and so forth. So it’s kind of a different calculation. Um, but I appreciate you bringing that to light again and yeah, why this could be certainly a legitimate choice even for a graduate student.

Kyle (39:56): Yeah, and as far as I understand too, the fact that I have a Roth IRA, um, from before actually pairs well with this because, you know, I could withdraw from the 457B up to the standard deduction or up to the 10% tax bracket, and then if I’m still spending money beyond that withdraw from the Roth IRA without owing any extra taxes.

Emily (40:15): Absolutely correct. Yeah, I, that’s one of the reasons why I say that it’s great to have both traditional and Roth money available to you when you get to retirement so that you can do that kind of tax optimization. And we’re even talking about pre-standard retirement age in the case of the 457 that you, you would’ve access to it, as you said, as long as you’ve separated from your employer. So that’s a really exciting account to use. Um, as you kind of mentioned early on, you do have to be an employee of your institution to have access to this. So like you mentioned your first year you were on fellowship, I’m suspecting this letter came after you transitioned over to an employee type position. So for those listeners, um, for those listening, if you are an employee, then certainly this is something to check into. I would hazard a guess that, um, large public universities part of state systems like the one that you’re at are more likely to offer this kind of benefit than private universities, or it might depend on your state as well, like maybe some state systems do, some don’t, but I have heard of this for, you know, certain employees at um, large public institutions.

Kyle (41:19): Yeah. My understanding is that, uh, it’s more of a benefit of public universities, so you wouldn’t find it everywhere and some universities might just not offer it, but worth looking into if you’re employed by a public university.

Emily (41:32): Absolutely. Before I ask you my final standard question, I was just wondering, with all these strategies you’ve been using over the past five, six years, what’s been the effect? Like, have you, you’ve mentioned numbers here and there, but like have you significantly increased your income or your net worth or reduce your stress or like, what, what has been the effect of actually employing these strategies? And I guess also the cost, like how much time do you spend on these kinds of activities

Kyle (42:01): Overall, the result of these has been, you know, thousands of dollars that I’ve saved up. And because any extra money that I’m saving up, I’m putting into retirement accounts that’ll continue to compound. So, you know, a thousand dollars saved now will be even more thousands of dollars at retirement age. Um, so it’s really kind of had a snowballing effect, uh, where just a little bit saved results in making it easier to save more money, uh, which will result in more money with investments further down the road. Um, so I found it to be definitely worth pursuing. Uh, my net worth has definitely increased quite a bit in graduate school, although part of that was having a Roth IRA from even before I’d started graduate school. Um, and like you said about, uh, benefits to stress and wellbeing, I think that’s a very strong part of it as well. Uh, by having enough of an emergency fund, uh, saved up that you can do these sorts of strategies and have money to contribute for, uh, 529s or bank bonuses or whatnot, um, and having enough extra money like that beyond your monthly living expenses is really a source of stress relief. Uh, it’s nice to know that uh, if something unexpected comes up, I’m not gonna be unable to pay my bills that month. You know, and there’s circumstances where, you know, for instance, one point in graduate school, both my parents injured themselves within a few days of each other and I flew out, uh, to help take care of them. And you know, having enough money that you can just book a last minute, uh, flight without having to, you know, be unable to pay your bills, uh, is really a source of stress relief

Emily (43:40): About the cost question. Like how much time would you say you spend doing the stuff? Like per week or per month?

Kyle (43:45): Really not that much, I would say. Um, a lot of these things, especially over time have gotten better at optimizing. Um, you know, in terms of like contributing to a 529 plan and stuff like that. Um, you know, once you’ve got it set up, it just takes a few minutes to say, you know, transfer a thousand dollars into this account and then just put a reminder on your calendar to do taking it out next week. Um, so some of these are pretty low effort. I would say that the bank bonuses and credit card bonuses take a lot more time and that’s something that I’ve not been doing as much lately, especially as I’m trying to finish up my dissertation. Um, but it’s something that, you know, was a nice extra source of cash here and there, there, and you can kind of devote time flexibly to it depending on if you’ve got extra time to look up if there’s any good signup bonuses right now. Um, but then since you’re not depending on that income, if you’re don’t have the time or don’t wanna deal with it, then you don’t have to.

Best Financial Advice for Another Early-Career PhD

Emily (44:47): Yes. Oh, such a wonderful position to be in. Thank you so much for sharing all of the things that you’ve learned and tried out and, you know, found what works and what didn’t for you, um, over the course of your time in graduate school. This is really amazing. I really hope the listener is gonna take away at least one thing to experiment with <laugh>. Um, so let’s wrap up with, um, my final question that I ask of all my guests, which is, what is your best financial advice for another early career PhD? And it could be something that we’ve touched on in the interview already, or it could be something completely new.

Kyle (45:14): Yeah, if I had to sum up everything that we’ve touched on in this interview, it’s that things that are small amounts of money here and there and just a few percent of recurring things, uh, really add up over time. Um, that by saving a few percent off your living expenses, having your emergency fund earn a few extra percent, uh, per year, um, saving a few percent on your taxes for money, that’s gonna grow a few percent every year until you retire. Um, these things when combined, uh, really start to add up and let you, uh, get to a place where you have enough money that you have more financial stability and more flexibility, uh, to do the things you want. Um, and really a lot of it comes from having enough of an emergency fund saved up that you can do these sorts of strategies. Um, so especially anything that you can do to save up extra chunks of change if you don’t have an emergency fund. And then once you get to the point where you, you know, got four or five months of your living expenses you’ve saved up in the bank, you can start to play around with some of these other strategies to let that money snowball.

Emily (46:18): Wonderful. I love it. Thank you so much, Kyle, for volunteering to come on the podcast.

Kyle (46:23): Yeah, of course. Thanks for having me.

Outtro

Emily (46:34): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by me and show notes creation by Dr. Jill Hoffman.

How to Establish and Improve Your Credit as a Graduate Student or PhD

September 13, 2021 by Emily

In this episode, Emily explores the topic of credit: what is it, why it matters, how to establish it, how to improve it, and when you can stop thinking about it so much. Near the end, she also reveal the biggest credit killer that she sees among the PhD community and how to overcome it. As ever, the content is tailored to the PhD experience of finances in the US, including that of international students, postdocs, and workers.

Links Mentioned in the Episode

  • Investopedia definition of creditworthiness
  • What Is a Good Credit Score? How Do I Get a Good Credit Score? [Nerdwallet]
  • Sam Hogan’s Zillow Profile
  • Council of Graduate Schools, Financial Education: Developing High Impact Programs for Graduate and Undergraduate Students
  • Personal Finance for PhDs Community
  • How to Up-Level Your Cash Flow as an Early-Career PhD
  • How to Pay Off Debt as an Early-Career PhD
  • Hub for the Personal Finance for PhDs Podcast

Intro

Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts.

This is Season 10, Episode 6, and I don’t have a guest today, but rather I’m exploring the topic of credit: what is it, why it matters, how to establish it, how to improve it, and when you can stop thinking about it so much. Near the end, I also reveal the biggest credit killer that I see among our community and how to overcome it. As ever, I have tailored the content in this episode to the PhD experience of finances in the US, including that of international students, postdocs, and workers.

I’m eager to devote time to this important topic because many PhDs, especially those who grew up outside the US or are from underprivileged backgrounds, don’t have credit or have poor credit or are concerned about their credit. If you have good credit, it’s not something you have to pay much attention to. But if you have poor credit or no credit, it can really hold you back financially and limit your life choices.

The credit bureaus start tracking our financial actions as soon as we start taking any. For many of us, that starts when we’re minors or college students, long before we may have the financial acuity to safeguard and foster our credit. Very sadly, some children and adults are victims of financial fraud, which can destroy your credit through absolutely no fault of your own, and it can be very difficult and painful to rectify.

I expect listeners of this episode to run the gamut, from PhDs and graduate students with great credit to those with poor credit to those with no credit. You will all find great information in this episode, including what steps you should take to establish or improve your credit, if necessary, and some reassurance as to when you can put your credit out of your mind.

What Is Credit?

Asking the question “What is credit?” seems like a basic place to start this episode, but I actually had to search a little harder for a good definition than I was expecting. In fact, the best definition I found was for the term creditworthiness rather than credit, and it’s from Investopedia.

“Creditworthiness is… how worthy you are to receive new credit. Your creditworthiness is what creditors look at before they approve any new credit to you. Creditworthiness is determined by several factors including your repayment history and credit score.”

Basically, credit is a tool that lenders use to evaluate how risky you are to lend to, which affects whether whether they will work with you at all and what interest rate you’ll be offered. This evaluation is based on your past use of credit.

All of your credit-related activity is tabulated in your credit report. Actually, you have multiple credit reports, each prepared by a different credit bureau. There are three main credit bureaus: Equifax, Experian, and Transunion. In theory, they are all working off of the same information.

The information that is included in each of your credit reports is 1) personally identifiable information, such as your name, social security number, and address; 2) lines of credit and payment history, which is all of the loans and credit that have been extended to you and your repayment history with each, going back approximately seven years; 3) credit inquiries, which is a record of each time your credit is viewed by a potential lender; and 4) public record and collections, which is a record of bankruptcies or bills that have gone to collections because you neglected to pay them.

Your credit reports are used to calculate credit scores. You actually have many credit scores calculated in different ways by different bodies for different purposes. The most popular credit score for mortgages and similar loans is the FICO credit score. A close second is the VantageScore. We’ll return in a few minutes to how those scores are calculated and what they mean.

The main points I want you to take from this section are that your credit scores are based on your credit reports, which are records of all of your credit-related activity.

Why Credit Matters

Why should you or anyone else care about your credit or your credit score in particular? You can see that your credit is based on how you’ve treated your debt and some other financial obligations in the past, and it was developed to help lenders asses whether they should lend to you under the assumption that you will behave in the future as you have in the past. So clearly your credit matters if you are trying to take out a loan, like a mortgage or car loan, or a line of credit, like a credit card.

Rather strangely, your credit score is also often referenced when someone wants to quickly judge how financially responsible you are. Landlords, utility companies, and insurance companies often access credit scores, and some employers and even governments do as well. It is a big leap to assume that how you’ve treated debts in the past is predictive of general financial responsibility in the future, and I think it’s quite unfair.

People who have no credit are often quite financially responsible because they have managed to run their lives without the use of debt, but that’s not reflected in their nonexistent credit score. Also, credit you may have had in your home country does not translate to the US; you have to start over. And for anyone with poor credit, the actions and/or circumstances that created that low credit score are not ones that will necessarily be repeated in the future. You can change your financial behavior on a dime, but it takes a long time for your credit score to catch up.

The Equal Credit Opportunity Act of 1974 ostensibly prohibits discrimination based on race alongside other factors, but in practice there is a credit gap. A recent study by Credit Sesame found that 54% of Black Americans had no credit score or a poor or fair credit score, while only 41% of Hispanic Americans, 37% of white Americans, and 18% of Asian Americans had the same. The credit gap stems from the Black-white wealth gap, homeownership gap, employment gap, and income gap, and perpetuates the wealth gap and homeownership gap.

The credit gap is caused by systemic problems, and systemic solutions are warranted. However, in this episode, I’m going to focus on what you can do as an individual to impact your own credit score.

What is a good credit score and how is it calculated?

The FICO credit score and VantageScore range from 300 to 850. According to a lovely Nerdwallet graphic linked in the show notes, a score of 720 to 850 is considered excellent, 690 to 719 is good, 630 to 689 is fair, and 300 to 629 is poor. For another reference point, a FICO credit score of 760 and above will get you the best interest rates on a mortgage.

https://www.nerdwallet.com/article/finance/what-is-a-good-credit-score

While the exact algorithm for calculating FICO credit scores is proprietary, we know that 35% of the FICO score is based on payment history, 30% on amounts owed, 10% on new credit inquiries, 15% on the length of your credit history, and 10% on the mix of credit. We’ll get into what actions you can take in each of these areas to improve your credit score momentarily.

How do I establish credit?

Before we get there, I want to speak to those of you who do not have any credit history in the US. I do think it’s worthwhile to establish credit history and a credit score if you are not yet financially independent. A good credit score is useful as a renter and a virtual necessary when taking out a mortgage.

As I explained earlier, credit is self-referential. To have credit, you must have had credit. So how do you get your foot in the door?

The simple and free way to do so is to take out a secured credit card. This is a special kind of credit card designed to help people establish credit. You turn over a deposit, which becomes your line of credit. You borrow against that line of credit and then pay it back. After about six months, you should have a credit score and be able to move on to more conventional debt products, if you want to. These credit cards are often marketed as student cards.

Alternatively, if you have a family member who is very responsible with credit, you could ask to be added as an authorized user on one of their credit cards. In this way, their good credit sort of rubs off on you. You don’t actually have to even have or use your authorized user card. Just make sure that the person you ask to do this pays off their credit card balance in full every statement period. As soon as your credit score is established and high enough, take out your own credit card to establish your independent credit history. As I learned from Sam Hogan, a mortgage originator with PrimeLending (Note: Sam now works at Movement Mortgage) and an advertiser with Personal Finance for PhDs, in one of the live Q&A calls we’ve held, your credit score may look good with only an authorized user card in your history, but you won’t qualify for a mortgage on that alone.

There are two other solid ways to establish credit, but they are not usually free, and therefore I suggest you only undertake one of them if it is very financially important to you to establish the highest possible credit score quickly. That’s not usually necessary, so these are sort of extreme steps.

Method #1 is to take out a loan with a bank, sometimes specifically called a credit builder loan. This is an installment loan, so it’s a good complement to the revolving line of credit you likely already have with a credit card. It’s not enough to take out the loan, but rather the point is to make the minimum payments consistently to demonstrate that you are capable of repaying debt responsibly. The cost here is the interest you’ll pay throughout the repayment period, so you should shop around for the best rate available to you. You could also consider doing this with a student loan if you are a student, but since the loan won’t go immediately into repayment, I’m not certain it will have as positive an effect on your score as a credit builder loan would. Plus, student loans are not dischargeable in bankruptcy, if it came to that, so that’s a strike against them in comparison with a bank loan.

Method #2 is to pay a service to report the payments you are already consistently making to the credit bureaus. For example, the service might report your rent payment, which would not normally be included in your credit report. The cost here is the fee for the service, so again, shop around. You won’t have to keep the service up indefinitely, only long enough to qualify for another debt product.

This last tactic of reporting rent payments to credit bureaus and having them be calculated into credit scores is, from what I can tell, the top method being pursued to address the credit gap. A few landlords are starting to report rent payments to the credit bureaus on behalf of their tenants for free. The newest versions of the FICO and VantageScore algorithms do take rent payments into consideration, but most lenders still rely on older versions of the algorithms.

How do I improve my credit?

Now that we’ve covered establishing credit, let’s go deep into how to improve credit. Please take note from the outset here that improving your credit score is a long game. You must practice good credit behavior consistently for years. Since the length of your credit history is taken into account, you really can’t attain a top credit score until you’ve been using credit for at least a handful of years.

I’m going to give you at least one suggestion from each category that goes into the FICO credit score. Don’t be shocked when one or two of the suggestions contradict each other!

35% of the FICO score is based on payment history. This is the key category. Make your payments on time and in full every time. For years.

30% of the FICO score is based on amounts owed. Pay down your debt. Pay off your debt. For a specific hack, keep your credit card utilization rate low. Your utilization ratio is the balance you owe across all your credit cards divided by the sum of your credit limits. You should keep this ratio below 30% or ideally below 10%. Please note that your utilization ratio can be viewed at any point in your statement period. So even if you pay off your credit cards in full every period, as you should, having a high utilization ratio at some point earlier in the period will still ding your score. You can keep your utilization ratio low without changing your spending by 1) requesting credit limit increases across all of your cards, 2) applying for new credit cards to increase your overall credit limit, and 3) paying off your cards multiple times each statement period instead of just at the end.

10% of the FICO score is based on new credit inquiries. Don’t apply for any new loans or lines of credit. I warned you that some suggestions would be contradictory!

15% of the FICO score is based on the length of your credit history. Basically, you just need to let time pass. It helps to keep your oldest credit card open indefinitely and to close newer accounts if you want to close any. If you haven’t opened a credit card yet, choose one without an annual fee to be that first card.

10% of the FICO score is based on the mix of credit. Specifically, this means having both revolving lines of credit, like credit cards and home equity lines of credit, and installment loans, like a mortgage, car loan, student loan, etc. If it was really important to you to improve your credit score and you didn’t have any installment loans, you could take one out, like the credit builder loan I mentioned earlier, but it will cost you.

Another great, general step to take is to check your credit reports for accuracy once per year through annualcreditreport.com, which is the government-sponsored website where you can order one credit report per year from each credit bureau. During the pandemic, that limit was increased to once per week. Keeping tabs on your credit reports is part of your basic good credit behavior.

Credit killers

Now I’d like to explore the main credit killer that I see PhDs and particularly graduate students falling into. And it’s not student loans! Believe it or not, as long as you’re current on your payments and your balance isn’t inordinately high, student loans are kinda good for your credit score. No, the big credit killer, and killer of your finances overall, is credit card debt.

According to the Council of Graduate Schools’ recent report, Financial Education: Developing High Impact Programs for Graduate and Undergraduate Students, 85% of graduate students have a credit card. Forty-five percent of those carry a balance on their cards, with 9% only making the minimum payment.

Everyone listening to this podcast episode knows that finances in graduate school are challenging at best. We can all understand how readily an emergency or unexpected expense could result in a carried balance on a credit card. But, I implore you, instead of accepting that your credit card balance will be with you until and through graduation, get aggressive about ridding your balance sheet of this most toxic kind of debt.

Ideally, you would pay your balance off by increasing your income and/or decreasing your expenses and throwing all available cash—outside of a starter emergency fund—at the debt. Depending on how high that balance is, you may not have to make these sacrifices for long.

If it is absolutely impossible for you to increase your income or decrease your expenses before you finish graduate school, you could at least mitigate the negative effects of your credit card debt. If your credit card debt resulted from the hard reality that your stipend is insufficient to pay for basic living expenses, please consider taking out a student loan to pay off the past debt and supplement your income going forward so you stay out of credit card debt. While it’s not great to be in student loan debt either, at least you can defer the payments until after you graduate. If your credit card debt resulted from an unexpected expense that is unlikely to recur, you might consider paying off your credit card debt with a personal loan from a bank or with a balance transfer credit card. That way, you can at least get a break on the interest you would have paid while you’re paying down the balance.

If you’d like to learn more about increasing your cash flow and paying down debt, please join the Personal Finance for PhDs Community at PFforPhDs.community. Inside the Community, you will find the recordings of two workshops I gave in August, titled How to Up-Level Your Cash Flow as an Early-Career PhD and Whether and How to Pay Off Debt as an Early-Career PhD. After working through the materials, you will have a plan for how to handle your credit card balance in the short and long term.

When your credit doesn’t matter

The final credit topic I’ll address in this episode is when your credit doesn’t matter and when it does. Once you have attained a great credit score of approximately 740 or above and you keep up your good credit habits, you don’t need to pay much attention to your credit. Keep paying your bills on time and in full, use your credit cards as you would debit cards, chip away at your debt, and check your credit reports for accuracy once per year. You don’t have to actively work on increasing your credit at that point—with one exception. If you are planning to take out a loan in about the next year, it would behoove you to get a little more protective about your credit. I’m particularly speaking about taking out a mortgage, but this would also help you with a car loan or similar. For example, you might stop opening credit cards months or a year in advance of applying for your new loan so that you don’t have any recent hard credit inquiries. You might pay off a smaller debt in its entirety. You might pay special attention to your utilization ratio. Above all, when you start working with a mortgage loan officer, listen to that person’s advice about what to do regarding your credit. They might instruct you to make absolutely no changes. I know that Sam Hogan, the mortgage originator I mentioned earlier, advises his clients all the time about their credit in the lead-up to taking out a mortgage. If you are looking to take out a mortgage in the near future and you want to work with someone who understands PhD income, please reach out to Sam over text or a call at 540-478-5803.

Conclusion

I hope this episode was instructive for you and clarified what steps, if any, you should take regarding your credit as a graduate student, postdoc, or PhD with a “Real Job!”

Outro

Listeners, thank you for joining me for this episode!

pfforphds.com/podcast/ is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes’ show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast. I’d love for you to check it out and get more involved!

If you’ve been enjoying the podcast, here are 4 ways you can help it grow:

  1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use.
  2. Share an episode you found particularly valuable on social media, with a email list-serv, or as a link from your website.
  3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license pre-recorded workshops on taxes.
  4. Subscribe to my mailing list at PFforPhDs.com/subscribe/. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs.

 See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps!

The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC.

Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

This Grad Student Travels for Free by Churning Credit Cards

October 26, 2020 by Lourdes Bobbio

In this episode, Emily interviews Julie Chang, a graduate student at Stanford University. Julie’s partner and parents live on the East Coast and she has family abroad, so during grad school she has pursued a specific credit card rewards strategy known as churning to help her travel hack. She has regularly flown domestically and internationally for several years almost exclusively using points and miles instead of cash. Julie details how she manages her churning strategy, including how she meets minimum spending requirements on her stipend, and how she has changed her strategy during the pandemic.

Links Mentioned in this Episode

  • Find Julie Chang on Twitter
  • Personal Finance for PhDs: Perfect Use of a Credit Card
  • Personal Finance for PhDs: How to Establish Credit in the US
  • Podcast Episode: How to Make Money without Working: Credit Card Rewards and 529s
  • Personal Finance for PhDs: Community
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
grad student travel hacking

Teaser

00:00 Julie: Even if you don’t want to start off with churning right away, my best advice is to just get a credit card with a low minimum spend, and at least use that to start building your credit score and acquiring some points.

Introduction

00:18 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host Dr. Emily Roberts. This is season seven, episode eight, and today my guest is Julie Chang, a graduate student at Stanford university. Julie’s partner and parents live on the East coast and she has family abroad, so during grad school, she has pursued a specific credit card rewards strategy known as churning to help her travel hack. She has regularly flown domestically and internationally for several years, almost exclusively using points and miles instead of cash. Julie details, how she manages her churning strategy, including how she meets minimum spending requirements on her stipend and how she has changed her strategy during the pandemic.

01:06 Emily: Julie and I don’t go deeply into the topic of who can or should pursue credit card rewards or how to get started, so I’m going to point you to some free resources I’ve created on those topics. They’re all linked from the show notes for this episode, which you can find pfforphds.com/podcast. My article titled “Perfect Use of a Credit Card” explains how to avoid all the pitfalls that easily accompany credit card usage by putting in place some pretty stringent rules. You will have to be well-practiced and following strict rules in this area if you want to succeed with credit card rewards. My article titled “How to Establish Credit in the US” is for people who have recently arrived in the U S or who have lived in the US for many years, without taking out any debt. It explains how to get your first toe hold in the world of credit and how to build your credit score over time. Finally, in 2019, I published a podcast interview with Seonwoo Lee titled “How To Make Money Without Working: Credit Card rewards and 529s”. That episode is quite complimentary to this one, and I recommend listening to it. If you want to go deeper into the subject. Without further ado, here’s my interview with Julie Chang.

Will You Please Introduce Yourself Further

02:20 Emily: I have joining me on the podcast today, Julie Chang. She is a graduate student at Stanford currently, and we’re going to be talking about credit card hacking, credit card rewards strategies today. So, Julie, will you please introduce yourself a little bit further?

02:34 Julie: Sure. I’m a fifth year bioengineering PhD student at Stanford, and I’m currently studying how the mechanical properties of the extracellular matrix affect cell behavior and specifically in the context of cancer.

Credit Cards vs. Debit Cards

02:48 Emily: Yeah. Excellent. You have done what I used to view as the impossible, which is having a strategy for credit card rewards during graduate school. And I always thought there’s a little bit out of reach, so I’m really excited to learn more about credit card reward strategies in general, and then the strategy that you use in particular. Let’s just start off for listeners with what are the general advantages for using a credit card versus using a debit card? Because I know for me, I definitely started out just using debit cards. I was a little bit afraid of credit card. So what are the advantages?

03:22 Julie: Yeah, so I think there’s a couple of main advantages. The first is that you can earn rewards often in the form of points or miles, and then you can actually redeem this for either cash back or for miles to fund plane tickets. And on another point is that you can actually use credit cards to help build credit history. So in the future, when you’re buying a house, getting a mortgage, having a high credit score is super important.

03:50 Emily: And another benefit I’ll add to the two that you just mentioned is there’s a little bit more fraud protection available for credit cards. It’s quite easy to have a fraudulent charge reversed, erased on a credit card versus maybe more of a process or maybe even potentially impossible with certain charges on debit cards. Those are three, three great ones.

Pursuing Credit Card Rewards

04:08 Emily: Specifically on the rewards aspect of using credit cards, what are the different kinds of goals you might be able to pursue?

04:15 Julie: Right. Sometimes you can acquire airline points, so you can get a lot of Delta points, American airline points, and then you can use those to re redeem tickets, either domestically or internationally. On the other hand, you can also use points for cash back. Then you can actually use this to kind of pay yourself back when you purchase, say groceries or anything else. It kind of depends on the credit card.

04:43 Emily: Yeah. I know when I was in graduate school and I started learning about this area, I definitely only tried to pursue the static cashback, because I guess I sort of felt like the travel rewards were a little bit more, it’s a little bit higher level. It’s a little bit more complicated. It’s something you have to learn. There’s more of a learning curve on that. So I definitely stuck with the static stuff at first, which I think is a pretty common approach for people. But both of those are different kinds of strategies that will work. For you in particular why are we talking to this today? Why is this a strategy that you have learned a lot about and decided to pursue during your graduate degree?

05:19 Julie: For me, I’m doing my PhD program in California, but my family lives in New York, so then I would have to go back during breaks and my partner, he’s actually also a PhD student in Atlanta, so this requires a lot of traveling. Also a lot of my relatives are in Taiwan, so occasionally I make these international trips. Basically my perspective is using credit cards on things that I would purchase anyway and slowly build points to then redeem for these flight tickets. My goal was to not spend too much money on flights during grad school, but I don’t want money to be kind of a limiting factor in that I can’t see my partner or my family.

06:08 Emily: Okay. And was there…when did the shift happen? When did you set this as a goal? Was it just when you were starting graduate school, when you were looking at the geography of the situation and realizing the challenge, or did you go for while paying for flights in cash and then said, well, there must be a better way here.

06:23 Julie: I got into it just before graduate school since, I think to apply for credit cards, it’s a lot easier to apply for credit cards after you’re a certain age. It might be 21. So before then, I wasn’t really applying for credit cards anyway. And I think just when I turned 21 and then it was right before I went to graduate school, so it kind of worked out in that sense. And then I just kind of learned about it from searching online.

06:54 Emily: Yeah. And would you say that you’ve done more traveling than you would have been able to do just if you were paying straight cash? What’s been the effect on your finances, I guess?

07:06 Julie: Yeah. Essentially I typically don’t really need to factor flights into my budget, which is really, really awesome. And basically when I need to travel, I typically am able to, of course I still need to look at my budget overall, but there is a lot of flexibility. Another example is that my partner and I, we were able to go on a vacation to Greece, which typically the tickets might be a little bit more expensive and because we were able to pay for our flights in points, then maybe we have a little bit more flexibility in our budget for say housing or for food, during our vacation. So it definitely just reduces the impact of needing to spend a lot on a vacation.

07:50 Emily: Oh yeah. I mean, I can’t remember exactly what I was saving to spend on travel during graduate school, but I think it was at least a couple hundred dollars per month per person. And that was really mostly just for like obligation travel, like I have to go see my family, I want to go attend this wedding. So yeah, it’s really inspiring what you’ve been able to do. I’m really excited to dive into the mechanics of exactly how this happened.

The Basics of Credit Card Churning

08:13 Emily: What you have been doing as a strategy known as credit card churning. Can you explain what that is?

08:20 Julie: Yeah. Basically the bulk of the cash back from credit cards isn’t necessarily through the exact amount of money that you spend. It’s actually through these bonuses of signing up for new credit cards. For example, in some credit cards, you can get a certain number of points, usually it’s pretty high, maybe like 50,000 points, if you spend a certain amount of money in a few months. So a lot of cards you might have to spend $1,000 to $4,000 in about three months. And these points have 50,000 points. It could translate to say $500 if one is 1 cent, but if you can actually increase the value, say 1.50 cents per point, it becomes $750.

09:05 Emily: Yeah. I think maybe another way of phrasing what you just said is the amount of money that you need to spend to gain a given level of rewards is much less when you do that through signup bonuses, rather than through ongoing spending and ongoing cash back. There’s this lucrative period available right when you sign up for a new card. It’s the incentive that they’re giving you to do your business through that card versus some others. It’s this opportunity to capitalize on, right when you first switch onto a card. And so credit card churning is like very frequent switching onto new cards to gain those early on sign up bonuses. Is that right?

09:42 Julie: Yes, that’s correct.

Keeping Track of of Credit Cards

09:44 Emily: Okay, awesome. For you, as I said earlier, this is a little bit of an advanced level strategy. How do you keep track of all these cards that you either currently have, or maybe ones that you need to close, or maybe ones that you’re planning on opening? What is your mechanically…how do you keep track of all this?

10:04 Julie: Oh yeah. I basically do this through an old-fashioned spreadsheet. I color code everything. I typically put when I sign up for a credit card. And this is especially important if a credit card has an annual fee, because potentially you might want to cancel or downgrade the card when the annual fee comes up because it might not be worth keeping the card.

10:27 Emily: Yeah. So you keep track of when you sign up for a card, and then when one year, let’s say, is up for something that has an annual fee. Do you keep track of anything else? Maybe the minimum spend amount I would imagine, and the time period over what you have to do that?

10:40 Julie: Yeah. I keep track of all of that. I actually go into more detail in which I actually, every month I update all the point totals that I have and I also keep track of all of my redemption. So I think that might be a little bit extra in the amount of information I’m keeping track of, but for me it’s actually pretty fun to just tabulate everything.

11:01 Emily: Yeah. I could totally see how this would be fun because there’s kind of two halves of this, right? There’s like the accumulation of points and then there’s the planning of how am I going to actually use these points. And that is the really pleasurable par, I think, especially if one enjoys planning then getting to play around with different scenarios and so forth. Well, let’s come back to that in a few moments.

Meeting Minimum Spends

11:20 Emily: We just mentioned the minimum spending requirements like between one and $4,000 over a period of some months, that might seem like a lot of money on a graduate student’s stipend. So how do you actually make sure that you’re going to meet these minimum spends without, as you said earlier, outspending your budget, outspending your planned expenditures?

11:40 Julie: First I just want to be clear that everyone has to be very careful and tracking their finances. And you’re definitely in a very privileged position if you are able to do this. But for me, I look at many different factors. So one is timing. If I have a big purchase coming up, then I might as well use it in a minimum, spend another, more specific for graduate students is if you have conferences. So conferences can be pretty expensive. Sometimes you have to use your own credit card, so why not actually use it to help meet a minimum spend? Another thing that I’ve done is paying stuff in advance for other people, especially my family, where, for example, if we have a cell phone bill, I can pay that ahead of time. Another one that actually found out more recently is that you can actually pay estimated taxes with credit cards. And this is really interesting because with a credit card, there is a fee of, I think the lowest is 1.87%. But say, if you have a credit card that does 2% or even a special credit card, if the rotating category matches 5%, you can actually make money by paying the estimated taxes, which you actually have to do anyway. However, if you don’t have a card for that, if you’re actually trying to meet a minimum spend, perhaps it is worth it to pay that fee to kind of help you get that really high bonus for the credit card.

How Many Cards is Too Many

13:09 Emily: So for you, like let’s say in 2019, how many new cards did you sign up for?

13:19 Julie: I would say I haven’t signed up for too many cards just because I’ve been slowing down a little bit towards the end of my PhD, but I would guess maybe three to four cards, so nothing too crazy. I know there’s people that are super into it that might sign up for 10-20 cards per year.

13:36 Emily: Yeah. Well, that’s 10-20, that’s a number of more minimum spends that you need to hit. Actually three to four sounds like fast, but like okay, reasonable pace for graduate students. I think that this strategy of keeping track of minimum spends and what your expenses might be that are coming up that might help you meet those minimum spends, it goes actually really well with the strategy I love to talk about, which is that of targeted savings accounts. Not specifically the saving in advance for doing things, which is also a good idea, but actually more the planning aspect that comes along with keeping account budgeting like that is that you can look out over the next six months or over the next year and say, yup, I know that this large expense is hitting in this month. I know this needs to be, be paid here. And I definitely found that there were some one, two month periods when I was in graduate school where I would have like a flight I needed to buy, well, I was buying them in cash, a flight I needed to buy, and my six month car insurance premium was coming up and there were some other maybe some housewares or electronics purchase we need to make. There were definitely months where they would hit kind of like that, and I was budgeting for those and using targeted savings and thought that was great, but hey, the next level up from that is yes, save in advance, but why not also put it on a credit card and meet a minimum spend that you’re gearing up for anyway.

When to Apply for a New Card

14:48 Emily: This is more of a personally motivated question, but how far in advance of, let’s say a major purchase that you know is coming up on a certain date, would you need to sign up for a card? How do you actually time this so you know that you have the card ready to go when you actually need to make the purchase.

15:04 Julie: Yeah. I mean, I would probably do at least a month just because you have to apply for the card. And in some cases, if you’re not approved right away, you might have to wait a week or so. And that doesn’t mean that they’ll reject you, it’s just something that is part of the process. Another is if you put a credit freeze on your credit score, so that’s actually something I’ve done to be extra careful, you might have to lift your credit freeze, and that also takes some time. So I would budget at least a month.

15:35 Emily: Yeah. I know there’s a little bit of a game there because you need to give some buffer time in advance, but you also need to have enough purchases within the period of time to get the bonus to go through.

Commercial

15:46 Emily: Emily here for a brief interlude. If you are a fan of this podcast, I invite you to check out the Personal Finance for PhDs Community at pfforphds.community. The community is for PhDs and people pursuing PhDs who want to take charge of their personal finances by opening and funding an IRA, starting to budget, aggressively paying off debt, financially navigating a life or career transition, maximizing the income from a side hustle, preparing an accurate tax return, and much more. Inside the community, you’ll have access to a library of financial education products, which I add to every month. There is also a discussion forum, monthly live calls with me, book club and progress journaling for financial goals. Basically, the community exists to help you reach your financial goals, whatever they are go to pfforphds.community to find out more. I can’t wait to help propel you to financial success. Now back to the interview.

Using Credit Card Churning to Fund Travel

16:50 Emily: So you mentioned the challenge that you were facing of living far from your family and your partner, and you also mentioned, okay, you’ve been able to, for instance, you were able to go to Greece with your partner. What were some of the other benefits that you’ve experienced by doing this? For instance, have you ballparked like how much money you have not spent on travel by doing this strategy? Or can you tell us a little bit more about the upside?

17:13 Julie: It’s definitely quite a bit of money that I’ve saved through travel. I don’t remember exactly how much, but for example, I would go from California to New York round trip before the pandemic, probably two to three times a year. Then in addition, I would also go to Atlanta or vice versa maybe a couple of times a year. So it’s definitely many flights that I’ve saved on. And pretty much I’ve been able to not pay cash for most of my flights during grad school.

17:44 Emily: Yeah. It’s just an incredible benefit to not have to have that aspect in your budget, of paying for travel when you know that you have to do it like this. It’s really amazing that money can come kind of from nowhere, if you have a great credit score, if you’re really on top of your budget, if you have a spreadsheet like you do and you’re keeping track of everything and being diligent. It’s just amazing how much money you can free up for your budget. So I hope this is sounding like good news to some people in the audience who are currently spending more than they would like to on travel.

Credit Card Churning Strategies

18:14 Emily: For you, like when you’re realizing you’ve come to the end of a one period of minimum spend and you start thinking, well, what’s going to be my next card, how do you search out these cards? How do you actually find that’s going to be the best fit for you?

18:27 Julie: There’s a lot of very active communities on the internet. Specifically on Reddit, there’s a subreddit called churning that has all of these. There’s a lot of specific websites such as Doctor of Credit. Actually, I keep pretty up to date and people will typically announce whether there might be a new card coming up. But for me as a graduate student, if I know I don’t have any big purchases coming up, it’s also a practice of self-restraint, where I know I shouldn’t apply for new credit card, and instead kind of look at my portfolio of credit cards and see perhaps certain cards have increased points per certain category and maximize that instead.

19:10 Emily: I see. And then you mentioned earlier cards with annual fees, specifically canceling a card with an annual fee before that second fee comes up. How do those overall play into your strategy? Is it something that people should consider or maybe should avoid? What are your thoughts about that?

19:26 Julie: I would say definitely for beginners, maybe focusing on cards without annual fees because they also have much lower minimum spends, so it would be pretty easy to hit minimum spend. But for me, the only card I have with an annual fee that I currently use is a Chase Sapphire Reserve. For me, I always have to do a calculation, whether it’s worth it for me to keep the card for the next year. There’s certain factors that I consider. One is looking at the benefits that the card offers and if I would actually use that, and another that I might consider is whether keeping the card will help me increase the value of the points that I’m spending. For example, with the Chase Sapphire Reserve, each point I can actually redeem for 1.50 cents instead of just 1 cent.

20:19 Emily: Yeah. I actually, so also for me, the Chase Sapphire Reserve was the first or maybe the second card with an annual fee that I ever signed up for. And I actually just canceled it a few months ago because I was like, I’m not traveling. I’m not traveling anytime soon. I don’t want to pay this fee because I do not see any redemption on the horizon. What I did specifically with that was I transferred the points to another Chase branded card that we had figuring at some point in the future, I’ll probably get the Reserve or the Preferred again, transfer the points back and be able to redeem them at at least that much value, if not more/better later on. So that was my particular solution to that, but I’m glad that you reevaluated and decided, okay, I’m going to keep this card for the time being. It does have some pretty nice perks to it for a high fee.

Churning During the Pandemic

21:04 Emily: Speaking of the pandemic and recent changes, what has been going on with you and this strategy in the last six months?

21:11 Julie: Yeah. So there has actually been a lot of changes to the point space since the pandemic and I think these effects are likely to stay for quite a while. So obviously I’m not redeeming my points for travel; however, for Chase, because they realize this they’re actually allowing you to redeem 1.50 cent per point for groceries. Before it used to be just travel, but now it’s actually for grocery purchases. So for me, if I put my grocery spend on the Chase Sapphire reserve, I’m able to redeem those points for the groceries. And also since I had a few canceled flights this earlier this year, then I’m not really looking to apply for cards that will give me more miles, but I might look for cars that give me a little bit more flexibility in how I can use those points.

22:01 Emily: Hmm. So when I thought about the pandemic and affecting my travel plans, both personally and professionally, I’m already in a period of not applying for cards right now because my husband and I are looking forward to buying a house in a few months. And so we don’t want to be messing around with our credit right now. If not, I think I would probably still be signing up for stuff because I, again, hypothetically, I think my attitude would be well, get the points, bank them now, spend them later at some point. Why is that not your approach? Why do you prefer the flexibility right now?

Julie (22:36): Well, so actually right now, I’m not really applying for cards and I’m just kind of using my current portfolio of cards to reach or to kind of build up the points, as you said. I might look towards applying for a card later this year, but I’m actually not in a rush to apply for new cards right now.

Planning Point Spending

22:59 Emily: Yeah. You said you updated your spreadsheet monthly with figuring out how many points you currently have and with what providers and so forth, how do you go about planning how you’re going to spend the points? What is that process like for figuring out, okay, these points transfer to this airline, you know, all of the complexity that goes along with that.

23:18 Julie: Yeah. That I would say is actually the hard part of figuring out how to use those points. There’s certain programs, like Chase, where it’s pretty easy to redeem the points because you can just do it through any airline by using Chase travel, but certain cards you can actually transfer it to specific airlines and convert it into miles, which is actually, even though it’s harder, it could be better because you could get better value for your points. For me, I like having points in several different companies, for example, also in American Express. I also have points specifically in Delta, so then whenever I, for example, if I want to travel to New York, I can look at what are the different points I have and figure out which program I want to redeem it in for the best value.

24:10 Emily: I’m also thinking that some of this, the planning of the redemption might be specific to your local city. You obviously live in a major city with several different airports and airlines to choose from. I’m also reflecting, I recently moved from Seattle to the Los Angeles area. So in Seattle it’s all about Alaska. Like Alaska is by far the winner airline right there, so I was always trying to sort of figure out how to get Alaska airline points versus other things. Now that I live in a different kind of city I’m thinking, well, my strategy might need to be different. Do you know of any resources where people can find out more about the airlines that service their local airports or maybe their destination where they commonly go, they want to figure out how to do that?

24:51 Julie: I think the best way to figure that out is just looking through the specific airline website and figuring out which destinations your city travels to. But otherwise also just looking online to see what other people tend to do in your city.

25:08 Emily: Yeah. And I guess if you live in a major city, like the San Francisco Bay area, Seattle, Los Angeles, there’s going to be plenty of conversation around how to do this in cities like that. Well, is there anything else you want to add to tell the audience more about your strategy or what you’ve been able to do with it?

25:26 Julie: I think as a graduate student, even if you don’t want to start off with churning right away, my best advice is to just get a credit card with a low minimum spend and at least use that to start building your credit score and acquiring some points.

Best Financial Advice for Early Career PhDs

25:43 Emily: So Julie, as we wrap up this interview, what is your best financial advice for another early career PhD?

25:50 Julie: My best financial advice would be to start early. Many financial related actions serve their greatest benefits when done early, so the effects can be compounded over time. And I think this not only applies to investments compounding over time, but also any positive practices that you do such as saving money on food by not eating out too much or using credit cards to your advantage.

26:14 Emily: Yeah, absolutely agree. Starting early, I mean, a lot of graduate students might feel like they don’t have a lot of options right now, especially living on a lower stipend, but anything you can do any habits that you can form any even habits of mind that you can work on, it’s all going to benefit you throughout your time in graduate school, after that going into your career, and really, I like to think of it as, if you build up these habits and practices and thought patterns right now during graduate school, once you get that higher salary later, you’re going to be able to like hit the ground running blast through financial goals, when you get to that point, if you’ve done the sort of mental preparation beforehand, even if you don’t see a lot of actual financial progress earlier on.

26:57 Emily: Thank you so much that advice, and thank you so much for joining me today, telling the audience about your strategy. I’m really excited post buying a house to be back on the credit card rewards game so this is really inspiring to me.

27:11 Julie: Thank you.

Outtro

27:13 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the personal finance for PhDs podcast. There you can find links to all the episode show notes, and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

How to Improve Your Finances While Social Distancing

April 11, 2020 by Emily

Now that we’re a few weeks into our new normal of social distancing / isolation / quarantine, you may find yourself with the time, ability, and willingness to work on your personal finances*. Below are my top suggestions of activities you can engage in while social distancing that are highly likely to improve your finances in the short or long term, helping you to save money, pay off debt, and invest more money.

*If this sounds preposterous to you, this article isn’t for you right now! Keep taking care of yourself, your loved ones, and your community. If you want to know how I’m getting on without my regular childcare, listen to this podcast episode.

This is post contains affiliate links. Thank you for supporting PF for PhDs!

social distancing finances

Read a Personal Finance Book

Reading (or listening to) a book is the most time-efficient way to consume high-quality, curated personal finance content. I started my personal finance journey with a few cornerstone books (some of which appear on the list below) before moving on to blogs and podcasts. Reading a book is a great way to get a firm foundation—if you choose the right book.

In normal times, I would suggest that you check your local or university library first for the books you are interested in before considering purchasing. Personally, I know my local library branches are closed, but ebooks are still an option.

The list below includes some of my personal favorites and suggestions I received in response to a Twitter prompt. The knowledge you’ll glean from any one of these books is worth incalculably more than you would pay for them if you do decide to purchase!

  • A Random Walk Down Wall Street by Burton G. Malkiel
  • Broke Millennial by Erin Lowry
  • I Will Teach You to Be Rich by Ramit Sethi
  • The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach
  • The Laws of Wealth by Daniel Crosby
  • The Millionaire Next Door by Thomas J. Stanley and William D. Danko
  • The One-Page Financial Plan: A Simple Way to Be Smart About Your Money by Carl Richards
  • The Simple Path to Wealth by JL Collins
  • The Two-Income Trap: Why Middle-Class Parents Are (Still) Going Broke by Elizabeth Warren and Amelia Warren Tyagi
  • You Need a Budget by Jesse Mecham
  • Your Money or Your Life by Vicki Robin and Joe Dominguez

Catch Up on a Podcast

For fascinating interviews with financially successful people and in-depth discussions of particular financial strategies, I turn to podcasts. (Podcasts are the one thing I have more of in my current life than I do in my regular life!)

Personally, I am a Completionist, so I prefer to listen through the full archives of most podcasts that I decide to subscribe to. Now that you have the time, here are a few of my favorite personal finance podcasts and other popular ones in the space. Listen to a couple of the recent episodes; maybe you’ll decide to commit to the archive!

  • Bad with Money
  • Choose FI
  • Gradblogger
  • How to Money
  • Journey to Launch
  • Personal Finance for PhDs (I course I have to include my own!)
  • So Money
  • The Fairer Cents
  • The Mad FIentist

File Your Tax Return

I am a major tax return procrastinator. My husband and I usually start working on our tax return in April and submit it barely under the deadline. Confession: This year, with the filing deadline extension to 7/15, we haven’t even started yet.

I do think that preparing your tax return is a good social distancing activity if you have the capacity. You can put an evening or two’s worth of uninterrupted time blocks to work with your tax software or even manually prepare your return (that’s our preferred method).

If you are expecting a refund, file ASAP to receive your refund ASAP. It’s your money! It should be working for you, either by paying expenses if you’ve experienced an income drop or going into savings, debt repayment, or investing if you income has stayed steady.

My tax workshop, How to Complete Your PhD Tax Return (and Understand It, Too!), comprises videos, worksheet(s), and live Q&A calls. Please consider joining through the appropriate link:

  • Grad student version
  • Postdoc version
  • Postbac version

Network

One of the upsides of physical social distancing for some people is the chance to connect remotely with a different set of people than usual. (I am highly envious of this! I had high hopes to reconnect with old friends during this time… My children’s insistence on derailing all adult conversations has dashed those hopes.)

Instead of limiting your Facetime/Zoom calls to your family and friends, consider reaching out to people in your professional network.

In a general sense you should be networking like this all the time, but the motivation intensifies if you are coming up on an expected transition point in your PhD career or you think your job/position is at risk and you might need to look for another soon.

An excellent, low-risk group to network with right now is people who graduated from (or otherwise left) your PhD program in recent years. You can reach out over email to see what they’re up to and schedule a call if that is mutually agreeable.

If you reach out to someone and don’t receive a response, don’t take it personally! People are dealing with a lot right now. Just cast a wide net, and appreciate the people who are able to give you some of their time right now.

Oh, and always ask at the end of an interesting conversation if the other person can recommend one or more people for you to connect with next!

Explore Career Options

As a spin off of networking, right now is also an incredible time to work on exploring your career options. Yes, the academic job market looks abysmal right now, but—upside?—it’s been trending that way for decades, so there are lots and lots of PhDs established in non-academic careers that might be of interest to you.

A great first place to go for resources is your university’s career center. (Check on this even as an alum—you may have access to resources from all the universities/colleges you’ve graduated from.) The robustness of their resources for PhDs in particular might be strong or weak, but some of their resources for undergrads will still be helpful.

The career center may have assessment tools, instructional resources for job seekers, recordings of past live events, and opportunities to meet one-on-one with staff. If you know they have a resource that is not currently available online, submit a request that it is made available.

Two platforms for PhD job seekers in particular are Beyond the Professoriate (Aurora) and Versatile PhD. If your institution has a subscription, access the platform through its login mechanism, but if not you can sign up as an individual. Beyond the Professoriate has an upcoming online career conference as well.

To combine networking with exploring career options, set up informational interviews with people in careers you’d like to learn more about. From my experience on both sides of informational interviews, they can be quite enjoyable and beneficial for both parties!

Invest in a Frugal Strategy

Most of us are practicing forced frugality these days in a few areas of our budget. I’d wager that your discretionary spending was down in March from where it was February and that April will be lower than March. There are lots of possible uses for that freed-up cash flow, but consider one more: investing in a frugal strategy.

One of the major, legitimate complaints about frugal practices is that they take some capital to get started with. I’ve heard “Frugality is only for the rich,” for example. This is not the case for every frugal strategy, but it is for some. Well, now that you have some capital, what frugal strategies can you ‘invest’ in that you know will pay off with decreased spending over the long term?

I’ll give you one tiny example: Last December, I ‘fessed up—to myself—that my family (which includes two tiny children, one of whom is still in a high chair) was consuming paper towels at a positively alarming rate. We were buying the huge packs from Costco for $20 each half a dozen times per year. This didn’t sit well with me from a financial or an environmental perspective, so I purchased these microfiber cloths (12 for $12—now I wish I had doubled it!). They work far better than paper towels, our paper towel consumption rate dropped like a rock (we’ve probably made up for that initial investment twice over by now), and they haven’t substantially added to our laundry load. (Again, two tiny children—we already do a ton of laundry, including cloth diapers.) These towels were absolutely a frugal investment. Bonus: Not having the pressure right now of needing to buy this particular paper product before we run out when it is in short supply is a load off my mind!

Ask yourself: Are there any frugal strategies I’ve wanted to try but haven’t yet because of the up-front investment of capital? Can I use my newfound cash flow right now to establish one of the strategies? And if it wasn’t money but rather time was your limiting factor before: What frugal strategy did you never have time to initiate, but you can put in the time now to make it a habit?

Here are a few ideas for similar frugal/environmental investments, gleaned from this Twitter thread:

  • Bee’s Wrap as an alternative to plastic wrap
  • Silicone Reusable Food Bag as an alternative to sandwich bags
  • Silicone Baking Mats as an alternative to parchment paper/foil/cooking spray
  • Reusable Facial Cleansing Pads as an alternative to disposable cotton pads
  • Wire Mesh Coffee Filter as an alternative to paper coffee filters
  • Wool Dryer Balls as an alternative to dryer sheets

Sign Up for More Awesome Content

I'll send you my 2,500-word "Five Ways to Improve Your Finances TODAY as a Graduate Student or Postdoc."

Success! Now check your email to confirm your subscription.

There was an error submitting your subscription. Please try again.

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

Clear Out Your Closets, Etc.

My mother, a retired empty nester, has undertaken as her social distancing project clearing out the basement storage area of the home my parents have lived in for 30 years. It’s a massive project, and it is made more difficult by the closure of some of the places you might normally go to resell, donate, recycle, or trash your old possessions.

I do think a spring cleaning/clearing out is a good activity for right now. This might positively affect your finances if you are willing to hold on to the valuable items long enough to resell them. (You might be able to resell currently, but I suspect the demand will be relatively low.) If nothing else, it will benefit your mental health and will reduce the amount of work you’ll need to do leading up to your next move.

Close Old Financial Accounts (and Open New Ones?)

Spring cleaning can apply to your finances as well as your home!

You may very well have old banking or credit accounts that you no longer use or have need for. If you can close the old bank accounts without going anywhere in person, do so! Some people like to keep old credit card accounts open because length of credit history and utilization ratio play into your credit score. However, if you have a high credit score already, you should consider closing the accounts you don’t need; maybe just keep the single oldest account open. The suggestion to close old accounts goes quintuple for any accounts that charge you a fee.

In the same vein, now is a great time to join (aspects of) your financial accounts with your spouse or partner if you have decided to keep joint money. My husband and I decided to join as much as we could after we got married, and the months-long process involved researching and opening new accounts, waiting for money to transfer, and closing old accounts. Again, it’s a great social distancing activity as long as you don’t have to go anywhere in person. (Another reason online-only banks are my preferred institutions!)

If you’ve never looked into it before, you could put your free time into figuring out how to generate extra income from credit card or banking rewards. Please keep in mind that offers might be somewhat different during social distancing than they were before (or will be again). Before you open any new accounts, triple-check that you can meet the minimum spending requirements or transfer amounts given your (presumed) lower level of current spending.

Further Listening: How to Make Money without Working: Credit Card Rewards and 529s

Plumb Your Values/Dream

If you’ve been able and willing to slow down and reflect, this pandemic might have granted you new insight into what you want for your life. I don’t think you should be making any life-altering decisions in this stressful period, but lean into your different perspective and deepen your introspection.

What is truly important to you? What are the aspects of your life that make you feel fulfilled? What can you change about how you manage your finances to better support those aspects?

Further Reading: Determining Your Values and Financial Goals While in Graduate School

Get Coaching, Take a Course, or Join a Community

One way you can invest in yourself right now is to establish a relationship with a coach, join a community, or take a course focused on an area of personal or professional development. Spending money on this kind of endeavor makes it much more likely that you will actually take the necessary steps to ensure your financial success.

If your chosen area is finances, consider how you and I could work together. I offer one-on-one financial coaching, and I am also going to open up the doors to my program, The Wealthy PhD, in May 2020. Through both avenues, you will have individualized access to actionable knowledge, inspiration, and accountability. If you feel confident in your income security, this is the perfect time to firm up your financial plans and even take advantage of the unique opportunities this period affords.

If finances aren’t your preferred area of focus right now, I also recommend checking out the services offered by my colleagues:

  • Dr. Jen Polk coaches PhDs on their careers
  • Dr. Katy Peplin’s community Thrive PhD supports graduate students around the mechanics of graduate school and their mental health
  • Dr. Katie Linder offers podcasts with actionable tips, coaching and courses for academics on productivity and related topics
  • Dr. Echo Rivera offers courses and coaching on effective presentation design & presenting with data for academics, scientists, and researchers (grad students through PhDs)

If you do commit to working on your professional or personal development in one of these other areas, I’m confident that there will be an indirect positive effect on your net worth! Perhaps at that point you’ll be ready to directly work on your finances with me.

How have you improved your finances while social distancing?

How to Make Money without Working: Credit Card Rewards and 529s

May 13, 2019 by Jewel Lipps

In this episode, Emily interviews Seonwoo Lee, a PhD student in electrical engineering at Georgia Tech. Seonwoo has mastered two methods to earn extra money without “working.” Emily and Seonwoo discuss in detail their experiences with garnering credit card rewards and give both beginner and advanced tips. Seonwoo also explains a 529 hack he discovered to reduce his state tax bill that is applicable in as many as 30 states. They also briefly touch on several other methods to make money without working that are readily accessible for early-career PhDs.

Links mentioned in episode

  • Schedule a Personal Finance Seminar
  • Volunteer as a Guest for the Podcast
  • How to Money Podcast
  • Doctor of Credit: Best Credit Card Sign Up Bonuses for May 2019
  • Doctor of Credit: A Beginner’s Guide to Bank Account Bonuses
  • Information about 529 plans 
  • Blog: 529s as a College Coupon by Seonwoo Lee

make money without working

0:00 Introduction

1:14 Please Introduce Yourself

Seonwoo Lee is a PhD student in electrical engineering at Georgia Tech. He did his undergraduate at Cornell. He pursued a number of ways to make money without actually having a second job.

1:48 Why have you tried to make money without working?

Seonwoo says that if you do it right, you can make more money per hour than working a traditional job. He says it gives you more flexibility, since you can do as much or as little as you want.

There is some effort involved in pursuing these strategies, but it’s not as much time you would put into working if you had a second job. Additionally, some people are prevented from officially working in other capacities, either by the terms of their contract or by their student visa. The strategies they’ll talk about are probably available to any PhD student or postdoc.

3:07 What are the two topics that we’ll go into detail discussing? What are some other strategies?

Seonwoo will discuss credit card rewards as well as banking sign up bonuses. Second, he’ll talk about the 529 trick to save money on your state taxes.

Emily mentions other ways to make money without working.

  1. Emily has sold items when she’s moved as part of a downsizing process. She has sold items on craigslist.
  2. Another option is Ebates *. Here, you make purchases through the Ebates platform and you are selling your information in exchange for money.
  3. Emily presents short term investing in taxable accounts as an option to make money without working. She and her husband paid off student loans through mid-term investing.
  4. Other options are receipt apps like Ibotta, where you upload your receipts and you sell your information to get cash back.
  5. Also, there is the strategy of “car wrapping,” which is wrapping your car in an advertisement and you receive money based on how much you drive. Emily recommends listening to the How to Money podcast for more information on car wrapping.

* This is a referral link. If you sign up and spend $25 through Ebates, you’ll receive a $10 bonus to your account and I’ll receive a referral fee. Thank you for supporting Personal Finance for PhDs!

7:19 How do the credit card rewards and sign up bonuses work?

Seonwoo begins with the caveat that if you can’t manage credit cards responsibly, you should not pursue credit card rewards in any form. If you pay any interest at all when you do this, you are likely not going to reap the benefits of rewards. Emily adds that you already need a good or excellent credit score to pursue these strategies. If you carry a balance on your credit card, this strategy is not for you. Emily says make sure you are using your credit card like a debit card, and if you are you can consider this strategy.

Further reading: Perfect Use of a Credit Card

Seonwoo says that plenty of credit cards offer sign up bonuses. These require you to spend between $500 and $4,000 within the first three months of signing. The bonuses will vary from credit card points to straight cash. The offers will range from $100 to $500 in cash or 30,000 to 100,000 points. Seonwoo says there are ways to meet these minimum spending requirements without spending more than you normally would.

Emily talks about fitting these credit cards into your normal spending. She signed up for a credit card with a minimum spending requirement of $3,000 over three months. She had to put everything she was purchasing on that one card. She picked a time of year when she had to pay for car insurance and flights. She timed signing up for the credit card with when she knew she had above average expenses. Reaching the minimum spend requirements is a hurdle for people with lower income.

Seonwoo says you can see if you can pay your rent with a credit card. He says the fee may be 3%. If that is the only thing stopping you from pursuing a sign up bonus, do the math to see if the rewards are worth it. You can see if you can put tuition or fee charges on the credit card. You can see if you can pay your bills months ahead of time. He says you can buy grocery gift cards to get the charge on the credit card, but then you can spend that gift card over a longer period of time.

Emily says that someone new to this can try it with existing spending, then they can try manipulating their spending.

13:00 Is cash back or points more valuable to a graduate student?

Seonwoo says that cash back is much easier to start with and understand. There are only so many cash sign up bonuses. If you like to optimize things, credit card rewards will be more valuable if you use the rewards for travel.

Emily says that there are cards with a regular cash back rate, like 1-2% back on spending. She says that is a good way to start. Then the next level would be switching to actively pursuing credit card rewards. To make rewards lucrative, you have to be able to redeem them. She explains that in Durham, North Carolina, she couldn’t be loyal to any one airline. But in Seattle, Washington, she makes use of the Alaska Airlines credit card and its reward system.

16:18 What are the pros and cons of the annual fee situation?

Seonwoo says a lot of cards that have sign up bonuses waive the annual fee in the first year. Seonwoo’s strategy is that he signs up for the card, meets the minimum spend requirement, and by month 11 he has decided he won’t pay the annual fee and he will close the card. He says some cards are worth the annual fee, but he wouldn’t recommend keeping the annual fee card to people with lower income.

Seonwoo says that if you cancel within 30 days of being charged the fee, you can often get a refund. Ideally, set up a spreadsheet and reminders to track your credit cards.

18:54 How much money have you made using this strategy?

In his best year for strictly cash, Seonwoo has made about $2,200 to $2,500 from sign up bonuses. He says he has more credit cards and points than he knows what to do with. Most of his rewards have been in credit card points.

Emily says when she was in graduate school and pursuing cash sign up bonuses, she and her husband together made about $1,000. This can alleviate budgetary stress.

20:38 Anything else you want to add on this topic?

Seonwoo brings up how this affects your credit score. In general, when you apply for a credit card, there is a small hit because you have an inquiry on your report. He emphasizes that the point of your credit score is to help you get low interest rate loans or good rewards credit cards. If you’re not applying for a loan in the near future, you can use the credit score for new credit cards. He applied for cards until he started getting denied. He waited a few months, then tried again and got approved. He says people stress out a bit too much about their credit score. He says people should recognize the point of the credit score.

Emily points out that there are positive affects of having several credit cards. She also mentions some cases where you need to keep your credit score high, like when you apply for a new residence or take out a mortgage.

Further reading: How to Establish Credit in the US

24:24 How do banking sign up bonuses work?

Seonwoo says that the main difference is that instead of requiring you to spend money, banking sign up bonuses require you to already have money. You sign up for a new checking account, get a couple of direct deposits in there and keep it open for at least six months, and sometimes make some transactions. You can get between $100 or $350 for signing up for that account. Some have fees, but the bank may waive the fee for students or on other terms.

Emily mentions minimum balances, and Seonwoo clarifies that high balances requirements are usually for savings accounts. Checking accounts have minimum balance between $1500 and $3000, and the percent return is 10% to 20% in six months. This is a good option for your emergency fund.

Seonwoo recommends the blog Doctor of Credit, who has several blogs on these topics.

28:54 What is a 529? What are the benefits of it?

Seonwoo explains that there are two types of 529 plans. One is a prepaid tuition plan, which he is not talking about. The other type is an investment plan. At both the state and federal level, it is not taxed when you withdraw it for education expenses. Emily compares this to an IRA, where you are not taxed on the growth of the money if you use it for retirement. Seonwoo calls it a Roth IRA for education.

Seonwoo says 30 states and the District of Columbia offer a state income tax deduction for contributing to your 529 plan. Most states require that you have a plan with that state, but they don’t require a net contribution for the year. He says you can contribute the money to get a deduction, then pull it out to pay for your expenses.

Emily says cost of living expenses can be considered qualified education expenses for the 529 plan. She explains that you can put money into a 529, then take it out to pay rent, and then you get a state tax deduction or credit. Seonwoo says even if your living expenses are $0, you can still do this. The amount is set by the university’s financial aid office room and board estimate of the cost of attendance.

Seonwoo explains his specific example at Georgia Tech. The financial aid office lists the cost of attendance estimate for room and board as more than $10,000. In Georgia, a single taxpayer can deduct up to $2,000 of a 529 contribution. His marginal tax rate is 6%, so a deduction of $2,000 saves him $120 per year in state taxes. So, he contributes $2,000 to the 529 plan and leaves it in there for 10 days, then he takes it out. This is all it takes to get the tax deduction.

36:37 Where can we go for more resources?

Seonwoo says he learned about this by going through his state tax return to look for deductions. On his blog, he has a college tag and he has a post about the 529. The site Saving for College is a good resource for 529 plans.

Emily says this is a strategy that you need to investigate for your own state. Seonwoo mentions that there are other education credits and deductions available, but you can’t double count expenses. This 529 trick makes use of the living expenses, because this is unique to this tax benefit.

Seonwoo recommends printing to PDF the page from the financial aid office that documents the cost of attendance. This is documentation to keep if you’re audited.

40:50 Final Comments

This episode is about ways to alleviate budgetary stress by leveraging your assets and optimizing your usage of financial accounts.

41:17 Conclusion

  • Go to page 1
  • Go to page 2
  • Go to Next Page »

Footer

Sign Up for More Awesome Content

I'll send you my 2,500-word "Five Ways to Improve Your Finances TODAY as a Graduate Student or Postdoc."

Success! Now check your email to confirm your subscription.

There was an error submitting your subscription. Please try again.

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

Copyright © 2025 · Atmosphere Pro on Genesis Framework · WordPress · Log in

  • About Emily Roberts
  • Disclaimer
  • Privacy Policy
  • Contact