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The Gardener and Rose Approach for Childfree PhD Couples

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In this episode, Emily interviews Dr. Jay Zigmont, who holds both a PhD in Adult Education and Certified Financial Planner designation. Jay has focused his financial planning practice, Live Learn Plan, on the childfree community, and his book, Portraits of Childfree Wealth, will be published on June 1, 2022. Emily and Jay discuss the stories and interview excerpts from the book and Jay’s observations about the relationship between being childfree and finances. Jay holds up the model of the Gardener and Rose as a potentially useful one for dual-PhD couples, which is what he and his wife practice.

Links Mentioned in this Episode

Teaser

00:00 Jay: And I was amazed that people would share this. I mean, to be frank, people would rather talk about their sex life than their finances. But people were sharing it all, and it’s just amazing to see.

Introduction

00:15 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 12, episode one, and today my guest is Dr. Jay Zigmont, who holds both a PhD in Adult Education and the Certified Financial Planner designation. Jay has focused his financial planning practice, Live Learn Plan, on the childfree community, and his book, Portraits of Childfree Wealth will be published on June 1st, 2022. We discuss the stories and interview excerpts from Jay’s book and his observations about the relationship between being childfree and finances. Jay holds up the model of the gardener and rose as a potentially useful one for dual PhD couples, which is what he and his wife practice.

01:10 Emily: If you’ve been getting value from this podcast, would you please do me a favor? This is a perfect time of year to recommend me and my work to an appropriate host or sponsor at your university or Alma mater. In case you didn’t know, I offer numerous personal finance seminars and workshops on topics like taxes, investing, budgeting, and debt repayment, all tailored for graduate students, postdocs, and/or prospective graduate students. If you think that you and your peers would benefit from my teaching, please recommend me to your graduate school graduate student association or post office. These recommendations help me get my foot in the door with new clients or remind past clients of the need for this material. If you choose to recommend me over email, please Cc me, [email protected] so that I can pick up the conversation. It’s only possible for me to create free-to-you content like this podcast if I have paying clients for my speaking engagements and prerecorded workshops. Thank you in advance for recommending me. Without further ado, here’s my interview with Dr. Jay Zigmont, CFP.

Would You Please Introduce Yourself Further?

02:29 Emily: I am delighted to have joining me on the podcast today, Dr. Jay Zigmont. He is a CFP whose practice is called Live Learn Plan. And he’s also a PhD. His PhD is in Adult Learning from Yukon, and we’re going to be talking today about his kind of specialty within his financial planning practice, which is in childfree people. So, that’s kind of the topic, and specifically how like his career has progressed and how he and his wife together have progressed in their careers and trade offs in their childfree life. So, Jay, it’s such a pleasure to have you on the podcast. Thank you so much for volunteering! And would you please introduce yourself a little bit further for the listeners?

03:06 Jay: Absolutely. Emily. So what I do for my day job is I help people understand their dreams and figure out their life and financial planning. I specifically work with childfree folks, which is a interesting area, because in finances it’s completely ignored. There’s no mention in the entire certified financial planning training of being childfree. So I try to bring a little bit of my own life and my research into the practice.

03:30 Emily: Yeah, that’s really, I just think it’s really exciting to learn people’s niches and like why they chose them. Obviously, I have a very specific niche in my like financial education stuff. So, that’s awesome that you’re kind of overlapping your own life choices with what you focus on in your profession. So, it’s a little bit of an unusual path, right? To get a PhD and then get a CFP later on. That’s a certified financial planner by the way, for those who aren’t familiar with the acronym. So, can you tell us how your career took that path?

04:00 Jay: Yeah, so I spent a lot of time in healthcare and academia and you know, everybody listening, there are probably some people who have done both those careers. And it’s always good, bad, and ugly. And across that time, the thing that was common was I was doing coaching. So, whether it’s executive coaching, career coaching, life coaching, academic coaching, whatever it is. And the reality is people are more willing to pay for financial coaching than they are for some of the other. And as soon as you do that, you need to start working on a CFP, become an investment advisor, all the other ones to cross the T’s dot the I’s. And what I’ve found is that I can combine life coaching or life planning with financial coaching and financial planning, because I don’t know if you can separate your life and your finances, but at least that’s the way I look at it, they’re all together.

04:45 Emily: I have the exact same viewpoint. It’s one of the things that has always like excited me about personal finance is that it is so intertwined with just your life holistically. It’s impossible to separate. And I think you really can like get to know people really well, what their values are, what excites them through how they are using their money or how they would like to use their money in the future. So, I totally agree. That’s really, really fun.

05:08 Jay: So, I’m also advice-only. So, I’m an advice-only CFP. I don’t do investment management for people. So, my work is around teaching people to do it themselves. So, that matches where I come from. But it’s also, frankly, different in the financial world, because I’m not charging an AUM fee or anything like that. I meet with people on a regular basis. I actually meet with them monthly and we work through their life finances and it just helps people grow.

05:31 Emily: I totally agree. This is a really new, like exciting model within financial planning. I don’t know if the listeners will be familiar with the AUM or assets-under-management model, but that’s where you hear like a, you know, an advisor’s charging you 1% or some other fee similar to that, to do all your investment management for you, but your model is completely different. And a lot of, I think younger planners are moving towards this fee-only model where, like you said, you’re paying kind of for someone’s time and expertise, but it’s a teaching relationship. It’s a coaching and guiding relationship. I’m working with a financial advisor as well who’s a CFP who works under that same model of a subscription model instead of this like AUM model. So yeah, I really, I love that.

Portraits of Childfree Wealth

06:10 Emily: So, in preparing for this interview, you sent me a book. Can you tell us about the book and the study that you did that leads into it?

06:20 Jay: Yeah. So, I actually started off with a different plan than my book. And, you know, when you dive into research, you have this idea of what you’re gonna look at and then it goes somewhere else. And I’m a qualitative researcher by nature. So, I really wanted to look at the question of what is it like to be childfree, and how does that impact your life and your finances and your wealth? And I’d done a bunch, you know, got a bunch of surveys, got a bunch of data, started going through it. But I was doing these interviews with these people, and these amazing stories came out of what their life was like. And I said, okay, I have to kind of pause some of the analytical work I’m doing and just share these life stories because they don’t exist. You know, and the childfree, they’re about 11% of the U.S over 55 are childfree. And a recent study in Michigan found that 27% of adults are childfree, but there’s no stories about kind of like, well, what does that mean? How does that work? What is that life like? And I was like, how is it possible that such a large group, I mean, we’re talking millions and millions of people, don’t have something, and in the financial literature it’s completely ignored? So, I’m sharing the stories, and hopefully people can go, “Oh, that’s me,” or, “Wow, I didn’t realize that was a way of life.”

07:28 Emily: Can you say the name of your book and when it’s coming out?

07:31 Jay: So Portraits of Childfree Wealth comes out June 1st.

07:35 Emily: Okay. So, I read this in preparation for the interview, and what I found fascinating is that it feels very honest. It feels very unfiltered, especially about a topic like finances, which is so sensitive. And a lot of people are not willing to speak openly about it. So, it is really exciting that you could, you know, compile these interviews and really share, like you just said, like exactly what life is like for these, you know, selected people that you included in the book. So, it was really a fascinating read. Disheartening at times, honestly, but also very encouraging at times. Because obviously different people have different kinds of stories.

08:10 Jay: So, you’re right on it. And I think one of the most shocking things to people is, being childfree doesn’t mean you’re rich. There are people in there literally talking about living on an air mattress. You know, I’m like, the way I look at it is, you know, if they had a kid they’d drown, you know, they just barely keep, and I was amazed that people would share this. I mean, to be frank, people would rather talk about their sex life than their finances, but people were sharing it all. And it’s just amazing to see.

08:37 Emily: Yeah, and I don’t know if this is one of maybe the threads that you pulled out of this set of interviews, but definitely in a number of them, finances were not necessarily like a motivation for making a choice to be childfree, but it helped a lot on that front. Like you said, some of people interviewed would not, I think, be able to financially support a child without some additional like outside assistance, the way they were earning and living like at the moment. And so, it seems like a practical choice as well.

09:10 Jay: Yeah. And I think, so because we’re talking to researchers, this is always a fun one. There’s a relationship, I’m being technical on that, between growing up in poverty or poor and choosing childfree. I don’t have enough data to look at correlation/causation, but there is something there, you know? I didn’t come up with it. I don’t have the money. And then I’ve made that choice. And I think that’s one of those that we’re going to have to dive deeper in to understand, but there are also people that have chosen, well, I’m not having kids because of climate or medical issues or all different reasons. So, I mean, they’re just as varied as the people themselves.

FIRE versus FILE

09:47 Emily: Yeah. And I’m sure this is probably typically a multivariate decision, right? It’s not just one overriding reason for making the choice to be childfree, but it’s, it’s a few things that all kind of come together. Besides the relationship between growing up in poverty and choosing to be childfree, what were some other like key observations or other relationships that you saw?

10:06 Jay: So, I think some of the interesting ones, I was surprised the amount of childfree folks that say they don’t really want to retire. So, there’s a lot of work right now on the FIRE movement, Financial Independence, Retire Early. And there are a couple people that are FIREd and some people like inadvertently FIREd and all that. But most people are going, I’d rather do what I call FILE, Financial Independence, Live Early. It’s kind of dimmed the work. You know, Ryan shares his story in the book of, he works 25 hours a week, never on Fridays, never before 10:00 AM. And like he could take his laptop and go to Palm Springs and do work from anywhere. And that’s really interesting because I think that might be a unique thing to the childfree community that you can get up and go and have that mobile life. But it’s also, if your goal is not retirement, it completely changes your financial plan.

10:54 Emily: I really like that you had that acronym that you explained a few times throughout the book, the FILE. And it reminded me of some of these other like flavors of FIRE, like barista FIRE and Coast FI and all of those. Yeah, super interesting.

11:09 Jay: Some of the people in the FIRE community will argue with me and say, well, Choose FI or Slow FI, the same as FILE. And I go, well, here’s the question? The question is, are you retiring at the end? And what you hear is a lot of FIRE people go, “No, I don’t really want to retire.” Well then you’re not FIRE-ing. You are doing something else. And I think the point I was trying to work through is if I’m not retiring, then my financial plan shouldn’t reflect retiring. And people go, well, what does that change? Well, it changes a lot of your assumptions, and it changes what are your goals, and how does that fit?

11:41 Emily: Yeah. That’s a really exciting concept. Were there any other observations or relationships that you’d like to pull out from the study?

The Gardener and the Rose

11:48 Jay: Yeah, I think the other one I mentioned in there comes out of me and my wife to an extent is this concept of the gardener and the rose. So, my wife and I were both PhDs, and anyone that has a family with two PhDs, you know how hard it is to get a career with two PhDs. Does that make sense, Emily?

12:04 Emily: I know it very well. My husband has a PhD, too.

12:07 Jay: Yeah. So, we get this trailing spouse thing, and it just, it’s a nightmare. My personal belief is it’s almost impossible to get two careers at exactly the same level at exactly the same time for two PhDs. It is possible, but I mean, it’s like you won the lotto. And what I heard from the childfree folks was people were looking at, Hmm, what are the options? And what my wife and I did is we look at it as the gardener or the rose. Somebody’s the rose growing, and somebody’s the gardener providing the support. And I have to clear, you know, that is not gendered roles or anything like that. It’s just expectations, because somebody has to provide support, and somebody has to grow. And my wife and I, we actually have made a conscious effort that we’re going take turns, you know, and that allows the rose to kind of grow and do its own thing.

12:54 Jay: And what you heard is people in this book saying, “Well, you know, we have two incomes. We don’t need both. One of us is not happy.” And I’m like, “So, quit.” And they’re like, “Wait, what?” I’m like, “Well, take turns growing and you can work this gardener and the rose approach. And I’ve got people in there that one’s creating his own video games and he’s doing indie game design and they’re living in an RV. He’s the rose right now, and his wife works in healthcare. It’s this thing that can happen where you can take these turns. Does that make any sense?

13:24 Emily: It absolutely makes sense to me. And as I was reflecting on this concept, I was trying to sort of apply it to like my relationship with my husband and how our careers have progressed. It doesn’t fit, I think, quite as cleanly for us as it does for you and your wife. But I see elements of it at different times and in different ways.

Commercial

13:43 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, including my recent set of Wealthy PhD Workshops. There is also a discussion forum, monthly live calls with me, 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.

Taking Turns

14:49 Emily: The examples in the book, as far as I remember of gardener and rose, were like the one that you decided of like, well, one person’s going to like take a break from earning or like earn less than they maybe could because the other person is financially able to provide. But from what I can tell for you and your wife, that’s not the case. You’re both working, you both have income, but it’s more about whose career is driving some other decisions in your life. Is that right? How does that work?

15:12 Jay: Yeah, so my wife is in the academic path. And as everybody here knows, when you get the right tenure track position, you just go <laugh>. So, we actually recently moved 1200 miles for her career, and you’re right. It’s not about income, but it’s about that support. So, if somebody’s going to be on that tenure-track path, there’s a whole lot of other stuff that needs to get taken care of. I mean literally like the gardening and the house and the landscaping and the, whatever it is and paying the bills and whatever it is. It’s not about money, but it’s about that support that you need to do that. Because if my wife had to stop and do all that while she was on this tenure-track fun, it would hurt her career. So, we take those turns. Now, mind you, my turn as a rose, I’ve told her 15 years I’m retiring completely and we’re going to get in a boat and travel the world. That’s it. And that’s what I want to do. And she knows that, but that puts a limit, frankly, on her career. But also, it’s a fairness of taking turns.

16:14 Emily: Do you think that the turn-taking aspect is like essential to the concept of gardener and rose? Or is it okay for a couple to choose permanent roles as one or the other?

16:24 Jay: Yeah. So, it’s a rough question. I believe that if people pick one role or the other, it’s way too easy for someone to be neglected or not appreciated or have concerns, let’s call it that. What I think happens is, there are some great stories in there of people that have tried to do the type of gardener and rose without the swap, but then the person that’s in the rose position feels guilty. You know? Well, I’m taking advantage of, well, no, if we know we each have our own turns, I can be selfish for my turn. You can be selfish for yours, and that’s okay. I think if one person decides, “Hey, I want to be this role forever,” and that’s their conscious choice, maybe. But especially when you’re talking about like two PhDs, that’s hard, you know? Fortunately, I can do my finance work from anywhere, but there are other career options I could follow if I was being the rose. So, I think there’s just a balancing act. Does that make sense to you?

17:24 Emily: It does. And I’m actually thinking back to, I’m not going to be able to like cite research on this, but it’s something that I think I read maybe during our premarital counseling that my husband and I went through about how it was maybe about like life satisfaction or something with, we’ll just say married couples, where they had an agreement about whose role was whose. Like maybe there was a working spouse and a non-working spouse. As long as they both were in agreement about what their roles should be, they had a pretty decent level of happiness, even if their circumstances caused them to be flipped. So, let’s say, you know, more traditional, let’s say the husband’s supposed to be the one working, let’s say the wife’s supposed to be the one taking care of the home. Well, the husband becomes disabled, and the wife is the one who has to go into the workforce. Couples who were in agreement about like what their roles should be were happier, even if they couldn’t actually live out those roles, but just having the agreement between them was satisfactory to them. So, it reminds me a little bit about this. Like how do you negotiate, you know, who should be the gardener and who should be the rose at any given time. As long as you’re in agreement, I feel like it’s going to help, even if maybe life circumstances end up playing out a little bit differently.

18:31 Jay: Yeah. And I think there’s some of that that nature does to it. You know, like just your life, your career, there are times in your career. There’s a great example, somebody in the book who just needed to take a 90-day sabbatical, just needed to like get her brain back, you know? And we’re seeing some of this with the great resignation where people aren’t really quitting jobs forever. They’re like, I just need to stop and do something else. And that might be just for a period of time. And I think you’re right. It is the clarity on the roles. But I think with childfree couples, one of the challenges is you have the time, money, and the wealth, the freedom to do what you want. And that actually can cause a little bit of analysis paralysis routine of having too many choices. So, by taking these turns in the roles, you go, “Okay, you’re the rose. Follow your dream. I’ll do like the day in, day out work and vice versa.” And it’s almost like it’s just a little anchor between the two of you. And it also gives people to think through that chance, like you’re talking on the marital counseling of, well, what are our roles? What do we want to do? And a lot of couples have never had that discussion. It’s just implied. And that can cause issues.

19:35 Emily: Yeah. I mean, I’m just trying to think about like two people trying to be the rose at the same time. And if you both want to be the rose, then you’re both also going to have to be the gardener in some ways. There’s going to have to be some kind of negotiation and agreement there. It’s a little bit more clean if it’s like, okay, clearly one person’s a rose, one person’s a gardener. But maybe there are ways you can work out, you know, different aspects of your life or something like that where it could play out a little bit where both of you sort of get to feel like the rose, maybe. This is maybe a little bit how I was applying it to the course that my husband and I have had with our careers. Because, like you and your wife, we moved in 2015 for my husband’s job.

20:15 Emily: So, his first like post-PhD job in industry. We moved across the country. And I was okay with that. I was starting my business. And so I was like, you know, I had a location freedom within my job, but I wasn’t making nearly as much money as I could have had I taken a traditional job after my PhD. And so, in a way, you could interpret that as he’s the rose, because we’re moving for his job. Our location where we’re living is determined by his work. I also see it as my husband was providing financially for both of us, to a large degree, so that I could grow my business, which has flourished over time. And so, I see it like kind of both ways in different ways, right? Location on the one hand, and actual like finances on the other hand. So yeah, I just, there are different ways, I think, that you could imply this framework, but I think it works.

Outsourcing the Gardener

21:03 Jay: Yeah. And I think the gardening roles can be a whole bunch of things. And frankly, if you make enough money, you can pay somebody to do all the gardening roles. Literally. I mean, you can pay somebody to do all that. And then you can have two roses. But as long as location doesn’t mess with it. Some people do look at it as the financial support and the other. But if we go back in time, and I hate to say these old gender roles, but the idea was somebody was doing their primary job and somebody was providing support at home. And I don’t think we realized how much work it is to provide support at home, with or without kids, there’s just a lot of stuff. You know, we need a new roof on our house. Well, that’s a giant project, you know? So, you’ve got to have somebody with the flexibility to do that. Or, you have to be able to pay somebody to manage these projects for you. And I think that’s overlooked because if we’re both at the top of our careers, then we’re going home and have to figure how to mow the lawn. Like, our brain just explodes. Money is not important. What money gets you is important. So, if you’re just working to make the dollars, and it’s not making your life better, change something,

22:16 Emily: I’m feeling this like so strongly right now because my husband and I purchased our first home, which is like a single-family like house a year ago. And so, we went from like apartment living as renters to this managing an entire house situation. And it is a lot of work. I was not quite prepared for this. So yeah, and we’re trying to figure out ways, like how much should we be outsourcing? How much should we keep, you know, us to do the work. But it is a lot, a lot, a lot of work that it takes to run a household. Yeah. And I definitely did not appreciate this a few years ago back when I was still a renter.

22:51 Jay: Let me give you a number on that one. I’ll actually give you the answer on what you should outsource. The question is what do you make per hour, and would you rather work an hour than do the work? So my wife and I, we have somebody come in to help clean. I’ll work an extra hour of work and not have to clean the toilets. I mean, that’s the math behind it. If you enjoy mowing the lawn, do it. If you don’t, <laugh> figure out your hourly and, you know, pick up an extra, you know, class or whatever it is to cover that.

Communication is Key

23:18 Emily: Yeah, this is like airing my dirty laundry on the podcast, but like literally my husband and I are talking about this right now with respect to a house cleaner. I am very confident that we both made more per hour, and that a house cleaner could do a better job and faster than we could do it. But he still has this like, idea that like, you should do it yourself or something. We’re working on that. That’s something we have to agree on together. So yeah, we’re sort of in negotiations about that right now. Is there anything else you want to tell us about this like gardener and rose concept?

23:51 Jay: I think the big thing is communication. I mean, that’s the bottom line of all of it. And I think, when it comes to finances, unfortunately, even couples don’t talk about it, you know? And here’s what I’ve found, with my clients, I talk about this type of concept all the time. The person who needs to be the rose, the person who’s burnt out of their career or whatever, the other spouse is perfectly fine with. It’s the rose that has trouble taking it, you know? Of saying, okay, I will step down or I will change, or I will do whatever. The other person always supports it. So, I think it’s that communication. And I think the other part of it is, what I’m seeing at least in the great resignation world is it’s not about money. It’s changing jobs for either meaning or, you know, whatever that feeling is for the soul, not about the dollars and cents. Hey, I want to make more in my career.

LifeScriptTM Deviation

24:46 Emily: Kind of tying into that. One of the big patterns that I saw reading through the stories in your book was this concept that childfree people, and the people are sort of speaking about their own experience, they have this sense that they can make changes in their lives without maybe considering how it would affect a child or maybe other people in their lives. And that they, in theory, have like a freedom to do that. Did you have that observation as well? But what I also observed is that they weren’t always acting on it. They thought they had the freedom, but they weren’t using it.

25:22 Jay: So, I have this moment frequently and it was in the book and also with just everyday people. And I look at their numbers, I go, “You’re fine. You can do that. You can make that.” And then you get this look in their face, like, “No, no I can’t.” And I’m like, “I’m looking at it financially, you can.” And there’s like this tension. And it happens with people that could cut back on work or retire or change their careers. And I think, you know, I just had a good conversation with somebody that’s this concept of like the middle class work ethic or the Protestant work ethic, which is kind of what you’re talking about with your husband, where I’ve got do this. No, you don’t. Like, so for childfree folks, our goal is not to pass generational wealth. It’s to pay for our bills on the way out. So, adding more zeros to a bank account doesn’t help. So, there’s a point where you’re like, well, I want to go on that, you know, trip of a lifetime or whatever. Well, then do it. And people are like, “Oh, I can’t. I still got…” I’m like, why? And I think it’s just this cultural component. It’s why your husband won’t let somebody else clean the toilets.

26:28 Emily: Yeah, I totally agree. That Protestant work ethic thing <laugh> how people are brought up. And I guess what we see in the book is like people, you used the term LifeScriptTM in the book. And how people who have made a conscious choice to be childfree have deviated from the LifeScriptTM. But it sounds like even though they’ve made that step, some of them are still being held back by this like cultural conditioning around making radical changes or really experiencing the freedom that they have earned through their finances and through their career.

27:02 Jay: Absolutely. So, the LifeScriptTM goes this way. You go to school, high school, you graduate, you go to college, by the way, most people don’t even like pick where they go to college. Their parents put something on them. So, that’s part of the script. You go to college, you get a job, you get married, you have kids, you get old, you retire. That’s kind of like the standard script. So, childfree people threw out the middle of it. Like, nah, I’m not doing the kids. And also, interestingly enough, 32.1% of childless people, this is per census, will never get married. So, they even threw away the married part. So, they threw that all out. Cool. Throw away the part about job and career and like, it just locks up because, well then what do I do? And they’re like, well, I don’t like where I live.

27:50 Jay: Well, then move. And they’re like, well, but you know? So, another great example is people go, well, I have to buy a house. You don’t. If you’re childfree and you’re going to move every two years, there’s no reason to buy a house. But then people go, well, but how do I, you know, make money without a house? That’s fine. We can do reeds. We can do some other stuff with it, but it’s just like this, it locks them in. And I have to spend a lot of time going well, there are other options and working it step by step.

28:18 Emily: This is just that observation you just made is why I’m so pleased that you chose this as your niche, because some of those elements you just said, you know, the FIRE movement is kind of working on people’s psychology around this, but I love that you have that further spin on it of focusing just on the childfree community. Because they, as you said, you know, at the beginning they have different financial lives than other people who do have children. And they deserve to be served specifically with their finances. And so, I’m so glad that you chose that as your niche and connected that personal element of your life to your professional life. I’m just so excited for your business. Tell us where people can find the book and where they can contact you if they’d like to learn more?

29:02 Jay: Sure. Portraits of Childfree Wealth is sold everywhere books are sold. If you want to go to Amazon, Barnes and Noble, whatever works for you. And I can be found at childfreewealth.com.

Best Financial Advice for Another Early-Career PhD

29:13 Emily: Well, Jay, thank you so much for giving this interview. I conclude all my interviews by asking what is your best financial advice for another early-career PhD? And that could be something that we’ve touched on already in the interview, or it could be something completely new.

29:27 Jay: Let me give you something that’s a life advice, if that’s okay. One of our colleagues taught us this and I wish others knew it. He said him and his wife both were MDs, had made a deal that they don’t have to go to each other’s corporate events. You know, the Christmas events, all that. So, my wife and I early on adopted this and we don’t go to each other’s events, because frankly, we don’t know anybody. And it’s been the best thing for our life because we don’t have to have that awkward conversation and the other. And people go, well, that’s not financial. No, it’s a life thing. You know, I don’t need to have that convo. And by the way, it’s easy to explain to people go, yep, we have this deal. This is how we do it. We have separate careers. And it works. And it sounds silly, but if you try it, you’ll like it.

30:12 Emily: Okay. Very interesting. Well thank you, Jay, for this fascinating interview. Thank you so much for coming on!

30:17 Jay: Happy to be here!

Outtro

30:24 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? I have collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance…but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

This Postdoc from a Low-Income Family Evolved Her Financial Attitudes and Practices During Her PhD Training

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In this episode, Emily interviews Dr. Fushcia Hoover, a postdoc at the National Socio-Environmental Synthesis Center. Fushcia grew up in a low-income family and graduated from college in 2009. Unable to find full-time work, she accelerated her plans to pursue graduate school, ultimately earning a PhD from Purdue University and winning an NSF Graduate Research Fellowship. Fuschia’s background imparted her with certain financial attitudes and skills that influenced her financial journey through her PhD and postdocs. On the positive side, she already knew how to keep her expenses low and she had enough discretionary income from her stipend to pay off her undergrad student loans, even while sending money home to her mother. On the negative side, she was unfamiliar with investing and understandably gun-shy after witnessing the stock market crash. Fushcia and Emily discuss how her financial attitudes and practices evolved during her PhD and first postdoc and why and how she negotiated her salary for her second postdoc position.

Links Mentioned in the Episode

Teaser

00:00 Fushcia: As a graduate student, postdoc, there’s this expectation that we just kind of have to accept things as they are. And, certainly in some cases, yes, that’s true. But I think in a lot of cases, there are always things that are negotiable and that are malleable. And I think a lot of that comes down to recognizing how valuable you are, not just as a person, but also as the work and your contribution.

Introduction

00:35 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 two, and today my guest is Dr. Fushcia Hoover, a postdoc at the National Socio-Environmental Synthesis Center. Fuschia grew up in a low income family and graduated from college into the depths of the great recession. Those experiences, and parted her with certain financial attitudes and skills that influenced her financial journey through her PhD and postdocs. On the positive side, she already knew how to keep her expenses low, and she had enough discretionary income from her stipend to pay off her undergrad student loans. On the negative side, she was unfamiliar with investing and understandably gun shy after witnessing the stock market crash. Fushcia and I discuss how her financial attitudes and practices evolved during her PhD and first postdoc, and why and how she negotiated her salary for her second postdoc position. You absolutely do not want to miss her concluding words of encouragement for all PhDs, but especially those in marginalized groups. By the way we recorded this interview in October, 2019. Without further ado. Here’s my interview with Dr. Fushcia Hoover.

Will You Please Introduce Yourself Further?

01:54 Emily: I have joining me on the podcast today, Dr. Fushcia Hoover, tnd she’s going to be Talking to us about her background, coming from a low income family and ultimately entering graduate school and a couple of different postdocs. And what she has picked up and learned about finances along the way and the work she’s done on her own mindset. I’m really excited about this episode. Fushcia, thank you so much for joining me, and will you tell the audience a little bit more about yourself please?

02:17 Fushcia: Thank you so much for having me I’m happy to be here. I am a engineer by training. My graduate degrees are all from Purdue University, Ag and Bioengineering, but I actually got my degrees from an interdisciplinary program, the ecological sciences and engineering program at Purdue. And so a lot of my research that I do now, as well as my dissertation work, looks at both social and ecological aspects of storm water management and the way green spaces and green infrastructure can be used to reduce runoff during rainfall events, but then what are the different environmental justice potential impacts. Then recently I have also started incorporating black geography theory, which looks a bit more at the way that people and places are connected and the historical and cultural connections between those two, and what that means in terms of storm water management planning and where we place green spaces and green infrastructure. That’s kind of where I’m at now, so I like to call myself, well, it always changes, but currently I call myself a socio-ecological systems hydrologist.

03:45 Emily: That is so fascinating, that the arc of your work has gone in that direction, from the technological to the more sociological. Okay, great. And so you said you have your all degrees from Purdue, bachelors through PhD, is that right?

04:00 Fushcia: No. My bachelor’s is actually from the University of St. Thomas, which is based in Saint Paul, Minnesota, where I originally am from and grew up. That degree was mechanical engineering, as my bachelor’s. And then I also had a minor in Middle Eastern studies. I’ve always been interested in balancing my science and the technical work that I do with more social and cultural components. That’s where I started and I’ve just been traveling the Midwest sense, but now I’m on the East coast.

04:34 Emily: Yeah. So tell us about your positions that you’ve had since you’ve finished.

04:39 Fushcia: Yeah, so I finished in 2017. My first postdoc was through the National Academy of Sciences. And that’s called National Research Council graduate fellowship, or post graduate fellowship, I believe. That was based at the Environmental Protection Agency in Cincinnati, Ohio. I was there for a year and eight months, so almost two years. Then, my contract for that ended, and my boss and I weren’t sure if there was going to be additional funding, so I had been applying to other postdocs, one of which is the one I’m currently in, which is with the, this is very long, so bear with me, the National Socio-Environmental Synthesis Center, um, or SESYNC for short, and that’s in Annapolis, Maryland. So both very research focused. All I do is research. At the time I wasn’t interested in going into academia. Things have changed since. Then I worked in this position with Sarah Moreau, who is a faculty at Arizona State University.

05:52 Emily: Gotcha. So interesting that you just dropped in there that you’re now more interested in academia than you were before. People don’t usually go in that direction, but not the subject of our interview today. I’ll have to follow-up about that another time.

Growing up in a Low-Income Family

06:05 Emily: Let’s take a step back even further to your childhood and then basically your time going through college and up until you entered graduate school. Just really briefly, what was your financial experience during that time?

06:18 Fushcia: My mom is a single parent and I have a twin sister as well, so it was the two of us and our mom. We grew up in a single parent households and we had been low income for the duration of my childhood into early adulthood. Certainly for anyone that is from, I think either one of those demographics, there was a lot of like coupons and buying things either on sale or clearance or discount. On and off throughout growing up, we would have access to food stamps, depending on what my mom’s specific financial situation was at the time. The great thing about growing up in Minnesota was that there were and are amazing social services. In terms of basic needs like healthcare, we were on the free and reduced lunch program, we always had all those things. So it actually took me a very long time to realize that we were low income because of that. It was, I think until seventh grade, when I realized that lunch wasn’t free. I just thought that was a service everybody got and people who brought their lunch, that was just a preference. I really grew up in that environment of saving and being very conscious about spending.

07:53 Fushcia: My mom was also very open with us in terms of explaining why we could only get things on sale, but I think the child, part of me was still like, well, if she wanted to, we could get this, but she’s just being a mom. You know, “parents are mean” type of childhood mentality. It wasn’t until I got older, I was like, “Oh yeah, that makes sense.”

Loans and Scholarships During Undergrad

08:21 Emily: Yeah. Thanks for telling us about that. Then, when you got to college, what was the situation then? You mentioned the school that you went to, but was it private or public, and how did you fund it?

08:34 Fushcia: It’s the largest private university in the state of Minnesota, and I was fortunate there was a college access program and I was part of in high school called College Possible. I made my sister join as well, so we were both part of the program and it helped teach us about scholarships, applying for college, doing college visits, as well as like practicing the ACT, which is what most of the Midwest takes as the college entrance exam. I think I had applied to between 20 and 30 scholarships as a senior, and then the ones that I was awarded, combined with, I received a full tuition scholarship from the University of St. Thomas based on my academic record and I’d done a lot of community service as a high school student as well. So through that, I was actually receiving refund checks, which is pretty rare.

09:45 Fushcia: A big part of the conversation my mom had with us in terms of college was that she could not afford to send us to college and she could not afford to co-sign on a loan. So my sister and I were very diligent about then seeking out money and applying for scholarships and finding resources that could help us pay our way, or in my case get paid, through college. I took out two loans, one for my last semester of college, and then for a January term study abroad. When I finished, I had about $7,000 in debt and that was all within Sallie Mae at the time, so one was subsidized and one was un-subsidized.

10:40 Emily: That is really good. I mean, to have access to that program, first of all, maybe that was part and parcel with the general great services you had access to in Minnesota, but yeah, that set you up amazingly and to of course then put in the work and get the scores and do the scholarships and everything that, I mean, it’s clear why that happened and why you ended up in that position. So your tuition, you had a scholarship. You had enough scholarships coming in to cover the room and board and so forth, so that you’re actually receiving at sometimes a little bit of money back. Then you took out some small student loans for part of that experience. So coming out of college, about $7,000 worth of student loans and you didn’t go immediately to graduate school, is that right?

11:19 Fushcia: Yeah, that’s correct. And I actually forgot, I did have, I think it was maybe like a $3,000 loan from Wells Fargo, which, well, maybe I can save this for the end as one of my pieces of advice, but at the time I didn’t know about kind of self-loans or just the loan system. My checking and savings were through Wells Fargo, and I was like, “okay”, not knowing that that doesn’t allow you to defer your loan and that the rates are higher.

11:52 Fushcia: When I graduated, in 2009, which if you remember, was kind of the peak of the financial crisis.

12:03 Emily: Yeah, the worst year to be graduating.

12:05 Fushcia: Yes, it was a horrible year to graduate. I didn’t have a job. I had started working part time for a program that I was a part of while at St. Thomas. And then I had transitioned into working for a program called AVID or the Advancement Via Individual Determination, which was located in the public — well, it’s a national program, but I specifically worked within the Saint Paul public school system. Tthat was part time as well. So I was doing that, I had moved back home, I was living with my mom and barely able to pay my $50 a month minimum for my Wells Fargo loan. I had been able to put it into forbearance for six months. That was the only thing that they would allow me to do. It was actually a very…I was very stressed. Thankfully, living with my mom helped cut down on a lot of expenses, but it was a lot of penny pinching. I think my income was maybe $500 a month, before taxes. So, trying to give my mom something and then basically pay for my cell phone and basic expenses and then this loan. That was my financial situation upon graduating.

Starting Graduate School in the Midst of the Great Recession

13:39 Emily: And did the difficulty in finding work of that year, the peak year, did that play in your decision to go to graduate school or had that always been the plan?

13:48 Fushcia: I’d always wanted to go to graduate school. I did not want to go right away. I was really mentally and emotionally exhausted after undergrad.

13:59 Emily: I know that feeling.

14:01 Fushcia: Yes, and I think a lot of us have those feelings even after grad school as well. I think the only difference was that I went to grad school sooner than if I would have had a full time job. I worked part time for almost two years before going back to grad school, because I also wanted to make sure that I wanted to go back and I didn’t know what I wanted to go back for quite yet. I knew I wanted to stay within engineering, but I didn’t know…I knew a lot of what I didn’t want to do. I took that time to figure out the programs and the schools of interest and what my potential research interests could be.

14:49 Emily: Gotcha. So when you entered graduate school, was that actually an increase in your income from working, I guess it’s still part time technically in graduate school, but was your income higher than at that point?

15:02 Fushcia: It was. It’s funny, a lot of people talk about how poor graduate students are and how we’re going to pay, and we are. I certainly agree that for the work that we’re doing, all graduate students should be paid more. But it was such a jump in income for me. I think especially going into an engineering program at Purdue, I think my monthly income was about $2,500 per month. All of a sudden, not only did I have a higher income, but I also had a dependable income. And it was an income that I was going to be getting, regardless of my hours that I put it in. That was the first time being on a salary, and having something that I was like, “okay, wow, I can pay my bills, I can pay my loans, and that’s not something that I’m going to have to worry about. Where’s this money going to come from? Am I going to make my minimum payment this month?” It was a big relief for me in a lot of ways.

16:13 Emily: Yeah. And I would imagine that stipend goes pretty far in Lafayette, Indiana, does it not?

Employing Frugal Strategies in Grad School

16:19 Fushcia: Oh yes, it does. And I very much…I had two roommates, I didn’t have a car either. I had a bicycle, so I was pretty much biking or Lafayette, if you’re a student, or basically if you are affiliated with Purdue and you have a Purdue ID, then you get to take the public transportation system for free, so I wasn’t having to spend money there. It was really just groceries and utilities and rent split between three people. I found a lot of ways to reduce the amount of expenses that I had because then I had also then started sending money back to my mom. I was sending her about $300 every month. Definitely trying to funnel resources and reduce costs.

17:09 Emily: Yeah. It sounds like you took a lot of the the strategies that you’d been using prior to that point, and also some of the mindsets you’d had to that point. That was what you applied right then. You found the low cost living situation, you used the public transit instead of owning a car, so you really reduce your expenses right off. But it sounds like still, even with sending your mom money, you probably had a good bit of discretionary money to be working with, above the bills that needed to be paid. What did you start doing in your personal finances at that point? What did you have to learn about since you now finally have this discretionary money to do what you want with? What did you learn about what did you apply in your life?

Paying off Student Loans During Graduate School

17:49 Fushcia: It’s funny, I had taken a financial literacy workshop before I started graduate school, and that was more focused on like budgeting and saving and negotiating whether you pay off credit card debt first, or if you have student loans and how you prioritize your debts. The biggest thing, aside from sending money home to my mom was that I started making monthly payments on the undergraduate loans that I had. I targeted the Wells Fargo private loan first, and then —

18:28 Emily: I just have a follow up about that. Were those loans, at least maybe the federal ones, in deferment at that point?

18:34 Fushcia: They were, yes.

18:36 Emily: And what about the Wells Fargo one? Was that in deferment?

18:38 Fushcia: No, the Wells Fargo, my forbearance had ended after the first six months, from me finishing my undergrad degree. I had only been making $50 a month payments, so you can imagine on a $3,000 loan, that’s not very much. So I kicked that up and I think I started making either between $150 and $200 loan payments every month. So about $500 every month was going to this one particular loan and then my mom. Then the rest that was remaining after bills and rent, I was just putting into savings or using for other expenses like going out to eat or going home for the holidays, things like that.

19:34 Emily: What I like to call irregular expenses.

19:37 Fushcia: Yes, irregular expenses.

19:38 Emily: The ones that can really mess up your cashflow if you try to pay for them in just one month. How long did it take you then? Did you just keep working in paying down those loans straight before adding any other goals to the picture and how long did it take you to pay them off?

19:50 Fushcia: I did. I had paid off my Wells Fargo loan by the end of my masters, so just under two years, and then my government loans, it took about two and a half. I don’t remember if it was two and a half or three years. I think part of the decision why, even though those loans were in deferment, one of them was unsubsidized, so it was gaining interest. And I think because of coming from low income background, and even though I was in this position where I had a steady paycheck, I was still really worried that it would end. Certainly, I knew the degree would end and I wasn’t sure what my income would look like after that, and I didn’t want to have that stress. I think I might’ve been the only one I knew of my friends with loans from undergrad who was actively paying it down.

20:54 Fushcia: That was my goal, was to have zero debt by the time I graduated from Purdue. Pretty much all of the focus was on paying off those loans. Then I would typically have anywhere from like $200 to $400 that I would just put into savings every month.

21:17 Emily: I will say, in my contact with graduate students, some people do, but it’s on the rare side to be working on paying down student loans while in graduate school. I think yours because they’re relatively small, might…I think some people get really defeatist about student loans. Especially if you have more than a hundred thousand dollars or multiple tens of thousands of dollars of student loans, it can feel really, really daunting, and why even bother like getting started on your low salary during graduate school. But I think yours, they were a fraction of what you made in a given year, and so it felt like something that you could tackle, probably. And like you were saying, you had that fear of, well, what if your program ends for whatever reason? Well, then the loans are coming out of deferment, you have to make at least minimum payments, and then what’s your income going to be? You don’t know. That decision definitely makes sense to me.

Commercial

22:12 Emily: Hey, social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15 minute call with me at PFforPhDs.com/coaching to determine if financial coaching with me is right for you at this time, I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now back to our interview.

Personal Finance Mindset Shift During and Post-PhD

22:58 Emily: Did you do anything else within your personal finances during graduate school, aside from paying off those loans and then also building up savings?

23:06 Fushcia: No. I had conversations, I talked with a couple of friends who were working about IRAs and investments, but it was all very intimidating. I think for me, at the time, it was easier to just put my money in savings and then I could also see it, and there wasn’t like a fear of losing it. With investments, I think particularly because of being an adult through the stock market crash, and also remembering when Enron went under and people’s entire pensions were lost. I have a, I wouldn’t say a strong distrust, but I would say I’m very kind of apathetic and very wary of different financial institutions. Even Sallie Mae and Freddie Mac and all of those. For me, I was like, “nope, I want to have my money with me, so I’m putting it in my savings account.” By then I had also transferred to a credit union, so I felt a lot more secure about credit unions as financial institutions, int that I’m an owner in this. And I have amplified checking, so then I was getting, I don’t remember what the return is, but it’s a couple percent return. I was like, “okay, I like this. I can make money from my own money.” Even though I had those conversations with a lot of friends who had higher income backgrounds or whose families did, and so these were conversations that they had. It still wasn’t something I felt comfortable really digging into because I think part of me still felt like I didn’t have the financial security yet to start investing.

25:05 Emily: Yeah. It’s interesting. I graduated from college in 2007, so two years before you did, so before the crisis hit and I was safely in graduate school, by the time everything went down. But I took away like a different kind of financial trauma from that whole period, which is that I’m very gun shy about the housing market. I’ve still always been a renter. I have yet to buy my first home. And that’s partially because, while I didn’t personally experience, all the media coverage is about people losing their homes and foreclosures. So while I was very gung ho about getting into the stock market and I was able to experience the rise right after the crash, it’s still is something that lingers with me regarding the housing. It’s just interesting to talk to someone near a similar age who had some witnessing and some stake in everything that happened and what’s lingering.

Investing

25:58 Emily: Actually, maybe you’ve turned this around since then. You were talking about during graduate school, you were nervous to start investing. And I think it actually is really smart to build up the cash savings to get the debt paid off before embarking on that. At what point did you, or have you started to invest?

26:14 Fushcia: I started a few months, maybe six months into my first postdoc. By the time I finished at Purdue, I had about a four month break where I was job searching and then preparing for a move, and I had saved up about maybe $5,000 to $6,000 in savings. One of things that I did start doing was also using credit cards as a way to prepare for high cost expenses. I had opened a card, um, just before I graduated so that it allowed me to have 18 months of 0% APR because I knew I’m not going to have a job. I was at a part time job that I got to cover basic things, but in terms of, I have to move, that card held all of those expenses. Then once I started my postdoc and getting paid, I worked on paying that down, and since I had 18 months, there was no rush. But then, because I was like, “Okay, I have a job.” As an engineer coming in for an NRC, my stipend was $69,000 for the year, which certainly is very high compared to a lot of postdocs, but I think most of the federal agencies, you’re going to see a higher salary, that’s closer to what a full time federal employee would be making

27:55 Emily: And for you in particular that’s over double what you had been making her in graduate school.

27:59 Fushcia: Yes. Well, and I should say that my first year of my master’s I applied for and was awarded a National Science Foundation GRFP, so I think that also really allowed me to focus on my debt because then I was making $30K. I still had to account for the taxes, which was not fun, but compared to my friends in college of liberal arts, who were in English or social science making $13K, that’s a big difference. One of the things that I actually learned from you was while I was in my first postdoc, I joined the National Postdoc Association, and you were a guest. This would have been a couple of years now. I watched your webinar, when you gave a presentation. From that point, I looked more into kind of the difference between an IRA and a independent tax account and figuring out, okay, with NRC, it’s the same thing. They don’t take out taxes. And so then —

29:19 Emily: I’ll jump in there and say, because you were on fellowship, because you were not technically an employee, I’m just explaining for the listener, you wouldn’t have had access to the workplace based retirement account, whatever that would be, that they would offer to their full time employees. So you’re still dealing with a stipend, you still have to handle the taxes manually, and you’re really only tax advantaged retirement option would be an IRA. Nothing was being offered through your employer, because you didn’t have an employer.

29:47 Fushcia: Yes. I was a contractor. I did a little bit of…well, I should say I did a lot of research trying to figure out then where I wanted to open an account. I actually ended up going with an online system called Betterment because I did not have the time to actually look into managing my own investments. I think because so much stuff is online, it also made it easy for me, so then I didn’t have to find an office location to go into. In my postdoc now we are considered faculty of the University of Maryland and the University of Maryland is a state run system, so we actually have mandatory investment portfolios and the portfolio that I chose is through the I don’t remember the, the full meaning, but it’s TIAA.

30:53 Emily: Yeah. I don’t know what it stands for either, but TIAA or TIAA CREF.

30:57 Fushcia: I still have my betterment accounts and I haven’t decided how much I’ll be putting into it. They take out just over 7% from my salary for the TIAA account, so I need to figure out what that balance is going to look like. Now I was like, okay, it’s probably about time. I was a little bit nervous about being older, like 31, and just starting to invest. But I think because I don’t have any debts and because, well I have a little bit of credit card debt, but I also just moved for this postdoc. I think that’s why I was finally at a point where I feel confident that I will have a job and I will continue to have income and that’s not going to be something I’ll be lacking anymore. And so now I can fully invest having confidence in, well the system is still problematic, but I at least have confidence that I’m not going to wake up and be without a job.

Learning Debt Management Strategies

32:12 Emily: You said earlier there were maybe some things that you brought out of your childhood that you had an aversion towards debt. A smart one. But you also maybe weren’t exposed to conversations around investing and IRAs, maybe like some of your peers were. Was there anything else that you kind of felt maybe you were a little bit out of step with other people during graduate school, or during your postdocs regarding personal finance. And anything you had to learn or mindsets to change or overcome?

32:44 Fushcia: I think I definitely learned about the healthy ways that you can use credit cards to manage certain debts. I think that that came from conversations with a close friend when I moved for my postdoc. I opened a card to buffer that, and a lot of that helped and realizing that all debt doesn’t have to be bad. That it can help you create a credit score and debt management techniques and strategies, and build out this financial portfolio that can actually then make you have a higher score and more competitive for other loans and things like that. A lot of that came from conversations with friends who had either taught themselves that, or they learned it by proxy from their parents. Just asking about their debt and how they managed it, and then also asking, are you afraid that you won’t pay it off or are you afraid that it’s going to be there forever? Certainly, I remember an ex of mine, she was like, “Yeah, it’s just going be there, and it’s just this thing that I have, and I’ll make payments, and it sucks, but also I have the education that I wanted to get and I’m in the job that I I think through those conversations, it definitely helps release some of the anxiety and like intense fear around debt.

34:48 Fushcia: Listening to webinars or reading your blog, for example, and just trying to educate myself more, so that I’m more informed and that’s definitely alleviated a lot of the fear and anxiety, but I think I still like coupons, I still like things on sale. It’s still really hard for me to pay full price for clothing or a pair of shoes that’s a hundred dollars. I’m like, no, can’t do that. Like you, I’ve been a renter this whole time and I don’t know if I want to buy property or a home. I did buy a car when I moved to Cincinnati, and so I’m making those monthly payments now. Part of it is also okay, well, I’m going to make these payments and pay off my car and then maybe see where I’m at in terms of, if I’m in a permanent position that then I feel more comfortable buying a home. I think some of the approaches I still have to managing that is to have one type of debt at a time. Take on debt, pay it off and take on a new debt, pay it off.

36:10 Emily: Yeah, it sounds like you really have learned much more about, as you were saying earlier, debt management or how you can use debt as a tool, especially to avoid large expenditures of cash. Because it sounds like you still have cash savings to a degree, but it’s more about not wanting to let go of that and using debt to help you basically just hold both to have the cash and to have the debt, so that you can feel, feel more secure around it. Is that right?

36:39 Fushcia: Yeah. I think that’s a really good way of kind of summing that up.

Negotiating a Post-Doc Salary

36:44 Emily: Yeah. And then the other thing that you mentioned that you wanted to talk about in this interview was negotiating your salary, which is also kind of another mindset leap, right? Like not only, maybe from someone coming from the kind of background that you have, but also just being in academia where like with your first postdoc, negotiation is not really an option, but it sounds like you did at your first opportunity, negotiate. Can you tell us how that worked?

37:09 Fushcia: Yeah. To be honest, a lot of it was just like, I know I need to practice this because I know I’ll have to do it at some point, so let me just practice it now because it’s lower stakes.

37:21 Emily: Yeah. Good point.

37:25 Fushcia: Part of that came from in your webinar you had been talking about kind of how you plan for transitions. So either going from your degree to a postdoc, postdoc to a full time permanent position, and managing the moving costs and change in expenses. I had sat down and looked at essentially the cost of living for Annapolis and estimating what my costs are now, and what’s expected to grow. The majority of that, it’s about a 300% increase in housing expenses from Cincinnati to Annapolis. I started there and then looked at how much would I want in savings or investments, and then worked with the business office at SESYNC to then figure out is there a parking cost? Learning about the exact percentage rate that they take out for retirement or investments. Trying to find what are all the other hidden costs and expenses that come with this position so that I could factor that into my budget and then know what would my minimum salary need to be, because I know my minimum payments for my car. I know my cell phone payments. Those are things that I know and then wanting to make sure that it had wiggle room.

38:54 Fushcia: Then I think on top of that, I also wanted to try and stay as close as possible to what I was already making. Certainly, it can be challenging to do that with a different type of postdoc, particularly because this one’s affiliated with the University of Maryland, academic post docs are much slower. But I didn’t want to have this $20,000 drop, because the great thing about the NRC was that they gave a $1,500 increase every year. I came in at $69,000, but then the next year I was making $70,500. So it’s like, okay, well, how close can we get to this?

39:38 Fushcia: Again, a lot of it was using my network, and talking to in particular, a good friend who is now at Cornell. She had just finished her PhD, and she had negotiated her position. Asking her for advice and resources and how you frame what you’re negotiating for and the language that you use so that it’s still appropriate and respectful, but that you’re still firm, in terms of, these are my skills, particularly because I was coming out of a postdoc. I already have almost two years of experience post-PhD, and I’ll have all these other publications, and knowing different questions to ask.

40:22 Fushcia: I wrote up this letter, had a few people review it. Ironically, when I asked my former PhD advisor, she was like, “We don’t do that. If someone were to do that, maybe I’d give like a two to 3000 increase.” But when I had looked up other negotiation strategies on Inside Higher Ed, I used a lot of their articles. They mentioned, I think it’s 15% to 22% is typically what you negotiate as your range, particularly if it’s not a lateral position, if you’re moving up. So I was like, “Okay, we’re going to go for 15%.” And they did not give it to me, but they came close. From there I went back and said, “Okay, based on this salary, could I make it work?” And I could. It’s going to be tight, which is a bit frustrating to have a point where you have more flexibility and you have more expendable income and now it feels a little bit more like being a grad student again where it’s a smaller salary. I have to be more conscious of where my money is going and not spending as much as I was, particularly now that I have a car and all the expenses that are associated with that. But I know that I have the skills to make it work. And at this point I’m also looking for a permanent position after this postdoc. I don’t anticipate after this two year position, being in a situation where I have to kind of penny pinch and reduce costs elsewhere.

42:23 Emily: Yeah. It sounds like you approach that — I mean, it’s clear that you did a lot of research and preparation through that process, not only taking what you learned from the webinar that I gave, but also this research you did with the articles in Inside Higher Ed and in speaking with your friend. You really prepared for that and kind of the best way possible, so it’s a great, it’s a great model for the listeners to hear, especially because you knew that you were going into an almost guaranteed income drop and also a cost of living increase. Both of those factors just highlight the need for being really careful around this. And if your academic advisor said, well, this isn’t done, I mean, it is, it is done sometimes, in some places. Maybe no one’s ever attempted it with her.

43:06 Emily: I want to point the listeners to one of my resources, which is postdocsalaries.com. And there’s also another one PhDstipends.com, for those in graduate school. It’s kind of like a Glassdoor, but for those types of positions, for postdocs and for grad student positions. That’s just another resource out there, if people want to get benchmarks on what is reasonable to be paid for different kinds of postdocs in different areas of the country. And I also ask questions about negotiation on that survey. I think the last time I looked in the database, it was around 25% or maybe a third of the people who had answered the questions had said, yes, I at least attempted to negotiate salary or benefits for the postdoc position. I think it’s becoming more and more popular, as people realize that this is a standard thing you do in most jobs, and why don’t we at least try it in these academic or nonacademic postdocs. That was great story.

43:58 Fushcia: Well, and I think too, salary, while I think it is very important, isn’t the only thing that you can negotiate. You can negotiate moving expenses and you can negotiate time off. I also negotiated my start time because I wanted to finish through my contract at the EPA before coming to SESYNC. That was something that I successfully negotiated. I had picked my top three things of these are the things that I would like, so we’ll see where they can meet me. There’s another postdoc who negotiated because he also was coming out of a previous postdoc and then everyone else who we’ve talked to, we were having a conversation and they were like, I didn’t know that you could do that. And we were like, all they can say is no, especially once they offer you a position, if they want you. If you don’t ask, you’ll never know.

45:02 Fushcia: I would also say for all the listeners that if you are going to any type of public institution, you can look up everyone’s salary, that’s all publicly accessible information. And that was something that I did to give me a sense of what are the ranges for the people that are employed within the center. I had an idea of what their budget is to figure out do I ask for the 15% or I do I ask for the 20% to 25%.

45:29 Emily: Yeah, that’s a great advantage when you’re going to those types of places, that there’s a large degree of transparency around salary there. That’s an amazing thing to look up, if that’s where you’re applying.

Best Financial Advice for an Early Career PhD

45:41 Emily: Last question here, Fushcia, as we wrap up — what is your best financial advice for another early career PhD? And that could be something that we have touched on in this interview, or it could be something completely else.

45:53 Fushcia: I think my first piece of advice would be to do as much research as you can. As grad students, we’re training basically how to do research and conduct research. I think we already have a lot of the skills to be able to access these resources and information and find ways or people to help us get there. I would say that most of the way that I have navigated my finances has been through talking to friends, talking to people who are in positions where I see myself going, and just doing the research and using the academic online journals that are available or financial journals, blogs, anything, and everything that you can capture to try and help inform what the decision that will be best for you, or rather the best decision for you.

47:00 Fushcia: The second thing that I would say is to give yourself more value and credit than what you would default to. I think as a graduate student, postdoc, there’s this expectation that we just kind of have to accept things as they are. And certainly in some cases, yes, that’s true. But I think in a lot of cases, there are always things that are negotiable and that are malleable. I think a lot of that comes down to recognizing how valuable you are, not just as a person, but also as the work and your contributions and that the majority of the people in this country do not have PhDs, so you’re bringing in a very valuable skillset, which, when you’re going into a space where everybody has PhDs, it may not seem like that, but I think it’s important to remind yourself of that.

48:05 Fushcia: I think especially, I say this to women postdocs, women of color, black women postdocs, we are already underestimated in many way. We are already underpaid in many ways, thinking about your initial salary offer or associated benefits. I think because of all the work that’s coming out from the national academies and other research centers about this still huge discrepancy across all fields, I think I use that as a way to empower me to ask for more. Because now it’s not just valuing my work and what I bring, but also recognizing that I’m already going to be undervalued, because of what I look like when I come in the room. I think that would be the last piece of advice that I would say for all the postdocs out there. And this includes folks who are femme or femme-identified. If you’re any type of on the marginalized periphery, ask for more, because again, all they can say is no. And if they take back that offer, then that’s probably not a place you want to go in the first place. Because you want to go where you’re going to be celebrated and valued. Give yourself more value than what you default to.

49:39 Emily: I think you put that so well. That was great. I have nothing to add there. Just everybody go back and listen to that again, listen to it a few more times, especially if you’re in one of these groups that Fuschia just identified. Absolutely.

49:50 Emily: Well, thank you so much for this wonderful interview and it was really a pleasure to speak with you today.

49:54 Fushcia: Yes. Thank you so much. This was really fun. I hope that whoever’s listening has been able to take something away, even if it’s just to know that you’re not the only one that’s in grad school who’s from a low income background or is having anxiety or fear around debt or salary. That’s that’s normal and also you will be okay. Everything will be fine.

50:23 Emily: Love that. Thank you so much.

50:25 Fushcia: Yes. Thank you.

Outtro

50:27 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.

This PhD Got a Late Start Financially But Is on Track to Retire Early

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In this episode, Emily interview Dr. Sean Sanders, Director and Senior Editor for Custom Publishing for the journal Science and Program Director for Outreach. Sean came to the US for a postdoc position with little savings. Living in the DC area on a postdoc salary was financially challenging; he didn’t start to make real progress with his finances until he left his postdoc for an industry job, which more than doubled his salary. Sean and Emily discuss the strategies he has used to build wealth in the last decade, from moving to reduce housing expenses to retirement investing to purchasing real estate. They go into great detail about Sean’s passive investing strategy and the mistakes he made in the past. Sean lists his favorite books and podcasts on personal finance that he has used to improve his knowledge over the years.

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Links Mentioned

PhD early retirement

Teaser

00:00 Sean: When I was thinking about being a scientist, I always had the impression that scientists are poor. We never make money, and that you did research because you loved it. You know, when I moved over to the USA, I really didn’t have much in savings, so I didn’t really think about it very much. I had to learn from scratch once I moved to the US and once I had a little bit of income to invest, that’s really when I started thinking about what I wanted to do with it.

Introduction

00:33 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode eight, and today my guest is Dr. Sean Sanders, director and senior editor for custom publishing for the journal Science and program director for outreach. Sean came to the US for a postdoc position with little savings. Living in the DC area on a postdoc salary was financially challenging. He didn’t start to make real progress with his finances until he left his postdoc for an industry job, which more than doubled his salary. Sean and I discuss the strategies. He is used to build wealth in the last decade or so, from moving to reduce housing expenses, to retirement investing, to purchasing real estate. We have a particularly involved and enjoyable discussion of Sean’s passive investing strategy and the mistakes he made in the past. We also swap recommendations of personal finance websites, books, and podcasts. Sean is now on track to retire early, and I’m sure his story will give hope to other PhDs who have, or will enter their thirties without any appreciable savings. Without further ado, here’s my interview with Dr. Sean Sanders.

Will You Please Introduce Yourself Further?

01:50 Emily: I’m delighted to have joining me on the podcast today, Dr. Sean Sanders. Sean works for AAAS and actually we met recently and did an event together at the end of 2019, Fiscal Fitness for Scientists. We’ll link it up from the show notes is a great event that Sean moderated and I was part of the panel. That’s how we first connected, but as we talked more and more at that event, I realized that Sean has an amazing story of his own to tell with respect to his own personal finances, so that’s what we’re going to be discussing today. Sort of how his career has evolved and also his finances, alongside those. Sean it’s really a pleasure to have you joining me here, and will you please introduce yourself further for the audience?

02:29 Sean: Hi, Emily. Thank you so much for inviting me, for the opportunity to talk to your audience. It really is a great pleasure for me to be here. I think we had some fantastic conversations when we met and I’m so pleased to share a little bit more of my story. I’m currently the director and senior editor for custom publishing at Science, here in Washington, DC. I’ve been in this position about 13 years now, but I actually started out as a research scientist. To give you a very overview of my career arc is I started my studies in South Africa. I grew up in Cape Town. I did my undergrad at the University of Cape Town. I then did a one year what we call an honors degree, which is equivalent to a one year masters. I took a break for a while and then I did a PhD actually at University of Cambridge in the UK. I was very fortunate to get in there. Following that, I moved over to the US to do a postdoc at national institutes of health, doing cancer research. I then moved on to a second postdoc at Georgetown University. I was there for about a year and a half, and then a few things happened, which we’ll probably get into a little bit later in the podcast, and I ended up moving into industry, into a small biotech company where I was for about three and a half years. Then got laid off from that, and that’s another story in itself. Then I moved into publishing and I joined the journal BioTechniques for a couple of years. Then, I finally got an offer at Science and I’ve been here for 13 years now. It’s quite a convoluted journey, but it’s been really interesting. And obviously I’ve learned a lot of things along the way.

Early Career Money Mindset

04:09 Emily: Yeah, love it. We’ll be hearing about a few of those as we go forward. Going back to your days in training during your PhD and your postdoc, was your plan to stay in academia and that changed during that second post doc. And then alongside that, with your plan to be in academia, how were you handling your finances at that time? And what was your view of finances generally?

04:29 Sean: When I was thinking about being a scientist, I always had the impression that scientists are poor. We never make money and that you did research because you loved it. And that’s what I wanted to do. I really had just a great passion for research. I really enjoyed investigating. So that’s what I wanted to do. When I was doing my undergraduate, I didn’t really think about finances. I didn’t have much money, even when I moved over to the US I, I really didn’t have much in savings. I didn’t really think about it very much. I had to learn from scratch once I moved to the US and once I had a little bit of income to invest, that’s really when I started thinking about what I wanted to do with it.

05:15 Emily: You’re referencing your move to the US, is that a thing in and of itself, your move to the US, or is it more that you were just advancing in your career and it was a later stage and you were earning more money?

05:26 Sean: I think it was a little bit of both. I was a student through the time that I was in the UK at Cambridge University. As a student, I had a very generous scholarship from the Welcome trust, and I actually managed to save a little bit of money to bring over to the US, but it wasn’t more than a few thousand dollars, so I really was starting from scratch. I didn’t have any income to save and at that point, I didn’t even know what a retirement account was.

05:54 Emily: Yeah. I mean, the transition to the US also comes getting used to a whole other financial system, which I think we’ll talk about more in a moment. So your view was that scientists are always poor. That was your plan. Did you think that would even be the case once you got the tenure track job? You just really thought that was going to be your whole life?

06:13 Sean: Yeah. I didn’t think that scientists earned more than like $70,0000 or $80,000. And, you did it for the love of it. You were working off grants, so you never really made a lot of money. I didn’t ever think that I would be able to retire any time before 65, 70.

Changes in Finances Leads to Changes in Money Mindset

06:31 Emily: Got it. But you mentioned earlier that sometime during your second postdoc, something happened, something changed. Can you tell that story please?

06:38 Sean: Sure. As I said, I was at NIH for about three and a half years, and then I moved to Georgetown University. One thing that I should share with everyone is coming from South Africa, when I moved to NIH, I was on a J-1 visa. I’m not sure if your audience are familiar with this, some probably are, but it’s a training visa. While you’re on a training visa, you’re essentially like a student. You don’t pay taxes like a worker does, and you don’t pay social security. You don’t pay Medicare. Any of that. Now, the advantage of that is there’s more money in your pocket. The disadvantage is you don’t have that social safety net. When I moved to Georgetown University, I got into an H visa, which is what I wanted, because that’s a working visa and enabled me to stay in the country for longer and also progress to a green card, which I eventually did. But what comes along with that is all these other taxes. I had to pay federal tax. I had to pay state tax. I even had to pay county tax in Montgomery County, which was a huge surprise. When I was thinking about this job and looking at the finances and seeing what they would pay me, I didn’t even think about all these additional taxes and I didn’t do my due diligence, and that really came back to bite me.

07:53 Emily: I want to add in there that this is not even necessarily a story that’s unique to someone switching visa types or anything, or becoming a resident. This is something that can happen. I think even moving from graduate school to the postdoc level, or postdoc to another type of job. The reason is not regarding income tax, but regarding payroll tax. As graduate students, generally speaking students, don’t pay payroll ta, that is for social security and Medicare. They have a student exemption. Also anyone who’s not receiving wages, so anyone on fellowship, non W2, they also aren’t paying payroll tax. So getting out of those kinds of training stages, that payroll tax can be, it’s like 7.65% on the employee side, so if you weren’t expecting that, it can be a shock. For you the shock was bigger, because it is not only payroll, but it’s also income taxes and other things, but just wanted to point out like other people need a little heads up about this as well.

08:45 Sean: Right. I wasn’t completely ignorant to the federal taxes I’d had have to pay, but it was just everything at the same time. On top of that, I found out that I had to pay for parking on campus, which I didn’t know about and that was an extra hundred dollars a month or something. All of these things sort of piled on top of each other and then I’d been there for about a year and I read a story in the local paper about what garbage collectors or sanitation engineers, I guess they call them, were being paid, and it was actually a couple of thousand dollars more than I was being paid as a postdoc. Not to take anything away from any kind of employment, it’s all honest work, but I felt that with all the work that I put in to get these higher degrees, I really wasn’t doing myself any justice by being in a position where I wasn’t getting paid, what I thought I was worth.

09:39 Sean: I made a decision at that point to start looking around and I started doing a search for a job in industry, and I was very fortunate to find something up in Massachusetts. The thing is it’s something that probably affects a lot of your listeners is that you can’t always make easy moves, geographically. Some people have families, they have kids, they have spouses. I was in the fortunate position that I could, so I looked very broadly around the country. I looked on the West Coast, I looked up in New England, and I found a great position in Massachusetts, and almost instantaneously I’m more than doubled my salary. I’ve heard of some people calling this geographic arbitrage where you’re willing to move to a different place for our highest salary, and that’s what I did. And although I didn’t love living in Massachusetts, the snow was horrendous, but it was worthwhile for me, and it really set me off on a new financial path, where I could actually save some money and invest in my future.

Making Lifestyle Changes to Increase Savings

10:38 Emily: Yeah. Please elaborate on that. What were the changes that you started making in that time with the higher salary?

10:45 Sean: Well, I think probably the biggest thing was just starting to put away money in savings. As I’m sure you’ve talked about, the first thing I did is I started an emergency fund. I brought up about three months of savings. I also put money into my company’s 401k, immediately. It was as soon as I could, I think it was six months before I could vest. There were also some stock options, which ended up not being worth anything because the company to go under, but it was, it was things that I needed to think about and learn.

11:18 Sean: I started really focusing on living below my means because actually when I was at Georgetown University, I actually found that from the numbers that I looked at, I was actually losing money. So I was spending more than I was earning. Part of that was living in Montgomery County, which was expensive.

11:37 Emily: If you don’t mind, just how were you financing that. If you were actually losing money, was it savings previously built up that you’re drawing down or were you accumulating consumer net?

11:47 Sean: No, it wasn’t debt. I just couldn’t come out on what I was earning. At the time was paying about $800 or $900 a month in rent and that was about 40% or 50% of my income. I didn’t go out that much, but you want a little bit of spending money and I was paying all these other things. I was paying for parking. And I was managing to save a little bit, but really not much. It just made it clear to me that I needed to find some way to focus a bit more on my financial future and get the kind of position where I could actually save and have something in retirement.

12:27 Emily: Yeah. One thing that I discuss during the seminars that I give at universities, one of the points I try to make is that there’s a lot that you can do within your finances while in training, regarding frugality and finding the low rent place to live or what have you. But ultimately, the best thing you can do for your career is to finish that training, be out of graduate school, be out of the post doc, and get that your full salary. The point that I’m trying to make is, although I love to talk about frugal strategies and I love to talk about side hustling and all that stuff, none of that should distract you from just progressing in your career and moving on and getting that higher salary. When you did that, when you achieved that, and you decided, okay, we’re ending this postdoc, I’m getting another type of position, you said that you were focusing on living beneath your means, but I wonder how that compared to your lifestyle when you were at Georgetown. When you got the new job, did you consciously increase your lifestyle in any way, yet still live beneath your means, or were you trying to keep it pretty much feeling like you had during your postdoc?

13:30 Sean: No, I was very focused on saving as much as I could because, at that point I was in my thirties already and I really had very little savings to speak of, and I knew that I really had to start doing something, because I didn’t want to reach 35 or 40 and not have any savings. I’ve always focused on living beneath my means. I can tell you, just an interesting story. When I was up in Massachusetts, I had a coworker who I remember was talking about leasing a car with her husband, and they turned in their previous car. They were paying something like $500 a month or something exorbitant like that. They turned in the car and they could’ve got a cheaper car, but instead they got a better car, a fancier car for the same payment. And that made absolutely no sense to me. Why wouldn’t you get the same car or similar car that’s cheaper and pay $350 a month. That was a mentality that I never understood and I didn’t want to fall into that trap. The way I looked at it is I’m going to get the cheapest car I can. I buy a second hand car, drive it into the ground. I’m going to spend as little as possible on rent. And in fact, what I did is I moved three times in five years while I was up in Massachusetts, both to get closer to work, so my commute was shorter, but also to save on rent. The one move that I made was into a new condo unit that had just been refurbished and they were giving a special for the year and two months of free rent. I stayed there for the year and then I moved. Again, if you’re able to do something like that, you can save quite a lot of money. And I mean, it probably saved me about $5,000.

15:08 Emily: Yeah. This is a strategy that I also try to mention because it’s one I used during graduate school. For example, I moved a couple of times specifically because okay, our rent is increasing, we know what else is around, that’s available. Can you talk about how you actually executed that though? Because it is a really daunting thing to both research a new place to live and then actually execute the move, and it can be expensive too. How did you do this, and still come out ahead financially?

15:32 Sean: As far as moving, you just got to have very patient friends who are willing to help you move. And I always depended on them. I tapped into my network and I’d hire a U-Haul and throw everything in there and move to the next place. Actually, just to add a little bit to the story, once I I’d been at this company for about three and a half years, the company ran out of funding, we were venture capitalist funded, and I got laid off along with the rest of most of the rest of the business. I decided I’d have to move. I couldn’t afford the apartment that I was in. I moved from a two bedroom apartment to a one bedroom, a little bit away from the main part of the city, so it was cheaper. The commute was a little bit longer, but it was definitely worthwhile. Again, I saved quite a lot of money that way. To your question about how I did it, I would just always be keeping a lookout for new places. Both as I drove around and online, I’d constantly be researching, see if there were any deals. And to this day, I do things like that with for instance, CD rates. I look every couple of months just to see where the certificate of deposit rates are, see if I can get a better deal some way. If there’s a good savings account that I can move my money into, my emergency fund, just to get maybe a half a percent or percent more.

16:55 Emily: Yeah. It sounds like you’re just kind of keeping a pulse on the market. Whatever markets you’re involved in, you’re keeping an eye on it to see if there’s a better deal available.

New Financial Goals

17:03 Emily: Okay, so when you increased your salary, you moved to Boston, eventually, of course, you found yourself back in the DC area, you mentioned using the 401k available to you through work, you mentioned living beneath your means consciously. It sounds like you didn’t have any debt or no significant debt to work on. Were there any other financial goals that you’ve set for yourself, with this higher salary?

17:31 Sean: Not really. I’m not much of a goal setter, and that’s probably one of my downfalls. I don’t have a budget. I feel that I just spend as little as possible. I would do things like I would eat out very seldom. I’d rather get takeout or cook at. I was not married, I didn’t have kids, and I know that definitely adds complications to everyone’s stories. I was very fortunate, from that point of view. And I really just wanted to build up as much savings as I could and put the maximum into whatever retirement funds that I could, just to really build up a nest egg for myself in retirement. And also, my parents were aging at that point and I wanted to make sure that if necessary, I could provide for them.

18:20 Sean: Then the other thing that I had in mind is that I did eventually want to buy a property to live in. That was sort of one of my goals. I wasn’t saving consciously towards that as in, I didn’t set aside a separate bank account and put in money for a down payment, which some people say is a good way to do it, sort of use the bucket mentality. I was thinking about the future, but not in any specific way, but I did know that eventually I wanted to be a homeowner and have a place that I could call my own, that I knew I couldn’t get kicked out of because somebody wanted to raise the rent.

18:57 Emily: And has that happened? Have you purchased a home?

18:59 Sean: I did. When I moved back to Washington to my, my position at Science and AAAS, I decided…well, actually my thought process was, I think you’re old enough now you should get a place of your own, so I bought a condo in an area called Columbia Heights, which is an up and coming area in DC. I was quite strategic in doing that. I wanted an area that had recently been revitalized and that was not too expensive, but that I saw some opportunity. Also DC, as you probably know, is a city that will always have people coming to live there. It’s a huge itinerant population that are coming to work for government, for law firms, et cetera. I thought having a place there would be good because when I eventually upgraded or got married or moved out, I’d be able to rent it. That’s actually what I’m doing. I lived in the unit for eight years and I’ve been renting it now for five years, and basically my rent covers my mortgage payment and the condo fees with a little bit of extra. It’s worked out really well.

20:01 Emily: Nice. Have you bought another property or are you renting again your primary residence?

20:05 Sean: No, I actually, I got married, and I moved into my now wife’s house, up here in Silver Spring. I’m looking to possibly buy another rental property, an investment property, but this area is really, really expensive and you need to find just the right place to make it worthwhile, and it’s really tough. I’ve been looking for over a year now and it’s very difficult.

Commercial

20:34 Emily: Hey, social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15 minute call with me at PFforPhDs.com/coaching to determine if financial coaching with me is right for you at this time, I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now back to our interview.

Financial Strategies and Advice

21:20 Emily: Okay. Yeah. So I think we’ve gotten a good landscape of the goals that you had — saving cash, using your 401k, buying property, and some of the strategies that you use, but were there any other strategies that you’d like to throw out there for the audience? Anything you’ve tried and found works really well for you?

21:37 Sean: As I mentioned, I’m as frugal as I can be. I try to live below my means and save as much as I can. The other thing that I learned in the last few years is that…Well, let me take a step back. When I moved to the NIH and I started investing, I had a little bit of extra money, I got advice from the banker who was at the local Crest Star branch, which is, I think became SunTrust eventually. There was a little bank at the NIH and he recommended some stocks that I could invest in, some mutual funds, and I didn’t know any better, so I put some money into that, but I learned over the years about what kind of fees are involved, especially with mutual funds.

22:21 Sean: I started reading and listening to podcasts, and my strategy now really is all index fund investing. I invest in ETFs, exchange traded funds. They have very low expense ratios, usually less than 1%, and I have no doubt on your show, you’ve talked about the power of compounding. If you start early and save, by the time you get to retirement, you’ll have a good nest egg. The same applies for expenses, sort of in reverse. If you have very high expenses on your investments, you’re going to lose a lot of that money. I recognized that I had not done my due diligence on the type of funds that I was investing in. There’s a few people that I follow that I’ll maybe mention some of the podcasts that I listened to who talk about index fund investing and how much more efficient it is than investing in especially managed mutual funds, where you’re paying 1%, 2%, sometimes 3% or 4% in the expense ratio.

Investing Strategies and Tips

23:22 Emily: Yeah. I do want to elaborate on that because investing and the specifics, like this, are not something that we talk about on the podcast, as much as I would like to, because I love the subject. Expense ratios, for those who don’t know, it’s just kind of a catch all number representing how expensive it is to own that fund. And basically whatever amount of return you’re getting, you have to subtract those fees, those expenses right off of it. So if over the long-term, you might expect like an 8% average annual rate of return, if you have a 1% fee that you’re paying, it knocks you down to 7%. And while that doesn’t necessarily sound like a lot, like 1% doesn’t necessarily strike you as very high, I’ve seen calculations on this, where it can result in a net worth decrease over the decades of hundreds of thousands of dollars ,for just paying something like a 1% fee, where you could have gotten with an ETF or an index fund, maybe 0.1%, maybe 0.05%, maybe 0% in some cases. So there are much less expensive funds out there, and the expense of owning an actively managed mutual fund is one of the reasons why index funds and ETFs are actually, in the long-term, better investments in the sense that you end up with more money in your pocket, usually, when you invest in those kinds of vehicles, rather than actively managed mutual funds. Expenses are one of the big reasons why that is the case. Do you agree, would you like to elaborate at all?

24:40 Sean: Absolutely. I think we’re singing from the same hymnal. I completely agree and for the scientists out there, as much of your audience is, there is a lot of good research that shows that investing in managed mutual funds is not beneficial to you. You actually end up making less money than if you invest in exchange traded funds. The reason is that the management of the funds will sometimes be good for a few years, but then they always going to have downtimes, and the success of the fund really has very little to do with the manager. There are very few people in this world who actually know how to invest well in the stock market, and maybe just a few people like Warren Buffet and Jack Bogle are ones that maybe it would come to mind. But really for the majority of us, we don’t have the time or the resources to really understand every single stock that we invest in.

25:39 Sean: Just to talk a little bit more about ETFs, essentially what you’re doing with an ETF is similar to a mutual fund, where you are investing in a basket of companies. So instead of just investing in a single stock, so say I buy Amazon or Apple, I invest in the broad market. Say I have a Vanguard total stock market ETF, and that basically encapsulate the entire stock market, and that way it protects you against volatility and risk. You’re not going to make the same returns as if you invested say in Facebook 10 years ago, and now it’s worth 20 times as much as it was, but slow and steady wins the race as far as I’m concerned. You’re not going to lose your pants by investing all your money in a company, or in Bitcoin, or something scary like that.

26:27 Emily: Yeah. Lots of good long-term investing principles and philosophies that we’re throwing out there. Anything more that you’d like to say about investing or other strategies you’ve been using?

26:37 Sean: Maybe I’ll just talk a little bit about some of the other ETFs invest in. I will mention before the end of the podcast, a few resources that I really like. But from the advice that I’ve read, really the methodology that I follow is to get broad market funds. I invest in the total stock markets. Then I have a little bit of money in small cap and medium cap ETFs, or mid cap ETFs. Then I also have some in an international equity ETF, and all of these actually are through Vanguard. I did want to mention this because you did mention that there are some expense ratios that are zero, and there are companies now, including Vanguard and Fidelity that are offering some of their ETFs at a zero expense ratio, which is fantastic. And a lot of them also offer free investing so that there’s no charge to purchase these ETFs, and I think that’s a great deal.

27:37 Sean: Then the other two areas of the market that I do invest in are a total bond market ETF, as well as a REIT which is a real estate investment ETF. Basically, it’s very similar to the other ETFs that invest in companies that are invested in real real estate. And the reason I do that is just to diversify. Generally, REITs don’t move with as much volatility as the rest of the markets, so they’re a little bit more stable, but they’re not quite as as low return as bonds are. They’re kind of between stocks and bonds. I have it a little bit, maybe about 10 or 15% of my portfolio in that.

29:19 Emily: I think what you’re describing, it might for the uninitiated listener, sound a little bit complicated. You’ve thrown out maybe five, half a dozen different ETFs you’re invested in, but to my ear, what this is, is a well diversified and an appropriate asset allocation for you and your investing goals. And you need a few different ones of these buckets to make those two things happen. But the actual investments that you’re in are all in themselves well-diversified and across market sectors. You are not for example, picking individual stocks. As you mentioned, you had done that in the past, or your advisor was telling you how to do that in the past. You’re also not picking market sectors. I didn’t hear you say, Oh, well, I’m invested in a special biotech ETF, or a special some other one. You’re going for something that’s representative of full market sectors. You are really avoiding the kind of psychological traps that we can easily fall into around investing, of thinking we know where the market’s going or one segment of the market, so I appreciate that approach. Are those kinds of things that you’ve done in the past and that you’ve learned from and changed your approach, or did you avoid some of those pitfalls entirely?

29:23 Sean: I think it’s been an evolution over the years that I’ve sort of moved more and more towards ETFs as I’ve become more comfortable with them. Really, I went from investing in individual stocks to investing in mutual funds and then into ETFs. I did want to make the point though, that I don’t want to tell you shouldn’t invest in individual funds or in more narrow market ETFs, but just do your due diligence. And also, one of my mantras is I don’t invest money that I can’t afford to lose. If there is money that I need say in the next couple of years, that is not money that’s going to be in the stock market. I’m investing long-term. In fact, in my investment account, I’ve sold very few of my stocks. I’ve sold some of the original ones that were high expense ratios and some of the individual stocks, but I really haven’t sold much except to rebalance. I’m investing for the long-term. I’m putting money in, I’m not taking much money out. If you think you’re going to need to buy a house in the next five years, that money shouldn’t be in the stock market, that should be in something safer.

30:30 Emily: Yeah, I totally agree with you. You mentioned earlier using your 401k — are all of your investments inside that 401k, or do you use other kinds of vehicles as well, like an IRA or a taxable investment account?

30:42 Sean: I try to max out my 401k. I actually have a 403b, which is essentially the nonprofit version of a 401k because I work for a nonprofit, AAAA. I do also put as much money as I can, as I’m allowed, into a traditional IRA. There’s also a Roth IRA that’s available to some people. There is a cap on your income where you can no longer invest in a Roth IRA, but if you are able to I’d recommend that as well. And then I also have just a straight brokerage account where I put in after tax money. Anything that’s left over goes into that.

31:24 Emily: I do want to mention, because this is a conversation about investing, at least it’s part of it, that earlier, 2019 and prior, graduate students and postdocs who are on fellowship, who did not have W-2 income, they were not able to contribute that non-W-2 fellowship income to IRAs, but starting in 2020, that law has changed and you are now able to contribute non-W-2 fellowship income to IRA. So anyone who had learned about that old system, but hadn’t yet heard about the update, I want to throw that out there for them, that you are able to now use that kind of vehicle, even if you have non-W-2 fellowship would come during graduate school or your post doc.

32:01 Sean: That is great news.

Financial Literacy Resources

32:03 Emily: What we’ve come to, I think is kind of a very…I don’t necessarily want to see sophisticated because it’s also simple, but a well-tuned practice of your personal finances. You’ve mentioned a couple of times, maybe you can take a little bit more time now to say, how did you actually come to this point? How did you learn about all these different strategies and start to implement them? Because it’s not something that many of us would get from our mother’s knee, for example.

32:33 Sean: When I moved to this country, I was very fortunate to meet somebody who already worked at the NIH, who kind set me on the right path. His name is Chi Kang and he’s still a good friend of mine. We’ve known each other for more years than I can count. He gave me some really great advice to start off. One that I remember is as soon as you come to the country, start building up a credit history. Even if you don’t need credit, take out a small loan for a car or something like that, because you really need that later on in life, if you plan to stay in the country.

33:03 Sean: Really, I just enjoyed reading articles, online reading books. I’m something of an autodidact, so I like to learn myself. I don’t necessarily like being taught things. I just love to read as widely as possible. I kind of got into a little bit of the wrong track early on when I started reading magazines like Money. They used to make my head spin because they’re always jumping around from the latest thing to the next latest thing that you need to invest in. And I realized when I learned a bit more, that they’re really just selling a magazine. I don’t think there’s really good information there. Once more articles started getting online and more podcasts became available, that really became my primary source. There’s a really fantastic series that it gets quite deep into the weeds, but you can take away what you want from it. But there’s a guy named J.L. Collins who you’ve probably heard of, Jim Collins, who did a fantastic series on stocks, it’s called the stock series and it’s available at jlcollinsnh.com and I’m sure you’ll link to that in the show notes.

34:10 Emily: I will. It’s a very famous, very well-known stock series.

34:13 Sean: Yeah. I’m probably about three quarters of the way through that, and it is quite dense, but you get so much information from that. It’s really amazing. That could be your single resource for investing for the rest of your life, and you’d probably be just fine. He actually has a couple of really nice, different types of investment portfolios from a single ETF through to, I think, a seven or nine ETF portfolio. And that’s actually one of the portfolios that I followed. I sort of took the four stock portfolio and I’ve based my investing on that. I didn’t come up with all of this myself, just so that everybody knows. As I think Einstein said, “we stand on the shoulders of giants.”

34:55 Emily: Just to add, J.L. Collins published a book based on that stock series called The Simple Path to Wealth in either 2018 or 2019. We’ll link to that as well in the show notes, if you prefer book over blog post form.

35:08 Sean: Yep, that’s a great one as well. And then a few other books that your listeners might be interested in is The Four Pillars of Investing, that I’m sure you’ve heard of, that’s William Bernstein, and A Random Walk Down Wall Street, which is also a really great book. Right now I’m actually reading for the first time in my life, The Seven Habits of Highly Effective People by Stephen Covey, which isn’t necessarily about investing, but it’s a really great book about how to think about your life and how you’d like to be in your life. It definitely can be applied to your investment strategy.

35:45 Sean: Then if I can, I’d love to mention some podcasts that I listened to.

35:50 Emily: Of course, I am a great podcast lover!

35:54 Sean: Of course. I’m sure you’ve heard of, of a number of these. One of my favorites at the moment is Afford Anything with Paula Pant. She covers quite a broad range of investments and investment strategies, but what I like about it is it’s just very accessible. The way she talks about these things, she explains things really well. Every other week, she has a guest and on the alternate week, she answers questions from her audience. I always come away from every single podcast with some nugget of information that I can apply. Another one that I like is the Mad FIentist. That’s like scientists with an F instead of the S-C. It’s called the Financial Independence Podcast. I haven’t seen any new podcasts since October last year, but I think he’s still going.

36:44 Emily: He has an irregular publishing schedule, but what he does is everything he publishes is so high quality. It’s fantastic. Yes.

36:53 Sean: Yeah, no, he’s great. And I also love the graphic that he has for his podcast. It’s a crazy guy in a lab coat. Then the other one is The White Coat Investor with Dr. Jim Dahle. Now this is actually specifically for medical doctors, but I think a lot of what he talks about is applicable to everybody and also specifically to scientists. And then of course there’s Planet Money and The Indicator from NPR, which I think are just really great podcasts about the broader macro economic principles and really very interesting, accessible content that can help you learn about sort of how the financial world more broadly works.

37:32 Emily: I like those two. They’re not exactly well, The Indicator more so, but they’re not exactly like breaking news, but it sort of keeps me up to date on what’s going on the economy more broadly without being overwhelmed by daily content. I used to listen to Marketplace, for example, when I had more time, and I liked it, but it’s a lot every day to take all that information. Not all shakes out to be really that important in the long run, so I really like Planet Money and The Indicator for that.

37:59 Sean: And I like the way that they sometimes take a different look at the economy, or they’ll take something that you think has nothing to do with the economy and apply economic principles.

38:10 Emily: I think I cut you off a little bit, but I think you were going to mention ChooseFI, as well.

38:15 Sean: Yes. ChooseFI was the last one. So this is a new one to me. I haven’t really had much of a chance to listen to it. I’ve binged on a few episodes. I find that I have too many podcasts that I want to listen to, but I get to it when I can. They also really have some fantastic information and if folks don’t know this FI term refers to financial independence. Some people call it the FIRE movement, financial independence retire early, and this is something I’ve only started learning about it in the last few years, but it really resonates with me. Sort of harking back to what I said previously about thinking that I would just have a straight career path and retire when I was 65 or 70, this really gave me some insight into how I can change up that story, and I’m actually on the path and intending to retire hopefully within the next five years. So I’m hoping by the age of 55, which will give you a clue to how old I am. It gave me some confidence to look at my finances and say, you know, maybe I can do this.

39:21 Emily: Yeah, I’m glad you mentioned the FIRE movement, because as you were talking and telling your story, I could tell that you would find a home within that movement, if you hadn’t already, which it sounds like you have, as it’s become more popular. You were on this path before it really exploded. I also really love ChooseFI. We’re recording this in March 2020, and I just a couple of weeks ago, finished listening through their entire archive, which was like an eight month project as I was, of course, listening to new episodes as well. It was a big thing to tackle, but I think it was really worthwhile. Even though I don’t necessarily consider myself part of that movement, I got a ton out of all of that content. And actually what you said earlier reminded me of one of the hosts, Brad Barrett’s little mantras, which was, he basically says he doesn’t keep a budget either. He just says, “well, I just default to not spending money. I’m just going to save a hundred percent until I decide that something is worth spending on.” So that reminded me of sort of your philosophy as well.

40:16 Sean: Yeah, absolutely.

40:16 Emily: Since we’re swapping podcast recommendations, I will add one more, which is So Money with Farnoosh Torabi. She does three episodes a week. Her Friday episodes are Q&A’s ,and then she has guests on Mondays and Wednesdays. She has a little bit more of a women in money and women in entrepreneurship spin on the personal finance content, but still very strong in personal finance. So I really love that one, as well.

Final Words of Advice

40:38 Emily: I think we’re now down to our last question, which is what is your best financial advice for another early career PhD?

40:46 Sean: I think we’ve probably touched on all of these. I would say that the top four that I have is, remember the awesome power of compounding. Start early, save as much as you can. I know there’s, there’s plenty of calculators out there that you can play with online and see if you save even $20 a month, or $50 a month, when you you’re doing a PhD, and I know it sounds like a lot, but if you just save whatever you can, when you get to retirement age, you will have a good nest egg.

41:19 Emily: The way that I like to phrase that in my seminars is never discount whatever small amount of money it is that you can put towards investing when you’re early on in your twenties or your thirties. Never discount that because it will add up and compound being just a startling amount of money.

41:36 Sean: Yeah, absolutely. And I completely agree. The other one is educate yourself and do your homework. We all make mistakes. I certainly made my share, but I guess I’ll add to that, one of my other mantras, which is that the perfect can be the enemy of the good. There’s never going to be a perfect investment strategy. Things are going to change. You’re going to learn as you go, but just start, do something, start investing, even if it’s very small. There’s plenty of apps out there now, like Robinhood is a really great way to just start investing in small amounts of money. So yeah, start now. Don’t wait until you know everything.

42:14 Sean: Then the last one is really just live below your means. It’s kind of like if you’re trying to lose weight, you’ve got to take in fewer calories than you expend, and your body will lose the weight. It’s the same — if you spend less money than you bring in, you will save. It’ll be automatic.

42:32 Emily: Yeah. And I like to turn that on its head a little bit. I think this is probably a strategy you use, although we haven’t articulated it, is to pay yourself first. That old personal finance chestnut, but to live beneath your means, give yourself less means. Save first, give yourself less means to live on, if you are tempted to spend your checking account down to zero, as I am. What I have to do is get that money out of my checking account, out of my mind first, and then I know that I can safely spend the rest if I want to.

43:03 Sean: Right. And there’s so many ways to do that now. Even my bank will do automatic sweeps from my checking account into a savings account. I just set the amount and it does it automatically every month, so you don’t even see the money.

43:14 Emily: Absolutely. Well, Sean, I enjoyed this conversation so much and I think the listeners will have gotten a lot out of it, especially our discussion about investing, so thank you so much for joining me.

43:22 Sean: Oh, it’s such a pleasure. I really appreciate the invite and hopefully we’ll stay in touch and swap some more podcasts

Outtro

43:30 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 a Book Inspired This PhD’s Financial Turnaround

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In this episode, Emily interviews Dr. Amanda, a tenure-track professor at a small college in the midwest. At the start graduate school, Amanda was disengaged from her finances and considered grad school to be a financial continuation of undergrad. She had resigned herself to being a “poor graduate student” until she read Ramit Sethi’s book, I Will Teach You to Be Rich. Slowly, the financial messages in that book replaced the limiting beliefs she had absorbed from academia. Amanda took small steps to improve her finances, starting with her bank accounts and opening a Roth IRA, and over time her strides with her finances became bigger and bigger. At the end of the episode, Amanda summarizes the financial success she is now experiences and connects it to the hard and slow work she did on her finances during grad school and her postdoc.

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Links Mentioned

Teaser

00:00 Amanda: I was initially a little bit resistant and I had the, “Oh, I’m a poor grad student” identity, I definitely did. I thought of myself as a poor graduate student and thought, well, all grad students are poor, that’s what it’s supposed to be, and I hadn’t challenged that at all at that point.

Introduction

00:19 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode 15. And today, my guest is Dr. Amanda, a tenure track professor at a small college in the Midwest. When she started graduate school, Amanda was disengaged from her finances. She had resigned herself to being a poor graduate student, until she encountered Ramit Sethi’s book, I Will Teach You to Be Rich. Slowly, the financial messages in that book replaced the limiting beliefs she had absorbed from academia. Amanda took small steps to improve her finances starting with her bank accounts and over time, her strides with her finances became bigger and bigger. At the end of the episode, we get a glimpse at how the hard and slow work she did on her finances during grad school and her postdoc is now paying off in spades. Without further ado, here’s my interview with Dr. Amanda.

Will You Please Introduce Yourself Further?

01:16 Emily: I’m so glad to have Dr. Amanda joining me on the podcast again today. She was first on in season one, episode 11 talking about geographic arbitrage, and her career transition from her postdoc into her academic job. And anyway, if you didn’t listen to that episode, and you have time right now, go back and listen to it. But today we’re going to pick up and talk about something that she briefly mentioned in that first interview that I thought was fascinating enough that I wanted a whole interview devoted to it, which is her financial turnaround story. We would definitely say that Dr. Amanda is financially successful today, but she’s not always identify that way, so we’re gonna explore that story in a lot more depth. Amanda, thank you so much for coming back on the podcast and being willing to share this aspect of your story.

02:01 Amanda: Thanks for having me.

02:02 Emily: So would you please tell us a little bit more about yourself, maybe for those of you who didn’t listen to the first episode?

02:08 Amanda: Sure. I am an assistant professor in a college of education. And I work primarily with doctoral level students. I teach courses on research, writing, qualitative methods. And then I also teach a course on information and information literacy and innovation. My background is in digital media and learning, and specifically video games and learning. A lot of my research has been around the digital games industry, and then how people learn from playing video games, both games designed to be educational, but also commercial games and game communities.

Life Before the Financial Turnaround

02:45 Emily: Great. And tell us briefly about where you went to graduate school where you did your postdoc and about your family, how that formed along the way.

02:53 Amanda: Sure. I guess the first thing is, after I graduated from college, I moved out to the San Francisco Bay area for a short time, and worked as an editor in the games industry. And that’s how I developed an interest in video games and doing work on games. But I was always a school person and I had intended to go back to school to attend graduate school. And so I decided at that time that I wanted to do something with games. When I was looking for graduate programs, really my criteria was I want to work with people who are doing interesting things with video games. I felt like there was a lot of emphasis on games research, on games and obesity, games and violence, really negative things. And I thought, you know, there are a lot of great things happening in this industry. And I felt like there was a lot of potential for games to be used for a more positive impact. And so my search for graduate programs was really just who’s doing stuff around games in their potential.

Amanda: I found a group of people at the University of Wisconsin, Madison called the games learning society group, and they were a group of scholars doing really fascinating work from games and learning perspective. These were people looking at games like Civilization and World of Warcraft and how are students learning about history from a systemic point of view from Civilization, and how are high school boys, who are really disengaged with school, acquiring literacy skills and critical thinking skills and math skills from playing World of Warcraft. That was graduate school. And then following, that I did a postdoc at USC, the University of Southern California in Los Angeles, where I worked on a project where we were looking at using a game to teach first generation, low-income students about the process of applying for college.

04:43 Emily: Wow, that is so fascinating. And I think along the way you met your husband, is that right?

04:48 Amanda: I did. So I met my husband Dennis in graduate school. His advisor was actually married to my advisor.

04:55 Emily: Oh, wow. Incestuous relationship.

04:58 Amanda: Yeah, and I was I think resistant to dating him for a little while because of that, but he just turned out to be too awesome of a person, and so we started dating in grad school. Then we ended up getting married during the postdoc, and he went out to Los Angeles with me.

05:14 Emily: Was he doing a postdoc during that time as well? Or did he have a different type of job?

05:16 Amanda: He was working for the University. I’m blanking on his job title. But he was working with the USC games group, teaching courses, and then also helping manage their tech program. So he was working more with students who are learning to be game developers. And then I was in the College of Education, doing work – it was a large grant with the US Department of Education is what I was working on.

05:38 Emily: Okay, yeah. And going back to that first interview, the transition out of your postdoc, deciding where to apply for academic jobs, all that we covered in the previous interview. So if people are interested in your subsequent career path, they can go back and listen to that. But today we’re going to be talking about your financial journey during that whole time. Can you start with kind of the before, when you weren’t feeling so financially successful? What was your financial life like at that time and what were your financial attitudes?

06:11 Amanda: I think it wasn’t even that I wasn’t feeling financially successful. I wasn’t financially engaged. I had this narrative in my head, you know what, I’m good at school, as long as I do well in school, and I work hard, I will be successful and that is something that I worry about when I’m done with school. Later on, when I’m an adult, even though of course, if you get a PhD you end up spending a good amount of time in school as an adult. But I had this attitude that money was something that I would worry about later.

06:40 Emily: I’m curious how that actually plays in because you had work experience prior to starting your PhD. Is that the same attitude you had at that time? Or did it actually switch when you entered graduate school?

06:51 Amanda: Yeah, so I was working. I did work full time as an editor after my undergrad, and so I started paying off my student loans. I didn’t have a huge number of student loans, but I had taken out some loans, particularly I took two classes abroad when I was an undergrad, and so I had borrowed some money beyond scholarships for that. So I started making the payments, and I just sent in whatever the minimum expected payment amount was, and wasn’t really thinking about it. I mean, I did pretty well in that I was an English major, who at least managed to pay my rent and make a living in San Francisco. And this was right around the time of the beginning of the financial crisis, too, so there was a lot of anxiety and I knew a lot of people who are laid off at that time. I kind of felt like, “Oh, well, I have a job and I’m paying the rent and it’s San Francisco, so I must be doing just fine or even really great.” Things like investing for the long term or bigger goals weren’t really on my radar. I was just sort of paying the rent and paying the student loans.

07:57 Emily: Yeah, well, given the the time and the place that you were in I actually think you probably were doing very well. But in graduate school, you had that same attitude of just kind of going along and school is your primary focus. Is that right?

08:10 Amanda: Yeah. I hadn’t really had a good understanding of how graduate school was different from undergraduate, and so I borrowed money my first year of grad school. I took out whatever loans were offered as a part of the FAFSA, even though I had a project assistantship that year. And it wasn’t until I was kind of well into that first year that I understood, “Oh, you can work as a project assistant or research assistant, a teaching assistant and throughout grad school, I had each of those roles. And that can be enough to live on.” It’s not an exciting lifestyle, but I hadn’t realized at first that I didn’t need to be taking out those loans. So I took them out, and then I just didn’t do anything mindful with them. I probably did a little bit of travel, I ate out probably more than I needed to, and just that money sort of trickled through. I didn’t blow through it right away or anything like that, or need to take out additional loans, but I just didn’t understand the ways that you could avoid taking on additional debt in grad school. I sort of treated it like undergrad, just not knowing how that system worked until I was further along.

What Sparked the Financial Turnaround

09:16 Emily: I see. Yeah, that kind of makes sense, actually, because you were thinking about yourself as a student again. I guess that’s part of what this podcast is about, right? Making a wider awareness known that graduate school should be handled financially completely differently than you’ve handled your undergraduate degree. So when did this start to change? When did you start to have a greater degree of engagement or awareness around your finances?

09:40 Amanda: Sure. So my boyfriend at the time, now husband, had started reading, I Will Teach You to Be Rich, a book by Ramit Sethi. And if you’re not familiar with it, it’s really a book that just sort of walks you through how to set up a financial framework tohelp you be successful. He talks about how to use credit cards strategically how to set up the right sorts of bank accounts — checking savings, how to get started investing. He was reading that book and we just decided to read it together. We worked through it chapter by chapter. And from there, we started feeling really motivated by by that book, in particular.

10:23 Emily: This is really interesting to me, because this may be a better question for your husband, but the title of Ramit’s book, I Will Teach You to Be Rich — how did you even have the idea that that book was for you, because rich was nowhere near what was going on for you at that time?

10:40 Amanda: Not even close.

10:41 Emily: Maybe it was the teach you, like you were a learner, you wanted to be taught?

10:45 Amanda: I remember being really resistant to the book because I hated the title. I remember actually making fun of it or just saying, wow, it seems really cocky. And there were parts of the writing style where I felt like it was a little more aggressive than really appealed to me. But I also found I was just kind of drawn in by some of the message. I was initially a little bit resistant. And I had the, “Oh, I’m a poor grad student” identity I definitely did. I thought of myself as a poor graduate student and thought, “well, all grad students are poor. That’s what it’s supposed to be.” And I hadn’t challenged that at all at that point. But I do remember being actually turned off by the title of the book, so it’s funny that you mentioned that. But he was reading it and it was fun to be reading a book together too, and having that partner to talk things through and bounce ideas off of, and then we were able to hold each other accountable to actually doing something once we had read through the book.

11:42 Emily: Yeah. So did you encounter any other resistance to that identity as a poor graduate student? Was that pushing back at all against the messaging you’re receiving from the book?

Mindset Shift

11:55 Amanda: Yeah. I came up against some limiting beliefs at that point. As I was reading the book, I started having these feelings that “oh, well, I feel like I’m starting too late” or “as a graduate student, I don’t make enough money for financial planning to be worthwhile, that that’s still not something I can do.” I was simultaneously feeling like I had waited too long and like I still needed to wait longer. And that was really frustrating for me, because I have the type of personality where once I decide I want to do something, I want to act on it right now, or yesterday. It was frustrating to me to start learning about all these things, but not really feel like I had the means to put everything that I wanted to into place right away.

12:38 Emily: Yeah, I can imagine that a lot of people starting to learn about personal finance in graduate school, from whatever source, can feel that way. And it’s to your credit that you kept engaging with the material, instead of just totally turning off and say, “Oh, I have to pick up this book again in a few years later on.” I can definitely understand why hearing the message, while maybe this is not what he intended, but to you interpreting as I’m already starting too late when you were probably in what your mid-20s or so?

13:07 Amanda: Yeah.

13:09 Emily: Yeah, it’s not like objectively actually that late, but when you understand that people who did not go to graduate school route can be working on this right away when they finish their bachelor’s or even potentially earlier, that can be really frustrating. And like you said, you have all these great ideas once you start accepting the messages, but still, nothing has really changed in terms of your means and ability to work on them.But still, you were able to start making some changes. Once you started accepting the messages, what did you do right away even while you were still in graduate school?

Small Steps Make a Difference

13:47 Amanda: The book actually had really specific instructions about how to set up — I don’t think he frames it this way, but it’s essentially setting up a framework for yourself. One of the things that Sethi talks about is getting away from high-fee brick and mortar banks. A lot of banks charge to have a checking account if you don’t have a certain amount of money in it. And for most graduate graduate students, those minimums aren’t necessarily realistic. ATM fees are things that just can kind of bleed through. He had recommended switching to an online bank, and at the time, he had specifically, I think, recommended the Charles Schwab high yield investor checking. And so we both switched over our banks, because I think one of us was with Wells Fargo at the time, the other was with Bank of America. We were with exactly those banks that he was saying, “you know what, these are just set up to make you fail. They’re never going to do you any favors, get out.”

14:42 Emily: I don’t think anything has changed in the 10 or so years since that point. I would still say anyone who’s a Bank of America and Wells Fargo, get out of that relationship ASAP.

14:53 Amanda: Exactly. And one of the things that I love about the Charles Schwab account and that I think is really good for grad students, especially if you’re presenting research, is you get reimbursed ATM fees from anywhere in the world. Any ATM fees that you end up paying while you’re at a conference, it can even be an international conference where those can be really steep fees, at the end of the month, you will get a deposit in your checking account that reimburses you for all of those fees. That’s a feature that I just really like, and it’s not a lot of money, but over you know, several years that does start to add up.

15:25 Emily: And I think that on a graduate students stipend, those $3 or $5 here and there — it’s a higher percentage of the money that you’re working with as a graduate student that it would be for Ramit’s general audience. Like maybe that tip is “okay, it’s a good thing for them to do, but it doesn’t make that big of an impact,” but for graduate students, coming up at the end of month with 20 extra dollars or so like that can make a decent difference in your life, especially if your savings goal starts out at that $10, $20, $50 level. That can really help you meet that

15:58 Amanda: Yeah and it’s okay if that’s where you’re starting. Another thing that we did is we set up higher interest savings accounts. This was when interest rates were really low. Right now it’s realistic to maybe get, at the time of this recording anyway, 2% or a little over 2% on a savings account. At that time, I believe 1% was the absolute most you’re going to get, and so we weren’t talking a lot of money, but it was the same principle. I was with one of those banks where I think the interest was under 0.5%, so even with a lot of money, you’re not going to be earning anything. And so, you know, with the amount of money that I that we had in savings at that time, 1% was still only earning us, maybe pennies, but a few more pennies. But over time, as we started saving more and built up an emergency fund, those pennies became a latte every month. Now it looks a little bit more like a dinner out, maybe a modest dinner out, but it’s something. I think it’s important if you can aggregate those kinds of small gains across a bunch of areas, then they do start to make a difference. It’s changing your attitude from I don’t care that I’m bleeding money a little bit here and there on fees and interests that I could be earning. It’s saying, I’m taking control of this and I am mindful of where all of those dollars go and how I can now be in control of my financial situation.

17:26 Emily: Yeah, I can see how this example of changing where you bank can be a really impactful psychological when at the start of a financial journey, like what you’re talking about, because it’s not like you’ve set a savings goal and that you’re feeling discouraged about that, because you know, you only make X amount of money. It’s something that you do have complete control over and it doesn’t cost you any money. In fact, it’s going to be bringing money back into your account, a few dollars at a time. I can definitely see how this can be a wonderful first step to take when you’re starting to take in your financial life. You actually just mentioned a term I wonder, based on our last interview, if you also listen to the Choose FI podcast?

18:07 Amanda: Definitely. What was the term that I used?

18:08 Emily: You didn’t quite say it the way they did — aggregation of marginal gains. I’ll explain that for the audience. This Choose FI podcast is about the financial independence movement. We’ve had a pair of interviews on that with Gov Worker in season three, so if you want to learn more about the FIRE movement, financial independence and retire early, you can listen that one. We also touched on it in Amanda’s first interview. But anyway, on this Choose FI podcast, they have this term that they’ve come up with throughout their episodes, the aggregation of marginal gains, which is when you just make a tiny little change in your financial life, like the one that Amanda just mentioned, of stopping to pay ATM fees or stopping to pay fees just to hold a small balance in a checking or savings account. Those are very, very small things to do. But once you add up ten small things or hundred small things, that aggregation becomes really significant in your finances. This can be that step one for your aggregation of marginal gains. So yeah, thank you so much that example Amanda.

Commercial

19:09 Emily: Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

Long-Term Changes

20:17 Emily: Anything else structurally that you changed around your finances at that time when you first started following the I Will Teach You to Be Rich framework?

20:24 Amanda: One other account that I got set up, which I think in the long run is going to have been really important, is taking control of getting started with retirement savings. Because I had opened the checking account with Charles Schwab, which is an investment firm, I also then opened a Roth IRA and I forced myself to remember that I had had some 401k savings from that editorial job that I had had before, but I wasn’t paying any attention to it. I couldn’t have told you how much I had saved. I sort of knew where it was. I still to this day today do not know how I had had that money invested at that time. So what I did is I opened up an IRA and I rolled that 401k over. And it was not much money, because I had not been — at the time I had been in San Francisco, I was proud to be paying my rent, I wasn’t worried about saving for decades out in the future. But what I did is I got that money to where now I knew where it was and then I had it on my radar to when I had windfall money from contract work or side projects that I was doing, I was like, “You know what, I can start to invest in a Roth IRA.” And that’s something that, sure, it would have been great to start at 18, but I can start right now and that’s still going to be really good for me over time.

21:41 Emily: Yeah, that’s amazing. I love that you specifically tied any windfall money or any extra side hustle money or whatever it was, you then had a place to put it. There wasn’t the extra hurdle of, “Oh, I have an extra $50 in my account right now. What do I do with it? I’m not sure” and it ends up just floating away somewhere you don’t even know where it went. You had then a place to put it. This is another great first step to take, is just to open an account, just to set it up, as long as there’s no minimum, or you can meet the minimum required to open it, just so you have a place about money to go. I think it makes such a huge difference that once you have that goal in mind, okay, any money extra money that comes in, this is where it goes. And it’s really easy to follow through on that once you’ve gotten over the activation barrier of setting up setting up the account.

22:31 Amanda: And both my husband and I, throughout the years have split that money between Roth IRAs and then that’s how we made substantial payments to our student loans. Both of us have done side projects where we might get a couple thousand dollars here and there, for consulting work or book projects or other things. We were very mindful that 100% of that money, we would just take it and allocate it toward one of those two goals. We had actually paid off a good chunk of student loans while we were still in school or within that first year, just because we were really consistent about taking that extra money and putting all of it towards either long term investments or towards the student loans with the highest interest rates, because at that point, we had pooled together all of those loans and actually started tracking, “Okay, what are the interest rates on each of these and which do we need to tackle first?”

23:28 Emily: Is that something else you learned from I Will Teach You to Be Rich, how to handle the debt? Were you following that part of earnings plan as well?

23:37 Amanda: Yes. And we were big fans. It was it was obvious for us that we wanted to tackle highest interest rate first. I know some people will start with the smallest loans, just to get those those wins, that sort of dopamine hit from getting a loan paid off. But for us even if the higher interest rate loans were bigger, we started with those.

23:57 Emily: So you’re going through the remainder of your graduate degree and you had this system for living off of your stipend for your budget and then pushing forward your finances with the extra money that was coming in. That’s how you finished out graduate school. Was there anything you did to keep yourself on this path of sticking to your goals and sticking to this idea of financial improvement through that time?

24:20 Amanda: Yeah. I mentioned that I have an “I want to do things now, now, now” sort of personality. As we transitioned from graduate school to the postdoc phase, we were in a higher cost of living area, but we are making more money. I felt like “okay, now we can start to do some more things.” There are things that we couldn’t do as students that now we can really tackle. One of the things we did, we were in Los Angeles, which means we spent a good amount of time in traffic. We were fortunate enough that we both were working at USC, at the same university. That meant we had a good chunk of time every day in the car and so we started listening to podcasts at that time.

Amanda: Really there’s a handful of podcasts that we had started listening to. We started listening to Afford Anything, Paula Pant’s podcast. We listened to The Mad Fientist, which is another financial independence podcast. We started listening to some entrepreneurial and side hustle podcasts. We were really just looking for ideas for things we could do and those podcasts really kind of helped keep us looking for new improvements that we could make and kept us motivated too. Sometimes the smart thing is not to change your goals, but just keep doing what you’re doing, but for me, I needed that motivation. I needed to be constantly learning new things and assimilating new information, and then making little tweaks along the way.

25:55 Emily: Yeah, I think those are all fantastic suggestions. I also love listening to podcasts. Not surprising, having my own podcast, I love the medium and listen to a lot of different ones. All the ones that you mentioned are excellent. We’ve already mentioned Choose FI, that could be another one to throw into the mix for the listener. Of course mine has a completely different audience than many of these other ones. If you’re already a listener, please stick with it, because I think this will help motivate you as well. And then the other one that I really like for motivation is Dave Ramsey’s podcast/radio show. You probably have to be in a debt repayment phase of life to really appreciate it, but he is very motivational, I will say that. That’s another idea if you’re looking for motivational podcasts.

Life after a Financial Turnaround

Emily: Let’s take the last couple minutes here, Amanda, and just give us some highlights of what’s been going on. What did you hit? You eventually paid off your student loans. What would have been the financial highlights of years, finishing out your postdoc, and then since then?

26:54 Amanda: We were fortunate enough to really get our loans paid off within a couple years of us graduating. That was a huge win for us. But of course, I wanted to keep that momentum going. Every time we complete a goal, I say, “okay, but we can’t lose momentum. So what are we going to do next?” And so we, we paid off the student loans and then we were kind of in that transition to a lower cost of living area, which I covered in that other podcasts, so I won’t talk about it. But that was another thing we wanted to do. My family’s in the Midwest, I had wanted to get back to the Midwest. That was something that we felt was important before we started a family.

Amanda: We started transitioning from high cost of living area to a lower cost of living area and that made home-ownership really feasible for us. We saved up and at the end of the last year — we weren’t planning to buy a house until this year, but we just ended up finding the right house in the right neighborhood, and we we had enough saved where we were able to make that happen. That was one of the latest things we did and now we just had our first child. I had a daughter in June, and so we’re wanting to get a little bit put away for her college already, too. We’re working on that and we’re kind of hoping to make a purchase of a rental property in the next couple years, so that’s another goal that we’re working on right now.

28:14 Emily: I think this is an amazing example of how much your financial progress accelerates once you have the higher income to be working with, and you can’t expect that to necessarily happen if you haven’t laid the groundwork earlier. If you do have the attitude of, “well, I’m still in graduate school, I’m still in my postdoc, I just have to worry about money later,” It’s not necessarily all going to turn on a dime for you when your income changes. But for you, Amanda, because you guys have been working so diligently on these various goals with whatever means you had for all those years, once you had the higher incomes, it was just like, boom, you knew exactly what to do with it. You knew where to funnel your money. You could make really, really quick progress and that’s the same thing that happened my finances as well — laying the groundwork during graduate school, once the income changed, the winds just come faster and faster and faster, even though they were really slow and hard fought in the beginning years. I really appreciate hearing this more about that “after” aspect of your story, after the financial transformation.

29:17 Amanda: I’ve heard that the first $100,000 is the hardest, for net worth. And I do believe that that’s probably true. I don’t know how well documented that is, but that’s something that I’ve heard before on podcasts and on blogs. It does seem like, it doesn’t really matter if it’s $100,000 or whatever it is, the beginning is the hardest to make progress because your money isn’t making much money, you probably aren’t making much money, because otherwise you could be making things move a lot faster. But it is true that if you’re just consistent about it, and have a framework set up and have goals that you’re working towards, it does really feel like your ability to do things does you know pick up pace a little bit.

30:01 Emily: Yeah, I would agree with that. I can definitely attest in my own life, the first $100,000, which I documented, actually, it’s in season one, episode one, of how we got to our first $100,000 of net worth, that was a long journey and it’s the next iterations that have come a lot faster, obviously. Now, I didn’t start very much in debt, we had sort of a slightly negative net worth, not huge. But if you have like a very negative net worth, maybe you’re working on over $100,000 of student loan debt to pay off, there’s sort of two phases to that journey — there’s getting to zero and then there’s getting to the first $100,000, and your first $100,000 of positive net worth will be easier than when you’re working to get to zero. It’ll be easier than that, but it will not be totally as easy as someone who started at zero, if that makes sense, just because of the way compound interest work.

30:54 Amanda: When we first calculated our net worth it was negative. It wasn’t significantly negative. And I do agree that if you are one of those people who happens to have six figures of student loan debt, you’ve got a different process to go through. Hopefully a soon to be future income that will help you tackle that with pretty good pace. When we first calculated it, it was below zero, and that was frustrating. That was definitely something for us that didn’t feel good. But we knew that we couldn’t get to zero and above zero without just tackling it. We were fortunate enough, right around the time we got married, we calculated and we were at zero when we got married, and we had a very, very modest tiny family only wedding in order to keep it that way. We didn’t want the wedding to drag us further down, but I think when we got married we are right around zero. So that was kind of a neat place because symbolically It was like okay, you know, we’re married and now we have nowhere to go but up. Let’s get moving on that.

31:57 Emily: Yeah, that sounds amazing.

Final Words of Advice

32:00 Emily: Final question here, Amanda, which is one that I asked all of my guests. Now, we’ve already heard you say a lot of financial advice during this entire podcast, but it was mostly you following the advice of others. I’m curious now that you’ve been through this whole process, what you would turn around and say to another early career PhD, in terms of your best financial advice for that person?

32:18 Amanda: Sure. So something that we do, and I guess this applies for people who have a partner, something that my husband and I do is we do a monthly finance update. It’s really just a spreadsheet where we keep track of our debts, and our savings and investments. We just go through and update the balances of all of those accounts every month. It doesn’t really take long, but it’s something that I look forward to because it means that we have a conversation around money and it means that at least once a month, probably more often just because it’s become a hobby of mine. But you know, if it’s not something you’re that interested in scheduling a regular check in, like once a month, it’s just a good way to make sure that you’re communicating financially. And I feel like that’s been really good for us because it means we’re making sure we’re still on the same page about our goals. And if we are starting to have different ideas, then we have a conversation about Okay, do we want to prioritize this thing or this other thing first?

33:18 Emily: Yeah, that’s a fantastic suggestion. Again, for anyone who is in a relationship with another person, however you handle your finances, you know, joint separate or Yours, Mine and Ours. I think that monthly check in can serve any one of those models really well.

Emily: Amanda, it’s been an absolute delight to have you back on the podcast. I’m so glad that you made time for this. Congratulations on the new addition to your family, both the baby and the house and the potential next rental property, all of it. It sounds wonderful, and it was really great to catch up with you today.

33:47 Amanda: Yeah, you too. It was good to talk to you, Emily. And thanks for having me on.

Outtro

33:51 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.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, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

How to Combat the Negative Financial Attitudes We Learned in Academia and in Childhood

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In this episode, Emily interviews Cortnie Baity, a doctoral candidate in Human Development and Family Sciences at Florida State University and licensed marriage and family therapist intern. Cortnie’s dissertation is on how your upbringing influences your financial attitudes and behaviors later in life and how to effect better financial outcomes, specifically for African American families. Cortnie shares a framework from the literature of four money belief systems, three of which significantly correlate with income and net worth and two of which can become pathological. We discuss the financial messages PhDs absorb from academia and how those might influence financial attitudes and behavior. We conclude with Cortnie’s advice for PhDs who want to combat financial attitudes that don’t serve them well.

Links Mentioned in This Episode

financial attitudes academia

Teaser

00:00 Cortnie: I would suggest early career PhDs to take a financial attitude questionnaire and to gain additional insight to see what financial attitudes you resonate with the most and how they could be possibly subconsciously guiding on your financial behaviors and influencing your overall financial well-being.

Introduction

00:25 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 five, episode three and today my expert guest is Cortnie Baity, a doctoral candidate in human development and family sciences at Florida State University and licensed marriage and family therapist intern. Cortnie’s dissertation is on how your upbringing influences your financial attitudes and behaviors later in life, and how to bring about better financial outcomes, specifically for African American families. We discuss how financial attitudes form and how they translate into behavior. Cortnie shares a framework from the literature of four money belief systems, two of which can become pathological. We discussed the financial messages PhDs absorbed from academia and how those might influence financial attitudes and behavior and what PhDs can do to combat financial attitudes that don’t serve them well. Without further ado, here’s my interview with Cortnie Baity.

Will Please Introduce Yourself Further?

01:25 Emily: I am delighted to have joining me on the podcast today Cortnie Baity, who is a doctoral student, and she specifically has an interest in financial attitudes and how they develop. This is such a relevant subject for us. I’m so delighted that Cortnie reached out to me and that we’ve been corresponding and she agreed to come on the podcast. So Courtnie, will you please introduce yourself?

01:47 Cortnie: Hello, Dr. Roberts and hello listening audience. Again, my name is Cortnie Baity. I am a current doctoral candidate in the human development and family sciences PhD program. I am located at Florida State University. I earned my masters of science degree from the couple and family therapy program at the University of Kentucky, where I initially became interested in personal finances. Just a little bit of background about my areas of research, it includes family finances, personal finances, socialization processes, African American families, and minority mental and physical health disparities. The overall goal of my research program is to minimize any inqualities in mental and physical health, experienced by black families. In the way that I have chosen to go about intervening on health for black families is looking at how personal finances influences or undergirds some of those health disparities that we might be noticing in the literature.

02:52 Emily: That is so interesting. So exciting. Really, really glad that you’re working in that area. Can describe for us for just a couple of minutes, the dissertation that you’re working on, your specific research?

03:04 Cortnie: Yes. So my dissertation studies financial socialization in black American families, and its implications on financial wellbeing for young black adults. My primary hypotheses is that black young black adults experience asset and resource inqualities, in part because they receive minimal or possibly counterproductive training about finances. My goal with my dissertation is to do three things: document diverse types of family, financial socialization experienced by black young adults, explore the consequences of types of family, financial socialization for financial literacy and financial wellbeing, and then lastly, consider gender variation experienced in family and financial socialization and how it may have undesired effects on financial literacy and financial wellbeing. My overall hope for this study is to, in this study and in following research, will be to produce clinical strategies for marriage and family therapists like myself to help black clients improve financial management, which can help reduce asset and resource inequalities among black families. Personal finance has been demonstrated in the literature to be connected to mental and health outcomes, especially unfavorable mental and physical health outcomes. So I’ve chosen to focus my research on personal finance interventions to improve black health overall.

What is Financial Socialization?

04:40 Emily: Yeah, I’m sure the listeners know that this is a subject that I’m intensely interested in — how to improve financial outcomes among our population, the PhD population. And this is so applicable. It’s a great subject for me to learn about as well. You’re using the term family financial socialization. Can you explain that? Can you define that a little bit more? What plays into that?

05:03 Cortnie: Yes. If we think about socialization broadly, there’s a communication component, so it’s the sending and receiving of a social message, but it also includes the implementation and application of that message into the individual’s life. If we put that into context of personal finance, we’re looking at how families socialize their members surrounding personal finances. That includes how the messages and beliefs surrounding personal finances, including budgeting, world perspectives about money, and the economy and that influences an individual’s financial attitudes. There’s also a tie between financial attitudes or your perspective of finances and how that influences your financial behaviors. And then of course your financial behaviors feed into your overall financial well-being.

06:03 Emily: Yeah. So there’s a whole chain there and this is something that is being passed from parents and other family members to children, and it’s being propagated within families, as well as within society more largely. Can you give some concrete examples of maybe those communications or demonstrated behaviors?

06:23 Cortnie: Sure. One concrete example of a family financial socialization that you may witness in families is, for instance, when families, parents will distribute out an allowance to a child, and they say, “Hey, you know, you have this amount of money once it’s gone, if you want to buy things for your hobbies or if you want to buy a video game, that money is gone.” And so it’s socializing the child surrounding finances in the family social context. Some type of message is being transmitted over to that child. The thought behind family financial socialization is that the child not only hears that message from the receiver, but they start to internalize that message and start to make decisions about their environment around them, based on the message from the receiver. And in that case, whether the child internalize the message to save the money and let it stretch a little bit. So don’t kinda spend all your money on the most expensive video game because you know that if you want to go to the movies the next weekend with your friends as well, you won’t have anymore financial means until the next time that you receive an allowance. So that will be one concrete example.

07:47 Emily: Yeah. Thank you for that. That’s definitely an example of an intentional or an overt way that parents would communicate around finances to their children. I don’t know about you, but the family that I grew up in, the signals around finances were implicit. We did not talk very openly about this subject, but I learned a lot from my parents by example. So can you give another example of how that kind of communication would work?

08:11 Cortnie: Oh yes, absolutely. Gudmunson and Danes has a family financial socialization theory and they support the idea that the majority of family financial socialization happens through modeling or observation. So one implicit way that we learn about money is when our parents will take us to the bank with them. There is some type of message that is being sent to us that there are outside institutions that help us to manage our money. That would be one concrete example of family financial socialization. You’re with your parent, it’s in the family social context is not really being spoken we’re at the bank because I need them to help me manage my money, but it’s that kind of unspoken undertone. It’s an institution It’s associated with money. I see mom and dad go here. So those kind of implied messages are occurring in that kind of way.

09:16 Emily: It’s a really, really interesting example. It just reminds me of, well first of all there’s a large unbanked population within the United States, right? So there’s all kinds of children who are not getting that particular kind of message that maybe some other children are. Maybe the actual interaction the parent is having with the teller or the manager could be positive, could be negative. All kinds of differences there. And it’s actually making me think now. So I have two very young children. The older one is maybe on the cusp of being able to learn some money lessons if we were to overtly teach something. But I’m just thinking about how much financial stuff that I do that it just takes place digitally online. It wouldn’t necessarily be seen very easily by my children if I just choose to not do that stuff in front of them. So yeah, I don’t know. Going into the new generation, we might have to have different strategies around how to do the socialization, given the differences.

10:09 Cortnie: Very true, very true.

The Four Financial Attitudes

10:11 Emily: Okay. So that’s about how parents and families are communicating some lessons around finances, implicitly or explicitly. How the children are receiving those attitudes. Can you speak a little bit more about the connection between what you’re learning in your family and the attitudes and so forth that you develop and then how that translates to behavior? What the connection is between those two.

10:33 Cortnie: Personal finance psychology and marriage and family therapist scholars, Klontz and Britt have produced some studies that look at how financial attitudes developed and they suggest that trans-generational personal finance messages, typically learned in childhood, subconsciously influences the development of financial values and beliefs. And collectively these financial values and beliefs are referred to as financial attitudes. So Klontz and Britts specifically have come up with four distinct financial attitudes. One is money avoidance, money worship, money status and also money vigilance. To have these categories are important because some of them suggest a pathologic view of money that can have a negative impact on your financial behaviors in your overall financial well-being.

11:35 Emily: I love to hear a framework. This is great. Can you say a couple of words about what each of those four categories are so people can kind of say, “Oh, I definitely see myself here or there.”

Money Avoidance

11:45 Cortnie: Reiterating when I say a financial attitudes are important because certain attitudes for example, like money avoidance and money worship, have been demonstrated to suggest pathological views of money. Those who resonate with money avoidance attitudes may tend to believe that money is bad or that you don’t deserve money, and for people with this personality, money can typically evoke feelings of fear, anxiety, or disgust even. This is a financial attitude that is common among low income, younger, and single individuals because they typically have something going on with them where money is evoking these anxiety or stressor indicators for them. It has been demonstrated that typically those who are money avoidant produce, financial outcomes like financial well-being that are not as high as individuals who possibly resonate more with other types of financial attitudes.

12:58 Emily: Yeah, I definitely can see that. I mean, we can sort of imagine very easily that prototype person who is money avoidant. There’s probably, I don’t know if they’d be listening to the podcast, but there’s certainly potentially some of those within academia, within graduate students. Maybe not because of how they were raised, but then the environment that they’ve been put in, you know, since getting into training. We’ll talk more about that a bit later, but go through these other three categories please.

Money Worship

13:23 Cortnie: Money worship, more so those types of individuals, you would see indicators of that individual where they’re very central to their career. They’re very central to building wealth and things like that. It can be suggestively pathological. In the Klontz Money Scripts inventory, there is a cutoff score for what is kind of considered as like a clinical concern, a clinical cutoff score. If you go beyond that threshold, you will be considered possibly you need to look into it being an actual issue. Even if you resonate with, and I do want to say it is possible for you to resonate with several categories of financial attitudes. For a lot of people it kind of depends on the context. Like we talked about, being a PhD student. But going back to what I was saying with the, clinical cutoff score, there essentially are four different types of financial attitudes and worship would be another example of that. There’s literature that goes through the exact representations of the four financial attitudes and Klontz and Britt will be the scholars to kind of refer to that information in further detail.

15:05 Emily: Yeah, I would love it if you could send me a link to put in the show notes for that. Yeah. So I think money worship is another one where we can again, sort of maybe imagine a prototype for that. And I think that I, obviously I don’t know about this clinically for myself, but I have been very careful, mentally to not, because I think I have maybe some tendencies where I could fall into that category. Maybe not even tendencies, but just based on what I do, right? I talk a lot about money. I’m very careful to not allow myself to fall into that category.

Money Status and Money Vigilance

15:33 Emily: Can you remind me what the final two were and maybe give some examples? These were maybe more the non pathological categories.

15:41 Cortnie: Money status, it more so resonates with viewing money as a social status for yourself. And then also money vigilance is being careful with money. Those are two that are not as suggestive to pathological views of money.

16:02 Emily: Yeah. Okay. Thanks for that clarification. I’m seeing myself maybe in the vigilance category, for sure, and I hope the audience is starting to get an idea of where they might fall and what possible interventions might be helpful depending on where they are.

Commercial

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How Financial Attitudes Can Affect Your Finances

17:25 Emily: Can you give maybe like a concrete example of how let’s say, a money avoidant person, a behavior that might result from that attitude?

17:33 Cortnie: I think that it kind of blends into our follow-up question of how does academia, how does being a graduate student, how does that influence certain financial attitudes. As we all know, being a graduate student is very expensive, yet graduate students often have very little income, unless you’re in a situation where you do have enough fellowships and scholarship funding to carry you throughout your entire program. Also, because graduate students are in the process of becoming experts in their field, they may feel like they do not deserve to get paid very much. Those kinds of experiences typically evoke fear and anxiety surrounding money, which could be suggestive that graduate students tend to have a money avoidant financial attitude. Of course, there are clinical cutoffs for that, as we discussed before, but some of those common experiences and feelings of being a graduate student, surrounding money, may lead to being category categorized as money avoidant.

18:52 Emily: Yeah, I definitely want to talk about for this for another moment, because I think this is going to be such a common experience for many people in our audience. Either that they’re currently in this space, they are currently a graduate student and experiencing some of these forces and attitudes or maybe that is in their past and it’s still something they’re working on because they still have some residual effect, mentally, from that time. I do think there are pervasive messages within academia that your passion should sustain you. You should not care how much money you’re making right now or in the future because you just love your work so much, none of the rest of that matters. It really plays into a larger attitude within academia. And I’m not blaming any person or institution. This is just like a mother culture kind of thing around “Well, you should just go ahead and put your life on hold while you’re in training. Nothing else matters aside from your training. Put your money on hold, put your relationships on hold. Other things in your personal life, your health, mental health, all that stuff is secondary to the all consuming goal of your research getting to a certain level, finishing your dissertation, whatever it is. Super, super unhealthy. Super, super unsustainable. I mean, maybe you can do that for a few months or a year, but for the five, ten, more years you might be in training it’s too tall of an order. And yet this is still the message that we’re all kind of marinating in within academia. Right? And so what I think I’m hearing from you is that these messages, maybe it’s not the family that we grew up in, right? That has a certain influence on us. But then our academic family is also having an influence. Does that make sense? Can you talk a little bit more about that?

20:37 Cortnie: That definitely makes sense because essentially what family financial socialization theory suggests is that our founding beliefs and values surrounding money typically come from the family system because that’s typically our first opportunity to learn in a social context. As you become 18 and you move away from home and you have more interactions with other socialization agents, like being in an academic setting, being around peers, being in a romantic relationship, that influences your personal finances as well, or how you’re being socialized around personal finances as well. It’s certainly a undertone, kind of an unspoken thing in academia that the main goal is to focus on getting your program or research to a certain level, getting through the program and graduating and the personal finance piece is often not really addressed very much, or the stressors that are associated with finances are typically not addressed unless you actually go directly to a personal finance specialist on campus that can help you to continue to fund your program. And not just your program, but your life outside of that. A lot of graduate students have full blown families. They’re married, they have mortgages and all kinds of things like that. So yes, academia can definitely put some stressors on your personal finances and your financial beliefs and kind of make you question “Should I be money avoidant because it gives me so much anxiety or possibly having the opposite effect of making you so money vigilant to the fact that you kind of become OCD about just budgeting down to the dime every single semester so that you can have all your expenses covered.

22:43 Emily: Yeah I think there’s the component of what we sort of implicitly absorb in academia about work being the primary thing. But then there’s what you were just saying, the actual real life in your face stressors – the stressors associated with being academia, not being paid enough for where you’re living, having to pay tuition fees, the budgeting issues. These are all not just in your mind, these are real problems that are happening to students. And I think what I’d also love you to comment about is the influence that these experiences and hearing these messages can have on a young adult, right? We’re just talking about okay, the family is the first place where we start to form these attitudes. But I would imagine that a graduate student in their 20,s maybe straight through college and to graduate school is going to have a different set of experiences than someone who starts later on after working. Maybe they are married, maybe they’ve had just more time to build up what their beliefs are and their attitudes around their own finances. Can you comment about that a little bit?

23:46 Cortnie: So I’m not speaking from my empirical research theoretical standpoint. This is just my own personal perspective. But my belief is that when young adults go straight through graduate school and they don’t really get that real world application personal finance management, they kind of start at a deficit when it comes to personal finances as an early career PhD, or if you’re graduating fresh out of a master’s program or early career master’s degree recipient. You don’t have those opportunities to really grapple and absorb what it means to budget with an income and a salary, especially not at the level that you will be earning outside of a graduate program. Then also maybe not being privy to the realities of the consequences of not having enough personal finance related literacy. Not knowing about how credit works, how student loans may impact credit, how that may later impact your purchasing power when it comes to purchasing a new home or a car. And then of course, it has implications on your romantic relationship. Having to have not so easy conversations with your partner that “Hey, you know, when it comes to my personal finances, I’m kind of behind the curve”, especially if you have a partner who did not take the graduate school route, who did have opportunities to kind of build up their financial literacy through work experiences and budgeting that adults do who do not decide to go straight through graduate school. So yes, absolutely, going to graduate school for us to sit significant amount of years, not participating in the workforce as like a traditional adult would so to speak, definitely can leave a graduate school student at a little bit of a deficit when it comes to managing their personal finances. Unless you’re a business major, typically you do not get that background working knowledge about personal finance management.

How to Work with the Money Attitudes You Have

26:11 Emily: Yeah. This is exactly the space that I’m trying to step into. On that subject, once a person recognizes, “okay, academia is feeding me some toxic messages, it’s giving me all these stressors,” what do you do with that? How is it that you can change financial attitudes. Or maybe it’s from the upbringing as well. Maybe you recognize, “okay, my family was not super healthy around this, can I change my own way I approach these things?” How do you actually do that?

26:39 Cortnie: Me, personally, as I’ve gone throughout my graduate school education, I have become more immersed in the subject area of personal finances, becoming more aware of my own financial attitudes and financial behaviors that do not serve me well, and I go by the saying of try to practice what I preach in my clinical practice. And as a therapist, I suggest to all my clients, the first step of changing an unwanted behavior is to acknowledge that it’s problematic and explore its origins. If you recognize that you’re just taking out way too many loans, it’s just not feeling right to you, kind of explore the fact you’re going against what one of your financial values or beliefs are, which is to keep your loans to a minimum, and explore where the origin of the motivation to do that behavior is coming from. Once you have acknowledged that the behavior is problematic, explored its origins, from there I will suggest seeking out resources to support the desired behavior change. Personally what I did for myself is one, I made personal finances, I was very intentional incorporating that in my area of research. And also, my niche is actually surrounding personal finances, mental health, physical health and family relationships. And so it kind of forced me to get immersed in the personal financial literature, become more financially literate in ways that were supportive of my career, but also in my personal life. So I actually did the accredited financial counseling education requirement through Texas Tech University. I did that program back in this past spring and I learned a wealth about personal finances that not only legitimized myself as a marriage and family therapist, that her niche would be personal finances, but also my research. I will say another huge impact that it had was application into my own personal finances. Recognizing that there’s an issue with the financial attitude or the behaviors that you have become accustomed to in graduate school, exploring what the origins are, like why did you even start doing these behaviors, and then seeking out resources, and there’s a wide variety of ways of doing that, but just becoming more knowledgeable about healthy money management.

29:44 Emily: I can definitely see a parallel in myself to what you’re saying. I didn’t necessarily know that what I was trying to do was changing my attitude so that my behaviors would follow. But I can see, from my upbringing, I grew up with a one one parent who was like a spender and one who was like a saver, and sort of absorbed the spender mindset from one of my parents. And that was something when I finally had my own paycheck coming in, I realized my small stipend cannot support the spender inclinations that I had based on my upbringing. And so that was something that I had to, as you were just saying, recognize, “okay, this is going to put me at some dissonance here.” This desired behavior and the financial realities, I realize, “Okay, well that I learned that from my parent. That doesn’t have to be what I do. That’s just what my parent behaves that way, I can be different.” And as you just said, seeking out more and more resources and support around the positive behavior that I wanted to affect, which was not spending a lot of money whenever I wantet to. And so the resources that I went to at that time were personal finance books, the personal finance blogosphere, which now has morphed into podcasts and blogs and Reddit and all these other wonderful places where you can go for resources. So I really sort of started to see into the lives of people who I could recognize as models of positive financial behaviors and start to, um, enact what they were doing in my own life. And if I would be so bold, I will say that the Personal Finance or PhDs community is one of these places where you can learn some of these positve behaviors, from me and from the guests who I interview and from the articles I have on the site and there’s lots of ways you can get involved. In fact, please, if you’re not yet on my mailing list, get on my mailing list because I’ll be sending this great content your way every week.

31:35 Emily: Cortnie, thanks so much for pointing that out. I think we’re coming to the end of the interview here. If someone wants to follow up with you, maybe they have a question about something you’ve said today or maybe they’re like, “Oh my gosh, I need Cortnie in my life. I need more Cortnie”, how can they get in touch with you?

31:51 Cortnie: For those listeners out there who are interested, I’m always happy to share whatever information I have and chat with you. So, um, I can be best contacted at my email. It’s [email protected]. I am also listed on the Psychology Today website as a psychology today verified marriage and family therapist intern. You can look their website up and then as we’ve discussed previous to actually starting the interview, you’ll leave the actual website in the notes. Then also the agency that I’m currently contracted it as a marriage and family therapist intern, Better Living Solutions in Tallahassee, Florida, and we’ll also leave information for their direct website. Those are two additional mediums to gain contact with me.

32:57 Emily: Yeah, it’s so excellent. All that information will be in the show notes as Cortnie just said.

Final Words of Advice

33:00 Emily: So last question here, Cortnie, what is your best financial advice for another early career PhD?

33:07 Cortnie: In the same spirit of the conversation we’ve been having, I would suggest early career PhDs to take a financial attitude questionnaire — one example is the Klontz money script inventory — and to gain additional insight. If you have some inklings but you’re not exactly sure if you’re at that clinical cutoff for certain financial attitudes, to see what financial attitudes you resonate with the most and how they could be possibly subconsciously guiding on your financial behaviors and influencing your overall financial well-being.

33:47 Emily: Perfect. And can we add that link to the show notes as well?

33:49 Cortnie: Absolutely.

33:50 Emily: All right. Perfect. Oh, Cortnie, this is such a wonderful interview. Thank you so much for providing your expertise on this subject.

33:56 Cortnie: Thank you so much for having me Dr. Roberts, I enjoyed talking with you.

Outtro

34:01 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.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, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.