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financial goals

Financial Questions from an International Graduate Student

January 27, 2025 by Emily

In this episode, Emily interviews Gauri Patel, a first-year grad student in biomedical engineering at the University of Texas at Austin. Gauri is on an F-1 visa, but she has lived in the US for over 10 years. The financial questions Gauri has encountered are different from those typically asked by both US citizens and new international students. Gauri and Emily discuss bank accounts, retirement accounts, tax reporting, and the cost of immigrating to the US.

Links mentioned in the Episode

  • Host a PF for PhDs Tax Seminar at Your Institution
  • PF for PhDs Tax Center for PhDs-in-Training
  • PF for PhDs S4E17: Can and Should an International Student, Scholar, or Worker Invest in the US? 
  • PF for PhDs Subscribe to Mailing List
  • PF for PhDs Podcast Hub

Teaser

Gauri (00:00): I’m the type of person to gather all the information before doing things, but that can hinder progress if you just keep adding more bits of information rather than like acting on what you already know. I spent a little too long deciding like, oh, which, which company to go with. But yes, I I was able to open up the Roth IRA.

Introduction

Emily (00:28): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (00:59): This is Season 20, Episode 2, and today my guest is Gauri Patel, a first-year grad student in biomedical engineering at the University of Texas at Austin. Gauri is on an F-1 visa, but she has lived in the US for over 10 years. The financial questions Gauri has encountered are different from those typically asked by both US citizens and new international students. Gauri and I discuss bank accounts, retirement accounts, tax reporting, and the cost of immigrating to the US.

Emily (01:30): The tax year 2024 version of my tax return preparation workshop, How to Complete Your PhD Trainee Tax Return (and Understand It, Too!), is now available! This pre-recorded educational workshop explains how to identify, calculate, and report your higher education-related income and expenses on your federal tax return. Whether you are a graduate student, postdoc, or postbac, domestic or international, there is a version of this workshop designed just for you. While I do sell these workshops to individuals, I prefer to license them to universities so that the graduate students, postdocs, and postbacs can access them for free. Would you please reach out to your graduate school, graduate student government, postdoc office, international house, fellowship coordinator, etc. to request that they sponsor this workshop for you and your peers? You can find more information about licensing these workshops at P F f o r P h D s dot com slash tax dash workshops. Please pass that page on to the potential sponsor. Thank you so, so much for doing so! You can find the show notes for this episode at PFforPhDs.com/s20e2/. Without further ado, here’s my interview with Gauri Patel.

Will You Please Introduce Yourself Further?

Emily (03:06): I am delighted to have joining me on the podcast today, Gauri Patel, a first year PhD student in biomedical engineering at UT Austin, and today Gauri and I are going to discuss being an international graduate student, but one who has been in the US for a significant amount of time and how the financial questions that you have at that stage are different than either you know, domestic graduate students or people who are international students and brand new to the US. So I’m really excited to learn from Gauri about this. So Gauri, will you please introduce yourself a little bit further for the audience.

Gauri (03:37): Thank you so much Dr. Roberts. So I, as you mentioned, I am a first year graduate student at the University of Texas at Austin and I’m studying biomedical engineering, uh, specifically in biomedical imaging. So my start in this field was during my master’s thesis where I studied a particular image analysis technique to understand how a tumor microenvironment could influence outcomes to therapy. And so I want to continue studying this and so here I am, uh, doing more research at, uh, in a PhD program.

Emily (04:14): Excellent. Well, let’s kind of rewind the clock and take us back to, uh, maybe when you first, uh, entered the US and tell us about how that happened.

Gauri (04:23): I first moved to the US pretty much exactly 11 years ago. Uh, and it was because my dad had found a job in Michigan and so at at that age you don’t really have much of a say in where you’re going. And so my family moved to the states and I’ve been in Michigan ever since.

Visa Status: H-1B, H-4, F-1

Emily (04:46): So tell me how that works visa wise. ’cause I know, I’m gonna guess your father was on an H-1B, but I don’t know how the family aspect of that works.

Gauri (04:55): He eventually got to an H-1B, so we moved from Canada to the US and so Canada, there’s a different visa category that my dad could also work under. So he first started on a TN visa and I was on whatever dependent version of the TN there is. I’m not sure what the name of that is exactly, it was quite a while ago, but then eventually he did get moved over onto an H-1B, after which I was on an H-4 visa, which is a dependent of the H-1B. And I basically stayed on that, um, from middle school through high school and then my first year of my undergrad.

Emily (05:34): Okay. And then from your second year of undergrad, did you start on F1 visa at that time?

Gauri (05:40): I switched to an F1 during my second year of my undergrad and that was because I wanted an opportunity to do internships or paid research on campus. Uh, so the H-4 visa, you require some type of worth work auth- authorization and that there’s a different timeline about when you’d be able to work. It has to go through a different approval process and it’s kind of like up in the air when that, uh, work authorization would come through. And so if I was on an F1 visa, it would be rather immediate. I would do a year of school and during that time I would be permitted to work in a research capacity on campus. And also it’s pretty immediate you can get authorization for CPT or OPT and so that’s why I switched to the F1.

Emily (06:34): That certainly seems like a reasonable reason to, to, you know, make that switch. I’m wondering were there any downsides, like anything that you were foregoing or giving up by making that switch?

Gauri (06:44): Yeah, for sure. So since my family was on an H-1 was under the H-1B visa category, there’s also the option to apply, have your employer sponsor for a green card. And so that’s like the main perk of the H-1B visa. It can eventually lead to a green card. However children, they age out at 21 and so I was like really getting close to that point of aging out. And so the question remained, do we still hang on to this H4 dependent visa and not be able to work in the hopes that before I turned 21 I would, that green card would, you know, go through or do I switch immediately and you know, cut my losses. And so, uh, we just decided that the green card was probably not gonna happen before I turned 21. And so I might as well switch to the h uh, sorry, excuse me. F1 visa at this time.

Emily (07:53): Well I wanna kind of pick up with the green card process maybe a little bit later in our conversation, but let’s kind of go back with um, your experience, you know, doing research and everything through your undergrad. Um, it totally makes sense to me that you would want to have those potentially paid research experiences where you already thinking at that time that you wanted to pursue, uh, your field or science generally or like did this basically the switch to allow you these experiences. Were you thinking ahead to graduate school, I guess is what I’m asking?

Gauri (08:24): Yeah, for sure. So I first started off, um, my first year I was pretty set on pre-med. I wanted to go to medical school, um, and pre-med the curriculum makes you jump through like a lot of hoops, like oh, do shadowing and do research hours and all that. And so that’s how I got into research in the first place. But I ended up liking it so much that I abandoned the pre-med track and I’m like, I think this is the research is just what I’m interested in general. And so the F1 visa definitely helped. It also would’ve been helpful for pre-med purposes as well to get like clinical hours maybe, you know, work in some, some sort of, um, healthcare setting. So working somewhere was like whether I wanted to go to graduate school in research, in a research capacity or to medical school working somewhere had to have happened.

Family and Personal Finances

Emily (09:21): Yeah, that makes sense. Um, since we’re talking about work then and paid work and so forth, can you tell me a little bit about, doesn’t necessarily have to be your family’s finances, but like what was going on for you financially during that time and especially if there were any tie-ins then with like your visa status or your choices around that.

Gauri (09:39): Finances were never really a struggle for my family, which I’m very grateful for. Um, because I, as an international student, I didn’t get any financial aid or qualified for federal student loans, so everything did have to come out of pocket. So more about having paid work, it was more about, um, finding a sense of autonomy and not having to rely on, you know, my family being my safety net all the time. And so that’s why I was interested in the paid work.

Emily (10:14): And you told me during our, um, pre-interview chat that you started listening to financial podcasts even as an undergrad, including this podcast. And so what led you in that direction of like being interested in finances even at that stage?

Gauri (10:28): Oh yeah, it was pretty much, so I worked in this, um, lab as a volunteer for two semesters and then that summer after I asked them like, Hey, can I stay for the summer and work here full time and also get paid perhaps? And they were like, yeah, sure we can make that happen. Um, in hindsight I didn’t realize how like, oh wow, that actually happened <laugh>. Um, now that I know more about the research space like that, that was kind of incredible that that happened. But anyway, so I, I’m like, oh, I’m about to get money for the first time. Um, and unlike some of my peers that I went to high school with, they all worked like, you know, jobs, um, at like the local ice cream shop or they were, you know, hosts at, you know, some type of diner or they tutored on the side. I couldn’t do that on the H-4 visa. And so up until this point I’d just been volunteering. This was quite literally like my first paycheck. And so I was like, what do I do with this? What could I possibly do with this? And I’m just the type of person to go poking and prodding for answers. And so I went to finance podcasts.

Emily (11:49): Yeah, that’s great to hear. Um, I think when I had a similar like transition, you know, coming out of undergrad and getting like my first stipend paychecks, like after that I was asking the same questions like, oh, uh, never had this control over money before. Like, what exactly do I do with this? I went to books because podcasting was barely a thing back then, but that’s awesome that we have so many different like avenues you can go to now. Um, okay. So anything else you’d like to share with us? Maybe about the transition from, you know, finishing up undergrad and your master’s into graduate school in terms of your finances and then we can kind of dig into the, um, specific questions or concerns that like someone in your position has?

Gauri (12:29): I think the only big difference between my undergrad and master’s and then grad school now is that in undergrad and Master’s, the amount I was making was like, it, it couldn’t sustain all of me. Um, my family was helping out with tuition entirely and then now it’s a, a different ball game. Like I, I can more or less like take care of myself on this stipend. And so that autonomy I was like really searching for. Um, I I feel like it’s like finally coming to fruition like, oh, it’s happened.

Emily (13:06): So when you kind of approached me about doing this episode, you were saying, okay, yes, I’m an international student but I don’t have the same concerns of a brand new to the US international student and I also have different concerns going on than someone who is already a citizen or resident. So just like point by point like let’s talk through like what you’ve encountered and sort of what you’d like to share with other, other listeners who might be in a similar situation.

Choosing a Bank as an International Student in the US

Gauri (13:30): Yeah, for sure. So the first thing, um, you do is when when you get some type of money in your hands, it’s like I have to put this somewhere. And so it’s the first question is like, oh, what bank do I choose? And so I was consuming this financial content and it was like, oh, you should start saving up for an emergency fund and moreover you should put it in a high yield savings account, but for international students there are only a certain number of banks that will offer their services to you. And so the first bank account I had was, um, a Chase bank account. Um, I don’t know if it’s okay to name names.

Emily (14:07): Oh yeah, go ahead.

Gauri (14:07): For banks. Okay. So it was a Chase bank account and it had some like stipulations on the minimum balance that should be in there. It didn’t offer any interest at all. And so in terms of all the different banks you could choose from, you’re limited to a very set few. Um, so I had that bank account first, but then finally after I got the work authorization to work on campus in this uh, lab and then after I got the social security number associated with it, it was after all that that I could open this bank account. And so anytime you hear like, oh, do this, do X, y, and z, like a pretty actionable step, that seems easy enough. Um, I always seem to find like, oh I need to have this before I can do this thing.

Emily (15:05): Yeah, it is, it is really hard at like as a podcaster, someone who does one to many communications, it’s really hard <laugh> to keep all audiences in mind and speak to like all audiences. So you’re absolutely right. Like if you’re listening to a US based, you know, personal finance podcast or like reading a book or something else, like you definitely have to put another filter on that and say like, okay, <laugh>, is this actually going to be possible for me? And the answer is like, just like you said, yeah, there are banks that will work with you, it’s just not necessarily every bank and not everyone’s gonna make it easy and some people need the SSN and some don’t and so forth. So like you just have to be, there’s just another selection criteria on that. Absolutely. Have you, so since like having that Chase bank at first, have you subsequently opened or been able to open any other types of like higher yield savings or something like that?

Gauri (15:51): Yeah, for sure. I primarily use uh, my SoFi bank account now and it was pretty easy to like get the account, but it’s only after you’ve got some type of job lined up and you’re getting paid for it and you’ve got like all the things that come with the job first, like you need to have that SSN which um, is not like a oh I’ll just like apply for it type of thing. They’re finding the job is not like the easiest thing in the world. So you could hear the fi- finance advice but know that there are steps before steps you must take before you can, you know, enact those. Um, yeah, in general it’s like a thing I have to Google, like, oh open up a Roth IRA, can I open up a Roth IRA is something I have to Google.

Commercial

Emily (16:42): Emily here for a brief interlude! Tax season is in full swing, and the best place to go for information tailored to you as a grad student, postdoc, or postbac, is PFforPhDs.com/tax/. From that page I have linked to all of my free tax resources, many of which I have updated for this tax year. On that page you will find podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs and PhDs-to-be. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with. Again, you can find all of these free resources linked from PFforPhDs.com/tax/. Now back to the interview.

Opening a Roth IRA as an International Student in the US

Emily (17:34): Yeah, let’s talk about that question. Um, so you heard about Roth IRAs, I’m sure through all the content that you were consuming and uh, tell me what year that was when you like first learned about a Roth IRA,

Gauri (17:46): I actually learned about a Roth IRA back in high school and so my high school offered a finance class and so they tried to teach us about, um, saving for retirement and 401Ks and Roth IRAs and whatnot, but I don’t think it like fully sunk into our minds yet about how significant those things were. So I heard about a Roth IRA before, um, I didn’t fully grasp its like importance until I started listening to like finance content a few years later.

Emily (18:21): Yeah. So when did you like start googling that question? When did you feel like, okay, as an imminent step I would like to open this kind of account and I really need to figure out if I’m able to? When did that happen?

Gauri (18:31): I think that was two years ago. I was like, I’ve listened to all this advice. Um, so I’m the type of person to gather all the information before doing things, but that can hinder progress if you just keep adding more bits of information rather than like acting on what you already know. So I knew that I needed the Roth IRA and I was like, you know what, fine, let’s, let’s just start googling. Um, can I, can I open this and who’s willing to offer this to me?

Emily (19:01): Yeah. And what did you find?

Gauri (19:04): I think it was from your podcast, like some interview a while back, um, and there was like a snippet. I remember watching like as an international student you can open a Roth IRA and I’m like, oh check. Fabulous. Um, now I spent a little too long deciding like, oh, which, which uh, investment bank or like, which, which company to go with. But yes, I I was able to open up the Roth IRA <laugh>.

Emily (19:31): Yeah, that I think you’re referring to the interview I did with Hui-chin Chen who’s a CFP. And I think that we recorded that back in like maybe 2018 or 2019. And even by then I had been getting regularly questions in my like, live seminars from international students, can I open a Roth ira? Should I open one? You know, is it allowed? Is it a good idea? And so I was really, really glad to get an expert on the podcast who could help us with all those questions. But the, the gen, I mean people who are interested should listen to that full episode. But yeah, the, the general, uh, takeaway was like, yep, <laugh>, if you want to invest like while you’re an international student or postdoc in the US go ahead and do it now with a Roth IRA specifically, you still need to fulfill the, um, taxable compensation requirement to be able to make those contributions. Did you have to like, I don’t know if you were receiving W2, you know, employee type income at that time, maybe it wasn’t so much a question for you or is that, is that taxable compensation question something you also had to investigate?

Gauri (20:30): I don’t think I investigated it that much because at the time I really wasn’t earning all that to put anything into the Roth IRA, so it was just open for a while and it, my income definitely wasn’t a W2, it was actually a 1099, but I think from another series of, not another series, but like another episode or couple of episodes of yours, um, I think you went over the old guidance before 2020 and then after 2020 and it was like, yes, 1099 income can be uh, put into a Roth IRA. And so I was like, oh great. So I I could have done it all along. Um, not that there was anything left <laugh>.

Emily (21:16): Yeah, that definitely did change to have fellowship income not reported on W2 eligible to be contributed starting in um, 2020. But you still had that added wrinkle of like as an international student, as a non-resident in the us um, we’ve settled like the compensation term in, in taxable compensation, but you also had to know that your income was taxable in the US and I don’t know, would you like to share like what is your technical country of residence? It seems so silly to say that ’cause you’ve been here for so long, but like what is your country of residence?

Gauri (21:47): I think right now for tax purposes, it is not the US I think it switches to the US in a year. I think it’s like five years. Mm-hmm <affirmative>. Yeah, that I can say I’m on my tax. I’m like, not from here, but after five years of saying that you are from here now for as far as taxes are concerned.

Emily (22:09): Yes. So I don’t know the Canadian US tax treaty intimately, but I’m pretty confident that your income was then taxable in the US at least to some extent. So you did have that eligibility mm-hmm <affirmative>. Yep. So yeah, that’s great. But like you said, like, you know, US citizens, residents and so forth, they have this one bar of like questions they have to ask about the Roth IRA and then there’s that further bar that, you know, international non-residents have to ask. So I’m really glad that we kind of reviewed that to like, you know, point people back to that other resource and like get that all out there because like it is such an amazing tool. Um, and it’s really a shame to miss out on it if you’re ready to contribute to one just because you might have some outstanding questions that, you know, they can take a little bit of time to resolve those. So hopefully we resolved a few for the listeners. Um, is there anything else that you’d like to add on that? Like Roth IRA question?

Gauri (23:03): I think that’s about all. Just, uh, don’t let the tail wag the dog as, as they say. So I had the account open but I wasn’t like too worried about what could go in there. Um, it all worked out in the end for me, but I think if I got too caught up in the weeds, I I don’t think the account would’ve ever been opened or I would’ve ever put anything in there <laugh>.

Emily (23:25): Yeah, I totally agree. And it’s, and it’s this area of investing where people that in my observation seem to have the most like analysis paralysis. Um, and I, maybe you’ve heard me say this on podcast before, I’ve probably told the story, but like I made like a huge mistake when I first opened my Roth IRA, which is that I didn’t actually invest the money that I was putting in and yet it’s really good that I started it and started contributing even though I made like a huge mistake with it. Like, I mean we have a decades, decades long investing journey ahead of us, so like it’s better to just get started even imperfectly than to just like wait and wait and wait and wait and not do anything. It’s totally okay to make relatively minor mistakes. You can overcome them along, along the journey. What was your third uh, point that you wanted to bring up?

Opening a 403B as an International Student in the US

Gauri (24:08): So I figured out the bank account, I figured out the Roth IRA and then now my question is, hmm, I still have some more left to save. Can I open a 403B? Which the answer is yes, but then all of this additional money that I have, it’s coming from a fellowship which according to my university, it’ll be reported on a 1042s form, which I’ve never encountered before. Um, from my searches on Google, I don’t see that much guidance for graduate students with this form. It’s more about US citizens that have moved abroad that, that received this form and I’m like, I’m, I’m not that <laugh>. I’m very much the opposite. I’m a non-citizen within the US so the jury is still out. I’ve emailed like the tax folk at my university regarding like, Hey, would you happen to know if this can be put in a 403B or a Roth IRA or like any tax advantaged account and they’re like, sorry, we can’t give tax advice.

Post-Interview 403B Contribution Follow-Up

Emily (25:19): Hi y’all, this is Emily breaking in during the editing process. Gauri and I talked for a bit here about her 403(b) and her tax situation, but I wasn’t quite asking the right questions, so we ended up exchanging several emails after the interview to sort it out. Here’s what we figured out: Gauri has two types of income. She’s an employee throughout the year and also receives supplemental fellowship income. Her employee income exceeds $10,000 per year and therefore is not subject to the US-Canada tax treaty, so it is fully taxable and reported on a Form W-2. As a nonresident, her fellowship income is reported on a Form 1042-S with income code 16, and it is also fully taxable. Gauri’s question was whether or not she could contribute her Form 1042-S income to her 403(b), and the answer to that is no because it is fellowship income and only employee income can be contributed to a 403(b). But she does have employee income, and that’s why her university allowed her to open the account and she could contribute to it from her employee, i.e., W-2, income if she chose to. The reason she particularly was asking if she could contribute the fellowship i.e., Form 1042-S, income to her 403(b) is because of the automatic 14% income tax withholding rate, which is rather high compared to her effective tax rate. So our conclusion is that she can contribute to the 403(b), but not from the particular pot of money that she wanted to, and even though she has that annoyingly high income tax withholding rate, it’s all going to come out in the wash at tax time, likely in the form of a tax refund. OK now back to the interview!

Building a Financially Stable Life in the US as an International Student

Emily (26:52): Was there any other, another point that you’d like to bring up in this sort of question about having been in the US for like a very long time yet still being on this F1 status?

Gauri (27:03): The main goal of consuming all the finance content is, so answering the question of like how do I build a financially stable or good life for myself years in the future if I’m in the US but because of my visa I also have to, it’s like vacillating between yes, think long term, but also what if you’re not here long term? What then? Um, so of course that opens a can of worms, like what if this, what if that? But I just have to work with, let’s just assume I’m gonna be here for some indefinite amount of time and then if the day that I have to go back to Canada comes, um, I will deal with extricating myself from all of this money that’s invested in these US-based, um, accounts at that point. Um, I think it would, it would be like a hindrance if I constantly worried about it right now.

Emily (28:09): Yeah. And I I’m really not sure what steps you would that would be practical to take, um, to, you know, think about this possible future where you would be living in Canada, um, I don’t know, open a Canadian bank account. Like I’m not even sure what would be like a reasonable thing to do, um, like you said for an outcome that you’re hoping is not going to come about and has a probably a low chance of actually coming about. I think you’re exactly right. Just to say like, I’m gonna build what I can here and if the day comes when I have to make a change, I’ll make a change then, but you don’t need to anticipate that. Yeah, and I think that was the answer too from that podcast episode with, um, with Hui-chin Chen. She was just saying like, yeah, if you end up leaving the US later whether because you wanted to or because you had to or whatever the reason, you can sort of cross that bridge when you come to it. Like don’t let that be a reason for you to not build wealth and build your financial life in the US. So I think you’re taking exactly the right path.

Gauri (29:08): That’s fabulous to hear.

Current Financial Goals

Emily (29:09): <laugh> Do you have any current financial goals?

Gauri (29:14): Current financial goals? So the immediate thing would be to restore my emergency fund. So my emergency savings, I had to draw out of that for moving to Austin from Michigan. And so the moving costs and then furnishing, you know, the apartment, the first few months of, you know, rent before the, uh, the stipend payments came in. I used my savings to tide me over during that time. And so right now I, I need to work on restoring that amount. Um, so that’s my immediate goal. And then once that’s done, I think that should take up to a year, depending on how aggressive I’d like to be at. After that point, I will have to decide where to redirect those extra funds that were going into my, um, emergency savings, like should I put that into a taxable brokerage account or finally answer that 403B question. And so send that, send those funds over there. Where should those go would be the next question.

Emily (30:25): And are you also thinking about a potential green card in the near future and like what are the, because I know there’s sometimes hefty financial costs associated with that transition.

Gauri (30:34): Oh yeah, for sure. So the past, I think two or three years, uh, my Visa has cost about $500 a year in different work authorization fees or different petition fees. So I already have that in the back of my mind. Like, oh, every time I need to do something with my visa, it’ll be a couple hundred dollars. But for a green card application for someone that is seeking a PhD, there is a employment based visa that I myself could petition for if I demonstrate that I’ve done outstanding research in my field and I’m a person worthy of staying in the us. Um, and so just for that, just for two forms relating to that, I think it’s um, called, it’s called Immigration for Alien Worker or Petition for an Alien Worker, something along those lines. The fee for that is around $700 and then the adjustment of status. So to adjust my status from an F1 to this employment based visa, that would be around $1,400. And so just for those two forms, if I were to go about it without the help of any sort of immigration lawyers, whatnot, that’s already over two grand. So I definitely need to have some sort of bucket larger than a couple hundred dollars ready to go for when that day comes about. And also I have to decide like, do I even wanna pursue that path or would I prefer to just go the more routine route, which is employment based, um, visa. So like pursuing an H-1B track, so up in the air.

Emily (32:31): How will you make that decision? Or I guess I’m also asking like you mentioned earlier about, you know, the number of years you’d been in the US and having to make a decision about F1 versus staying on the previous status. Um, is there an amount of time that you’re looking at where you’ll, that you’ve been in the US where you or been on the F1 visa where you’ll need to make this decision? Or is it really kind of up to you? You can do it at any point?

Gauri (32:53): The sooner it happens, the sooner like a weight would be lifted off my shoulders about like this always, you know, you have to keep in the back of your mind that like you’re not necessarily here forever, whether you choose to be or not to be here forever. So it would be like a mental weight, you know, relieved. Um, the F1, since I’m in a STEM field, I could have my OPT go for I think up to three years with the extension. And so within those like three years, I’d have to make some type of decision about whether my employer can sponsor for an H-1B visa or I’m going to go about it on my own. So it’s within the next eight years I have to come up with an, an exact plan about what would be the fastest, um, most efficient way to go about this process. Mm-hmm <affirmative>

Emily (33:53): And if you decide you wanna do it on your own and you have those fees that you’re looking at, plus maybe you, you might wanna pay a lawyer, um, to help you as well, are the finances going to hold you back or do you think you’ll be able to save up the requisite amount of money by the time you want to go about this process?

Gauri (34:10): I think I am well informed enough about how much this is going to cost me, and so I’d be able to plan for that regardless. It would still be a stretch, but it’s not like this is happening six months from now or you know, this is happening in just in a very short amount of time. Like I have the time to prepare for this type of scenario.

Traveling Back to Your Home Country as an International Student

Emily (34:36): I don’t know if this applies for you at all, but something I’ve seen happen with other international students, um, is that they need to go back to their home country every so often to deal with their visas. Has that ever come up for you and, and if not, is it ’cause you’ve been in the US under all these different statuses for so long? Or is it because of the relationship between US and Canada or like how does that work?

Gauri (34:57): It’s a US and Canada thing, so it’s a special caveat in this regard as well. So most students need to go through a Visa interview and actually receive approval to study in the US however, I’m Canadian and so I simply have to be accepted into a US university and show that I have some method of paying for my stay here and that’s all the evidence I have to give to study. I don’t have to continue to go back to Canada to renew my visa or even have any documentation for the exact visa.

Emily (35:41): I see. I’m just throwing that out. There’s another potential cost that I’ve seen international students bear uniquely these like high fees of international travel every, you know, few years to deal with that like particular issue. Um, yeah, I mean the more that obviously I, I was not an international student, so like, but the more I learned about the financial aspects of having this status in the US like it just, there’s just kind of more that burdens that kind of get thrown on the pile. Like, okay, no access to student loans, can’t side hustle, have to pay fees for visa related items, maybe for travel as well. Like just, it it emphasizes um, very deeply for me the importance of paying a living wage and not just a living wage more than a living wage to graduate students, especially international students because there’s just no, there’s no ways to pivot. Um, if you are financially on your own, if you’re financially independent from your family, then you have to make it work on the stipend like you’ve been talking about and you have all these additional, um, fees that can, that can pile up as well that domestic students don’t have to, don’t have to worry about. So yeah. Yeah. I’m really glad that, you know, you brought this up and that we got to have this conversation. Um, is there anything else that you wanna add about yeah, um, being an international student, having been in the US for so long? Or about your current financial goals or anything else?

OPT Application Tip for International Students in the US

Gauri (36:59): Pro tip for international students, um, when it comes time to send in your OPT application, do it the day you’re allowed to submit that application. So first you need all those signatures or you know, green lights from your advisor about like, yep, you’re ready to graduate and whatnot. That should be done before the 90 days. You have like a 90 day window before your last day of classes to apply for OPT. Have those ready to go. And on that like very first day of the 90 days apply for OPT then ’cause I did it right the first year after I grad, graduated from my undergrad and the second year I waited a few weeks and my OPT was delayed, I think over a month.

Emily (37:55): So it’s just for processing time, like you’re just saying like be the first one, like be first in line mm-hmm <affirmative>. Because if you delay then these applications are like piling up behind it and just pushes like the timeout. Is that right?

Gauri (38:06): Yeah, exactly. So when I was first in line, my OPT, like the EAD card arrived within three weeks. And so I had it well in advance of any start date and the second year round I was like, oh, it arrived in three weeks. I’ve got time.

Emily (38:26): You were complacent. Yeah, <laugh>.

Gauri (38:27): I was, I didn’t think I’d be so off base. Um, but yeah, don’t, don’t, don’t do what I did. <laugh>.

Best Financial Advice for Another Early-Career PhD

Emily (38:37): <laugh> Yeah, don’t do it <laugh>. Um, okay. Well thank you so much for that tip. And I’d like to end by asking you the question that I ask all of my guests, which is, what is your best financial advice for another early career PhD? And it can be something that we’ve touched on in the interview already, or it could be something completely new.

Gauri (38:53): I’ve learned that you need two savings buckets at least. So there’s the emergency when truly it’s an emergency and you have no sources of income whatsoever, and then a second bucket for yearly, like one off expenses, like, oh, there’s that vacation you’ve really been wanting to take or you have to travel for whatever reason. For me it’s like, you know, oh, here’s a couple hundred dollars for some visa related thing or I’m working in a STEM field. But I think all grad students in this day and age need a laptop or some type of technology of some sorts, and that’s pretty costly as well. And so, you know, your phone falls apart or your laptop needs to be replaced or you gotta go to a conference or whatnot. Um, there has to be like a separate bucket <laugh>, aside from the emergency savings. Um, and that, that having that separate bucket really relieves like a lot of stress, at least for me.

Emily (39:55): Yeah, this is like a major component of my teaching. I would say that’s different from like you mentioned listening to like financial feminists, for example, Tori Dunlap’s podcast, Her First 100K. Um, what I see in like the more general personal finance space is people talking to other people who have higher incomes high, you know, moderate to high incomes, which is just not the case for graduate students. And so things like having to pay for a plane ticket, well, you know, if your income’s high enough and you’re doing a great job with your personal finances, you know, keeping your rent low and all that stuff, like that’s not gonna be an issue for you, but it’s an issue for almost all graduate students to pay for those types of expenses. So like that is definitely an area that I have of much greater emphasis than other like personal finance teachers do because I totally agree with you. It takes so much stress off to have planned and prepared for those expenses in advance so that you’re not having to, I don’t know, like go to the food bank and like not, you know, put gas in your car and like all the stuff that you would have to do on the short term basis to sacrifice, to come up with money that you really needed if you, if you didn’t have that savings. So I love that tip. Thank you so much for sharing that. Um, and this was, it was wonderful to talk to you and thank you so much for teaching me and you know, asking the questions and you know, sharing the conclusions that you’ve come to along the way. And I wish you all the best in getting your, you know, status in the US secured in the way that you would like it in the near future.

Gauri (41:15): Thank you so much. It was great talking to you

Outtro

Emily (41:27): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by me and show notes creation by Dr. Jill Hoffman.

Negotiation and Long-Term Thinking Effected Financial Success for This International PhD

November 18, 2024 by Jill Hoffman

In this episode, Emily interviews Wen, who recently earned a PhD in plant pathology from the University of Wisconsin-Madison. Wen came to the US for her master’s degree immediately after finishing undergrad and started learning about the US financial system, even though she had an avoidant money mindset. After overdrafting her checking account, she realized she needed to take control of her finances, start thinking long-term, and work toward financial goals such as investing inside a Roth IRA. Alongside peers, Wen negotiated the research assistantship stipends in her department, they were ultimately given a 13% raise. She has started applying those negotiation skills in other arenas. Finally, Wen explains how she pursued a career in tech transfer, starting with professional development and an internship during grad school.

Links mentioned in the Episode

  • Wen’s Podcast: Go out with Huo
  • Emily’s E-mail Address
  • PF for PhDs S14E10: The Motivation and Strategy Behind Biology PhD Stipends
  • Host a PF for PhDs Tax Workshop at Your Institution
  • PF for PhDs Subscribe to Mailing List
  • PF for PhDs Podcast Hub

Teaser

Wen (00:01): Um, yeah, I, I think I want to circle back, um, the negotiation again. Um, I want to, uh, emphasize, um, negotiation. It’s not only like what the stipend could be like, I think every grad student could ask more from their PI, um, you know, sponsor me to this conference. This is a good workshop I want to do, and this is a career event I want to attend, and can you sponsor me? Can you cover that for me? Um, and there’s everything there. There’s a lot of things online. Talk about negotiation and everything. So I, I do want to share that. Um, when I purchased my second car, um, I watched a bunch of videos on YouTube, how to talk to the dealership, and, uh, just, um, trying to negotiate the best option for myself. Um, it was a quite funny, like real life big purchase that I went to the dealership, uh, and the dealer just thought I’m a innocent, uh, foreigner. <laugh> doesn’t, didn’t know what’s going on. And, um, so I think I, um, really take advantage of negotiation and know that what’s the best for me and, um, argue that, uh, those, those terms. And, um, yeah, I, I learned a lot of from practicing, uh, negotiation. And, um, advocate for myself.

Introduction

Emily (02:02): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (02:32): This is Season 19, Episode 7, and today my guest is Wen, a recent PhD graduate in plant pathology from the University of Wisconsin-Madison. Wen came to the US for her master’s degree immediately after finishing undergrad and started learning about the US financial system, even though she had an avoidant money mindset. After overdrafting her checking account, she realized she needed to take control of her finances, start thinking long-term, and work toward financial goals such as investing inside a Roth IRA. Alongside peers, Wen negotiated the research assistantship stipends in her department, and they were ultimately given a 13% raise. She has subsequently applied those negotiation skills in other arenas. Finally, Wen explains how she pursued a career in tech transfer, starting with professional development and an internship during grad school.

Emily (03:24): I have a quick update for you on the tax return preparation workshops that I’m offering next spring. I’m super excited for my planned live in person workshops in California and Colorado and also my live virtual workshops for universities in Minnesota, Missouri, and New York. I’m sure there will be many more universities offering my asynchronous workshops as well. If you want to learn if your university is already on my list for a live or asynchronous workshop or want to help me get one offered at your university, please email me! You can reach me at emily at P F f o r P h D s dot com. You can find the show notes for this episode at PFforPhDs.com/s19e7/. Without further ado, here’s my interview with Wen.

Will You Please Introduce Yourself Further?

Emily (04:25): I am delighted to have joining me on the podcast today. Wen, who is a postdoc in tech transfer at a university in Texas, and she’s going to share with us about her sort of financial transition to the United States as an international graduate student and now postdoc. And also about, uh, her pivot to the field of tech transfer. So that’s really exciting. Uh, Wen will you please introduce yourself a little bit further for the audience?

Wen (04:50): Yes. Uh, thank you Emily. Um, my name is Wen and I’m a recent PhD graduate, uh, from University of Wisconsin Madison, and my major is plant pathology. And, um, when I started my PhD, uh, four years ago, um, I, I wasn’t sure about much about financial situations and all my career plans, so I’m glad, um, things are work out, uh, currently and, uh, really, um, happy to share with people in the, uh, going through grad school. Um, so yeah, and I currently start, I just started working as a tech transfer early professional as a postdoc position at university, uh, in Texas and help researchers to protect their, uh, IP and licensing the IP to, uh, the, the industry. So it’s quite interesting and fun new, um, career for me.

Finances During Childhood and Young Adulthood in China

Emily (05:57): Yeah, that is great. Tech transfer was very intriguing to me when I was in graduate school as well, and definitely a career that I considered, uh, before starting my business. I want to actually take a step back and would you please tell us a little bit about how you grew up and your young adulthood, at least in terms of your finances, um, up until the point that you came to the US so we can understand a little bit of your background and your mindset?

Wen (06:20): Yeah, so I came to United States in 2018 when I finished my college back in China, Beijing. So before that, um, before I was 22, I spent my whole life in China. So I would see that the bigger picture of how I grew up is China was, uh, developing country and we have fast economic and financial growing throughout my, the, that two decades is I live there and how that affect my early, uh, adult year is we, not only me, but my parents, they went through a insufficient, uh, lifestyle to kind of going to be self-sufficient and to industrialize and to eventually abundant, uh, lifestyle. Um, I think that affect me in the way that okay, situations always change and I don’t feel like I need to plan for financial situation when I grow up, especially rely on my parents. And that’s quite Asian family culture, um, that parents help children to, uh, uh, fund that college and find job and, um, kind of help them to establish their, the family, new family in the future too. So I don’t have many financial literacy, uh, when I came into u uh, the, the us. And another personal, um, background about my family is my parents they are, uh, they own a family business, so they always talk money, um, in our private family life, and they would argue and things get stressful. And when I went to, uh, sleep a lot of times, and I think that just make me, doesn’t feel positive to talk about money or thinking about what can money do. Um, yeah, so I don’t consider much about learning financial stuff, uh, even in college, uh, when I make, uh, decisions on what to study. So I just follow my interest in biology, went to, uh, plant pathology and decide to pursue higher education. Um, because I wasn’t thinking about making money, it was kind of a hard topic for me to discuss or openly to look into what do I need to do? Yeah. Until I, uh, came to United States and explore things on my own here.

Emily (09:15): Yeah, that’s really fascinating. And I’m sorry if this is like overly like reductionistic, but it sounds like you developed a bit of an avoidant mindset around money because both of being provided for by your parents and in an increasing lifestyle over time, right? Things are getting better and better lifestyle wise, and also because of the stress that money, um, caused in your household and that you absorbed some of that. And so that sort of came together to be like, well, it’s, it’s all okay and I don’t wanna think about it. Does that make sense? Yes.

Wen (09:46): Yes.

Adapting to the US Financial System

Emily (09:47): Okay. So then there’s a big shift right when you get to the us. Can you tell us, uh, about that and, and how it happened and how you were feeling and how you adapted to this new system?

Wen (09:59): Yeah, so when I came to us, I started my master program in Ohio State. Um, and I was awarded the research assistantship, so the regular RA stipend to start. Um, and it was quite efficient for me to, uh, start living there because, uh, to cover rent and, uh, groceries. Um, I was just excited to just experience all things. Um, and I got my first credit card, uh, when I came to United States. It’s not a thing in China. Um, and I got my first a used car, um, in my second year. Um, but I think there is a, there was a turning point when after I pay my, um, car payment to buy the car, my bank account, I didn’t realize it went to negative. Um, and I got, uh, a fine of the overdraft fee, $39. I still remember that. So I went, um, really anxious. I’m like, how could this happen? And, uh, the bank can just take, uh, overdraft fee from me. And, um, I think I was able to argue with them saying, Hey, it was my first time I was, I was new to this system. So at that point I realized, okay, like, um, I need to take serious on my situation. I need to plan and budget very well to buy things, um, and know how much number in my account, how much do I have. And, um, so I’d say more and, uh, during Covid I moved to Madison, Wisconsin, which is a higher cost of living city, um, for grad student. Um, I just starting to saving even more, um, for the moving and, um, adjust to their high rent here.

Emily (12:15): Can you say a little bit more about how you got into that, more of like long-term or annual planning? Um, because I can imagine that’s a really, that’s a really difficult thing for someone who’s, you know, within a year or two of being financially independent from their parents. I know it took me several years to start sort of pushing that time horizon out for the planning, right? Like, did you use any like tools or, I don’t know, anything that would help someone else who’s going through that transition?

Wen (12:45): So at beginning I do ha- uh, in my first year in Madison, I want to focus on getting to know my own financial habits, uh, tracking my spending, and I just downloaded very simple, um, Excel sheet from the website to track down my spending. Um, and I realized I eat, uh, a a I spend more money take out and, uh, some online shopping and necessary fashion stuff, um, into some unnecessary items. Um,

Emily (13:28): Sounds pretty typical pandemic spending though, right? <laugh>

Wen (13:32): I know, and investing couples hobbies. Um, yeah, I think those the first step is getting to know myself and, um, get rid of their, the spending. I didn’t realize I, I was, I was doing. And then I figured out if I want to save extra, um, cutting spend, it’s one thing. And another thing is I found some resources on campus. Um, back then, we do have international student group that, uh, we will go to their, uh, local food pantry that’s on campus. Um, and there are very fresh produce. We’ll go weekly with, uh, a bunch of international students and we, it’s just like, uh, grocery shopping and I will, I got save quite a lot of money from that. And sometimes our dining hall, um, they will have extra dining food and they will pack very well and give to students. I think all this, um, on campus activity, uh, on campus nresources help me allow to save some, um, necessary spending as well. Um, and it’s a way for me to find my community that time.

Emily (15:03): Yeah. Thank you so much for, for sharing that. Um, is there anything else that you wanted to add about kind of adapting to the US um, financial system?

Wen (15:12): I think getting the social security number and um, just a first debit card was, uh, essential for us to get paid. Um, and establish that is very important, especially, um, I need the social security number to apply, uh, the credit card later and, um, be aware that having credit card is essential for, for future, like the credit scores, um, which I wasn’t educate, educated, uh, in that perspective back in China. We don’t use credit score. Um, and also I just think it’s extremely more important for international student have the emergency, um, savings because we don’t have, um, the, the, the support that domestic students have, um, and always have that saving would just help so much. Um, and at the same time take advantage of the health insurance, the benefits that, uh, come with our student staff. And I always use my dental and vision and um, uh, insurance, um, coverage every year. Um, so those are now counted by numbers, but they are financial. Um, they could be financial spendings in the future. Um, yeah.

Stipend Increase During Grad School

Emily (16:53): Yeah, that’s great that you have that insurance provided you by your program. I know not everybody has that, but it’s something that more and more programs are adding if they don’t already have it. So I believe you told me in advance of our interview that you increased your stipend during the course of graduate school. Can you tell me how that happened?

Wen (17:10): Yeah, I think, uh, it’s just a, a process of negotiation between our grad student, um, group, uh, with our department. And when I started my PhD four years ago, uh, we had that huge inflation that like about 8%, um, that year. So I realized our department only increased like about 2% into the student stipend that year. Um, and the something I think it’s critical is timing. Um, most of the universities, or at least our department will decide how much to pay the year ahead for student. So for example, this August we, the department will submit their budget for next, um, next year’s, next fall students, um, payment. So I just couldn’t, um, thinking about like this lack of, um, catching up <laugh> eventually just will make our stipend pay so behind, um, the current raise of rent. Um, so in my first year I realized this financial hardship, but I think we started talking about it. Um, and until second year, I actually joined the student body, uh, kind of our grad student council, and I initiated more discussion. We talked to other departments, grad students as well. Um, and eventually I designed a survey, um, right after actually, uh, nature published a paper on the graduate student stipend survey results. Hmm.

Emily (19:17): Was that the biology PhD stipends one?

Wen (19:21): Yeah, I think so. It has a bunch of, um, PhD programs, data that related to our program.

Emily (19:29): Yeah.

Wen (19:29): Uh, entomology, plant pathology, horticulture. So

Emily (19:32): We’ll link to the episode that I did with the, uh, one of the co-founders of that, uh, database. So we’ll link to that in the show notes.

Wen (19:39): Yeah, that’s awesome. Yeah, I think getting the information about what’s going on with other universities really help us to push this forward. So I, um, we made, I made a survey about what’s our current inflation rate and cost of living in Madison specifically, um, and stipend numbers we quote from their PhD stipend.com, uh, a bunch of data and make, make, uh, we make a very informed, um, survey plus it, uh, plus like collection of the students data points. And we made a report, so we were able to present a report at our department meeting before they make a decision. And, um, you know, it’s hard to, um, really let them to, um, because they have their budget, uh, difficulty as well. So we will patiently, um, talk about this with our department, um, faculties and administrations, and I think we got their feedback. They want to, uh, so we ask more data from other universities, similar program, um, you can say like a competitor of our programs administration, uh, admission. So I think after two times, like monthly meeting like that, we were able to, they devote, um, increased stipend, um, about 13%, um, which includes a percent inflation and 5%, um, extra for their cover, our student’s fees. It’s, it’s like their activity fee we pay for the university. So our department, uh, help us on that. Um, yeah, so we got, uh, got a pretty good raise on that. And the good thing is, um, it didn’t make our students happier and, uh, have stronger adminis admission data to attract prospective, uh, students applicants. Also our, um, nearby like close program, they were able, the student body were able to kinda refer to what we do, we did and, uh, start some conversation with their department. So yeah, I, I think it was something that, um, really amplify, um, what I think that time was important. Just voice out, um, what we need as grad student, um, and, um, extra, uh, hardship for international student that time.

Emily (22:44): Yes, I love that example so much and I’m, I’m so glad to hear this story as well as we’ve heard a couple other similar ones on the podcast about departmental level negotiation.

Commercial

Emily (22:56): Emily here for a brief interlude! I’m hard at work behind the scenes updating my suite of tax return preparation workshops for tax year 2024. These educational workshops explain how to identify, calculate, and report your higher education-related income and expenses on your federal tax return. For the 2024 tax season starting in January 2025, I’m offering live and pre-recorded workshops for US citizen/resident graduate students and postdocs and non-resident graduate students and postdocs. Would you please reach out to your graduate school, graduate student government, postdoc office, international house, fellowship coordinator, etc. to request that they host one or more of these workshops for you and your peers? I’d love to receive a warm introduction to a potential sponsor this fall so we can hit the ground running in January serving those early bird filers. You can find more information about hosting these workshops at P F f o r P h D s dot com slash tax dash workshops. Please pass that page on to the potential sponsor. Now back to our interview.

Low Stipends and High Costs Impact International Students Most

Emily (24:13): So you just mentioned, especially if you’re international students, so like the way I view this, you can tell me if you agree, um, is that in that period of high inflation or I’d really any time when stipends are not keeping up with basic cost of living expenses, um, the international students are the ones who suffer the most because domestic students have sort of financial pressure release options, which are, you can get a side hustle. I mean, they, your department may not like it, but it’s legal. You can do it. Um, and or you can take out student loans. And these are just not available at least to the, you know, 90% are not available to international students. And so it’s so much more important for the international student community together with domestic students to do the type of negotiation that you just outlined, which is, let’s just raise the stipends. Can we just get these stipends up to a decent level? Do you, do you agree or like, what are your further thoughts on that?

Wen (25:06): Yeah, I, I totally, um, agree on that as well. We’re, as international students, we are restricted to apply for certain funding and look for a, a, a second shift and make extra money. Um, but I, I will say that, um, getting to know the resources out there is still, um, skill to, uh, develop, even though there are, are limited. Um, for example, that’s something related to my stories about professional development and career planning as well. Um, there are, you know, all kinds of event provide free lunch, pizza, <laugh> free dinner. So I, I try to, um, take advantage of that. Um, and it’s also a form of connecting to other students getting to know what’s going on. Um, yeah, I think be resourceful even we are restricted is, um, I think one day it, it just extra skills we develop make out of the, the, the situation. Um, yeah, so I was involved, uh, in a professional development, um, student organization called <inaudible> on campus. Um, so this is an organization help grad students, postdocs to practice, um, um, commercialization of technology. So it’s really something I really want to develop. And, um, in this, uh, organization, they hosted event to, um, work on project and they gave micro grant, which is a grant. Um, I will buy linking per, uh, subscription and take professional headshot and only use for professional development events. Um, so yeah, that covered a lot of my, um, let’s say unnecessary spending, um, that I wouldn’t spend, I wouldn’t have the capacity to spend out on my personal account, but it’s important for me in the future. Um, so I think take advantage of the resources, uh, like that will, um, be very helpful.

Financial Goals During Grad School and Beyond

Emily (27:53): Yes. Thank you so much for adding those examples. For sure. I totally agree. Um, okay, so your stipend is increasing <laugh>, it’s, it’s at least catching up to, you know, the, the damage done by inflation. Um, can you tell us about some of the financial goals that you pursued during graduate school or since graduate school?

Wen (28:10): Yeah. Um, I wouldn’t say I have a specific number to target, but I know that I want to save as much as I can and start, start investing. Um, so it’s more like explore- uh, -ation of what’s going on in the market and where the, uh, where the places and learn about all the ETF, um, and the fire movement and write books about, uh, investing. So set up, um, investing, um, with, with the, the stipend I can save, um, I, I try to, because my pay is biweekly, so I set up other automatic transfer to my saving and, um, brokerage account biweekly. Um, just couple, just not couple hundred. I think like it’s, it’s probably 10% on my paycheck each time it comes through. And I have a individual investment account and a Roth IRA in investment account. Um, and yeah, I, and mostly just looking to their, uh, VOO S-P-F, um, their ETFs, um, trying to not, uh, yeah, I don’t do like day trading and all that. Just put money in there in, uh, in there.

Emily (29:52): Sounds perfect to me. That’s the type of investing that I teach and that I, um, subscribe to. Um, what brokerage firm or firms do you mind me asking? Um, did you open your Roth IRA with or, and or your taxable brokerage account?

Wen (30:05): So, yeah, <laugh>, um, first I think, uh, firstly I use Robinhood for my individual investment account because I think it was, uh, a fun app, uh, for me to get started and to get motivated. And I, I really enjoy, simplify their investing, um, using that app. So later I got to know more about, um, the long-term investing opened. I opened uh the Fidelity, um, uh, Roth IRA and the individual accounts I transferred my, uh, the investment from Robinhood to, uh, fidelity. Um, and one thing I think about learning out this is just finding the community of people comfortable in sharing that and learning that, and listen to your podcast. Um, really at beginning of my PhD to realize, okay, I need to, uh, pay attention to my PhD stipend. I think Sam, someone shared at a grad school workshop thing, so I clicked and I subscribe, and later I did follow some podcast, her 100, uh, her first 100k writes books about like the most important thing about investing. Um, and I think I started action, just got to know people have a similar background like me. Um, there is a website called Women Overseas built by, um, Chinese, um, Chinese Women Study abroad, work abroad. And that’s really the community. I learned a lot of these things from, they will share from life to work career and, and investment. And I, yeah, I think I learned a lot from them, from their experience. A lot of the members, um, in that Open Formula firm room, they started working for years. So it was really good experience to to set up myself to that path too.

Emily (32:26): I love it. I love that, you know, my podcast became a springboard for you to investigate, you know, the subject further, and that you found a community that was like exactly, exactly what you needed. And, ugh, that just makes me so happy. I’m so pleased. There’s such a huge amount of resources, financial education related areas now, um, that kind of, everybody can find their community that reflects, you know, who they wanna see and who they wanna be. Like, and I, I get to be one of the voices in the PhD space, but then, you know, everybody has multiple aspects of their identity, so like we can expand beyond that. And oh, I just, I love that so much. Um, is there anything else you wanna add about the financial goals you’ve, uh, pursued during graduate school, aside from the investing ones?

Wen (33:08): Um, yeah, I, I think I want to circle back, um, the negotiation again. Um, I want to, uh, emphasize, um, negotiation. It’s not only like what the stipend could be like, I think every grad student could ask more from their pi, um, you know, sponsor me to this conference. This is a good workshop I want to do, and this is a career event I want to attend, and can you sponsor me? Can you cover that for me? Um, and there’s everything there, there’s a lot of things online, talk about negotiation, everything. So I, I do want to share that. Um, when I purchased my second car, um, I watched a bunch of videos on YouTube, how to talk to the dealership, and just, um, trying to negotiate the best option for myself. Um, it was a quite funny, like real life big purchase that I went to the dealership, uh, and the dealer just said, I’m a innocent, uh, foreigner. <laugh> doesn’t, didn’t know what’s going on. And, um, so I think I, um, really take advantage of negotiation and know that what’s the best for me and, um, argue that, um, those, those terms and, um, yeah, I, I learned a lot of from practicing, uh, negotiation and, um, advocate for myself.

Current Postdoc Position in Tech Transfer

Emily (35:00): Love it. And that’s a skill you’re gonna be using literally throughout the rest of your life. So it’s fantastic too, um, master that early. And especially I know that the cultures around negotiation are very different. So especially to understand how to do that in an American context, it’ll be received <laugh> by other people in, in this, uh, in this culture. Um, that’s awesome. Okay. Let’s talk about then your current postdoc position and how you got to it and why you chose to, you know, make this pivot to tech transfer. And you already mentioned earlier that, you know, there was this specific professional development group that you were involved with. So maybe you could start back there with like, the preparation and then, you know, like your choice in like, getting your new position. 

Wen (35:38): Yeah. So I would say like, compared to financial goal I had at, um, beginning of my PhD, I’m more really like clear about my career goal. Um, and I took PhD as one of a professional, um, period, um, in on my resume. So I don’t think I, I don’t think I’m a student, uh, in school. I think it as a, a career I’m at right now. So I know that I am not the best person, um, best on myself to do bench science when I went in, uh, grad, uh, the PhD program here and I want to connecting people and I want to bridge the science and market, um, gap. So I know that my goal long, uh, like four years later, my PhD after PhD, I want to do that kind of thing. Um, but I learned lot doing science and talk about science. And so I think I have that goal just over my head and took other opportunities, uh, in the professional development organization. And I took extracurricular, uh, courses, um, I P, uh, that taught by another, um, economic department. And then that lead me to an internship on campus at our tech transfer office. Um, and I learned, uh, really through their internship that one year time and, and got and just confirm my interest in tech transfer space. I really enjoyed talk to scientists and, uh, about their innovation and on different, um, topics of projects and then connecting that idea to their, the, the market, what could we amplify the value of research, um, and, and license this patent. So I think like networking, uh, in, in that space and outside our university and connecting to other tech transfer office, um, just, it was a great, I talked to a lot of PhD working in that space, really see myself can make that transition. Um, so that’s what I did. I applied and talked to people and eventually landed this tech transfer, um, role. And I think it’s very, um, a good fit for me to, uh, really combine my interest in the science background.

Emily (38:34): Yeah. I love how you emphasized like we’re not in a PhD program simply to finish the PhD and do research. I mean, if that is exactly in your professional goals and you wanna just keep doing research in that area and you’re gonna stay in academia or you’re gonna pivot to something really, really close. Actually, my husband followed that path. Like his research is very close to what he did during graduate school research wise. So like, it was a good preparation, but if you wanna make any kind of a little sidestep from that, like you need to start layering on those experiences and the, that networking and, and exploration. ’cause of course you don’t necessarily know right away what your goal is going to be your career goal. So it’s, it’s about figuring things out and exploring the space. And I love that you got to do an internship. Did you say it was for a year with the tech transfer office? And so was that like a part-time thing, um, that you were doing alongside your, your normal PhD type work?

Wen (39:24): Yes. And it’s on campus. Um, it’s very flexible, uh, terms of hours with my PhD, uh, advisor’s requirements <laugh>.

Emily (39:34): So it was something you had to again, negotiate with your advisor, right? To take a little bit of time to do that.

Wen (39:39): Mm-Hmm, <affirmative>. Mm-Hmm. <affirmative>,

Emily (39:41): Yeah. Awesome, using that skill again. Um, this is so great. Is there anything else you want to tell us about that, about that career step,

Wen (39:49): Um, about transitioning to a new role or job hunting overall? I think it’s quite, um, a self discovery <laugh>, um, time for, uh, us as PhDs as we are going to this tunnel of focusing things on our field. And then suddenly we have to, I think, set up us to be very open-minded about the careers we’re, we’re, uh, we’re going to explore and I think it’s sometime we got break ourselves a little bit. Um, and it’s okay if we don’t talk in, in our research terms and it’s okay to just talk very, um, I don’t know, simple words. We don’t use scientific words. And, um, and I I think it there, the PhD is, is a, is a journey and that doesn’t represent us going to move forward, um, like connecting with others.

Best Financial Advice for Another Early-Career PhD

Emily (41:06): This is so great. Well, Wen, thank you so much for volunteering to come on, on the podcast to do this interview. And, uh, we’ve gotten so many great stories out of this. I’m really glad that the listeners got to hear, um, about your journey. Um, would you please tell us what is your best financial advice for another early career PhD? And that could be something that we’ve touched on in the interview already, or it could be something completely new.

Wen (41:31): Mm-Hmm. <affirmative>. Yeah. I think just to be able find yourself being financially independent in charge of your finance, um, is extremely empowering. And I have situations about myself going through, uh, co-living with someone and then we broke up and move out. I think all those, um, life-changing decisions need, um, ourselves have their confidence in our financials and now feel obligated to, um, make decisions around others. Especially I think as international students. I, I think the last advice is we prepare to save money for the applying for, uh, work visas EAD card. And if you want to get it on time, um, use a premium, um, service, which adds $2,000 <laugh>, um, to the application. So, um, don’t be shocked how expensive those things can take and, um, make, um, make informed decisions on that. Yeah,

Emily (42:54): I’m, I’m sure you’ve heard this since you’ve been consuming like other financial material, but I just love um, the sort of, uh, mantra or phrase money gives you options. So you’re just definitely able to, um, you know, so fully realize, you know, your potential and get yourself out of situations you don’t wanna be in and you know, pay for that premium service when you need it. Whatever needs to happen if you have the savings built up already. And sometimes we don’t know when we start saving what exactly we’re gonna be using that money for, but it’s just there as like a backstop and insurance policy just to give you, um, options in the future. So I’m really glad that you emphasize that, especially for international students. Mm-Hmm. <affirmative>. ’cause I totally agree that, um, you just, you need a, a bigger pool of money to draw from for it because a lot of expenses that international students experience are pretty large. Um, irregular expenses as I often talk about, about, um, on the podcast, like traveling home, like visa stuff and all that. So thank you again so much for volunteering to come on. This has really been a pleasure to talk with you.

Wen (43:52): Thank you so much, Emily. Thank you for, um, doing this and I, um, really benefit from this podcast and I, I know you will continue to serve a lot of PhD students.

Outtro

Emily (44:17): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

This Grad Student Channeled Her Financial Exuberance into Teaching and Coaching Her Peers (Part 1)

October 21, 2024 by Jill Hoffman Leave a Comment

In this episode, Emily interviews Elle Rathbun, a 5th-year PhD candidate at UCLA. Elle shares her financial origin story of growing up in a low-income family, becoming a QuestBridge scholar during undergrad, and working for two years before matriculating at UCLA. During those years, Elle developed her financial acuity and prepared financially for grad school, including investing for retirement and saving up cash. This energy carried forward into grad school, where within her department Elle started a group to chat about money and created resources to help her peers navigate the financial aspects of their fellowship and UCLA’s bureaucracy. Tune in to the next episode for part two of the conversation!

Links mentioned in the Episode

  • PF for PhDs 15 Minute Introductory Calls
  • Host a PF for PhDs Tax Seminar at Your Institution
  • PF for PhDs Subscribe to Mailing List 
  • PF for PhDs Podcast Hub
This Grad Student Channeled Her Financial Exuberance into Teaching and Coaching Her Peers

Teaser

Elle (00:00): I think a lot of undergraduates and techs and PhD students are like, oh, I’m not making money yet, um, to any real degree. Like, I’ll just wait. Um, and I think that’s one of the worst things you can do is to wait. Um, and I think even if you have five extra dollars to put into a Roth IRA, I think that is worth doing.

Introduction

Emily (00:25): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (00:54): This is Season 19, Episode 5, and today my guest is Elle Rathbun, a 5th-year PhD candidate at UCLA. Elle shares her financial origin story of growing up in a low-income family, becoming a QuestBridge scholar during undergrad, and working for two years before matriculating at UCLA. During those years, Elle developed her financial acuity and prepared financially for grad school, including investing for retirement and saving up cash. This energy carried forward into grad school, where within her department Elle started a group to chat about money and created resources to help her peers navigate the financial aspects of their fellowship and UCLA’s bureaucracy. Tune in to the next episode for part two of the conversation!

Emily (01:41): This fall, I’m opening my calendar for 15-minute introductory calls! This is a chance for you and me to meet one-on-one. I want to hear your current financial questions and challenges. If I can provide some quick value by answering a question or pointing you to a resource I absolutely will. These calls are a way for me to keep a pulse on what’s going on financially in our community so that I can address whatever comes up through my seminars for universities and the free content I create. I would love to meet you, so please sign up today at PFforPhDs.com/intro/. You can find the show notes for this episode at PFforPhDs.com/s19e5/. Without further ado, here’s part 1 of my interview with Elle Rathbun.

Will You Please Introduce Yourself Further?

Emily (02:40): I am delighted to have joining me on the podcast today, Elle Rathbun, who is a, an entering fifth year PhD candidate at UCLA and Elle and I actually met last spring when I was giving an in-person seminar at UCLA, and she was there because she was part of the financial wellness office, so she was there with a booth so the students in attendance could get some extra resources after my presentation was done. And she came up to me after the presentation introduced herself, which I love it when people do that. So podcast listeners, if you ever have the opportunity, please, please introduce yourself. We had an amazing conversation right then and there, and I immediately invited her on the podcast. So we’re gonna have a really good time today learning about Elle’s story, how she came to work for the financial wellness office, everything she’s done in her personal finances, in between. So Elle, I’m absolutely delighted to have you on the podcast today, and would you please introduce yourself a little bit further for the listeners?

Elle (03:30): Absolutely. Thank you so much, Emily. I am so excited to be here. First of all, I am a long time listener, even before I started graduate school. This is really something that, um, this podcast kicked off my, my interest in personal finance as a PhD student. Um, and so yes, I was, uh, raised in Durango, Colorado, so a very small rural mountain town. Um, and my parents always sort of, um, struggled to keep things afloat in terms of, in terms of finances. Um, and so I was able to get the QuestBridge Match scholarship to the University of Chicago for my undergraduate degree. So that meant that I got a full ride, uh, uh, to to University of Chicago where I majored in neuroscience and biological sciences. Um, and I was really, really grateful for, for that opportunity. Then I stayed at the university, uh, for two years in a biophysics lab. So I was a tech there. Um, and that sort of is really when, uh, things started coming together for me in terms of what I wanted to do academically, but also when it came to personal finances. And, um, and then I ended up at UCLA’s graduate program in neuroscience. Um, and that’s where I am now.

QuestBridge

Emily (04:39): Okay, fantastic. Now I wanna talk more about your, um, interest in personal finance, your passion for the subject. And you mentioned this QuestBridge program, so maybe we should start there. Can you tell us more about that program?

Elle (04:51): Absolutely. I’m happy to. So QuestBridge is a phenomenal nationwide program that basically helps match high achieving low income students with some phenomenal, uh, undergraduate universities. So I think at the time I applied, I, we had 35 partner colleges and now we’re way above that. Um, and essentially what it is, is it’s an application on its own. You apply as a high school senior before in the fall, um, and then the people at QuestBridge look through those applications, figure out who qualifies, uh, both financially and academically, and then helps match those students to a partner college. And it’s a phenomenal program. You rank which colleges you would want to go to, and the deal is whichever one you rank the highest that accepts you, you have to go there, but you get a full ride. And so for me, that also included a stipend for housing and included money for books and for travel, um, and for food and board. And so it was just, it was a phenomenal experience. Um, and it allows me to not have the burden of student loans, which I have come to learn more about. Um, and it’s, there are thou- now thousands of, of QuestBridge alumni, um, and I’m continuing to work with them, uh, in terms of guide, sort of guiding Questees for, um, preparing for graduate school, whether that’s law school or medical school or PhD programs, um, and sort of things that people from, especially from low income backgrounds, don’t necessarily know or not are not, uh, privy to, especially since so many of them are children of immigrants, first generation students, college students, um, et cetera.

Emily (06:27): What an incredible program. I had no idea that it was both, you know, the, the tuition and fees and everything and all that plus the stipend and your living expenses. I mean, it’s a very analogous situation to, um, being in a funded graduate program, really. And so that’s a very interesting kind of like, um, twist on this in that you had some experience prior to starting graduate school with managing that kind of budget, right? The stipend kind of budget. Um, it’s just incredible that you had that opportunity and that you’re giving back now to like, you know, help shepherd, you know, other people interested in the path that you’ve taken, uh, along that same route. Okay, awesome. So college, no student loan debt. Um, great. And talk to us a little bit about that, um, interim time period before you started graduate school and like what was going on with your finances, and it sounds like you started listening to this podcast, maybe looking at other resources too during that time. Tell us that story.

Financial Journey From Childhood To Grad School

Elle (07:12): Um, I started working when I was very young. I started, uh, selling rocks by the train, uh, in Silverton, Colorado. So if you’ve ever visited Silverton, um, or took the drain from Durango to Silverton and saw kids selling rocks, I used to be one of those kids. Um, and so it was very sort of my personal finance story started very young. I I always thought about money, not necessarily always with a negative connotation or a positive connotation. It was just a reality. Um, and I knew how many rocks I had to sell in order to buy the grilled cheese sandwich that I needed, that I wanted at the end of the day. And so, um, when I entered college, I had some savings from the rocks, from working in multiple restaurants, um, in my parents’ shop, et cetera. Um, and so you’re Yeah, exactly right. That was sort of my emergency fund going into undergrad where a lot of things were paid for, but I had some flexibility and I knew I had to be very careful with that stipend. So coming out of undergrad, I was able to, I had about, I was, my net worth was about the same as going into undergrad. Um, and then I realized, okay, I need to start saving money. One of my reasons for staying in Chicago, um, for those two years before my PhD was because I knew the lay of the land. I knew that it was affordable. I knew I could get cheaper housing here than I could in LA for instance, or New York or Boston. And so, but I knew that in order to be stable and to feel, uh, like I had flexibility, um, and to be able to help my family if they needed it, I needed to really get my stuff together, um, and, and understand where I was, where I wanted to go, and how I could get there. Um, especially before starting, uh, graduate school. And so I started listening to this podcast. Um, I think this is the main podcast that I’ve just continued listening to. Um, and I think I fangirled out when I met you <laugh>, um, just because I’ve listened to like almost every episode. Um, and, uh, but I also start, I listened a little bit to Dave Ramsey, uh, which I think is fine for people with credit card debt, but that wasn’t necessarily my case. Um, the Dough Roller Money podcast Money Girl, um, I read Beth Kobliner, uh, Get a Financial Life, um, in your twenties and thirties, um, and then sort of just hodgepodged a lot of podcasts, resources, pamphlets, booklets, webinars, um, and, and try to figure out, okay, what do I need to prioritize? What do I need to do? And when can I apply to graduate school? Because applying to graduate school isn’t necessarily cheap. Um, and so, so that was sort of what, what came to be over those, over those two years.

Emily (09:48): So it sounds like you, um, knew that you were probably headed to graduate school at the, even coming out of undergrad, right? But you wanted to take some time to get your feet under you, figure out where you wanna do that. Exactly. I have the same story for my, you know, between undergrad and grad school kind of time period. Um, were you intentionally then working on like building up savings to have maybe a more robust emergency fund? Were you working on investing because maybe you knew that would be more difficult, you know, once you started graduate school? Like what, what sort of goals did you set during that time period?

Elle (10:16): At first, I was just like, okay, just figure out where I am, like, figure out how many credit cards I have, figure out how much I have in savings, figure out what those savings are for, um, how much I feel a need for a comfortable emergency fund. Um, so the first goal was just to understand where I was. And then the second goal was me looking at my benefits and being like, what is a 403B? I have never heard of that. I’ve heard of a 401k. Um, and that’s sort of it. And so it became pretty apparent that I needed to educate myself further because I knew, okay, if this is taking a good sum of my paycheck, I wanna know what that’s going into. Um, and also in my junior year, senior year, one of my, uh, older friends who worked at the university told me, just open a Roth IRA, just trust me. You won’t regret it, just open it, throw a couple dollars in, um, and, and then educate yourself on it. And so I had done that as well. And, but I had, I had put it in there, um, but didn’t invest it, uh, just was sort of sitting in that, in that cash account. And so that was my, my second goal. So after I understood where I sort of was coming from and what I had, um, I wanted to learn more about invest investing. Um, and so a lot of my youth was, uh, I was told, don’t invest. That’s fake money. Like the stock market isn’t real money. Um, and so I sort of had to reeducate myself, um, in, uh, sort of the risks, but also the benefits of investing in the stock market and the bond market, um, and what a retirement account was, why it existed, um, advantages of, of those and, and tax laws and things like that. And so, um, so that was my next step was to just sort of understand and start investing.

Resources For Learning How To Invest

Emily (11:58): You’ve already listed a few different resources, like podcasts that you listen to. Was there anything that you found, well, is there anything you would recommend to the listeners who are at a similar stage and wanna learn what investing is and how to do it and what a Roth IRA is and what a 403B is and all of that? Any books or, or any resource that you enjoyed?

Elle (12:15): Yeah, I think that Get a Financial Life book was a game changer for me in reading that. Um, and also this podcast and Money Girl, I think, um, oh, I forget the host’s name currently, but, um, the, the host does a phenomenal job breaking down everything. Um, and also, uh, if you can by Bill Bernstein, um, just sort of it, because that especially takes, really takes into account like not everyone can do this, um, but a lot of people can do at least a little bit. And that’s where to start. It’s so important to start building that habit. So once you can contribute more to a retirement account, you already know what that is and how to do it. Um, and also just your local hr,

Emily (12:55): I’m really glad to hear these resources, some of which are new to me, like the Bill Bernstein book that you just mentioned. Um, I’m gonna check those out because I found that a lot of the maybe most popular personal finance, or maybe now it’s financial independence material is much more geared for high income earners who have a different set of financial things to deal with than lower income earners. Um, I’m not at all surprised that you mentioned Dave Ramsey because even though his philosophy is maybe at odds with mine or other people’s at certain points, he does try to speak to people who are lower income at times. And so yeah, I’m just, I’m really glad to hear these resources and, and yeah, to have you speak to this because it’s a different set of things that you need to handle when you’re not quite in graduate school yet or, or in graduate school than you would, you know, later in your career.

Financial Goals Before Applying to Grad School

Elle (13:42): Yeah, absolutely. And I think, um, that, that’s something to, to keep in mind as well for, for listeners, for people who I coached, which we’ll get into later. Um, but in terms of just building the habit, um, right, I think a lot of undergraduates and techs and PhD students are like, oh, I’m not making money yet, um, to any real degree, like, I’ll just wait. Um, and I think that’s one of the worst things you can do is to wait. Um, and I think even if you have five extra dollars to put into a Roth IRA, I think that is worth doing. Um, just to, to figure out what it is. I had, I think I had $500 sitting, sitting in my Roth IRA for like two years before I figured out what that actually was. Um, and, and then as soon as I realized, oh, okay, I need to invest this, um, that sort of just took off flying. And so that was, that then became my main goal because I didn’t know when I was going to start a PhD program. I didn’t even know, even know what PhD program I was going to apply to. Um, I was deciding between, uh, neuroscience or biological sciences or even biochemistry. Um, and so while figuring out all my academic stuff, um, I decided, okay, I will apply to graduate school when I am comfortable, uh, with the idea of maxing out my Roth IRA for five years. Um, and so I didn’t necessarily need to have all of that money in cash right away, but I needed to have a plan to max out my Roth IRA for five years. Um, and that’s, that was sort of my, my threshold for, for applying to graduate school.

Emily (15:13): Hmm. That’s a really interesting goal. I mean, I definitely see the merits of it, of course. Um, now I’m wondering when you were applying to graduate school, how much you had the stipend and the cost of living, um, in mind since it had been such a focus for you over the past couple of years?

Elle (15:26): Very much in mind, um, the first, the first job was to get into graduate school. And so, um, so I sort of, I, when I applied, I didn’t consider it. I think I had looked at what graduate housing options were in all of those areas, but, um, I knew I didn’t necessarily have to go, uh, even if I applied. And then once it came time to decide, um, I was basically, it, it, it got narrowed down eventually to just two options. One was UCLA, which is, um, in a very high cost of living area, um, but it would be new to me. And they offered me basically a recruitment, um, scholarship, which was a large enough sum of money to make me feel comfortable matriculating in this program. But the other option was to stay at UChicago. Um, and there I had cheap slash uh, cheap housing essentially. Um, I was living in a house where I would be taking care of the dogs and I didn’t necessarily have to pay rent. Um, and so, but I, so that would mean that I could essentially keep the majority of my stipend and continue saving. And so in that regard, I decided that UCLA was the better career move, um, and even the overall better financial move, I could make more connections. I would have more opportunities, and I would be studying precisely what I wanted to study. Whereas UChicago, which just wasn’t as good of an academic fit.

Emily (16:47): I think that’s the ideal position to be in when you are, um, applying to graduate school and you are keeping an eye on the personal finance side of things is just the decision is not gonna be completely determined by the finances, but you least need to set some kind of bar of, like, anything above this bar I’m gonna be able to say yes to, and I can decide based on the academics or whatever other factors are important to you. But you just know that anything below that bar is, is really just not a viable option. And a lot of times you don’t really, even though it’s great to check out what the stipends are, what the, you know, what the base stipends are, what the cost of living is, et cetera, in advance, a lot of times you don’t know until you get into admission season exactly what they’re going to offer you. Because like you said, with UCLA, they could come up with an extra scholarship or fellowship that you weren’t aware that they were going to offer you. And that can completely change the calculus of the situation.

Elle (17:32): Oh, absolutely. I had, I had my mock budgets of whether I stayed or at U Chicago, whether I continued living in that house or whether I came to UCLA and lived in graduate housing versus with, without roommates. I had all the mock budgets just because, um, it’s, it’s a commitment. It’s like a five plus year commitment, um, for, especially for the biological sciences. Um, and so I knew that like, okay, this is a financial decision as much as it is a educational and, uh, career decision.

Current Housing Situation

Emily (18:03): And I’m really glad to hear that you had those different like scenarios modeled out too, because sometimes, okay, so I don’t know. So are you living in graduate housing now?

Elle (18:12): No, I, I started, uh, because I matriculated in 2020 and then, um, and so I lived my first year here in graduate housing and then I moved to a, a private rental.

Emily (18:23): Okay. Was that the plan all along or was there a possibility that you could have stayed in graduate housing?

Elle (18:28): UCLA offers three years of graduate housing. Um, and then after that it’s really hard to stay in it unless you move to family housing. And so, um, I think my plan was always like, okay, start in, uh, graduate housing, um, and then maybe go live with friends, sort of get a lay of the land <laugh> after Covid is over and, and then, um, move somewhere cheaper because graduate housing is in West la. Um, but that’s not necessarily where I needed to stay. So currently I live in Studio City, in the Valley.

Current Financial Goals

Emily (18:56): Okay. So we’ve talked about kind of the lead up, you know, your decision to go to UCLA now that you’ve been in graduate school for four years. Um, what kinds of goals have you been working on? You mentioned the Roth IRA earlier. Have you been able to do that? Anything else? Just let us know how your finances have been going

Elle (19:11): In graduate school. Yes, I’ve been keeping up with the, the Roth IRA, I’ve been learning more about different retirement, um, options. Um, and I’ve sort of stuck with the same strategy, just index funds, putting extra savings into, uh, different account types and, um, keeping up with my budget, I budget with YNAB or you need a budget, which is a phenomenal budgeting service. Um, and just sort of making sure that my finances and how I spend my money align with my goals and my priorities. So that absolutely includes, uh, investing for retirement, but also, um, I am also investing in, uh, a taxable account just for an eventual down payment on a home. And, um, making sure to spend, spend, uh, enough money on, on funds, so things like travel and seeing different sites in la. Um, and then I also, on the non-money side of things, um, sort of just created a lot of resources for myself and for others where I could sort of track my net worth because that is very motivating to me just to be able to see progress over time. Um, but also getting things in order. Like I, uh, I signed up for life insurance term life insurance, uh, when I was a first year graduate student, just because I am sort of my family’s overall retirement plan. And so if anything were to happen to me, I would want to make sure that they, um, are at least somewhat stable financially. And so, um, so sort of putting that into place, getting a feel for, um, what’s su- what is sustainable in terms of credit cards. I’m big on credit card bonuses and rewards. Um, and so that’s something else that I’ve sort of made sure that I was good to go, um, and, and to sign up for more credit cards, um, while still maintaining a good, uh, credit score and, but being, being able to take advantage of, of that, that as well.

Emily (21:10): So exciting. I love all of those. Um, I love that there’s a variety of goals in different areas, right? It’s not just about increasing the net worth, it’s also about increasing your own financial, um, education you could say, or just your, um, acuity and also like some budgeting stuff. I love that you mentioned Y-, uh, YNAB you need a budget and you know, the credit card stuff. I’m curious, um, about how your spending is overall. ’cause you mentioned that you, you wanna spend on fun things on discretionary items. You may have heard me mention on the podcast before, like the balanced money formula. It’s probably something you’re familiar with. Um, I’m curious how your overall budget conforms or doesn’t conform with the balanced money formula, because it can be so challenging to achieve that on a grad student stipend in a high cost of living area. So go ahead and have you made that comparison before?

Current Budgeting Process

Elle (22:00): Not explicitly. So I think the sort of, the way I approach things, especially in YNAB is the, I still stick with the whole pay yourself first thing. So, um, I, um, have a specific set amount that I put aside for the Roth IRA that’s just determined by the federal maximum, um, every month. And then, and I always, I save up throughout the year and then deposit it right at the beginning of the year. So I try to get it in there as, as soon as possible just so I can forget about it, um, and not have to like, keep such an eye on it or figure out when I want to, to invest it or not. And so, so that’s my strategy for that. And then I also have specific amounts for, um, a home down payment and a car down payment. Those aren’t necessarily massive funds, but they are goals of mine. And so I just make sure that every month I put in, um, that set amount. And um, and then after that I figure out, okay, like how, how am I doing, uh, and where are my finances? And then I go ahead and distribute throughout the rest of the categories, starting with, with needs. So of course, like rent, utilities, groceries, uh, gas, those are basically my big ones. Um, and I, I have a monthly goal of how much to budget, so not necessarily how much to spend, um, but how much do I wanna allocate to each category? Um, and usually I don’t really know how much I spend in a month because that varies all the time. And also if I go get car maintenance and it costs $1,500, that kind of offsets my monthly spending, but it has almost no impact on my monthly budgeting, um, because I save for that, I know I eventually need car maintenance. I know I’ve eventually want to buy an expensive plane ticket. And so, um, so my, I don’t focus too much on the spending. Um, I just make sure that I spend whatever I have available in my budget and if I don’t, I sort of just reallocate, um, when I’ve called it rolling with the punches. Um, and so, um, and then after I reach sort of that amount that I am comfortable with budgeting, if I have any leftover, then I just start putting it in next month’s categories. Um, and then if I get more than two months out ahead, um, then I just, everything else just goes straight to, um, my home down payment fund.

Emily (24:15): So I’m not a YNAB user, but I’m a longtime wine nab admirer. Does the software en enable you and, and sort of teach you how to do all the things you just mentioned? And I’m specifically wondering if the software makes any suggestions on where you house these different pools of money? Like does the software think it’s okay to all stay in your checking account? Does the software want you to have like a single separate savings account? Like sort of mechanically? How do you communicate between the software and like how you structure your accounts?

Elle (24:42): Uh, great question. Um, I love YNAB because it is so flexible, it doesn’t necessarily give information as to whether it’s something should be checking or savings, um, or a cd. Um, that’s sort of for you to completely decide. Um, and so, and then I just write it in the account name. So I have like an ally cd and that’s where I house my emergency fund because if I need, if in case of emergency, um, break glass, I don’t really care about the interest that I might lose, um, if it’s like fairly short term. Um, but they do separate things into budgeting versus tracking accounts. So basically anything that looks that is within budgeting is for spending. And if you move something from budgeting to a tracking account, it looks, it comes up in your spending reports. So I love this feature because it allows me to make saving look like spending. So if I pull up my spending reports, um, and I don’t filter out anything, it, I see exactly how much I put aside for my home down payment for my car down payment, um, and for retirement, and I can always filter those out to get my actual spending. Um, but it sort of removes it mentally and within the software of, okay, <laugh> no touching, this is for these goals only. Um, of course in reality, if I really needed those funds, I can, I can pull from them, but I also would have to go through the hassle of adding them back into my budget where it would look like income. And so, um, in terms of, of checking and savings, it doesn’t really matter. So I think you’ve talked about ally buckets before, um, and I love those. And so for me, my ally buckets are listed as different accounts within YNAB even though in reality they are one actual account with one account number one routing number. Um, and so there’s a huge amount of flexibility in that. Um, and YNAB has like several, like four main rules, um, that, uh, really just help you figure out how to approach things. Um, and yeah, it’s a great software. Highly recommend it

Emily (26:40): Since you’re highly recommending it. Um, I, if I remember correctly, it’s free for one year for students, but then after that you pay for it. Um, can you tell people where to find this, how to sign up <laugh>?

Elle (26:53): Absolutely. Um, and so this is actually one of the many resources in, uh, a folder that I share with, um, UCLA students and my friends. Um, but yes, you can actually get 13 months for free. So YNAB offers all users a 34 day trial. So what I recommend to, especially students, unless you’re about to graduate, is sign up for the 34 day trial, then you just email them saying, hi, like, I did a 34 day trial, um, I’m still really interested, but I am a student, um, and I would like to sign up or I would like to get the year, uh, free that you offer students. Um, and, and then they say, no problem. They just need a proof of enrollment or acceptance. So I started mine even the summer before I matriculated, but at that point I had already had on my paperwork from U-C-U-C-L-A, so they accept that as well. So if you’re like a tech or about to reenter school, you can still, um, get away with that as long as you can have proof of being a student or about to be a student.

Emily (27:50): Oh, perfect. Thank you so much for the detail on that. Sometimes people really need like a what exactly when exactly,

Commercial

Emily (27:58): Emily here for a brief interlude! I’m hard at work behind the scenes updating my suite of tax return preparation workshops for tax year 2024. These educational workshops explain how to identify, calculate, and report your higher education-related income and expenses on your federal tax return. For the 2024 tax season starting in January 2025, I’m offering live and pre-recorded workshops for US citizen/resident graduate students and postdocs and non-resident graduate students and postdocs. Would you please reach out to your graduate school, graduate student government, postdoc office, international house, fellowship coordinator, etc. to request that they host one or more of these workshops for you and your peers? I’d love to receive a warm introduction to a potential sponsor this fall so we can hit the ground running in January serving those early bird filers. You can find more information about hosting these workshops at P F f o r P h D s dot com slash tax dash workshops. Please pass that page on to the potential sponsor. Now back to our interview.

Talking to Peers About Money

Emily (29:15): You obviously have, you know, a great deal of passion, a great deal of knowledge about the subject area. You’re working on your own finances. I understand that you then started talking to your peers and started having more sort of interpersonal interactions around money. So can you tell us how that got started and, and what you were talking about with your peers?

Elle (29:33): Absolutely. So I, as soon as I started educating myself, um, about finances and personal finances and sort of really building up that confidence, um, and then starting graduate school, um, I wouldn’t really shut up about money. And so I would have, um, I would host these discussions just among my cohort about, um, finances. And everyone was coming in from different places. You know, some people were coming in straight through undergrad, um, and then some were married, some had been already been in the workforce for the better part of a decade. Um, and so it was really nice just to be able to see, um, how’s everyone doing? Um, right, how are we figuring out stipend housing? Um, how are we saving for retirement? Um, is anyone doing any side hustles gig work? Um, TA ships and, and sort of just opening the floor for those conversations. Um, and so that was really useful. And we also have to take a presentation class, um, as a first year and, but we can pick anything. So, um, I talked about finances, um, and, uh, and I think that really made me realize how much I loved educating people and just having a discussion and being educated. Um, I don’t necessarily, it’s not a one-way conversation most of the time. I learn a lot from everyone I talk with. Um, and so before graduate school, I, I started realizing this about myself and I was familiar that, um, or I knew that UCLA has a financial wellness program. So actually before I started graduate school, um, I reached out to financial wellness and talked with the, uh, then and still current director, um, Sara Potter-Gittelson. And she just sort of reaffirmed what I was doing. She said, she told me my options in graduate school. Um, we just sort of talked about retirement investing and, and aspects of being a student at UCLA, um, and how it impacts my finances and my financial wellness.

Emily (31:22): What are the specific kinds of like issues or questions that came up during like these money talks, money groups, conversations with your peers? Um, because I understand eventually you started creating some resources. So there, there must have been, you know, certain topics that came up over and over against certain questions or certain issues.

Elle (31:38): A lot of it was based on your podcast. And so one massive thing was taxes. Like how do we pay quarterly taxes? Do we have to pay quarterly taxes? Um, what, what’s the step by step for doing that? How, how well do they need to be calculated, et cetera. So, um, taxes were a big thing. Uh, payment schedule thing, scheduling was another. Um, and so just because UCLA, they, they’ve restructured the whole system, they just restructured it again. But when I started, we got paid pre-work. So our, um, our September stipend would disperse mid August, um, which was really nice. But once you join a lab and start being employed by your PI’s department, then it goes post work and it becomes a W2 income. And so just making sure everyone was sort of understanding what, um, that situation is. Um, making sure that if sometimes issues would arise with, uh, with how we got paid. So with our stipend, which also is how we paid our housing. So, um, if we got, if we got underpaid with our stipend and then housing just took that back up, we now have no disposable income and have to use like something like credit cards or loans if we don’t, um, have an emergency fund. And so, so those are things that I think came up a lot. Um, some people were, uh, uh, thinking about tutoring. Um, so a lot of like gig work. How do we manage that? Um, is it possible to do, um, and, and sort of all the implications that come with that. Um, and yeah, yeah, I think that’s the, the majority of it. And then of course I was just saying like everyone should open a Roth IRA and I got multiple people in my cohort, uh, to open a Roth IRA, um, which I am very, very happy about <laugh>.

Emily (33:24): Uh, honestly, I mean this is something that I get to hear through my work from time to time, but I, if they haven’t already said it to you, like, that literally changes people’s lives like five years from now, 10 years from now. Like if they haven’t said it already, like they’re going to think back on that and like, really, really appreciate that they ran into you that they were, you know, had the good fortune of just being in your circles and, and hearing that. ’cause they probably wouldn’t have gotten it, you know, from many other sources at that time. So, um, that’s amazing. So tell us more about the resources. Were they about taxes? Were they about these crazy bureaucratic pay schedule things like, um, I love how specific this gets to be, right? UCLA certain fellowships your program, like, let’s talk about that.

Financial Resources for Grad Students

Elle (34:01): Um, the resources, it’s just a, it’s just a folder where I’ve put everything that I’ve created. And so, um, I think one of the, the main things that I have the pleasure and privilege of doing is the orientation finance presentation, um, just to the program, just to the first year cohort, um, sort of orienting them on, okay, this is how we get paid, um, taxes are a thing, but also, um, I have a couple slides on credit and credit cards just to make sure that everyone’s sort of on the same page and we can have a discussion about that. And if you’ve never really considered credit or if you’ve never checked your credit report, I am available to go through it with you just because I think that is so incredibly important. Um, and I also just give, I cannot give tax advice. I am by no means qualified to do that, but I do provide links. Like this is exactly where you go to get your 1098T this is exactly our site ID that you enter. Um, here are the links to the California Franchise Chat tax board that is create an account, make your tax payments. These are the dates. Um, so just sort of links to things that are kind of hard to find sometimes. Um, and that’s even when you know you need to find it. And, and I think the major case with graduate school is that, especially at a place as big as UCLA is that it’s really easy for communication to sort of, um, be looked over, right? Like we get so many emails, we’re just inundated with all this information, especially while starting a graduate program, um, that I sort of try to synthesize the main key points of information, um, and, and, uh, communicate it to the incoming cohort. I also go through pay schedules. So I say, okay, this is our stipend, but also if we’re getting paid in May for June work and then we get paid in August 1st for July work, that means you have no more income coming in between May 20th and August 1st. Um, so sign up for direct deposit to make sure that your check gets, or that your, uh, uh, income gets to you in time. Otherwise they will mail you a check and you won’t get it till August 5th. And if you rent is due August 1st, you need that money. Um, so sort of just going over things to, so that people can either approach me about it if they have any questions later. Um, right. Roth IRAs and investing are a multiple day long conversation. Um, but uh, just sort of putting things on people’s radar. Um, I tell them, uh, oh, just put it in your calendar right now, um, or set aside money or this is where to go get a loan if your, uh, payment doesn’t come through, um, et cetera. Just so they have like a go-to uh, person and also a go-to presentation that. And then I give them the link to the presentation, um, that is just full of notes and links <laugh>. So, um, those, that’s the main, uh, resource that I, uh, created. And then every year the, the presentation changes, just depending on how long the presentation is and, and what changes the university has undergone.

Emily (37:04): Your program is so lucky to have you honestly <laugh>, um, because a lot of the things you just listed, um, I actually have, I I even use the same like phrasing that you do, but I created a new workshop this year called Your Financial Orientation to Graduate School. Um, and so it’s got a lot of, it has credit, like I never talk about credit, but I decided to put it in there because I was like, this is the best time, like right at the start of graduate school to be, you know, reassessing, rethinking, um, starting to build credit if you haven’t before. Uh, but my main point though is that like, even when I’m brought in by a client to give this presentation for like a specific university, and I do look into some policies, like I try to figure out, um, about their tax policies and I try to figure out about their pay schedules and, and all that stuff, but it’s not honestly not the same as having the lived experience of and knowing all those details.

Emily (37:49): And so I honestly can’t get to that level right without working through across many different clients. So your program, UCLA more generally is very lucky to have you have put this together because these resources are needed and they are really hard to find. And until you have, um, walked through it, it’s, it’s hard to know everything that you need to know, right? Until you’ve been through it. So they’re lucky this is not happening at other places. Although by the end of this interview we’ll get to how can this be happening at more places. Um, but that is just awesome and amazing. So next phase of this is, you already mentioned that you would approach the financial wellness office, you know, sort of as a, as a, as a client. Um, but then at some point you started working with them. So can you tell us why you took that step?

Working For the Financial Wellness Office at UCLA

Elle (38:33): Definitely. So, um, at the end of my third, third year of graduate school, I had applied to an NRSA an F31 diversity. Um, and so it’s just a, a grant. Um, and I had completed my qualification exams, um, and I was sort of just looking for more whether that was, um, volunteering and I, and I signed up for some volunteer opportunities. Um, and then in the fall, um, one of the two financial graduate consult financial wellness graduate consultants, um, was no longer able to maintain the position. And so they put out like a mid-year, like hire, um, job posting. And so I said, great, I already know that this is a great office. I’ve already met with Sara, um, and I wanna be a part of this because I’m already doing so much of this work and I’m spending so much time on Reddit giving people financial advice, um, or to, uh, redirecting them to, to resources. And so, um, so I sort of wrote out a whole thing to my, to my PI saying, this is not a zero sum game. Like, this is how I will make sure that I maintain my hours in lab, because that still is my priority, but also this is a huge passion of mine and I feel like I can absolutely really help people to an even greater extent. Um, and so it was really nice just because that was all in like October of, of 2023, um, and I got my PI’s approval, which I, uh, needed, um, on a practical and moral level. Um, and, uh, so I applied the interview was, was great. And when I was, uh, being onboarded, um, things went really smoothly and they had me sort of just go through a lot of their, their training that they typically do with consultants over the summer. Um, but we were sort of working on a, on a condensed timeline. Um, but fortunately I had been able to educate myself a lot, um, in regards to personal finances and, uh, so a lot of the stuff I was just able to like reaffirm, um, and I think it was mostly like student loans that was, uh, I was mostly unfamiliar with just because I don’t have personal experience with those. Um, but then we just dove right in. Um, so after a few weeks of, of training, um, I was signing up for, for workshops and for appointments. And so those are the main aspects of my job is giving, uh, workshops and the slides were already created to undergraduate students and graduate students. Um, so clubs or organizations within UCLA could ask us to come and talk to them. So these were like resident assistants, um, who wanted us to talk about credit to their, uh, to their residents, um, in the residence halls or, uh, more specific like biology PhD students who wanted me to talk about, um, graduate school and investing. And so, um, they could request that we go and talk to the group, um, and, and just be, be available as a resource and really just tell them like, Hey, if you want to dive more into your personal situation, you can make an appointment with us. So that was the other aspect of my job was one-on-one coaching, um, just sort of helping people figure out what resources were available to them, um, just to, you know, and it kind of motivated them to put a little thing together, just say, this is where I am, this is where I wanna go, help me get there. Um, and so, um, that was a phenomenal opportunity and I got to speak to, um, not just PhD students in the Biosciences, but also PhD students, um, in, you know, the humanities and in education and also, uh, law students, medical students, um, master’s students who are about to enter, uh, some really high paying jobs, but they didn’t know what to look for in their offer letters or, um, how to talk about like, uh, restricted stock units. And so I, I really was able to get, um, a whole breadth of, of people to talk to and I was able to educate myself. So we would have the coaching appointment, um, and, and then I would follow up with, with actual links and sort of an outline of what we talked about, an action item list if we created one together. Um, and, and I think with almost every single followup email, um, I think I included one specific, uh, uh, uh, episode from your podcast, like Emily talks about it here. And so, um, especially for, for uh, students who were expecting parents or who had just had a baby, um, or living in family housing, I think those episodes were incredibly useful. Um, and so yeah, so that was sort of my experience with financial wellness.

Emily (43:13): So exciting. Again, what a credit you are to this office, <laugh>, um, coming in with a great deal of like knowledge and, and, um, experience talking with your peers and so forth.

Outtro

Emily (43:32): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

How This Grad Student Shifted Her Student Loan Strategy through the Pandemic

March 6, 2023 by Meryem Ok Leave a Comment

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

Links Mentioned in the Episode

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

Teaser

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

Introduction

00:33 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. This is Season 14, Episode 5, and today my guest is Lexi Jones, a 4th-year PhD student in the Massachusetts Institute of Technology – Woods Hole Oceanographic Institution Joint Program in Oceanography/Applied Ocean Science and Engineering. Prior to Lexi entering graduate school in summer 2019, she resolved to pay down her undergraduate student loan debt first and foremost. However, the confluence of learning more about personal finance, the passage of the Graduate Student Savings Act, and the student loan interest and payment pause starting in March 2020 caused her to adjust her strategy. Instead of paying down her student loans, Lexi has maxed out her IRA for the last few years, built a 4-month emergency fund, paid back debt to her parents, and started saving for a wedding. Lexi and I also discuss how Lexi is dealing with the frequent student loan policy changes announced through fall 2022.

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

Will You Please Introduce Yourself Further?

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

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

Financial Mindset at the Start of Grad School

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

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

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

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

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

05:19 Lexi: Summer 2019.

Federal Student Loan and Parental Debt

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

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

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

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

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

07:40 Lexi: A combination.

Income-Based Loan Repayment

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

07:57 Lexi: I did, yeah.

07:58 Emily: Okay.

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

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

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

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

08:44 Lexi: No, I was not.

Initial #1 Priority: Unsubsidized Federal Loans

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

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

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

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

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

Administrative Forbearance

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

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

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

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

Shift from Paying Off Loans to Investing in an IRA

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

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

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

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

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

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

Commercial

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

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

IRA Investment and Parental Debt Repayment

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

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

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

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

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

Podcast Recommendations

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

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

25:01 Lexi: Yes.

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

Shifting Student Loan Policy

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

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

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

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

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

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

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

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

Playing the Waiting Game

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

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

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

Saving for Retirement

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

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

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

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

Best Financial Advice for Another Early-Career PhD

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

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

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

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

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

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

36:32 Emily: You’re welcome.

Outtro

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

This Grad Student Deferred Her Acceptance to Work on Her Finances

February 20, 2023 by Meryem Ok Leave a Comment

In this episode, Emily interviews Brittany Trinh, a PhD student in chemistry at the University of Wisconsin-Madison. Brittany originally applied to grad school in fall 2018, but she elected to defer her acceptance for two years in favor of taking a job. Brittany shares how she developed her finances, side business, and professional life in the 2.5 years she worked prior to matriculating. She started graduate school in fall 2021 in a much stronger financial position—and more confident in herself—than she would have in fall 2019, even though it was a bit of a rough transition. At the end of the interview, Brittany explains for whom deferment of grad school acceptance is a good option.

Links Mentioned in this Episode

  • Set Yourself Up for Financial Success in Graduate School (Workshop)
  • PF for PhDs S14E4 Show Notes
  • PF for PhDs Tax Center
  • Brittany Trinh’s Website
  • Brittany Trinh Twitter
  • Brittany Trinh Instagram
  • PF for PhDs S11E8: Semester-Proof Your Academic Side Business with Digital Products (Money Story with Dr. Toyin Alli)
  • Brittany’s E-mail Address
  • Upwork
  • PF for PhDs Subscribe to Mailing List (Access Advice Document)
  • PF for PhDs Podcast Hub (Show Notes)
PF for PhDs S14E4 Image: This Grad Student Deferred Her Acceptance to Work on Her Finances

Teaser

00:00 Brittany: I think the biggest thing was just, one, knowing how the PhD stipend is, and just the whole grad school process. I was just really afraid about like how like setting up my like financial future when like the stipend makes it kind of difficult to do that, savings and things. Like it is possible. But just at that time, I knew that like with my job, I could do that a lot faster than like going to grad school right away. And we know that like with time and investing, like time is like the most valuable thing.

Introduction

00:41 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. This is Season 14, Episode 4, and today my guest is Brittany Trinh, a PhD student in chemistry at the University of Wisconsin-Madison. Brittany originally applied to grad school in fall 2018, but she elected to defer her acceptance for two years in favor of taking a job. Brittany shares how she developed her finances, side business, and professional life in the 2.5 years she worked prior to matriculating. As a result, she started graduate school in fall 2021 in a much stronger financial position—and more confident in herself—than she would have in fall 2019, even though it was a bit of a rough transition. At the end of the interview, Brittany shares from her perspective for whom deferment of grad school acceptance is a good option.

01:57 Emily: If you’re a prospective graduate student currently in the thick of admissions season, I encourage you to check out my asynchronous workshop, Set Yourself Up for Financial Success in Graduate School. You can pick and choose which modules are most relevant to you now and over the coming months. For instance, if you’re staring at a cryptic funding offer letter, you might want to join “Interpret and Compare Offer Letters.” If you’re not sure if your stipend offer is really livable for a certain city, you might want to join “Stipends vs. Cost of Living.” If you know already that your top-choice program is offering a sub-par stipend, you might want to join “Negotiate Your Stipend and/or Benefits.” You can learn more about Set Yourself Up for Financial Success in Graduate School and the various modules at PFforPhDs.com/setyourselfup/. You can find the show notes for this episode at PFforPhDs.com/s14e4/. Without further ado, here’s my interview with Brittany Trinh.

Will You Please Introduce Yourself Further?

03:06 Emily: I am delighted to have joining me on the podcast today Brittany Trinh. She is a first-year graduate student at the University of Wisconsin Madison in chemistry. By the way, we are recording this in April, 2022, but I’m expecting to publish it in early 2023. So, for reference, you know, Brittany will now be a second-year graduate student at the time of publication, we expect. Okay, Brittany, thank you so much for joining me. Will you please introduce yourself further to the listener?

03:31 Brittany: Hi, yeah, my name is Brittany and I’m, like you said, currently a PhD student in chemistry at UW Madison and part of the Boydston group studying metal-free ring-opening metathesis polymerization. And before that, I was getting my BS chemistry at the University of Houston and then also working at a polymer company for about two and a half years before I became a grad student.

Timing of Grad School Application and Deferment

03:58 Emily: Excellent. And that is the subject of our interview today. So, Brittany applied for graduate school, got in, and decided not to go for a bit. So, we’re going to talk about that deferment process and why it happened and how it happened and how she used that time to better her finances and be in a stronger position when starting graduate school. So, I love this topic. Okay, so starting off, what was the timing of this? Like when did you apply for grad school? Were you also applying for jobs that same time? Just like walk us through the beginning of this process.

04:28 Brittany: Yeah, so I actually graduated a little bit later. So, in the fall of 2018 was my graduation semester, so that’s when I started applying for jobs and grad school at the same time. And then throughout that process, I actually only applied to one grad school, which was UW Madison because of like a fee waiver I got from a preview program. And simultaneously applying for a bunch of jobs and we all know how job searching goes.

04:59 Emily: Interesting. So, when you, because you were graduating like at that end of fall semester timing, were you already anticipating that you would have to have a job between, you know, let’s say January and August or whenever it was that you would matriculate if you had gone directly to graduate school?

05:16 Brittany: I think that I wanted to do something but I wasn’t expecting to honestly get into the graduate program because I did get the job offer by October, 2018. So, I had already like accepted the job offer before I even knew that I was getting into grad school.

Receiving an Acceptance Letter

05:38 Emily: Okay, great. So, when you got the acceptance to UW Madison, what were your thoughts at that time? Were you thinking that you wanted to enroll or were you already thinking by that point that deferring was going to be a good idea?

05:51 Brittany: So, this is actually a really funny story. I got my acceptance letter the same day that I came home from like my first day at work. And I was super surprised because I did not think I was going to get in. And so, of course I’m like kind of freaking out and thinking like, well, what do I do? You know? But ultimately I decided that it was better for me to just stay at my job because I literally just got started. And so, I wanted to see if there was an option for me to defer just for some time so I could get the work experience but then still pursue grad school later.

Role of Finances in Decision

06:27 Emily: And what role did finances play in that decision to defer?

06:33 Brittany: I think the biggest thing was just, one, knowing how the PhD stipend is and just the whole grad school process. I was just really afraid about like how like setting up my like financial future when like the stipend makes it kind of difficult to do that savings and things. Like it is possible. But just at that time, I knew that like with my job I could do that a lot faster than like going to grad school right away. And we know that like with time and investing, like time is like the most valuable thing. And then of course there were other some like emotional things related to that. Yeah, and I think the thing was that my job offer was really good and I just really could not turn it down. And that was why I ended up deferring my grad school enrollment.

07:32 Emily: Yeah, I think it definitely makes it easier to imagine what else you would be doing if you didn’t go directly to graduate school already being in that job, which is awesome. I’m wondering, did you have any particular financial concerns? Like I know generally things are hard, right? For grad students and finances, but I don’t know, were you like looking at like student loan debt that you wanted to pay down? Or were you like, “Oh, I have zero in savings and I really want a certain amount in savings.”? Like was there any specific element of your finances that was a top concern?

08:01 Brittany: Oh, yes. So, I am very fortunate that I did not have any like student loan or other like personal debt. But for me it was definitely zero savings. Because I obviously just graduated from school, and I had just like a little bit of savings from like summer research or things like that. But yeah, I really wanted to build up my emergency fund, my 401(k), and just kind of let it sit there while I’m in grad school and things like that. Those were like the main concerns.

Informing the Grad Program About Deferment

08:37 Emily: Okay. So, we’ve talked about like the decision to defer why you did it, what you were planning on doing with your time anyway. How is it actually like telling your program <laugh> that you got into that that was your plan, that you would like to exercise a deferment option? Like, I don’t know, like how did those conversations go?

08:55 Brittany: Yeah, so I don’t remember exactly like how I came up with the idea of deferring. But I think maybe I’ve seen it somewhere. So, I think I was just like searching the department’s website to find any reference in like the handbook or their FAQ or whatever about the deferral process. And so, I remember seeing this on their FAQ page saying that like, yes, it is possible because they’ve granted it to people before, you just have to like let them know and it’s up to two years. So, what I did was I waited until I went to the official visit weekend and I wanted to talk to the graduate program coordinator personally as opposed to like over e-mail. And it was actually a little bit awkward because it was at like a poster session when I approached her because the schedule is like pretty packed.

09:45 Brittany: But she had just finished chatting with another student and so when I came up to her, I introduced myself and explained to her my situation and I just said like, could you tell me more about the deferral process? Like I would love to come here, but like as of right now, I’ve just started my job and it’s only been like two months and I don’t really want to leave that yet. And in the end she was very kind and reassuring about it and she just told me it’s totally possible just like stay in contact with her and she would like follow-up with me and let me know what the steps were.

10:15 Emily: It’s actually like, I hadn’t thought about this before, but sort of thinking about it from the program director’s perspective, you’re going to be an even stronger candidate when you actually join the department in like a year or two or whatever having had that relevant work experience. So, it actually feels like they’re getting like a bargain or something, like, we’re going to get an even better grad student than like the one we accepted. Like that’s amazing. So, I can see how that would maybe be attractive. But something I hadn’t asked you yet is, when you were admitted to the program, were you admitted already like knowing who your advisor was? Or was that a process that would maybe happen during like your first year?

10:52 Brittany: Yeah, so when I was admitted, we don’t know who our advisors are yet. It’s just like you’re just generally admitted, and then once you enroll whatever semester, that’s when you go through like the whole rotation process and stuff. So, that wasn’t a concern at that point.

What About Funding?

11:07 Emily: Yeah, I can imagine if, you know, for anyone listening to this who’s maybe going to consider this, if you’re admitted directly with an advisor, that’s the way I was admitted to graduate school, then it’s like two levels, like you have to make this okay with the department level, their program level, and also with your advisor. And the other like sort of wrinkle in there is like, what about your funding? So, what was your funding situation and did the deferment matter at all in like, you know, was your funding automatically going to come again? Or did you have to like apply again? Or how did that work?

11:36 Brittany: Yeah, so I think when I was accepted, they offered me full funding as a student and then they also gave me an additional fellowship which was a surprise to me, but when I followed up with her about deferring and such, I just asked her what the situation was like. Because I would understand if they decided to rescind the additional fellowship which I think was like an additional $4,000 or $5,000 just for the first year because I deferred, but actually she said, “No, your funding will [I guess] transfer.” And I was really surprised. And so I think it, it just is a matter of just asking very directly. Like it was a little uncomfortable for me to be so forward about it because I didn’t want to seem like, you know, I’m just only concerned about money, but it was something that they offered me and I just wanted to see if that was still available to me.

12:36 Emily: Yeah, well that’s great. I mean, it sounds like this person was like very receptive to the process. I mean, even them having it on their website is a good indication that yeah, this is something there that happens from time to time, and they can handle it. And especially like you were saying, just being admitted generally to the program I think makes the whole process easier since you’re not negotiating with like a certain person with a certain number of spots that are available or whatever the case might be.

Finances During Gap Years

12:57 Emily: Okay. So, let’s move beyond like the decision to defer and talk about what you did with your time about two and a half years, you said, between when you started your job and when you ultimately entered graduate school. So, we talked earlier about like the financial reasons for why to pursue this job instead. What actually ended up happening during that period of time with your finances?

13:18 Brittany: Yeah, so during that time while I was working, I was able to save over like $60K in my 401(k). And so, I’m like really proud of that, and a lot more like for emergency funds, my future house, as long as like PhD expenses because I know that like moving would be expensive and like school fees and such. So, I wanted to have like an additional fund for that that I could tap into in case I needed it. The other thing was I also just learned a lot more about my own financial habits and values and such. And so, all of those were like really good to know before coming to grad school just in terms of like spending and how you save and such. And then of course the last thing was like, I started my business, which was really a fun learning experience.

14:12 Emily: Yeah, let’s put a pin in the business for just a second. I definitely want to talk about that further. But I just want to like congratulate you because it sounds like you made great use of the time that you’re working to like build up 401(k) balance and the savings and all that. And just like hearing all that, I’m just so happy for you like starting graduate school in such a strong financial position. You’re not precarious in the same way many other graduate students are. Especially having those like investments in place because, I mean, maybe you’re still adding to them, but even if you weren’t able to add your investments at all during graduate school, like I mean five years or more in graduate school, like that money is going to grow. I mean, we’re like assuming the market behaves like sort of average over a long period of time, but it’s going to grow like a lot, like at least 50%, maybe even, you know, closer to doubling during just that period of time that you’re in graduate school. So, it’s amazing to have that wind at your back is what I call the financial wind at your back of having investments. So, that’s just awesome.

15:04 Emily: One thing I did want to ask you though is that like since you had this plan of eventually going to graduate school, were you concerned at all about like your lifestyle or like experiencing lifestyle deflation upon entering graduate school? Because I know that I’ve heard that as like a reason against deferring or against taking time between undergrad and graduate school. It’s like, oh no, what if I become used to spending $60,000 a year and I can’t do that in graduate school, that’s going to be painful. So like, what was your thought process around that, like lifestyle setting aspect of the question?

15:38 Brittany: Oh yeah, that’s a really good point and question. Some other people also brought this up to me as well. But for me there was a little bit of a transition, which I guess we can talk a little bit more later, but the reason why I was able to save so much was because like I was already, I never saw that money because it was always like going direct deposit to my 401(k) or to my savings accounts and things like that. So even though yes, I was making like was like $65K a year or so, I didn’t see that $65K every year. It was like most of it’s already gone to savings. And so I was kind of living as if like I was making more of like $40K or something like that. And so, it wasn’t as bad. And then again, like I mentioned, I learned a lot about like my own habits and values and such. And so then once I came into grad school, I was able to kind of realign that with my current budget.

16:42 Emily: Yes, that makes total sense. And yeah, just having those extra couple of years of experience, as you said, learning about yourself, learning about your own like systems and habits and mindset and so forth with respect to money can be so super helpful with that.

Commercial

16:55 Emily: Emily here for a brief interlude! Tax season is in full swing, and the best place to go for information tailored to you as a grad student, postdoc, or postbac is PFforPhDs.com/tax/. From that page I have linked to all of my tax resources, many of which I have updated for tax year 2022. On that page you will find free podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with. The absolute most comprehensive and highest quality resources, however, are my asynchronous tax workshops. I’m offering four tax return preparation workshops for tax year 2022, one each for grad students who are U.S. citizens or residents, postdocs who are U.S. citizens or residents, postbacs who are U.S. citizens or residents, and grad students and postdocs who are nonresidents. Those tax return preparation workshops are in addition to my estimated tax workshop for grad student, postdoc, and postbac fellows who are U.S. citizens or residents.

18:11 Emily: My preferred method for enrolling you in one of these workshops is to find a sponsor at your university or institute. Typically, that sponsor is a graduate school, graduate student association, postdoc office, postdoc association, or an individual school or department. I would very much appreciate you recommending one or more of these workshops to a potential sponsor. If that doesn’t work out, I do sell these workshops to individuals, but I think it’s always worth trying to get it into your hands for free or a subsidized cost. Again, you can find all of these free and paid resources, including a page you can send to a potential workshop sponsor, linked from PFforPhDs.com/tax/. Now back to the interview.

Web Design Business

18:58 Emily: Okay, let’s come back to the business. So, what is the business that you started during this time before entering graduate school? And I guess, you know, did you have it in mind that you would continue it after starting graduate school?

19:12 Brittany: Yeah, so the business that I ended up creating is a web design business specifically for scientists, researchers, and academics, helping them build their online presence and their websites and such. And so, I started this business unofficially in April of 2019. So that’s like about four months after I started working. That was like kind of the, beginnings of it, but I didn’t start like actually getting clients until September. And that’s when I officially launched. And then since then, I’ve been working with a lot of clients one-on-one and doing workshops, collaborating with organizations and such and all those like fun things that come with an online business. And throughout the process, I made about like $15K in revenue, which most of it was reinvested into the business. But I always did have the intention of continuing it in grad school because I wanted to have that additional income.

20:14 Brittany: I think that was like the thing that really was also another concern for me was that I didn’t want to feel limited by my stipend and I wanted to do other things. One of them being visiting family because I’m in Wisconsin now and I’m from Houston, so, you know, flying home at least like three or four times a year is kind of a priority for me. And so, if I’m able to have like this extra side income, then I don’t need to worry about it, like cutting into like my daily expenses.

20:48 Emily: I just love how intentional you were with the choice of the business to start. And also just using again, your time before starting graduate school to establish it. Like you mentioned, you know, your revenue was like largely put back into the business as an investment and that actually makes a lot of sense to do that while you were working your job because the point at that time was not to get income from it, it was to, I assume, it’s to establish the business so that you can really reap that income once you have your graduate student stipend that you’re living on. So yeah, I just, this is so great and like of course also the subject matter of your business is still like related to like academia and like science and so forth, so it’s still like, it’s something that isn’t totally out of left field for like a graduate student to be doing, right? So, I love that choice because you can still sort of market it and it makes sense like even once you start graduate school. So, just to commend you on all of that. That’s great. Is there anything else that you want to say about the business? Where can people find you by the way, if they want to work with you?

21:43 Brittany: Yeah, if you want to work with me, you can find me on my website, brittanytrinh.com. Or you can also just connect with me on Twitter and Instagram, which is b r t t n y t r n h. So, that’s basically my name without the vowels. Yeah, so all the things about like website design start building and starting your website. That’s what I love to do and yeah.

Starting Grad School

22:09 Emily: Okay, great. So, let’s go back to our timeline. So, you’re doing great with your finances, you’re liking your job and so forth. How did you decide that it was finally time to start graduate school?

22:20 Brittany: So, the program that I applied to, or at least in my time, it was a limit of two years for deferral. So, what happened was the graduate program coordinator contacted me at the one-year mark which would’ve been fall of 2019 for me to enroll in fall of 2020, to ask if I was still interested. And I said, I am, but I still wanted to defer another year. And she was like, okay, that’s that’s totally fine, just keep in contact. And so then again, she did that in fall 2020 and well, we all know what happened then. And so at that point, at work things were kind of slowing down because of COVID, and I was just thinking, you know, maybe this is a good time now to go back to school. Because I also felt like I could not progress in the way that I wanted to at my workplace with my current credentials. And just in general, if I wanted to move up in the chemical industry, having a PhD would strengthen my application.

23:20 Emily: You know, we didn’t even mention that earlier, I guess because in your case this was a deferment of an acceptance instead of like a choice to just wait to apply to graduate school. But I love that you also ended up using that time to confirm that you really did need a PhD like for the career because of course you could have just bailed if you said, “Oh no, I have plenty of room for advancement, this is great, my BS is awesome, maybe I’ll do a master’s on the side.” Whatever it is. You could have gone that track, but yeah, I love that you really are sort of once again intentionally like choosing the life and career that you want to have, and use that time to like confirm this is the right path. So, that makes so much sense to me. I understand you did have to technically apply again to Wisconsin, right? So, in that fall of 2020, right? So you’re submitting another application to them. Were you also looking around at other grad schools? Because as I said earlier, now you’re a two-years better candidate than you were the first time around. So, tell us about that too.

24:11 Brittany: Yeah, so this was something that I brought up with the graduate program coordinator at Wisconsin. I was wondering if I was allowed, like if the deferment meant that I was kind of confirming my acceptance and she said, “No, feel free to apply to other schools that you want.” And I was like, okay, that sounds great. So then I did end up applying to four other schools, really reach schools like MIT, Colorado Boulder, Rice, and University of Michigan. And so, I applied to those four other schools, but in the end, I still went with Wisconsin because I thought that they were the strongest program for what I wanted and needed for my own career.

24:57 Emily: Yeah, that’s great and it makes sense. I mean, I guess maybe someone else considering a deferment would still have to check with their program, but it doesn’t really make sense that you would be obligated to go. It’s more like they’re obligated to you <laugh> to still like accept you. Right? But you’re not really obligated in the same way to them. So, that makes sense. Okay. So, you technically apply again, you apply to some other schools. You still decide on Wisconsin. Did you go to a second visit weekend? Did you get to do that again?

25:21 Brittany: Yes, but because of COVID, it was virtual but I still came anyways to, originally it was to look for apartments, but it ended up just being hanging out. And actually, I did meet some professors during that trip, and one of those professors is now my advisor, <laugh>.

25:39 Emily: Okay. So that worked out on multiple fronts.

Financial Transition

25:41 Emily: So, let’s then talk about like the transition to graduate school, like specifically through a financial lens. You mentioned earlier that you did have to make some adjustments. But you have the savings in place, you know, for the moving fund, all that. So, how did that transition go?

25:57 Brittany: So, it was definitely rough in the first semester. Like you mentioned, there was a little bit of a time period where I had to transition my finances in that curbing my spending was a thing. So, I was trying to keep a closer eye on spending, especially like online shopping, clothes, and things like that because obviously I wasn’t making as much as before. And then on the other side of my business, I also made the decision to kind of put it on the back burner for the first semester because I was trying to focus on just transitioning, TAing, coursework, and finding a lab group. So, all those things were happening and I was like, my business does not need to be going on right now. The other thing was that I experienced a little bit of financial anxiety which was mostly avoidance.

26:47 Brittany: And this was because I just didn’t want to think about like how much I was spending now that my budget or my income was a lot less. But obviously that’s not the greatest way to go. So earlier this year, like in January I just decided to, you know, kind of clear all those things up on like my spending habits and things and trying to keep track of like, what do I spend for groceries and all those things and kind of get a good better handle on that. The other thing was that like related to the financial anxiety, it was mostly about like financial future because now it’s like I don’t have as much money as I did before to put towards savings, but I definitely still want to keep saving, which was why I decided to kind of get a better handle on my spending. So then I can see like, okay, can I save like $200 a month? Right? That would equal out to be, I think the $6,000 for like a Roth IRA contribution per year, is that right?

27:49 Emily: It would be $500 a month.

27:50 Brittany: Oh no, it’s $500 a month. Yeah. So yeah, actually $500 a month, not $200. But yeah, so those are some of the things that I wanted to do.

28:00 Emily: Yeah, that makes sense. I’m glad you’re being like, so like open about this and honest about it because I bet other people who had a similar experience would have similar emotions around it of like, you know, feeling more insecure and more anxious even though you knew it was coming <laugh>, like still to see like the smaller numbers in the bank account and like your savings going down because you’re, you know, you’re spending on moving expenses and whatever else is going on. But really glad to hear that you sort of eventually like kind of firmed up on the mindset and the processes and so forth. So, that’s great and thank you so much for sharing. And have you re-ramped up with your business? Again, we’re recording this in April 2022. So now that you’re in like your second semester, is that more, is that something you’re spending time on now?

28:43 Brittany: Yes, definitely spending more time on it. Really wanting, I’m really trying to push for teaching more workshops. I’m still taking on one-on-one clients, although it’s just a little bit different than before. So, definitely taking that first semester off to kind of recalibrate to see like how do I want my PhD experience to go and what I want to get out of it has also helped me realign my own business goals as well. So, that’s been really fun.

29:10 Emily: Okay. Well, this is an unexpected tie-in, but in season 11 we published an episode with Dr. Toyin Alli sort of along these same lines of like moving from one-on-one services to more scalable like passive products. So, interesting. If anyone is like jibing with what Brittany is saying, then check out that episode with Dr. Toyin Alli where we talk more about these like strategies.

For Whom is Deferring a Good Option?

29:32 Emily: Okay. So, kind of to wrap up here, for whom do you think deferring is a good option?

29:39 Brittany: I think deferring may be a good option for anyone who’s like at all doubting their decision to do a PhD because that’s how I felt. Like I did not want to do a PhD yet, at the time that I was accepted for not just financial reasons, but also a lot of like emotional and like mental health reasons. I felt a lot of burnout from undergrad and I wasn’t sure if I could complete a PhD successfully given where I was at at the time. And I don’t really think that the decision to do a PhD should be taken lightly, right? And so if you’re not sure, like you’re honestly better off taking that time to work at a job and figure out like what you like to do or like in my case, like do you even really need a PhD for what you want to do? And like just in general learning more about the industry that you want to work in and ultimately you should just do the PhD, or I guess when you decide to do the PhD, it’s because it’s an experience that you want to have in your life. So, getting to like a more like affirming position rather than like feeling FOMO about not doing a PhD.

30:53 Emily: Love that. I had, so I didn’t defer my acceptance to grad school. I just waited to apply until, I was planning on taking two years between undergrad and grad school. I ended up applying so that I enrolled just one year after I finished undergrad. But for some of the same reasons that you just mentioned, like I felt like I was a stronger candidate having had like extra work experience. I wanted to see what science was like in a different kind of setting than what I experienced during undergrad. All of that still just confirmed for me that I did want to do the PhD. What you did that I did not, was really working on the finances in that time because I did a post-bac program, which paid me basically what a grad student stipend is. So, there were no financial advantages there, but there were those other advantages still that you mentioned. So, that’s so great.

31:35 Emily: And where could people find you if they want to follow up? You mentioned your business website earlier, do that again, but let’s say someone wanted to follow up more on like the personal side about deferring or something. Where can people find you?

31:44 Brittany: Yeah, so definitely you can still visit me on my website, brittanytrinh.com. Or you can email me at [email protected] if you want to like send a longer message. And also just again, connect with me on my social media accounts. You can just tag me or DM me as well.

32:02 Emily: Sounds great.

32:03 Brittany: Totally open to share more. Yeah.

Best Financial Advice for Another Early-Career PhD

32:05 Emily: Good, good. Okay, so, we’ll finalize here with the question that I ask of all my guests, which is, what is your best financial advice for another early-career PhD? And it could be something that we’ve talked about in this episode or it could be something completely new.

32:19 Brittany: Yeah, so I would say that my best financial advice is to find a skill that you like enough to leverage for extra income. So, a lot of people do like tutoring, writing, editing, whatever. And like one of my, like my roommate, she like does like cover art for like, you know, for like for publications and such. So, it’s like having those types of skills or just having something that you like to do. Especially like if it’s something that doesn’t require too much time or effort from you, it’s always more, it’s more beneficial to you anyways. And like you don’t have to build like a whole business, but it’s good to know that you have another way to make extra money if you want to.

33:05 Emily: Yeah, that’s interesting you say that because I mean, I totally agree. I’m so on board with this advice <laugh>. But like furthermore, you’ve built like a business and you have like a brand and all of that, but someone doesn’t need to go to that level to make extra money on the side. Like they could do more like freelancing or like put themselves on, is it called Upwork now? Is that the current name for the website?

33:24 Brittany: Yeah, Upwork.

33:24 Emily: Yeah, Upwork. So, they can put themselves on Upwork or something like that where like you’re finding clients but you don’t need to necessarily build a whole infrastructure around it. At least not at the start while you’re just like trying things out. So, I love that, just like thinking about what skills you enjoy that you have that might be a little bit unique in the marketplace. I definitely see how your skills with like the website building is unique and something very needed. And especially if you can speak like the language of, you know, your clients, that’s a big advantage. Anyway. I love your business so that’s awesome. Brittany, thank you so much for joining me for this interview! It’s been wonderful! I hope the listeners got a ton out of it. Thank you so much!

33:56 Brittany: Thank you for having me!

Outtro

34:03 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

This First-Year PhD Student Prioritizes Investing While on Fellowship

December 5, 2022 by Meryem Ok 1 Comment

In this episode, Emily interviews Michele Remer, a first-year PhD student at Michigan State University, about her financial goals for graduate school. Michelle graduated in spring 2020 and worked a few different jobs during the pandemic, so she was able to generate some savings and open a Roth IRA prior to starting grad school. Thanks to a summer 2022 internship and one-time bonus on top of her ongoing fellowship, Michele is in a strong financial position at the start of graduate school. Michele shares her investing goals and values and why she’s considering buying a house hack in the spring. She also breaks down her budget and shows how she’s keeping her large, necessary expenses under about 40% of her gross income.

Links Mentioned in the Episode

  • Michele Remer LinkedIn
  • PF for PhDs S13E1: PhD Home Buying Updates for 2022 (Expert Interview with Sam Hogan)
  • Sam Hogan E-mail (Mortgage Originator)
  • PF for PhDs S13E8 Show Notes
  • PF for PhDs S10E1: How This Grad Student Plans to Contribute to His Roth IRA Using 529 Money (Money Story with Ben Wills)
  • PF for PhDs Tax Workshops
  • PF for PhDs S8E4: Turn Your Largest Liability into Your Largest Asset with House Hacking (Expert Interview with Sam Hogan)
  • PF for PhDs S13E2: This PhD Student-Nurse Is Confident in Her Self-Worth (Money Story with Brenda Olmos)
  • PF for PhDs S10E18: This Grad Student Purchased a House with a Friend (Money Story with Courtney Beringer)
  • I Will Teach You to Be Rich (Book by Ramit Sethi)
  • PF for PhDs S5E15: How a Book Inspired This PhD’s Financial Turnaround (Money Story with Dr. Amanda)
  • PF for PhDs Subscribe to Mailing List (Access Advice Document)
  • PF for PhDs Podcast Hub (Show Notes)
S13E8 Image: This First-Year PhD Student Prioritizes Investing While on Fellowship

Teaser

00:00 Michele: And then I also was able to start my program during the summer and I did an internship in D.C. which, technically, I wouldn’t be allowed to do because you are only supposed to, you can’t work more than 10 hours a week with your fellowship at Michigan State. But because it was part of a class, I was able to overcome that requirement. So, I had money from my internship to like live on in D.C. and then I also had that like fellowship money that I could use for like saving and investing.

Introduction

00:38 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. This is Season 13, Episode 8, and today my guest is Michele Remer, a first-year PhD student at Michigan State University. Michelle graduated in spring 2020 and worked a few different jobs during the pandemic, so she was able to generate some savings and open a Roth IRA prior to starting grad school. Thanks to a summer 2022 internship and one-time bonus on top of her ongoing fellowship, Michele is in a strong financial position at the start of graduate school. Michele shares her investing goals and values and why she’s considering buying a house hack in the spring. She also breaks down her budget and shows how she’s keeping her large, necessary expenses under about 40% of her gross income. By the way, we recorded this interview in late October 2022, and since its recording, there has been a lot of student loans news. As of November 27, 2022, the day I’m recording this, the $10k or $20k degree of cancellation that Michele and I discuss has been blocked by court challenges, which are likely to be resolved in the Supreme Court. Additionally, the administrative forbearance has been extended into summer 2023.

02:26 Emily: Speaking of the possibility of home ownership in 2023, Sam Hogan is now offering lunch-and-learn seminars on how graduate students and postdocs can purchase homes. Sam is a mortgage originator specializing in graduate students and PhDs, an advertiser with Personal Finance for PhDs, and my brother. He’s been a guest on this podcast numerous times, most recently Season 13 Episode 1. If you live in a city where graduate students and postdocs sometimes buy homes, please consider arranging for Sam to come to your campus for a lunch and learn on mortgages and the home-buying process. He’s put these on for a couple of groups this fall and has more booked the spring. He gives a short presentation and then answers questions about individual borrowing scenarios. Sam has done a ton to help grad students and postdocs with usual academic incomes like fellowships and summer pay gain access to mortgages so they can realize their dreams of home ownership. You can reach Sam about the possibility of coming to your campus—or with your own mortgage question—at [email protected] or 540-478-5803. You can find the show notes for this episode at PFforPhDs.com/s13e8/. Without further ado, here’s my interview with Michele Remer.

Will You Please Introduce Yourself Further?

04:03 Emily: I’m delighted to have joining me on the podcast today Michele Remer. She is a first-year graduate student at Michigan State University, and we are going to be talking today about kind of what her finances look like as a first-year graduate student and what her plans are for the future. So, Michele, it’s a delight to have you on. Will you please introduce yourself a little bit further for the listeners?

04:24 Michele: Of course. Thank you for having me by the way. So, as you said, I’m a first-year PhD student. I’m in the Fisheries and Wildlife Department at Michigan State. And I got my undergraduate degree from a small liberal arts college in Minnesota back in 2020. So, I’m a pandemic graduate. And then I was supposed to go into the Peace Corps but it ended up not working out due to the pandemic once again. So instead, I did some other seasonal jobs, which included AmeriCorps. I also want to preface this by saying that I have had some assistance from my parents for expenses in college and post-graduation as well.

05:03 Emily: Yeah, let’s talk about that more. So, it sounds like you had about two years between your graduation college and when you started graduate school. I’d love to learn more about those jobs that you did during that time and kind of what your finances looked like through that period.

05:17 Michele: Yeah, so my first, well I graduated 2020 and I still had my job through my university. It was a GIS job so I was able to do it remotely during the pandemic. So, I was just living at home with my parents and didn’t have any big expenses there, which was really nice. And then I got a job with AmeriCorps in a Conservation Corps out in western Utah. So, that’s where I went next. And that one was <laugh>. I was basically just breaking even for that job because it was volunteer and it was also a pretty low like stipend that we received. But I was able to get free housing, and they gave us like a free tent. I just had to provide the gear and a plane ticket. So, I think it worked out pretty well for me, especially because with the pandemic I was getting stir crazy in my house so I welcomed the opportunity to go somewhere new during that. When everyone else was kind of stuck inside. I was able to be out in the woods and <laugh> doing conservation projects.

06:26 Emily: And was it like a full year? Was it a full year that you were with AmeriCorps?

06:30 Michele: So, this was about seven months was my term. And then also for AmeriCorps, you get, they call it education award. That’s what it’s called. So, I got about $3,000 for my education that I was able to put towards my student loans.

06:47 Emily: Oh nice. That’s a good flexible usage.

Money Mindset Coming Into Grad School

06:52 Emily: Okay, so we’ve had I think one previous guest who was in AmeriCorps, if we can find the episode, it’ll be in the show notes. But I’m very interested in like your mindset I guess going into graduate school, having just had that AmeriCorps experience. Because I know that, I mean as much as graduate student stipends need to be higher, AmeriCorps is like whoa, you are really, as you said, it’s kind of a volunteer position that they basically just kind of give you housing and food money, right? So, can you talk about yeah, your mindset coming into graduate school, having had that experience with respect to your finances?

07:25 Michele: Yeah, I think it was actually really helpful for me personally because, so my undergrad, it was a residential school so like all of my food and stuff was like at a cafeteria and everything and included. And with this job, I like had to like cook dinner and everything. And so, that really taught me how to like meal prep and just like living on such a low wage, I was able to be really smart about like how I was handling my groceries and everything. And then like while we were on project, like, so we would work eight days and then we would get six days off. So for those eight days they provided all the food. So basically you were just like, didn’t have any expenses for eight days of the week and then, or eight days at a time and then six days you would have expenses, but we were able to like also have leftover food from that. So, it was this kind of like, and I also don’t really buy a lot of other things. Like I still to this day I basically just buy food and that’s my only other expense besides like housing with like occasional other like luxuries now that I have some more money. But yeah, so I think it was a challenge but it actually kind of set me up well for grad school.

Stipend at Michigan State

08:42 Emily: Yeah, very interesting. So, give us a picture of your finances when you started at Michigan State. So like, you know, did you have any assets? Did you, you already mentioned student loans, maybe you had other liabilities as well. And also what is your stipend at Michigan State?

08:57 Michele: Yeah, so my stipend first of all is $30,000. And I also got pretty lucky too because I got a $5,000 fellowship for getting accepted into the environmental science and policy program here. So, I can kind of lump that on top. And then I also was able to start my program during the summer and I did an internship in D.C. which, technically, I wouldn’t be allowed to do because you are only supposed to, you can’t work more than 10 hours a week with your fellowship at Michigan State. But because it was part of a class, I was able to overcome that requirement. So, I had money from my internship to like live on in D.C. and then I also had that like fellowship money that I could use for like saving and investing.

09:51 Emily: So, am I understanding that you were being double-paid during that time? You were receiving your fellowship and your internship pay?

09:58 Michele: Yeah, I was. The reason why like we decided to do the fellowship. Like I was talking to the administrators about this and everything and the class, because technically, the internship was part of a course. And so there was like a $2,600 tuition fee that I would’ve had to pay if I was just doing the internship. So this way the fellowship, because the fellowship also covers my tuition. So, in this way it covered my tuition and then I also was able to receive the money, the stipend money with that.

10:29 Emily: Nice. It sounds amazing. And that $5,000 that you mentioned, so your sort of baseline, standard stipend on the fellowship is $30,000 per year. Did you get that $5,000 as like a lump, it’s kind of like a bonus, like a lump sum at the start, is that right?

10:42 Michele: Yeah, it’s supposed to be a lump sum. I actually haven’t received it yet, but yeah, I think that’s just going to be like a lump sum to my account once they process it.

Finances: Assets and Liabilities

10:52 Emily: Okay. This is great. I so wish that more or all graduate students could get started with like, hey here’s some money just like for you to have for savings because you’re probably going to need this down the line. Because the stipend is really not, you know, necessarily enough to generate a decent savings rate, although, you know, we’ll get to yours and what your plans are with that. So let’s, if you don’t mind, could we share some numbers, like what assets did you have at the start of graduate school? What liabilities did you have?

11:16 Michele: Yeah, so I think I came in, so the AmeriCorps job that I had, I finished that. I did that right after college. So, I took another seasonal job where I was able to minimize my expenses a lot more and then I had another part-time job before starting. And I think the best thing that allowed me to build up savings was that I like basically reduced my housing expense. Like every time I got a new job it was either like free or it was like max $300 a month. So, I was doing really well in that area. So then I was able to, I had about $6,000 in my Roth coming in to grad school. And then I also have, let’s see, I guess for my other assets I just have like, oh I also just put in $2,000 into I-bonds too for my student loans after I graduate.

12:11 Michele: And then I also have some other savings just from, because I was saving up more money to pay off my loans as well. But now with the pandemic or the student loan forgiveness, I should be sitting in a much better place because after my education award using that and then the 10 grand that I’ll get from student loan forgiveness, I’ll be in a really good spot. And so, now that’s freed up a lot more money that I was going to put towards my loans because I’m super debt-averse, so I had saved up all this money to pay off my debt right away.

12:45 Emily: I see. I want to talk more about the student loans in just a second, but you don’t have any other debt, I would take it then, aside from the student loans?

12:52 Michele: No, no. Like I have a car, but it’s paid off. And yeah that was my only other sort of I guess liability since I don’t have a home or anything.

13:05 Emily: Yeah. Okay. So I want to point out for the listeners that we were recording this in October, 2022. So by the time this comes out, I’m hoping that people will have received the cancellation but as of the time that we’re talking, I don’t think anyone has started to receive it yet, although the application is open. So yeah, hopefully in the coming months. Did you already apply Michele?

13:24 Michele: Yeah, I did. I signed up for the email alerts. I was one of the first people, I think.

13:28 Emily: Okay, perfect. So, your cancellation amount hopefully will come through before the end of 2022 is the idea I think. Yeah. And so, and the rest of your student loans, the ones that weren’t being taken care of by these other sources, are they just going to be in deferment during graduate school? Or are you going to work on paying it down?

13:43 Michele: Yeah, I only took out subsidized loans, so they’ll be in deferment.

13:48 Emily: Okay, perfect. Yeah, for anyone listening, subsidized loans, well, if they’re in deferment you’re not going to make payments, and then if they’re subsidized the government pays the interest on your behalf so they won’t start accruing interest until when you come out of deferment, presumably after you graduate. And it’ll be pretty easy to hopefully take care of them at that point. So, that sounds awesome.

Making Investing a Priority

14:04 Emily: Okay, so you have some savings, you have started your Roth IRA, you bought some I-bonds, that’s great. So, let’s talk more about this investing situation. I understand you want to continue investing during graduate school. Why are you making that a priority?

14:18 Michele: Yeah, I think it’s a priority for me because I want to have the flexibility to take whatever jobs I want. And so, like with the AmeriCorps thing, I was able to take that job because, well for one, the student loan payments were on pause and it was kind of just like a good opportunity for that point in my life. But I also want to be able to take other opportunities that may not pay me as much because I’m really passionate about doing like environmental jobs that sometimes you don’t really get that high of a salary for. And so, I just want to make sure that I’m in a good financial spot in order to take those positions that I want.

14:58 Emily: So, is the idea that you’re going to start saving and investing for retirement now because perhaps at some later points in your life your salary won’t be really necessarily much higher than it is now? Or is it to be building up assets so that later you don’t have the pressure as much of having to save, you know, so much for retirement later on? It could be both, but I’m curious about your decision-making here.

15:21 Michele: I would say it’s both. I think, too, just everything I’ve read about personal finances, it’s time in the market over timing the market, and so I wanted to start as soon as possible so that I don’t have to worry about like starting after grad school. And like maybe if I don’t get a very high-paying job and I still like can’t contribute as much as I want to, this starting early allows me to have much more time to like accrue interest and just a bigger retirement savings account and that also would let me be more flexible in case I need to take like a career break of some kind or anything like that.

16:04 Emily: Yeah, I have to say, like so I’m 37 now, I’ve been out of graduate school for eight years about, and this is really like I can already see this playing out in my own life because I did start saving into a Roth IRA or investing when I was like 22, right out of college. And it’s really like because of some other stuff going on in like my and my husband’s financial life, like we, you know, saved diligently during graduate school. It was never, I’d never even maxed out my IRA so it wasn’t even like a large dollar amount, but for a graduate student it was a lot. And that portion of our portfolio in the time since then, like it’s a really big portion of our portfolio even though we have started since buying our house like last year we’ve really ramped up our retirement contributions because we no longer had like the down payment savings to be considering. But it’s like still amazing how much of our portfolio has just been those long time ago contributions that have had plenty of time to compound. And even though we’re saving a lot right now, and in the decades to come, like it’s still going to be a huge part of our portfolio despite being you know, dollar amount-wise not that much in contribution. So, I really commend you for getting started with this early. Is it your goal to max out every year? Like what number have you put around how much you’re going to contribute?

17:19 Michele: Yeah, I’m already maxing out every year so I put in $500 a month automatically so that I don’t have to like worry about forgetting doing it. And then I also am planning on increasing next year since they just announced that it’s going to be $6,500 instead of $6,000.

Getting Started with Investing

17:39 Emily: And many of the listeners who are, you know, considering getting started with investing or trying to get started now might be curious like how did you exactly get started? Like where did you choose to house your money and you know, what do you invest in? Obviously you’re not giving anyone advice but just like the path that you took.

17:54 Michele: Yeah, so for me I really wanted to make sure that I was going to be investing in funds that I believed in, like ethical investing for me. So, to do that I chose Fidelity as my I guess like taxable or tax advantaged account that I wanted to use. I’ve since learned that Vanguard has lower cost like target date funds if you’re interested in those. But I think Fidelity is a good one for graduate students because they have more fractional investing so you can invest with as little as like $10 a month, but for Vanguard you need to have I think a minimum of a thousand. So that’s why I chose Fidelity. And then as for the funds, I just chose ones that were offered by Fidelity because that those have lower expense ratios. And then also I chose environmental funds so there’s like, they have a US Sustainability Index Fund, International Sustainability Fund and then an Alternative Energy Fund. Plus some other ones. I got a little trigger happy when I was first starting out but yeah.

19:06 Emily: Okay. It sounds like though, are you like a hundred percent in equities with this with your IRA investments?

19:13 Michele: Yeah, so I have mostly stock funds right now since I’m still pretty young and I can afford to be more aggressive. I do have one bond fund which I’ve learned as I’ve been researching more that you want to have more bond funds in your Roth IRA cause it’s a tax managed account and so if I start a taxable brokerage account then I’ll switch to more stocks in that one.

19:38 Emily: Yes, this is asset location optimization, this is a really advanced strategy. But just in case anyone, any listener doesn’t want to put as much thought <laugh> as Michele has into this process, I mean it’s great to put thought into it but if you just want to get started and don’t have the time right now, whatever you choose, as long as it’s like broadly pretty appropriate, like you were just saying. Largely stocks, you know because you’re just starting out and you have a long timeline to retirement. What’s most important at this point is just to get started. And your exact asset allocation and everything, you can figure that out down the line. Because right now, the way that your portfolio is growing is mostly by your contributions <laugh> later on, you know, a couple decades from now, it’s mostly going to be growing because of the compounding interest. But for now, it’s really your contribution. So even if you’re not like a hundred percent the most optimized in what you’ve chosen, it’s okay. It’s really the thing is just to get started and to get that nice savings rate going like Michele has with her, you know, $500 per month current target. So, that sounds awesome. And are you also doing any other kinds of investing outside of your Roth IRA?

Investing Outside of Roth IRA

20:46 Michele: Yeah, so right now, like I said before, I have the I-bonds. So, my goal is to have about I think maybe like $4,000 in I-bonds so that hopefully the interest will accrue enough that when I graduate I can take those out and pay for the rest of my student loans. And then I’m also looking into doing a taxable brokerage account but I’m still exploring that because I’m still figuring out how the taxes would work on that.

21:17 Emily: Sure. Would that also be for long-term investing like for retirement? Or would it be maybe for like a shorter-term goal? Nearer-term goal?

21:24 Michele: I think that would be a longer-term goal just because I don’t want to have to worry about like taking it out and losing money because I didn’t like pick the right investment. So, I would rather leave it in there for retirement.

21:39 Emily: You’re actually taking a fairly similar approach to what my husband and I did when we started graduate school. We, as I said, we had our Roth IRA investments going at a certain rate. And then we also, I had student loans as well that were subsidized during graduate school. And so, initially I was just like, okay, forget about those. Like I don’t even need to think about those. Not like you’re doing, you’re planning from the beginning but at some point along the way in graduate school I realized, oh it would be nice to have money set aside to pay this off once they come out of deferment. And so, that became a goal as well for us. And then we also opened a taxable brokerage account. So, lots of different kind of layers to this.

Union Efforts to Obtain 403(b)

22:13 Emily: Okay. Is there anything else you want to share about your investments?

22:17 Michele: I guess I also want to, I’m part of the union here on campus now. I’m like our department representative, and one thing that I want to work with them on is getting a 403(b) account for grad students at Michigan State. Because I know that there are some other schools, a lot of schools don’t have them for grad students, but there are schools that do and I think that that would be something that would be really beneficial, not only for the grad students but also for the university to attract more people to come there. So, I think that that’s something that we could work on together to hopefully achieve <laugh>.

22:56 Emily: Yeah, that would be really exciting. I definitely want to hear an update from you about that. I mean I hope you’re successful certainly, but even if you’re not, I would love to know why like what their reasons are for, you know, not including graduate students. Because as you said, in very few places graduate students are included, and I don’t really know why they would bother like excluding them really.

23:16 Michele: Yeah, I could see maybe like, I know that the ones I’ve been looking at, they don’t provide a match. But I think they already have like a 403(b) set up for like employees. So, I think just like allowing grad students to open an account even if you don’t do a match, I think it would still, I think that would be pretty easy to do, but I don’t know. I haven’t looked into it super far yet.

23:38 Emily: A match would be, I would be shocked if I ever <laugh> Yeah. If I ever saw a match for a graduate student. Even postdocs oftentimes don’t get matches. Some of them do, especially if they’re like state employees. But yeah just the first step of like, because when I read these like plans and so forth, because I often do this with schools that I give seminars at. I’ll go into and just do a little check and see if students might have the opportunity to contribute to a 403(b). And most of them say explicitly students cannot contribute or you have to have at least a 50% appointment and they, you know, put all the students at 0.49% appointments. They have these kinds of like workarounds to specifically exclude graduate students. But why? I don’t know, is it just an administrative burden for them? I really don’t know why because I’m sure there wouldn’t be that many graduate students who would, you know, elect to use it even if they had the option. Although even just, I mean psychologically, just knowing that you had the option would actually help, I think. Students start thinking about, oh is retirement something I should be preparing for in this stage of my life? So, I love this idea, and I really want to hear an update about it.

24:41 Michele: Yeah, I think that would also maybe help like with negotiations for like increasing stipends as well.

24:50 Emily: Alright. Okay, great. To be followed up on.

Commercial

24:55 Emily: Emily here for a brief interlude! I’m hard at work behind the scenes updating my suite of tax return preparation workshops for tax year 2022. These pre-recorded educational workshops explain how to identify, calculate, and report your higher education-related income and expenses on your federal tax return. For the 2022 tax season starting in January 2023, I’m offering three versions of this workshop, one each for U.S. citizen/resident graduate students, U.S. citizen/resident postdocs, and non-resident graduate students and postdocs. That third workshop is brand-new this year, and I’m very excited about it. While I do sell these workshops to individuals, I prefer to license them to universities so that the end users, graduate students and postdocs, can access them for free. Please reach out to your graduate school, graduate student government, postdoc office, international house, etc. to request that they sponsor one of my tax preparation workshops for you and your peers. I’d love to receive a warm introduction to a potential sponsor this month so we can hit the ground running in January serving those early bird filers. You can find more information about licensing these workshops at P F f o r P h D s dot com slash tax dash workshops. Now back to our interview.

Budget Breakdown

26:36 Emily: Okay, so we’ve talked about your investing goals. How are you formulating your budget to support those goals and to support all the other things you want to be doing in your life right now?

26:47 Michele: Yeah, so actually, the reason why I want to do a budget breakdown is because I’m really bad at actually doing a budget, so this helped me to track my spending. So, right now, I guess like my fixed costs, so my rent, I’m living with two roommates. So I have, my portion of the rent is $375 a month. And then with like utilities they’re kind of high here so I’d say that brings me to like between like $450 to $500 for my portion total, sorry, when I add rent and utilities <laugh>.

27:27 Emily: Just to interrupt, because that is such a low amount of rent, I have not heard a rent amount that low in a long time. Do you have your own bedroom or are you sharing a bedroom?

27:35 Michele: No, I have my own room and then it’s actually like a really nice setup because it’s a house, and so we still have like our laundry and like a dishwasher and like a yard. So yeah, when I found this place I was like, this is great. <Laugh>.

27:50 Emily: Is that through a private landlord?

27:52 Michele: Yeah.

27:53 Emily: Okay. Yeah, I’m always curious in different cities about like, where can you get the best deal? Is it going to be a corporate place, is it going to be, you know, a mom-and-pop landlord? So yeah, that’s great. Did you find this house? Or did these roommates exist and you found the room?

28:06 Michele: So, my roommates are both also in, not my department but a similar department to me. So, they had sent out like an e-mail on the listserv, and so I reached out to them through that.

Food and Furniture

 28:18 Emily: Amazing. Love it. Okay. What’s your next expense?

28:22 Michele: Yeah, so I guess my next biggest expense would be my food which I kind of just lumped together, like going out to eat and groceries. So, I guess my first month it was $450 and then my second month was $385, so I guess roughly $410 right now. And then also with my moving, I didn’t bring any furniture with me so I actually got pretty good deals on all of them. So my total for that was $170.

29:01 Emily: You spent $170 in total on furniture? Was it just like a mattress or like what?

29:07 Michele: No, I got like someone was selling their bed at a rummage sale, so I got that pretty cheap. And then I got a desk, a chair, and two dressers. Yeah, Facebook Marketplace.

Transportation

29:21 Emily: I’m just delighted by this great job. <Laugh> Yeah, Facebook Marketplace. Okay, great. Yeah, have you incurred any other expenses? I think you said earlier you basically only buy like housing and food, so what else is on your list?

29:35 Michele: <Laugh> and then I guess like transportation. So, my gas money and then I’m flying home for the holidays and I’m also going to be taking the train home so I have to like buy those tickets. So, for this month it was like $282 and then last month it was like $110 for gas. And then I guess too, one other thing I should mention is I like bike to the university so that I don’t have to buy the parking pass and I can just park for free at my house when I go to the store and all that stuff, so.

30:19 Emily: So, I think we’ve covered the big three, right? Housing, food and transportation. You mentioned that you own your car outright, so you know, you’ll pay insurance on that but not a whole lot in terms of fixed costs. But even just with those three, I think you’re still under a thousand dollars a month probably. Which is quite reasonable given your gross salary, let’s just say it’s $30,000 per year. $2,500 per month. So, keeping your like larger necessary expenses under 40% of that is great. You’re doing very well. What are you doing with the rest of it? Like are you choosing to spend discretion early? Or is this just going to go into investments and savings?

Discretionary Funds

31:00 Michele: I’m still trying to figure that out. I guess I also have had like different like fees come up just from like, so I’m trying to figure how to incorporate that into my budget from like the TSO and different organizations on campus. And then I’ve just like since moving, I’ve been like finding little things that I like want to get. Like I just got some new headphones and needed to replace like my watch band and everything. So, I still don’t know how to budget the rest of my money just because I don’t like have a good grasp on it yet, but I’m hoping that I could spend like $200 a month, like discretionary and then just like either invest or save the rest of it.

31:51 Emily: Yeah. Given how low you’re keeping your fixed expenses, especially your housing and this like very decent fellowship, yeah it seems like you have a lot of choice over what you can do with that excess cash flow, so that’s great. I don’t, you know, many graduate students are not in such a fortunate position. That sounds awesome. Does this fellowship last the entire time you’re in graduate school? Or is your stipend expected to like drop at some point?

32:14 Michele: So, for this fellowship, it covers the first and the fifth year. But then like you’re supposed to work with your department to find funding for the middle three years. So, I’m supposed to always have like, at least in my offer letter it said I’m always supposed to have like the base rate somehow.

32:31 Emily: Which is 30,000 per year.

32:33 Michele: Yeah.

Best Financial Advice for Another Early-Career PhD

38:34 Emily: Okay, so let’s finish up, Michele, with the question that I ask all of my guests, which is, what is your best financial advice for another early-career PhD? And that could be something that we have touched on already in the episode or could be something completely new.

38:49 Michele: Yeah, I think my best financial advice would be to automate everything as much as possible so that you don’t miss payments or if you are investing you don’t miss your investment goals. I know most credit cards you can set up an automatic payment so that you don’t miss that at all and then you can also link your accounts together so that you can like send money from your checking account to your savings account automatically so that you don’t miss anything or spend the money that you wanted to save. And I think this also can help with fixing like if you have any problems with like overspending or just like if you get super busy in your PhD like you probably are, then you don’t have to worry about like saving your money.

39:34 Emily: I love that advice. I totally concur. It took me some time, I think, to trust myself with automation, but I’m really glad that I got there. Was there anything that you wanted to add about your bank that you wanted to say?

39:47 Michele: Yeah, I did. So, I highly recommend reading I Will Teach You to Be Rich by Ramit Sethi. I think that’s how you say his last name. Because he gives a lot of recommendations for personal finance in general but for banking. So, like I just opened up the checking account that he recommended, which is called the I think it’s the Schwab High Yield Checking account and you get a brokerage account with that, but you don’t have to invest in it if you don’t have the money or if you don’t want to invest with them. But that checking account gives you 0.4% interest, which is like awesome. And then you also get ATM reimbursement everywhere and you also, I don’t think there’s like overdraft fees. So yeah, it’s just a great account. And then also for savings accounts, he recommends like I open a Capital One 360, and there’s also like an Ally Bank account that you can get like over 2% interest right now. Yeah, because I was looking into the Aspiration account because of their, they don’t lend to fossil fuel companies, but the downside of that is I heard a lot of people talking about how they like couldn’t get their money out and so that kind of scared me a little bit, but I might look into them again once they’re more established because they’re a pretty new bank.

41:06 Emily: Yeah. That’s good to hear. And thank you so much for the recommendation of the book, I Will Teach You to Be Rich. There’s actually a 10th anniversary edition that came out, I want to say within the last year or two. So, recommendations like banks, like I’m sure those have all been updated in the new edition, so if you’re looking for that kind of recommendation, you should definitely get the new edition and not the original edition from like 10 plus years ago. Or I would imagine you can just go to his website, which is probably, I Will Teach You to Be Rich or Ramit Sethi or something like that. And he’ll have those kinds of recommendations, but that’s awesome. And yeah, I think, I read that book again recently after the new edition came out and it’s great. It’s very, very direct and actionable and he’s so confident in what he tries to teach you. So like, it’s really compelling, it’s a compelling book. And a previous podcast guest mentioned that reading that book was like her sort of catalyst for like starting to get her personal finances under control. We’ll link that episode as well in the show notes. But I think it had to do with banking. I think the first thing she did was change her bank and felt really like great about that decision and like just sort of snowballed that energy like going forward. So, that’s awesome. Thanks for the recommendation.

42:10 Michele: Yeah, no problem. Yeah, the banking was really helpful, too. Just using like an online bank that doesn’t have as many like brick and mortar locations, they save a lot of money and give it back to you. So, that was a really helpful tip from him.

42:21 Emily: Totally. I started using an online or an internet-only bank I think about a year after I graduated from college when I knew like I’m going to move for grad school and then I’m probably going to move again. And then maybe, you know, I just saw a lot of moves like in my future and didn’t want to be sort of tethered to like regional, you know, availability of brick and mortar banks. So, all great suggestions. Michele, it’s been such a pleasure to talk with you. Thank you so much for volunteering to be on the podcast!

42:45 Michele: Of course. Thank you for having me!

Outtro

42:51 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

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