Personal Finance for PhDs

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How to Eat Well on a Grad Student Budget

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In this episode, Emily interviews Jen from the Budget Epicurean (formerly College-Approved Food) about her experience as a grad student. Jen finished a master’s and spent several years in a PhD program, but decided to leave before completing her dissertation. They discuss her reasons for leaving and the career she built and what role finances played in the decision. In the second half of the interview, Jen gives her best tips for eating well on a grad student budget, including curating go-to meals and ingredients, where to shop, how to track prices, and what kitchen appliances are the best bang for your buck.

Links Mentioned in This Episode

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Teaser

00:00 Jen: I almost tripled my income within two years of leaving the program. It was very exciting to get those paychecks and say, oh wow, this is what real money feels like.

Introduction

00:17 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is Season 9, Episode 4, and today my guest is Jen from Budget Epicurean. Jen finished a master’s and spent several years in a PhD program but decided to leave before completing her dissertation. We discuss her reasons for leaving and the career she built, plus what role finances played in the decision. In the second half of the interview, Jen gives her best tips for eating well on a grad student budget, including curating go-to meals and ingredients, where to shop, how to track prices, and what kitchen appliances are the best bang for your buck. I have found through facilitating my workshop Hack Your Budget that early-career PhDs are highly interested in food spending. I poll the attendees about what budget category they most want to discuss, and food always comes out on top, plus the vast majority of the frugal tips submitted are related to food. I think this is because grocery spending is typically the largest variable expense category in a grad student or postdoc budget. It’s quite gratifying to try out a new frugal strategy and immediately see the effects on your spending. In fact, Season 4 Episode 13 with Dr. Brielle Harbin was devoted to the subject of meal planning, and I almost always interrogate my budget breakdown guests on their cooking and food shopping habits.

01:51 Emily: Keep in mind, though, that your frugal journey should not end or even necessarily start with food spending. I am a firm believer that you should re-evaluate your large, fixed expenses, such as housing and transportation, before any other categories. It may take a long time, a lot of research, and even some money up front to reduce your spending in one of those areas, but once you do make a reduction, that lower spending level is locked in indefinitely and requires no conscious action by you to maintain. That is the big advantage of reducing fixed expenses first. However, I also love the idea of using frugal strategies in the kitchen to start what I call a frugal stack, which is when you use variable expense reductions to leverage yourself into fixed expense reductions. If you would like to learn more about strategic frugality and frugal stacking, check out the Personal Finance for PhDs Community at PFforPhDs.community. I taught these strategies as part of two monthly challenges held near the end of 2020. I also devoted a chapter of my ebook The Wealthy PhD to frugality; it discusses the philosophy of frugality and gets into really nitty-gritty strategies for each one of your budget categories. I hope you will join us this month inside the Personal Finance for PhDs Community PFforPhDs.community.

Book Giveaway Contest

03:30 Emily: Now onto the book giveaway contest! In June 2021 I’m giving away one copy of The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach, which is the Personal Finance for PhDs Community Book Club selection for August 2021. Everyone who enters the contest during June will have a chance to win a copy of this book. If you would like to enter the giveaway contest, please rate and review this podcast on Apple Podcasts, take a screenshot of your review, and email it to me at emily at PFforPhDs dot com. I’ll choose a winner at the end of June from all the entries. You can find full instructions at PFforPhDs.com/podcast. The podcast received a review recently titled “Preparation and survival!” The review reads: “Excellent resource to get prepared for graduate education and to navigate it. I think the specifics of your personal situation and institution will always vary. So some things you take with a grain of salt, however, the biggest asset of the pod is the variety of people interviewed. People from different backgrounds and programs and the amount of topics covered. Most of these topics are discussed behind closed doors and in private, but this podcast makes you remember you’re not alone and there are way more people out there navigating difficult situations like you.” Thank you to this reviewer, and I fully agree that the strength of this podcast lies with the guests! I really appreciate my guests being transparent about this taboo topic. Without further ado, here’s my interview with Jen from Budget Epicurean.

Will You Please Introduce Yourself Further?

05:10 Emily: I have joining me on the podcast today Jen from Budget Epicurean. And we kind of ran into each other on Twitter. And I realized that Jen would have a lot to say to us on the podcast. So that’s why I invited her on. And she is both a former grad student and, as you can tell by the name of her blog, Budget Epicurean, has a lot of content to offer us on managing a budget with respect to groceries, with respect to cooking, food spending. So we’re going to learn about both these things. Why did Jen leave her graduate program, and then what are the food tips that she can give us for, you know, eating well on a budget? So I’m really excited for this interview. Jen, will you please introduce yourself to the audience a little bit further?

05:59 Jen: Sure. Thanks Emily. Yeah. I was a graduate student for a very long time. My mom’s a nurse, my dad’s a chemist, so I’ve always been interested in science and knew from a young age that I wanted to go to grad school, get a PhD, run a lab. So that was kind of my path. And I got my undergraduate degree in biology and then I pursued a master’s degree right after, also in biology, and then got into a PhD program in genetics which was wonderful. I loved being in school and learning, but I realized after about a year of talking with the other graduate students, the other postdocs, and even some of my advisors who said funding kept getting tighter and tighter. Tenure-track jobs were almost non-existent anymore. And it just seemed like a big struggle. So it took me about two and a half years to decide, it was a really hard decision, but I did not complete the PhD program. And we can get more into that later. But throughout all this time, I was also blogging because I love food and cooking. So it started out in undergrad as College Approved Food, that most of it you can make in like a dorm room. And it’s just kind of grown from there and morphed over time into the Budget Epicurean as my personal cooking skills and interests expanded.

What Were Your Career Aspirations at the Start of Grad School?

07:24 Emily: One thing I love about blogging, and I used to blog about personal finance, is that you have this wonderful record to look back on, you know, years later. When you can’t quite remember as well, you know, what was going on day-to-day, you have that blog. So it’s so fun that you were focused on food for all those many years and that you have the record of it. So I want to go back to, you know, when you started graduate school, you said you were basically going straight through, undergrad, master’s, into a PhD program. What were your career aspirations? Was it definitely to have a tenure-track job or, you know, was that the only thing you were there for, or what were you thinking when you started the PhD program?

08:00 Jen: So early on, I guess I just had this dream of having my own labs and writing papers and grants and, you know, like I’d cure cancer someday or some kind of fabulous scientific discovery. It just seemed so interesting and just a thing I wanted to do. And then the more I got into it, it’s kind of, they say, you know BS is bull crap, and then MS is more crap and then PhD is just piled higher and deeper. And the longer you go, the more narrow your focus gets on your field. So you know a lot about a little. And so my ideas of big discoveries kind of just became more like fixing this one little problem that we don’t know enough about. And I think that was the further I got, the more I saw people in the end goal as like a professor, as someone running a lab and saw what their lives were. They don’t actually do the science anymore. They’re lab managers and money managers and politicians almost to a point. So I think that’s where the kind of disillusionment started.

09:19 Emily: Yeah. I think, you know, I had a similar trajectory, I would say at the beginning of grad school, like came in wanting to run my own lab, not necessarily in academia, but just to be doing research. And I realized as you did that, once you’re at the top of that, you know, hierarchy of your own lab that you are not doing the day-to-day in the research. And so I then started thinking, oh my God, I actually sort of idealized a postdoc as like the perfect job. And of course there are, you know, staff scientists, those positions can exist, although they’re not super common in academia. So for me, it was never about like academia and like the tenure-track and so forth, but rather about doing research. That was until I got sick of doing research and decided never to do it again later on. But yeah, I’m just thinking about like, I’m sure you considered this because you took a lot of time for this decision, but what were the jobs that you maybe could have had without the PhD? And did you just still have that sense of like, no, I’m going to be overeducated by that point, according to what your interests were? Was that kind of how the decision was made? That even if you didn’t stay in academia, if you finished the PhD, you would still be pigeonholed so much?

10:30 Jen: Yes. I think that ultimately is why, because I did finish a master’s program before going into a PhD program, so not everybody does that. So I had the masters already, so I knew I was that like one level above a college degree, which was, you know, good financially-speaking and did lead to the career path I’m currently in. But not wanting to go the full PhD without wanting one of those “You need a PhD to do it” jobs. I was lucky we had a group that was called careers, alternate careers in science, something like that where once a month they brought in people. So I saw a couple of different options of people who, you know, were clinical scientists in pharma and they advise drug companies or clinical illustrators for textbooks and things like that. But none of those really spoke to me. So I kind of got into that thought process of, okay, well, if I finish the PhD, then there’s nothing really at the end of this tunnel, so I should stop now.

Role of Finances in the Decision to Leave Grad School

11:31 Emily: Yeah. Again, I see myself so much in this path because when I went through the same career exploration process, I did identify a career track that I was like, well, that sounds really cool, and I do need a PhD to do it. Or not need, but you know, it’s helpful. And so I decided to keep going kind of with that in mind. And of course after I finished my PhD, I started my business and it has nothing to do with that career track or anything. So it’s just so interesting, like that can make all the difference is really seeing a career that you’re interested in. Obviously, why would you finish it if you didn’t think there was a career on the other end that needed the degree and that, you know that you were super passionate about? So what role did finances play in this decision?

12:12 Jen: So, there are definitely pros and cons to going straight through. Sometimes I kind of wish I had just taken a few years off after undergrad or after the masters to try and get a career and see if I liked it and then go back. But I think it was also helpful that I had just come out of undergrad where, you know, you’re very used to living on a low income. So going into the master’s program, I think I made $12,500 per year. Which now seems completely absurd, but this was in Ohio and my rent was only $350 a month. So it was doable.

12:47 Emily: What year was that? Or years?

12:50 Jen: 2010 to 2012.

12:53 Emily: Okay.

12:54 Jen: I believe. And it was an attic. So I was literally just living in an uninsulated attic apartment in Ohio. So, you know, my electric bill was probably almost that. But then going into the PhD now I was making 20 something in Colorado. So this is circa 2012 to 2014, something like that. And it just was getting very difficult. I was starting to think about wanting a house someday. I met my future husband there. So we’re thinking about, you know, buying a house, having a family, getting married. And we were both graduate students at the time. So even combined, we were 40 ish. So it was just really difficult to save anything or feel like, you know, you could start doing those adult things as a grad student. So that’s one of the many things we discussed was, okay, if we want to buy a house, we need more income.

High Attrition Rate Amongst Grad School Cohort

13:53 Emily: And you mentioned to me when we were preparing for this interview, that most of your friends left grad school too. Was there a pretty high attrition rate from your cohort?

14:02 Jen: Yes. we had four start and, to my knowledge, only one is still in the program. And the year after us I believe they had the same, they had four people start and only one is still in the program. And now six, seven years later the one person who stayed is still not graduated and had switched labs twice already. So.

14:28 Emily: And do you think that finances are playing a role with those decisions as well? I mean $20K a year, you know, 6, 7, 8 years ago in Colorado, not a low cost of living area, by any means. It sounds quite difficult, even as you said, in a two low-income, two low-income household combined, I still think that would be quite difficult. I’ve just been thinking a lot recently about the strain that we put–“we,” academia–puts on our young, our trainees, of the financial strain that we put on them and the effect it can have on our mental health, our career outlooks. Obviously the financial directly affecting that, even physical health because, you know, food security can be an issue. Housing security. So, yeah. Did you talk about that sort of thing with your cohort mates?

15:21 Jen: We didn’t really, I mean, we weren’t close enough to talk about the numbers and the details, right. But I know I’m the only one who stayed, I think a large part had to do with, he had a lot of family support. Family lived in the area, so he lived with them. So even though he was married and had a kid with another on the way there was, you know, no costs for housing, he had support to help watch the children, to support, to get food and things. So I think that probably helped him a lot, that, that low-income didn’t matter as much. He had that social safety net. One of the other girls who dropped out it was because she got pregnant along the way and got lucky that her husband got a pretty high-paying job about halfway through her first year. So they were comfortable enough that, you know, they said the amount that she was making wasn’t worth the stress it was putting on her. So she left and didn’t come back. So I think that if you don’t have that type of support or other income, it’s really hard to make it as a grad student.

16:22 Emily: Absolutely. It sounds like you, and you know, these other friends, you mentioned like you’re starting to kind of lift your heads up and say, what do I want the rest of my life to look like outside of my career, and what finances are needed to support that? And is grad school currently, or in the future, going to take me to that financial place that I want to get to? And you know, I’ve had a previous interview actually, we’ll link it in the show notes, with Dr. Scott Kennedy, where he talked about, you know, his aspirations initially to become a faculty member, you know, tenure-track, and just realizing as he started his family that a postdoc and, you know, an assistant professor position was not going to cut it for him and his wife and three kids and so forth.

Improved Finances and Current Career Trajectory

17:06 Emily: And so, I mean, so he changed career tracks and he’s very satisfied with that and is paid very well. But yeah, sometimes, you know, the decisions you make when you’re 22, 23, 24 years old, you’re not thinking super far, like you might be thinking decades ahead in your career, but not necessarily about how things might change in your personal life. And they can change very quickly when you’re in your twenties. And a lot of people are, you know, forming families and so forth. So yeah, I just, I find that really interesting. So, you know, what career have you had after leaving your PhD program and how are your finances looking now?

17:39 Jen: Yeah. So once I had made the decision that, yes, I did need to leave. I didn’t want to just jump ship, right. I didn’t want to have zero income. So I started looking at other options and as I said earlier, having the master’s already really helped because that gave me a leg up and a lot more options beyond just, you know, being a research tech, cleaning beakers at a university somewhere. Not that that’s a bad thing. But I think it was actually through one of the people who came to talk to us. It was someone who worked for pharma as the medical monitor for clinical trials at a pharma company. And so I started looking into clinical trials, which prior to then I hadn’t really thought about. Every drug that’s approved, that’s what they have to go through. And so I looked into, you know, how does that happen?

18:27 Jen: What are the different careers you could do on the pharma side, on the site side? And I just had good timing. I found an opportunity with a research group, very close to where I was and interviewed. And even though I had no research experience, clinical research experience, I had the master’s degree. And so I convinced them that I could learn quickly and they decided to go ahead and take a chance and hire me as a research associate. And I loved it. It was the first time I ever had patient interaction with people in a clinical setting. And it was just so much fun and it was a very eye opening moment of like, this is like the thing. This is the thing I want to do.

19:08 Emily: Wow. And it sounds actually like, you know, based on, you mentioned your parents’ careers earlier, that it’s kind of an interesting melding of the two, like still doing research, but having patient interactions, like probably, yeah. They probably both do each side of those things, right?

19:21 Jen: Yes, yes. It was perfect. So I still get to read scientific papers. I still get to browse Google Scholar. It’s just, you know, looking at the background of my drugs and standard of care and being on the cutting edge of research is so much fun. So yeah, it was a very good fit. And having the masters, I think is the thing that really pushed me into it. And then once you’re in clinical research and you have years of experience, then the whole world opens up to you. So I’ve switched companies several times, moved up in the ranks and now I’m in essentially a clinical coordinator management position. And so I think doing that was an excellent choice. I don’t know that I could have done that right out of undergrad. So ultimately I’m glad it all worked out the way it did. But I almost tripled my income within two years of leaving the program. Because I mean working full-time, I think I started at like 40. So just by getting a job, a 40-hour-a-week research assistant job, I had doubled my income there. And then after I had a year of experience, I went to a different company and then I was at like 58 or something like that. So yeah, it was very exciting to get those paychecks and say, oh, wow, this is what real money feels like.

20:43 Emily: Yeah. Incredible. And that’s the thing that, you know, I often talk the income jumps that can come along the PhD process, but guess what, if you’ve been living on a grad student stipend, almost any job is going to pay you quite a bit better than that. So yeah, I’m sure that did feel incredible.

Commercial

21:02 Emily: Emily here for a brief interlude! This announcement is for prospective and first-year graduate students. My colleague, Dr. Toyin Alli of The Academic Society, offers a fantastic course just for you called Grad School Prep. The course teaches you Toyin’s 4-step Gradboss Method, which is to uncover grad school secrets, transform your mindset, uplevel your productivity, and master time management. I contributed a very comprehensive webinar to the course, titled “Set Yourself Up for Financial Success in Graduate School.” It explores the financial norms of grad school and the financial secrets of grad school. I also give you a plan for what to focus on in your finances in each season of the year that you apply to and into your first year of grad school. If this all sounds great to you, please register at theacademicsociety.com/emily for Toyin’s free masterclass on what to expect in your first semester of grad school and the three big mistakes that keep grad students stuck in a cycle of anxiety, overwhelm, and procrastination. You’ll also learn more about how to join Grad School Prep if you’d like to go a step further. Again, that’s the academic society dot com slash e m i l y for my affiliate link for the course. Now back to our interview.

Best Tips for Eating Well on a Budget

22:30 Emily: So let’s switch focuses now and talk about the food side of things, the subject of your blog. And so I’m going to kind of let you like drive this half of the conversation, but like, what are your best tips for us in terms of shopping, cooking, whatever it is, as I said earlier, eating well on a budget?

22:45 Jen: Yeah. So I’m also lucky there. My mom is a fantastic cook, and I grew up in a household that we were just very thrifty and frugal and creative. So I got to use all of those skills to feed myself, you know, better than ramen all throughout college. So my house was always the place to go for dinner parties and game nights. And I love hosting, so I had to find ways to, you know, feed six of my grad student friends without, you know, we can’t afford $60 worth of pizza every Friday. So I think one of my best tips is to just try new things. And eventually you will find some recipes that you like, and put those on repeat. So for your standard meals, I have tons of like cheap ingredient lists and less-than-five-ingredient meals on my blog. Things like stir-fried rice. That is just infinitely possible to mix it up. You can put beans in it, you can put whatever meats are on sale in it, and whatever vegetables. It’s good with canned or frozen seasonal produce. So find those couple of recipes that are very flexible, that you almost always like, it’s easy to cook, and that saves you tons of time and money. If you just say, okay, it’s Tuesday, I’m hungry. What can I make? And you just have these like three, five things that you just know you have on hand in the house.

24:10 Emily: One of the things that you just mentioned that I thought was really key was short ingredients lists. Because I know when I started cooking, and I did not have extensive cooking experience growing up or through college. I was always on like a meal plan, so I didn’t have to really cook outside of that much. So when I started with that, I was looking at whatever, I don’t know, standard recipe at that time books. And they would have like 10, 15 ingredients for like a recipe. And it would be cool and like taste good at the end, but the work that went into handling all those different ingredients, and also just the fact that I did not have a stocked kitchen and it would be like, oh, you know, three different spices for this one, you know, meal. And they’re like several dollars each and I had to pick them up and so forth.

24:55 Emily: I realized that it was the wrong approach, looking back at it, and now I cook much, much more simple meals, usually that have usually, you know, much shorter ingredients lists. And I think that’s really a key when you’re just starting out. And yeah, like I said, your pantry is not already stocked with, you know, the sort of esoteric like spices that some fancy recipe might call for. So I really love looking at yeah, five ingredients or less, like those kinds of recipes. And I also really like the idea of having some kind of generic base kind of meal that you can then tweak and alter with, depending on what you have on hand, or as you mentioned, what’s on sale. Something that’s flexible, like a stir fry. Do you have some other examples of that? I’m thinking like salad, you know, that works too.

25:39 Jen: Yeah, for sure. Salads are a great one. You can, you know, can a corn, can of black beans, suddenly it’s Tex-Mex. If you got, you know, walnuts, cranberries, some kind of cheese, salads are great to mix it up. Whatever proteins on sale. I love chickpeas or, you know, a little flank steak. You can get those for a couple bucks, slice it up. It makes a great salad. Soups are really great. If you’re a person who likes soups that’s always a good kitchen-sink meal. Like I don’t know that I could think of anything that you couldn’t throw in a soup and make it work. Casseroles are also great. Omelets, you would be surprised at the things you can put in an omelet and make it delicious. I’ve had like leftover French fries that normally taste terrible. Chop them up and throw them in an omelet. Now they’re basically hash browns. So yeah, I love meals like that. We still have them all the time.

Time Management Tips for Food Shopping and Cooking

26:30 Emily: And so what’s another kind of suggestion, maybe on the time management side of shopping and cooking, which I know can be a real challenge for graduate students?

26:40 Jen: For sure. So again, I would start with what you like, and then branch out a little bit from there. So a list is very helpful if you’re the type of person who likes lists to keep you focused and not spend eternity at the store. Plus it’ll keep you from, you know, just being confused in front of the spice rack, like there are 7,000 things. What do I get? Like, you look at your list, you know, I need like salt, pepper, cinnamon, that’s it. So having that also keeps you from spending money because grocery stores, you know, want you to spend more money than you intended and having a list can help not do that, although I still do.

Process for Making a Grocery List

27:23 Emily: And what about when you’re making that list? Like, what’s your process for that? Like, are you looking at the circulars that are produced by, you know, I don’t know how many different grocery stores you kind of cycle through, but is that, is that another strategy that you use, like shopping multiple stores? Like, let me know how you’re doing in terms of making a list, how you do that with your budget in mind.

27:42 Jen: Yeah. So I have a number in mind that I’m trying to hit every week, right? So let’s say you only want to spend 50 to $70 a week for one person. So you should definitely look at the circulars because stores have what they call loss leaders. So it’s usually whatever’s in season or they can get a lot of, and they want to use that to get you in the store. So like it’s wintertime and cabbage is on sale and Brussels sprouts are on sale. So they’re super, super cheap per pound. So you start with those things and say, okay, what can I make with those things? I can make soup. I can roast them as a side dish. I can put them in a casserole, and just come up with some ideas for meals. And so I would then make a list of, okay, I want this thing, this thing, this thing, they’re all on sale.

28:33 Jen: Check your pantry as well. So like, you know, I have some pasta noodles still, so I’m going to make pasta one night. So I don’t need to buy that, but, oh, I don’t have any sauce. I’ll put a jar of that on the list. So between what you need that’s not in the house and what’s on sale, you can then kind of build your meal ideas around that. And then when you’re at the store, you can look around because, you know, sometimes I’ll find deals that weren’t advertised in the circular, but they have, you know, there’s like a markdown on pineapple because it didn’t sell well enough or whatever. So I’ll pick up some of that too. So I think the idea of flexible meal plans is what works best for me. I’m not like, okay, Monday I will have oatmeal and then sandwiches. And then a tuna noodle casserole. It’s more like, I’ll probably make tuna noodle casserole this week.

Using a Price Book

29:23 Emily: Another strategy that I use. So, my husband always makes fun of me. I do not know the prices of things. I don’t like look at price when I’m shopping, especially in something like a grocery store. So it’s really important for me to kind of study the prices because it’s not something that I like naturally will just absorb. Like he just naturally absorbs that. He knows the last time we bought this, we paid this. The price I see in front of me is lower or higher. That helps me know when to buy it or not, or to skip it. But I actually have to use a price book. So especially when I am, so we recently moved to a new state. And so we were kind of like, well, we don’t know what the prices here are. So we started using a price book again.

30:02 Emily: It’s not something I do all the time, but just to check out, okay, well, this is what we’re paying over here, studying the receipts, basically. This is what we paid for this food at this store. This is what we paid for this food at this store. Okay, that price is the same every week. Okay, sometimes that price is lower and sometimes it’s higher. We need to like pay attention to when it goes to this level and then we can buy it. So the price book to me is really helpful as someone who does not naturally incline to, you know, notice the prices of food to know when something is a good deal or something is not a good deal. Because for me, if it’s not going to appear on the circular, unless I have that price book, I’m not going to know if it is a good price or not a good price.

30:37 Jen: Mhm, that is an excellent point. Absolutely. And I think I’m like, I must be like your husband. I just know in my brain like, oh, last time I bought Italian dressing, it was about 1.50 and it’s, you know, 10 for 10 while on sale. That’s a dollar. So I’ll just get three of them. Should last for, you know, until the next sale comes around. But if that’s not a thing you notice then a price book is definitely a good idea. And I would suggest a price per unit as well. Because sometimes they do get you there. You assume, you know, the big package, cheaper per ounce, but maybe it’s not, maybe you should get two of the one-pound bags instead of one of the two-pound bags. And that’s one way to know for sure.

Finding Your Go-To Stores

31:17 Emily: And one strategy that I just mentioned with that was shopping multiple stores. And so I’m wondering, you’ve lived in multiple places now, someplace for your undergrad, master’s, PhD, maybe you’ve moved since then. How have you found like your go-to stores in those new areas?

31:34 Jen: So I think it’s a lot of the mental price book thing. So we did move around a lot. We’ve lived in Colorado, Connecticut, and now we’re in North Carolina. And so when I go to a new place, I usually do go to all of the grocery store options at least once just to see, you know, what’s the layout, what do the prices look like? How far is it from home? And then I kind of choose the best one based on prices and now a little convenience, because we have that wiggle room in our budget to sometimes pay a little bit more just because it’s closer. But yeah, so I would definitely recommend going to the stores, just checking things out, write down in your price book the things you commonly buy. So that’s another way that you’ll know your eating habits like, oh, I always buy chicken and spinach and milk and bread.

32:20 Jen: So those are the things you’re buying every week, even if you’re only saving 10 cents, 20 cents every week, that’s going to add up. So I usually go to our Harris Teeter because they have pretty good prices. They have regular rotating sales on things we use all the time. Then I supplement once a month, once every other month with Aldi, which is one of my favorite discount grocers. And they’re expanding, they’re in most of America by now. So they just have great super cheap prices on your common everyday staples, like canned tomatoes, canned beans. So those are my two I use most frequently.

33:01 Emily: I’m glad you mentioned that you were in North Carolina. I did not know that. I did grad school in North Carolina at Duke. And so actually when my husband and I first got married, the closest grocery store to where we lived was a Harris Teeter. So we were doing a hundred percent of our shopping at Harris Teeter, which I do not think was a good idea, especially because we were not, again, paying attention to the sales cycles and so forth. It was just, it was all about the convenience of that being like super, super close. So after we started paying attention, after I started paying attention a little bit more to the grocery prices, we mixed in Kroger in North Carolina and Costco and Aldi. And so we would not definitely hit up, you know, Kroger and Costco and Aldi every week, but it would maybe be kind of on a two-week rotation.

33:45 Emily: And yeah, another kind of vote for Aldi. I recently moved from Seattle to Southern California. There were not any Aldis in Seattle, I don’t think, that I was aware of, but there is one really close to where we live now. And so I’ve been, like, as soon as we got here and we were like, oh my gosh, there’s an Aldi again, like we are so excited to be able to go back to Aldi. So yeah, definitely that’s where we do, like, our kind of primary shopping, I would say. And then sort of supplement it with like a regular, you know, grocery supermarket kind of situation.

Tips for Meal Prepping

34:11 Emily: I asked earlier about time management and I was thinking about like, I don’t know, meal prep or like bulk cooking, batch cooking. Do you have any tips around that for someone who maybe is just cooking for themselves and has a busy schedule? I know when I was in graduate school, a big problem for me was staying on campus till, you know, post-six, post-7:00 PM and coming home hungry. And what do you do in that situation?

34:36 Jen: Yeah, absolutely. So I think as a grad student, if you don’t eat leftovers, you should start now. I think I only met one person who refused to eat leftovers and they spent way too much money on food. But that is the best way to just make sure you always have something ready. So I would say, seek out things that freeze well. Things like pasta bakes and soups and chilies, and even some casseroles, and you can make those things in bulk. And honestly for one person, that’s not very difficult. You make one pan of, you know, like a rotini bake or lasagna, and you can eat some then, have some for tomorrow, and then freeze the other half. And that’s 2, 3, 4 more meals for you. So you can start out with cheap Tupperware or even Ziploc bags. The way I do it now is not necessarily cooking whole meals, but I batch prep when I make ingredients.

35:33 Jen: So say I’m making rice for stir fry and burritos this week, and I need like a cup or two cups of rice. Well, I can cook like six or eight cups all at the same time and freeze it in Ziploc baggies. And then next time I need rice, I don’t have to cook it. It’s already made, I just pull it out of the freezer, stick it in the microwave. And that saves me 40 minutes of not having to boil rice next week. So if you’re making things like that, I would say definitely batch it and freeze it if you can.

Go-To Kitchen Appliances

36:05 Emily: And also with, you know, someone budget-conscious in mind, what are your go-to like kitchen tools or small appliances that you would say are good for facilitating the kind of things we’ve been talking about?

36:19 Jen: Yeah, for sure. It’s a little hard looking back now, now that I have the luxury of so many things in my kitchen. But I would say if you can only get one thing right now, probably a pressure cooker is my absolute favorite accessory right now. And the newer ones that are super fancy and have a million things that can do are great, but you don’t need a super fancy one. Like I have an ancient pressure cooker from my grandma and it gets the job done. But that will definitely save you time. You can cook something like a roast from frozen in 30, 40 minutes. It’s amazing. So that helps you maximize your freezer usage of foods like that, and it’ll save you money because you can make your own dried beans. My biggest problem with dried beans was that they take so long. You’ve got to soak it overnight, put it in a Crock-Pot for hours. You can take dry beans, stick it in the pressure cooker, and 40 minutes later, you’re good to go. So the price per pound of dried beans is way better than canned, and a pressure cooker makes them almost as convenient. So that would be my top one right there.

37:35 Emily: That’s a good tip. I’m like pulling out my Amazon like wishlist, like, oh, I need to add one. Because I don’t have a pressure cooker right now. Oh yeah. That sounds really. Because I have far too many times left, you know, some meat or something frozen until way too late and have to kind of scramble and remake the plan. So I mentioned, I don’t have a pressure cooker, but the appliance that I used most when I was in graduate school, and I think it was something like $40 when I received it, was a slow cooker. And I really liked that too, because it was so easy to cook in bulk, again for one person or two people. Like you can cook one meal in a slow cooker and it’s going to last you all week pretty much in terms of like taking it for lunches or whatever.

“Leftovers” Avoid the Takeout Trap

38:13 Emily: So that was my, like, when I started using that, it like completely changed my like cooking life. It made things so much easier. And I really, like we mentioned about like, you know, freezing meals and having things ready also, you know, leftovers. I don’t even like the word leftovers. I love eating leftovers, but I don’t like calling them leftovers. I feel like it’s really pejorative. Like they’re like an afterthought. No, you intentionally created food than you needed, you know, initially. And you had a plan to eat it like over time. I love that because yeah, I think a big sort of trap is being hungry and not having anything really easy to go to at that moment. Especially as I mentioned, like coming home from lab late, I remember when I was blogging at some point and I mentioned something about cooking.

38:56 Emily: Like, you know, not eating out, basically. Like not eating out for convenience. I remember I got a comment from a grad student like, well, what do you do? Because you know, when you get home from lab, like you have to be, it’s late. Like you’ve got to be hungry. And I was just like, oh, I realize I never cook at that time. I always had something already ready to go in the fridge and the freezer because yeah, I came upon that situation over and over again. And I would be tempted to grab takeout on my way home if I didn’t know that there was something there waiting for me that was appealing.

39:25 Jen: Yeah, absolutely. And, the Crock-Pot would be my second for sure. They probably are a little bit more affordable, but yeah, you can make a lasagna in a Crock-Pot. You can make a huge batch of chili or soup or casserole or cook a whole chicken and shred it up and save it for later. So yeah, just having a bag or a Tupperware you can pull out of the freezer, the refrigerator, whatever, you know, it’s eight 30 at night. You just need something before bed. That is definitely a huge time saver, huge money saver.

Find What’s Cheap Per Pound Near YOU

39:55 Emily: Do you have any other tips around budget, budget, cooking, shopping, eating?

40:00 Jen: I would say just look, I mean, there are so many resources on things that are generally cheap per pound. Take those lists, but compare them to what’s near you. Just because the internet says eggs are cheap, that might not be the case where you live. Just because, you know, carrots are supposed to be cheap, maybe they’re not in Canada, I don’t know. But find the things near you that actually are cheap per pound and just keep trying different ways to make them until you find one you like. Because if you can make your average cost per pound lower, that’s going to make your cost per meal lower. And that’s going to be much friendlier to your budget.

40:38 Emily: I have to say, I’ve been doing this recently with cabbage. I’ve been on the website, like Budget Bytes, a lot recently and noticing a lot of cabbage recipes coming up on there. So I was like, okay, I need to find a way, because I never ate cabbage earlier in my life, but yeah, that’s the one I’ve been experimenting with recently. Haven’t quite found the thing that we love yet that’s made of cabbage, but maybe I’ll try one or two more before I give up.

Best Financial Advice for Another Early-Career PhD

41:01 Emily: Okay. Well Jen, thank you so much for giving this wonderful interview. As I ask all my guests at the close of our interviews, what is your best financial advice for another early-career PhD?

41:13 Jen: I would say, learn all you can about investing, but then do it. I spent far too many years just reading, reading, reading, but never actually opened an IRA or a Roth. I had a savings account, you know, but it wasn’t much. And even if all you can do is $10 a month, you know, at least I would have had something building, because time is your biggest ally and don’t let it slip away. Just do it. Open it. That’s what I told my sister. She’s six years younger than me, and she probably already has more than me in her retirement account. So just do it.

41:51 Emily: Yeah, that is perfect advice. I see the same thing with many, many people who come to me, come to my material that they know kind of what they’re supposed to do. They’ve been reading about it, but that step of getting off the sidelines and doing it is really where they get kind of held up and tripped up. And I guess my message to like that same audience is like, you don’t have to be perfect from the start. You don’t have to have the perfect investing strategy figured out. It’s much better to get started imperfectly and figure it out as you go along than do everything perfect right from the start. However, the start is two, three years later than it could have been if you had just been willing to, you know, take the leap. So I’m really glad you mentioned that, it’s yeah, a very, very common problem.

42:35 Emily: I don’t know. Maybe it’s a PhD thing, like a grad student thing, like wanting to do the research and wanting to be right and wanting to not mess up. And I certainly understand that. I actually did mess up when I first opened my IRA and didn’t catch my mistake for like a year, but you know what, I’m glad I started when I did, even though I didn’t do it right at the start. And I’ll mention actually for anyone who’s, you know, hearing themselves in that situation. I have a challenge inside the Personal Finance for PhDs community that is specifically about opening an IRA. So if you join the Community, PFforPhDs.Community, you can go to that challenge and find a six, I think it might be seven, actually, seven-step process. This is exactly how you open an IRA. This is what you need to do, the decisions you need to make at these different points.

43:17 Emily: This is how you research it. It points to resources I’ve created that are inside the Community. So it just, for exactly that problem, people getting off the sidelines. And so it just provides a little bit of accountability, too. Like you kind of go in there and you call me and say, okay, I’m taking the challenge. I’m going to do it. And then by the end of the month, I’m going to be asking you, did you finish? Did you go through all the steps? So thank you so much. Thank you so much, Jen, for this interview. And it’s been great talking with you and hearing about your journey and hearing these great grocery budgeting tips. Thanks.

43:46 Jen: Yeah. Thanks so much, Emily!

Outro

43:48 Emily: Listeners, thank you for joining me for this episode! pfforphds.com/podcast/ is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes’ show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest. I’d love for you to check it out and get more involved! If you’ve been enjoying the podcast, here are 4 ways you can help it grow: 1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me! 2. Share an episode you found particularly valuable on social media, with an email list-serv, or as a link from your website. 3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license pre-recorded workshops on taxes. 4. Subscribe to my mailing list at PFforPhDs.com/subscribe/. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

Pursuing Your Passion in a Financially Healthy Manner

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This episode is a podcast swap! Emily’s guest is Dr. Stephanie Schuttler of Fancy Scientist. Emily and Stephanie interview one another on the financial challenges of a career in wildlife biology and how to pursue your passion while preserving financial balance and health. They discuss the necessity and prevalence of volunteer and pay-to-play experiences in wildlife biology and how to have realistic expectations about the job availability and compensation at various levels of education. Stephanie is an expert in careers in wildlife biology, but this conversation is applicable to PhDs who are following their passions into many other competitive fields.

Links Mentioned in This Episode

Teaser

00:00 Stephanie: In this field, so much is about those experiences. So if you really want those pay-to-play experiences, because, I mean, some of them are super cool, you could focus more on getting into a school that’s more affordable and do some of those things rather than go to a really expensive school.

Introduction

00:21 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is Season 9, Episode 3, and today Dr. Stephanie Schuttler of Fancy Scientist and I are publishing a dual interview! Stephanie is a wildlife biologist-turned-science communicator and expert in careers in wildlife biology. We have a great topic: How to pursue your passion in a financially healthy manner. Stephanie gives the financial and career lay of the land for wildlife biology, a popular and competitive field that requires volunteer and pay-to-play experiences prior to being admitted to graduate school. Even completing a graduate degree in wildlife biology doesn’t necessarily lead to the type of job young people dream about when they enter the field. Sound familiar? Stephanie and I discuss how to limit the financial risk of pursuing a career in a field that you are passionate about.

I have some exciting personal news, which is that I finally received my full vaccination course against COVID-19! I have to say, it was tough to watch my friends and acquaintances who have university and hospital affiliations receive their vaccinations over the last several months while I was waiting for them to become available to my age bracket in California. But my turn finally came. I am ecstatic that my parents are visiting us this week, whom we have not seen in person since November 2019.

01:51 Emily: Prior to COVID, as you likely know, I gave in-person seminars and workshops at universities. I honestly wasn’t sure how my business would fare without being able to travel and with universities facing the uncertainty that they did early on. As it turned out, in the 2020-2021 academic year, my speaking services in the virtual format were more in demand than ever, particularly this last spring. I feel really, really fortunate about that! My calendar is now open for engagements in the 2021-2022 academic year. I am of course offering virtual events, which I assume will continue to be popular. I’m not sure if professional development events and conferences are switching back to being in person this year to any degree, but if they are and I am asked to present, I will certainly consider it. I am over the moon about how I have adjusted my offerings for early-career PhDs this year, which you can check out at PFforPhDs.com/speaking/.

02:53 Emily: First, I got honest with myself about my most popular seminar, The Graduate Student and Postdoc’s Guide to Personal Finance. The Guide is my comprehensive overview of multiple personal finance topics. I was trying to cram it into 90 minutes, but it really is a two-hour seminar with Q&A. It’s great for the end of a workday, not so much for a lunch hour.

03:15 Emily: Second, I clarified the topics for my in-depth seminars, which are financial goals, investing, debt repayment, saving, and cash flow management. Each of these seminars comes in a one-hour lecture and Q&A version or a two-hour workshop version. The workshop version includes the teaching from the lecture version plus spreadsheet templates, worksheets, and/or small group discussion prompts. These seminars work well as stand-alone events or part of a series.

03:45 Emily: Third, I took my tax seminars off my slate of offerings. This is honestly a big risk for my business because my annual tax return seminar was second to The Guide in popularity and always drew my biggest audiences. The preparation of an annual tax return and calculating estimated tax on fellowships are my audience’s most universal financial pain points.

04:10 Emily: However, I am not leaving you in the lurch with respect to tax education and assistance. Stepping back from giving live seminars on this topic actually enables me to scale the delivery of the help. In place of these live seminars, I am licensing access to my pre-recorded workshops on the same topics. I have been offering these workshops for the past several years, and I know that they are even more effective than live events in guiding graduate students and postdocs to their goal of an accurate tax return and up-to-date income tax payments on their fellowships. Please keep these workshops in mind as we draw closer to tax season for 2021. If you would like to book a virtual or in-person event with me or recommend me to your graduate school, postdoc office, or graduate student association, the best place to go is PFforPhDs.com/speaking/. From there you can learn about all my seminar offerings, read reviews from previous event hosts and attendees, view my speaking fees, and schedule a call with me to discuss your event. I look forward to partnering with you this year to deliver high-quality, high-impact financial education to the early-career PhDs at your university, in your association, or at your conference.

Book Giveaway Contest

05:29 Emily: Now onto the book giveaway contest! In June 2021 I’m giving away one copy of The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach, which is the Personal Finance for PhDs Community Book Club selection for August 2021. Everyone who enters the contest during June will have a chance to win a copy of this book. The Automatic Millionaire was one of the first personal finance books I ever read, and it had an enormous impact on my financial mindset and behavior. The path to becoming a millionaire is not necessarily quick or easy, but it can be simple and automatic. I can absolutely credit the key strategy that this book teaches as the reason my net worth is as high as it is today. I hope this book effects a similar result for you. If you would like to enter the giveaway contest, please rate and review this podcast on Apple Podcasts, take a screenshot of your review, and email it to me at emily at PFforPhDs dot com. I’ll choose a winner at the end of June from all the entries. You can find full instructions at PFforPhDs.com/podcast. Without further ado, here’s my interview with Dr. Stephanie Schuttler.

Will You Please Introduce Yourself Further?

06:49 Stephanie: Hi, I am Dr. Stephanie Schuttler, and I am a wildlife biologist, and now I’ve turned a science communication entrepreneur. A brief background of myself is that I kind of stumbled into this career. I didn’t know I wanted to be a wildlife biologist until my last year in college when I decided to study abroad and I randomly chose a wildlife management program in Kenya. So that changed my life. And I knew from there that I had to go to graduate school. So I got some experience doing three different types of internships over the course of three years. And then I went to graduate school to get my PhD at the University of Missouri, where I spent close to seven years there, followed by one short postdoc and one long postdoc, lasting, probably about, honestly, seven years. Yeah, so my short postdoc was at Missouri and my long postdoc was at the North Carolina Museum of Natural Sciences where I got to work on a lot of camera trap stuff that I talk about today. Yeah, and now the last part is I started my own business last year. I’ve been blogging for the past few years and I officially made it a business last year where I spread knowledge about science communication, I educate people, I started kids’ programs, and then of course I help people in their wildlife biology careers.

08:20 Emily: Fantastic. What is the name of your business?

08:23 Stephanie: A Fancy Scientist.

08:25 Emily: Great. I’m really excited to speak with you, Stephanie, today because are subject is kind of, you know, the finances of pursuing a career in wildlife biology, but it’s a little bit more general than that really, because we’re really talking about how to stay sort of financially balanced and healthy while you’re pursuing a passion that is not necessarily, or immediately, lucrative. And in fact might, you know, you might be paying for, in the form of your education, you might be paying for career experiences. So that’s kind of our general topic. So even if those of you who are coming to the podcast are not in wildlife biology, like still stick around because this is going to be generalizable information.

09:03 Stephanie: Yeah, absolutely. I would even add that our field can be more lucrative in terms of going to graduate school than other fields. Like I’ve heard about people who are getting their PhDs in English and their TAships get paid just so poorly. So a lot of the experience and advice here will definitely transfer over.

How People Develop a Passion for Wildlife Biology

09:25 Emily: Yeah. Let’s talk more about specifically how wildlife biology is positioned because it’s a science field, of course, which you might immediately think, oh, like you make money in science, of course. But on the other side of it, it’s a very competitive field and people follow it because of long-held passions. So let’s talk more about that. Like how do people develop their passion for wildlife biology and pursue that?

09:47 Stephanie: I think people develop it usually from a young age. That’s what happened for me. I always loved animals and I love nature. And like I said, I didn’t discover it until a career as later on. Like when you’re young, people always say, like, why don’t you become a vet if you really like animals? So I didn’t know it was a career option. Some people do, but when you track back to like, why people want to do it, it usually has to do with those experiences of being outside in nature when you’re young. And actually a lot of wildlife biologists, a lot of them start off like hunting and they just spend a lot of time outdoors. So I think that a big reason why people are so attracted to the field is that they think they will be spending a lot of time outside.

10:35 Stephanie: And this is definitely true for some careers. It depends on what level of education you have, and of course, what job you have. But in general, the more education you have, the less time you spend outside. It’s like an inverse relationship. And you know, we get really cool experiences. A lot of us get to travel. Of course, some of us get these really close interactions with animals that regular people can’t have, or even just accessing different types of places. Like some of the field sites I’ve been to would have been difficult to visit as a tourist and some of the experiences you have. So yeah, I think that’s what’s really attractive about it. And you’re right. It’s really interesting because there’s so much push for STEM education and especially getting People of Color and girls interested in STEM because our field is not very diversified.

11:33 Stephanie: And a reason to advocate for STEM careers is often actually like finances, that it’s a really financially beneficial career. But again, it totally depends on what you do, and wildlife biology is not very lucrative. And it’s just simply because there’s not a lot of money in wildlife and conservation work. A lot of our employment is nonprofits. The universities and, I mean, universities, you can definitely get paid well. And any of these jobs you can get paid well. But in general, if you think of like disease research, there’s going to be so much more money from the U.S. government and other sources to invest in like medical research than there is in saving wildlife. So, that’s really the big difference. But I think most people go into it because they love it so much. And that’s what I always said. I knew I wasn’t going to make a lot of money, but I loved it so much. So that’s why I went into it.

12:38 Emily: It’s so important to go into these kinds of career choices with your eyes wide open as to what the possibilities are, including the financial possibilities. So it sounds like people, maybe from the time they’re children, have a very like romantic idea of what this career is going to be, but the reality does not necessarily line up with that, especially as you advance further and further.

12:57 Stephanie: It’s interesting though, that you said that about like the romantic version, because I have a book, Getting a Job in Wildlife Biology: What It’s Like and What You Need to Know. And I had a review on there recently, it wasn’t a bad review, it was a four-star review, so it was good, but it was a parent that bought it for her daughter and she read it first, and with the intention of getting it to her daughter. And after she read it, she was kind of like, I’ll leave it up to my daughter to read. And her review was all about how realistic I was. And, and that’s exactly why I wrote it because people have this really romantic view of what wildlife biology is, like myself growing up, I saw Jane Goodall. And I mean, Jane Goodall, isn’t really considered a wildlife biologist. She’s more of a primatologist, but still that’s what you imagine it to look like, or Steve Irwin. And the reality is you’re not doing those types of things. So I pride myself on telling the truth, and I don’t want to dissuade anyone from entering this field. I just want them to know like what it’s like going into it.

Volunteer and Pay-to-Play: Are They Really Required?

14:01 Emily: So, one thing that I learned from our prior conversations is that in your field, it’s very common for people to have to do volunteer experiences or even pay-to-play experiences, to get into graduate school, to get a job, to advance. And this is not necessarily as common in other areas. So could you please tell us more about what, you know, what does pay-to-play mean? What are the kinds of volunteer experiences that people may be required to have? And are they really required?

14:30 Stephanie: Yeah, absolutely. This is a really hot topic right now. I personally think that you cannot get into graduate school without having some sort of experience. And in order to get that first paid experience, honestly, you really need experience for that. And you can, I would say you can get it in college if you volunteer with a lab and you get college credit for it. So that’s essentially not totally volunteering. And there are some work-study programs in colleges as well, but really to get your first experience, you need to volunteer. And that’s just the unfortunate reality of it. And this is a big problem because it discourages diversity from our field. So, I’m in no way, like advocating for these experiences. I just feel like that’s the reality of the situation. So there’s lots of experiences. And even our museum, when we had interns in our lab, we did have money for some of them.

15:27 Stephanie: And I constantly applied for grants to get money to pay interns, but they don’t come through. So either like I would have people email me and be like, I’m so interested in your research. Can I help you out? Or I would have a lot of research to do, and I would come across people and offer them experiences to help me with this. And there are exchanges in other ways. Like I write them letters of recommendations and I invite them to be on journal publications and stuff like that. But yeah, we can’t afford to pay for everyone. So it’s hard to deny people experiences who want them. But also, the pay-to-play thing is that some experiences are so desirable that they can afford to charge for them. And I do think there are some sort of scammy experiences out there where they profit off of it, but there are also legit scientists who are working in another country and they have to pay for the field site and the food costs and things like that.

16:35 Stephanie: So I’ve seen job advertisements where you get to maybe go to like South Africa for a summer and you have to pay to stay there. And they mention that it just covers the field costs and they’re not making money off of it, but still, I know a big reason why I got certain opportunities was because of my experience in Kenya. I had a study abroad program and an internship in Kenya. And Kenya was, it really was volunteering because I did get paid, but I got paid a Kenyan salary. And then I did have to pay for half of my airfare. So it ended up being a year where I didn’t make anything. And yeah, if I didn’t have those experiences, then I would have not had like my graduate school experience of studying forest elephants. So if somebody who comes from a financially disadvantaged background really wants to do something like work internationally, honestly, it’s really tough because those experiences are more desirable and people are willing to pay for them.

17:42 Emily: Yeah. You outlined a couple of reasons why these experiences exist. It really sounds like the field is in a bind. There’s not enough funding coming in for all the work that needs to be done, sort of from above, but from below, from the people coming up the ranks, there is an eagerness for people to do the work, even if it’s on a volunteer basis, even if they have to pay out of pocket for it. But it sounds like this just comes back to a funding squeeze, right? And the field being so popular and competitive. Those things combined have set up the conditions for this system to develop. And I agree with you. It sounds nightmarish, actually, for someone who doesn’t come from a financially advantaged background. And it’s a little bit like, you know, in the recent, I don’t know, last decade or two, there’s been so many more conversations about unpaid internships and the elimination of unpaid internships in most fields because they’re not great for anybody. Especially people who, you know, can’t afford to do them. But it sounds like that hasn’t quite touched the field of wildlife biology yet. Because these are essentially unpaid internships like on steroids, because you actually have to, in some cases, pay to access the site or what have you.

18:53 Stephanie: Yeah, absolutely. And that’s, like I said, that’s a huge conversation right now. And I think it’s especially difficult for nonprofit organizations because, you know, they obviously always need more funding. And they have been under attack, like posting unpaid internships. And I understand both sides. Like I understand that people need to get paid for their time, but I also don’t think it solves the diversity problem because if you’re just taking experiences away in general, then anything that is available is going to be so, so, so competitive. So it’s like a lose-lose situation.

Financial Risks in Pursuing a Wildlife Biology Career

19:32 Emily: Yeah. It definitely sounds like that. Okay. So we’ve kind of talked about the downsides to the field of kind of relying on these volunteer and pay-to-play experiences in the pipeline, at the beginning of the pipeline. To get into graduate school, you need to have some kind of experience. To get that first experience that maybe you get paid, well, you have to have an unpaid experience before that point. There are downsides to the field of like losing out on having great scientists, budding scientists who could be part of the field, maybe being turned away for financial reasons. What are the financial risks that are posed to an individual who tries to pursue a career in wildlife biology?

20:06 Stephanie: I think, I mean, just going into debt or living paycheck to paycheck constantly, that’s like super common in our field, but I know many people who have gone into debt for these like pay-to-play experiences or to do a volunteer experience, but they don’t have the means to cover themselves financially while they’re doing that experience. And it affects your entire life. The opportunities, I guess, like they kind of go away, but they manifest in different ways. So like once you get your PhD, well actually after your master’s too, like I talked about my friend, Rebecca, a lot of times you have these temporary opportunities, and it’s really difficult to get things lined up financially. And it’s a very demanding career. There are always things that you could be doing for your career, especially once you get to like the science route of doing more research-based things, then you are going to want to be working on your publications and things like that to get you that next job. So you don’t necessarily have the time to be able to like take on another job. So I mean, it’s really just that you have the potential to go into debt. People do go into debt, and then they don’t have the finances saved to be able to keep going, in the future, if opportunities don’t line up.

21:40 Emily: Yeah. This does remind me of the general like pursuit of the tenure-track in some fields where you need a PhD to get, and your goal is to get, a faculty position, but the employment opportunities, if you don’t end up, you know, landing that faculty position, are non-existent, very rare, not very lucrative. And so it’s like, yeah, if the stars completely align and you get that job that you’re going for, it all works out. But for most people who pursue that, it’s not going to work out. And so you have to realize that going in, it doesn’t mean you can’t like, you know, shoot for the stars and everything, but you need to have some kind of nets and backup plans and safety. Because the stats are that a tenure-track position is not going to work out for the vast majority of people who pursue one. And so it seems like there’s, you know, an analogy here with the field, the career in wildlife biology,

22:33 Stephanie: Do you see any additional downsides or risks?

Debt and Opportunity Cost: Loss of Compound Interest

22:38 Emily: I mean, mentioning, going into debt like you did is absolutely perfect. But to me there’s another layer on top of that, which is the loss of opportunity to get compound interest working for you. So if you go for many years in your twenties and into your thirties, maybe doing temporary work and underpaid work, and maybe you’re accumulating some debt, or even if you’re not, but you’re not doing anything like on the saving, investing front to get ahead with your finances, then that’s lost time. That decade or so is lost time. And it’s possible to make up for lost time, but you just have to save so much more later. But what if you end up, maybe in your thirties, in a job that pays, as you mentioned before, $50,000 a year, when you were hoping for something that paid more or was more stable or something like that? Like that’s where you are, and that’s what you have to live off of and save off of after that point and still try to make up for that lost time. So I think that people can be financially successful at all different kinds of salary levels, but like we were talking about earlier, you just have to be realistic about what the opportunities are, the salary opportunities are in the field that you’re pursuing, and also in your backup plans, if that primary plan doesn’t work out that well. So yeah, the loss of time to get compound interest working for you is the main one that I see there.

23:48 Stephanie: And I think that people in our field don’t think about that stuff at all and even, or I know they don’t think about that stuff at all. And even like talking about the loss of time with your first starting salary. You really don’t have at least a good first starting salary. I had a starting salary in graduate school, but like how most jobs work is you get your first job, and that’s your starting salary. And then that’s like the bar for you to negotiate a higher salary every job that you get. So for myself, when I graduated from my PhD, I was, what, thirties, close to 30. And you know, my husband who is an electrical engineer, he had been in his career for, for several years already. So not only are we getting paid little when we’re starting out, but we’re starting out later in age.

24:45 Stephanie: And another thing is people don’t do retirement investments either. So my dad grew up poor. His dad died when he was younger, and he had his brothers to take care of. So he was always like financially worried, and he always had us read financial books and stuff like that. So I’ve had a retirement account since legally you can have one, I think maybe 16 or 18. But yeah, like we’re not taught that. Like, you’re right. Like nobody’s talking about this stuff. And they, like, my friends would be like, well, I’ll get it through my job, when I get my first job, but some of my friends didn’t get their first jobs until they were close to their forties, and your retirement compounds. And that’s really where the money comes from. So if you are waiting a while to start that, then you’re missing out on a lot of that income compounding.

25:42 Emily: Yeah. And I think, again, to generalize, like this is something that I see with graduate students all the time, postdocs all the time is that there’s an optimism about what the future salaries are going to be post-PhD, post postdoc. And I certainly have the same optimism for them. But the other thing that happens as you age, generally speaking, is that your life gets more expensive in a variety of ways. You know, maybe you buy a house, maybe you have a child, maybe you have to take care of aging parents or other family members, like, so even if you do see a post-PhD, jump in salary in whatever field that you’re in, it might not go as far as you were hoping that it would. And so to me, my attitude is more like, you know, work with what you have now, that is, try as best you can to live a sort of financially balanced lifestyle and do some of that retirement investing or paying off debt or whatever it is that your goal is while you still have a lower salary, while you’re still in graduate school. And yes, like I do hope that that higher salary comes, the permanent job comes and it will all be much easier later, but just in case it’s not, let’s get started now so that you have that time, as we were talking about for, you know, your money to compound, or at least your debt to not compound as much.

26:54 Stephanie: Absolutely.

Commercial

26:57 Emily: Emily here for a brief interlude! Heads up, fellows: The next quarterly estimated tax payment deadline is Tuesday, June 15, 2021! This one always catches me by surprise because quarter two, strangely, is only two months long, while quarter four is four months long. Yet, a full quarter’s payment is due on June 15th. If you aren’t having income tax withheld from your stipend or salary and haven’t yet filled out the Estimated Tax Worksheet in Form 1040-ES, now is the time to do so. The worksheet will tell you how much you can expect your tax liability to be this year and whether you are required to pay estimated tax. If you need some help with the Estimated Tax Worksheet or want to ask me a question, please join my workshop, Quarterly Estimated Tax for Fellowship Recipients. It explains every line of the worksheet and answers the common questions that postbacs, grad students, and postdocs have about estimated tax, such as what to do when you switch on or off of fellowship in the middle of a calendar year. Go to PF for PhDs dot com slash Q E tax to learn more about and join the workshop. Now back to our interview.

Advice for Pursuing a Financially Risky Career

28:13 Stephanie: Okay. So knowing that this is a financially risky career, what do you think, like, what’s your advice to people who want to pursue it in like, they’re absolutely sure they want to do this and maybe they don’t have a financial safety net or they don’t come from a really, really wealthy background? What can they do?

28:33 Emily: I think the first thing to acknowledge is that you, as an individual, are a whole person and that you have needs and desires that are perhaps independent of this career in wildlife biology that you want to pursue, or any kind of competitive and perhaps not lucrative kind of career. And what I mean by that is that I would love for you to pursue like your career kind of passion, but just as you’re doing that, keep in mind that you still have needs as a person. You have financial needs, you have relational needs, you have spiritual needs, health needs, all these things matter as well. And I think there’s a tendency for people, especially when they’re younger and in their twenties and so forth, to drive hard at their career goals at the expense of some of these other areas of life. And it will catch up to you, eventually. You will reach age 30 or age 40 and realize that you have some deficits or dearths in these other areas, because you were trying to sort of suppress your needs and desires in those areas for so long to pursue this career.

29:35 Emily: So I don’t think that’s healthy and don’t do it. So try your best. Right? And so we’re going to talk about the finances, but there’s all these other areas of life as well. So don’t forget that you’re a whole human and you’re more than just your future career or job in wildlife biology. So that’s kind of the first thing to keep in mind. So, as we’re talking about sort of financial health and financial wholeness, as you pursue these careers, I do think you need to create your own safety net and your own financial security and backup plans as you go. And so that may mean that it will take you a little bit longer to get to graduate schoo, for example, if that’s like your next goal. Maybe you might take an extra year instead of, you know, taking a one or two year gap, take a three or four year gap between finishing undergrad and that graduate degree, for example. And that’s to build up more of your own financial security in the meantime.

30:25 Emily: And so one of the things we talked about earlier, these pay-to-play or volunteer experiences, is it possible for example, for you to plan around that and say, I’m going to have a summer job? Maybe it’s not even a job, I’m going to have a summer experience, and it’s going to cost this much money, or I’m going to be paid this much, but my lifestyle needs are this much. And how can you save in advance for that? And what kind of job can you have when you’re not actively engaged with these experiences? How can you pursue a job and a career that will allow you to have the experiences, but still give you some financial stability in the meantime? And one of the things I end up talking a lot about, and that I’ve learned a lot about from people I’ve interviewed on my podcast is regarding money mindset and limiting beliefs.

Navigate Limiting Beliefs

31:06 Emily: And so a limiting belief that someone in the field of wildlife biology might hear, and they might even get this from your work, again, the realism, is I can only ever have a temporary job and I can’t have a job the other seven or eight months of the year, because that’s not in my field, whatever. But maybe there is a way for you to build a job or an income or a career in that part of the year and still have that balance where you want to do, you know, these special experiences in the summer or the spring, or what have you, but still be making money in the other part of the year. And honestly, I think one of the most accessible ways is what you and I are now pursuing, which is entrepreneurship. So maybe there’s a way to have, you know, set up your own stream of income.

31:45 Emily: Maybe you work on it more intensely in one part of the year and less intensely in the other part of the year. And you can create that balance for yourself to still allow you to pursue the experiences in the career that you want to have, but still be making money in the other part of a year or a little bit, you know, while you’re having those experiences still. So that’s one idea. The other one is about this debt, you know, either going to have experiences or on the flip side, maybe not paying down student loan debt that you’ve accumulated in the past. I mean, we’ve had a student loan debt crisis that’s been building and building ahead of steam for a long time, but especially in the last decade. And, you know, in the last decade, I think many people have come to realize, you know, your student loans, your education, especially at the bachelor’s level is not necessarily an investment.

32:30 Emily: It’s not automatically an investment. You can’t pursue any bachelor’s at any price and, you know, be sure that that’s going to pay off. Same thing for graduate degrees. You know, your home is not always an investment. There are things that used to feel safe that used to give you a path to the middle class that are not there, they’re not guaranteed any longer. And so I think you have to be really, like, in thinking about pay-to-play experiences as an extension of student loan debt. So like I’m taking out student loan debt to pursue my education. I’m taking out some kind of personal loan or consumer debt to pursue this experience that I want to have to get into graduate school. You can think about them sort of analogously. And so one rule of thumb that works for student loan debt that maybe you could extend to, if you’re going into debt for these experiences in wildlife biology, is don’t take out more debt than one year, your first-year starting salary.

33:20 Emily: That’s like the rule of thumb for an undergraduate degree. And so if you’re, you know, going into a little bit better or forgoing salary to pursue these volunteer pay-to-play experiences, can you keep the debt level down to one year of your current salary or lower? Is that possible? So like, so yes, pursue these experiences, but make sure you’re not giving yourself carte blanche, right? To spend and go into as much debt as you might want to. You’re sort of putting some checks and balances on yourself along the way to make sure that you’re not getting in too far over your head.

Consider the Cost of Your Education

33:56 Stephanie: Yeah, absolutely. And actually one of my big, I have a lot of advice for people, something I think that people should do is not worry about the school so much. Like a lot of students are super obsessed with like, what’s the best graduate program or what’s the best college to go to. And I honestly think that students should really, especially at the college level, focus on getting in the school that’s going to cost them the least, because like you mentioned your degree doesn’t necessarily pay off. If you’re going to invest, you know, $120,000 for a college degree and you can get the same result with one that’s going to cost you $10,000. I mean, I actually regretted for a long time, my experience because I didn’t know what I was doing. I didn’t know what I wanted to be.

34:49 Stephanie: An, I even applied poorly to schools. I applied to like only Ivy league schools because that’s what I knew. And the only schools I got into were my local state school and other schools that cost like $30,000 a year or a semester. And I was like, okay, I’m just going to start from my state school because I don’t know what I’m doing. And then it also felt weird to dorm at my state school, which is like 20 minutes down the road from me. So I stayed with my parents and I regret not having the college experience, but I also love that I don’t have debt and that it was, I mean, I paid, I think a thousand dollars a semester for school. So in the long run it definitely was worth it.

35:34 Stephanie: And in this field so much is about those experiences. So if you really want those pay-to-play experiences, because I mean, some of them are super cool. You could focus more on getting into a school that’s more affordable and do some of those things rather than go to a really expensive school. And this is true for graduate school, too. And graduate school in science, you do get paid, you get a stipend, but you get paid different amounts according to the different schools and even according to the different programs. So I was actually not in the wildlife biology program for my PhD, or in the department. I was in the biological sciences department, and they had a fellowship. So I was paid a lot more and I didn’t have to TA. And that played a huge role in me deciding to do that as opposed to another program where I would have to TA and get paid less.

36:31 Emily: I think that’s a great point. Both at the graduate and the undergraduate level. It’s more about what is the actual work that you could be doing? Who can you be working with? Rather than maybe the name of the school. And of course the finances come into play as well. Because again, I think my basic point here is like shore up security for yourself as you go as best you can to keep you on this route, as long as you want to be on it in pursuit of a career in wildlife biology. So that if you get to the end, let’s say of your PhD and you realize, okay, I can get the permanent job. I’ve achieved all my goals. Everything is wonderful. Well, you have some good, you know, financial, a nest egg behind you perhaps, or at least not as much debt as you could have been in.

37:15 Emily: That would be great. But if you get to that point and you say, Nope, I’m going to exit this career now. I’m not going to have the type of job that I thought I would have. I’m going to have some other type of job. At least you won’t have the financial regret behind you of, oh my gosh, I pursued this school, that school, they didn’t pay me well enough. I spent too much on this experience. Yeah. I think what you said is perfect is like focus more on the experiences. If you want to go for, you know, a less expensive college education, but save your dollars for some pay-to-play experiences that are really high impact, then that makes a lot of strategic sense to me.

FIRE: Financial Independence, Retire Early

37:45 Stephanie: Yeah. And another route, I think we talked about this in our chat, you talked about an acronym FIRE.

37:51 Emily: Yeah. So FIRE stands for Financial Independence Retire Early, or Early Retirement.

37:57 Stephanie: Yeah. So you could either do that or do a sort of hybrid model. And I interviewed somebody who did something kind of similar to that, inadvertently. He didn’t, I mean, he didn’t retire early, but he had 20 years in a corporation that was a really good job. And he participated, he volunteered in the Citizen Science programs on the weekends and in his spare time. And his corporation actually paid for him to go back to school. So he did get a degree in environmental sciences. But when he was finished and on the job market, he got the second job he applied for. And I could not believe that I was like, oh my gosh. Wow. And it was because of those volunteer experiences, he had so much experience that he was like leading groups and organizing events and stuff like that. So that all translated really well.

38:48 Stephanie: So you could start off in a more lucrative career and volunteer with conservation organizations, with Citizen Science, and make enough money then where you can take a less lucrative career. Or if you’re a real go-getter in today’s world, like, I mean, there’s really not a financial limit to like what you can do online and with entrepreneurship and stuff like that. Like, it is tough to do, but it’s, I mean, there’s so many like millionaires who are six-figure earners from selling courses online, and in practical stuff, too. Like I remember I was listening to this one podcast, this woman, she had a podcast all about goats and she made six figures just from selling a course on how to raise backyard goats. And she had like, she had like different courses, too. So it’s like, you know, you just don’t think like, oh wow, like you can make a lot of money off of information and goats, but you can. So there’s a lot of opportunities out there.

Combining FIRE with Passion Careers

39:52 Emily: Yeah. What I think is really interesting about the FIRE movement and combined with like these sort of passion careers, whether it’s wildlife biology or whether it’s maybe some other things you want to get a PhD in. So if, you know, the most intense people in the FIRE movement, the goal is to retire in about 10 years, not retire necessarily, but become financially independent in about 10 years. That would be like a fast goal. So you get out of college when you’re 22, you know, by 32, if you’re really intense about it and chose the right career, maybe you were an engineer or something like that. You could be retired by that point or, you know, financially independent, optional to retire at that point. Now that is a route to free up the entire rest of your life from age 32, to whatever, to do anything that you want.

40:37 Emily: As long as your lifestyle expenses don’t creep up to the point they exceed your investments’ ability to support you. And so that is where you could spend the next 50, 70, a hundred years of your career working in wildlife biology in any kind of capacity that you can achieve knowing that your finances are already taken care of. And that’s a very unconventional route, right? But I think it’s something that maybe more people should consider if their passion is in a field where it’s so difficult and so competitive to get a full-time position. And, you know, I think it also goes back to the realism discussion we’re having earlier. You know, maybe there’s something about wildlife biology or whatever field that you’re in that you would like that romantic version, but you are not so enamored with the reality of having a career in that field version, and maybe becoming financially independent allows you to experience the romantic versions of the career, you know, of rather the field to a great extent without having to commit to having to earn in the career and doing maybe the work that’s not quite as exciting to you.

41:43 Emily: And so that’s, I don’t know, it’s a very like interesting idea. I actually did meet someone one time at a financial bloggers’ conference who had reached financial independence in his early thirties through, whatever, he’s like a finance guy or something. And he was telling me, oh yeah, I’m considering going back and getting my PhD in some completely unrelated area because I can do whatever I want now, essentially. It doesn’t matter if I get a stipend or not. I can support myself. He can pursue anything he likes. And so I’ve never really like discussed this idea with anyone in terms of PhDs before, but I think it’s, I don’t know. It’s not the most outlandish thing.

Wildlife Bio: Career or Lifestyle?

42:19 Stephanie: Yeah, absolutely. And I actually, I mention this in the last chapter of my book is, like you said, maybe you don’t want it as a career, too. And maybe that’ll actually be more satisfying to you. So I had this talk with this very prominent biologist and he was talking about his friends, how like they’re traveling all over the world and showing him all these cool pictures and all these cool places that they’ve been to. And one of the countries that he said was a country that he does a lot of work in. And I was like, you work there, you’re like always traveling there. And he’s like, yeah, but I am in like conference rooms, I’m in meetings. I’m not going to see like this beautiful waterfall or go to the beaches. So again, it might be that romantic version of like, once you get higher up with your education, you’re going to be doing like more administrative work.

43:10 Stephanie: And you’re going to be writing scientific papers and writing grants and stuff like that. And, to be honest, that’s sitting behind a desk writing. So I just want people to like really understand what it’s like and what they’re getting into. And, yeah, like, if you’re really driven because you want to travel or have cool experiences with animals, there are Citizen Science vacations, Earth Watch does this, that you can pay for that give you those opportunities. Like you can pay to work with a sea turtle biologist and help him tag turtles or help them tagged hurdles. And so you can still have these experiences. But you’re not the one leading them, which actually might be nice because then you don’t have to worry about like all the logistics of setting everything up, and yeah. And managing people and things like that.

44:03 Emily: Yeah. I love that idea. And it’s just kind of thinking outside the box, right? Like how can I get to have this lifestyle that I want? Does it have to be my career, or can it be something I do on the side as you’re building a career in another area? Or I’ve retired from my career. And so now I can do it afterwards. I think that’s a really exciting idea that you can be in wildlife biology in more ways than just a full-time professional scientist.

44:32 Stephanie: You’re so right, too, about your, your life choices changing when you get older. I talk to a lot of young people who are like, I don’t need to live in a big house. Or maybe not necessarily live in a big house, but you do want more things as you grow up. Like you want more stability and things like that. You don’t want to be moving around all the time. And like, even myself, I didn’t want to have children, but yeah, like I want to be stable and I want to stay put and not going from here to there all the time.

45:02 Emily: Yeah. What I often repeat on my podcast is money gives you options. And so really what you’re doing when you, for instance, take out a bunch of student loan debt and then go into even more debt for these, like, pay-to-play experiences and eventually go into graduate school. And you’re there for a long time. And then, you know, all the things that you might have to do to get this final career that you are going for, if all that while you’re just accumulating debt and you’re not putting money into retirement, you’re basically hamstringing yourself into this career has to work out, or I am sunk, you know? And instead if you try to pursue it, but in a more balanced manner in terms of finances and other areas of life, you can get to that point, maybe when you’re done with your PhD and say, okay, I have options. I can still pursue this career that I’ve been going for. I can get another type of job because you have built up some financial stability along the way. So it gives you options. You don’t feel like you’re stuck in just the one type of job that you’ve been going for that whole time, which might not even be available to you.

46:06 Stephanie: Absolutely.

Best Financial Advice for Another Early-Career PhD

46:08 Emily: Okay. Well, as we’re wrapping up the interview, Stephanie, one thing that I ask all of my guests is what is your best financial advice for another early-career PhD?

46:18 Stephanie: I think probably the best is, and this is where I always tell people to start out in this career, is to look at the jobs out there now that they ultimately want. And I have a tool on my website for this it’s called the Job Tracker. And you basically just like write down, or you copy and paste, like what jobs you like, how much they pay, what your education is. And then, in my course, I actually, I also have a budget planner too. And like, see if you can afford that career and see if it works out to be the type of lifestyle that you want. So really like copy the salary and the location, and look up houses in that area and how much they cost, and see if this fits into your lifestyle. But again, like really get an idea of like, where you want to end up. So there’s no surprises and you can pivot more easily along the way if you decide, okay, I love this, but I really want to make more money. Which is okay, because, like I said, some of these jobs, they pay very little and it can be difficult to live with those jobs. I knew somebody who had what other students thought was like an absolute dream job, but she was just so sick of not making money.

47:38 Emily: Absolutely. I love that advice. It goes along with the general theme of like being realistic. Okay. So where can listeners find you, Stephanie?

47:49 Stephanie: They can go to fancyscientist.com or just Google, fancy scientist I’ll come up and they can contact me any way. I check all my messages. I’m happy to answer their questions. And I love hearing from people.

48:02 Emily: And what is the title of your book?

48:05 Stephanie: Getting a Job in Wildlife Biology: What It’s Like and What You Need to Know.

48:10 Emily: Great.

48:11 Stephanie: Very blunt. Well, thanks so much for doing this. I had a good time talking to you and I learned a lot.

48:17 Emily: Thank you. It’s exciting to me to learn about a new field and kind of wrap my mind around like particular financial challenges within that field.

Outro

48:26 Emily: Listeners, thank you for joining me for this episode! pfforphds.com/podcast/ is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes’ show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest. I’d love for you to check it out and get more involved! If you’ve been enjoying the podcast, here are 4 ways you can help it grow: 1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me! 2. Share an episode you found particularly valuable on social media, with an email listserv, or as a link from your website. 3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license pre-recorded workshops on taxes. 4. Subscribe to my mailing list at PFforPhDs.com/subscribe/. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

Where PhD Candidates Are Full-Time Employees with Benefits

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In this episode, Emily interviews Dr. Veronika Cheplygina about the differences between how universities in the Netherlands and the US financially support their PhD students. In the Netherlands, PhD candidates (beyond the master’s level) are full-time employees under a 4-year contract that specifies their pay and benefits. It’s a secure position with only slightly lower pay than other types of positions. Veronika explains the financial and psychological benefits of this system and describes her lifestyle while she completed her PhD, which included purchasing a home. Prospective PhD students who are interested in doing their PhDs in the Netherlands should listen through to the end of the episode for application advice.

Links Mentioned in this Episode

phd candidate employees

Teaser

00:00 Veronika: You know, when I was doing my PhD and I saw this PhD Comics for the first time, I didn’t recognize the whole situation of like people hunting for free sandwiches. It’s not a lot compared to industry, but it’s also decent. And you can sort of take care of your basic needs.

Introduction

00:24 Emily: Welcome to the personal finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This Is season nine, episode two and today my guest is Dr. Veronika Cheplygina who holds a PhD in computer science from Delft University of Technology in the Netherlands. Veronika and I explore the differences between how universities in the Netherlands and in the US financially support their PhD students. In the Netherlands PhD candidates beyond the master’s level are full-time employees under a four year contract that specifies their pay and benefits. Veronika explains the financial and psychological benefits of the system and describes her lifestyle while she completed her PhD, which included purchasing a home. This is the perfect time of year for prospective PhD students in the US to consider broadening their search to include universities in the Netherlands and other countries with similar funding models.

01:24 Emily: On June 6, 2021 at 4:00 PM Pacific, I’m conducting an interactive workshop on choosing the optimal financial goal for you to work on right now, whether to save up cash, invest or pay down debt. I’m a firm believer that you should work on only one or a minimal number of financial goals at any given time, especially when you have a limited income like while in graduate school or a post-doc. Prior to the workshop, you’ll prepare your balance sheet, which is a record of all of your assets and all of your liabilities.

01:56 Emily: During the workshop, I’ll present my eight step financial framework, which I developed specifically for early career PhDs. I’ll show you how to break down your balance sheet to determine which step in the framework you’re currently on and what financial goal I suggest that you work on next. This workshop is for PhDs at all career stages, from rising graduate students through to PhDs with real jobs who are members of the Personal Finance for PhDs Community. If you’re not yet a member, you can easily join the community at PFforPhDs.community, and find details about the event under the course title, the Wealthy PhD workshops. If I get a good response from this first workshop on my financial framework, I’ll plan more of these live workshops for community members, which will be deep dives into money mindset, investing, debt, repayment, cash savings, and cashflow management. Sign up for the community today pfforphds.community, for access to the workshop on June 6th and much, much more great content.

Book Giveaway

03:05 Emily: Now onto the book giveaway contest. In May, 2021, I’m giving away one copy of “Bad With Money: The Imperfect Art of Getting Your Financial Sh*t Together” by Gaby Dunn, which is the Personal Finance for PhDs Community book club selection for July, 2021. Everyone who enters the contest during may will have a chance to win a copy of this book. Today is the last day to enter. The Bad with Money podcast was first recommended to me by one of the participants in my program, The Wealthy PhD. I think it’s going to generate a lot of great discussion in the book club. So please consider joining us pfforphds.community. If you would like to enter the giveaway contest, please rate and review this podcast on apple podcasts, take a screenshot of your review and email it to me [email protected]. I’ll choose a winner at the end of may, from all the entries you can find full instructions pfforphds.com/podcast. Without further ado, here’s my interview with Dr. Veronika Cheplygina.

Will You Please Introduce Yourself Further?

04:09 Emily: I have joining me on the podcast today, Dr. Veronika Cheplygina. She’s currently an assistant professor in the Netherlands, and she’s actually going to teach us today how the path to the PhD in the Netherlands compares to the path to the PhD in the United States, which of course I can represent that position. I think this will be really interesting to our American listeners, listeners in other countries, to compare these two paths, especially for anyone who has not yet embarked on the PhD. But I also think it’s going to have value for people who are already in graduate school in the United States, because there’s a very different view of graduate students there that we could really benefit from adopting, to a degree. We’ll see where the conversation goes. Veronika, thank you so much for joining me and will you please tell the listeners a little bit more about yourself?

05:01 Veronika: Thank you so much for having me it’s a pleasure to be here. As you said, I’m currently an assistant professor at Eindhoven University of Technology. My background is in computer science. I did all of my degrees in Delft, which is a different university of technology, also in the Netherlands. This was followed by, I got my PhD in 2015, followed by a two year postdoc and then, the tenure track, which I’m currently doing now. I am however, also leaving my tenure track in favor of a tenured associate professorship in Denmark, in Copenhagen, where I’m starting in February, 2021. I think that sums it up.

Overview of the Path to the PhD in the Netherlands

05:49 Emily: Congratulations on the new position and the upcoming move. We’re recording this in December, 2020, so I think you’ll have completed that by the time this is out so wonderful. Let’s get an, a quick overview of the educational path to the PhD in the Netherlands. Let’s start at the bachelor’s level: how much time does it take, how is it funded? Would you please answer that?

06:15 Veronika: Sure. Usually for the university level, there’s a three year bachelor program. It is formally separated from the master’s programs, which can be one or two years, but I think in practice, usually universities offer matching masters for different bachelor programs. I think most students end up doing the matching masters. It’s rather usually that the bachelor’s and the master’s are done together in five years or so, then that the master’s is as part of graduate school as in the US.

06:52 Veronika: And then after master’s, some students may go on to do a PhD, which would be typically a four year full-time trajectory. I think it’s different from the US in that you don’t really have a lot of courses anymore, as you would have had the research component in your master’s. Perhaps you might do some career development courses and such, or like an in depth summer school. From the time you’re, well at PhD researcher, I should say you were actually a university employee, and I think that makes a big difference for the experience.

07:36 Emily: Yes, absolutely and we’ll get into that quite a bit more. Then what about the funding? So you just said at the PhD level for the PhD training, you’re a full-time employee. What’s going on with the bachelor’s and master’s equivalent earlier than that? Is that funded by the student? Is it funded by the state? How’s that?

07:56 Veronika: The bachelors and the masters is a combination of the student and the state. I think the current tuition fees are around, for a domestic, and by domestic, I mean European union plus people with an eligible residents permit, that would be about 2000 euros a year in tuition. And the government contributes to this for the universities. So universities get funded centrally depending on the number of students there. I think the fee for non-EU students is quite a bit higher, but still, probably not at the level of many US schools. Then for the PhD, it’s an employment position which needs to be funded beforehand. As professor, you would need to acquire some kind of grant from a funding agency. And if you have that guarantee that you have this financing, then you can advertise a position. As a starting assistant professor, if you don’t have any kind of startup package from the university or already a grant on your own, you cannot say I’m recruiting grad students. Yu might have a master’s students will, of course need, will need to do a research project, but the PhD students, PhD researchers rather, you would need to finance yourself.

09:37 Emily: So to draw a contrast with the system in the US, it seems like for you all at the bachelor’s and master’s level, that’s where people are really viewed as students, right? You’re a learner you’re there to consume the product of the university and develop yourself, as a scholar. And it’s relatively inexpensive compared to here. There’s a big, big, big distinction between the master’s level and the PhD training level before you’ve actually completed your PhD in that it’s treated as a full-time job for your position and you’re going to finish in that time, it sounds like. Does anybody ever go over that amount of time or is it very firm? You’ve got four years you’re going to finish.

10:21 Veronika: Well, you get your salary for four years, unless there have been some special circumstances. For example, if you would take a 80% full-time working hours, you probably would have a longer time. Your salary will stop after that. It doesn’t mean you will necessarily defend your thesis in that time, but most people do aim to submit within then. Of course, this doesn’t always happen depending on your personal circumstances, et cetera, but I think it is doable in four years, given that you don’t have lots of courses and teaching, you would be required to help out a little bit in the department, but that’s not your main occupation. I do have to of course say that this is based on my model of how I experienced things, and I’m sure there are also departments that try to deviate from this, but this is how it should be and how I’ve seen it work in several places.

11:23 Emily: I see. Yeah, it seems like the contrast here, I guess, is that you have the opportunity to be paid at the master’s level. If you’re already, typically, if you’re already enrolled in a PhD program, you’re going through, what would be your master’s. You have the opportunity to receive a stipend usually during that time, but it’s not much. I’m curious about how much in the Netherlands, the PhD students or trainees, you know, PhD employees, PhD researchers are being paid compared to what’s enough to get by on, because definitely here, it’s a question mark, whether you’re going to be above or below that line as still a graduate student. How is the pay compared to if you had a full-time job that wasn’t PhD training?

12:11 Veronika: I think it’s a little bit less than, so for example, for, for me in computer science, industry jobs would be paid a little bit more. I think, compared to some other jobs, maybe straight after master’s, it’s not that much of a difference. I looked up, there are salary scales for these PhD positions, I looked it up just before, and it’s about 2,400 euros, before tax for the first year of the PhD. And it’ll go up to like 3000 to the last year. Of course the amount of after tax will depend on several other issues, like if you own property, et cetera. I think it should be, definitely if you’re sharing a living space with somebody else, it should definitely be okay. When I was doing my PhD and I saw this, PhD Comics for the first time, I really didn’t recognize myself…I didn’t recognize the whole situation of people hunting for free sandwiches everywhere. It’s not a lot compared to industry, but it’s also decent and you can sort of take care of your basic needs.

13:39 Emily: Yeah, I think that’s maybe the most impactful statement you could make in terms of to the credit of the system that you have there, is that it does not feel like what’s going on in PhD Comics. That’s wonderful.

Psychological Benefits to Being Treated as an Employee during the PhD

13:51 Emily: Okay, so you’ve said that once you get to the PhD candidacy stage, you’re a full-time employee of the university. What do you think is the psychological benefit of being viewed and legally treated as an employee versus as a student, like in the earlier stages? Let’s leave aside the financial for now, but just the psychological,

14:15 Veronika: I think it’s a good thing that you are in the same kind of position as your supervisors. I mean, you have, even though they will, of course be in the higher salary scale, you kind of have the same rights and I think that makes for a more equal playing field. Also several things you would not really necessarily need your supervisor’s permission for. Of course, it’s good if you inform them if you are ill or so, but actually that kind of thing would be arranged centrally by a party outside of the university. It just feels like you’re less dependent on your supervisor in personal matters. There’s just a bit less things to worry about. You can concentrate more on doing your job, your research and your life outside it.

15:16 Emily: Yeah. I’ve actually been reflecting on this recently. I had another podcast interview within the last few weeks and I believe it will be published recently before this one. It was with Laura Frater and she said something in that interview that’s really stuck with me since then, which is to not view yourself as a student while you’re pursuing your PhD. Because, and this is my interpretation of what she was saying, if you view yourself as a student, you sort of have an out for doing normal, like adulting things, like taking care of your finances and maintaining your relationships and keeping your body and mind healthy and so forth. Because we think of this, in the US we think of being a student, like being an undergraduate student as this just like magical period, when all you have to focus on is your education and no time passes and you stay healthy and everything’s wonderful, which is realistically not at all the case, especially when you do this for five, 10, whatever years into your twenties and thirties. I think that merely that switch alone of like, no, I literally am a full-time employee of this university – I’m receiving benefits, I have decent pay, would be a massive sort of, it’s like a graduation out of adolescence, when you’re not being considered a student anymore. That’s how I’m thinking about it. Does that strike a chord with you at all?

16:41 Veronika: That’s very true. I think generally, I tried to limit my hours also during my master’s, but it would definitely be the case I would study in the evenings and weekends, whenever. I think once I started this job, I would just come to the office between 8:30 and 5, which is when my supervisors were there. I just assumed that that was normal. I didn’t have like homework in the weekend and because I was in a small lab and I didn’t really have other PhD students to compare to, I didn’t really realize that people were maybe working on their projects the whole time. For me, there was no expectation to do this. This is definitely something that gets deviated from in some labs. But indeed I think just the realization you’re getting paid to do research for 40 hours a week, it’s also in your contract, that that helps with drawing a boundary there.

17:50 Emily: That actually reminds me of, I did a post-bac fellowship, so a year between when I finished undergrad and when I started graduate school, I did a post-bac fellowship at the National Institutes of Health. And it was a very different feel of an environment than a university feel, at least in my corner of that. People did work, I don’t know if it was 40 hours, but it was daytime office kinds of hours, maybe a little bit longer, that I could see. And I didn’t feel pressure to be staying super late. I would come in for eight or so hours a day, do my work, go home. Really, I was able to have some pretty good work-life balance during that time, which was not at all what I experienced during graduate school, where there was much more pressure to be working longer and just be doing a lot more. It sounds like more of a kind of professional environment rather than an environment that’s focused on the training or the trainee situation. Does that make sense?

18:48 Veronika: Yeah, that sounds that’s consistent with my experience

Commercial

18:54 Emily: Emily here for a brief interlude. This announcement is for prospective and first year graduate students. My colleague, Dr. Toyin Alli of The Academic Society offers a fantastic course just for you called Grad School Prep. The course teaches you Toyin’s four step Grad Boss method, which is to uncover grad school secrets, transform your mindset, up-level your productivity, and master time management. I contributed a very comprehensive webinar to the course titled “Set yourself up for financial success in graduate school”. It explores the financial norms of grad school and the financial secrets of grad school. I also give you a plan for what to focus on in your finances each season of the year that you apply to and into your first year of grad school. If this all sounds great to you, please register theacademicsociety.com/Emily for Toyin’s free masterclass on what to expect in your first semester of grad school and the three big mistakes that keep grad students stuck in a cycle of anxiety, overwhelm, and procrastination. You’ll also learn more about how to join grad school prep, if you’d like to go a step further again, that’s theacademicsociety.com/Emily for my affiliate link for the course. Now back to our interview.

Labor Contracts for PhDs

20:21 Emily: You mentioned earlier that there there’s a contract, like there’s a labor agreement for people pursuing PhDs. What are some of the elements of that contract?

General Benefits

20:31 Veronika: It’s the same labor agreements basically for all people in academic research. There’s a salary scale that corresponds to the kind of level you’re working at. That’s a different scale for PhDs. In comparison, so I told you that last year a PhD would get 3000 before tax per month, as an assistant professor, who’s just starting and you would get, I think 3,700. So it’s quite a flat ladder. There’s also a pension buildup. I have to confess that I haven’t really looked into how it’s done because I kind of trust that it’s done well, so it’s not something I haven’t had to worry about.

21:23 Veronika: The number of hours that you work and the number of vacation hours, you can take are fixed in there. You can also trade some vacation hours for some other benefits, like for example, extra pension. And then you get sort of like a tax advantage. There’s maternity and paternity leave, 16 weeks for maternity leave. And for paternity, I think it’s five days at full pay and then you can take a number of weeks off at lowered pay. There’s also a sick leave. So I think you can be something like 40 weeks at full pay if you need to, and then also longer at a lower pay. Lots of things like this. Basically life things that can come up, there’s usually a provision for.

22:29 Emily: Yeah. I think that must sound like a dream to a lot of PhD students and maybe even postdoc fellows right now who are in the US who are not treated as employees, or at least not as full-time employees of the university and just to have those benefits spelled out explicitly. It’s very patchwork here. In some places, maybe especially if you’re covered by a contract that’s been negotiated by a union, it can be very clear. I don’t think the benefits would be as high as that because just in the US we don’t get as much leave and so forth, but they would at least be clear.

23:03 Emily: But in many, many, many places, it’s not at all clear what your benefits would be, and it’s not until as an individual you come on to, okay, well, I’m pregnant, so I need to figure out what the maternity leave is going to be, or, okay, I need to take a leave of absence because I’m ill — I have no idea am I going to be paid? Unless you’re covered by probably a union contract, you probably wouldn’t know that until you actually encounter the situation, what the benefits might be. I think that clarity is just so, so helpful. And even on the vacation, like that’s even as a smaller issue, but something everyone encounters every year. That often has to be just negotiated one-on-one with your advisor and sort of oftentimes completely up to that person, whether or not they’re going to grant it or what you have to trade off for it. It sounds wonderful just to have the transparency.

23:56 Veronika: Yeah. I imagine that creates inequalities if you have to do it on a case by case basis, and also depending on how rich the field and the PI is. Here, there’s no difference between social sciences and technology and another thing. The agreement is the same for all academic institutions.

24:20 Emily: Yeah, I just left out something that would be super, super important. It wasn’t part of my personal experience during graduate school, but many, many PhD students here experience funding insecurity. They, they might have funding for a year, but they didn’t know what’s going to happen after that. Maybe they have funding every academic year, but in the summers, they have to scramble to find a certain grant or something. You can feel very precarious when you’re sort of careening from term to term, not really sure where the next paycheck is coming from in the upcoming term.

Funding Guarantee as a PhD Employee

24:48 Emily: You mentioned earlier that a PI couldn’t even advertise a position until the funding has been secured for all four years and so that is a massive difference. Actually in that way, it sounds even better than regular employment, like at-will employment, because I would imagine it’s unusual for a PhD student to be let go from that position, a PhD candidate to be let go, unless something has really gone off the rails with their performance.

25:15 Veronika: Usually you would have an evaluation after a year, and if you show progress in the project, then usually it’s fine and you can continue for the other three. It’s actually more secure, it’s a more secure contract that you won’t get right out of university, because you would maybe have a series of temporary contracts for industry.

25:39 Emily: Anything else you wanted to add on that question?

25:42 Veronika: Oh, yeah. About the financial insecurity. So it is possible here that if you are a student and so often students from China, and there are also some from Brazil, I believe, but they get like a scholarship from the government to come here and their salary is paid through that scholarship. This is possible, but then they, they come to the professor with their scholarship. And then they would be paid, the conditions there would probably be different than for most PhD positions. It’s less common and it wouldn’t be advertised as a PhD position because the person comes with it themselves.

Cost of Living Adjustments

26: 31 Emily: I see. In our prep for this episode, you mentioned to me something about cost of living. So earlier you said that, you know, there’s this agreement that’s been negotiated. I don’t know if it’s between universities and the government or who the parties are, but it’s a set schedule. It’s a set contract that all employees, PhD employees are under. Does the pay vary by city or is it the same everywhere?

26:57 Veronika: It’s the same everywhere.

26:59 Emily: Okay, so there is a consideration for cost of living in terms of how your lifestyle is going to be while you’re pursuing the PhD.

27:07 Veronika: So in the pay that you get there, so consideration for it, but of course, if you live in Amsterdam, it will be much more expensive than if you live in Colonian.

27:19 Emily: Yeah. Gotcha. That’s a little bit interesting, I guess, that there wouldn’t be any adjustments for cost of living.

27:27 Veronika: Yeah. Perhaps I’m not sure if that’s the case. So I know like in the UK, there’s a London allowance because London is just so much more expensive than the rest of the country. I’m not sure we have that here. I also imagine that the differences in the bigger cities are not as big. Like if you would go out more into like a more rural area, then the prices go down very quickly, but then you’d have to commute much more as well.

Veronika’s Personal Finances During Her PhD

28:04 Emily: We’ve talked very generally about the system country-wide and what you observed in your experience during your PhD. Can you tell me how your finances kind of went during your PhD? Were you able to live comfortably? Were you able to save?

28:20 Veronika: Yeah, I think it was quite okay. It was definitely an upgrade from my master’s. Then, I had a part-time job, but I had also the stipend from the government. It was enough to cover my expenses, but with the PhD things went better straight away, especially after the first year, because that’s, when you make the largest jump in your salary. I did also move out from a more student-like apartment to a more adult-like place. So my costs went up then, but I think I was still able to save a little bit.

29:03 Veronika: And actually, in the last year of my PhD, I was able to apply for a mortgage, which was very surprising to me at the time. This is because, after three years in the Netherlands, if you have…Normally for a mortgage, you would need a permanent contract, which you, of course don’t have as a PhD student. But after three years of temporary contracts, you can be seen as a kind of freelancer and the bank averages your salary. At that point in time, my PhD student salary average over three years was sufficient to get a small mortgage for an apartment. In current days this would not be possible because of how the prices have increased recently and I think you also need to have a much larger down payment now then rules used to be. I got very lucky. I definitely don’t want to say everybody in any place anytime can do this, but this was of course a combination of several favorable circumstances after which my living costs actually went down back to like the student apartment level, but for an adult-like place. So that’s been very good.

30:35 Emily: Yeah. That’s a wonderful accomplishment. As you said, circumstances had to come together to make it happen, but it did! Wonderful!

Can a US Citizen Do Their PhD in the Netherlands?

30:43 Emily: If there is a listener, let’s say in the US not in the EU, who’s thinking “This sounds amazing! Why would I deal with the system we have here in the US when I could go there?” Is it possible for an American to complete their PhD in the Netherlands?

30:59 Veronika: I don’t see why not because the vacancies are open to everybody in the world. Sometimes there are some EU specific grants, so if the EU gave you a grant, they want you to employ European citizens, but other vacancies do not have this restriction. I’ve been in groups where there were also people from the US doing PhDs, so I don’t see why that’s a problem. I guess you need to find out first about more specifically about the master’s requirements. It seems to be fairly standard, but I don’t think it’s a hard rule. So I do know of somebody from the US who didn’t have a master’s, but he had some additional research assistant experience, which sort of was sufficient. But this was of course also a couple of years ago.

31:52 Veronika: All the open positions they are listed on academictransfer.com, that’s an aggregator from all of the universities. I guess about the master’s thing, there’s always an administrative contact and the professor, so you could always contact the administrative one to check. Outside of these positions, of course you could always contact a PI if they have any upcoming vacancies, because they might be interested in writing a proposal together with you about something, or they already know something is coming up, but they have not gotten the official documents yet, so they cannot advertise it yet. It’s always worth approaching people want to work with, I think.

32:40 Emily: Yeah, that sounds amazing. And actually just the simple fact of there being a central database of all open positions is incredible. Again, in favor of like transparency and wow, making things so much easier for the applicant, so that sounds great. And I should mention, we’ll link in the show notes, because I’ve done a couple other interviews with Americans who have done their PhDs in the EU. I think they’re both in Sweden actually. But anyway, some similarities, so I’ll link to those from the show notes as well.

33:10 Veronika: For sure Sweden should be similar.

Best Advice for an Early Career PhD

33:13 Emily: Veronika, I like to end all my interviews by asking my guests, what is your best financial advice for another early career PhD?

33:22 Veronika: I would say it’s good to look at examples. Of course you need to get over some kind of hurdle of talking about finances, but it would be great to see what are other people spending on different things and how it works, or what kind of insurances and pension schemes and investment things people have. Yeah, I think you can learn a lot from that and it shouldn’t be such a difficult topic to discuss

33:55 Emily: Yeah. Another vote in favor of openness and transparency around these issues. Veronika, thank you so much for joining me on the podcast. It was so interesting to me to learn more about the system that you went through and congratulations again on your new position.

34:10 Veronika: Thank you very much.

Outtro

34:17 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email list serve, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt, repayment and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe through that list. You’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. Music is Stages of Awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC podcast, editing and show notes creation by Lourdes Bobbio.

Insights from a Financial Planner Who Works with Academics

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In this episode, Emily interviews Andy Baxley, a Certified Financial Planner who specializes in working with academics and PhDs. Andy pursued graduate school in psychology immediately after undergrad, but quickly realized the career path wasn’t right for him and the financial pressures were too great. He eventually started practicing financial planning, realizing that it is psychology ‘out in the wild’, and decided to serve the academic community he so closely identified with. Andy shares his insights from working with PhD clients nearing retirement about what they are glad they did when they were younger and what they wish they did. At the end of the interview, Andy explains how his career plans have brought him back to graduate school again. Andy brings deep insights to the interview from his years of study and practice in this space—ones you won’t want to miss!

Links Mentioned in this Episode

Teaser

00:00 Andy: It was sort of that long-term existential financial dread mixed in with just the day to day, “I don’t have enough money for anything.” I was living in a big, fairly expensive city and just was very, very much living like the proverbial graduate student. I didn’t mind that, but it was that in tandem with feeling like everyone else was just taking like leaps and bounds beyond where I was in their financial journeys, that confluence of things added a lot of anxiety.

Introduction

00:34 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season eight, episode 17 and today my guest is Andy Baxley, a certified financial planner who specializes in working with academics and PhDs. Andy pursued graduate school in psychology immediately after undergrad, but quickly realized the career path wasn’t right for him, and the financial pressures were too great. He eventually started practicing financial planning, realizing that it is psychology out in the wild and decided to serve the academic community he so closely identified with. Andy shares his insights from working with PhD clients nearing retirement, about what they are glad they did when they were young and what they wish they had done. At the end of the interview and explains how his career plans have brought him back to graduate school. Again, don’t miss Andy’s deep insights from his years of study and practice in this space.

01:36 Emily: I have my own insights that I will provide to you next week, specifically regarding the home buying process. My husband and I closed on our very first home a week ago. My podcast episode next week is going to be all about our journey to home-ownership. Like many other PhDs and millennials generally, we put off buying our first home for quite a while. I’ve been open on the podcast about my regret that we did not buy our first home back when we were in grad school and I’m pretty bullish on grad students and PhDs buying homes if it’s financially feasible.

02:10 Emily: To that end, I’m publishing the episode next week on our personal home-ownership journey, which I hope you’ll listen to. I’ve also scheduled a special event with my brother, Sam Hogan, who is a mortgage originator specializing in grad students and PhDs. You’ve heard Sam on the podcast previously in season eight, episode four; season five, episode 17; and season two, episode five. We are going to do an AMA style live call over zoom on Thursday, May 6th, 2021 at 5:00 PM PDT 8:00 PM EDT. We will do our best to answer any question you have about buying a home, especially as a grad student or PhD. You can register for the event and my mailing list at pfforphds.com/mortgage. I hope you will join us.

Book Giveaway

02:56 Emily: Now it’s time for the book giveaway contest. In April, 2021, I’m giving away one copy of Walden on Wheels by Ken Ilgunas, which is the Personal Finance for PhDs Community book club selection for June, 2021. Everyone who enters the contest during April will have a chance to win a copy of this book. Walden on Wheels made a splash when it was published, because the author wrote about how while he was a graduate student at Duke, he lived in a van on campus instead of renting a home so that he could avoid taking out student loans. This was an even more counter-cultural move than it appears to be now because it was before the rise of hashtag van life. I’m looking forward to learning more about the author’s motivation to make such an extreme choice and discussing it with the members of the Personal Finance for PhDs community. If you would like to enter the giveaway contest, please rate and review this podcast on Apple podcasts, take a screenshot of your review and email it to [email protected]. I’ll choose a winner at the end of April from all the entries. You can find full instructions at pfforphds.com/podcast. Without further ado, here’s my interview with Andy Baxley.

First Go at Grad School

05:12 Emily: Yeah. And we’re going to get ton of that insight later on. I’m so excited for it. But first we want to go back in your own history back to when you were pursuing your own PhD the first time, so could you please tell us about the graduate program that you entered and what you were studying?

05:30 Andy: Yeah, absolutely. It’s funny, when I look back on my own personal history, I would have been really surprised 10 years ago, if I could have gotten in a time machine and seen where I am today, I don’t think I ever would have guessed that I ended up exactly where I am, but I also wouldn’t have guessed that I’d be as professionally fulfilled as I am either. It turned out well, but definitely a number of unexpected turns along the way. To go way back, I think the best place to start this story is probably in high school. I was a really sort of uninspired student in high schoo,l to say the least, and my parents always said, you have to get a 3.0 at minimum, so I always got like exactly a 3.0, I just didn’t really have much direction or passion.

06:15 Andy: All that kind of changed when I got about halfway through college and I just got very inspired by a couple of professors and started doing research assistantships and teaching assistantships in my undergraduate work and ultimately decided to pursue becoming a professor myself in psychology. The second half of my academic career, I think I was an excellent student and that was the first time I’d ever been excellent at anything. I really was just very excited to be good at something. I started thinking about life after undergraduate work and ultimately went to a master’s program, that was well-known for being a feeder into really good PhD programs, and so I thought that was the path. It didn’t end up working out that way, and I can tell you more about that story certainly.

What Drove the Decision to Leave Grad School

07:07 Emily: Yes, please do. I mean, I think we all know the beginning of this path, but where your story gets interesting is when you start to deviate from it. So why did you end up leaving that master’s program?

07:17 Andy: It was a mix of things, it was definitely a confluence of things. First and foremost, I think I got there and I realized that while I was fully funded in the program and I had a stipend, I sort of looked around and I realized that I didn’t have the same sense of purpose or direction that a lot of the other students in the program did. At first it didn’t seem like that big of a deal, but the more I thought about it, the more I realized that the further on I got in that journey, the competition was only going to get fiercer and fiercer. I sort of had this mindset that as long as I can do the next thing, that’s where I’ll find happiness. If I can just get into this master’s program, then my path is paved and I’ll find happiness and all will be well.

08:05 Andy: Then I was like, well, that’s obviously not true and I was thinking, okay, well maybe if I get into a great PhD program, once I do that, all will be well and my life will be pretty much set at that point. And I kept talking to people who were either one step or two steps or three steps along in the journey and realizing that some of them are happy, but a lot of them were under a tremendous amount of pressure financially. They just had a lot of stress in their lives that I wouldn’t have expected, and that wasn’t just true. One or two steps beyond. The more people I talked to, I realized that even all the way up to tenured faculty, those folks were under a lot of pressure as well. Some folks were extremely happy with their lives, but not all of them were and I just realized that I wasn’t on a path to sure happiness or professional fulfillment.

08:52 Andy: Also, I was going up against people who were really super passionate about the research topics that they were focused on and I just didn’t have that. All I had was that I was really excited to be good at something and excited to be a good student, but I just didn’t have that passion and didn’t have that drive. Those were sort of the personal reasons. And then there were certain financial ones as well, which I’m certainly happy to go into.

09:15 Emily: Let’s do that in a moment. I am really impressed with you as a, whatever you were 22, 23 year old person, really being able to kind of take a step back from the day-to-day rush and rigor of the program and evaluate “is this really where I want to go” and to do that, looking ahead to your older people ahead of you in the program and older mentors and so forth and asking yourself if you really want that out of your life. And to do that so early on, right within the first, it sounds like about a year of that program doing that evaluation. I really encourage the listeners to periodically step back and reevaluate and see if the path that you’re on is really the one you went to beyond because bailing out like you did earlier is much, much less sunk cost, than getting to the end of the PhD and realizing that you don’t want the career that’s on the other side of that PhD, the one that you thought you wanted. I really commend you for that. Can you talk a little bit more please about the financial pressures that you were experiencing and observing?

10:13 Andy: Absolutely. And one thing I’ll add to what you just said as well, is that that was the hardest decision I’ve ever made to leave that program. It felt like it felt like my world was crumbling down. So much of my identity was wrapped up in that path that I had chosen for myself. At the time it was truly like crushing at a personal level to make that decision, but looking back, it truly is the best decision that I’ve ever made. That’s not to say of course, that everyone should leave their PhD programs or that everyone should leave graduate school, but it is to say that if you have that hunch, that maybe that’s something worth considering. It may feel like the end of the world in that moment, but it will get better later on as you find your path, it just doesn’t seem like it in the moment.

10:57 Andy: To circle back around to the financial side of things, I think I had this experience that a lot of folks probably do, which is that I was seeing a lot of my peers from college who hadn’t chosen the same path, start to experience some degree of financial success. I always had assumed like, “Oh, financial success isn’t for me like that that’s for other people, that’s, that’s not really a thing for me”. But then I had this weird experience where I started to see other people get jobs and decently paying jobs and I felt a little bit of jealousy there. Also I just felt, my stipend was generous, but it wasn’t quite enough to live on, so I was accumulating more student loan debt on top of what I already had for my undergraduate work.

11:42 Andy: I was by no means into personal finance yet at that point, but I was just doing some very simple math and thinking about when am I actually going to make enough money to start to dig out of this hole? I started playing around with compound interest calculators and realizing how delayed I was going to be, not only in paying off my debt, but also in starting to accumulate assets long-term. It was that long-term existential financial dread mixed in with just the day-to-day “I don’t have enough money for anything”. I was living in a big, fairly expensive city and just was very much living like the proverbial graduate student. I didn’t mind that, but it was that in tandem with feeling like everyone else was just taking like leaps and bounds beyond where I was in their financial journeys, that confluence of things added a lot of anxiety, I think.

12:32 Emily: Yeah. I think what you’re expressing is, again, common enough if people take the moment to think about it. And certainly when you’re actively taking out student loan debt it’s really in your face that this it’s not a long-term sustainable thing to be doing. I think it’s a little harder when you have the stipend and it’s enough to live on, but you don’t quite realize, like when you were playing around the compound interest calculators, you don’t quite realize the long-term effects of not being able to save, not being able to invest, so you can make it day to day, but it’s easier to not think about the long-term. You had the pressure of both the day-to-day and the long-term bearing down on you. I really appreciate those observations.

Life after Leaving Grad School

13:12 Emily: Can you tell us what you did next — after you left your program, after you world crumbled around you? And on that path, how you fell in love with personal finance?

13:22 Andy: Yeah, absolutely. After the program, I spent a couple of months just sort of wallowing in uncertainty and not knowing what I would do. Ultimately what I landed on — I love to travel, so I moved to South Korea and taught English as a second language. I intended to do that for one year, just to sort of get my financial house in order and also have a really neat, unique experience. I actually ended up staying for four just because I really loved it. And I knew that I didn’t want to be — I was teaching anywhere from kindergarten to middle school, depending on which year I was there. I knew I didn’t want to do that forever and I also knew I didn’t want to be a teacher forever necessarily, but I just found the experience kept getting more and more interesting and so it kept me there longer than I thought.

14:07 Andy: Somewhere about halfway through that journey, I picked up a book called Millionaire Teacher by a guy named Andrew Hallam. And first of all, the term “millionaire teacher” seemed like an oxymoron to me, which I think is kind of the point of the title. And again, like I said earlier, building wealth, and certainly becoming a millionaire, never felt like something that was for me. It just always felt like that’s that’s for rich people and I just don’t know anything about that. I sort of always buried my head in the sand and was never a great saver, never even thought about investing. I don’t remember why exactly I read this book, but I started to read this book and realized that actually, if you start early enough and you save even just a bit, and as your earnings increase, if you can save a bit more, there’s a pretty clear path to wealth for a lot of folks. I don’t want to make it seem like it’s, it’s available to everyone because I think we have systemic structural issues that do make it really hard to build wealth. But I think it’s, it’s available to a lot more people than most people think. If you can be prudent, especially in your younger years, that there is a path to wealth and, and that wealth isn’t, we can talk more about this certainly, but wealth isn’t just about, how big your accounts are getting, but it’s also about what does that allow you to do. What sorts of freedom does that allow you to pursue? Once I realized number one, that wealth isn’t just for rich people, you know, building wealth isn’t just for people with trust funds, I think I just started reading every book I could possibly find on personal finance and just became sort of obsessed. So that’s how the interest was born in personal finance and then the career part came later.

15:41 Emily: That’s a fantastic entry point into the subject matter. Finding that perfect book that you could see yourself in — The Millionaire Teacher. And I love that you said it’s a provocative title, it’s an oxymoron. I also have a program called the Wealthy PhD, which is similarly designed to be provocative and “What a PhD can be wealthy? How could that possibly be?” Of course, we’ll talk about that in a moment.

Transitioning into a Career as a Financial Planner

16:05 Emily: You’re falling love the subject of personal finance. How did you make it into your career?

16:10 Andy: The first part was the realization that building wealth isn’t just for rich people, but the most important thing was the second realization, which was that personal finances is not just about finance. It’s not just about the numbers. There’s kind of a corny saying that I’ve heard, but I actually like. It’s that personal finance is more personal than it is finance. I started to make this connection. I was also really deeply immersed in the positive psychology movement at that time. I was reading a lot of work by Marty Seligman and other folks who were really just making the statement that it’s not just about fixing our deficiencies, it’s about how do we get from our baseline and transcend beyond that and live a life that is maybe even better than we ever could have expected.

Andy: I started to make this connection that like, “Oh my God, if building wealth is available to everyone, maybe that can also be a tool for helping people, to use another cliche, live their best life.” How can wealth become a tool to live in accordance with our values and live a life filled with joy and fulfillment? And once I made that connection, that personal finance is the best applied psychology there is, it just clicked for me. I was like, Oh my God, I can do this thing professionally that I’ve become really interested in and sort of honor my love of psychology and that original career trajectory I had set for myself. It was like psychology out in the wild. And that was really exciting for me. I didn’t have to just become, I shouldn’t say just, I didn’t have to become a professor. There were other ways to do that. That was really exciting for me. I was hooked at that point and I haven’t really looked back even a single day since then.

17:49 Emily: That’s such a beautiful expression. I’m completely on board with you, but I hope the audience is hearing this as well, the insights that you just gave, because I think it can maybe explain a lot to them about why they haven’t been successful with personal finance in the past. Even if they’re obviously super smart if they’re PhDs or whatever. But like you said, it’s psychology. It’s personal.

Insights into Personal Finance for PhDs

18:09 Emily: So, you get into this as your career, and I know you’ve had a couple of jobs, but what I want to focus on now is what you have learned from and observed in the academic clients you’ve been working with since you did switch to having a focus on that population in your practice. What does the future look like for someone who is maybe currently in graduate school or otherwise early on in their PhD career? What happens a few decades from now, if they are intentional now with their money?

18:40 Andy: Yeah. That’s such a good question because the answers are very different about when you think about the person who’s intentional versus the person who isn’t. To talk about the people who are intentional, there’s this quote I really love by a guy named Morgan Housel, he just came out with a book called the psychology of money and he says “the ability to do what you want when you want with who you want for as long as you want is priceless. It’s the highest dividend money pays.” And so what comes later down the road for folks who are really intentional and diligent about their personal finances early on is freedom. I guess that’s just the best way to put it. And that can be intellectual freedom, it can be creative freedom, it can be — the one thing I would add to Morgan’s quote is the ability to be wherever you want to.

19:25 Andy: I think when people are investing and saving, it can feel abstract, but the way I think about it is they’re just saving little units of freedom and flexibility and how they end up using those units of freedom and flexibility later on, we don’t necessarily know that on the front end, but when they get there, they’re so happy to have them. I’ve had clients who spend half of the year abroad in South America. I’ve had clients who retired and started a little boutique motel. I’ve had clients who were able to afford to do sort of part-time work very early on, like in their fifties and do a half retirement, half working thing for a period of time. So truly the limits are non-existent. The possibilities are as big as your creativity. What comes later on, I can’t say specifically what comes for each individual person without knowing them, but I can say that everyone I’ve ever talked to who did a good job saving early on was really glad they did. I’ve never once heard somebody say that they regret it.

20:24 Emily: I really love the way you phrased that of, saving up units of freedom and flexibility for the future. I’ve expressed that before as money gives you options. Whatever you want to do, having money is going to make it easier to accomplish that. But I really like the way you phrase it, because I know that for me earlier on when I was in graduate school and so forth, and I still don’t to a degree, didn’t have a clear picture of what my retirement or my long-term future would really look like. I wasn’t really sure what kind of career I would have. I wasn’t really sure where I’d want to live or. I have children now, but when I didn’t, I didn’t know how big my family would be. There was a lot of uncertainty and I think that’s really common for PhDs because if you stay on that track, like you may end up moving many times, it’s very difficult to tell what your life is going to look like many decades from now. That can make it a little more difficult to save for and get motivated about because if you think about the vision board technique, for example, you are supposed to have like a really crystal clear vision of like what you’re going for. When you’re facing reality about what your career might look like as a PhD, it might be difficult to have that clear vision, but I love the way you phrase that of just whatever it ends up looking like, saving up for your freedom and flexibility now we’ll give you your options later on for living wherever, doing whatever with whoever, everything you just listed from Morgan Housel. I really love the way you phrased that.

Commercial

21:51 Emily: Emily here for a brief interlude. Taxes are weirdly, unexpectedly difficult for funded grad students and fellowship recipients at any level of PhD training. Your university might send you strange tax forms or no tax forms at all. They might not withhold your income tax from your paychecks, even though you owe it. It’s a mess. I’ve created a ton of free resources to assist you with understanding and preparing your 2020 tax return, which are available pfforphds.com/tax. I hope you’ll check them out to ease much of the stress of tax season. If you want to go deeper with the, or have a question for me. Please join one of my tax workshops, which you can find links to from pfforphds.com/tax. It would be my pleasure to help you save time and potentially money this tax season. So don’t hesitate to reach out. Now back to our interview.

Pitfalls to Avoid as an Early-Career PhD, According to a Financial Planner

22:57 Emily: Do you want to talk about the converse side about mistakes that you’ve seen your clients make or pitfalls that younger people earlier on in their career should avoid?

23:08 Andy: Yeah, absolutely. The number one mistake is a pretty obvious one and it’s just not saving. It doesn’t have to be, Oh, I didn’t have a super high savings rate, it’s people who just decided, I’m going to wait until much later to start saving. And the thing about investing and saving is that time is your best friend. A lot of people think Warren Buffet’s secret is that he’s this fantastic investor, but the truth is Warren Buffet’s secret is that he’s a fantastic investor and he’s been investing now for like 80 years or something like that, so he’s had that time for, for compound interest to take effect. I think starting really late is one thing that a lot of folks end up regretting. When I meet clients who are 60 and maybe they didn’t start saving until they were 45 seriously and they’re a bit behind or a lot behind, I think what really rings true for me is that it makes it very clear in meeting with these folks is that money doesn’t buy happiness, certainly, but it does pave the way for you to build happiness and joy and fulfillment over the time.

24:13 Andy: Conversely, a lack of money can make it really hard to achieve those things. When you’re 60 starting to think about retirement, but knowing you don’t have enough money to fund a decent lifestyle in retirement that you can enjoy, that’s a really tough place to be. And that stress really weighs on people, in my experience. I think a piece of advice I would give to younger people sort of like cautionary advice is just we’ve all probably experienced some version of resource scarcity at some point in our life, especially folks who’ve gone through graduate programs where you just feel like it’s really hard to make ends meet. And we know how stressful that is. I guess the pieces of advice I would give to a lot of folks is that that stress is amplified by 50 to a hundred times, if you’re at the end of your career, because you no longer have three or four decades of earning potential in front of you. It can be really scary for folks. That’s one of the things I’m most passionate about when I work with younger clients is these small changes we can make on the front end, end up making these tremendous differences on the back-end.

25:15 Emily: Compound interest truly amplifies your actions from early on, given that timeline that you were talking about. I’m thinking about someone in the audience who — you mentioned earlier, systemic barriers to building wealth that many people experience. Of course, we have a student loan crisis now that did not exist for the people who you’re working with who are nearing their retirement years. I’m thinking about someone in the audience who is really struggling, or maybe they were really struggling until recently and only in their thirties or forties, they’ve finally gotten to a point where they feel like they have a career and they have the paycheck and they can start saving. What can someone who is struggling or has been struggling do to — I know that time is your best friend, but like what can we do to make up if the time has already passed?

26:04 Andy: What I often tell clients who come to me with that question, because I do get clients who are like, honestly, it’s too late for me. What I tell them is certainly the best time to start building wealth is the first paycheck you get. That’s the best time to start doing it. Knowing that the vast majority of people don’t start then, the second best time is just today. Just start today, wherever you are, whether you’re 30, 35, 45, 55. And I think the best advice I can give people is just start really small. If you don’t have a lot to save, if you don’t have huge amounts that you can put towards paying off your debt, start very small and build up from there. Even if say you’re almost done paying your student loans off and you’re starting to think about saving for retirement, even if you can start saving 1% of your pay and then commit to moving it up by a percentage point, say every three or four months, programs like that eventually will get you on track.

26:58 Andy: And I think taking those baby steps is important because the idea of saving for retirement, it’s one of the biggest financial burdens we’ll ever have to face and it can be really overwhelming. I think for a lot of people, when they hear numbers like, Oh, you need to save 15 or 20% of your income, they think of it in this very binary way. They’re like, well, can’t do that, so I guess I just won’t do it at all. I think what I would really emphasize is just start small and just build up incrementally and you will get there and no matter how much you’re ultimately able to save, you’ll be really glad you did it.

27:32 Emily: Yeah, I completely agree, especially about people being turned off by the big numbers of savings percentages. I remember when I was in graduate school and reading the advice of like have a three to six month emergency fund, I was just like, no way, there’s no way I can save up whatever that would have been at the time, $6,000 or something like that. I saw that as totally out of reach and so I really just didn’t even try. I fell prey to the same kind of psychology that you just said there. But like you said, just saving as much as you can or putting as much as you can towards debt — could be $5, could be $10 — I think one of the most transformational things about that is not necessarily the amount of money that you’re putting towards savings, but just the fact that you have changed your identity to “I am a saver, I am repaying my debt and I am a person who invests” and that alone can be super powerful and is a great building block on this path towards wealth, even if the numbers are not that big yet.

28:31 Andy: Absolutely. I couldn’t agree more. I think that identity piece is as important or more important than those initial dollars that you’re able to save. I hope people take heart and realize that when you’re just starting on the journey, it’s a little bit like when you watch a rocket ship take off, like watching a space X launch or something. It starts super slow at first. It’s really hard. There’s a gravitational pull that you have to get past, but the momentum builds over time. And once you start to build that momentum, it gets easier and easier. The hardest dollar to save is that very first dollar and every dollar will just get a little easier beyond that. Then eventually once you’ve started to invest as well when you’re at that stage, those dollars will be making more dollars for you while you sleep. That’s the idea of compound interest. Just know that it will never be harder than it is right now and that it does get easier progressively over time.

29:26 Emily: Yeah. Thank you so much for adding that insight. I totally agree. You hear it in the personal finance community: the first hundred thousand is the hardest to get to in terms of your investments and then getting to the $200,000, $300,000 is so much easier, it takes so much less time. But if we’re talking to grad students, let’s lower that scale — the first $10,000, the first $1,000, the first $100 — every order of magnitude that you go down, it is the hardest at that stage. Once you get that compound interest working in your favor, it happens while you sleep, as you said. I know I’ve experienced this in my own life from grad student years, scrimping to save even $5 more per month was like a big accomplishment and now things look very different 10, 15 years later, in terms of the compound interests working in my favor. I can kind of personally attest that yeah, that first hundred thousand, which I’ve well-documented in the first podcast episode that I published actually, was definitely the hardest. It’s been a lot easier since then.

Going Back to Grad School After a Career Shift

30:25 Emily: Andy, I want to get back to your own story because that’s taken another twist. You’re a CFP, you’re working with clients, but you’ve also recently decided to go back to graduate school. Tell us about that decision

30:40 Andy: There’s still that part of me that identifies as a great student and a person who loves school and I’m actually really grateful to have held onto that identity and so a couple of years ago, I started thinking about going back to school and I ended up signing on for the Masters in Financial Planning Program at Kansas State. I did a dual concentration. Half of the degree was really focused on advanced financial planning, so kind of the numbers side of things — taxes, estate planning, that kind of stuff. The other half was focused on financial therapy, so really taking a very deep dive into the psychology of money.

31:18 Andy: I’m finishing that degree actually in March, so I’ll be done in March and my next juncture is to decide if I want to do the PhD, which it’s so funny to me to think that I might yet again, be considering a PhD, but I think I’m doing so with a different head on my shoulders than before. If I decide to do the PhD program, which I think I will at this point, it’ll really be to further what’s been done with regards to academic research around the field of financial planning because not a ton has been done. It’s a very under-researched field.

31:52 Andy: I wouldn’t want to stop being a financial planner. The way a lot of folks do it in the industry is they get the PhD and then they sort of spend 70% of their time in practice and then the other 30% of their time doing research and publishing and doing some teaching. That for me seems like a pretty good balance, kind of having my foot in one door and the other as well, right now. We’ll see! Hopefully we can check in again in a couple of years and I’ll tell you what I decided.

32:17 Emily: Yeah, that would be excellent!

Best Advice for an Early Career PhD

32:18 Emily: Andy, I wrap up all my interviews by asking my guest, what is your best financial advice for an early career PhD? We’ve obviously already said a lot of advice throughout the course of the interview, but did you have something that you wanted to underline for us or maybe something new that you wanted to throw in?

32:34 Andy: Absolutely. I don’t know if it’s new, but I would definitely say that if it isn’t new deserves to be reemphasized and that is to me, the best investment you can make at any age, if you haven’t already made the investment is in your own financial education. Before you even start thinking about index funds and long-term savings and 401ks and things like that, just investing in your own knowledge and establishing a baseline understanding of personal finance, I think is the best possible thing anyone can do.

33:05 Andy: One critique I have the financial services industry is that I think a lot of the messaging has been set up to tell people this is too complicated or too time consuming or whatever “too this” or “too that”. It’s not for you to do, it’s for you to hire us to do. I think in some cases that’s true. When things do get complicated, it is really helpful to have a professional. I believe that obviously as a financial planner. But the basics are not complicated. It’s not to say it’s easy to master them because you know, saving money is never easy, but the principles are not complicated. I always just recommend folks, if you can take 10 or 12 hours, you will basically have mastered the fundamentals of personal finance.

33:49 Andy: A couple of books that I always recommend to people — one is The Index Card by Helaine Olen and Harold Pollack, which is rooted in this idea that basically everything you need to know about personal finance can fit on one five by seven index card. I love that idea and I tend to agree. A second one I’ve already mentioned is The Psychology of Money by Morgan Housel. If The Index Card tells you how to do it, The Psychology of Money is like a user’s guide to your money brain, which is a pretty interesting part of your brain as it turns out. And then the third is The Millionaire Next Door by Thomas Stanley. That’s probably my all time favorite because it really shows that the type of people who become millionaires actually aren’t the ones who you would think become millionaires. It’s not the people driving Mercedes and BMWs and living in fancy neighborhoods. It’s the people who have high savings rates. You don’t see their wealth because it’s all stowed away in investment accounts. I find that book just to be very empowering. Invest in your education, that would be my advice.

34:51 Emily: Yeah. I completely, completely agree. And also starting with books, I really love that idea. It’s kind of old school, but it’s how I started my journey into personal finance as well was reading some well curated material. Actually since you mentioned books, inside the Personal Finance Community, we are currently as of December, 2020 reading The Millionaire Next Door in our book club. Morgan Housel’s book is on the slate for January, 2021. And then The Index Card is one I have not read before, but it’s actually been on my list as another book to consider for that. I’m not sure when this will be published, but when it is, if you’re interested in reading these kinds of books along with some of your other peers, check out the Personal Finance for PhDs community, pfforphds.community, you can see what the current book is we’re reading, the next one on page. If that’s your thing, please come and join us and have some discussions around these books because I love taking these sort of general personal finance texts and bringing it into, okay, well, how does this apply to graduate students and post-docs and early career PhDs? What is this really saying to our population with our particular psychology and career path and so forth. I totally agree with your advice about investing in your education. That’s one way people can do it if they want to do it with me and with others in our community.

36:03 Emily: Andy, last, last question here is where can people find you if they have really connected with you during this interview? Or maybe they want to recommend you to someone in their life?

36:13 Andy: Yeah, absolutely. ThePlanningCenter.com, you can find me there. You can find my email there as well, which is [email protected]. I’m on LinkedIn, very active on LinkedIn for a time. Tried to get active on Twitter so you can find me on Twitter, but I will say I’ve neglected my Twitter page and find the whole thing to be a bit overwhelming. So probably email or website or LinkedIn would be the best.

36:36 Emily: Thank you so much for joining me today and for giving us your insight

Listener Q&A: Are Fellowships Taxable

Question

36:47 Emily: Now on to listener question and answer segment. Today’s question was asked in advance of one of the live Q and A calls I host as part of my workshop, “How to complete your grad student tax return and understand it too.” Here is the question. “Is the NSF GRFP fellowship taxable? It’s not listed on the 1098-T form. I have no tax documents relating to it.”

Answer

37:12 Emily: Yes, the NSF GRFP is, generally speaking, taxable income, even if it’s not reported on any tax forms, I’ll quote from publication 970, page five: “A fellowship grant is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research.” Fellowships can be tax-free under certain conditions, which implies that they are not tax-free if they don’t meet those conditions. Publication 970 page five further states: “A scholarship or fellowship grant is tax-free only to the extent it doesn’t exceed your qualified education expenses.”

37:52 Emily: There are two additional points that further limit the conditions under which fellowships are tax-free but just going off of that first one, if your fellowship exceed your qualified education expenses, it is not tax-free. The NSF GRFP is composed of two parts, a $34,000 stipend and $12,000 for a cost of education allowance. If the $12,000 to the institution goes entirely to qualified education expenses, for example, tuition and required fees, that portion would be tax-free. To whatever extent the $34,000 stipend goes toward qualified education expenses, it would also be tax-free, but I suspect that little to none of it does, perhaps just some required course related expenses at most. You probably use the stipend for your personal living expenses and savings and that means that it’s not tax-free. Strangely enough, the IRS does not require universities and funding agencies to report fellowship income in any way. Some universities do report the NSF GRFP award on the form 1098-T, but others do not. It’s completely up to their discretion.

39:03 Emily: If you would like to learn more about the taxability of fellowships, please listen to season two, bonus episode one. To go even deeper into how to calculate your taxable income and higher education tax benefits as a grad student, whether you have a fellowship or not, please join “How to complete your grad student tax return and understand it too” at pfforphds.com/taxworkshop. If you’d like to submit a question to be answered in a future episode, please go to pfforphds.com/podcast and follow the instructions you find there. I love answering questions, so please submit yours.

Outtro

39:41 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest, and submitting a question for the Q&A segment. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email list serve, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt, repayment and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe through that list. You’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. Music is Stages of Awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC podcast, editing and show notes creation by Lourdes Bobbio.

This PhD Found Financial Peace through Pursuing FIRE

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In this episode, Emily interviews Dr. 50 of By 50 Journey, a federal employee who is pursuing financial independence and early retirement (FIRE). Dr. 50 came to the US after finishing college, but worked minimum wage jobs while she learned English until she could apply to PhD programs. She worked full-time to self-fund her PhD over six years. Ultimately the PhD was a game-changer for Dr. 50’s income, and within three or four years of finishing she was earning a six-figure salary. However, a higher salary was not the solution to her family’s financial problems. Dr. 50 describes her emotions at their financial low point, when they completed their debt repayment journey, and upon discovering the FIRE movement. Dr. 50 concludes the interview with an incredible insight regarding financial struggle and striving.

Links Mentioned in This Episode

PhD FIRE

Teaser

00:00 Dr. 50: And one day I was like, okay, this is it. I am making a six-figure salary and I couldn’t even afford a lunch at the cafeteria. And it’s like a wake-up call. I need to do something. We need to do something.

Introduction

00:21 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is season eight, episode 16, and today my guest is Dr. 50 of By 50 Journey, a federal employee who is pursuing financial independence and early retirement: FIRE. Dr. 50 came to the U.S. after finishing college, but worked minimum wage jobs while she learned English until she could apply for PhD programs. She worked full-time to self-fund her PhD over six years. Ultimately, the PhD was a game-changer for Dr. 50’s income, and within three or four years of finishing, she was earning a six-figure salary. However, a higher salary was not the solution to her family’s financial problems. Dr. 50 describes her emotions at their financial low point when they completed their debt repayment journey. And upon discovering the FIRE movement. Listen through to the end for an incredible insight from Dr. 50 regarding financial struggle and striving.

01:28 Emily: We’ve just passed decision day, April 15th, so I’d like to extend a massive congratulations to everyone who committed to a graduate program for fall 2021. This is an incredibly exciting period of time. As you dream about and plan this new phase of your life, keep your finances top of mind. You’ve already made the biggest financial decision of your graduate career by one, choosing to attend graduate school, and two, committing to a specific stipend and location. The next biggest decisions are housing and transportation, which presumably you will lock in over the next few months. Before making those big commitments, I recommend that you sketch a budget to figure out how much you can afford while ideally maintaining some kind of savings rate. If you would like some help with that process, join the Personal Finance for PhDs Community at pfforphds.community. Inside the Community, you’ll find my How to Draft a Budget From a Distance webinar and custom spreadsheet. We also have a forum and monthly live calls where we can chat more about your specific situation. I would love to assist you with this process in any way that I can.

Book Giveaway Contest

02:44 Emily: Now, it’s time for the book giveaway contest. In April, 2021, I’m giving away one copy of Walden on Wheels by Ken Ilgunas, which is the Personal Finance for PhDs Community book club selection for June 2021. Everyone who enters the contest during April will have a chance to win a copy of this book. If you would like to enter the giveaway contest, please rate and review this podcast on Apple Podcasts, take a screenshot of your review, and email it to me at [email protected]. I’ll choose a winner at the end of April from all the entries. You can find full instructions at pfforphds.com/podcast. The podcast received a review recently titled exactly what I was looking for. Quote, having read a lot of scattered news articles and attending college workshops, I still felt a need for expert advice on investment strategies for international students. I stumbled upon this podcast while doing my weekly finance research, and I can say that Dr. Roberts does a phenomenal job at it. PF for PhDs is one of the few resources I could find which has got something for every grad student trying to figure out personal finances. Highly recommend it to incoming and current students alike. End quote. Thank you so much for this review. I am focusing more energy in 2021 on serving international students, postdocs, and workers, and I’m so glad that is coming across. Without further ado, here’s my interview with Dr. 50 from By 50 Journey.

Will You Please Introduce Yourself Further?

04:19 Emily: I am delighted to have joining me on the podcast today, Dr. 50. She actually goes by Mrs. 50 on her blog, By 50 Journey, which is a FIRE journey blog. However, she does have a PhD. So, we’re going to call her Dr. 50 today. She has an incredible story to tell us about coming to the U.S. As an immigrant, speaking no English, having no money, and you know, pursuing a PhD and ultimately being on this path to financial independence and early retirement. So, really delighted to get her story today. Dr. 50, welcome to the podcast. And will you please tell us a little bit more about yourself?

04:55 Dr. 50: Thank you so much. That was a really great introduction. Yes. That was a long time ago. I would say like over two decades, I came to this country and I had nothing. I mean, it’s nothing. So, I was trying to get a job, but I didn’t get any, because of course I didn’t speak any English. I couldn’t even answer a simple question like, how are you, what are you doing? Because I could understand, but I couldn’t express myself. So meaning trying to get a job, even a simple job. I couldn’t get it. So I was thinking, ah, this is, this is tougher than I thought it would be to start spending my life in a new country with my new husband. And I was trying, okay, let’s go back to grad school. That way I have friends. I have professor, I have, everybody so I can practice on my English. Because back in the day I didn’t have any friends, I don’t have anybody, except just for my husband. Right?

05:59 Dr. 50: And years later, I got accepted into grad school. I was so happy, but on the back of my mind, Oh well, okay, now here I am, I didn’t have any money. I didn’t have any financial support. And then I was trying to get funding, trying to get an assistantship, fellowship, whatever that was available. I didn’t get it. So, my first semester I used my credit card to pay for the tuition. I was, Oh, this is not going well. I have to do it better. So I was trying to find a job on campus. But as a student, we couldn’t work more than 20 hours. I said, this is not going to be enough to pay for everything. And not even the rent. Finally, in my second year of grad school, I got a full-time job which was wonderful. I was so grateful and I worked my way and then time flies.

07:07 Dr. 50: I got my master’s and PhD in six years because I was like, okay, let’s get this done as soon as possible so I can get a job and make real money. Right after I finished my PhD, I got a very great offer, even though I finished in the year 2008. So, everybody knows 2008 was the financial crisis. So I denied that job offer. I don’t know why, maybe because of the years, years, and the struggle of the grad school, I didn’t want to get that job because it was so stressful. So I accepted, I was a post-doc for a year and a half. During that time I was trying to find a real job. So I got a great job offer again. And then I got that job. And then my income was increased significantly. I would say, like triple. But unfortunately that job, it was in the city and I was traveling 90% of the time.

08:11 Dr. 50: And I just had a baby. I was happy with my job, but the work-life balance was not great. So I quit my dream job and then I had to find a job that’s not in the city. And then I got that with a negotiation that I negotiated with them. I managed to get the same salary that I had in the city, but I would live in the country. So, which is great. So, the struggle that was in grad school and a great job offer and determination and then patience. So I would say this is from, didn’t speak English to have a career that I wanted because of my PhD, and I was really happy. So, I’m ready to go on to the next level.

Pre-Grad School Finances

09:12 Emily: Yeah. I want to tease out a couple other pieces of that stories so that I understand it correctly. And thank you for giving us that like overarching view of how your career has evolved. So, it sounds like when you came to the U.S., it was a few years in between when you first arrived and when you were accepted to graduate school, is that right?

09:33 Dr. 50: That is correct.

09:35 Emily: And so, were you ultimately able to find some kind of job? I know that you said that you struggled at first, but how were the finances for you and your husband during that pre-grad school period?

09:46 Dr. 50: Yeah, I had odd jobs washing dishes. I answered the phone. I worked in a Chinese restaurant. I worked in a factory. I worked night shift. I did everything that I could do to earn money. And back in the day, it was the minimum wage. I believe it was $4.75 an hour. And yes, we were struggling before I got accepted into school. Even though after I accepted into grad school, we were still struggling because okay, now I spend my time studying during the day. I didn’t have time to earn money, so it was zero, but yeah. And using credit cards to pay for living expenses, even to pay for rent.

10:33 Emily: Yeah. So, it sounds like you very clearly identified the PhD, having that credential, as the path out of these minimum wage positions, is that correct?

10:44 Dr. 50: Yes. Yes. Definitely.

PhD as a Path to Professorship

10:47 Emily: If you had stayed in your home country, do you think you would have pursued a PhD?

10:53 Dr. 50: Yes, because before I met my husband I had a fellowship lined up for me, which they would pay for my school expenses, tuition, and living expenses. And yeah, I was about to go to doing my masters at the time, but decision between, okay, stay here and pursue my dream of becoming a professor or go there and be with my husband, and the love all my life. So, it’s a life-changing decision.

11:28 Emily: I am glad to hear, though, that you were already oriented in that direction. You were already planning on doing the PhD. It’s just, you decided to do it in a different country and had to take a couple steps back and learn the language and so forth. But you still got to, in terms of doing the PhD, you still got to that same goal.

11:44 Dr. 50: Yes. I always wanted to be a professor. A university professor.

Making Ends Meet in Grad School

11:49 Emily: And one other question I had about kind of the finances during graduate school. You said that you initially started out financing, you know, you weren’t funded, so you were financing it through consumer debt, and ultimately you got, I think you said a full-time job, right? So was it the case that your PhD was never funded? You didn’t have an assistantship or a fellowship, but you worked aside from doing the PhD?

12:10 Dr. 50: Yes. I worked 20 hours at the university dining hall in the morning from 3:30 to eight o’clock. And then during the day I worked as a lab technician for 40 hours. So yeah, my week was full. I would get up at three o’clock and then wouldn’t come home until 11 at night.

12:38 Emily: So you were working 60 hours at jobs plus the PhD work?

12:45 Dr. 50: Yes. And I enrolled full-time because if I did it part-time, it would drag me to eight or 10 years. I couldn’t afford that. That’s too long.

12:57 Emily: Wow. Incredible. I can’t, I can’t even fathom how you got through that. And you said it took six years, right?

13:07 Dr. 50: Yeah. It took six years, a master’s for two years and PhD for four years.

13:11 Emily: And you kept up that, I mean, I’m just like flabbergasted, you kept up that schedule the whole time?

13:16 Dr. 50: Yes. And finally, when I did my research, I quit my dining hall job because it was, Oh, it’s early. And I had that job because I got free meals. So, to save money, so I got free meals for five days. So, that’s awesome. Finally, I didn’t have time to do my research, so I quit that job and then I just kept my full-time job.

Post-PhD Finances

13:45 Emily: Yeah. I think we’re getting a real picture of how your finances were, but what it took, the work it took to keep yourself afloat, you and your husband afloat, during that time. And you know, clearly why you had the motivation to do the PhD. So, I’m really glad to hear that element of the story. Thank you. And so, you told us a little bit earlier about, you know, having the postdoc position and then, you know, taking a couple of different jobs, post-PhD. Did you want to add anything in there about how your income has been or anything like that?

14:20 Dr. 50: Yeah, sure. So, during my grad school years, the part-time one was the dining hall one. That was minimum paid. So, it was like, six or $7 an hour for 20 hours. So, that wasn’t that much. My full-time job, I worked as a lab technician that was $15 an hour. Back in the day, that was, I’d say 15 years ago, that was a lot for me. So, I’d say that I earned the most was $34,000 a year. That was awesome. That’s great money for us. That allowed us to buy a house, this would be our first house, and I didn’t have to worry much about my school tuition. And during that time I was able to talk to my boss, have them pay for a couple of classes. So, that was great. And so, post-PhD I had a postdoc and that doubled my income. I earned $63,000. That was in 2009. I graduated in 2008. So, it was double wage. Our finances were starting to get a lot, a lot better.

15:42 Emily: I just want to ask there, what kind of setting was that postdoc position in? Because that sounds like a pretty well-paid one, especially for that time.

15:52 Dr. 50: I was in the federal agency.

15:55 Emily: Okay. Gotcha.

Money Mindset: Salary Negotiation

Dr. 50 (15:56): And I, again, I negotiated my salary. I always had this mindset, even though with the federal, we have to follow rules and although certain staff follow certain salary level. Yeah. I negotiated. So, actually, it started at, I believe back in the day, was like $51,000 and I was able to get $63,000.

16:23 Emily: I think that’s a really great tip for anyone else who’s looking to apply for federal jobs because you have the, it’s the GS system, is that right?

16:31 Dr. 50: Yeah, it’s the GS system. Even though you’ve been told, okay, this position will give you the GS level this or accept this, you can always negotiate with them. Even though they have the fixed table to follow, you always can negotiate. Yeah. So, after the postdoc, I got a really great job offer in the city. This is in New York city. I was like, Oh my God, New York city, that’s a high cost of living. But it was a job of my dreams. So, I took it and my salary was doubled again. So, I made a six-figure salary. So I came from making minimum wage and then making a six-figure salary within, I would say, three or four years after I got my PhD. So, it was very quick.

17:28 Emily: Yeah. And then you said you maintained that salary even though you didn’t live in New York anymore.

17:33 Dr. 50: Yes.

17:33 Emily: Yeah. That’s fantastic.

17:35 Dr. 50: I came back to the federal, and I negotiated with them again. Different agency. And then they said, yes. I said, Oh my gosh. Yeah. It was so wonderful.

17:46 Emily: And do you still work for the federal government?

17:47 Dr. 50: Yes.

Overcoming a Large Financial Struggle

17:48 Emily: Okay. Yes. Thank you so much. It’s an incredible income trajectory. Also in this period post-PhD, I understand you overcame a large financial struggle. Can you tell us about that?

18:01 Dr. 50: Yes. So, during my graduate school years, I mean, as I already told you guys, we didn’t have much. Plus I supported myself and my family, husband, because he was still trying to finish his college also. So, I’d been using credit cards to pay for my tuition. And I was trying to pay it off every month. Some months I did, and some months I did not. So, it’s accumulated from there. And also, when I got my first real job in the New York City, we had our first child and then baby came and husband still couldn’t find any jobs. So, he was unemployed for a long time. Plus, the daycare cost was like so high. So, it’s better for him to be at home and take care of the baby. And then I’ll take care of the financial side of it.

19:04 Dr. 50: And yes, during this time we have surgeries, hospital, car wreck, and everything you can imagine. So, we accumulated a lot of debt. And one day I was like, okay, this is it. I am making a six-figure salary, and I couldn’t even afford a lunch at the cafeteria. And it’s like a wake up call. I need to do something. We need to do something. So, I say to myself, okay, no more excuses. I don’t want to wait until he got a job or I don’t want to wait until the baby leaves the daycare and goes to school. Let’s start now. Let’s do it. Yeah, all of the frustration. I just made our plan, trying to pay off the debt and made a budget and started doing my excel sheets. And then we go from there. And then in less than six years, all the debt was gone, including the mortgage.

20:04 Emily: Wow. What was the total debt balance then? Between the mortgage and the consumer debt that you were working on?

20:10 Dr. 50: Yeah, we had one car payment that was $18,000 and credit card debt was almost $80,000 and the mortgage was $114,000. So, I would say that 230 to $240,000.

20:26 Emily: Wow. So, within six years you paid off 230, $240,000 of debt on $120k ish, it sounds like, salary. Plus your husband was not working or maybe started working at some point during that period?

20:43 Dr. 50: No.

20:43 Emily: Not working during that period.

20:45 Dr. 50: He was not working yet.

20:45 Emily: Okay. Home with the baby.

20:48 Dr. 50: Yes, home with the baby.

A Shift in Money Mindset

20:48 Emily: Yes, plenty of work there. But it doesn’t sound to me, I want to ask you a little bit more about that transition about that day you couldn’t buy the lunch, you were so frustrated. Because the things that you mentioned, you know, that got you into the debt, the medical bills and the car wreck, none of that was frivolous spending. So, what did change actually at that point?

21:13 Dr. 50: It changed because, it’s kind of embarrassing to say, but I spent hours, hours just to pay a couple of bills. Because I have to think in advance, okay, if we have enough to pay for this and that before the next paycheck comes in. So, basically, we were living paycheck to paycheck. We stressed ourselves financially. Okay, the baby crying, I was trying to pay the bills. And I spent a lot to pay a couple of bills. This is, something’s wrong here. It’s not right. So I was, yeah. From there. Okay. Let’s make a decision to tackle this issue from the cause. Yeah. I was struggling and sad, and then I had nobody else to turn to. And I would say, let’s do this. I don’t want to wait any longer. Let’s do it. Our lifestyle will change, no more shopping, no more eating out. Let’s do this. If we do this, we can do this in under 10 years. In 10 years, we will be a whole new person, a new family, and then life will be much better.

22:29 Emily: And is that how you felt when you, you know, sent off the last payment?

22:33 Dr. 50: I felt relief. Okay, I don’t have to make all these calculations and then try to predict the future if my paycheck will be the same or if we will have any unexpected expenses. But I was like, Oh, well, okay, now we are definitely, the debt is gone. I still, so surprisingly, I still felt the same. It wasn’t the financial that I was looking for. I feel I miss something. We were missing something, but I couldn’t put a word to it until I found the FIRE movement.

Discovering the FIRE Movement

23:16 Emily: Yeah. So FIRE, acronym for financial independence and early retirement or retire early. Would you please explain for my audience, you know, your version of what FIRE is and why that spoke to you, and why you decided to pursue it?

23:31 Dr. 50: Yeah. So, before I knew it was a thing I always, Oh, wait, I don’t want to work. I don’t want to do this for the next 40 years. I mean, I only get one take on this planet. I want to do something that really matters, really matters to me and to my family, and really matters, that I am passionate about. I don’t want to spend my 40 years doing this. So, but I didn’t know what that feeling was until I met the FIRE movement, which you already said stands for financial independence, retire early. So, at this point, I want to be financially independent. The retire early can come back later. So, to me, FIRE means that you don’t have to worry about money anymore, meaning you don’t have to be worried about making a living, making money to support your lifestyle, your life. I mean, you can spend your time doing what really matters. To me, I really have a passion about helping animals in need, dogs and cats at the shelter. So, I really want to pursue that.

Commercial

24:50 Emily: Emily here for a brief interlude. This announcement is for prospective and first-year graduate students. My colleague, Dr. Toyin Alli of The Academic Society, offers a fantastic course just for you called Grad School Prep. The course teaches you Toyin’s four-step Grad Boss method, which is to uncover grad school secrets, transform your mindset, up-level your productivity, and master time management. I contributed a very comprehensive webinar to the course titled Set Yourself Up for Financial Success in Graduate School. It explores the financial norms of grad school and the financial secrets of grad school. I also give you a plan for what to focus on in your finances in each season of the year that you apply to and into your first year of grad school. If this all sounds great to you, please register at theacademicsociety.com/Emily for Toyin’s free masterclass on what to expect in your first semester of grad school, and the three big mistakes that keep grad students stuck in a cycle of anxiety, overwhelm, and procrastination. You’ll also learn more about how to join Grad School Prep, if you’d like to go a step further. Again, that’s theacademic society.com/E M I L Y for my affiliate link for the course. Now, back to our interview.

Striving for Financial Independence

26:18 Emily: It sounds like when you were heavily in consumer debt and you had your mortgage, you were stressed out and you thought that it was because you were playing this paycheck-to-paycheck game, right? Which is super common, that you have to really figure out, you know, when things can be paid so you have money in the bank to do it and all that. But then, once you got out of that level of stress, you said you still kind of felt the same. And so it sounds like you realized that it wasn’t just the paycheck to paycheck game. It was that you had to have a paycheck at all. You wanted to be freed of needing to work to support your lifestyle.

26:53 Dr. 50: Exactly. Yes. I still felt the same. I was surprised. Oh my gosh. I should just be, feel very happy. Definitely I felt relieved, but it wasn’t the happiness that I was looking for. And then, yeah, I just don’t want to have any paychecks at all. I just want to have my money working for me instead of working for the money. I had been working for the money for a long time, and I don’t want to work for the money anymore.

27:19 Emily: I see. Can you give us a little bit of more of the technicalities of how FIRE works, at least in your example? Like, do you have a number that you’re shooting for, and what are the strategies that you’re using to get to that point?

27:31 Dr. 50: Yes. I have several options. So, because my older child and my husband had a chronic disease that the health insurance is the other issue, but yeah, I have a couple options here. So, the first option would be, we accumulate enough money that we can live off the investments, mainly to live off the dividends or the 4% rules. If you Google 4% rules, you will know what it is.

FIRE: The 4% Rule

28:03 Emily: Yeah. I’ll just say for the listener that there’s kind of a rule of thumb in the FIRE movement, which is that if you are supporting yourself through paper assets, stocks and bonds and so forth, the rule is that you save up, invest, 25 times your expected spending level in your retirement, or if that’s what you’re doing, and that you can withdraw 4% per year from your portfolio over the long-term without endangering, you know, that you’re going to draw it down to zero. That’s a really brief explanation. There’s a lot more underneath that, but that’s the gist of the 4% rule.

28:40 Dr. 50: Yes. So, the first option would just live off the 4% rules and everybody will be staying home and taking care of the kids. So, I just had a baby this year, so yeah, the FIRE just came back to me again. And then the second option would be like my husband keeps working. So, we will have the health insurance that we desperately need. And I would be at home and taking care of the baby. And then the third option would be to move to another country that has the universal health insurance. So, we would get that issue covered, and then we’d just live off of the investment.

29:20 Emily: Yeah. So, which one is your plan A?

29:23 Dr. 50: My plan A is the option two. So, have him keep working so we don’t have to move. And then, because by that time they’d be about to get close to the number. The younger one was still be in elementary school. So, would be just like six or seven years old.

29:40 Emily: Okay. And I think this, you know, this health insurance thing that you brought up is something that is such a big conversation in the FIRE movement in the United States, not necessarily elsewhere. And there are plenty of people who are keeping jobs, not because they need the money, but just because health insurance or the risk that you take, if you went on certain kinds of health insurance plans, is so great here. So, it sounds like either your husband will keep working, or maybe at some point we will have a universal option and then that’ll give you a lot more flexibility.

30:11 Dr. 50: Yes, that’s true. Yeah. If you have that flexibility, that would be great. He doesn’t mind working at all. He loves working. So, I’m really grateful for that.

Federal Retirement Benefits

30:21 Emily: Since you’re a federal government employee, do you have a pension? Or do you have like defined contribution plans, or what’s the deal with your retirement?

30:30 Dr. 50: Yes, I do have a pension that is very, very small. So, let’s say if I worked for 30 years plus if you meet MRA, MRA stands for minimal retirement age, if you meet 30 years at your minimum retirement age, you will get 1% of your high three of your salary. The high three is your last three years of your salary. Let’s say, to make the math easier, if you make a hundred thousand a year for the last three years before you resign. So, 1% of that, and times 30 years, so it’s only $30,000 a year, plus tax and all the deduction, it wouldn’t be much. And we have a 401(k), like any other industry, but what we call it TSP. TSP stands for Thrift Savings Plans. So, it works just like 401(k), but it’s just called differently.

Investment Changes Toward  Achieving the FIRE Goal

31:39 Emily: And since you already went through that massive debt payoff journey before discovering the FIRE movement, was there anything that you actually started changing in your finances once you had that identified as your goal?

31:52 Dr. 50: Yes. I’m glad that you asked that question. So, it changed dramatically. So, I’ve always been maxing out my 401(k), or my TSP, every year. Okay. So, we agreed as a family that we’re going to pursue FIRE. Let’s do something different. Because if I keep my job, if I still continue trying to do a traditional retirement, I would work into my MRA at 57 or 60 years. And if you want to pursue FIRE, we need to fill a gap between that because I cannot take the money out until 59 and a half. So that gap, we cannot draw our 401(k) or any retirement account. So, we opened a broker’s account and instead of maxing out my 401(k) and his 401(k), we just contribute to the match just enough to get the match from our employer. And then divert all the money from that into the brokerage account, the taxable account.

33:00 Emily: So, that sounds like you felt like your post-60 retirement was well-funded enough. And I mean, you’re still going to get the match, so there’s still more growth and a little bit more contribution there, but it sounded like you thought that that was well-funded enough. So, now you’re going to focus on those years between whenever you do stop working and when you can start to access those retirement accounts.

33:21 Dr. 50: Yes. It would be about 10 years. So, the “50” came from, I would like to retire by the time I turn 50. Yeah, so, 10 years I calculated it. All the expenses in the future. I came up with the numbers that we have to have at least $600,000, or $600,000 to be okay, that’s the lean FIRE. If you want to get more comfortable, I say $750,000. That will get up to be better than lean FIRE. Lean FIRE is just like, minimal, barely enough to live on.

34:00 Emily: Anything else that you changed aside from the destination of your investments?

34:05 Dr. 50: Yeah, that’s the one thing. And then we also, any leftover money that we can save, any activity that we cannot pass by, like re-doing our budget, do the meal plan. Budget system number one and meal planning, not going out, basically just frugal living. And then I started a side business. Anything that I can sell. And as a family we like, talk, okay, this is the goal that we want to do. And everybody was on board and yeah. Every little thing, side hustles, living frugally, anything will go to the FIRE account.

Lifestyle and Money Mindset Pre- vs. Post-Grad School

34:54 Emily: How does, how you’re living now–you know, frugally and so forth, saving a lot, working hard–how does that compare to that pre-grad school period, or even the time when you were in graduate school, and you had that heavy workload? I guess I’m asking, how does your lifestyle compare, and also how do you feel about your finances now compared to back then?

35:18 Dr. 50: I would say I feel a little bit better. Because back in the day, we were struggling financially trying to put food on the table, trying to pay rent and then trying to pay the mortgage. Right now, we’ve comfortably more than enough to pay all the expenses, living expenses and mortgage, everything is on auto pay. I didn’t have to worry about if we have enough money. If the bill comes in, if we have a roof leak, if we have a broken pipe, we have emergency funds. So yes, my feeling was much better, but financially I was still trying to meet my financial goal, which is the financial independence. So it’s a different feeling, but I would say a different feeling kind of between struggle and the finish line, I would say.

36:14 Emily: So, sort of like struggling to get off the starting blocks. Right? To even make it, you know, to have a tiny bit of financial security, versus now, like you just said, you can see the finish line. You’re striving and you’re racing for that finish line. And yeah, I would imagine that, even if your lifestyle is pretty low, like you’ve tried to like be pretty frugal and stuff, having that financial security of the, you know, X, many hundreds of thousands of dollars, you know, in the bank and the investments, it has to be a massive, massive relief on your mind.

36:49 Dr. 50: Yes. Yeah. It would be a relief because right now we trying, I would say we are in an accumulation phase trying to get as much money into the FIRE as much as possible, as soon as possible. But at the same time, I just don’t want to stress myself out. Because one thing that I learned from our debt-free journey, our debt journey was like, because at the end of the day, you just want to be happy, right? The money doesn’t make you happy. You just need to learn to live in the moment, even though you are trying to achieve something or aim for something, but overall you just want to be happy and just trying to live in the day. I just don’t want to stress out too much because during our debt journey, I was so stressed out. I just wanted to be out of debt so badly. I just didn’t want to spend at all.

37:47 Dr. 50: And I wasn’t happy. And when we were debt-free, I still wasn’t happy. Now, we are on the FIRE path, FIRE journey. I just don’t want to be the same. I just want to enjoy a little bit more of my life. I just want to stop and breathe and enjoy every single day. I just don’t want to wait, because if you wait, you will feel depressed. And if you ever feel like it will never come. So yes, I take it easy and just live in the day. And that day will come before you know it.

Was the PhD Financially Worthwhile?

38:24 Emily: I’m really glad to hear you say that. That’s a message I need to hear. I need to hear that and be able to focus on living in the moment more and not striving. And I’m really glad to hear you say that because I know that some people in the FIRE movement do stay very caught up in the end goal. And even though sort of the philosophy around FIRE would be to be living in the moment both while you’re pursuing it and once you’ve achieved it, a lot of people do fall into just thinking about the future and living for the future and you know, not taking the time to enjoy the time they have at the moment, which is all we have. Right? Really. So, I’m really glad to hear that you’ve, based on your debt free journey, you’ve already learned that lesson. And you’re now, you know, beyond that and into still enjoying your life even while you’re pursuing FIRE. So, I’m really pleased to hear that. Do you think the PhD was financially worthwhile?

39:14 Dr. 50: Oh, yes. In my case, for me. For me, it was worthwhile. I am glad that I made the right decision to pursue a PhD because it’s opened so many doors for us. If I were working at my minimum wage job at a factory, or I was afraid to take the risk of not having any paycheck and then just went straight to grad school without any backup plan. We wouldn’t be here today. Yes. It was very worthwhile. Yeah.

Best Financial Advice for an Early-Career PhD

39:47 Emily: Yes. I can see that clearly from the story now. And so, Dr. 50, I conclude all my interviews by asking my guest what is your best financial advice for an early-career PhD? That could be something we’ve talked about already. It could be something completely different, but would you please share that with us?

40:04 Dr. 50: Yeah, sure. I say, from my past experience as a PhD graduate, you feel like, Oh my gosh, I have a PhD behind my name now. I make a ton of money. Even though it’s not a ton, I would say, it’s increased your income. My one piece of advice would be trying to live the same. Don’t let the life inflation get you. Because if you do that, it will be never enough. I mean, it’s how much you make, how advancing your career brings you. It will not be enough. You just, if you just keep inflating your lifestyle. I’m not saying that you should be conscious as a graduate student, but on the back of your mind, trying to do like other peers are doing. I’m not saying like, you should live this way, but yeah. Lifestyle inflation, it really hurts your financial life.

40:59 Emily: Yeah. And it definitely sounds like you were there, you did that for a little while. I like to say, don’t inflate your lifestyle, but increase your lifestyle. Increase it intentionally, mindfully. But don’t, yeah. Don’t just let it float up to, you know, whatever your salary is.

41:16 Dr. 50: Yes.

41:17 Emily: Yes. I love that advice. Thank you so much. Dr. 50, it’s been a real pleasure talking to you. Thank you so much for joining me on the podcast.

41:22 Dr. 50: Oh, thank you so much. I’m glad to be here. And I’m so honored to be on this podcast. I am. I hope that my life lesson and experience will be helpful to you guys in some way, some small way. Thank you so much for having me here.

Listener Q&A: Financial Independence

41:42 Emily: Now on to the listener question and answer segment. Today’s question was asked in advance of a live webinar I gave recently for a university client. So, it is anonymous. Here is the question. Quote, can you start a journey to financial independence in grad school. End quote. Wow. It is awesome that this person is already thinking about long-term financial independence as a graduate student. The answer is, unequivocally, yes. In fact, if you’d like to think about it this way, you have already started your journey to financial independence in grad school, because you are making a long-term investment in your career, and presumably, your earning potential. While FIRE is achievable in theory by anyone, it’s definitely an easier road if you have a good salary. So, in that sense, if getting a graduate degree is going to put you on a road to a good salary, you’re already pursuing financial independence. Now, what can you do while you’re actually in graduate school to pursue financial independence?

42:46 Emily: No matter what your income, you can work on your mindset. You can learn more about personal finance. You can put strong habits into place, which you’ll definitely need during graduate school, like budgeting and frugality. Your income is always going to be rather low during grad school, but that’s not the only side of the equation when it comes to financial independence. Your expenses matter a lot as well. I would say, during this period of time, when your income is suppressed, you should take the time to master the controlling expenses side of the equation. But that’s not all. Even with a lower income during grad school, you can work on increasing your net worth. This is what I put a lot of focus on when I was in graduate school. Tactically, once you have your budget set up and hopefully a bit of free cashflow, you can put that towards saving, debt repayment, or investing, following, like I’ve talked about in recent weeks, the financial framework that I developed for PhDs.

43:43 Emily: Now, here’s one key concept that might not have occurred to you yet. While you’re in graduate school and you have this lower income, you also have a lower tax rate. Graduate students tend to, unless they’re married to someone with a much higher income, top out in the 12% federal marginal tax bracket or lower. And that means that it is a perfect time to use a Roth IRA for your retirement investments. Especially, again, if you anticipate a large income increase postgraduate school, this is probably the most optimal time in your life to be using a Roth IRA. And presumably it’s also the earliest investing you’ll do, so it has the longest timeline to compound and grow. People are crazy for the Roth IRA, and they will contribute even when they’re in incredibly high tax bracket. So, you really have, if you think about it, a great opportunity to be able to contribute to the Roth IRA without paying a high tax rate. And five years or so investing in a Roth IRA and then decades compounding after that, this will be a very big portion of your portfolio, ultimately, even if you don’t contribute in absolute numbers a lot of money during grad school. Thank you so much for this question, Anonymous, and I’m so glad to learn that you are already on your journey to financial independence. If you’d like to submit a question to be answered in a future episode, please go to pfforphds.com/podcast and follow the instructions you find there. I love answering questions, so please submit yours.

Outtro

45:18 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs Podcast. On that page are links to all the episode show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast, and instructions for entering the book giveaway contest and submitting a question for the Q&A segment. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email listserv, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

A Low-Cost Lifestyle Can Be Both Necessary and Enjoyable During Grad School

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In this episode, Emily interviews Dr. Trevor Hedberg, who completed his PhD in philosophy at the University of Tennessee at Knoxville in 2017. His academic year stipend was $15,000 throughout graduate school, yet he finished with about $35,000 in savings. Emily and Trevor discuss the money mindset and financial strategies that enabled Trevor to save even on this low stipend, including his willingness to apply for any possible extra funding and conduct frugal experiments.

Links Mentioned in This Episode

low cost grad student lifestyle

Teaser

00:00 Trevor: Don’t fall into that self-fulfilling prophecy. Don’t just assume that your destiny, as a humanities PhD, is to live paycheck to paycheck. It doesn’t have to be that way for everybody.

Introduction

00:15 Emily: Welcome to The Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is season eight, episode 14, and today my guest is Dr. Trevor Hedberg, who completed his PhD in Philosophy at the University of Tennessee in Knoxville in 2017. His academic year stipend was $15,000 throughout graduate school. Yet, he finished with about $35,000 in savings. We discussed the money mindset and financial strategies that enabled Trevor to save, even on this low stipend, including his willingness to apply for any possible extra funding and conduct frugal experiments. Have you heard about the IRS pushing back the federal tax filing and payment deadline? By the time you listen to this, it would have happened a couple of weeks back. The new deadline for filing your federal tax return and paying any remaining tax due is now May 17th, 2021. I hope that by now, your state will have made up its mind about whether to extend its deadline as well.

01:21 Emily: So, check on that. Please note, however, that the federal deadline for making the quarter one 2021 estimated tax payment on your fellowship, if you’re required to, remains April 15th. And of course, you need to check with your state as well. In response to this extension, I added live Q&A call times to How to Complete Your Grad Student Tax Return (And Understand It, Too!). If you join the workshop now, you’ll be invited to any and all of the remaining Q&A calls, which will take place on April 10th, May 2nd, and May 15th. You can learn more about and join the workshop at pfforphds.com/taxworkshop. I hope to see you inside.

Book Giveaway Contest

02:08 Emily: Now, it’s time for the book giveaway contest. In April 2021, I’m giving away one copy of Walden on Wheels by Ken Ilgunes, which is the Personal Finance for PhDs Community book club selection for June 2021. Everyone who enters the contest during April will have a chance to win a copy of this book. Walden on Wheels is a memoir about student loan debt, if you can believe it, and the steps the author took to get out and stay out of it. Although I haven’t read it yet, the book has been on my radar since its publication because of the extremes the author went to to avoid taking out student loan debt while he was a graduate student at Duke, which is my Alma mater. I’m really looking forward to this one. If you would like to enter the giveaway contest, please rate and review this podcast on Apple podcasts, take a screenshot of your review, and email it to me at [email protected]. I’ll choose a winner at the end of April from all the entries. You can read full instructions at pfforphds.com/podcast. Without further ado, here’s my interview with Dr. Trevor Hedberg.

Will You Please Introduce Yourself Further?

03:23 Emily: I have joining me on the podcast today, Dr. Trevor Hedberg. I’m really delighted to have him on. He is now out of his PhD, but he’s going to be telling us about how he managed his finances during graduate school, which as a slight departure from many of the other interviews we’ve had, Trevor was in a humanities field, philosophy, and he had a lower stipend. So if you are in the audience and have been tired of listening to interviews with people who have had much higher siphons than you did during graduate school, this is the one for you. So yeah, Trevor, thank you so much for joining me for this episode.

03:55 Trevor: Sure, Emily. Thanks for having me.

03:57 Emily: And would you please tell the audience a little bit more about yourself?

04:00 Trevor: Sure. So, my present position, I’m a postdoc at the Ohio State University situated in Columbus. I’ve got a joint appointment with the Center for Ethics and Human Values in the College of Pharmacy. My two main responsibilities are coordinating Center for Ethics and Human Values events. Right now we’re doing webinars because of the whole COVID thing. And I’m teaching bioethics courses to students in the College of Pharmacy. I also do some of my own research in areas of applied ethics.

Length of Time and Stipend in Grad School

04:26 Emily: Yeah, that sounds fantastic. Great kind of postdoc work to have, I think. Okay, so let’s go back to the grad school years. Tell us what years were you in grad school for?

04:36 Trevor: I was in grad school for a while. I started at the University of Tennessee in fall 2010, and I picked up a master’s degree on my way to the PhD and I got the PhD in spring of 2017.

04:48 Emily: Okay. Actually, that doesn’t sound that long to me.

04:52 Trevor: It is about average for humanities PhDs. So it’s like, I don’t feel bad, but when I think back I’m like, man, that was a seven-year chunk of my life, you know, that’s a while.

05:03 Emily: Yeah, it is. My husband also took seven years to finish his PhD and he’s in a bio kind of field. So, it can take a while. Okay. So, what was your stipend during that time? Or if it ranged, maybe just give us the range.

05:15 Trevor: The base stipend for the time that I was in the program, so if you had a standard teaching assistantship package, didn’t do any summer teaching, just fall assignments, spring assignment, was $15,000.

05:26 Emily: And were you at that the whole time, or did you ever get above that?

05:29 Trevor: My first year I had an introductory like one-year fellowship, which reduced my teaching responsibilities to half, well you’re normally at half-time, it reduced it to quarter-time. And I also got like a lot of extra money, which is kind of weird, right? You get paid a bunch of extra money for doing less work, but that’s, you know, why it’s a fellowship. It’s supposed to give you time to work on research. So for that semester, I made around 20,000, $21,000 something like that.

05:58 Emily: Yeah. This is a note for any prospective rising graduate students in the audience that you can get an offer letter and your first year it can look nice and rosy. Oftentimes fellowships are given to help people, you know, transition into grad school or whatever, but you need to be asking about years two plus, because I hope that you were aware that that was a, you know, a short-term thing, but some people may not be aware just looking at that first year.

06:21 Trevor: Yeah. So actually, my situation’s the opposite. I got admitted without having that fellowship and I applied for it under the supervision of a faculty member after they’d already admitted me to the program and then I got it. So it was a bonus on top of my initial offer. So I did not get, you know, deceived or something.

Finances at the Beginning and End of Grad School

06:40 Emily: Good. Yeah, I’m glad to hear that. Okay. So base stipend $15K, a little bit extra in one year, but that was basically what was going on. And so, over that seven-year period, overall, how did your finances end up going? Like where were you financially when you started? Where were you financially when you finished?

06:57 Trevor: I went to Knoxville with a little bit, somewhere between five and $6,000, just kind of a nest egg that had been given to me by parents and other relatives and so on during undergrad and I just had not spent that much of it. And I was able to, without taking out any additional loans or anything, I had some loans from undergrad. I didn’t add to them at all during grad school, but I was able to leave graduate school and go and move to Tampa, Florida with between 35 and $40,000 in my bank account. I was also able to purchase a new car while I was, I didn’t really want to, but my Mitsubishi Lancer was totaled out in a freak hailstorm. And it happens, I guess, in April of 2011. And so I wound up leasing a car for a while and then buying it at the end of that, I ended up getting a Hyundai Elantra. But that was, I got some money from the insurance company for like the payout from the Lancer. But it was, you know, that was still a sizable expense that I had to cover in the long-term.

08:03 Emily: Yeah. I mean, the numbers that you just threw out, I mean, having 35 or $40,000 in savings, that’s two years of what you were earning during that seven-year period, plus buying the car on top of that. That’s quite surprising to me and obviously probably a motivating reason why you came on the podcast because somehow you were able to do that. And we want to hear about how on that lower stipend, right? So kind of like let’s dig into that. Why did you end grad school with so much savings? Was it an intentional thing that you set out to do? Or was it just a happenstance thing based on, you know, your personality or something?

Ending Grad School with Savings

08:39 Trevor: One of the few pieces of financial advice that I got going into graduate school in philosophy is whatever you do, don’t take out any loans en route to your degree because the employment prospects in the humanities, and philosophy included, are just so uncertain. There’s, you know, every job has hundreds of qualified applicants and you may apply for a hundred jobs, but the odds are still very uncertain as to whether you’ll actually wind up with employment at the end of it. So the idea is don’t take out a ton of money for, you know, for a career that might not pan out. And a lot of what happened just kind of resulted from being very steadfast in doing what I could to minimize my expenses and to try to save where I could and also apply for as much extra money as I could get.

09:28 Trevor: I mentioned the first year of fellowship, I also got a couple of summer dissertation fellowships, which were just basically extra money because people thought your dissertation project was cool. Did some summer teaching, which paid very well Tennessee relative to the amount of extra work. And when I traveled to conferences or did events like that, I always put in my, you know, travel reimbursement requests and things like that. And just over a seven-year period of time, these kinds of small, you know, savings or these extra little bundles of cash that you happen upon, it just adds up over time.

10:03 Emily: So at kind of the root of this is you being really realistic about job prospects. And I assume also the possibility of having a lapse of income, right? Like, while you’re job searching. And so having that kind of, let’s say one to two years of, you know, living expenses in the bank when you finished is a hedge to help you pursue the career that you want. Is that a fair characterization?

10:28 Trevor: Yeah. The other thing I was cognizant of is that once I was out of grad school, I’d have to start repaying student loans. And so I wanted to be in a position where, you know, if I’m in fact unemployed, I can float while making loan payments successfully for a while, you know, long enough to if it requires going a non-academic career route, so be it, whatever. But you don’t want to be stuck in that situation where you’re living paycheck to paycheck, then you’re not getting any more paychecks. Now, student loans are coming due and you’re in a really tough spot.

10:59 Emily: Yeah. So really it’s about like financial flexibility in a sense, and being able to meet your obligations, even if you haven’t landed the ideal job yet.

11:10 Trevor: Yeah, I think that’s fair to say.

Summer Funding Strategies

11:10 Emily: Okay. So you mentioned a few different ways that you increased your income during graduate school, such as by pursuing summer funding and summer jobs. I’m wondering, did you have funding in some way or another every summer? Or were there some summers where you were unfunded?

11:26 Trevor: So the first two summers I was there I did summer teaching, and summer classes paid very well. They were about $4,000 which I was offered to adjunct some classes at community colleges. Like I would be getting paid less than half of that. So I turned down those instances, because that’s too much. I think that’s too much time and energy for not enough pay. But four grand for, you know, five, six weeks to teach a summer course was a pretty good deal. One summer I had a research assistantship that I think paid between $2,500 and $3,000 where I was basically helping a professor edit a book that he was putting together. And then there were two summers where I had a dissertation fellowship, which was around the same amount of money as teaching a summer class, but you’re supposed to just be working on your dissertation during that time. So there were two summers in there where I didn’t have any extra income, but that’s still pretty good. Five, you know, five of those seven summers, I managed to add something to what I was getting.

12:31 Emily: I was just thinking, based on your kind of sort of defensive posture towards financial planning and saving that, were you thinking like every year I need to be prepared financially for an unfunded summer? If money comes in, if I get work, that’s a bonus. But were you confident that you, and, you know, there were two summers where that was the case. So were you using your cash to fund, you know, your living expenses through those periods?

12:54 Trevor: I didn’t have any trouble. The amount of money that it seemed to cost to live in Knoxville, Tennessee, where I was living and with what I was doing, was roughly $12,000 a year. [Note: It was actually closer to $14.4K.] So I didn’t really seem to have, there was no danger of if I didn’t have money in the summer that like it was going to be, you know, I was going to take a loss in the year.

Frugal Living Tips for Grad Students

13:18 Emily: Gotcha. $12,000 per year, not bad. Do you have any you know, sort of frugal living tips for the listeners? And I’d really love to hit, for sure the big three expenses for grad students, which are housing, transportation, and food.

13:34 Trevor: Yeah. So the housing in Knoxville is really good. I was able to live in a pretty comfortable, not quite 600 square-foot, I think it was around 600 square-foot, one bedroom, one bathroom apartment for right at $500 a month. That included some, but not all utilities. Transportation-wise, you know, I got that new car. I didn’t have any car payments for almost the first year of grad school. And then I had around payments for around $300 a month once I did have a car again. So that right there is 800 bucks. I said it was around $1,200. I think groceries came out to a little bit, like $200 to $250 a month, give or take. And there were utility expenses, right? So I got a cell phone. You got to pay for gas.

14:24 Trevor: I had a very unusual like cable internet situation because I eventually just got so tired of Comcast because they just rate-hiked ludicrously. And after they did that enough times, I just said, no, I’m done. And just, and I had a period where I didn’t have any internet or television at my apartment, which was an interesting six months. When you’re basically doing all your, now, now during the remote learning period we’re in right now, that would not be doable, but this was a different time. You know, a simpler time where you could have all your internet access on campus and it was okay. So just on average, this whole situation came out to around $1,200. I will say, I wasn’t living like an extremely miserly existence. I was still, you know, it’s not like my apartment was destitute or that I had no material possessions. I still enjoyed the same amount of video games the average person in his twenties nowadays probably enjoyed. I would say that there were certain things that I didn’t do as much as some grad students might. I certainly wasn’t like going to bars frequently. I was eating out on special occasions, but not very often otherwise. So, there were some sacrifices, but I do want to stress I don’t think that it was unbearable.

15:41 Emily: Yeah. You know, in what you’re saying, I’m reflecting on my own time in graduate school as well and thinking about how we did eventually, my husband and I, did eventually get into a rhythm of just kind of simple living, you know, relatively low costs. We were okay with the fixed expenses we had. Yeah, the going out expenses weren’t too much. By about halfway through grad school. We had found friends, we love to hang out with who also wanted to socialize in a low-cost manner that didn’t require us, you know, going out all the time. We would just hang out at each other’s homes and stuff. And so we just kind of settled into what I felt was a very satisfactory, but also pretty low cost, sort of lifestyle. It sounds like what you were doing was similar. Were there any other, you might say discretionary expenses that you did engage in? You haven’t mentioned travel so far.

16:29 Trevor: Oh, so yeah, I did go back. My hometown is in Topeka, Kansas, so I did go back about twice a year to visit. Usually, my parents were willing to cover the flight back. As far as travel to conferences and things like that. It was very rare for me to pay for hotel rooms and other things because I would always apply for travel reimbursement. So I did go to a fair amount of conferences. I don’t know what the average would be over grad school, but I had, you know, 13, 14 conferences on the CV by the time I was on the job market, like at the end. But I didn’t generally have trouble getting reimbursed, provided you go through the actual administrative channels and you show that you actually did present at that conference, you know, show the receipts and all that stuff.

17:12 Trevor: So, that wasn’t really a huge obstacle for me. I suppose if someone, if you were an international student for example, and you’ve got to go abroad to go back home to visit, that would be a more significant expense. There were also some, you know, not all TA assistantships include like health insurance, which was something that I had through my assistantship. So, that’s an extra expense I didn’t mention that I didn’t have to pay. And when you’re making so little money, your taxes are very low. They’re not nothing, but usually like the income tax that was withheld would usually be much greater than what I actually owed. So if anything, I’d be getting a check from the IRS at some point.

17:52 Emily: And there’s no state tax in Tennessee, right?

17:55 Trevor: That’s true as well. Yeah. No state income tax.

Money Mindset Developed in Grad School

17:58 Emily: Yeah. So, you know, we just talked about sort of having a satisfactory but low cost existence. What was the money mindset that you developed, by the end of graduate school, regarding where happiness comes from?

18:11 Trevor: Well, I saw some graduate students, like some of my peers, who lived even more miserly than I did. And I sort of realized there were certain limits. Like there were apartments I could have gone to in Knoxville that had much lower rent than even the $500 I was paying, for example. But there were certain thresholds below which I wasn’t willing to go to save money. So there was an extent to which I did, you know, it wasn’t just save money at all costs. There was a certain amount of prioritizing my own personal satisfactions. But I also think that there were certain things that just, I was able to live without too much trouble. I mean, cable television was a great example. I grew up with cable television and when I didn’t have it, I just didn’t care. It didn’t really make that much of a difference.

19:01 Trevor: If anything, I was just glad that I wasn’t seeing commercials all the time. Now, the internet was different. That six months without internet access was kind of rough. That was an experiment that was probably worth doing. But, never again, right? Like always going to have internet whatever it goes for. But there were lots of things like that that I just kind of tested and experimented with to see what I could do without and what I needed. If you test enough things, pretty quickly, you hone in on what’s important to you and what’s worth spending money on and what’s not. And I think that process is really important when your money is very tight.

Frugal Experimentation

19:37 Emily: I love that point. Absolutely. I use the same word, experimentation, when I talk about, well, I use the term frugal experimentation. So, sometimes if people are, you know, in my audience, looking for ways to decrease their expenses, I’ll say, you know, conduct a 30 or 60-day frugal experiment where you try out a new tip you found. You’re not sure at the outset if it’s going to be right for you. One, you know, you have to sort of evaluate, like you were just saying, like, what impact does it have on your quality of life? If it’s negative, or maybe it could be positive. And how does that compare to the actual savings that you realize? And you can’t really know until you actually try something out. So I’m really pleased that, you know, you also came to this idea of experimentation and it sounds like you did it in multiple areas. Do you want to give us some other examples, aside from the cable and internet one, of some other experiments you did?

20:27 Trevor: So, some of it had to do with technology upgrades in general. So, I was one of the last people, for example, to buy like a smartphone. Because I actually really liked the model of phones where you had the little slide-out keyboard. So they were really good with texting, but not so great for like the web browsing and other stuff that we do on them now. That was one where I was perfectly content to not technologically upgrade for as long as possible. So, you know, once that phone was paid off, I just had that phone for a really long time. And that bill was lower as a result. I wasn’t able to keep my PC around for all of grad school. When I was working on my dissertation, the motherboard finally died, but I mean, I’d had that PC I was using for seven or eight years. And it had been through heavy, heavy usage. So that was another thing that like, I didn’t need to replace. I think that nowadays, especially, we’re so prone to just want to upgrade, upgrade, upgrade when a lot of times the upgrades are marginal and just cost us more money and don’t actually make our lives much better. Those are the obvious other examples I can think of.

21:31 Emily: I have one that I remember from grad school really calling out as a frugal experiment on the blog that I was keeping at the time, which was no longer using our clothes dryer or rather using only for like towels, like that kind of thing. And we were just hanging, drying you know, shirts and all the rest of the stuff that would dry pretty easily in that manner. And I wasn’t that diligent to like, actually look at the difference that made on our electricity bill, and I’m sure it made some kind of small difference. But yeah, that was just something that we like tried out, weren’t super wedded to whether we would keep it around or not, and ended up doing it for a couple of years. Because it was really no more difficult, and again, you know, we weren’t running the dryer, so that probably helps some.

22:08 Emily: So I remember that as being one of our frugal experiments I’m also really big on, this is just like my personality type, I’m big on like rules. Like I love boundaries, like things being black and white and not gray. So for instance, one rule, you mentioned this earlier, but one rule we made eventually in graduate school was that we would only eat out for social occasions and we would not eat out for convenience. Because we noticed that was a pattern going on for us, that we would be, Oh, I’m staying late on campus. I’m just going to grab dinner from whatever fast food joint. And so just that wasn’t really bringing a lot of satisfaction, just convenience, into our lives. So we decided to cut that out and I made a rule for myself. Okay. No more eating out for convenience, only with other people. I wonder, I don’t know if your personality is the same way, but did you end up having sort of a set of rules, financial-related rules, for yourself by the end of graduate school?

How Low (ºF) Can You Go?

22:56 Trevor: Real quick, before I answer that question, there is one other one that comes to mind because you just mentioned like the clothes-drying thing. One of the other things I experimented with was what temperature I could stand to live at. So just adjusting the AC or the heat. And Knoxville has really good weather for that because there’s about a six-month period of the year where you really don’t even need the AC or the heat on at all. The temperature outside is mild enough that it just kind of self regulates. But that was one thing. So, if you need 70 degree summers, so to speak, inside, that’s going to cost you a lot of money in Knoxville, Tennessee. If you’re willing to satisfice for, you know, 76 or 78, that could be $50 on your utility bill at the end of the month. That’s not an exaggeration. Found that out in the first, like couple of months in the summer that I was there. So.

23:50 Emily: That’s a great example. Thank you.

23:53 Trevor: Now, your question about other rules. I’m not necessarily, I like the idea behind setting, like these kinds of rules and rigid boundaries, but I often find that you always wind up being put in a weird situation where you’re tempted to make an exception.

24:08 Emily: Travel is my exception to the no eating out for convenience rule. Yeah. It’s going to happen when you travel sometimes.

Forming Good Financial Habits

24:14 Trevor: Yeah. So I like to think of it maybe in terms of, instead of rules, like habits. Like things that you kind of just try to motivate yourself to do regularly, but not in a sort of rigid ironclad sort of way. So there were quite a few habits that I developed. A few of them I’ve already mentioned, like I always applied for money that I thought I had a chance to get. I always tried to, one of the big habits I developed was not auto paying very many bills and always taking the time to like manually manage what I was doing. Just so that I was more cognizant of the money that was being spent so that, you know, a $70 bill doesn’t just go by and you know, just the system pays it and then, you know, it’s handled.

25:04 Trevor: Nowadays, I do auto pay a fair amount of stuff because I just have more bills and more expenses. But also it’s because I don’t need to be aware of every tiny little expense here and there. But as a grad student, I felt like I did need to be aware of that stuff. I needed to be aware of exactly where all the items on my credit card statement were coming from. So, that was one big habit. Some of the other ones I think would overlap with things you’ve mentioned, like generally not going out to eat unless it was a department event or a Friday night social gathering with a bunch of the other grad students. Reserving that kind of stuff for special occasions. I also have just never been a big drinker. So for me, not regularly going to the bar was not much of a sacrifice, not something that I really had to think too much about to follow.

Commercial

25:59 Emily: Emily here, for a brief interlude. The federal annual tax filing deadline was extended to May 17th, 2021, but the federal estimated tax due date remains April 15th, 2021. This is the perfect time of year to evaluate the income tax due on your fellowship or training grant stipend. Filling out the estimated tax worksheet and form 1040ES will tell you how much you can expect your tax liability to be this year and whether you are required to pay estimated tax. Whether you’re required to pay throughout the year or not, I suggest that you start saving for your ultimate tax bill from each paycheck in a dedicated savings account. If you need some help with the estimated tax worksheet, or want to ask me a question, please join my workshop, quarterly estimated tax for fellowship recipients. It explains every line of the worksheet and answers common questions that postbaccs, grad students, and postdocs have about estimate tax, such as what to do when you switch on or off a fellowship in the middle of a calendar year. Go to P F F O R P H D s.com/Q E Tax to learn more about and join the workshop. Now, back to our interview.

Financial Values Post-PhD

27:17 Emily: I want to go back and like emphasize again this experimentation that you were doing. And I don’t want anybody to take what I’m about to say the wrong way. Graduate school is a very financially challenging period of life, especially for, like you, living on such a low stipend. So I don’t want to lionize that too much. But one of the benefits, if you want to look at it that way, is that you are, many people are sort of forced to do what you did, which is experiment and really figure out, you know, what is going to add to your happiness and your satisfaction with your life at the end of the day and what is not. Because you really have to be kind of brutal about managing your money and cutting out those things that are not adding that much to your life. And I went through that process as well during graduate school. And I think it’s been really beneficial overall. I mean, now post-graduate school, we have a much nicer income and that’s lovely, but I still go back to the lessons and the identification of my own values that I came to during that period of time. And have you carried some things forward into your post-PhD life like that?

28:25 Trevor: Yeah, definitely. Still don’t have cable television, for example. But thinking about it more generally. I would say that the same habits of like checking where my expenses are coming from on like my statements and things like that that, that’s pretty much just stayed the same. Some things are different. I’m a little more willing to like upgrade, you know, things now that I was in graduate school. For example, like once we started this remote learning thing, I bought a printer for my home office, which is something I would have never even considered in grad school. Like always use the department printer, right? Like it’s free and you’re on campus so often. But, so there are things like that or buying new computer software, or stuff like that, I wouldn’t have considered buying, you know, in grad school. You just use whatever freeware alternative, you know, you can get. So some things are a little different.

29:20 Trevor: I am willing to spend a little bit more. And the place I’m living at now is a little bit bigger, like a little bit larger. A little bit more comfortable, higher rent. I have an add-on garage, which I wouldn’t have paid for in grad school, but now, like I like the extra security. And guess what? If it hails, my car won’t get totaled. So that’s nice. But I would say overall, you know, aside from those kinds of incremental changes over time as my income’s gone up and I’m no longer required to micromanage my finances so much, a lot of the habits are still kind of the same. It’s not that big a difference.

Avoiding Lifestyle Inflation

30:00 Emily: Yeah. So, a common term used in the financial space is lifestyle inflation, right? So like when your income goes up and your lifestyle just, somehow the money goes away and you’re suddenly living a higher lifestyle every time you get a raise. I think of a positive process of lifestyle increase that can happen when you go from grad school to a postdoc, postdoc to a real job. That is to say, that like you were just mentioning, adding in intentionally item by item some things into your lifestyle that you think really add to it that you can now afford on the higher salary, but not just blindly increasing everything across the board, right? So that’s what I kind of meant about like keeping the insights that you gained into your own values from that lower-earning period of life in graduate school.

30:47 Trevor: Yeah, definitely. The mere acquisition of more material possessions does not automatically make your life better or make it more fulfilling. It just gives you more stuff. And if you’re like me and you’ve had to move a couple of times since your PhD, having more stuff is not always a good thing for other reasons. I would say, you know, as you said, you want to be more deliberative about the things you buy and about what you add into your life. You want to make sure that it’s actually going to provide some kind of meaningful benefit.

Beware of Financial Pitfalls

31:17 Emily: Yeah, absolutely. Do you have any bits of advice for current graduate students, some things that you’ve maybe observed like, you know, pitfalls that other graduate students have fallen into that maybe you either used to fall into or, you know, learned how to avoid?

31:33 Trevor: Yeah. There are a couple. So, I think there would be basically three that would come to mind. One is, especially in philosophy and English and some of the other humanity fields I’m familiar with, a lot of graduate students seem to assume that they are going to have to live paycheck to paycheck. That they will never be in a financially stable situation at all while they are a grad student. And of course, if that’s your mentality going in, it kind of creates a self-fulfilling prophecy. You’re very unlikely to get out of that position if you think it’s inevitable and don’t take any steps to avoid it.

32:08 Trevor: Another one is, I was shocked to learn there were lots of grad students in my program, I don’t think our program is anomalous, i’s just a common thing, that just didn’t apply for stuff. That were eligible to get travel reimbursement, or to apply for certain kinds of fellowships, whatever, and just wouldn’t apply for it. And they’d say something like, sometimes it was just forgetfulness maybe, or not knowing the like Byzantine administrative requirements, or something like that. There were also some of them, you know, that thought they weren’t good enough to get a fellowship or something like that. But the thing is like, there’s so much arbitrariness in how these things are evaluated. You have no idea whether you’re good enough or not. Let the committee tell you you’re not good enough, you know. Always apply for whatever it is.

32:53 Trevor: And the last one we’ve already kind of alluded to a couple of times in some of the habits we talked about. But I think there’s a really serious tendency to discount small but frequent expenses. So, you know, one $10 on-campus lunch, not a big deal. But if you’re doing that four days a week for a 15-week semester, suddenly like that’s over a thousand dollars a year that you’re spending, you know, buying lunch on campus, as opposed to what you could be doing, which is just taking a few minutes in the morning, packing a sandwich and whatever else and handling things that way. So, I would say, you know, we’re not great at that kind of arithmetic, like human beings just aren’t wired that way to sort of aggregate those small expenses over really long periods of time. But you’ve got to fight that habit and recognize that that stuff does make a difference.

33:45 Emily: I love all those examples so much. I mean, they really all are about as you were just saying, like mindset and habits. And I think that, you know, they’re especially impactful for someone at the kind of stipend level that you were at, right? Like, I mean, you were able to do quite a bit of savings, but it was still a low stipend overall during that period. And so, it absolutely makes such a difference as you were just saying to go into that situation with believing that there’s something financially possible for you above living paycheck to paycheck. I mean, of course, we all know grad school is very difficult financially, for some people more so than others. But like you said, if you never even think that it’s a possibility to get out of that, you definitely never will. I guess I’ve heard the phrase, like whether you believe you can or believe you can’t, you’re right.

34:35 Emily: This can be applied generally. I don’t think that’s quite true at the graduate student level because many graduate students may believe that they can, but they still can’t just because of circumstances. But the opposite is definitely the case. If you don’t believe that you can get out of the paycheck to paycheck cycle, you absolutely won’t no matter what your circumstances are. So I’m so glad that you brought up those points and I hope that, you know, current and entering graduate students will take note of all three of them.

Navigating Savings and Loan Repayment Post-PhD

34:59 Emily: So, now that you’re on the other side of the PhD and you’re in your postdoc, how does the way that you handled your finances during your PhD affect your life? You know, did you end up having to use the savings during a job search? Or how did it work out?

35:14 Trevor: After it, yeah. So when I was in my last year of graduate school, I wound up getting a postdoc at the University of South Florida, which is where I went and spent two years in Tampa. And now I’m at another postdoc at Ohio State. So I didn’t wind up having to dip into savings to navigate any employment gap, which was very fortunate. I was very happy to have that money on hand though, because I was able to really pay off my loans very quickly as a result. And I was also able to pay off my car. So I think that all my loans and the car were both paid off by the end of like December of 2018 or no, was it 2019? I don’t remember, before I finished up at Florida. The December before I finished up at Florida. And that was obviously very satisfying. Now, like the money that I’m saving is mainly going into like an investment portfolio which is something I wasn’t thinking about at all during graduate school. But, you know, as time goes on, your financial goals and what you’re trying to do have to change with your circumstances,

36:14 Emily: I’m wondering why you chose to pay off the debt during that first postdoc, both the car and your student loans, when you could have worked on those earlier, instead of having such a large cash cushion? What was the calculus there?

36:29 Trevor: One was medical emergency. Wanting to have money on hand in case something like that happened. That never happened to me personally, but there were peers I had to whom that happened. And I wanted to be prepared for that possible contingency. I had no reason to think I was high risk. But some of them didn’t, either. And so, that was part of it. I actually did pay off one of the loans while I was in grad school. I could have theoretically paid off all of them. I don’t know how much of a dent it would have taken in that like 35 grand or whatever I had when I was leaving, but it would have been substantial. The other thing I learned is that I didn’t know how much the moving expenses would be, but because of the delay in getting my first paycheck in Tampa and because of other moving-related expenses, you need around five grand as a minimum to do the kind of move that I did and not be in kind of a tough situation.

37:30 Trevor: You also got to put down security deposits, pay, you know, at least one, I had to pay two months rent without any paychecks in Florida, because I was delayed getting into the system. You know, stuff like that. So, the short answer is, I don’t know if it was necessarily the right call. Like some of those loans though, the interest wasn’t running until I graduated. So for those at least, I’m sure it was fine. But I’m honestly not sure looking back if that was like the financially optimific way to do it, but that was the rationale.

Any Financial Regrets?

38:00 Emily: Yeah. I’m not trying to criticize your decision. Just wondering, like, as someone who held onto the cash for so long, why were you able to let go of it at that point? But having loans actually start accruing interest is a great reason to kick into the repayment mode instead of just save the cash mode. Do you have any financial regrets from graduate school?

38:23 Trevor: I think that any financial regrets I would have would be tied to the choice to get a humanities PhD in the first place, right? Because there’s an opportunity cost with going to grad school, right? Like, I’ve got plenty of friends in non-academic positions who during the time that I was in graduate school, they got a certain degree of career capital, such that when I was getting my PhD, they were like getting promoted or something like that. But insofar as I, you know, don’t regret getting a PhD or having one, I don’t regret the financial circumstances I’m in.

Best Financial Advice for Another Early-Career PhD

38:58 Emily: Yeah. Thank you for pointing that out. We sometimes overlook the most important financial decision, which is whether to go to graduate school or not. So yeah. Thank you for that. Well, Trevor, I’ve enjoyed this conversation so much, and I think that, you know, it’s been really valuable for the listener as well. As we’re wrapping up, the question that I ask all my guests is what is your best financial advice for another early-career PhD? And that can be something that we’ve touched on already in the interview, or it could be something completely else.

39:25 Trevor: I’ll just reiterate one short little low-hanging fruit point, which is don’t take out loans to get a degree in the humanities. But that one I’ve already mentioned. The less obvious one I think might generalize across all PhDs is you have to take initiative with your finances because you’re not going to get any feedback from anyone that you’re interacting with about them. So, think about like if I was in a seminar and I wrote a crappy term paper. I would be told that I wrote a crappy term paper and I would be made aware of that and be given suggestions for improvement. But if I made a bad financial decision, no one would know. There’d be no feedback, no graduate advisor is going to be like looming over you to make that kind of decision, which means that you have to self-police pretty much entirely.

40:13 Trevor: No one’s going to give you, you know, any kind of pushback even if you’re making like poor choices or suboptimal choices, repeatedly. And so the only way to kind of keep to avoid that is you have to take the initiative yourself and you have to make some effort, you know. Whether that means making a spreadsheet of all your expenses and tallying them, or just repeatedly like logging into your accounts and checking where your expenses are going or what deposits are being made. Whatever it is, whatever you have to do, like do it because no one else is going to push you in that direction.

40:55 Emily: Such an interesting point. As you were making that, well, one, I thought of the phrase, no one cares about your money as much as you do, which is kind of a truism, but yeah. And the other one is, you know, generally for Americans, like we’re pretty much on our own like financially in a lot of respects with the, you know, pensions being almost non-existent. Social security, yes, it exists. How reliable is it? We don’t know. It’s not that well-funded anyway. It’s not like you get that much money. So in general, Americans are pretty well on their own financially, but the situation is intensified during graduate school because your employer is not giving you the retirement benefits. They’re not giving you certain kinds of insurance. Like unemployment insurance, for example, if you’re a student, I’m pretty confident is not being paid in for you. So other examples like that of just like sort of social safety net kind of stuff. Also, you’re not paying into social security or Medicare. Social safety net stuff is like, we’re kind of exempted from it as students, which is a little bit odd. Especially when you’re getting into your late twenties and thirties, maybe even forties, and you’re still, you know, in PhD training. It’s such an interesting point. So yeah, while Americans in general have to kind of captain their own ship in this, it’s like even more so during graduate school because yeah, your employer is not doing anything for you.

42:13 Trevor: Yeah. That’s an interesting set of observations. Your situation as a graduate student is just very weird and very financially perilous for so many reasons.

42:22 Emily: Yeah. Gosh, well, Trevor, I’m so glad to have gotten your insight on this interview, and I’m really glad that you, you know, had the experience you did in graduate school and all the things that we’ve talked about today and it was positive overall and you got that nice, healthy, you know, nest egg by the end. And yeah, I wish you all the best and thank you so much for volunteering for this.

42:41 Trevor: Sure, thanks Emily. It was good talking with you. And I hope my story can help some other people in the humanities who are struggling. I mean, there were some advantages that went my way. You know, I don’t care how good you are with your money. You’re not making a 15 grand stipend work in New York or LA. So, Knoxville was really good for that. But as I said, you know, don’t fall into that self-fulfilling prophecy. Don’t just assume that your destiny, as a humanities PhD is to live paycheck to paycheck. It doesn’t have to be that way for everybody.

43:11 Emily: I think that’s a perfect note to end on. Thank you so much.

43:15 Trevor: Thanks, Emily.

Listener Q&A: 1098-T

43:15 Emily: Now, on to the listener question and answer segment. Today’s question was asked in advance of a live webinar I gave recently for a university client. So, it is anonymous. Here is the question. Quote: is the form 1098-T accurate? I am confused by it. End quote. I loved the simplicity of this question. I think my conclusion on this is that the form 1098-T is accurate, but it probably doesn’t mean what you think it means. It’s not really trustworthy. The sums in chiefly box five and box one of the form 1098-T draw from the transactions in your student account. So one of the reasons that you shouldn’t take form 1098-T at face value is that not all of your awarded income and not all of your qualified education expenses might have been processed by your university’s student account.

44:23 Emily: You could have awarded income that completely bypassed your student account and just landed in your bank account thanks to some kind of external funding agency. You also could have incurred some expenses that your university did not process. So in that sense, the form 1098-T includes some awarded income and some qualified education expenses, but not necessarily all of them. You still have to critically evaluate your own actual cashflow situation to see the totality of the picture. The other way that the 1098-T maybe doesn’t mean what you think it means is that box one of the 1098-T reflects payments received for qualified tuition and related expenses. That might sound like the same term as qualified education expenses, which is used elsewhere by the IRS, but they’re not quite the same. The sum reported on your 1098-T in box one might be all of the qualified education expenses you can use to make your awarded income tax-free, or it might not. More likely not.

45:34 Emily: There are several education expenses that are considered qualified education expenses for the purpose of making scholarship and fellowship income tax-free that would not be included that are explicitly not to be included in box one of the 1098-T. So, if you incurred those kinds of transactions, even if they show up in your student account, they’re not going to be in the sum reflected in box one of the 1098-T. Therefore, once again, you can’t take box one of the 1098-T at face value. You have to go into your student account and really look at all the transactions that occurred there and figure out whether or not they’re qualified education expenses for the benefit that you are taking. Bottom line, the 1098-T has some issues. And the IRS knows about these issues.

46:27 Emily: And the IRS knows that you may be using qualified education expenses to make some of your scholarship and fellowship income, or what I call awarded income, tax-free that’s not reflected on the 1098-T, and that’s okay. The IRS is aware that this can happen. So the form 1098-T is not given a whole lot of weight when we’re talking about the particular benefit of making scholarship and fellowship income tax-free. It’s given much more weight for the Lifetime Learning Credit, the Tuition Fees Deduction, and the American Opportunity Tax Credit. But those are less often used by funded graduate students. If you want to learn more about the expenses that could be qualified education expenses that you can use to reduce your taxable income and reduce your tax liability that do not show up on form 1098-T in box one, you can join my tax workshop, How to Complete Your Grad Student Tax Return (And Understand It, Too!). You can find more information about that at pfforphds.com/taxworkshop. Thank you to Anonymous for this beautifully phrased question. If you would like to submit a question to be answered in a future episode, please go to pfforphds.com/podcast and follow the instructions you find there. I love answering questions, so please submit yours.

Outtro

47:50 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for The Personal Finance for PhDs podcast. On that page are links to all the episode show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast, and instructions for entering the book giveaway contest and submitting a question for the Q&A segment. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email listserv, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.