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Where PhD Candidates Are Full-Time Employees with Benefits

May 31, 2021 by Lourdes Bobbio

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

  • Find Dr. Veronika Cheplygina on Twitter
  • Related Episodes
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  • The Academic Society: Grad School Prep
  • Personal Finance for PhDs: Community
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
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

April 26, 2021 by Lourdes Bobbio

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

  • Find Andy Baxley on The Planning Center
  • Personal Finance for PhDs: Live Call on purchasing a home as a grad student
  • Personal Finance for PhDs: Tax Resources
  • Personal Finance for PhDs: Community
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list

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

April 19, 2021 by Meryem Ok

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

  • PF for PhDs: Community
  • Walden on Wheels (Book by Ken Ilgunas)
  • E-mail Emily (for Book Giveaway Contest)
  • PF for PhDs: Podcast Hub
  • By 50 Journey Website
  • General Schedule (GS)
  • The Academic Society Website 
  • Toyin’s Free Masterclass (Emily’s Affiliate Link)
  • PF for PhDs: Subscribe to Mailing List
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

April 5, 2021 by Meryem Ok

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

  • Dr. Trevor Hedberg’s Website
  • Dr. Trevor Hedberg’s YouTube Channel
  • PF for PhDs: Tax Workshop
  • Walden on Wheels (Book by Ken Ilgunas)
  • Emily’s E-mail (for Book Giveaway Contest)
  • PF for PhDs: Podcast Hub (Instructions for Book Giveaway Contest) 
  • PF for PhDs: Quarterly Estimated Tax
  • PF for PhDs: Subscribe to Mailing List
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.

Can I Make Extra Money as a Funded Graduate Student on an F-1 Visa?

March 29, 2021 by Lourdes Bobbio

In this episode, Emily interviews Frank Alvillar, an immigration attorney at Alvillar Law in San Antonio, Texas, and Sheena Connell, a designated school official and the assistant director of International Student and Scholar Services at the University of the Incarnate Word. International students are sometimes in a very tough financial situation in graduate school, even if they are fully funded, and may desire to increase their incomes. But what kinds of additional income are allowed on an F-1 visa if a graduate student already receives a stipend? Frank and Sheena share their frameworks for thinking through what is and is not permissible. Emily asks them how these frameworks apply to specific income-generating activities such as self-employment, working remotely for an employer outside the US, investing, rental income, credit card rewards, and more. This episode is a must-listen for any prospective or current international graduate student!

Links Mentioned in this Episode

  • Find Frank Alvillar on Twitter and Sheena Connell on LinkedIn
  • ImmigrationCases.org
  • American Immigration Lawyers Association
  • Study in the States
  • Quarterly Estimated Tax for Fellowship Recipients
  • Related Episodes
    • Can and Should an International Student, Scholar, or Worker Invest in the US?
    • What Happens When Personal Finance Education Becomes Your Hobby
    • How a Book Inspired This PhD’s Financial Turnaround
  • Personal Finance for PhDs: Resources for International Students
  • Personal Finance for PhDs: Tax Resources
  • Personal Finance for PhDs: Community
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list

Teaser

00:00 Sheena: I think there is a kind of an idea that that students can work around it. I think culturally, I find a lot of our students come from a lot more…there are a lot more countries that has a lot more ingenuity and that’s appreciated, of going outside the bounds of law, but in US immigration law, there’s just not a lot of wiggle room. And the, “I didn’t know excuse” doesn’t really work that well.

Introduction

00:33 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host. Dr. Emily Roberts. This is season eight, episode 13, and today my guests are Frank Alvillar an immigration attorney at Alvillar Law in San Antonio, Texas, and Sheena Connell, a designated school official and the assistant director of international student and scholar services at the University of the Incarnate Word.

01:00 Emily: In this episode, we discuss what kinds of income generating activities are allowed and not allowed for funded graduate students on F1 visas. I have been asked variations on this question by international students in tough financial situations for many years and I finally found two experts who are able to give us a full answer. Frank and Sheena share their frameworks for thinking through what is and is not permissible. I asked them how these frameworks apply to specific income generating activities international students have proposed to me, such as self-employment working remotely for an employer outside the US, investing, rental real estate, credit card rewards, and more. This episode is a must listen for any prospective or current international graduate student in the US. Even if you’re not in a tight financial situation right now, things may be different down the line and it’s best to be prepared.

01:53 Emily: This podcast episode kicks off a season for my business of publishing in-depth content for graduate students, post-doc and PhD workers who are in the US on visas. The three big topic areas I plan to publish content in are this podcast episode on work options, an at your own pace workshop on taxes, and at least one video course on investing. That last course will be taught by Hui-chin Chen, who we heard from in season four, episode 17. If any of these subjects sounds interesting to you, please sign up for the Personal Finance for PhDs mailing list at pfforphds.com/international to learn when the new content becomes available, which I expect to be in the next six months. I’m really pleased to be able to serve this segment of the PhD population in more depth and I hope you’ll join me on this journey.

Book Giveaway

02:42 Emily: Now it’s time for the book giveaway contest. In March, 2021 I’m giving away one copy of, I Will Teach You to Be Rich by Ramit Sethi, which is the Personal Finance for PhDs Community book club selection for May, 2021. Everyone who enters the contest during March will have a chance to win a copy of this book. I Will Teach You to Be Rich has come up in two previous podcast episodes with Dr. Amanda in season five, episode 15 and Laura Frater in season eight, episode two. In both episodes, my interviewees is say that while they were initially turned off by the books title, it eventually inspired them to execute dramatic financial turnarounds. After listening through either one of those episodes, you will definitely want to read this book and participate in the book club. 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 March, from all the entries. You can find full instructions pfforphds.com/podcast. Without further ado, here’s my interview with Frank Alvillar and Sheena Connell.

Would You Please Introduce Yourself Further?

03:59 Emily: This is a really special episode. I’m so glad that you all have joined today. I have with me Sheena Connell and Frank Alvillar. We are talking today about graduate students on F-1 visas and what their possible options are for adding to their incomes. Can they work? Can they not work? Can they get an income without working? These are the kinds of questions that we’re going to be asking today. I’m so glad to have these two experts with us. So Sheena, will you please tell us a little bit more about who you are, where you work and so forth?

04:30 Sheena: Yeah, sure. I’ve worked with international students for almost 15 years now. I’ve worked at public research institutions, at private schools, secondary schools, intensive English language programs — kind of the whole gambit of the F-1 world. I am currently serving as assistant director for international students scholar services at University of the Incarnate Word in San Antonio, Texas. And I’m also the designated school official for their F-1 program and alternative responsible officer for the J-1 program. I’ve served as the co-chair for San Antonio Forum for International Educators. And currently, just started this position, serving on the national team for NAFSA, which is the Association of International Educators as the chair elect for international student and scholar services knowledge community, and we’re kind of responsible for cutting edge international advisor resources and trends. I’m not a tax expert. I’m not a Department of Labor expert but I am a certified trainer in F-1 and J-1 advising.

05:32 Emily: Thank you so much. We are so lucky to have you on today. And will you please explain what this role DSO is? Because I know this is going to come up more later and it was not one that I was familiar with.

05:41 Sheena: Yeah. We have this acronym, designated school official, that is a designation given by Department of Homeland Security to a person or a group of people at a university who control F-1 student records and then alternative responsible officer is the equivalent on the J-1 side.

06:01 Emily: Thank you so much, Sheena. And Frank, will you please introduce yourself?

06:04 Frank: My name is Francisco Alvillar, I go by Frank. I am an immigration attorney. I have been practicing since 2007. I’m board certified in immigration nationality law. I practice in every area of immigration law and that runs the gambit from processing visas at consulates, to defending people in deportation court, to simple green cards, simple citizenship cases, as well as federal litigation, which involves suing the US government.

06:37 Emily: We are so fortunate to have you as well. And Frank, you are the one who I initially reached out to about doing this interview because you have recently started a fabulous website. And will you please tell us more about that?

06:48 Frank: Sure. It’s immigrationcases.org. A friend of mine and myself, we found that a lot of our clients had what we referred to as pain points. Those were things that individuals didn’t necessarily need legal representation for, but they were pieces of information that they couldn’t get online, that we knew because we had been through the process with our clients. Things from delays in cases, to general processes, to just little nuance things, delays in receiving receipts, what to do when you have a court case. What we’ve done is trying to find those pain points and create pages for each and every single one and that’s how we got connected because one of the pain points for F-1 international students is knowing what their options are to work because it’s expensive to go to school here in the US. We found a lot of people calling our offices asking for options where they didn’t necessarily need representation, but they just wanted to be informed before they made a mistake and jeopardized their immigration status.

08:01 Emily: Yeah, I think that’s going to be the case for a lot of people listening to this episode. I was just googling F-1 work options as I do every few months, because I had not really found a satisfying article until I did this a month or two ago, and found your website ranked on the first page of Google. Really, really wonderful article and I immediately reached out and proposed this podcast episode. That’s kind of the background for this.

Disclaimer

08:25 Emily: I know that, Frank, you had a disclaimer you had to say upfront and also just kind of explaining the different perspectives that you and Sheena come from. Let’s talk through that.

08:34 Frank: As a primary disclaimer, the information that we provide should not be construed as any type of legal or direct advice for your case. You may hear something that sounds extremely similar to your situation, but don’t take it for granted that you could have things or aspects of your situation that could make the outcome markedly different than what we’re describing here. It’s always important to get that information for your specific situation and to not rely necessarily on just what the descriptions we’re giving here. That’s number one.

09:11 Frank: Number two is that we’re going to be talking about this from two perspectives. One is the legal perspective, what the law says. We’re able to give you a description of what the regulations tell you you can and can’t do. But I think that the more important thing, which is perspective, number two is the practical application, because one of the things that you have to realize is that it’s people who are applying the law and immigration law is complicated because it’s so voluminous and you can’t expect every single immigration official to know every single regulation. It’s important to understand that the way these things are applied aren’t necessarily just based on what the regulation says. It’s based on the individuals. You want your case to make sense to individuals within the framework of the law, but you should never rely strictly on this is what the law says, and then you almost argue with an immigration official that they’re wrong. You never want to be in that situation. Think practically when we’re giving you this advice, because that’s the way — or not advice, but practically what we’re giving you this information, because that’s really, what’s most important here.

10:25 Emily: Okay. Thank you for providing that perspective, but I guess I’m still a little bit confused. Let’s say we go through the course of this episode and we’ve identified something that according to law would be a perfectly fine income generating activity for an F-1 visa student. Does that mean because this practical application other lens that they shouldn’t pursue an activity that does seem to be in accordance with the law?

10:50 Frank: Not necessarily. I think that what I would tell them to use is the Frankie five second rule. And the Frankie five second rule is that if an immigration officer can’t understand what you’re doing within five seconds, it’s probably a bad idea because anytime they’re confused or it’s unclear the activities that you engaged in, they’re going to err on the side that you did something wrong. As an example would be, let’s say, and we’ll talk about this later, but credit card rewards shows up as income on your tax returns. If they were to ask you to see your tax returns, it would look like you worked here in the US from some individual’s perspectives. You would need to be able to, let’s say, as a practical matter show, those credit card rewards statements, show the amounts, maybe even make a spreadsheet, showing that they add up to the amount that’s declared on your taxes. It’s not that you don’t want to do it. It’s just that you want to make sure that it’s clear what you’re doing. And like I said, I even use this with my clients — the five second rule, and it’s not for when the food falls on the floor, it’s for when an immigration officer gets confused, you never want to be in that situation.

Work that is Permissible with an F-1 Visa

12:01 Emily: Okay. I think that’s a super helpful rule of thumb, so thank you so much for clarifying that. I want to go over here the perspective that I’m trying to ask these questions from, which is the one that you know, I was not an international student myself, but I speak with international students on a very regular basis through the podcast, through the speaking engagements that I do through people who email me, and I hear quite often about the financial pressure that international graduate students are under because in all too many universities in the US graduate students are underpaid. International students lack the pressure release valves that some domestic students have, like being able to take out student loans without like a guarantor in the US. Maybe right away when they arrive in the US they don’t have credit scores yet, so they don’t even have the option of like consumer debt immediately. And then there’s of course the work issue, which we’re going to be talking about in much more detail.

12:53 Emily: When I hear from international students, sometimes they are in very, very dire financial straits. Some have dependents here in the US that they aren’t able to support properly, and they are looking for any kind of solution, any kind of way out of this rock and hard place that they’re in. A lot of times I get these questions about, well, what kind of income generating activities are permissible? I’m using that term very carefully, because I’m not necessarily talking about work, and we’ll try to distinguish between these two things later. That’s kind of the perspective that I’m coming from, that I’m asking these questions from. Let’s start off with what kind of work is definitely, definitely allowed on F1 visa. Like it is what they’re doing that they are in the US to be doing. What kind of work is definitely, definitely allowed?

13:36 Sheena: I would start, I guess, to preface all of that is that the F-1 visa is a student visa, so the primary purpose is to study and work is not really at the forefront, unfortunately. I also think that the US in general kind of underestimates the cost of education when students are coming. F-1 students are supposed to prove a certain amount of money to survive in the US before they’re even allowed to enter, but I think that schools could do a better job on estimating what the real cost is. Talking to students before you arrive is probably pretty helpful on that.

14:14 Sheena: As far as what’s allowed on campus, of course is naturally allowed. Now on campus can come into quite a different few forms. For graduate students, research assistant fellowship, teaching, and whole gambit. And those can be different things, hourly pay tuition, waivers, stipends, more combination. I would say anything that takes place on your institution and is paid by your institution, definitely allowed, unless it’s under federal work study or sensitive fields with specific grants that wouldn’t allow non-citizens to work there. There’s also on pick campus employment, commercial, or contracted businesses that provide direct student services. That would be your bookstore or sometimes your student cafeteria if it it’s run by a different company. What would not be is probably construction. So let’s say that there’s a company that’s contracted to do construction on campus, that definitely wouldn’t be allowed because it’s not providing that direct student services.

15:13 Sheena: Off campus, this is a tricky one, which a lot of students don’t know about, but the off-campus/on-campus employment or educational affiliate sites. You’ll see this with a lot of the researchers where maybe they’re not actually on the campus, but they’re at a place that’s contractually, I guess put together by funded research projects. They’re not on campus, but they’re at a lab somewhere, something similar to that. The practical training world — hopefully all of our F1 listeners know about CPT and OPT, so I won’t go into that too much.

15:47 Sheena: And then there’s the rare kind of off-campus authorization. And all of those require that you apply with your international advisors with the form I-765 for employment authorization document, for severe economic hardship. And that we’ve seen has been very difficult over the last few years to get approved. Usually these are unforeseen circumstances, well beyond the student’s control. That could mean like a death of a family member, or there’s a war going at home, major surgery, or the currency plummeting for some reason, which at this time it’s kind of worldwide, so I don’t know the trends right now of economic hardship, how that’s going to look in the post COVID world, but it’s worth a try, I would say if, if you feel like you’re in that situation. However, you’ll usually have to be in your program for one year before you can apply for those, because again, as an F-1 student, you had to prove that you had enough money to come here to begin with.

16:47 Sheena: And then the employment with international organizations. That’s any organization under the IO Immunities Act, meaning like International Monetary Fund or World Bank, that’s also a type of work authorization you can get to work for those companies. So those are the allowable work worlds that we see most often.

17:05 Emily: Okay, let me ask a follow-up around that, because the situation that I see most often is PhD students who are funded, like you said, through assistantships or potentially through fellowships, which in the case of fellowship technically wouldn’t be work, it’s kind of like a scholarship award sort of thing. But anyway, with assistantships, what I typically see is that the appointment is limited to 20 hours per week. And so I’m just thinking of a person who is thinking, “Okay, oh, wow, Sheena you just listed all these options for different places I could work on campus, but I already have a 20 hour week assistantship.” Is it possible to add on to a job that you already have that already is a halftime employment deal?

17:45 Sheena: I think that’s going to range per institution. Graduate students do have a little leeway at some institutions about the 20 hour work week, if it’s CPT and a research assistantship combined. Now that’s not all institution. Some institutions interpret it very strictly and say, nope, 20 hours is 20 hours. Others consider it if it’s CPT, if it’s part of your coursework, it shouldn’t be counted against the 20 hours. Now, I would say USCIS has been very strict about tallying up those numbers over the past three years that we’ve seen. We didn’t see that under the previous administration. I don’t know if we’re going to see it under this administration, Frank might be able to talk more to that, but you do have to realize that your institution’s interpretation, if it’s more lenient, you’re still at some point taking a risk if you’re going more than 20 hours. And that’s from my point of view, I’m a very conservative advisor on these types of things. But you also have to remember during spring break, you have a little bit more leeway during winter break, and then also during summer break, you can go more than that 20 hours without a lot of issue. Now, finding the job, that’s an additional pain point, as Frank was saying.

19:07 Emily: Okay, Frank, do you have anything that you want to add onto this point about the straightforwardly allowable activities?

19:13 Frank: Yeah. I think that what Sheena touched on and I think more generally from the 30,000 foot view is these DSO’s are quasi-immigration attorneys and one of the things that a lot of F-1 students don’t realize, and perhaps it’s different with PhDs because I deal more with undergrads than graduate students, but that the institutions are reliant on immigration giving them permission to accept these F-1 students and it’s a big deal to these institutions. They’re required by regulation, by law to report violations to make sure that they’re doing everything properly. One of the things that’s very important is to really go and speak to the DSO and that you understand that there are perhaps options that are institution specific. Because again, the institution is the one who has to report back to CIS. In other words, the institution going to okay, it, and then CIS is going to okay it, or immigration is going to okay it, so it’s important that you go have that conversation.

20:14 Frank: And you shouldn’t be having that conversation right before you’re in economic dire straits. You should be having it the minute that you arrive at a university. If I need to work, if something happens, what are my options? Can we talk to people? Can we figure something out? Just in case so you have it in your back pocket, because the big takeaway is that these decisions, and this is what I described it to Sheena before podcast and I think she agrees with the metaphor is that these students come and they’re in the immigration system or the US is a dark room and all they have flashlight. And so you need to light that room up as much as you can. And it starts first and foremost with the conversations with the DSO, because it’s a mutually beneficial relationship. They get to accept you as students and recruit from around the world, and you get an education from them. That’s going to be the first starting point for you, and it should happen before you need it.

21:24 Emily: Yeah. Thank you so much for saying that. I think just to pick up on a point that you made earlier Sheena. If you have spoken with other graduate students, let’s say, especially, you would be valuable as other graduate students from your same home country, and they’re telling you, “Ooh, it’s really tight on the stipend.” You know you have to have that conversation with the DSO right away. What are my options here? And not to wait, like you said, Frank, until you really get into trouble before having the conversation. Now, if students are telling you, “Oh, no, that’s no problem. Don’t worry about it.” Well, maybe you can skip out on that for the moment because you’re not really anticipating having any difficulties with the stipend.

22:02 Sheena: I would also add that DSOs, we care a lot, sometimes to a fault, but if we see a student struggling and they’ve come up to us and said, “Hey, I’m really having a hard time.” We might not have an immediate solution, but we might have a scholarship that comes in later this semester. We might have an additional grant that we find out about. And if we have those students in our mind, we know this kid’s not doing great, the student might need help — we keep that in the back of our mind, I would say the majority of DSOs that I work with.

22:32 Emily: Great, great tip. Thank you.

Consequences of Violating the Work Restrictions of an F-1 Visa

22:34 Emily: Okay, so we talked about what is like straightforwardly permissible on an F-1 visa. Before we get into like maybe more borderline or creative solutions, what is the potential consequence of violating this work aspect of your visa?

22:50 Sheena: As Frank mentioned, we definitely have a legal obligation as advisors to report violations. If we don’t report it, not only are we jeopardizing that student we’re jeopardizing every F-1 student, our ability to host it, our institution’s reputation, everything. So working beyond F-1 regulations or working within regular F-1 regulations, but without prior approval, those are the big violations I would say most DSOs see. Those have severe consequences.

22:23 Sheena: Number one, automatic termination of your F-1 status. Your SEVIS record is no longer valid, your I-20 is no longer valid, your I-94 loses validity because it’s tied to your I-20. Your visa is essentially canceled. Frank can go more into the weeds of what happens once that happens. We actually are automatically immediately notifying DHS. DHS, or Department of Homeland Security, they have access to SEVIS. We’ve worked with ICE officials that come in and educate our students about the negative consequences, and they’ll say, once that file hits my desk, it’s kind of game over, particularly for work violations. Those are the most serious violations of your F-1 visa. There’s a lot of forgiveness, I think in F-1 violations. You can apply for reinstatement, but work, that’s not one of those violations that you can apply for reinstatement.

24:20 Emily: Okay. Thank you. I was just thinking the same thing as you said, game over. What do you say, Frank?

24:25 Frank: Yeah, I think that the big thing is that anytime somebody is trying to get over, visit the US or come to the US, they’ll ask about a visitor visa first, and then I recommend, if they need to study, to find a program here, a short term program, and the reason why is that I say that the consulate officer is a lot more willing to give you an F-1 visa or a student visa because they know that that school will report you when you don’t do what you’re supposed to. To pick up on what Sheena said and talk about ICE, which is immigration and customs enforcement, which is the police arm of immigration, they have, and they will, and I’m sure continue to show up at people’s door when their SEVIS record is terminated. It doesn’t happen a hundred percent of the time. I can’t give you a percentage of what it is, but you’re playing with fire when you commit a violation. And when they come to visit you, it doesn’t necessarily indicate an arrest. They’ll normally give you, what’s called a notice to appear, which is how they initiate deportation proceedings against you. That’s one consequence.

25:33 Emily: The second one is simpler and straightforward is that if you fall out of status here and you have to go back to your home country and try to reapply. You can’t do what Sheena said, a reinstatement. They just don’t treat violators, they don’t give them a lot of latitude. What I mean by that is the immigration system, when we’re talking about everything other than a green card, is designed for you to come for a specific purpose for a specific time. They are giving you this visa with that in mind. When you violate that, you essentially lose the trust of the consulate officer or the consulate. When that happens, it’s very, very difficult to get that back. How do you prove that you’re not going to do something in the future after you’ve done it. You can’t prove a negative Just having that stain on your record, which in a lot of cases can be really unfair, why you have it, but that goes back to the, you have to talk to your DSO and be fully informed because as Sheena said, the consequences can be fairly, fairly high for mistakes that you intended to make or didn’t intend to make.

26:46 Emily: Yeah. Thank you for that. And I think, just to put a really fine point on it, if you lose your visa, I’m guessing you’re going to be kicked out of your program. I’m sure it’s going to vary by program and there’s been a lot of leniency during 2020 for people working remotely and still being in their programs, even if they’re in another country or whatever. But I would imagine that you’re going to be terminated from your program if you lose your visa for most cases.

27:09 Sheena: That’s going to depend on the institution, but I would say you’ll definitely lose your assistantship. You’ll definitely lose the ability to work on campus specifically. If your entire education is based on campus funding by an assistantship or something like that, that will no longer be an option.

27:30 Emily: Yeah. Gotcha.

27:31 Frank: Yeah. One of the things just to follow up on that is the non-immigrant visa system works based on this idea of continuity since their last entry. Violations break that continuity and so going from step to step, getting the permission or going from the student to an OPT, I taught an immigration law class and I would always talk to students or teach them this way, that when you’re talking about a change of status, you can’t go from nothing to something. If you have no status because you made a mistake or because there was a violation, then you have to do as Sheena said, a reinstatement, but you do jeopardize the ability to be able to move on in the system because it breaks that continuity.

28:14 Emily: Got it. Thank you.

Work That Is Not Allowed on an F-1 Visa

28:16 Emily: Okay, so we talked about what is straightforwardly allowed now let’s talk about what is definitely not allowed. We know for sure that these are not going to be permitted. Sheenna, this is just the negative of what we talked about earlier, but let’s go over it again. What can you not do?

28:31 Sheena: I would reiterate anything outside of the description that I had for the different work authorizations. And then anything without prior approval. I would say, this is the biggest issue.There are some things you can actually do, but if you’re not asking and getting permission or figuring out a creative way to make it work for you, either with your DSO or an immigration attorney, then you can’t do it or you shouldn’t be doing it. I would say employment not authorized by your international office, of course, is not allowed. And then we would also go so far as to saying working or any thing that generates active income. And there’s a bright line rule, which most DSOs will subscribe to. And you’ll talk to an attorney, they might have a different perspective. But for us is if you’re doing any work on us, soil for anyone or any company located anywhere on earth, you are violating your immigration status. That’s, if you are doing that work on us soil, then you are violating your immigration status. And that’s, even if you’re working in the USA online for foreign company, you’re paid in your foreign bank account, you’re paid in foreign currency, that’s still in most DSOs definition is a violation of your immigration status.

29:52 Emily: Okay. What you said there was so insightful, and I’m so glad that this came out early on in the interview, because I have been asked this question of, “okay, I get that I can’t have a second job off campus. I can’t be a W-2 employee for some American employer.” People understand that, but I have had multiple people say to me, “Oh, well, I work for such and such a foreign employer. Not a problem, right?” And I’m like, “I don’t know.” That’s why I got you guys on here. So you’re saying that your definition, your bright line is you’re in the U S you’re doing active work, doesn’t matter where the money is, who the employer is, you’re in the US you’re doing the active work — that’s not allowed. Am I hearing that correctly?

30:34 Sheena: That is probably 99.999% of DSOs interpretation because we’re beholden not just to the US government, not just to our students, but also to our institution. We’re not jeopardizing any student just for, oh, maybe there’s a little wiggle room. That’s where you go and talk to an immigration attorney and they might have a different perspective.

30:55 Emily: Okay Frank, let’s hear your perspective.

30:56 Frank: This is where the whole idea of what the law says and the practical application. I would, as the late great RBG would say, I respectfully dissent. I think that you can probably think of a situation that wouldn’t be too crazy of a hypothetical where let’s say somebody working in a foreign online, but the companies outside the US, they’ve hired them because they have work authorization in the country of origin. They’re getting paid in that bank account, whatever the case may be. I think the law probably…You’re not taking any job away from any US worker.

31:44 Frank: That said you just had a conversation with a DSO who said that there’s a problem with that. So despite what I’m telling you the law says, from a practical standpoint, you can see where this can be an issue with your institution, and that’s going to be the first stop that you make. Those are going to be the first conversations you’re going to have, because if a DSO has that perspective, the perspective that Sheena described, and they get wind of you working, they could terminate your status. Again it different. What the law says, the argument you can make, you can make that argument all day long to your DSO, but they’re worried about their status possibly to be terminated where they can’t, for a willful violation, where they wouldn’t be able to accept F-1 students anymore. When you do that, you have to realize I’m asking permission from somebody who their perspective is going to be wholly different from mine. Again, my legal perspective, I don’t think that’s unauthorized employment, but in terms of the practical application, I think a DSO would disagree, like Sheena said.

32:53 Frank: I also think that it’s likely that immigration would disagree with me. If we’re working by Frankie’s five second rule, and I can explain why I’m working in my home, in the US while I’m on an F-1, if it doesn’t make sense within five seconds, you probably don’t want to get into that legal chess match or more of a checkers match with a CBP officer or USCIS by mail or somebody else, trying to argue that, well, that’s not what the law says. That that should be, that’s only your point of last resort. I think that you’re probably going to get pinged with it, even if I disagree that that is actually unauthorized employment. My opinion only matters so much. It’s how they apply the law.

33;38 Emily: Okay. I’m so glad that we got right away to an example of this difference between the theory and the practical applications.

What if No One Finds Out About my Unauthorized Employment on an F-1 Visa?

33:46 Emily: I’m going to ask a question that I hope probably no international student would actually ask you Sheena, which is what if you never find out? What if my DSO never finds out about this online work that I’m doing for someone else? And how likely also is it that immigration would find out? I feel like we’re treading into dangerous territory here, but yeah. What if you never found out?

34:07 Sheena: We actually have whole sessions about this. I love this conversation. So that’s risk you’re going to have to take. And I would say, I am not paid by Department of Homeland Security to go knock on your door and see if you have all this nice stuff that you bought with this job that was off-campus. My job is not to hunt you down. My job is if something comes in front of me and I have evidence, I have to take action. B,ut I would also say just because I don’t catch you or I don’t know doesn’t mean you’re not going to get burned later on in line. We saw this a lot in this last administration, because the way the agencies were implementing some of the rules that had been standing for years, were all of a sudden more strict or more intense, or they scrutinized applications harder. What looked like a normal case maybe five years ago, over the last three years, they were either denied or they were asked for more information. You don’t know what you’re risking in the future. Especially for a lot of our students, they do plan to work in the United States. Some of them may plan to immigrate on down the line. And just because I’m not finding out doesn’t mean they’re not shooting themselves in the foot years from now. Frank, you probably have a lot more content for that one.

35:30 Frank: I think that one of the things that the past administration implemented was that the forms changed. The net that before had the holes that were a little bit bigger, the holes shrunk. The information that could get you in trouble that was slipping through that net, it was getting caught. I think that that’s where you see that the officials and the rules and the forms are catching up with the understanding of what people are doing. What people would say, “I did this and I didn’t get caught, or they didn’t ask about it, so I didn’t get in trouble,” that’s no longer 100% true. We see that a lot, not just with F-1 students, but just in general, because as Sheena said, an example would be your reported income on your 1040, on your tax returns. Let’s say in the future that you have to prove that you maintain status since your last entry. CIS could look closer at that if you have a green card application. As I mentioned before, if you break the continuity, there could be huge consequences. Let’s say as an example, you were present in the US for five years and you messed up in year three, and then you applied in year five for your green card and they say, you have to prove that since your last entry, you maintain status, well, that status would have been broken when you may have committed that violation in year three. And they can catch it, let’s say on the application for a green card, but maybe they didn’t catch it on the application for the student visa. As Sheena said, just because you can do it or get away with it, and I put that in air quotes, doesn’t mean that there won’t be consequences down the road.

Commercial

37:27 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.

Creative Solutions for Working with and F-1 Visa

38:33 Emily: Okay. So we’ve talked about, what’s definitely straightforwardly allowed, what is not allowed in each of your opinions. Getting in between those two, how do we thread the needle? What are some activities that may be permissible to generate income and Sheen I think you used a really key word before, which was active income. So now let’s think about like passive income. Is that such a thing? What are each of your perspectives on that question? Like if it’s not work, not active work, what kinds of ways can an F-1 student generate income that would not be raising any flags?

Active vs. Passive Income

39:06 Sheena: I think understanding income, understanding what employment means, understanding what working means, and understanding tax law, I think to some degree. I put that disclaimer up front, I am not a tax expert, but there are tax experts out there specifically for non-residents, which is a majority of the students that we work with. Remember that your intent is to study, that’s what the visa is for, and anything that’s passive, shouldn’t be a lot. Anything that’s passive can bring you under, but it’s worth, I think it’s $5,000, something around there, again, not a tax expert, could bring you under more scrutiny. If you’re making money in your sleep because you’re investing and all you’re doing is investing like four hours a week, not an exorbitant amount of money of time, then I, as a DSO, we don’t see any problem with that. If you want to invest, that’s great.

40:09 Sheena: But the problem is, again, like Francisco was saying, is that at some point it’s going to get noticed. And so for us passive income, isn’t that big of a deal. I would never probably know about the passive income you’re making, but you do have to arm yourself as a student and know your own boundaries or understanding tax law, understanding immigration law more than what a DSO would do, because again, your immigration status is your immigration status. We’re there to help you, we’re there to bring you along, but if you’re doing something outside of the normal DSO realm…I’ve worked a lot in this because we get a lot of these questions, but if you’re working outside of that, you need to hire somebody, in my opinion, or at least take advantage of as many free resources as possible to understand what’s really going on it when it comes to passive income.

41:04 Sheena: I think there is a kind of an idea that students can work around it. I think culturally, I find a lot of our students come from a lot more…there are a lot more countries that have a lot more ingenuity and that’s appreciated, of going outside the bounds of law, but in US immigration law, there’s just not a lot of wiggle room. And the, “I didn’t know, excuse doesn’t really work that well,” so making sure that you are becoming that mini-immigration or that mini-tax expert before you go into any of these passive income realms is really important.

41:41 Emily: Okay, Frank, I want to get your answer to this in just a moment, but especially because Sheena, you mentioned if you’re not doing that much of it, and I’m wondering if you meant time or money or both, like the income is above a certain threshold or the number of hours is above a certain threshold, but before I throw it over to you, Frank, for to get your answer, what are some other examples, Sheena, of passive income types of activities that you’ve seen that you think are permissible if they fall within this “not too much” definition that we’re trying to get to. For instance, you mentioned investing, what about being a landlord? Is that passive rental income?

42:18 Sheena: It’s going to depend on how much work you do, and again, this is my advice as a DSO, working with students in a framework that they can understand, or that I can explain, would be, if you’re doing something more than 500 hours a week (a year), it’s no longer a hobby. It’s no longer just for fun. You’re doing something that’s taking a significant amount of time. I believe that there’s actually a rule that we let our immigration attorneys explain in our workshops.

42:59 Emily: Let’s go over to Frank, then to get the definition here of what is passive.

43:04 Frank: Yeah. I think that we’re looking at what Sheena was referring to is that when the Department of Labor defines, if it’s less than 500 hours a year, then it’s considered a hobby. But passive income, I think that for simple terms is as Sheena put, it is money that you’re making while you’re asleep. You’re not getting your hands dirty doing anything. You mentioned rental properties to me, that would be fine. And I’ll tell you why in the context of F-1 by giving an example of other visas, which is for example, there are a lot of Mexican nationals. We live on the border here in Texas, and a lot of them own properties and a lot of them have somebody who manage it, and collect rent and they have income and they’re not considered to be violating their non-immigrant visa status.

43:56 Frank: I think that rental properties are probably okay, but again, I’m going to defer to, or hark back to the Frankie five-second rule, which is if somebody asks you, can you explain that income? And I mean, show a statement that says this is purely, you know, I have a management company who collects rent, here’s a letter from them that amount of collection minus the expenses is what’s reported, so I don’t really do anything. I just invested in real estate, but I’m here to study. That’s all I’m here to do. And so if you’re able to explain that within five seconds and it makes sense to the officer, then I think that you’re going to be okay.

44:34 Frank: Again, it’s the practical versus the legal. You have to realize that when you come, let’s say for example to the border that I mentioned, if you’re coming from an international flight, you have CBP officers who have been sitting there all day. You’ve been on a flight all day and they’re seeing people over and over and over again, it’s a heavy to make them sit there and listen to you meander through an explanation. So just be prepared with documentation to show that you’re really not actively getting your hands dirty to do something. You always want to err on the side of caution. So rental property probably just higher, there’s tons in every city of people who will manage the rental properties for you. You don’t have to do anything. That’s a perfect example of where you say, well, I have a rental property, but I don’t touch it. It’s a management company that handles everything. I think that would be a great example, but I think that what you need to do is you need to think in practical terms to be able to explain it to somebody who has no idea, who is you meeting you for the first time and be able to do it in a simple and straightforward way so that they’re comfortable that you’re not taking a job from a US worker.

Investment Income

45:47 Emily: Okay, I’m going to throw another idea at you Frank. So Sheena mentioned investing earlier, but also you just said, the 500 hour per year guideline — what about, what I might call day trading or active investing? How about that? How does that play?

46:03 Frank: Right. I think that I looked up what the common definition of day trading is, and it’s making four more trades a week. And I think, again, we’re getting to the practical application of this because as Sheena mentioned, a couple of times during this podcast, the administrations can strictly enforce rules. Also, people coming from different countries, and I think the way where enforcement is different. I think she mentioned flexibility or the approach is different, but I think ultimately how laws are enforced really, really matters. And for us in the US, the president or the executive branch has the exclusive authority to enforce immigration laws.

46:43 Frank: Related to that, if you have an administration that’s tightening the screws, then you probably don’t even want to be called a day trader. We have yet to see how the Biden administration is going to do it, but let’s work on the assumption that they’re going to be a little more laxed about this. I think that the approach should be that if you’re trading in a way to support yourself, that it’s almost a necessity, you’re doing it in that type of volume where you can pay your rent, your groceries, you pay all your bills with day trading, even if you don’t need to, but you’re making enough money to do all that, it’s probably not going to be okay. Say that you are buying stocks, four or less a week. You’re trading, just something dropped and you’re doing the investment, then I think that that’s probably okay.

47:33 Frank: Being able to explain it, these trading platforms will issue a form 1099 that’s fairly detailed, and as long as that matches your taxes and you say I invested when the market dropped. I don’t need it to support myself and I’m doing it in a volume that’s very low frequency, here’s the statement, you’ll probably be okay. But again, that’s my perspective. You’re going to have to ask, or you should ask your DSO and be prepared to explain it. But in terms of day trading, I think that unless you’re doing it in this high volume every day, trying to move and really just make enough money to pay for every expense here, school included, living expenses, I think that you probably okay, if you don’t do it in that type of volume.

Credit Card Rewards

48:27 Emily: I have another scenario for you, which is one you’ve already mentioned, I think at least once in the interview, which has credit card rewards, which to me seems one of the more accessible forms of generating a side income is that also considered making money while you sleep? And is it easy enough to explain to an immigration officer?

48:44 Sheena: I would chime in about documentation. So of course we’re concerned about documentation and so tax documentation, what that looks like, is what you’re going to have to pay attention to. Then also realize we’re working with the IRS, we’re working with the Department of Labor, we’re working with Department of Homeland Security. All of these are factoring into what the reality of the situation is and factoring into how they’re enforcing it at that specific time.

49:14 Frank: Yeah, that was one of the things that we talked about before the podcast, is that not only different departments, but different sub-agencies within the Department of Homeland Security, their perspectives can be different. The Department of State, when they’re processing your visa, abroad could be different than USCIS. I’ve seen it, where something is okay here and then all of a sudden it’s not okay abroad. It comes as a shock to the client because they were asking how can one sub-agency say yes, and the other one say no, and that’s why it is important to have that documentation.

49:51 Frank: You asked about credit card rewards, so let’s take just a hard example. Let’s say you made $1,000 or $2,000 in credit card rewards, which means that you’re using your credit card quite a bit, but that’s money, that’s considered income. But I think that if you’re able to know that if anybody asks you, you could have that spreadsheet, you could have those statements, you can show the totals and show that you’re not working. You’re simply getting rewarded for using American Express, Visa or MasterCard. I think you’re going to be okay, because again, the practical application of laws, you have to remember that you’re dealing with a human being, so a human being will understand if you can show them that you didn’t go and apply for a job anywhere. You’re not actively doing anything. I’m sure that almost every credit card offers some sort of reward points at this moment. Those are things that an immigration officer can understand, as long as you can show them that that’s what’s reflected in your tax forms or that’s what’s reflected in whatever official document you have to present them.

51:01 Sheena: Yeah. And we actually found a pretty good article about it talking that some rewards, if it’s per dollar you spend, it’s more like a rebate, whereas if you’re actually opening an account and that’s the incentive, then that can be considered more like income.

51:16 Emily: Oh, interesting.

51:17 Sheena: And that’s what might get you the 1099 miscellaneous.

51:20 Emily: Okay. So kind of a difference between ongoing credit card rewards and credit card churning, which is opening new accounts for the sign up bonuses. Interesting. I will have to look into that distinction further.

Self-Employment

51:30 Emily: I think we’ve probably already covered this, but I just want to throw out one last scenario, which is essentially self-employment. Again, maybe sort of not taking work maybe from an American, but how does self-employment fall into this whole framework?

51:47 Sheena: For what’s already allowable, OPT definitely go for it. It’s encouraged. It’s one of the seven allowable types of employment, as long as it’s directly related to your degree programs so it’s giving you practical experience in your, in your program.

52:04 Emily: I’m wondering how common or how practical of a solution that is for again, the people who I serve are generally PhDs, so they’re in a PhD program and that’s supposed to be taking up pretty much all of their energy, and maybe they’re only allowed a little bit of time for themselves or hobbies or whatever on the side. When I was thinking about self-employment or starting a business, again, a lot of students don’t have a lot of capital either. I’m thinking more about tutoring, freelancing, like wr,iting, like editing these kinds of services that I think would be a little bit more analogous to having a job rather than owning a business where you could outsource the work. Does that make sense? I would think that those kinds of activities would probably fall under, no, this looks too much like work.

52:46 Sheena: Yeah. If you register your company, if you obtain the license, those kind of aren’t operating the business. I think planning the business, especially depending on your major could be okay. I think who’s doing the services. Who’s controlling the money. If you’re involved in any of that process, it’s not a good thing. Using the institutional address. So if it’s part of your program, we have a lot of MBA students, if it’s using your program and it’s part of CPT, or if it’s part of, I guess, pre completion OPT is the more common, then you could possibly try that one. I think it comes down to how dirty your hands get, as far as how much are you in. I will tell you, your DSO will rarely have an exact perfect answer for this. They’re going to tell you to talk to an attorney so they can help you set it up because if you’re really interested in doing that, you’re going to have to invest some money to do it properly. It’s not just, “Oh, here are the five points and you’re fine.” It is about the documentation. It’s making sure that if all those agencies, look at it, they’re going not going to determine that you’re working.

54:03 Frank: Yeah. Self-employment is going to be the same as just having somebody hire you, if you’re just working, but only working for yourself. If it looks like that, if you could do the same thing that you’re doing for yourself for an employer, then I would tell you, even me who tries to navigate along the lines of edges of immigration law, I would say you can’t do that because they’re going to accuse you of working here or violating your status. I think what you have to remember is, as Sheena said, your F-1 is given to you to study, and so if it’s not obvious that you can do it CPT, OPT, on-campus employment, economic hardship, then you really have to understand the decisions you make sometimes will toe the line and you need to mitigate the possibility of being accused of violating your status. And the only way to do that is conversations with your DSO, conversations with an immigration attorney. A lot of attorneys offer free consultations. Even if you have to spend $100 to $200 to speak to an attorney, I know that you’re doing it because it’s already a difficult situation, but just come armed with some questions and that $200, if it saves your status, I think will be well worth it.

55:31 Emily: Yeah. Thank you so much for mentioning that as the next step, when you’re thinking about is this kind of activity okay or not. Those two resources — speak to a DSO, speak to an immigration attorney — I’m glad you threw out that number because yeah, $100-$200 is a significant amount of money, but it’s not $1,000 it’s not $10,000. I’m glad to get that sort of order of magnitude.

Additional Workarounds, Advice, and Resources

55:51 Emily: Are there any other workarounds that we have not already brought up? Because we’ve already brought up the economic hardship, which there’s different trends in that, may not be as viable as before. Sheena, you brought up CPT, OPT, maybe there’s some creative solution there. And also both of you mentioned changing visa types just away from the F-1. Any other workarounds that we haven’t mentioned so far?

56:15 Sheena: I would push for scholarships. We have a pretty extensive workshop on how to apply for scholarships. There’s so much money out there that actually doesn’t get used and I think a lot of students, especially if they’re on a full ride or like a full tuition waiver, they’re not necessarily thinking of how else can I get a scholarship or grant. There are outside ways I think to get a little bit of extra money without even touching the work world. And I think on top of that with COVID and with everything going on right now, a lot of institutions do have emergency funds. So if it really is a matter of, “Hey, I may not be able to afford rent this month” or “Hey, I, I need groceries,” I think reaching out to your institution, they are aware that students are struggling right now, particularly now, so having that conversation again with your DSO or with your financial aid office, or even your campus ministry. There’s a lot of different resources on campus that are meant to help to support students. If you find that you’re, you’re kind of on that cusp, then that’s what I would recommend.

57:23 Sheena: I also want to put a plugin for stay away from Instagram. I’ve had this question billions of times I feel like. The product placement, being a brand ambassador, getting a few things, even only fans — all of those, that free merch, a lot of times it’s not free merch. Those product placements, a lot of times if they’re mailing you something, they’re going to 1099 you later on. Just be very, very wary if you’re messing around with any of those social media platforms. Those companies that are trying to get people to be influencers, they do not care how they’re taxing you. They will burn you hard if you’re not paying attention and asking questions before you accept something free.

58:09 Emily: Okay. I’m so glad you brought that up as like a potential other, the influencer model for gaining what is normally called passive income, but there’s certainly a lot of work as well that goes into that. Are you saying it’s more of a problem on the tax front or more of a problem on the hours you spend doing it front?

58:26 Sheena: Our interpretation is on the tax front. You may be getting four bathing suits for free or something, or I don’t know, whatever anybody gets these days. But it may not actually be free. They may actually send you tax documents or their HR may be considering it, that you’re an employee or that you’re a contract worker, when in actuality you just thought you were getting free stuff for posting something. I think you really have to, again, not to make everyone go and hire an attorney, but I think in this realm, in the F-1 world, you cannot be too safe when it comes to planning ahead and doing your research before you jump into something. I think some of the students that I’ve seen gotten in trouble, haven’t asked ahead of time. They haven’t done their research. Or they trusted a friend’s advice who was very well-meaning but may have been from a different country or completely different circumstances, or maybe didn’t have as much to risk or to lose as they do.

59:31 Emily: Okay. Thank you. And Frank final workarounds, or just final other examples and thoughts?

59:36 Frank: Congress just passed a $1.9 trillion package. A lot of that money is going to local governments. The local governments don’t necessarily always make a distinction between the status of the individual. They just want to help the local economy. They’ll do a hold evictions in abeyance rent programs, local programs, and if they don’t make a distinction between it and you don’t have to do anything to obtain the money, then it’s probably okay. I would say, as Sheena mentioned, but just generally speaking, why work if you can get the money for free?

1:00:14 Emily: Yeah. I’m glad we got around to those solutions that are even outside the scope of really our conversation today.

01:00:19 Emily: Okay, so someone listening may be left with more questions than they had at the beginning of the podcast. This is just an introduction to the material. Where would each of you recommend that people go next? Obviously we’ve already talked about talk with your own DSO at your own institution. How does one find an immigration attorney, Frank? Where do people go next?

01:00:39 Frank: Right. So in finding an immigration attorney, my recommendation is to go to aila.org. That stands for American Immigration Lawyers Association. They are the largest immigration lawyer institution in the country. They have over 3000 attorneys or 2,500 members, rather. That is anyone who’s a serious immigration attorney will be a member. You can do that. That’s number one. Each state bar will have board certification lists or people who have to take exams, take classes, practice immigration law, and they’ve been certified by their state bar association. You can look for that particular to your state, wherever you are, but it’s also important to keep in mind that immigration is federal, so you can actually look at any state for a board certified immigration attorney. I would say those two would be two places. You can go to our website, immigrationcases.org. You can follow me on Twitter @alvillarlawpc, and you can post something and I’ll try to give you some general advice and see if I can answer the question. But I think that if you’re going to schedule something with an immigration attorney, aila.org, or looking for a board certified immigration attorney through the state bar website, or the state board of legal specialization would be a great place to start.

01:02:08 Emily: Yes. Thank you. And Sheena, do you have any recommendations for further resources?

01:02:11 Sheena: Yeah, so Study In The States, that’s Department of Homeland Security website. They do have a lot of nitty gritty stuff about your immigration status that your DSO is probably telling you, but just to double-check them, you’re more than welcome to. I would be very wary of forums. De COPT I think is one of the more reputable ones, but they do get some stuff wrong. Quora is absolutely terrible. Yahoo answers, absolutely terrible. Don’t trust your immigration life to that. I think avvo.com, I think it’s where attorneys answer questions, that’s pretty decent. When it comes to investment, I didn’t mention this resource, but our campus uses Sprint Tax. They actually came out with a great blog about investment income for F-1 students and how to file those on taxes. I would definitely work on that one. And immigrationcases.org, Francisco’s website actually has really great content.

01:03:10 Frank: I would also, Sheena mentioned this earlier, but go to your DSO and ask them to reach out to local attorneys or even attorneys from out of town who can do video presentations. That’s an easy marketing tool for attorneys, so a lot of them will jump at it and it can be really helpful to have that perspective because it’s a group setting where maybe there are questions that you haven’t thought of, that one of your classmates can bring up. Reaching out to your DSO to see if they can bring in an attorney or have an attorney present at your college or university.

01:03:43 Emily: Yeah. That’s a wonderful idea.

01:03:44 Sheena: There are great attorneys, as well as Francisco that lots of campuses can reach out to that are more than willing to give their time to talk about all of these topics for free to a group of students.

01:03:59 Emily: Yeah, I think that’s an awesome next step to help, not only you, the listener, but the other people on your campus. Well, this has been just an incredible interview. Thank you both so much for your time. This has been really enlightening for me. I know it has for many of the listeners. I hope it helps be well, see solutions, avoid pitfalls, and yeah. Thank you so much for joining me.

01:04:17 Sheena: Thank you, yes.

01:04:17 Frank: Thanks for having us.

Listener Q&A: Estimated Tax Payments

Question

01:04:26 Emily: Now onto 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.

01:04:36 Emily: Here is the question: “I heard that there is a penalty for not having income tax taken automatically from fellowship paychecks. Is there any way for me to withhold some of my pay to cover taxes and avoid the penalty?”

Answer

01:04:50 Emily: Thank you anonymous for this question. It is excellent and you are exactly right. The IRS does expect to receive tax payments throughout the calendar year. And when you’re an employee that’s typically taken care of by your employer through income tax withholding. However, when you’re not an employee, like if you’re on fellowship, most universities do not offer income tax withholding as a benefit. Yet the IRS still expects those payments.

01:05:18 Emily: So what’s the best way to go about getting those payments to the IRS? So, first of all, you should check if your university offers this benefit to non-employees, to fellowship or training grant recipients. While rare, some universities do such as Duke and Johns Hopkins. This most commonly happens when fellowship paychecks are processed through payroll rather than through financial aid. So if your university does process your paychecks through payroll, you can inquire if you’re able to submit a W-4 and have them withhold income tax on your behalf. Now, like I said, that solution is simple, but it’s not that common.

01:05:56 Emily: Next consideration after that is whether you or your spouse has any W-2 income that continues throughout the entire calendar year. So for example, some graduate students have a combination of W2 income, or employee income and fellowship income, or some other kind of award on top of that. If you have that kind of combination income throughout the whole year, all you have to do is submit an updated form W-4 to payroll and request that they withhold more than they had been before out of your W-2 income. How exactly you calculate, how much more they should withhold, we’ll get back to in a moment. This strategy also works well. If you have a spouse who has W2 income, because what the IRS cares about is whether your entire household sent sufficient tax payments into the IRS throughout the year, not whether you did as an individual. So likewise, your spouse could submit an updated form W-4, that indicates a slightly higher withholding rate.

01:06:56 Emily: Now, how do you calculate what you should put on a W-4? And also what do you do if those options are not available to you? Well, really the main way that graduate students and post-docs get their income tax into the IRS if they’re on fellowship and they’re at university doesn’t offer this kind of benefit is through the estimated tax system. The estimated tax system exists to collect income tax payments throughout the year from individuals who don’t have employers withholding income tax for them, such as fellowship recipients, but also such as self-employed people or people who have passive income.

01:07:31 Emily: What you need to do is pull up form 1040-ES go to page eight, which is the estimated tax worksheet, and fill out that worksheet for your income for the entire calendar year. Basically you are going to do kind of a high level draft of your tax return in this one-page form. When you get down to the end of the form, it will tell you, this is how much income tax you can expect to owe this year and whether or not that rises to the level that the IRS requires you to make estimated tax payments.

01:08:05 Emily: My kind of rule of thumb is if you’re on fellowship and you have no W-2 withholding or anything like that, if you’re on fellowship for an entire calendar year and you’re a grad student, or post-doc, it’s pretty likely that you’re going to be required to make quarterly estimated tax payments, but the worksheet will tell you for sure. If you have fellowship income for only part of the year, like you switched funding sources mid year, then a little bit more borderline, you definitely need to fill out the worksheet to see whether or not it would be required of you.

01:08:31 Emily: If quarterly estimated tax is required of you after you fill the worksheet, it will tell you what the amount of your payment should be up to four times per year. So you can manually go right before the due dates and make those payments. They’re in mid-April, mid-June, mid-September, and mid-January. Or near the beginning of the year, you can set up automated payments for all four of those payments throughout the year, if you know, it’s going to be consistent. Form 1040-ES will give you various payment options, but personally, I think the easiest one is just to go to irs.gov/payments.

01:09:03 Emily: Now, if the worksheet tells you that you’re not required to make quarterly estimated tax payments what’s going to happen is you’re going to make the full tax payment that you owe when you file your tax return in the next year. So you do need to be prepared because you may owe quite a large lump sum at that time. The best practice for preparing to make these payments, whether once per quarter or once per year is to set aside the money that you expect to pay in tax from each one of the paychecks that you receive. I recommend using a separate, dedicated savings account.

01:09:34 Emily: Now, what if you’re looking at the estimated tax worksheet, and you’re really not clear about how to fill it out — looks pretty complicated to you, you’re not sure how to answer all the questions, you don’t know how it applies to your specific unique fellowship situation. I have a resource for you go to pfforphds.com/qetax. That page will tell you about an asynchronous workshop that I created. It’s a bunch of videos, a spreadsheet, and an opportunity to attend a live Q and A call. And I’ve included in the videos answers to a lot of the common questions I receive about fellowship income and quarterly estimate tax, such as how to handle things when you switch on or off a fellowship during the course of the year. So that resource is there for you, if you need it.

01:10:20 Emily: By the way, the last part of the question about the penalty, if you are required to pay your income tax quarterly and you do not do so, yes, the IRS might assess a penalty to you. It’s not necessarily anything to freak out about. It’s probably going to be on the order of dozens of dollars, not hundreds of dollars, but still, I think it’s best to avoid that. If you’re required to pay quarterly estimated tax, just go ahead and make those payments, even though it’s a little bit of a pain. Better to do that than to be hit with a fine, in my opinion. All right. Thank you again to anonymous for that 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

01:11:04 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.

University Policies to Better Support Grad Student Parents

March 15, 2021 by Lourdes Bobbio

In this episode, Emily interviews Dr. Alaina Talboy, a PhD in cognition, neuroscience, and social psychology. Alaina had her son before starting grad school in 2011 and separated from her husband a couple of years before finishing her PhD in 2019. She describes what it took financially to complete her PhD on a small academic year stipend: multiple side jobs, the maximum possible federal student loan debt, and childcare negotiations with her co-parent. She did nothing in those years aside from researching, working, and parenting. Emily and Alaina discuss the university policies that would have made all the difference to her experience as a graduate student and parent, such as fee waivers, conference funding, and on-campus childcare.

Links Mentioned in this Episode

  • Find Dr. Alaina Talboy on Twitter and on her website
  • Alaina will speak on overcoming imposter syndrome at the Women in Tech Global Conference in June 2021.
  • 20s and 30s Personal Finance Panel
  • Related Episodes
    • As a Single Parent, This Graduate Student Utilizes Every Possible Resource
  • Personal Finance for PhDs: Speaking
  • Personal Finance for PhDs: Community
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
grad student parent

Teaser

00:00 Alaina: If those supports were in place, I can imagine this going a completely different direction. And I don’t know if I would have ended up where I am, but I can’t imagine it would have made things worse, it could only have made things easier. It would have relieved everything. That support would have completely changed my life and made my PhD something I could just focus on without worrying about all the other stuff.

Introduction

00:32 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 11 and today my guest is Dr. Alaina Tallboy, a PhD in cognition, neuroscience, and social psychology. Alaina had her son before starting grad school in 2011 and separated from her husband a couple of years before finishing her PhD in 2019. She describes what it took financially to complete her PhD on a small academic year stipend, multiple side jobs, the maximum possible federal student loan debt and childcare negotiations with her co-parent. She did nothing in those years, aside from researching working and parenting. We discussed the university policies that would have made all the difference to her experience as a graduate student and parent, such as fee waivers, conference funding, and on-campus childcare.

01:30 Emily: As I’m recording this many people in the US are reflecting on what their life was like a year ago when the country started shutting down versus now, so I thought I’d do the same for a moment. My very last in-person speaking engagement was on March 5th, 2020. While I was waiting for my return flight in the airport, I started receiving emails that regular meetings and events in Seattle, where I was living at the time, were being canceled. That’s when I knew that we would be hunkering down at home for a couple of weeks and started mentally preparing for my husband and I to work from home without childcare. Of course, we all know how wrong that expectation turned out to be. I felt relieved at the time that I didn’t have any other speaking engagements on my calendar so I didn’t have to cancel any travel or switch seminars to webinars.

021:15 Emily: However, once May rolled around, I started getting quite concerned about my business, which did heavily rely on in-person speaking engagements at universities for its revenue. Not only was I unsure when I’d be able to travel again, but I had no idea whether university budgets would be slashed and unable to accommodate hiring an outside person like me.

02:37 Emily: Over the summer, I pivoted my business to focus more on serving individual graduate students and PhDs, and that has been successful, but I’m also delighted to report that believe it or not, the speaking side of my business is currently having its best year ever. I discounted my speaking fee for the webinar format, which has enabled me to work with more offices and groups than ever. In previous years, my clients were always graduate schools, postdoc offices, career centers, et cetera. But this year I’ve actually been hosted by single departments and small graduate student associations as well. It’s been so rewarding to reach more people than ever this year with my tailored financial education. This spring alone I have given, or I’m scheduled to give 19 webinars, and I’m still receiving inquiries for events in April and May. I don’t know whether or how long this trend will last, but I’m going to try to serve as many people as possible while it does.

03:32 Emily: If you would like to bring one of my webinars to your university schooled apartment association group, et cetera, please check out my website pfforphds.com/speaking. All you need to do to get the ball rolling is schedule a call with me through that page or email me [email protected]. I hope to hear from you!

Book Giveaway

03:58 Emily: Now it’s time for the book giveaway contest. In March, 2021. I’m giving away one copy of, “I Will Teach You to Be Rich” by Ramit Sethi, which is the Personal Finance for PhDs Community book club selection for May, 2021. Everyone who enters the contest during March, 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 [email protected]. I’ll choose a winner at the end of March from all the entries. You can find full instructions pfforphds.com/podcast.

04:38 Emily: The podcast received a review this week titled “Great Encouragement”. The review reads: “This podcast provides so much useful information while also encouraging me on days when I get worried about my limited funds. I’m not bringing in much money while working towards my PhD, but this makes it feel more possible to save a little for the future while working towards my degree.” Thank you so much to batty_in_AK for leaving this review! I am so glad that you find the podcast encouraging during a financially difficult time of life. Without further ado, here’s my interview with Dr. Alaina Talboy.

Will You Please Introduce Yourself Further?

05:21 Emily: I have joining me on the podcast today, Dr. Alaina Talboy. She has a really compelling story for us today about becoming a single parent while pursuing her PhD and what that was like financially to experience that. And then we’re really going to have a detailed discussion around what are the university-level policies that would have made her PhD go easier for her as a single parent, what policies would be helpful. I hope that this conversation will be, maybe yes, maybe no, applicable you as an individual, but it’ll give you some insight into the experience of PhD parents, especially PhD single parents, and what we can do as a community to support them better, Maybe at the university level. So Alaina, I’m really happy to have you here. Thank you so much for agreeing to the interview ad will you please tell the audience a little bit more about yourself?

06:05 Alaina: Absolutely. Thank you for having me today. I started graduate studies in 2011 and finished my PhD in 2019 in cognition, neuroscience, and social psychology from the University of South Florida. Ever since then, I’ve actually been a research scientist at Microsoft, looking at user experiences for the Edge browser.

06:26 Emily: Yeah. Sounds wonderful. We’re recording this in January, 2021 for the listeners context, so you’ve been there somewhat less than two years, between one and two.

06:33 Alaina: Just under.

06:33 Emily: Yes. And I believe that you got a master’s degree first and then moved on to your PhD. Is that right? Was that when you started in 2011, your masters?

06:43 Alaina: I did. I started my master’s at University of West Florida in 2011. That took two years to complete. And then I went straight from my masters to my PhD at USF in 2013 and was there until I completed in 2019.

06:57 Emily: Great. Okay. So we’ve got the professional highlights. Let’s hear about what was going on in your personal life at that time, the development of your family.

07:04 Alaina: Yeah, so I actually started my family before I started grad school. My son was born in 2010, and so he’s been with me every step of the way from my first graduate interview all the way until I had my diploma in hand. And he helped me hang it up on the wall and everything, right next to his picture. So he has been here through everything and has seen all that it takes to get a PhD.

07:32 Emily: And you were married for time as well. Is that right?

07:36 Alaina: I was married up until about a year and a half, two years before I finished my PhD. We had a very amicable split, but we had to figure out a lot of the co-parenting stuff that is not typically a concern for graduate students. So it took a while to really figure out how to balance making sure the family was taken care of, had a roof over our heads and then ensuring equitable time between each of us for parenting.

08:06 Emily: Yeah. And just for a little bit more context for us, what was the stipend that you were earning during that time and then what was your former husband earning as well?

08:15 Alaina: The stipend I had at that time was a nine month contract from USF that was $14,300 for nine months. That worked out to a little under $1,500 a month for my income. My husband was making about the same as I did, but at that point then we were supporting two different households, so I actually had to take on numerous side jobs to support myself and my son during those last two years of graduate studies.

Funding Situation During Grad School

08:46 Emily: Yeah. I want to get into sort of the tactics you were using that time in a moment, but I want to go back for a second to talk about the funding during your master’s degree because you mentioned your PhD funding. How was your master’s funded?

08:58 Alaina: The master’s degree was not funded. It’s interesting because I left undergraduate without any student loans, because I was able to get a lot of grants and things like that, but when I got into my master’s program, it was not a funded program. I actually had to take student loans out to support us at the time, because my husband’s job at the time was not enough to support our family. We use the student loans to support us through some really difficult financial times, and then eventually I did end up getting a 10 hour per week position my second year of my master’s program, but that was just barely enough to cover half of a week’s cost of my son’s daycare. I have had side jobs for a very long time to make sure the family was supported.

09:50 Emily: Yeah. Okay. When you finished your master’s, you’d worked for a variety of part-time positions during that time. What was the balance of student loan debt when you came out of your master’s?

10:04 Alaina: I had about, I believe it was $30,000 in student loan debt for my master’s degree, and in total with my PhD, I had borrowed just over $120,000, which was the maximum I was allowed to borrow. And the last two years of my PhD, I didn’t even have student loans. Now I am two years post PhD at $4,000, roughly, a month in payments. And my student loan balance is $198,000.

10:37 Emily: Wow. Maybe a conversation for another episode. Incredible. So you were taking out more student loan debt during your master’s and PhD. But in addition, working at your assistantship, you got during your master’s, as well as the one you had during your PhD. Let’s talk more about, okay, we got this stipend, which is not very generous, not a very generous stipend.

11:01 Alaina: And it’s only nine months. That’s something I don’t think people realize is that this does not include summer funding and summer funding is never guaranteed, so that’s three months you got to figure it out.

11:13 Emily: Yeah, and what kind of benefits came along with that? Like health insurance, was there more than that?

11:19 Alaina: There was health insurance for myself. There was the option to get dental, but the cost was insanely high. There was no way to get my son or my former husband on the health insurance because the co-pays would have been more than a paycheck, and it wasn’t financially responsible to do insurance that way. Unfortunately, during that time, my son was actually enrolled in Medicaid to make sure that he had health coverage and that he had dental coverage and things like that because we simply couldn’t afford to get health insurance for him and him.

11:58 Emily: Were there any other benefits available to you?

12:01 Alaina: They had the campus health and wellness centers that you could go get your physical checkups. You could get psychiatric services, therapy services. Really great, but of course there’s always the co-pay for that. If there were any other benefits available, I couldn’t tell you because I looked and it would just wasn’t clear.

12:25 Emily: Yeah. So probably none. And if not none, at least a lapse in communication about what benefits were available.

12:34 Alaina: Exactly.

Balancing Parenting, PhD Dissertation, and Side Work

12:34 Emily: I want to get an idea of how, especially your PhD went with these financial pressures of having the small stipend part year, of having the student loans that you were taking out, but then at some point couldn’t even take out any longer. And you’ve already mentioned side work. So tell me about how the balance was in your life between actually working towards your PhD on your dissertation, all the side work, if it was an assistantship that you had the work for that, the parenting. It sounds like a lot. What was your life like at that time?

13:08 Alaina: Looking back, I look at it and I have no idea how I did any of it. I look back and I think about doing that now, and it just blows my mind because I was teaching a class at USF, I was teaching a class at a local community college. I was doing another class at a private college, plus my dissertation plus parenting. I did dissertation editing services on the side just because that money had to come from somewhere. Looking back, I was either always working or parenting. There was never me time. There was never downtime. There was never just time to sit and relax. It’s either work or parents and you make do and you get through it, and hopefully on the other side end up with some sort of work-life balance.

14:04 Emily: Yeah. I hope you don’t mind me saying this, but it seems to me incredibly unfair that you would be in a funded PhD program and be striving so hard to work on the side and spending so many hours doing that. And still on top of that, be racking up more student loan debt. I think we all kind of get, yeah. PhDs are underpaid. Yeah, it’s a hard time of life. Well, you added parenting onto that too. Wow. Yeah, of course, you’re going to have some time constraints, but to do all of it with the energy that you had, which sounds inhuman, almost, and then to add the student loan debt on top of that is really kind of mind boggling to me, that that’s what it came to.

`4:47 Alaina: It is. And the advice that you get is that, try pay back your student loans while you’re in grad school. But in my mind, I’m just sitting there thinking, I’m taking these student loans to make sure we have a roof over our head. That we have food to eat. That we have the ability to go back and forth between buildings. How could you possibly pay back student loans while you’re in school? And particularly in my situation, where I’m supporting a family. It’s not a realistic expectation. And when my student loans ran out and I had to talk about possibly going and getting another side position, the conversation I had with some professors was just go take student loans. Like why can’t you just take student loans? And it’s an unfair conversation and it doesn’t address the realities and the limitations of what we can actually do during grad school, financially.

15:42 Emily: I do want you to explain a little bit more what happened, financially after you were no longer able to take out student loans. And of course that was also the time that you were separating from your husband and you have the two households and all of that. If you were only barely hanging on before that point with the student loan debt, what happened when that stopped?

16:03 Alaina: I cried a lot. I’ll be completely honest, the last two years of grad school had a lot of tears and a lot of stress. I was teaching six classes to make ends meet and I was trying to get my PhD done and I had to, because my former husband and I co-parent, and we’re really adamant about making sure our son spends equal amount of time with both of us, we had to actually work that around my adjunct schedule because as adjuncts, you don’t get to choose what time you teach. You’re just given a time slot. And so not only was I under the financial pressure of that, I had to move my time with my son to make sure I could keep those jobs to make sure that we could keep paying bills.

16:51 Emily: So you added more work essentially while you were trying to finish your dissertation. I’m actually very impressed that you finished. I think because a lot of people at that stage when they’re ABD and the financial pressure is there, they want to move on and they may not ever end up completing it. So how did you hang on to the end?

17:13 Alaina: I almost didn’t. I almost walked away. Um, there were several times where I just looked at my document that I was writing and just went, “why, why am I doing this?” But I’m stubborn. I am an incredibly stubborn person, and I have put eight years into this degree. I am finishing this degree. This is going to get done. And I just put my foot down and said, no, this is, this is going to end. There’s going to be a light at the other end of the tunnel. It’s going to be worth it.

17:40 Emily: Yeah. And we’re going to circle back to this at the end of the interview, that there has been a light at the end of the tunnel. I don’t want to say it’s all been doom and gloom. Okay, so we’ve got an idea of the financial pressure that you were under and what you were doing, basically pushing yourself to the human maximum to meet the responsibilities that you had, and finish your dissertation. You said earlier, okay, yes, there was health insurance for you. It was not practical to put anybody else in the policy. There weren’t really any benefits offered by a university in terms of you as a parent.

The Benefits That Would Have Been Helpful as a Single Parent

18:09 Emily: What policies, now that you’ve taken some time to reflect on this, what policies would have made a big difference in your life? What policies on the university or departmental level would have made a big difference in your life in terms of making sure you did complete the degree and maybe not in the fashion that you did?

Reducing or Eliminating Semester Fees

18:28 Alaina: There’s so many things I would go back and argue against and one of the first thing is semester fees. ‘m not sure if this is across all universities, but almost every graduate student I’ve talked to has had to pay roughly $800 a semester in fees, even though they are employed by the university. And so you imagine that’s one entire paycheck that’s just completely gone for the semester because those fees are required. Eliminating fees for graduate students would be the first and foremost thing on my list to go back to the university and say, “Hey, you want to help parents who are finishing their PhD, eliminate these fees.”

19:14 Emily: The fee itself, of course, $800 per term is quite it’s a lot of money and no, that’s not universal. Some places have figured it out that they don’t have to require that kind of fee. Was it due all at once or was it something that you were able to prorate?

19:30 Alaina: I don’t remember being able to prorate it. It was not something that could be taken out of paychecks. It was not something like your parking permit, your $200 a year parking permit — yeah, they could take that one out of your paycheck every other week and they could do it like $30 or $50 a paycheck. But your fees, no. They were due when they were due. You could make payments up until that due date, but once you hit that due date, if you missed it at all, it was an immediate hundred dollar fee stacked, right on top of it, with increasing fees the longer it took.

20:06 Emily: Okay. So punitive responses if you did miss it. Okay. Got it. Large fees had to pay all at once. High fines if you didn’t, if you didn’t make it. Okay. What was the next policy?

Policies Against Moonlighting

20:20 Alaina: The next policy I would say is looking back at my contracts at that time, it felt like moonlighting was completely unacceptable. The language that they used is, you’re given this stipend offer, you must let us know immediately if you have accepted work anywhere else. There’s the possibility that this stipend will go away if you have other funding. Looking at that language and the position that I was in, it felt like I was forced to hide the adjuncting work that I was doing and all the work I was doing on the side, because I was so scared that my stipend was going to be taken away from me, because even though it was minuscule and it is well close to that poverty level, it was absolutely necessary to make it through. I didn’t want to lose that stipend. The moonlighting restriction, I understand they want people to focus on their degree. I understand they want people to be all in headspace on their PhD and stuff, but it doesn’t allow for the reality of life that you have to be able to support your family and student loans don’t cut it. You have to be able to let people have a job outside of their department if they need to do that, to support their family.

21:29 Emily: Yeah. I mean, I’m in total agreement. Treat graduate students like they’re adults and they can manage their own time. And if a problem does come up with someone’s side job, because it actually is interfering with the dissertation progress or the coursework, or whatever’s going on, then address it when the problem comes up. But I think the language that you read that scares people off from moonlighting or hides the fact that they are doing it is really counterproductive. Of course the other part of that, which you just mentioned is you can also just pay people enough that they don’t feel the pressure to take on the side work. If you really want the students to be focused on their degrees, then pay them adequately to allow them the room in their lives for that focus. That makes the most sense to me.

22:22 Alaina: Exactly. The book that I’m working on right now, the whole first section of it is talking about treating your graduate studies like it’s your job, because that’s exactly what it is. You are going for a graduate degree, you are being paid to get that graduate degree, and in exchange, you’re teaching a course or you’re doing research, or you’re doing some kind of service to the university. You should be paid appropriately for that time.

22:48 Emily: Yes, absolutely.

Commercial

22:51 Emily: Emily here for a brief interlude. This coming Thursday, March 18th, 2021 at 7:00 PM. Eastern, I’m serving on a personal finance panel and you’re invited to attend and ask your money questions. The event is officially for people in their twenties and thirties, but it’s kind of secretly a PhD panel as I, another panelists, and the moderator all have PhDs. The remaining two panelists have a JD and an MBA. We are all card carrying personal finance nerds. All personal finance topics are on the table, including student loans, investing, couple’s finances, buying house, COVID economics. Anything you like the event is free to attend live, and you can purchase access to the recording for one year for $17, go to pfforphds.com/panel to find out more and your ticket through my affiliate link. I hope to see you there now back to our interview.

Accessible Childcare Options

23:53 Emily: What’s another policy on your list that was hurtful or would have been helpful?

23:58 Alaina: The other one that I was thinking of was the childcare facilities on campus, because there is a childcare facility. It was not subsidized. At that time in 2013, it was $220 a week for the age group my son was in, and that was their subsidized value. The problem with that though, is that of course faculty gets first pick and that completely fills up the entire program. There really was no daycare option available on campus that was even remotely viable. We ended up having to do a lot of off-campus shopping to find a daycare.

24:41 Emily: Yeah. I mean, of course adding another benefit, like a subsidized service, like daycare would be an incredible boon to the parents on campus. And actually I’ll link in the show notes because I did an interview back in season two with a single mother in graduate school, and she talked about the incredible childcare support that was available to her on campus. One of the things I remember from that is just in reflecting on it, I’m thinking, wow, to have your daycare option, your childcare option, like geographically, physically close to you, saves you so much time and commuting, and it actually gives you more flexibility in your time being on campus and so forth. It would be a benefit to all employees and of course, graduate students and undergraduates and everybody who has children to have more of those options. Expanding those programs would be fantastic.

25:31 Alaina: Absolutely.

25:32 Emily: And subsidizing it, if they can.

25:34 Alaina: And subsidizing, if they can. I understand they have to pay their workers. And I totally respect that, but you know, again, you’re an employee.

Conference Travel Assistance

25:43 Emily: Yeah. Were there any other benefits that you wanted to bring up?

25:46 Alaina: The last area I want to talk about is conference travel. And this is something that strikes me as so odd because I am in a STEM field or a STEAM field, depending on which acronym you prefer. Going to conferences is vital to your success in academia and also outside of academia. Being able to present your papers and your posters and giving talks and all those things. There’s something about the conference circuit that just really is invaluable and cannot be replaced. The problem is most of the program didn’t have funding for conference travel, let alone trying to figure out how to set up childcare, if my former husband wasn’t going to be able to watch my son during conference season. Luckily our lab had very small stipends. We got $500 stipends to go do conferences and there were four of us, so we split one hotel room and able to limit the cost of conferences by having four of us in one room. However, that’s another area that really is just lacking in support and really hits your finances hard, especially if you’re serious about trying to follow that academic route.

27:00 Emily: Yes. Thank you for bringing that up. There’s one other area that I thought of in terms of policies. Maybe this wasn’t on your list because you had your son before you started graduate school, but I’m thinking about parental leave and is it defined? Is it defined for graduate students? Does depend on whether your employee or a fellowship recipient non-employee? But just having, first of all, clear policies around what the parental leave is, is super helpful. Of course, if that leave can be paid or if it can be 12 weeks would be incredible here in the US. All those things can add on to that, but just having clear policies around that I think would be super, super helpful.

27:39 Alaina: Yeah. It’s interesting as you’re right, I had my son before graduate school, but I did run into some medical issues during graduate school and come to find out the grad students were not protected under FMLA. If you had to take any time off, you were literally at the mercy of your advisor. Now, thankfully I had a phenomenal advisor who let me do my work remotely and told me to stop replying to emails the day after I got out of the hospital, but there was a leave period that I had to take for medical reasons, and if my advisor wasn’t as understanding as she was, I could have been dropped from the program because there are no protections in place for that.

28:19 Emily: Yeah. Great, great point. I hadn’t really thought about FMLA, but ideally the university would be providing its own protections for its students. Wow, thank you for bringing that up.

How University Benefits Can Impact a Grad Student Parent

28:31 Emily: Okay. In thinking through this list of like, wow, what would have been like if I’d had subsidized childcare and so forth — what would it have meant to you, as a PhD, as a developing scholar to have had the kind of support that we were just talking about from your university?

28:48 Alaina: It would have been life-changing. I can’t quantify the stress that I felt those six years and what it has done, not only physically being under that much stress that long, but mentally being under that stress. And two years out still having some kind of anxiety about large purchases or the thought of going and getting the car repaired is still an anxiety, even though I have a really good job right now. There’s some almost side effects of living like that for so long that now have to be undone and have to be unlearned. If those supports were in place, I can imagine this going a completely different direction. And I don’t know if I would have ended up where I am, but I can’t imagine it would have made things worse. It could only have made things easier. It would have relieved everything that support would have completely changed my life and made my PhD something I could just focus on without worrying about all the other stuff.

30:01 Emily: Yeah. I’m so glad you phrased it that way, because if you had received additional financial support whether that’s in the form of a higher stipend or fees being waived, or some kind of subsidies, or maybe health insurance being a better option, a variety of ways that can play out, of course, that would made a difference to your finances. And of course you would have more savings in the bank or you’d have less student loan debt or something like that. But I’m really glad that you phrased that in terms of the stress that you were under, because I think that we don’t, we don’t really consider enough that affect — the cognitive, the emotional, the physical effect of that stress on our developing scholars, on our PhDs when they’re in training.

20:42 Emily: And like you just said, what that does, not only during that time and how does it affect your work — I mean, your work, as if the only that’s the only thing that matters — but your work, but also everything else during that time. But then also later, because as you just said, you have to unlearn all the things. You have to recover from that period of stress financially for years and potentially decades after your PhD. And that’s a lot of what my work is as well is how do you get out of the mindsets about money that you were forced into during that time. I’m really glad that you phrased it that way. Anything else you wanted to add to that?

31:18 Alaina: It also would have opened up just so much more time to spend with my son. I feel like I missed milestones because I was so busy trying to scrape together and make ends meet that I miss some of those important childhood things that I can’t get back.

The Light at the End of the Tunnel: Current Career

31:36 Emily: Yeah, absolutely. Now we said that there was a bright spot at the end of this, because you did get to the end of the journey. You did get to graduation, you got the PhD, and now you’ve mentioned that you have a really good job. So tell us what your career is now.

31:51 Alaina: Yes. I actually made the choice to leave academia after I was offered a tenure position, and instead I moved to Seattle to join Microsoft. Now I am a research scientist here at Microsoft, a user researcher, and I do work for the Edge browser. And I got to say, I love my current career. I don’t know if that’s too forward to say that, but I am in the best spot, not only financially, but also in terms of work-life balance than since I started grad school. That’s where I’m at right now.

32:31 Emily: It really seems like you came through the crucible in graduate school, financially, time-wise, so forth. I hope the rest of your life feels this good.

32:40 Alaina: I hope so.

32:40 Emily: It’s good to hear that you’re in a much better spot now, have a much better income. You’re making those student loan payments, as you mentioned earlier. I’m assuming that you’re glad that you finished the PhD, that you think it’s working out?

32:54 Alaina: I am, yeah. And I was thinking about this earlier today, preparing to talk to you about this, is if I had the choice to go back and do it again, would I change anything? And honestly, I don’t think I would. I know sometimes people regret going the PhD route, but I don’t regret it. I am so proud of the work I did during my PhD and all of the work that it’s enabled me to do after my PhD and the work I’m doing now is so personally validating to know I can use all of those skills I developed and I can just only go up from here.

39:31 Emily: Oh, well, that’s really great to hear. I’m really glad we could end this on a little more of a cheerful note. You mentioned earlier about a book. Can you tell us a little bit more about that?

33:39 Alaina: I’m currently writing a book. It’s going to be essentially a how-to guide for people who are just starting their graduate studies, but it’s trying to help people change their mindset about how they think through graduate school and doing things like research for the rest of their lives. It’s a book that will help you think about graduate stays not only as a student, but also as your job and as the start of your career. It provides the tools and tips and tricks and all the things you need to walk out, not only with your degree PhD in your hand, but also to try to land that real coveted academia job, but also how to leave academia on the other end, if that’s something that you want to do. It’s opening up the possibility of not staying in that smaller bubble of academia, but looking at the broader world of opportunities that exist just for PhDs.

34:33 Emily: Yeah. I love that reframing about yes, you’re a graduate student. Ye, you’re a student, but it is your job. It’s the start of your career. I love that reframing of it, and I wish that I had embraced it a little bit more at the start of my own PhD. Where can people go to learn about this, when it’ll be out and so forth?

34:52 Alaina: They can find updates on alainataloby.com and they can sign up for the newsletter there. I will happily post additional information on Twitter and LinkedIn as well. And I’ll ask to include those in the show notes.

Best Financial Advice for and Early-Career PhD

35:05 Emily: Yeah, absolutely. No problem. So last question before we conclude is what is your best financial advice for another early career PhD? And that could be something that we’ve touched on here, or it could be something completely else,

35:18 Alaina: Something completely else. So I’m going to say this is for right after your PhD, where you land that first job. With your first real paycheck, go get yourself the most delicious steak or whatever meal is your favorite and just sit down and it, because you earned it.

25:39 Emily: Wow. Yeah, thank you so much. Thank you so much for joining me today, Alaina. This is a great interview.

35:43 Alaina: Thank you for having me.

Listener Q&A: Emergency Fund Savings

Question

35:51 Emily: Now onto the listener question and answer segment. Today’s question actually comes from a survey I sent out in advance of one of my university webinars this spring, so it is anonymous. Here’s the question:

36:03 Emily: “Where should I park my emergency fund savings?”

Answer

36:08 Emily: This straightforward question deserves a straightforward answer, and that answer is in a savings account. Ideally, you would use a “high yield savings account”, bit of a misnomer right now., You might be able to get half a percent in interest or so at the moment of this recording, but that’s really the best you’re going to do without taking some degree of risk with your money or moving it around to chase the highest yield.

36:34 Emily: I know this is a really tough answer because emergency funds feel like they are just sitting there doing nothing when interest rates are low, but the job of your emergency fund is not to earn a return for you. It’s to be available for you, in its full amount, in case of emergency when you need it, whenever that might come up. So your checking accoun,t savings account, money market account, these kinds of places are the most appropriate for emergency fund savings.

37:04 Emily: I like to keep my emergency fund in a separate savings account so that I don’t dip into it accidentally, but at the same bank as my checking account, so that in the case of an emergency, it would be very instantaneous to transfer money from the emergency fund into my checking account. So if you, the listener have any issues with accidentally or kind of on purpose using your emergency fund for purposes other than emergencies, then you might want a little bit more separation. So definitely the separate savings account, but maybe even keep it at a different bank than where you have your checking account, so that there’s the delay of a few days to get money between the two accounts that will discourage you from dipping into it.

37:46 Emily: Now, some people who also still can’t stomach the idea of the emergency van, not getting any kind of return might set up what is called a tiered emergency fund. So there may be some degree of emergency fund savings in cash equivalents, like in a savings account. There might be some degree in a conservative investment fund, like bonds, mostly bonds. Maybe they’ll even have some of what they call their emergency fund invested more aggressively, so that some of it can earn a return while it’s still available to you, in the form of taxable investment accounts.

38:22 Emily: And I’m not totally opposed to this strategy. This may be one that I implement at some point in my life, but I just want to point out it’s for people who have money. My typical audience, graduate students, they’re typically living a little closer to the edge than the people who set up those types of emergency funds. If you just have $1,000 or $5,000 or $10,000 in an emergency fund, I don’t think you should be looking at these tiered options. I think that should be an all cash equivalents kind of situation. The unfortunate truth is as you have more money, as you have more wealth, you can afford to take on more risk.

39:00 Emily: So there’s a straight forward answer. Keep it in a high yield savings account, possibly at your bank or at a different bank. Don’t try to invest the money until you have lots and lots of wealth and accessible money at your disposal. At that point, you can afford to take on more risk with this part of your portfolio.

39:19 Emily: 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

39:33 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.

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