Personal Finance for PhDs

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How This Grad Student’s Finances Changed During the Pandemic

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In this episode, Emily interviews Eun Bin Go, a PhD student at the University of California at Los Angeles. Eun Bin reflects on the financial changes she made during 2020, and which ones of them will stick post-pandemic now that she has developed more DIY skills. Emily and Eun Bin discuss Eun Bin’s housing decisions during her time at UCLA and why she moved out of subsidized student housing. Eun Bin shares the tricks she used to max out her Roth IRA for the first time in 2020 and how she discovered she can contribute to UCLA’s 403(b). The strategies Eun Bin uses to keep her finances and time management on track might be unique to her, but are a great example of how powerful it is to know yourself and find the strategies that work well for you.

Links Mentioned in This Episode

Teaser

00:00 Eun Bin: Honestly, things like IRA, investing, like 403(b), 401(k), all those things. Like if we are new to it, it can feel really overwhelming. Like if I read an article about this topic, like three years ago, I would be Googling like every other word, like, what is this? What is that? And it can be a lot of information. Just taking the time to digest through it slowly, I think, gave me the confidence to go for it. Because if you don’t know what it is, it’s hard to put your money into something you don’t know a lot about, right?

Introduction

00:35 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is season eight, episode 10, and today my guest is Eun Bin Go, a PhD student at the University of California at Los Angeles. Eun Bin reflects on the financial changes she made during 2020, and which ones will stick post-pandemic now that she has developed more DIY skills. We discuss Eun Bin’s housing decisions during her time at UCLA and why she moved out of subsidized student housing. Eun Bin shares the tricks she used to max out her Roth IRA for the first time in 2020 and how she discovered she can contribute to UCLA’s 403(b). The strategies Eun Bin uses to keep her finances and time management on track might be unique to her, but are a great example of how powerful it is to know yourself and find the strategies that work well for you.

01:34 Emily: I was very excited to discuss the effect that 2020 has had on Eun Bin’s finances, as it’s not a topic I’ve covered much on the podcast over the past year. It’s difficult to speak about positive financial changes while so many in the U.S. In the world are grieving, sacrificing, and experiencing hardship. Yet, I think the financial course of Eun Bin’s year is likely relatable to people whose income has not faltered during the pandemic. The American personal savings rate spiked during the pandemic. According to the Federal Reserve Bank of St. Louis, the personal savings rate at the end of 2020 was approximately double what it was at the end of 2019. So what is a grad student whose income has stayed steady do with her extra cashflow, at least for the time being? That’s what Eun Bin shares with us in this episode. I hope you’ll use this listening as an opportunity for a retrospective on your own finances over the last year.

Book Giveaway Contest

02:36 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 at [email protected]. I’ll choose a winner at the end of February from all the entries. You can find full instructions at pfforphds.com/podcast. The podcast received a review this week titled helpful advice to help you take action and optimize your personal finance. The review reads, quote, I share this podcast with all the academics I know. It is exciting to hear frank and relatable advice that can be actionable rather than just theoretical. A lot of the personal finance space doesn’t speak to the nuance of the academic life, but Dr. Roberts covers a wide variety of helpful topics. I found her work when I got a fellowship and was confused as to how to do my taxes, but I use the information across my whole financial life. A must-listen for every grad student. End quote. Thank you so much to AK for leaving this review. My subtle plot to lure grad students in with talk about taxes and then help them improve their finances overall seems to be working. Without further ado, here’s my interview with Eun Bin Go.

Will You Please Introduce Yourself Further?

04:11 Emily: I am delighted to have joining me on the podcast today Eun Bin Go. She is a graduate student at UCLA. We have been long-time Twitter correspondents. This is very exciting to get to talk with her live. And, you know, when she came to me wanting to be on the podcast, we kind of talked it over and decided on a theme of 2020, because Eun Bin decided that 2020 was the year that she was going to get her finances in order. And 2020 turned out to be a crazy year, as we all know. So it’s around this theme of kind of like pandemic life and stay at home order life and all of that, of course, that has extended into 2021. We’re recording this in February, 2021. Still going on. So it’s kind of still 2020, right. So, Eun Bin, I’m so happy to have you on the podcast and, you know, will you please introduce yourself a little bit further to the listeners?

05:05 Eun Bin: All right. Yeah. Thank you, Emily. It’s really exciting to be on your podcast after being an avid listener for about a year and a half. So thanks again. Thank you again. Hi everyone. My name is Eun Bin Go and I am a fourth year PhD candidate in biochemistry at UCLA. And like Emily said, this is a year or 2020 was a year that I really decided to be more intentional about my finances and how I invest, how I spend. And so I’m really excited to discuss that here today.

Housing Decision at the Start of Grad School

05:38 Emily: Yeah. So we’re going to go through kind of a few different financial areas in the course of this conversation. And the first one is starting with housing because as, well, we’re both California residents. I recently moved to California, but we all know that housing is a major, major, major expense in California. So how have you made different decisions around your housing in 2020?

06:00 Eun Bin: Right. So I started at UCLA in summer of 2017, and my first year of grad school, I just decided to go apply for the on-campus graduate housing at UCLA, reasoning being that I didn’t have too many months before I committed to UCLA and was about to start my program. So there wasn’t really much time to do all the research into different housing options. So that was like the simplest option for me, I suppose. And I thought, well, a lot of other first year, my classmates were also going into graduate housing. So I thought it would be a good idea to just go into graduate housing with my cohort members so that I can spend more time with them. And it was pretty close to campus. It’s about a three-quarter mile to my lab and because I don’t have a car, I don’t drive. Like I can’t drive, so I can’t live too far away. And so I thought, well, pretty close to campus. Like price was about like 15, like mid 15 hundreds, but apparently that’s a pretty good price for how close it was to campus. So I was okay with that. Sure, I’ll go with that. So that’s where I lived for about one year, my first year of grad school.

07:14 Emily: And did that housing choice live up to your expectations? Did it help you bond with your peers? And did you like living that close to campus?

07:21 Eun Bin: So living close to campus, I think had its pros and cons and the con is actually something I’ll mention later about why I decided to move a bit far away. I was okay with the price per se, like with grad school, like spending more time with my peers, because it’s not really like a dorm life as in like a college, like you live in your own room. I didn’t have a roommate. I was in like a one-room studio by myself. So that made it a bit harder to, I guess, connect with my fellow, like apartment-mates because I’m in chemistry and not all chemistry students were in the same housing. It’s really hard to connect with students from other departments, as you might know, if you don’t have any other connections outside. So that didn’t really work out, but it was nice that at least so it’s close to campus. And I just wanted time to settle in, focus on my first year of classes and research and not have to worry too much about housing stuff. So I think it worked out overall well. Yeah.

Housing Journey After the First Year of the PhD

08:24 Emily: Yeah. I think when it’s available to first years, it makes a lot of sense to them to move there. But you lived there for one year and then you moved somewhere else. So what was the choice you made after that?

08:35 Eun Bin: Right. So after my first year, so in the summer of my second year of grad school I have just been, not constantly like every day, but once in a while I would browse like the Facebook housing group and other like listings, local listings. I would constantly look to see if I can find something a bit cheaper that’s still in a reasonable distance now that I have settled it. And I like found my rhythm in grad school, if you will. So I did come across in the summer, July of 2018, exactly after one year, a listing for just one room in a house for $700. And that happened to be at a place that was pretty accessible via bus from just outside of my lab to the house. So I thought, Hm, it might not be a bad idea to move there.

09:32 Eun Bin: I mean, it’s about like seven, $800 cheaper. And this is, I guess, now is a good place to bring up one of the cons for me in terms of on-campus housing is that if I live too close to campus, I’m, it’s just me. Like, this is my problem, but I’m terrible at establishing like physical boundaries with lab. And it’s always so tempting to just go check in what’s going on in lab, even if it’s like 11:00 PM or 6:00 AM, like if I’m awake, I’m thinking about lab. I just want to get myself there. And that was not the best for like, just like work-life boundaries. And so that’s what made me, I guess, decisively move to the other place. In addition to the lower housing costs is that I wanted sufficient boundaries so that when I’m at work, I would be a lot more focused. And if I am far away and the bus doesn’t run anymore at midnight, I can’t just go to lab because I want to, for example. And I have to be sure to get my work done by the last bus so that I don’t end up having to like walk or Uber cause that also costs money and takes a long time. If I’m going to walk like four miles, it was a four mile distance if I were to walk that, for example.

10:50 Emily: Yeah. I think that’s an interesting like way to help enforce the boundary. I don’t know that I’ve actually heard of like, you know, distance from campus as a time management tool, but it sounds creative. And did it work out, you know, did it play out according to your expectations?

11:06 Eun Bin: Oh, absolutely. Right. So I was sure because the last bus stops after like close to 11:00 PM. So there were never times I could stay beyond that. And I definitely was more focused with the time that I had in lab in school, knowing that it’s going to take a lot more effort for me to find my way back home and then find my way to lab for example. Yeah.

11:33 Emily: Yeah. And how about the price? Because when you said that you were dropping your rent by about 50%, I’m thinking what is wrong with this place? Was there anything that you encountered like that?

11:44 Eun Bin: Not at all, no. It was just a one room. It’s probably just big enough to have a tiny desk and a tiny bed, nothing. It’s a tiny, tiny room, but that was honestly enough for me. I just needed a desk and a bed. Nothing else super fancy. And then there was a bathroom outside my room, but then there was only one other lady who lives in this house and then she had a master room with a bathroom inside. So that bathroom was pretty much mine. So it felt I had a lot of privacy. Good distance, nice roommate lady who rent me her room. So there were no issues. Yeah.

Additional Housing Moves During the Pandemic

12:23 Emily: But, you said you moved in 2020 as well. And so why did you give up that housing situation?

12:29 Eun Bin: Right, so only because of the pandemic when we got the notice that, Oh yeah, we absolutely cannot go into lab for however long it may be. I figured, well, do I hold my place here and keep paying rent while I can’t go to lab? Because there was no reason for me to like live in LA cause my family, my parents are in Orange County, in Fullerton, not too far away from UCLA. So if I were to move back with them, which I did, it’s like, is it worth holding onto this place? Because as you might know, like housing around UCLA is very, very competitive and I had a really nice deal, but that is a question I had to wrestle with. Do I keep paying rent and then hold this place? Or do I just give it up and then start over when we are allowed to go back to school and when will that be? We had no idea when it was February, March. We have no idea what time that would be. Right.

13:24 Emily: Yeah. I think a lot of graduate students have been in that exact situation this year. You’ve told me I can’t come back to campus. Why am I here? Why am I paying massive rent in this area? Okay. So, so are you still with your parents or have you found another living arrangement?

13:38 Eun Bin: Right. So I moved back to my parents’ place in March and I came back out to LA in June in 2020 when the school said, Oh yeah, we can let grad students work in labs now just under limited time. But, and the students have to come and shift, but still students can come in. So that’s when we got that notice, that’s when I started actively looking for a new housing arrangement because someone else, as I had worried about, moved into that place, so that place was no longer available. So I just had to find something else. And my priorities this time was I wanted something that’s in a walkable, reasonably walkable distance, just in case like I can’t take the bus, for example, it’s too dangerous to take the bus. I had to have a way to get to school and I can’t drive because of a condition that I have. So I had to find a place where I can walk. Yeah.

14:38 Emily: And so, where are you now and what rent are you paying?

14:42 Eun Bin: So right now I’m living in an apartment. My roommate is a lady whose children have all moved out of this house. So they had a room open and I was able to move in here. This is housing that I found from a UCLA housing Facebook group. And I’m paying now 1300, which is about 600 more than what I was paying in my earlier apartment, but it’s reasonably close to campus. I like the location, my roommate. And my roommate is also very generous with like her sharing her supplies in the kitchen and things like that. And sometimes she cooks for me occasionally. So that’s a nice bonus to have. Yeah.

How Did Housing Changes Affect Your Finances?

15:32 Emily: I feel like I’m experiencing like whiplash, like thinking about all these different amounts that you’ve paid for housing. How has this affected your finances over these last few years with these big swings?

15:43 Eun Bin: Mhm. Right. So like my first year of grad school, when I was living on on-campus housing I knew that based on talking to the grad students at UCLA, all I knew was that they, the pay is good enough for you to live in on-campus housing and be able to like eat and do a little fun things occasionally. So after hearing that, I thought, well, then I’ll just pay the rent that I have to pay. And with the rest, like feed myself and maybe go out once in a while. And so that’s the time in my graduate career where I did not think about money at all. I paid what I needed to pay and that was it. And whatever I had left, I did whatever I felt like kind of.

16:31 Emily: Yeah. Kind of a conventional grad student mindset. Right? All I have to do is pay bills. If I do that, I’m good.

16:37 Eun Bin: Exactly. Right. Yeah. And like, like retirement account, like what is that? Investing like, Ooh, do I even have enough money to give that a try? I didn’t really consider that seriously at the time. And so food, rent, and the remaining money, I just kept. Right.

17:01 Emily: And then when you moved to the much cheaper place, did you make any changes how you were managing your money?

17:07 Eun Bin: Ah, yes. The one big change I would say. So, even though I was paying less in rent, I still treated my life as if I were paying the equal rent that I was paying at the more expensive on campus housing. So with the 600 or so that I had left over every month, I put that into a high yield savings account. And that’s money like, that’s a way for me to just like put money away so that I don’t feel tempted to like just spend it all away immediately. So that was like my first real attempt at saving if you will.

17:44 Emily: Yeah. I think that’s a great little psychological trick is if you manage to reduce a bill, I mean, reducing it by multi hundreds, hundreds of dollars a month is very impressive, but whatever you can manage to do, as you just said, don’t think about that as now available spending money. Divert it towards whatever purpose is, you know, your real priority, which, okay. So you’re building up cash savings during that time. And then, and then you have this short period when you were living with your parents. And now that you’re back paying a higher rent price, how are things going? Are you still saving that little different, that smaller differential? Or how are you thinking about it now?

Weekend Side Hustle Toward Roth IRA Contributions

18:18 Eun Bin: Right. So I guess there are some things that have changed. I also, in addition to moving to a more expensive housing in 2020, I also got a weekend job that pays about 700, 800 a month. So I guess that kind of helps offset that a little bit, but again, I still treat my real rent in my brain as being in the mid 15 hundreds. So every like excess of my rents up to 1550, I just put away. Before I had my Roth IRA account, I just would put it in my high yield savings account. But now I just funnel that to my Roth IRA account for a regular contribution throughout the year.

19:07 Emily: Awesome. Yeah. Well, we will come back I think to the Roth IRA in a moment, but now I’m curious about this weekend job that pays so well. Is this something pandemic-related?

19:19 Eun Bin: No. So it’s like a high school tutoring and like mentoring job that I just do on the weekends, every Saturday. So it’s just helping students with various topics. Mostly I do like chemistry and calculus, high school level calculus, and just like providing peer support for high school students.

19:41 Emily: That’s very interesting. And is this a W-2 job or are you a contractor, self-employed?

19:46 Eun Bin: Yeah, it’s a W-2 job. Yeah.

19:49 Emily: Wow. Okay. That sounds fantastic. I also tutored for a little bit after college, it seems like it’s a kind of a natural job for a grad student to have, but it’s very interesting that you have it as a W-2 job. And how do you feel like that is like balancing with your role as a graduate student? Like, are you able to keep up, you know, good time management? Does your advisor know about this?

20:11 Eun Bin: My advisor, I may have mentioned, I mean, he does know that I go home every weekend and sometimes like, he takes me to the train station. Like before the pandemic, he would give me rides to the train station. So he is aware of the fact that I go home and I’m not in the lab during the weekends. And this is another one of my psychological tricks, I guess. I need to physically distance myself from whatever that I’m tempted to do, whether if it’s lab, I need to move myself far away so that I’m not tempted to like, keep thinking about it. Oh, should I go into lab and do this or not? So going home on the weekend is another way of like, enforcing like a work-life balance that works for me. Yeah.

How Else Has COVID Changed Your Spending?

20:50 Emily: Yeah, wow. Okay. So you definitely, weren’t going to be in lab anyway, so it’s not affecting that. That sounds really good. Okay. So what are the other ways that like COVID social distancing has changed your spending? I mean, I know it has for mine, but how has it affected yours?

21:05 Eun Bin: So because when I moved back into my parents’ place I did pay them a little bit, a couple hundred dollars just because they were feeding me and housing me, but not like what I was paying out here. But besides that, I really had no other expenditures really. I can’t travel. I can’t go out to eat in restaurants. And really, I would say besides housing, food, just eating out was a majority of my other non-housing expenses. So I naturally got to save a lot in that regard.

21:42 Emily: So you have been eating out less during the pandemic. Because I know that some people are still eating or, you know, getting takeout or whatever the equivalent is quite a lot.

21:50 Eun Bin: Yeah. Right. So, yeah, I pretty much like never ate out for like, at least the first month where it was like really picking up, like the news is like encouraging, Hey, people stay home. Like don’t do so many things outside. And so like early on, like I barely even left the house, for example. Yeah.

22:11 Emily: Okay. So yeah, you just had a lack of outlets for your spending. Like you know some people have been like shopping more, like shopping more online or like maybe they’re subscribing to a few more things for like streaming entertainment. Did any of that have an uptick for you?

22:24 Eun Bin: Yeah. I know a lot of people like signed up for a new Netflix account and stuff for like watching a movie, but I did not do that either. And I didn’t really notice any differences in spending online shopping necessarily. I mean, I didn’t do too much of that to begin with, and it’s not, it’s just not something that I started doing more necessarily, I would say. Yeah.

22:46 Emily: Okay. So you’ve just been stacking up your cash throughout much of the pandemic because yeah. The spending outlets don’t, don’t interest you. And what do you think, like in the future, at some point when spending opportunities are available again, are you going to go back to your prior level of spending or have you made any changes that you’re really happy with and you want to have stick?

23:08 Eun Bin: Yeah. So something that, some things that I realized as a result of, I guess, like my lack of outlets for spending is that I started cooking more at home and that, that truly led me to like I guess, meal options that are cheaper to prepare and also are healthier because I can actually pick what I decide to put in my food instead of if I were eating out, I can’t necessarily do that. And that’s something that I’ve come to appreciate a lot more, doing more cooking healthier. And I think just because I realize this doesn’t mean I’m never going to go out to eat again. Of course, if like friends come over or there’s a special occasion, of course, I will go out to eat once in a while. But I think I’ll try to be, I guess, more conservative in my spending on restaurant dining, I would say. Definitely. Yeah.

24:08 Emily: Yeah. So it sounds like the pandemic in that respect has given you an opportunity to expand your skillset, expand your repertoire of, you know, menu items and so forth. And so it’s really kind of, you sort of up-skilled yourself in the cooking department so that the eating out differential is not so attractive.

24:24 Eun Bin: Right. Mhm.

24:24 Emily: Yeah. Gotcha.

Commercial

24:26 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 at 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 material or have a question for me, please join one of my tax workshops, which you can find links to from PF F O R P H D s.com/T A X. 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.

Starting a Roth IRA in 2020 (for 2019)

25:34 Emily: So you mentioned earlier that at some point along this way, you started on a Roth IRA. Can you tell us about deciding to start that and what you did and also when that was?

25:45 Eun Bin: Alright. So honestly, so I have to say, I did not know about Roth IRA. I didn’t know what a Roth was, what IRA was, any of that term until I have chanced upon one of your articles describing compound interest, that was very informative and very eye-opening. So I’m very thankful for that.

26:03 Emily: We will link that in the show notes. I think you’re probably referring to…

26:06 Eun Bin: The $5,000 initial investment one, the compound interest.

26:10 Emily: Yeah, like what you can save during grad school has a $1 million impact on your net worth. Yeah. That’ll be linked from the show notes.

26:19 Eun Bin: Right. So when I first saw that I was like, no way that can be like seven-digit figure. Like, but when I actually did the math out, it’s actually true. I was like, wow, that’s amazing. And that was like the first catalyst I would say. And the second was when there was the announcement that the IRS has delayed the tax filing deadline to July of 2020 for the year 2019. And that also gave you more time to contribute to your 2019 Roth IRA if you desire. And honestly, that delay is what made me think, huh? Should I actually start this thing? It actually gave me time to think about, because that was not on my mind at all before that. And so after having done some more research, like seeing more articles that you had on Roth IRA, and I knew that I had W-2 income and that I had money in my savings account that I can just funnel over to a Roth IRA account when I realized that that’s when I decided here, let’s go for it and start contributing. Yeah.

27:26 Emily: Okay. So if I have the timing on this right, in 2020, you started contributing to your 2019 IRA. And for the listener, just anyone who’s not familiar, you can contribute to your prior year IRA contribution limit, which is currently $6,000 per year. You can contribute up through tax filing day. So, normally, April 15th. In 2020, it became July 15th. So you took, you saw that extra three months as an opportunity to reevaluate and have a little bit more time to fill up that 2019 IRA. So did you end up contributing like a lump sum or did you start dollar cost averaging or what was your strategy?

28:01 Eun Bin: Yeah, so I had about, about like two years worth of IRA contributions from just my savings in a savings account. So I actually had more than $12K in my savings account at the time. So I just, it was like a one lump sum deposit for both the year of 2019 and 2020 that I made in mid-2020 to my Roth IRA.

Roth IRA Contribution Strategy in 2021

28:22 Emily: Wow. All right. So you maxed out two years at once. You’re all set through the end of your, you were all set through the end of 2020 now we’re in 2021. And is your strategy the same? Are you saving up cash and doing another lump sum contribution or have you started contributing on a regular basis?

28:38 Eun Bin: Yeah, so I have a direct deposit set up where I put in about 500 every month into my Roth IRA account. And that should come out to exactly 6,000 in one year. Yeah.

28:48 Emily: Yeah. So you’re on track to max out in 2021 as well. Yeah. Incredible. And did you, so you explained how you went about this in terms of saving up cash and so forth. Were there any other like tricks you want to pass onto the listener about yeah, how to start this process of contributing to an IRA or how to contribute more than they have been before?

29:11 Eun Bin: Right. So, honestly, things like IRA, investing, like 403(b), 401(k), all those things. Like if we are new to it, it can feel really overwhelming. Like if I read an article about this topic, like three years ago, I would be Googling like every other word, like, what is this? What is that? And it can be a lot of information. But I think honestly your resources have been very helpful for me. You have a lot of resources regarding Roth IRA. And so going through them one by one, like slowly digesting, Hey, what’s an IRA, what’s Roth? What are the different types of investment, I guess, products available to you? Just taking the time to digest through it slowly, I think gave me the confidence to go for it, because if you don’t know what it is, it’s hard to put your money into something you don’t know a lot about, right? So I think part of the solution was just to spend the time to learn about this whole IRA, retirement savings investing. Yeah.

30:12 Emily: Yeah. I’m really glad to hear that you used some of my resources and that, that like worked well for you of course, in combination with some other things. Yeah, I agree. It can be really daunting. And I do correspond with a lot of people who, I have, if you subscribe to my email list, there’s a certain point in the sequence where I ask you, what’s your biggest challenge right now in your finances. And if I can help you, I’ll try to, and probably, I don’t know, at least 25% of the responses are, I want to open an IRA and I just don’t know what to do. Like I know it’s important, but what do I do to get from here to there? So I want to mention, I do have a resource available for people who are in that position.

30:48 Emily: I think you probably opened your IRA before I created this resource. So you didn’t actually use it. But it’s inside the Personal Finance for PhDs Community. So if you go to pfforphds.community and sign up for the community, there’s a challenge in there in the forum called open an IRA, or like open your first IRA, something like that. And so I wrote out like a seven-step process, like every sort of decision point where you need to, you know, figure out what you’re going to do and we need to learn about, and I have resources inside the community like webinars and things I’ve written that sort of support that. So step one, okay. Here’s what it is. Here’s a support item. If you’re not sure about this yet, go watch this or go read this. So I’ve had great feedback from people who have been through that seven-step process and have opened and funded their IRA at the end of it. So if anyone is still sitting on the sidelines, you have money like Eun Bin did, you know, this could be a resource available for you. So pfforphds.community, if you want to check that out.

31:41 Eun Bin: And if you don’t have, like, I mean, I made a lump sum because I had money saved up, but honestly it takes us a little as a couple tens of dollars to make the initial investment. You don’t have to contribute all at once, just little by little and you don’t necessarily have to max out. So do what you can. And I think like, as Emily writes in that one article, 5,000, that’s not even like a maximum of one year’s contribution, but compound interest can do a lot of great things to that 5,000.

Transitioning from NSF Fellowship to W-2 Income

32:08 Emily: Yeah. Thank you so much for saying that. I love talking about investing and I understand there’s actually been another exciting investment change on for you in 2020.

32:19 Eun Bin: Right. So in 2020 is also when I transitioned from my NSF graduate fellowship to TAships so just regular W-2 income. And after having learned about different like retirement savings options, I started looking into like, what retirement options does UCLA provide for its employees? And I did find that they provide like the 403(b) and so with this, I decided to also contribute like 5% of my pay to this 403(b) account. Honestly, this was, I mean, Roth IRA, I would say is like my primary retirement saving vesicle, but I just wanted to, I guess, try it out. That’s what got me into this. And this is also a way for me to, now that like restaurants are opening back up and there are more opportunities to spend, that’s just another way of me just putting money away so I can’t take it out. That’s how I deal with like managing my savings, I guess, like similar to, I need to physically move myself away from the lab so I don’t think about it. It works the same way for me with money as well. Yeah. So.

33:40 Emily: Absolutely, me too. I love the pay yourself first strategy. I use it myself. I recommend it everywhere. And it’s just because I’m a bit of a spender also. So like, I just want that money, like out. I’m a forced saver, but a natural spender. I think I’ll put it that way. I like saving, but I have to put systems in place to make sure that I do it or else I’m really not going to.

33:58 Eun Bin: I’m exactly the same way.

34:01 Emily: Yeah. That’s so exciting that like you had, you know, you found out that you had the 403(b) access. And this is a good tip for anyone else at UCLA or anyone at any of the UCs, I would imagine. And also just anyone anywhere to check to see if you have access because you know, I don’t think many graduate students can, you know, save the full 6,000 for the IRA and then be looking for their next like savings opportunity. But you have, especially with this like awesome side job, I mean, it seems like you have, you know, plenty of pocket money already, so yeah. So it’s worth looking into, sometimes you’ll be surprised and the answer will be, yes, you do have access to the 403(b). And switching from fellowship to being on W-2 has also come with some tax changes, right?

34:44 Eun Bin: Right. Right. So when I was on the NSF, I know this is a very hot topic that you talk a lot about Emily, like quarterly taxes and filing. So for me, because my parents also run their own businesses, they have to do their own quarterly taxes. Thankfully, like, the CPA who helps with my parents’ finances, they were kind enough to help with mine as well. So that made it a lot less stressful for me. And in terms of like saving, because I know you mentioned in one of your articles, like have a designated savings account for your quarterly taxes. But what helped me in that regard was my actually side job that I had. Because of that excess income I didn’t necessarily, I guess, have to withhold my own taxes, I suppose and whatever I had to pay, I could just pull that from my weekend job money that I had. Yeah. That was enough to cover all my taxes. Yeah.

35:46 Emily: Yeah. So it sounds like you, with that additional income, you had enough sort of flexibility in your cashflow to be able to pay that somewhat larger tax bill in a given month. That’s awesome. It’s definitely not the case for most grad students. And that’s why I think that saving up in advance strategy is so critical for, I mean, for most people, right? All these strategies are, if it works for you, great. If it doesn’t like move on from it. And I think one of the themes that, you know, you’ve identified in this interview is that, you know yourself, you know your psychology, at least in a few of these areas, right? You know, what’s going to work for you and you set up systems that help you stay within the boundaries that you, that your like higher thinking self wants you to be in.

36:27 Emily: Whereas like in the moment you might not make that decision, but that’s why you have the boundary in place. So I think that’s an awesome takeaway for the listener to kind of figure out what those tricks are that, you know, are going to work really well for you. They may not be the same as what other people do. That’s okay.

Best Financial Advice for Another Early-Career PhD

36:41 Emily: So as we wrap up Eun Bin, thank you so much for this interview, it’s really interesting to hear what’s been going on in 2020 for someone else. I feel like I haven’t had that many interviews that sort of acknowledge that we are in the middle still of a global pandemic. So as we’re wrapping up, would you please tell us your best financial advice for another early career PhD? And it could be something that we have already touched on that you want to emphasize, or it could be something completely new.

37:04 Eun Bin: Yeah. So I think based on my experiences, my advice for early career PhD students is number one, do this before you apply. Sign up for Emily’s website, they are very helpful. I wish I had discovered them way earlier in my career. Definitely. And second, like if this is like your first time making like regular income, which it was for me until after I graduated college it can feel very overwhelming to have just a lot of cash than you’re normally used to. So make a budget of like your essential I guess like costs that you need to pay and then like just develop a budget for yourself. And what I did was whatever that was above that beyond the budget, I just put away into a savings account that I can’t touch. But I guess Emily did mention also, but be open to, I guess, experimenting a little bit with your finances and figuring out a strategy that works for you.

38:11 Eun Bin: And do take the time to learn about like saving and investing. I know when you first get into it, for me, it was like, Oh, like investing in like the stock market or like mutual funds. Like what are those things like? How does it work? And like, are you sure that I won’t lose my money this way? I had a lot of these concerns, but I think there’s a lot of really informative articles. I like the one Investopedia, for example, they have a lot of really informative articles that are friendly to beginners and combined with Emily’s various articles. I think it is a steep learning curve but it is something worth putting your time into, I would say. Yeah.

38:53 Emily: Yeah, I totally agree. And the thing about learning about investing, especially learning about passive investing is there is an initial upfront investment of time of a few hours or 10 hours or 20 hours. Maybe if you want to be really like in depth. But after that, it’s very, hands-off like, it is not something that you have to continually be learning about and maintaining for the rest of your life. You make this initial upfront investment of 10 hours. Read one book, you know, read a couple of my articles, whatever you’re probably going to be pretty set for like a very, very long time on just that amount of information. And that’s the nature of passive investing. And so you have to find the time to make that initial push, but once you’re over that, it’s like, it’s like smooth sailing. It’s so easy after that point. Yeah. Great. Well, Eun Bin, thank you so much for joining me on the podcast today. It’s been a pleasure having you.

39:39 Eun Bin: Yeah. It was a really great time talking about these things with you, Emily. After being a listener for a very long time, it was really exciting to be a guest on this podcast. And I hope this would be helpful for the other listeners.

Listener Q&A: Making Smart Financial Decisions

39:56 Emily: Now, on to 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 is the question: quote, what smart financial decisions should every PhD student be making with their money? End quote. This is an amazing question. So thank you anonymous for contributing it. I have to acknowledge upfront that not every PhD student is going to be able to make the decisions that I’m about to list as smart financial decisions. And that’s okay. I hope in those cases, that being in a PhD program overall is a smart financial decision for your longterm career. Maybe it’s not a short-term smart financial decision because you’re not being paid that well, but I still hope it is a longterm smart financial decision. Okay. First smart financial decision over the course of your graduate degree is backup, before you get into graduate school, choose a PhD program that will support you well financially so that you can do the rest of things that I’m about to list.

41:05 Emily: Okay, one smart financial decision that you should make as a grad student, but it’s certainly not unique to graduate students is to not abuse your credit cards. Use your credit cards, if you use any, exactly as you would use a debit card and never put a charge on it that you could not immediately pay off with cash from your checking account. That certainly means not carrying any credit card debt, but it also means not giving yourself an advance on your next paycheck through floating charges on a credit card. For further explanation of why this kind of use of credit cards is dangerous and how to get out of it, listen to my episode last week, season eight, episode nine with Elana Gloger. Another smart financial decision during grad school is to prioritize your savings rate. You might direct that savings rate toward different purposes throughout the course of graduate school.

42:00 Emily: Maybe it’s going to be cash savings. Maybe it’s going to be investing. Maybe it’s going to be debt repayment. But whatever it is, getting that savings rate higher, maybe even in the 10 or 20% or higher ranges, that’s a really smart financial decision. And you can work that savings rate up to those levels that I just mentioned by attacking both sides of the equation, both the earning more and the spending less sides. Now of course, an individual graduate student might have more opportunity on the earning more side, might have more opportunity on the spending less side. It depends on your personal situation, but you can reevaluate both sides. Start with the easier one for you, but eventually get around to thinking about how you might do the other one. On the earning more side, you know, I think you should be consistently applying for outside fellowships that might increase your stipend or for smaller grants that will add on to your stipend or your funding package.

42:59 Emily: Grad students can also try to generate a side income. In many cases, that’s not to say necessarily a side job or a side hustle, which are not accessible to all graduate students, but some kind of side income. On the spending less side, a lot of people are attracted first to tweaking and cutting back in the small and variable expenses in their lives. But that’s actually not where I recommend that you start. I think you should start with the big three expenses that most Americans have, which are housing, transportation, and food, specifically your grocery spending. But start on the fixed side of that. So start with your housing expense to reevaluate is there a way that I can pay less on a monthly basis for housing? Yeah, it might take months or a year to work into that next housing situation, but it’s very worthwhile if you think there is room for reduction right there. On transportation, any fixed expense you can reduce would be amazing. You know, if you own a car, if you have a car payment, how can you reduce or eliminate that? If you presumably pay for car insurance, how could you reduce that expense?

44:03 Emily: Food is the last one of the big three to address. And I suggest that you make long-term sustainable changes to your habits around shopping and eating rather than trying to use willpower in the short-term to reduce your spending. Okay. There are obviously many other budget categories to address after those, but I think you should start with the big ones. Another smart financial decision would be to work the steps in my financial framework. I have an eight-step financial framework that kind of toggles back and forth between building financial security in the form of cash and working to improve your net worth overall through debt repayments and investing. But these things have to come in a certain order.

44:45 Emily: If you go out of order, you can take on more short-term risk. If you want to read more in a lot of detail about my financial framework, you can join the Personal Finance for PhDs Community, pfforphds.community, or sign up for coaching with me, pfforphds.com/get-coaching. The last smart financial decision that I’ll recommend is to not languish in your graduate program. Get out as soon as you can. Really overall, the best thing you can do for your finances is finish that PhD and move on to a higher post-PhD income, whether that’s in a post-doc or a real job. I know there are good reasons to stay in grad school longer related to publishing, related to applying for tenure track jobs, but it’s not a smart short-term financial decision. So again, if you think that the extra year or whatever it is in your PhD program is worth the long-term investment, that’s great. But if you don’t see that ROI on the horizon, just get out as quick as you can. Thank you so much to anonymous for submitting this 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

46:11 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 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.

This Grad Student and Her Family Lived on Her Stipend While Banking Her Spouse’s

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In this episode, Emily interviews Dr. Jacqueline Kory-Westlund, who recently completed her PhD in the MIT Media Lab. During their five years in Boston, Jackie and her husband lived on her grad student stipend and saved and invested all of his income. Jackie and Emily discuss the frugal tactics Jackie and her husband used to keep their expenses low, even after having their first child. Saving and investing Jackie’s husband’s income gave them a sizable nest egg by the end of grad school, which they used to purchase a home in cash in a low cost of living area of the country. Jackie and her husband have designed their lifestyle around location-independent work so they can live where they want to while they expand their family, which is now an option for more workers made remote during the pandemic.

Links Mentioned in This Episode 

Teaser

00:00 Jackie: We started out with a generic retirement fund, and then at some point later that year realized we could probably get better returns if we were more selective about what funds we invested in. So then we switched to some market index mutual funds and over the course of the next three years made almost $40K.

Introduction

00:26 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 eight, and today my guest is Dr. Jacqueline Kory-Westlund, who recently completed her PhD in the MIT Media Lab. During their five years in Boston, Jackie and her husband lived on her grad student stipend and saved and invested all of his income. We discussed the frugal tactics Jackie and her husband used to keep their expenses low, even after having their first child. Saving and investing Jackie’s husband’s income gave them a sizeable nest egg by the end of grad school, which they used to purchase a home in cash in a low cost-of-living area of the country. Jackie and her husband have designed their lifestyle around location-independent work, so they can live where they want to while they expand their family.

01:18 Emily: It’s a model that is now an option for many more people whose positions went remote during the pandemic. This interview is a wonderful example of how an early, intense focus on a lofty financial goal can often result in financial freedom within a short time. Financial freedom means something different to everyone, but it could include leaving, or not taking in the first place, jobs that are unsuitable to you, location independence, working part-time, starting a business, staying home with a child, full-time travel, or just living your best life. Even if it is a bit unconventional. Financial freedom means choices. And this freedom can arrive quite a bit earlier than full financial independence, which is when you never have to earn an income again. We’ve had many stories on the podcast of guests working on or accomplishing a financial goal that seems outlandish for their career stage.

02:10 Emily: Some examples, which are linked from the show notes include Dr. Jenni Rinker paying off over $60,000 of student loan debt during grad school, Beth Moser clawing her way out of financial ruin during the great recession, Jonathan Sun and Dr. Matt Hotze house hacking during grad school, Courtney Danyel growing her freelancing writing business to over $100,000 per year, and Dr. Rachel Blackburn investing for retirement, despite her $1,000 per month grad student stipend. There are even more examples than that in the archives. Even my and my husband’s own story of increasing our net worth by over $100,000 during grad school qualifies. I can tell you that I appreciate my past self for being aggressive about frugality and retirement contributions more with every year that goes by. I don’t this to wag my finger at anyone who has not been working on a lofty financial goal. Personal finance is personal, and we all have different things we value. I just say it because I had no idea when I was in grad school and racking my brain for ways to increase our savings rate by another half a percent, how sweet financial freedom would taste just a few years later. If you’re looking for motivation to push yourself with your own finances, dream about what your best unconventional like might look like.

Book Giveaway Contest

03:28 Emily: Now, it’s time for the book giveaway contest. In February, 2021, I’m giving away one copy of The Simple Path to Wealth by JL Collins, which is the Personal Finance for PhDs Community book club selection for April, 2021. Everyone who enters the contest during February will have a chance to win a copy of this book. The Simple Path to Wealth has quickly become the go-to text in the financial independence community to explain passive investing, which is the style of investing that I practice and teach. It sometimes comes as a surprise that the most effective form of investing is both low cost and low maintenance. If you’ve been sitting on the investing sidelines, this book will almost certainly motivate you to get started by showing you how simple successful investing really is. 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 February from all the entries. You can find full instructions at pfforphds.com/podcast. Without further ado, here’s my interview with Dr. Jacqueline Kory-Westlund.

Will You Please Introduce Yourself Further?

04:55 Emily: I am welcoming to the podcast Dr. Jackie Kory-Westlund, and she’s a recent graduate of her PhD program. And we are going to discuss her finances during her PhD and how she accomplished a massive financial goal, right upon completing her PhD, which was purchasing a home in cash. When Jackie emailed me about this prompt, I literally misread it because I could not believe that anybody would possibly do that. So this is going to be really exciting to figure out. But Jackie, why don’t you tell the audience a little bit about yourself first?

05:28 Jackie: Hi. Yeah. I did my PhD at MIT in the MIT Media Lab with Dr. Cynthia Breazeal. So I worked on small, cute fluffy robots that helped kids learn stuff. And I, let’s see, I finished in 2019, so I’m currently an independent scholar, writer, artist. I do not have a full-time job because I’m staying home for the most part, hanging out with my kids. My husband is a software guy so he works from home, has his own startups and all of that going on. And we had our first kid during the PhD. So that’s relevant to our finances and our financial goals.

Jackie and her Husband’s Finances at the Start of PhD

06:08 Emily: All right, let’s dive into it. This is such an exciting story. Okay. So please give me a snapshot of your finances when you started the PhD. If your husband was in the picture at the time, include him, too.

06:20 Jackie: Right. So when I started the PhD, this was back in 2012. I was one year out of undergrad. So I’d spent one year kind of doing a research internship thing. So I hadn’t made a lot of money at that point. My husband and I, we were not married yet at the time, but we both moved to Boston for MIT at the same time. I had a used car that was probably worth $2,000. We had a couple thousand in our bank accounts that we used for our first month of rent in the rental deposit and the realtor fee and a couple of thousand in student loans. And that’s about it.

06:56 Emily: Alright. Yeah. Almost zero, close to zero. It sounds like. And then what was your stipend?

07:04 Jackie: My stipend was about $30K a year. And MIT paid for healthcare for me, not for my husband. We had to add him to the plan later, once he couldn’t be on his parents’ plan anymore, you know, hitting 25 years old there. And that stipend increased slightly year to year because MIT made cost of living adjustments. And it also went up slightly when I switched from the master’s program to the PhD program, but it was never more than like 32K or so.

07:33 Emily: Okay. So from 30K, in 2012, when you started to about 32K, when you finished, you said 2019, right?

07:39 Jackie: Yeah. Though, actually for the PhD. So we actually moved and got the house the year before I finished. I finished up the last bit remotely.

07:49 Emily: Okay. Okay.

07:51 Jackie: Because I was just writing at that point, so we actually moved in the middle of 2018.

07:55 Emily: Okay, great.

07:56 Jackie: And at that point I stopped getting the stipend because I wasn’t on campus.

08:01 Emily: Oh. So you, you left the stipend behind in 2018 and finished self-funded after the last month or up to a year. And how about your husband’s income during that period?

08:11 Jackie: So initially, for the first couple of years in 2012 through about 2015 or so, he was working on a couple of startups and as a contractor, primarily working on his self-funded software startup. So was not making a huge salary, probably around $50K a year in the last couple of years. And throughout the entire time I was in grad school, our combined income never went over about $80K on our tax returns.

Strategies to Decrease Expenses During PhD

08:39 Emily: Okay. So that gives us a range to think about over that period. So pretty low at the start a little bit better by the end, but again, we’re talking about Boston, so yeah, pretty high cost of living area. So $30K is a pretty decent grad student stipend, but in a high cost of living area, it’s still really challenging. Okay. So that’s your finances when you started the PhD. So as you’re going through the PhD, I’d love to talk about, you know, both sort of frugality, like how do you keep a lid on your expenses? And also did you increase your income in any way? You just told us what the total was, but were there any, you know, methods that you used to increase it? So let’s start on the decreasing expenses side. What, you know, what were your strategies? What were the things that worked out best for you in terms of controlling those expenses?

09:21 Jackie: The biggest thing is we both just kind of by default are fairly frugal people. Neither of us like tend to eat out much. You know, we don’t usually buy that much stuff. We ate a lot of rice and beans. Probably were in the range of only about $250 a month on food. Probably the entire time we were there. I’m the one who started the trend in my lab of people packing their own lunches to bring to the lab.

09:46 Emily: Great influence.

09:49 Jackie: So we primarily lived on my stipend of about a $30K a year. And two thirds of that was rent. And our vehicle expenses tended to be pretty low because like we did have the car, but we didn’t use it that much. I took public transit and walked to MIT and that was half subsidized by MIT. And the other big thing was we had an awesome landlady who did not increase our rent.

Housing and Rent

10:13 Emily: Wow. Okay. Well, you just hit kind of the big three expenses right there. You hit housing, which at $20,000 per year is yeah. It’s a bit expensive on that grad student stipend. Really admirable, by the way of structuring your budget so that you would live just off the one income and save, presumably, the higher income. That’s really, really impressive. So you hit housing. Now was it luck that you found someone who was not going to increase rent, or was there any strategy involved in finding that place?

10:42 Jackie: That was entirely luck. When we were moving up to Boston, we spent about a week there prior to moving looking at places. And we talked to a realtor who was like, Hey, I’ve got this landlady who just needs someone. We just got lucky that she just had this policy on her own where she just didn’t like increasing rent too much. And she’s a nice old lady, lives downstairs, you know?

11:04 Emily: Yeah. I mean, actually that’s, you know, it could be luck for you, but it might be strategy for someone else. I wonder if there is something there around being neighbors with your landlord and like cultivating a positive relationship, because I think it’s definitely harder to raise rent on someone whose face you see like multiple times per week, rather than some, you know, unknown number or whatever in some system. So, yeah. So it sounds like you were living in a duplex kind of situation?

11:28 Jackie: Yeah. It was one of those three-story, three-family homes.

11:32 Emily: Triplex.

11:32 Jackie: Yeah. Triplex, that’s the word I’m looking for. Yeah. And my husband and our landlady, they both went to the same church, so that maybe was a relevant factor there, you know.

11:43 Emily: Yeah, any kind of connection you can make.

11:45 Jackie: Yeah. Yeah.

11:46 Emily: That’s awesome. Okay. So, you know, housing expense is clearly number one, but managing to get a place, you know, by luck probably that didn’t increase the rent is an incredible advantage because that, you know, the rate that rent often rises at is higher than, you know, what you’re getting in your salary increases for cost of living. So you hit housing, number one. You also mentioned transportation. You know, it’s a city life kind of thing. Like you don’t have as much need for like the car usage. And did you have one car or two?

 Sharing a Car, Reducing Food Costs

12:14 Jackie: Just the one.

12:15 Emily: Just one. Okay. So sharing a car as well, another great strategy. And you mentioned, you know, the food expenses. So not eating out very often and also, I mean, $250 per month in food is like really keeping a lid on things. You mentioned rice and beans. Presumably you’re cooking a lot. Do you have any other like, tips in that area around like managing the grocery? Both the budget and like the time that goes into cooking and meal prep?

12:40 Jackie: Well, I kind of have a hobby of cooking, so we did a lot of the crock pot full of a big dinner on Sunday, and then eat leftovers all week to reduce time cooking. Buying things in bulk, instead of popping out to the store every couple of days. We tended to go for beans over meat, which decreases expenses. You look for what’s on sale, you know. That kind of stuff.

13:05 Emily: Yeah. Do you have any like Boston specific tips, like a grocer that you really liked for good deals or something?

Roberto’s Produce (in Boston)

13:11 Jackie: Ooh, let’s see. Actually, we lived about half a mile from a produce store that had way cheaper produce prices than the main grocery store that we drove to.

13:22 Emily: And what was the name of it?

13:23 Jackie: That was, let’s see, what was it called? It was Roberto’s. Roberto’s produce. Cute little place. Just, just produce.

Financial Goals with Savings

13:30 Emily: Yeah. We actually frequented a little shop like that in Seattle as well and had great prices. You mentioned earlier that you actually bought your home prior to finishing your graduate program and that you had been, I think, saving your husband’s salary during that whole period. What were your financial goals during that time, aside from you said, living on just your income, what were you doing with your husband’s salary?

13:56 Jackie: So, in about, I think 2015 was when we realized that we had some money in the bank, we should probably do something with it, which was about my third year of grad school, I think. So we took all of our extra money and put it, invested it primarily in the stock market using Vanguard. We started out with a generic retirement fund, and then at some point later that year realized we could probably get better returns if we were more selective about what funds we invested in. So then we switched to some market index mutual funds, and over the course of the next three years made almost $40K just from having money invested, which is like free money! It’s just so cool. It was like, when we first started doing that, we were like, wait, we just get money from having our money sitting here? Like it’s pretty cool when you figure out how that works.

14:49 Emily: It doesn’t always work out like that over the short-term.

14:53 Jackie: It’s true, we got lucky with which, which years we were investing there.

14:57 Emily: Yeah. I felt that way too. I started investing basically in 2009, like at the nadir of the market and just the last decade has been incredible with, you know, a few hiccups along the way, but overall, obviously really, really strong. And was that in like retirement type accounts or was it more just taxable accounts that are accessible to you?

15:17 Jackie: We had a little bit in some IRAs and the rest of it was just like a generic account that we could move money around whenever we wanted.

Having a Child Motivated the Goal of Home Ownership

15:27 Emily: Okay. So you’re basically living on your stipend, investing your husband’s salary or whatever income he has during that period. At what point did the goal of home ownership materialize?

15:38 Jackie: About the same time we had a kid. So it was in my fourth year of the PhD. That’s when I started thinking, Hey, you know, we’ve got a baby now, at some point I’m going to finish this PhD and where are we going to go? What are we going to do? So that’s when we started doing a lot more life planning and getting a house with a yard somewhere for kids to play. And that’s when that started being like really on our radar.

16:01 Emily: Yeah. We glossed over the whole having a kid during grad school thing. How did that work out with like, did insurance cover pretty much everything? Like, how did the finances of the having a child work?

Health Insurance and Parental Leave

16:13 Jackie: MIT’s healthcare program like yeah. Insurance covered pretty much everything. We paid probably $200 total to have a baby.

16:19 Emily: Amazing. And did you get any leave?

16:22 Jackie: Yes. MIT was good about that as well. And the Media Lab gave me an extra month. So MIT had a policy of two months paid leave for any parents. And then the Media Lab gave me an additional month and that was all paid leave.

16:35 Emily: Amazing.

16:35 Jackie: So I had three months off and then last thing on that was my advisor was awesome. And my lab was awesome in that they’re all very supportive of this and I could work remotely a lot more and was at a point in the program where I didn’t have to go into class anymore because I was just able to just research stuff. So a lot of, a lot of things went into that being, not that bad, like being like a reasonably doable thing. I know it’s not for a lot of women. It can be difficult.

Did You Also Pay for Childcare?

17:06 Emily: So I think about three big expenses when it comes to having a child. We just covered two of them, health insurance and the leave. And then the third one is childcare. You just mentioned working from home, but did you also pay for childcare?

17:18 Jackie: We did not, actually. My husband and I split that.

17:21 Emily: So interesting.

17:22 Jackie: And just managed to work that into our work schedules. That was part of why he was doing such flexible work at the time. And then my lab was flexible. So we just squished childcare and somehow, you know, did lots of work when the baby was napping kind of thing.

17:36 Emily: Yes. I remember those days very well. I have two kids as well, and I’ve actually done one other interview on the podcast from season one. So if newer listeners haven’t seen this one yet, but you’re interested in having a child during graduate school, check it out because I interviewed another graduate student mother married to another PhD father who also did the same thing. I think for the first six months after their first child was born, they completely split childcare and I did not pay for any outside services in that regard. And yeah, she talks about how she managed to you know, complete her dissertation and get a TT job and have the baby. And it’s kind of a really crazy year for her. But it’s incredible that, you know, you took that on and then were able to accomplish it. Was that motivated by finances? Was it motivated by, we just wanted to spend time with our child a lot of time or, you know, what was the reasoning behind that?

18:29 Jackie: All of the above. So, childcare in Boston is ridiculously expensive. But also a lot of you want to spend time with this baby. Like, why would you have a kid if you don’t want to spend time with it? And there are some philosophical things around how we wanted to approach raising our kids and actually being around a lot of the time. I was homeschooled actually growing up. So that’s probably very influential in how I’m thinking about how to raise my kids.

18:57 Emily: Yeah, so a familiar model for you.

18:58 Jackie: Yeah.

How Did You Choose Where You Wanted to Live?

19:00 Emily: Gotcha. Okay. So got the baby, but we’re not paying for childcare or the other associated expenses. MIT did a good job providing you with the appropriate benefits. Okay. So then you said that home ownership became a goal. Once you had the child and you were like, we want to get out of the city life, how did you choose where you wanted to live?

19:19 Jackie: So we decided based on kind of two factors. One, we were not tied to any particular location first. So we could kind of pick anywhere because of the kind of flexible job situation that we’re setting up for ourselves. And then we wanted to move nearer to some of our family. We were like, we’re having kids. We’d love to have some grandparents around. We’d love to live near some family finally, because it’s been a long time since we’d done that. It was really nice. So my husband’s family is in North Carolina. Mine, a lot of them were in Idaho, North Idaho. So between the two of those, we were looking at the different areas and ended up picking Idaho for a variety of reasons. I mean, both places had a lower cost of living. It’s hard to get a higher cost of living than Boston, New York, or San Francisco. Lots of nice, pretty lakes and mountains up here.

Commercial

20:15 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 at 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 material or have a question for me, please join one of my tax workshops, which you can find links to from P F F O R P H D S.com/T A X. 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.

Location Independence

21:21 Emily: Sounds like you know, you have intentionally chosen a route that not many PhDs do. You know, a lot of PhDs feel that they have to be geographically flexible to have the type of job that they want. And you’ve gone another direction and said, my primary goal here is to be in certain locations in the country and the job is going to be, it sounds like the job is going to be secondary to that in that you want to work in a way that is flexible to live wherever you want. You want to be location-independent. Is that right?

21:52 Jackie: Yep.

21:53 Emily: And that’s what you’ve done and your husband has done.

21:55 Jackie: Yes. Yeah. That’s one of the main reasons he was working on his smaller software startup was so that he would be able to work from anywhere and not be tied to someone else’s you have to work in this location. And I was not looking at the end of grad school to get an academic job, necessarily. I mean, there’s a university here, but I’m not looking for an academic job or a full-time job currently because I wanted to be able to spend time with my kids and also work on some part-time things.

22:25 Emily: Yeah. I see actually, a lot of similarities between your story and mine actually. I mentioned to you when we started the call that my husband and I recently became location-independent. He still has a job job, but it’s just remote now. And I would imagine a lot of people are in that situation and going forward, a lot of people are not going to be going back into offices and labs and all of that. So depending on the nature of the work that you do, a lot, I think more people in my audience are going to have location independence in their future.

22:54 Emily: And it’s really, it’s exciting, I was telling you too, but it’s also a little bit intimidating to figure out where exactly do I want to live.

23:01 Jackie: We made spreadsheets, we made spreadsheets.

23:05 Emily: You went the direction of going to a lower cost of living area, which is known as geographic arbitrage in the financial world. We are actually choosing to live in a very high cost of living area because we love it and want to be there, but have to make the finances, you know, work out to have balance in that area too. So, in different ends of that spectrum. Okay, so you chose based on, you know, more personal factors where you wanted to live and then comes this, you know, huge accomplishment of buying this home in cash. And I think we’ve already heard how you saved up for it, right?

23:39 Jackie: Yeah, pretty much.

How Much Money Did You Have for Home Buying?

23:40 Emily: So do you want to share like the numbers around that? Like how much money you had to work with by the time you did buy?

23:46 Jackie: Yeah. So when we decided to move, we had about $150K from our non-retirement accounts. We also emptied our IRAs for the most part which was about $25K. So we had around $200K to work with when we were buying a house up here. And relevantly because I no longer had the stipend from MIT when we were moving and my husband’s startup had, like no long-term proven history of income, we wouldn’t have been able to get a loan. So that was also relevant in us deciding to get a home in cash. So we had about $200K to work with and the market up here was moving very quickly at that time. So we came out to Idaho for about two weeks that summer with the plan of when we leave, we will have a house.

24:39 Emily: That’s an incredible story. You say, now you couldn’t have gotten a loan or it would have been, Oh my gosh. So, so difficult, so much paperwork or something. Did you know that that would be the case, like looking forward when you started that taxable savings, savings and investment, or was it just more about having flexibility at that point?

24:59 Jackie: Well, when we first started saving money, we had no idea what we were going to do with all of it. And then we were like, Hey, we should buy a house when we move out of here. And then when we started looking into, how do you buy a house? How do you get a loan? How, how much money do you have to put down on a house? How expensive are houses in the different areas that we’re looking at? As I said, we, we did spreadsheets for a lot of things and calculations about how much money might we have and how much money would we need for this kind of house in this area. And having provable income for getting a loan from just about any bank seemed to be pretty relevant. And because my husband’s business was not quite off the ground yet, it kind of got off the ground a lot more in the year right after we moved, there was relatively little income that we could prove at that point in time, which was, you know, fine for how we lived, because we didn’t need much income to live off of.

25:51 Jackie: But for the purposes of buying a house would have made getting a very expensive house difficult or getting one with a smaller down payment more difficult. And maybe, maybe there was a bank that if you talked to the guy and explained all your situation in lots of detail, lots of paperwork, maybe, maybe they could work something out. But the other factor, I guess, that I should probably talk about was our goal of being debt-free when we moved as well, because we only had a couple of thousand in student loans and we paid that off before we went for the house. So as soon as I was done with grad school I was like, all right, pay off student loans, get rid of any other debt that we have.

Challenges of Mortgages for Fellowship Recipients

26:31 Emily: Gotcha. I probably know a little bit more than I should about getting a loan at this point because my husband and I are anticipating buying a house soon. My brother is a mortgage loan officer, so he sells mortgages. So I’ve talked with him quite a lot about this process. And thirdly, he’s actually helped me quite a bit. We’ll link in the show notes to some episodes I’ve done before on how people receiving fellowships during grad school or a post-doc can or cannot ultimately get a mortgage because a lot of times they’ll be just flat, turned down right away. There is sometimes a way to get a mortgage, but it’s really tricky. So we’ve done all that in these other episodes, but to your point, self-employment income is another really kind of dodgy form of income. I know because that’s what I have that is going to be looked at a lot more carefully and you have to prove a lot more than, you know, you would for like a W2 type of situation.

27:24 Emily: So, yeah. It sounds like, you know, you, you started the savings investing for whatever, you know, because you were in a position to be living on just the one salary and saving the other, and it turns out that it helped you accomplish this like major goal. So now, you know, sounds like you have little housing expense, it would just be like insurance taxes, this kind of stuff, very minor relative to what a mortgage would be, correct?

27:51 Jackie: Correct. Yeah.

What Are Your Future Financial Goals?

27:52 Emily: Yeah. And so what are you thinking now about your finances? Like your, you know, your living expenses must be quite, quite low. So what are you working on next?

28:03 Jackie: So for what’s next we like the idea of having a bigger house with acreage around it. Because up here, we have, you know, the small neighborhood house on, you know, maybe a quarter acre, you know, enough space for a garden, a lawn. But we really liked the idea of having some more acreage out here because this is a great area for that. And then be able to keep this house and rent it out as side income. We would like to keep increasing our income enough that we can increase charitable giving, investing in the local economy and community, that kind of thing. Relevantly, we got our house for about $210K and it’s now worth over probably over $300K, just in the last two years because of the increased, this area is growing a lot. So we liked the idea of maybe being able to get something else soon and then maybe get into more real estate in this area. It seems to be growing a lot.

29:01 Emily: So what would be the plan for the next house? Would you try to take out a mortgage given the change in your husband’s income or in whatever you have going on or is it saving up more cash?

29:12 Jackie: That’s still up for debate. Kind of depends on what kind of house we want to have. Yeah we still have been talking. So that’s been actually a fairly recent conversation. We’re like, okay, we’ve been here for a couple of years now. Like jobs are working out better, you know, one is increasing, income’s increasing, like what are we doing next? So that’s something we’ve actually just been talking about a lot recently is like, what kind of house would we want next? And would we want to do that in cash again, or not? Because now we could deal with a mortgage payment, you know, we could do that now, but not sure.

Best Financial Advice for Another Early-Career PhD

29:46 Emily: Yeah. So still under development. Well it sounds, I don’t know, really lovely. It sounds like a real, you know, you’ve really done lifestyle design, I guess is the way that, you know, it’s kind of put in like the entrepreneurship community of figuring out how you want to make money, where you want to make money, where you want to live getting your expenses down very, very low, if you want them to be. And then maybe even turning this house into an income producing asset, ultimately. Wow. Like what a story. As we wrap up this interview, is there, what’s your best financial advice for another early-career PhD?

30:21 Jackie: Probably to actually have long-term financial goals. Because having something you’ve got your sights on helps a lot when you’re coming up with like, if you’re, if you’re trying to stop spending money or trying to budget and keep to a budget or whatever it is, having something in mind that you’re going for helps a lot. Because we got a lot more conscious about what we were doing with money when we were like, Oh, we have a baby and we want to move and we want to get a house. We started paying a lot more attention to what we were doing with our money. As the second thing, don’t actually be afraid of investing money in the stock market or mutual funds because in a good year, that can actually make you quite a lot.

31:01 Emily: Yes. We also made some investments in a taxable account that has grown quite a bit in the last decade, I guess. It’s actually part of our house down payment of money. Now it’s been allocated in that direction. I of course like need to say like past performance is no indication of future return. So like this was a great, you know, three or so year period where you got to do this, it’s been a great time for me investing, but you know, this ride is not going to continue forever. And so I think what you were just saying, like if you have a specific goal for your money, like think about the timing and think about how much risk you want to take with it. And if you’re flexible about it, like the house was not necessarily quite, you know, a goal on your horizon yet, it makes sense that you would, you know, invest at that time. But once you have the goal in mind, like really think about, okay, do I need the money, do I need to take it out of the market now, do I need to, you know, go a little bit more conservative in the investments because you can hit a bumpy period and then not have the time you need to write it out. But if you’re flexible, keep the money invested, then you know, you can go for the higher return over time.

32:03 Jackie: Yeah, we actually lost about $10K right before we bought the house because Trump started a trade war with China. We were like yeah so I guess we should pull this out of the stock market.

32:13 Emily: It’s really, really hard to time the market. Yes. Well, great lessons here and thank you so much for sharing, you know, again, the lifestyle design, the frugal living, the goals. I think it’s, you know, a wonderful story and well illustrated for my audience. So it’s really been a pleasure talking with you Jackie.

32:29 Jackie: Thanks. Thanks for having me on.

Listener Q&A: Tax Claims

32:36 Emily: Now, on to 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. Quote, how do I do my taxes? What can I claim on my taxes? Can I claim a laptop that I needed for school as an expense? End quote. So this is a really big question. Obviously not one I can answer in a few minutes on this podcast. So the best place to go for further resources about your taxes, especially as a funded graduate student, is my website pfforphds.com/tax. That’s my tax center from which I’ve linked all of my relevant podcast episodes and articles and videos and so forth. This answer is even too big for a set of articles. So I have created an entire tax workshop to help answer this question. The workshop comprises 11 videos, two worksheets, and one Q&A call per month throughout tax season. So if you’re interested in getting into the workshop and having a full exploration of this question, please go to pfforphds.com/taxworkshop.

33:55 Emily: Okay. The part of the question I do want to tackle on this episode is the last part. Can I claim a laptop that I needed for school as an expense? There are four higher education tax benefits. However, one of them is virtually always used by funded graduate students. This benefit is called tax-free scholarships and fellowships. I’ll tell you whether or not you can use a laptop or a personal computer as a qualified education expense for the purposes of making scholarship and fellowship income tax-free. I won’t comment during this episode on whether or not you could do it through one of the other three benefits. So how tax-free scholarships and fellowships generally works is that you have some income as a graduate student, for example, the scholarship or waiver that pays your tuition. If me mentioning scholarships as income shocks you, please go check out my further resources.

34:59 Emily: On the other side of the ledger, you also have some higher education expenses such as tuition. Now, tuition is always is considered a qualified education expense for the purposes of making scholarship and fellowship income tax-free as long as you are enrolled in a degree program at an eligible educational institution. So in the case of tuition for a fully-funded graduate student, how this usually works is that the tuition charge and the tuition scholarship or waiver exactly equal one another. And so basically use the qualified education expense to make the scholarship tax-free. So they cancel each other out. The income, the scholarship, has no net effect on your taxable income. You’ve made it tax-free. And furthermore, you can’t use that tuition charge to take any of the other higher education tax benefits because you’ve already used it for this one. Okay. So that’s generally how the benefit works.

36:00 Emily: The question that I’m drilling down to is, is a laptop or a personal computer considered a qualified education expense for the purpose of making scholarship and fellowship income tax-free? Now, please note, to get down to the question of whether your laptop or personal computer is a qualified education expense, you have to have some scholarship and fellowship income to cancel against it. If you’ve already canceled all of your scholarship and fellowship income against other qualified education expenses, like tuition and required fees, then you would not have any additional scholarship and fellowship income to try to cancel against a laptop. So this benefit wouldn’t apply in that situation. However, there are lots and lots of funded graduate students who have scholarship and fellowship income that exceed the tuition and required fees and so forth. So this question would apply to them. So is a laptop or a personal computer, a qualified education expense for the purpose of making scholarship and fellowship income tax-free?

37:04 Emily: I’m pulling up IRS publication 970 because I’m going to read the definition of a qualified education expense. Quote, for the purposes of tax-free scholarships and fellowship grants, these are expenses for tuition fees required to enroll at, or attend an eligible educational institution and course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction. End quote. The definition goes on to specify some types of expenses that are not qualified education expenses, laptops and personal computers were not included in that list. So we go back to the second half of this definition of qualified education expenses regarding supplies and equipment that are required for the courses at the eligible educational institution. They must be required of all students in your course of instruction. So the question is, does a laptop or personal computer fall under that definition? Here’s my opinion on the matter, this is not tax advice, by the way. If you can prove, if you can show in writing that a laptop or personal computer is required of every student in your course of instruction, that could be an individual course that you’re taking.

38:27 Emily: That could be the degree program that you’re enrolled in. That could be everybody in the graduate school. At whatever level, if a laptop or computer is required of all the students, then it can be considered a qualified education expense. I know that we both know that pretty much a laptop or a personal computer is required of every PhD student, especially in the time of COVID. However, you and I knowing that it’s a tacit requirement is not the same as it being an official requirement that the IRS would accept. The theory is that you, as a graduate student can go to the computer labs provided on campus and do all your work there, I guess, which obviously is ridiculous. But in my opinion, for this to work as a qualified education expense, it needs to be down in black and white somewhere that having your own computer was required.

39:29 Emily: Now I went searching to see if I could find some of these in-writing requirements. So I did a few different Google searches. Does X university require students to own their own computers? Obviously, you would do the search for just your own university. I found a really clear example at Iowa State University, page titled Computer Requirement, quote, beginning in fall, 2020, all students at Iowa State University will be required to own or obtain a laptop computer or other device appropriate to their discipline. End quote. The page goes on explaining why this requirement is in place, but having this page, you would be able to show to the IRS, Yes, I am required as a student at Iowa State University to have my own laptop or computer. It is a qualified education expenses for the purpose of making scholarship and fellowship income tax-free. Super clear. However, you will not find this kind of requirement or clear language everywhere.

40:25 Emily: For example, on the computing and information technology page on Brown’s website, it says, quote: Brown does not require students to own a computer. End quote. Of course, there’s more text on that page, but there it is, you’re not required to own a computer as a student at Brown. So unless you can find maybe something more specific to your course or your graduate degree that says something else, this would probably apply. So you would not be able to say that your laptop or personal computer is a qualified education expense. Now, as I said earlier, you know, there could be a university-level requirement. It could be a graduate school level requirement that could be, you know, for your individual department or program, even for an individual course, you know, you might find a requirement, any one of these levels. So please do look at all of those levels to see if you can find in black and white, this kind of requirement.

41:13 Emily: So for example, I searched out Georgia Tech, and I found their page titled, Required Computer Ownership, quote, all undergraduate students, entering Georgia Tech are required to own or lease a computer. End quote. So I could find that requirement for the undergraduates, you would have to search and see if they had a similar requirement for the graduate school or, you know, your degree program. I couldn’t find that. So I think that’s what it comes down to. Can you find in black and white that a laptop or a personal computer is required for you at some level by your university? If you can, it’s a qualified education expense, and you can use it to make some of your scholarship and fellowship income tax-free that was not already made tax-free by other qualified education expenses. This question showcases really well why you can’t rely solely on your 1098T to provide you with information about your qualified education expenses.

42:06 Emily: A laptop that you purchase from a retailer that’s not your university would not be reflected on your 1098T, yet, as we’ve seen under certain circumstances, it can be a qualified education expense for the purposes of making scholarship and fellowship income tax-free. There are other examples like this of qualified education expenses that don’t show up on your 1098T. So you cannot trust your 1098T alone. You have to really think holistically about what your higher education expenses were for the year, and then figure out whether they can be considered qualified education expenses. So I know that was a lot to follow, especially if you’re new to my tax material and you’ve never heard me talk about how your fellowship scholarships are part of your potentially taxable income. Again, if you want more resources, pfforphds.com/tax is the best place to go for articles and podcast episodes and so forth. But you’re going to find the really in-depth information in my tax workshop. Again, pfforphds.com/taxworkshop. I answer questions like this one once per month during our Q&A calls. The next Q&A call is coming up on Sunday, March 14th, 2021. Thank you so much to Anonymous for submitting this 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

43:34 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.

Knowing Your Worth in an Environment that Devalues Your Work

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In this episode, Emily interviews Sam McDonald, a fifth-year PhD student in informatics at the University of California at Irvine. Sam received the NSF GRFP, completed a lucrative internship at a tech company, has won multiple smaller grants and fellowships, and taught classes for additional income. Upon observing this, some of her peers questioned why she was still applying for awards. Even more light was shone on this issue when her department compiled a list of all the grad students’ income as part of the Cost of Living Adjustment protests in the University of California system; Sam was the highest-paid grad student. In response, Sam became discouraged and even stopped submitting funding applications until her advisor counseled her about knowing her worth. Sam has now come out the other side of this financial shaming experience and has great advice for anyone else questioning their worth and what they should be paid in academia.

Links Mentioned in this Episode

grad student know your worth

Teaser

00:00 Sam: Sometimes our expertise and our ability to do stuff is so undervalued. And it’s hard to measure how much you’re personally valued because you have all these different discrepancies in how different grad students are getting paid. And you really, I think just have to sit yourself down and look at comparatively, well, if I were to go into industry right now, how much would I be making? So I’d recommend the students to really go out there and see how much is my value in other places versus in grad school, where I think we have this skewed sense because of this limited budgeting construct of how much you’re actually worth.

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 three and my guest today is Sam McDonald, a fifth year PhD student in informatics at the University of California at Irvine. Sam received the NSF GRFP, completed a lucrative internship at a tech company, has won multiple smaller grants and fellowships, and taught classes for additional income. Upon observing this, some of her peers questioned why she was still applying for awards. Even more light was shone on this issue when her department compiled a list of all the grad students income, as part of the cost of living adjustment protests in the University of California system. Sam was the highest paid grad student. In response, Sam became discouraged and even stopped submitting funding applications until her advisor counseled her about knowing her worth. Sam has now come out the other side of this financial shaming experience and has great advice for anyone else questioning their worth and what they should be paid in academia.

01:42 Emily: It wasn’t until Sam brought up this topic to me, that I realized that I had my own story of financial shaming and academia. Additionally, several of my relatively well-paid grad student, friends, acquaintances, and podcast guests have told me their stipends or that they had won a fellowship, but asked me not to repeat that information. I believe this was in fear of the financial shaming they might experience from their peers. I am a big advocate of transparency around stipends and benefits, which is why I started the websites, PhDstipends.com and PostdocSalaries.com. But transparency is hindered by shame. Asking for what you’re worth is hindered by shame. Shaming someone else for their financial success doesn’t put any money in your pocket, it just discourages them and ultimately harms our whole community. I’m so pleased that Sam volunteered to give this interview. I hope her message encourages you to swing for the fences financially and to speak respectfully when discussing sensitive topics like finances. Those are great lessons for me too.

Book Giveaway

02:35 Emily: Let’s turn our focus to the book giveaway contest in January, 2021. I’m giving away one copy of the House Hacking Strategy by Craig Curelop, which is the Personal Finance for PhDs Community book club selection for March, 2021. Everyone who enters the contest during January will have a chance to win a copy of this book. I’m delighted to bring attention to house hacking, which is when you buy a home live in it and rent out part of it, thereby radically reducing or even eliminating your housing expense. It’s a new name for an old tactic that grad students and PhDs have been using for a very long time, but this book puts a highly strategic spin on it. If you’d 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 January, from all the entries you can find full instructions pfforphds.com/podcast. Without further ado, here’s my interview with Sam MacDonald.

Will You Please Introduce Yourself Further?

03:54 Emily: I have joining me on the podcast, Sam MacDonald, who is a graduate student at the University of California at Irvine and she’s here to talk with us today about kind of a touchy subject. It’s financial shaming, and she’s experienced this and I’m really just excited that she’s decided to come forward because I know that her experience is not unique. After she approached me about this topic, I started thinking and I realized I’ve experienced this. I’ve realized I know other peers who have experienced this, so she’s definitely not alone. And we’re going to treat the subject very carefully today. So Sam, thank you so much for your willingness to talk about this. I know it’s not an easy subject matter at all. Would you please tell the audience a little bit more about yourself?

04:37 Sam: Yeah, absolutely. Thank you so much for having me Emily. Like Emily said, my name is Sam McDonald. I am a fifth year PhD candidate at the University of California, Irvine studying informatics. I actually study the United States Congress and their use of constituent communication. So I’ve been back and forth in DC and in California to figure out how members of Congress use technology to communicate with their constituents and how to make it better. I have an undergrad degree from the University of Maryland Baltimore County, where I did a lot of research before going straight from undergrad to my PhD and I got a master’s along the way that I got from UC Irvine.

Funding During Graduate School

05:11 Emily: Thank you so much that overview. Super interesting subject matter, not what we’re getting into today, but thank you so much for the context. So what’s been the funding situation for you during grad school?

05:21 Sam: My funding has been different for different years. My first year I got the GAANN fellowship, which is from the US Department of Education that my department supplied to me, which was really helpful not to TA at first. Then I TAed for two years, and while I was doing that, I applied for the NSF GRFP and luckily I got it to fund my last three years of my PhD. I’ve also spent two quarters teaching as additional funding and have gotten grants from congressional research funding and travel grants. And then also I’ve worked for Facebook for an internship, so I have internship money as well.

05:54 Emily: Can you give us like an idea of much money you were being paid — and I know it might be different year to year — versus, if you’re aware of it, the baseline stipend in your department?

06:05 Sam: Yeah, absolutely. The TA baseline stipend is around $2,200 for teaching us a little bit more. And my GRFP is about $2,800 per month, just to give you a baseline ballpark for how much that is.

06:21 Emily: Okay. And it sounded like in your second year you were being funded only from TA-ships. Is that right?

06:27 Sam: Yes.

06:27 Emily: Okay. So on that year, you lived on that baseline stipend and is it every other year you’ve been above that for one reason or another?

06:34 Sam: Yeah, it’s really fluctuated for different months, depending on if I’m getting travel grants, going to DC during the summer is quite expensive, so getting additional grants for that to be moving around, but still keep my apartment in California. I think my money has fluctuated every single month, being different because of all these different activities that I’m doing in addition to this baseline salary.

06:57 Emily: That is such an interesting budgetary conundrum. One that I would love to explore, but not our subject for today. And this is maybe not super on this subject, but I’m just curious how much the internship at Facebook paid.

07:09 Sam: Let me remember. I think it was around. I could be wrong, I think it was around seven per month,

07:16 Emily: $7,000 per month?

07:18 Sam: Yeah. I think it might be a little bit higher than that. I’d have to go back and double check, but it’s definitely around that ballpark.

How Sam’s Peers Reacted to These Extra Sources of Income

07:24 Emily: Yeah. Sounds great. Well, I am of course, wanting to congratulate you on winning the NSF, gaining these other travel grants, but I understand that’s not necessarily how some of your peers reacted to you having this wonderful CV full of accolades.

07:40 Sam: Yeah, absolutely. The NSF GRFP — I want to particularly point out, I’ve had three advisors, not through my own fault, one retired, one moved, and then one picked me up like a lost puppy and she’s been great, but none of them have had funding for me, so I’ve always had to go out and get my own funding as well, which is why I was so motivated to get a lot of these grants. But I always haven’t had the best reactions to it. After I got the NSF, which is amazing and it’s given me so much more flexibility, I still had to pursue other grants for travel to DC, and then I just kept applying to more grants because it looks good on your CV. A lot of students were really supportive, but one or two would always sort of give me side comments of like, “Oh, you’re applying for this grant, I thought you already had the GRFP. Why do you need this? Why did you win this grant even though you already have these things?” So I’ve had to deal with a little bit of tension and figuring out my own worth in that process.

08:30 Emily: Yeah. How did you feel when you got those snide comments?

08:35 Sam: I felt a little bit guilty. I will say with a caveat that like I am a more privileged person. I’m white. I came from an upper middle class family. I am working in technology, so I get tech internships. I have a really supportive advisor. I live on subsidized housing and I also live cheaply because I love hiking and I bike more than I drive places. Just for context here at the University of California, Irvine it’s so expensive to live in Orange County that even the professors have their own subsidized housing on campus and there’s an entire professor community. I’ve done a lot to really sort of push myself towards getting these grants, and it kind of made me feel bad that I was getting them because I am in such a privileged position. So for a while I was feeling bad about applying to grants and had to talk to my advisor and other peers about it to figure out if I’m in the wrong here of applying for more money, even though I already have a more stable income.

09:28 Emily: So it seems like even though a lot of your peers were supportive of this and they were helping you edit your applications and so forth, a few, a minority, were making these comments. What do you think their kind of motivation was behind that?

09:43 Sam: I think a lot of students — we’ve had protests in California about this — are struggling financially in some ways, or maybe they don’t get the grants that they want, and then they’re feeling like I’m getting a lot of grants and my research is very attractive for the current context with everything going on in Congress and wanting to improve that. I naturally do have an attractive topic and I think some people feel like maybe their topics aren’t reaching that same attractiveness when it comes to advertising your own research. Also it’s hard being a grad student and I’ve worked really, really hard to have really good grants. When I did the GRFP, I went to the writing center on campus at least 12 times and had dozens of friends review it and professors review it, so I really, really take my time with grants where I know some people also can do them last minute because they’re so overwhelmed with everything else. I think it depends on the person, but it’s just the struggle a lot to get grants in the first place, I think.

10:38 Emily: Yeah, definitely. I understand that at some point, this sort of crystallized and it was not only people by happenstance noticing that you won this grant or that grant, even though you already had the GRFP, but at some point it came down in black and white. Can you tell us about that?

10:54 Sam: Earlier this year, our department got together and decided to make a spreadsheet of everyone’s income from the department, because this was part of our consolidarity with the COLA protests. And for those who don’t know, COLA stands for cost of living adjustment. Here in California there’s been a lot of protest from grad students around, the cost of living adjustment, especially at UC Santa Cruz, where a lot of grad students are spending 50 to 70% of their income on just their housing alone, because it’s so expensive to live and they are demanding to have an adjustment to their rent because they are so rent burdened. So UC Irvine and my department in particular, especially one or two students who are really involved in the unions on campus, wanted to make a spreadsheet to show how much did we all make because we needed the data in order to demonstrate how most of us are rent burdened. Even though we have subsidized housing, even though we are a tech department, we found out that 99% of us are still rent burdened just going through this. But did find out in that instance that I do make more money than everyone else in the department. And that was in black and white and that’s on a spreadsheet that’s available to all students in my department to see.

12:03 Emily: I think this is a great process to go through actually and I am very in favor of more transparency around what people make, especially in grad school, not necessarily with your name tied to it, but just what people are making and the range. I’m kind of curious about why you ended up, I guess it was because it was asked of everyone, but what the motivation was for including people who were on fellowship, especially external fellowships like yours, along with people making the baseline stipend from the department. The argument is going to be about increasing the baseline stipend, right? So is it, we want the bottom sector here, that’s just making the baseline to be brought up closer to where you are, closer to where other people who receive outside fellowships are? I’m kind of wondering what the angle is on that.

12:47 Sam: That’s a great question. When this was sent out to students, it was completely optional. You had the option of doing it anonymously. I think most of us just decided to do it publicly and to be able to share how much, and we did put specific notes for each person of like where your funding was coming from — is this the baseline, or is this with an addition to external income? Is this pre-tax, this is post tax?. So we had all those details as well and it is a good question because I think with our department particular, there is an assumption, especially in the summertime that you’re going to go out and get other sorts of funding. And they know that there are a lot of students in our department who have Google and Facebook and Amazon and other sorts of internships because we are a more attractive group for those big tech companies that overcompensate sometimes for this wealth gap and this discrepancy for teaching.

13:34 Sam: I think that was also sort of demonstrating, even if there was a baseline, how much students were maybe feeling like they have to go for these internships in order to supplement their income. And just seeing these different discrepancies of if you were lucky and privileged enough to even get an internship. There’s actually someone in our department who studies this and how to get a tech internship, and she’s really helpful, but also shows the different discrepancies that can happen for who gets it and who doesn’t. So all those details, I think, were just really interesting to sort of demonstrate how broad the ranges and incomes in our department, just for students.

14:06 Emily: Yeah. It’s a super interesting project. I’ve actually recently heard of another, not related to the California specific protest, but another department where students took this on and used it as a negotiation tactic, as in a sense collective bargaining, although they were not in a union. So it can be a really powerful exercise. And what happened with either your peers or with your own feelings about this after the spreadsheet is out there?

14:28 Sam: The spreadsheet was out there during the pandemic, so I haven’t seen much of my peers in person, so there’s less discussion that I can have with them. Definitely for me personally, it did really two main things for me. First, it really sort of solidified this idea that I do make more money than everyone else in the department, and sort of feeling a little bit shameful and a little bit uncomfortable with that, but also at the same time, recognizing that I have a privilege to have these sort of grants and I’ve worked for it, but I’ve also been very lucky with some of these grants. And because of that, I do feel like I have a responsibility to share that and make that transparent and advocate for the people in my department who don’t. So on the one hand, it does make me uncomfortable to come out and say like, “Oh, I make a lot of grant money and I do a lot of other things to supplement that money in different ways, but also I am privileged enough to share this with you to show these discrepancies and make sure that we’re all coming up to a baseline.” And even before I had my tech internships, despite getting all these grants, I was still technically considered rent burdened. It’s kind of funny to show that you make more, but we’re all still in this sort of struggling standpoint, so it doesn’t really help to have as many tensions, in-fighting, I guess, as much as it is to collectively work together.

Continuing to Apply for Additional Grants

15:38 Emily: How did you feel regarding going after more funding?

15:45 Sam: That was a little bit hard for me. I had to talk to my advisor once about this and really figure out what’s the best path, because I did have to tell her once that I felt uncomfortable applying for more because I’ve gotten some of these comments. I was like, “I have enough, I’d be okay.” And she really sat me down and made sure I remembered what my worth is and that grants are really important for CVs if you’re wanting to go into academia, and that you should not stop applying for things just because you have some money.

16:13 Sam: I have a great example of this where actually one of my funders, the democracy fund in DC helped me fund an entire summer in DC and they asked me, “Okay, how much do you need to do your research? And I was like, “okay, well I need this much for housing and this much for food and this much for a plane ride and some Metro and like, that’s it.” And they came back to me and said, “This is great, but you forgot to mention your actual value in terms of the work that you’re doing for this grant, so we’re going to double what you’re asking for.” That just blew my mind because it was the first time that someone came to me and told me you’re worth way more than you’re asking for and you need to make sure that you’re asking for these things at a higher level. I think even now I am getting these grant fundings, it doesn’t necessarily mean that that is my baseline worth just because I get something. And that took me a while from my advisor really encouraged me to keep applying for grants coming to me and telling me that I’m worth more than what I’m asking for.

Commercial

17:06 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.

Understanding the Value of Your Work

18:12 Emily: I’m really glad that you can share that with our listeners, because some other people in the audience might be feeling the same way — sort of limiting themselves and saying, “well, I shouldn’t go after more. I shouldn’t do this. I shouldn’t do that.” You had these great mentors in a sense in your life to help you push back against that, but maybe someone in the audience doesn’t have that and they’re hearing this line of thought for the first time, which is really wonderful, so I’m really glad you’re sharing that with us now. Is there anything else that you want to say about like understanding your worth? I mean, that is not just in the context of fellowship and grant applications, but just for graduate students more broadly, this is a very tricky topic to value yourself.

18:53 Sam: Yeah, absolutely. I think sometimes our expertise and our ability to do stuff is so undervalued and it’s hard to measure how much you’re personally valued, right? Because you have all these different discrepancies and how different grad students are getting paid. How much you’re worth versus another grad student. You really, I think just have to sit yourself down and look at comparatively, if I were to go into industry right now, how much would I be making? How much is my value in terms of giving to different nonprofits or companies, which was what I was doing. I was technically partially consulting, but mostly had a grant to do my own research. Having those opportunities and making myself step out there and ask other people, “how much am I worth to you?” I think that makes a big difference, so I’d recommend to students to really go out there and see like how much is my value in other places versus in grad school, where I think we have this skewed sense because of this limited budgeting construct, of how much you’re actually worth.

19:46 Emily: I think that’s a really excellent point and I want to underline it that who is paying you, that context, matters a lot in how much you can command for your value. Your value can be the same in the academic context, in the private sector, or in the nonprofit sector. But what you can get paid is vastly different from those different contexts and if you stay stuck in just the academic context, you’re not really going to realize all those different price points, in a sense, for your work.

20:16 Sam: Yeah, absolutely. I’ve come across different discrepancies, even internally, because in addition to having the GRFP and doing my research, I was extremely lucky and my department gave me a chance to teach twice, the first time being right at the onset of the pandemic. And me never teaching before and then teaching 140 students online wasn’t the funnest, but it really showed me how much they were also paying. And actually apparently we get paid more as grad student lectures than adjunct faculty do, which is kind of crazy think about because we have a better union. Recognizing the transparency that “wait I’m a grad student, but I make more than an adjunct faculty.” That’s just telling me that the value system inside the university is skewed and I really shouldn’t use that as a metric for my worth and that I really need to go outside the university bubble to understand that metric at least for grad school.

Financial Transparency in Academia

21:10 Emily: I understand we’ve been in COVID times, you haven’t seen much of your peers so I don’t know if you’ve actually, now that you have this new mindset around going after things and valuing yourself, maybe you haven’t had a chance really to speak with your peers and receive a comment and be able to respond or push back against it. Certainly tell us, have you had that opportunity at all?

21:33 Sam: No, I really haven’t just because everything’s remote and most of the stuff is just friendly, get togethers and things like that. There was a little bit of work with COLA still going on, but that’s a little bit hard with everything being remote and kind of put off to the wayside, I think, in a lot of people’s minds.

21:48 Emily: Definitely. I guess maybe in preparation for you once again seeing your peers in some months, maybe — we’re recording this in January, 2021 — is there anything that you think that you’ll say to your peers at that time, or maybe something you wished you could go back and tell them, earlier on in this process when these comments started?

22:09 Sam: Yeah, absolutely. I mean, the biggest takeaway that I’ve really found, especially contributing to this data when it comes to COLA is that we’re really all in this together. And it’s really important to be open to this process, to share it with other grad students and to not really react negatively when other people are potentially making more than you are applying for more grants than you are, because everyone’s so different. Especially even in my department — my first advisor was an anthropologist, my second was a computer scientist, and my third had a business degree a PhD. Even in that, the professors in our department have different scales of finances just because they come from different backgrounds, so it’s all a little bit hodgepodge anyways.

22:46 Sam: But most importantly, I think it’s important to be transparent. I had an occasion where we had new grad students come into the department, like accepted grad students, and they had a panel of current grad students answering questions about what it’s like living in Irvine. What is the rent like? What is it like being a student and what type of classes do you take? And one of the accepted students asked “what is your stipend like, and how much is it to live on campus?” And none of the other students on the panel were directly answering the question. They’re like, “Oh, it’s enough. It’s reasonable.” And I was like, why aren’t you giving people a number and I just straight up said, make this much money. This is how much I pay for rent. And this is for this type of housing. And they’re like, “Oh, thank you. That’s really helpful.” And I think there’s a stigma still even just to share for accepted students, this is how much you’re actually going to make, because there’s some uncomfortableness with this transparency that I think really needs to be broken because it really does help us collectively to have those discussion.

23:46 Emily: Yeah, thank you for that. And of course, I also contribute to and promote this process through my website, PhDstipends.com and PostdocSalaries.com. That’s an anonymous way that you can share what you’re making, what the funding sources and so forth, because that is also super, as you were just saying, important in this context. Are you making a baseline stipend? Do you have supplemental money coming in from XYZ, other sources? Are you taking out student loans to supplement the income because the rent is so high? Whatever the situation is I’m definitely in favor of being more transparent about it. But I certainly understand the discomfort because this is not, of course, something that exists only inside academia, only in our context, but in our entire society. Employers, even if they can’t actually disallow it, certainly discourage employees from sharing their salaries with one another. It’s really an entire society wide situation, so it’s really commendable for you and also for your peers that you are doing more to throw back the curtain and say this is what it is and we want more and using it as like a bargaining tool. It’s really awesome.

24:49 Sam: Yeah, absolutely. And especially, I think now that we’re having more conversations about minority students and getting a leg up for a lot of people who are underprivileged, it helps to know where the line is and what they should be meeting equally. I work a lot with Congress and there are so many debates about congressional staffers, because staffers are woefully underpaid, but there’s no transparency as much. There is some in documentation about knowing people’s worth in that context. So I’ve just been around these discussions and I feel like the more that we can pull back the curtain, the more we can level up people, especially people who are underprivileged in the beginning and even that playing field.

Advice for Other Early Career PhDs

25:22 Emily: Yeah. Thank you so much and thank you for your willingness to come on the podcast and talk about this because it’s a bit of an uncomfortable process. As we wrap up the interview, the question that I like to ask all of my guests is what is your best financial advice for another early career PhD? And that could be something that we’ve touched on in this interview, or it could be something completely different.

35:43 Sam: Yeah, absolutely. Going along with the theme here, apply to everything, even if you think you have enough, because you’re often worth way more than you think that you are, things cost more than you think they’re going to be in the beginning. That’s always something that happens too. So I think that’s really, really important and always being smart with your money. I’m personally a big fan of the FIRE method. I barely eat out. My activates that I love are cheap, so I’m just naturally in that mindset of being more financially savvy than I think a lot of people want to be, but that’s okay, and that’s my position. Not everyone needs that. But I think the more that people understand to apply and to really say “I could have more and I can really utilize this to my own advantage.” Take advantage of it. There’s so many grants out there that barely anyone applies to and those micro grants really can add up. Just applying for anything that you possibly can, I think is really important. And I know sometimes you get tired, especially towards the end of your PhD, like I am now, but it definitely makes a huge effect in the long run, especially you want to talk about compound interest and investments and things like that. Absolutely doing those as much as possible in the beginning.

26:49 Emily: Yeah. Thank you so much for that advice. And I totally agree with that. I want to emphasize two components of that. One is, like you were just mentioning, kind of the only way you can get a raise as a graduate student is to win outside funding. And whether that is outside funding that replaces your stipend at a higher level or supplements a stipend that you’re receiving, maybe like you mentioned earlier, taking on extra teaching work could be another way to do that. But the fellowship and grant applications are really the way to do it without actually adding more work to your life, so it’s kind of the equivalent of getting raised rather than just taking on more hours of work. A lot of paths to higher income are barred for graduate students, but this is one that is available.

27:30 Emily: The second thing that I wanted to emphasize is, you mentioned earlier that your advisors don’t have funding for you, so this was completely your responsibility. I think that’s part of this mindset of you know that you have to provide for yourself, but I just want to emphasize for people who do have funding to fall back on as a research assistant or teaching assistant, whatever it is for their advisors or their departments, the word guarantee might be in there, but what does it actually mean? And the word guarantee you might not be in there and what does that mean? I had a friend for example who had the NSF GRFP and that finished and she still needed another year or something. And because of a situation going on with her advisor not providing funding as he had in the past, she was left unfunded for a year. That was not something she ever anticipated. That was not supposed to happen in the way the funding typically went in this department, but it did happen. She had to negotiate and say, “you know what, I brought in the GRFP, you can give me another year. I brought in three years of funding.” But that wasn’t necessarily guaranteed to work.

28:37 Emily: In a sense, in academia you’re a little bit like an entrepreneur. You have to hustle for your own money. Yes, you’re supposed to be paid by someone, but how secure is that really? It feels to me a little bit more secure to be applying for lots of different things, have a lot of irons in the fire. And if those don’t work out, at least you can say to your department or to your advisor, “I have applied for four grants in the last year. Hey, they didn’t work out, can you give me some bridge funding?” There’s a way to argue about that too. I think there’s a lot of merits and a lot of different directions for applying for as much as you possibly can. I’m really glad you came back around to that position after having these conversations with your advisor and so forth.

29:19 Sam: Yeah, absolutely. And I love what you said about thinking about it as a raise. Especially as you’re getting more and more in your PhD, you are more valuable, but your finances stay exactly the same. I love the idea of thinking about applying as a way to show that your worth increases over time. Thanks for sharing that too. Yeah.

29:35 Emily: Well, thank you so much for joining me today for this interview, Sam, this was really enlightening.

29:39 Sam: Yeah, absolutely. Thank you so much!

Listener Q&A: Investing

Question

29:42 Emily: Now onto another one of our new segments, the listener question and answer. Today’s question actually comes from a survey I sent out in advance of one of my university webinars this past fall, so it is anonymous. Please note that nothing I say in the segment or anywhere else on the podcast is investing advice.

Answer

30:00 Emily: Here’s the question: How do I invest? I don’t have time to monitor the stock market constantly, but I would like to have at least a small amount of money invested.

30:10 Emily: What a wonderful question and I am so on board with the sentiment here. I also do not have time to monitor the stock market constantly. Who does? Honestly, I feel like people who do have the time and inclination to constantly monitor the stock market should just make that their full-time job, like go become a fund manager and get paid millions of dollars to do so instead of just doing it for your own paltry assets.

30:33 Emily: The good news is that spending that kind of time on investing is absolutely not necessary. In fact, in 99+% the cases it’s actually counter-productive to do. Let me introduce a term to you: passive investing, also known as index investing. Passive investing is the most effective least expensive and most time efficient manner of investing.

31:00 Emily: The real quick gist of passive investing is that you buy one or a small number of index funds and you hold those funds in your portfolio long-term in a percent-wise allocation that you have determined in advance. Index funds themselves are collections of, we’ll stick with the stock market, collections of stocks that reflect a broad market sector. So in these funds, the fund manager is not trying to pick the winners and dump the losers. They’re just trying to buy either everything or a representative selection of everything available in that market sector. My go-to example is always the S&P 500 index. When you listen to the stock market news of the day, you’re going to hear how the S&P 500 and the NASDAQ and the Dow Jones did. So those are three indices that represent how the market overall is doing. The S&P 500 has a really clear definition. It’s simply the 500 largest companies that are traded on the US stock exchanges. So if you were to purchase an S&P 500 index fund, you would be a part owner, a very small part owner,of all 500 of those companies. So that represents the market sector of large cap companies, the largest companies. So basically the learning and the research that you need to do is to understand what passive investing is, what index funds are and which index funds you want to purchase and in what allocation. This might take you a few hours of upfront investment of your time, but it’s not something that you need to put time into on a continual basis. Once you’ve decided on your strategy, you basically just let it ride. Another really easy set it and forget it way of accomplishing this is to use what’s called a target date retirement fund, which is in itself a collection of index funds in a percent-wise allocation like I described earlier.

32:53 Emily: So where to go next for resources. I actually have a set of webinars inside the Personal Finance for PhDs Community explaining what passive investing is, what index funds and exchange traded funds are, how to choose them, which brokerage firm to use for your investments, whether you use an Roth or a traditional IRA, all these kinds of questions. So if you would like to view that webinars series, simply join the Personal Finance for PhDs community at pfforphds.community. And that webinars series will be immediately visible to you. I also have inside the community, a challenge that I ran a few months back on opening your first IRA. So you might be interested in following the steps of that challenge, which point to certain webinars to watch in a certain sequence and other steps to take. That might be relevant for you. Or you could do something like read a book such as the Simple Path to Wealth by JL Collins.

33:46 Emily: Now, another element to this question is that you mentioned you want to have a small amount of money invested. You might be tempted to use. What’s called a micro investing platform. Those are brokerages that specialize in helping people with zero capital upfront get started with investing. Some names you may have heard are Acorns, Robinhood, M1, these kinds of platforms. I want you to be really careful when you’re choosing the platform to go with. Ideally, you would only pay the fee associated with the ETF itself that you end up buying. You wouldn’t be paying fees on top of that. For example, some of these platforms charge like $1 per month to be invested with them. I want you to avoid a platform that charges, that kind of fee. Because when you are investing only a small amount of money, a fee of $1 per month actually takes a big, big bite out of that money. So if you go with a micro investing platform, make sure it’s one that doesn’t charge any fees on top of the underlying ETF fees.

34:46 Emily: You also should check whether the platform offers IRAs, individual retirement arrangements. It might not seem important when you’re just starting out with investing, but retirement investing should probably be your top investing goal when you’re starting out, because it is such a large need, even though it’s a long time away. For example, Robinhood fit some of the criteria I mentioned earlier — they don’t charge you fees on trades, you can buy ETFs through that platform, but they don’t offer IRAs, at least as of the time of this recording. It’s very worthwhile to check out what are called the online discount brokerage firms, like Vanguard, Fidelity, and Charles Schwab. Those are kind of my go tos for being able to avoid higher fees that might be charged by other companies. However, the issue is that sometimes they have minimum amounts that you need to invest to get started, like maybe a thousand dollars, which of course is not at all a that you would have that much money. So in my mind, those are the places to get to, eventually maybe when you’re starting out or maybe later on. But if you need to start out in a micro investing platform or a robo-advisor at the beginning, that’s perfectly fine.

35:51 Emily: I think once you really understand the concept of passive investing and how simple it is, how easy in a sense it is to build up wealth over the decades, you’re going to want to have more than a small amount of money invested. You’re going to be really motivated to increase that savings rate and a discount brokerage firm is a great place to be when you’re saving a hundred dollars a month or more, or have a thousand dollars in your account already. Personally, when I first opened my IRA and started investing, I went with Fidelity because at that time they allowed me to open an account with no money up front, as long as I set up a recurring savings rate of at least $50 per month. So I did that for a little bit over a year until I had $3,000 in my IRA. And then I transferred my account over to Vanguard. They had a $3,000 minimum at that time, and I’ve been with Vanguard ever since. So I hope that is a start to answer your question and that you have a place to go for our further resources, either with me or other people who talk about this. And I really want to encourage you at the start of this investing journey, so I do hope you’ll take that next step. 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 listeners.

Outtro

37:10 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.

What Happens When Personal Finance Education Becomes Your Hobby

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In this episode, Emily interviews Laura Frater, a first-year PhD student at the University of California at Davis. Laura grew up in a low-income family in Scotland and first came to the US a few years ago for a master’s degree. She went from having “zero financial literacy” at that time to being highly engaged with her finances now, and even considers personal finance education to be her hobby! Laura details the top seven tips for financial success that she has implemented over the last few years, including one just for international students. She continues to discover new strategies and experiment with her finances.

Links Mentioned in this Episode

financial education hobby

Teaser

00:00 Laura: You don’t have to sort of wait to be an adult to do those things. Like you are an adult already in grad school, and you can do other things that adults do with their money for sure.

Introduction

00:14 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 two, and my guest today is Laura Frater, a first-year PhD student at the University of California at Davis. Laura grew up in a low-income family in Scotland and first came to the U.S. a few years ago for a master’s degree. She went from having zero financial literacy at that time to being highly engaged with her finances now and even considers personal finance education to be her hobby. Laura details the top seven tips for financial success that she has implemented over the last few years, including one just for international students. She continues to discover new strategies and experiment with her finances. For season eight of the podcast, I’ve shifted up the format. There are two new short segments, one before, and one after the interview. I hope this new format will encourage more interactions between me and you, the listener.

01:17 Emily: January is always an exciting month for Personal Finance for PhDs. First, it’s a brand new year, so a lot of people have a heightened interest in personal finance at this time. They want to start budgeting, increase their savings, open IRAs, et cetera, and I love that energy. Second, tax season has started. I rarely file my own tax return before April 15th, but I’ve learned that a lot of people file in January to get their tax refunds ASAP. Therefore, I’ve already kicked off my tax support for your 2020 return, which you heard about in last week’s episode. Third, I view January as the start of admissions season for PhD programs. Although, I know some people receive acceptances even earlier. So, it’s a thrilling and hopeful time of year for prospective graduate students, and a perfect time of year for them to connect with my material.

02:10 Emily: If you would like to learn more about personal finance and want a friendly environment in which to ask questions and discuss topics, including all of the ones I just mentioned, please consider joining the Personal Finance for PhDs Community at pfforphds.com/community. If you know that you want support in accomplishing a big financial goal this spring, I recommend my group coaching program, The Wealthy PhD. You and I will meet one-on-one to identify and plot a course toward a big financial goal. Past participants have opened IRAs, set up systems of targeted savings, started budgeting, and systematically implemented frugal tactics. Every week for eight weeks, you will participate in a small accountability group that I facilitate that will keep you on track to meet small weekly goals. The next round of The Wealthy PhD starts in mid-February, and enrollment is open now. Visit pfforphds.com/wealthyPhD to learn more.

Book Giveaway Contest

03:12 Emily: Now, onto one of the two new segments, the book giveaway contest. In January 2021, I’m giving away one copy of The House Hacking Strategy by Craig Curelop, which is the Personal Finance for PhDs Community book club selection for March 2021. Everyone who enters the contest during January will have a chance to win a copy of this book. I’m super enthused for my audience to learn about house hacking, which is when you buy a home, live in it, and rent out part of it, thereby radically reducing or even eliminating your housing expense. In fact, I’m bringing back a special guest from the past to discuss the strategy with me in an episode that will be published at the end of January. We’re going to tell you how even a grad student in certain housing markets can apply the principles explained in this book. And certainly, it’s even more viable if you have post-PhD income. If you’d 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 January, from all the entries. You can find full instructions at pfforphds.com/podcast. Without further ado, here’s my interview with Laura Frater.

Will You Please Introduce Yourself Further?

04:29 Emily: I am delighted to have joining me on the podcast today Laura Frater. She is a first-year PhD student at UC Davis, and she’s going to be kind of telling us the arc of her financial story, starting as international student, and now, you know, in her PhD. And she has a great story to tell. And she’s going to be specifically telling us a few different strategies that she’s used, seven different strategies she’s used, in the course of this time to kind of get her financial life in order and now going into a PhD program. So Laura, it’s really a pleasure to have you on thank you so much for volunteering. And would you please, you know, tell the audience a little bit more about yourself?

05:10 Laura: Yeah, sure. So, my name is Laura and I just turned 29. I am originally from Scotland. I was born and raised in Glasgow and I moved to the U.S. when I was 25. So, it’s been about four years. I originally came to do my Master’s in English in New York city. And after four years of being there for very long years, I moved to Oakland, California with my husband about three months ago. So yeah, I’m still settling in and learning how to finally manage my money properly with my brand new graduate stipend, which is exciting.

Funding Journey Over the Past Four Years

05:43 Emily: Great. And so just to get a little bit more detail there, was your master’s funded? Were you paying for yourself? What were the financials during that period?

05:51 Laura: Yeah. Good question. So, I was there as an international student but it was a private school, so I had a full scholarship. I had all my tuition paid for, and then I had a fairly modest bi-weekly stipend over the course of two years. So, obviously it wasn’t a lot of money, but it kind of paid for things like travel. And my now-husband was a rock star and he took care of things like rent. So, I was definitely in a very fortunate situation overall.

06:21 Emily: And did you finish your master’s within those two funded years? And what did you do for the next two years? We’re talking about a four-year period, right?

06:28 Laura: Yeah. Four years. So the first two years, yeah, I started 2016, finished 2018. And then I went onto what’s called the OPT visa, which is like a temporary work visa for international students. So I spent about a year working on that visa, and long story cut short, I got married and applied for my green card and became a permanent resident last year.

06:53 Emily: Okay, gotcha. So, I wanted to give the listeners as well, a flavor of like your current financials. So, you came to the U.S. What was your financial life at that time, and what are you doing now? Like sort of where are you now? And then we’ll talk about, you know, how did you get from point A to point B? So, you know, what was point A, what’s point B like?

07:11 Laura: Yeah, well, point A was just a total lack of awareness with money. So, I really, I didn’t really grow up with any financial literacy, and I grew up in a very, just like a low-income household, basically. So, money was just always associated with stress and limitations. So, I didn’t have any knowledge about managing it effectively. So I would, I tended to, you know, pay for everything I needed to pay for. And then I would try and like hoard all my money and save everything, but that’s just not realistic. So, it was kind of a mess. And when I was not able to work last year waiting for my green card, I just made a huge point to learn about finances and become as aware as possible about every dollar and where it was going. So, today it’s just much more about engagement and seeing it as a way to feel more free, basically. As free as you can be in graduate school.

Financial Strategy #1: 50-30-20 Rule

08:08 Emily: Okay. So, it’s really been a lot of like sort of mindset evolution then during that period of time. And it sounds like you went about it also very intentionally, at least for a period last year. So, let’s dive into the strategies then. You have six strategies that will be sort of applicable to hopefully anybody and then one that’s particular for international students. So, we’ll talk through each one of these. So, first strategy, what is it?

08:31 Laura: Okay, so this is something I definitely picked up listening to your podcast. So, knowing exactly where your money’s going and what the goal of those segments of money actually is. Again, this is something I learned from you was just the 50, 30, 20 rule. So, 50% goes towards everything you need to pay every month, like rent and utilities, and then 30% is for your wants–things that you want to spend money on–and then 20% towards your savings goals. So, just having those goals clearly outlined has been the biggest thing.

09:04 Emily: Yeah. I definitely like that touch point, which is why you’ve heard it from me before, but I’m curious how it struck you living in New York and now living in California. Because sometimes it’s really hard to hear that living in a high cost-of-living area.

09:17 Laura: Yeah, it’s definitely challenging. And I should definitely preface this by saying that, you know, being married, I share my expenses with somebody, so I have a benefit in that sense, for sure. We talk about our money really openly and we both stay within that 50, 30, 20 limit. So, we really talked about the kind of lifestyle that we could number one afford, and then, okay. So, were we willing to make certain sacrifices to live where we ideally wanted to live? So yeah, we probably spent about a month deciding on, you know, where we wanted to live, the cost of the apartment, did we want a car. All those kinds of things. And yeah, we definitely live, we live in Oakland, so it’s very expensive, but it’s a trade-off. We’ve had to be at peace with that choice.

Impact of Location and Commute

10:05 Emily: And let me, I’ll just ask also, so you’re living in Oakland, but you’re going to UC Davis, and those are not the same city. So, is there like, are you commuting or is it different now because maybe you’re remote or what’s going on with like your choice of location?

10:19 Laura: Yeah. So everything is online at Davis until next year. So, our lease in Oakland ends October, 2021. So, we definitely have the option to go closer to Davis if we want. But honestly, my schedule is very flexible and I only have to be up there twice a week, on average, if I was going up there. So, I don’t anticipate us moving somewhere cheaper so that I can be closer to Davis. My husband works in tech, so he has to be in San Francisco. So it’s really, we have to prioritize how much he has to commute, because that would be like an everyday occurrence almost for him.

10:56 Emily: Gotcha. Well, we’ll see how all of this evolves. You know, we’re recording this interview in November, 2020, and the future is very uncertain. I guess you at least know when your remote period will definitely go until, if not maybe further. Yeah. So, we’ll see how that goes. Anything else you want to say about that? The strategy of like, of budgeting and balancing?

11:17 Laura: I mean, I think you just have to like, not be afraid of the numbers and, you know, we really sat down, especially with the rent. Coming from Manhattan, we thought there’s no way it can be more expensive than Manhattan. And it was. So, you know, this is down to my husband’s great sales skills. He really haggled with the building and got us a really good deal. I wish I could give advice on how to do that, but I don’t. You might be better to interview him for that. So, we got about 12 weeks off of our rent. So, three months of this year we don’t pay for, and we managed to get free parking in our building as well for a little bit. So, negotiation skills is probably my next financial education to-do list point.

Financial Strategy #2: Side Hustles

12:01 Emily: Yeah, that’s incredible. And I think that’s both, it’s just good to know that it’s possible and some people are successful with it. Even if you don’t know, like particularly the script that he used or whatever, you can look up those kinds of things. But I am thinking that, you know, being in San Francisco adjacent kind of area, and also during COVID times, you know, the willingness to negotiate on behalf of the company that’s running the building or whatever is probably increased. So, it’s worth trying whenever, but I suspect your success rates are going to be higher now than they will be a year or two from now or whatever. Okay. So, what is strategy number two?

12:38 Laura: So, number two is something, again, that you’ve talked about a lot is side hustles. So, I’d always aimed to find a side hustle during grad school. You kind of have to. But, I ideally wanted something that was remote during this weird time. So, I was lucky to get, it’s a grading job with UT Austin. So, you’re basically grading papers for this program that they do for high school students who are taking college-level composition classes. And I’m not totally sure how I feel about it yet. It’s definitely a lot of work for the money that you make. So, that’s something to probably think about. You know, maybe have a goal in mind in terms of how much money you want to make off of your side hustle, how much you need to make, and then decide whether that side hustle is the best fit for you. So, I’m going to do it for a few more months and see what else is out there. But I would never say no to even like a little bit extra money in the week on those stipends. So yeah, definitely go for a side hustle if you can.

13:37 Emily: Yeah. So, I do want to note that you’re saying that you did the side hustle post-getting your green card, because you’re not allowed to have an income that you are working for as an international student. So this is only for, you know, people who are citizens or residents and also even a subgroup within that of people who are not going to be risking their funding by pursuing a side hustle or, you know, their relationship with their advisor or whatever. So, it sounds like the kind of the one that you chose is probably quite flexible. Maybe the pay is not great for the hours, but you can fit it in around the other things that you’re doing.

Flexibility and Fellowships

14:09 Laura: Yeah, totally. It’s definitely very flexible and yeah, that’s a good point. I’m on a fellowship. So, I cannot work at UC Davis or any of the UC campuses, but I’m allowed to work anywhere else off those campuses. So, this was actually recommended to me by UC Davis and I felt pretty confident going into it that it was, you know, a good space in which to work. So, yeah, I think keeping an eye on how much I’m probably making per hour, given how much work I’m doing for them. And I love the job itself. I just want to be careful that I’m not giving too much of my time for, you know, a really low rate of money. So, that’s something to definitely be aware of.

14:48 Emily: Yeah. I’m really glad that UC Davis actually gave you that clarity around what the policy was, because I don’t know that that’s actually that common. So like, here’s what’s not allowed, here’s what it is allowed. Oh, recommendations for what, you know, what work you might do. I know I had a side hustle that was doing editing for journal articles for a while after I finished my PhD. And I similarly had to be really conscious and sort of suppress my like perfectionist tendencies, because I was just like, for the rate that I’m being paid, I need to be very careful how much time I spend per paper. And like, yeah, maybe I’m just going to get it 90% of the way there. That’s okay. That’s good enough. And not, you know, toil over every like last detail. So, yeah. Great tip to be conscious about that. Anything else you wanted to add about side hustling?

15:32 Laura: So, one thing I am doing right now is I’m almost a qualified yoga teacher. So, that is something I really want to pursue. And I don’t know enough about setting up my own business yet and things like that. You obviously want to make sure that you’re not, you know, you want to be paying taxes and things like that. That’s really important. But the yoga stuff is just something I love to do. And I started becoming a teacher actually during COVID. Like right at the beginning, there was a really great online course. So things like that, you know, try and make those side hustles fit in with your schedule. Don’t be like missing time on studying just to make money if you can avoid it. So yeah, just looking for flexibility and not being exploited is the most important thing, I think.

16:15 Emily: Totally agree with both of those. And I’ll also add, I really like that you are just experimenting with things. You know, like you aren’t holding onto like, what’s exactly the most perfect thing, and that’s the only thing that’s going to be acceptable. Or you don’t have these limiting beliefs around, I’m not allowed to do anything. I can’t do anything. I can’t fit it in, I don’t have time, I’m not allowed. Yeah, you’re just trying things out and I think that’s a great approach.

16:36 Laura: Yeah. It’s definitely fun. And you know, again, podcasts like yours, you know, finding out from other people what they’re doing. It doesn’t have to be a conventional, probably pretty dull side hustle. Like, you know, try and enjoy your life as much as possible because I think these years only get more intense as you keep going with the PhD. So, try and do something that is good for your soul as well as your bank account.

Financial Strategy #3: Check Your Bank Account Regularly

16:58 Emily: Yeah, that sounds good. Okay. Let’s talk about your third strategy.

17:03 Laura: Yes. So, I think just checking your bank account every single day is, it seems like the most simple advice, but something that I never used to do. I would just, you know, live in denial and not check it for days at a time. So, like take advantage of the apps from your bank. Like they need to be good for something. So, have it on your phone, check it every day. And I also try and look at the last five to six transactions. And I try and work out, are there any patterns in my spending? Are there things that I’m wasting money on? But that also helps you figure out what you actually enjoy spending your money on in the first place, so you can be prepared for it. And it also will just show up any kind of like random transactions that were maybe incorrect, which actually do happen. Like you think that they won’t, but they definitely do.

17:51 Emily: I have an example of that actually, that I was looking at our, my husband, I share a Mint account. I was looking at it the other day, and I saw a charge from Amazon Music for like $15. And I was like, Hmm, husband, did you subscribe to Amazon music without discussing that with me? And he goes, Oh, no, like weirdly my phone was like freezing up and I thought I tapped something and then I wasn’t sure. And so anyway, it was a total mistake that he, you know, accidentally subscribed and, and he, you know, he talked with them and he got it reversed and it was totally fine. But if we had gone a month or two without like catching that, or if it had just gone into the, you know, swept away with all the other transactions, then, Hey, you’re out $15 every single month. Not just one time.

18:32 Laura: Yeah. It’s a lot of money. I mean, also like looking for those free trials that you forget to cancel. Happened to me twice this month. I was so embarrassed because I pride myself on not letting that happen, but Microsoft charged me 75 bucks, which, you know, I would have gotten that free through Davis and I forgot that I paid for last year, and Hulu as well. So yeah, we still have it for one more month, but not worth it at all.

Monitoring Short-Term Savings Goals

18:56 Emily: So, what else do you get out of the particular strategy of checking every single day? Like, are you, I mean, you mentioned finding patterns in your spending, which I think is super valuable. What else are you getting out of that practice?

19:09 Laura: I think the other thing right now that I’m getting out of it is checking on my short-term savings goals, which I’ve actually established, which is really great and has lowered my anxiety. Also like looking for avoiding any bank fees, which are really, really tricky, especially with someone like Wells Fargo, who we can talk about that later, maybe, but like that bank is terrible about those fees. Checking for example, how many times I’ve used my debit card to make sure that I avoid the monthly fee. Things like that, that I never really did before. It’s just another way to be as fully engaged as possible with my spending.

Financial Strategy #4: Make Financial Education a Hobby

19:47 Emily: Alright. So, what’s your fourth strategy?

19:49 Laura: Fourth is just making your financial education a hobby. I guess that’s the best word to describe it. I used to view finances and the education around it with a lot of fear and anxiety, but finding fun ways to learn about it has really changed my life in so many ways. For example, your podcast. I’ll go for a walk by my apartment. I’ll go running, I’ll go to the gym. And I just pick an episode and then I, you know, listen to it and I make notes on it afterwards, normally. Getting an audio book is a really good idea as well. Going on YouTube and just sifting through different people’s videos. There’s definitely some weird people out there for sure. So you can, you can judge that as you, as you figure your way through it. But just making your education a part of your lifestyle, I think is really important.

20:37 Emily: Yeah. I definitely also went down this road with when I was sort of getting, I had been learning about personal finance through reading some books and stuff, but then when I got a little bit interested and more engaged, I was reading about a lot online and like starting to connect with bloggers and then I started blogging myself. So, there was like a community, you know, developing online around it. And I definitely would call that my hobby at that time, which of course has since become my business. But at the time it was just a fun thing I was doing like, you know, wake up, like check my email and like check my like feed for, you know, what the new blog posts are. And I really liked having that perspective from other people. I think those communities have moved more towards like Reddit and YouTube now.

21:17 Emily: It’s not so much like blogging. I mean, people still do that, but it’s not quite as huge as it was at that time. But just finding like a way that you like to consume information, like you were just saying, like audio works really well for you. Obviously, I love podcasts. So, audio works for me too. Finding a way you’d like to consume information and then a few people maybe like on whatever medium that is that you like to follow. There’s a big personal finance community on YouTube now, I know. So, if that’s your thing, like you could definitely find, you know, great influences there. And yeah, I think books still have their place for sure. And if audio books can do well, or if you have the time and capacity to read, then that’s perfect too.

Commercial

21:54 Emily: Emily here for 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 at 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 material or have a question for me, please join one of my tax workshops, which you can find links to from PF F O R P H D S.com/T A X. The first live Q&A call for my workshop on preparing your 2020 PhD tax return is this Sunday, January 17th. Also, for those of you who are paid by fellowship or training grant, the deadline to make your quarter four estimated tax payment is January 15th. If you’re not going to file your tax return by the end of January. 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.

Financial Strategy #5: Decide What Makes Your Life Rich

23:21 Emily: So, what is the fifth strategy on your list?

23:24 Laura: The fifth one is actually from a really good book called I Will Teach You To Be Rich, which was actually the audio book that I just downloaded. And one of the questions, gosh, the author’s name I’ve totally blanked on.

23:36 Emily: It’s Ramit Sethi.

23:38 Laura: So, yes. He’s really great. And I wasn’t super sure about the title at first. I thought it was maybe like a little bit crass, but he has some really good advice including sit down and decide what makes your life rich. And that doesn’t mean in terms of how much money you have for retirement or how much money you have on the day-to-day, but what do you really value and what do you enjoy spending your money on? So, that was something that I kind of made my husband and I sit down and talk about. You know, like what are our individual, you know, finance goals and our joint ones as a couple in the next five, 10 years. Like where do we want to live? Like what kind of life do we want to have for ourselves? And it’s not just helped us plan our savings more appropriately, but it’s also alleviated my personal guilt when I see like what I’m spending money on. For example, I love eating out. Like I never did it growing up and I love doing it now. And that’s part of what makes my life personally rich. So, it just helps you, I think, feel less shame if you’re spending things and you’re initially worried that it’s not appropriate. But if that’s what you value, then you should enjoy it if you can afford it.

24:46 Emily: Yeah. I think Ramit’s voice is a very unique one in the personal finance space, because he does have this emphasis on, you know, spend extravagantly on the things that are really important to you and increase your income so that you can support that. And do not worry about like, cut spending in the areas that are not important to you. I was just actually listening to him as a guest on another podcast a couple of days ago. And I think he said something like, you know, he drives a super old car still and he like, there are some areas of his life that he really does not spend on, but there are a few that he’s identified they’re really important where he spends lavishly. And so that’s, I think it is a really good perspective for someone who is like you were talking about earlier, like sort of afraid to spend money or like hoarding money that like, I can definitely see how that message could help you with your own money mindset.

25:38 Emily: I Will Teach You To Be Rich actually came up earlier on the podcast and we’ll link it from the show notes. We did an interview with Dr. Amanda and she talks about how that book in particular, when it was first published like 10 years ago or whatever totally turned her like money life around. That was like the sort of inception of her money, her financial journey. So, if you want to hear another perspective on, you know, how that book’s helped someone else, that’ll be linked from the show notes. Yes.

In Other Words: What Are Your Values?

26:05 Emily: So, another way of like saying this, like figure out what makes your life rich thing, which is a little bit more like classic financial planning, is what are your values? What is important to you? You also mentioned identifying goals. And I think it’s a wonderful process. Not, you know, not a lot of graduate students might get into this because they feel like they’re more on the survival level. But what I like about this exercise of figuring out what’s really important to you, what really makes you happy, what really makes you feel satisfied, is that there are sometimes ways that you can find a way to fulfill those values that don’t involve spending. And that’s okay. Like for instance, you know, you said earlier that you’ve been trained to become a yoga teacher. So, maybe, I’m guessing, physical health and mental health and balance and things like that are important to you. And it doesn’t take a lot of money to have a yoga practice, right? So, there are ways to find fulfillment, even if you aren’t able to spend right now. But then later, you know, when your income is higher, post-PhD, you can maybe think of ways that you could spend and even enhance that more later, but still find some ways to do it now and fit it into your life right now. Instead of just sort of saying to yourself, I can never do anything. I can never spend anything. I can never afford anything because of my stipend right now. And just sort of shutting all of that down.

27:19 Laura: Totally. Yeah. And I think that’s something as a cohort when you’re in your PhD program, like you should definitely talk about that with other people. Because the attitude, at least from what I witnessed, is like, everyone’s scared about their money. But you’re totally right. If you sit down and think about what brings a particular richness to your life. But when I did it, I realized, Oh, wow, I do yoga. I love hiking. I love going for walks. Like I’m such an old lady that way. So it’s like, I have all these things already there for free. And it just helps you feel, it gives you perspective on your money. It’s, you know, you don’t have a lot right now, but that’s okay because X, Y, and Z doesn’t cost me anything.

Financial Strategy #6: Talk to Your Partner About Money

27:55 Emily: Well, it’s a wonderful point. Thank you so much for expanding on that one. Sixth strategy. What’s that one?

28:02 Laura: So, the sixth is to anyone in a relationship. Talk to your partner about money. It’s not something you talk about the first couple of years, probably, when you’re on your first dates. But I mean, my husband and I have been together for almost nine years, married for just over a year. And you know, he’s so good with money and he has such a natural interest and I have such a fear of it normally that we’re kind of a perfect match that way. But the more we’ve talked about it, the more our relationship has improved, the better our goals are with our spending. There’s no awkwardness about things that we’re both buying. We do also keep, you know, separation there, which I think is healthy. I don’t know everything that he’s spending his money on, but we both know exactly how much the other person makes every month. We both know our bills when they’re due and if there’s any kind of more extravagant purchases that we’re both thinking of having as individuals, we do run them past the other, because it’s just a respectful little gesture. So, just making it a not scary thing. Just talk about it with your partner. The worst thing is to keep it a secret, for sure.

29:10 Emily: It sounds like you two have found like a balance. You have transparency but you also have a degree of autonomy. So, no secrets, anything that needs to be flagged as brought to the other person’s attention, but the decisions are still ultimately your own individually for certain aspects of your spending. And obviously certain aspects you have to come to an agreement. I did a pretty interesting podcast interview recently with Dr. Michelle Roley-Roberts where we talked about joint and separate finances.

29:40 Laura: Yes. I listened to that.

Financial Strategy #7: Learn About U.S. Credit Card Culture

29:42 Emily: Cool. Yeah. So, I’ll link that in the show notes, in case people want to follow up on like, okay, well, what is the money management system that might work well for me? And you can certainly hear, you know, Michelle and I discuss our respective systems, which are somewhat different and somewhat similar. I think that your last strategy is specific to international students. So, will you share that one please?

30:00 Laura: Yeah. So this one, I so wish I’d known before I moved here, but better late than never. Learn about credit card culture in the USA, because it’s not going away and you will be all the better for accepting it. And I know it’s not always possible on a student visa to get a proper credit card. That was the problem I ran into, but they will give you something like a credit card from certain banks, and it will be a way to transition into an adult credit card, so to speak. I just got my first credit card. I’m not ashamed to admit it. So if anyone else out there is thinking, Oh gosh, I don’t even have one yet. It’s okay. Like better to just go and do it. But I just had so many questions about them because growing up in Scotland, we were always told don’t get a credit card. It’s, you know, it’s because you’re a failure financially, if you need to get one. But here it’s a very valuable thing to have a good credit history. So, learn about it as soon as you can, and go to your bank and just ask a ton of questions. And do not leave until you know the answer to all of them. Because they’ll try and just brush you off most of the time.

31:08 Emily: So, the credit card culture that you were just mentioning. It’s so closely held for me. I was taking a second, like, what do you mean by this? What is this culture? So, what you’re saying is like the importance of credit, like your credit score, your having good credit reports and so forth is not just for when you want to get a mortgage or when you want to take out a car loan or whatever. It can be checked by landlords. It can even be checked by employers in some cases. And so it’s like, yeah, weirdly important to have a really good credit or, you know, a decent to good credit score. And it doesn’t mean, like you were just saying, that you’re necessarily in debt or, you know, taking out lots of debt, or that you’re in a need or anything like that.

31:50 Emily: But yeah, it is it’s pretty weird and it’s pretty insidious that other kinds of payments are not reported on your credit report. Like, Hey, I pay my rent every month. Shouldn’t that count for something? And it’s also weird that your income doesn’t factor into your credit score. So, it’s a very strange system. I agree. And so, okay. So, I understand. So you had to understand what was going on with the U.S. system and kind of accept that, yes, you did need to establish a credit score. These are the steps to do, you know, get a secured card, later on, get a regular credit card once you have a credit score, and then kind of work it up from there. Is that right?

32:26 Laura: Yeah, totally. And again, like I was in a very privileged position because my husband has a credit score. But again, I didn’t know that to get an apartment, for example, in New York, even with his credit score, which is really solid, it was still a challenge. Like you got to wait until it’s processed. There are a lot of questions afterwards as well. So, just establishing that, the sooner the better. It will lift your anxiety about it and it, unfortunately it just will give you more freedom down the line. So, I would start off really small. You know, I just got my credit card and I’m only allowing myself to use it for certain expenses in the month so I can practice using it appropriately. So, just figure out how to use it properly and stick to the rules. And I think you should be good to go.

Credit Cards Can Intimidate Anyone 

33:12 Emily: I’ll actually like add in, even for, you know, people have grown up in the U.S. or whatever. Like, I also was very afraid of getting my first credit card, which thankfully I don’t know how, because I was very ignorant at the time, but thankfully I did not sign up for any credit cards during my undergraduate degree. So, I got through all of that with only, you know, I had student loans and so I actually had a credit score, but I didn’t have any credit cards. Thankfully. And by the time, I don’t know, I had just been like warned so strenuously about the dangers of credit cards that I was very, very nervous to get one for the first time. But like you, I was reading about how important it is to build credit. And this is, you know, an easy way to do it without actually paying interest on anything, which is also nice.

33:52 Emily: So, I like very carefully picked out my first credit card, very reluctantly, like signed up for it, used it very infrequently. And, you know, have still maintained that account to this day because it’s my oldest account. So, it’s definitely not just international students who can be kind of like perplexed and nervous about this whole system. It’s a little bit easier, of course, if you did go to college in the U.S. and you did take off student loans because you will have a credit score, even if you have never made a payment on student loans or anything like that. It’ll actually probably be a decent, I don’t know. It’s so weird. It’s such a weird system.

34:26 Laura: It’s so weird. Yeah. I mean one last thing I would say is just when they give you those documents at the bank with all the terms and conditions. It’s very tempting to just put it in an envelope and not look at it again. I have a whole box, actually in my office right now, and I’ve gone through the whole thing with a highlighter. And I asked my husband the definitions for things. I search online. I called the bank twice more because I wanted to confirm something. Like, ignorance is just not bliss. You just, you need to know what exactly you signed up for to really feel confident about it.

Benefits of Reflecting on Your Money Mindset

34:55 Emily: Yeah. Well, thank you so much for adding that. I know that a lot of international students I think hear this advice of open up a secured credit card when you get to the U.S. But I think a lot of them will kind of find some kinship with you in your like trepidation about this. And what exactly is this about and what are the attitudes? So, yeah. Thank you so much for adding that. So, what are the benefits that you’ve experienced from going through this, you know, this process and reflecting on your money mindset that you grew up with and putting all these strategies in place. Obviously, I’m assuming your hard numbers of your financials are looking rosier than they would have if you hadn’t gone through this process. But is there anything else that you want to add about benefits aside from the, you know, the black and white?

35:38 Laura: Yeah. I think that the biggest benefit is just, you know, getting out of this mindset as a grad student that you can’t have any savings goals. That was the big misconception that I had. You know, once you learn, for example, what an emergency fund is, what a Roth IRA is, all these little things. You realize, Oh, wait, it is possible to save for the future. Yeah. It’s not going to be as much as someone working as a lawyer or whatever, but it’s going to add up over the five, six years that you are on this smaller stipend. So, you know, it gives you a lot of hope and I think the mental health during graduate school, that’s something you have to be aware of. And putting aside, you know, a couple of hundred dollars a month to your Roth IRA, for example, that’s a great feeling. And that’s, you know, one of my goals that I have by the spring. You don’t have to sort of wait to be an adult to do those things. Like you are an adult already in grad school, and you can, you can do other things that adults do with their money for sure.

36:35 Emily: Yeah. I also, very coincidentally, I gave an interview this morning for Roostervane, which is Dr. Chris Cornthwaite’s brand. And I was talking about this as well, the mindset of really that label of being a student. It makes sense in a context, but it can really trip you up and mess you up, like in your mindset, because I think, you know, at least in the U.S., you know, for traditional college students, we’ve kind of accepted that it’s an extended adolescence period of time until you graduate from college and it’s okay to be dependent on your parents. And, you know, you may be still not really working on your finances because, Hey, you’re probably taking out a bunch of debt. We’ve kind of accepted that. And then when that student label gets applied to funded PhD students, there’s really a disconnect. And it’s much healthier, as you were just saying, to not really make that student like the closest part of your identity, but recognize that you are an adult, you need to have a well-rounded life, you know, financially healthwise, in your relationships, all these other areas. It’s not really feasible for you to kind of suppress and ignore various different facets of your life for the length of a PhD, which is very long.

37:42 Laura: No. Yeah, I completely agree. And also, I do understand the anxiety of the student label, right? But at the same time, you do have to kind of wake up to the fact that people are actually offering you money from a lot of different resources. Like, especially at Davis, where they are excellent at emailing us with fellowships and funding, money here and there. You do have to be proactive about it. You know, it’s still very hard and it’s stressful, but for example, go through your emails every month. And if you’ve missed anything with free money, put it in a spreadsheet like I’ve been doing. It does add up after a while and you realize, Oh, wait, year two, I can apply for, you know, $2,000 here for this. It doesn’t have to be so limited for the entire time.

38:26 Emily: Yeah. It’s kind of funny because I think in some ways earning more money while you’re a graduate student is like frowned upon in certain corners of academia or even not allowed as we talked about earlier. But there are other ways where earning more money is like completely sanctioned and encouraged by everyone which is applying for fellowships and applying for grants and doing all these like academia-style, like raises and like, you know, the things that we would use different terms for it outside of academia, but inside it’s still allowed and still a good idea. And like you were saying, some programs are pretty good about, you know, showing those opportunities to you and presenting them in a way that’s easy for you to take advantage of. So yeah, that’s wonderful to hear.

Best Advice for Another Early-Career PhD

39:04 Emily: So, I’d like to conclude with your best advice for another early career PhD. I feel like we’ve already heard a ton of great advice throughout the whole interview, but if there’s anything you want to add to that in a different area or something you want to emphasize, make sure the listeners walk away with, you know, please let us know.

39:20 Laura: Yeah. I mean, just, I think two things. My main points of advice would be to just make your financial education, or whatever you want to call it, a hobby. The more you know, the less anxiety you’re going to feel. And don’t think that saving for things like retirement or long-term savings goals have to be put on pause. It’s better to have a little bit saved towards that kind of goal than to have nothing in five years. So, the longterm does not have to be on a permanent pause by any means.

39:48 Emily: Yeah. And even, as you know, from compound interest, any little tiny bit of investing or debt repayment that you can do right now makes a massive difference later on. So, you know, don’t feel bad if it’s like $10 a month, $50 per month. Anything on that scale is still going to really, really add up over time. Well, thank you so much for this wonderful interview, Laura. I really enjoyed getting to know you a little bit.

40:09 Laura: Yeah. Well, thank you for having me. This was really fun.

Listener Q&A: Savings

40:16 Emily: Now, on to the second of two new segments. The listener question and answer. Today’s question actually comes from a survey I sent out in advance of one of my university webinars this past fall. So, it is anonymous. Here is the question. How can I effectively build my savings back up while still feeling like I have room to go out to dinner or buy a book when I’d like to? I feel so guilty whenever I make unnecessary purchases. Thank you so much for that question, Anonymous. It sounds like your main financial goal right now is to build up savings. And you’re struggling to find a way to balance that with discretionary expenses. And you might hear this as a strange solution, but I think the answer is budgeting. Most people think of budgeting as a way to cut back on their expenses or reduce their expenses or beat themselves up when they go over the amount they were supposed to spend in one category or another.

41:17 Emily: But that’s actually not how I see budgeting. I see budgeting as a method of intentionally and thoughtfully creating balance among the different purposes that your money has. So, what I think you should do is write into your budget “unnecessary purchases,” like going out to dinner and buying a book. And in this sense, these are not categories that you should, you know, try to spend much, much less than the cap. Your goal is instead going to spend right at that level that you identified when you set up the budget. This means that you have to decide what is an adequate savings rate. There are not just two broad categories in your budget, that is paying for your necessary expenses and saving. There are three. Necessary expenses, discretionary expenses, and saving. I’ll point you to the balanced money formula, which I really like the idea behind, although I have to acknowledge that it does not work in every city in the U.S. on any grad student stipend. The balanced money formula is that you would devote no more than 50% of your after-tax income to necessary expenses, 30% to discretionary expenses and 20% to savings.

42:31 Emily: Now, for your budget, that savings rate might be a little bit too low, or it might be unattainable, depends on where you are right now. But the point is that discretionary expenses hold a place in a balanced budget. It is really psychologically difficult to go for months and years spending little to no money on discretionary purchases. If you accept what I’m saying, that you need to build discretionary expenses into your budget, but you’re still saying to yourself, I’m not saving as much as I would like to, instead of cutting back on those discretionary expenses, I want you to take a really hard look at your necessary expenses. Necessary expenses are almost like this misnomer because, yes, it is necessary to house yourself and feed yourself and clothe yourself. But often we’re spending more than we absolutely baseline need to, to accomplish those things. So, for pretty much every quote, unquote, necessary expense, there’s going to be an actual necessary portion, and a discretionary portion.

43:34 Emily: So, I would really encourage you to go through your necessary expenses with a fine-tooth comb, starting with your largest fixed expenses like housing, perhaps transportation, moving to other fixed expenses like utilities. Then moving into your large necessary expenses like groceries. Then moving into your smaller necessary expenses, like maybe gas for your car. Reevaluate every single one of those expenses in that order to try to find a way that you can reduce them. Now, that may not happen instantaneously, if you have to do something like move, obviously. But the point is that you don’t just have to focus on your discretionary expenses and your savings. You can also pay some attention to those necessary expenses. In my mind, it’s way more fun to save money and also to spend on discretionary expenses. Spending on necessary expenses doesn’t really light people up. So, it definitely makes sense to reevaluate them and see where you can cut back.

44:34 Emily: Now, if you’ve done all of that, you’ve built the discretionary expenses into your budget. You’ve really evaluated if you can reduce any of your necessary expenses, and your savings rate is still not as high as you want it to be, then you need to consider increasing your income. Maybe that is the right solution. Some grad students are able and allowed to side hustle. So, you can look into that, if that’s your case. Some grad students are not allowed to work outside their appointment as a graduate student. And so in those cases, you might have to look for side incomes that don’t require work to generate them. I’ve talked about this quite a bit on my site. You can search for a side income or side hustle to find more discussion about that. Okay, Anonymous. I hope this helped. It is legitimate to spend money on discretionary or quote unnecessary purchases.

45:22 Emily: Absolutely. It’s just a matter of finding the right balance between your savings, your discretionary expenses, and your necessary expenses. And oftentimes, the two culprits in those areas are your necessary expenses and your income being too low. I hope that helps. Thank you so much for submitting this 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

45:53 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 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.

How to Set Yourself Up for a Successful Career and Financial Life Post-PhD

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In this episode, Emily interviews Dr. Jennifer Polk, a career coach specializing in PhDs whose brand is From PhD to Life. Emily and Jen explore the damage that graduate school and academia often does to PhDs’ financial lives, in terms of both dollars and money mindset. They answer the question, “What can a graduate student or PhD do to mitigate academia’s financial damage?” from both a financial and career perspective, starting in grad school and extending several years post-PhD. Jen concludes the interview with an incredible insight that can only be gained with years of distance from the PhD.

Links Mentioned in this Episode

post-PhD career and finances

Teaser

00:01 Jen: Woo boy, I think the two-word answer is compound interest. The more that you can put away, even very, very, very small amounts earlier on, make such a huge disproportionate difference over the long term.

Introduction

00:23 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season seven, episode 14, and today my guest is Dr. Jennifer Polk, a career coach specializing in PhDs, whose brand is From PhD to Life. Jen and I explore the damage that graduate school and academia often do to PhDs’ financial lives, in terms of both dollars and money mindset. We answer the question, “what can a graduate student or PhD do to mitigate academia’s financial damage?” from both a financial and career perspective, starting in graduate school and extending several years post-PhD. Jen concludes the interview with an incredible insight that can only be gained with years of distance from the PhD. If this episode, and that final insight in particular, get your wheels spinning about what you should be doing right now in your finances, there are several ways you can work with me in the upcoming months to level up your financial life.

01:29 Emily: The Personal Finance for PhDs Community is always open to new members. That’s where you can find my courses on financial goal setting, budgeting, investing, et cetera, plus monthly challenges to participate in a book club and lots of opportunities to ask me questions and engage in discussion with other like-minded graduate students and PhDs. You can find out more at pfforphds.community.

I’m facilitating my brand new half-day workshop, Chart Your Course to Financial Success, twice in the next couple of months. Spend four hours with me and a small group of peers, and you’ll come away with clarity on what your current financial goal should be and how to achieve it, plus super actionable ideas for increasing your income and decreasing your expenses. On December 12, 2020, I’m facilitating the workshop exclusively for funded graduate students. And on January 10th, 2021, it’s exclusively for PhDs. You can find out more at pfforphds.com/chart.

02:34 Emily: Finally, Mark your calendars for the next round of The Wealthy PhD. My two-month group-coaching program that provides guidance and, most importantly, accountability to help you achieve a significant financial goal and set you up for future financial success. Enrollment will open in early January, 2021. You can find out more at pfforphds.com/wealthyPhD.

I’m so pleased to be able to offer you all these different avenues of support going into the new year. I hope you will identify one that fits you the best and sign up.

If you’re not quite sure about diving into working with me, please join my mailing list at pfforphds.com/subscribe. Every Friday, I’ll send you an email detailing, a personal finance concept, an actionable strategy, or an inspirational story. You will receive an incredible amount of value, absolutely for free, through the list.

Without further ado, here’s my interview with Dr. Jen Polk.

Will You Please Introduce Yourself Further?

03:28 Emily: I’m delighted to have joining me on the podcast today, Dr. Jen Polk. You probably know her brand From PhD to Life. She is a career coach specializing in PhDs. So, she has a lot to say to us around this topic. And we’re actually going to be talking about money mindset today and specifically how it affects, you know, your finances, but also your career journey as you’re moving through and beyond the PhD. So, Jen, thank you so much for joining me on the podcast day. It’s wonderful to have you.

03:56 Jen: Yeah. Thank you, Emily. It’s my pleasure. I’m nervous. I’m excited.

04:01 Emily: It’ll be fun. So, please tell the audience just a little bit more about yourself.

04:05 Jen: Sure. So Jen, as Emily says, I work with PhDs figuring out what to do next in their careers and my business is From PhD to Life. That’s fromphdtolife.com. And I’m self-employed and I live in Toronto.

What Academic Culture Teaches Us About Money

04:22 Emily: What does academic culture–in your experience, and also what you’ve observed from your clients–what does academic culture teach us or tell us about money?

04:32 Jen: Yes. Yes. Big question. So, my own personal background is from the humanities, a history PhD. And I think that academia emphasizes, at least my corner of academia, to use that phrase, thinks of money as a bad thing, as kind of a necessary evil. And extremes to which we might take that view do exist out in the wild. There are people out there who will, they can’t possibly live this way every day of their lives, but they will literally say things to me that anybody who has more money is morally inferior or that it is unethical to have, you know, more money than one needs, et cetera. And I think that, yes, one can find that view in academia.

05:29 Emily: Is that defined as more money than they have? Is that the dividing line?

05:34 Jen: Probably, probably, probably. But yeah, I think that thinking about money, talking about money makes you somehow less of a scholar, less of an intellectual. Of course, as we know, the truth is that you can’t actually do scholarly work over the long-term if you are constantly worried about money. It’s difficult. But yeah, there’s definitely a sense that if you’re the person–and I think this is also tied in with aesthetics–if you show up in your humanities department wearing flashy suits and red lipstick and earrings you will be deemed less serious as a scholar, as an intellectual. I think that is related to money mindset as well. It’s really gross. It’s really gross. And yet, of course, you need money.

06:33 Emily: Yeah. I mean, you just said that, of course over the long term, you, you have to have money or else you’re going to have a constant, you know, really it’s a fog in your brain. When you’re constantly stressed about money, when you experience scarcity, and this has been studied, you know, through research, that you literally don’t cognitively function as well as you could, if you did not have that stress in your life. So it’s really actually perplexing to me that we do this. We–academia–does this to graduate students, especially, but also postdocs and also, you know, adjuncts and other faculty members to a degree. Why are we doing this to our youngest, most vulnerable developing scholars? I mean, I know you can’t answer that question, but it’s really perplexing to me that, you know, the system chooses to put this kind of stress on people, and then moralizes it, as you were just saying, says, “Oh, this has been official to you that you don’t have the distractions of money and flashiness and opulence and so forth in your life.” When really what it is is, “No you’re stressing us out, so we can’t even think properly.” And that’s, it’s horrifying, really.

07:37 Jen: Academia is perplexing. I think that’s a good short way of putting it. There’s a lot of work to be done to kind of recognize the truth of one’s situation and think about what you actually do value that is different from what academia implies that you should value.

Money Mindsets in Academia

07:57 Emily: Yeah, I will say from my, you know, my corner of academia and engineering, I did not get the message that money is evil or money is to be shunned. Certainly, we were still under, you know, some money stress depending on how well-funded you are. But definitely from the advisor or the faculty level, we weren’t getting that kind of message. And yet, there were still money mindsets that academia tells even to students in disciplines like that, like all your best time and energy has to be spent on research. Like, you know, you’re not allowed to do XYZ other things in your personal life or earning money on the side. Even if it is not explicitly disallowed, it is certainly frowned upon, because again, you should be spending all your best energy on your research. Things like that. And I think another really sort of damaging thing that happens that probably speaks a little bit more to your experience as a career coach, is that people become anchored at the graduate student salary that they are earning during those years. And so how do they judge what they’re worth in the marketplace after they exit academia when their skills can and should be valued much differently? But how do they, you know, transform their own understanding of the value that they bring? Maybe we can talk more about that.

09:14 Jen: And I also see from scientists that, of course it varies and everyone’s experience is unique, but a lot of worry about getting a quote unquote industry job is morally inferior. And I think part of that is that those jobs pay better than academia. And I think people not only would you make more money, but potentially, I mean, depending, you would have a better life and a better career. Because there’s just lots more variety out there. And there’s a lot more better places that one could be for a lot of people. But I do think that money is part of it as a signal of virtue. Does that make sense, Emily?

09:56 Emily: Yes, I definitely hear what you’re saying. I actually would add onto that. It’s possible that you can have more of an impact on the world in industry than you could in academia, potentially, depending on your field. So, there’s that too. Is your scholarship actually getting out there?

10:11 Jen: Yeah. More money, more impact.

Financially Damaging Money Mindsets

10:14 Emily: We’ve talked about how these money mindsets are not true, damaging in some ways. How is this financially damaging?

10:25 Jen: Whoo boy, the two-word answer is compound interest. The more that you can put away, even very, very, very small amounts, earlier on makes such a huge disproportionate difference over the long-term. There is such a potentially, I mean, again, it really varies, but there is a real opportunity cost to spending time in academia, as a graduate student who is not earning, you know, a whole lot of money. And then, you know, if you do post-docs and then in a lot of disciplines, even a tenure-track professorship, is not going to pay you really enough to live in a lot of cases. And that, you know, life isn’t about comparing oneself to others, but it does put you behind, to use that framing, other people with similar types of education in terms of your financial resources. And of course, if you have debt.

11:20 Emily: I couldn’t agree more. I mean, you know, sometimes I think about there’s been, I don’t know, I think I’ve seen studies from time to time on, “Oh, a PhD is worthwhile like salary-wise because yes, you take this income hit early on, but then later you could make, you know, much more than you would with just a bachelor’s or whatever.” But I really wonder, and I have not done the math on this. I really wonder, well, you’re disagreeing with even that assertion because I’m sure it is very individual, entirely. But even taking that as a given, if you then factor in the opportunity costs for compound interest of paying off your debt, starting to invest for the long-term for retirement, it becomes very dubious.

11:58 Jen: Well, that’s just it. That’s just it. Exactly what you say. Like, even if the salary itself is higher, you’re starting so much later than other people. Like Emily, you and I are both in North America, U.S./Canada context. PhDs take a while. You know, on average, somebody is 30, more than 30, almost 30, right, when they finish, with limited prior work experience. And yeah, it’s not just about annual salary. I’ve seen those studies where everybody’s like, “Look how much more money PhDs make” than people with other degrees. And yes, that is an average. And, you know, it varies a lot. A lot. Not only between disciplines, it does vary a lot between disciplines, but within disciplines, it varies a lot, over gender and race and immigration status, et cetera, subfield. And whether you’re in an academic career track or not, right?

12:54 Jen: There’s a lot of variety there. But yeah, it’s not just about your salary number. It’s not just about that. Yeah. It’s about all of the other things you said. You know, if you’re 10 years later entering the housing market, you might not enter the housing market, et cetera. Anyways, I don’t mean to bemoan and lament, but I do think that it is a message that if anybody listening is considering a PhD or in a PhD program earlier on and doubting whether they should continue, please take this seriously and know that I respect any and all decisions to not apply, not enroll and potentially, you know, if it’s right for you, to not continue in a PhD, because it really might not be the right thing for you for lots of reasons, including financial ones.

Working on the Post-PhD Money Mindset

13:40 Emily: Yes. I would actually love to expand on that. So, we were just saying, okay, to people who have not yet applied for graduate school or are early on in your graduate school journey, take seriously any doubts you may be having and explore other career possibilities for you. For my part, I’m a little less don’t do the PhD, but I’m more on like, why don’t you get some work experience and see what’s out there for you and be able to judge the PhD more, not from, okay, I just got out of undergrad and this is what I want to do, but judge it in a little bit of a more informed context? So let’s say someone is on that path and they’re firm about finishing the PhD, but they’re still early on or, you know, midway through. What can that person be doing to be, you know, both working on their mindset, setting themselves up for financial and career success, following the PhD, what can they do at that stage?

14:31 Jen: I think that, you know, and this comes from my own work, you know, day-to-day career coaching PhDs. I think it is never too early, never too early to think about your career because there is, and I don’t, I think this surprises people, there is so much work that you can do that you really ought to do, but you know, that you can do before you ever apply for a job. And part of that is about money and how much you really need and how much, you know, you 10 years from now is going to want. But I would really, the quicker that you can get into a job and the quicker that you can get into a job and a career that is one that you like, and you can really excel in and you know, it doesn’t sort of match up that you would excel in a career and you make money, but a little bit, right, the quicker you can make that happen for yourself after you graduate, the better.

15:28 Jen: So, do all of the work that you can when you’re still a student. And I just mean the self-assessment, the reflection, like what you were talking about, Emily. Identifying the right, you mentioned identifying the careers that you are interested in going into, right? Like do all of the work ahead of time to identify those, and then start building your network, and, and draw on your network to learn more about those career paths, to get really specific about the types of work that you could do. To have a kind of a draft resume in place for various different kinds of roles that you might apply for. Again, long before you ever get to the point of application. So that six months, four months before graduation, before you’re kind of ready to work, you can hit the ground running.

16:13 Emily: You mentioned like doing self-assessments and so forth. I did a lot of that stuff and it was provided by the career center at my university. I wouldn’t say I showed up at every event, but I was definitely like a regular frequent flyer at, you know, what they had going on. And I was able to do like, yeah, some of the various self-assessments and that was wonderful.

Career Exploration: Know Thyself

16:30 Emily: So, there’s resources that may be available to graduate students through their career centers. There’s your website of course, From PhD to life. Do you know, would you recommend any other resources outside of the university context, for people to help in this like career exploration phase?

16:46 Jen: Yeah. I think at this point, anything can be useful. And so, you know, I think it can sound really simple, simplistic but even just sitting down and making a list of the things that you actually truly value and that are really important to you, that there’s real power in that. Taking a few minutes and just doing a brain dump, like, okay, what do I actually value in having, and write it down. Make a visual of it and make a graphic that you stick on your computer desktop. I mean, whatever it is so that you can keep reminding yourself when academic culture is swirling around you, which can be, I’m exaggerating, but it can be a bit of a totalizing culture and impose values and priorities on you that, you know, can kind of make things messy, just to remind yourself of what you truly value.

17:42 Jen: When I say anything can be useful at this point, I mean, sure do the Myers-Briggs. Scientifically dubious, doesn’t matter, because point is to give you new language, like literal words, and new perspectives, different perspectives on the types of skills and strengths that you have. So, any kind of like skill assessment, strengths test, value survey, anything like that, you can find online. Any of those that can be really kind of interesting to get you thinking about yourself in a different way. And then make your own lists. Some people like spreadsheets. And take advantage of any and all assessments that, yeah, you get from your career center on campus if that’s available to you. This process, I’m talking about it like it’s a mess, and that’s because it is a mess. So, it’s fine. And the other thing I would say is that this is not a process of identifying your one true right job.

Do Not Get Stuck on the “Dream Job”

18:42 Jen: Your dream job. No, no. Wipe that from your mind. That’s not a thing. A lot of jobs out there are broadly similar. And you, whatever your PhD discipline, whatever your background, you can do a lot of them. So they’re broadly similar and you can do a lot of them. And so what becomes important is not that particular job title, but more where in the world do you want to live? What kind of lifestyle do you want to have? What the vibe of the office that you want to be in? What kinds of like actual work do you want to do every day? Who do you want to hang out with? What kind of impact do you want to make? So all of those kinds of questions that, like job title is not even that relevant. At a certain point, you’re going to try and identify some so that you can find jobs to apply to. And so that your network can help you out by making suggestions. But yeah, it’s a mess. Embrace the mess and know yourself.

19:37 Emily: At that stage. Because you can be really open to a lot of different things, like you were saying. We’re not at all trying to like narrow things down, right? It’s about sort of broadening. So, I’m also thinking about, for an early-stage graduate student, mid-stage graduate student, how to mitigate this financial damage that we were talking about. And so very briefly, I just want to say, as you said earlier, compound interest. So if you are at a stage in your finances, when you’re able to save, get an emergency fund together, but after that start tackling your debt, start investing if that’s where you are. And I of course talk about that many, many other interviews and so forth. So people can find a lot more resources. But as you said earlier, the early you get started, small amounts of money, perfectly fine. It’s still going to make a difference.

The Value of Outside Work Experiences

20:18 Emily: So don’t dismiss just because you’re a graduate student, “Oh, I can only save 50 bucks a month or I can only save a hundred bucks a month.” That’s amazing. That would be a lot of money if you actually got that invested. So don’t dismiss that while you’re, you know, doing all this other career stuff. I also want to bring up outside work experience. You know, you mentioned earlier, like, you know, think about your network and so forth, and you can do that without working. You can expand your network. But you know, for some PhD students, it is possible to do internships or to have some kind of side hustle, that’s going to ultimately help you in your later job. Can you speak to that a little bit?

20:53 Jen: Yeah. And I take your point, Emily, that you said for some they can have, because yes, acknowledgement that, you know, it does depend on visa status and the contract, et cetera, et cetera. But, so in response to a Tweet I sent earlier this morning, somebody, I think she’s a humanities PhD student, said that in her program, when she was doing her PhD, she was reflecting on one of her colleagues had this like prestigious grant. So she didn’t have to have a job on campus to pay the rent. Because she had the prestigious grant. And the person who wrote the tweet was saying, you know, I didn’t have that, but instead I worked outside of academia and that, you know, the implication here being that, that gave me the same amount of money. And the vibe she got, not only the vibe, the actual literal the message she got from her professors in the department was that the fellowship was of greater value.

21:46 Jen: Even though from our perspective now, as people out in the world, you know, working jobs, we know that actually in some ways having actual work experience is more valuable. And that is really, really, really important and can’t be undervalued. This is not, you know, to ask students to do more and more and more work. But just to say that when you are making decisions about what to do in your kind of free time, quote unquote, you know, where you have a choice about whether to do this and this and this, just to pause and say, “Well, the, the thing that I think that I should do is adjunct one more course.” Well, hold up, just think to yourself, what is the value of adjuncting a course versus stepping up your side hustle or getting a job outside campus, even just in retail? I mean, it’s not obvious from where I sit that adjuncting a course is the right move. Whereas that can be like just a totally obvious thing according to academics, but no no no. I mean, it really depends. So, I would, you know, use your critical thinking skills and question the things that seem obvious to you.

Commercial

23:00 Emily: Emily here, for a brief interlude. You are invited to my brand new half-day workshop, Chart Your Course to Financial Success. The central question this workshop will help you answer is what should my singular financial goal be right now and how should I best pursue it? I’ll teach you my eight-step financial framework that explains when you should save versus pay off debt versus invest. And we’ll explore many, many strategies to increase your income and or decrease your expenses. I will facilitate the workshop exclusively for funded graduate students on Saturday, December 12th, 2020, and exclusively for PhDs on Sunday, January 10th, 2021. You can learn more and sign up at pfforphds.com/chart. That’s P F F O R P H D s.com/ C H A R T. The deadline to register for the December 12th workshop is Wednesday, December 9th. So, don’t delay. There are discounts currently available for both workshops and registration is limited. Now, back to the interview.

Pay Attention to Your Base Salary

24:10 Emily: Let’s now talk about someone who’s finishing up about to finish up the PhD, and maybe about to finish up a postdoc, if that’s the choice that you made following the PhD. And you want to get a real job and it’s not going to be in academia. So, what can a person who’s reached that stage do, again, to mitigate the damage that the mindsets and the financial damage that academia has caused?

24:31 Jen: It’s really tricky this because you know, some people ask, how do I know when to take this job now, or to take the risk of turning it down in hopes that I would get a higher offer six months from now? So, you know, I think it’s not obvious what the answer is and it will highly depend on the individual person. But one thing for sure to think about is, when you’re ready to accept and negotiate a job offer, right? Accept and negotiate, right?

25:02 Jen: Both of those together. That your base salary is a really important consideration. It’s not the only thing up for negotiation. It’s not the only thing to discuss. But that a one time payout, like a bonus, like a signing bonus of five grand, for example, that seems great in the moment and sure you could invest that, but over the long-term, it’s probably better for you to have like $500 extra on your base salary, something like that. I mean, I can’t do the math immediately, but I think tending to base salary is really important.

Do Not Underestimate the Value of Your Network

25:37 Emily: To pick up where we left off with the career exploration, exploration of yourself. Now this person is ready to narrow things down and apply for some jobs. So, what do they do at that stage?

25:53 Jen: Yeah. So, I think don’t underestimate the value of your network. And before people are like, “Hold up, Jen, I don’t have a network.” No, you have a network, you have a network and you know people, and the people that know you also know other people. And, it can depend, but your academic network, don’t discount them. Even if you’re applying for non-academic jobs. Again, it can depend. But, I mean, I have a client now who is a research associate, a post-doc, and he was nervous about talking to his PI about the fact that he’s, you know, he’s on the job market. And he had the conversation and the PI was very supportive. And then the PI sent a few emails. My client got some interviews literally the next week and, you know, might have a job offer like within like a month. And so don’t discount the value that your network can come through for you.

26:54 Jen: And I know in my work with PhDs, with my own clients, but also all of the research that I’ve done over the years that you talking with people, and that’s all I mean when I say you should network, is you should interact actively with people in your field, with other professionals, quote, unquote. Just actively interact with people, that pays off enormously. And if you don’t do that, it’s going to be so, so, so, so, so much harder. At this stage, unless you have really particular technical skills, and I would wager that a huge number of PhDs don’t–and that’s not a criticism, that’s not a criticism–but if you don’t have these like really narrow, really specific, really rare technical skills, and you’re not at the right place at the right time, then you really have to use your network.

People Can Connect Us to New Opportunities

27:48 Jen: And that’s all of us. Not only so that potentially you could get referred to a job, you could be an inside hire as it were. Right? That’s great. But it’s not only that. It’s so that you can learn what’s out there. It’s so that you have people on your team to send you job ads. I applied for a job in September, and I wouldn’t have seen it except that somebody that I know and have known over the years. I’m not frequently in contact with her, but she kind of knows about me in general. She sent me the job ad as soon as she saw it posted. And I was like, “Oh my goodness.” And what happened is I had a number of other people send me the job ad subsequently.

28:26 Emily: Your branding is so clear that many people could identify what is a perfect job for you.

28:31 Jen: Exactly, exactly. Right. Exactly.

28:34 Emily: I actually have another story to add to that pile, which is how my husband got his job in industry. And so this is more about the value of networking with people from your own program who have moved on in the years prior to you. Because it’s not just the faculty who have networks. It’s anybody who’s exited academia. Even an undergraduate that you worked with who is now in the workforce can be a contact in your network. So my husband, some person who had graduated from his program a couple years earlier, sent a job listing for his, you know, at the time current company to my husband’s PI and said, I know that your lab lines up very well with what we do here. Could you show this to your students who are graduating? And that happened, and my husband got that position. So that was like just, yep. Clearly networking. Because of course it was on the strength of his PIs reputation. This individual didn’t know my husband in particular. But yeah, that’s exactly how it happened and it was quick and easy.

29:31 Jen: Yeah. And that’s what you want. Right? I mean, life doesn’t always work out that way, but quick and easy means that there was years of work that went into that ahead of time, but it doesn’t have to difficult. It’s all, I mean, it’s just about making friends, having good conversations and doing work that you find interesting and that you find engaging. And if you do that over the years and you are in conversation with people about that, hopefully kind of stars align at a certain point and it seems easy.

Always Try to Negotiate Your Starting Offer

30:03 Emily: Yes, exactly great point. So, okay. Our candidate has, you know, done the job searching, done the self-reflection, applying for jobs. You mentioned a moment ago, negotiating base salary as incredibly important. And so this to me also is one, probably your biggest opportunity, to mitigate financial damage that’s occurred during your PhD, is to get that first starting offer as high as you reasonably can within the scope of the field and your skills and so forth. But to negotiate that offer, because I think some PhDs might be kind of bowled over by, “Oh my goodness. You’re offering me how much money?” And again, they’re anchored to their graduate student salary. And so, might just feel so grateful, yeah, and I get that, that they don’t negotiate. But really it’s expected. It’s absolutely expected in industry and it’s probably going to be pretty well-received.

30:54 Emily: Even if the answer is, no, this is a union job and you can’t negotiate, that might be the answer, but you’re not going to be faulted for trying. Right? So, definitely at least attempt that negotiation, because as you said, having a slightly higher base salary, that’s going to affect for sure, whatever salaries you have, as long as you stay at that company. And may even beyond that, if you know, employers shouldn’t, but are allowed to, at least in the U.S. In many cases ask about prior salaries, it depends on what state you’re in. So it’s possible that it could even affect once you leave that, you know, that particular employer, could still follow you. So getting that starting salary as high as you can is a great idea. Even if it seems really scary and daunting to you in terms of the number.

31:38 Jen: Yeah. And I would recognize, you know, everything in life is a risk. Sure. Of course. But once an employer has made an offer to you, they are imagining you solving their problem and hanging out with them every day. And that gives you some power here. As I say, there’s a risk, but I would, you know, own the power that you have in that situation to make a strong case for yourself. You have to make the case. But you want to be successful in that position long-term to help the team grow, et cetera, et cetera. And so, you’re going to show up for them and they should show up for you in terms of base salary.

Good Employers Make their Employees Feel Valued

32:22 Emily: Yeah. And I think it actually goes back to what we talked about earlier that academia, for whatever reason, decides to put this financial stress on its trainees. Your employer probably does not want you to be under that kind of financial stress. They want to pay you enough to reflect the value, to make you feel like you’re valued. That you’re not going jump ship and go to someone else. That you’re going to be able to live in the city that they’re in, you know, comfortably without having to move an hour away for your commute. All of that stuff affects your performance at work. And so it can all come into play when you think about what is the salary that I want to have to perform well in this position? That’s really your opportunity to express that.

32:57 Jen: To a certain extent, there’s some recalibration that might need to happen for folks coming out of academia, where things can be such a struggle, and you can have this impression that any employer is kind of out to get you, out to screw you over. Depending on the experience that you have in academia and the experience of your colleagues and friends around you. But yeah, as Emily said, I mean, any employer that you would really want to work for, they recognize the crucial importance of their labor, of the people doing the work. I mean, this is so, so, so important, and employers, good employers, employers that you want to work for. And there’s lots of them out there. They’re not going to pay you outrageous sums of money potentially, but they want you to be able to have the lifestyle and do the work and be happy and get what you need to be on their team, solving their problems. So, I would assume, assume that they want to pay you equitably right. Fairly and adequately. And, you know, maybe a little more than that. I would assume that, and go forth.

34:04 Jen: Yeah, I am glad you put in the caveat of a good employer, because certainly there are ones that–maybe not employers broadly, but maybe a manager, someone who views this more as a competitive thing, like I’m going to pay you less because I have that better from my bottom line. But it really should be viewed more so as, “We want you to do a great job, and we’re going to compensate you well to do that great job.” And certainly if you get into a salary negotiation process with an employer and you’re getting a vibe that they don’t really seem like they want to support you, then that’s your red flag. And that’s the time to go back to the exploring you’ve done and go back and look at other, you know, positions that you might have, and so forth.

Avoiding Lifestyle Inflation and Unhealthy Mindsets

34:40 Emily: Okay. So, let’s then talk about, you’ve got the job, maybe you’re a few months, a few years into that point. What should you still be doing to again be mitigating the mindset and the literal financial damage that your time in academia has wrought?

34:55 Jen: Yeah, it’s interesting. I mean, I think there’s lots of things that one could say here, but something that comes to mind for me is a phrase that I’m sure, you know, people that grew up in this part of the world have heard, penny-wise and pound-foolish, right? And to a certain extent, you know, when you’re in academia, there are a lot of things that you don’t pay outright for, of course you do pay for them through tuition, et cetera. But it doesn’t occur to you. So there might be things that you yourself would want to invest in, to use that term. And I use that term kind of in a broader sense that will help you over the long term. Ideally, your employer pays for professional development and pays for coaching and whatever, pays therapy, right? Ideally you have benefits around that. But it could be, you know, if you don’t, or if you’re unemployed at the moment, that it can be really valuable to invest in those kinds of services for a relatively short amount of time, because the investment as a metaphor is the right one, because there will be a longer-term payoff.

36:01 Jen: And if you can get your career started kind of on a good footing, great. Right? It’s just so helpful. It’s so helpful. And I would sit down with a money advisor, financial advisor, or whatever the term is, you know, somebody who can kind of tell you things, even if it’s your mom, right? Because if you can get into the lifestyle kind of early on of making good decisions around money, but also, you know, making decisions about you suddenly have more money, hopefully maybe you can set money aside for vacation. You know, that’s a good thing too, et cetera.

36:43 Emily: I totally agree. And actually, this is a phase that I’ve come to now that I’m, you know, a few years post-PhD and into my career, my business with Personal Finance for PhDs, is this idea of investing in myself was something I was very reluctant to do, right? Because I was being penny wise, pound foolish right when I finished my PhD because I wasn’t making that much money yet. So how can I, you know, decide to invest? But actually, you were one of the first people who I worked with, you know, near the start of my business. And it was a was a small investment, but I joined one of your programs. And it, I mean, I still talk about it and laud it, this was Self-Employed PhD, and how we originally met and what an impact that made on me.

37:23 Emily: And I’ve since then been much more willing to invest in training and professional development for myself. So I would definitely, I mean, obviously my field as an entrepreneur is, is different from what other people were doing, but just be thinking about what are the professionals, if it’s again, not provided, as you said, through your workplace, which sometimes it is, what professionals might I work with that can help further my career further, my financial development? Of course you are one of those professionals. If the question is more on the career front with PhD to Life. I am one of those professionals if the question is more on the, how do I handle my finances? How do I handle my budget? You know, what should I be saving for? What should my life look like? If those are the kinds of questions, then of course, feel free to work with me, but there are also many other types of professionals, depending on the exact needs that you have.

Invest in Your Future

38:06 Emily: And as you said, it is an investment. It takes money to work with a professional in the way that we’re talking about. But ideally, the dividends are going to start coming very, very soon after you begin that relationship. Another sort of financial tip, I’ll definitely say, once you’re into that, you know, your career and you’re making a much better salary than you were as a post-doc or as a graduate student. This is now the time to not super increase your lifestyle. Yes. Hopefully, you will be spending more so that you don’t feel stressed. But to some extent you should keep your lifestyle level on a little bit lower than maybe where you see your new colleagues at because you do need to make up for lost time a little bit, and doing things like starting to invest inside your company’s 401(k), even maxing out that 401(k). So to be going into those tax advantaged, designed for retirement types of accounts to a great degree, I mean, just put money away from your salary. You never see it coming in your paycheck. It’s all payroll deductions. That’s the best way to do things. So it might seem like a large number. Right now, a 401(k) in the U.S. would be $19,500 per year to max that out as an employee.

39:17 Emily: Why not? Why not? If your salary has jumped up by much more than that in this transition, why not go for that? Why not have that be your new anchor in your mind? So think about maxing out that 401(k), or at least contributing a good amount to it. Think about making serious, serious progress on your student loans if you have decided that you’re not going to go for an income-driven repayment plan and forgiveness plan. So all kinds of other questions, but this is the time when you get into that job where you can really, like you were saying earlier, you know, hitting the ground running like you’ve done these years of preparation for your career so that by the time it’s finally time to apply for a job, you’re ready and raring to go. It’s kind of the same thing financially. You’ve been keeping your lifestyle low for such a long time. Now you have the salary, don’t do too much lifestyle inflation and just get saving, get investing, get on that debt.

Think of Your Future Self

40:02 Emily: When we were preparing for this interview, you told me you had a message for people earlier on in their PhD journeys than you are currently. So what is that message?

40:12 Jen: Oh boy, your future self is going to care so much more about money than you do now. You know, if you’re in a PhD program, like I started my PhD at 24, like I was like, “Whoa, $15,000 a year.” This was a while ago now. Great. I can’t believe, you know, we hear this all the time. I can’t believe I’m going to get paid to do a PhD. That’s amazing. Okay. Awesome. Congratulations. But just know that your future self is going to care so much more. I mean, I happily, relatively happily, lived with a roommate for years and years and years, and I now live by myself and I pay a lot more money for that privilege, but I just, I just don’t, I don’t want to go back. Right? And so, of course I need a lot more money than I used to. And that, yeah, your future self is going to thank you i you care about it a little bit more than you might be inclined to when you’re, say, 24.

41:15 Emily: Yeah. And by doing the things that we’ve been talking about, like negotiating, like starting to invest early, even if none of your peers are doing it. Like having a side hustle maybe to bring in a little bit of extra money. I’ll say from my perspective too, like now that I, you know, my husband and I got married during graduate school, so we really, you know, we didn’t need any more money after our marriage than we did before. We were both in graduate school. But after we finished our PhDs, we had a couple babies and you know what, once you get on that train, things get very expensive very quickly. And so that’s not at all to say that you can’t have children earlier. That’s just my personal journey, but I certainly feel like we need to command a much higher salary at this stage in our lives and our family formation than we did years ago when we were, you know, DINKS [dual income, no kids]. So there’s that too, if you want that in your future. Yeah. It’s something to start thinking about now.

42:08 Jen: One of my recent clients, she lives in an expensive part of the U.S. Right? Granted but the lifestyle that she has now, a few years out of her PhD with a couple of kids and, you know, a mortgage and all of the above, she really can’t accept a job that pays her less than $150,000 a year. And right. It’s just the reality. And that might seem outrageous to folks listening now who are living on, $30k or less, maybe much less. Like, just keep that in mind. It’s not, you know, I’m not saying that my client, she’s not greedy. It’s just the reality of the situation. Life can get expensive really quickly.

42:45 Emily: Yeah. And I’ll link actually in the show notes, a wonderful interview I did with Dr. Scott Kennedy a year or two ago where he talks about his own realizations as he formed his family during graduate school, that he was going to have to change his career plans, to go into a different field that was going to pay more because he could not afford, now that he had a family, to stay on the track that he had been on. Even though that was sort of intellectually, maybe his preference from earlier on. So these kinds of things have, you know, your life has real impacts on how much money you need to make. And that’s something to start, you know, being realistic about as early on as possible.

How Can People Work With You, Jen?

43:24 Emily: All right, Jen, how can people work with you, should they, you know, if they’ve been intrigued by this interview?

43:32 Jen: For sure. Yeah. Thanks for asking. So, start on my website fromphdtolife.com. I work with individuals. I do small group things, coaching, open discussions. Those are a lot of fun. Shout out to small group things. I think those are awesome. I do drop-ins for Self-Employed PhDs. So, if that applies to you at all, check those out. And then I also work with institutions. So I’m happy to come to your campus, virtually please, I do a presentation or a workshop. I love workshops. So there’s different options.

Best Financial Advice for Another Early-Career PhD

44:07 Emily: Wonderful. And final question that I ask of all my guests. What is your best financial advice for another early-career PhD?

44:15 Jen: So this is a totally “do as I did, and also, as I say,” usually those two things do not go together. But one thing that I have been doing for 20 years, gosh, wow, something like that, is I track every penny. There are no pennies in Canada anymore. I track everything that I spend. So I know how much my life costs. Like I literally know how much my life costs in different categories. And years ago, I used to do this on a, it wasn’t even Excel. I use the WordPerfect version of excel, just a spreadsheet. But now there are lots of programs out there. But I think, you know, tracking what you spend is really, really important. It’s different from budgeting. You can do both together. But the example I like to give is like, I think this is really common for grad students.

45:11 Jen: Like you might spend like a lot of money, like on clothing kind of once or twice a year, not on a monthly basis. So some of the kind of standard ways of thinking about budgeting is sort of like a monthly thing. You go to your big annual conference one month and suddenly you’ve spent $2,000 more than, right? So anyways, but track, and then you can see the trends over time. And by seeing the amount of money that you’re spending in different categories, literally being able to like, see it on a spreadsheet, you can make decisions, better decisions about, you know, how much, how do you really want to spend $200 on takeout every month? Maybe. Yes. Maybe no. Right. But it makes it very clear.

45:55 Emily: I totally totally agree. Foundational personal finance advice. Step number one, track your spending. Track your expenses. Well Jen, this has been such a wonderful conversation. Thank you so much for coming on the podcast and sharing your expertise.

46:07 Jen: Thank you.

Outtro

46:09 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

How to Identify and Change the Money Mindset You Developed in Academia

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In this episode, Emily interviews Dr. Chris Cornthwaite of Roostervane. Chris and Emily share the money mindsets that they have observed among PhDs and academics, including believing money and wealth to be evil, scarcity, relating time to income, and anchoring. They discuss how to identify and change your own money mindset. Chris shares how his money mindset has evolved from his youth idolizing poverty through his underpaid grad student years and now into his employment and entrepreneurial journey.

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Link Mentioned in this Episode

PhD money mindset

Teaser

00:00 Chris: It’s one thing to start when you’re, when you’re 20 or 25, and have the value of compound interest over time and save that $40 a month or whatever it was. But it’s actually quite a different thing to start when you’re 35 with student loans that need to be paid off and try to create a sizeable chunk of wealth.

Introduction

00:23 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season seven, episode 11, and today my guest is Dr. Chris Cornthwaite of Roostervane. Chris and I list the money mindsets that we have observed among PhDs and academics, including believing money and wealth to be evil, scarcity, relating time to income, and anchoring. We discuss how to identify and change your own money mindset. Chris shares how his money mindset has evolved from his youth idolizing poverty, through his underpaid grad student years, and now into his employment and entrepreneurial journey. As you’ll hear during this episode, one of the best ways you can change your money mindset is by intentionally seeking out and learning from people who have the money mindset you want to move toward, whether that is through books, other media or new acquaintances.

01:22 Emily: If this episode convinces you that you should work on your own money mindset, I invite you to join the Personal Finance for PhDs community at pfforphds.community. Inside the community, you can communicate with me and other like-minded PhDs through our forum and monthly live calls. The community has a monthly book club and group financial challenges as well. In November, 2020, we’re reading Get Money by Kristin Wong and in December, it we’ll read The Millionaire Next Door by Thomas Stanley and William Danko. Our challenges for November and December are to create a frugal stack and set up a system of targeted savings accounts. One of the eBooks included in the community, The Wealthy PhD, also has a chapter on what money mindset is, why it’s important, and how to shift it. While I didn’t understand it at the time being part of the personal finance blogosphere while I was in grad school was absolutely vital to the level of financial success I had then and now, and was directly my inspiration for starting my business. With the Personal Finance for PhD’s community, I’ve attempted to replicate many of the positive elements of that experience while making the whole process more time efficient and accessible for you. If you’re interested in learning more about and joining the community, you can do so at pfforphds.community. Without further ado, here’s my interview with Dr. Chris Cornthwaite from Roostervane.

Will You Please Introduce Yourself Further?

02:49 Emily: I’m so delighted to have joining me on the podcast today, Dr. Chris Cornthwaite of Roostervane. He writes a lot about PhDs and career transitions and career over there, but he also has a lot of material about money, wealth, money, mindset, and so forth. And that’s why I invited him on the podcast today to tell us more about money mindset. So, Chris, will you please just introduce yourself a little bit further to the audience?

03:14 Chris: Yeah, for sure. So in terms of my academic background, I have a PhD in religious studies from the University of Toronto and after I finished my PhD, I was kind of lost and didn’t know what to do for work. Kind of was the impetus for starting Roostervane, eventually. But I went and I worked for a think tank. So I ran projects for Canadian think tank. Kind of a lot of different projects, but some that kind of related to money that are still interesting to me is things like economic development and prosperity and things like that. And then I went and worked for the federal government for a little while, the Canadian federal government. I worked on a project that helps other countries launch refugee programs. Basically it’s a lot of like international diplomacy kind of stuff and that was really neat. And I still do some consulting in that world, in the refugee program world, but I also run Roostervane. I started a blog, initially it was kind of chronicling my own journey out of academia, but it’s just evolved to things that I like to write about. It’s become everything from a little bit on personal finance, as you say to careers, LinkedIn, ideas about purpose, which has really been an interesting question for me. That’s become about, I would say it’s maybe like 80% of the work I do, but it’s not my full-time income yet. It’s growing, but as you know, it takes time, so I’m working on that too. That’s me.

4:40 Emily: So interesting. Thank you so much. So money mindset is our topic for today.

What Are the Common Money Mindsets of PhDs and Academics?

And I wanted to start off by asking you what are the common money mindsets that you have observed in PhDs or academics?

4:53 Chris: This is such a fun conversation. I’m really glad to have it. I think the thing that I see a lot of, I mean, we could talk about scarcity mindset and that sort of thing, and that’s certainly common. I think the thing that I deal with the most, especially as people are like leaving academia and it’s not just about money, but it’s about careers in general, but there’s a lot of constructs within academia, like ideological constructs that money is bad, money is evil. The pursuit of money is something that, especially for those pursuing life in academia, a lot of people kind of buy the idea that this is a noble cause and worth doing for nothing basically. I think that a lot of PhDs have the idea that they shouldn’t think about money or that they’re bad for thinking about it or that they’re not serious academics if they want to think about it.

5:46 Chris: The irony is that, I remember having one exchange with a student in particular and he was kind of saying some of these things to me and he was quoting his professor. And some of the things his professor had said about how this is not about money. And I said, “is that your professor who makes $170,000 a year?” There’s a huge discrepancy, I think, between the idealism of PhDs and the reality of both the Academy and just “real world”. I think that’s the biggest holdup I see in terms of money mindset is that people have this idea that poverty is noble or that earning money is bad. Investing is capitalism, capitalism’s bad. I think those become really big holdups and I think can actually seriously hinder people from first of all, making good decisions about their career, but also from actually acquiring wealth and getting comfortable, much less wealthy.

6:38 Emily: So I think here, your discipline might be showing because like in contrast, so I’ve heard the same things, but it was not until I started speaking with PhDs more widely across a lot of disciplines that I encountered that mindset. Because for me as an engineering PhD and in the STEM fields, yes, scarcity mindset was there. Yes, undervaluing yourself was there, but not the money is evil aspect of things because I think we were all expecting like, okay, yeah, this is a low-income period of life, but this is not characterized my life overall. Like overall I’m going to be a highly employable, decent to good earner as an engineering PhD or STEM PhD. And honestly, even in my let’s say path through academia in terms of the professors that I interacted with, because I was in science fields and engineering fields, I didn’t have any professors say to me, capitalism is evil or anything like that. So it’s not an idea that I found until I started interacting with humanities PhDs that I even encountered that. I think this is really feel dependent.

7:48 Chris: A hundred percent, I agree. And it’s interesting for careers too. I’m always kind of realizing where these field differences are and it’s hard because I write for PhDs, like it’s one audience, and in some cases I think there are a lot of things that are kind of universal, but you’re a hundred percent right. And I think a lot of the kinds of ideologies around money that I was exposed to, and I mean, I still see them a lot, but you’re you’re right, they’re definitely much more predominant in humanities, social science fields for sure.

8:13 Emily: Yeah, but I’m so glad you brought that one up because I think that one is maybe the most insidious, like the hardest to reverse, which of course we’ll get to in a moment, but that was a great first observation to bring up. Do you have any other ones? You mentioned scarcity mindset earlier, but didn’t actually define it. Do you want to talk a little bit more about what scarcity mindset is?

8:31 Chris: Gosh, yeah. I think scarcity mindset for me, the way I understand it is just the idea that like there’s never enough money and it’s always, I’m just going to be poor and I’m always going to be poor. I mean, I don’t know, we’ve never had the conversation about the philosophies of money behind it, but a lot of the people that I read see this as manifesting into your life, that you adopt this type of scarcity and it becomes true for you. There’s a whole different conversation we could have, but I think at least anecdotally that’s been true in my life too, that when I kind of live this kind of scarcity — there’s never enough money, I have to keep it all tight, and pinch every penny and be just really, really controlling about, about my money. I think that’s what I see and I saw a lot of that in academia and I think, I mean, a lot of people are poor. I actually did all right, because I won the right fellowships. I mean, it’s just luck of the draw. There’s not really any reason why one PhD makes $15,000, another one makes $50,000. But all that to say that I saw a lot of that scarcity mindset. But the other thing that I think one of the things that I really observed academia taught me was this idea of linking your time to money. I didn’t get paid by the hour other than when I did TA or RA work, so I think one of the really valuable lessons I learned in academia and it’s a mindset that academics have if you kind of dig for it is this idea that you can actually work on a grant application for five or six hours and it might bring you a hundred thousand dollars. I think there are also some positive money mindsets from academia too, if you want to dig for them, but it’s just hard to kind of hard to get at them sometimes.

10:16 Emily: Yeah. I think that’s a really interesting point to bring up. Actually, I wanted to go back to the scarcity mindset for a second because there’s actual scarcity in your life and there’s the scarcity mindset and those things can come together or they can be separate from each other. You can have one or the other, you can have both, you can have neither. There is actual scarcity, especially at the graduate student level in terms of how much money you’re making. Now, does that apply to everybody? No, because of course there’s fellowships you can win, you can have side hustles, but there is scarcity in a sense. But whether it limits your mindset or not doesn’t necessarily come along with that scarcity. And the other thing is the academic job market, like there is literal a lot of scarcity in the academic job market. And I think that PhD’s observing that market, even if they choose not to pursue it or don’t end up in academia long-term, they still take that observation with them onto their other career paths and imagine the kind of scarcity and other places that they have rightly observed within academia.

11:15 Chris: Yeah. That’s really interesting. One thing I’m thinking of as you say that some of my professor friends who sat on on grant committees, especially for university-level scholarships and realize how many scholarships actually didn’t get any applications. So it also kind of does make me think that like there is of course literal scarcity, but I think one of the ways for example, that that can play out is that instead of me saying as a student, how can I go make more money or how can I increase my, my income? What scholarships can I apply for in this case because there was a lot of years that they didn’t give out a lot of the scholarships. It’s easier just to say, well, I’m just poor and this is my lot in life and woe is me kind of thing. So I hear what you’re saying. I do. I totally agree with you. And I think there’s a balance there for me between the actual scarcity and the mindset that says, how can I make the most of this? There’s obviously going to be some kind of a limit, but how can I expand what I do have access to?

12:11 Emily: Yeah, exactly. I think it’s really depressing for graduate students to think about their hourly wage, because they imagine, especially because they work so many hours, usually beyond 40 and yet they’re only being paid ostensibly — you mentioned RA or TA work earlier, that’s typically limited to like 20 hours a week, at least in the US — so they’re calculating this off of like 40 plus hours per week when actually they’re only being paid for 20 and technically they’re doing their dissertation for free and a lot of people don’t understand that. So it is depressing, they calculate their hourly wage, but like you said, that’s not actually literally what they’re being paid for. And sometimes you can, as you said, win an award for just a handful of hours of extra work on top of the work that you are already doing. So I do like the idea of divorcing the hourly wage thing, but it’s disheartening to think about in the first place.

13:05 Chris: I’m trying to look on the bright side. There’s a lot to be sad about, about the financial state of academia. So overall I’m not saying it’s like, great, but there are things that I’ve realized — I know we’re going to talk about it later — but as I’ve moved into my life, there are things that academia trained me for that I’m actually like, Oh, that’s actually not a bad thing.

13:22 Emily: Yeah. So let’s finish up talking about the mindsets that you see. Are there any ones that you’ve have any other ones that you’ve observed either positive or negative, helpful or unhelpful?

13:32 Chris: Let me think. Well, I guess so, so I think the thing that initiated this conversation was you had mentioned a post that I wrote where I had identified a lot of different things that I had learned. I’m trying to think about how much they relate to mindset, but I think there are principles, some of which do relate to mindset, about money that students kind of carry forward. So we already talked about the hourly wage, but I was thinking about in terms of scale, like when you think of I don’t know, a journal publication, like creating one thing that can influence multiple people. That’s not so much a mindset though. I guess I think the answer is no, I don’t really have any other mindsets offhand that I talk about.

14:13 Emily: I think the only other one that I’ll bring up is anchoring. So when you’re in graduate school and you’re making this tiny hourly wage or maybe you think about your yearly salary also tiny, because you’re anchored there, because that’s the first, early on salary that you’ve experienced in your life, you may not really understand your value in the marketplace once you go forward from that position, whether it’s in academia or outside of academia. And so your anchored to this, as you mentioned, 15 or 30 or whatever it is, thousand dollars per year, you’re making as a graduate student and you think, “Oh, wow, could I make double that?” And that’s like amazing to you. Instead of thinking, I want to three X, four X, five X, 10 X what I was making in graduate school, or more. I think that’s another really insidious one is, is the ultimate under valuing that you do later on.

15:04 Chris: Yeah, that’s a great point.

How Do You Identify Your Money Mindset?

15:06 Emily: So we talked about the money mindsets that are common among PhDs. These are not universal. So how does an individual determine what are the money mindsets that I currently have? And this is such a tough question because money mindsets are so closely held you don’t even recognize them as such. It’s just how the world works according to you. So how do you identify your own, your own money mindset?

15:28 Chris: I think the thing that helped me most was reading. I would say the first book I read on money was The Undercover Economist. And I read that, I mean, that must be 10 years ago now. I read it somewhere in my graduate journey, I think pretty early on and it rocked my world and I started reading every single personal finance or money book I could get my hands on after that. So I’ve read a lot of them. And I think a lot of what I saw through reading kind of reflected back to me in my own life.

16:01 Chris: For example, I started to, I can’t even pinpoint like where I got it from, but I started to see like things that I was raised with. I was raised in quite a poor family. My dad worked as a maintenance man in hospital, my mom stayed home with five kids, and a lot of my money mindset came from there. There was never enough money, money doesn’t grow on trees, money is for other people, and then we were also religious, so it was also spiritualized. I don’t know if I ever heard that money is evil, but I definitely heard that poverty was kind of noble, poverty was spiritual. I think the more I started to read and just hear people name similar things to what I had felt and seeing other people who grew up in similar places, I started to unpack a lot of those. There’s one podcast I really liked, it’s called Profit Boss, and she really did a fantastic job. Is it Hillary Hendershot? Do you know that one? I haven’t listened to it about five years.

17:00 Emily: I don’t think I know that one.

17:00 Chris: She had done an episode on money mindset, and it was really good and really opened up to me a lot of my own limitations and that really helped a lot. I think just hearing people name their money mindset and seeing it in myself.

17:17 Emily: So I totally agree with you that you have to start encountering other minds to recognize your own mindsets and whether that’s through reading as you were doing. I also early on in my life journey was reading the personal finance blogosphere quite a lot. So hearing from other personal stories of people who are talking explicitly about money. That’s the thing is you have to actually kind of get towards money or money related topics when you know, exchange these other minds. So it’s a little bit easier to do in an impersonal format, like reading or listening to podcasts or watching videos or whatever. But I’ll add into that talking with other graduate students, maybe like we mentioned earlier, outside your own discipline and outside your own worldview. Or not even other graduate students, but just like your peers, maybe peers who have real jobs, that can help you open up. If you’re actually, again, touching on these money or money related topics can help you recognize what’s a mindset in you and what’s like actual observable truth about the world versus just your perception of it. Encountering other people I think is crucial to identifying your own money mindset.

18:24 Chris: The kind of thing that that makes me think of is this idea of even talking about money. And I know that’s another money mindset I had is like, we don’t talk about money. We don’t talk about it with anybody. Money, politics, and I guess religion were the three things you’re not supposed to talk about. Right. And that’s definitely something that I’ve experienced. It’s funny, even with Roostervane. For example, I wrote a post a while back and it was just for fun about how PhDs can be worth a $100K or something, and it was one of the most read posts that I’ve ever done, but it’s actually one of the least shared. People were happy to kind of read about it, but didn’t really want to talk about it. I think there’s a lot of shame in talking about money and expressing an interest in money, and even an interest in having money or growing wealth. That’s another mindset that had held me back in the past. And I think it’s still pretty prevalent.

Commercial

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

How Do You Change Your Money Mindset?

20:27 Emily: Okay, so an individual has started to identify their own money mindset by listening to this podcast or reading your articles or reading other materials. How do you think they should actually go about changing a money mindset that they’ve identified as unhelpful that they have?

20:44 Chris: I’ve given a lot of thought this. It’s an interesting question, because I think what I realized is it doesn’t change overnight and I will find myself even years later, like something identified years ago and all of a sudden I kind of will stop myself when I’m doing something and say like, Oh, that’s my X mindset that has kind of played in, but it’s kind of sneaking back in. It’s really, really hard to change the way that you are kind of hardwired to think about money. It takes a lot of time. I mean, I’ve done things like I do journaling and I will sort of journal about it. I just watch and read a lot of stuff. I think really immersing yourself in things that kind of present a different view from what you’re used to, I think that kind of immersion has really helped me a lot. I’m trying to think what else. Those would be the two main ones, just kind of exposing yourself to different ideas and kind of recognize that you’re on a journey to change your money mindset. It will definitely take time. It’s not going to happen overnight. Start taking kind of the little incremental steps to grow it. And I think also education, I would say, is a big part of that. The more you learn about money, the more you learn about growing wealth, the less scary it get. It can get confusing because there’s a lot of contradictory information, but it’s at least less scary. So ideally you’re going to, you’re going to be a little more competent and therefore comfortable with actually thinking about and dealing with your money.

22:07 Emily: I totally agree with you that I think the first stop is sort of the extension of the identification. It’s continuing to encounter other ideas about money and maybe now you can kind of selectively go towards, “okay, well, this is a money mindset that I would like to cultivate, or this is the money mindset I want to get away from, so I’m going to specifically listen to source X or source Y, which is going to help me move again slowly over time towards that more helpful money mindset.” So yeah, I totally agree. Like for instance, listen to this podcast. Maybe this is giving you a different perspective on money than you had before. Or continue to read other sources. I know I, as I mentioned earlier, totally immersed myself in like the personal finance blogosphere. That was really helpful in changing some of my money mindsets, especially around like earning more because definitely as a graduate student, I had those limiting beliefs about like, I can’t have a side hustle and like, I can never increase my stipend, but that turned out to not be true after working on it for years and years I finally figured that out. So definitely getting around other people. I don’t remember the exact phrase, but there’s that thing where like, you’re the average of the five people you spend the most time with. And so with respect to your money mindset, if you’ve had parent one, parent two, professor one in that circle before, you can maybe, at least with respect to this subject, edge those people out in favor of people who, have the mindset that you want to adopt.

23:28 Chris: Exactly. Yeah, I totally agree.

23:30 Emily: And I’ll add in, you mentioned a little bit earlier, abundance mindset and thinking and so forth. And I’ve also read a little bit about that in the entrepreneurial space. That’s how I actually first sort of encountered the topic of mindset was through the entrepreneurial stuff. One of the things that is talked about a lot in that space, which I think might be helpful, is actually writing and saying affirmations. And you mentioned, it’s a little bit related to journaling. Basically what we’re talking about is self-talk. You’ve been telling yourself money is the root of all evil and capitalism needs to die and I will never have money and all those things. You’ve been telling yourself those things for years. And so now you need to start telling yourself other things. It might be helpful to actually write down an affirmation, something that you know maybe intellectually to be true, but you don’t really feel it. You haven’t really internalized it yet and start reciting those to yourself. Maybe it’s once a day or a few times a day, to kind of get that self-talk like grooved in. And so eventually you’ll go to it more naturally. This is something I recommend to people who I work with on money mindset. It’s not something I practice all the time, but I do it from time to time when I feel like I need a little boost or a refresher with my mindset. Have you ever done the affirmation thing?

24:46 Chris: I do actually. I think I just, wasn’t clear in defining how I think of journaling because I do journaling, but within my journaling, I do affirmations as well. I have every day and there’s one in particular, there’s one that I’ll share just because it’s been a recent realization for me. I’m not particularly religious anymore, but coming from this idea of my youth that having money is evil somehow or whatever, I’ve really been thinking through like trying to get myself to adopt the idea lately that money is almost spiritual. That having money and creating wealth, especially as an entrepreneur, is actually an indication of the value that I bring to somebody else’s life. Rather than our ideas about entrepreneurship growing up is like, well, business people trick people into giving them money or whatever. In fact it’s quite the opposite. My wealth, the amount that I get paid is reflective of the value that I bring to people’s lives, and that’s really a beautiful thing. I think that’s one thing, just for example, that I’ve been kind of writing down variations of that for quite a long time now, trying to really worm it into my head because I really do believe it’s true, actually.

25:54 Emily: Yeah. I’m working on a similar one for me and my business as well. The amount of money you’re bringing in reflects the value that you bring to the world. That’s true, if you have a job too, but it’s sort of brutally true when you’re an entrepreneur, like you’re feeling that like all the time, there’s no comfort of the salary.

Chris’s Own Money Mindset Journey

26:13 Emily: Okay, so we’ve talked through what kind of mindsets you might have if you’re in academia, how do identify them, how to change them or start to change them, because you said, it’s going to be a process. You’ve talked about your own personal story here and there throughout this. Is there anything that you want to add more so about your career or your financial journey, especially as it relates to your money mindset?

26:35 Chris: Yeah, I think it’s interesting. I’ve had a constant evolution of my money mindset and it started back when I started reading personal finance books, at the beginning and each personal finance books was like a revelation. Like the first one, I remember reading a book called The Millionaire Teacher. I don’t know if you know that one. And it was like, okay, it’s low cost index funds, that’s how I’m going to build wealth. Low-cost index funds, low MER, ETFs — that’s the answer. And then I read the next one and it was like, actually people with managed portfolios do better over time and like, okay, who do I believe?

27:11 Chris: I think one of the most interesting things about my money journey has been, first of all, just digesting the huge amount of contradictory information out there. And there is a lot of it. For example, I remember reading Dave Ramsey and David Bach around the same time, and Dave Ramsey is like, pay down debt, don’t buy a house until you’re out of debt and David Bach was like buy a house tomorrow because nobody’s going to let you leverage that amount of money anywhere else. So it’s funny, I think like looking back now, I was forming my own views around money, even though there are little nuances in how they actually play out. I remember reading one book in particular and it was after I had read all these different people and the book was, I’m almost ashamed to say it. There are two money books I’m really ashamed to say that I like. I wonder if you could guess them, the first is Robert Kiyosaki’s Rich Dad, Poor Dad.

28:05 Emily: Yeah I was going to say Rich Dad, Poor Dad.

28:08 Chris: I’m so embarrassed to say that I liked that one. First of all, because if you Google Robert Kiyosaki, as an individual, I’m not endorsing Robert Kiyosaki. He’s had some interesting business practices and definitely has some interesting beliefs today. But the book was revolutionary for me. It really changed the way that I thought about business and wealth and just my own upbringing. The second one, this one it’s called The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime! It’s by a guy named MJ DeMarco. I would almost recommend it, but I’m hesitant because it’s like a bro book. He’s just one of those…he was an internet millionaire and it’s really, especially when you read it there are just some things that like don’t sit right. But the one thing that I will say that hit me about that book is he said actually when you look at all these personal finance gurus, none of them got rich off of following their own advice. Dave Ramsey and Susie Orman, these people didn’t get rich from saving 15% of their paycheck. They got rich by creating something that had massive value, massive scale, and creating huge personal brands and putting it out there in the world.

29:16 Chris: And I think that was really like something clicked. I had been working for the government too and realizing that even though I was making quite good money compared to what I was making in my PhD and I was interviewing for jobs that would make even more, I was giving away a third of it in taxes. I was struggling. Even our family, we thought we were going to be wealthy now that we have a paycheck and have a good job and I have a pension. And I mean, the opposite was true. Trying to scrape together that 15% to save every month or whatever it was going to be, it felt almost impossible, just because of the realities of our cost of living and raising kids and unexpected expenses. And I remember kind of thinking this through and saying, okay, it’s one thing to start when you’re 20 or 25, and have the value of compound interest over time and save that $40 a month or whatever it was. But it’s actually quite a different thing to start when you’re 35 with student loans that need to be paid off and try to create a sizable chunk of wealth. It’s possible. It’s definitely possible.

30:23 Chris: At the time I was the only one working my spouse Carolyn was home with our kids and she is a graphic designer, so she does some freelance work, but she wasn’t making a full-time income. So I think I just kind of came to the reality and it was about the time I read this, that it kind of shook me. And I said like, actually the way that I’m thinking about wealth is right for a lot of people, but it might not be right for me. For your listeners, there’s probably a variety of people. If you’re a two income family earning $180,000 a year, it might be pretty easy to catch up and squirrel away 30% a month instead of 15% a month and catch up to where you would have been. But for my own reality, I fell in love with the idea of business and the idea that in my case, especially with an internet business that I could start with almost like nothing. I could start with $3 a month and create a business that’s worth a lot of money. I didn’t know where else you could leverage that. Like you have that kind of leverage or create that kind of scale from starting with like paying Bluehost $3 a month and putting my ideas online to creating something. And I don’t know exactly, like I’m not great at evaluating blogs, but I think even today, Roostervane, from what I understand would be worth like between $30 and $60,000, which is not a huge amount of money, but I started it last year.

31:39 Chris: As a business person, it’s just thinking through business has changed everything about how I see money and I’m no longer one of those people trying to squirrel away part of my paycheck. And those are totally fine if that’s the position somebody is in and that’s kind of their money worldview, that’s totally great. But for me personally, I just got a lot more interested in creating an asset. Creating this asset that’s called a business and it changes everything. I don’t really care how much I take out of the business. I don’t care how much my paycheck is because I actually love having money in the business to reinvest back into it. It’s just little things like that, that as an entrepreneur radically reorients your relationship to money and it really changes the way you view everything. It’s been a long journey and I think I’ve talked a lot about it, but it’s been really interesting, and I still have so much to learn, but it’s just that constant growth and realization, coming to the idea that there are some principles that I’ve come believe about money, about things like scale and impacting people and creating value. And that’s some of the things that I’ve put on the blog, which I haven’t really blogged about why you should invest in low cost index funds. I’ve just blogged about here are some of the kind of generic things that I believe about building wealth.

32:54 Emily: Yeah, I’m so glad to hear that narrative and I see a lot of my own story reflected in that as well. Of course, I’ve also come to entrepreneurship.

Chris’s Business

33:01 Emily: So if people want to read more stuff from you, tell us where they can, they can find you.

33:08 Chris: Yeah, Roostervane.com. It’s kind of like a weather vane, but there’s a rooster on top — Roostervane. And that’s where I blog about…my main thing is careers with purpose. It’s just thinking through like how we actually get jobs and careers, but also how we make meaning from them. That’s the kind of humanities thing that I bring to it is how we think about meaning. So Roostervane.com. You can find me on Twitter, @cjcornthwaite is my handle. You can just search my name, Chris Cornthwaite. Twitter, LinkedIn, wherever I’m always happy to chat.

33:40 Emily: Wonderful. And last question for the interview, Chris, what is your best financial advice for another early career PhD? And it could be related to something we’ve already discussed in this interview, or it could be something completely else.

33:52 Chris: Educate. Education, learn. It’s amazing how many people can spend five or ten years learning about the nuances of a field, but don’t actually want to take any time to learn about the basics of personal finance. I would say read as much as you can, listen to a podcast like this one, and just educate yourself and you’ll be empowered to actually create wealth and to get over some of those mindsets we’ve talked about.

34:18 Emily: Wonderful advice. Thank you so much for joining me for this interview, Chris.

34:22 Chris: Thank you, Emily. My pleasure.

Outtro

34:24 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the personal finance for PhDs podcast. There you can find links to all the episode show notes, and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.