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The Motivation and Strategy Behind Biology PhD Stipends

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In this episode, Emily interviews Shelly Gaynor, a fifth-year PhD candidate in botany at the University of Florida. After learning of the possibility of a stipend decrease in her department last year, Shelly dedicated herself to raising the stipend in her department at UF. She and a partner even launched an app to collect stipend information from other biology departments around the US. Shelly shares everything she’s learned about the factors that influence how stipends are set and her advice for other stipend advocates. The interview concludes with a round-up of all the stipend and benefits advances Shelly has witnessed in her department, through her union’s negotiations, and at other institutions.

Links Mentioned in the Episode

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Teaser

00:00 Shelly: I think that the conversation has to focus on how competitive the stipend is. I think that is a focus of admins, at least here at UF. That is a big focus, is, you know, they want to compare themselves to other institutions and they want to look good. So, I think that comparison’s really important.

Introduction

00:25 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. This is Season 14, Episode 10, and today my guest is Shelly Gaynor, a fifth-year PhD candidate in botany at the University of Florida. After learning of the possibility of a stipend decrease last year, Shelly dedicated herself to raising the stipend in her department at UF. She and a partner even launched an app to collect stipend information from other biology departments around the U.S. Shelly shares everything she’s learned about the factors that influence how stipends are set and her advice for other stipend advocates. The interview concludes with a round-up of all the stipend and benefits advances Shelly has witnessed in her department, through her union’s negotiations, and at other institutions.

01:40 Emily: There are some free recurring opportunities to meet with me that I’d like you to be aware of. First, my Office Hours are back! I set aside 30 minutes once per month to chat with up to 4 early-career PhDs about whatever money-related questions or topics you’d like to bring up. I’ve set the dates for these sessions through August 2023. Register for any of them at PFforPhDs.com/officehours/. Second, through at least September 2023, I’m hosting a monthly Ask Me Anything on mortgages and being a first-time homebuyer with Sam Hogan. Sam is a mortgage originator specializing in early-career PhDs, an advertiser with Personal Finance for PhDs, and my brother. If you are considering or embarking on the home-buying process and have a question about any aspect of it, please join us! Register for the next session at PFforPhDs.com/mortgage/. I hope to see you in one of these calls in the coming months! You can find the show notes for this episode at PFforPhDs.com/s14e10/. Without further ado, here’s my interview with Shelly Gaynor.

Will You Please Introduce Yourself Further?

03:07 Emily: It’s really a special day on the podcast because today I get to interview Shelly Gaynor, a fifth-year PhD candidate in botany at the University of Florida. You may recognize Shelly’s name because she is one of the people behind an advocacy campaign and research campaign around raising stipends in her department and across the field of biology. And that’s gotten a lot of attention in the past year. So, Shelly, thank you so much for agreeing to come on the podcast. I’m really looking forward to speaking with you today! Will you please introduce yourself a little bit further for the audience?

03:40 Shelly: Well, thanks for having me! I study evolutionary biology of flowering plants here at UF and hopefully will be done in about a year.

03:49 Emily: Yeah, that’s great. So, regarding the project that I just mentioned, is there a name? How should we refer to the project?

03:56 Shelly: We call it Biology PhD Stipends.

Biology PhD Stipends

03:59 Emily: Okay. Biology PhD Stipends. So, what motivated you to start to advocate around raising stipends in your own department, which ultimately led to Biology PhD Stipends?

04:11 Shelly: So, I started advocating more formally during my fourth year of grad school. I was starting to plan out my timeline and figure out when I was going to finish my PhD, and it became very obvious that I really should take six years. We had always planned for me to take six years, but I hoped not to because I really didn’t plan for the cost of living to increase so much in Gainesville. Every year, it seemed that rent went up about a hundred dollars, but the cost of living increased even more as we moved through the pandemic. And, you know, friends everywhere were struggling, not just here, but it was very noticeable here that people were starting to struggle to afford to live. So, at first I put together a document with about four other students that outlined what the current salary meant in Gainesville, what was the take-home after taxes, tuition, fees, and health insurance, and how far did that money actually go in Gainesville.

05:05 Shelly: And the conclusion was that it doesn’t cover the average cost. Students are expected to be rent burdened and spend more than 30% of their income on rent, and they could also be health burdened and spend more than 7.5% of their income on health costs due to our really high out-of-pocket maximum. At the same time as we put together this document and distributed it through our department, at the college level, there were discussions about how to deal with the decreasing teaching assistants’ budget. And they had decided that a group of faculty were the ones who had to decide how to decrease this budget, how to deal with those decreases. And one of my dissertation committee members was a part of that committee, and he let me know about discussions regarding cutting the graduate teaching assistant pay and standardizing it across the college. And this is when I started to collect data.

06:05 Emily: That’s a bit shocking. What was the reason behind the overall budget decreasing? Is that enrollment decreasing or something further than that?

06:14 Shelly: I think it had to do, based on the documents that I’ve read, with just general flow of money, there was a line that used to go into OPS budget, which is what the teaching assistants come from, and that had been diverted elsewhere. So, they had to deal with this ongoing decrease, and the provost gave them funds for a few years to help them cover this change, but the decrease was still coming because that revenue flow wasn’t supposed to be there originally. And they just had to start to account for that.

06:48 Emily: It’s not that I don’t appreciate the budgetary strains that I think universities and schools and departments and so forth are dealing with, but it seems to me that making the budget balance seems to be too often placed on the shoulders of the graduate students and it becomes their responsibility. And the effects on them are real <laugh>. They don’t eat as much or they don’t get the type of food that they want. They don’t live in safe housing, et cetera, et cetera. Instead of being a more, I don’t know, academic exercise <laugh> to cut it elsewhere. I think it’s so unfortunate that the budget is balanced on the backs of teaching assistants, for example. Okay. So, you heard that this was a possibility of there’s not even less work to go around, it’s just the same amount of work and potentially for less pay. You started doing the research route, the actual cost of living, what the stipends were.

07:50 Shelly: And there is a happy ending to at least that part is that they did not cut, you know, graduate TA stipends. That was not the end result.

07:58 Emily: So, what happened? What did they do?

08:01 Shelly: They did allocate differently and they cut the overall amount of TA lines rather than individuals’ pay.

08:07 Emily: Okay. So, the work was just distributed among fewer people, but those people were not paid less than they were before. Is that right?

08:16 Shelly: Yes.

08:17 Emily: Okay.

08:17 Shelly: From my understanding.

Building an Argument

08:19 Emily: So, when you started collecting this information and to make this argument for not just maintaining but increasing the stipends, what elements were you looking at to include in this argument?

08:31 Shelly: So, since we put together that document about, you know, how does the pay go in Gainesville, how far does that go? I focused on what would convince those who weren’t swayed by student conditions, what would the admins want to see? And I talked to a ton of faculty and leaders at my institution, but mostly others. And what I learned from that was, you know, you need to know who controls the budget and you need to focus on the importance of hierarchy. So, there are different budget systems at universities, and from my understanding, at the University of Florida, the budget is determined by our provost and our board of trustees. Now, to get to that provost and board of trustees, the faculty members need to convince the department chair to then go to the college and the dean who then can go to the provost and board of trustees.

09:22 Shelly: So, that was part one, is that, you know, it’s a hierarchy that people need to be talking up the list so that everyone cares and is pushing for this agenda item. Now, the second part is that benchmarking is really important. At the college level, and at the university level, the main administration offices should be doing benchmarking. And what I mean by that is two parts. So first we have internal benchmarking, which is just assessing the current status of students. For example, within our department, we found we have 19 different pay rates for the same work. So, are TA positions are at 19 different rates. We also looked into the yield rate, which is the percent of students who accept our offer to come to our program. And we found that in three years, we went from 80% to about 55%. The next step is external benchmarking, and that’s pure institution comparisons, and that is what my database was made for.

10:25 Emily: So, the internal and the external benchmarking, you targeted these as areas that you could, I guess, assist with or bring your own data to. But were the administrators and you know, this hierarchy, people in this chain of command, they were already doing this, right? Or were you bringing different data to them? How were you supplementing the process that they were already engaged in?

10:49 Shelly: So, supposedly they were doing benchmarking and they have presented data at the board of trustees meetings, but it doesn’t match my data. And even if I cherry-pick my data, I can’t find a way to make it match. And one of the reasons is because they’re combining med programs with college of liberal arts and science programs and calling that biology. So yes, we do look a lot better when you take the students who are funded by the med school versus colleges that only fund based on liberal arts and graduate TA ships.

11:22 Emily: So, in your mind, they weren’t really comparing apples to apples, they were conflating a couple of different groups together?

11:28 Shelly: Exactly.

11:29 Emily: Okay. So, the process that you were engaged in was, you were thinking, presenting higher quality data than the ones that they were using in their discussions to hopefully go up this chain to the decision makers. Is that right?

11:42 Shelly: Kind of. I also wanted the data to be accessible at the faculty level. So, when we talked to other faculty, they would ask me, you know, what about the other institutions? Like, that was actually a conversation that we already started having. So, it made sense to collect our own data so that we had something to show.

11:59 Emily: Gotcha. So, it seems like the conception of Biology PhD Stipends was to be able to compare, do this external benchmarking from the University of Florida, but also many other universities would be able to use this data as well to do this external benchmarking. And you mentioned my database, PhD Stipends, which is self-reported and a starting point I would say, but you approached things a little bit differently with Biology PhD Stipends. So, can you explain to us how you were collecting this data?

12:33 Shelly: We should rewind a bit. So, originally I just made a plot of 40 or so departments and realized they didn’t meet the living wage. And once I tweeted that and got a lot of feedback from other departments, that’s when we made it public. The reason why it’s different than PhD Stipends and not self-reported is because admin don’t always want to believe that data. And so we got a ton of pushback saying, well, you know, these are self-reported, they’re probably less, they probably account for taxes already and fees, and that’s not, you know, what we’re looking at. So, we don’t trust this data. Bye. You know, they would push it away. So, my goal was to have something that an admin couldn’t push away, couldn’t discredit, to do as much due diligence as possible. We even have an option on our website to only look at nine-month salaries versus 12-month, even though those nine-month agreements are the only money you’re getting for the whole year. We still allow those divisions so that if that’s where the pushback comes from, you can already see the data that way.

Phases of Data Collection

13:44 Emily: Okay. So, I guess I’m asking maybe two phases. So first phase, when you were collecting data and you created this chart that then later got more attention, where did that data come from?

13:55 Shelly: So, part of that data came from my undergrad institution and from faculty members there who had collected internal or external benchmarking measurements for their own efforts. And the rest of it came from searching the internet or there was this one Google sheet with a couple links in it for EEB stipends. So ecology and evolutionary biology stipends. And I worked from there. So, I just started searching biology PhD stipends to see if I could find reported stipends online.

14:26 Emily: Okay. So, this is what departments themselves say about what they’re paying their students, is that right?

14:31 Shelly: Yes.

14:32 Emily: It’s interesting that, and I understand it, but that the administrators didn’t want to trust the self-reported data in PhD Stipends, for example. But I don’t trust what they put on their websites. You know, you have to get both sides of the story. Right? Okay. But you went with the self-reported in terms of the administrative self-reporting side of things for that initial set of 40 schools. And then you said you tweeted, it got lots of attention as <laugh> I’m sure anyone would be interested. And then how did you expand the data from there?

15:01 Shelly: I started talking with faculty members at a lot of different institutions as a student rep for the Botanical Society of America. And that gave me a lot of connections within my field. And so I knew faculty members at lots of different institutions and I made a Google form and had different faculty members test it out to see if they could report data accurately and if it made sense. And I, in some cases, sent it to two people at one university to see if they would report the same thing. And then we made the shiny app. Part of the reason it was a shiny app which is just a version of R, it’s an interactive R-based plot, that you can put on a website was because my significant other had just launched another shiny app. So it was like, okay, I’m going to learn how to make a shiny app with this data to make it accessible. So, we made the Google form, we put up the shiny app, and we went from there.

15:57 Emily: I guess I’m still wondering a little bit about this data collection process. It doesn’t seem too dissimilar actually from what we’re doing at PhD Stipends, but you mentioned like internally within, I can’t remember if it was your department, you said there were like 19 different pay rates. So how, if you approach a faculty member at a different department, at a different university and say, what are you paying your graduate students? How do they know which pay rate they’re supposed to choose?

16:20 Shelly: So we asked for the minimum, what is your lowest paid PhD student in your department at this time? Not in the incoming class, but in the class that still exists. Who is your lowest paid? What is that rate? And that’s what we’re looking for. We make that very clear on our Google form. And that’s why I sent it to many faculty members was, Hey, does this make sense? Do you know what you’re reporting? Yeah. And the cool thing is that a lot of faculty or a lot of different departments have been reported more than once. So we can go through, compare the wages, figure out what’s going on, and a lot of times it’s the same, which I think is really important to see.

16:59 Emily: Do you get back zeros? Are they reporting that there are unfunded students or is that something that you explicitly exclude?

17:08 Shelly: So, if you don’t have an appointment, a 0.5 FTE, then no, we’re not including you. It’s only if you have a work appointment. In biology, it’s very rare to enroll in a program and not have an associated research assistantship or teaching assistantship. And if that’s the case, run, like don’t be part of that program

17:33 Emily: Yeah. In that field for sure. And then I’m also wondering about people who are not employees, but who rather are paid from what I call awarded income or fellowship income. I’m assuming they’re not included in this survey?

17:47 Shelly: No, they are not.

Commercial

17:51 Emily: Emily here for a brief interlude! We’re doing something special for Season 15 of this podcast, and as a loyal listener, I know you’re going to want to be involved. Season 15 will be a chance to share your financial experiences, even if you don’t want to give a full-episode interview or want to remain anonymous. We’re going to publish compilation episodes around certain themes, and each episode will feature at least a half-dozen different contributors. The contributions can be audio clips or written text that I will read aloud for the episode. If you are interested in contributing, check out PFforPhDs.com/season15/. That’s the digits 1 5. On that page, you’ll find a list of the proposed themes and how many volunteers I’ve identified for each episode. Your next step is to email me at [email protected] to let me know which episode you’d like to contribute to or if you have another idea for the list. Once I’m confident that we have enough contributions for an episode to be created, I’ll give the volunteers specific prompts and directions to create their submissions. I hope you will choose to participate in this unique season! I can’t do it without you, so please get in touch! Now back to the interview.

Reallocating Funds for TAs

19:14 Emily: So, what happened as the database gained traction?

19:18 Shelly: Okay, so nothing happened here at UF Biology in response to the database gaining traction. Eventually, maybe seven months later, I ended up presenting at faculty meeting and our faculty signed a letter saying they wanted to increase salaries, but then they had voted against every option to increase salaries at the department level. Within a department, there are many ways other institutions have been able to successfully increase TA salaries. It might not be by a lot, but things that other institutions have done include converting faculty hire lines into teaching assistantship salaries. Many have reevaluated the teaching assignments and decreased their TA needs to then reallocate funds. Many admit fewer students. One cool one was fundraising to top up students, which is kind of fun to see. And then another that’s more controversial is that programs have required principal investigators to cover summer pay.

20:21 Emily: Okay. So, all of these options were sort of in the mix. Maybe this could happen, but specifically none of them were agreed to.

20:29 Shelly: Yeah, not so far. We’ll see over time how that changes. I hope that they you know, look at the TA allocations. I think that’s something in the works, but it just hasn’t started yet.

20:42 Emily: So, that’s what was happening at UF. Have you seen other reactions or other effects at other institutions?

20:50 Shelly: Yes, and so I think that’s the more positive side. I’ve seen about 50 salary increases in biology departments across the country this year. We’ve had a lot of users on our site, about 12,000 unique users and a lot of submissions and corrections. It’s always good to hear that it’s been helpful in discussions in other departments and successful in some cases.

21:16 Emily: Yeah, that’s awesome. And you’ve had people like directly attribute like, Hey, we use this data to make this argument. Yeah. That’s amazing. Well, thank you so much for doing this work, and I’m so glad it has had some positive effects for some other people not necessarily at your institution.

Behind-the-Scenes Factors for Administrators

21:32 Emily: Okay. We touched on this a little bit earlier but let’s expand. So, what have you learned about the behind-the-scenes factors that administrators are weighing when they set stipends? And in learning that, do you have any advice for people at other institutions who are advocating for stipend increases?

21:50 Shelly: I think that the conversation has to focus on how competitive the stipend is. I think that is a focus of admins, at least here at UF. That is a big focus is, you know, they want to compare themselves to other institutions and they want to look good. So, I think that comparison’s really important. From that and from behind the scenes, I think the biggest thing I’ve learned is advocacy has to happen at every level. You need to be having conversations about pay with your faculty members, and they need to have those conversations with the chair. And the chair needs to be pushing. Everyone has to push for change to happen. And not only that, the money needs to come from somewhere. We just saw that with the UC system, that in some cases in response to this amazing bargaining agreement, departments are cutting the FTE to be able to afford the pay. So, identifying where the money can come from would also be something important to administrators.

22:55 Emily: So far, these levels that you mentioned, I suspect would’ve stopped at the university president, but how about going up to the state level or federal level? Have you given thought to advocacy at those levels yet?

23:08 Shelly: To an extent, yes. In Florida, our universities can submit funding requests in order to raise stipends. And so, Florida State University was actually able to do that. So, they got that from the state, but I haven’t thought about advocacy at that level because I’m in Florida. And I don’t think it would be successful at this time. They would rather have the war against academia than work with us. So, I don’t think that’s a conversation we’ll have here.

23:39 Emily: Yeah, I was thinking about it, because I live in California, when the UC strike was going on like that again, the responsibility for balancing the budget should not be on the backs of the graduate students. It needs to be at the state level, it needs to be at the federal level. And I agree it’s a much harder road to hoe in Florida than it is in some other states. So yes, thank you for those comments. So, I understand that you have a union at UF for graduate students. Is that just for TAs or is it for research assistants? How many people does it cover?

Graduate Assistants United 

24:10 Shelly: So, it is called Graduate Assistants United, and it covers teaching assistants. So, as a fellowship recipient right now, it doesn’t technically cover me.

24:20 Emily: Okay. And so what work is the union doing on campus, and how does your Biology PhD Stipends project fit into that?

24:31 Shelly: So, our union is currently bargaining, and in the past they have won tuition waivers, health insurance coverage, and some increases including about a thousand dollars increase to the minimum last year. Biology PhD students are paid more than the minimum. So my data really isn’t helpful for our union because they’re really focused on that minimum and bringing the minimum up.

24:56 Emily: Okay. So the union has made some strides, but your biology department already being above those minimums, it’s a little bit not so relevant. But is there anything else that you want to say about how your work can complement the union efforts?

25:11 Shelly: So, our union is still currently bargaining and they have made past wins, like I mentioned. One thing that makes it really hard in Florida is we’re a no-strike state. So, that puts a lot of burden on what advocacy can be done. As we’ve seen strikes have been, you know, really successful in unions across the country. And with that off the table, I think it’s really difficult to bargain here.

25:36 Emily: Yeah, as I’m learning more and more about this topic of unionization, and because I work nationally, that’s something I need to keep in mind. That not everything operates the same in every single state. It’s really kind of a heterogeneous map. So, then what is the current status of the minimum stipend in your college?

25:56 Shelly: So, at our university, it’s now $17,000, but in the biology department, we found out that our master’s students are actually paid $18,000 while our PhD students are at $20,500 as the minimum. So, this is the same minimum we started at when we started the biology stipends database, but new students who are incoming, there’s a slight win that for the next four years in their degree, the first four years of their degree, they’ll be paid $24,000. So that we see as a win, even if it doesn’t really help the rest of us. There was also an increase in the maximum research assistantships that our faculty were allowed to write into their grants, so that now has increased as well. One other, I would say exciting increase partially because my dissertation advisor was a part of this, our biodiversity institute was able to increase their nine-month fellowships to 30,000, which is a big win.

26:58 Emily: Yeah, I’m so pleased about those things. I’m a little bit surprised actually that the raises that were given didn’t apply to current graduate students and only incoming. Do you know any more about the reasoning behind that?

27:11 Shelly: That has to do with how the university allocates funds. So, in order to, you know, recruit good students, they have funds that are only earmarked for recruitment and incoming students, and those are only four-year fellowships. So, that’s what the funds come from and sadly, they cannot be applied to current students.

27:33 Emily: I guess this is the dangerous downside of using that external benchmarking specifically as a comparison in terms of recruiting other students, is that they can then use that logic of, well, we already have students enrolled, we don’t need to worry about them leaving, we’re just going to focus on recruiting that next class with this extra money. So, a little bit sorry to hear that, but good for them. And thank you again for doing the work that you do to at least benefit those incoming students and really your department overall, if not the older classes. Okay.

Advice for Prospective Students

28:05 Emily: So, what advice, you know, speaking of prospective graduate students and being recruited and so forth, what advice do you have for prospective graduate students in light of everything that you’ve learned through this process?

28:15 Shelly: Yeah, so I just had two undergrads I mentor apply to PhD programs. And one thing I kept telling them was, know your worth and ask for more, and actively discuss pay. Ask students in your potential lab and department how much they get paid now and what opportunities exist at their institution after you’re enrolled. Just because we know that these, you know, top-ups to get you there exist in those only last four years when our programs could last much longer. So, having those conversations as you interview at institutions is really important. I just think that we really have to open the door to conversations about pay and financial wellbeing during that recruitment process, make it not taboo, really just open that dialogue. So yeah, if your prospective, I definitely say talk about it.

29:07 Emily: That component of your answer was about gathering data, right? As a prospective graduate student, what are you being paid? And I would add onto that, of course, the qualitative, how does that feel, <laugh>, are you able to live well enough? Right? But you mentioned when you first started answering, ask for more. So what do you think about that process?

29:24 Shelly: So, I’ve never done it myself, but when I was applying to grad school, a current PhD student in my lab told me, you know, apply to multiple places and then tell them how much the other institution’s gonna pay you. He said he did it successfully, and that is the only time I’ve ever heard of that working. But, you know, if an institution really wants you, they’ll find more funds if you need, like, if they really truly do or at least I think they will.

29:51 Emily: Yeah, I fortunately in my line of work have come across many examples of people using that kind of strategy and also the strategy of, I won this external fellowship. If I bring it to your institution, you know, what are you going to do for me? Et cetera, et cetera. Those kinds of strategies, I mean, they’re not universally successful, but some people do have success with it. Your comment of if they really want you, then they’re going to find more money. I don’t know, I don’t know if that’s true, but I think they should at least respond to you very respectfully and understand why you’re asking for this and explain to you at the kind of the things that you’ve learned. Well, you know, our hands are tied in this way and we have to standardize this and this and this, but we do really want you. And you know, they, they may be able to find another way to make up for it that’s not financial, at least with verbal affirmation, we hope, alone. So yes, these strategies can be successful sometimes. Any other advice for prospective graduate students?

30:42 Shelly: I think on that same line read the fine line print, like if a fellowship is only gonna be four years, ask for the other for what’s left over to be covered. If you’re on a research assistantship that pays more than your teaching assistantship in the department and that research assistantship only asked x number of years, ask to see if there are funds available to make it equivalent. In some cases there won’t be, you’re completely correct, but if there is, it’s good to know about them going in and if there isn’t, it’s good to know about them going in.

31:16 Emily: And I just think this process of asking, even if you don’t get anything from it, which I certainly hope that people will, and I think they do sometimes. I think just the process of asking signals to the DGS or whoever is you’re asking that they can go up the chain as you were saying earlier, this is an issue that is important to the graduate students that we are recruiting. And even if they can’t do anything right then for that student who’s in front of them, it goes into, you know, the anecdotes and the data that they’re collecting to make those arguments for more fellowships or higher stipends or whatever the case it is going forward. So, even if you don’t see an immediate yes result, that doesn’t mean it’s not going to have a positive effect downstream. And really that’s kind of the lesson that we’ve seen from your work overall, right? Like there have been some, you know, gains here, gains there, marginal gains here, and it’s certainly helped a lot of other people quite a bit. So, like you never really know what the end result is going to be from that ask or from that data that you collect.

32:13 Shelly: Yeah, I definitely agree. Even having the conversations about if someone brings a fellowship, we should top them up is important and something that GRFPers who received that award while they’ve been here, have been having with the department here. So, I do think just asking can have a lot of impacts.

32:35 Emily: Yeah, I literally gave that advice to someone I was speaking to last night. A current first-year graduate student won the NSF GRFP, her stipend’s going to go up by $10K for those three years. And I said, just ask, just ask for that fifth year, sixth year, whatever it’s going to be at that 10K bonus or closer at least, and it really does no harm. Just ask.

Best Financial Advice for Another Early-Career PhD

32:56 Emily: Well, Shelly, I so appreciate you coming on the podcast and sharing this information with us, and I really hope that the listeners will take some of these strategies and lessons that you’ve learned and certainly the database itself if they’re in your field, and use those for a positive effect on stipends at their own universities. And then to wrap up here, I want to ask you the question that I ask of all my guests, which is, what is your best financial advice for another early-career PhD? And that could be something that we’ve touched on already in this interview, or it could be something completely new.

33:26 Shelly: Yeah, so I went back and forth with my family about what makes sense, and one thing that I live by, save when you can and try to live within your means. And I know that’s a really hard thing to do when we’re talking about stipends not meeting the living wage. But as you move through your career, I think it’s important to keep that in mind.

33:49 Emily: I had an experience in my own life where, you know, sometimes the opportunity to earn money can be there and sometimes it cannot. And I just told myself, make hay while the sun shines <laugh>. when you have the chance, earn the money that you can, put away the money that you can because at some point that sun will stop shining. Whether that’s because of something, you know, decided for you by your university or other personal circumstances and it’s just such a peace of mind that you could have something to fall back on in those cases.

34:17 Shelly: Yeah, I definitely believe in a rainy day fund and having funds saved up.

34:23 Emily: Well, Shelly, thank you so much again for coming on the podcast and giving this interview. And for anybody wondering, you know, where to find all the great work that you’ve been doing and there’s been articles about your database and so forth, we’ll link all of that stuff from the show notes. So, thank you so much again for coming on and sharing your insights!

34:39 Shelly: No problem.

Outtro

34:45 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

This Grad Student Saved and Spent $60,000 for a Year-Long Seabbattical

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In this episode, Emily interviews Michael Spano, a fifth-year PhD student in chemistry at the University of California, Irvine. After seeing his stipend offer from UCI and securing university-subsidized housing, Michael resolved to save and invest as much money as he possibly could throughout grad school. Michael shares his financial philosophy of keeping recurring expenses low, splurging only on high-value experiences, and finding joy and fulfillment in inexpensive activities. Over the course of graduate school, Michael saved up approximately $60,000 in cash, which he has spent—listen through the end of the episode to find out on what. His post-graduation plans include a year-long sabbatical and pursuing financial independence.

Links Mentioned in the Episode

Image for S14E9: This Grad Student Saved and Spent $60,000 for a Year-Long Seabbattical

Teaser

00:00 Michael: I talked about how I minimized all of my recurring costs so that I have a lot of ability to save, and that allows me to make these one-time purchases that I put a lot of value on. Things that I only have to buy once. For instance, you know, a wetsuit, it’s maybe a four or $500 investment, which, you know, if you don’t have savings, it’s a lot of money. But because I had this, you know, money saving up as I’m watching it grow, I’m like, Hmm, yeah, I’ll take a little bit off the top and I’m going to buy this equipment. And it gave me hours and hours and hours of joy.

Introduction

00:36 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. This is Season 14, Episode 9, and today my guest is Michael Spano, who at the time of this interview was a fifth-year PhD student in chemistry at the University of California, Irvine. After seeing his stipend offer from UCI and securing university-subsidized housing, Michael resolved to save and invest as much money as he possibly could throughout grad school. Michael shares his financial philosophy of keeping recurring expenses low, splurging only on high-value experiences, and finding joy and fulfillment in inexpensive activities. Over the course of graduate school, Michael saved up approximately $60,000 in cash, which he has spent—listen through the end of the episode to find out on what. His post-graduation plans include a year-long sabbatical and pursuing financial independence.

01:59 Emily: I have a personal update for you all today. The last six months or so have been pretty hard for me and my family. Starting last fall, my husband and I had some extra caregiving duties for one of our parents pop up. And the conclusion of that journey a couple of months ago was the death of that parent. So, it’s been a very trying season of course managing all of our regular life plus these extra caregiving responsibilities. Plus it was tax season, which, you know, is like the busiest time of year for me. And then of course grieving and the funeral and all these associated things. So, it’s been a lot, and I just wanted to say thank you to you all. To everyone who has supported my business in any large or small ways through this period, I’m especially appreciative. I could not do any marketing for my tax return workshops outside of like this podcast and my own mailing list because I didn’t have the time and energy for it.

03:05 Emily: So, I super appreciate all of you who recommended that workshop, whether that was to an individual or to a potential sponsor at your university. It really helped me get through this season without a huge hit to the business revenue and so forth. And I also want to say, you know, thank you for your patience with me. Some of you may have emailed me during this time and I may not have gotten back to you or gotten back to you weeks or months later. And I’m really sorry about that. It had to happen. And one more, very special thank you needs to go to my team who works with me behind the scenes on the podcast and on other aspects of my business. Jill, Lourdes, and Meryem, I appreciate you so much. It is really, really all to their credit that things have been happening in the business. That your emails have been getting answered, that podcast episodes have been coming out, that transcripts are getting done, all of those sorts of things especially over the last few months. Literally, the business would have ground to a halt without you. So, thank you.

04:03 Emily: Now that we’re near the beginning of May, I have turned my thoughts to summer vacation. I am looking forward to a change of pace and hopefully some rest and recuperation over the summer. My kids are out of school from about early June to like mid-late August, and we have a couple of vacations planned. I’m going to a couple of conferences as Personal Finance for PhDs. My kids are enrolled in fun summer camps. I’m just really looking forward to a change of pace for the summer. One exciting thing about the podcast is that we’ll be doing something different with episodes over the summer and I really want you to contribute. So, please keep listening to this episode to find out how you can be part of the special set of episodes we’re doing over the summer.

04:50 Emily: What this experience has to do with finances, let’s see. I am really grateful to myself and my husband in the past for working very diligently on our finances and especially automating as much as we can. Because whenever you hit an emergency of any type, and we’ve been through a couple, having those finances automated is just a huge peace of mind that the bills are getting paid and you do not have to do anything to make that happen. I’m also really grateful that we, you know, have aggressively saved in the past because we did have some extra costs associated with the caregiving we were doing. And we didn’t have to worry about overdrawing the checking account. We had savings that we could rely on. And this experience of losing a parent and, you know, reflecting on the life that that person had and the relationship that we had with them, it makes you realize that <laugh> life is for living, you know?

05:38 Emily: And money should be in service of that. So, I do think that we are going to be adjusting our strategy going forward. We’re not going to be saving quite so aggressively for retirement. We’re really good on that front, and we’re going to be using our money a bit more in the here and now to upgrade our lifestyle and create, you know, lasting memories with our friends and family. So again, thank you so much for bearing with me through this time period. I’m really grateful to you. Thank you for listening. Thank you for sharing these episodes. If you’d like to join my mailing list to keep up with new episodes coming out and other announcements from Personal Finance for PhDs, you can do so at PFforPhDs.com/advice. And why don’t you give your loved ones a hug or a phone call today? You can find the show notes for this episode at PFforPhDs.com/S14E9. Without further ado, here’s my interview with Michael Spano.

Will You Please Introduce Yourself Further?

06:27 Emily: I am delighted to have joining me on the podcast today, Michael Spano. He’s a fifth-year PhD student at UC Irvine in chemistry, and he was actually recommended by past guest Sam McDonald from season eight, episode three. So, Michael, thank you so much for volunteering to come on the podcast, and will you please introduce yourself a little bit further to the audience?

07:05 Michael: Yeah, sure. Thank you for the warm welcome, Emily. I’m really happy to be here and talk about my story. Sam and I are domestic partners, so we share a lot of things in common. A little bit about my background. I’m actually a dual citizen with Brazil. I spent half of my life in Brazil. I had all of my primary education there, so middle school, high school, and college. And then I got lucky in college to have a Science without Borders fellowship. So I came to North Carolina and I got exposed to what like a science lab was in the United States, and I was hooked. So I knew I had to do my PhD here. So, ever since then I’ve been working to get back to the United States. And here I am doing my PhD at UC Irvine in chemistry, and I’m, yeah, stoked.

07:49 Emily: So, I understand that when you started your PhD, well, tell us what your stipend was. And tell us how that struck you. Having, you know, recently or let’s say for college, you were in Brazil and so obviously there’s currency and, and cost of living differences there. So like what were you thinking about that stipend when you first saw that offer letter?

08:05 Michael: Yeah, absolutely, right. So, the stipend was right around $30,000. And that was an enormous amount of money, like you said, having been coming straight from Brazil that was more money than any of my professors made at university in Brazil. So, it struck me as like an opportunity. Like if I play my cards right and I’m frugal about living, I could save a ton of money and be really well off. And mind you, if you go to a federal university in Brazil, it’s free. So, I didn’t have any debts from college. And I was going into a PhD where not only was I not accruing debt, they were paying me. So I could actually build net worth if I played my cards right. So, $30,000 a year was the largest amount of money I had ever seen at the time. And I think we can agree I kind of played my cards well and built something for myself.

Cost of Living Expenses

08:56 Emily: Yes, that will be revealed through the course of the episode. I know where the exciting conclusion is here, but the listeners don’t yet. But okay. I mean, you see the number $30,000 per year, I understand how that could strike you, but we also are talking about Southern California, which is incredibly expensive. So I don’t know if you had like the context for that at that time. Like when you lived in the U.S. before, was it also in a high cost of living area? Or like how did you, before you actually got on the ground in Irvine, did you have a concept of how much your basic living expenses would, you know, account for as part of that stipend?

09:27 Michael: That’s a fantastic question. Because no, I didn’t, I had no idea. You always hear like, you know, California’s super expensive. So, kind of to back up, I applied only to three grad schools because it costs money to apply. And, you know, at the time I didn’t have it. So, I applied to three schools, got into two of them, Chapel Hill and UCI. And UCI had this really cool deal where they guaranteed you student housing if you signed up for it in your first year. And it’s common in graduate programs, at least in chemistry, for them to fly you out to see the school and you get to meet the faculty and everything. So on that trip, you know, I took a quick look at all the facilities. I was like, great, yeah, everything checks out. It’s a top-notch school.

10:08 Michael: Let me go to Aldi and buy, you know, enough groceries for a week. Let me see what that costs. Let me go fill up the rental car that I have. Let me see what it costs to actually live here. And I talked a lot with the students about housing, and I saw that the rent varied a lot. The cheapest housing units at UCI were around $550 a month, which is like fantastic. And some of the more expensive ones were around $1,500. So, that’s a difference of a thousand dollars every month. That’s 12 grand a year. That’s a $60,000 difference over the course of your PhD. So, it was essential that I got one of those cheaper units. And because I got accepted into two programs, I was willing to walk away from UCI and go to Chapel Hill because the cost of living there is much cheaper if I didn’t get the housing assignment. Did that answer your question?

10:57 Emily: Yes, it did. So I think we’ve already, if there are any prospective graduate students listening to this, we’ve gotten some lessons there already from just what you said was going on during this admission season of you actually having the opportunity to be on the ground at the university. You were checking out what are the costs that you can observe, what are the costs that you can speak with other graduate students about? And like you said, housing is number one, the most key expense to identify and make sure that it’s going to be able to fit within your budget. So, this sounds like this was a point of negotiation with your program, that you said, I must have this guaranteed housing spot, or else I have to decline the admission. Is that correct?

11:33 Michael: Not quite. I didn’t quite have the power to enforce that requirement upon the school. But I did know the date in which they would tell me if I got the housing was still not too late, that I couldn’t turn down the offer and go and join the other school in North Carolina. So it was kind of like a plan B, if I didn’t get the cheap housing, I was willing to just say, okay, I’m out. I quit and I’m going to go to this other school that’s cheaper.

12:02 Emily: Yes. Okay. Maybe not for your situation, I don’t know, but for other prospective graduate students listening, don’t be afraid to try to use this as a point of negotiation. For you, it sounds like it was just a boundary. If I get this, I’ll go here, the numbers are going to work out. If I don’t, I’m going to go with my next top choice. And that’s totally fine to have that boundary for yourself. But other people could maybe go the next proactive step and just inform the program that that’s what you’re thinking and that is going to be a boundary that you’re setting for yourself. Okay. So, you have your $30,000 per year statement. You have your guaranteed lowest cost housing. You mentioned $550 per month. Is that what this has been during your graduate career, or has that changed?

12:45 Michael: Yeah, it’s been that and it’s gone up 15 bucks every year. So, I’m still in the range of like $600 something per month. Yeah.

Money Mindset in Grad School

12:53 Emily: Okay. Amazing. So, you know, you spoke earlier about, you know, being impressed by the amount of money and that you were interested in saving as much as you could of that stipend. Can you say anything more about what motivated you to think in that direction? Because it’s definitely not a typical goal for a graduate student.

13:14 Michael: Yeah, I think I just realized at some point, you know, like this money is freedom down the road, right? Like we exchange our life for money to do things we want. And if you’re not born into wealth, all you have to work with is your salary, right? If you’re not, if you don’t get an inheritance of, you know, $500,000, a million dollars, all you’ve got to work with is, either you come up with a really good idea, you start a business, you get rich, or you work with what you have. So, that was basically me realizing like, hey, this is a really good opportunity. I’m going to work with what I have. I did the math and you know, as we’re going to get into shortly, making some really severe like austerity measures, you can save a lot of money during grad school. It’s guaranteed income for five years, and if you play your cards right, you can save it. So, I think that’s where my head was at. You know, I realized, yeah, I wasn’t born into like a lot of wealth or anything. And this was what I had to work with. So, this was my shot I was going to take it and work with it.

14:19 Emily: So interesting again, and so unusual. I think I did something similar when I was in graduate school, though not to the same extreme as you in terms of the mindset that you had. My mindset was more like, I am an adult and I need to do adulty things with my money, even though I am also a graduate student. And so that involved like saving 10%. So I’m not thinking like, oh, I want to save every single dollar I possibly could, but like having a savings rate of some kind is something that, you know, I wanted to do. And so we had a similar thought process, but you’ve taken it a little bit further than I did at that time.

Minimizing Recurring Costs

14:53 Emily: So, let’s talk about the budget that you’ve had during graduate school, and later on we’ll discuss what you’ve, you know, decided to put those savings towards. But in terms of living expenses, what have those been aside from the rent, which we’ve discussed?

15:06 Michael: Yeah, so my philosophy on living expenses was to really take a hard look at everything that I was spending money on and asking, is this absolutely necessary? Do I really need this recurring cost? And I’ll be clear, I’m trying to minimize all of my recurring costs, like rent, like insurances, like cell phone bills, all these things that you have no choice. They get billed to you every month and you have to pay them, right? If you minimize those and you can save a lot of money, then you can choose to buy things when you want them, right? Like one-time payments for an object that will bring you lots of joy in my mind was better than subscribing to things over and over. And then, you know, wasting my salary because that, like I said, that was my only leverage is building up that savings.

15:53 Michael: So, my rent, I’m going to give you some numbers here annually, but my rent equates to about $7,200 annually. So for 12 months, I decided that, you know, in California you absolutely need a car. So I had a hand-me-down little car but it needs insurance, and that’s a recurring cost. So, even if my car is parked, it still costs me insurance. That was around $348 per year. And that’s another thing, a lot of people pay way too much for car insurance. Call the competitors and haggle. Say, Hey, I’ll switch to your company if you beat this price by 50 bucks. And when they do, call up the other competitors, like six companies. Just keep doing that until you drive the cost down.

16:34 Emily: I do have to say I’m very impressed by that number. Because I hear other people talk about their expenses for car insurance but I’m assuming you have a car that doesn’t have much value, right? And that mostly you have liability insurance is mostly what it’s there for.

16:48 Michael: Exactly. It’s just liability. A car is a tool. It shouldn’t, I’m sorry, this is my opinion, it should not be your pride and joy. That’s silly. It’s a trap. It’s a financial trap. If you’ve got a new car, sell it. Go buy a junker. Anyone giving financial advice would tell you that. Buy a junker, drive it until it explodes, fix it, and keep driving it. So here we are, rent $7,200 car insurance, $348 a year. My cell phone bill, I prepaid a whole year with Mint Mobile. They were doing this promotional. $109 for the whole year. And that’s for a four gigabyte plan, unlimited talk and text. The car needs a smog check in California, it’s $36 every year. Can’t get around that. It also needs to be registered, $128 a year. So right there, those are like my basics. Living and transportation. Mind you, I don’t have to put fuel in my car.

Retirement Saving and Discretionary Spending

17:36 Michael: So that’s not non-discretionary, that’s definitely discretionary. And then one thing that I put in my budget that I was not going to skip on was maximizing my Roth IRA. Now that’s a retirement account, it’s tax leverage. So you put money in that account that you’ve already paid taxes on and it grows tax-free and you can withdraw it under certain circumstances. But typically when you’re about to retire. So I max that out, it was $5,500 and it’s grown to $6,500 now. They might even change it this year or next year to compensate for inflation. So, when you add all those up, my non-discretionary spending, things I have no choice to pay. It’s $14,321 per year as you know, the criteria there. So my gross income is $30,000. You subtract those two and I now have a discretionary spending of $15,679.

18:31 Michael: So now, what do I choose to spend my money on? How am I going to live my life, live a fulfilled life, travel, see the world, be happy on $15,679? Well one, I buy California state park pass. So, that’s $200 a year and that gives me free parking to any of the state parks. So, I live six miles from a beach and that’s my go-to place. That’s my happy spot. I also bought some, well I’ll talk about that later, but groceries is a big one. I’ve got this supermarket called wholesome choice. I mostly eat vegetables, really healthy food. It’s $35 a week. So, that equates to $1,680 a year. I choose to have beer. I like my beer money. So, you know, having two or three beers a week, that’s, you know, at the grocery store. So, it’s six bucks a week. That equates to $288 a year.

19:25 Michael: Gasoline, let’s say $60 a month to go travel, see things that really opens up your horizons. That’s $720 a year. And then finally the National Parks Pass, which is a hundred dollars a year. And that, you know, just opens your world, right? And then California, we have so many national parks. That was, you know, hands down worth it. A hundred dollars a year. So now, add up my discretionary spending, that’s $2,983. Subtract that from my discretionary spending, and I’m left with what is my saving ability. So, I’m able to save $12,696 every year if I stick to this or roughly these numbers. So, that’s about a thousand dollars a month. So, multiply that for 12 months over the course of a PhD, five years, that’s $63,480. That’s not accounting for, if this money is in a savings account or invested in the stock market growing with the market, it’s actually more than that. It turns out to be like 70, 75,000 over that five-year span. So, that was the math I did. You know, if I can be happy putting gas in my car, going, seeing national parks, doing natural things, I don’t have to spend money on movie tickets or these other things or buying clothes or whatever, right? Whatever brings people happiness. Mine was cheap quality, good happiness, and I’ve lived a very fulfilling life.

20:50 Emily: That does bring me back to kind of a note or a point or a question that I wanted to make regarding what you said earlier about, you know, like not getting trapped into like high rent or like high transportation costs in terms of what you’re calling your recurring expenses. The expenses that have to go out the door every single month. It sounds to me like you do not value those things. So, you are going to spend as little as you possibly can. And thankfully, you know, UCI has given you a good deal on housing and so forth. So, it’s not like you have to go to market rent and everything like that and compete in Irvine for that. But I just wanted to point out that other people can have a different opinion about this.

21:29 Emily: The listeners, for example, might not want to follow your example of spending the absolute minimum possible amount of money on things like housing or transportation. And that’s okay. It’s just that you have determined, what I think is really fantastic about this story is that you have been very clear about what is important to you and what is not. And minimizing the spending on what is not important to you. You know, you’ve been very intentional about that and I fully agree with, advocate for that strategy of decide what’s important, decide what’s not. Spend as little as you can on what’s not important so that, like you’re doing, you can free up money to spend on the things that are really adding value to your life. Like you mentioned the National Parks Pass and the state parks parking and all that sort of thing. The gas to get to these, you know, wonderful natural, beautiful places. You’ve decided that’s what you value. Now you’re, I don’t know if lucky’s the right word, but in your worldview it happens to be that those things are not that expensive, right? <Laugh> in the grand scheme of things. So adding a lot of value to your life for just a little bit more spending has really increased your quality of life dramatically.

22:33 Michael: Yeah, I think you nailed it. That’s a great summary of my perspective on this.

Commercial

22:39 Emily: Emily here for a brief interlude! We’re doing something special for Season 15 of this podcast, and as a loyal listener, I know you’re going to want to be involved. Season 15 will be a chance to share your financial experiences, even if you don’t want to give a full-episode interview or want to remain anonymous. We’re going to publish compilation episodes around certain themes, and each episode will feature at least a half-dozen different contributors. The contributions can be audio clips or written text that I will read aloud for the episode. If you are interested in contributing, check out PFforPhDs.com/season15/. That’s the digits 1 5. On that page, you’ll find a list of the proposed themes and how many volunteers I’ve identified for each episode. Your next step is to email me at [email protected] to let me know which episode you’d like to contribute to or if you have another idea for the list. Once I’m confident that we have enough contributions for an episode to be created, I’ll give the volunteers specific prompts and directions to create their submissions. I hope you will choose to participate in this unique season! I can’t do it without you, so please get in touch! Now back to the interview.

Spearfishing

24:02 Emily: You brought up something else in our prep for this episode that I thought was really illustrative of your kind of philosophy around spending, which was spearfishing <laugh>. So, please tell me how spearfishing fits into your financial philosophy?

24:18 Michael: Okay, so I talked about how I minimized all of my recurring costs so that I have a lot of ability to save, and that allows me to make these one-time purchases that I put a lot of value on. Things that I only have to buy once. For instance, you know, a wetsuit. I still bought a pretty cheap wetsuit, so don’t think like spearfishing, super expensive, but you know, a spear gun, a wetsuit, gloves, it adds up. It’s maybe a four or $500 investment, which, you know, if you don’t have savings, it’s a lot of money. But because I had this, you know, money saving up as I’m watching it grow, I’m like, Hmm, yeah, I’ll take a little bit off the top and I’m going to buy this equipment. And it gave me hours and hours and hours of joy. I’ve just fallen in love with the ocean and I’m so fortunate that I got to go to school here.

25:04 Michael: I’ve never been an ocean person, but by going to the ocean, I fell in love. One day when this lady, she took her goggles and put it on a kid, her daughter shoved her head underwater and she’s giggling and screaming. And I went over, I was like, can I see what’s underwater? She put the goggles on me and I was hooked, instantly hooked. I wanted everything to do with underwater. So, spearfishing actually allows me to catch quality fish, be sustainable, and save a lot of money on groceries. Like I only buy fruits and veggies at the supermarket. Most of my protein comes from the ocean. And quality protein. Lobster season just opened up. It’s legal to catch lobsters here with your bare hands. So, I’ve had fantastic lobster dinners, lots of sea bass. I make ceviche, I jerky my fish. I mean, I have a really good quality of life from spearfishing. So, it brings me joy and it reduces my costs even further by providing me quality protein that I don’t have to spend money on, or at least the cost is very little.

26:03 Emily: Yeah, what a virtuous like cycle there that you have set up. Like something that you enjoy doing with your free time, brings you some, you know value to your mental health and so forth. And oh, what do you know? It also happens to help you reduce your expenses at the same time in terms of the grocery spending and, you know, the healthful diet and all that lovely stuff. So, I think the, maybe the broader lesson to take from that for the listeners is, maybe you won’t be able to find such a hobby that will actually help you reduce your expenses after, you know, an initial investment. But finding an inexpensive hobby that really brings a lot of value to your life is wonderful during grad school. Obviously, when you don’t have, have tons and tons of money to be having a very, very expensive hobby, it’s great to find things that are just low cost. Like I know for me during graduate school I went to Duke, so I got like really into Duke basketball and like, it’s free essentially to like watch a game with your friends, right? Like, and to have that be like your social activity. So yeah, I just love that point of finding these low cost activities that you just really, really enjoy.

Self-Sufficiency and Knowing What Makes You Happy

27:05 Emily: Is there anything else that you’d like to add regarding your expenses or how you find joy and happiness at this like, lower spending level?

27:16 Michael: There are two things I might want to talk about. So one is unexpected things happen, right? We own things that might break, like our cars or laptops, whatever. I’ve gotten very good out of necessity at fixing those things myself. So, if you think about, you know, the hourly cost to bring your car into the mechanics, it’s outrageous. If you have to do that very often, because you’re driving a junker like me, it actually defeats the purpose. So I’ve gotten phenomenally good at fixing my own car. And I’ll often try to purchase equipment that will allow me to fix the car multiple times. So that thing could break, like for example, I bought a welder from Harbor Freight for a hundred dollars because I had a hole in the exhaust of my old Subaru that rusted all the pieces. So when I got a quote from a welder, it was $150 to fix it.

28:09 Michael: And I thought, well I could buy this welder for a hundred and fix it two or three more times because another hole’s going to show up. So, it’s that kind of mentality of like, I’m going to do it myself. I’m going to fix these things, I’m going to drive the cost as low as possible. And you know, for some people it might just seem like work, but you end up learning so much in the process. Like, I can fix anything now and it’s great. I mean, even like in my next steps in life, it comes in really handy to achieve those dreams because I know how to fix things and I’m good at it. So, and another thing that I would like to drive home is like when you’re trying to find these cheap hobbies, it can be hard because we live in such an environment where we’re being advertised to all the time or we compare ourselves with other people. Try and declutter everything and, and ask yourself what really makes me happy? For me it’s nature. I love nature. And the beauty is nature’s free, right? You can just walk outside, go to a park, and yeah, when you get in tune with the things that really, really make you happy and you pull back away everything that’s clouding that, not only does it make for a much more fulfilling life, but you can save a lot of money too.

29:19 Emily: Do you think that you would have gone on that same kind of journey of understanding yourself and what makes you happy had you not had the financial constraints of the stipend slash wanting to save as much as possible? Like if you had gone a different route and not gone to graduate school, had a different kind of job, do you think you would’ve ended up in the same place?

29:41 Michael: Probably not. I think another beauty of grad school is it gives you a five-year span where you can think about things, right? It’s kind of our job is to, well the Ph in the PhD is philosophical, right? So, we have this time to think. I think, I can’t quite say if things would’ve panned out the same way if for instance, I had declined UCI and gone to Chapel Hill. My life would’ve been totally different. I probably wouldn’t have discovered the ocean. I might not have had a reason to save so aggressively my stipend, who knows, right? But all I can say is that, the way it happened, I wouldn’t change it. I wouldn’t have it any other way. It’s been a fantastic experience.

Sailboat and Seabattical

30:24 Emily: I think the listeners don’t yet fully appreciate how fantastically you are setting yourself up. Because we talked about, you even talked about Roth IRA contributions as like a recurring thing that you have to do, but you’re saving on top of that around $12,000 per year. You have that opportunity to save around $12,000 per year. So, the big reveal, what are you doing with that money <laugh>?

30:50 Michael: Right. So, to everyone that pulled out their calculators and was adding up all my expenses you know, five years of saving a grand a month, that adds up to, you know, over $60,000. I’ve purchased a sailboat here in Southern California. And more importantly, sailboats actually are kind of cheap. I bought the parking space for the sailboat that was twice as much as the boat. So, it’s called a mooring system. It’s lead weights at the bottom of the harbor, and you get to park your boat on it, and it’s kind of like a lease. So, when you buy that, you buy the rights to use that indefinitely, so long as you pay a small tax. So, that’s what I’ve done with my stipend. I’ve saved up all this money. I’ve bought the mooring and the sailboat. And my view for it in the future is, you know, it’s a little place that I can call home.

31:40 Michael: I’ll always have a place to come back to in California, wherever my life might take me. And you can actually live on them for very cheap. Now, some people have all the amenities of a house on a boat and then you completely skip rent. So, in a future where perhaps I get a job somewhere here in southern California, I have a place where I could live virtually for free and that will allow me to save, repeat this process and save even more, earning six figures. And then, you know, together with Sam, we both are like-minded. We can do whatever we want. We’ll be financially free. We can take whatever job we want because we don’t have to have a job. We’ve saved up enough money and we could do this in a relatively short time-scale.

32:22 Emily: You are the first person I’ve interviewed who has purchased a boat during graduate school. And as you said, not even just the boat, but the place to house the boat even more important. Incredible.

32:33 Michael: Thank you.

32:34 Emily: Why are you living in your campus arrangement right now? Is the boat that you have right now not suitable for living in full-time?

32:41 Michael: Yeah, it’s not suitable right now. I need to do some work on the plumbing for the sewage. Now, trying to juggle a PhD and working on a boat that’s floating in the middle of the harbor is kind of difficult. So, I’ve prioritized my education right now. But also, if you look at the house around me, this is a really nice deal. It’s beautiful. I call this place home and it’s lovely. I wouldn’t want to get rid of it. So, the rent, even though I could cut that and live on the boat cheaper, the joy that this apartment brings Samantha and I for the cost is worth it. So, we’re going to stick with this until I can no longer live here when I graduate.

33:21 Emily: And so, I see how now, you know, the skills that you mentioned developing from working on your car, I’m assuming some of those are at least the same learning mindset is translating to being able to fix up the boat and maintain the boat and and so forth. So like you found a new way to apply the skills that you were trying out and practicing on maybe a lower stakes endeavor with the car?

33:42 Michael: Yeah, absolutely. Anyone that knows someone that owns a boat, they are financial nightmares unless you do the work yourself, in which case they’re a time commitment. But it’s kind of what I’m going for here. I want to have the ability to slow down and take life at a slower pace. And that means that I do the work myself on the boat, even if it takes me a little bit longer. And I’m planning as soon as I graduate to spend a whole year on the boat traveling around the world with Sam before we go into our next endeavor. You could call it a “seabbatical”. And in that time, you know, I really want to slow down, kind of refind myself again before I just jump into the next opportunity and, you know, spend the rest of my life in a career. I really want to make sure that I get that time for myself. And slowing down learning how to fix things yourself on a boat, it’s a good way to make that dream happen on a budget.

34:36 Emily: I am so amazed by this, this idea of doing the seabbatical after you finish. Now, you’re a fifth-year, so this is in the relatively near future, right? Can you tell me what the plans are for finishing up your PhD, for doing the seabbatical, for, you know, what you’ll do after that for your next job?

34:53 Michael: Yeah, absolutely. So, I’m quite, I’m right in between opportunities here. I’m trying to finish up my thesis work and get that published and submit my thesis and defend. I’m trying to do that in the next, let’s see, we’re in November. I’m trying to do that in the next three months, and then be graduated sometime in January. And I’ve already written a grant that will fund my postdoc at a National Laboratory. So, that money is already, you know, in my hands at the National Lab. So, I’ve got a guaranteed postdoc after the seabbatical. So the idea is graduate, take the boat down to Baja, explore Baja, California, cross the Pacific either to Hawaii or straight to French Polynesia. And it’s my lifelong dream. I want to see the Pacific atolls. There are these beautiful rings of coral in the middle of the Pacific Ocean. That’s my dream. If I see that in this upcoming seabbatical you know, I’ve made it, you know. Anything else can come and I’ll happily go and join a national lab and do work there and produce science.

35:57 Emily: I love the strategy of securing the funding before, like knowing really what that next step is going to be. Because it’s a little bit of a risk, and especially I think with academia type stuff. People say, oh, you know, you take a break, you get out, you can never come back and so forth. But I really like this that you have the money, which is kind of the most important part. Having that established so that you know, you have a place to land when you’re done with this lovely break. And I’m so excited for that. And I definitely want you and or Sam, both of you to come back on the podcast after you’ve taken this year break and tell me, you know, all the shifted, you know, perspectives that you have. Maybe your life won’t even be going in the same direction that you thought at that point. That would be wonderful.

National Laboratory Postdoc Funding

36:37 Emily: But I want a little bit more detail now, if you don’t mind. I understand you’re already working with this National Lab that you had then, you know, applied for the grant for and so forth where you’ll do your postdoc. So, can you talk about that like relationship between, you know, yourself and your current advisor, your current program, and that National Lab?

36:55 Michael: Yeah, absolutely. So, you know, when you join grad school, they tell you that you’re guaranteed a stipend, right? $30,000 in my case. What they don’t tell you is what you have to do to earn that $30,000. Most people find out kind of the rather harsh way that they need to be a teaching assistant their entire PhD. Or some people write NSF grants and they get a fellowship which funds them. My case was neither. My case was, you know, a fellowship that came from Los Alamos National Laboratory. They were looking for a person that had my skillset. And my advisor at Los Alamos, my current advisor now at Los Alamos, reached out to my advisor at UCI looking for this type of individual that I kind of fit the bill. And that was that they already had built up a relationship in the past.

37:38 Michael: And, you know, that’s kind of how the world works. You call up, do you know anyone that’s good at this? And yeah, I do, here. So, that’s how I got selected for this. But that didn’t quite solve my financial problems once that connection was made. Just because I was the person for the project didn’t mean the money was there yet. So, we went through multiple rounds of applying for grants to fund me in this new endeavor, this partnership collaboration between UCI and Los Alamos. And it took us three years to actually get the funding. And then finally it came through internally from Los Alamos. My advisor at Los Alamos kind of pulled through and got that funding. And it was meant to be more of like a summer internship funding. But the way that we’ve structured it is we’ve kind of spread that money out over the whole year.

38:22 Michael: And then we, it’s not enough to fund me for the whole year. So then we have to supplement it with additional funding that my advisor from Los Alamos is able to get internally there at Los Alamos. And it’s kind of the first of its kind, but there are going to be many more of these types of fellowships. So kind of like a plug to anyone that’s in the southern UC school systems. It might not be known, but the UC system is actually a third owner or administrator of the National Laboratory. So, they’re trying to build a pipeline of students from the southern UC, you know, UCLA, UC San Diego, UC Riverside, UC Irvine to go to Los Alamos because all of the Northern UC system schools already have that pathway to the National Labs in Berkeley. So Lawrence Livermore, Lawrence Berkeley, Sandia, they already have that pathway. So, their students kind of go there. And so they’re looking to build that. So, there are actually going to be more opportunities like the one I have for students in the Southern UC school system.

39:20 Emily: Yeah. And so the way that I understand this is structured is you are an employee of the National Lab, but since you’re still a student, your education expenses are still outstanding. And your department, your program has agreed to pay those on your behalf, even though you’re not, you know, a teaching assistant or you don’t have a fellowship that’s being administered by the university, they’re still covering that part of things.

39:43 Michael: Yeah, that’s correct. It’s kind of messy, right? Because once you get external funding, the school doesn’t get its cut and then it requires you to pay for tuition. But in the way that this is, because there is this unique kind of like part-ownership of the UC systems with the National Labs, they’re trying to make this work, right? They’re trying to get students from the UC systems into the National Labs. And so, you know, some kind of conversation had to occur between Los Alamos National Lab and my department where my department agreed to pick up my tuition costs.

Financial Independence, Retire Early (FIRE)

40:19 Emily: I’m so glad we got that into the interview because it’s a structure that I had not heard before. So, it’s really just interesting and good to hear that there are creative solutions to how graduate students can be funded in various ways. And thanks for letting the other, you know, UC students know about this upcoming pipeline. Surprise second-to-last question, Michael. There are some ways that you’ve been answering questions in this interview that indicate to me that you might be part of the financial independence movement. Is that the case?

40:51 Michael: I mean that’s the dream. Yeah. FIRE, right? Financial independence, retire early. And I think it’s funny because a lot of people have a negative connotation with the word retire, but it’s focused more on the financial independence, right? If you have saved enough money, built enough wealth, created passive income streams to the point where you don’t have to take a job, it means you can work on whatever you dream, whatever you wish. And because we’re humans, we’re always evolving. What we picked to do in school might not be the thing we want to do for the rest of our lives. So, having that ability to say no to that job, say no to maybe perhaps corporate America or something and say yes to entrepreneurship or whatever floats your boat, right? That’s the beauty. So that’s what Samantha and I are both trying to achieve together is that financial independence so that we can dedicate our lives to whatever we want, whatever we think has value, not necessarily the big corporate, you know, pharma company or this or that, whatever pays the bills.

41:46 Emily: Do you see this pursuit of financial independence as enabling you to continue to do science in the way that you want to? Or are you thinking of it as a way of stepping away from that vocation entirely when it might, you know, please you to do so?

42:01 Michael: Hmm. Both <laugh>. Yeah. To do science, it’s a very costly endeavor, and it’s really funny the way that we structure, you know, professorships. You get paid to teach, you don’t really get paid to do the science. You need to get that grant money kind of independently from your position as a professor. So it’s kind of like, they hire you for one thing but expect you to do the other. If you have the financial independence, you can do whatever you want. You can do research, maybe you go and pursue opportunities in science that you wouldn’t have thought of otherwise. Like perhaps joining an antarctic exploration boat or something like that, right? It means you have the flexibility to pursue what you want. That might be continuing science, that might be doing something entrepreneurial, but it’s nice to have the flexibility and the financial security, or at least striving towards the financial security, to do whatever I might please in the future.

42:59 Emily: I’m so glad we got to this point of understanding this even bigger picture. Because we’ve been talking about, you know, the expenses during grad school, the savings, saving up for the seabbatical and everything, which is not full early retirement, but it’s certainly a mini-retirement as it’s called within the FIRE community. I’m glad to see that this is a vision that you see playing out over your entire lifetime. Not something you’re doing, you know, temporarily just during grad school, just for whatever reasons. You’re going to be sort of fluidly moving in and out of different employment opportunities and maybe some other sabbaticals or mini-retirements and maybe other, you know, unusual work arrangements and so forth because you’ve already started to build up this financial capital. Even though you’re not fully FI at this point, you have enough financial wherewithal to have a lot of control over how you spend your time and everything.

Best Financial Advice for Another Early-Career PhD

43:51 Emily: And so, I’m just so pleased that we can see how, you know, that started with the seed of an idea at the beginning of graduate school and how it’s going to be blossoming over the coming years and over the coming decades. So, so glad that we got to this point in this interview that we could understand that. The question that I ask all of my guests at the end of interviews is, what is your best financial advice for another early-career PhD? That could be something that we’ve touched upon already or it could be something completely new.

44:18 Michael: Hmm, that’s good. I’m going to try and answer this as best I can. Because as we’ve established, I’m kind of an exception to this, right? So my advice might be a little bit extreme for others, but I would advise to those whoever may resonate with my story, minimize your recurring costs, advocate for yourself, whether that’s, like you pointed out, the necessity for a certain accommodation at the university. You can also advocate for a higher stipend for yourself at the university. Most people don’t know that. So, minimize recurring costs. Advocate for yourself. Those are my two big ones.

45:00 Emily: I love that. That’s sort of how I see my, you know, even business going forward of like advocacy and also doing really well with what you have, such as by minimizing those not important to you, recurring expenses. And Michael, where can people find you if they want to reach out?

45:17 Michael: Yeah, so if you want to follow me, my sailing adventures are all published on YouTube under my channel Sailing Ambrosia. So if you want to, you know, unplug and unwind, you can follow me there on YouTube.

45:30 Emily: Michael, this has been such a fascinating interview. I’m so glad that Sam recommended you. And thank you so much for taking the time to give it!

45:37 Michael: It’s been my pleasure. I really hope that someone out there resonates with this story and perhaps I’ve enlightened someone to follow in my footsteps.

Outtro

45:49 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

Budgeting for the First Year of Grad School Even with Financial Anxiety

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In this episode, Emily interviews Georga-Kay Whyte, a first-year graduate student in history at Brown. Georga-Kay is a first-generation college student from Jamaica who grew up with financial insecurity, which spurred her to set a high bar for the financial support she expected from her graduate program. Georga-Kay was just as forward-thinking as she evaluated her housing and transportation options for her first year at Brown to set them at a reasonable level for her stipend. However, once she started living the grad student life, she realized she was overspending, especially on groceries and Amazon. She shares how she worked through her financial anxiety to confront her spending and start to budget. Finally, Georga-Kay details her financial goals for her 20% savings rate going forward. This episode is a must-listen for anyone with an upcoming career transition or move, especially if it’s your first!

Links Mentioned in the Episode

Image for S14E8: Budgeting for the First Year of Grad School Even with Financial Anxiety

Teaser

00:00 Georga-Kay: There’s so much like financial literacy that we don’t have as graduate students because it isn’t prioritized. And so, the best way to sort of break that barrier is to talk to other people who are in similar situations. And that’s how it’s helped me to approach a lot of the things that I do now and how I think about creating a budget or how I think about my lifestyle. So, I highly recommend just reaching out to your community and starting those conversations. It helps a lot.

Introduction

00:31 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. This is Season 14, Episode 8, and today my guest is Georga-Kay Whyte, a first-year graduate student in history at Brown. Georga-Kay is a first-generation college student from Jamaica who grew up with financial insecurity, which spurred her to set a high bar for the financial support she expected from her graduate program. Georga-Kay was just as forward-thinking as she evaluated her housing and transportation options for her first year at Brown to set them at a reasonable level for her stipend.

01:28 Emily: However, once she started living the grad student life, she realized she was overspending, especially on groceries and Amazon. She shares how she worked through her financial anxiety to confront her spending and start to budget. Finally, Georga-Kay details her financial goals for her 20% savings rate going forward. This episode is a must-listen for anyone with an upcoming career transition or move, especially if it’s your first! If you’re listening to this episode the day it’s released, you know that tomorrow is the filing and payment deadline for your 2022 tax return as well as the payment deadline for your quarter 1 2023 estimated tax. If you haven’t yet cracked the code for your grad student or postdoc taxes, there’s still time to receive my help! Go to PFforPhDs.com/tax/ and sign up straight away for the appropriate workshop for you. The workshops are asynchronous, so upon registration you’ll have immediate access to all the video modules with transcripts, worksheets and/or spreadsheets, and recordings of previous Q&A calls. Best of luck finishing up! You can find the show notes for this episode at PFforPhDs.com/s14e8/. Without further ado, here’s my interview with Georga-Kay Whyte.

Will You Please Introduce Yourself Further?

03:04 Emily: I’m so excited to have on the podcast with me today, Georga-Kay Whyte. She’s a first-year graduate student at Brown, and our subject today is budgeting and what she’s learned as a first-year graduate student about that topic. So Georga-Kay, would you please introduce yourself a little bit further for the audience?

03:20 Georga-Kay: Yes! First, thank you for having me. My name’s Georga-Kay, I’m a first-year history PhD student at Brown University. I study 20th century African American labor history and I’m actually first-gen Jamaican. My parents are immigrants. We all migrated to the U.S. And so, I sort of like had to figure out not only personal finances in terms of like living in a new country but also personal finances because like I didn’t grow up with a lot of personal finance talk in my family. So yeah, that’s just like my background.

03:51 Emily: Okay, so you get the multiple first-gen labels, right? Like you get first-generation American, I don’t know about first-generation college, necessarily.

03:58 Georga-Kay: I am first-gen in college as well. <Laugh>, first-gen graduate student, first-gen everything.

04:02 Emily: First-gen grad student, we got it all. Okay, that’s wonderful! And what age did you come to the U.S.?

04:08 Georga-Kay: I came to the U.S. actually right before I turned 18. So, I was pretty, yeah I was, I was much older.

04:13 Emily: Very new.

04:14 Georga-Kay: Very new to the U.S., yes.

04:16 Emily: Yes. And where did you go to college?

04:18 Georga-Kay: I went to college at Agnes Scott College in Decatur, Georgia. It’s a small women’s liberal arts school.

Money Mindset at the Start of Grad School

04:24 Emily: Yeah. Okay. So, wow. Okay, this first question that we have, what was the state of your finances and your financial background and money mindset coming into graduate school? So really we’re talking about what you grew up with in Jamaica, and then also just that short time you had in college. Yeah. So what was going on both in your finances and your like money mindset by the time you entered graduate school?

04:47 Georga-Kay: Yeah, so I grew up, I would say like relatively low income. In Jamaica, like I would be considered mostly like middle-class but in the larger scheme of things I grew up with a lot of financial insecurities. So, I had like an anxious sort of relationship with money from like childhood. And so, once I was coming into grad school I was super anxious about it because I had just started like looking online and seeing like the discourse around grad school and grad students being like they’re underpaid and they’re not like happy with their financial situation. And coming from someone who’s first-generation, I didn’t have a lot of financial safety nets. Like I just know that if anything, I’d have to figure it out on my own. And so yeah, definitely once I was like deciding to go to graduate school, this was before I found out about like what schools I’d be going to when I was thinking about like applying, I was like, “Oh my god, is this going to be the worst financial decision of my life to do this right at this time?” Because I came straight from undergrad, so I didn’t have a lot of time to like build up savings and stuff like that. But I really knew that I was passionate about the topic so I was like, I’m going to do this, hopefully it works out. Hopefully I can get a stipend that’s like livable. And that was my number one concern. I wanted a stipend that I wouldn’t be in a financially precarious situation just because I’ve already experienced so much like financial turbulence that I wanted some sort of safety net.

Role of Finances in School Selection

06:04 Emily: Absolutely. That makes so much sense. So, I want to talk a little bit more about maybe application and admissions process. You, I mean as anyone would be, were very nervous seeing the discourse currently going on, rightly so, about how difficult graduate school is financially. And all the unionization movements and so forth. So like, tell me about like the schools that you chose to apply to, were finances on your mind? Let’s talk about that. Like the selection process of where to apply.

06:31 Georga-Kay: Yeah, so I was super selective about the schools that I applied to, and I sort of feel like I was really naive in a way, but it worked out right <laugh>? I was like I’m going to apply to mostly private schools because they tend to have higher stipends, unfortunately. I started looking, I actually used, I forget what the platform is called, but they publish stipends for students. I think you might know what it’s called.

07:01 Emily: Is it PhDstipends.com?

07:03 Georga-Kay: Yes. Is that a website that you run?

07:05 Emily: That’s mine, yeah.

07:06 Georga-Kay: Yes. Okay, okay. Yes. So, thank you for that because I actually used that website a lot. So I looked at the PhD Stipends and I was really serious about, “Okay like is this a stipend that’s livable?” And then I would go ahead and like look at the livability calculator to see like, “Okay, is this going to work?” And I ruthlessly took schools off my list if they weren’t in that like situation of like they had a decent stipend for the area. So even if the stipend on its face was like, you know, almost $40K and the livability like it’s in New York, it’s like okay that’s still not going to work. So I was very serious about that, and I ended up applying to nine programs. And those nine programs I felt like had really strong stipends and they had other benefits like health insurance and stuff like that that I was looking at, too.

07:52 Emily: So, you’re the first I think interviewee I’ve had on the podcast who answered that question in that way. Because a lot of people I talk to, of course by the time they get into admission season they’re thinking about the financial offers and so forth. But to back that up into application season, I mean this is actually what I teach in my workshop for prospective graduate students: Set Yourself Up for Financial Success in Graduate School, is it starts way back the summer before you apply even earlier than that, understanding the funding models, just like, I mean you said you were naive, but that is a very advanced strategy that you’re applying. So that’s awesome. Yeah to really think through like why bother applying to a place that you are pretty confident already is not going to support you sufficiently? And so to just, if you have programs that you know, make your list, that’s great. You don’t need to bother with the other ones who aren’t. If this is a priority for you, which it was for you. It’s not necessarily going to be a priority for everybody, but for you it was. So, I love that process.

08:48 Georga-Kay: It was really just my financial situation, like coming in with so much student loans. Like I felt a lot of guilt over the amount of student loans I had, and I knew I didn’t want to get any more student loans in graduate school. And so I was like, I need to find a situation that’s going to work out. And the reason why I say naive, just because talking to people about like the admissions chances in graduate school. So I was like, okay, I’m going to be selective but these schools are going to have higher competition. Because they do like, they have high stipends and people know about them and stuff like that. So that’s why I was like, okay, well hopefully I get it <laugh>, you know?

Considering Other Factors

09:19 Emily: Yeah. But applying to nine schools, that’s a pretty good number. I think that’ll give you a lot of chance. Anyway, it has worked out. So let’s talk about admission season. I don’t know how much you want to share about how many offers you got, but like, you know, did your expectations bear out? And the offers that you did get, yes, they were decent stipends? And then maybe you could share how much more finances, if at all, played in the decision of where to go or if you’d already done that filter early on, maybe it didn’t really have to.

09:46 Georga-Kay: Yeah, so I got three admissions out of the nine that I applied to. I got admitted to Penn, Brown, and Maryland. University of Pennsylvania, Brown University, and University of Maryland. And those offers were pretty good offers honestly. Especially looking at like the averages for stipends. So, I got $38,000 from Penn and then I got $45 from Brown. And I think Maryland offered like $32. I don’t remember specifically, because I knew almost immediately that Maryland had the lowest stipend. So I was just mainly considering Penn and Brown. And yeah, those were like comparable in some sense. Obviously like there’s still a discrepancy there between the amount that I got from Penn and the amount I got from Brown. It was actually a hard decision for me because the programs were both equally great, but then also the cost of living was relative. And I knew that like if I wanted to, I could have probably negotiated with Penn, which I didn’t end up doing, but I definitely still considered finances when I was thinking about it. But it was like close enough where I felt like, “Okay, well what else do I want from graduate school?”

10:51 Emily: Based on how you’ve talked about your thought process so far, and I’m pretty sure I know the answer to this question, but were you only considering your first-year stipend and like the source of the funding? Or were you also looking forward to like, were you being funded for five years or were there guarantees or you know, was it a TAship versus a fellowship? Like did you factor all that stuff into?

11:12 Georga-Kay: I factored everything in. When I got my offers, I reached out to the like DGAs of each department and I was like, okay, explain to me how this works <laugh>? I was just like, I wanted all my bases covered. So I talked to both schools and I was like reading through the offers and sort of seeing, okay, like first year, they were very similar. So it was like first year would be fellowship and then you would TA for some years and then you’d go back on fellowship. And both schools offered like five to six years of funding. Brown guaranteed six years, Penn basically they’re like, you basically will get six years but we’re guaranteeing five. And so, I knew that like throughout the program I would be funded for the entirety of it.

11:53 Emily: I’m so glad that you shared that as well. This is another thing that I encourage in my workshop is following up with the directors of graduate studies or maybe the admin in the department to like explain to you anything that’s not really clear, or maybe they’re only talking about the first year but they’re not talking about subsequent years. Like they’re recruiting you, okay? They want to convince you to make good on that offer that they just made you and convince you to come there. And so they should have pretty solid answers to these questions. And they might say, like Penn did, “Okay, you know, we’re not officially going to guarantee that sixth year, but you know, in nine cases out of 10, like we do find funding for you know, that sixth year or whatever.” Like they should be able to give you those really well-thought-out answers to those questions. So I’m so glad that you went through that process as well of really investigating.

Financial Expectations in Grad School

12:35 Emily: And you chose Brown, and that’s where you are now. So, let’s kind of talk I guess about now that you knew the stipend, you knew that maybe had some degree of confidence that the precarity was not going to be as much of an issue for you. What were your expectations then about how your finances would look in graduate school once you had that offer in hand?

12:56 Georga-Kay: Yeah, once I had the offer, I sort of felt a lot more secure just because like I feel like $45,000 is like a relatively, it’s not like anything crazy, but it’s average enough where it’s like, okay, in Providence I could live on that. And I think I could save on that, which was like a big deal because I know that like a lot of times in graduate school people talk about not even being able to save. And I wanted to be able to save and like achieve other financial goals. So, once I got that offer in hand, I started to think about, okay, well now what do I want to do? Like I know I’m going to make this much money. How much do I want to spend on rent? Do I want to keep like my costs low? You know, how much am I willing to compromise for the next few years–because I’m in my early twenties–to sort of set myself up for a good financial foundation?

13:39 Georga-Kay: And so those were just sort of all the questions that I had in my head. And then also, I started to think about like the realities of graduate school and what in cost that would incur as well. So, I like when I was going through my stipend and sort of backtracking a little bit, going through my offer, I would see that, oh I had like research funds and these funds, but I didn’t know until I sat down with the DGS and asked about it. I was like, “Is this money that would be like deposited into my account?” And they’re like, “No, it’s reimbursements.” And I was like, “Oh okay.” So then I had to learn about this whole reimbursement thing. So I was like, I have to actually have to have a safety net, like some sort of savings because if I want to pay for something I have to pay for it first before I get the money back. And so I started to think about that and just, yeah, just a lot of wheels turning now that I know that okay this is how much I’m going to make, how can I make this work in order to like pay for my day-to-day living expenses?

Housing and Rent

14:29 Emily: And one other thing, again, I’m talking about this workshop so much because this is the process you just went through. One other thing I talk about in this workshop is about the big decisions you need to make in your budget that happen probably before you even arrive at graduate school, right? You mentioned housing, so like did you commit to a lease for example, in advance of moving? Or is that something you were able to arrange once you got there? It’s very different, you know, different housing markets.

14:50 Georga-Kay: Yeah, so housing for me was one of the biggest things that I thought about because it was going to be my first time paying rent because I came from undergrad where I was like paying tuition and that would like cover, you know, my expenses. So, I wasn’t paying anything monthly. So moving to Providence and then also having to pay for moving expenses. I knew that like housing was going to be a big deal and I knew that it would probably be my biggest expense. And I had to make a decision about whether I wanted to live with roommates or I wanted to live alone and what does that mean? So I decided to live alone. I’m currently in graduate housing and the housing is somewhat subsidized. I don’t know if they say it’s subsidized on their website, but it’s like a lower cost of living apartment than I typically would be able to find in Providence, essentially.

15:32 Georga-Kay: And that was great. I started that <laugh>, luckily I started the process early so I was able to sort of like compare housing situations. I looked at the average cost if I wanted to live with a roommate in a house or if I wanted to live in a studio. I currently live in a studio and my rent is like, I feel like it’s on the high end of what I would want to spend, but I knew that I would appreciate that more having that sense of like security and that sense of not having to worry about if I have a roommate that maybe I don’t mesh with or you know, like there’s things that you have to think about lifestyle stuff. So I was like, okay, I know that I’m willing to pay a little bit more to live alone and keep my other costs low.

16:10 Emily: What I love about this model, I mean you’ve listened to the podcast, you know, I’m always like roommates, roommates, good idea. But what you did was you worked with your numbers and you knew that it was feasible, especially making that you know, decision to go with the on-campus option and so forth. I’m curious now we’re recording this in March, 2023, if you’ve already made a decision for housing next year? Or like are you going to keep the same situation? Do you think you’re going to do something different?

16:34 Georga-Kay: Yeah so I’m definitely, unfortunately the housing at Brown, they only guarantee it for two years. So I’m going to keep those two years. So I’m going to keep going until next year because I really love the area that I live in. I love my apartment, and so I feel like I really lucked out with housing. So, I’ll keep it and I probably will have to move after my second year since it’s not guaranteed and that it’s a really high interest area. Like a lot of students want to live here. So, I feel like after the second year I’ll be more comfortable in the area I can find somewhere else.

17:02 Emily: Yeah, and you might have met someone you really like enough to live with <laugh>.

17:06 Georga-Kay: That is true.

17:07 Emily: So, a roommate might be more feasible.

17:08 Georga-Kay: I’ve also considered that. Yes, I’ve thought about that too.

Transportation and Other Expenses

17:10 Emily: Yeah. So, we’ve already talked about kind of what I call the biggest rock in your budget, which is housing. And I’d like to know about your transportation choice. Like do you own a car or do you think it’s necessary? What is your choice there?

17:24 Georga-Kay: So, I decided to actually sell my car <laugh>. I sold my car before. When I was living in Atlanta, I bought a car used and it was a great car. It carried me to my like last two years of undergrad. But then I was like, I’m moving to the northeast. The transportation here seems a little bit easier. There’s a lot of public transit and there’s also trains and stuff. So, I talked to graduate students and they said that it would be fine to live without a car. So I was like, I’m going to use that money to move. And now I currently don’t have one and I rely on public transit, walking, and Brown has a university shuttle that’s actually really, really good and I’m able to basically spend like less than $50 a month on transportation costs.

18:06 Emily: Love that. Whenever it’s possible to live car-free, especially if when you’re pairing that with the campus housing, it’s like, I’m sure it’s really convenient and everything, you can just, not eliminate entirely, but dramatically reduce the costs associated with transit by getting rid of your car. Ugh, I have a car but I’m such a like anti-car person. <Laugh>, I live in Southern California.

18:26 Georga-Kay: No, I love living in a walkable city and that’s something I considered too. I was like, I wanted to, I knew that like if I’m going to be paying a little bit higher rent then at least if I don’t pay transportation, it kind of evens out.

18:37 Emily: Yeah, absolutely. So, we’ve talked about these major, major components of your budget, the housing and the transportation. And so I’m curious like how you formulated the rest of your budget, maybe more with the other smaller fixed expenses and other variable expenses? And then kind of what you’ve learned through living with that budget for the last, you know, six, seven months?

18:55 Georga-Kay: Really the things that I thought about was rent and transportation and then the rest of it was just sort of like I was going to do trial and error. So I was like, I don’t know what’s a reasonable grocery bill? I don’t know how much I should expect to, you know, spend, I also have a pet. And so that’s also a part of my budget. So I was like, I don’t know how much I’m going to be spending for vet bills. And so, I really just was like, okay, like this is less than half of my, like my total living expenses is less than half of my stipend. And so I was like, whatever the rest is, I’ll play around with the numbers. So when I originally started, I realized I was overspending because I just sort of didn’t want to look at it to be honest.

19:32 Georga-Kay: I was like, I’m going to take care of the big stuff. And because of my financial anxiety, I sort of had a lot of avoidance about money, especially when I just moved because I was like, “Oh my god, like am I going to, you know, completely throw off my budget or something like that?” So I was like, okay, I have this wiggle room essentially and we’ll figure it out. And so I started just shopping without caring. And then once I started looking back at my budget, which is something that I’m really happy I did, I started actually looking at my money. I was like, oh, maybe I’m spending a little bit too much on groceries. Like, and talking to other graduate students as well. I’ll get to this later, but talking to other graduate students and realizing, oh this is like an average cost for, you know, a meal for a single person, like a grocery bill for a single person, or this is the average cost for electricity or something like that. So I at first was avoidant, but then I started slowly having those conversations, started slowly thinking about it and then I started actually setting price markers like, oh I want to spend $300 on groceries. Oh, I want to spend this much on electricity. And then actually going in and doing those numbers and keeping track of that.

20:38 Emily: I think this process that you’ve gone through is so relatable. Absolutely. You don’t know how much you’re going to be spending on all these little variable expenses that aren’t like a contract that you’re entering into.

20:48 Georga-Kay: Yes, <laugh>.

Financial Discussions with Other Grad Students

20:49 Emily: When you first get to a new city and you have a new lifestyle different than the one you had before. So it definitely makes sense to just kind of work it as you go. And really, I’m actually very impressed you’re talking about having financial anxiety around this just six months ago and six months later you’re coming on a financial podcast? Like that’s a lot of progress in a short period of time. So I’m very impressed. How did you start having these conversations with other graduate students? Like, did you just come out and say, what’d you spend on groceries last month? Or like, what was it?

21:15 Georga-Kay: No <laugh>, no it wasn’t like that. I feel like I just started getting closer to the people in my program, but also just to people that I’ve met through school. And I like to think I’m a pretty forthcoming person. So if like we’re talking and everyone’s like, how’s your week been? And it’s like, you know, if there’s something on my mind, especially now that I feel like I have a close relationship with some of the people in my program I’ll mention like, “Oh my god, like I feel like I’m overspending on groceries,” which is literally something I did. I was like, I feel like I’m overspending on groceries, but I don’t know. And then all of a sudden everyone starts chiming in, like, oh, I think I spend this much. And then we all start comparing. We’re like, oh. And so I sort of like, I guess instigated the conversation, but now I feel like there’s so much more financial transparency between us all, like within my history cohort and we’ll share things now where it’s like, okay, do you guys think this is a reasonable amount to spend for this or something? And yeah, so I just feel like luckily I’ve always been open to sharing and I feel like sharing invites other people to share.

22:09 Emily: Absolutely. What you did there was like, you were a little bit vulnerable, you said, oh I have a little weakness or like something I’m unsure about, can you help me?

22:19 Georga-Kay: Yes.

22:19 Emily: And you like invited that feedback. And that allows the other person to like be the expert for a second, because they’re the expert in their own budget, right?

22:25 Georga-Kay: Yeah.

22:25 Emily: So like then they can help you and everybody feels good about it and like, oh man, that’s a wonderful like sort of pattern that you have established. I think that’s going to help you so much throughout your time in graduate school. I remember for example, not necessarily about groceries, but like just asking other people how much they spend in rent. Like, oh I really like your place. Like do you mind me asking because this is what I spend and like how much do you have? And that was a way that I found like a really great deal on housing. My friend was like, you wouldn’t believe it. I only pay such and such for this great place. You know? And so just having that, those open conversations, I feel like it’s easier among people who are all paid the same <laugh>, which I suspect probably everyone in your cohort is more or less like being paid the same, at least at the moment, right?

23:05 Georga-Kay: Yeah, we’re all paid the same. I do have an additional fellowship just a little bit, but yeah, we’re relatively all on like similar pay scale. And I also with the rent thing, like that was also a thing that we talked about was like, okay, well this is how much I pay for rent. This is how much we all pay for rent. And having those conversations, like especially for someone I think because I’m first-gen and I’m also like the youngest in my program that I’m like the baby and I’m like, I want to ask because like you guys have had a few more years of like, people have been in master’s programs, so I know like I feel like accepting that like I’m still figuring it out and not having any sort of pride about it of being like, oh I’m not going to share because you know, maybe someone will judge me. Just being like, hey, like you know, I’m figuring out and you’ve had some experience like what is your take on this? As you said, like they’re the expert in their budget and so people like to help in that way.

Commercial

23:55 Emily: Emily here for a brief interlude! You’ve heard me mention several times during this interview how Georga-Kay perfectly lived out the principles and strategies I teach in my year-long asynchronous workshop, Set Yourself Up for Financial Success in Graduate School. If you would like to take a deep dive with me into financial tutorials designed for prospective and rising graduate students, please check out PFforPhDs.com/setyourselfup/. The workshop modules that relate to the topics in this interview are:

  • Stipends vs. Cost of Living
  • Decipher and Compare Offer Letters
  • Right-Size Your Necessary Expenses
  • Prepare for Your Start-Up Expenses

To learn more about these modules and the structure of the workshop, visit PFforPhDs.com/setyourselfup/. I hope to see you inside the workshop and to help you set yourself up for financial success in graduate school the way Georga-Kay has! Now back to the interview.

Tracking and Budgeting

24:53 Emily: Okay, so you’re on the ground, you’re figuring things out, you’re using your cohort to kind of bounce ideas off of. I love that. Tell me about your actual practice of budging. Because you said at first you didn’t want to look at the numbers, but does that mean that you were actually tracking? Like there were numbers there that you were avoiding looking at? Like practically, what was happening with those numbers?

25:14 Georga-Kay: Yeah, so once I moved, I sort of had a little nest egg to move because I knew that I would need that money. Luckily, we did get a transitional amount. We got $2,200 so I knew I was going to get that as well. So I had like a number in my head, okay, this is how much I’ll need to move. And once I paid for my moving costs, there’s a lot of things I didn’t think about. So like how much furniture costs, buying a trashcan, buying a trashcan is so expensive. Like all of these little things I’ve never paid for before. And I quickly went over budget and had to put some of those things on a card. And that was the first time I’ve ever done that, which is like put expenses that I couldn’t afford on a card, and that gave me a lot of financial anxiety as well.

25:52 Georga-Kay: And so once I did that I was like, I don’t want to look at this, I don’t want to know how much I have to spend because some of this stuff was like necessary expenses and I knew that once I started getting like regular stipends I could like then start thinking about it more critically. But in the first like month or two I was just like, I knew I was spending and I knew I wasn’t overspending, but I was definitely spending very close to like the borders of my budget I guess. My budget being the amount that I know that I make per month, that’s sort of like what I had in my head is like this is how much you make, this is how much you have to spend on your actual, like as you said, like the things I have to spend like contractually.

26:30 Georga-Kay: But everything else I was like okay, I’m going to spend and hope I don’t go over. And so I wasn’t looking at it. I wasn’t looking at it. I was just spending and not looking. And then after I would say about October, I downloaded Rocket Money, which is this app, I don’t know if you’ve ever heard of it, but it’s just like, it’s sort of like a Mint. If anyone’s familiar with Mint and they do like roundups, essentially. They tell you this is how much you spent on restaurants, this is how much you spent on Ubers this month and whatever. And so that was my first step into like, okay, what am I actually spending per category here? And then I saw the numbers, I was like, oh God, you know? And once I saw those numbers and I didn’t have to do a lot for it, I feel like that also is like something I would recommend if you’re scared about it and you don’t want to actually sit down, like go line by line, having some sort of like app that does it for you. It’s just like all I had to do was open, put my bank account in, open it and then just be like, okay, what is here? And so I looked at it and I was like, this is how much I’m spending per category. And then I started to think about changes that I might want to make in the future.

Frugal Measures

27:30 Emily: Yeah. Can you give some examples of what those changes were having realized that you were, your spending was a little bit too high? Like what were some, I would probably call it frugality, but what were some frugal like measures you started taking?

27:42 Georga-Kay: Yeah, so the spending that I saw was like mainly Amazon, which is <laugh>. I feel like people can relate to that. I was overspending on Amazon because I was constantly being like, oh I need to get this for my apartment because I had just moved and I realized, oh I don’t have like you know, I really want a toaster or something like that. Things that I didn’t need in the moment. And so I was like spending this much on Amazon, but I was doing it like in singular expenses, so I was never tracking how much I was actually spending and I wasn’t thinking about the cash flow of like, maybe I should wait a week or two until I get my next stipend to pay for this as opposed to like buying everything at once. And so I was just like not paying attention to it.

28:20 Georga-Kay: So once I saw it I was like, oh, I’m spending like $500 on Amazon, that’s like so much money. And then I was like, okay, I need to plan out what are the essential things that I need right now for my apartment since I just moved. Everything else will have to wait. And then also I looked at groceries, which I’ve mentioned a few times before and I was like, oh, I’m spending this much on groceries. I was spending like over $350 on groceries and I’m a single person and I wasn’t even eating that much. And I was like, that seems like a lot of money to me. And so I asked people and people were like, oh, like I actually spend like $300 or a little bit less than that on groceries. And then I realized it was because I was shopping at the more expensive grocery store. And I didn’t know, because I didn’t like shop around. I was like, this is the closest grocery store to me, so that’s what I’m going to go to. But literally if I just went in a like one that’s like a little bit further away, I found cheaper groceries and so I was able to get the same amount of groceries for a little bit less. And so yeah, those were the things that I realized once I looked at the numbers.

29:13 Emily: This is so relatable to me personally. And also I think the audience generally just, yeah, it’s a transitional time when you’re starting grad school and you don’t know the place to shop yet. And you do need, well need is a relative word. You want to have some things for your new place. And so it sounds like it was a combination of like finding some more frugal tactics to apply, and then also just really the proactive aspect of budgeting. You know, you were doing the reactive, the retrospective aspect, which is like looking at where your money had gone. And then you started adding in the, okay, well I only have, you know, available this amount of money for you know, discretionary Amazon purchases so I’ve got to keep it to that limit and anything else will have to wait for the next pay cycle and you know, we refill the coffers. Is there anything else that you’d like to add about that practice of budgeting?

30:02 Georga-Kay: I would say once I started doing like the automated where it was like the app was tracking it for me, then I actually sat down and like made an actual budget. Like I was like okay, this is how much, not like what the thing is telling me that I should spend based on my previous expenses, but based on my goals, like my savings goals, how much should I reasonably spend? And then that actually made me cut back a little bit more because I was like, oh, if I want to save up an emergency fund, then I can’t be spending this much on you know, eating out or something.

Resources for Budgeting

30:31 Emily: Yeah, I want to get back to those financial goals in just a minute, but before we do, so you said that you had some resources that you’d like to share about, you know, how you’ve learned about budgeting, how you’re practicing budgeting. You mentioned, I’m going to say Rocket Mortgage, that’s like the ads that I hear for them, but Rocket Money, is that the name of the budgeting app?

30:49 Georga-Kay: Yes, Rocket Money is the one that I started with. I’ve actually, in college I tried to use Mint because everyone was like, oh, Mint is a great app and I think it is a great app, but I quickly realized the interface just wasn’t like super user-friendly to me it was just, it was a little bit clunky. So I stopped using that and mainly also because I was just scared to budget at that point as well. It’s taken me a while to get into proactively looking at my money. And so Rocket Money has helped me to do that because it’s been like a really simple interface and once I put in my stuff it just sort of gave me all the numbers that I wanted to look at. And I would say also a lot of personal finance podcasts, which obviously this one I listened to, which I think is really, really helpful because there are just some things as an academic that like other podcasts will be like, oh you need to focus on, you know, negotiating for a raise or things like that.

31:37 Georga-Kay: And it’s like, okay, that’s not super practical to the life I’m going to be living for the next few years. But in terms of podcasts, I love The Financial Confessions. I feel like it talks a lot about like the social life of money, like money with friends and money and relationships, which I think helps a lot. I also like the Her First $100K podcast, which is like, I feel like that’s a pretty popular one, but it’s like Women in Money and thinking about how we perceive money, which is a lot of these podcasts are actually thinking about like how we think about money, how we use money on a daily basis. And then books. I love books I feel like as academics, like of course like my first sort of introduction to finance was through books. So I Will Teach You To Be Rich, which is a very popular one.

32:19 Georga-Kay: But also Jen Sincero’s, How to Be a Badass With Money [You Are a Badass at Making Money]. I think that’s the title of the book.

32:26 Emily: Yeah, I’ve read that as well.

32:27 Georga-Kay: That one really, yeah, that one is really good. I know people have mixed opinions on it, but the reason why I personally enjoyed it is because it’s sort of like allowed me to think about the ways that I talk about money to myself in ways that I didn’t really think about before. Because as I mentioned a lot that I’ve had anxieties around money and so I would just sort of be like, oh, like in college, like I’m so broke or I’m so this and like a lot of negative money talk and I’ve stopped doing that and I think having done that for a few years now and sort of reframed the way that I think about myself and my relationship with money has allowed me to make these like larger steps towards being like more financially competent.

33:02 Emily: Yeah, I noticed in those books that you listed, there are a lot of money psychology, like aspects there. It’s not, and that’s the hard part, right? Like the hard part is not necessarily the math <laugh>, like it’s not like the addition, subtraction, multiplication. It’s not the facts of like, okay, do I have access to an IRA or not? I mean I talk about that because it’s a little wonky, but like once you know, you know. The psychology part of it is the one that you need to work on over a time and it’s like you’re never really done with it <laugh>. You’re always evolving to like a new level with it. So, I like that you mentioned those like for that reason specifically. Yeah, any other resources that you’d like to add to your list?

33:41 Georga-Kay: I would say, I don’t know if this really counts as a resource, but what I mentioned previously, which is talk to graduate students. Like talk to graduate students, preferably graduate students are in a similar department to you or in a similar field to you because then you can get like ideas about, you know, the decisions that you can make that might help you in the future. Like just like daily living expenses. As you said, like maybe talking to them about apartments you might find a great deal or something. So I found that actually some of the best like resources have been like the other students in my department and students at Brown.

34:14 Emily: What I love about that suggestion is just that you’re going to get the most relevant information from the other people who are living that similar life to you. Like for me, like I work on a national level, so I do not get to be an expert in every single different state in every single different city. And so, sometimes when I go to speak at certain universities, I ask the people who are living it, like for their suggestions, like I can say some things that work generally, but like they’re going to know like the exact, like you mentioned earlier, the right grocery store to go to for like this specific thing. Like oh this farmer’s market is really wonderful for blah blah blah, whatever. Or like, oh, have you heard about this city-specific subsidized resource? Things like that. Like that is not what you’re going to get from from books and and national podcasts and so forth.

34:57 Emily: It’s really, you have to get it from the people who are living through it with you. So it’s an amazing resource. I’m so glad that you’ve been tapping into it. I hope people listening to this episode will follow that model as well.

Financial Goals

35:08 Emily: Okay, so I want to turn now to talking about the future. We’ve talked about how diligent and thorough you’ve been with like investigating your finances and becoming more comfortable with them in the past. But now I’m wondering like have you set some financial goals for the rest of your time in graduate school?

35:26 Georga-Kay: Yeah, so my biggest goal is to save three to six months of expenses so that I can have just like a little cushion if I need to so that I don’t end up incurring more debt in the future. I would love to be able to, you know, occasionally be able to go back home, go to Jamaica, go visit extended family or even having a pet. Like I am scared that if something happens and I need to cover like a really big vet bill, I don’t want to have to put that on a card. So my immediate immediate goal is to save three to six months of living expenses. And then my second goal is really a way to like manage my financial anxiety, which is just to automate a lot of the big picture stuff that I know that I want. So, automatically like saving 20% of my income.

36:09 Georga-Kay: And then also once I’ve done that, moving on to automating retirement and investment. So, that’s something I see as more like a building sort of building block sort of goal where I’ll be working on that for the next year or two of just slightly changing things within my account so that the money goes where I need it to go. My third goal is to increase my income, which is not something I hear a lot of graduate students talk about and I get why. But I really do feel like especially for me, I want to be able to help with family stuff and just feel more secure. And so I feel like the best way to do that is to increase my income. And the way that I sort of see myself doing that is through additional teaching responsibilities. So, I can teach in the summers and I can also do like proctorships that pay a little bit more and those will pay up to like $10,000 more per year. So, that’s just a small way that I can increase my income so that I can have a little bit more flexibility.

37:01 Emily: So, with your first two goals of building up that emergency fund and then you know, starting to invest and starting to save for like other types of goals as well, you mentioned a 20% figure. So, I’m wondering are you currently saving 20% and is that going towards your emergency fund? Or is 20% something you’re like working up to over time?

37:22 Georga-Kay: Yeah so I’m currently saving 20%. I have my account set up where once I get my stipend, it automatically takes off that 20%. I am not going to lie, I’ve had to dip into it a couple times. Mainly for my dog. She’s had some stomach issues and so I just had to pay a huge vet bill. But I will continue to save that as much as I can and do that 20% minimum. And in the future, I would actually like it to be more, but for now I feel like 20% is a good amount to save.

37:52 Emily: Definitely don’t feel any guilt about spending on emergencies. I mean that’s what it is when you have like a medical situation, whether it’s yourself, your family member, your pet, if it has to be done, it has to be done. That’s what, I mean you’re saving the emergency fund, that’s what the emergency fund is for, so you’re saving it and yeah, you spend down but you still have the 20% savings rate and it’ll, you know, not every month is going to have, you know, one where you have a big expense like that. So, that’s awesome. That’s an amazing savings rate for a graduate student. So, just congratulations to you and I’m really excited for, you know, when the emergency fund is filled and when the other, you know, cash savings goals are filled and you get to turn to investing, it’s going to be so exciting.

38:25 Emily: And I love this idea of, you know, of course increasing income as a graduate student but also that you’ve thought through what your options are. And sometimes like it seems like you identified in your case there are opportunities even at your university that you can sort of easily pivot to and just add on to the responsibilities that you know you’ll have in the moment that’ll allow for that additional income. And I like that because you know, side hustling is sometimes frowned upon, sometimes disallowed, but when it’s an opportunity that comes through your university, it’s like oh you’ve kind of already like been approved for this because it’s something they offer to you, you know? So it doesn’t have to be like hidden or you know, anything like that.

39:00 Georga-Kay: Yeah, and that’s something I thought about. I’m very much a work smarter not harder person. And so I was like I keep my, now we’ve gotten like emails about like, oh if you want to teach in the summer, I’m actually going to be teaching this summer. And that’s an additional $4,000. So I was like, actually this is great. Like if I teach every summer or if I try to, then I can make a couple thousand dollars and then if I take on like an extra TA assignment, I can make another couple thousand dollars and that’s like money that I can put towards savings because right now I feel like pretty good in my base living expenses that I don’t need to like, you know, upgrade apartments or anything like that. So, it’s like all that money can go towards my larger goals.

39:39 Emily: Yeah, and you’ve just identified another great strategy there, which is base your, you know, your typical budget, your contractual living expenses, your necessary expenses around the minimum amount of money you can expect to be taking in the course of the year so that you know, anything you’ve taken above that could be used for savings, or also other discretionary purchases. Like you mentioned, you know, going like back home to Jamaica, and so like that maybe you could do an extra trip, you know, and still have money to put like into savings as well. So, I love that balance and it’s a great strategy for pretty much any stage of life, not just graduate school.

Best Financial Advice for a Fellow Early-Career PhD

40:09 Emily: Well, Georga-Kay, this has been such an amazing interview. I’m definitely going to be pointing to it for all the prospective graduate students as a model for how to handle this. And even especially, you know, even like your self-awareness around the money anxiety and so forth and how you, you know, faced it and like trying to work through it and everything. Again, super relatable I think to so many people. So, I’d like to finish up here with the final question that I ask all of my guests, which is, what is your best piece of financial advice for a fellow early-career PhD? And that could be something that we’ve already touched on in the interview or it could be something completely new.

40:41 Georga-Kay: Okay, so I have two, but I’ll make it quick. I would say the first one is one that I’ve mentioned a few times, which is that you should talk to the people around you. Like I would say not even just graduate students but also if there are any postdocs in your department or even early-career faculty. I have just like had such great conversations, and it might be hard at first to sort of like bring things up, but I feel like you don’t even have to ask about specific numbers, but just how people make it work in graduate school because there’s so much like financial literacy that we don’t have as graduate students because it isn’t prioritized. And so the best way to sort of break that barrier is to talk to other people who are in similar situations. And that’s how it’s helped me to approach a lot of the things that I do now in how I think about creating a budget or how I think about my lifestyle.

41:28 Georga-Kay: So, highly recommend just reaching out to your community and starting those conversations. It helps a lot. I would also say the second thing is to look at your money <laugh>. I think that’s harder than it seems especially for people who maybe struggle with being scared about what they’ll see, but it really, really helps because you don’t even have to make any changes. Like I just start looking at it and like being cognizant of like, okay, this is how much I’m spending. And I feel like that automatically leads to you making some slightly different decisions.

41:59 Emily: I agree. Totally, totally agree. It could just be you don’t even have to do, like you sort of went very quickly from the looking at the numbers to the starting to budget stage. But even staying at that, like I’m just looking, I’m not intentionally making any changes, but as you said, it kind of works in the background of your mind and you’ll automatically most likely start to make at least a couple of changes and you don’t have to be too like forceful with yourself about it, just having that awareness. So that is great advice. Thank you so much for sharing and Georga-Kay it’s been an absolute pleasure. I’m so glad that you volunteered to come on the podcast and you know, I hope you’ll come back in a couple of years for an update.

42:31 Georga-Kay: Thank you! I’ll be back anytime you want me <laugh>.

42:35 Emily: Okay, lovely. Thank you so much!

42:37 Georga-Kay: Thank you for having me!

Outtro

42:43 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.

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

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

Links Mentioned in the Episode

S14E5 Image: How This Grad Student Shifted Her Student Loan Strategy through the Pandemic

Teaser

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

Introduction

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

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

Will You Please Introduce Yourself Further?

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

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

Financial Mindset at the Start of Grad School

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

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

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

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

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

05:19 Lexi: Summer 2019.

Federal Student Loan and Parental Debt

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

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

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

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

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

07:40 Lexi: A combination.

Income-Based Loan Repayment

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

07:57 Lexi: I did, yeah.

07:58 Emily: Okay.

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

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

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

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

08:44 Lexi: No, I was not.

Initial #1 Priority: Unsubsidized Federal Loans

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

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

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

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

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

Administrative Forbearance

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

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

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

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

Shift from Paying Off Loans to Investing in an IRA

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

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

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

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

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

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

Commercial

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

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

IRA Investment and Parental Debt Repayment

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

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

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

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

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

Podcast Recommendations

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

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

25:01 Lexi: Yes.

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

Shifting Student Loan Policy

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

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

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

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

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

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

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

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

Playing the Waiting Game

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

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

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

Saving for Retirement

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

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

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

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

Best Financial Advice for Another Early-Career PhD

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

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

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

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

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

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

36:32 Emily: You’re welcome.

Outtro

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

This Grad Student Deferred Her Acceptance to Work on Her Finances

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

Links Mentioned in this Episode

PF for PhDs S14E4 Image: This Grad Student Deferred Her Acceptance to Work on Her Finances

Teaser

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

Introduction

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

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

Will You Please Introduce Yourself Further?

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

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

Timing of Grad School Application and Deferment

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

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

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

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

Receiving an Acceptance Letter

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

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

Role of Finances in Decision

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

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

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

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

Informing the Grad Program About Deferment

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

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

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

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

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

What About Funding?

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

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

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

Finances During Gap Years

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

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

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

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

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

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

Commercial

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

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

Web Design Business

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

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

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

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

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

Starting Grad School

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

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

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

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

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

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

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

Financial Transition

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

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

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

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

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

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

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

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

For Whom is Deferring a Good Option?

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

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

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

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

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

32:02 Emily: Sounds great.

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

Best Financial Advice for Another Early-Career PhD

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

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

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

33:24 Brittany: Yeah, Upwork.

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

33:56 Brittany: Thank you for having me!

Outtro

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

The Tax and Retirement Effects of Receiving Fellowship Funding

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In this episode, Emily interviews Dr. Jamie Lahvic about her experience being funded by fellowship during grad school at Harvard and her postdoc at the University of California, Berkeley. Regarding the tax complications of being on fellowship and the lack of retirement benefits, Jamie and Emily outline the issues, discuss possible solutions, and suggest advocacy avenues for instigating change. Listen through the end of the interview for the Big Questions regarding the true nature of fellowships and employment.

Links Mentioned in the Episode

S14E3: Image The Tax and Retirement Effects of Receiving Fellowship Funding

Teaser

00:00 Jamie: Because I often felt, you know, in addition to like the confusion and the frustration and wondering what to do, that I don’t know, it felt like an emotional hit. I felt unvalued when I’m put into this weird little category where my earnings don’t make sense and I can’t open an account and I can’t figure out how to pay taxes. And I went on this really kind of rollercoaster from feeling like, “Oh, I’m a valued scientist and worker in this field,” down to like, “Oh, nobody really cares about me or the type of work that I’m doing.”

Introduction

00:38 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. This is Season 14, Episode 3, and today my guest is Dr. Jamie Lahvic. We discuss Jamie’s experience being funded by fellowship during grad school at Harvard and her postdoc at the University of California, Berkeley. Regarding the tax complications of being on fellowship and the lack of retirement benefits, Jamie and I outline the issues, discuss possible solutions, and suggest advocacy avenues for instigating change. Listen through the end of the interview for the Big Questions regarding the true nature of fellowships and employment.

01:43 Emily: If there are any prospective PhD students listening—and I hope there are—I want to point you to a new workshop I’ve been publishing in installments throughout this academic year, Set Yourself Up for Financial Success in Graduate School. Now that we’re in admissions season, the modules are getting really exciting and immediately actionable. The two most recent modules are titled “Decipher and Compare Your Offer Letters” and “How to Negotiate Your Stipend and/or Benefits.” One from last fall that you might want to check out as you’re evaluating the cities your offers are in is “Stipends vs. Cost of Living.” I sincerely want you to go into grad school with your eyes wide open regarding the financial realities and in the strongest financial position possible for the program you choose. I hope you will check out the workshop and enroll in the modules that will help you accomplish that. Go to pfforphds.com/setyourselfup/ for more information. You can find the show notes for this episode at PFforPhDs.com/s14e3/. Without further ado, here’s my interview with Dr. Jamie Lahvic.

Will You Please Introduce Yourself Further?

03:01 Emily: I have joining me on the podcast today, Dr. Jamie Lahvic. Super delighted to have Jamie here. We actually met at a conference last summer. I’m recording this in November, 2022. So, we met at the Graduate Career Consortium Annual Meeting, which was in July, 2022. We ran into each other during like a break or something, and we just started chatting and we had this electric conversation about funding, about fellowships, about benefits, about systemic issues that need to be addressed. And I just wanted to capture some of that magical conversation here on the podcast. So, Jamie, I’m super delighted to have you on. Will you please introduce yourself to the audience?

03:42 Jamie: Sure! My name is Jamie Lahvic. I am currently working as a Program Officer at the National Institute on Aging, where I focus on some policies as well as programs related to graduate students, postdocs, and early career faculty. But today I’m kind of excited to talk about my own personal experiences as a graduate student and then a postdoc. So, I went to grad school at Harvard Medical School studying biomedical sciences and then I moved on to UC Berkeley to do a postdoc in cancer biology. And I wrapped up that postdoc in 2021.

04:18 Emily: I’m really excited to see all these different perspectives from you being at a private university, a public university, now in government. Like, this is awesome! And I’m of course going to share some of my own limited experience as well. But we’ve both had some observations about these issues about the finances and the benefits and so forth that are offered to graduate students and postdocs as employees or as fellows. So, I want to, for the listeners just to introduce them. I have a framework, this is not necessarily the way that everybody talks about this, but in my mind there are sort of two broad classifications that graduate students and postdocs can fall into. One is as an employee. The way you know that you’re an employee especially if you’re a citizen or resident, is if you receive a W-2 <laugh> at tax time, that’s like really indicative that you’re an employee.

05:04 Emily: So, you have this employer/employee relationship with the university and that may cause different benefits and so forth to be offered to you. The other classification, a little harder to name, a lot of people use the term fellowship, but not only things called fellowships could fall into this classification. So, I broadly call it awarded income when your income comes from an award that you received. Could be certain types of grants, could be a fellowship, could be some other things. So, that’s the language we’ll be using. We’ll just say fellowship for shorthand, but that basically just means non-employee or at least under the, you know, the timing and circumstances of receiving that award, you’re a non-employee.

Switching Between Grad Student Funding Sources

05:37 Emily: Okay. With that clarification out of the way, let’s talk about, you know, your personal experiences, my personal experiences with being an employee and/or being a fellow during grad school and postdoc. So, we’ll probably take this like topically. What would you like to share? What you know surprised you about maybe switching between these two types of funding? What issues did they bring up? Go ahead.

05:59 Jamie: Sure. Yeah, so as a graduate student, I was never an employee. I was always either paid a student stipend coming straight from the university or then a fellowship stipend once I got an NIH fellowship. So there, it still was a really complicated process. I remember being very surprised first year as a graduate student to try to figure out how to pay taxes, how to pay estimated taxes every year. And it seemed to become more complicated every year, especially because once I got my fellowship, some of my money would come from the fellowship, some of it would come from the university. Those would come in separate paychecks. And then later on once I was teaching I would get a third paycheck to cover the teaching that I was doing. And throughout all of that, I never received a W-2. Every now and then I would receive a 1099 for the teaching, but they were kind of inconsistent in whether they would send that. So come tax time, I kind of never knew what I should even do. So, that was a big struggle.

07:01 Emily: Yeah. Let’s talk about the tax issue for a minute longer, because I mean, you probably know this is like part of the bread and butter of my business now because so many graduate students and postdocs are running into confusion around the tax issues. And basically, I mean we will link in the show notes some episodes I’ve done on this in the past, but it basically boils down to like when you’re an employee, your employer has certain responsibilities in terms of telling you how much money you’ve been paid and how much money they withheld on your behalf and so forth. And once you get into this weird non-employee status, they simply don’t have those legal responsibilities in the way that they do for employees. And so, universities take like all these different approaches. And you’re saying even within Harvard, different pools of money were being reported in different ways.

07:46 Emily: And so, yeah, of course, that gets confusing for the recipient when the vast majority of our like, I mean already the U.S. tax system is so complicated to navigate, but if you step outside of the simple like employee world, it gets even harder to find, you know, the support and the resources that you need. That’s part of why I do what I do. But yeah, tell me a little bit more about how you dealt with these like challenges or complications of not having income tax withheld, for example, or like the reporting inconsistencies?

Team Effort for Taxes

08:15 Jamie: Yeah, I think a lot of the students kind of banded together to help each other. I remember we had one really proactive student who would post in our year’s Facebook group four times a year saying, “Remember, pay your estimated taxes.” And I was like so grateful to get that reminder because I was so caught up in, you know, rotations and qualifying exams and whatnot. I just couldn’t think about remembering to do this. So, just having somebody send a reminder was amazing. And then we did a lot of talking to each other to try to fill out the forms correctly. I think I was a few years into graduate school when I found your website and some of your tips, and I remember that being just amazing and just feeling like that’s something that was, you know, it’s complicated but once it’s laid out it is relatively simple. It is the type of information that the university could have given us that they never really did because they wanted to stay away from giving tax advice and they’re not a certified public accountant, and that type of thing. So, it felt like the students were on our own to try and figure it out.

09:17 Emily: Yeah, I think that again, while the universities don’t have again this legal requirement to issue tax forms that make sense, or whatever, I do think it’s really helpful when they try to address this as much as they’re able to. And I mean, I hear a lot of pushback when I work with uni–not a lot. Some places I hear pushback like, “Oh we really can’t, you know, give tax advice and so forth.” And I try to kind of make the point like, “Well, you on your own or me, like we could talk about this without it being advice.” Like we can just talk generally about how estimated tax works and what these different reporting things that are going on are. And that’s what I do like with my quarterly estimated tax workshop. Again, we’ll link it in the show notes. And so, a lot of times universities contract with me to provide that because they feel like that shifts some liability off of them and onto me and they’re more comfortable with that.

10:07 Emily: But again, just giving a little bit of education and some reminders and tips and so forth is not, to me, giving advice, because really it is ultimately up to the individual to figure this out. Like I’m not sitting down with anyone filling out their forms, like they’re still doing that on their own. I’m just providing guidance on how to do so. So, I guess this is kind of turning into an ad but like if the listener <laugh>, if you listeners are on fellowship and you want your university to help you, tell them about what I offer, because they may feel more comfortable working with me then doing this, you know, with an internal employee who, you know, might expose them to some liability.

Added Hardship of Inconsistent Tax Reporting

10:41 Emily: Okay. Estimated tax and reporting stuff, all a difficulty of being on fellowship. Anything more you’d like to add about that? Or should we move on to a new talking point?

10:52 Jamie: I just thought it, you know, in addition to kind of the confusion, it can sometimes cause real hardship. Like for me for instance, I didn’t receive a 1099 for my final chunk of teaching that I did in my like final year as a graduate student. And so, in between doing that teaching and like the spring and into summer semester, I got a postdoc. I moved across the country, I had started a whole new tax, you know, qualification as an employee there. And then when it came time to do taxes, I honestly completely forgot about the money I had gotten paid in the previous spring. Because I never received any kind of 1099, any kind of documentation, and I just didn’t pay taxes on it. And I think I like woke up in the middle of the night sometime like three months later and went like, “Oh my god, I made like thousands of dollars <laugh> that I didn’t pay any taxes on.” And then like on my own, I had to then figure out how to adjust my taxes. I had to pay a penalty for the amount that I, you know, had failed to pay previously. And at the time, like I had just spent all of this money to move cross country. I was making a postdoc salary. Like I really didn’t need to be paying any extra penalties on my taxes for that type of thing.

Potential Changes at the University Level

12:04 Emily: Absolutely. I mean, good for you for doing the amended return and everything, because I know some people will just kind of let it go after that point. But you really don’t want to let it go like multiple years and then have the IRS, I mean I know it’s rare, but it can happen that they can come after you, and then it’s an even bigger problem. So, good that you took care of it. But I think kind of what we’re saying here is just like communication, <laugh> communication is helpful around this topic. So, we’ve talked about this problem, various problems related to taxes. What are some things that could change at the university level, state level, federal level, whatever it is, to alleviate these problems?

12:41 Jamie: I mean at the university level, my understanding is that even if you’re not an employee, the university can still give you a 1099 for the money that you’ve made, and that universities, as far as I know, kind of choose whether or not to go through that step and send out those 1099s. So, I think that’s a major thing that just having a very clear document makes filing your taxes easier. You know, that’s something that like TurboTax and similar basic tax filing software knows how to work with. So, I think that would make a huge difference for a lot of students.

13:12 Emily: So, I actually did experience this during graduate school, so I’ve had a couple periods of my life where I was on fellowship. But when I was at Duke, Duke actually did manage to withhold income tax on behalf of at least me. I don’t know if every type of fellowship it was available, but at least for me, about half my years I was on this like non-employee kind of income. So, they were able to withhold on my behalf, and they did issue a 1099-MISC (Miscellaneous) at year’s end. So, that helps with like the problem you just identified of like, you know, a year and a half goes by and you’ve forgotten about some chunk of your income. Yes, that does help with that problem. The issue that it causes <laugh> is that the 1099 is most widely recognized as a self-employment income kind of document.

13:59 Emily: And so, then there’s, I feel like there’s even more burden on the recipient to properly communicate what this is with their tax software or their tax preparer. So, if they know to do that and they know that they’re not supposed to pay self-employment tax on this income, then it can work out. As a reporting document, it’s okay, but I would say, you know, nine times out of 10, people don’t know that it’s not self-employment income or maybe they know that, but they don’t know how to communicate that. And they don’t check that, they don’t understand how it’s going to affect their return. Anyway, so it can cause an even bigger mess. So like, I hesitate to say that that is the best solution. I mean really to me, I would say the 1098-T is the best form that we have as of now.

Reflections on an Adjusted 1098-T and Streamlined Tax Reporting

14:50 Emily: Although I would love it if there was just an adjusted 1098-T or a different kind of form that really could fully reflect the fellowship like situation. Because again, the 1098-T, while it’s used by many universities, they’re not required to issue one if you have more of this box five grant income than you do box one, like the educational expenses and charges. So, if they would just issue it all the time, I think that would be helpful. But even going beyond that, like this is now like a federal level kind of thing. Like if there were a different form or the 1098-T itself were somehow different, that would be even more clear.

15:26 Jamie: Totally. Yeah. Yeah, and I know anecdotally, I eventually switched over from like the TurboTax software to I think FreeTaxUSA that has a great little box to check that said you know, is this income, are you like, are you a graduate student or postoc rather than an undergraduate? Because I think it’s typically with that 1098-T where they’re trying to like not take out taxes on the portion that you’ve used to cover scholarly expenses, which applies to like an undergraduate who’s receiving, you know, tuition reimbursement, but not to a graduate student. So, I could imagine at the federal level, you could create a little box like that on the 1098-T, right? To check here if this is a graduate or postdoctoral level fellowship, right? Or check here if this money is not being used to cover tuition and scholarly expenses. It would be nice.

16:20 Emily: I think this is both like maybe a reporting option at the federal level, but also it comes down to the university level and how, like which department is the one that’s like processing these paychecks. And you are, like saying how you did about your various different incomes from Harvard, that indicates to me that like maybe payroll was issuing some of this, maybe financial aid was issuing some of this. And like having these different siloed departments separated from one another communication-wise means that things are not streamlined and you get different types of forms and maybe for you, maybe you were on different pay schedules for, you know, different sources. Yeah. So, having like a single department that handles like all, you know, income for graduate students and postdocs, whether it is payroll income for employees, whether it is, you know, non-employee income, that might help. I don’t know, maybe that’ll cause other problems too, but like right now, again, the universities are not really set up to handle this in a streamlined, or at least, I don’t want to say broadly. Some universities are not set up to handle this in a streamlined manner. Maybe others have it a little more figured out. I don’t know.

17:23 Jamie: I know actually when I got paid at UC Berkeley, it was more like that. So there, I was eventually on a fellowship as well, but I received one paycheck per month. And it was kind of interesting because, you know, I would receive my lump monthly salary or stipend from the fellowship, but only a little portion of that would get taxed. So, there would be like a little tiny bit of tax taken out, and then the rest of it was untaxed. But it at least came to me on like one single paycheck where it was very clear how much tax had been withheld, and then I could run the numbers when it came time to pay the estimated taxes on the rest.

17:59 Emily: So, it sounds like you were still receiving a pay stub. Even though a portion of this is employee. Yeah, that’s perfect. I mean, I kind of always tell people who are employees like, “Okay, look at your last pay stub, even before you receive your tax forms. Look at your last pay stub.” Maybe you have to access it through your payroll system or whatever, but you can find out how much tax was withheld. But again, those pay stubs are not generated usually if you’re a non-employee. But it sounds like Berkeley has this figured out, so I’m really happy to hear that. I would, yeah, I would love to be able to come up with like, I don’t know best practices, like which universities are using the best practices. So like, Duke has something figured out over here, Berkeley has something figured out over here. Like, I don’t know, maybe there’s a way to again, promulgate these best practices among these different universities and financial whatever, backend stuff.

18:44 Jamie: Yeah, and you know, I think great groups to kind of connect to for that are unions. Within the UC system, we have a strong postdoc union. And I think they had done a lot of pushing, you know, both on how much you get paid, but also a lot of these minute policies about how you get paid. And so I wouldn’t be surprised if the more streamlined system came about because of pressure from the union. And I’d be interested to know what other, you know, grad student unions and postdoc unions are where they’re having successes.

19:13 Emily: Yeah, I’m super glad to hear that. Exactly. Like sort of giving a voice to these, well, you might not know, but the downstream effect of this like decision that you’ve made, the way you’ve set up the system is it’s causing these problems.

Commercial

19:28 Emily: Emily here for a brief interlude! Tax season is in full swing, and the best place to go for information tailored to you as a grad student, postdoc, or postbac is PFforPhDs.com/tax/. From that page I have linked to all of my tax resources, many of which I have updated for tax year 2022. On that page you will find free podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with. The absolute most comprehensive and highest quality resources, however, are my asynchronous tax workshops. I’m offering four tax return preparation workshops for tax year 2022, one each for grad students who are US citizens or residents, postdocs who are U.S. citizens or residents, postbacs who are U.S. citizens or residents, and grad students and postdocs who are nonresidents. Those tax return preparation workshops are in addition to my estimated tax workshop for grad student, postdoc, and postbac fellows who are U.S. citizens or residents.

20:43 Emily: My preferred method for enrolling you in one of these workshops is to find a sponsor at your university or institute. Typically, that sponsor is a graduate school, graduate student association, postdoc office, postdoc association, or an individual school or department. I would very much appreciate you recommending one or more of these workshops to a potential sponsor. If that doesn’t work out, I do sell these workshops to individuals, but I think it’s always worth trying to get it into your hands for free or a subsidized cost. Again, you can find all of these free and paid resources, including a page you can send to a potential workshop sponsor, linked from PFforPhDs.com/tax/. Now back to the interview.

Advocacy Avenues for Grad Students and Postdocs

21:28 Emily: The last kind of question in this area, and you just mentioned one of the advocacy avenues: unions. Can you think of any other advocacy avenues that graduate students and postdocs might be able to use to make these kinds of changes that we’re talking about?

21:45 Jamie: I mean, even outside of a formal union, I’ve seen a lot of success from graduate students and postdocs just banding together and working together on these things. Whether that is kind of peer-to-peer advice and providing resources, or working together as a group to request something from your department, from your university. You know, I have so many memories of like trying to do my taxes, trying to fill in the forms, and getting like frustrated and upset and not knowing what to do. And I think like you have peers who can help you through some of those things and at least to help you feel supported.

22:25 Emily: Now, I don’t know exactly what avenue this is, but I have noticed over the years that I’ve been studying federal taxes for, you know, as in how they affect graduate students and postdocs, that there have been changes. The 1098-T has gone through actually a big remodel in the last few years. The Kiddie Tax went through a slight change with the Tax Cuts and Jobs Act. So, there have been other changes that have been made that makes me realize that changes possible. Now, I don’t know what the avenue is for letting someone know, <laugh> that you want a change to happen. Maybe it’s contacting your representative or your senator or whatever. We can talk about some of the advocacy around like retirement stuff that happened a few years ago in a moment, but the change can happen. I’m just not clear exactly how you communicate, you know, this advocacy at the federal level.

23:09 Jamie: Yeah, that’s a good question. I mean, I know I’ve been on like the IRS website looking for like from their resources, like what is their advice for people in these situations. And what I found was only a few lines, right? Like not a lot of detail. So, I would love to see, you know, coming directly from the IRS some more clear advice around these types of situations. And I do know that government agencies put out things like RFIs, requests for information, and they do have various sort of feedback channels, so trying to find those for the IRS or for your state tax departments could be one way to go about it.

(No) Access to University Retirement Accounts

23:48 Emily: Okay. Future project for me. Okay, well I just alluded to retirement accounts, so let’s talk about that next. What’s been your experience with being offered or not being offered access to university retirement accounts?

24:01 Jamie: Sure. So, as a graduate student, I didn’t have any option for any kind of retirement account. And my understanding was that from legal sort of tax reporting purposes, I wasn’t able to open an official retirement account. So, in graduate school I was making like just enough money to save up a little bit and I did start buying like some mutual funds with that. And then as a postdoc, I did have a retirement account offered. However, I started out by like not really contributing very much to it at all because I was living in this really high cost-of-living area with not a lot of income. And then I actually found out as I was going through the fellowship application process that I was going to be losing that retirement contribution once I got a fellowship coming in. So then I sort of, at the last minute just before my fellowship came in, I like maxed out all my contributions as best as I could for like the last few months and tried to top it off. But then the fellowship came in and those accounts kind of sat stagnant for the rest of my postdoc. So, that was a frustrating thing to see. And it’s definitely been really nice now for a little more than a year I’ve been in, you know, a real job with very solid you know, federal government retirement accounts. So, that’s been nice to watch those finally like properly growing.

25:26 Emily: Yeah, it’s been my observation that if you’re not an employee, you do not have access to the 403(b) or 457. I actually don’t know why this is the case, but I’ve never seen an exception to it. Like yeah, I guess it has to do with like the rules behind what kinds of money can be contributed to a 401(k) or a 403(b), 457, these kinds of accounts. What I mentioned earlier, and you probably know this is, at the end of 2019 with the SECURE Act, there was a definitional change. So, 2019 and prior, fellowship-type income not reported on a W-2 was not permitted to be contributed to an IRA, an individual retirement arrangement. But that definition of what kind of money is allowed to be contributed to an IRA was changed by the SECURE Act.

26:18 Emily: And so 2020 and forward, you can contribute fellowship income not reported on a W-2, if you’re a graduate student or postdoc, to an individual retirement arrangement. I don’t know why a similar definition change could not occur for 403(b)s, 457s, et cetera. I just know that I’ve never seen it. I’ve never seen a non-employee be offered access to that particular benefit. Furthermore, at the graduate student level, it’s just very, very rare. Not totally unheard of, but rare, that a graduate student employee is offered access to those accounts. It does happen from time to time, but usually not. I’ve had a couple podcast episodes, and we’ll link in the show notes, where people have talked about as a graduate student contributing to those types of accounts. But again, it’s not common.

27:00 Jamie: I didn’t know actually about that change to the SECURE Act. Like I was still a postdoc in 2020 and I had had that IRA that I had opened like just before my fellowship started. But yeah, I definitely wasn’t contributing to it in 2020 and 2021. I had no idea that that was a possibility.

27:17 Emily: Yeah, I don’t think it was, I mean I talked about it a lot, but just like generally speaking, people make that assumption, right? That graduate students and postdocs are usually not able to contribute to a retirement account. So, why would we even have the conversation about whether they’re allowed to or not? Thankfully, someone was having the conversation because there was a change, right? Because I mean I remember that Senator Elizabeth Warren was a sponsor of this bill. There were other co-sponsors. It came up multiple times in the Senate and the House and it just never passed, multiple years, until it was rolled into the SECURE Act. There were a lot of other changes going on with how retirement accounts were being treated. So, it was kind of rolled into that and I’ll link in the show notes a couple of episodes we did right around that. But again, people make these rules. So, if people at the federal level decided that graduate student and postdoc non-employee income was legitimate in whatever, you know, little tax benefit they’re trying to offer, then it could become legitimate and maybe universities also would follow suit and start to offer that benefit. I actually don’t know why graduate students would be excluded from 403(b)s and 457s. Does it cost the university anything? Like a little more administrative burden to extend those benefits? I honestly don’t know why they wouldn’t for those students who can.

28:34 Jamie: Yeah, especially if it’s not a question of matching, if it’s just a question of contributing your own earnings into this account, right?

28:41 Emily: We can dream, Jamie, that there would ever be a match <laugh>. That’s a couple more steps down the road. No, some postdocs do receive matches or actually, I don’t know about you for being a postdoc in the UC system, but the UC system has a defined contribution level for their employees. I don’t know if it applies to postdocs, but in any case you might get that as an employee and then lose it if you, you know, then switch over to fellowship at a non-employee.

29:06 Jamie: Yeah, I believe in the UC system, I never got any kind of match, but I did have access to that 403(b) as well as I think a DCP.

29:15 Emily: Yeah.

“Non-Employee” Fellowship Income Legitimacy

29:16 Jamie: But yeah, I think it’s interesting that you describe it as like the legitimacy of being an employee and the legitimacy of that income. Because I often felt, you know, in addition to like the confusion and the frustration and wondering what to do that, I don’t know, it felt like an emotional hit. I felt unvalued when I’m put into this weird little category where my earnings don’t make sense and I can’t open an account and I can’t figure out how to pay taxes. I remember having like some really sharp juxtapositions between attending a professional conference and like giving a talk and talking to PIs in my field and having people really excited about the work that I was doing and then coming home a week or two later and trying to figure out some of my financial life and it being so confusing and seeing that there was just no support set up for it. And I went on this really kind of roller coaster from feeling like, “Oh, I’m a valued scientist and worker in this field,” down to like, “Oh, nobody really cares about me or the type of work that I’m doing.” So, I think it can have an emotional hit as well.

30:24 Emily: I’m so glad that you shared that. I think this is how we started our conversation at GCC actually, that fellowships and similar kinds of awards are supposed to be so prestigious.

30:35 Jamie: Exactly.

30:36 Emily: It’s supposed to be such an honor. It’s supposed to be based on your merit that you’ve received this. And yet the downstream effects are, well now you’ve been unclassified as an employee and your benefits are reduced. And I don’t know, maybe at some point in the past, the money made up for it. Like maybe you could make more as a fellow, which could make up for some of these issues. But I don’t know that that’s so much the case now. I was actually just seeing on Twitter today that like, you know, fellowship awards on certain grants are set at such a level that they’re below the minimums the universities have to pay their own graduate students and postdocs. So it’s like, well if you’re not even making more and the university has to make up some deficit in the award that you’re receiving, like what is the point of this when it has these negative implications later on?

31:27 Jamie: Yeah, absolutely. I mean I think the point for, well you know, it’s a point for your PI, right? It saves them some money out of their budget, and otherwise it’s a line on your resume. You got this prestigious award, congrats. Here’s some prestige. Right?

Inherent Value of a Fellowship

31:44 Emily: This almost reminds me of like, I don’t know, I’m thinking like crypto, like a currency. Like it only has value because we’ve decided it has value, it doesn’t have inherent value. If it came with more money that would be inherent value, but would it still be actually worth it? How much money would it take to make up for some of these deficits that we’re talking about?

32:04 Jamie: That’s a good question, yeah.

32:05 Emily: Right. So like, not only is it maybe the retirement stuff that we mentioned. Now on the tax front, you’re not necessarily paying more in taxes, it’s just more difficult. But I will say there are certain tax benefits I know at the federal level that you’re not eligible for if you have only this non-employee kind of income. So for example, the earned income tax credit, which is supposed to be for low-income individuals, usually with children, multiple children who are not making enough money, they have to have “earned income.” And under that definition, as of now, 2022, fellowship income is not considered earned income. So, you can’t get the earned income tax credit. You also can’t get the child and dependent care tax credit, which was so valuable in 2021. It was massively increased in 2021. You can’t get it if, let’s say even if you’re married to someone else, let’s say I ran into this situation literally I had a question from this married couple, both postdoc fellows, could not take this tax benefit because they did not have earned income under the definition. Now, graduate students can take it because students have an exception. But postdocs, everybody forgets about the postdocs!

33:08 Jamie: Everybody forgets the postdocs, it’s true!

33:11 Emily: Postdocs don’t have this exception <Laugh>. Everybody forgets that postdocs exist and yet for some, in some career paths, you can spend just as much time as a postdoc as you will as a graduate student, maybe even if not more. It’s a very important life stage. There’s family formation going on, and yet they’re excluded from some of these benefits. And like we were just saying, it comes back to is this fellowship income considered earned income? And that term earned income is used all over the tax code or the way the tax code is interpreted. Now, it used to be used for retirement account contributions, then the term was changed, taxable compensation, then the definition of taxable compensation was changed to include fellowship income. So, why can’t this term earned income be changed to include this type of income? I think this brings up a bigger, even bigger, bigger question though, which is like what is earned income?

Earned Income: Great Expectations

34:04 Emily: What is the responsibility that you have when you receive this non-employee income? What’s the responsibility that your employer has to you or your non-employer has to you? What’s the responsibility you have to your non-employer? So, if you’re an employee, you’re expected to work and produce certain outputs, whether it’s teaching, research, whatever. If you’re receiving a fellowship, it’s much less clear what the outputs are supposed to be. You have to have outputs to continue to be on the fellowship. But what are they exactly? And I think that lack of definition is what’s going into this earned income, not, you know, fellowship income not being considered earned income.

34:39 Jamie: Yeah, no, I think you’re right about that and I think that’s how this ties into kind of bigger labor questions, right? About our graduate students. Should they be classified as employees? Are they workers or are they students? And these are, you know, big things that have big implications across the U.S. and especially for universities on not just tax status but on a lot of things about how academics do their work and how academics get paid.

35:08 Emily: I’m so thankful for this conversation because it’s really like stretching me to think about these like bigger issues exactly as you were just saying. Whether we’re on fellowship or whether we’re employees, is there actually a difference there? Why are these differences encoded at the university level, at the federal level, state level, if they don’t have much meaning to us at the functional day-to-day, month-to-month, year-to-year. I know I mentioned earlier about half my time as a graduate student was spent as an employee, half as a non-employee. Functionally, what is the difference between what I was doing one year versus another year? It felt all pretty much the same to me.

35:45 Jamie: Yeah, and I think I remember it being sold to me as if you receive a fellowship, you have more independence from your PI because you’re bringing in your own money so you can be more independent in, you know, what experiments you do or how you drive your project. But in actual experience of my own or talking to other people, their level of independence was really just dependent on their PI and how that PI ran their lab. And I didn’t know anyone who was able to be more empowered because they had the fellowship or were able to push back on PI demands because of the fellowship.

36:22 Emily: I did see people who received fellowships be able to switch labs when possibly that wouldn’t have been the case otherwise. They were more attractive to that PI like accepting them. And they could, you know, take some time to get up to speed or whatever, again, without some maybe output expectations of being on a different kind of grant or whatnot. But I think you’re right, you know, we’re both kind of speaking coming from like the biological sciences kind of research. There’s so much overhead, there’s so much cost to that. How much money is the student really bringing in versus how much is their research overall costing the PI and the university? And so, if that ratio is not that great in the student’s favor, I don’t think there’s much independence that they can advocate for. Now, if your cost of doing research is like pretty much only your salary if you don’t have those kinds of overhead from doing like wet lab experiments and so forth, then maybe there’s a better argument here about independence from the PI. And I think in the humanities fields, some of them, at any rate, my understanding from talking with people is that like they have a lot more independence anyway in their research questions. And so a fellowship could be even more in that direction. But, yeah, I do think this is very, very field dependent.

37:32 Jamie: Yeah, I think that makes a lot of sense.

Future of Research

37:35 Emily: Well, this conversation has been so invigorating. Is there anything else that you want to share about your experiences or your observations or advocacy avenues that we can encourage listeners to take?

37:46 Jamie: I mean, I always love to tell people to check out the organization Future of Research. I used to serve on their board of directors and it’s a really great non-profit that kind of helps students and postdocs come together and crowdsource information and advocacy plans and push the field of research forward from the point of view of these early-career folks.

38:08 Emily: Excellent. And we will link in the show notes an interview that I did with Dr. Gary McDowell, the former director of Future of Research where we talked about post-doc salaries and post-doc work environments and how to, you know, choose a supportive PI and these kinds of questions. That’s excellent. Well, Jamie, I’m so glad that we got this interview out on the podcast that it didn’t just have to stay in the halls of the GFF conference, but that’s where great ideas are born with these like mixings and so forth and it was great to meet you in person and yeah, to be able to record this for the podcast listeners. So, thank you so much for coming on!

38:44 Jamie: Thanks, it was wonderful talking to you!

Outtro

38:51 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.