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This PhD Candidate Paid for Her Wedding with Her Research Side Hustle

August 3, 2020 by Lourdes Bobbio

In this episode, Emily interviews Rebecca Brenner Graham about side hustling to pay for her wedding while a PhD candidate in history at American University. In addition to working on her own dissertation and serving as a teaching assistant, Rebecca used her skills as a history researcher in a self-employment position assisting an economics professor at another university. Rebecca had to quickly learn how to manage her time and energy well across all her different professional roles and her personal life. If you are planning a wedding as a graduate student, you’ll also enjoy hearing wedding planning and budgeting tips from both Rebecca and Emily.

Links Mentioned

  • Find Rebecca on her website and on Twitter
  • Personal Finance for PhDs: Community
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side hustle wedding

Teaser

00:00 Rebecca: The piece of advice that I’m just learning and wish I had known sooner was that unpaid opportunities are almost always not worth it. Full stop.

Introduction

00:20 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode 14, and today my guest is Rebecca Brenner Graham, a PhD candidate in history at American University. Rebecca has always side hustled to supplement her stipend, but she kicked it up a notch in her fourth year to pay for her wedding. We discuss how Rebecca balanced her time and energy among her own dissertation work, her teaching assistantship, her self employment gig as a researcher for an economics professor, wedding planning, and the rest of her life. Listen through to the end here, how Rebecca’s wedding went and some wedding planning tips from both of us. Without further ado, here’s my interview with Rebecca Brenner Graham.

Will You Please Introduce Yourself Further?

01:07 Emily: I am so delighted to have joining me on the podcast today Rebecca Brenner Graham, who is going to be discussing with me, her wedding, her recent wedding, and how she ended up paying for that on her Grad student stipend, and actually on more than just her grad student’s stipend. So Rebecca, thanks so much for joining me on the podcast today and will you please tell us a little bit more about yourself?

01:27 Rebecca: Thank you so much for having me, as I was telling you. I’m a long time listener and it just occurred to me that I might have something useful to add. I went to college at Mount Holyoke in Western, Massachusetts as a women’s college. There, I double majored in history and philosophy, and then I went straight into my history graduate school. I’m now starting my fifth year of the PhD. I was able to do the public history master’s combined with my doctoral coursework, which is one of the reasons that I love my department at American University. My dissertation, if anyone’s interested in that, is on Sunday mail delivery from 1810 through 1912 as a lens into religion, state relations. Because I got my masters in public history, I’ve also had some museum gigs on the side, on top of working as a TA in the American University Department of History. That’s about it.

Side-Hustling as a History PhD

02:27 Emily: Yeah. Is that typical for people in your department to be taking on museum jobs or outside gigs like that.

02:33 Rebecca: It’s typical in the sense that being atypical is typical. So there’s not one way to do it. There’s not one way to make it work. Like one of my classmates does a bunch of oral histories of basketball players for money. Some of them are like older and married or have houses. For me, especially brcause I came straight from undergrad, in order to have enough money to not be worrying about it constantly, I have had part time work every year on top of the TA-ing.

03:06 Emily: Okay. That’s good to know. So basically what you’re saying is the stipend that you’re receiving is not sufficient across the board. No one is doing this on just the stipend. They either have outside sources of income from a spouse or something, or maybe past savings, or they’re currently taking on side hustles. Right?

03:22 Rebecca: So I can think of two classmates who, and this is not a coincidence, they’re the two in the department that are younger than me, that haven’t had that much part time work. One of them is extremely frugal and the other one decided to take out loans on top of the stipend. I adore my department, like I am so happy to be there, at the same time we do have the second lowest stipends of all history departments in the greater DC area.

03:49 Emily: Okay. Yeah. Glad to hear that balance of like, Hey, it’s worth it, we’re doing it, but this is what it takes to get it done. Side hustling for you, other solutions for other people, but glad to hear that.

Getting Engaged During Grad School

04:01 Emily: Okay, you’ve given us a little bit of a brief career history, coming straight from college into graduate school, doing your master’s and PhD right in a row. Where does your relationship factor into this?

04:12 Rebecca: Going way back for a second, we actually met in a summer program in Washington, DC when we were 16, like for high school students. We ended up at college near each other. His name is Brandon, and Brandon went to UMass Amherst. We were together for the first half of college, and then we broke up, just seeing other people, didn’t think or know that we’d get back together. We ran into each other a couple of years later and the summer after graduation, we ended up getting back together. Then six months after that, he moved from New York to DC in order to be with me. And even before Brandon and I got back together, I had to facetiously told friends that I need to pass my dissertation proposal, even before I get an engagement proposal. And this was even before I was in a PhD program, this is when I knew I wanted to do a PhD.

05:04 Rebecca: So third year of graduate school, toward the end of the year, I was about to become all but dissertation, ABD, and we had already gone ring shopping. I thought we might be getting engaged soon. And then I ended up getting engaged a few weeks before my prospectus defense. So at the end of my third year of grad school, I was ABD and also engaged.

05:30 Emily: Yeah. I really love that you were, I know you said facetiously, but you were thoughtful about this, right? You had an idea of how you wanted your career to play out and also how your relationship, whoever that was with, how you wanted that to play out. And it’s good to hear really that, um, your husband made that sacrifice when he was your boyfriend of moving to where you were so that you could prioritize your career and he was going to figure it out and it’s not necessarily common story. I’m really glad to hear that.

06:00 Emily: I’m reminded of when I got engaged which was also during graduate school. My husband, we had sort of decided together that we were going to get married, moving towards that direction, but he wanted to wait to propose until he also achieved candidacy. So I was further away from that. That actually didn’t happen for me until my fourth year of graduate school, I think, just the way my department works. But he was like, no, I got to get, I have to get my prelims out of the way, and then I can think about the engagement. So he had the same thought process as you, but from the opposite perspective, in our case.

06:34 Rebecca: I think it’s an autonomy of time thing because even if it’s the same work across the board, you have, I think in most programs, you have more autonomy of time after that ABD mark.

06:45 Emily: Yeah. I think for my husband, it was that, but also just the stress of preparing for the prelim and writing whatever he had to write and doing whatever we had to do, like oral defense or something, I don’t remember the details for him, but just to get past that stressful thing, he wanted it off his plate, so he could enjoy the process of being engaged and planning the wedding and not having to juggle those two things simultaneously and know that, yeah, there’s going to be a few more years here until we have to repeat that process for the dissertation and ultimate defense. With respect to your actual timing of your wedding, like how long were you guys engaged for?

07:25 Rebecca: We got engaged in March, 2018. For about a month, we were actually planning with my parents, and my mom in particular is quite traditional and they were generously willing to pay for it, but it became clear, especially to me very quickly that coordinating with them and negotiating priorities was more labor, and especially more emotional labor, than actually making money myself and working towards paying for it. We also decided in between that March and April period that the things that we cared most about relating to our wedding were not that expensive. Like making the ceremony go how it was important to me was a higher priority than venue or the number of people who were coming. So eventually, I guess around April, when we started planning and paying for it ourselves, we got a date on the calendar. We got married a year and I guess two or three months, not great with numbers, I guess a year and three months later on June 30th, 2019.

08:43 Emily: Okay. So yeah, we are recording this in August, 2019, so this is really fresh for you and that’s exciting. This is definitely a tip for other people who are going into the wedding planning process of anyone who contributes gets a say. If you don’t want that party to have that say in that particular way or whatever, if there are strings attached to that gift, sometimes it is easier to simply take on all of the finances on your own. That’s the decision that you made.

Paying for the Wedding through Side-Hustling

09:12 Emily: We’ve already kind of gone over that your stipend was not really enough to live on, at least in the lifestyle that you want, and you were already side hustling. Did you have a plan for like how much more money did you need to bring in either in total or on a monthly basis to be able to pay for the wedding?

09:28 Rebecca: We looked at it a little backwards, in retrospect. It was more like however much money we have to delegate toward this, that is how much that we could pay. Brandon and I split it almost exactly evenly between us with a few exceptions. If there was something that was really important to him or really important to me. I paid for Ketubah the Jewish marriage contract. I paid for our pre rabbinical counseling. He paid for our entire rehearsal brunch because that was not something that I was tied to doing. On my end, my stipend from American when I started was $19,000 per year, and now currently thanks to our union it’s $22,000 per year, which is actually a huge difference just in the four years or whatever that I’ve been a TA. I really didn’t give it that much thought about, will I be able to afford this? It was more if I can’t afford it, then I won’t do it, and we love each other, and we want to get married, and that’s the most important thing. I have another classmate in my program who literally eloped at one, but I don’t really know the details on that. Also around this time, I was reading those books by Jen Sincero, have you ever read her books? The first one is called “You Are a Badas” and the second one is called “You Are a Badass at Making Money” and they’re —

11:00 Emily: Actually, I’ll interrupt you just for a second. I literally just finished “You’re a Badass At Making Money”, like last week. So I’m a little late to the Jen Sincero game, but I did read it and enjoyed it. I’m trying to figure out what I want to incorporate. So yeah, please go on.

11:15 Rebecca: Oh, that’s so exciting. I’m glad you liked it. In spring 2018, this was when her money book came out, the green one. She’s a little bit more, I don’t know if the word is capitalist than I am, but she’s also in line with my feminism. A central takeaway from Sincero’s work is that sometimes you have to jump and then create the net for yourself. That’s what happened when we decided to pay for our own wedding. So around the time that we had made that decision, I was reading a bunch of Jen Sincero. A major advantage of doing a history program in DC is that a lot of people email the department to offer work opportunities. So then in May, 2018, I heard about a summer job working for an economics professor at George Mason to do research on 19th and early 20th century labor history. My dissertation is on 19th century and early 20th century religion-state relations, and there was a lot of overlap with that labor history. I ended up working for her over the summer and then she offered for me to stay for the coming school year, like this past school year 2018-19. My advisor helped me negotiate a 50% salary increase for that, so that was my side gig that took a lot of time and essentially paid for my wedding. But it was also a completely pleasant experience working for this economist.

12:55 Emily: Yeah. I want to hear more about the logistics of how this side hustle worked. For you with American, because you’re a TA, does that mean that you’re not working/not being paid over the summer?

13:07 Rebecca: Oh yes.

13:09 Emily: Okay, so you’re already dealing with an academic year only stipend. So —

13:13 Rebecca: Last year I had a fellowship from my department for summer research. This year I did not, which was my why my reaction was “Oh yeah”, because that was the situation. But last summer I had a $3,500 fellowship from my department and then $5,000 from this professor George Mason.

13:35 Emily: Okay, so in your summers, at least last summer, you had a balance of working on your own dissertation and also doing this other work for this other professor, but I’m wondering, because you guys are at different universities, what was the actual relationship between you and this professor or the grant? Were you a W-2 employee or was this a self-employment situation?

13:58 Rebecca: It was a self employment situation, so I got taxed on it pretty heavily.

Researching as a Side-Hustle

14:04 Emily: Yeah. So that’s definitely a couple of things I want to talk further about with that, because I don’t really know that well, how this works. I think you’re the first person I interviewed for the podcast who has done research, like very similar skill set and everything to what you’re doing for your dissertation, and as a graduate student, but as a self employment project. Can you just talk to me a little bit more about what the differences are between that self-employment gig and maybe what you typically do as a graduate student?

14:36 Rebecca: In terms of the content itself, it was really just teaching versus researching. This past year I TA-ed class about the presidents and then I TA-ed History of Memory, and that whole time I was researching 19th century labor history. The biggest difference in terms of how much it affects me is that the side gig did not withhold any taxes. So as a graduate student, I’m cobbling together a bunch of opportunities to approach like 40[K per year, which is really great for grad school, I paid $4,000 in taxes last year, and that was most of my money.

15:23 Emily: I’ll make a couple elaborations on that for anyone who is looking into self-employment, which, if you’re going to do a side hustle, I kind of think self-employment is the way to go, because you have a lot more control over your schedule over how much you’re going to work. But the flip side of that is you have to take a lot more responsibility yourself when it comes to the financial side of things. One of the main things is that you need to pay a lot of tax and no one is withholding that tax for you, so two notes there. The first is that, with self-employment stuff, it’s not like income tax and you know that, so I’m speaking to the audience, but it’s not like income tax where you’re not taxed on the first chunk of income you take in, then you’ll have a low tax rate on the next chunk, then you’ll have a higher tax rate on the next chunk. That’s the graduated income tax system. You will still pay income tax as a self employed person, so just add that on top of whatever the rest of your income is. It’s going to be in the 12% or maybe even the 22% bracket, depending on how much money you make. But in addition, you have self employment tax, which is, I believe 15.3% on everything. The first dollar that you make as a self employed person, 15.3% of everything. So it’s not like that graduated system. It ends up feeling like you pay a lot and you do pay a lot in tax because of these two different types of tax that you end up paying income tax and self employment tax.

Emily: For anyone who is making a significant self employment income like you did, you have to set money aside for tax. You have to prepare for that. You have to do the calculations because you don’t want to be surprised at the end of the year with…I mean, you can be very pleased that you made all this money through selling employment, that’s amazing, but you have to be prepared for the tax side of things. One thing I’ll recommend actually for anyone who is either self employed or who has a fellowship who doesn’t have income tax withheld, I have resources on my website about paying quarterly estimated tax. You can go to the site and search for quarterly estimated tax. You’ll come up with like my main article on that. It’s designed for people who have fellowship income, but people with self employment income can take a lot out of that as well. And if you want a little bit further help I’ll link from the show notes, actually have a workshop on helping people pay quarterly estimated tax. Again, to not be surprised at the end of the year with a huge tax bill. It helps you estimate the amount of tax you’ll have to pay and also pay through it quarterly.

17:37 Emily: Okay, so Rebecca, that was a little bit of a diversion just because this is my wheelhouse about taxes.

17:41 Rebecca: That’s very helpful. Yeah.

17:44 Emily: I actually was a little bit for curious, because I think what I was asking, I didn’t phrase quite right earlier, was about, so the difference between your dissertation work, which you are either receiving a fellowship for, or maybe not being explicitly paid to do in your primary role as a graduate student versus the self employment relationship, this contractor relationship you have with this professor. I guess what I’m asking about is like intellectual or academic ownership over that work. Are you going to be on papers? Just because it’s an unusual way to be doing research, as a self employed person, but still in an academic setting, but it’s at a different university. So that’s why it was sort of interesting and complex.

18:24 Rebecca: I find it to be really common, particularly in Washington DC where we have a lot of federal archives. Since I started grad school in 2015, I’ve honestly lost track of the number of professors who’ve emailed the department literally from as far as Australia and asked our grad students to do work for them. Now I don’t do it unless it’s $30 per hour, but I used to do it for like $12, $15 per hour before I knew better. And as far as I know, we never get even an acknowledgement because we’re a human in the right location who has used archives before, and isn’t going to mess it up when researching.

19:12 Emily: Gotcha.

19:13 Rebecca: For my dissertation, I am the author.

19:16 Emily: Right. So it’s really just by virtue of where you’re attending graduate school and the skill set that you have,that you have access and people, as you were saying from all of the world want some access and they’ll use you, hire you to be a conduit for helping them with that work. But in terms of the academic ownership, because you’re being paid and again, as a contractor, it sounds like you sort of relinquish that. They’re going to be completely in control of the scholarship side of things. You’re not apparently even getting an acknowledgement, which I feel like it definitely deserves an acknowledgement at minimum, but okay.

19:50 Rebecca: That’s just the random people from California or whoever who can’t fly into DC.

19:54 Emily: Yeah, totally. Okay. So now I have a better idea about this.

19:57 Rebecca: It’s not even taxed sometimes, because it’s not enough money to be taxed, but I’ve done that a lot of times. And then my research gig at George Mason, I have a relationship with this person now. I don’t know when her book will be done, but I’ll be in communication with her. And I definitely felt like I was a part of the project, even though for the argument of the book, that’s entirely her argument, I’m just providing the facts that she then integrates into her analysis.

20:29 Emily: Yeah. I guess I’m also wondering like maybe you know for her situation, why wasn’t she working with a graduate student at our own institution? Like her advisee or something like that.

20:39 Rebecca: She wanted a historian. She’s in an economics department and she specifically reached out to history departments because she wanted reviews of historical literature by historians. And then also just that change over time analysis that my department trains me to do.

21:01 Emily: Gotcha. Okay. Yeah. This is really, really interesting to me.

Commercial

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Research Side-Hustles and Career Advancement

22:29 Emily: I guess the other sort of big picture question I wanted to ask you about side hustling is, so the side hustling is necessary financially — for the wedding, for living your life — do you think it’s giving you more than that? Like is this actually advancing your career in some way?

22:46 Rebecca: That’s a fantastic question and I really hadn’t thought about it. I mean, the economics people at George Mason, like their department is a completely different environment than mine, so it’s educational, just in that sense to meet more people in different places. Overall, the research work definitely was not expanding my skillset. It probably expanded my content knowledge a little bit, but it wasn’t that much more than whatever I had to be familiar with for comprehensive exams, because I did all of that time period. For the George Mason people I earned, what was it? For the whole year it was $15,000. And the previous year, before I was engaged, my side hustle, during my third year of graduate school paid $1,500, so literally take off a zero, and that was writing an exhibit for a museum. That was fantastic experience that definitely advanced my CV/resume and what I know how to do.

23:56 Emily: Gotcha. So there may be a little bit of a trade off there. This is not surprising that the things that benefit you more as an individual, there may be a trade off on the money there. You’re being paid more, but —

24:06 Rebecca: In my experience, that is correct.

24:08 Emily: Yeah, so I mean, hopefully that’s not the case. I wish for everyone to have a side hustle that pays really well and advances your career and all that, but sometimes you may have to trade off one or the other, but it sounds like at least at the very, very minimum you’ve expanded your network, right? You’ve met more people. You’ve worked closely with this one individual. So maybe that’ll come into play later on. Who knows about that.

Time Management and Side-Hustling

24:31 Emily: So I want to move now to talking about how you, how you manage your time. You’re obviously a long time side hustler, but it sounds like you really maybe stepped it up, maybe stepped up your hours to make this additional money in this past year to be able to fund the wedding that you wanted. Can you talk to me a little bit about how you balanced your dissertation work, your TA role, the side hustle, maybe multiple side hustles, if you’re still doing other ones, and then of course, just the rest of your personal life.

24:59 Rebecca: I have noticed for a while that it comes down to two things. One is time management, which I’m sure seems pretty straight forward. And the second is the kind of energy that the opportunity is giving you. I have felt for a long time, this is also just my personality, that if an opportunity is giving me a lot of positive energy and genuinely feel like I can do anything, but if it’s not, and sometimes things take away from my energy, then that becomes a real challenge. I remember at the beginning of last school year, last fall, actually around this exact time, last year, I majorly had not figured out how that balance was going to work. I was so stressed that I ended up giving up caffeine for several months, even though coffee is my favorite thing, because I was just so energized and stressed all the time that it was just miserable. And just not knowing how I was going to balance my time all year.

26:03 Rebecca: Also, the way that we ended up doing our wedding, and I’m sure we’ll talk about this later, it ended up working out great, but we accepted a lot of favors from people. Like a friend did the photography, a friend did the flowers, a family friend officiated our service. And when you rely on people, even if they’re really close friends and family, it’s just really stressful to maintain the relationships. I never wanted to feel like I was a burden on people. That created a lot of stress and the most challenges very early on, but over the course of the year, I think I just adjusted. Also second semester, I had this past TA assignment for a fantastic, really supportive enthusiastic professor. She’s Eileen Finley at American University and she was just a breath of fresh air twice a week, and that made a huge positive difference in my ability to find positive energy and manage my time well.

27:08 Emily: I think that’s an excellent, excellent point that you’re making. I wonder to make it any more applicable for the listener, can you tell in advance what kinds of activities are going to give you energy? So you can kind of filter, like I’m not gonna accept this opportunity because it seems like it’ll be draining. Have you figured out any kind of framework around that or is it just have to try it and then see?

27:31 Rebecca: I’m definitely not an expert on that in the sense that I am still figuring that out. So this is not what you asked, but I could break down what an average week was like. I think both semesters my TA at AU, that was Tuesday and Friday, so then I would often go to George Mason where they gave me a desk, which was nice. And that way I felt like I had community there. I almost always went once a week. I didn’t go more than once a week, very often, but it was typically on a Monday, Wednesday or a Thursday really. And then one or two days I would actually get to do my own work on my own dissertation. And I ended up, um, drafting one chapter out of six first semester and one chapter out of six second semester, but I really have much higher hopes for this coming academic year when I’m not planning and paying for a wedding. I hope to be able to draft more than one chapter each semester.

28:31 Emily: That actually does sound like really good progress to me. I take it you are going to take the side hustle down some. You’re not trying to make as much money in the upcoming year as you did last year.

28:41 Rebecca: I ended working for George Mason at the end of the school year, because it was an academic school year position, but also during second semester, I allocated some time toward applying for fellowships just because everyone told me that that’s what you do when you’re going into fifth year. I actually got three out of four of the ones that I applied for. One of them is through the same people at George Mason, so that ties into what you said about like making connections helps. One is from Mount Holyoke College where I did my undergrad work. It’s specifically from the history department. There that’s the biggest fellowship. They’re basically paying my rent for the coming year. And that will hopefully really allow me to focus on my actual dissertation work. Then the third is a research grant from my department at American. I’m really trying not to take on side hustle work like I did last year. Though, I did have a potentially paid opportunity fall into my lap for this coming year, but it hasn’t fully developed yet and I need to prioritize my dissertation because I wasn’t always able to work on it as much as I wanted to this past year.

29:58 Emily: Yeah. Congratulations on winning those three fellowships. Are you continuing to TA in addition to accepting those fellowships?

30:05 Rebecca: This coming year is my last year of TA-ing.

30:08 Emily: Yeah, it’s a great point for anyone who is looking to side hustling during graduate school and especially for you where your progress on your dissertation is up to you. You’re ABD, it’s at your own speed. There is a danger of devoting too much time to making money on the side and not enough time to actually progressing through your current career stage so that you can get a full time job and have an actual salary.

30:33 Rebecca: It’s a balance to strike for a few reasons. One is I get the most work done when I can take myself out to the pizza place next to my apartment and buy my favorite pizza, or get coffee and a bunch of different coffee shops, or buy a nice new planner for myself to organize my life. You have to have some cash flow, at least in my experience in order to be your best student.

31:00 Emily: Gotcha.

31:01 Rebecca: And I think the other reason is that I actually want to go into public history and museum work rather than academia. So in order to get more relevant job experience, that’s also a balance to strike for me.

The Financial Side of Wedding Planning

31:15 Emily: For sure. Yeah. Thanks for pointing that out. So we’ve been talking about the side hustles and the wedding you added, you know, $15,000 to your wedding fund. It sounds like more or less for this past year and it just was a month or so ago. So how was it, how did the wedding go?

31:30 Rebecca: We got married at the Hamilton Restaurant in downtown Washington, DC. It’s around the corner from the White House and it’s both a restaurant and a concert venue. And I would highly recommend to anyone looking to have a great wedding at a minimal cost to get married at a restaurant that has a concert venue because under one contract we had our venue, the food, they provided the cupcakes, they included the open bar. There was a guy that was — so, I thought we had a lights guy and then a sound guy, and I just realized when I was telling my husband about this interview, that those were actually the same person. So it came with a lights guy and the sound guy. The venue was really great.

32:18 Rebecca: I was really happy with my dress. I found it for $130, which I’m really proud of. One of my bridesmaids asked me what I was envisioning and I described sort of a shorter dress, but also a sun dress, but also beautiful. And she pulled up one on Pinterest and was like, “do you mean like this?” And I was like, “yes, that’s exactly what I’m looking for.” Then, a few days later she texted me that it was 75% off online. So that’s how I got my dress from $130. A different bridesmaid took me veil shopping and I got one for $30. I would say for any brides out there, don’t spend a lot of money on the veil because you’re only going to wear it once. One of my aunts bought my shoes for me at Macy’s or something as a gift.

33:09 Rebecca: The most important part of the whole wedding experience to me was the ceremony and it’s hard to describe why that is. I guess, I mean, it’s a Jewish life cycle event and I did not have the traditional bat mitzvah, but I identify very strongly with Judaism, and my husband’s one of his parents is Jewish, but he didn’t grow up with a lot of religion, so I would describe it as Jewish with an interfaith twist. The way I think back on our ceremony is that there are a few events in life that are really deeply, very important, and for one of those to go so well, I appreciate that it went flawlessly so much. I think the ceremony itself, which we have a link to the video, actually that I can send you if you’re interested, I’m just so happy with how it went. We had a family friend officiate and play guitar and sing. My cousin, who is also a bridesmaid, did the Hebrew. An aunt and uncle made our chuppah for us as a gift to us. My dad sang a song during it, actually. It was like everything I could have imagined, and I’m so grateful for that, and we made it happen ourselves.

34:31 Emily: Yeah, that’s something to be really, really proud of, obviously. What I’m hearing, as someone who has also planning a wedding, is that it sounds like you DIY-ed, in terms of accessing your community and asking people to contribute, the parts of the whole experience that were most meaningful to you, but also the ones that their contribution was particularly, again, meaningful or personal, like singing a song, for example. And also not particularly a ton of work, versus your choice of venue, where you combined the restaurant and the venue and all the staff is there and everything is, as you said, under one contract. That was a way that you made a really simple decision that made the planning a lot, lot easier. I did the opposite thing with my wedding, so I know that it’s a lot of work and a lot of money to do things the other way. So anyone who’s thinking about planning a wedding, I think that you went about this in a very positive and thoughtful and way that paid off, it sounds like, really well.

35:34 Rebecca: What was your wedding venue, if you don’t mind me asking?

35:36 Emily: Yeah. So we had two, first of all, because one, we got married in the church and two the reception was at a different location. So it’s already dealing with two different locations, right? We actually had our reception at a museum of natural history in Raleigh, North Carolina, which was awesome.

35:52 Rebecca: I’ve been there, actually.

35:55 Emily: Yes, it’s a fantastic museum. I was so excited. I grew up outside DC, so I’ve been in love with the natural history museum as part of the Smithsonian forever, so to have a chance to do that in a similar museum in Raleigh was so much fun. The venue was really, really fun, but it was an outside caterer. It’s a lot of work. Rentals were a whole separate thing. Getting it all done in one place, I think, was really smart. It saves a lot of time, saves a lot of money. And as I said, then you chose to DIY the parts where people could actually really contribute instead of, for example, asking for people to contribute on the food or, you know, there’s other ways to do this kind of thing that could be a little bit more work for everyone rather than just, oh, I’m giving you this wonderful gift of a song or the shoes or whatever it turns out to be. I appreciate hearing that. And it sounds like you had a wonderful time and I’m happy that everything worked out with the side hustle and everything. Any final comments on the wedding and the side hustle?

36:50 Rebecca: Just a quick, funny thing that came to mind is that one of my closest friends who did our flowers, she was literally a few days away from getting her doctorate. Her name’s Arlisha and she got her doctorate in history a few days after my wedding. Her final year of dissertating, she literally texted me and was like, I’m taking up flower arrangement as a hobby while I finished my dissertation, can I do this for your wedding? And I had not previously cared about the flowers, but I was like, yes, if you want to, go for it. She did an amazing job. Just the aesthetics of the room, I think looked so much better because Arlisha’s dissertation side hobby was flower arrangement.

37:34 Emily: Yeah. I think in the academic space, we talk a lot about mental health and self care and so forth, and that’s a really fun, healing, stress-relieving thing to potentially do that, hey, can also help out a friend or even become a side hustle , if you want to. I had an interview recently with someone who decided to turn her baking hobby, as a graduate student, into a business. So it’s the same kind of thing, right? You have something you enjoy doing, it’s a stress reliever for you, why not turn it into something a little bit bigger?

Final Words of Advice

38:02 Emily: Final question here, Rebecca, which is, what is your best financial advice for another early career?

38:08 Rebecca: The piece of advice that I’m just learning and wish I had known sooner was that unpaid opportunities are almost always not worth it. Full stop.

38:20 Emily: Yup.

38:20 Rebecca: Also, as a PhD student, you have to do your doctoral requirements and dissertation, but there’s really nothing else that you have to do. And if you have different wedding preferences from your parents, just do it your own way. And if some customs from your religion are meaningful, just stick to those. If others aren’t…our wedding was really a growth opportunity for me and I’m proud and thankful for how it went.

38:50 Emily: Wonderful. No need to elaborate any further on that, Rebecca. Thank you so much for sharing the story on the podcast with me.

38:56 Rebecca: Thank you so much.

Outtro

38:58 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the personal finance for PhDs podcast. There you can find links to all the episode show notes, and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

How to Qualify for a Mortgage as a Graduate Student or PhD, Even with Non-W-2 Fellowship Income

April 27, 2020 by Lourdes Bobbio

In this episode, Emily interviews her brother, Sam Hogan, a mortgage originator with Prime Lending (Note: Sam now works at USA Mortgage) who specializes in PhDs and PhD students, particularly those receiving fellowship income. Sam relays what it takes to qualify for a mortgage in terms of credit score, income, and debt load, including the special way deferred student loans play into the calculation. He details the unusual strategies he has learned over the past year of working with PhD clients to help them get approved for mortgages, even with non-W-2 fellowship income. At the end of the interview, Sam shares why he loves working with PhD home buyers. Over the past year, Personal Finance for PhDs has referred so much business to Sam that he has become an advertiser on the podcast.

Links Mentioned

  • Contact Sam Hogan via phone: (540) 478-5803; or email: [email protected]
  • Listen to a previous episode with Sam Hogan: Purchasing a Home as a Graduate Student with Fellowship Income
  • Related episode: “This Grad Student Defrayed His Housing Costs By Renting Rooms to His Peers”
  • Personal Finance for PhDs: Financial Coaching
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
grad student PhD mortgage

Teaser

00:00 Sam: It’s always best for a PhD student to be as proactive as possible. I’ve seen letters with three years of continuance, but they’ve reached out to me after one semester has passed. Now they only have two and a half years of continuance, where someone, if they had reached out a year earlier about their future, and how they’re planning to purchase home when they were in a new area, that is the perfect slam dunk way to do it.

Introduction

0:33 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is Season 5, Episode 17. And today, my guest is Sam Hogan, a mortgage originator with Prime Lending (Note: Sam now works at Movement Mortgage) who specializes in PhDs and PhD students, particularly those receiving fellowship income. Sam relays what it takes to qualify for a mortgage in terms of credit score, and debt load, including the special way deferred student loans play into the calculation. Sam details the unusual strategies he has learned over the past year of working with PhD clients to help them get approved for mortgages, even with non-W-2 fellowship income. At the end of the interview, Sam shares why he loves working with PhD home-buyers. Over the past year, Personal Finance for PhDs has referred so much business to Sam that he has become an advertiser on the podcast. Without further ado, here’s my interview with my brother Sam Hogan.

Will You Please Introduce Yourself Further?

01:34 Emily: I’m welcoming back to the podcast today. My brother Sam Hogan, who is mortgage originator. He sells mortgages. And Sam was actually on the podcast before in Season Two, Episode Five. It was while we’re recording this on April 12, 2020 and he was last on about a year ago. At that time, we were talking about how someone with fellowship income can actually get a mortgage — non-W-2 fellowship income because tis is a tricky thing that we talked about in that episode. So now, as I said, it’s been a year since that time, Sam’s handled a lot more mortgages of this type and so he knows a lot more about this process now. So I thought we’d have him back on for an update, basically, and a little more background on getting a mortgage as a graduate student or postdoc or PhD. So, Sam, welcome back to the podcast. Thank you so much for coming back on. Will you please just tell the listeners a couple words about yourself?

02:28 Sam: Thank you for having me, Emily, and Happy Easter from the east coast. Yeah, I’ve been working with PhD students now pretty heavily over the last 12 months. The company I work for, Prime Lending (Note: Sam now works at Movement Mortgage), is licensed in all 50 states. I’ve had the opportunity to read, review, approve, sometimes deny, these special candidates while they’re looking for their options for home-ownership.

[Sam’s Nationwide Mortgage Licensing System and Registry number: 1491786]

Basics for First Time Home-Buyers

02:52 Emily: Thinking about someone who is probably probably a first time home-buyer doesn’t necessarily know a whole lot about the process of getting a mortgage, and of course is concerned maybe about their their income, and are they really going to qualify and all these factors — what are the factors that go into a mortgage application? And what are the the ranges, that would be acceptable for those different factors?

03:16 Sam: Okay, so generally speaking, we’re looking at a risk profile and the ability to repay. For the borrower, having a over 700 credit scores for conventional, now about over 640 or 660 for FHA loans.

Different Types of Home Loans

03:32 Emily: Okay, you just dropped the terms conventional and FHA — what’s the difference between those two?

03:37 Sam: Yeah, so FHA is your original first time homebuyer program. It’s backed by the government and it’s designed for everyone to qualify for it, if you have decent credit and decent income. Conventional is preferred because it’s going to have a lower monthly payment, and the private mortgage insurance will drop off automatically. You should have over 680 or higher credit scores to go conventional and the income ratios are a little tighter. So it’s the better loan to qualify for and it has better terms throughout the whole 30 years, or whatever your loan term is.

04:16 Emily: Okay, so FHA is a little bit easier to qualify for, because it’s sort of designed for first time home-buyers, but it’s a less preferable loan in the long term. And so if I remember correctly, a lot of people who have FHA loans for a while they then end up refinancing to a conventional type of loan a little bit later on, to get rid of that private mortgage insurance.

04:38 Sam: That is correct.

04:39 Emily: Okay, great. Okay, so going back to the the lending standards you just mentioned, like credit scores, what else goes into an application package?

04:49 Sam: Yeah, I want to just touch on our current world situation and the lending standards are changing right now. And they’re changing because everyone is in the same boat regarding a possible change or disruption in income, slowing income for a certain amount of time, so be sure to talk with an expert and their specific requirements because this will change from bank to mortgage company to a larger credit union or financial institution. These are uncertain times, so you’re going to have some fluctuation and differences from lender to lender, but you want to work just as we said before, you want to work with someone who’s keeping you in mind and your goals in mind.

How Credit Scores and Debt Impact Home Loans

05:32 Emily: Yeah, okay, great. I totally agree and we should re-emphasize that like we’re recording this in mid April, things could be different by the time we publish it, things could be different a couple months down the line, so definitely just talk with someone right away. You mentioned credit scores, but I know also, your income, of course, plays into how much of a mortgage you can qualify for. Can you talk about that a little bit?

05:53 Sam: The common rule of thumb is people will qualify for four to five times their annual income. Now that will depend also on how much debt they’re carrying, and how much they’re putting from their savings into downpayment. But that’s a pretty safe estimate. Some people who are completely debt free will qualify six times their annual income, up to. Something else lenders experience a lot is, um, people doing their own due diligence and crunching the numbers, but we have systems and practices that do this quickly, more accurately, and can give you better results, so I would say talk with someone early and have them do the work. And then after you get their feedback, run your numbers to double check and maybe have some questions for them. We want to be able to work for you, and there’s no obligation to just have a few conversations and have someone explore your options.

06:48 Emily: Yeah, that sounds good. How does that play into that because I know a lot of PhD students do have significant debt loads from maybe undergrad or a master’s degree or something like that. How does debt affect the package?

07:03 Sam: Debt is not bad. It’s good to have things on your credit that have positive history, whether that’s a student loan you’ve paid off or currently paying off, revolving credit cards. You will run into issues, if you have absolutely no debt or debt history. I strongly recommend everyone, even against their pride, get a credit card. Don’t exploit it but use it regularly, pay off regularly. You want to have established credit, especially for a young homebuyer, because they might not have the 10 or 15 years of other types or forms of debt that someone who’s in their 30s or 40s might have.

07:49 Emily: Yeah, I definitely agree with establishing a credit score and having a strong credit history. But I’m just wondering, you mentioned earlier about the size of the mortgage and how debt can affect that. Solet’s say there’s someone who’s holding a good amount of debt. Does that affect like the ratio of the amount of mortgage they can take out?

08:06 Sam: Absolutely. Let me put it in some simpler numbers. If you’re bringing in $3,000 a month, all your credit cards, new house payment, maybe your car payment or gym membership, all that cannot add up to more than $1500 dollars of your income, We take your gross income and if you’re over 50% of that debt ratio, that’s a “Hey, better luck next time.” Even better situation is to be under 43%. Under 43% of your monthly income to debt ratio, is what Freddie Mac and Fannie Mae require, currently. Now this could be used to change, sometimes annually, sometimes quicker than that, but under 43% and better is a very good place to be in.

08:55 Emily: That makes sense. Yeah, so the total amount of debt payments you can have per month is limited and the mortgage has to fit in. To be approved for a mortgage, it has to kind of fit in around those other debt obligations that you already have.

09:09 Sam: Correct.

09:09 Emily: Okay, yeah, that definitely gives us something to kind of get our hands around when someone’s deciding, like, is it even worthwhile for me to approach Sam or another lender about possibly applying for a mortgage? I know you said earlier, just ask, that’s the best thing to do, because you guys can run the numbers better than than we can outside of the industry. I had one more question about student loans, because while student loans are in deferment, how does that play into that 43% that you just said. Because if they don’t make payments, does that just like not count at all? Or how does that work?

09:43 Sam: This a very specific guideline detail that changes, just letting you know Emily, and for conventional loans, and FHA loans, it’s both different. A rule of thumb: if your student loans are in deferment, you have to take the remaining balances and calculate 1% of that, and we factor that into your debt to income ratio. So if you have $100,000 in student debt, and we’re about to calculate a potential thousand dollar payment, even though you’re not making payments on them, that could stop your deal. Okay, so brings me back to letting an expert look at it.

10:19 Sam: Also, sometimes when the lender pulls credit, the way the credit populates, it looks like they’re making payments on their student loans. But really, they’re in deferment, so all those payments have to be switched. This is why when people run the numbers themselves, they might think, “Oh, no, I can’t do it.” But lenders know what it takes to get it approved. And I did want to touch back on the debt to income, it’s best for people to know first that you want to be under 43%. If that’s 42.98%, that’s still two thumbs up. But as soon as you’re over the 43%, some of the loan terms can change and make it stricter for you to buy.

10:56 Emily: Gotcha. And I also want to emphasize that just because you qualify for a mortgage of a certain size, or just because your debt-to-income ratio fits onto that 42% or whatever, that doesn’t mean you have to buy a house that that’s expensive. So these standards are for the lending industry, they’re not necessarily the advisable thing on the personal finance side. So just keep that in mind. We’re talking about basically how to qualify, not whether this is a good idea for your finances overall to have that high of a, an amount of debt per month. I just want to add that in there from the personal finance side.

What If You Don’t Have a Typical Situation?

11:33 Emily: Okay, Sam, so thanks for running down those broad strokes criteria. If someone doesn’t meet one of these, is there any recourse? Is there anything else that can be done if they still want to go through with a purchase?

11:47 Sam: Don’t give up lenders in general, we’re in the process of approving loans. We’re not in the business of denying people we would be out of business. So try and try again, I would say, because I have had PhDs students who have finalized their transactions with me been denied by two other lenders. The tip I can give to some of these people exploring their options is be willing to over document things for any uncertainty the lender might have. If there’s some variables in your income, explain to them that “Hey, this is all under the same advisor. I’m working in different areas, different years, but it’s under the direct supervision of x and he can provide you a letter saying that I’m here for five years under his supervision and it’s common for students in my place to continue to receive their funding. Please let me know if you need any other confirmation from my supervisor.” But yeah, recourse I would just validate how good of a borrower you are: I have great credit. I have the downpayment. I have guaranteed funding.

12:52 Sam: And you always can strengthen a file with obviously a cosigner. You can have a non occupant co bar family member, even a friend, who also is hopefully in good credit standing and has income to cosign on the loan for you. That’s not a forever thing, you can refinance them off the loan. But what I’ve found out in my years in this business is, there’s always a way to make it work if you keep working at it. Some people run out of options, and while they’re in school, it’s a funky time in their life, but that doesn’t mean that you’re not going to be a homeowner in a year or two years.

13:33 Emily: Yeah, gotcha. I actually was thinking specifically about co-borrowers because that was another example that we had on the podcast. My interview with Matt Hotze, he bought a home in Durham, North Carolina when he was at Duke and he bought his first year there and he had his parents, or maybe one of his parents, as his co signers and that enabled him, because his income was, low — one graduate student stipend. He was able to get into a larger house than he would have qualified for on his own. He actually had a three bedroom house. And then he rented out two of the bedrooms. So he was able to house hack, had no problem paying the mortgage because he had reliable renters. And yeah, it all worked out really well for him. So he just needed that little bit of help at the beginning. His parents, very fortunately, were able to provide that to him, and it was kind of a rosy story after that point, but that’s what he had to do to qualify for the mortgage.

14:27 Sam: A cosigner, sometimes can solve everything, except for poor credit. But strength in numbers. You can have up to four people on conventional loan application. Have I done that ever? No. But is it possible? Yes. So yeah, I mean, if you’re having some difficulty, your loan officer, if you’re brainstorming with them, one of their first solutions is have a cosigner. A cosigner is a very simple fix. If you have to pivot your approval because you have gone through the process, you didn’t get approved on your own and your adding a cosigner on your contract, I would say give your lender about 10 days and you should be in good shape.

15:08 Emily: Gotcha. I’ll add in one more time. This is the “how to qualify for a mortgage” talk, not “is it a good idea to be a cosigner or to have a cosigner”. Totally separate conversation.

15:19 Sam: A client of mine that’s closing this month who listened to your podcast…I don’t want to reveal too much about his purchase, but we’ve been given the approval and at the start, we ran the numbers a few different ways. He was like “With a cosigner, what’s my payment? Without a cosigner how much is my cash to close?” And we were on the fence for a little bit but we were still in the process. So while he was under contract, I was still able to give him scenarios and options. We eventually decided with his deposits and everything that was already being credited, his cash to close was low enough that he wouldn’t need to have a cosigner. So it’s not set in stone at the start. Yes, it’s always better to have your ducks in a row. But the lender is flexible. We always can pivot for the buyers needs. And I also say that in the buyers defense. If something’s going wrong with the house, the lender can help you get out of the loan on your finance contingency, maybe if your home inspection is past. So there’s different ways we’re always here willing to help.

16:25 Emily: Yeah, that sounds really good.

Commercial

16:30 Emily: Hey, social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15 minute call with me at PFforPhDs.com/coaching to determine if financial coaching with me is right for you at this time, I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now back to our interview.

Tips for Home Loans with Non-W-2 Income

17:15 Emily: Okay, so let’s narrow down to the the scenario that we talked about the last time we did an interview, which is about a graduate student or postdoc with fellowship income, with non-W-2 income, and that a lot of lenders don’t understand how to deal with that. You’ve been working with these types of clients quite a bit over the last year. And so you have really figured out some things that how to make these loans work in some cases and what will not work in other cases and maybe in those cases, a co-borrower or something like that would be needed. Can you just tell me a little bit about, you know, this particular weirdness of non-W-2 fellowship income and how you make it work?

17:54 Sam: It’s definitely a tricky income. How I help make it work is I support all the variables within the fellowship income. I show that it’s the same field of study or field of work that they previously in. Especially in the offer letters, they usually always contain a phrase if the student remains in good standing, and the underwriter can say, well, that’s too much of a variable, we can’t accept this income because there’s too many variables. Well, I say well look at her transcripts, look at his transcripts. They’ve always been in good standing, literally forever. That’s why they were one of five students selected out of 400 applicants to get into this program. Yeah, it takes a little bit of storytelling, and the presentation is important, so it’s okay if someone who doesn’t have W-2 income, we treat other incomes just as fairly, but you have to know how to present it, how to over-document it, and if it’s too uncertain at the start, most lenders have a scenario desk you can reach out to who will give you some early feedback without going completely through the application process, completely through the loan process, and still having a little bit of a question mark about if you’re really approved. I’ve had our scenario desk, give me pushback on certain files, and I just asked, How can I support that variation or the uncertainty that you’re seeing in this letter because I can provide what you’re looking for most likely, I just need to know what that is.

19:38 Emily: Yeah. So I think if I can kind of zoom out from that a little bit. First of all, one of the things that you talked about in the last interview was that non-W-2 fellowship income is not going to qualify for an FHA loan. It’s just completely off the table. It’s only going to be a conventional loan. And what you’re talking about now is saying, okay, you know, PhD student or postdoc, you’re showing me your offer letter and you are looking for certain things that offer letter, like the income and also the number of years of guarantee, sometimes that’s in there as well. And then you’re saying, Okay, well for all the things in the offer letter that are maybe a question mark to the underwriter, you have now learned how to recognize some of those things, and you can start providing additional supportive documentation, that is asking the student or postdoc, okay, well send me your transcripts. Okay, well send me whatever it is, your work history. I don’t know what those things are. Can you talk a little bit about that guarantee? Because I know the guarantee is a very important factor when we’re talking about non-W-2 income.

Loan Types for Non-W-2 Income

20:41 Sam: Yes. So I want to answer your questions in the right order. One of the main critical points for this type of income is that it’s not recognized by the VA, Veterans Administration, FHA. It’s not recognized by USDA, and it’s not recognized by Fannie Mae. Your most successful application and loan approval is going to come from a Freddie Mac conventional loan, okay. Now you can do as little as 3% down for that conventional loan. But this is the key point that only Freddie Mac recognizes this income, per the lenders approval. Why these PhD students are not going to approved their first attempt with their lender is because it’s per the lenders approval, the lender can’t document it and approve it with their underwriter, then Freddie Mac will not take the loan.

21:40 Emily: So what you’re just saying there is that you now know having worked this type of income, this mortgage type is off the table. This mortgage type is off the table. This is the one that is potentially successful. And what you have to do is get your underwriters that you work with to approve that loan and then Freddie Mac will take it on, will approved it. What you have figured out is these little tricks and document support and so forth that need to happen for the underwriters that you work with, which presumably would be the same elsewhere, except they’re not necessarily as knowledgeable about this particular type of income.

The Importance of Offer Letters for Non-W-2 Income

22:15 Emily: Let’s talk more about that. I know that you’ve mentioned to me before, I think you mentioned in the last interview, that for this non-W-2 income, normally underwriters, lenders for W-2 income, they presume it’s going to continue for at least a while, even though we all know you can lose a job at any point. But for the fellowship income, they for some reason, don’t presume that it’s going to continue and they want to see a certain length of guaranteed fellowship time.

22:41 Sam: Yes. For conventional loans, we’re looking for three years of continuance of income. Now, I know it’s not fair because my job doesn’t guarantee me three years of employment in the future. That’s not the typical contract for all employment, its employment will usually. For conventional loans we want to see three years. I actually have a example that I’ve written up. It’s a mix of a few different approval letters that worked, that I had some success with clients in the past year. And I will say briefly that if your approval letter is more than three pages, there might be too many variables in your offer to get an approval.

23:36 Emily: You’re saying an offer letter, like the offer letter you get when you start grad school or start a postdoc position. This is going to be your stipend this along goes on for. This is a typical document, like instead of having a Form W-2, this is what a fellowship recipient would send to you. They would send you their offer letter and so what are you looking at in that offer letter that is like yeah, this is going to go forward or no, this might be a problem.

24:00 Sam: Yes, so what we’re looking for is the continuance of income, we want to have three years. We want it to state that you’re being provided health insurance, because that’s a really good sign shown you’re actually an employee, you’re not just a student. It’s okay for it to have a few variables in it, like remaining in good standing or making satisfactory progress towards their doctoral degree. That’s a good phrase in there, that’s fine. But when you have layers and layers of variables, like you know, making satisfactory progress towards our doctorate, you must take these courses or get this exact GPA or higher in these courses, must have approval from their supervisor for a continuance into a fifth year. Those are things I’ve had to get more information on because the more variables, the more uncertainty it makes the underwriter feel. And so that’s where it comes back to the presentation of the loan.

An Example of An Offer Letter

24:58 Sam: “I’m pleased to inform that you been awarded a fellowship in the first academic year beginning September 2019. In subsequent years, you’ll be supported by research and teaching assistantship. This Fellowship Award gives you deserved recognition for your accomplishments to date, as well as added independence to stipend and exploring your research interests for the first year. For the academic year 19-20, the stipend will be $3,345 for nine months. For Summer 2020, the stipend will be $3,475 for three months. This means you receive an annual stipend of $40,530. In addition, the award pays your tuition health insurance and health services fee. We are committed to continue this financial support for for up to five years, as long as you remain a PhD student in good academic standing.

25:51 Emily: Yeah, so what I’m hearing and I think what the listeners will hear is, that’s first year fellowship followed by W-2 income for the remainder, four years guaranteed.

26:02 Sam: Right.

26:03 Emily: That’s great. So that means in your world, that person would qualify for a mortgage during that first year, even though it’s fellowship, because their letter says, Yeah, it’s one year of fellowship, but you’re going to have after that this W-2 type income,

26:17 Sam: Correct. The most success I’ve seen with the PhD community are the simple letters that are less than two pages with little variable, that will show more than three years of continuance. And that’s a very simple approval for us.

26:35 Emily: And that’s whether that is fellowship income, or W-2 or a combination. If that’s what the offer letter says three years or more. That’s straightforward for you.

26:46 Sam: Correct. And that is where I’ve seen the most success with these doctoral candidates.

26:53 Emily: But still going back to your earlier point of if that’s not what a particular individuals letter looks like, still reach out to you, or another lender, because maybe with enough supplementary documentation, it could still go through, but it’s just going to be a little bit more of a process.

27:09 Sam: Correct. And, I mean, when I get connected with some of these department supervisors, I let them know, “Hey, this is what we’re looking for. Can you simplify this offer ladder for me, because we’re looking for something a little less complicated?” And I do like to tell my PhD applicants that, “Hey, I would love a shortened version of your personal statement. I want to be able to know a little bit more about where you’ve been, where you’re going.” And it always helps to tell a little bit of a story.

27:40 Emily: That is really interesting. That adds a little more detail to what you said earlier about the story and the presentation being what matters. That’s really interesting to me that you that you might include something like a version of a personal statement in this package that goes to the underwriter, that’s really interesting.

27:59 Sam: At the end of the day, I know I said this in the last episode, the last time I chirped in, but it does come down to one person’s decision. If the underwriter is comfortable, they’re going to approve you. If they’re not comfortable, they’re gonna want more documentation, or a cosigner, or something else to make it, you know, aboveboard.

28:20 Emily: Yeah, that clarifies. Thank you.

Final Words of Advice

28:23 Emily: Sam, is there anything else that you’ve learned about this fellowship type income that would be helpful to the listeners, with respect to getting approved for a mortgage?

28:32 Sam: I’ve learned that working with the PhD community are some of the best clients I’ve ever had.

28:38 Emily: Yeah, you’ve told me that before, and I really love to hear it!

28:42 Sam: Yeah. It’s really nice to work with people who are planning. It’s always best for a PhD student to be as proactive as possible. I’ve seen letters with three years of continuance, but they’ve reached out to me after one semester has passed, so now they only have two and a half years of continuanc, and that is a big problem. Whereas someone, if they have reached out a year earlier about their future, and how they’re planning to purchase a home when they were in a new area, that is the perfect slam dunk way to do it. Unfortunately, I’ve had to let some PhD students know that it’s not going to work out because their continuance, they’re under three years. And that’s going to be one of the major roadblocks. So talk to someone early, tell them you’re interested in a Freddie Mac, conventional loan. If they can find the right way to document their income and approve them. It’s happened more often in the last two months, I would say, with clients reaching out at this time of the year, when, if I had been talking to them six months ago, I could have had them approved.

29:52 Emily: Yeah, so actually at this time of the year, April 15 is decision day. Everyone has to decide what grad school they’re going to, or they’re supposed to decide. So if a PhD student is looking at that fellowship income in their offer letter, it says three years, they need to reach out to you sooner rather than later before that clock starts ticking, if they’re interested in purchasing within that first few months or first year or whatever, of being in graduate school. They need to reach out earlier. Thank you for saying that.

How To Reach Sam Hogan

30:21 Emily: Sam, you have not been particularly self promotional during this interview, and I appreciate that but I do want to say that you have been working with this type of client — people receiving fellowship income, also other types of PhD clients over the past year. I think you’re working really hard for them and that they should go to you, at least among getting a few different voices in their life, they should come to you. So will you please tell them the best way to contact you?

30:46 Sam: The best way to reach me is definitely by cell phone. Text is preferred right now because there’s a lot of volume going through the industry. My cell phone number is (540) 478-5803. And then my work email is a great line of communication, also. It’s [email protected].

31:15 Emily: Yeah. And we’ll have all that contact information in the show notes, as well. Sam just mentioned, I was surprised to learn, but even during this social distancing period, the mortgage industry is hopping, because interest rates are so low. People are really refinancing a lot right now, even if they’re not doing necessarily new purchases at the moment or not going into that process at the moment. But, you know, maybe in a few months or a year, whatever things will return to a more normal time and you’ll be able to move forward with lots more purchases.

31:47 Emily: Sam, thank you so much for coming on the podcast. And thank you so much for working with this population and being willing to, as a personal favor to me, to investigate this and take this on. I think it’s really fruitful and it’s been really great for my audience, so I really appreciate you

32:00 Sam: Thank you for having me on Emily. Always a pleasure to work with you and the PhD community. I’m just here to help, so if you need help text me, call me bother me on the weekend. It’s all good. I just want to make sure you all are seeing some success here while you’re getting your doctorates.

32:16 Emily: Excellent. Thank you, Sam.

Outtro

32:18 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the personal finance for PhDs podcast. There you can find links to all the episode show notes, and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at PFforPhDs.com/subscribe. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is stages of awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC podcast editing and show notes creation by Lourdes Bobbio.

Combatting Climate Change with Your Finances, Individually and Collectively

March 30, 2020 by Lourdes Bobbio

In this episode, Emily interviews Jewel Tomasula, a graduate student at Georgetown University in biology, specifically ecology and evolutionary biology. Jewel participates in climate change collective action through the Sunrise Movement, through 500 Women Scientists, and at her university. Emily and Jewel discuss how people can combat climate change as individuals and collectively through the lens of personal finance, covering frugal and environmental strategies, socially responsible investing, and leveraging our affiliations with universities. You do not need to be a homeowner or in command of massive capital to explore the advice in this episode.

Links Mentioned in This Episode

  • Find Jewel Tomasula on Twitter, Instagram, and on her website
  • “What We Should Really Do For Climate” by Samuel McDonald
  • “I work in the environmental movement. I don’t care if you recycle” by Mary Annaise Hegler
  • “Scientists Must Speak Up for the Green New Deal” by 500 Women Scientists Leadership
  • Personal Finance for PhDs: Tax Center
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list

climate change investing

Teaser

00:00 Jewel: I think people are maybe a little quick to discount the power that you have as an individual in these collective action movements and just being a body that’s part of this protest really makes an impression on the people who are making the decisions. People we’ve elected can’t ignore you when you were physically sitting in their office or physically outside the building and you’re part of a mass group of people.

Introduction

00:28 Emily: Welcome to the personal finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five episode thirteen, and today my guest is Jewel Tomasula, a graduate student at Georgetown University in biology, specifically ecology and evolutionary biology. Jewel participates in climate change collective action through the Sunrise Movement, through 500 Women Scientists, and at her university. We discuss how people can combat climate change as individuals and collectively, through the lens of personal finance, covering frugal and environmental strategies, socially responsible investing, and leveraging our affiliations with universities. Listen on for actionable strategies that do not require you to be a homeowner or in command of significant capital. Without further ado, here’s my interview with Jewel Tomasula.

Will You Please Introduce Yourself Further?

01:24 Emily: I am so happy that Jewel Tomasula is joining me on the podcast today. This is a really special one for me because Jewel was the person who worked with me on editing the podcast and creating the show notes in the first three seasons, so really happy to have her back on now as a guest even though she’s moved on from the editor role. And today we are actually talking about kind of one of Jewel’s areas of special interest, which is climate change and climate change collective action. And we will get into how this intersects with personal finance momentarily. But before we do, Jewel, would you please introduce yourself to the audience?

01:50 Jewel: Hi. Thanks Emily. So I am a PhD student at Georgetown University. I’m working on a biology PhD and more specifically my discipline is ecology and evolutionary biology. The ecosystem that I focus on is the salt marshes. And they’re an ecosystem that is really affected by human activities, as well as really important for us adapting to climate change in dealing with sea level rise and salt marshes are important for carbon storage. I look at the resilience of this ecosystem and so I have a very ecology perspective, but I also think about climate change a lot because of the setting of my research.

02:47 Emily: Yeah, that’s perfect. So very strong professional connection as well. What is it that you’re doing outside of your professional capacity in terms of climate change collective action?

02:57 Jewel: I would call myself an active participant in the Sunrise Movement, and also a mobilizer of the 500 Women Scientists network. I wouldn’t say that I’m like a big leader in any sorts, but I’m someone who closely follows along and participates when I can. With the sunrise movement, I participated in a December 2018 action, where we visited out members of Congress and talk to them about supporting a Green New Deal resolution, which hadn’t been formally introduced yet, but it was an initial talking about ramping up climate action and taking on more stringent goals than just the Paris agreement and saying we want a stronger plan for climate action. And then it was a sit in of Nancy Pelosi and Steny Hoyer and McGovern — representatives of the top Democrat offices. That was a really powerful experience, just to be one of hundreds of people that joined together and are taking this action and really showing our representatives that people care about this. And they can’t avoid it when we’re all sitting in the hallway or sitting outside their offices.

04:18 Jewel: I’ve tried to keep up with Sunrise Movement and participate when I can, not that often because I’m doing my PhD work as well. Then with 500 Women Scientists, with other leaders in that organization, we wrote an op ed for Scientific American called “Scientists Must Speak Up for the Green New Deal” and we outlined why scientists should be interested in this resolution and should take it seriously and advocate for it. And then that’s the group that when I go to, and just participating in in strikes or protests, that I usually kind of group up the DC pod of 500 Women Scientists to go together to these actions and support the leaders. And I try to amplify in my offline and online networks what the leaders of the youth climate strikes…their message, and the Sunrise Movement message as well.

05:24 Emily: Yeah, I think you have this interesting crossover identity that you are, identity-wise, compatible with these various friend groups. And it’s nice that you can be an intersection point between them and be, as you were just saying, amplifying messages from one to the other. And back and forth. So that’s great. Thank you for detailing that.

Climate Change and Personal Finance

05:50 Emily: I think that now we’ll get to the point where I want to say a couple of words about why we’re even talking about climate change on a personal finance podcast. Because maybe, you know, you say, well, Emily, this isn’t a good fit. This is about money, why are you talking about this? Or like, Emily, this is too political, why are you covering this topic? You don’t usually cover politics. And that’s not at all my intention, but the reason that I think about climate change in the way that it intersects with my business is because within personal finance and what I do a lot is thinking about the long-term — in my own life and the lives of my clients. When I talk about like investing and the power of common interest, I’m throwing out 50 years as a timeline that we should be looking over to think about our money. And over 50 years, over many decades — as you said, we’re already seeing effects of climate change and certainly over to 2030 and beyond that point, this is something that I think should be factored into our financial plans. As well as whatever motivation you might have to care about this as a human being specifically, it intersects our finances in this longterm planning aspect and also short-term planning.

06:56 Emily: There is this wonderful sort of synergy between frugality and conservation, or environmentalism and minimalism. A lot of the strategies that you might use to reduce your carbon footprint or be more environmentally focused in general are also ones that dovetail really, really well with being frugal in general or being a minimalist in general and not consuming so much. And so I just think whether you’re focusing first on reducing your carbon footprint or focusing first on frugality, you’re going to end up probably doing a lot of things that will benefit both facets, just naturally by the choices that you make. Because, as we’ll go through in a few minutes, there are a lot of things you can do that are good for your wallet and good for the planet. That’s kind of why I wanted to bring this up because there’s just this wonderful overlap. Not only should you be thinking about your own finances and what’s best for you in the long term. Maybe you can also direct your finances and your life choices in a way that’s compatible with being more sustainable long-term, as well. Jewel, can you just start, just make a couple of comments here — what can people do as individuals to reduce their carbon footprint?

08:13 Jewel: I think you outlined that so well about how we have to think about our personal finances in the long-term and that’s good for us, that’s a healthy thing, but if we’re going to be doing that, we also need to be thinking about the state of our environment and how sustainable our economy is as a whole and how that might be changing over the long term. I would hope that our economy is going to look really different in 50 years, that’s what my big hope is. And so this question of the individual carbon footprint and your responsibility there, it really centers on the power you have as a consumer. That’s often what you see in articles. If you can just Google how to go green and you can find lots of options and lots of suggestions, but I feel like they hardly ever take into account what power you actually have as a consumer and your dollar. If you’re someone with a constrained income and you only have a few hundred dollars of discretionary spending every month, if even that, it looks really different than somebody who has a lot of discretionary income, and the power you have with that.

09:33 Emily: Can I just jump in to ask — something I see for example in these how to go green suggestions is make your home more energy efficient. And so I’m thinking, okay, well I’m a renter, I have absolutely no influence over this. When I become a homeowner, I would love to think about that, but it’s not something for me in the here and now. Is that the kind of thing that you’re talking about that people just have differing degrees of influence over their own lives in terms of especially how much discretionary income they really have?

09:58 Jewel: Yeah, exactly. I live in the state of Virginia and there’s essentially a monopoly with Dominion Energy and you don’t have very much choice over where your power comes from. You see a lot of these lists and it’s like install solar panels or make your home energy efficient. And I’m like, I live in an apartment. But it is really empowering to think about, even if you have a constraint income, where you do have power in your budget and your spending and trying to direct that as much as you can towards the way we want the world to look like — a more ethical world with healthier and safer communities. I think part of that is if you are living in an apartment, there’s only so much you can do, but maybe you can live closer to work and you can take out that transportation part of the carbon footprint because you’re walking or you’re taking public transit.

The Impact of Individual’s Choices

10:58 Jewel: With individuals, the big things I think for anyone are your diet and transportation. If there’s ways that you can alter those to have a smaller impact, a smaller footprint, then those are two big things. Meal planning is one that I’ve been engaging with more recently, especially since starting grad school. My partner and I found that that’s also part of frugality and really making a difference in our personal finance wellness. Meal planning makes a difference and also really reduces our food waste. It made a big difference in how much for wasting, not just in food but also in the plastic that comes with food. If you’re not having take out all the time or just getting pre-prepared meals, there’s like a lot of packaging waste that’s produced there.

11:52 Jewel: I guess something that I care about with having that zero waste is that I have really minimized how much I use. That’s kind of in that minimalism that you talked about. Kind of that buy nothing new or going to thrift shops or just holding onto things and repairing them if they break. There’s still clothing alteration shops and shoe repair shops out there and so that’s something that I utilize. Those things aren’t always the most frugal, necessarily. Sometimes it is cheaper to just buy a new pair of shoes, but if I have a pair of shoes that I can get fixed, then that’s more in the mindset. Just because it is just as cheap to get a new pair, they are still a good pair of shoes. Those kinds of things I’ve really built into my budget and I think a lot of PhD’s could think in those terms as well and just rejecting our disposable consumer system that we have. Those are some of like the individual actions I think people could look towards.

13:02 Emily: Let me jump in there because I have a couple of comments about what you just said, which I thought was great. In terms of like the food that you eat, you’re talking about reducing waste, which is awesome. I think I read, years and years ago, I think there’s a book called American Wasteland*, which is about food waste. And I think it said that 50% of food is wasted, like that we grow in America doesn’t get into people’s stomachs. Most of that does not happen in your refrigerator, it happens prior to that point. Again, not something you necessarily have influence on, although I guess we can choose where we source our food from. So maybe getting it more from like local farmers or something rather than conventionally grown agriculture.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

Emily: And also, I guess I’ve been seeing these advertisements for ugly produce and like similar sorts of services like that where it’s food that wouldn’t make it to the grocery store, you can still buy that and eat it because it’s perfectly good. It just doesn’t look pretty enough to be in the grocery store. There’s different sourcing things you can do around that as well, and you were just saying about packaging. That also reduces packaging, all that kind of stuff. You didn’t mentioned what you eat, but I know that one of the major things that you can do is reduce your consumption of meat and dairy, particularly beef. I think beef is one of those big offenders in terms of greenhouse gas emissions. Food selection can also go into that. And it’s really difficult to change your diet, I know that. There’s all kinds of things that influence why you eat what you eat, but to the degree that you’re able to, think about addressing that in terms of less beef, lamb consumption, and dairy.

14:35 Jewel: It’s a really personal thing, that’s something that I’ve experienced. I would say I’ve spent the last 10 years of my life trying to be vegetarian. And it’s a really personal and often a cultural thing too. Food is how you connect with your family often. I get really excited with plant based diets. I have a special spot in my heart for plants and so I think it’s so cool what we can do with plants. I have like a personal excitement about plant based diets and then from the frugal side, meat is often more expensive, especially beef. When we do have beef every now and then, it’s always what’s on sale. If we’re getting it on sale, it’s not really part of the driving demand for beef, in a way.

15:30 Emily: I see what you’re saying.

15:31 Jewel: Right. That’s thinking about what’s the power of your dollar here and having beef is part of it. I have looked into what they say the average American consumption of beef is and it’s a little absurd. It’s not healthy for us as a culture to be eating that much beef, for our own bodies, as well as for our environment. That’s very justified and that’s one of the first things to cede. But if you’re someone really constrained in your income then you’re probably not eating very much meat anyway and I know there are calls for meatless Mondays and stuff. When we do meal planning — and this is me and my partner — my partner is environmentally minded, he still has the attachment to meat and that cultural element that we’re kind of working through.

Jewel: I’ll just be honest there, I’m the one that pushes more for plant-based foods and he’s still like, “Oh, but the meat, it tastes good. And it’s part of how I know how to cook.” That’s just the expectation that your plate has like a meat and then a veggie and a potato. It’s like a very ingrained American conception. But we’ve been looking at our weekly meal plans and it’s only meat for one meal a day typically and often the meat is a small part of the meal. That is something that has changed as we’ve started being more intentional with our meal planning. If you just think meatless Mondays, that’s three meals out of your week that don’t have mea. I would say for everyone, if you can have two meals a day without meat, that’s kind of a big win right there and you’re probably a lot less than the average American. We definitely do need to change this expectation that every meal should have meat in it.

17:39 Emily: Yeah. And I don’t actually think that’s a historically accurate view of the American diet. But anyway, you’re right in that it is sort of in the cultural zeitgeist. A larger point that I wanted to make about what you were just saying is that, as you were just saying earlier, as a consumer and especially if we’re talking to graduate students and postdocs and people who have a smaller degree of control over their finances and their lives — make the changes that you can and that you’re willing to and do what you can. It’s okay if for the time being you cannot change your diet because of whatever else is going on in your life, or you cannot change where you live to start taking public transit. Maybe you can choose one of these areas to make a big shift in and worry about the other ones later. It’s good like to make even a small change, like you were just saying with meatless Mondays or having two meals a day that are meaningless or whatever. It’s not that you have to become completely vegan or completely vegetarian to make an adjustment from where you are today. It’s just about making some degree of progress in that area. Were there any other individual actions that you wanted to discuss?

Being Mindful with Where You Keep Your Money

18:47 Jewel: Yeah, I have one more that I’ve been exploring recently, but I do want to mention two articles that I’ve found can really be like light bulb awakening for the nuance of this issue. One of them is titled “What We Should Really Do for Climate” by Samuel Miller McDonald and that’s published in The Trouble. The other is “I Work in the Environmental Movement. I Don’t Care If You Rrecycle” by Mary Annaise Hegler.

19:16 Emily: I think actually read that one.

19:17 Jewel: Yeah. And honestly, anything by Mary Hegler is on point. That one’s in Vox. Those are two I think that are really helping to increase awareness and making you understand how constrained this can be and how to feel that individual responsibility but also to channel it and grapple it with it better and understand how income plays in and how we kind of just need the whole system to change. How trapped you can feel, but also what personal empowerment you can find in it. Along those lines, something I’ve been looking at just this summer that kind of just slipped by me before was where my money is actually kept in my bank — who I’m letting have my money while I’m waiting to use it. And also looking into investing and trying not to be a typical like 20-something grad student who just puts off investing.

Jewel: I have been using Wells Fargo just because that’s the bank that my parents set up for me and I never really thought about it. Even when I was learning about how Wells Fargo is funding oil pipelines and doing other shady stuff, I just didn’t think about it and didn’t think about taking my money out of there. That’s something I’ve like just done and I’m transitioning to using a bank called Aspiration. They are an online bank that tries to make themselves an accessible option that’s not using any of the money for fossil fuels or gun manufacturing either. Those are two of their big things and building that social awareness into their whole model. It’s nice to have a bank that’s like thinking about this ethically. They also have sustainable investing options. I have $2,000 in there now, but I put in $1,500 and so over two years — I think it’s a little over $1,500 that I put in, so it’s grown like a few hundred dollars over two years. And you actually get to set your own fee for that. They have what’s called a pay what’s fair fee. I had it set pretty low and so over two years I’ve only paid just under $10 in the fees and you could set it to zero actually, if that’s something you really need to do, just to start trying investing.

21:52 Emily: That’s interesting. I hadn’t heard about that model before. And even Wells Fargo’s actions that you just mentioned — I know that they’re sort of blacklisted because of their like consumer protection fails, but I didn’t think before about the way that they’re using just the cash you have with them at any point. I’ll have to take a look at my bank and see how they’re ranking on this metric.

Commercial

22:21 Emily:

Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

Socially Responsible Investing

23:24 Emily: Okay, great. So you thought about where your cash is. I know we also wanted to talk a bit about investing, about what’s called socially responsible investing or SRI. This is something that you’re learning about, that I’m learning about right now, so can you start making a couple of comments about that?

23:41 Jewel: My understanding is that there’s a spectrum. Maybe it’s with typical investing group like Fidelity or Vanguard and they just have options that are more socially minded and you can pick those options as well, but it’s still focused on growing your money. And then —

23:59 Emily: Oh, we should say more generally that socially responsible investing is not just about these environmental causes. It could be about like social justice or working conditions or the sort of sin areas, like tobacco and firearms and those kinds of areas. Depending on your exact social preferences, you can make different choices within these groups. But continue, I just wanted to say that SRIs they cover more categories than we’re talking about today. But yeah, go on.

24:31 Jewel: Yeah, kind of this overall ethical minded. Like “Is what I’m investing in doing harm to other people that I’m not necessarily seeing every day? Is there harm or sketchy things being done out in the world with where I’m investing my money?” And that empowerment say, “no, l want my money to be supporting the things that do good in the world and not the things that are doing harm.” And that’s bigger or more encompassing than just environment or carbon emissions. It’s about how the people are treated as well. There’s someone more typical — I guess I don’t know if that’s more typical options, like through Fidelity or Vanguard. They’re big investing options. But then there’s kind of the filter out options since that’s what I have, where it’s still performing pretty well.

Jewel: Through Aspiration, they have these pretty accessible investing options. The deposit you have to make is pretty low, they have where you can set your own fee. I think for someone starting out in investing it’s something accessible, and it’s also passive, like you’re not having to pick out each stock that you want to invest in. It’s a diversified portfolio already, but they do have, I think I was looking at it, Amazon and Facebook are part of their portfolio. Some people might think that those companies are a little sketchy, but then what they do have filtered out are anything with fossil fuels and gun manufacturing and some of these other big sin stocks, as you had mentioned before. And then with socially responsible investing, there is the option to pick out the specifics stocks, but then it’s not passive anymore, and that’s something that I don’t have any experience with and it’s a little like out of my realm at this stage in my life that I would look into.

26:38 Emily: Yeah. Long time listeners definitely know that I teach the strategy of passive investing versus active investing. And so when we’re talking about getting into the socially responsible realm, it is a bit more active, because you’ve decided, you the consumer, and also the person running the fund or whatever, have to look into, okay, it’s not just a strict definition on what are the biggest companies in the US, it’s more like, okay, we have some criteria that we’re evaluating these companies on and some are not going to make the cut. So it’s a little bit more active in that sense, but it can still be a fairly passive approach if you go with a managed fund, because their criteria can be rather fixed.

Emily: And again, they’re not trying to market time and they’re not like picking and choosing necessarily individual companies that are in or out based on whims. It’s all based on sort of an investing plan that’s been laid out in advance. So it can still be a fairly passive strategy, in terms of the important aspects of passive investing, like being well-diversified and not trying to market time and so forth. It’s a little bit more active than like classic passive investing strategies, but still fairly passive overall, or at least it can be. And really I think that it’s so difficult as an individual to do all the research that is necessary to pick individual stocks when you’re trying to evaluate them on these metrics that we’re talking about, that SRIs care about. So I do think it’s a really good idea to go in with a larger fund where there’s a professional, a set of professionals doing that kind of research for you. And as long as you are selective about which fund you go into and make sure that it matches up with your values, then you should be good to go and it’ll be fairly passive on your end.

28:18 Jewel: Yeah, and I’ve been trying to think in terms of like, I really appreciate that Aspiration just has a whole values model behind what they’re doing, as opposed to just being a bank that’s all about the money, no matter who or where is getting hurt, or just what’s good for business.I feel like it’s part of that system change. Let’s have institutions that are actually accountable, and that care about the well-being of communities instead of institutions that are about the bottom line with profit.

28:57 Emily: Before we started recording this episode, I sent you another podcast episode that I had listened to from “How to Money,” which is another great personal finance podcast that I’d definitely recommend. Episode 97, “Socially Responsible Investing” is where they went over this model that I was really learning about for the first time, that there are gradations within social responsible investing. And I think you’ve already covered two of them — what’s called ESG, environmental, social and governance, and then also SRI, socially responsible investing. Those are more about…They’re pretty similar to like your classic like mutual fund where it is largely driven by what’s going to be best in terms of like the profit and bottom line for the investor, with differing degrees of sensitivity towards these social issues that you might care about. And then the final category was impact investing where the goal of impact investing is not necessarily get a great return, although maybe that will happen, but the goal is really to influence the world through with the companies that you invest in. The profit thing is secondary to the mission. Do you do any impact investing at this point?

30:07 Jewel: No. It’s a little out of my realm, as someone who’s at the grad student stage, where I’m just trying to actually invest instead of not investing in. I could bring up here that if you go into the real job that offers the 401k, that’s a great plan and you need to do it, but I am trying to take this time in my life where I don’t have that option, where I don’t have employer match, I don’t have the 401k option and it opens me up to try other investing options. I’m trying to look at it that way, but still with that passive investing, where I can just pick a managed fund and make contributions to it. That impact investing is interesting and I don’t know if I would manage to get there in the future, because you have to really pay attention and do research.

31:06 Emily: Well I think there could still be impact investing funds that you go into. It’s just that they’re going to be composed differently than like the SRI or the ESG types of funds. But I totally agree with you, I think that’s an amazing point that when you have an employer and you’re being provided a 401k or 403b, especially if there’s a match involved, you really do need to use that in terms of your own personal finances. That is the best place for your retirement money to be. But when you have an IRA, either because you don’t currently have access to a 401k, or you haven’t in the past, but any IRA money that you have is completely self-directed. So if you want to invest inside SRIs with your IRA money and do whatever is offered to you through your 401k, that’s a really good balance that you can strike as an individual. And as graduate students, postdocs, we start out probably only having access to an IRA. So the core and the part of your investments that are growing the most over time because you started them the earliest, those are the ones where you can have like the most discretion over where they go. And every time you leave a job, you close out your 401k or 403b, you can roll that money into your IRA and still have that total discretion over how it’s invested. I really love that you made that point.

Collective Action

32:15 Emily: We’ve kind of moved from talking about individual actions and diet and transportation and so forth to now we’re talking about investing, which is something you can do as an individual, but you’re really banding together with other individuals when you go into these funds and you choose SRIs over conventional investments. What are some other things that we can do as individuals but that is joining together with other people for this collective action around climate change?

32:40 Jewel: With collective action, I think the understanding there is that there are some decisions made at the collective level with the idea that they’re accountable to you as an individual. We have voted people in that should be accountable to us as voters or there are people working on behalf of the community that should be accountable to the community members. Whether it’s elected officials or a board of trustees at university or at another institution that you are associated with, those people are making the decisions on behalf of everyone else, but they should be accountable to you and you have power in holding them accountable. That’s where you as an individual have the chance to use your voice and to pay attention.

Jewel: Maybe starting with, since we were talking about investing, there’s also the question with universities and where they have their investments and their endowments. If you’re a PhD, you have an association within a university, whether you’re currently there or you’re an alumni and you have power in influencing how the university is using their money. Especially I think when you’re an alumni, when you can say, I’m not going to donate to you. Or you can contact the university, or be part of a movement. I think people are maybe a little quick to discount the power that you have as an individual in these collective action movements. Just being a body that’s part of this protest really makes an impression on the people who are making the decisions. The people we’ve elected like can’t ignore you when you are physically sitting in their office or physically outside the building and you’re part of like a mass group of people. Paying attention to those and joining anyone you can and just even voicing support and talking about it amongst your coworkers and your family is an important thing. If you have the right to vote, where you are able to use your vote, in the US, paying attention to what kind of plans the candidates have and how firm they are in their belief and voting for those candidates and then not stopping at voting. Actually realizing that you have power as a constituent to go and meet with them and join as a group to go meet with them.

Jewel: I mentioned being part of the Sunrise Movement action in December. That started with us going to our representatives office. I went with a group of people who are Northern Virginians to representative Tom Steyer’s office and we talked with the staff there. Then about a month later we got an email that our representative had changed his attitude towards the green new deal because of what we had come and said to him. You can all see more immediate change and impact just by like stepping up a little and using your voice and being part of movements. But you could also look in your communities and see what kind of like actions are happening there and any time that you can like hold systems accountable or change systems and think about how can your community be more resilient. I think it’s part of that power that is a little under utilized by people in their 20s. It’s definitely growing. And that’s really exciting to me but I think we could use more people. We could always use more people at least paying attention.

36:34 Emily: I like what you brought up there and it goes back to what we said near the beginning of the episode of like you as an individual can be part of groups at different levels. You’re a voter and you have representatives at both the national and also the state and the local levels and you vote for the people that you want to be in office. But then also once they’re in office, you still have influence with them, to some degree, over the decisions that they’re making once in office. They’re still supposed to be representing you. And then not only are you a voter, but you’re also a member of an academic community with your university, maybe multiple different universities. And then you also are a person who lives in your community and like you, you’re using your identity in terms of what age you are, to be affiliated with one movement. And also like you’re a scientist, you’re affiliated with another movement. I think we can all think about the various facets of our identity, and where we live and so forth, and the different groups that intersects with, and to see, as you were just saying, sort of see what’s going on in our own communities at these various levels and start participating as you feel comfortable, or as you see there’s something to participate in to make your voice heard. I really appreciate that. It’s not something I’ve been involved with personally to this point, but I’m definitely now going to be looking for more of those opportunities.

37:50 Jewel: I think just following your representative on social media or signing up for their email is really enlightening and just like a way to see what are they actually saying about these issues or what kind of bills are they introducing? That’s a really simple way that raises your awareness by a lot and shows you the opportunities to go to a town hall or to call them up. That’s one really simple thing.

38:18 Emily: The larger point around a lot of the discussion we’ve had today is you can evaluate where you are now and what you’ve been doing and you don’t have to keep doing the same thing. You don’t have to give into inertia of “well, I’ve always eaten this way” or “I’ve always lived in this place” or “I’ve always kept my money here.” Now that you are aware, if you weren’t already, that these various different areas impact how sustainable your lifestyle is or where you’re putting your money and what it’s doing in the world, now that you have a little bit heightened awareness about that, you can reconsider and make changes where you’re able to.

38:52 Emily: Jewel, thank you so much for coming on the podcast today. This is a real treat for me.

38:57 Jewel: Yeah. Thank you Emily.

Outtro

38:59 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

Why Mental Health Is Worth Investing In (with PhD Balance Founder Susanna Harris)

February 17, 2020 by Lourdes Bobbio

In this episode, Emily interviews Susanna Harris, a PhD student at the University of North Carolina and the founder of PhD Balance (formerly PhDepression). Susanna is an outspoken advocate for the mental health of PhDs. However, bolstering mental health can take up-front resources, such as time, money, and energy. Susanna argues that mental health is worth investing in, particularly in your early 20s and while you’re affiliated with a university. Susanna and Emily discuss low- and no-cost methods to improve mental health.

Links Mentioned in This Episode

  • Find Susanna Harris on Twitter or Instagram
  • Find PhD Balance online, on Twitter, and on Instagram
  • This PhD Healed Her Scarcity Money Mindset Using a Goal-Setting Framework (Part 2)
  • How This Graduate Student Rejects the Academic Culture of Being Broke
  • How to Combat the Negative Financial Attitudes We Learned in Academia and in Childhood
  • Personal Finance for PhDs: Tax Center
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list

mental health grad school finances

Teaser

00:00 Susanna: The point of investing time, money, resources into your mental health is one, if you don’t, it’s not going to get better. I think that there is this really dangerous mentality around grad school that it’s like, “Okay, I’m going to do grad school and then when it’s done I’m going to start my life” and that for some reason that the moment you graduate, everything’s going to get a lot easier and there’s a lot less stress and you’re going to be making way more money and you’re going to feel like an adult. And not surprisingly, when I talk to people who’ve been out of their PhD for six months they’re sort of still reeling from it.

Introduction

00:43 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode seven, and today my guest is Susanna Harris, a PhD student at the University of North Carolina at Chapel Hill and the founder of PhD Balance. Susanna is an outspoken advocate for the mental health of PhDs. However, bolstering your mental health can take upfront resources such as time, money, and energy. Susanna makes the case for why mental health is worth investing in particularly in your early twenties and while you’re affiliated with the university. We discuss ways you can improve your mental health even if you don’t have much or any money to put towards it. Without further ado, here’s my interview with Susanna Harris.

Will You Please Introduce Yourself Further?

01:34 Emily: It is my pleasure today to have Susanna Harris on the podcast. She is the founder of PhD Balance and we’re going to be talking about a really exciting and a very relevant subject matter, which is mental health. So Susanna, for those in the audience who don’t already know you, will you please introduce yourself?

01:48 Susanna: Sure thing. Well, first of all, Emily, thank you for inviting me. At first when you asked for me to be on, I was like, I don’t know what my work has to do with finances and it’s definitely not something I’ve gotten nailed down. I started PhD Balance about a year and a half ago to really just start talking about mental illness in graduate school. I myself am a, we’ll say a final year PhD student in microbiology, and what I really wanted to do is just start talking about mental illness because I’m someone with depression and anxiety and working on a PhD. And throughout this process of building that community, I’ve learned a lot of really important things, one of which is how important it is to get mental health care and how it can be really tricky for people to find space in their finances to do that.

02:44 Emily: Yeah, that’s exactly how we’ll narrow this very vast subject down today, the crossover point between the two of us. So tell us a little bit more about this origin story of PhD balance because I understand there’s even a name change involved.

02:56 Susanna: Yeah. I think that was one of the most difficult decisions for me. So when originally this started, it was just called PhDepression. Again, because I was a PhD student with depression, I thought maybe I would put up an Instagram post and find a couple other people who’d be interested in joining. The whole point was to share a photo, like you would put up on Instagram or you know, the image that we put out to academia. And then in the text share a more personal story about your own dealing with mental illness or mental health struggles while going through academia. And this all came about actually because about a month before — so PhDepression started in March of 2018 — about a month before this Nature Biotech paper came out showing about 40% of graduate students were dealing with anxiety or depression or the symptoms of them at any given time, and I saw that and it was just like, “Oh, I kind of had no idea. I thought I was really alone in this.” And I looked around, I was in a conference of about 200 people and I thought, “there’s no way that five other people understand.” And I think that that’s where it sort of clicked of we get these numbers, but it doesn’t really mean anything unless we can look around and find other people who are going to understand us, who are going to listen to us, not judge us, and then really importantly, be able to give us the resources that we need when we need them.

04:19 Susanna: Probably about a year into it, well six months in, I ended up turning it into a business and that was mostly for liability reasons. It’s a sensitive topic to talk about mental illness. At that time I had a small team of people working with me and I wanted to make sure that if anything should happen, if we ever faced anything legal that we just didn’t know about, that that responsibility would fall on my shoulders. And of course, once you have a business, then people ask you to kind of run it as a business and figure out money. As we were doing that, trying to think of what it’s going to be a sustainable financial model for what we do, we realized that changing to PhD Balance, one people could pronounce it easier, which is always a benefit.

Susanna: Two, it really became much more about general mental health, and that idea that even if you’re not dealing with a chronic mental illness, even if in general, your mental health is great, there’s going to be times where you do become imbalanced. You do kind of tip over to one side and need to right yourself. And so the idea of this PhD Balance is to acknowledge that there are those tipping points that different people have their kind of center at different places, but that the goal is to find that place where you’re okay. And I like to tell people, I think about it balance in terms of yoga, where the purpose of balancing in yoga is not to be perfect. And in fact, if you’re in a position where you’re absolutely perfect and it’s no challenge, you’re not really pushing yourself. Maybe that’s where you need to be that day, but you’re through yoga trying to find out more about yourself, learning where your limits are, understanding that your limits are different than somebody else’s. And the goal is not, again, to be perfect, but rather to learn how to balance and learn how to respect those boundaries of yours. We thought PhD Balance was a good switch to encapsulate all of that.

06:17 Emily: Yeah. What I’m getting from what you’re describing is a dynamic balance, right? And not a static balance. I think everyone likes the term balance, but I like it too, and one of the reasons is really what we’ll be talking about during this interview is that it’s not actually that mental health is one’s only concern, right? You would not sacrifice everything else in your life to have whatever perfect mental health might mean because this does impact other areas of your life such as finances, such as time management, such as work-life balance, other areas. It is about finding a balance between what your needs are and your resources are in one area versus another, and it does have to be dynamic over time. Anyway, we’ll be diving into more of that for the rest of this interview.

Intersection of Finances and Mental Health

06:59 Emily: Let’s talk about kind of, again that intersection between the finances and the mental health. When you’re experiencing financial stress, financial insecurity, as many PhDs do, especially during the graduate student or postdoc period, what effects can that have on mental health?

07:17 Susanna: I think there’s a few kind of separate but overlapping ways that that can affect your mental health. One is just like you said, that added stress. Chronic stress, so stress that lasts over weeks instead of let’s say a day. You know, there’s some stress that’s good. I think that whether it’s in work or even in finances to go, “Ooh, well this is a crunch time,” that’s not necessarily bad, but rather to have it constantly ticking in the back of your mind, that can take a toll on everything else. Oftentimes when we’re stressed about finances, it’s not just that we want to get to a certain goal, but rather that we’re afraid of falling into something else. Especially as people who in general are not making a lot of money, or are making no money, or paying money, it’s not so much always about like, “Oh, how can I best invest my extra money?” It’s rather, okay, how do I get by with my rent and my food and you know, any dependents I might have. And so just that stress and that background knowledge that you might be dealing with those things, that on its own is very difficult.

08:29 Emily: If you don’t mind, I want to add something there, which is about how chronic this can be because I think in regular society, in a normal kind of job, if you were experiencing financial stress or insecurity, there are actions you can take to alleviate that by increasing your income through your primary job, finding another job, moving to another place. But inside academia we don’t feel as free because we have this career goal that we’re pursuing, and the income is not really the main point of the job, right? It’s the training for that next stage. So we start to feel more stuck. Whether that’s actually true or not, how stuck we are, I think it’s a very common feeling, and to me that contributes to the stress, as well as just looking out of this long time horizon of this is not going to change for years and years and years potentially. I really think that that contributes to it, the stuck feeling.

09:22 Susanna: Yeah. Well absolutely. Sometimes I think about, so I’m in my sixth year and at this point I’ve invested so much time and money that I could have made in a higher paying job and I’ve gotten paid the same amount for five and a half years. Now, if I decided I have to have more money right now — I’m really lucky to be a single person who didn’t come in with a huge amount of debt, and has a lot of skills that help to keep my financial requirements down — but let’s say I had a dependent, or let’s say something happened, if I needed more money, I literally could not get it right now. Part of my department is that we signed on saying we weren’t going to have a part time job. I would have to choose between my actual needs versus all of this time and energy I’d put in and walking away with almost nothing. At this point I actually can’t master out, it’s a weird part of my department, so I would literally walk away after five and a half years. So I think that that goes both ways with any kind of crisis, right? Whether it’s finances or mental health or just general physical health, that we are in this really precarious spot where if anything major happens, there’s not really a safety net. And I think that we’re constantly, like you said, we’re constantly aware of that and it’s not something that’s going to go away.

10:52 Emily: Yeah, we’ve definitely well outlined that part of the problem. What was the second point you’re going to make?

10:56 Susanna: Yeah. So the second point is just that, and I think we’ll talk about this a little bit more, of why mental health is worth investing in, worth putting in that money, even when we don’t see the dividends right away. But if you don’t have the money you might decide to or you might have to allocate your resources to other things. Although mental health affects everything that we do, if you can’t buy food that’s going to be a more immediate problem. And what we know about mental health is that even if it’s a small issue, if left unaccounted for, I’m saying untreated, but that doesn’t have to be necessarily medical, that can just be talking to a close friend or doing something like yoga, those things to help you rebalance, if you don’t get the chance to do that, then can develop into something worse and more chronic and takes you more energy and resources to get out of. I think that those financial issues not only cause some of the mental distress, but also make it very difficult for people to remedy the kind of signs and symptoms before it becomes a bigger issue.

12:14 Emily: Yeah, I definitely see what you’re saying there. It’s the same in the area of finances as well, which I say this a lot, an ounce of prevention is worth a pound of cure, but when the prevention becomes out of reach for whatever reason, then yeah, you’re continuing down that line into the negative conclusion there.

How to Support Your Mental Health in Grad School

12:33 Emily: Okay. Given constraints in resources that PhD students and postdocs have, how can they find low cost methods and resources for bolstering mental health? And you just said it might involve treatment or it might involve some non-treatment options.

Professional and Medical Options

12:50 Susanna: I think my biggest piece of advice would be to talk to an expert in whatever way that you can. It’s not great across the world or even across the US, as far as having healthcare for students, but one thing that people might not necessarily know is that your general practitioner, so the doctor you’d go to if you had a sore throat or something similar, that’s actually someone who has some training in mental health. If you have health care coverage, you can go to that perso, and that’s something, you know, if you go to your university and say you want to talk to someone about mental health, if they covered mental health at the university, then that’s fantastic. I think it’s worth looking into. If they don’t, it’s okay to say, well, I’d like to speak with my general practitioner, and they can do some basic screenings.

13:39 Emily: I actually want to ask a little question there because when I was in graduate school, I went to student health as my — so I didn’t have a primary person, I had sort of a practice that I saw through the university. So when you’re saying the university versus your primary care provider, you’re saying the university as in the nonmedical support options that a student might have available to them. Is that right?

14:01 Susanna: Oh, no, that’s a good clarification. So for me, even though I go to campus health, we have our own providers. So we can meet with somebody and then request them every time. I do all of my physical health care through the university student health. The university also has a campus psychological service, so a counseling service, and in fact, what happened for me when I was having a hard time is I actually went into my practitioner who is at the general student health, and she did this little screening. I had gone in to try and get sleep medication because I wasn’t sleeping and she said, “you know, it seems like there might be something else going on here. I’d like to instead prescribe you some antidepressants.” And then they kicked me over to the campus psychological services who in turn referred me to my now therapist. But all that’s to say that the campus health, the people there, even just in the physical health spaces, do have training, at least to give you an idea, is this something that you’re going to need a more specialized form of help, or is this something that maybe you can deal with outside of medical treatment?

Susanna: In terms of the financial side of this one is that it’s really important to figure out what your insurance covers. This can be really tricky and I would just recommend either finding someone who’s gone through this or working with the campus facilities because they should have somebody. It’s okay also to reach out to a friend and say, “Hey, I’m having a hard time with this. I have to navigate it and it’s going to be brutal. Can you help me?” Because I think that’s one of the big issues with the crossover of finances and mental health is that when you’re already feeling just drowned in distress and responsibility, the idea of waiting through calls and emails is just absolutely abhorrent. I would say reaching out, figure out what your insurance covers, take a look at what money you do have flexible. If this is something that you could afford to see a therapist once a month, twice a month, once every two months, and to be able to then go into your resources, at the university, talk to someone and say, this is the amount of money I have, just full stop. I don’t have flexibility outside of that and they will be able to help you find, there’s something called sliding scale therapy, and so if you don’t have the means or the insurance, there are places that don’t take insurance but also charge you based on how much money you make. One really good option is group chat sessions, or kind of the support groups. Sometimes they’re through university. A lot of times depending on what you’re dealing with, there are local groups.

Susanna: Then I would say though that there are going to be some situations that you’re going to have to find a way to see, maybe a psychologist or a psychiatrist. A psychologist has a PhD in psychology. They’re usually you’re like high level counselors. A psychiatrist is someone who can prescribe medication. And so for things that might need a little more attention, it’s going to be important to figure out if you can get close to those resources. I would just encourage people to reach out to a friend, reach out to an ally and ask them for help navigating the system because there are low cost options, but it can be really exhausting to figure out what you need.

17:40 Emily: Yeah, that’s a great point. It would be, I’m imagining it would be amazing if there were a campus affiliated person who could like officially could help you navigate this. That may or may not exist in different places. Sort of an ombudsman, I guess that kind of thing, maybe that would exist. I know for me, when I sought out a little bit of counseling help when I was in graduate school, if I remember correctly, I went straight to the counseling services on campus. I did not go through like the medical referral route and they had some sort of package available where you can get this many sessions for free over the course of the semester. And then if I needed more than that, I think it would’ve gone through my insurance. Then the other place that I went to was actually through my church and I was able to get some free counseling sessions — actually, some were free and some were low cost — through that avenue too. So it could be another maybe community group that you’re part of. Maybe that’s something that is provided to you as a benefit for being part of that group maybe. That’s kind of the medical side of things. Actually, I want to make one more point, which is for graduate students who are younger and who are still on their parents’ insurance. This is something that you might want to consider when you have insurance offered to you through your graduate program, but you also have the option of being on your parents’ insurance still. If you know that you’re going to need this kind of care, and this would apply to a variety of other medical conditions as well, which insurance is going to be more beneficial to you, and maybe even, is there a way to get double covered, potentially. I don’t know if that’s the case sometimes. Just something to evaluate if you’re eligible for more than one plan.

19:10 Susanna: Yeah, yeah, absolutely. And I would also say one of the things that gets brought up a lot is that it’s bad, that’s like the low term, that students don’t get full psychological care in addition to whatever medical insurance they’re provided, or just full medical care. But I would say that graduate school in general is not a bad time to start these processes and to get early intervention care. About 75% of people who are going to deal with mental health problems have their first encounter before they’re 25. So right around early, mid twenties is when these things really start showing up, or at least they recognized as larger issues. This is a good time to start getting that help and often university programs, even though they’re not fantastic always, offer a lot more things than you might get at a starting position at a job. I think that it’s worth mentioning, even though it’s not the best system, this might be one of the better places, at least for me in the next five years, foreseeably this is a better insurance set up and a better support system than I will probably have at my next job.

20:25 Emily: I think one of the other benefits there, and it goes right along with that is that the people who you see who are affiliated either with a university or just in the same city as university are used to seeing college students, graduate students, young adults, other people in this age range as you were just saying, when these problems sort of first start occurring, so they may have a little bit more familiarity than if you were in some random city somewhere else and a person who’s dealing with all kinds of different people. We would hope, at any rate.

Commercial

20:55 Emily: Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

Non-medical Options

21:58 Emily: Okay, so that was kind of on the medical side of things, but what about on more of the balance that’s not directly related to the medical or counseling treatment of mental health problems. What can people do this low cost or no cost on that side of the spectrum?

22:13 Susanna: Well, I love that you brought up the aspect of your church. Whether or not it’s a church, more religious side or some other kind of community based services. And I also know that some churches, even if you’re not a regular member, even if you’re not necessarily religious, will offer those kinds of support groups for people, depending on where it is and what exactly you’re looking for. But even things like joing a yoga studio, or finding a group — Meetup oftentimes has groups that get together, do yoga or have conversations — what can be really helpful for your mental health, there’s a couple things. One, the biggest thing is having a community and being able to feel like you can reach out to somebody and say, “Hey, I’m having a hard time” and to know that they have you. I think that’s technically a no cost option but it takes time to build those relationships with people that you can actually trust.

Susanna: Another really big thing for your mental health is your physical health. Being able to unplug from our phones, which is funny coming from someone who I basically live on social media, but I do actually try to take a week off every two or three months. But taking some time away from our built environment inside and getting outside or if you have access to university gym, fantastic. If not, going for a walk is fantastic. Call a friend while you go for a walk if you don’t want to be alone. Or walk to the grocery store. Or a lot of times if I’m having a bad day, I will get off the bus one stop early and just give myself a little bit extra space. You can do this with any sort of physical activity. There’s ways that you can build up your mental health, even by little things of like choosing positive music, doing affirmations, which is so cringy if anyone has done affirmations, it feels really weird. One of the things that I do that helps that takes like three minutes — I call it three, two, one where I list out three things. I’m grateful for that day; two self complements, so the things that I would say to a friend, but to myself; and one self-love thing I’m going to do that day. It could need get myself a coffee, it could be call a friend, whatever. That kind of like active self intervention can be so helpful.

24:48 Emily: I want to add something there. I really love that you gave that little tool because it’s so, I mean, you can do that at any time throughout the day at any point. I’ve recently been learning more about affirmations also and I’ve actually published a couple podcast episodes on how sort of your mindset with respect to money and career affects your finances overall and how affirmations can be helpful in reversing limiting beliefs around money or false beliefs that kind of holds you back from accomplishing things. I also was very resistant to this idea of affirmations the first dozen times I encountered it. But anyway, anyone who’s interested in that kind of thing, there’s been a couple episodes in the past, I’ll link them from the show notes. This affects all different kinds of areas of life, but I’ve been focusing on learning more about how they affect your money mindset. But go ahead.

Further listening:

  • This PhD Healed Her Scarcity Money Mindset Using a Goal-Setting Framework (Part 2)
  • How This Graduate Student Rejects the Academic Culture of Being Broke
  • How to Combat the Negative Financial Attitudes We Learned in Academia and in Childhood

25:38 Susanna: That’s super cool. Now I’m going to have to go back and listen to those podcasts. The last thing is just having hobbies, having things that you do outside of your work. And that can be anything from, again working out can be a hobby, or cooking, or sewing. Anything that you do, not because someone else is going to think it’s cool, you know, something that you walk away from and you’re like, “yeah, I feel better” just cultivating that. It takes time away, but it is a way for you to give back to yourself and basically a very low cost way of taking care of your overall balance.

26:20 Emily: There’s one more that I want to add in there. I think it’s on the physical health side of things, but that is sleep. This is something that I learned like personally, I did not sleep a lot during college. It was such an intense time and it was weird, I actually went on graduate school interviews about a year after I finished college saying if people ask me, what do you like to do in your spare time, what are your hobbies? I would just say I sleep now. That is my hobby. I lost all my hobbies during college. Now I sleep. That’s how I’m choosing to spend my time and build into myself. And it’s something that I’ve never returned to that lack of sleep that I practiced during college and it’s so much better on this side of things with the sleep.

27:04 Susanna: Yeah. I think that, overall a lot of these things can be summarized of like there’s two limiting factors. You’ve got the limiting factors of finances and you’ve got the limiting factors of time, and in general you’re going to have to choose what you’re gonna pay into. And you’re probably going to have to pay in both, but it is worth it because you get back both. I think that’s what’s really cool is that if you’re at a place mentally that is more healthy, you’re going to do better with your finances and you’re definitely going to do better with your time management and with the enjoyment you get out of your time.

26:45 Emily: Yeah, I think so as well. I don’t really think of these activities as taking away from time or money, but like you said, just just building back into it. I hear this a lot about like working out, like working out does not take time out of your day. It gives you back time during your day because of the energy boost you experience from it and how much, well, if we want to talk about productivity, how much more productive you can be after working out and so forth. Okay, so great, low and no-cost resources there.

The Importance of Investing in Your Mental Health

28:14 Emily: You mentioned earlier this idea of investing in mental health and especially at this particular time of life of, you know, potentially the early twenties. Why is mental health worth investing in? I use that term very carefully, because there’s very few things that actually qualify as investing. And because I deal with finances, I think about actually putting money towards making more money. But there is this parallel idea of investing in other areas of life that don’t directly give you returns on your money but rather give you returns on your self, your person. Why is this worth investing in?

28:46 Susanna: Wow, there’s just so many things and I guess I’m saying this from a perspective of somebody who, if we’ll keep going with the analogy just like really kept digging into that credit card of mental health, where I really didn’t sleep much. I’m still guilty of this and sometimes pushing it too hard, of having to dig into these stores that I don’t necessarily even have. But the point of investing time, money, resources into your mental health is one, if you don’t, it’s not going to get better. I think that there is this really, I think it’s dangerous mentality around grad school that it’s like, “okay, I’m going to do grad school and then when it’s done I’m going to start my life.” And that for some reason that the moment you graduate, everything’s going to get a lot easier, and there’s a lot less stress, and you’re going to be making way more money, and you’re going to feel like an adult. And not surprisingly, I when I talked to people who’ve been out of their PhD for six months, they’re sort of still reeling from it. They’re like, “Oh, it’s, I still have stresses, I still have responsibilities. And in fact, it’s really hard now because I have dealt with these for so long. It’s exhausting.” And so one of those things of why investing now is important is that, um, relative to at least how my future looks — that I want to have a family and kids, I want to have a really full career. I love being busy — is that I don’t foresee my life getting some easier and for me to suddenly find an extra hour in every single day to start dedicating. Building those healthy habits is going to set you really well up for the future when you do have more responsibility rather than just fight this kind of stress. I think this is a really weird time. There’s a huge amount of stress there. There’s no question.

30:42 Susanna: Then the other thing is that I think people have this idea that having better mental health just makes you feel better and it certainly can. I will also say that sometimes working on your mental health feels really awful and it’s important to know that working on your mental health or focusing on finding that balance throughout your life, might not feel great at the time, but you do reap a ton of rewards later on. Speaking personally, I used to go really hard throughout the week and I had something called my Fridays where anyone who was close to me understood that probably two or three Fridays every month I would just crash out. As of about 2:00 PM, I was useless. I was cranky. I couldn’t stay with having commitments and it would take until Saturday afternoon until I was back on it. It would just be a really weird cycle. Looking at it, if I — and this is what I’ve started doing is that I’ve been able to invest 20 minutes a day or so, on average, and then I don’t have that crash out time at the end of the week. And that’s time that I have actually saved. Some interesting things is that people who, for instance with depression, people who deal with depression take significantly more sick days than people who are not dealing with depression. People with anxiety are much less productive if it’s not being handled or managed. And so although you might be working more hours and feeling like, Oh, I can’t possibly fit 30 minutes of exercise in here a day, based on the data we have, you’ll probably be much more productive and you’ll probably make up that 30 minutes and then some, and you’ll also have the benefits of enjoyment that you have there.

32:39 Emily: I think you’re making excellent points on the mental health side of the equation, but I just have to underline everything that you’re saying on the financial side, too, of like don’t squander this opportunity that you have at the moment in building those positive habits in multiple different areas of your life. Because I couldn’t agree with you more that it is pervasive in academia that we think that our life somehow gets to be put on pause during graduate school or during PhD training. And it’s really not the case. As you were saying, if you allow problems to lie on unaddressed, they just, they fester and they grow and then it takes, even that much more to pull yourself back out of it if it’s even possible, at the end of that process. So it is much better to, as you were just saying, invest a little bit of time, a little bit of money, a little bit of effort on a consistent basis up front rather than trying to dig yourself out of it on the back end. Whether we’re talking about mental health or whether we’re talking about finances. Wonderful points overall. And I’m sure if we had more people on this call speaking about other areas of life and they would say the same thing. Beautiful points there.

Financial Advice for PhDs

33:44 Emily: As we wrap up the interview, I like to ask all my guests, what is your best financial advice for another early career PhD? And that could be related to something we’ve already addressed in the interview or it could be something entirely different.

34:00 Susanna: I think my biggest piece of advice and the thing that I’ve had to learn several times over is to give yourself a bigger buffer than you expect. I think what was hard for me is that coming into grad school, I budgeted kind of monthly and that was because a lot of my expenses were pretty consistent throughout undergrad. It was like, okay, every month I’m going to have this, and I didn’t have a car, I didn’t have my own real place. I was renting and everything was already taken care of. What I spent in one month was pretty much what I would spend the next month and I’d have a small buffer. And then getting into grad school, you get kind of these more adult-like problems of your washing machine breaks down, or I have to suddenly pay medical bills that I wasn’t expecting. Things like that. And so I’ve had to learn instead of focusing on a month to month and if I have a buffer at the end of the month, then great. I get to spend that next month, thinking about my buffer in terms of semesters or at least longer, maybe six months at a time. And then at the end of that six months, consider using that buffer. I actually had to learn that my second year when I switched over to a fellowship and they didn’t give us our fellowship for I think 25 days. I didn’t get a paycheck until almost a month after I was expecting it and I was really lucky to have that buffer. You are kind of at the whim of the university. You can’t do a side hustle necessarily. And so that pre-planning for things that you have no idea if they’re going to it’s just, it’s necessary. It’s tricky but it’s necessary.

35:45 Emily: Yeah. Wonderful point. And I mean there’s so much that I could and have teased out in what you’re saying in terms of not relying on the university to pay fellows the same way they would pay employees in terms of being on a deadline. That’s a common unfortunate problem. I totally agree with you about budgeting. I would say over the course of a year, like looking out over the coming year, although semester’s a little bit easier to get your hands around, through what I call targeted savings accounts. That’s a little bit more of a formal system. But like you were just saying, it’s just basically having a longer view about the expenses that are coming your way because they are hard to handle if you only have a given months amount of income to do so. Wonderful points there and thank you for that. Great advice.

Where to Find Susanna Online

36:24 Emily: For members of the audience who don’t yet know where to find you, what’s the best place that they want to follow up with you or learn more about something that you cover?

36:33 Susanna: Sure. I am on social media probably more than I should be, but it is sort of one of my hobbies. I consider it the only game on my phone. You can find me on Twitter and on Instagram @SusannaLHarris. And then to find PhD Balance, we both have a website which is www.phdbalance.com. And then we have Instagram and Twitter as well. You can join the conversation. You can see the other stories that people have have posted, some of our tips and we’d love to hear your stories and your tips. That you can find us @PhD_Balance.

37:15 Emily: Perfect. Thank you so much for giving this interview today.

37:18 Susanna: Yeah, thank you Emily. I’ll talk to you later.

Outtro

37:20 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

How to Combat the Negative Financial Attitudes We Learned in Academia and in Childhood

January 20, 2020 by Lourdes Bobbio

In this episode, Emily interviews Cortnie Baity, a doctoral candidate in Human Development and Family Sciences at Florida State University and licensed marriage and family therapist intern. Cortnie’s dissertation is on how your upbringing influences your financial attitudes and behaviors later in life and how to effect better financial outcomes, specifically for African American families. Cortnie shares a framework from the literature of four money belief systems, three of which significantly correlate with income and net worth and two of which can become pathological. We discuss the financial messages PhDs absorb from academia and how those might influence financial attitudes and behavior. We conclude with Cortnie’s advice for PhDs who want to combat financial attitudes that don’t serve them well.

Links Mentioned in This Episode

  • Find Cortnie Baity on Psychology Today or contact her via email
  • Personal Finance for PhDs: Tax Hub
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
  • Article: Money Beliefs and Financial Behaviors: Development of the Klontz Money Script Inventory
  • The Money Script Inventory

financial attitudes academia

Teaser

00:00 Cortnie: I would suggest early career PhDs to take a financial attitude questionnaire and to gain additional insight to see what financial attitudes you resonate with the most and how they could be possibly subconsciously guiding on your financial behaviors and influencing your overall financial well-being.

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. This is season five, episode three and today my expert guest is Cortnie Baity, a doctoral candidate in human development and family sciences at Florida State University and licensed marriage and family therapist intern. Cortnie’s dissertation is on how your upbringing influences your financial attitudes and behaviors later in life, and how to bring about better financial outcomes, specifically for African American families. We discuss how financial attitudes form and how they translate into behavior. Cortnie shares a framework from the literature of four money belief systems, two of which can become pathological. We discussed the financial messages PhDs absorbed from academia and how those might influence financial attitudes and behavior and what PhDs can do to combat financial attitudes that don’t serve them well. Without further ado, here’s my interview with Cortnie Baity.

Will Please Introduce Yourself Further?

01:25 Emily: I am delighted to have joining me on the podcast today Cortnie Baity, who is a doctoral student, and she specifically has an interest in financial attitudes and how they develop. This is such a relevant subject for us. I’m so delighted that Cortnie reached out to me and that we’ve been corresponding and she agreed to come on the podcast. So Courtnie, will you please introduce yourself?

01:47 Cortnie: Hello, Dr. Roberts and hello listening audience. Again, my name is Cortnie Baity. I am a current doctoral candidate in the human development and family sciences PhD program. I am located at Florida State University. I earned my masters of science degree from the couple and family therapy program at the University of Kentucky, where I initially became interested in personal finances. Just a little bit of background about my areas of research, it includes family finances, personal finances, socialization processes, African American families, and minority mental and physical health disparities. The overall goal of my research program is to minimize any inqualities in mental and physical health, experienced by black families. In the way that I have chosen to go about intervening on health for black families is looking at how personal finances influences or undergirds some of those health disparities that we might be noticing in the literature.

02:52 Emily: That is so interesting. So exciting. Really, really glad that you’re working in that area. Can describe for us for just a couple of minutes, the dissertation that you’re working on, your specific research?

03:04 Cortnie: Yes. So my dissertation studies financial socialization in black American families, and its implications on financial wellbeing for young black adults. My primary hypotheses is that black young black adults experience asset and resource inqualities, in part because they receive minimal or possibly counterproductive training about finances. My goal with my dissertation is to do three things: document diverse types of family, financial socialization experienced by black young adults, explore the consequences of types of family, financial socialization for financial literacy and financial wellbeing, and then lastly, consider gender variation experienced in family and financial socialization and how it may have undesired effects on financial literacy and financial wellbeing. My overall hope for this study is to, in this study and in following research, will be to produce clinical strategies for marriage and family therapists like myself to help black clients improve financial management, which can help reduce asset and resource inequalities among black families. Personal finance has been demonstrated in the literature to be connected to mental and health outcomes, especially unfavorable mental and physical health outcomes. So I’ve chosen to focus my research on personal finance interventions to improve black health overall.

What is Financial Socialization?

04:40 Emily: Yeah, I’m sure the listeners know that this is a subject that I’m intensely interested in — how to improve financial outcomes among our population, the PhD population. And this is so applicable. It’s a great subject for me to learn about as well. You’re using the term family financial socialization. Can you explain that? Can you define that a little bit more? What plays into that?

05:03 Cortnie: Yes. If we think about socialization broadly, there’s a communication component, so it’s the sending and receiving of a social message, but it also includes the implementation and application of that message into the individual’s life. If we put that into context of personal finance, we’re looking at how families socialize their members surrounding personal finances. That includes how the messages and beliefs surrounding personal finances, including budgeting, world perspectives about money, and the economy and that influences an individual’s financial attitudes. There’s also a tie between financial attitudes or your perspective of finances and how that influences your financial behaviors. And then of course your financial behaviors feed into your overall financial well-being.

06:03 Emily: Yeah. So there’s a whole chain there and this is something that is being passed from parents and other family members to children, and it’s being propagated within families, as well as within society more largely. Can you give some concrete examples of maybe those communications or demonstrated behaviors?

06:23 Cortnie: Sure. One concrete example of a family financial socialization that you may witness in families is, for instance, when families, parents will distribute out an allowance to a child, and they say, “Hey, you know, you have this amount of money once it’s gone, if you want to buy things for your hobbies or if you want to buy a video game, that money is gone.” And so it’s socializing the child surrounding finances in the family social context. Some type of message is being transmitted over to that child. The thought behind family financial socialization is that the child not only hears that message from the receiver, but they start to internalize that message and start to make decisions about their environment around them, based on the message from the receiver. And in that case, whether the child internalize the message to save the money and let it stretch a little bit. So don’t kinda spend all your money on the most expensive video game because you know that if you want to go to the movies the next weekend with your friends as well, you won’t have anymore financial means until the next time that you receive an allowance. So that will be one concrete example.

07:47 Emily: Yeah. Thank you for that. That’s definitely an example of an intentional or an overt way that parents would communicate around finances to their children. I don’t know about you, but the family that I grew up in, the signals around finances were implicit. We did not talk very openly about this subject, but I learned a lot from my parents by example. So can you give another example of how that kind of communication would work?

08:11 Cortnie: Oh yes, absolutely. Gudmunson and Danes has a family financial socialization theory and they support the idea that the majority of family financial socialization happens through modeling or observation. So one implicit way that we learn about money is when our parents will take us to the bank with them. There is some type of message that is being sent to us that there are outside institutions that help us to manage our money. That would be one concrete example of family financial socialization. You’re with your parent, it’s in the family social context is not really being spoken we’re at the bank because I need them to help me manage my money, but it’s that kind of unspoken undertone. It’s an institution It’s associated with money. I see mom and dad go here. So those kind of implied messages are occurring in that kind of way.

09:16 Emily: It’s a really, really interesting example. It just reminds me of, well first of all there’s a large unbanked population within the United States, right? So there’s all kinds of children who are not getting that particular kind of message that maybe some other children are. Maybe the actual interaction the parent is having with the teller or the manager could be positive, could be negative. All kinds of differences there. And it’s actually making me think now. So I have two very young children. The older one is maybe on the cusp of being able to learn some money lessons if we were to overtly teach something. But I’m just thinking about how much financial stuff that I do that it just takes place digitally online. It wouldn’t necessarily be seen very easily by my children if I just choose to not do that stuff in front of them. So yeah, I don’t know. Going into the new generation, we might have to have different strategies around how to do the socialization, given the differences.

10:09 Cortnie: Very true, very true.

The Four Financial Attitudes

10:11 Emily: Okay. So that’s about how parents and families are communicating some lessons around finances, implicitly or explicitly. How the children are receiving those attitudes. Can you speak a little bit more about the connection between what you’re learning in your family and the attitudes and so forth that you develop and then how that translates to behavior? What the connection is between those two.

10:33 Cortnie: Personal finance psychology and marriage and family therapist scholars, Klontz and Britt have produced some studies that look at how financial attitudes developed and they suggest that trans-generational personal finance messages, typically learned in childhood, subconsciously influences the development of financial values and beliefs. And collectively these financial values and beliefs are referred to as financial attitudes. So Klontz and Britts specifically have come up with four distinct financial attitudes. One is money avoidance, money worship, money status and also money vigilance. To have these categories are important because some of them suggest a pathologic view of money that can have a negative impact on your financial behaviors in your overall financial well-being.

11:35 Emily: I love to hear a framework. This is great. Can you say a couple of words about what each of those four categories are so people can kind of say, “Oh, I definitely see myself here or there.”

Money Avoidance

11:45 Cortnie: Reiterating when I say a financial attitudes are important because certain attitudes for example, like money avoidance and money worship, have been demonstrated to suggest pathological views of money. Those who resonate with money avoidance attitudes may tend to believe that money is bad or that you don’t deserve money, and for people with this personality, money can typically evoke feelings of fear, anxiety, or disgust even. This is a financial attitude that is common among low income, younger, and single individuals because they typically have something going on with them where money is evoking these anxiety or stressor indicators for them. It has been demonstrated that typically those who are money avoidant produce, financial outcomes like financial well-being that are not as high as individuals who possibly resonate more with other types of financial attitudes.

12:58 Emily: Yeah, I definitely can see that. I mean, we can sort of imagine very easily that prototype person who is money avoidant. There’s probably, I don’t know if they’d be listening to the podcast, but there’s certainly potentially some of those within academia, within graduate students. Maybe not because of how they were raised, but then the environment that they’ve been put in, you know, since getting into training. We’ll talk more about that a bit later, but go through these other three categories please.

Money Worship

13:23 Cortnie: Money worship, more so those types of individuals, you would see indicators of that individual where they’re very central to their career. They’re very central to building wealth and things like that. It can be suggestively pathological. In the Klontz Money Scripts inventory, there is a cutoff score for what is kind of considered as like a clinical concern, a clinical cutoff score. If you go beyond that threshold, you will be considered possibly you need to look into it being an actual issue. Even if you resonate with, and I do want to say it is possible for you to resonate with several categories of financial attitudes. For a lot of people it kind of depends on the context. Like we talked about, being a PhD student. But going back to what I was saying with the, clinical cutoff score, there essentially are four different types of financial attitudes and worship would be another example of that. There’s literature that goes through the exact representations of the four financial attitudes and Klontz and Britt will be the scholars to kind of refer to that information in further detail.

15:05 Emily: Yeah, I would love it if you could send me a link to put in the show notes for that. Yeah. So I think money worship is another one where we can again, sort of maybe imagine a prototype for that. And I think that I, obviously I don’t know about this clinically for myself, but I have been very careful, mentally to not, because I think I have maybe some tendencies where I could fall into that category. Maybe not even tendencies, but just based on what I do, right? I talk a lot about money. I’m very careful to not allow myself to fall into that category.

Money Status and Money Vigilance

15:33 Emily: Can you remind me what the final two were and maybe give some examples? These were maybe more the non pathological categories.

15:41 Cortnie: Money status, it more so resonates with viewing money as a social status for yourself. And then also money vigilance is being careful with money. Those are two that are not as suggestive to pathological views of money.

16:02 Emily: Yeah. Okay. Thanks for that clarification. I’m seeing myself maybe in the vigilance category, for sure, and I hope the audience is starting to get an idea of where they might fall and what possible interventions might be helpful depending on where they are.

Commercial

16:21 Emily: Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

How Financial Attitudes Can Affect Your Finances

17:25 Emily: Can you give maybe like a concrete example of how let’s say, a money avoidant person, a behavior that might result from that attitude?

17:33 Cortnie: I think that it kind of blends into our follow-up question of how does academia, how does being a graduate student, how does that influence certain financial attitudes. As we all know, being a graduate student is very expensive, yet graduate students often have very little income, unless you’re in a situation where you do have enough fellowships and scholarship funding to carry you throughout your entire program. Also, because graduate students are in the process of becoming experts in their field, they may feel like they do not deserve to get paid very much. Those kinds of experiences typically evoke fear and anxiety surrounding money, which could be suggestive that graduate students tend to have a money avoidant financial attitude. Of course, there are clinical cutoffs for that, as we discussed before, but some of those common experiences and feelings of being a graduate student, surrounding money, may lead to being category categorized as money avoidant.

18:52 Emily: Yeah, I definitely want to talk about for this for another moment, because I think this is going to be such a common experience for many people in our audience. Either that they’re currently in this space, they are currently a graduate student and experiencing some of these forces and attitudes or maybe that is in their past and it’s still something they’re working on because they still have some residual effect, mentally, from that time. I do think there are pervasive messages within academia that your passion should sustain you. You should not care how much money you’re making right now or in the future because you just love your work so much, none of the rest of that matters. It really plays into a larger attitude within academia. And I’m not blaming any person or institution. This is just like a mother culture kind of thing around “Well, you should just go ahead and put your life on hold while you’re in training. Nothing else matters aside from your training. Put your money on hold, put your relationships on hold. Other things in your personal life, your health, mental health, all that stuff is secondary to the all consuming goal of your research getting to a certain level, finishing your dissertation, whatever it is. Super, super unhealthy. Super, super unsustainable. I mean, maybe you can do that for a few months or a year, but for the five, ten, more years you might be in training it’s too tall of an order. And yet this is still the message that we’re all kind of marinating in within academia. Right? And so what I think I’m hearing from you is that these messages, maybe it’s not the family that we grew up in, right? That has a certain influence on us. But then our academic family is also having an influence. Does that make sense? Can you talk a little bit more about that?

20:37 Cortnie: That definitely makes sense because essentially what family financial socialization theory suggests is that our founding beliefs and values surrounding money typically come from the family system because that’s typically our first opportunity to learn in a social context. As you become 18 and you move away from home and you have more interactions with other socialization agents, like being in an academic setting, being around peers, being in a romantic relationship, that influences your personal finances as well, or how you’re being socialized around personal finances as well. It’s certainly a undertone, kind of an unspoken thing in academia that the main goal is to focus on getting your program or research to a certain level, getting through the program and graduating and the personal finance piece is often not really addressed very much, or the stressors that are associated with finances are typically not addressed unless you actually go directly to a personal finance specialist on campus that can help you to continue to fund your program. And not just your program, but your life outside of that. A lot of graduate students have full blown families. They’re married, they have mortgages and all kinds of things like that. So yes, academia can definitely put some stressors on your personal finances and your financial beliefs and kind of make you question “Should I be money avoidant because it gives me so much anxiety or possibly having the opposite effect of making you so money vigilant to the fact that you kind of become OCD about just budgeting down to the dime every single semester so that you can have all your expenses covered.

22:43 Emily: Yeah I think there’s the component of what we sort of implicitly absorb in academia about work being the primary thing. But then there’s what you were just saying, the actual real life in your face stressors – the stressors associated with being academia, not being paid enough for where you’re living, having to pay tuition fees, the budgeting issues. These are all not just in your mind, these are real problems that are happening to students. And I think what I’d also love you to comment about is the influence that these experiences and hearing these messages can have on a young adult, right? We’re just talking about okay, the family is the first place where we start to form these attitudes. But I would imagine that a graduate student in their 20,s maybe straight through college and to graduate school is going to have a different set of experiences than someone who starts later on after working. Maybe they are married, maybe they’ve had just more time to build up what their beliefs are and their attitudes around their own finances. Can you comment about that a little bit?

23:46 Cortnie: So I’m not speaking from my empirical research theoretical standpoint. This is just my own personal perspective. But my belief is that when young adults go straight through graduate school and they don’t really get that real world application personal finance management, they kind of start at a deficit when it comes to personal finances as an early career PhD, or if you’re graduating fresh out of a master’s program or early career master’s degree recipient. You don’t have those opportunities to really grapple and absorb what it means to budget with an income and a salary, especially not at the level that you will be earning outside of a graduate program. Then also maybe not being privy to the realities of the consequences of not having enough personal finance related literacy. Not knowing about how credit works, how student loans may impact credit, how that may later impact your purchasing power when it comes to purchasing a new home or a car. And then of course, it has implications on your romantic relationship. Having to have not so easy conversations with your partner that “Hey, you know, when it comes to my personal finances, I’m kind of behind the curve”, especially if you have a partner who did not take the graduate school route, who did have opportunities to kind of build up their financial literacy through work experiences and budgeting that adults do who do not decide to go straight through graduate school. So yes, absolutely, going to graduate school for us to sit significant amount of years, not participating in the workforce as like a traditional adult would so to speak, definitely can leave a graduate school student at a little bit of a deficit when it comes to managing their personal finances. Unless you’re a business major, typically you do not get that background working knowledge about personal finance management.

How to Work with the Money Attitudes You Have

26:11 Emily: Yeah. This is exactly the space that I’m trying to step into. On that subject, once a person recognizes, “okay, academia is feeding me some toxic messages, it’s giving me all these stressors,” what do you do with that? How is it that you can change financial attitudes. Or maybe it’s from the upbringing as well. Maybe you recognize, “okay, my family was not super healthy around this, can I change my own way I approach these things?” How do you actually do that?

26:39 Cortnie: Me, personally, as I’ve gone throughout my graduate school education, I have become more immersed in the subject area of personal finances, becoming more aware of my own financial attitudes and financial behaviors that do not serve me well, and I go by the saying of try to practice what I preach in my clinical practice. And as a therapist, I suggest to all my clients, the first step of changing an unwanted behavior is to acknowledge that it’s problematic and explore its origins. If you recognize that you’re just taking out way too many loans, it’s just not feeling right to you, kind of explore the fact you’re going against what one of your financial values or beliefs are, which is to keep your loans to a minimum, and explore where the origin of the motivation to do that behavior is coming from. Once you have acknowledged that the behavior is problematic, explored its origins, from there I will suggest seeking out resources to support the desired behavior change. Personally what I did for myself is one, I made personal finances, I was very intentional incorporating that in my area of research. And also, my niche is actually surrounding personal finances, mental health, physical health and family relationships. And so it kind of forced me to get immersed in the personal financial literature, become more financially literate in ways that were supportive of my career, but also in my personal life. So I actually did the accredited financial counseling education requirement through Texas Tech University. I did that program back in this past spring and I learned a wealth about personal finances that not only legitimized myself as a marriage and family therapist, that her niche would be personal finances, but also my research. I will say another huge impact that it had was application into my own personal finances. Recognizing that there’s an issue with the financial attitude or the behaviors that you have become accustomed to in graduate school, exploring what the origins are, like why did you even start doing these behaviors, and then seeking out resources, and there’s a wide variety of ways of doing that, but just becoming more knowledgeable about healthy money management.

29:44 Emily: I can definitely see a parallel in myself to what you’re saying. I didn’t necessarily know that what I was trying to do was changing my attitude so that my behaviors would follow. But I can see, from my upbringing, I grew up with a one one parent who was like a spender and one who was like a saver, and sort of absorbed the spender mindset from one of my parents. And that was something when I finally had my own paycheck coming in, I realized my small stipend cannot support the spender inclinations that I had based on my upbringing. And so that was something that I had to, as you were just saying, recognize, “okay, this is going to put me at some dissonance here.” This desired behavior and the financial realities, I realize, “Okay, well that I learned that from my parent. That doesn’t have to be what I do. That’s just what my parent behaves that way, I can be different.” And as you just said, seeking out more and more resources and support around the positive behavior that I wanted to affect, which was not spending a lot of money whenever I wantet to. And so the resources that I went to at that time were personal finance books, the personal finance blogosphere, which now has morphed into podcasts and blogs and Reddit and all these other wonderful places where you can go for resources. So I really sort of started to see into the lives of people who I could recognize as models of positive financial behaviors and start to, um, enact what they were doing in my own life. And if I would be so bold, I will say that the Personal Finance or PhDs community is one of these places where you can learn some of these positve behaviors, from me and from the guests who I interview and from the articles I have on the site and there’s lots of ways you can get involved. In fact, please, if you’re not yet on my mailing list, get on my mailing list because I’ll be sending this great content your way every week.

31:35 Emily: Cortnie, thanks so much for pointing that out. I think we’re coming to the end of the interview here. If someone wants to follow up with you, maybe they have a question about something you’ve said today or maybe they’re like, “Oh my gosh, I need Cortnie in my life. I need more Cortnie”, how can they get in touch with you?

31:51 Cortnie: For those listeners out there who are interested, I’m always happy to share whatever information I have and chat with you. So, um, I can be best contacted at my email. It’s [email protected]. I am also listed on the Psychology Today website as a psychology today verified marriage and family therapist intern. You can look their website up and then as we’ve discussed previous to actually starting the interview, you’ll leave the actual website in the notes. Then also the agency that I’m currently contracted it as a marriage and family therapist intern, Better Living Solutions in Tallahassee, Florida, and we’ll also leave information for their direct website. Those are two additional mediums to gain contact with me.

32:57 Emily: Yeah, it’s so excellent. All that information will be in the show notes as Cortnie just said.

Final Words of Advice

33:00 Emily: So last question here, Cortnie, what is your best financial advice for another early career PhD?

33:07 Cortnie: In the same spirit of the conversation we’ve been having, I would suggest early career PhDs to take a financial attitude questionnaire — one example is the Klontz money script inventory — and to gain additional insight. If you have some inklings but you’re not exactly sure if you’re at that clinical cutoff for certain financial attitudes, to see what financial attitudes you resonate with the most and how they could be possibly subconsciously guiding on your financial behaviors and influencing your overall financial well-being.

33:47 Emily: Perfect. And can we add that link to the show notes as well?

33:49 Cortnie: Absolutely.

33:50 Emily: All right. Perfect. Oh, Cortnie, this is such a wonderful interview. Thank you so much for providing your expertise on this subject.

33:56 Cortnie: Thank you so much for having me Dr. Roberts, I enjoyed talking with you.

Outtro

34:01 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

Can and Should an International Student, Scholar, or Worker Invest in the US?

December 9, 2019 by Lourdes Bobbio

In this episode, Emily interviews Hui-chin Chen, a Certified Financial Planner specializing in advising globally mobile professionals through her business, Pavlov Financial Planning. In the interview, Hui-chin answers the questions: Is it permissible for an international student, postdoc, or worker to invest while in the US, and if permissible, is it advisable? Hui-chin and Emily discuss several factors that could impact the answers to these questions: whether the person desires to stay in the US long-term, the type of visa they are on, what type of income they have (W-2 vs. fellowship/training grant), and whether they have access to a tax-advantaged retirement account, such as a 401(k), 403(b), or IRA. Listeners to this episode should come away with clear next steps to further evaluate whether and where to invest while living in the US.

Links Mentioned in This Episode

  • Attend an office hours with Hui-Chin on 7/22/2020
  • Money Matters for Globetrotters
    • Investing as a non-resident alien living in the US
  • Pavlov Financial Planning
  • Personal Finance for PhDs: Sign up for personal finance coaching
  • Personal Finance for PhDs: Wealthy PhD group program sign-up
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
  • Find Hui-chin Chen on Twitter
international investing in US

Teaser

00:00 Hui-chin: I would actually recommend the default is think about, well, if I had the extra money I can invest for the long term, I don’t really need the money — why not? So there has to be a really good reason why you don’t do it.

Introduction

00:21 Emily: Welcome to the Personal Finance for PhDs Podcast for higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season 4 episode 17 and today my guest is Hui-chin Chen, a certified financial planner specializing in advising globally mobile professionals through her business, Pavlov Financial Planning. In this interview, Hui-chin answers the questions: Is it permissible for an international student, postdoc, or worker to invest while in the US and if permissible, is it advisable? We discussed several factors that could impact the answers to these questions. One, whether the person desires to stay in the US long-term. Two, the type of visa they’re on, F-1, J-1 or H-1B. Three, what type of income they have, that is W2 versus fellowship or training grant. And four, whether they have access to a tax advantage retirement account such as a 403B, 401k, or IRA. I’ve wanted to help the international graduate students in PhDs in my audience think through these questions and scenarios for a long time and I’m so grateful to Hui-chin for giving us her expertise in this area today. Please consider sharing this episode with your friends and peers. Without further ado, here’s my interview with Hui-chin Chen.

Will You Please Introduce Yourself Further?

01:42 Emily: I am so delighted to have joining me on the podcast today Hui-chin Chen. She is a CFP. Her business is Pavlov Financial Planning. She is an expert in this area of international students, postdocs, workers living in the US and what can we do investment wise? I know this is a question of high, high interest in my audience. I get this question every single seminar I deliver at universities. Can I invest in the us? Should I invest in the US. What kinds of accounts can I use? So Hui-chin is here to help us answer these questions as best we can. It’s a very complicated and detailed area, but you know, we’re going to work through it over the next 30 minutes or so. So Hui-chin, thank you so much for, for joining on the podcast and please tell us more about yourself and your business.

02:29 Hui-chin: Well, thank you for having me Emily and I think you covered like all the high levels. Like you said, I’m a CFP, a certified financial planner and I focus my work on clients and international planning needs, whether they’re immigrants to the US, people who are temporarily working in the US that migh leave or US citizens that become expats. So sort of like your listeners who are technically expats from other countries. So I deal with international complexities day in and day out for my clients, so I’m happy to answer any questions you might pose today.

03:05 Emily: Yeah, I mean I have been searching high and low for an expert, just like you. Will you please mention your blog name, your website name.

03:12 Hui-chin: Yes. You can read more about just in general financial planning topics for global and mobile people on moneymattersforglobetrotters.com and if you want to learn more about my business or working with me, it will be on pavlovfp.com.

03:29 Emily: Great. And you have a YouTube channel as well, right? What’s the name of that?

03:32 Hui-chin: Yes. Well there’s no name because I just record more like a series of different topics. The most recent one I recorded, I call it “Welcome to the USA: personal finance edition”. I think some of you might be interested or your spouses who accompan you to the US while you study or work and they may or may not be able to. So it goes through a lot of the different steps of understanding the US system that will be helpful if you eventually do want to stay in the US.

04:04 Emily: Yeah, perfect. Tell me just a little bit more about yourself — when did you arrive in the US, where are you from, why did you come here and those kinds of things.

04:12 Hui-chin: I first arrived full time in the US in 2004 for my graduate degree in public policy and management. I did consider going into a PhD, but I did not eventually and I basically stayed. Since then, I found a job in the US, I continued my work and then I met my husband in grad school, but after working separately for a few years, decided to get married and he got a job posting overseas in different countries. So I also have a very personal interest in working with people from all over the world because, for example, right now, I’m actually not physically in the US, we’re somewhere else. So.

Investing in the US as an International Student

04:58 Emily: Okay. Yeah. Fascinating. Oh my gosh. I really hope people follow up with you about this. So what we decided to do with this interview was to answer two broad questions, which are the ones that hear during seminars. The first is am I allowed to invest in the U S is this permissible? Secondly, is it advisable for me to invest in the U,S while I live here? Now the second question is a lot thornier than the first, I understand, so we’ll kind of go through a few different, aspects of this question that might affect the first question or the second.

Is it permissible? Yes!

05:33 Hui-chin: All right, so you’ll have to prompt me later for all these different questions. I’m going to answer the easiest one which is whether, as an international student who is not a US citizen or a green card holder, can I invest through a US based account? The answer is yes. And the United States is one of the few countries that’s very friendly to foreign investors investing directly in the stock markets and the US also has one of the largest stock markets. A lot of foreign companies come to list in the U S. dot. Markets. So really, even if you were not in the US, even if you were just like live in your home country and you want to open a US brokerage account, you can actually do it.

06:24 Hui-chin: It’s not only permissible, it’s actually a sometimes recommended way to invest, especially if your home country gives you very little access directly to investing equity on your own. A lot of countries don’t even have what we call retail access, like in the US. In a lot of places you have to invest through insurance contracts or very expensive mutual funds. So investing directly as a retail investor, that means that you’re as an individual, not going through an advisor, just like open your own account and start investing, it’s actually a great opportunity to do so. Now you’re in the US, it’s a lot easier. It’s easier for you to find information like that instead of doing it in your home country and tried to find those kinds of information. So that’s the long answer. But the short answer is it’s definitely permissible to do so. Right now you’re in the US and you can invest no matter what kind of income that you have. We’re talking about just a normal broker brokerage account, so it doesn’t give you any tax advantages. It’s just for somebody who wants to buy some ETFs or even just stocks. For example, if you really like Apple, you want to buy Apple stocks, you’re totally permissible to open a brokerage account online and pressures that Apple stocks with whatever money you have, either from your work in the US, from your grants, from your fellowships, or from your wealthy uncle back home who wired you some money. Those are all possible ways to invest.

Opening a Brokerage Account

08:06 Emily: So I think there may be, you can tell me if this is the case, I think there may be a distinction between something being permissible under the law and being, will I actually find a brokerage firm who will work with me? Because what I hear from international students and scholars is, and I never know if this is the rumor mill or if it’s actually their own experience is, “well it’s difficult to find a brokerage firm to approach who will work with me.” Is that the case? Is it, I can walk up to any brokerage firm and you know, as an international student or scholar or worker and open whatever. Or is it like, Oh well some of them might, by policy, be excluding certain types of people from you know, opening accounts.

08:51 Hui-chin: That’s a good question. Sort of at the practically, how does that work? So the first scenario is that if you have, for example, if you actually pay social security, now you have a social security number and you’re technically getting your income and you’re an employee of your university, then, for example, if you go onto Vanguard, that’s all the information they ask for. So at Vanguard, if you provide those two types of information, you will be able to open the account and plus you have a US address because you’re currently living in the US, so you actually do not need to already be a green card holder or something in order to have it processed through it. It doesn’t mean that if you eventually decide to leave the U S and if Vanguard finds out, they will want to close the account. So that’s one scenario.

09:43 Hui-chin: The other scenario is that I know some people because their totalization agreements, they don’t even have a social security number or they choose not to have one in the US and so in that case, even though you’re physically in the US and you have a US address through your apartment or on campus, it’s basically you’re considered a foreign, like how you file taxes as a nonresident alien, you can be a foreigner. So in that case, if you still have pretty close ties with your home country and you do decide to go back, you can actually open an account like your just a person living overseas, but in that case it is pretty much dependent on the brokerage company being willing to work with you because every brokerage company, like Schwab or Fidelity or TD Ameritrade, it’ll have their own internal list of which countries residents they were willing to do business with. So you’re basically declaring to them, I am a resident of some other country, would you would do business with me? And then they may or may not. So that’s another way to go about it.

10:59 Emily: Got it. So, okay, an international student or scholar who does not have an SSN, when they actually try to go and open a taxable brokerage account, what should they say to customer service? I’m a resident of X country, but I’m living in the US currently, will you work with me? Is that the question that they need to pose?

11:22 Hui-chin: Yeah, the question will really be, I’m a resident of another country, because if that’s the case, you’re providing an address of that country. You may be able to provide a us mailing address, but that’s not the address that’s associate with the account. So if they know that you are foreign customer, they will have different tax reporting, different tax withholding. Instead of filling out a W9, you fill out W8-BEN, all the different things, so it’s whether you want to be considered as a foreigner to the US institution or somebody who’s a US resident.

12:01 Emily: Got it. So in the case where someone does have an SSN, probably because they’ve been employed W2 employee for at least part of the time that they’re here, would you say that it’s totally fine to then present yourself as a US person? Even if you’re still technically a non resident alien for tax purposes, even though you have the SSN, but let’s say you’re a nonresident alien for tax purposes, is it okay to go ahead and use that SSN and be like, I’m a US person?

12:26 Hui-chin: Well, that’s the tricky part because you are still for tax purpose, like your dividend capital gains interest will be taxed differently. So you do need to report, you need to write a W8-BEN instead of W9. So I would just give an example on how easy it is to actually open an account. For example, on TD Ameritrade’s website they actually ask what kind of visa you have. So I’m just saying that usually in those kinds of applications, if you have a SSN, you have a US address, you have a US employer, it’s most likely those online retail brokerage account, they will allow you to open the account. But you also need to make sure that they know that for tax purposes you need to fill out a tax form as a non resident alien.

Investing during Short-term vs. Long-term Stays in the US

13:17 Emily: Got it. Okay. I think that’s very clear now. Than you so much for going through that in detail. Okay. So then let’s go back to the scenario of “I plan to stay in the US long term, or hope to, not sure if it’s gonna work out” versus “I don’t plan to stay in the US long term”. We now know what’s permissible, but then what is advisable? Should a person who hopes to stay in the US long-term, has the ability to invest right now — is there any reason for them to shy away from doing that because they’re not sure about the longterm status? Let’s start with that question.

13:50 Hui-chin: So like I mentioned, I guess, eluded to earlier, because the US is such an attractive market, not in terms of return or performance, but in terms of access, you can invest in a broad index in so many different countries, so many different companies with such little cost, and it’s really hard to beat if you tried to do it in some other country. Usually there’s more brokerage fees more commission, there are more hurdles to jump through as an individual investor. So I would actually recommend the default is think about well if I have the extra money I can invest for the long term, I don’t really need the money — why not? So there has to be a really good reason why you don’t do it upon the US perspective.

14:38 Emily: Got it. And so maybe that person in that situation is thinking, “well, is it a good reason that I might eventually leave?” How would the investments that are in the US for the moment, do they to exit the country with that person? If the person ends up leaving, how does that work and how’s that handled?

14:57 Hui-chin: Yeah. So as I mentioned earlier, even for somebody who’s never been to the US, some custodians will be willing to open account for a foreign customer. So if you’re thinking about, “Oh, I’m just leaving after I finished my grad degree in three years,” if the country you’re likely going to is on whatever list that custodian posts, like it’s European EU country or it’s a relatively developed country or it’s a safe country, it’s not like a terrorist country that may be on the treasury list of “do not do business with”, then you’re probably safe to assume that you can continue to hold the account. But of course do your own research on the specific countries. It’s impossible for me to go into every single country.

15:46 Emily: We’ll link to a reference if you can provide a reference of that treasury list. We’ll put that in the show notes and check to see if your country appears on this list, in that case, okay, we need to tread more carefully. But let’s say, okay the country is not on that list, go ahead.

16:04 Hui-chin: Yeah, so basically what will happen is that for example, if you went the first route when we’re talking about opening an account, you open account with the U S address and everything, and let’s say you actually end up staying over five years or you actually got a job at under H-1B then leave, right? So you actually went from nonresident alien for tax purpose to a US person tax role, and then you’re leaving, so you’re going back to a non resident alien textual. So you do need to report to the custodian that you’re leaving this is my W8-BEN, this my new address. So of course you want to make sure the custodian does business with people at that address. And there is some other complexity in terms of what you can invest in. Some people from the EU countries might know there are some new regulations saying that the custodian is not supposed to sell ETFs that’s not registered in the EU to their residents. So that’s one type of complexity that may come up that whatever you invested in, you may or may not be able to add more to it once you leave. But whatever you have already invested in, there shouldn’t be any issue with keeping it there, as long as the custodian is willing to keep you as a customer.

17:30 Emily: Got it. So let’s say then that the custodian is not willing to keep you as a customer, for whatever reason. What happens in that scenario?

17:39 Hui-chin: It does happen. Over the last 5 to 10 years, even some US citizens are experiencing that, living overseas, it used to be okay that custodians know that they live overseas and now they’re not okay and custodians say please close your account. For normal brokerage account, of course the first step was if you want to keep your investment in the US, you can always find a different custodian to move your investment to. You actually do not need to sell those investments. You can do a transfer. It’s just whoever’s holding those stocks will transfer the certificate electronically to another custodian. It’s not like you’re selling and getting the money back. But if because where you’re going next or because of personal reasons, after investing in the US for five years, you’re willing to take the money and leave, you can go ahead and sell your investments, close the account, taking the money and leave. There’s no problem with that. There’s also some tax considerations there. For people who are considered a nonresident alien, getting capital gains while they stay in the US for over 183 days versus they do not. Because if, for example, if there is a tax year when you have a US based account and you have a lot of capital gains on your Apple stock because it increases in value a lot, but if you already finish your study and you’ve moved back to your country for two years you’re just wondering, well, will I be taxed on the capital gains? The question is, you actually do not get taxed on the capital gains, in the US. There could be also tax treaties that differs between the US and your country, but in general, the rule is the US does not tax and your country may or may not tax that. So that’s actually a good–

19:34 Emily: It sounds like in that situation, where you’re planning on moving the money out of the US, it sounds like that’s the time to consult a tax advisor in the country that you’ve moved to, right? How to execute this, when to execute this and the tax implications. Is that right?

19:51 Hui-chin: Yeah. So you’re definitely thinking about tax strategy, because, as opposed to the situation I talked about, if you sell the day you leave the U S for example, like “I’m just closing everything down, I’m moving back home.” And if you sell the stocks as somebody who has lived in US, even though you’re a nonresident alien but you were in the US as a tax home, when you sell the stocks, the capital gain is actually taxed at 30%, unless their treaty dictates differently as well. Like you said. So definitely talk to your tax advisor in your home country, as well to understand how the tax coordination works.

Taxable vs. Tax-Advantaged Accounts

20:33 Emily: Got it. And now, you mentioned earlier that all of that was for a taxable brokerage account. So let’s also throw in the scenario that the person has been using a tax advantaged retirement account — IRA, 401k, 403B — and they’re not going to leave it in the US, they’re are going to be moving the money out, what are the tax implications of making a withdrawal from whichever account type.

20:56 Hui-chin: Yeah, in that scenario, basically first of all, you should know that there is a penalty that applies if you take money out of and IRA, 401K, 403B. You should have known it before you put money in, but that’s the same rule that applies broadly to everyone, whether you’re a US person or not. Right? Because the reason is that the government gave you a tax benefit and it’s the incentive for you to keep the money there for retirement. They don’t want you to take the money out. So, if you need the money obviously and you think closing the account, paying the penalty and income taxes is still better going back home and doing it in a few years because of the different tax situation, of course that’s something you can consider. But knowing, with a penalty if you are not not going to need the money and it is eventually going to pay for retirement, one thing you also can consider is to leave the account open for a very long time and let it grow. Of course, you cannot keep putting money into it, but whatever is in there can continue to grow and you can consider taking the money when your income is lower and take the penalty, so the income and the penalty together is less of a hit, or you can take it out when you are 59 and a half, which is the current law of when you can take it out and then there won’t be a penalty but there is going to be taxes in the US and withholding as well.

22:42 Emily: It sounds to me, and this may be painting with too broad of a brush, but it sounds to me like you know, if you end up having investments in the US, if you’re eligible to keep them in the US, and you do leave, sounds like it’s a good idea to keep the accounts open. You won’t be contributing anymore, at least to the tax advantage ones, but it doesn’t sound like there’s a big reason to be closing accounts and moving the money out, unless it is that you are not permitted to keep the accounts open based on the custodian and the rules of the country that you’re going to, and how they deal with the US, is that right? It sounds to me like that’s the pattern. Like go ahead and keep the money here and then when you’re of retirement age in the country that you’re residing and then you can work on doing the withdrawals and dealing with taxes at that time. Is that kind of broadly what you recommend?

23:32 Hui-chin: I think that’s generally correct. Like I said, the main reason for that is because the US is such a individual investor friendly country to allow you to invest that way, so like I said, I would ask the question of why not. Of course everybody’s situation is different. If there is a legit reason that you think that you shouldn’t be keeping the investment in US, of course, you just need to understand the tax implications. Otherwise, keeping investing long-term in the US, not just — let me clarify this, not investing in US companies only, but using a US based account and custodian, who charges you basically right now no commission to buy and sell anything and with very low mutual fund costs, very low ETF costs, it’s a really good bargain compared to the other alternatives.

24:34 Emily: Yeah. So it sounds like whether an individual in the US, not on a green card yet, not sure if they’re gonna be able to stay long-term or planning to not stay long-term, if they have the ability to invest at the time that they’re living in the US, as you said, why not? Why not go ahead and open the taxable brokerage account or the IRA or the 401k or whatever it is and use it, because it’s sort of, as we know — we don’t have to go into about the power of compound interest — starting to invest earlier is fantastic. So basically don’t a waste or fritter away the time that you may be in the US, it might be longer than you expect. Go ahead and start investing and then deal with either moving the money out or keeping here or whatever later, once you know where exactly are you going to be living. I like that approach of why not. So whether the intention is to stay in the US long-term or to not, go ahead and use the time while you’re here. Use your access. Go ahead and open the accounts, again if you’re able to be able to invest.

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25:37 Emily: Emily here for a brief interlude. As a listener of this podcast, every week you hear strategies that another PhD has used to improve their financial picture. But listening and learning does not automatically translate into action in your own financial life. If you are ready to change how you think about and handle your money, but need some help getting started, I can be of service. There are two main ways you can work with me to create and implement a financial plan tailored for you. First, I offer one-on-one financial coaching, either as a single session or a series, as you make changes over the long term. You can find out more at PFforPhDs.com/coaching. Second, I offer a group program called The Wealthy PhD that is part coaching, part course, and part community. You can find out more and join the wait list for the next time I open the program at PFforPhDs.com/wealthyPhD. I believe it’s possible to succeed with your finances at every stage of PhD training and throughout your career. Let’s figure out together how to make that happen for you. Now, back to the interview.

Investing Under Different Visas

26:52 Emily: Okay. That was the first scenario to talk about. And then the second one was about visa types. So F-1, J-1 and H-1B. You’ve already said broadly it is permissible, but is it advisable? Are there any differences among people holding each one of those different visas that they should be thinking about? Or is it like, “no, the general consensus of it’s permissible, why not?” still applies no matter what visa type?

27:17 Hui-chin: I think that it’s not really only based on visa type, but the idea of combination of visa type, how long are you staying in the US — as, you know, F1 can turn from NRA to US person, J-1 as well, with different time frames. I would think about it as just, it’s very similar to what we were talking about before, like longterm or short term. Eventually, the main difference is tax treatment of if you’re staying, if you’re becoming a us person long-term, or even becoming a US citizen and we’re just going to pay US taxes forever versus at some point, in the future, it’s possible you will sever tax ties with the US, other than whatever investment you kept in the US. So overall investing in both scenarios are great. You just need to know the tax implication and the tax strategies, because if you’re switching from one to the other, there may be some opportunities for you to reduce taxes. And if you don’t think about it clearly or get the correct advice, you might find out, well I could have been taxed zero but now I’m getting taxed 30%.

28:28 Emily: Got it. So it’s not so much about the particular visa type, but rather at what point it flips to you being a resident alien for tax purposes, which is different on the different visa types. Okay, great! Quick one there.

Investing for Different Income Types

28:41 Emily: Third point that I wanted to talk about was the income type. So having W2 type income, or even self-employment type income, if that’s permissible, versus having this weird fellowship, training grant, non W2 type of income. This is very common for graduate students and also for postdocs. And so the general rule that certainly applies for US citizens and residents is if you have the W2 type of income that is taxable compensation for the purposes of contributing to an IRA. So let’s say in the scenario where the person does not have access to a workplace-based retirement account, they’re looking at can I open an IRA or not? Taxable compensation would be the W2 type of income. They can open an IRA and use that income towards it. If you go an entire calendar year and don’t have the W2 type of income, not taxable compensation, it’s all fellowship or training grant, and of course for international students, scholars, they’re not permitted to side hustle, they can’t have the second jobs and so forth, so there would be no possibility of having taxable compensation type of income. I guess the question is, whether they had access to an IRA or not, does it change the, we know it’s permissible, but does it change the advisable recommendation on whether to be investing at this time or not, knowing that in the one case with fellowship and training grant type income they wouldn’t be able to use an IRA but could be using a taxable brokerage account as we discussed earlier.

30:09 Hui-chin: I think that’s actually something we can just combine with the fourth one, so the tax-advantaged one. Like you said, eventually the main question is whether I have taxable compensation or I do not have taxable compensation.

30:23 Emily: Now, I want to jump in just to note that we’re recording this in November 2019 so the SECURE Act has not passed the Senate, yet. I am certainly hopeful that it will because what it does is it changes the definition of taxable compensation to include fellowship and training grant type of income, non-W2 income for graduate students and postdocs. So maybe when you’re listening to this, that law would have changed, and so certainly keep that in mind that we’re discussing this as what is the definition of taxable compensation. Basically, right now it does not include fellowship and training grant and come perhaps in the future it will, but right now it doesn’t. Okay, go ahead.

31:02 Hui-chin: I think at the very beginning you mentioned the whole connection to your personal service, right? So the idea of you can contribute to areas that you need to have taxable compensation and that’s related to the idea of it’s not just that it’s taxable, but it is a compensation for performing a service. If we’re just really thinking about why we’re using IRA, it is for the tax advantages. So even before you think about that, it’s like what would be the tax consequences or how much you save by using that kind of account and is that really helpful in your situation? I know, one question, you posed before is well, everybody wants a Roth IRA because they’re like, well, I’ll never get taxed in the future. I want to be able to contribute to that.” But a Roth IRA and traditional IRA have the same rule: the compensation needs to be taxable. So if it’s already not taxable, the government wouldn’t allow you to put money into something that’s never been taxed before. The Roth IRA is for the government to tax you up front, so it doesn’t tax you it in the future when you take it out.

32:26 Emily: Okay, let me, I just want to clarify this. This is a little bit new information to me. So when we have the two words, taxable and compensation, you have to have taxable compensation to contribute to an IRA. The compensation part of it is this, is it non-W2, fellowship and training grant type income? Okay, that’s not compensation. But now we’re also talking about the “taxable”, the first word there in taxable compensation. Your income has to be taxable in the US in the first place to be eligible to be contributed to an IRA. So maybe under certain tax treaties, your income for a time is not taxable in the US, that income would not be eligible to be contributed to an IRA. Correct?

33:05 Hui-chin: Yes.

33:06 Emily: Okay, great. Go ahead.

33:07 Hui-chin: Yeah, and the second one, we use compensation, but on the US-person side it’s called earned income. So if you look at IRS publications it’s always referred to earned income for US person related publications on contributing to IRA. Those two are equally important. It has to be earned income, so your compensation from service, and it’s taxable. The idea is that you will know whether you have that kind of income or not and if you have that income, meaning you’re getting tax in current year, so you’re thinking about, “Oh, if I contribute to an IRA or 401K, or 403B, I get taxed less. Or you contribute to it and now we get taxed, but in the future it won’t get taxed, which is the Roth side. In the first one, just the pretax contribution, it makes sense if you’re really high income. I think for the students, because if you’re on a 1040-NR, depending on the level of your compensation, because you may not have standard deduction, you may only have itemized deduction, some people can be at the zero percent, some people can be twelve percent or above, so you have to look at your tax situation of which bracket you’re going to be in to give you an idea of, well, maybe I want to do pretax instead. And the second one is, okay, so if I’m at a really low bracket, how about I just do Roths, but then the idea is you want the tax benefit in the future, right? But if you are going to move away from the US, how much more is that tax benefit versus simply using a taxable brokerage account, if you don’t get current year tax benefits. So those are the analysis that you need to go through, in terms of whether or not to use a tax advantage account, if you have the income type to do so.

35:20 Emily: Okay. Yeah. Let me see if I can summarize that. If you don’t have taxable compensation, can’t use a tax advantage account anyway, so go through the brokerage firm and go for the taxable brokerage account, if you’re able to use it, if you can set up that kind of cap. Okay. On the other side, we have eligibility for the 401K, the 403B, the IRA. If you want the tax deduction today for contributing to a traditional version of each of those accounts, great. Go ahead and take it and get a tax deduction today. Awesome. The money grows tax deferred, you’ll deal with the taxes in retirement or whenever you move the money out or whatever. For the Roth option, because of any of those kinds of accounts, because you don’t have the immediate tax advantage today, you really have to be asking yourself, does it make sense to put my money into a Roth IRA, no immediate tax advantage, but it will grow income tax free and then I can withdraw it income tax free in retirement versus can I just use a taxable brokerage firm, which is more flexible. And I think maybe the answer to that question, of course it will depend on the math in any individual’s scenario, but might come down to, again, what we talked about earlier, the expectation of staying in the US long-term or the hope, because really over the long, long term it is very advantageous to be using an IRA of any kind, Roth or traditional. But maybe if the time that you see yourself being in the US is on the shorter side, not to retirement or only five years or the length of your degree, then maybe it’s like, well why bother with the whole Roth IRA scenario? Let’s just go for the taxable brokerage account because if you are expecting to move the money out, for example, it’s kind of more of a pain to do so with a Roth IRA, because while you can withdraw your contributions, whatever gains have been in the account, if you try to withdraw those, then then the penalty comes into play. Is that correct?

37:12 Hui-chin: Yeah. And one big difference for people who eventually just move away from US and no ties in the US, I think I mentioned that before, you could qualify for 0% capital gains tax rate if you sell it, so it’s almost like the same, but the only difference is the dividend. So dividends are taxed at a flat 30% if your a NRA living outside of the US, but over the long term, if you’re investing in, for example tech companies, they don’t pay dividends anyway, and your main goal is for that capital gain growth for the next 30 years, then investing in Roth and investing in a taxable brokerage as an NRA living somewhere else is the same.

37:53 Emily: Gotcha.

37:53 Hui-chin: Why give yourself more ties to a Roth type account you can’t access and there’s more complexity.

38:01 Emily: I see. So really your investing strategy might change based on the tax treatment, if you’re no longer living in the US, of capital gains versus dividends. I actually do want to also add in for people who, I think this is still the case under post-tax custom jobs act, people who are the 12% marginal tax bracket or less, they have 0% federal tax on long-term capital gains and qualified dividends. So if you have a very tax efficient strategy, if you’re buying and holding, generally, as long as you stay in those lower tax brackets, you’re really going to see much or any income tax anyway. So why bother with the IRA, when you could be using a taxable account and not really having that much in the way of actual tax burden. Is that correct?

38:47 Hui-chin: Yeah. And just going back to definitely understand the tax treaty if you already know where you’re going to. Of course, most of the time you might think, well I’m just moving back to my home country, but then you get a job somewhere else and then you know, your life is not really as predictable, but at least understand the tax treaty between us and your home country, if you think it’s very likely you might end up there at retirement age when there would be IRA, 401k distribution consequences and compare that to, if I simply use a taxable brokerage, how does that change my dual country tax liability.

39:31 Emily: Got it. I think what I’m hearing mostly from this interview and the point that you just made about life being sort of unpredictable is, okay, here’s what you know. You know you’re in the U S right now. You have to be in the US for a few years, several years, maybe longer. Deal with what you know about right now, make the best decision you can for right now, and then if the situation changes later, you have to pivot. It’s possible to pivot. You’re not going to be losing your investments just because you’re leaving the country or whatever. It’s something that you can move with you, so you can adapt and change depending on, you know, the next step that you take. And hey, if you end up, if you do end up living in the US long-term, like until retirement age, it will be awesome if you started investing earlier and had started using an IRA or a 403B or a 401K earlier, as soon as you have access. Is that fair?

40:22 Hui-chin: Yeah. And I think those more specific questions and people questioning whether they should have account here. I think in my experience, I really mostly hear it from people from EU countries, Australia, Canada, because they feel like they have the same access when they move back. They don’t want the complexity of dealing with cross border things. And I totally understand that. And if you have good access to invest when you go back home, of course. But I think, what I know is being from a developing country myself is that most of the people who come to US see it as an opportunity and if you can have an investment in the US and don’t have to deal with turmoil that may be happening in your home country, most people jump on the opportunity. I don’t know that many people would say it’s a bad idea to open an account in the US.

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Where to Find More Information

41:26 Emily: Got it. I think we’ll leave it there. This has been fantastic. Thank you so much for joining me. Tell us again where people, can find you — your website, your business name and so forth.

41:35 Hui-chin: Yeah, sure. If you want to read more about what I just talked about, and this also how Emily found me, is on moneymattersforglobetrotters.com. It’s just a blog for reading. And if you’re interested in working with me, you can go directly to pavlovfp.com. That’s Pavlov Financial Planning.

41:54 Emily: Thank you so much for joining me today Hui-chin.

41:57 Hui-chin: You’re welcome.

41:58 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

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