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The Financial Hurdles of Moving to the US as a Postdoc

May 18, 2020 by Lourdes Bobbio

In this episode, Emily interviews Dr. Louise Lassalle, a postdoc at the Lawrence Livermore National Lab in Berkeley, CA. Louise recounts the hurdles in the process of her move from France to the US for her postdoc. We discuss short-term hurdles; e.g., being approved for a rental, establishing credit, and the cost of moving; medium-term hurdles; e.g., choosing a health insurance plan, adjusting to the cost of living, and paying tax; and long-term hurdles, e.g., the cost of applying for a green card. This episode will give international graduate students and postdocs preparing for a move to the US a preview of what is to come and what pitfalls to watch out for.

Links Mentioned

  • Find Dr. Louise Lassalle on Twitter
  • Website: PostDocSalaries.com
  • How to Budget At a Distance
  • Personal Finance for PhDs: Speaking
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to the mailing list
international postdoc US

Teaser

00:00 Louise: Don’t just accept a job offer because you love the science. We are all passionate about it, we just want to do science. But where you live is also important, and if you have to worry too much about the financial then you won’t have as much time to do actual science.

Introduction

00:24 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode three and today my guest is Dr. Louise Lassalle, a postdoc at the Lawrence Livermore National Lab in Berkeley, California. Louise recounts the hurdles in the process of her move from France to the U S for her post-doc. We discuss short-term hurdles like being approved for a rental, establishing credit, and the cost of moving; medium term hurdles like choosing a health insurance plan, adjusting to the cost of living and paying tax; and long-term hurdles like the cost of applying for a green card. This episode will give international graduate students, postdocs and workers preparing for a move to the US a preview of what is to come and what pitfalls to watch out for. Without further ado, here’s my interview with Dr. Louise Lassalle.

Will You Please Introduce Yourself Further?

01:21 Emily: I am delighted how joining me today on the podcast, Dr. Louise Lassalle, and we are going to be discussing the particular financial challenges that come with coming to the US for part of your training. So, Louise, thank you so much for joining me and will you please tell me and the audience a little bit more about yourself?

01:40 Louise: Sure. Thank you for having me. I got my PhD in France, in Grenoble and after that I was looking for postdoc and I think I was looking in all Europe and also in the US and I got a postdoc in San Francisco in Berkeley, more precisely. When I came for my post-doc was my first time in the US. I went to the US neither for vacation or for conferences and I’ve been there for three years now and I’m still the same job, so I’m still on my post-doc.

Initial Financial Challenges with an International Move

02:23 Emily: All right. Yeah. Great to hear. So let’s start back when you first arrived, maybe even before you arrived in the US but when you were applying for your job, getting your job offer — were there any challenges associated with being an international post-doc associated with that stage of things?

Before the Move

02:41 Louise: I think the first thing is even before you come, you already start with a visa application. You already start with paperwork and try to understand what’s going on. I think that’s the visa application was the main thing to understand, make sure you do everything right and I think that’s the main thing.

03:06 Emily: One question to that is that — the visa application, is that something that you’re able to do totally on your own or do you need to consult with a lawyer or something?

03:15 Louise: In the US, most of the post-docs will be on G-1 because it’s the easiest way to get a post-doc. A G-1 is supposed to be for a change and visitor, but university use it for that proposal too. So basically you employer will provide you with a form for DS-2019, and the process is quite easy on G-1s. Now that I know other processes, I realized that G-1 wasn’t that difficult, but as a first timer you don’t know. So you don’t need a lawyer. It’s quite a straightforward.

03:54 Emily: Okay. Yeah. Great. And I think you mentioned to me earlier that one of your difficulties at that stage of things was understanding the salary offer that you received and putting it in context, having never lived in Berkeley before.

04:11 Louise: Yeah. So first I was very excited to get a post-doc in Berkeley and the topic was super interesting for me, so I was already in the mood that I will accept whatsoever. And also the salary was basically twice what I was doing before, but of course it doesn’t work this way because the rent is not the same as it was. The rent would be like three times and all the costs of living are different. So that is my first advice is make sure you know what the cost of living is before. I’m not sure would have been able to negotiate my salary whatsoever. It’s very hard when I just have like a Skype interview with my PI at this point. But perhaps negotiate your starting time, if the flight is too expensive, then say, “okay, can I start like one month later?”, or something like that.

05:12 Emily: Yeah. Actually, so a year or so I launched this project, PostDocSalaries.com and that’s a database of self reported salary and benefit information. And one of the questions I included in that survey is did you negotiate something about your package or not? And I was surprised actually that about, if I remember correctly, it was about a quarter or a third of the people who responded said, yes, they did negotiate, successfully that is. I thought that was actually pretty high. So it’s definitely something that people don’t necessarily know to do, but it’s sort of one of those, well you may as well try, like you might not be successful, but why not try. But I would be interested in knowing if international postdocs have less leverage maybe than domestic ones in going into that negotiation process. I’m not sure.

06:01 Emily: So you decided you were going to accept whatever offer came your way because you’re excited about the topic and so forth. And so did you try before you actually moved to figure out what the cost of living was going to be or were you just kind of like, “Okay, it is what it is, I’m going.”

06:15 Louise: It was a little of both. I think I still started to check on Craigslist to see the rent, but I was still very optimistic about that and I can go little more on how to get to housing after that. So no, I didn’t really look at it more carefully and it was more like, “Let’s go, let’s do it.”

06:42 Emily: Okay. And so did you arrange for housing before you moved or upon your move?

06:47 Louise: So in this also, I was a little too optimistic. I did a book an Airbnb for one week before and it wasn’t enough at all. I should have booked it, I will advise at least two weeks or even one month. Also because, at least for me, where I live is kind of important. You want to make sure you’re making a great choice and I won’t advise anyone to rent something, apart from Airbnb, from outside. You need to see before you sign anything or you send money. I would really advise to go to an Airbnb, even if you spend a little more money at the beginning, and then find something that really fits your needs. And also you don’t know your neighbors, you don’t know the public transport, or if you want to get a car, if you can do it.

07:40 Emily: Yeah, there is a lot. I mean I agree with you. It’s very difficult to rent something sight unseen. You’re taking a big risk there. And so it’s kind of cool actually that there has been this rise in short term rental options so that you can do something for a couple of weeks or a month without having to sign a lease, but just going into a short term rental situation so that you can do all that research on the ground. It sounded like you needed a little bit more time than what you gave yourself. Did you end up extending that Airbnb or moving to a different one or how did you work that out?

08:09 Louise: I moved to another one but I got a very cheap one and it wasn’t great. And then I rushed to rent an apartment and it wasn’t a good one, because what you see in Airbnb is not what you will get. I can expand more on that later on, but you are not actually competing at exactly the same levels as other people, so in general you go to the more expensive or the apartment that kind of no one wants.

Financial To-Do List When You Land

08:37 Emily: Yeah. So what’s the next thing that you would like to address? When you have your flight coming into San Francisco or wherever you flew into, what were the financial challenges that you were facing right away?

08:50 Louise: I think this is for everyone moving somewhere else, you need quite a lot of money to just first book your flight. Since you need your visa and you don’t know when your visa will come up, then you book your flight like two weeks in advance. And for example, I booked my flight and I arrived mid July. It was a more expensive flight I ever booked, and this, I think I could have perhaps negotiated more, or ask for an increase in my relocation fee because of that.

09:28 Louise: To rent, all of this, I think opening a bank account was actually one of the easiest things I’ve ever done. It Is very, very easy, and what helps a lot is to have the letter of employment with you, and that helps also for the renting part. In general, when you go to the city, everyone knows the big universities that are close by and they like to rent, especially if you’re not the students, you are post-doc, because they know that an employee will pay their rent on time and is not going anywhere. This kind of helps as kind of a reference.

10:06 Emily: I actually am curious about how you paid for things like until you had that bank account opened. Did you have a credit card from your home that worked here or how did that work?

10:17 Louise: Yeah, so you can pay with your credit card. Actually in France we don’t have credit cards and our card is both debit and credit. But the equity we can get on it is generally smaller. But you can pay outside. I think we use, I think the cheapest way is to use wise transfer, but this also takes a few days, so sometimes it’s a little harder. I have to say think that with a credit card I was good because after one week I sent some money over and it was okay.

10:55 Emily: Yeah. It sounds like opening a bank account was probably one of the very first things you did right? Like day two or something.

11:02 Louise: And as I say, it was super easy. Some people say that they ask for, for example, security numbers. They don’t or at least the one I went to it was okay.

11:15 Emily: Gotcha. And what about getting like ID here? Is that another thing you did right away?

11:21 Louise: So right away what you need to do is get your social security number, for sure. This was also another paperwork, but I think it was — generally the university will provide you with some guidance on that. Then what you can do, I mean, the only ID you can get here is a driver license, and I got mine actually a few months after I got here because I didn’t need a car. It was more so I didn’t have to bring my passport everywhere. I think a drivers license is great because it’s kind of an ID and, and then you can keep your passport safe.

11:58 Emily: Gotcha. Yeah. Was there anything else that you discovered in those first few weeks here, especially as you’re arranging for housing? Anything that you wish you had known maybe before you moved or that would have made things easier?

12:14 Louise: So I didn’t expect it will be so hard to get an apartment. First, a lot of people ask for reference and they ask for credit score, and if you’ve never lived in the US you don’t have a credit score. And you have your letter of employment, but technically you didn’t start it yet, so you don’t have that previous salary and sometime also when, if you move up as a couple, you just have one salary. So in general, when they do the list and it’s hard to get at the top of the list, because there’s always someone that’s making more than you, or has better credentials.

13:00 Emily: I would imagine just the housing market also in the Bay Area, broadly, is a very difficult place. Lots of competition. So you may have had among the hardest times that you might have in any city around the US. So how did that end up working out?

13:18 Louise: So I rented something very fast and it wasn’t the best apartment ever, and I moved out this apartment after six months. Also, for example, the rental lease, the rule around that is very different from France and it’s much, much harder on the people that are actually renting the apartment than on the owner, and for me was a surprise to sign a lease. I say that I will have to stay there, whatever happened, even if I get a new job for one year, or I will have to elect to pay for it.

13:55 Emily: So the terms were a little bit unfamiliar to you, in terms of it was much more favorable to the owner, the landlord than it was to the tenant. Is that what you’re saying?

14:05 Louise: Yeah.

14:05 Emily: So what would be more typical in France?

14:08 Louise: So in France, in general, the lease is to protect the renter and also owner. So the lease will be a [inaudible] lease. That means that the owner cannot push you away or they need a big reason for doing that, but you can leave. You have to let your landlord know three months in advance and you can go down to one month if it’s a very hot market or if you get a new job or you move for professional reasons. So I think it’s much more close to what the reality here is, that sometimes you just need to move because you get a new job.

14:46 Emily: Yeah, I know the lease that I signed for my current apartment in Seattle, the terms to break the lease were much more stringent, much higher costs than I had signed in the past. So this is definitely one of those local things, right? It can vary from place to place and obviously individual owner or leasing company, like that. But yeah, I think maybe in higher cost of living cities, the owners have a little bit more power and anyway, the terms can be quite high for breaking a lease early.

15:15 Emily: Anything else regarding some of those first financial challenges that you encountered right away when you arrived here?

15:24 Louise: One thing, it is not directly financial, but you have one month, at least in my lab, you have one month to sign up for your healthcare insurance. The postdocs here have great healthcare insurance also because we have a union, so it was negotiated. We pay very low. You still have two ways, like HMO, PPO is covered differently. And so I think it’s not specific to internationals, because what I understand is even for an American it is a complete mess and so I don’t think it’s very specific, but perhaps for international, it had another layer of things you have to take care of and can be very stressful. And I will say especially for people with family, to understand that with kids that you go much more often to the doctor to understand how it works.

16:19 Emily: Yeah, I can imagine that can be a huge challenge because the US healthcare system is really, really challenging for everyone, and especially if you’re coming from somewhere that makes it a lot easier and you’re not familiar with all the weird stuff that happens here, I can see how that could be super challenging. Was your HR department helpful for you in making that kind of decision about which kind of healthcare plan to take? Did they guide you in any way?

16:42 Louise: Yeah, we had some presentation. The problem here is that I think I remember not getting anything. I think I got how it works perhaps one year after, when I was actually explaining to other people and I asked them to sit down and I think it’s just very confusing. Even me when I tried to explain it again to new postdoc, I also get confused at some point., but they try to help you out.

17:10 Emily: Okay.

Commercial

17:13 Emily: Emily here for a brief interlude. I bet you and your peers are hungry for financial information right now, especially if it’s tailored for your unique PhD experience. I offer seminars, webinars, and workshops on personal finance for early career PhDs that can be billed as professional development or personal wellness programming. My events cover a wide range of personal finance topics, or take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you’re interested in having me speak to your group, or recommending me to a potential host, you can find more information and ways to contact me at PFforPhDs.com/speaking. We can absolutely find a way to get this great content to you and your peers even while social distancing. Now back to our interview.

Mid-Term Financial Challenges of an International Move

18:13 Emily: So let’s move to sort of more midterm challenges. You’ve been here for a few months, what were the next sort of set of financial challenges or questions that you had?

18:25 Louise: I think you feel like you are getting a bunch of money, but of course, when you remove the rent and then half is gone, and as the cost of living tends to be also a little higher, so I think you also need to adapt to that and adapt your way of living. Also what you will do in your country that will cost you nothing that here is expensive. For example, the food. You have to rethink and you have to come up with new things because there’s no way I can eat the same way I eat in France, it is way too expensive. I mean this is a small adjustments, but it is and adjustment. For me, and this is personal, but I have a hard time to understand the credit card system. And it scared me at first, that they say, yeah, you have $1,000 and you can spend it. I’m like, but I don’t have it really. I mean, yes, you have it, but not really. Andwhen I should do my reimbursement and how I should reimburse so my credit score actually goes higher. This also was a little confusing for me.

19:38 Emily: I do not think you’re at all alone about that, because even for people who grow up here, if you’ve never been explicitly sat down and taught how a credit score works or read about it for yourself, there’s a lot of misconceptions floating around about it. Like, for instance, some people believe that if you carry a balance on a credit card, it improves your credit score. In fact, the opposite is true. It’ll probably dinging you in some ways. So yeah, understanding that system can be really difficult. Did you start off with a secured credit card? Was that the first kind you got or were you able to qualify for like a normal credit card?

20:14 Louise: I think a normal. So what I heard from some friends is sometimes the bank actually asks them to put a deposit and they get from this deposit and I don’t know why my bank just give me one and they didn’t ask for anything. And even my husband that was, so we were teo on my salary, and my husband got a credit card like this. So yeah, no we didn’t. I think we get the normal one right away.

20:42 Emily: Yeah. I don’t know why that would be either. The path that I also know is the same thing. Secured card. You put down a deposit, then that’s the amount of money you have available to you. So it’s kind of the same as a debit card, but it helps you build credit. It’s something that mostly people only have to use for a few months, maybe six months or something, before they can then move on to the regular credit system. I don’t know why you would be able to jump right into that one either, but glad you didn’t have to take that first step. And how do you feel about credit now? Now that you’re three years in, are you more comfortable with that? Do you use it at all?

21:13 Louise: Oh yeah. I noticed some people have different credit cards and all from a specific supermarket or brand or whatever. And I just, I didn’t go into it. I feel more safe to just have one. And even this, I use it carefully. But yeah. This is this more personal but once you get it, it’s okay.

21:44 Emily: It sounded like you moved in July, three years ago. How about when it came to tax time that following year? How did you work through that?

21:58 Louise: Okay, so first I’m a post-doc employee, so I have a W-2 form, so it’s quite easy. It’s much, much easier than people on fellowship. So you just have to do it once. And I find actually the first year, it’s not so confusing. We had a presentation here to the lab from the tax people, they help us go through and we can send her an email with our specifics, because since also I wasn’t in the US before, so I was no resident for everything, and it was kind of okay. I think the second year I became a resident for California, but not resident for federal, and it makes it a little more difficult. And this year actually my husband got paid, but as self-employed and that for this one was very difficult to figure out how to declare that. The taxes are hard, but it’s also once a year and everyone has to go through it. We invite people to try to find people from the same country because you can have some country has this treaty that you’re exempt from federal taxes, and some country you still need to pay your taxes back then. Some you don’t. This was quite, it was a boost of my salary and helped a lot in the beginning. That’s a big one for federal taxes.

23:34 Emily: And so is that what the tax treaty with France says? Is that what applied to you, that in the first year you moved here you didn’t have to pay federal tax, but starting in the second year you did, is that right?

23:44 Louise: It’s two years.

23:44 Emily: Oh two years.

23:44 Louise: Yeah, it’s two years day to date. And then the fact that I didn’t have to pay in France is because French tax says that you just pay what you earn in France. It is not related to your citizenship like in a US or in Germany.

24:02 Emily: Gotcha. Yeah, I think the US is very unusual. There’s only a couple of countries that tax their citizens no matter where they live, but yeah, US does that, warning.

Additional Advice for PhDs Planning an International Move

24:13 Emily: Anything else? Any other financial challenges you came upon or things that you want to pass on to other people, bits of knowledge, as you were getting acclimated to the US.

24:22 Louise: Yeah, I just think getting used to that you will spend much more cash and you have to be careful with that. Also, you get a little excited. You want to travel, you want to visit, and it can get a little too much. Every time you go on conference you will spend at least $1000 to $2000 and in general you will get reimbursed but after that, so even with credit card and all of this, get prepared for that too and kind of put it on your budget. If you know you will go to a conference, you should have at least $2000 to make sure you cover the cost. This is for everyone, but that’s true that for an international sometimes you already spent so much on getting there and then you need to rebuild your funds.

25:13 Emily: Yeah, I totally agree. You were just mentioning traveling and I guess something that we think about here is that, you know, in France, our perception is that you guys get a lot of vacation time and we get very little vacation time in comparison. How has that been for you?

25:28 Louise: First that’s true. But as I mentioned before, we have a union, we negotiate five weeks vacation. So it’s actually quite good. And we have also some sick leave that we can take from here to here. Five days is the minimum you will get in France, for example. Generally when you work for a university in France, you get more like 10 or 12, weeks per year. So it’s not that far away and I think it’s helped a lot also. Also if we talk about vacation, this is also a burden on the international. It’s like every time you need to renew your visa, you don’t know how long it will take. So in general, in most countries in Europe are okay, but you never know because they can go on back processes and then you don’t know. But people from India or China, it could take like one month, one month and a half, and then you just use all your vacation for that or you just don’t come back.

26:37 Emily: Yeah, that’s really, really challenging. Just the uncertainty around that, I agree.

Long-Term Planning for Permanent Residency

26:42 Emily: So I understand that you are applying for permanent residency, or are looking into it. What’s that process been like?

26:49 Louise: Okay. Actually I got it.

26:52 Emily: Oh yeah. Great. Congratulations!

26:54 Louise: I got it a few weeks ago. The process for the green card — you will need to pay basically two entities. You will need to pay the US government, and it will be I think $2000 to $3000, also depending if you apply as a couple or not. The big thing, the big part of it is to pay a lawyer, and I won’t to go into details, but you may need lawyers. A lot of people go with lawyers because if you need to make your case, even if you get a green card because you are a scientist, there is a lot of legal stuff going into it, and it’s not a straight out science, like you would write a paper. You can get become eligible by just getting married with an American. Your employer can also ask for a green card for you, and you can petition. That’s what I did. And as a scientist you can kind of easily make your case and you can go for one of the easiest ones, national interest. So that’s like US economy needs you, basically. Then there’s the whole process to get people to refer you. Technically, your lawyer will write a reference letter that you will send to them and they will sign it. And then it’s a lot of bunch of paperwork, that you need to put and translate stuff. In general, preparing all of this will take between three to six months, I would say. And then generally this is used both for eligibility and to adjust your status. Eligibility, you will know around six months. Adjustment of status, it depends a lot on where you come from. It can be from one year to 10 or more.

28:40 Emily: Wow. Yeah, that sounds quite the ordeal. And do you mind sharing, how much did you ultimately spend on the lawyer part of it?

28:48 Louise: For the lawyer, I paid for the eligibility part and I paid $5,000 and I think that is roughly what you will pay. There are cheaper ones, but…I did much more math for this one, I wanted to be more prepared. If you look at the postdoc salary, anything else you can get, in general, is much highe,, and that’s th problem. With my G-1 I cannot get a job in industry or nonprofit or anywhere else. And also I cannot have a side job. I just can work for my employer at my university. This, or me, was also why I wanted ,a green card so I can start and perhaps have a side business, if I wanted to.

29:39 Emily: And why did you decide to go that route instead of maybe finding a next employer and going to the H1B route?

29:49 Louise: Because I wanted to do a career move. I wanted to go out of science and go more applied initiative positions in university or nonprofits. To still work with scientists, but more on the kind of development on the science communication part. And for this one, then my skill as a scientist, I will use part of them, but not the specific one, not the technical one. My employer won’t be able to say, because that’s what they do when they ask for your H1B for you, they basically say no American can do it. I was applying for jobs that they can’t say that, so that’s why. And I think even if you can get a n H1B, the H1B for industry, you can just apply once a year and it is a lottery, so even your employer doesn’t know if you will get it. Then I think you have the O-1 that you can apply to, but it is also, I think, depending on the employer, so you do get less freedom on your part. Actually a lot of people that want to stay here a little longer, if they can, the go for a green card because that’s what gives you the most freedom and also peace of mind. Because now if I lose my job now I need to leave the country within a month. So I think a green card also gives you some freedom around this.

31:12 Emily: Yeah. Well, I’m glad that you have completed that process, so you have that peace of mind now. That’s great to hear. Is there anything else that we haven’t covered yet? Some piece of advice you’d want to give to another international student or postdoc moving to the US for the first time?

Final Words of Advice

31:26 Louise: Yeah, so for sure I will say, do your homework, as good as you did when you choose your position, or you look for a job. When you look for a job, you will perhaps do informal interviews, you will do networking, and try to know what is the job about and do you want to go this way? And I think it’s great to do exactly the same when you move to another country, or another city. Do informal interviews. Be aware, because, so I did one, but someone who lived here I think five years ago and so the renting market just completely changed. The rent doubled. So of course what he was saying, he wasn’t what was happening right now. Do some informal interview, too. See if the environment fits you and fits your needs, because this can also be one point. And do the math, too. And be aware that getting an apartment for the first time will be much harder than you think you will be, so take your time for that.

32:34 Emily: Yeah, I agree. And actually I have a resource. I made a webinar and template spreadsheet earlier this summer, so I’ll link that from the show notes that are all about how to budget at a distance. So how to figure out what is that cost of living where you’re moving to. This could be within the US, if you’re coming from another US city, or coming from outside the country, it’s going to work either way. So what are some like resources you can look to, to figure out what does that cost of living going to be, especially the housing, because that’s the really big rock in the middle of your expenses is figuring that out. And so that’ll really help you kind of know, how is that salary offer? Is it going to be sufficient? And certainly for graduate students it is a question mark, whether or not it’s going to be enough to live on, depending on the city and depending on the program. If that sounds good to you, please go check out that resource in the show notes.

33:19 Emily: So Louise, last question before we wrap up. What is your best financial advice for another postdoc or another early career PhD?

33:29 Louise: Really look into it. Don’t just accept a job offer because you love the science. We are all passionate about it. We just want to do science, but where you live is also important, and if you have to worry too much about the financial part, then you won’t have as much time to do the actual science. And especially if you move in with a partner or if you are moving with your family, then you have even more. That is my advice.

34:04 Emily: Oh, excellent. I totally co-sign all of that. Great, great advice. And Louise, thank you so much for this interview and for joining me today.

34:10 Louise: Thank you.

Outtro

34:14 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 The Lucrative Artist Identifies and Reverses Negative Money Mindsets with His Clients

February 24, 2020 by Meryem Ok

In this episode, Emily interviews Dr. Brian Witkowski, a Doctor of Musical Arts and the founder of The Lucrative Artist. Brian serves as a business and leadership development coach for artists and teachers. Brian often sees money mindsets in his clients that don’t serve them well, and these mindsets are common among PhDs as well. If left unchecked, these mindsets have detrimental effects on our finances. Brian and Emily discuss how to reverse negative money mindsets and how entrepreneurship is often the most lucrative and satisfying career for a PhD with a transformed money mindset.

Links Mentioned in the Episode

  • Personal Finance for PhDs: Tax Center
  • Self-Employed PhD Website
  • Beyond the Professoriate Website
  • Dust Safety Science
  • The Lucrative Artist Website
  • The Lucrative Artist Facebook Page
  • The Lucrative Artist Twitter
  • The Lucrative Artist Instagram
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Subscribe to Mailing List

toxic money mindset academia

Teaser

00:00 Brian: When you’re starting out just by yourself, you don’t have to do all that. It’s just a matter of figuring out what’s your actual service, and who are the people you’re going to serve, and then what kind of value exchange you’re going to be creating that you can reasonably get paid pretty well for it, from the right people, in the right way.

Intro

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 five, episode eight and today my guest is Dr. Brian Witkowski, a doctor of musical arts and the founder of The Lucrative Artist. PhDs, like many artists, tend to have certain money mindsets that do not serve them well, such as a scarcity mindset. Brian and I discuss how negative money mindsets can detrimentally affect our finances and how to reverse them. For many PhDs, and Brian’s clients, the most lucrative and satisfying career path forward might be through entrepreneurship. Without further ado, here’s my interview with Dr. Brian Witkowski.

Will You Please Introduce Yourself Further?

01:06 Emily: I am delighted to have on the podcast today Dr. Brian Witkowski, and we’re going to be talking about mindset work and entrepreneurship and other fascinating topics like that. So, I’m really looking forward to this conversation and learning a lot from Brian. Brian, will you please introduce yourself a little bit further for our audience?

01:23 Brian: Yeah, so I’m originally from Michigan. My grandparents immigrated from Poland. My dad grew up in a very poor area of Detroit and kind of aspired to a much higher middle-class life and worked his way up and eventually became a professor and then raised me to someday want to be a professor, too. Obviously, the world is a lot different today than it was for the generation back then. You know, I’ve had to explore how else, where I can take my teaching and my work and what I really want to do. And so, when that tenure track job, after I finished my doctorate eight years ago, didn’t quite come up, I started exploring other opportunities. I started to really think what else is not being taught that we all could be taught and how can I better serve people. So, I started studying more about business and finance and looking to see where we can help people. Especially as myself, I have a doctor of musical arts degree, and especially in music and the arts, we know nothing about finance or financial literacy.

02:13 Brian: There’s so much to be learned and needs to be learned. So, you not only can just, you know, understand about money and know how to conduct yourself in life. And because we can’t just expect those few jobs we’re trained for, we have to be entrepreneurs, we have to come up with multiple streams of income, and come up with other opportunities and open our minds up to creating new opportunities as opposed to competing for just a few things that less than 1% actually end up having. So, basically, entrepreneurship is kind of the new golden age for higher education in some ways, is what I like to say. Because we can take our expertise and leverage it in new ways and recreate different learning opportunities, not just for the people in the college classes but for the lifelong learners. So, that’s kind of where I’ve taken my teaching nowadays.

Unhealthy Money Mindsets

02:56 Emily: Oh, that’s fantastic. I’m so excited to dive more into all of that, and I’m really excited to have you on as a guest because a lot of my audience, I think, is currently still in PhD training as graduate students or postdocs or maybe closely following that. They may still be competing for that tenure-track job or not sure what they’re going to do if it doesn’t work out. And so I’m really glad to have you on as someone who’s several years further down that line and has a lot more life experience and career experience in that way. One of the things that we said that we would talk about during this interview was money mindset. Because I think the people who you work with through The Lucrative Artist and also the people who I see through Personal Finance for PhDs have some troubling mindsets around money. So, can you talk a little bit more about the mindsets that you see your clients that also maybe overlap with mine? The money mindsets that they have that don’t serve them very well?

03:48 Brian: In some ways, one thing that doesn’t serve a lot of people is just that mentality that we don’t have enough and there’s never enough there. And we always think that it’s a scarcity mindset complex that so many of us have. Even my own father did, even though his adulthood was phenomenally better than his childhood, he was still struggling financially as a professor just putting it all together. There’s a book called Rich Dad, Poor Dad* by Robert Kiyosaki. More or less, he talks about how his poor dad actually worked his way up in higher education and became the administrator in the state of Hawaii, and so forth. Back in the fifties and sixties, when his “poor dad” was his friend’s dad who didn’t have any college training and just focused on acquiring real estate and thinking about owning a business and trying to earn money that way. And so, he more or less points out how we’re not taught about how to actually earn money other than to expect the job. So, part of the mindset is having your mind open to the possibilities of where you can create new income opportunities and new sources of revenue, and so forth, for your personal life using all you have to offer.

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

04:52 Emily: Yeah, I can definitely see how the scarcity mindset–if you’re thinking only that, again, that tenure-track job is the only one for you and the only thing that’s worth doing after after a doctorate–there is scarcity in terms of that actual career path. That’s not imagined. That’s perfectly real. But I guess the mindset that doesn’t serve you is thinking of course that that’s the only or the best option for you following finishing your higher education. So, to think a little bit more broadly about your career track would be, I guess, the way to combat that scarcity mindset. Any other kinds of mindsets that you see in those populations?

Aim High: Raise Your Anchor Point

05:30 Brian: The only thing is, I guess we’ve focused so much like on student loans and the cost of higher education. It’s like we let the four-figure, accruing interest, to get in the way of thinking how we could maybe use that same energy toward, “How can I create maybe six figures of income or more later on?” We don’t open our minds up to the possibility of earning way more than what certain salaries we’re used to or what our parents or colleagues are earning. In a lot of different ways, if we package our expertise and services in the right way, you can find that clientele or that other startup, that kind of business that can easily make you enough money to more than pay off your debt and then some. And sometimes we get so bogged down with getting depressed over having a big student loan sum and we don’t realize that yes, it’s not that great, but it’s better than some other forms of debt that are out there.

06:19 Emily: Yeah. So, I think that’s like having an anchor point, right? So, like you in your mind around the amount of money you can make, you have anchor points, whether it’s what you were earning as a graduate student, if you had a stipend or as a postdoc or what you expect to earn as a faculty member or another kind of professional. Or, like you were just saying, the balance of student loan debt that you have or maybe the living expenses that you have to cover each month. These are anchor points that float around in your mind as, “Okay, I need to make this much money.” But really there’s no limit to that. Like, why are you anchoring yourself there? Go ahead and anchor yourself at 10 times that amount or a hundred times that amount, maybe.

06:55 Brian: Yeah, definitely. And there’s one interesting exercise that I sometimes give the clients to consider. Okay, what are you earning right now? What would you have to become to suddenly earn double that? Like who are some role models out there? Because there’s always going to be somebody out there we can imagine who’s already making more than what you’re making that you could easily–sometimes not even actually do a whole lot more, but just adjust the way you’re presenting yourself and to the right audience, and so forth. And then figure out how we can double that from there. If all else fails, at the end of this exercise, people usually say they’re going to be Oprah or Tony Robbins or something, which is great. You’ve got to not be afraid to think big like that.

07:32 Brian: Too often we think small, we don’t think we can be these celebrities and these great leaders, but anyone can really grow themselves to be more than just what they thought they could. And sometimes we’re not taught enough of that in our school. My father taught leadership courses when he was a professor. So, those are classes where I’ve kind of avoided anything that he taught when I was in school. Hence, I’ve got a doctor of musical arts degree. His degree was in criminal justice. And so, I wanted to make sure I wasn’t just recreating everything I absorbed by osmosis as a child. I guess you could say it was part of my motivation to make sure I picked a very different degree program. But there’s so many of these things that my father taught in his classes that are not taught to people in the arts and so many other fields as far as management skills, how to interact with people, and what kind of personal growth is out there. We’re too conditioned to just do the exact training for the exact skill to get specific sets of jobs and not necessarily create the jobs instead.

Challenges in a Culture of Volunteerism

08:29 Emily: Mmm, yeah. Great point. So, anything else on your observations around detrimental money mindsets and then how they translate to ill effects in our finances?

08:42 Brian: Yeah, I think partly the scarcity mindset that sometimes starts with just the job market and the opportunities for earning money. Another problem is, especially in the arts and education fields, it’s almost like there’s a nonprofit aspect to it or more if you’re working for a religious institution or, in my case as a professional singer, getting paid to sing in churches and so forth. There’s that guilt trip kind of situation where some people who are cutting the checks kind of make you think you shouldn’t be earning as much as what you should be. And there are other situations too where it’s kind of like the negotiation turns into a coerced charitable contribution in some ways, but not in one in which you can actually get a tax deduction for your time in a concrete kind of way. So, it’s another situation we have to deal with, whether we’re in the arts or in education. There’s that mindset, “Wait, I’m not supposed to get paid this much. I’m supposed to do it for the children and do it for God or whoever, whatever the cause is, basically.” So, that kind of keeps people from realizing their potential. And then I try to tell people to be in a position where you can actually tithe or donate that 10% back as we all ideally should later in life.

09:49 Emily: Yeah, I agree to great, great extent. There’s this, I guess I call it kind of a toxic culture of like compulsory volunteerism in academia and in other similar fields. Exactly as you were saying. When the high level institution has some kind of nonprofit-like status that somehow translates to, “We don’t pay people what they’re worth or we don’t pay people to do work for us. We expect a degree of volunteerism.” I encounter this myself sometimes with institutions who want me to work without pay or with much less pay than I’m asking for. They can kind of use that, “Okay, well we’re a nonprofit,” as like an argument, somehow. But it’s just something that it’s hard to combat because as you said, when you’re sort of indoctrinated into that culture, you think, “Yes, well I’m supposed to be giving back. I’m supposed to be doing this for X, Y, Z. What about the people who won’t benefit from receiving my talents if I don’t take this opportunity?” But at the end of the day, you have to feed yourself, right?

Finding Balance in Value Exchange

10:54 Brian: Yeah. And that’s the other thing. I also tell people that, at the very least, it’s a two-way street. How can they serve me in return if there’s an imbalance in the actual value of exchange that’s taking place? At the very least, maybe that institution could give you a referral for another service you’re providing, or they might allow you to advertise something else. Or, like I tell people who are performing artists, maybe they can sell CDs or trade their mailing lists. There are other ways to at least get some kind of fair exchange of value if you open your mind to those things. I try to help people think about those things and make that happen so that at least if they’re not getting necessarily the actual money, maybe they’re getting a leisurely vacation out of it if it’s a traveling musical gig or something like that. They’re getting something that makes it still worth their while to otherwise feel like they’re volunteering their time.

11:41 Emily: Yeah. Something that can be mutually beneficial instead of just beneficial going one direction. Okay. So let’s say, you know, someone in our audience has identified, “Okay, well I do have that scarcity mindset,” or “Yeah, my anchor point is 10 times lower than it should be,” or what have you. Any of these money mindsets we’ve been talking about. How do you actually go about changing a money mindset that doesn’t serve you well once you’ve identified it?

Changing Your Money Mindset: Self-Talk

12:05 Brian: For me and for people who I work with, sometimes I give meditative exercises. You have to think positively. Positive manifestation-type statements, saying to yourself, “Your bank account may be empty,” but rather than say it’s empty, say, “It’s wide open and ready to receive.” It sounds silly, but you have got to think, “Okay, the money is going to come to me eventually.” You can’t think that you’re never going to get it. It’s just a matter of figuring out the right way to find the right people willing to give you that money, basically, for when you willingly deserve it and earn it.

12:37 Emily: So, it’s kind of about self-talk, then, I guess is what you’re saying? Like it’s about, “Okay, I’ve identified my bank account is empty. Oh, it’s always going to stay empty.” That’s the toxic mindset.

12:48 Brian: So, it’s reinforcing that negative stuff. And before you know it, you’re staying on the floor at the bottom and not working your way up. And then another thing is, there’s the song “Love is in the Air,” but also you could say money is in the air, too. The way the global economy works, the way money compounds everywhere, there’s always going to be enough. You know, sometimes we think, “If I take this job then suddenly somebody else is not going to have any money,” and that’s not how the world works, actually. When we keep getting all that we’re supposed to earn, then there’s more to give around and more to grow the pie.

13:22 Emily: Mhm, yeah. So, it’s not like a fixed pool of money, right, that we all are trying to grab a little bit of a piece of,  it’s about growing the entire economy–the entire pie for everyone. Is that what you’re saying?

13:34 Brian: Yeah, exactly.

13:34 Emily: Yeah, so we aren’t thinking, “Me gaining something is someone else losing something.” That’s not how it is.

13:40 Brian: Yup.

13:41 Emily: Yeah, great.

13:42 Brian: It’s how the markets work. If you notice, if you had invested a dollar a hundred years ago, it would probably be who knows how much now. It’s partly a result of that.

13:51 Emily: Mhm. Yeah. Anything else that we can do to change the money mindset aside from turning things in a more positive way and reinforcing that by self-talk?

Open Your Mind to New Revenue Streams

14:02 Brian: The other way probably: be open to thinking of new ways to earn, and be open to new revenue streams. Don’t be afraid to think outside the box as opposed to how you can make a living. Because we all get so caught up trying to apply for the exact same jobs and thinking these are the only ways to earn. There are so many different audiences out there and clientele that we could actually be serving that we don’t even think about. Especially for myself. People, my colleagues mostly, aspire to teach students who are college students and aspiring professional singers. And it’s kind of like we subconsciously only focus on the clientele that is like ourselves. And we don’t realize there’s another whole clientele out there that might be willing to pay way more, or you could actually set up scalable situations where you could easily earn way than you otherwise are used to earning. So, you’ve got to let go of that in one direction and think 360 every way around you, there’s something more you could probably do.

15:00 Emily: Yeah, I think this kind of relates. For people who are still in academia, they might not feel very special because everyone they’re surrounded by also has crazy advanced degrees. Very smart, very talented, very trained in a similar way. But if you can turn and look outside of that immediate environment like you’re talking about, you can see that there are many, many other opportunities to serve different groups of people or to leverage your skills in a different kind of way. And once you do step outside the ivory tower, your skills are going to be regarded in a way that you’re not used to. Right? They’re going to be much more highly looked upon because you are special. There’s only like 2% of the population or less or something that has doctoral level degrees. So, it’s not actually that common if you find the right group to serve. So, this translates really well once you’ve opened your mind to these other types of clients and other types of work that you might be able to do. At that point, why is self-employment more attractive than a job? Or why does self-employment serve you better with a different kind of money mindset than a job would?

You Can Be Self-Employed and Still Have a Job

16:07 Brian: It’s not necessarily mutually exclusive from having a job. And I think sometimes people get caught up thinking they have to quit their job and suddenly be a sole business owner right away. Not necessarily, although sometimes there are situations where you just need to get out of a toxic environment that doesn’t pay you enough. Then you easily find that one client and you can easily–or a few clients–you can suddenly afford to just say farewell to the job that wasn’t really serving you. But I think when you’re stuck in a job, you’re stuck with a cap on your income. Whereas if you start a business, you could think owning your own business, being self-employed, you’re open to more possibilities and there’s no limit necessarily. So, it’s like you’re removing an artificial cap and you’re also giving yourself more freedom once you get it going, you find the right clientele to serve, and so forth.

16:51 Emily: Yeah, I think this goes back exactly to that Rich Dad, Poor Dad book or idea that you were talking about earlier. The poor dad, right, has a job and his income is, as you were just saying, capped and scaled by the employer. It’s sort of out of his hands, right? But the rich dad is an entrepreneur and–well, Robert Kiyosaki’s really into real estate, so lots of different ways to be an entrepreneur–and in that case, the income streams are unlimited. And each income stream itself is unlimited in how much money you can actually bring in. So, there’s a downside to that, but there’s a big, big, big upside too, if you choose to walk away from a job. Which, like you said, it doesn’t have to be all or nothing. So, some people in my audience, again, are still in training. Self-employment is something that they can do on the side while they’re still in graduate school, while they’re still in a postdoc for now, as long as it’s permitted by their visa and their job and everything. But it’s something you can dip your toe into and see how it’s going, and you don’t have to just take the leap, like you said, right away.

17:53 Brian: Yeah, definitely.

Commercial

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Pay Attention to What is Not Being Taught

19:01 Brian: The great thing is, while you’re still in grad school, it’s your perfect opportunity to realize what is everybody doing the same? Where do you feel like you’re literally just in “the Matrix,” and what’s not being done? I stress to people that it’s the perfect time to really observe and reflect and take notes for what’s going on and what’s not being taught that still needs to be taught in real life. Because there’s just so much of that that still needs to be taught. Whether it’s with finances or just personal development or other aspects of just knowing how to live. Too many aspects of our degrees are just kind of geared to train us for specific jobs but not for creating jobs. So, one strategy is to just observe what’s not being taught. And then how could you actually teach that? I like to joke with people who are getting their terminal degrees, their PhDs, that they could actually create something in which those same people who may not hire you for a faculty job might actually hire you to do their professional development. Because you never know. That fresh perspective of being young, just finished your degree, and offering a different viewpoint is something that’s going to be valuable to them.

20:07 Emily: You’re exactly describing my own journey into Personal Finance for PhDs, because what was going on for me in graduate school was, I was learning about personal finance because I had to apply it in my own life, or felt that I had to, right? So, I was learning how to apply it and then over some time sort of looking at the way my university was or was not supporting that growth and that journey. And I should say that Duke, which is where I did my PhD, actually does a great job with personal finance in comparison to many, many other institutions. But even so, I could see that there was more that could be done there. And that’s exactly how I stepped into my business was seeing, “Okay, well no one is teaching personal finance from the perspective of a graduate student or a postdoc or a PhD. They’re teaching personal finance from the perspective of a CPA or a financial advisor who deals with very, very wealthy clients.” And this is just completely foreign to the people that I was coming out of. And so, I decided to turn around, right? And teach the people who are coming up behind me those principles. So, exactly what you described. And as you said, I never applied for jobs, universities, or faculty positions, but I am now hired by plenty of universities to do professional development in this area. So, it’s totally, totally, exactly what you said.

Different Business Models for PhDs

21:22 Emily: So, what are the different business models that you can see with PhDs or other people with doctorates that are successful, that are easy for them to access, given the skills they’ve been learning throughout their higher education?

21:35 Brian: Yeah. One thing is just to simply think, “What kind of professional development services could I offer? Are there businesses, are there organizations or clients where what I have to offer with my knowledge and expertise can be valuable to them?” And sometimes it’s not necessarily just regurgitating the same content, but how can you repackage it in a way that is more meaningful to them. Sometimes, with my work, I stress that you can kind of integrate some personal development, leadership growth, using your content as the vehicle, so that people are thinking not just that they’re learning more about a certain thing about history, but they’re realizing how their own life embodies that same historical thing you’re trying to reinforce. Find something like that.

22:19 Brian: It personalizes it more and really fits the clientele or the audience that you’re serving. So, there’s that. Sometimes you can do something as simple as different kinds of coaching, whether it’s life coaching, business coaching. There are so many forms of coaching out there that still people need to hire people. That’s not enough just to go about life waiting for the job or expecting your business to take off. We always need more people to help us in different ways to give us different perspectives, different viewpoints to push us in different ways. In the arts, even though I have my degrees, I still take voice lessons. My voice is an evolving instrument. I’m always learning how to use it in different ways. And the older I get, the different kind of repertoire I suddenly get to sing. So, it’s a never ending thing. And there are other aspects of life where it’s the same way. So, people with PhDs and other graduate degrees, just that background alone gives credibility with certain types of audience members.

Self-Employed PhD and Beyond the Professoriate

23:11 Emily: Yeah, absolutely. So, I’m part of a community called Self-Employed PhD, which is underneath the Beyond the Professoriate umbrella program. And so, what Jen Polk and Maren Wood do, who run that program, is they are career coaches for PhDs. And there are many other people who have stepped into the same area. Seeing again like we were just talking about that a lot of universities don’t prepare PhDs well for knowing the possibilities for their careers outside of academia or being prepared to actually apply for those jobs or network for those jobs or get those jobs. Many people have decided to become career coaches in this area because there is a lack of support from many universities in that area. So, exactly what you’re just saying. Any other business models that you see as very accessible for this audience?

Think Big, Think Lifelong Learning

23:56 Brian: Sometimes it can just be simply, create your own school. It might even rival your university. Don’t be afraid to think big like that. Or something else to that effect. Some kind of supplementary, after-school program for elementary kids or high school. Really any age group. I read an article that there is going to be an enrollment crash in higher education soon where suddenly, because there’s going to be way more retirees than young people, not as many young people enrolling in college. So, more job cuts and other drama might be around the corner. But at the same time, we have a retirement population that is just growing, and they’re bored. There are ways to serve them. So, rather than think higher education, think lifelong learning or higher learning and other things you can offer that can serve any kind of population.

24:45 Emily: Hmm. Yeah. If what you really wanted to do when you were pursuing that faculty position was teach–I mean there are so many different audiences and different ways that you can do that. Even within the subject matter that you were highly trained in, if you want to stay in that area.

24:59 Brian: If you’re willing to leave the country, there are 7.6 billion people in the world. There’s going to be somebody out there who will pay you to teach them something.

25:06 Emily: Yeah. Or work online, and have access to everybody in the world. Yeah. Any other business models you want to add to that list?

Other Business/Teaching Models

25:14 Brian: Yeah, one-on-one coaching, teaching, offering professional development seminars or other workshops, and so forth, using your expertise. Also, you don’t necessarily have to not teach the same students you’re expected to teach that you went through school. You just need to be offering them something that’s different from what they’re used to. So, that’s why I also, with my own business, I help people specifically in the arts figure out how can I do this likewise? How can I create something different and empower myself to have control over my career and do more of the things I actually authentically want to do? Because one thing, especially in the arts, there’s a lot of interesting toxicity that goes on when it comes to career expectations. Especially with professional singers. We have a lot of people who started their careers in the last century and sometimes they just went about teaching as if that last century way of life was still going about and everybody could easily have the same career they had. Or at least that’s how they’d go about, conduct themselves, and just kind of otherwise disregard your actual career and what you’d be doing.

26:16 Brian: You have to really be more of an entrepreneur nowadays as a performing artist if you’re not going to suddenly get some of those few jobs that are still out there. So, position yourself to help those same people who are in your field, not getting the help they probably should have had.

26:29 Emily: Mhm. Yeah. And you mentioning actually using the specific skill you’re trained in, singing. But I’m thinking about–so I have a colleague named Chris Cloney who has a business doing research. He has an independent research company, specifically translating the research that he did as a PhD student into basically another way of delivering it to the world. So, we’ve talked about teaching and coaching and speaking and so forth, which is what you and I do. But there are other ways to translate even more precisely what you were doing in graduate school into the entrepreneurial sphere instead of just going after a job. So, you brought up what you’re doing through The Lucrative Artist. I would love for you to tell us a little bit more about that. Maybe a couple of minutes on how you came to this point. We’ve already heard some of that journey, and then what you do for clients right now.

Brian’s Work with The Lucrative Artist

27:16 Brian: Yeah. So, what I do is I help clients literally figure it out. Sometimes, the biggest barrier that we need to break through is figure out what else we can do other than those few jobs we were conditioned to expect to get. And so I help people think, “Okay, how can I assess all your skills and your strengths, your weaknesses? What’s something that you can synthesize that can actually become a viable product or service that you could give to other people? And you’re more or less in a position where you’re not having to worry about competing against other people and you’re serving the audience that really wants you to serve them and so forth?” And so helping people really package that together. We do authenticity training where we think, “What is it we really, truly want to do?”

27:57 Brian: Like, “What is your purpose? What really drove you to want to teach? And how can you get more to that?” Like for me, it wasn’t really necessarily about the actual content, but it’s about helping people really actually change their lives. Like I’ve witnessed my father as a child, growing up. He did the same thing with his students, seeing people who were, likewise like him, grew up really poor, had no idea what they’d be doing later in life. Then finally they realized, “Oh, I can learn this. I can do this.” And suddenly they have great jobs or they have their own businesses, they’re making a great living, and so forth. So, helping people realize there is another way out there, and anyone’s capable of doing it. And then basically once people figure out what ideal business would be for them, what kind of service they’d be providing–sometimes there’s not a specific service, it’s like a bunch of different services related to themselves through their art form. So, for people in singing, for example, sometimes it’s teaching lessons, sometimes it’s teaching speaking lessons, presentation lessons, helping people patch together other skills related to their singing. So, they’re not just performing, but they’re also providing expertise and educating the public more about the works to bring awareness and you know, make that same connection between a certain classical work and you know, what its audience is going through right now.

Combat Limiting Beliefs and Imposter Syndrome

29:12 Emily: That sounds like, based on what we were kind of talking about earlier, you help people identify the limiting beliefs they have, the mindsets they have around their career, for example, and then coach them in how to combat that within themselves. I guess I just think about this as related to imposter syndrome, right? There’s nothing that we are trained for to do outside of academia. All we can do is teach. And if we can’t get that job, we’re like worthless, right? That’s a horrible thing to think about yourself. But I think it’s indoctrinated into so many of us who go through academia to have that imposter syndrome that “I’m not worthy of another kind of job. I’m not worthy of being able to start a business. I don’t have translatable skills into these other areas.” And so, once people see, “Okay, well this is what’s holding me back. I’m going to engage Brian,” you help them turn those mindsets around in a very practical way. Because you can say, “No, here is what you need to be telling yourself instead of what you have been thinking.” And then they do the work, right? To actually uproot those mindsets.

30:14 Brian: Yeah. And then once they get through there, once they realize what they want to do, then I coach them through step-by-step, “What can I do to actually make a viable business take off the ground.” And it’s not always necessarily too scary or confusing. Some people, you tell them you’re helping them grow a business, they want to see all these weird numbers and other things. And when you’re starting now just by yourself, you don’t have to do all that. It’s just a matter of figuring out what’s your actual service and who are the people you’re going to serve and then what kind of value exchange you’re going to be creating that you can reasonably get paid pretty well for from the right people in the right way. And it’s a matter of figuring out how you can package that and who you’d be serving.

Growing a Business is a Gradual Process

30:52 Emily: Yeah. I think some people when they hear like starting a business, they think about the startup world and where you have to have a highly refined business plan you’re pitching to investors and so forth. And it is really important to have this high degree of models and understanding of what you’re going to be doing in that world. But just to dip your toe into self-employment is much, much, less than that. You don’t have to do all that. You have to try out some things, see what people aren’t going to pay you for it, see what you like to do. It’s a lot of experimentation at the beginning and it’s not really high stakes.

31:21 Brian: Yeah, exactly. I love helping people, walk them through that and realize, “Oh, I can do this.” And yes, there’s actually a demand. One interesting exercise to really take people through is just called hot or not. What are some ideas that can work, and we talk them out. And then we also might contact some other people and see what they think about that if it’s a totally new thing that they hadn’t heard of before. And just a matter of, you need an opportunity to just test the waters and you openly be in a safe environment where you can express ideas without somebody thinking you’re stupid or whatever. There’s no stupid idea. There’s, you know, millions of ideas everywhere. And it’s a matter of figuring out how to piece together to create something viable as far as the business goes.

Origin of The Lucrative Artist

32:00 Emily: Mhm. Yeah, that gives me a good idea of what your services are. But I wanted to ask you about your name, The Lucrative Artist, which is very provocative. So, can you tell us a little bit how you came to that?

32:09 Brian: It’s fascinating. It’s a provocative word. It’s a word they say all the time on CNBC and all the other finance channel for other businesses. But for some reason we’re conditioned to think we have to starve as artists. And it’s not necessarily the case. So, I try and help people realize, “No, actually if you’re getting paid what you deserve and what you should be, you’re actually in a position to make even higher quality art and you’re serving people even better.” So, it’s actually an empowering mindset that better serves them later on.

32:39 Emily: Yeah, I love that. Oh my gosh. Well, where can people find you?

32:42 Brian: Well, my website, thelucrativeartist.com, the lucrative artist, three words there, .com or there’s facebook.com/thelucrativeartist where I’m active on a Facebook page. I also have a Twitter and an Instagram where I try to be accessible to as many people as possible through all those platforms, wherever the world’s taken me. There’s a Self-Employment in the Arts conference taking place in Chicago in February that I’ll be presenting at. And also some universities here and there. I’ll be doing some presentations and masterclasses and so forth. So, I try to be all-around.

Best Advice for an Early-Career PhD

33:13 Emily: Sounds awesome. So, final question. This is a standard one that I ask all my guests, which is what is your best advice for another early-career PhD or another early-career doctor? And this could be something related to what we’ve talked about today or it could be completely other.

33:30 Brian: Yeah, I think as far as the best advice, always keep a mind open to creating new sources of income and having multiple sources of income coming in. And think of ways you could create some passive income for yourself as well as the active income. And then, when you’re in your PhD, look and see what everybody else is doing and then think, “What is everybody not doing they should be doing?” And realize that might be a gold mine of a business opportunity just waiting to happen. So, just to open your mind up to that possibility and not being afraid to go for it.

34:03 Emily: Thank you so much, Brian. Thank you so much for the interview. I’ve learned a lot. I hope the audience has as well.

34:07 Brian: I really appreciate it.

Outtro

34:07 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, 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 cover the personal finance topics PhDs are most interested in like investing, debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode. And remember, you don’t have to have PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive, and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

Fellowship Income Is Now Eligible to Be Contributed to an IRA!

December 30, 2019 by Emily

In this episode, Emily explains the new legislation that allows non-W-2 fellowship income to be contributed to an Individual Retirement Arrangement (IRA). Up until 2019, fellowship or training grant income (reported on a Form 1098-T or Form 1099-MISC or not reported at all) was not eligible to be contributed to an IRA. Certain legislation, the Graduate Student Savings Act (GSSA), which fixes this problem, has been proposed a few times since 2016, but never passed. However, at the end of the 2019 Congressional session, the text of the GSSA was passed and signed into law as part of an omnibus spending bill (H.R. 1865). PhD trainees who are newly eligible to contribute to an IRA should consider their overall financial status and goals to determine whether to contribute and in what amount.

Links Mentioned in this Episode

  • IRS Publication 590A (p. 6, old definition of taxable compensation)
  • The Graduate Student Savings Act Fixes a Major Flaw in Tax-Advantaged Retirement Accounts
  • House Resolution 1865
  • IRS Publication 970 (p. 5, definition of fellowship)
  • Everything You Need to Know about Roth IRAs in Graduate School
  • One-on-One Financial Coaching
  • The Wealthy PhD
taxable compensation fellowship IRA

Intro

Welcome to the Personal Finance for PhDs podcast: a higher education in personal finance. I’m your host, Dr. Emily Roberts.

This is Season 4 Bonus Episode 1, and in this episode I will update you on recent legislation that has a major positive impact on the PhD trainee population.

Specifically, starting on January 1st, 2020, the definition of “taxable compensation” for the purpose of contributing to an individual retirement arrangement or IRA was  updated to include taxable fellowship income not reported on a W-2.

That’s the takeaway point for those of you already in the know about this issue: Your taxable non-W-2 fellowship income is now eligible to be contributed to an IRA. You can open a Roth or traditional IRA on January 1 or following and put in the $6,000 maximum contribution if you like, assuming your taxable fellowship income is at least $6,000 in 2020. If that’s all you need to know, feel free to stop this episode now, but please share it with your peers as you go.

In the rest of this episode, I will review the prior definition of taxable compensation and how it negatively impacted the PhD trainee community and then explain the recent legislation that changed the definition for 2020 and forward. At the end of the episode, I’ll point you to a few resources to help you in your investing journey.

1 The Prior Definition of Taxable Compensation

The federal government offers a few different tax incentives to encourage individuals to invest for their retirement.

When you invest money inside a tax-advantaged retirement account, you don’t have to pay tax on the growth in your investments as you would for a regular taxable investment account and you also can take a tax break on either the amount of money you contribute to the account or the amount of money you withdraw from the account in your retirement.

Most of the tax incentives are offered through workplace-based retirement accounts, such as a 401(k) in the private sector or a 403(b) in the nonprofit sector. However, there is one type of account that can be opened outside of your workplace, and that is the Individual Retirement Arrangement or IRA.

You as an individual can go to just about any brokerage firm and open an IRA, and it’s not at all connected to where you work. The contribution limit for an IRA is $6,000 per year if you’re under age 50.

The restriction the federal government places on IRAs is that you have to have what’s called “taxable compensation” in a given calendar year to contribute to an IRA. Your overall income also has to fall under certain limits to contribute.

The old definition of taxable compensation was as follows. Think of a two-column list. The left-hand column is types of income that are considered taxable compensation, and the right-hand column is types of income that are not considered taxable compensation. I’m not giving you the exhaustive lists, but just an idea.

In the left-hand list, taxable compensation, you had:

  • W-2 income, such as you would receive from being an employee,
  • Self-employment income,
  • Alimony,
  • Etc.

In the right-hand list, not taxable compensation, you had:

  • Rental income,
  • Interest and dividend income,
  • Pension or annuity income,
  • Taxable scholarship and fellowship income not reported on a W-2,
  • Etc.

This was specified in the tax code. So if your fellowship or training grant income was reported on any kind of tax form other than a W-2, such as a 1098-T or 1099-MISC, or not reported at all, it was not considered taxable compensation for the purposes of contributing to an IRA.

That means that if you went an entire calendar year with only non-W-2 fellowship income, you would not have been able to contribute to an IRA in that calendar year.

This was really tough news for a lot of people in our PhD community. The irony was that students and postdocs who won outside fellowships often received a higher income than their employee peers, so they perhaps had more money available to invest, but they were barred from using an IRA to do so.

Now, there were a couple workarounds. Keep in mind that the contribution limit to an IRA is $6,000 or the amount of your taxable compensation, whichever is lower.

First, the calendar year and the academic year do not line up. So if your funding source switched between W-2 and non-W-2 between academic years, you would still have at least a degree of IRA eligibility in that calendar year.

Second, if you were married and your spouse had taxable compensation, you could contribute to a spousal IRA, up to their amount of taxable compensation or the overall $12,000 per year limit for two IRAs, whichever was lower.

Third, if you had a side hustle, that self-employment or W-2 income would give you some eligibility.

As a last resort, if you truly didn’t have access to an IRA in a calendar year, you still had the option to invest for retirement in a regular taxable investment account. If you chose a tax-efficient investing strategy, such as passive index investing, you probably would not have much of an additional tax burden due to the favorable tax rates for long-term capital gains and qualified dividends. However, this tax advantage was not widely recognized.

The effect of this law was that many PhD students and postdocs who had the financial means to invest for retirement were prevented from contributing to IRAs, and they likely didn’t try to invest instead in a taxable account. The law sent the message that PhD trainees were not supposed to be investing for retirement and were not worthy of being extended the same tax break that employees were. This had an overall dampening effect on the financial ambition of PhD trainees, which in my opinion was a very serious problem.

2 The Legislation That Changed the Definition

All that has changed now. In essence, the new legislation moved taxable scholarship and fellowship income not reported on a W-2 from the right-hand column to the left, from being explicitly excluded from the definition of taxable compensation to being explicitly included in the definition for graduate students and postdocs.

The origin of this legislation was the bipartisan Graduate Student Savings Act or GSSA, first introduced in 2016 in the Senate by Senators Elizabeth Warren and Mike Lee and in the House by Congressmen Joe Kennedy and Luke Messer; however, it was not passed at that time. The GSSA was re-introduced in 2017 and 2019 and eventually included in the bipartisan SECURE Act in 2019, none of which passed.

You can learn more about the GSSA in Season 4 Episode 9 of this podcast, in which I interview Abby Dove, a graduate student who as a science policy fellow worked on getting a scientific advocacy group to endorse the GSSA.

Ultimately, in the closing days of the 2019 session, the text of the GSSA was included in an omnibus spending bill along with the rest of the SECURE Act, passed by both chambers of Congress, and signed into law by the president.

I’ll read to you exactly the change that was made in House Resolution 1865, and I’ll link it from the show notes.

“SEC. 106. CERTAIN TAXABLE NON-TUITION FELLOWSHIP AND STIPEND PAYMENTS TREATED AS COMPENSATION FOR IRA PURPOSES.

(a) In General.—Paragraph (1) of section 219(f) of the Internal Revenue Code of 1986 is amended by adding at the end the following: “The term ‘compensation’ shall include any amount which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study.”

(b) Effective Date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2019.”

There you have it! The definition of “taxable compensation” for the purposes of contributing to an IRA now includes taxable fellowship income for graduate students and postdocs. However, by my reading, it seems that taxable post-baccalaureate fellowships have not been included in the definition.

That language of “aid the individual in the pursuit of graduate or postdoctoral study” reflects the definition of a fellowship from IRS Publication 970, which reads quote “A fellowship grant is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research” end quote.

3 What to Do Now

This change is really good news for the PhD trainee community overall, but it may or may not materially change anything for you. If you now have access to an IRA in 2020 when you otherwise would not have, what should you do? I imagine that PhD trainees fall into one of three groups.

First, some PhD trainees should not be investing for retirement right now, so having access to an IRA doesn’t really matter. This is the case if you don’t have the available cash flow to invest or have other, higher-priority financial goals, such as paying off high-interest debt or saving up cash.

Second, some PhD trainees are ready and able to invest but don’t have pre-existing savings or investments. Maybe they have recently finished paying off certain types of debt or saving up sufficient cash, and they now have cash flow available for investing. This is the group that can open up an IRA and set up a regular savings rate into it; this is called dollar cost averaging. With a $6,000 per year limit, your regular monthly contribution to the IRA can be up to $500, which would be a great savings rate for a graduate student or postdoc.

Third, some PhD trainees have already been saving or investing outside of an IRA and are eager to contribute a lump sum of money to an IRA. You are permitted to contribute the full $6,000 in one go if that’s your preference. Then, throughout the year, you can direct your ongoing savings rate to a taxable investment account or other financial goals.

One question I’ve already received a few times is whether fellowship recipients will be able to contribute to a 2019 IRA. In general, you are allowed to contribute to your prior year’s IRA up until tax day of the subsequent year, and this is a strategy I recommend to anyone who has not yet maxed out their IRA for the prior year. However, since the text of the bill says the change will go into effect after December 31, 2019, my reading is that the old definition of taxable compensation will apply to 2019 IRAs and the new definition will apply to 2020 IRAs.

If you’re not sure what your unique next steps should be or if what I spoke about today even applies to you, I am available to coach you. I can’t recommend specific funds, but we can work together to determine your next financial goal, increase your savings rate, and figure out which high-level investing strategy is most appropriate for you.

You can set up one-on-one coaching with me by going to PFforPhDs.com/coaching. Another excellent option is to participate in my upcoming program, The Wealthy PhD, through which you will receive course content, individual and group coaching, and community with your peers. You can find more information about The Wealthy PhD at PFforPhDs.com/wealthyPhD.

I would be absolutely delighted to shepherd fellowship recipients who have never before invested through the process.

As for additional resources, I have many, many articles on investing on my website, and I have linked several updated ones from the show notes. You can find the show notes for this episode at PFforPhDs.com/s4be1 for season 4, bonus episode 1.

For international students and postdocs, I would also recommend listening to Season 4 Episode 17 of this podcast, which answers the question of whether it is permissible and advisable for international students, postdocs, and workers to invest while living in the US. Keep in mind that I recorded this episode prior to the definition of taxable compensation changing.

Finally, if you need to take a big step back because you were surprised to hear that your fellowship and potentially scholarship income is taxable, I recommend listening to Season 2 Bonus Episode 1 of this podcast, titled Do I Owe Income Tax on My Fellowship?

Thank you for joining me for this special bonus episode. Please spread the good news about IRA eligibility to your peers also receiving fellowship or training grant income by sharing this episode with them!

Outtro

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, 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.

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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Commercial

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.

This Postdoc’s Financial Turnaround Story and Attitude Toward Money Are Incredibly Inspiring

October 21, 2019 by Lourdes Bobbio

In this episode, Emily interviews Dr. Indira Turney, a postdoc at Columbia Medical Center. Indira tells the story of how her finances changed over the course of her PhD at Penn State. Indira started graduate school with approximately $60,000 of debt in a variety of forms and no idea where her income had been going. She resolved to turn things around, and by the time she graduated she was debt-free with cash savings and investments in a Roth IRA. Indira details the strategies she used to increase her income and minimize her expenses. Her methods are both creative and highly accessible for other graduate students.

Links Mentioned in This Episode

  • Personal Finance for PhDs: Schedule a Seminar
  • Personal Finance for PhDs: Podcast Hub
  • Personal Finance for PhDs: Help Out
  • Find Dr. Indira Turney on Twitter and Instagram

PhD financial turnaround

Teaser

00:00 Indira: And I think that’s when I realized, wait, my bills are going to be the same for the next five years and we’re having all this money coming in, I could pay off my loans. I don’t have to wait until the end. I think that’s what kind of started opening up my eyes.

00:16 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode ten and today my guest is Dr. Indira Turney, a postdoc at Columbia Medical Center. Indira tells the incredibly impressive story of how her finances changed over the course of her PhD at Penn State. Indira started graduate school with approximately $60,000 of debt in a variety of forms and no idea where her income from the previous year had gone. On top of that, she realized that she was taking an income cut to approximately $20,000 per year for her stipend. She resolved to turn things around and by the time she graduated, she was debt free with cash savings and investments in a Roth IRA. Indira details the multiple strategies she used to increase her income and minimize her expenses. Her methods are both creative and highly accessible for other graduate students and we could all do well to adopt her attitude toward income and finances. Without further ado, here’s my interview with Dr. Indira Turney.

01:25 Emily: I’m delighted to have joining me today on the podcast, Dr. Indira Turney, and she has a really remarkable financial story to tell from her time in graduate school and since. Indira, will you please tell us a little bit more about yourself?

01:38 Indira: Sure. I’m happy to be here and thanks again for inviting me on the podcast. I’m currently a postdoc at Columbia Medical Center in New York City and I graduated from the University of the Virgin Islands with my bachelor’s. I went on to do a pre-doctoral program at the University of Pittsburgh for about a year and then I went on to earn my PhD in cognitive neuroscience at Penn State University in Pennsylvania. Now, I just started a postdoc at Columbia Medical Center, where my research essentially focuses on using molecular and functional neuro-imaging to identify socio-cultural sources and neuro-correlates of Alzheimer’s disease across diverse racially and ethnic population.

02:25 Emily: That is awesome. Thank you for telling us about that.

Indira’s Debt-Free Journey

Emily: So financially, where were you at the start of graduate school?

02:34 Indira: When I started grad school, I had about $60,000 in debt at the time. I never really calculated it specifically, but I had a car loan, I had about $20,000 student loans, and I had some health insurance stuff that I hadn’t paid off fully and some credit card bills. So in total about $60,000.

02:56 Emily: Yeah, that’s a pretty heavy debt load for grad student, and especially because with all student loans, of course you’d be able to defer that and not pay attention to it. But with other types of debt you still have to address it as a graduate student. What was your income during graduate school?

03:12 Indira: My first year I had the regular base pay of about, I think it’s about $1950 on a monthly basis, so about $19,000 a year. That’s what we got to cover stipend and then they paid tuition as well, as a teaching assistant. That’s what I had the first year and then after that with applying to other things, I essentially increased that based on how much funding I got that year.

03:37 Emily: So can you give me like a range for your subsequent years in graduate school of what you were earning?

03:43 Indira: As far as grad school funding, for years two, three and four, I got an NSF grant, so I went from $19,000 to $35,000, so that was a huge increase. My last year I got off of NSF because it was only three years and I went back to the regular base pay of $1950, but because I was an NSF for three years, I also kind of negotiated having a little extra, so I had about $23,000 or $22,000 a year. In addition to that, I also had other grants and funding, which probably, at max, was about $25,000 a year from graduate funds, as far as stipend goes, in my last year. So anywhere between $19,000 to $36,000

04:32 Emily: And it was just five years during your PhD, is that right?

04:35 Indira: Six years, actually, six years. Right. So the last two years.

04:39 Emily: And you said a word that I love to hear, which is negotiate. Can you tell me really briefly about negotiating?

04:46 Indira: Sure. So technically the program is five years and if you’re more than that, they tend to bump you down as a way to push you out. I essentially was like, “No, I’m not going to get paid $18,000 a year. I saved you guys a whole lot of money for three years by getting NSF funding.” And even while I had NSF funding, I technically taught a class, which I wasn’t necessarily supposed to. So I was just like, “I did a lot for the university, especially for this department. You’re not going to bump me down. If anything, you guys should increase my stipend.” Not in those words of course. I think there’s always room for asking for more money because there’s always money there, because technically they gave you, in your letter in the beginning, this is your five-year funding. There is money there. If you told me there was money there for five years, I deferred for three years, then there’s money there, so don’t tell me I used up your money for six years. I think there’s always ways to negotiate and tell them why this is what you’re worth and you are always worth more than what they give you. And if you ask there’s usually a lot of room for extra money.

05:51 Emily: I know you just said you didn’t use those words, but I really love the words that you just said and I’m so pleased to hear them. I think a lot of people need to hear them, about your value, and especially if you win outside funding. Yeah, of course they should extend your tenure and increase your pay. But I was just very interested in hearing that you actually did that negotiating after the NSF concluded. And so there’s still room when the money is yet to come in, even after the money has already passed through the system. In your opinion and in your example, the money was still there, you said the right words, you unlocked the money. In those last two years, were you doing like an RA or did you have to TA or where did the money from?

06:31 Indira: I did a mixture of both, so I TA-ed, where I taught a class because after your master’s you can actually teach versus just correcting papers, I guess. Then I also did an RA fellowship with my lab advisor where essentially I just did the work in the lab and got paid for it, instead of teaching a class where I’m taking away time from my research. I also got another award that bought off some time where I didn’t have to TA that year, even though I was getting funded by the university, I still didn’t have to TA that semester. So I really only taught two years out of the six years and on-and-off half a semester here and there.

07:09 Emily: Gotcha. Okay, so start of graduate school, things are actually not looking too great for you to start of graduate school. Approximately $60,000 worth of debt, not a very generous stipend, although probably okay, given where you were living. But then second year and following, buku bucks, at least for the time you were on the NSF. What’s the snapshot of your financial picture upon your defense, when you finished graduate school?

07:35 Indira: Upon defending, I was completely out of debt. I had $0 in debt. I tried to pay off everything, so my goal was pay it off in five years and I paid it off in four and a half, so my last year I had absolutely no debt at all. My car was paid off. I had paid all my student loans, except for maybe like $1,000, that I think is lurking somewhere from undergrad because the $20,000 I had was for my first year of grad school because I had moved away from the Caribbean to the United States, and so I felt like I needed the extra money, but I had about $2,000 in undergrad, which those are deferred because I’m still taking in school. But your grad school loans, they accrue interest while you’re in grad school, so I was determined to pay off that before I graduated. So on graduation day, defense day, I was completely out of debt, which was amazing.

08:22 Emily: So just so I’m clear about where the student loans came from, that was from the year that you were in school prior to starting your PhD? Is that right?

08:31 Indira: No, so the year prior to starting my PhD, I was fully funded. I think we got like $2,500 a month for a year or eight months pre-doctoral program. Then, right before I started grad school, I applied for financial aid, for a student loan until the start of grad school. I had a $20,000, I don’t know what it’s called, but essentially it was a loan from the federal government and it accrued interest every month. once you started grad school.

08:59 Emily: Okay. So you had taken out a $20,000 student loan, but you also had the loan money. You received it at that time, at the beginning of graduate school?

09:09 Indira: Yes, essentially they give you the loan from the beginning, and then you decide, which was scary because I’m like, I have $20,000, what am I going to do with it? But the point was for moving expenses and living other things that I didn’t account for moving from the Caribbean. So I had that, and from day one, I guess it started accruing interests, so when you get that first bill where it’s accrued about $50 an interest, because I think it was like a 6% or 7% interest rate and I’m just like what. And I didn’t even know that at the time when I applied for it because I assumed I’m in school and I’m not gonna be paying off or getting interest while I was in school, but not for grad student loans, apparently.

09:50 Emily: Yes. Okay. I’m glad to get a little bit more clarity on that. So you took out the loan at the beginning of graduate school, which was un-subsidized, as graduate student loans are, because of the expenses that you had just accrued immediately before that in the moving expenses and so forth. And also, I’m assuming you’re looking at your stipend thinking, “how am I gonna do this?” Okay, so you had that loan right at the beginning, but then by the end of it, you had paid that loan back entirely, as well as the rest of your debt. Anything else going on in your financial picture by the time you finished graduate school?

10:22 Indira: So at that time, about maybe by third year of grad school, I had started saving, just regular savings in a bank, and then I also started investing in a Roth IRA where I ranged from putting in monthly about a $100 when I started and then maybe I upped it to about $300 a month. So I had a Roth IRA and regular savings at the end of grad school and zero debt, which was amazing.

Making the Changes to be Debt Free

10:47 Emily: Yeah, that sounds fantastic. And what a turnaround story. So what were you doing in between point A and point B to have this vast change?

10:57 Indira: Right. So essentially I applied to everything, including large grants up to $40,000, $50,000, or if you account for stipend, some of them were $80-$100,000, to things that were even just $500 for anything, whether it’s for research or…What I did was, so for example, if you go to a conference and they give you per diem, where you have about maybe $90 a day for breakfast, lunch and dinner, I don’t need $90 a day for food. I don’t normally spend that anyways. And so yes, I can’t meal prep while I’m on a conference, but I usually don’t have breakfast anyways. I’m not gonna waste $30 on breakfast. So when I get back from the conference, especially say a week long conference, I now probably save at least $30 for five days from a conference that I didn’t have breakfast. And most conferences probably give you coffee and bagels in the beginning anyways. Mmost times I probably spent most of the money on dinner because that’s when you network with colleagues in the field. So $30 breakfast and maybe I’m off $50 for lunch, so $70 for five days that I would save. I think that was one of the easiest ways in the beginning that I learned to save money from money that I got legally — legally I’m saving this, but I’m not, you know, forging signatures to say I didn’t have lunch or something like that. Not signatures, receipts, sorry. Because with per diem they’re not asking for receipts.

12:15 Indira: Then the other method. I meal prepped, so I didn’t have to buy lunch, because as grad students I think it’s so easy to run to the cafe and get something there, long nights you get food there, but I generally meal prepped, most times, on Sundays. I have these Mason jar salads that towards the end of grad school I learned was amazing, and so I would prep five and that’s lunch for the week. I have no excuse to buy lunch, especially since a salad costs like $10, when I probably spend $15 for five salads a week. I had fun, I hung out with friends, but I always planned it. Not the specific event, but plan for this month, like I’m spending $120 on fun and by the halfway of the month I’ll check in, where are you in that $120. Because I feel like once I’m out I’m like, “Well, I’m out, I’m going to have fun, I’m not going to make finances keep me down.” And so I just spend whatever versus if I know I’m within my budget, it doesn’t matter. But if I didn’t plan for it, then I overspend.

13:15 Indira: I also did a lot of side hustles, in addition to funding and federal money, where I did hair braiding, dog and cat sitting. House-sitting was my first summer when I moved. I moved about two months early before grad school and instead of paying for rent, I essentially house-sat for someone and they had a cat, so house and cat stuff for that two months. I also did Airbnb with my apartment. In PA, it was a lot cheaper than New York, so I was able to have a two bedroom apartment. On football weekends — Penn state is a big football school — so from Friday evening, someone would come and leave early Sunday morning and in just one weekend I can make anywhere between $600 to $800. I would just go bunk on someone’s couch and leave my entire apartment for someone, because even within the town, they knew football weekend was big, so hotels would be about $400 a night. Instead of paying $400 a night for a bedroom, they’d easily pay $400 a night for a whole house. I did football weekends about maybe five or six times a semester in the fall, and that would essentially be my roommate. I had a two bedroom, but I didn’t need a roommate. Then on graduation weekends, which was in May or December, but usually the May graduation weekend hotel rooms would be like $800 and $900 as well, so I would rent out my entire home again. On graduation weekends, I think I did it twice, and one time I got about $1,500 for just the weekend. I don’t remember the second time how much it was, but it was around that. So side hustles, applying for everything, and also meal prepping, saved me a lot, and planning my expenses for even fun.

Balancing Different Incomes During Grad School

14:56 Emily: Yeah, that was an amazing amount of information and amazing overview of what you were up to. I want to follow up on a lot of that stuff, but just before we get there — so when you started graduate school and you had this lower stipend level and then you know, in the next year the NSF stipend is so much higher than what you were making, so you have this vast income increase — did you change anything in between those two years? Were you living in the same place, for example?

15:28 Indira: Between the first year of grad school and second?

15:31 Emily: Yeah. I’m kind of wondering if you sort of set up your life in the first year to live off of that $20,000 per year-ish, but then you had that vast income increase — did you increase your lifestyle or did you keep your lifestyle at that original level?

15:45 Indira: No, so at the very beginning I was making about $1,800 a month and so I lived in a one bedroom, but technically it was actually more expensive than the two bedroom I moved into cause it was like a apartment complex versus someone who had a home and they were like, yeah, you can live here kind of thing from Craigslist. Um, and so I didn’t intentionally necessarily go cheaper. So that was really the only thing that changed. I probably, I think I was being like $975 for a one bedroom and that I paid like $950 for two bedrooms. So it wasn’t necessarily a big change. I still had a car so that all of those things remained the same. Um, side hustling if anything. I started Airbnb my second year. So even after I got NSF, it was when I started doing it, because I was like my biggest paying side hustle.

16:29 Indira: Lifestyle-wise most of the things stayed the same which is, I think one of the beauties of grad school. Your bills, your lifestyle for the most part stays the same for at least five years. I think for things like that, I started realizing, and I did a workshop from the Black Graduate Students Association and they had something about financial literacy. I think that’s when I realized, wait, my bills are going to be the same for the next five years and we’re having all this money coming in. I could pay off my loans, I don’t have to wait until the end. I think that’s what kind of like started opening up my eyes. But as far as lifestyle, no. Those things pretty much stayed the same for five years. Aside from like emergencies and stuff like that and just like maybe a little more traveling towards the end. But the basic lifestyle remain the same.

17:14 Emily: Okay. So really what happened is you had your lifestyle set at that original stipend level that you were receiving, and then your income vastly increased both from the NSF and from your side hustling. Were you just like crazy throwing everything at debt? Like that was a huge goal that you had. What were you doing with that excess?

17:34 Indira: In the beginning it was more so I never used to save. Like I said, the year before I started grad school, I did that pre-doc program and we got about $2,500 a month and we didn’t have to pay for housing because all of that was paid for. I don’t know where that $2,500 went for eight months. So when I started grad school and I realized I’m getting paid less than I was going to get out of the pre-doctoral level, I was like, “Wait, this makes no sense. Where did that money go? I need to learn to start saving.” I started just putting that extra money in savings, but then realizing of course I’m not getting a big return. All right, I know those debts, those bills keep coming back. And I’m like, “Why am I just letting this accrue interest for the loans?” So then I started paying just the interest rates and stuff like that.

Indira: I think I just didn’t want to be in debt and I realized that I have all this money coming in and grad school and the lifestyle that’s going to be the same for five years. I started realizing that I was blessed to not have $100,000 in just undergrad debt alone because a lot of my friends did. They just have that sitting there because it’s not accruing interest and that’s fine, but I realized too, a lot of them were taking that money and living a more luxurious lifestyle now in grad school because we’re getting all this money and we could live a pretty decent lifestyle depending on how much money you get coming in. But I’m like, “why not just pay off the other debt?” because then guess what, when you’re done with grad school, the debt is still there waiting for you versus live a balanced lifestyle and paying off your debt. I think it wasn’t like a big, “I have to pay off $60,000 debt”, I was just more aware of where my money was going and one thing after another just led me to investing and putting it into different things.

19:18 Emily: Yeah, I’m really glad that you had that sort of realization. Yyou had this one year in the pre-doc program where you are making a pretty okay amount of money for a stipend, but where was it going? And you sort of had a re-evaluation point, like “Okay, I don’t know what just happened to all of that. I obviously have to change some things within like my financial management going forward.” Also, it sounds like you also went to some financial literacy events or a course or something and that also helped you think differently about your money during graduate school and realizing that you had the ability to work on it right then and didn’t all have to wait for the end.

19:57 Indira: Right. Because unfortunately I think a lot of us are just not taught about how to use the money we get. And so then when you get it naturally, we’re like, “Oh my God, I have all these extra thousand dollar a month. Maybe I’ll go somewhere and travel, do something.” Which is nice, but I mean I think that workshop from the Black Graduate Student Association definitely opened up my eyes.

20:13 Emily: Yeah. Sounds super valuable. I’ll make a shameless plug for my own services here. Probably not exactly the same as what you experienced, but I do offer seminars and webinars for universities, specifically for grad students and postdocs on, I don’t call it financial literacy, but I call it personal finance. So anyone out there who’s looking for that kind of programming that can be incredibly life changing, please think of me. My website, pfforphds.com/speaking, is where you can go to find out more about that.

20:38 Emily: Back to Indira’s story. Okay, so we’ve seen the beginning of the end point. You’ve talked about a few of the strategies that got you from point A to point B. I want to dive into each of them a little bit more. So as you said, you were applying for everything to increase your income, including, I mean obviously you won the NSF, you’ve already mentioned that. That’s awesome. Probably the biggest difference of any of anything that happened. You were talking about how you were using per diems from conferences, but just being frugal right around your food spending. So instead of spending 100% of what you are given, that really is a little bit of like windfall money. You come home from a conference, you realize, “Okay, I was receiving X amount of money, only spent whatever it was, 50% of that.” Hey, a little bit of extra money. That’s something that I think having a plan for, that’s what I call windfall money, unexpected money that enters into your pocket somehow. Did you just throw that towards whatever your current goal was? Savings or debt? How did you think of it?

21:41 Indira: Yeah, so in the beginning, whatever extra I had, I just had it in savings and then I realized my savings was looking really nice and I was like, “well, what am I doing with this money?” I don’t have kids. I send money home to family and stuff in the Caribbean, but aside from that, I didn’t have a need to have a big cushion. Especially, like I said again, I know I’m not going to get laid off of grad school, so I didn’t have to have this big cushion in case I lost my job. I was like, “what am I gonna do with that?” In the beginning, I put everything into savings and then I started doing the Roth IRA because I’m like, “Oh well maybe I can get a bigger return there.” Now, as a postdoc, I’m doing some regular investments as well. But at that time it was just a Roth IRA and savings. I started calculating, if I have this in my Roth and this in my savings, where there’s still a “life happens” emergency fund in my savings, the extra I put towards starting to pay off my student loans. I think at one point I just put a lump sum on my car payments. That way, in case something happened, I just didn’t have like the feeling of every month I had to pay a certain amount and if I didn’t then all of a sudden it’s a problem, so I just put a lump sum down. Technically, I was always about three months ahead of my actual payments due. So starting with savings, then the Roth, and then started paying off the student loan and the car loans and the other health insurance and credit card debt. It’s like the highest interest rate and from there, just started working my way down. One thing I liked about what you said is that extra money. I had a monthly income, then I said this is what I’m spending and when I calculated my spending, I had fixed, flexible, where fixed is like the things that you need — there’s no ands, ifs or buts about it. And the flexible is like Netflix or eating out and stuff like that. Those were budgeted based on my $1,800 a month, and then when I had NSF, it was budgeted on my $3,500 a month and then all the extra staff, I never budgeted. Those just went into my savings and paying off debt. I never felt like I was using it and then extra stuff, that I used for extra fun.

Side Hustling as a Grad Student

23:55 Emily: I see. Yeah. Thanks for going into the that detail about your budgeting. You also mentioned that you had tried out several side hustles and I wanted to know because a couple of them are pretty accessible. So the first one that you mentioned was, house-sitting or cat-sitting, which basically meant that you didn’t have to pay rent for two months and this is like sort of a holy grail of things to pursue. How did you land that gig?

24:23 Indira: The house-sitting the first semester — I told my advisor that I wanted to move early and do an RAship, or research assistantship, so she paid me what they would pay a regular RA. I also asked her if there was anyone — on the faculty list there’s always people going on sabbatical or going away for the summer, for a month or during the summer. I know a lot of faculty members, from being at Pittsburgh, I know a lot of them were going away for about at least a month and they were looking for places or people to house-sit, or cat-sit if they had pets. So I was like, “Oh I wonder if people at Penn State do the same thing.” And lo and behold, they did. There happened to be a faculty member who was going away for the two months that I needed a place before grad school. I asked my advisor, she gave me a few different people who were looking, I reached out to them, told them I was moving, going to be a very responsible grad student and I would love to take — at the time, I didn’t have a dog so I didn’t have any recommendations about being a pet-sitter. But I mean, it was a cat, so I think it was easier to sit for a cat. I just applied and reached out to people and interviewed through Skype and stuff like that and then moved all my stuff into their basement, until I was ready to move into an apartment for grad school.

25:31 Emily: Thank you so much for sharing that because, as I said, I think it’s very accessible. It’s maybe not something you’d do 100% of the time and obviously later on you rented an apartment, you didn’t end up doing that 100% of the time. But for a bridge kind of period of time, it’s really perfect. And again, for the summer, as you said, faculty do travel quite a bit. Even someone going on sabbatical or whatever, could be longer than that. What you did is so easy to do. You asked your advisor, you got some recommendations, you followed up with those people, you land —

26:04 Indira: Sometimes our advisors may not know, but once I was in grad school, I also knew what people who needed house-sitters. I think even asking just the grad students, “do you know any faculty member who needs someone,” is another way to go about it, especially again, even sabbatical. I never did it, but for sabbatical, if someone’s going away for a year, that’s a year you can save in rent. I know one person who did that, so there’s definitely ways to save for rent.

26:27 Emily: You know someone who has sat for a year, like nine months?

26:31 Indira: Yeah, it was a little tricky. She house-sat for about four months. It was half a year, so it was just a semester, and she just stayed at their house. She still had her apartment, because she had a partner and he had to stay there and whatnot, but assuming she didn’t have a partner, that would’ve been saving rent for an entire three, four months. I know other faculty members who leave for six, eight months or usually two semesters I guess, and if they have a pet, that’s usually the key thing, where they need someone to stay there because they can’t take the pet with them or they rather not. They usually just have students who can just come and check in, but because usually we have our things set, and especially in a small town, it was a little tougher because you can’t get a six month lease or three month lease, it’s always a twelve month lease and you don’t want to break your lease. But given that opportunity, depending on the state that you’re in, the city, you would be able to just stay at that person’s place.

27:32 Emily: Yeah. This is a great idea for anyone who’s again doing something like moving somewhere on a little bit of an off schedule from what the market is accustomed to. That’s amazing. What were the other side hustles that you mentioned?

27:46 Indira: I did some hair braiding, so doing people’s hair. I have locks now, but before that I did all kinds of hair, and all kinds of races too. Especially being in State College, a lot of the faculty members kids wanted braids, for example. I know a lot of friends for example, who braid hair, but it’s a little tricky to braid ethnic hair versus someone who’s white or Hispanic. I braided all kinds of things. I would do the kids’ hair and of course they love it and be excited and be like, “Oh my God, I want you to do it to my hair all the time,” so that was a client automatically, at least once a month. Then I also did Airbnb.

28:22 Emily: Right. Airbnb. Yeah. That was the other thing I wanted to follow up with you about. It’s very evident to me that you have this, I don’t know if I want to say entrepreneurial, but you just go after things. You just take opportunities as you see them, which is amazing. The Airbnb thing I think is so clever and it’s again, something that I haven’t heard of from a PhD before. I wanted to talk to you a little about it a little bit more. You were renting during this time, right? And was that kind of usage of your rental in accordance with the lease?

28:53 Indira: I know in New York there’s a lot more, I didn’t realize there were so many restrictions with Airbnb. I know there were some rental properties in State College that didn’t allow Airbnb. I was pretty up front with my neighbors. They were these old little couples, so they were pretty flexible. I told them, you know, I’ll have people coming into my, I didn’t say Airbnb because I didn’t think they knew what Airbnb was anyways, but I was like, I have people who will be visiting and they would stay here on the weekend, especially a football weekend, Friday to Sunday. I will make sure they don’t damage anything, everything will be my responsibility, although Airbnb I think reimburses up to like $1 million in damage, I never had that issue. I essentially just reaffirmed them that I will have strangers in my apartment for short periods of time and I will make sure that they don’t disturb the neighbors or anything like that, but if you have a problem let me know. But actually, I think they never lived close to me anyways and like I said, they were older couples, so maybe there was some leeway there. Even after I started doing Airbnb, I told all my friends about it cause I was like, there’s so much money to be made here. Some of them illegally did it and others, their apartment people were fine with doing it as well, for the most part. I think it depends on the city. I think New York is definitely a big no, no, but in PA, unless it was one of those big fancy new student-based apartments, most apartments allowed it.

30:13 Emily: Yeah. This is definitely something that if someone’s interested in this idea, they definitely just have to keep on top of the regulations because it can change really quickly. But yeah, your place in time, it sounded like it was perfectly acceptable and the numbers you were throwing out earlier were very impressive for the amount of money you were able to rent for, especially the graduation weekends. I’m just thinking, you saw a huge influx of people coming in for a game day, coming in for graduation, and you saw what hotels were charging and you just said, “well, I have a place to offer too.” That’s just amazing that you did that. It sounds like some of other people are doing as well, so it’s not like you are the only person who thought of it.

30:49 Indira: I think about maybe four or five of us did. I don’t know anyone who was doing before me. Not like I’m the person who told everyone about Airbnb, but I think everyone was a little hesitant about having someone in their apartment. Is someone going to steal my stuff? And so I think after just being like, “no, there’s no harm because Airbnb also reimburses you up to $1 million,” that’s what they say anyways. I think when I got a dog it got a little trickier. Towards the end of grad school, I had a dog and it was easy for me to just go stay on someone’s couch, because you have friends, you’re probably spending the night there anyways, but with a dog you have to bring a crate and then if they don’t allow dogs in their apartment that gets a little tricky. I would do it a little less frequently when I had a dog and then the last year I just didn’t at all because it just became inconvenient for both me and him and my friends. But I think without a dog or if it’s a really small dog where you don’t have to bring a crate and all that stuff, then I think that’s more flexible too. Or like my friends, if they did it a weekend, I would take their cats and stuff and because it’s easy with a cat and stuff. I just think it depends. For the most part it was, I think, my most favorite side hustle because it brought in the most money for the least effort. Then the second one would have been hair braiding because I just loved doing hair.

32:05 Emily: Yeah. That sounds incredible. And I think this is again, potentially very accessible for other people who live in college towns who can see the same patterns emerging of people flooding into the city for big events.

32:17 Indira: I mean anywhere, especially college towns that have football games because people are just going to spend money. They come with families, they want a big place or a place versus just a hotel room. And there’s a really low risk because the whole day Saturday they’re at the game, so they’re not really there and you can decide whether or not you want them to have parties at your house or not and then they usually leave early Sunday morning and they come late Friday night. It’s really one full day that they’re there. Even now in New York, I was looking into it before I found out that you had to do at least 30 days or something like that. New York would be a good place too if it wasn’t the 30 day limit because again, it’s just another place where people are always coming in. I think as long as it’s a place that people like to visit, I think you can do it.

Lifestyle Changes as a Debt-Free Postdoc

33:03 Emily: Yeah. Oh my gosh, I’m so excited about this. Thank you so much for sharing that. We’ve talked a lot about your time in graduate school. Now that you’re a postdoc and you have even more experience in a different city now as well, you have a whole different set of challenges. What does your budgeting method look like today? What are your best practices?

33:23 Indira: I still use the same thing. I have a monthly budget, I have fixed and flexible spending and I still pay off my credit card in full. Recently, I’ve been experimenting with just trying to calculate the percentage of things that I’m spending for each expense. You know, because of the whole don’t spend more than 30% on rent kind of thing.

33:44 Emily: Exception, New York.

33:46 Indira: Exactly. I’m like, I don’t have a choice. So just having a better sense of my income and where it’s going and what I’m doing. Because in grad school, for example I just had my main fixed spending, flexible spending and everything else just went to debt. Now that I don’t have necessarily debt to pay off, but I have a huge rent and living expense, I just want to know where that money’s going. I still have a Roth IRA and now I am also doing regular investments with stocks and bonds and all that stuff. I just have the one you just leave it and you forget about it. I don’t do the following the stock market. That’s a lot for me right now. Maybe eventually one day, but right now I don’t think I have the time for that.

34:27 Emily: Stick with your current strategy, it’s a good one.

34:29 Indira: Exactly, stick with what you know. For the most part I’m doing the same strategies. I have a Mint app and I also still have an Excel sheet just to kind of visualize where all the money’s going because I think it’s a lot of anxiety of just spending way more than 30% of my postdoc salary on rent, but I’m okay. It’s more of an emotional thing to just feel okay about it. I don’t have a lot of money and I’m spending a lot on rent, but I’m still okay. I’m still doing the same thing.

35:02 Emily: Yeah. Okay, great. What frugal strategies are you using? Are you still meal prepping?

35:08 Indira: Definitely. I still meal prep. My Mason jar salads are still part of my lunches. Depending on my workout schedule and whether I am consistent with working out, I do breakfast, but I haven’t figured out a meal prepping for breakfast yet. Sometimes it’s just a shake. And then dinners, I also still meal prep. I have been trying to strategize and trying to figure out whether I need to meal prep all dinners. Because it’s fine for me to eat the same salad for months and years while I’m at work, versus when I get home, if it’s winter, I don’t really want the same food I had yesterday or maybe want something hotter. It just depends. I’m still trying to figure out dinner, but for the most part I still don’t eat out a whole lot. I still budget, like this is what I’m going to budget for lifestyle this month and if it’s the second week and I’ve gone through that, then I guess we’re done eating out for the week or the month or you know, hanging out or whatever. I still budget everything for the most part and just try to not overspend on things that I don’t need.

Indira: I don’t really take Ubers. The train is pretty reliable in New York. Unless I’m really, really late for something and it’s important that I can’t be late, then I’ll take an Uber, but for the most part, I still take the train everywhere. I feel like a lot of people are just like, “let’s Uber and I’m like, no, I’ll meet you guys there. I’ll take the train.” There’s just so many ways to lose money in New York. It’s ridiculous. I’m still trying to figure that out. I’ve been here about nine months and so I’m still trying to figure out going out. I was a big outdoors person in PA, so parks and hikes were great. Not so much in New York, although I do live close to a park, but it’s not like a hike. I’m trying to figure out those new things because I know there’s a lot of free things in New York, I just need to figure those out. But I still for the most part have a lifestyle and it’s just a matter of, again, budgeting that lifestyle.

Final Words of Advice

36:53 Emily: Thank you for sharing that. Final question as we wrap up here. Thinking back to yourself, your starting graduate school, you have a low-ish income coming in, for the stipend. You have this debt load. In fact, you even took out a student loan because you were unsure about how things were going to go with your finances. What advice do you have for another person facing that kind of financial challenge and also on a grad student kind of income?

37:19 Indira: I mean I think it’s kind of the same things you just summarize. I think apply to everything, no matter how small or large the grants are, because I think the more grants you apply to, the better you get at grant writing. In the beginning it may seem like, “Oh my God, I don’t want to write this essay or this statement.” But over time I reuse statements. And as you get deeper in the program, you learn to write better. You change things, but for the most part I never really rewrote a grant from scratch after my second or third year. Apply for everything no matter how big or small. Don’t doubt that you’re not going to get it, because a lot of grants I got, I didn’t think I was even eligible. Especially for diverse, minority students. I think there’s so much money for minority students that people just don’t even apply to. And then they give it to, not anyone, but people who actually needed versus who don’t. Because people who need it don’t apply or they don’t know about it. Ask other students because there’s so much. A lot of the grants I applied to was because another student had applied to it before. Imagine one person may not have five or ten grants, but if you ask ten different people who had ten different grants that’s ten different grants you can get, so apply for everything.

Indira: Definitely pay off debt while you’re in grad school. Don’t let it sit there and whatever money you get, don’t use it for other lifestyles until after you pay for your debt. One thing I did was paying off debt and then whatever was left over I would have for fun, travel, and stuff like that. And it’s okay to take out a loan in the beginning, especially people who have like $100,000 in debt in undergrad. Yes, it’s not accruing interest, but if you want to take out a loan and just pay a lump sum for now and just to get in the habit of like paying something down, take out the loan. And apply for a lot of things. Have a strategy to pay off the loan before you finish grad school because that loan is going to accrue interest. But in the long run you paid off more in grad school and then it’s like it never existed anyway. So apply for everything, pay off debt while you’re in grad school, and do what you need to do to also still balance life and paying off debt because you don’t have to be miserable paying off debt.

39:21 Emily: And I definitely would also add to that, from your story, just go after it. I mean you were going after funding, you said no to your program: “No, you’re not going to cut my funding. I won so much money. No, you’re going to pay me more.”

39:34 Indira: When you’re starting, so I know I asked after, but even in the beginning, once I was through the program and seeing behind the scenes, you can ask for more money in the very beginning before you even start grad school. They’re not going to take back your letter and say, “well, you asking for too much” because if they have it, they’ll give it. The worst they can say is no. So if they have it, they will give it. So ask.

39:52 Emily: Yeah, I totally agree. And I’ve done one podcast episode on negotiating grad student stipend, before in season one. I’m planning on releasing another one, actually a compilation of stories in the  early months of 2020. So if you’re very interested in grad student salary, stipend negotiation, please tune into those episodes.

Emily: Indira, thank you so, so much for sharing this story. Where can people find you?

40:16 Indira: I have been trying to be a lot more active on Instagram, so on Instagram it’s just my name, Indira Turney, so @indiraturney, I N D I R A T U R N E Y. And it’s the same on Twitter, as well. I think those are my two main networking platforms. Email is Indira dot Turney at gmail dot com. It’s fine if you want to ask me questions, please reach out. I’m always open. Like I had mentioned earlier, I’ve been trying to be more open, even about just budgeting on a grad school stipend on Instagram, but also I’ve been also doing a lot of one-on-ones with people just talking about their process because there isn’t a one size fits all for budgeting because people have different scenarios. If you’re interested, send me an email, reach out to me on social media and I’m happy to answer any questions.

41:05 Emily: Yeah, that’s amazing. Thank you for that work that you’re doing, and thanks so much for coming on the podcast today.

41:09 Indira: Thank you for having me. I had a lot of fun.

Outtro

41:12 Emily: Listeners, thank you so much 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’s show notes, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to PFforPhDs.com/helpout. There are plenty of ways to sell without laying out any of your own money. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Poddington Bear from the free music archives and it’s shared under CC by NC.

 

The Graduate Student Savings Act Fixes a Major Flaw in Tax-Advantaged Retirement Accounts

October 14, 2019 by Meryem Ok

In this episode, Emily interviews Abigail Dove, a PhD student at Johns Hopkins. Abby spent last summer as a science policy fellow at the Federation of American Societies for Experimental Biology (FASEB). Her major policy accomplishment during her internship was to secure FASEB’s endorsement of the Graduate Student Savings Act of 2019 (GSSA), a bill that has been proposed in both chambers of Congress. Graduate students and postdocs are not currently permitted to contribute their non-W-2 income, which typically comes from fellowships and training grants, to Individual Retirement Arrangements (IRAs). The GSSA would allow this type of income to be contributed and have a very beneficial effect on the PhD trainee workforce. Abby explains her role in shepherding the GSSA endorsement through FASEB, what the GSSA would do for graduate students and postdocs, and how the GSSA relates to the SECURE Act, another bill that has passed the House and is before the Senate.

Links Mentioned in the Episode

  • FASEB Webinar on Work-Life Balance
  • GSSA – House Bill
  • GSSA – Senate Bill
  • Personal Finance for PhDs: Schedule a Seminar
  • FASEB Statement on GSSA
  • SECURE Act
  • Personal Finance for PhDs: Podcast Hub

SECURE Act fellowship income

Teaser

00:00 Abigail: But it was a little tricky for FASEB to first navigate the waters. They’ve never supported a tax legislation before. You think that experimental biology doesn’t have that much to do with legislation on tax. But here was a perfect one for them to start.

Introduction

00:22 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 four, episode nine and today my guest is Abigail Dove, a PhD student at Johns Hopkins and recent science policy fellow at FASEB, the Federation of American Societies for Experimental Biology. Abby’s major policy accomplishment during her summer at FASEB was to secure FASEB’s endorsement of the Graduate Student Savings Act of 2019, or GSSA, a bill that has been proposed in both chambers of Congress. Graduate students and postdocs are not currently permitted to contribute their non-W2 income, which typically comes from fellowships and training grants to individual retirement arrangements or IRAs. The GSSA would fix that problem and have a very beneficial effect on the PhD trainee workforce. Abby explains her role in shepherding the GSSA endorsement through FASEB, what the GSSA would do for graduate students and post docs, and how the GSSA relates to the Secure Act, another bill that as of this recording has passed the House and is before the Senate. Without further ado, here’s my interview with Abigail Dove.

Will You Please Introduce Yourself Further?

01:33 Emily: I have joining me on the podcast today, Abigail Dove, and she is a PhD student who completed an internship at FASEB last summer. And she has a lot to tell us about the Graduate Student Savings Act. So if you have been wondering about your IRA and why you can or cannot contribute to it, that’s what we’re going to be discussing in today’s episode. Abby, thank you so much for joining me today and will you please introduce yourself a little bit further?

01:59 Abigail: Sure. Thanks for having me. My name is Abigail Dove. Currently, I’m a PhD student at Johns Hopkins and I just started my sixth year. I work in fruit flies and study the gonad development. A little bit of my background: I first started as an undergraduate at Bard college, a small liberal arts school in upstate New York. And then I did a postbac for two years at the NIH NIDDK (National Institute of Diabetes and Digestive and Kidney Diseases) before starting at Hopkins. What we’re talking about is kind of the work that I did at my internship at FASEB, which is the Federation of American Societies for Experimental Biology, which I guess to be a little more descriptive it’s a society that represents 29 member societies, which has about 150,000 scientists that they represent.

Tell Us More About Your FASEB Internship

02:57 Emily: Excellent. You and I have common that we both did a postbac at the NIH. In fact, I’ve interviewed several other people on the podcast who have that on their resumes as well. So very popular program. Anyone still in college considering going for a PhD in biomedical sciences or related areas should definitely consider the NIH postbac program. It’s amazing. Okay. So you had this internship at FASEB last summer. What exactly were you doing in that role? Because it’s a little bit unusual for a graduate student to have an internship. And I think especially a graduate student in the biological sciences because, I don’t know about you, but I sort of observe the culture as like, “ah, you need to stay at the bench 120% of your time and never do anything away from the bench.” So please tell us a little bit more about what you were doing in that internship.

03:40 Abigail: Yeah, so I was really fortunate. I have a PI that–we both know that I’m interested in a career that is outside of the academic track. So, I did a lot of science outreach and I knew that I like communicating science to the public. So I wanted to pursue this career of science policy as a way to talk to the public about science and its importance. So what I did at FASEB, I had a lot of responsibilities. I was particularly interested in training and workforce policy. So, policy that relates to students, postdocs, and even faculty as it’s something that everyone can relate to. So that was one of the reasons that I was most interested in it. And I did a wide range of things. I hosted a webinar on work-life balance and the lab culture and we can include a link to that if anyone wants to watch it later. I represented FASEB on Capitol Hill and at the NIH for different events and I generated comments on sexual harassment that will soon be sent to the NIH. I also helped organize an online symposium series for the FASEB Science Policy Committee on challenges facing women throughout their career lifetime. And then I compiled minutes for the meetings, I drafted talking points for committee members, and then the big thing that I did was I spearheaded FASEB’s endorsement of the Graduate Student Savings Act.

How to Land a Science Policy Internship

05:13 Emily: Excellent. And we’ll get a lot more into that in a moment. But that sounds like a really exciting internship. It’s absolutely fabulous that your PI was supportive in you completing that. I actually did a science policy internship as well. The Mirzayan Policy Fellowship out of the national academies. That was actually after I finished graduate school. But it’s available to current graduate students as well. So, if what Abby was describing sounds amazing to you, that’s another potential avenue for you to get that kind of experience in science policy. Okay. So how did you actually land this internship if other people are interested in doing something similar?

05:46 Abigail: Yeah, so I first started–we have an office at Hopkins, it’s called the Biomedical Careers Initiative Office. And it’s really great for people that are looking for careers outside of the academic track. They were offering a course on science policy and advocacy that was actually being taught by the Director of Public Affairs at FASEB, Jennifer Zeitzer, and the Director of Science Policy, Dr. Yvette Seger. So the class gave us a background on legislation and how bills get enacted into law. And we did some case studies on different issues in science policy. They also taught us how to be a science advocate. But finally, we had to write a policy memo on an opportunity or challenge in research activities supported by federal funding, and we had to give an elevator pitch on that to the class as well. And I did mine on saving for retirement as a graduate student and a postdoc.

06:48 Emily: Yeah. Excellent. And so was it through that paper and that pitch that you gave that you found the Graduate Student Savings Act?

06:56 Abigail: Yes, that’s how I found it. Oh, I guess we didn’t cover how I got the position too. So this office that hosted the class actually also hosts internships for students. And so FASEB was also accepting applications for science policy fellows through the Biomedical Careers Initiative Office. So I applied for that directly. But they also have internships for a wide range of different careers outside of the academic track, including industry and consulting and patent law as well as policy.

What is the Graduate Student Savings Act?

07:33 Emily: It sounds like a great deal of support actually, that Hopkins is providing and helping you sort of step a little bit outside of academia into another role that can really presumably help your post-PhD career, should you decide to pursue one in science policy. So let’s kind of back up a second and explain more about what the Graduate Student Savings Act is because it’s probably not one that most people have ever heard of. Right? Like probably a lot of people in my audience, they know about IRAs. Maybe they don’t have one, but they sort of know they’re supposed to or maybe they know they might not be able to have one. So what is the Graduate Student Savings Act?

08:06 Abigail: Yeah, so the Graduate Student Savings Act. There’s a bill in both the House and the Senate and they’re essentially the exact same bill, so they’re called companion bills. And they would allow graduate students and postdocs who receive their income through either a fellowship or stipend to contribute to an IRA or an individual retirement account. The current issue right now is that on the current tax law, trainees who are receiving their income through a fellowship or a stipend are actually prohibited from contributing to an IRA because it’s not considered compensation or earned income.

08:44 Emily: Exactly. And I like to further kind of clarify this for people by saying within academia we might use the word fellowship in different ways. We might use the word stipend in different ways. Nobody’s ever heard the word compensation. But what it really boils down to is, is your graduate student or postdoc income reported on a W2 or not reported on a W2? It could be reported somewhere else, it could be reported not at all. W2 income is the kind of income, taxable compensation, or earned income that can be contributed to an IRA under the current law. And anything else in terms of graduate student, postdoc income non-W2 does not fall into that category, unfortunately. So that’s how things currently stand. The Graduate Student Savings Act includes this type of non-W2 or fellowship income in taxable compensation for the purposes of contributing to an IRA. Is that correct?

09:39 Abigail: Yes. And unfortunately, it doesn’t change its designation universally. It doesn’t make it earned income or compensation, but it just allows it to be saved for retirement purposes in an IRA.

09:51 Emily: Yeah. This is one of those confusing things about the tax code in general is that they use these terms like “taxable compensation” and “earned income” under different contexts. And so sometimes they have different definitions under different contexts. So earned income has other implications in the tax code, like around the earned income tax credit. Whereas, taxable compensation has a different meaning. It’s under the section for IRA contributions and so forth. So it’s sort of defined there as “taxable compensation for the purposes of contributing to an IRA is these things,” and currently, it says explicitly, “does not include fellowship income, not reported on a W2.” So that’s the current status. But then there’s this Graduate Student Savings Act bill as you said, it’s sort of on the floor in both the House and the Senate.

How Abby Got FASEB to Endorse the GSSA

10:37 Emily: I was looking at the history of this and I think the first time it was introduced was 2016 and it’s introduced every year I think in more or less the same form until now, 2019. We should actually say we’re recording this interview on September 25th, 2019. It will be released within a couple of weeks of that date. So things might have changed. But as of September 25th, 2019, the Graduate Student Savings Act has not been passed but it is, I guess, available to be passed. So, what was the process like for getting FASEB to ultimately endorse the Graduate Student Savings Act, and what work did you do to make that happen?

11:15 Abigail: Yeah, so originally before I even did the class, FASEB was not aware of the Graduate Student Savings Act at all. It wasn’t on their radar. It wasn’t until I wrote my policy memo on the issues of graduate students saving for retirement, and I actually did the research and I was just Googling it and I came across it on my own, that we both kind of became aware of it. And so I kind of took this on as a task that I wanted to complete in my fellowship and I thought it was an important task and FASEB was great. If there was an issue that I really wanted to take on and it was something that was good for FASEB to endorse, they would have no problem with me taking the lead. So this was my big accomplishment of the fellowship.

12:04 Abigail: And since FASEB is a nonprofit organization any bill that they support needs to have bipartisan support for endorsement. And that thankfully both the House and Senate bill had bipartisan support on both pieces of legislation. I think some of the previous iterations of the Graduate Student Savings Act didn’t have bipartisan support. So this was really important for FASEB to get on board. But it was a little tricky for FASEB to first navigate the waters. They’ve never supported a tax legislation before. You think that experimental biology doesn’t have that much to do with legislation on tax. But here was a perfect one for them to start.

Personal Impact of Flawed Tax Legislation

12:49 Emily: Yeah. As you were saying earlier, it’s a clear workforce issue. Right? So that’s the definite connection or conduit between what they do generally and this weird little tax quirk that happens to deeply affect their own workforce.

13:03 Abigail: Well, yes. So this actually personally affected me. From when I was in college and doing other side jobs, I was always contributing to an IRA, if possible. My dad is very financially responsible and he just told me when I was young, “you need to have an IRA.” He always recommended a Roth IRA. He always thought it would be better to get tax first and any profit you make later you don’t get taxed on. So there’s two different IRAs, a Roth and the standard IRA. So maybe some clarity on that. But this personally affected me when I was a post-bac for those two years I was receiving stipend income and wasn’t reported on a W2 so I couldn’t contribute to an IRA for those two years.

13:51 Abigail: Then my first year in graduate school I was on a training grant, so also not receiving a W2 so I couldn’t contribute. My second year I was actually a teaching assistant, so I was being employed by the university somewhat and getting my income reported on the W2. So I was for that year able to contribute, which was really great. And then I got awarded the National Science Foundation, Graduate Research Fellowship award.

14:20 Emily: Congratulations, but also, dun, dun, dun.

14:23 Abigail: Yeah. So it was really great. But then I also couldn’t contribute to my IRA because it wasn’t reported on a W2. So that affected me for my third and fourth year of graduate school. My fifth year I got married. So that changed things a little. I was still on my NSF fellowship. But because I was married to someone who had a real job and was receiving income that was deemed compensation, I was able to contribute to my Roth IRA just because I was married to my husband. so that was my last year of my fellowship. Now I’m back at Hopkins and I’m TA’ing for this year. So I will again be able to contribute even if my husband wasn’t receiving earned income himself.

15:14 Emily: Yeah, I have a little bit of a similar story of flip-flopping between RAs and fellowship income. And at some point I got married and so my husband, having a similar situation of flip-flopping between RAs and fellowship income, it helped in certain years one of us would have a taxable compensation, maybe the other one wouldn’t. So one of the things that helps people in this situation–under the current status of fellowship income, non-W2 income is not eligible to be contributed to an IRA–one thing that helps is that the academic year and the calendar year do not line up. So, if you have different sources of funding in two different academic years, maybe you can be covered for one calendar year in terms of being able to contribute. It helps if you’re married of course, to someone with taxable compensation. And the other workaround is actually having a side hustle that is self employment income. So self-employment income is taxable compensation that can be contributed to an IRA. So that’s something I sometimes float with people who are frustrated by their multi-year wonderful fellowship packages that don’t allow them to contribute to an IRA. If it’s possible to side hustle, that’s another way to kind of sneak in that eligibility. So, your stipend wouldn’t be eligible, but that side hustle income would be eligible. All these are workaround solutions, the real main solution is just changing the tax code because this is ridiculous that this is happening, right?

Commercial

16:35 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs, and other early-career PhDs for universities, institutes, conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you are interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. That’s p f f o r p h d s.com/speaking. Now back to the interview.

Anything Else About Your Role in FASEB?

17:25 Emily: Okay. So, anything else to add about your role with getting FASEB to endorse the GSSA?

17:31 Abigail: Yeah. So, because it was a tax bill and FASEB had never endorsed a tax bill before, they want it to go through full process of endorsement. They wanted to get everyone’s feedback on it. So the first step was going through their Training and Career Opportunities Subcommittee. So, they have a monthly meeting, I prepared talking points for the chair of that committee, and we discussed it and they couldn’t see anything wrong with it. So, we got a full endorsement from that subcommittee. Then we had to go up one level to the Science Policy Committee and did the same thing, had to talk to the entire committee, got overwhelming support of it. So, it got pushed up to the next FASEB tier, which was the executive committee. They gave the final approval. Actually, for the Training and Career Opportunities Subcommittee and the Science Policy Committee, I made a one-page summary of the current situation and how the Graduate Student Savings Act would change that. So, a one-page review for them. And then when we went for approval for the Executive Committee, we had the full letter drafted for them to approve, and we can also give you a link to the FASEB’s endorsement letter too, as well.

18:56 Abigail: Normally, it would go to the FASEB board for approval, but the board was jam-packed with what they had to do for that month. So, because we got unanimous support from the two committees before that, they thought that the Executive Committee approval would be sufficient. But I started my internship in June and it wasn’t approved until the first week of September. So, it does take a long time for this approval to go through because you have to wait every month for the next committee to happen. And if there are changes and edits to it, then it can also take a lot of time. You want to do it as quick as possible so the endorsement actually has an effect if the bill is getting voted on soon.

19:47 Emily: Yeah, exactly. This is fascinating to hear kind of how the sausage is made, and not even to make the policy, but just to get something like this: an endorsement from group whose endorsement matters in this kind of thing. What I’m just thinking is how good it is that FASEB has connections to the current trainee workforce like through you and other interns they accept because they had you to tell them, “Hey, this is an issue that’s going on. And by the way, there’s a solution to it and it’s in front of Congress right now.” So it’s just, I guess it’s really good for them to offer these kinds of internships programs to get those fresh ideas and those connections to people who are still in training.

20:30 Abigail: Yeah, I think they really appreciate the fellowship program for that same perspective. The younger generation. People serving on these committees and the boards are faculty members that have been serving for a while and they’re very removed from this training portion. I think there might be–and correct me if I’m wrong–but I think there could be a few postdocs who are serving on boards, but I think that’s very unlikely. Most of it’s always faculty. There’s never a postbac representative in these meetings. So, having a fellow there, they really value so they can get that younger perspective on what’s happening currently.

What is the SECURE Act?

21:10 Emily: Yeah. That’s excellent. Okay. So that was your role with FASEB and then with respect to the GSSA, the Graduate Student Savings Act. There is a different bill before Congress that has sucked up a lot more attention in terms of changing the tax code than the GSSA has, and that is the SECURE Act. Can you tell us what the SECURE Act is? Not in a lot of detail, but basically just how it relates to the Graduate Students Savings Act?

21:35 Abigail: The SECURE Act is Setting Every Community Up for Retirement Enhancement Act of 2019, and it’s just a massive retirement savings bill. For some perspective, the Graduate Student Savings Act is a two-page bill, whereas the Secure Act is 124 pages. So it’s just way too large for FASEB to endorse something so big. But fortunately, it has almost the exact same wording as the Graduate Student Savings Act in one of its sections. So it would get across the same thing as the Graduate Student Savings Act. It would allow graduate students receiving unearned income to contribute to an IRA account. It just was too big of a bill for FASEB to endorse because we can’t vet everything and it’s a little bit out of FASEB’s wheelhouse.

22:22 Emily: Yeah. So, basically what sounds like has happened is that the Secure Act has absorbed the Graduate Student Savings Act pretty much verbatim. And it’s making a lot of other changes as you said to retirement accounts. I’ll link to a couple articles on the Secure Act from the show notes, but some other things that caught my eye that it’s trying to address are like having part time workers have more access to 401k’s. It’s changing a little bit of the distribution rules, like once you’re actually in retirement and about inherited IRAs and there’s just a lot of changes there. Abby and I were glancing over it and we saw something that, “Oh maybe this addresses the kiddie tax.” We’re not even sure about that, which would be amazing if it does. So there’s a lot of different things that it touches.

23:02 Emily: And as you were saying earlier, like for FASEB being able to endorse the GSSA, the GSSA had to have bipartisan support. In fact the Secure Act does have bipartisan support. It passed the House and is currently hung up in the Senate as of, again, September 25th. Because the Secure Act passed the House with such strong bipartisan support, everyone kind of thought that it would pass the Senate really quickly. But it’s been hung up, so its future is uncertain but hopefully it will get through. And the wording that was adopted from the GSSA, hopefully that would actually be maintained. And in the final version we would actually see this benefit be extended to graduate students and postdocs where it wasn’t before. But that’s kind of where things stand as of today as of this recording. Hey, maybe by the time this is published something will have changed on that front. That would be awesome.

23:56 Abigail: I think something also important to note is that the wording of the bill, I don’t think that it would also apply to postbacs. It seems very specifically to graduate students and postdocs. So I think, unfortunately, postbacs would be still excluded from the Graduate Student Savings Act.

How Will the Internship Help Your Future?

24:12 Emily: Hmm. Interesting. Yeah. I’ll have to take a look at that because I didn’t realize there were distinctions being made among different levels of training. We’ll see how that actually shakes out. It’s always sort of uncertain until kind of the next tax cycle rolls around how these things are actually going to be implemented and everything. Thank you for pointing that out. For postbacs out there, this might not be the news you’re looking for. Maybe you still need the side hustle or maybe you still need to get married to have one of these workarounds. Just kidding, people don’t do that. Okay. So Abby, how do you think that this internship experience with FASEB is going to benefit your future career?

24:52 Abigail: Oh, I think it benefited me already tremendously. Besides from just getting a sense of what science policy really is and getting to immerse myself in it and what I would expect in a job. I got great networking. I already met a bunch of people because FASEB represents so many other societies. You know, I really got to get my name around and people know my work now. I also just got a ton of experience. I generated a bunch of writing samples, which is really crucial in the science policy job search, and I think I’ll get great references also for future jobs. So, it’s benefited me tremendously.

25:30 Emily: Do you have specific plans yet for after you finish? Like what positions you might apply for?

25:35 Abigail: Yes, I’m probably looking for science policy analyst positions. When I graduate. I don’t see really any benefit of doing a postdoc afterwards. There are people that continue to do more science policy fellowships. I’m kind of in the boat where I would just like to be out of fellowships and schooling and just want a real job. And I think with this internship I generated enough experience that I would be able to get an entry-level position and be a sought-after candidate.

Final Advice for Early-Career Grad Students

26:08 Emily: Yeah, I have a great deal of sympathy with that position of, “okay, I don’t need any more training. I’m trained. Let me have a job. Finally.” Definitely. So Abby, last question here, which is one I ask all of my guests. What is your best financial advice for another early-career PhD? And that could be related to something we’ve talked about today or it could be something entirely different.

26:29 Abigail: Yeah. So I think of course I would recommend that everyone should open and save in a Roth IRA account and start saving what they can, even if they can’t hit the max. But I think more importantly, we know that graduate school is a really stressful time, and I think it’s really important to invest in your personal wellbeing. And so if that means, paying for workout classes or traveling or if it’s even retail therapy. I think whatever it is, if it’s important to you and if it makes grad school a little bit saner for you it’s important to put some money aside and make time for yourself.

27:08 Emily: Yeah, it’s, it’s actually a little bit weird that sometimes we have to give graduate students permission to spend money on themselves. But if you think about it like more broadly, other people when they receive the financial advice to cut back on those discretionary expenses, cut back on those Wants and so forth, it’s usually because they’re spending at such a level that’s actually endangering their other financial security.

27:35 Emily: Graduate students I would say in general are not spending a sufficient percentage of their income on discretionary things for themselves. Actually, sort of to tie this back to the GSSA, one of the co-sponsors of the GSSA is Senator Elizabeth Warren. She’s sponsored every year in the past, whatever, four years that it’s been up. Many years ago, back when she was a consumer advocate, basically, she wrote this book called All Your Worth*. She co-authored it with her daughter. And that book promotes the balanced money formula, which is to spend, of your after-tax income, no more than 50% of your after-tax income on Needs, 30% on Wants and 20% to Savings. And I was looking at that the other day and I’m thinking that graduate students, I would be surprised if they spent 30% of their income on their Wants.

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

28:28 Emily: Usually, it’s that Needs category that gets up to 60, 70, 80% or more because of rents and high costs of living areas and low stipends and all of those kinds of problems. So yeah, in fact, sometimes we do need to hear the advice that it is okay to spend a little bit of money on yourself to help bolster your mental health and help you get through graduate school in great shape. Of course, it’s ideal if you can do that alongside saving for your future and doing all these other great things, but we want you to get through graduate school in one piece. So yeah, thank you for that advice, Abby, and for giving this interview today.

29:02 Abigail: Well, thank you for having me.

Outtro

29:05 Emily: Listeners, thank you so much 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, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to pfforphds.com/helpout. There are plenty of ways to do so without laying out any of your own money. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC.

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