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How This Grad Student’s Finances Changed During the Pandemic

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

Links Mentioned in This Episode

Teaser

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

Introduction

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

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

Book Giveaway Contest

02:36 Emily: Now it’s time for the book giveaway contest. In March, 2021, I’m giving away one copy of I Will Teach You to Be Rich by Ramit Sethi, which is the Personal Finance for PhDs Community book club selection for May, 2021. Everyone who enters the contest during March will have a chance to win a copy of this book. If you would like to enter the giveaway contest, please rate and review this podcast on Apple podcasts, take a screenshot of your review, and email it to me at [email protected]. I’ll choose a winner at the end of February from all the entries. You can find full instructions at pfforphds.com/podcast. The podcast received a review this week titled helpful advice to help you take action and optimize your personal finance. The review reads, quote, I share this podcast with all the academics I know. It is exciting to hear frank and relatable advice that can be actionable rather than just theoretical. A lot of the personal finance space doesn’t speak to the nuance of the academic life, but Dr. Roberts covers a wide variety of helpful topics. I found her work when I got a fellowship and was confused as to how to do my taxes, but I use the information across my whole financial life. A must-listen for every grad student. End quote. Thank you so much to AK for leaving this review. My subtle plot to lure grad students in with talk about taxes and then help them improve their finances overall seems to be working. Without further ado, here’s my interview with Eun Bin Go.

Will You Please Introduce Yourself Further?

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

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

Housing Decision at the Start of Grad School

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

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

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

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

Housing Journey After the First Year of the PhD

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

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

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

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

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

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

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

Additional Housing Moves During the Pandemic

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

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

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

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

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

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

How Did Housing Changes Affect Your Finances?

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

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

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

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

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

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

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

Weekend Side Hustle Toward Roth IRA Contributions

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

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

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

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

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

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

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

How Else Has COVID Changed Your Spending?

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

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

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

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

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

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

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

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

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

24:24 Eun Bin: Right. Mhm.

24:24 Emily: Yeah. Gotcha.

Commercial

24:26 Emily: Emily here, for a brief interlude. Taxes are weirdly, unexpectedly difficult for funded grad students and fellowship recipients at any level of PhD training. Your university might send you strange tax forms or no tax forms at all. They might not withhold your income tax from your paychecks, even though you owe it. It’s a mess. I’ve created a ton of free resources to assist you with understanding and preparing your 2020 tax return, which are available at pfforphds.com/tax. I hope you’ll check them out to ease much of the stress of tax season. If you want to go deeper with the material or have a question for me, please join one of my tax workshops, which you can find links to from PF F O R P H D s.com/T A X. It would be my pleasure to help you save time and potentially money this tax season. So don’t hesitate to reach out. Now, back to our interview.

Starting a Roth IRA in 2020 (for 2019)

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

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

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

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

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

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

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

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

Roth IRA Contribution Strategy in 2021

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

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

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

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

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

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

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

Transitioning from NSF Fellowship to W-2 Income

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

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

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

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

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

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

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

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

Best Financial Advice for Another Early-Career PhD

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

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

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

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

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

Listener Q&A: Making Smart Financial Decisions

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

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

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

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

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

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

Outtro

46:11 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs Podcast. On that page are links to all the episodes show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest and submitting a question for the Q&A segment. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media with an email listserv or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing debt repayment, and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance, for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

Working Before Starting a PhD: The Financial and Career Advantages

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In this episode, Emily interviews Diandra from That Science Couple, a PhD student in nutrition at the University of Wisconsin at Madison. Diandra went straight from undergrad into a funded master’s program, then worked for six years before starting a PhD program. She lists the career and financial advantages to working before embarking on a PhD—and the disadvantages. Diandra and her husband are currently pursing SlowFI (Slow Financial Independence) while she is in her PhD program, and she gives excellent financial advice at the conclusion of the interview.

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Links Mentioned in the Interview

work before PhD

Teaser

00:00 Diandra: I said that I never want to retire because I love research. And then I kind of shifted to, well, if money’s not the determining factor in the position that I choose, then we can spend more time with family. We can travel more and be open to different opportunities so that maybe money is more of a tool rather than a requirement. And if I want to donate my time to work on some really awesome, amazing lifestyle research that maybe doesn’t have much money in the budget to pay me, then I can choose to do that.

Introduction

00:40 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season seven, episode 10, and today my guest is Diandra from That Science Couple, a PhD student in nutrition at the University of Wisconsin at Madison. Diandra went straight from undergrad into a funded master’s program, then worked for six years before starting a PhD program. She lists the career and financial advantages to working before embarking on a PhD. And the disadvantages. Diandra and her husband are currently pursuing slow financial independence while she is in her PhD program. And she gives excellent financial advice at the conclusion of the interview. This interview came about because I noticed That Science Couple tweeting about financial independence. I checked out Diandra and her husband’s website and noticed that she is a PhD student. So I decided to invite her on the podcast. It turns out that Diandra is a long-time listener of this podcast.

01:41 Emily: I literally did not know that until just before we started our interview. So I have a message for other long-time or short-time listeners, i.e., you. I am actively looking for interviewees right now. If you have personal finance knowledge or a skill that you want to teach through an interview, I would love to have you on. It’s absolutely fine if you gained this knowledge or skill from personal experience. So don’t shy away from volunteering because I use the word teach. Go to pfforphds.com/podcast to volunteer to be interviewed. Do not make me hunt you down on Twitter. Also, if you would like to hear me interview a particular person on the podcast and can help me make that connection, please send us both an email or tag us on Twitter. I’m actually looking for interviewees who can speak to two topics in particular. One, the proper tax treatment of travel and research grants. Two, exactly what kinds of income-generating activities are and are not permissible on F1 and J1 visas. If you know a professional who works in either of those areas in the U.S., please email me that recommendation. I hope to feature many of you on this podcast. Without further ado, here’s my interview with Diandra from That Science Couple.

Will You Please Introduce Yourself Further?

02:57 Emily: I have joining me on the podcast today Diandra from That Science Couple, and I was so pleased to run across her and her brand on Twitter, that’s where I found her, to find another science couple like me and my husband, who are passionate about personal finance. So Diandra, it’s a real pleasure to have you on today. Would you please introduce yourself a bit further to the listeners?

03:18 Diandra: Okay. Thank you, Emily, for having me today. I’m a long-time listener to the podcast. I actually listened before I got into my PhD program. So that was a bonus. And my name is Diandra and I’m a second-year student, PhD student, at the University of Wisconsin-Madison in nutritional sciences. I have a Master’s in Cell and Molecular Biology from Towson University. And before I started my PhD program, I worked in the industry from technician to scientist in the field of late-stage cancer diagnostics for six years. I’ve held five positions at four different companies over the six years and met my future husband, Brad from That Science Couple, at one of them. Each move was growth and financially motivated. And I’d like to say that it all started with a simple 1% cost of living increase.

Career Advantages of Working Before School

04:02 Emily: Wow. Okay. Very fascinating. So I heard in that description that you had a pretty big change in fields between what your master’s was in, what you worked in, in industry, and then what your PhD is in. So maybe we’ll get into a little bit why that happened. Because the topic that we’re going to discuss today is that path that you took between your master’s degree and your PhD and what the advantages are of working for at least a year or two years, few years, before you start a PhD program. The financial advantages, the career advantages. So let’s dive into that. You obviously have experience in this area, but you’ve probably also observed peers as well. So what are the career advantages that you perceive for working for at least some period of time between, you know, the first round of training, whether that’s undergrad, whether that’s a master’s, and then embarking on the PhD program?

04:52 Diandra: All right. So one of the big career advantages that I noted was that you’re able to test the waters. So you can gain experience before committing that five or more years to a program. And you can also determine what you don’t want in a career rather than like, focusing on what you wanted. So as you go through, you might identify different work environments that don’t click with you or ones that you like really do like, and that can help you channel your focus for your PhD program and what career you would want after that. You also are able to learn about the business side of things. You could go through different phases to take a project from beginning to completion. You work in diverse teams. So I specifically had worked in several different companies, and that collaboration either with inside my company, or to other branches, was very valuable, I think as well.

05:47 Diandra: It also trained me how to have proper documentation. So this is very useful for a PhD program. A lot of the beginning part of work for my program right now is all acquiring samples and making sure that we have good QC metrics and that we’re starting from a level basis for all of our samples. And then also I learned a realistic view on the cost of research. So I did a lot of ordering with my jobs, and then I could see what it would take to run the samples, how many times, what you needed for different replicates and then including like the final, like analysis cost as well at the end. So I think that was really important to get a realistic view of what a project I could propose in the future might cost.

06:34 Diandra: Also, another career advantage is that I was able to network early. So when you work in the industry, every time I changed jobs, I would go on LinkedIn and I would request my coworkers so that I could follow them after I had moved on. And they became references for my future applications. I gave several of them references as well. And then I also gained new mentors through working before going into my PhD. And they’re spread across a variety of fields. So now when I come back from my PhD, I’ll be able to see where they are and then potentially choose a path that maybe they’re already on or they switched to during the meantime. And then, also, I believe that I bring something unique to my PhD from working in the industry. It definitely helped me to improve my PhD application because I had a series of projects that I completed. Products that I helped launch. So that was something that I was able to include. And then I acquired additional skill sets, knowledge, and problem solving. And I’m definitely a lot more confident this time around, and I have more life experience. So when they throw a curve ball at you, or there’s an issue with your dissertation, then I’ve already been through so many times when we’ve had to switch projects or stop in the middle and change course and correct from there.

Projected Future Career Advantages, Post-PhD

07:55 Emily: So clearly there are advantages to you as the future PhD applicant, like having a stronger application, once you do decide to go for those kinds of programs. There are advantages to you in terms of knowing what you want out of your own career, whether or not a PhD is going to fit in that, and what you want to do after the PhD. And so you’ve described what you’ve experienced so far as, you know, your path to getting into the PhD program. I wonder if you can project forward, what are going to be the advantages of having worked prior to doing the PhD, once you’re looking for your first post-PhD position. What do you imagine will be the advantages then?

08:33 Diandra: Yeah. So one of the advantages then is that I already have this network built in. So I’ve tried to collaborate potentially with like my former colleagues and so far it hasn’t gone through. But when I’m looking towards the future, there are potentials that if I was a PI, that I could actually collaborate with them more. So it being like across industry is a good connection to have. So they can give you a discount on your study as long as you’re willing to share the information. So I think that’s a big proponent and I already have some of my former colleagues that are keeping in touch with me now and seeing like where I am. So I know that they’re vested in me and that if I were to say, “Hey, I need to start a team.” I have several people who have already told me, you know, “Just let me know when and where.” And they would be willing to make the leap and come join me potentially in the future.

Financial Advantages to Working Before the PhD

09:31 Emily: Wow, that’s fantastic. I also think that it takes a variable out of the equation for your future employers of, can this person be successful in my setting, an industry setting and not just an academic setting. And that question has already been answered, especially for like you had maybe a longer period of work experience, not just like a year or two. That’s already been well demonstrated for you. Okay. So we’ve covered the career advantages. This is not a career podcast. This is a financial podcast. So what are the financial advantages to working prior to starting a PhD program?

10:05 Diandra: Okay. So this was a big one for us because it took a lot of thought into, you know, why go back when I’m already established in my field, right? So it will make a big impact on you financially. And so I think the basis is just knowing what you’re getting into. Knowing that you’re going to have a few years of low income, but you can weigh that versus the potential future gains. So originally the program that I was thinking I wanted to go into would have given me a similar skillset and would not have provided any leverage up in comparison to where I already was. But then this past year, as I was developing and choosing which lab I wanted to go into, I was able to identify like, look, this is a gap in my knowledge, this is a skill that I don’t have.

10:53 Diandra: So if I add this, and it was data analysis, so if I add data analysis, then I can be potentially location-independent. I can also add this as like potentially a part-time job as well. So I could do research and then do data analysis on the side. So it’s a side hustle potential as well. So, it brought a lot of additional motivation to the PhD that I’m not going to just go out and make the same money that I was making before, but I can actually leverage that further in the future.

How Did Finances During Work Help with the PhD Transition?

11:26 Emily: Yeah, absolutely. I’m also thinking about, you know, let’s say traditional PhD student, you know, straight out of undergrad, straight of a master’s degree, early twenties, not a lot of capital, maybe a lot of student loan debt. What were you able to do in your finances in those years when you worked that helped you once you transitioned into the PhD program?

11:49 Diandra: Yeah, that’s a great question. So financially I didn’t have any student loan debt because my parents paid for my bachelor’s degree, which was great. And then when I got my master’s, I said, I’m only going to do it if they pay me to do it because I wasn’t quite sold on the need for it yet. And it was just at a transition point where I had an opportunity to stay on as a master’s student with my current research, my undergrad research. So it just kind of flowed right through. And I was able to get a TA position that covered it and then paid a small stipend. So I wasn’t able to pay off any, you know, credit card debt or things like that during that time. But once I started working, I was able to over the years level that out.

12:34 Diandra: So I had $5,000 of debt that I had to level out. And then Brad had also had some minor student loans that he was able to pay off during that time. So we go from a negative net worth of, you know, five, 10,000 to a positive net worth. And starting to open that 401k was a turning point for me because I had always started saving cash. And I had this number, this like specific amount that I could always get to my bank account. And then something big would happen. Like I would have a car repair or I would have a medical expense or something like that. And then I would have to, you know, bring it down again and start over in the savings. So working helped me to start investing earlier in comparison to some of my counterparts that are in the PhD program with me now.

13:28 Diandra: And I have that capital there that can grow during my program. So I was able to open a 401k, an HSA, which was very crucial. So I don’t have a ton in there since I was using it as I was contributing. But it’s been able to sustain me so far. And I’m hoping that after my program, that it will either still be there or it will have just covered all my medical expenses during the program. So I don’t have to worry, which is really, really useful. And then I’ve also started a Roth. So I’ve been able to do that post-tax money as well, that I will be able to access earlier. So if we choose to be, FI [financially independent], take time off you know, work remotely, or try to do more traveling, then I’ll have that money that I’ll be able to access since I’ve already paid the taxes on it.

14:22 Emily: Yeah. I call being able to start investing, and/or pay down debt, before you start graduate school. I call it having a financial wind at your back, right? Like if you just get that little nest egg started right at the beginning of graduate school before graduate school, and then you take whatever five plus years for your PhD training, even if you don’t add any more money to that, it’s something that it can be growing alongside you as that time passes. So it’s fantastic to be able to have that.

Common Objections to Working Before Grad School

14:50 Emily: Something I hear from people who are debating with themselves about going directly from undergrad into graduate school, debating with themselves about that versus working for a while. I hear two things. One is I’m going to get used to my financial lifestyle on my industry salary, and then it’s going to be too hard to live on a PhD stipend. So I should just go directly and never have that, like lifestyle intermediary. That’s one potential downside or whatever. The other one is that they’re concerned that their academic abilities, basically their ability to do school well, is going to deteriorate if they’re working for more than a year or two. How do you feel about those two objections?

15:36 Diandra: Yeah. Okay. So the first one, the financial aspect. I do agree. It can be really easy to get swept up in there. So I think for us, like the turning point was that we didn’t want to start like putting off our future. So we wanted to start traveling now and we didn’t want to say, “Oh, when we’re 65. That’s when we’ll start traveling.” So what we did initially was, when we started dating, moved into this nice apartment together, started saving for our first international vacation. And then when it came time to renew the release, it was going to go up. And we said, look, we can either do the vacation when we planned, or we can live in this nice apartment. And we looked at each other and I was like, I don’t want to live here. I would rather have the adventure that we planned than live in just a nice, shiny apartment that I can’t afford to have parties because I spent all my money on rent.

16:37 Diandra: So that kind of got us to stop with the lifestyle inflation. To cut back early on. And then we did back to back three years in a row, we did international trips for our birthdays and then just for the summer. So it was really nice. Like each one was only two weeks at a time, but instead of paying that extra to the nice, shiny things, we decided to pay it towards experiences. So I think if you were to work, you can still do that. But then like, what are your values? Like, does your spending align with your values? So if you value having a nice house for your children to grow up in, then that’s fine. But if you value adventure, then you don’t need to spend as much on your rent. So I think that that can be can be difficult to go up against like financially and having that inflation. But also every time I got raises, I pretended like I was still making the money that I was making in my master’s. So of course it was slightly more. But what I did was I took that extra when I got the raise, when I, the bonus and I put that into my savings and my investments, and I said, “I don’t want to see that money at all.” So I had that mindset that like, I’m still living on this fixed income, and no, I don’t have the extra to spend.

18:03 Emily: Yeah. I think that’s it’s a particular application of the advice live like a college student, live like a grad student, live like a resident, which is, if you are anticipating a future income decrease live on that future income. This is the same advice you hear, like people who are, for example, going to buy a house. Well, can you live on the mortgage payment that you’re going to make in the future? You know, is that possible for you in your budget? So like sort of projecting to your future, live on what that is, so that you make the adjustments in advance instead of having a real sudden, real abrupt, real painful lifestyle decrease when you enter, you know, something like graduate school. So I really liked that you took that approach of especially keeping your living expenses, your fixed expenses, on the lower side as if you were still a graduate student or will again be a graduate student. And saving the increase and also spending it on experiences. Because it’s not really lifestyle inflation, unless I guess those experiences become habitual for you.

Commercial

19:01 Emily: Emily here for a brief interlude. On Saturday, November 14th, 2020, I’m facilitating a new workshop: Chart Your Course to Financial Success, and you’re invited to attend. The central question this workshop will help you answer is, What should my singular financial goal be right now, and how should I best pursue it? This particular instance of the workshop is just for funded grad students. Future dates will be for post-docs and PhDs with real jobs. You can learn more and sign up at pfforphds.com/chart. That’s P F F O R P H D S.com slash C H A R T. The deadline to register is Wednesday, November 11th. So don’t delay. Now, back to the interview.

Financial Independence and Early Retirement (FIRE)

19:46 Emily: You discovered FIRE, it sounds like, in your time in industry. Financial Independence and Early Retirement. How is that pursued, or how are the principles still carrying on for you in graduate school?

19:58 Diandra: Yeah, so our basis going into graduate school was very important to see where we are and what we still need to do to get to potentially FIRE, or if not, just financial independence. So individually my husband and I are both 25% of the way towards our FI numbers. So that’s good. It means we have money that can grow. And then while I’m in my program, we’re working on our savings in two different ways. So instead of me trying to do everything and him trying to do it all separately, my focus is more on the post-tax money. So I make sure to pay myself first, every paycheck. And I have 25% of my stipend that will go in towards savings and individual investments. And then I also have another 10% that goes into a 457, and I’m treating this as a Roth account.

20:53 Diandra: So I’m paying the taxes now while I’m in a lower tax bracket in comparison to what I expect to be when I graduate. And then, so what Brad is doing is the kind of opposite. So he’s focusing on the pre-tax savings. So he’s also a university employee, but not a graduate student currently. So he’s been able to ramp up his savings and utilize a 457, 403(b), and HSA. And then while he has a moderate salary, he’s living on a similar income to me. So everything above that, instead of inflating our lifestyle, he’s saving that additional amount.

How Do You Have Access to a 457?

21:33 Emily: I was surprised to hear that you have access to a 457. How do you have access to that?

21:40 Diandra: So I have access to that through the UW system. So I actually didn’t know I had access to it in the first year of my PhD program. So I was doing like those micro investing apps. And then like, I would randomly put money into my individual retirement account, my IRA. So when Brad had gotten a job with the University, he saw all the benefits and explored it fully. And then he’s like, so I’m looking at these details. And it says that, aAt UW, that graduate students are considered employees. So since we had that label, we do have access to a 457. And I was able to go through and say, I could have it pre-tax, or it could have it post-tax. But since I know that I want to work for a few years, at least once I graduate, I’ll be in a higher tax bracket then. And so I’d rather pay the taxes now. So the whole point of it is that maybe we can get together funds that the whole first five years, when you become FI and you leave work is, it’s really hard to access your funds. So if you do like a Roth conversion ladder, that takes five years. So my aim was, what can I do now to build that initial five-year cash cushion?

Tracking Finances and Navigating Lifestyle Expectations

23:03 Emily: It sounds to me from the way you described that, that you and your husband either keep separate finances or like sort of track things kind of separately. Is that right?

23:11 Diandra: Yeah. So we don’t have any joint accounts but we do, you know, send money back and forth to each other all the time. So we keep it separately, and it’s good because then since we both did work around the same amount of time, that we have that money to grow. But we know that jointly, like if we’re going to go and buy a house, we can pull from both accounts. So like the HSA, since we got married this year, he’s going to switch over to a family plan. So I can’t contribute to my HSA during my program, but he’ll be able to contribute double. So it’s separate, but we joined them together. And like, when we look at our numbers, we’ll do both. So what do we individually and what do we combined have?

23:59 Emily: Yeah. And I think it’s also kind of a great, even though you’re keeping separate finances, it sounds like your lifestyle level you’ve agreed on. And you’re both living at this kind of grad student stipend ish level, and just doing a lot of saving above that. Because it sounded like you were saving 35 or maybe more percent of your stipend income, which is very high, very impressive. You must be keeping your lifestyle expenses quite low.

24:22 Diandra: Yeah. Yeah. So when we moved to Wisconsin from Maryland, actually, the last bonus that I got from my job paid for us to move across the country. So that was nice. It was just a net zero after that. Unfortunately I didn’t get to save any of it, but that was fine. So what we did when we moved here is we said, let’s pick an apartment that we can afford on my stipend. Since he was moving with me and for me, and he didn’t have a position to start with here. So we just immediately said, what is the lowest that we can find? And then like, you know, can we go slightly above that? You know, you want to live in a decent neighborhood, something that’s safe. But we were just very lucky. We got an apartment sight unseen.

25:12 Diandra: But it was actually only slightly higher than our rent back in Maryland. So we were able to just like, keep that nice low rent amount there. So that helped. And then one of the big things for us is that we do track all of our spending. We have a calendar. And so every day when we spend money, we have to write it on the calendar and then stare at it for the rest of the month. So it’s more like, was that purchase worth your life hours because that’s what you did and now you have to admit it. So we’re not like as stringent on what we spend, but like we always go into the grocery store with a budget. We say, we’re going to spend a hundred dollars on all our groceries. And we put every item in there individually. So we know when we’re hitting the cap. And if it’s only $5 more, well, that’s fine, but you don’t want to blow your budget. Like if you just don’t track it, then you can easily spend a lot more than you intended.

How Do You Describe SlowFI?

26:13 Emily: Well, thank you. So I actually have never heard that tip before of writing your spending on a calendar and then looking at it for a month. That’s actually a really great one. I understand that you identify as being on a SlowFI track right now. And I actually wrote a post recently on the flavors of five. So there’s all these different versions of FIRE, SlowFI being one of them. How do you describe SlowFI and yourself on that path?

26:38 Diandra: Yeah, so SlowFI is a term that was coined by the Fioneers. And so give like three big components. So they say it’s like embracing your dreams. So working in positions that will motivate you to like add to the world. To give back. Also being more intentional. So instead of just, I’m gonna work, work, work, work, work, you are in whatever you’re doing and that you’re actually like focusing on it and it speaks to you. So your position, your ultimate career should give you energy rather than take energy away from you. So I thought that was really, really key for the SlowFI movement. And then it’s also against that consumeristic kind of viewpoint of our country, where as you gain more money then you just buy more things. And then more things means more upkeep and being like environmentally-conscious.

27:38 Diandra: So for us, we just want to focus on the journey. So I think of it as what are you running towards instead of what are you running away from? So initially, we didn’t like our jobs, we weren’t satisfied. So we wanted to just get to FI so that we could take a break. But actually it’s really interesting with the pandemic right now that we’ve had glimpses of what life would be like if we were FI because we were fully remote for a while and we made our own schedules and it was interesting to see what do we choose to do with those extra hours. So finding that out now, while we still have incomes is better than leaving your job entirely, and then not knowing what you want to do, because if you say, I want to sip mojitos on the beach, that’s great.

28:30 Diandra: But how long is that going to last? So, I mean, for us, it was a really big shift when we met, I said that I never want to retire because I love research. And then I kind of shifted to, well, if money is not the determining factor in the position that I choose, then we can spend more time with family. We can travel more and be open to different opportunities so that maybe money is more of a tool rather than a requirement. And if I want to donate my time to work on some really awesome, amazing lifestyle research that maybe doesn’t have much money in the budget to pay me, then I can choose to do that. So that’s what SlowFI brings to us.

29:15 Emily: Yeah. I think the SlowFI path is probably one that’s quite appealing to PhDs. I know it’s appealing to me. Well, one, because it’s kind of necessary if you’re going to do graduate school at some point, you’re going to slow down your FI pursuit during that period. Almost certainly. It’s going to add some years. Like you said, though, earlier, there is income upside on the backside of the PhD, depending on, you know, what field you’re in. But I think PhDs also by and large have more opportunity to create work that they really love, that they’re really passionate about. That’s more, it goes with the territory, I think, of pursuing a PhD is that you found something that you love. And so yeah, work being part of your lifestyle long-term could still be attractive. Finding a job that you like, doesn’t have to be necessarily the most high-paying. Again, you don’t go into research if you want to be paid super, super, super well. You are talented enough to do other things if that’s your, you know, your primary motivation. So yeah, I think the SlowFI pursuit goes along very, very well with a lot of things that are common personality-wise to academics.

Best Advice for Another Early-Career PhD

30:15 Emily: So Diandra, as we wrap up here, would you please tell us your best financial advice for another early-career PhD?

30:23 Diandra: Sure. My best financial advice would be to fight lifestyle inflation and determine your value of enough early on. So this will be easier than trying to cut back, but instead use your bonuses or raises to supercharge your investments and move you along the path to financial independence.

30:44 Emily: So you’ve used language a couple of times in this interview that I have recognized as being from Your Money or Your Life, which I am currently reading. Would you recommend that book or how has that book shaped your journey?

30:55 Diandra: Yes. Vicki Robin is amazing. I would highly recommend Your Money or Your Life. She’s the one that talks about calculating your life-hours. And so how much money you make, and then how many hours does it take for that? So, when I was working at the startup company, I was driving an hour and a half down to the company and hour and a half back. So it was three hours. So instead of saying I had an eight-hour day, I would have to say that I had an 11-hour day, and then I needed time to wind down. So it turned into a 12-hour day. And then I had car maintenance. So then, the money that I got paid per hour started getting ticked off because of all these additional costs that I didn’t think of initially. Because you think of your hourly rate is one flat rate, but I would highly recommend it if you want to get more context and see that, is your job really paying you what you think it is or are you trading too many of your life-hours for that paycheck?

That Science Couple Blog

32:01 Emily: Yeah, absolutely. Thank you so much for that recommendation. And finally, tell us a little bit more about That Science Couple and what you’re doing with the blog.

32:08 Diandra: All right. So That Science Couple is a blog between Brad and I. And it was originally born out of a newsletter that we had written for our friends and family. So a couple of years ago, we had started our journey to becoming plant-based and we’ve used evidence-based nutrition. So there was the documentary Forks Over Knives, which I would highly recommend, and also the website nutritionfacts.org, which really motivated us to say like, look, there’s some science behind nutritional choices and that it’s not all about the macros. So we had noted that a lot of our friends and family didn’t understand the nitty-gritty details of this. And we wanted to start breaking down those complex ideas and topics into more relatable terms. So when we started our blog, we wanted it to be more holistic. Dr. T. Colin Campbell, his whole idea is treating us as like whole people.

33:07 Diandra: Also Dr. Dean Ornish does the same thing and there’s several other physicians that if we just look at one part, then we’re missing the whole picture. So what I really wanted to get across with our blog was that we can’t just talk about nutrition. But we are here because nutrition is important, but finances and having healthy finances is super important to having a lifestyle that, you know, supports health. And then our other point was the environment. So we didn’t want to tax the environment a lot. Brad was an environmental science major and got his master’s as well. So he wanted to talk about sustainability, and then that grew into, well, what makes a sustainable life? So when I was working as a scientist, it wasn’t sustainable. The commute wasn’t sustainable. The hours, the stress wasn’t sustainable. So how does that branch out further than just your impact on the environment, but your impact on you, personally?

34:09 Diandra: So those are the different categories that we’ve chosen to talk about on our blog. And, overall, we just want to provide a place for people to get information. So if you love those, you know, nerdy little citations and you want to see the references, like we’re going to be the place to go to, but then like personal growth is just like a free reign. So we had talked about The Value of Enough was a recent post that we put out. So if you’re trying to determine, you know, what makes your life sustainable, then maybe that’s a post that you would be interested in, too.

34:45 Emily: Yeah. We’ll link that post from the show notes. I can very easily see how those three topics interlock with one another and support and complement each other. So sounds wonderful. I’ve of course been to your blog and would recommend that everyone else go and check it out. And Diandra, thank you so much for joining me today and giving this wonderful interview.

35:04 Diandra: Yeah, thanks for having me. It was great.

Outtro

35:07 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, please consider joining my mailing list for my behind-the-scenes-commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance. But it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

How This Entering PhD Student Has Set Himself Up for Financial Success in Graduate School

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In this episode, Emily interviews George Walters-Marrah, a rising first-year PhD student in biophysics at Stanford. In the last year, as George has been applying to and preparing to attend graduate school, he’s been on a financial journey as well. We walk chronologically through the financial steps he’s taken this year, from applying for fellowships last fall to taking a personal finance course this past spring to drafting a budget this summer for how he plans to use his stipend in Palo Alto. Additionally, Emily and George have an insightful conversation on what George learned about investing in his personal finance course and how he’s already implementing some of the strategies.

Links Mentioned in the Episode

grad school financial success

Teaser

00:00 George: I’ve been investing for a while now. And it’s like, it’s not really time-consuming at all. I kind of like check it at least once a day just because I like looking at it. But other than that, it’s not like I’m constantly fidgeting with my stuff. And I think the more you fidget with it, the more fees you get. So, it’s like, it’s kind of like passive investing. It’s kind of like a win-win.

Introduction

00:21 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode 15, and today my guest is George Walters-Marrah, a rising first-year PhD student in biophysics at Stanford. In the last year, as George has been applying to and preparing to attend graduate school, he’s been on a financial journey as well. We walk chronologically through the financial steps he’s taken this year, from applying for fellowships last fall to taking a personal finance course this past spring to drafting a budget this summer for how he plans to use his stipend in Palo Alto. Additionally, we have an insightful conversation on what George learned about investing in his personal finance course and how he’s already implementing some of the strategies. This is a perfect episode to listen to if you are near the start of your financial journey, whether that’s at the beginning of graduate school or further on in your career. Without further ado, here’s my interview with George Walters-Marrah.

Will You Please Introduce Yourself Further?

01:26 Emily: I have joining me on the podcast today George Walters-Marrah. He is a rising PhD student. We are recording this interview in July, 2020, and within the next month or two, he’s going to be starting his PhD program at Stanford. And he’s already been on a financial journey. So, we’re going to talk through about the last year, how he’s been preparing financial aid to go into his PhD program, as well as he’s done an awesome amount of career preparation to get to that stage as well. So, George, it’s a real pleasure to have you on the podcast. Would you please introduce yourself to the listeners?

01:58 George: Thank you for having me. So, I just graduated with my bachelor’s in molecular microbiology, and I have a research interest in interdisciplinary sciences. But I’ve also been kind of really obsessed with personal finance over the last year. So, I’m glad to be able to talk about it. Because whenever I get the chance, I kind of get excited because I’ve been so involved and kind of like consumed with it for a while. So, thanks for having me.

Financial Preparation Before Grad School

02:28 Emily: Well, it’s really exciting for me as well. And the way we actually met was over Twitter, and you prepared this fabulous document of personal finance resources and included a lot of mine in there, which I’m really grateful for and you shared it. And I happened to see it and was just so flattered that you did that, and it was a fantastic document. So, I’m really excited that you have been sharing this material with your peers. We’ll get into that, why you’re doing that during the course of the interview. So, let’s take it back to almost a year ago. How were you starting to prepare financially for graduate school even, you know, well, well, before you finished your undergrad degree?

03:05 George: Yeah. So, about a year ago I was like kind of oblivious to personal finance. But what I did know was that there were things called fellowships and scholarships and stuff that I could apply to. So, like about a year ago during the summer, I was looking into scholarships and fellowships and I applied, I was starting to apply to the NSF GRFP, the Ford Fellowship, and other things like that. So, I started that pretty early and I would suggest to start that over the summer, if you can. If not, start it at the beginning of the fall, because I was able to get a couple of fellowships and I think a really big reason I was able to do that was because I started so early, kind of like reaching out to my letter writers and starting my personal statement and kind of like collecting the different, like papers that I would need to write my research proposal.

Balancing Coursework with Grad School Applications

03:54 Emily: Yeah. We’ll link in the show notes because I’ve done a couple other interviews with fellowship winners and that was a common thread of advice: start early. So, even right now, you know, July for the people who are going to be applying in the upcoming, you know, starting about six months from now, they need to really be working on this, you know, the preparation process getting started now. How did you–so I applied for graduate school and all of these fellowships after I finished my undergrad, I had a post-bac year–how did you manage sort of balancing your coursework, your thesis work, I assume, with doing these, you know, intensive applications?

04:30 George: So, full disclosure, I was a fifth year student, so I graduated in five years. So, I had most of my class requirements done. So, I had the luxury of kind of decreasing the amount of classes I had. So, I still had 12 credit hours, but I was able to kind of like pick and choose classes that weren’t like super intensive. So, I kind of did that. And I also had the luxury of having a class that could be like a placeholder and I could use that time to do my personal statement and prepare to apply to graduate school and fellowships. But I would say that, try to decrease the amount of classes that are super intensive. Try to kind of pick classes that, you don’t have a lot of, like, time-consuming, like it doesn’t consume a lot of the your time, and kind of learn how to say no to things.

05:25 George: If you can kind of just say no to a few things so you can use that time to kind of work towards your fellowship applications, work towards your grad school applications. I think that would kind of like, it builds up, like when you keep saying yes. So, if you kind of learn how to say no to things that may not be helpful to you in the future, or may not be worth the time, I think that would kind of really be helpful with allowing you to find that time to kind of complete all that you need to do that last semester.

Which Fellowships Did You Win?

05:54 Emily: Yeah. I think it’s a great idea that you actually had space in your core schedule for doing these applications, because that’s really how you need to treat it. You need to treat it as at least one class, if not multiple classes. That’s the amount of time it’ll take. So, you were successful in winning some of these fellowships. Which ones did you win?

06:12 George: So, I was able to get like three fellowships. It was kind of like three different types of fellowships. So, I had got an external fellowship and two internal fellowships. So, I got the NSF GRFP, which was external, it kind of followed me wherever I went. And then I got an internal Stanford fellowship, which is, they kind of reviewed my application and you kind of get considered for this just by applying. And they gave me that fellowship based on my application. And then my last fellowship is one I got actually pretty recently. And it was a fellowship that I got by applying to a program, a first year program, after I got accepted and after I decided to come. So, it was kind of like the first one, I applied to it way before I applied to grad school, and then I got the external one. The second one, like they considered me just by applying, and I got that one. And the third one, I applied to it after I actually got into the program. And it was like a separate first-year program at Stanford. So, like, there are kind of several different ways that you can try and get these fellowships, which I think is like really nice.

07:16 Emily: Yeah. So, the fellowship applications did not stop, you know, just after the fall of your application season. That’s awesome that you won so many different ones. I have a post that I’ll link to in the show notes where I list a bunch of these portable external fellowships, like the NSF GRFP. So, I’ll put them in the show notes if people want to kind of peruse through. A lot of people know about the NSF fellowship, but there are some other ones that are a little bit less known. You mentioned Ford earlier. That’s another great one. So anyway, there’ll be a list there, several ones you can probably apply to, you know, in the year that you’re applying to graduate school and then in a few years after that, but you’re taking care of for a few years. So, that’s amazing.

Lessons Learned from Undergrad Personal Finance Course

07:53 Emily: Okay, so now we’re going to fast forward, you know, that was kind of the fall of your last year of undergrad. And then I believe in the spring semester you took a personal finance course. So, tell me a little bit about that course. Like why did you elect to take it, and maybe like two to three big takeaways from the course that you think would be really instructive for other PhDs to know?

08:14 George: Yeah. So, my school like offers this course called Personal Finance and Investments. I actually learned about it the fall that I was applying to graduate school. And I always wanted to take a personal finance class because I didn’t really know anything about personal finance. I didn’t know how to invest. I didn’t know how to make a budget. I didn’t know any of that stuff. And in my first few semesters, I thought of like, “Oh, maybe it’s microeconomics or macroeconomics or something like that,” but I read the summary and it didn’t make sense. So, I finally found this class and that’s like, “Oh, this is the class.” So, I took it and it was a great class. Like, it was a kind of a learning curve. You had to kind of learn the language of personal finance. Like what’s a dividend and all these different stuff.

Lesson 1: You Don’t Have to be an Expert to Invest

08:55 George: But after I got the hang of it, it kind of went very smoothly and I got like way more invested in it. And if I was to say to like three things that I thought that I learned from that class that were very helpful to me, the first big one is that to invest, you don’t really need to like follow the stock market and be like an expert and kind of like, look at it every single second of every day. There are like a lot of different kinds of innovative ways that allow kind of like people who are super busy or people that are kind of inexperienced to actually have a good experience investing.

09:29 Emily: If I can summarize that first point or what you were starting to say, it’s that, I mean, I love the way you phrased it. Like investing does not have to be something that you are paying attention to all day long every day in and out. I think that is an image that we have in our culture of what investing is, maybe from like, I don’t know, the eighties or the nineties or something, like it’s kind of archaic at this point. Because index funds, which I think was what you were starting to talk about there. They’ve been around for, I don’t know, four or five decades at this point, but only have really been gaining in popularity in the last couple of decades. But index funds, like you were saying, just are a diversification. Like you get a lot of different investments, stock investments often in one bucket and it’s representative of kind of the whole market or an entire sector of the market. And so you can buy, you essentially buy everything when you buy an index fund and it’s in a given market sector. That means you’re buying the winners. It means you’re buying the losers. But it turns out that that’s a more effective strategy than trying to pick the winners and avoid the losers. Is that what you were learning through your course?

10:31 George: Yeah, so, it was big because like, I think like a lot of people think they have to beat the market, but if you match the market, you kind of avoid that pitfall of like losing to the market. Because it either could go really bad or really good, or you could just match it. And then the market kind of like trends up. So, I decided to go that way, kind of like passive investing. So, that’s like the one, the first big thing that you don’t have to, it’s not a full-time job to invest, which is really nice, since as a grad student, I’ll be very busy.

11:04 Emily: Actually, if I could expand on that for one more second. So, I also tell people like investing should not be your side hustle. Like you should not be spending a ton of time working on your investments. And I always say to them, like, if you want a full-time job doing investing, get a full-time job as an investor, be a hedge fund manager or go do that kind of thing. Like, make a ton of money off of this. Don’t just play around with your own money. If you’re going to be, you know, actually investing that kind of time into the process, which again, I don’t think is necessary or a good idea. So to me, investing is kind of like learn about it for a little while, you set up what you need to set up, and then you just let it run and you just do maintenance and you don’t have to, you know, mess around with it a whole lot.

Lesson 2: Make an Emergency Fund

11:45 George: Yeah. I totally agree, because like, I’ve been investing for a while now and it’s like, it’s not really time-consuming at all. I kind of like check it at least once a day just because I like looking at it. But other than that, it’s not like I’m constantly fidgeting with my stuff. And I think the more you fidget with it, the more fees you get. So, it’s like, it’s kind of like passive investing. It’s kind of like a win-win. But I guess two more points that I would say that are really nice that I got out of it is that kind of making an emergency fund. I never really thought of that. Kind of like before, an emergency happens, you just have the money in your savings account. So, I’ve been trying to get my emergency fund kind of like they say at a minimum is three months but I’m hoping to get it like higher, maybe to nine months, if possible.

Lesson 3: Time Value of Money

12:29 George: And I’m kind of slowly building towards that. And another thing that I learned that was pretty interesting is that, kind of like this thing called, I think it’s called time, money value, a time value of money. It’s kind of like a dollar today is worth more than a dollar a year from now. So, if you can get money today and kind of put it in your investments or put it into your savings account, maybe like a high yield savings account, that will be worth more than kind of like $50, maybe a year from now, that you weren’t able to get that interest off of by having it in your account. So, I never really thought of it that way. I kind of, I always thought that like, “Oh, if I have a thousand dollars today, it’s the same as having a thousand dollars in 10 years.” So, those are kind of like the three big things that I would think of that I got from the class.

13:15 Emily: Yeah. I think the time value of money is also just a, it’s a mind-blowing concept. Like once you kind of understand like compound interest and how much your money can work for you. And I think the point that, you know, graduate students especially should take away from that is it’s okay–it’s great–to start investing now with a very small amount of money. It will not be a small amount of money decades from now when you actually reach retirement. So, what I like to say is that graduate students should not dismiss whatever tiny amount of money they might be able to start investing right now. Maybe it’s $10 a month. Maybe it’s $50 a month. That money will add up over time with this factor of compounding with the time value of money applied to it. And so, yeah, it’s not something that you should just say, “Oh, well, I can’t really save that much, so I’m not going to bother. Like, it’s still something you should pursue, even if it’s a small amount of money today.

14:05 George: Yeah. Totally agree.

What Financial Changes Did You Make?

14:08 Emily: And so, what did you actually, you know, you took this fabulous course, you learned a lot from it. What changes did you actually make? So, you’ve already mentioned that you started investing. Can you talk a little bit about how you started down that road?

14:20 George: Yeah, so I started investing well, like the first thing I did was I tried to get my financial life together, trying to get like my financial health in order because I didn’t really know anything. So, I started tracking my finances. So, I got the Mint app. I started tracking how much money I spend in a month. And the first month I wasn’t really trying to make a budget. I was just trying to understand my money habits and see what I could change. See what I wanted to keep. And then I started thinking about budgeting. And then after that I started my emergency fund. I also started collecting all of my important documents, like my birth certificate and my social security number and putting them in one place. They were kind of like scattered around. So, I wanted to put them in one place and kind of like, just get all of my stuff, like organized, like the first few months.

15:05 George: And then after I got myself situated and kind of like knew what was going on financially, that’s when I started investing. I decided to do a Robo Roth at the start until I get kind of like experienced with the stock market. And then I plan to transfer it over to a manual one to kind of like start my own Roth. So, my manual Roth–I mean not my manual Roth, my Robo Roth, I’m kind of like, “invest stuff for me,” and it’s kind of in the safest way possible. So, I don’t kind of like put it in something that kind of like blows up in my face and I lose all my retirement money. And my brokerage account is kind of just, it’s a tax account, but I only put money in there that I put in there so I can kind of gain experience with buying stocks and selling stocks and stuff like that.

15:50 George: So, and now that I think about it, one other thing that I learned from my class is that, when I’m looking at stocks and stuff, there are these things called like target-date retirement kinds of funds, which is like kind of nice. And I plan when I make my manual Roth, I actually planned a large part of it to be a target-date fund, which will kind of like change based on how close I am to retirement. And so after I did all of that, I kind of like started thinking about like different things that I learned about in my class that I should think about when I’m kind of like investing my brokerage account. Like don’t invest what I’m not willing to lose. And like, if you don’t understand it, don’t invest in it. And I started kind of like building up my portfolio and now I have like a pretty decent nest egg. So, I’m pretty proud of how I’ve gotten so far in the last few months.

Choosing a Robo-Advisor

16:42 Emily: I know, you haven’t even started graduate school yet. I mean, which is arguably I guess not a job, and you’re just getting out of undergrad, and I don’t know, it’s a fabulous amount of progress that you’ve made in this time. Which robo-advisor did you choose to start with?

16:57 George: Oh, so I actually chose Betterment. So, there are several different websites, I think there’s NerdWallet, that kind of review all these different things. Something else I learned from my class is don’t take it from one source alone, kind of go to multiple different sources and then based on all the sources together, make a decision. And kind of like across the board people suggested Betterment. So, I kind of went with Betterment since it had such great reviews all across the board.

17:31 Emily: Mhm. I think, I don’t know specifically, this is true for Betterment. It might be because you chose them. But one of the advantages that robo-advisors have is that they often have $0 minimums to start investing. So, it’s a great place like you’re doing when you’re just at the very, very start of your journey to use something like that, as you were saying, sort of some more familiarity, get some experience. And then you can switch over as you were planning on doing to a Roth IRA that you manage yourself through one of like the discount brokerage firms, like Vanguard, Fidelity, Schwab. I’m sure you’re looking at one of those three, if not something similar, for once you switch, but those often have some kind of minimum. So, I know like my strategy when I started my Roth IRA was I started with Fidelity because they, at that time, they waived their minimum if you had a $50 per month automated investing plan. So, I did that until I had $3,000 and then I switched over to Vanguard, because that’s where I really wanted to be, once I had the Vanguard $3,000 minimum. So, it sounds like you’re probably doing something similar with your robo-advisor to, you know, a Roth IRA that you’ll manage yourself strategy. Is that right?

18:34 George: Yeah. And there are like multiple different reasons as well. Like a big one is like the minimum so that like I could start investing now so that even if it’s a little bit, I could still start growing my investments. And also, when I get to a decent amount, I’ll be able to get, like, I think there are minimums in mutual funds as well. So, it’s like in order to invest in mutual funds, you need to have a certain amount of money. I’m not there yet. So, I think I’ll keep it in my Robo fund, which is kind of very low expense. Very kind of like, easy to, well, not low expenses–you can put as little money there as possible, and then it starts going in investments. But I feel like with the robo-advisors, I don’t want to keep it in there too long because they have these expense ratios. And if I have a large amount of money, I kind of start eating at my investments. But I think early on in the process that this was the best decision for me.

19:25 Emily: Yeah. And expense ratio, for those in the audience who haven’t started investing yet, is a representation. It’s a percentage representation of the total cost of owning whatever the investment is. So, with something like a robo-advisor, they usually add to the expense ratio of the underlying funds that you buy. Maybe about a 0.25% fee, which is sort of low. It sounds like pretty low. But you can get quite a bit lower if you just manage it yourself. Like you’re planning on doing, you know, in a few months or a year or whatever. You can get down under like 0.1%, 0.05%, even down to 0% expense ratios. So, there are very, very low expense ratios out there, even though the robo-advising fee doesn’t sound very high. Over time, as you were saying, it really does add up. Whatever you’re paying in expenses compounds, as we were talking about earlier, and it could end up being quite a bit of money over your entire investing lifetime. But your plan sounds really great to me. It sounds like you’ve gone about it in a totally intelligent way. So, that’s awesome.

Commercial

20:27 Emily: Emily here, for a brief interlude. I am just bursting with this news. I have launched a Community for Personal Finance for PhDs. The Community is for PhDs and people pursuing PhDs who want to level up their practice of personal finance by opening and funding an IRA, starting to budget, aggressively paying off debt, financially navigating a life or career transition, maximizing the income from a side hustle, preparing an accurate tax return, and much more. Inside the Community, you’ll have access to a library of financial education products I’ve made in the past. And I’m going to add new trainings to that library every month. There is also a discussion forum, monthly live calls with me, a book club, and progress journaling for financial goals. Basically, the Community is going to help you reach your financial goals, whatever they are. Go to pfforphds.com/community to find out even more. If you’re listening to this in real-time, you have the opportunity to become a founding member of the Community at a discount. The price is going up on August 15th, 2020, so don’t delay. Go to pfforphds.com/community for all the details. I can’t wait to help propel you to financial success. Now, back to the interview.

George’s Financial Resources Document

21:47 Emily: Could you share like why you created the document that you did? Because I think it came out of the course, right? What you were learning from the course?

21:57 George: Yeah so, I was learning all the different stuff and I started kind of looking up all these different, like websites and I found your website and many other websites and I started bookmarking them. And then, since I was kind of so engrossed with it, I would talk about it. So, I’m a McNair scholar at University of Central Florida, and we’re in this kind of like community together. And I always talk about it to other McNair scholars, and they ask me for advice, they ask me, “Oh, what can I learn about this?” And then I would kind of like blow them up with links. And I didn’t think it was kind of the best way to go about it. So, I decided to make an easy to read document with like the links, kind of like embedded in words.

22:36 George: So, you can read through it in kind of a relaxing way, and then click a link if you want to learn more about what I was talking about. And then I posted this in our McNair group chat. But then I thought it would be nice for other people to use this as well as they wanted to. So, I posted it on my Twitter, and I think a few people were able to like use it to learn more about personal finance.

22:58 Emily: Yeah. And we’ll link to the document in the show notes as well because I thought it was really well put together. So, thank you for doing that. Thank you for that, like, community service.

Factors in Choosing a Graduate School

23:06 Emily: Okay. So, now we’re in the spring semester, you have, you know, you have applied to your fellowships, you’ve applied to graduate school. You’re being admitted to different programs. And of course, you know, we’re considering a lot of things when we choose a graduate program, the quality of the research, the mentor that you might work with, maybe overall the program, the structure of it, where it’s located and so forth. But you know, the stipend, I think should be one of those considerations. Did you factor in the finances when you were choosing which graduate program to attend, or were you able to make the decision based on those other factors?

23:41 George: So, I applied to like nine graduate schools, and I think from eliminating the first ones, it was mostly based on like the research and like the faculty and the resources and stuff like that. But then when I got to the end, it was kind of hard to decide. It was a very hard decision. And when I was down to two, like based on cost of living of the two areas, the stipends were very similar, the research interests were really similar. Like everything was very similar. So, it was kind of hard to kind of make that decision. So, I think what it came down to was kind of two things. The first thing was that one school was kind of like calling me and checking up on me, answering my questions and that kind of like had a really good impact on me.

24:27 George: But then the last thing is that the school that I decided to go to, which is Stanford, they offered transitioning costs. So, like transitioning funds. So, I think transitioning to grad, I mean, I haven’t done it yet, but I’ve heard that transitioning to grad school can be really expensive. So, that they offered kind of some funds to allow me to kind of like take that stress off of me was kind of like, I think that’s what kind of pushed me to choose Stanford since it was a really hard decision.

24:58 Emily: I think that’s an excellent, I mean it’s a really, really good insight into your decision-making process. It sounds like, you know, these final two schools, it was really close. What tipped you over was, you know, people at Stanford were really attentive to you, checking up on you, and then they offered you this moving fund. And I mean, that’s something that graduate programs should know about. If something that minor, a few thousand dollars I assume?

25:19 George: It was actually $500.

Consider Stipends AND Cost of Living

25:20 Emily: Oh, $500? Okay. Right. So, $500, which is like nothing to the graduate programs, could tip an excellent candidate like you, you know, you won this outside fellowship, you’re bringing in money. If something like offering you $500 could tip the scales in their favor, that’s something that they all should be doing, frankly, at this point. So, I think you mentioned something in there really quickly, but I believe you said something like after you factored in the cost of living of the two different places, the stipends were similar, is that right? So the stipends themselves weren’t actually the same, but they were similar to another, once you factored in the cost of living, is that right? Can you talk about how you did that?

25:57 George: Yeah. So, like the cost of living at Stanford is much higher. So, the two schools, I guess, were Stanford and Cornell. So, the cost of living in Palo Alto is much higher than the cost of living in Ithaca, New York. So, the Stanford stipend was much higher than the Cornell stipend, but there are different websites where you can put in the location. I think it’s a cost of living calculator. You could put in the location where you plan to live and then the money that you’ll be bringing in, and there are also like tax calculators, because there are different tax rules. So, you can calculate how much tax will be coming out of your stipend. They can calculate how your stipend compares if you were to live in another area. And I kind of compared the two stipends and they were very similar, like almost identical, once you took into consideration cost of living. So, I couldn’t really use that as a reason to choose one over the other.

26:53 Emily: Yeah. Thank you for pointing that out. Like, I mean, even, you know, I also was sort of getting into personal finance in the year that I was applying to graduate school, and I didn’t even do that step that you did of taking that into consideration. I was just kind of looking at, “Oh, the stipends are all sort of similar. I don’t know. I assume the cities are different, but I never sat down and like actually did that little, little bit of math that you did. So, it’s a great idea just for the audience, anyone else going through this. I really like to use the MIT Living Wage database or calculator, livingwage.mit.edu. And it shows you what the living wage is for every, you know, county or metro city area in the U.S. And so, that’s the factor that I like to use.

27:31 Emily: That’s what we use in phdstipends.com, which is my database website where people enter their stipends and then we do this little division, like you were just saying, of divide the stipend by the local cost of living from this database and spit out this like factor, you know, is it more than one? Is it less than one? So, exactly what you were doing, maybe using a different calculator, but I think it’s really, really smart.

Housing Budget and Taxes

27:51 Emily: So, okay. You’ve chosen to go to Sanford, and you already were just mentioning some of the basic building blocks of the budget that you’ll have once you start graduate school. Like you were talking about taking into consideration how much your taxes are going to be. And I know that you’ve been preparing a budget over this summer before you’re moving to Palo Alto. So, can you talk about that process a little bit, and also about your decision around housing?

28:12 George: Yeah. So, I started my budget already. So, the first thing that I kind of took out of my budget was taxes. Because what I kind of like found out that was pretty surprising is that they don’t take taxes out of fellowships. So, like your income tax will be kind of just like given to you and you’re expected to know that it’s supposed to be paid back in taxes.

Quarterly Taxes on Non-W-2 Income

28:34 Emily: Okay. Let’s pause there because I think we need to emphasize that. At most universities, it sounds like it’s Stanford included, if you’re receiving a fellowship, which is what I call non-W-2 income. So, fellowship, training grant, this kind of income. Very likely, they will not be withholding income tax for you, as a domestic student. For international students, they do. So, let’s emphasize that again. You are receiving your entire paycheck, but that does not mean that you get to keep all of that. Part of that is going to go back to the IRS in the form of income taxes, which you may have to pay quarterly. I’ll link in the show notes to my resources on that. It’s probably ones that you found, George, as you were doing this research. But yeah, please keep going. I just wanted to, like–we don’t want to gloss over that. Like, you will probably end up paying income tax and you have to do it yourself. It’s not done for you. And it’s a process that a lot of people just completely miss and they have an ugly surprise when they get to their taxes after their first year of graduate school.

29:30 George: Yeah. And actually, I plan to do quarterly taxes as well. So, I was kind of like putting it together so that every month, like I kind of calculated how much taxes I would owe at the end, and then I divided that by 12. And then I would kind of like save that amount of money every single month. So, when it comes to that time, when I have to pay my quarterly tax, I already have it in my savings account and I can just pay it. But that’s the first thing I kind of put away. And then I went to my housing. So, at Stanford, they have housing on campus which is subsidized. So, it’s kind of nice that I was able to kind of apply to housing at Stanford.

30:06 George: So, I kind of looked at all the housing options, and out all of the ones that I liked, I kind of picked the highest monthly rent, and I put that in my budget. And I was thinking that, if I get a lower one, I could just change that in my budget. It will be easier to change to lower than to higher. So, that was kind of my thought process on that. And then with my budget, I tried to make it so that it’s not a budget that I kind of don’t like looking at. So, I kind of like, as I said before, like I tried to find out how I spend my own money and I tried to make a budget that I can comfortably live within the budget, and I gave myself some breathing room.

30:44 George: I wanted my budget to be kind of pleasant to live on so I don’t kind of like break my budget. So, I kind of was thinking like, “Okay, I spent this much on food. Let me give myself a little breathing room since I can kind of like afford to do that.” And then I also put some money in there for shopping. I put some money in there for transportation because I don’t plan to bring my car with me my first year. And then I also put like 20 to 25% away for investments. So, kind of like putting stuff into my savings accounts, putting stuff into my Roth IRA. And then for my brokerage account, I don’t plan to put monthly in there until I have a good amount in my savings account, but then I plan to start putting monthly into my brokerage account. For now, I’ll just kind of like, if I have some money from the money I put away for shopping and for like kind of random stuff, I’ll buy some stocks if I feel like I want to, but it won’t be like a monthly thing that I put money specifically away for yet. But that’s kind of like what I decided to put in my budget.

Ranking Housing Options

31:53 Emily: I want to go back just to the housing point for a second, because I think you’ve made a really good decision, which was like, okay, so you’re applying for all this, you know, subsidized on-campus housing. You account in your budget for the highest possible rent you would be paying. But is that actually how it turned out? Like what housing did you, when you were saying where you wanted to live, was that the one that you put at the top of your list? Or like how did you rank order that list and what did you actually get into?

32:18 George: So, I ranked the list, so there’s like really new housing that’s coming out. It’s going to actually debut this fall semester. So, I put that at the top of my list and that was actually the most expensive, and I was able to get it. So, I didn’t change my budget, but I also had these different ones that were a little bit older, but they had good amenities. They would have good spacing. And I actually got the tour it when I was at my interview. So, I would be fine living with it. It’s not like I would be like, “Oh, I can’t live here and I’ll have to live somewhere else.” So, that’s how I ranked it.

32:53 George: But, there were other options that were really, really expensive. So, I kind of listed those. They say to list everything, so I listed them, but they were like in 30th place, like it was kind of ridiculous how much they cost. So, I tried to kind of combine quality, but also the cost of living because I feel like housing, I think when I was reading my budgeting you should try to keep housing as close to 50% as possible. My housing is a little bit, it’s still over 50%, but I think it’s kind of difficult to kind of get 50% or lower as a grad student. So, I tried to get as close to that as possible. And with some of the other housing, it was like well over 50%. So, I tried to take into consideration that I should try to be close to 50%, if at all possible.

33:43 Emily: Yeah, I think I don’t know exactly what you were learning in the course, but according to the balanced money formula, which is a framework that I like to reference, you should keep all of your necessary expenses below 50% of your net income, which is really, really challenging to do on a graduate student stipend and also on a graduate student stipend in a high cost of living area, which is what you’re doing. So, it’s not surprising at all to me that even you, you know, making a prudent housing choice, it’s still over 50% of your income. That is pretty common for graduate students in high cost of living areas. But yeah, so it sounds like you were, you know, really thinking through both the finances and the lifestyle that you wanted to have with that housing decision. So, super happy that you were, you know, really intentional about that.

Long-Term Emergency Savings Goals

34:29 Emily: And you were mentioning just now, like some of your financial goals for your finances in graduate school. You mentioned that you were going to be saving/investing 20 to 25% of your income and then possibly doing a little bit more investing if you wanted to at any particular time. And I think you also mentioned earlier that you wanted to save up an emergency fund of nine months of expenses. Is that right? Is that your ultimate goal?

34:54 George: Yeah, I’m trying to, one day I hope to get to nine months. So, I would say my kind of goals for personal finance and graduate school, in particular, are kind of modest. I’m not looking to have like a huge, huge thing by the time I graduate. I hope to kind of like build habits and get into the habit of kind of like investing, get into the habit of staying on my budget, getting into the habit of putting money away monthly. Because like in undergrad, I didn’t have any of those habits, and I think that’s something I’m going to have to kind of build. And also, have at least like three months, hopefully nine months, of my emergency fund. Because I know that emergencies are emergencies and I doubt I won’t have any emergencies in graduate school.

35:37 George: So, hopefully by the time I graduate, I’ll have at least three months, hopefully nine months. And then kind of have a decent amount in my kind of Roth IRA as well as in my brokerage account, and that I’ve kind of stayed consistent throughout the five, six, or maybe seven years that I’ll be doing my PhD of monthly, always, putting some money away and not falling into blowing money on stuff. But also giving me that kind of flexibility to have fun and to do things that I find kind of amusing so that I don’t get too stressed through graduate school.

36:13 Emily: I think that’s such an excellent point that you made. Like yes, it would be great to come out of graduate school with savings, with investments, with a nice nest egg. That’s what happened for me. My husband and I defended with quite a good nest egg, and it was really fabulous for our subsequent life. But, the more important thing, actually, is the habit formation. And it’s sort of changing your–like becoming a person who budgets, becoming a person who invests. Now, I know I said earlier that it matters a whole lot. Like if you do that with a small amount of money, it’s great, and yes, that’s true. But, even more powerful is the habit. And so, when you have that nice post-PhD salary, and you’re already in the habit of investing or you’re in the habit of saving, you can then apply those habits to that fabulous higher income and really make some fast progress with your, you know, financial goals.

Any Other Goals for Grad School?

37:02 Emily: So, I think that was such a good point that you made, and even for people who aren’t able to do what you plan on doing, which is still, you know, saving and investing during graduate school. Even getting into the habit of budgeting, like that can be a great goal for your time during graduate school is just to make those changes in yourself and who you are. Even if you aren’t able to come out with more savings, again, once you have the post-PhD income, you’ll be able to keep applying those habits and really make some fast progress. So, such an excellent point, George. Any other goals you have for graduate school, aside from the ones that we just talked about?

37:37 George: I guess like, I mean, there are like nonfinancial goals, like kind of building like skills and kind of building my network and traveling and learning all the different stuff from different people. But financial-wise, I just hope to kind of pay as little in taxes as possible, learn how to file my own taxes. Kind of learn like all the financial things that I need to know to kind of like succeed. I think for my brokerage account, I’ll be kind of investing. I think the money in there is probably going to be used as a down payment on a house in the future. That’s kind of like, well far off, but I’m kind of thinking, “Oh, I’m investing in my brokerage account. I’ll probably use it to kind of buy a house or have some money towards a house.” Kind of things like that. Those are kind of like the goals I’m thinking of, but I don’t really have like super hard, concrete stuff yet. But those are kind of the things I’ve been thinking about.

38:30 Emily: Yeah. I think it’s great that you identified like, “Okay, I know it’s important to have an emergency fund.” You’re going build that up. “I know it’s important to save for retirement. I’m going to build that up.” And then, “Okay, whatever else comes, I have this other brokerage account, you know, other savings I can use for that. If it’s a house down payment, if it’s something else.” I think that’s a great way to structure your finances when you have a lot of unknowns in the future, as is very, very common for PhDs, because we never know where we’re going to live. You know, after, it’s a lot of uncertainty that we live with kind of longterm.

38:59 Emily: But George, it was a real pleasure to talk with you today. Thank you so much for coming on the podcast and sharing this beginning part of your journey. I hope that we’ll catch up with you again in maybe a few months or a year and see if it’s all panning out the way you thought it would. Thank you so much for sharing your insight.

39:15 George: Yeah, no problem. It was a pleasure to be able to talk about it.

Outtro

39:17 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

Learn From This Poor Kid-Turned-PhD Student’s Different Perspective on Frugality and Debt (Part 2)

by

In this episode, Emily interview ZW Taylor (Zach), a PhD student in Educational Leadership and Policy at the University of Texas at Austin. As a child, Zach identified as a “poor kid” and never thought higher education was for him. His upbringing and winding path through community college and his bachelor’s and master’s degrees taught him lessons about money that he has carried into his life as a PhD student – for better and for worse. In this second half of the conversation, Zach gives detailed and unique financial advice to prospective and rising graduate students on evaluating stipend offer letters and selecting housing. He was determined to not go into debt during his PhD, so he thoroughly investigated his stipend offer letter and the socioeconomic layout of his new city before accepting the offer. Finally, Zach shares his vision for the future of his finances once he’s done with his PhD and earning a significantly higher paycheck.

Links Mentioned in This Episode

PhD research housing

Teaser

00:00 Zach: If they want you and they offer funding, then in a different side of the same coin, they should be able to tell you specifically what you’re getting, because how can you budget, how can you plan without knowing what your income is? I mean, it’s incredibly important. So to your point, encouraging PhD students to be their own best friends and their own advocates and be very clear about what you’re getting before you go.

Introductions

00:29 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five episode eleven and today my guest is Zach Taylor, a PhD student in educational leadership and policy at the University of Texas at Austin. Zach has such a unique perspective and so much wonderful advice that I’ve split our interview into two episodes, last week’s and this one. In this episode, Zach gives detailed and unique financial advice to prospective and rising graduate students on evaluating stipend, offer letters and selecting housing. He was determined to not go into debt during his PhD, so he thoroughly investigated his stipend offer letter and the socioeconomic layout of his new city before accepting the offer. At the end of the episode, Zach shares his vision for the future of his finances once he’s done with his PhD and earning a significantly higher paycheck. Without further ado, here’s the second part of my interview with Zach Taylor.

Financial Advice for Early Career PhDs

01:30 Zach: You know, in terms of advice for other early career PhDs, in terms of saving money and thinking about going to grad school, especially with the kind of frugal mindset is I was not going to go to grad school one, if I had any debt. That was just something that I had always thought to myself that if I’m going, again another childhood lesson, if I’m going to pay for it, I’m going to pay for it in cash and I’m not going to take out a loan. My best advice for early career folks who are thinking about the PhD is if you can work before you go to grad school and pay down any undergrad debt you might have. I know it’s not possible for some folks, but try your best to get some work experience and pay down that debt.

Further reading:

02:18 Zach: And then when you’re thinking about doing the PhD, do some of the same leg work that I did. Investigate the city — where is public transportation? Where are groceries? How can you get around? Talk with other folks who have been there for a couple of years. You know, one reason I came to UT Austin is that everyone was eager to give me their perspective. I mean, when I asked people how do you like living? How much do you spend? Where do you live? How do you get to school? No one held information back from me. Everyone was so willing to share because I think you want to help other folks out. So ask questions and be inquisitive and see where you can make it work financially. But then when you make that choice, I made the choice that I was going to go to a funded PhD program. I was going to work through. I wasn’t expecting just to not have to have an assistantship. I’ve worked all the way through, but I’m also not gonna have to take out any loans. And I think if you have the right combination of work experience and academic experience in certain fields, you can find those programs that are very, very low cost or no cost and be able to work through.

03:27 Emily: I just want to add a couple of comments on those pieces of advice, starting with your most recent one. So in the STEM fields and engineering, where I’m coming from, there’s this advice I guess, that people sometimes say to a prospective graduate students, which is that an acceptance without funding is a tacit rejection. Like if you are not offered funding along with your offer of admission, they don’t really want you there. And that’s typical in those kinds of fields. And at a certain, I’ll say tier of university. Not every graduate students — I mean some people do either take, you know, fully pay for their PhDs on their own, like there’s no funding package offered or they go into a situation where they know, okay, sometimes there’s going to be funding, sometimes there’s not going to be, or okay I’m going to have funding to a degree but I’m also going to have to do X, Y, Z to make up the deficit.

Emily: It’s really hard for me to ever say something as blanket as don’t go to a PhD program if you have to take out debt, because I just, I want to allow for individual situations. But I mean it sounds like from your perspective, even being in a totally different field than I’m coming from, you were still determined, I’m not going to go to graduate school if I have to take out debt. It’s just not going to happen under those circumstances. So you were very selective about where you applied slash the programs that you were actually considering going to, to make sure that you could make it happen in that way, even though it did in your case involve outside work as well.

What to Research When Choosing a Program

04:59 Zach: Absolutely. And one thing that I really insisted upon before I came and I don’t, know of too many other young PhD prospective PhD students who do this, but you really have to push the graduate coordinator or someone in financial aid. Know exactly what you’re getting. It’s really easy to say you’ll have an assistantship and it’ll provide a stipend. After taxes and benefits, how many specific dollars am I getting? When in the month am I being paid? Am I being paid biweekly or monthly? Am I paid over the summer? What are the opportunities for employment over the summer? As someone who is going to embark on a five or six year journey, they owe that to you. They have the information, they can provide that to you.

Zach: Before I came I was very, very explicit in saying, if I’m going to leave this job that I know that I like and I’m going to forego wages for five years and give up a salary and not be able to save any money, what am I specifically getting? What are the specific opportunities? And then matching them up with the area and saying, okay, I can make this sacrifice for four or five years. Yes, I’m going to forego wages and a savings, but I’m also not going to be in so over my head or I’m going to feel pressured to make choices that I wouldn’t normally make. And you know, Emily, to your point, it’s absolutely been the case in my experiences and other classmates that there have been times where they’re unclear about their funding package because it wasn’t made specifically clear when they were admitted. Kind of that tacitly, if you’re not fully funded, we don’t fully want you. If they want you and they offer funding, then in a different side of the same coin, they should be able to tell you specifically what you’re getting, because how can you budget, how can you plan without knowing what your income is? I mean, it’s incredibly important. So to your point, encouraging PhD students to be their own best friends and their own advocates and be very clear about what you’re getting before you go.

07:10 Emily: Oh my gosh, I’m so glad that you made this point even more explicit because it’s one that I talk about frequently during admission season. Check the show notes, if you are a prospective graduate student because there will be links there to further articles and workshops and resources that I have on that exact topic of figuring out exactly what your offer letter is saying to you and asking questions when there’s a lapse in information in the offer letter. And I mean, to your point, pay frequency. I mean that’s not even something that you would necessarily think about, but it’s really important once you’re actually on the ground and doing that budgeting. I’m super glad you brought that up.

Further reading/listening/watching:


Emily: But to go back to one earlier point would you mentioned which was paying off debt and working potentially before starting graduate school. I totally have to concur on this because, now student loans I’ll put in one basket, okay, because student loans can be deferred while you’re in graduate school, but other kinds of debt — credit card debt, car debt, any other kind of debt that you have to be making payments on during graduate school — do everything within your power I would say to clear that before getting into graduate school because the stipend is already so meager, you don’t want to have ongoing payments that you don’t have to, once you’re in that situation. And then of course the student loans in another basket, if it’s at all possible to pay down part or all of them are maybe the ones that the highest interest rate or just to make some kind of progress on that student loan debt, if you’re carrying a lot of it, before you start graduate school. It’s an amazing step to take. It’s a gift to yourself. Me personally, I had some student loans coming out of undergrad. I was sure to pay off all of the unsubsidized student loans before I started graduate school. The subsidized student loans, they’re not going to garner interest during that time. At that point, wasn’t caring about that so much, but I got the unsubsidized ones wiped off before I started graduate school. Just wanted to emphasize that point as well. Please go on with your other other advice for early career PhDs.

08:59 Zach: Yes. So this is more about where you’re planning to study and how you can kind of network beforehand. You brought up a great point that I want to hit on again about where you’re living and how much you’re paying and understanding kind of the socioeconomic context of not the university, but the city. Austin, like you said, is really rapidly growing and I applied across the country. I applied to Indiana, Vanderbilt, Stanford, Michigan, Princeton, Cornell, all over the place. But I was really specific about researching Austin when I got in because I knew how rapidly Austin was growing. And to give you an idea of the cost of living increase and how much graduate students are actually paid, I moved into this current one bedroom apartment back in the spring of 2017 for $960 a month and I am a one hour commute from campus. So I’m one hour away for $960, with utilities it’s about $1200 a month. That was a sacrifice I made. However, these apartments now go for $1310. So they have increased almost $400 in two years. And I’m still one hour from campus. If I was arriving to Austin today and having to sign a lease today, I would pay almost $400 more than I would have paid just two years ago. Now you had talked a 10% increase — 30% increase, 40% increase. And these are not….we don’t have a garage. We don’t have a private yard. We don’t have too many amenities. It’s a pretty standard one bedroom apartment with air conditioning, but it’s also an hour away from campus.

10:53 Zach: I always host PhD students in the spring who are prospective students. And I always, when I show them apartments, I ask not only for the current rent because a lot of major cities have market rent, which means it changes, with the ebbs and flows of moving season throughout the year. Don’t only ask for the rent now and move in, but ask for it three years prior because they have records of all the leasing contracts and all of the, um, leasing and rental agreements. So you can see how rent has changed and gone up or gone down in a certain area. And actually I just helped a friend from Michigan move in just the other week and he and his partner made a very specific decision to go to a certain complex and neighborhood because the rent had been somewhat stable over the past three years and had only gone up about $180 over three years. Whereas my neighborhood is in a different kind of more developing area of Austin and it is growing like crazy.

Zach: Especially when you’re moving into a new city, getting an idea of historical trends and then do the exact same thing for the stipend. How much was the living stipend, how much was the assistantship five years ago? What does it now and do you anticipate a cost of living increase and is that going to be compensated by the university? Something that UT Austin recently did was dedicate new money to try to keep up with cost of living and try to develop some new graduate student housing, which we haven’t really talked about, but always inquire about graduate student and subsidized housing because some universities still do have it. Even though in a very landlocked, city locked university like UT Austin, there’s not a lot of room for expansion anymore, but always ask about the cost of living increases in historical rent in the city, how that relates to the stipend from the university and then what the university is going to do to keep up with that cost of living. I couldn’t agree more.

12:56 Emily: Yeah. I’m so glad you made that point.

Commercial

13:02 Emily: Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

Understanding The Role of Cost of Living Increases

14:05 Emily: Really, a new idea for me is actually asking about those historical rents and seeing the increases. This might be a silly question, but does Austin have any rent protection in place? Like increases can only be a certain amount over time, like in terms of laws in place?

14:21 Zach: Not that I am aware of and it doesn’t seem to have translated to people who have actually been into leases and stayed multiple years. Our rent has only gone up $60 in two years, but for the same apartment, for new leases, it’s that new elevated price. However, and this to me was just absolutely ridiculous, I was actually outraged by this, that we have a valet trash fee that is mandated. That we have to pay $14 a month to have somebody pick up our trashcan outside the door and take it to the dumpster. Now the dumpster is a half a block away and I don’t want to pay for valet trash, but I have to because it’s part of the lease and it’s an industry that Austin supports. So there are some fees — you know I’ve heard a lot about the fee creep and higher education where you might have a tuition freeze, but you can keep charging student fees and those add up. The same thing happens with amenities and fees in Austin. The trash fee has gone up, water has gone up, electricity has gone up. It used to be that we would come in a close to $100 over the summertime for air conditioning. Now it’s closer to $140 or $150, and it’s a dramatic increase. So not only understanding the rent, but really understanding what fees you have to pay, what are mandatory, what are optional, and then how those feeds are going to be adjusted over time, because in some big cities they’re just mandated and you just have to bite the bullet and pay for them even if you don’t want to. But those really add up just in fees. We pay an extra $95 or $100 a month just in fees.

16:09 Emily: Yeah. What I’m getting from this part of our discussion is just the importance of interrogating every single component of your offer, of what your living expenses are going to be. And all the time that you put into researching these different components before you actually move to the city that your graduate school is in, or after graduate school, same story, it’s really going to be worth it. It’s going to pay off when you do this research, because the less you have to learn on the ground once you’re there and make changes, the easier it’s going to be. If you can find a place you want to live for several years right from the beginning, it’s a lot easier for you. I did want to go back to make one other point from what you said earlier about asking about the historical stipends. I definitely think you should and can ask a graduate program that, but I wanted to plug my own website, which is PhDstipends.com and also I have another one for postdocs, postdocsalaries.com. PhD Stipends has been around for five years now, I think. And people enter which academic year, the stipend their listing is for. So if your university has enough data in there, you definitely can look back, even potentially at your own department and see what they were paying five years back to compare it to what’s in your offer letter.

17:24 Zach: Yeah, absolutely. And to your point about having that access to data and actually seeking that out, now that you mentioned that, I don’t know anyone else who did that when they came. A lot of folks were really excited just to be able to come to Austin and to be in a PhD program. It’s a very highly ranked program. It’s very prestigious around the country, so a lot of folks were just happy to be there. But then down the road they really kind of regretted not understanding where they were going to live, how much they were going to make. Also the time crunch in making a decision. I had to make my decision in a series of three or four weeks. I mean really in graduate student visits when I was admitted to PhD programs, I the beginning of February really until about mid-March to visit places, do my research. So also understanding how that’s going to affect whatever job you have at the time.

Zach: When you’re exploring PhD programs, it is a serious time commitment. I mean just finding a PhD program in a city that fits you and your budget and that you can continue to maintain your expectation of living whatever that is, is like a full time job. It’s like being on the job market and people should take it with the same seriousness and explore all of those resources that they can because like you said, I have been very, very fortunate. It was some good planning, but I’ve been very, very fortunate not to have to move every year, not to have to sublet. That means my computer workstation has stayed the same. I have a routine. I’ve been able to write. I’ve been able to travel because I haven’t had to worry about where I’m going to live, how much money I’m going to make. It’s all very budgeted, all very meticulous and I think that has really made the PhD program a much more fulfilling experience, because like you said, I have gone through those hoops initially to make sure that I was in a place that I could afford and I would feel comfortable in.

Final Words of Advice

19:24 Emily: Yeah, absolutely. I’m so glad that you brought up that point as well. Any final advice for other early career PhDs?

19:31 Zach: Yes, so I guess lastly, and it’s kind of more of a philosophical point, is I did make the choice not to go to a PhD program that wasn’t going to financially support me. And I think, most people who pursue a PhD, it’s right in the prime of their earning potential, right? So you’re talking early twenties to anywhere in the late thirties like that 10 to 15 year period, you can make a lot of money during that time of your life and pay down a lot of debt. You have to understand that going and getting a PhD, you’re going to forego wages and you might take on debt. It’s such a double edged sword because you’re losing money on one hand, and you’re kind of having to borrow more money. So really, really committing and making that sacrifice, because understanding how many hundreds and thousands of dollars you may be foregoing in the future, and having to pay back debt, and having lost wages.

Zach: The sacrifices I made were having a very compromised social life and a very kind of frugal living down here because I knew it’s going to be four or five years of just extreme sacrifice. I am not going to go out. I am not going to go out to eat very often, I have only gone out for drinks three times in three and a half years and all three times were for professional networking, and to work on projects. I just don’t do it. A margarita is $12 and that’s my food budget for almost an entire week. I have made that kind of level of commitment to stay out of debt and to do it frugally. Not everyone can do that, but if you can commit to doing that, you can get out without debt or with very low debt and 10 or 15 years down the road, you’ll really thank yourself, and you’ll look back and you’ll realize, you know what? I think that sacrifice was worth it.

21:27 Emily: Yeah, I think so. I mean your point about opportunity cost is a very, very important one and not something that people, I think think about enough going into PhD program. For me, it’s another reason to work before you go into a PhD program because you have a better idea of what you are giving up on the one hand in terms of salary potential during that time. And you also have more context for your PhD work. What is this going to do for me on the career side?

Financial Plans After Grad School

21:51 Emily: I’m gonna surprise you with one last question, Zach. This is not what I prepared you with, but what do you think you’re going to be doing with your finances once you’re done with the PhD? And hopefully, you have a job you enjoy that pays you much better than whar you’re being paid right now. Do you see yourself shedding some of these mindsets and habits that you’ve carried with you to this point? And if so, how? How can you even step away from this since it’s been going on for so long in your life now?

22:22 Zach: Yes. It is such a lifestyle. I cannot emphasize that enough. I have thought about what I want to do with my money when I graduate and get a job and now I don’t have debt and the money is mine to spend. I don’t want a larger than two bedroom house because I’ve never lived in a place larger than that. I wouldn’t feel comfortable in a four bedroom house in the suburbs. That’s just not me. I would not feel at home there or comfortable. I could never buy a new car. I could never do that. I would not feel comfortable driving in a 2019 anything. I’ve always bought used cars. I wouldn’t even feel comfortable doing that. If you remember actually from HEFWA, though, what is really, really important to me is donating. I wanted to stay out of debt and get a PhD and have the earning potential to donate to certain programs that I was a part of as a kid and that really helped me out. I think when people are asked about “why do you save money?” I saved so I can give more. Since I’ve been a PhD student, I have been able to donate about $700 to my alma mater and a mentoring program that they have going that I was a part of when I was there. For me, that is such a better use of the money instead of going downtown a couple of weekends and having drinks. I feel so much better about it.

Zach: I think having an understanding of the kind of money I will make when I’m done and then how I’ve grown up, it’s going to allow me to do a lot more good and amplify a lot of the philanthropy that I’ve started doing, and that is really how I’m going to be spending a lot of my expendable income as you could say. I’m going to start a savings account. I’m going to start a 403B or a 401k or some employer sponsored a savings account. If there’s a state pension program, I’ll participate in that. But it’s really going to free me up to spend money where I think it needs to be spent, which is education and low income kids. And like I said, I’m going to look back on my time at UT and Austin and say, maybe I was able to send some kid to community college because I didn’t go out. I was able to help some kid get their associate’s degree because I made those sacrifices and I will trade that any day of the week.

24:56 Emily: I’m so glad to have that incredible perspective from you on the podcast today. It sounds like a really bright future and happy for you that you’ll be finished quite soon, and you’ll get there before too long. Zach, it’s been an absolute delight to have you on the podcast today. Thank you so much for joining me.

25:16 Zach: Absolutely. Thanks Emily.

Outtro

25:18 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

Learn From This Poor Kid-Turned-PhD Student’s Different Perspective on Frugality and Debt (Part 1)

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In this episode, Emily interview ZW Taylor (Zach), a PhD student in Educational Leadership and Policy at the University of Texas at Austin. As a child, Zach identified as a “poor kid” and never thought higher education was for him. His upbringing and winding path through community college and his bachelor’s and master’s degrees taught him lessons about money that he has carried into his life as a PhD student – for better and for worse. In this first half of the conversation, Zach shares the financial struggles his family experienced when he was a child and how he finally committed to higher education – without debt – as a way out. Living in Austin, Texas, with its rapidly inflating cost of living, has its own challenges, and Zach still employs some extreme frugal strategies that he developed earlier in his life.

Links Mentioned in This Episode

poor kid PhD frugality

Teaser

00:00 Zach: Whenever I submit to a conference, I will email the conference chair and try to arrange some sort of email conversation or phone call and ask to volunteer in exchange registration feeds. So there are probably 25 conferences that I’ve gone to in state and out of state. I have never been turned away.

Introduction

00:25 Emily: Welcome to the Personal Finance for PhDs podcast, higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five episode ten, and today my guest is Zach Taylor, a PhD student in Educational Leadership and Policy at the University of Texas at Austin. Zach has such a unique perspective and so much wonderful advice that I’ve split our interview into two episodes, this one and next week’s. In this episode, Zach shares the financial struggles his family experienced when he was a child and how he finally committed to higher education, without debt, as a way out. Living in Austin, Texas with its rapidly inflating cost of living has its own challenges and Zach still employs some extreme frugal strategies that he developed earlier in his life. Without further ado, here’s the first part of my interview with Zach Taylor.

Will You Please Introduce Yourself Further?

01:20 Emily: I have joining me on the podcast today Zach Taylor, and this is a really special episode for me because we’re recording this in August, 2019 and Zach and I actually met at a conference just last month. We were both at the Higher Education Financial Wellness Summit and Zach was a keynote speaker. And he had just this incredibly compelling story to tell during that keynote, which he’ll tell us a shortened version of that during this podcast, of his own personal story. And then during that keynote he also talked a lot about his academic work and we’re not going to get into that so much in this interview, but rather how Zach’s upbringing and the money mindsets and lessons he learned as a child have affected how he handles his finances as a graduate student. And also some tips for other graduate students who may find themselves in a similar financial situation to Zach. Zach, I’m so happy to have you on the podcast today. Will you please introduce yourself a little bit further to the audience?

02:17 Zach: Absolutely. Thanks Emily. Zach Taylor. At this point, I’m a PhD candidate at UT Austin in Higher Education Leadership. I have done a lot of things in education. I’ve been an admissions reader, college instructor, high school English instructor, youth coordinator, mentoring program coordinator. I’ve kind o, been in education my entire life. I really appreciate the opportunity to be here and be talking about this because so many of my life lessons in living an educational life. My mom was also a teacher. It’s been constantly learning new things and ways to save money. I’m so excited to be able to share it today.

Early Childhood and Living in Poverty

02:58 Emily: Yeah. Perfect. So let’s go back to your childhood, your pre-college days and tell us what was going on with you around that time, what was going on with your family?

03:09 Zach: I grew up very low income in the Midwest. Kind of grew up all over the place. My dad had a really hard time holding a job and it came to a head when I was about seven or eight years old. I think my mom realized that she couldn’t just take care of my brother and I, she needed to work, because my dad just couldn’t do it. She became a teacher, and we lived on that teacher salary pretty much my entire adolescence until I was 13. Something kind of tragic happened in my family at that point, so my mom and I decided to leave and go make a life on our own. And if any listeners out there are children of divorce, you can know how financially crippling that is, especially on a teacher’s salary. My mom paid child support to my dad. We were very, very poor. We split a apartment together. She became kind of more than a mom to me. She was kind of my roommate and my best friend and someone who split expenses with me.

Zach: And that was happening during high school. I was an athlete in high school and I quit most all sports by junior year because I needed to work. I needed to make money. I wasn’t able to buy food and pay for transportation and feel like I could save any kind of money at all. And that mindset growing up, coming from the family, I came from — loved going to the library because the library was free. I loved riding the bus because the bus was free. It didn’t cost anything. It was always reliable. It was always there for me. And so as I was growing up, having lived with my mom and having worked really, really early on, a lot of those behaviors really carried into college. I still, to this day, I love a good library. I love a good bus ride. I love having roommates. I’ve never really lived on my own because I’m so used to splitting expenses and living as frugally as possible. I’ve kind of foregone a lot of privacy in my life for that reason. I’m happy to share a lot of those experiences, and how they’ve translated in my college life because I’m again surprised how many habits were formed when I was a young kid that actually, I still practice to this day.

Path to the PhD

05:39 Emily: Yeah, we will definitely get into that in a moment. I also wondered if you could share for the listeners a little bit of your nontraditional path to the PhD. Because there may be some people in the audience who are thinking, well, they have some degree of imposter syndrome as many people do, but maybe a higher degree than others because of not going directly to college after high school or starting in a community college like you did. So can you talk about how you got to where you are now educationally?

06:08 Zach: Yes. I was not a good high school student. Like I said, kind of a broken home, working a lot. I never wanted to go to college. I actually didn’t think about going to college until my stepdad — I was living in my mom and stepdad’s basement working at a gas station and he had said, you’re a smart kid, you can probably go to community college. I was actually not fully admitted to community college. I had to take remedial courses. I had not taken even Algebra II at high school. I didn’t even pass Geometry. I was really credit deficient. I had no AP classes. I barely graduated when I did. And part of the reason I graduated was because my mom was a teacher and kind of helped me out doing summer school and getting and making up credits. I was extremely credit deficient coming in. Took the remedial coursework at my community college the first semester. I joked during the keynote that tuition at the time was $150 per class, but to me that was like food for months. That seemed so unaffordable. $150 per class was unaffordable to me and was initially a deterrent.

07:21 Zach: But I slowly came to realize that education was a way out of working at that gas station and being a poor kid. It was a a way out in many ways. I eventually finished about 18 credits or 21 credits at the community college. Got some really good academic momentum going. I applied to the cheapest in state public school that I could. I wasn’t looking at academic programs, wasn’t looking at what I was going to do. I solely looked at the tuition rates and I said, what can I afford to do as a part time student working part time so I don’t take out any loans? I was very debt averse and one of those things from childhood was if you couldn’t pay for it in cash, you didn’t buy it. And the same attitude translated to college. If I could not pay for tuition in cash, if I could not afford to support myself, I was not going to go. There were a couple of times then throughout undergrad where I stopped out and took a semester off and saved money and came back the next semester. I remember professors telling me, I hope I see you in the spring because they knew I wasn’t going to be there in the fall because I was going to take a a gap semester and make some money.

08:44 Zach: After seven years, I eventually finished. I transferred a few times trying to save money. My parents lost a lot of money in the housing collapse in 2008 so I ended up stopping out again and going back to work. But I was very persistent and also, another lesson from childhood was no waste. Don’t waste anything. And I had already had 80 or 90 credits. I didn’t want to waste those. I wanted to finish. So that was something that really propelled me forward was this investment. I already knew how many sacrifices, how much money, how much time I had already put into this thing, and I really wanted to finish.

09:24 Zach: I eventually did finish. Got a job as a mentoring program coordinator and teacher. I paid for master’s degrees with cash. I didn’t take out any debt. Granted, it took me five years to earn those degrees, but I didn’t accrue any debt because I paid as I was being paid. I was never able to save any money. To this day I have not had a savings account over a thousand dollars. however, I don’t have any debt. I don’t have any credit card debt. I don’t have any college student loan debt, specifically because I paid as I went. Now, that is not going to sound like how a lot of students do it. A lot of students go right from high school to college. They take off those loans, they get that degree as soon as they can. I took a much different path, but in looking back on it and hearing some of the stories that I hear from some classmates, some of them are a little envious of how I did it. And granted there were lots of sacrifices along the way, but being 33 years old, being in a really great PhD program, almost to the finish line and not having any debt is something I’m really proud of.

10:37 Emily: It’s a truly incredible story. And I hope that anybody who can relate to your path in any way, either about growing up as you said, as a poor kid and having some of the mindsets that come with that, or taking this sort of longer term route to get to the PhD to get to where you are now. But by the way, being 33 and being almost done with your PhD doesn’t sound too far behind to me. I hope that they’ll be able to follow up with you if they have anything that they want to you know, talk with you further about or learn from you about.

Carrying Forward Financial from Growing Up Poor

11:08 Emily: What I wanted to ask you about now is some of the attitudes or mindsets that you have carried from your childhood that are, that you’re carrying forward. Whether they are mindsets that you think help you or whether there are mindsets that you think kind of hurt you. You’ve already mentioned a couple of them. One is you being extremely frugal. We’ll get into more of that in a few minutes. Being extremely frugal, not wanting to waste anything. The other one is debt aversion, which I learned at this conference that we both attended is a very common thing for people who grow up in lower income families is having debt aversion, which can be very helpful in some situations and can also, as you were just saying mean that it takes you more time to do certain things like finish your education. If you’re not taking out student loans, there are just trade offs. Are there any other mindsets that you can see from your childhood that are carrying over?

11:58 Zach: I’ll start with the positives. Having the work experience and the education has been so helpful in interpersonal communication and just professionalism. I waited tables and I stocked shelves at gas stations and grocery stores and that kind of manual labor. And working with other people, working your body, you’re really just kind of come to an understanding that there are a lot of different kinds of work out there, about the different kinds of people out there, and to respect all professions and be able to communicate with folks from lots of different professions. In a positive, feeling like I needed to avoid that debt and work my entire way through, I’ve got to meet a lot of people I would never get to meet. I’ve got to develop my communication skills to a degree where I feel as comfortable on a public bus or a shelter or a church or a tier one research institution. Talking with senior level administrators, same level of comfort because I’ve been around and lived amongst all those kinds of folks. So that has really, really helped me in terms of the negatives.

13:13 Zach: Growing up, never went out to eat, never vacationed. The longest vacation we actually ever took was a weekend trip to Minneapolis when I was, I think eight or nine years old and that was it. That was the only vacation. Never left my home town. My first plane ride was at age 30, coming and visiting UT Austin. We never took vacations, kind of with the idea that if you can’t pay for it in cash you are not going to pay for it. And then thrifting almost everything. In prepping for this podcast, I was trying to remember going school shopping and I don’t think I ever did. I don’t think we ever went school clothes shopping. It was either hand me downs from older kids in our neighborhood and cousins or it was going to St. Vincent DePaul and getting used clothes. And to this day when I need something, a chair, shorts, shoes — I just bought a really great pair of used shoes — I still go thrifting for a ton of stuff. That has stuck with me, for better or for worse. To this day, I also just seek out free stuff even if I don’t feel like I belong, like free food on campus. There are speaking events that I go to that if they fit in my schedule, I’ll go for the food and for the socializing, which is totally free sponsored by the university. Also though, with having a really kind of frugal mindset, I had still made some really bad choices. I still tend to eat spoiled food and expired food. It’s just a bad habit to break. It’s kind of the no waste. I buy in bulk as much as I can and then if it goes bad, I still eat it. I still, for better or worse, shop at Walmart. A lot of my classmates are hard on me for shopping at Walmart, but it was the only grocery store in my hometown. It is consistently the cheapest. They always have discounted poultry and meat and bakery. I always freeze things and can things when I can. Some people have thought that I’m kind of weird for doing that. Like buying day old bread and buying day old meat and freezing expired food to kind of stretch the eatability and the usability of the food.

15:42 Zach: That has actually been a little socially stigmatizing. I find myself kind of gravitating toward other folks who grew up poor and just understood that that loaf of bread should last you a week and a jar of peanut butter should last you two weeks. And those can be meals, every single meal if you need them to be. It’s also been a little stigmatizing being an Austin because there’s so much money in this town. There’s so much technology and a lot of folks do come from money and going out to eat twice a week. Living downtown in a $2,500 a month apartment isn’t anything out of the ordinary. It’s so foreign to me and it’s been hard to relate to some folks who grew up that way, especially if we’re in the same PhD program, because I just don’t have those experiences. I don’t feel good about doing those things. So there are some positives than, as you said, there’s obviously some negatives too.

16:43 Emily: Yeah. I’m so glad that you’re telling this story here. It’s really good for me to get your perspective because I did grow up very differently, and most people who I know grew up more middle-class like I did. Or maybe if they had a background more similar to yours, maybe they were sort of concealing that. It sounds like you don’t do that, at least not all the time.

Commercial

17:12 Emily: Emily here for a brief interlude. Tax season is upon us and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns. From free articles and videos, to paid at-your-own-pace workshops, to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax that’s P F F O R P H D dot com slash T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now back to the interview.

Finances During Grad School

18:16 Emily: Okay. My question is around sort of the PhD program being kind of an equalizer in terms of income. Not that every PhD student or every PhD student at UT Austin makes the same amount of money, but more that you know, you’re kind of put on, let’s say within a factor of two, within your university, of one another. Now, some people coming into that situation are used to living a lifestyle that is higher than what they can afford on their PhD stipends. You, maybe, I don’t know, we’ll get into it, this may be have been a lifestyle increase to be able to have the stipend that you have, based on where you were coming from before that. But everyone has a choice to make when they hear the stipend that they’re receiving. They can choose to live within their means, at least semester by semester, sometimes funding changes, but they can choose to attempt to live within their means. Or they can choose to take on outside work or take out student loans perhaps and augment that stipend income with other sources of income or debt. I was wondering, maybe you could speak a little bit about what your finances are like right now — what is the stipend that you get at UT Austin and how did that compare is really briefly to cost of living? And whether or not you’re able to save on that or does anybody save on that?

19:35 Zach: In the college of education and most social sciences, the typical graduate research assistant or assistantship stipend is between $1,400 and $1,700 a month.

19:46 Emily: Not generous.

19:48 Zach: Not generous. And if you look around Austin, the typical one bedroom, entry-level, we’re talking no amenities, no garage, you might not have central air conditioning, you may have a box air conditioner, $1,500 a month, $1,700 a month, and if you want to live downtown and not have a car, it’s going to double and sometimes triple. It’s pretty ridiculous. The living stipend does not let you live comfortably whatsoever. And even really for my standard of living, you know, trying to find a one bedroom apartment on $1,500 a month, it’s incredibly hard to do and so incredible that I have had roommates my entire time here because there is no way that it would have been able to work. And in talking with other grad students in my program and, and in social work, and in psychology, sociology, linguistics, I don’t know anyone who lives on their own. They either live with family or they have roommates. Really in Austin there’s no other way to do it.

20:56 Zach: In terms of saving, there has been no saving. It has been avoiding debt. I’ve not had to take out any debt, but I’ve also not been able to save anything. And that’s common almost across the board. It’s just kind of four or five years of “I’m going to sacrifice earnings. I’m going to do my best to say at a debt, but I know I’m not going to save anything on the stipend”. Now at UT Austin, we do have healthcare paid for, so that is really great. It’s a great healthcare system. It’s really has really great coverage. There are other student benefits. We get to ride the bus for free. We get discounted food on campus. I mean there are lots of other perks of being a student. You are paid in other ways than just monetarily, but that money does not stretch far, that is for sure. In terms of being able to make ends meet and making enough money to be able to afford this town, I’ve picked up several other jobs, so I do work more than my assistantship for sure. I generally put in between 60 and 70 hour weeks. I also am an admissions reader. I teach courses part time at a nearby university. I edit dissertations part-time for about $75 an hour. And that has helped me make rent and pay for food some months. I also take automated surveys on Amazon Mechanical Turk during my bus rides. I’m a little bit car sick, so I can’t read a book and I can’t study, but I can be on my phone and take surveys. And through Amazon Mechanical Turk I can usually make $8 or $10 per commute, so I will drive my car to my park and ride for about 15 minutes. I’ll have about a 45 minute bus ride in, but in those 45 minutes I can make between $8 or $10 and that could be my food for a couple of days. I’ve been able to really stretch that out, but as you kind of alluded to debt aversion, but no savings whatsoever.

22:58 Emily: Yeah. Well I’d like to get now into more how you make it work. You mentioned what the stipend is at UT Austin, which I mean Austin is a rapidly increasing cost of living city, so I think what’s common in those cities is that the stipends that graduate students are paid and probably other people, the university, their salaries are not indexed at all to what the cost of living is increasing by. It’s a really tough situation to be in, especially as a graduate student, as you mentioned. Coming in and having maybe a five plus year path to the PhD, I mean in that five years, the cost of living can go up tens of percentage points, but your stipend is going to increase very little. So the situation that you sign on dotted line for when you start graduate school is not necessarily the situation that you’re in by the time you finish because your stipend is not going to be keeping up with cost of living. Just a word of warning there for prospective graduate students.

Frugal Strategies as a PhD

23:55 Emily: Now I would really love to talk about how how you make those ends meet. What are the frugal strategies? You mentioned extra income, which is fantastic, but on the side of being frugal, what are the strategies that you’re using that maybe you carried over from these mindsets from your childhood that you think are a little bit unusual? We already mentioned roommates. Okay. A lot of people have roommates. It’s kind of a necessity in most places. What are some other things that you’re doing that maybe other students wouldn’t think of? The idea behind this question is just so they can get some more ideas for other ways that they might be able to cut expenses. And also, with each tip or some of the tips, maybe say what you’re sacrificing to do things that way because there is always a trade off.

24:36 Zach: Absolutely. So, when I looked at moving here, I first and foremost looked at where the fastest public transportation was located and on which streets. In Austin, the big buses run on Congress and Lamar, so I knew I wanted to live off of those streets because I also understood that transportation was free with my student ID. First and foremost, before I even moved here, it was a very strategic move of I need to live on public transport and I also need to live near a grocery store because Austin is kind of known for having these food deserts and other major cities do as well, where there might be an entire swaths of the city where there is not a grocery store within walking distance or on public transport. Before I moved it was getting on transportation and getting on food and specifically living near a Walmart because I knew how much money I could save. Just being kind of a Walmart shopper, already having my budget from where I was moving from, I knew roughly how much I would spend so I could really budget my money really well.

25:48 Emily: With the first part, I just want to add that the selection, the location where you live determines so much about what you’re going to be spending during graduate school. You obviously are more highly aware, maybe then most students coming into graduate school. I really think this is something that other, you know, example that other people should follow.

26:05 Zach: And to your point about sacrifices, I do not live where the bars are or where the entertainment district is. I live miles and miles away from that. Right now, if I wanted to get to some place that had the live music venue, it’s a 12 mile bus ride. I do not live where all the action is in Austin and that’s a sacrifice. I lived on the bus line, I reserve myself to a 45 minute, one hour bus ride that was free. So those are are part of the tradeoffs. But I also went a step further specifically with Walmart and some thrift stores. And I asked, first of all, I would call the location and say to Walmart, when do you discount bakery? When do you discount meat? What day of the week do you put that out? And they’re happy to tell you like bakery and my Walmart is Mondays and the meat is Thursdays. So I know that I go Thursday morning, try to do grocery shopping on Monday and save a ton of money that way. And we’re talking, you know, ground beef that might be $12 is down to $4 and it’s the same amount of meat and you can still freeze it. So stuff like that.

27:14 Zach: Also thrift stores — when do you inventory and when do you give things away? A lot of folks who don’t shop at thrift stores don’t know that thrift stores throw out about 25% of the things that they get in donations and they tend to save those. So they’ll load everything in the back, they’ll sort through what is salable and then they’ll actually throw away everything that they don’t think is salable. A lot of good stuff is still in there though, so you ask thrift stores, down here it’s Goodwill. There’s lots of Goodwills and they are different in different places, but they’ll tell you when they’re going to chuck stuff and you can go on that day and not pay anything. You can go through and get good chairs, good tables. And especially in grad school, if you’re only going to be in a place for four to five years, a lot of that furniture can be just a rental, a four year rental. You go get a free set of kitchen table and chairs for free from a Goodwill, use them for a couple of years, and then give them away. Going the extra mile, especially knowing where I was going to live, but then the social services I was going to use — how could I maximize those? So that when I got here, it wasn’t a huge culture shock. I was doing a lot of same things back home that I had been doing here.

28:29 Emily: Yeah, I really love that combo, those first two tips of it’s not only where you shop, but when you shop. And I don’t think that second step when you shop is something that necessarily occurs to people right away. Thank you for that insight. What’s another tip that you have?

28:47 Zach: this is more along the academic side. in being a PhD student, there’s always pressure to publish and go to conferences and be an academic. But I have found that I am able to save quite a bit of money and do a lot of travel that I would never be able to do by one, when I do go to conferences, be extremely outgoing and friendly and —

29:11 Emily: I can attest to this, you are extremely outgoing and friendly. Yes.

29:14 Zach: And specifically try to meet people that are not from your state and those people become your friend network and those become people who have couches and floors that you can sleep on. So I have gone to a ton of conferences and not paid for a hotel or an Airbnb at all, just knowing someone in that spot. I’m going to Portland in the fall. I’m staying with someone. I’m going to San Francisco next spring. In San Francisco, the group hotel rates were $190 per night. I’m staying for free with a friend who I met at a conference and I have them return that favor. People who are coming to conferences in Austin, I always put them up, I keep a spare mattress, we throw it in the living room and they sleep on a mattress in the living room floor. That’s saving them hundreds and hundreds of dollars of conference hotels.

30:08 Zach: And then actually attending the conferences — I heard a lot of folks tell me they could never do this, but whenever I submit to a conference I will email the conference chair and try to arrange some sort of email conversation or phone call and ask to volunteer in exchange registration fees. So there are probably 25 conferences that I’ve gone to in state and out of state where I know when I will arrive and I’ll say, I can give you eight hours of my time before my presentation. I’ll help you at 5:00 AM and I’ll get the conference room set up. I’ll set up tables, I’ll put up projectors. TACAC is the admissions conference here in Texas and I have done check-in for the past three years in exchange for registration. I will happily volunteer a few hours of labor for a $200 registration fee that I don’t have to pay. And it also doubles as great networking, because they see a grad student who is eager to volunteer and help out and chip in, and I have never been turned away. I’ve never had anyone say, “no, we can’t support you in some way.” It’s not only saving the money in your personal everyday life, but in your academic life, there’s also some ways you can save some serious money and that money adds up over time. I’ve saved at this point over three years, thousands of dollars by doing those things.

31:34 Emily: Yeah, that’s a really incredible and powerful tip that I’m so glad you shared because I hear all the time, um, about how conference expenses are such a limiting factor in a grad student’s ability to network, ability to get their research out there and so forth and those fees and so forth are real barrier. Even if your department or your funding agency or whoever pays for part or all of it, it still is hard to have that money up front and what you’ve come to here is just a really brilliant solution, and I hope that a lot more people will start following your example. I mean the fact that you’ve never been turned down like when given that offer is just incredible. Well, I hope not too many people start doing it or else maybe you’ll have some competition for the volunteer jobs, but it’s a great, great idea and such an actual tip. Thank you.

Outtro

32:25 Emily: Listeners, thank you for joining me for this episode. PFforPphDs.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcast, Stitcher, or whatever platform you use. Two, share an episode you found particularly valuable on social media or with your PhD peers. Three, recommend me as a speaker to your university or association. My seminars covered the personal finance topics PhDs are most interested in, like investing, debt repayment, and taxes. Four, subscribe to my mailing list at PFforPhDs.com/subscribe. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Lourdes Bobbio.

How The Lucrative Artist Identifies and Reverses Negative Money Mindsets with His Clients

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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

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

17:58 Emily: Emily here for a brief interlude. Tax season is upon us, and while no one loves this time of year, it’s particularly difficult for post-bac fellows, funded grad students, and postdoc fellows. Even professional tax preparers are often thrown for a loop by our unique tax situation. And don’t get me started on tax software. I provide tons of support at this time of year for PhD trainees preparing their tax returns, from free articles and videos to paid at-your-own-pace workshops to live seminars and webinars for universities and research institutes. The best place to go to check out all of this material is pfforphds.com/tax. That’s P F F O R P H D S.com/T A X. Don’t struggle through tax season on your own. Visit my website for the exact information you need in the most efficient form available. Now, back to the interview.

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.